HomeMy WebLinkAbout2010/05/04 Item 17
CHULA VISTA
REDEVELOPMENT
AGENCY
AGENDA STATEMENT
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
MAY 4, 2010, Item 17
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA [A] APPROPRIATING $2,400,000 FROM
HOME INVESTMENT PARTNERSHIP FUNDS AND
$2,000,000 FROM HOUSING AUTHORITY IN LIEU FEES
FOR THE DEVELOPMENT OF THE LANDINGS II; AND
[B] AUTHORIZING THE CITY MANAGER TO EXECUTE
AN AMENDMENT TO THE HOME LOAN AGREMENT
AND A LOAN AGREEMENT BY AND BETWEEN THE
CITY OF CHULA VISTA, AND LANDINGS II, L.P. AND
ALL OTHER AGREEMENTS AND DOCUMENTS
NECESSARY FOR THE FINANCING OF THE LANDINGS
II AFFORDABLE APARTMENT PROJECT
RESOLUTION OF THE CITY OF CHULA VISTA
REDEVELOPMENT AGENCY AUTHORIZING THE
EXECUTIVE DIRECTOR TO EXECUTE A LOAN
AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY AND LANDINGS II, L.P.
AND ALL OTHER AGREEMENTS AND DOCUMENTS
NECESSARY FOR THE FINANCING OF THE LANDINGS
II AFFORDABLE APARTMENT PROJECT
RESOLUTION OF THE HOUSING AUTHORITY OF THE
CITY OF CHULA VISTA AUTHORIZING THE ISSUANCE
OF MUL TIF AMIL Y HOUSING BONDS IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$30,000,000 FOR THE PURPOSE OF FINANCING THE
ACQUISITION, CONSTRUCTION AND EQUIPPING OF
THE LANDINGS II MULTIFAMILY RENTAL PROJECT,
APPROVING AND AUTHORIZING THE EXECUTION
AND DELIVERY OF ANY AND ALL DOCUMENTS
NECESSARY TO ISSUE THE BONDS AND IMPLEMENT
THIS RESOLUTION AND RATIFYING AND APPROVING
ANY ACTION HERETOFORE TAKEN IN CONNECTION
WITH THE BONDS tV'
DEPUTY CITY MANAGE~~EVELOPMENT SERVICES
DIRECTOR tM/;
CITY MANAGERlEXECUTIVE DIRECTOR r
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MAY 4, 2010 ItemJL
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4/STHS VOTE: YES 0 NO D
SUMMARY
Chelsea lnvestment Corporation (CIC) and Brookfield-Shea have proposed the development
and construction of a 143-unit affordable housing development for low income households,
known as The Landings II (the Project) within the Winding Walk master planned
community. To finance the Project, CIC has requested a $2.4 million loan rrom the City's
HOME funds, $2 million rrom its Affordable Housing In-lieu Fees, $4 million rrom the
Redevelopment Agency of the City of Chula Vista and issuance of $30 million in
Multifamily Housing Revenue Bonds by the City's Housing Authority. Staff is requesting
authorization to execute all documents necessary to fund the requested loans and issuance of
bonds to finance The Landings II affordable housing development.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed project for
compliance with the California Environmental Quality Act (CEQA) and has determined
that the proposed project was adequately covered in previously adopted Final Second
Tier Environmental Impact Report, EIR 01-02. Thus, no further CEQA review or
documentation is necessary.
Additionally, the Environmental Review Coordinator has reviewed the proposed project for
compliance with the National Environmental Protection Act due to the use of Federal funds,
and has determined that the proposed project will not result in a significant impact on the
quality of the human environment.
RECOMMENDATION
The City Council, the Redevelopment Agency and Housing Authority adopt the resolutions.
BOARDS/COMMISSION RECOMMENDATION
On August 1, 2005, the Design Review Committee (DRC) reviewed and approved the
proposed site plans and architectural elevations for a 147 unit development.
On January 28, 2009, the Housing Advisory Commission voted to recommend the
development of The Landings II at Winding Walk as an affordable rental community and
the conditional approval of HOME funds to assist in its financing. Subsequently, on
September 30, 2009, the Housing Advisory Committee voted to recommend the
conditional approval of a $4 million loan from the Agency's Low and Moderate Income
Housing funds and an amendment to the Agreement to Post Security to allow The
Eastlake Company to assist in the financing of the Landings II.
On October 6, 2009, the Chula Vista Redevelopment Advisory Corporation
recommended the Redevelopment Agency conditionally approve $4 million in financial
assistance from the Agency's Low and Moderate Income Housing Fund.
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DISCUSSION
Chelsea Investment Corporation (CIC) and Brookfield Shea have proposed the development
and construction of a l43-unit affordable housing development for low income households,
known as The Landings II (the Project) within the Winding Walk master planned
community. The Project is being financed through a variety of sources, with the majority
from Tax Exempt Multi-Family Revenue Bonds and Low Income Housing Tax Credits.
The City and the Agency have taken previous actions to approve the remaining financing
gap for the Project. At this time, staff is requesting the City Council and Redevelopment
Agency authorize execution of all necessary agreements and loan documents and
appropriations for a $2.4 million loan from the City's HOME funds, $2 million from its
Affordable Housing In-lieu Fees and a $4 million loan from the Agency's Low and
Moderate Income Housing funds to finance the Project. Additionally, the Housing
Authority is asked to authorize the issuance, sale, and delivery of $30 million in tax-exempt
multi-family housing revenue bonds by the Housing Authority for the financing of the
project and approving in substantial form any and all necessary and related documents to
issue the bonds.
Back2round
Brookfield Shea Otay, LLC, master developer for Otay Ranch Village II (aka Winding
Walk), is required to provide 207 total affordable units (92 low-income and lIS
moderate-income) within its Neighborhood R-19 in satisfaction of its obligations under
the City's Balanced Communities Policy of the Housing Element. The Landings
apartment development, located at the north west corner of Crossroads Street and
Discovery Falls Road, was completed by Chelsea Investment Corporation and provides
92 affordable rental units in satisfaction of the requirement for lower income households.
The remaining balance of the affordable housing obligation (lIS units) was contemplated
as affordable housing for moderate income households. Due to the current financial
climate, the Project is infeasible to finance as a moderate income development.
In order to satisfy the moderate income obligation and to obtain necessary financing for a
project, Brookfield Shea has alternatively proposed the construction of a l43-unit rental
development affordable for lower income households, known as The Landings II. They
have again partnered with CIC to construct and operate the Project. It will be located on
the adjoining lot to the 92-unit Landings I Affordable Apartments constructed and
completed in November 2008. For purposes of this report Landings I will refer to the 92-
unit affordable rental development and Landings II will refer to the proposed 143-unit
development which is the subject of the requested actions.
Table 1: Winding Walk Affordable Housing Obligation
Description Planned Proposed
Affordable Units Affordable Units
Low Income 92 Landings I 92 Landings I
143 Landings II
Moderate Income 115 Landings II 0
Market Rate 32 Landings II 0
TOTAL 239 235
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MAY 4, 2010 ItemR
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The Applicant
Chelsea Investment Corporation has developed several projects in Chula Vista, primarily
in eastern Chula Vista, to satisfy developer inclusionary housing requirements (Teresina
Apartments, Rancho Buena Vista Apartments, Villa Serena and The Landings I). CIC has
over 5, I 00 housing units in its portfolio. The company has a strong and experienced
team of professionals. CIC has successfully managed low income housing units for over
20 years.
The Property
The Landings II development will be built within the Winding Walk master planned
community (aka Otay Ranch Village I I) in eastern Chula Vista. This Project will satisfy
the remaining requirements of the City's Program for the provision of affordable housing.
The development will be located at the northwest corner of Discovery Falls Drive and
Crossroads Street on a lot adjacent to Landings I. (A Locator map is provided as
Attachment 1.) The Project is a continuation of design and development ofthe Landings
I. All I43-townhome style units are 3-bedroom and will be affordable to very low and
low income households. Project amenities will be shared with Landings I and include a
pool, spa, clubhouse, and a tot lot.
The Proposal
All 143 units will be rented on a rent restricted basis to households whose income is at or
below 50 and 60 percent (50 and 60%) of the Area Median Income as determined by U.S.
Department of Housing and Urban Development (HUD). This Project will provide a
balance of housing opportunities and fulfill a need in Chula Vista for large family rental
housing, particularly in the neighborhoods east ofInterstate 805, as outlined in the City of
Chula Vista 2005-2010 Housing Element.
Income and Rent Restrictions
Per Brookfield Shea's Affordable Housing Agreement for the inclusionary obligation, a
minimum of 115 units must be affordable to moderate income households. Due to the
financing CIC is pursuing, the Project will exceed these minimum requirements and
provide 28 more units and deeper affordability (very low and low income).
Table 2: Landings II Affordable Units
Unit No. Target Income Group Inclusional1
Description of 'Yo of Annual Proposed Hsg Rents
Cnits AMI Income ('1'':/101/1) Rents (Hot/erall! fll(omt')
3 Bd/2 Ba 28 50% $44,600 $1,010 $2,060
3 Bd/2 Ba 113 60% $53,500 $1,225 $2,060
MGR 2 N/A N/A N/A N/A
Total 143 . . . .. .. .. ..... .
CIC proposes to maintain the income and rent restrictions for The Landings II for a
period not less than fifty-five years, exceeding the 30-year term required by the Bond
financing and the Winding Walk SPA Affordable Housing Program. The income and
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MAY 4,2010 Item~
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rent restrictions outlined above are to be incorporated into the Regulatory Agreement for
the Redevelopment Agency Loan, which will be recorded against the property.
Compliance with the income and rent restrictions will be subject annually to a regulatory
audit and annual tax credit certification. CIC will maintain strict property management
policies and procedures to ensure that income and rent restrictions will be maintained for
the full 55-year compliance period, and will bind all subsequent owners of The Landings
II, so that the commitment remains in force regardless of ownership.
Proposed Financine: of Proiect
Financing and development of The Landings II is proposed as a joint private-public
partnership. CIC will be using Tax Exempt Multi-Family Revenue Bonds and Low
Income Housing Tax Credit financing to support the majority of the estimated
$48,839,880 ($341,538 per unit) cost of constructing the Project. The permanent bonds
and Tax Credits would cover over 54 percent of the estimated cost.
The Housing Authority of the City of Chula Vista expressed its intent to issue up to $30
million in private placement bonds. On March 24, 2010, the California Debt Limit
Allocation Committee (CDLAC) committed an allocation of its private activity bonds for
multi-family rental housing projects to finance the Project.
The remaining development costs will be met by a combination of a contribution from
the master developer/contractor ($12,078,000), a deferral of CIe's fee for the project
($1,248,649), and City and Agency assistance. On February 3, 2009, the City and CIC
executed a loan for $2,400,000 from the City's HOME funds. On October 20, 2009, the
City approved a $2,000,000 contribution from The Eastlake Company to the Project in
satisfaction of the remaining obligation for Eastlake. Additionally, on October 20, 2009,
the Redevelopment Agency conditionally approved a loan of $4,000,000 to complete the
financing after an increased gap because of the current financial market.
City Assistance - HOME and In-lieu Funds
The City has executed a Loan Agreement for $2,400,000 from its HOME funds. An
Amendment to this Loan Agreement is attached (Attachment 3). The Agreement
incorrectly stated the name of the partnership (Developer) and will need to be corrected.
Additionally, since such time, CIC has received commitments for Bond and Tax Credit
financing and additional sources of financing for the project. At this time, an
Amendment to this Loan Agreement is proposed to provide a more specific summary of
the financing and to provide consistency between loan documents.
Additionally, the City approved a loan of $2,000,000 resulting from a contribution from
The Eastlake Company in satisfaction of their affordable housing obligation. The City
Loan Agreement for the $2,000,000 from its In-lieu funds is provided in substantially
final form as Attachment 4. Principal and the three percent (3%) simple interest on both
loans will be amortized over fifty-five years and repaid in annual installments from any
cash surplus.
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MAY 4,2010 ltemlL
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Redevelopment Agency Assistance - Low Mod Income Housing Funds
The Redevelopment Agency conditionally approved a loan of $4 million from its Low
and Moderate Income Housing fund to assist in providing a total of 28 units for very low
income households and 114 units for low income. While the Agency would receive only
half credit for The Landings II development, the Agency receives significant benefit from
this type of larger scale development opportunity. Even at half credit, the proposed 143
units equates to 71 units of credit, far greater than the typical development seen in the
Project Area. Use of the Housing Funds for this project is cost effective, with a lower
level of subsidy than the most recent developments and assists the Agency in meeting the
proportionality requirements for spending of its Housing funds towards very low and low
income family households.
The loan is considered to be permanent financing for the project, with a below market
interest rate. The hard payment loan carries a 3.6% simple interest rate on the loan with
principal and interest amortized over a 25-year period. Payments on the loan would be in
equal consecutive monthly installments. MontWy payments are estimated at $20,235.
Repayment is expected to be made in full by 2037. It will be secured by a note and deed
of trust recorded against the property. The Redevelopment Agency Loan Agreement is
provided in substantially final form as Attachment 5.
While the development and its financing is being considered now, disbursement of the
loan proceeds will occur at conversion of the construction loan to permanent financing
anticipated in FY 2011-12.
The Agency assistance is a maximum level of participation. It is expected that any
substantive revisions in such financing assumptions which would lead to an increase in
other resources available, would therefore reduce the level of the Agency Loan.
Bond Structure
The Housing Authority is being asked to authorize the issuance of three series of bonds
(Series 2010 A-I through A-3) to finance costs of developing the Project. The bonds will
be purchased in a private placement by US Bank National Association, who will also act
as the Housing Authority's agent in administration of the loan to the Borrower. One
series of bonds (Series 2010 A-3) will be subordinate to the other bonds and will be
purchased by Brookfield-Shea (Seller of the property) as a carry back. The documents
related to the bond issuance are in substantial form. These documents are listed below and
are on file in the office of the City Clerk instead of being attached to this report due to their
substantial length.
. The Bond Regulatory Agreement is a document which specifies the regulations for the
use and operation of the Project (see Attachment 6).
. The Master Pledge and Assignment specifies the terms and conditions for the issuance
and purchase of the Bonds and the obligation for repayment (see Attachment 7).
. The Loan Agreement specifies the terms and conditions of the loan financing for the
project (see Attachment 8).
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MAY 4,2010 Item~
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.
The Master Agency Agreement appoints an Agent to act on behalf of the Authority to
carry out its duties in the bond issuance, loan of the bond proceeds, and repayment of the
loan (see Attachment 9).
DECISION MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found no property
holdings within 500 feet of the boundaries of the property which is the subject of this action.
CURRENT YEAR FISCAL IMP ACT
City
The total HOME appropriation of $2,400,000 is available from the City's allocation of
HOME Investment Partnership grant funds. The $2,000,000 Eastlake contribution has
been paid to the City and will then be provided as a loan to the project. The City loans of
$4.4 million will be used towards costs related to the development of the Landings.
The project will pay all associated development and processing fees to the City as such
fees are required. This is estimated to be over $4,000,000.
Agency
The Redevelopment Agency loan of $4,000,000 is available from the Redevelopment
Agency's Low and Moderate Income Housing funds. The loan proceeds will be used for
costs related to the development of the Landings. As loan distribution is not needed this
Fiscal Year, appropriations will be included in the City Manager's Fiscal Year (FY) 2011
Proposed Budget.
The current fund balance available for affordable housing opportunities is approximately
$10 million. A $4.1 million Low & Mod Set Aside Loan of the Redevelopment Agency
may be necessary to make the Agency's payment on the Supplemental Educational
Revenue Augmentation Funds (SERAF). Even after the SERAF and Landings II loans,
there is still sufficient fund balance to carry out affordable housing projects considering
net annual revenue will increase the fund balance.
Housing Authority
Bond financing is a self-supporting program with the owner responsible for the payment
of ail costs of issuance and other costs and repayment of the bonds. All costs related to
the issuance of the bonds will be paid for from bond proceeds or tax credit equity. The
bonds will be secured by the project and will not constitute a liability to or obligation of
the City or Housing Authority.
The City of Chula Vista Housing Authority will receive compensation for its services in
preparing the bond issuance by charging an origination fee of 1/8 of I % of the bond
issuance, approximately $37,500. Additionally, staff costs associated with monitoring
compliance of the regulatory restrictions and administration ofthe outstanding bonds will
be reimbursed from an annual administrative fee of approximately $21,875 (based upon
1/8 of 1% of the outstanding bonds) paid to the Housing Authority by the owner.
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MAY 4, 2010 ItemJl
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ONGOING FISCAL IMPACT
City
There are no ongoing fiscal impacts to the City.
Agency
CIC will make monthly payments on the Agency Loan. Monthly loan payments are
estimated at approximately $20,235. Any repayment of principal and interest shall be
made available for the development of future affordable housing opportunities.
It is anticipated in FY 20 I 0-11, the Redevelopment Agency may need to borrow part of
the 20% set-aside allocation to its Low and Moderate Income Housing Fund (Housing
Fund) in order to make the FY 20 II SERAF payment of approximately $900,000 to the
State. Funds will be available to carry out future affordable housing activities with
existing fund balance and repayment of the CIC loan and RDA loans.
Housing Authority
The bonds will be secured by the project and will not constitute a liability to or obligation
of the City or Housing Authority.
Staff costs associated with monitoring compliance of the regulatory restrictions and
administration of the outstanding bonds will be reimbursed from an annual administrative
fee of approximately $21,875 (based upon 1/8 of 1% of the outstanding bonds) paid to
the Housing Authority by the owner.
ATTACHMENTS
I. Locator Map
2. Disclosure Statement
3. Amendment to Loan Agreement (City HOME Funds)
4. Loan Agreement (City-In Lieu Fee)
5. Loan Agreement (Redevelopment Agency-Low/Mod Funds)
Due to the size of the documents, the following Attachments are on file in the Office of
the City Clerk:
6. Bond Regulatory Agreement
7. Master Pledge and Assignment
8. Loan Agreement
9. Master Agency Agreement
Prepared by: Amanda Mills, Housing Manager, Development Services Department
17-8
Locator Map
The Landings II at Winding Walk
17-9
Attachment 1
The I..andhgs I & II
2122 Burdock Way
Attachment 2
Disclosure Statement
17-10
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Development Services Department
Planning Division I Development Processing
0lY Of
CHUIA VISfA
APPLlCA TlON
APPENDIX B
Disclosure Statement
Pursuant to City Council Polley 101-01, prior to any action on a matter that requires discretionary action by the City
Council, Planning Commission or other official legislative body of the City, a statement of disclosure of certain
ownerships, financial interest, payments, and campaign contributions must be filed. The following information must
be disclosed:
1. List the names of all persons having a financial interest in the project that is the subject of the
application, project or contract (e.g., owner, applicant, contractor, subcontr.ctor, material supplier).
Applicant Chelsea Investment Corporation
Owner: landi"9S II. L.P., landings II CIC, LLC (Admin. G.P.) Pac~lc Southwest Community Development ecrp. (G.P.)
-,_.~_._--_._,-----,---- -- ~~-~------_.--_.~_._-_._-,_.~.,.,._--- ------.-
ecntractor: Shea Homes Umned p.rtnershlp
Architect Hedenkamp Archnactuna & PI....,nl"!!
2. If any person' Identified in section 1. above is a corporation or partnership, list the names of all
individuals with an Investment of $2000 or more in the business (corporation/partnership) entity.
James J. Schmid
--- -_._._.._.._,._--~..,_.
3.
If any person' identified in section 1. above is a non-profit organization or trust, list the names of
any person who is the director of the non-profit organization or the names of the trustee, beneficiary
and trustor of the trust.
Robert W. Laing
---~-"--~'--'-
-'-" -----------
.-......-------
4. Please identify every person, including any agents, employees, consultants, or Independent
contractors, whom you have authorized to represent you before the City in this matter.
James J. Schmid
Wallace Dieckmann
Cheri Hoffman
5. Has any person 'Identified in 1.,2.,3., or 4., above, or otherwise associated with this contract, project
or application, had .ny f1nanclal dealings with an official" of the City of Chul. Vista .s It relates to this
contract. project or application within the past 12 months? Yes _ No L-
--
----...---.--..
If yes, briefly describe the nature of the financial interest the officiaJ" may have in this contract.
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276 Fourth Avenue I Chula Vista I California I 91910 I (619) 691.5101
17-11
Development Services Department
Planning Division I Development Processing
CnvOf
CHUIA VISfA
APPLlCA TION
APPENDIX B
Disclosure Statement. Page 2
6. Has any person "'identjfied in 1./2.,3., or 4., abo'lle. or otherwise associated with this contract, project
or application, made a campaign contribution of more than 5250 within the past (12) months to a
current member of the City of Chula Vista Council? Yes ~ No _
jf yes which council member? Rudy Ramirez, Stelle Castaneda. Cheryl Cox
7. Has any person .identified in 1.,2.,3., or 4., above, or otherwise associated with this contract, project
or application, provided more than 5420 (or an item of equivalent value) to an official.. of the City of
Chula Vista in the past (12) months? (This includes any payment that confers a personal benefit on the
recipient, a rebate or discount in the price of anything of value, money to retire a legal debt, gift, loan,
etc.) Yes_ No~
If yes, which official" and what was the nature of the item provided?
,.__,_,"__'_n.____" ..____. _
..'--....--.--
____....____ ,.. ._ ,"~..._._~~M_..U..._.__....____
8. Has any person .identified in 1.,2.,3.. or 4.. above, or otherwise associated with this contract, project
or application, been a source of income of $500 or more to an official" of the City of (hula Vista in the
past (12) months? Yes No X
If yes, which official" and the nature of the item provided?
Date April 27, 2010
IApplicant
~
/
------------
-.--.,...-----
Print or type name of Contractor/Applicant
.
Person is Identified as: any Individual, firm, co-partnership, joint venture, association, social club,
Fraternal organilation, corporationl estate, trust, receiver, syndicate, any other county, city, municipality,
district, or other political subdivision, or any other group or combination acting as a unit.
..
official includes, but is not limited to: Mayor, Council member, Planning Commissioner, Member of a
board, commisSion or committee of the City. and City employee or staff members.
...
This disclosure Statement must be completed at the time the project application, or contract, is submitted
to City .taft for processing, and updated within one week prior to consideration by legislative body.
last Updated: March 16, 2010
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276 Fourth Avenue I Chula Vista I California I 91910 I (619) 691.5101
17-12
Development Services Department
Planning Division I Development Processing
em Of
Q-IUA VISfA
APPLICATION
APPENDIX B
Disclosure Statement
Pursuant to City Council Polley 101-01, prlorto any action on a matterthat requires discretionary action by the City
Council, Planning Commission or other official legislative body of the City, a statement of disclosure of certain
ownerships, financial Interest, payments, and campaign contributions must be filed. The following Information must
be disclosed:
1. Llstthe names of all persons having a financial interest in the project that is the subject of the
application, project or contract (e.g.. owner, applicant, contractor, subcontractor, material supplier).
Pacllic So_I Communily Development CorJx>ratlon
--~--- ....-.-----..-.---...-.-.....-.-
._---------._._--,-, --_._--
--".'-'-
----,-..--.--.-',.---"",--..-
2. If any person' Identified In section 1. above is a corporation or partnership, list the names of all
individuals with an Investment of $2000 or more In the business (corporation/partnership) entity.
__n..".......~
3. If any person' identified in section 1. above is a non-profit organization or trust. list the names of
any person who is the director of the non-profit organization or the names of the trustee, beneficiary
and trustor of the trust.
Robert W. Laingu_
~._----
..------..--
4. Please Identify every person, Including any agents, employees. consultants, or independent
contractors, wham you have authorized to represent you before the City In this matter.
-------------.. '
5. Has any person 'identified In 1.,2.,3.. or 4., above, or otherwise associated with this contract, project
or application, had any financial dealings with an official" of the City of Chula Vista as It relates to this
contract, project or application within the past 12 months? Yes _ No .?L.-
--- ---.".--...-....-------.-.---......'---.----.--
If yes, briefly describe the nature of the flnanclallntere.t the official" may have In this contract.
276 Fourth Avenue I Chula Vista I California I 91910 I (619) 691.5101
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17-13
Development Services Department
Planning DivJslon I Development Processing
COY OF
CHULA VISTA
APPLICATION
APPENDIX B
Disclosure Statement" Page 2
6. Has any person *identified in 1.,2.,3., or 4" above, or otherwise associated with this contract, project
or application, made a campaign contribution of more than $2S0 within the past (12) months to a
current member of the City of Chula Vista Council? Yes _ No ~
if yes which council member?
7. Has any person 'Identified In I., 2., 3., or 4., above, or otherwise associated with this contract, project
or application, provided more than $420 (or an Item of equivalent value) to an official" of the City of
(hula Vista in the past (12) months? (This includes any payment that confers a personal benefit on the
recipient. a rebate or discount in the price of anything of value. money to retire a legal debt, gift, loan,
etc.) Yes_ N02--
If yes, which oll1clal" and what was the nature of the item provided?
-~,.,^.-,..~-~,...._--
8. Has any person *identified in 1.,2.,3'1 or 4., above, or otherwise associated with this contract, project
or application, been a source of Income of $SOO or mOre to an official" of the City of Chula Vista in the
past (12) months? Yes No X
If yes, which officia'" and the nature of the item provided?
Date April 27, 2010
fLt~ 7 .
Signature of Contractor/Applicant
Robert W. Laing
Print or type name of Contractor/Applicant
.
Person is identified as: any individual, firm, co-partnership, joint venture, association, sodal club,
fraternal orgclOization, corporation, estate, trust, receiver, syndicate, any other county, city, municipality,
district, or other political subdivision, or any other group or combination acting as a unit.
...
official includes, but is not limned to: Mayor, Council member, Planning Commissioner, Member of a
board, commission or committee of the City, and City employee or staff members.
...
This disclosure Statement must be completed at the time the project application, or contract, is submitted
to City staff for processing, and updated within one week prior to consideration by legislative body.
Last Updated: March 16, 2010
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276 Fourth Avenue I Chula Vista I California I 91910 I (619) 691.5101
17-14
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Development Services
Planning Division
Department
Development Processing
01Y Of
GlUIA VISTA
APPLICATION
APPENDIX B
Disclosure Statement
Pursuant to City Council Policy 101-01, prior to any action on a matter that requires discretionary action by the City
Council, Planning Commission or other official legislative body of the City, a statement of disclosure of certain
ownerships, financial interest, payments, and campaign contributions must be filed. The following information must
be disclosed:
1. list the names of all persons having a financial interest in the project that is the subject of the
application. project or contract (e.g.. owner, applicant, contractor, subcontractor. material supplier).
Wi~in~ w~~ Resident~I:.~::~......_"................ ..S~..l1om"!!-l.mil~.~~!!"!'rstIi.e. ._..............
--_._-~-
.. Both WWR and SHLP will have ()o/g financial interest once transaction to Chetsea entity has been completed.
2. If any person" identified in section 1. above is a corporation or partnership. list the names of all
individuals with an investment of $2000 or more in the business (corporation/partnership) entity.
N/A
._'m~__~"""_""~_""'_~_""_=__"~"""__~~____"'__'"__m'__~ ,~"."..-....,_"._~._....~,_.,...,~.__..'''~_'___~'''''''________~-_.
,..,.~,~,=",.,~"-;-,-",._~=~~~~.~._,_.,,,,~~.,=- .=,,~-~~,...._.,~~~~
3. if any person- identified in section 1. above is a non-profit organization or trust. list the names of
any person who is the director of the non-profit organization or the names of the trustee, beneficiary
and trustor of the trust.
NlA
"-_.~"_.......~,...~_..~~"....__.*.,..,*.._,.._.,,,....~-~-~_.---,-~,,'~-_.
4. Please identify every person. including any agents, employees. consultants, or independent
contractorS, whom you have authorized to represent you before the City in this matter.
The McKintey Associates. Architectural Hunsaker & Associales. Civil Enoineering
"..""ocon, I~., Sois E~l'eering __".,,~_..
Hecht, Solberg, Robinoon. Goldberg, & Bagley. Legal
Butsko Utility Design. Dry Utilty Consultants
~--~-----_.
Howard Associates, Landscape Archilect
s. Has any person "identified in 1..2., 3., or 4., above. or otherwise associated with this contract, project
or application. had any financial dealings with an official" of the City of Chula Vista as it relates to this
contract, project or application within the past 12 months? Yes _ No 2L--
_...._..~..._.."_......*".s_~ ~"_,,.~_,_~,~_~_~~,__
If yes. briefly describe the nature of the financial interest the official" may have in this contract.
.."_M........~~~~,~.....,.,..~"
"...~""...."~,,
"'m
...... )
IleY03.10
""a
276 Fourth Avenue
Chula Vista
I California I 91910 I (619)691.5101
17-15
Development Services
Planning Div,ision I
Department
Development Processing
CI1Y Of
OiULA VISTA
APPLICATION
APPENDIX B
Disclosure Statement . Page 2
6. Has any person 'Identified in 1.,2..3., or 4.. above, or otherwise associated with this contract, project
or application, made a campaign contribution of more than $250 within the past (12) months to a
current member of the City of Chula Vista Couneli ? Yes _ No L-
if yes which coundl member?
7. Has any person 'identified in 1., 2.. 3., or 4., above, or otherwise associated with this contract, project
or application, provided more than $420 (or an Item of equivalent value) to an official" of the City of
Chula Vista In the past (12) months? (This Includes any payment that confers a personal benefit on the
recipient, a rebate or discount in the price of anything of value, money to retire a legal debt, gift, loan,
etc.) Yes No.2!..--
If yes, which official" and what was the nature of the item provided?
8, Has any person 'Identified in 1.,2.,3. or 4.. above, or otherwise associated with this contract, project
or application, been a source of income of $500 or more to an officlal- of the City of Chula Vista In the
past (12) months? Yes No X
If yes, which officiai" and the nature of the item provided?
Dat" '-f / 2..:z,6Q_
~
....1lgnature of Cor
,'Ie, rei h .Qcc..ln:JLLtL__...
Print or type name of Contractor/Applicant
,
Person is idenUfied as: any individual~ firm, co~partnershjp. joint venture, association, social club,
fraternal organization, corporation, estate, trust, receiver, syndicate, any other county, city, municipality,
district or other political subdivision, or any other group or combination icting as a unit.
.,
official includes, but;s nOt limited to: Mayor, Council member, Planning Commissioner. Member or a
board. commission or committee of the City, and City employee or staff members.
...
This disclosure Statement must be completed at the time the proje-ct appliCation, or contract. is submitted
to' City staff fOI plocessing, and updattd within one WEek. plior to c:onsiderition by legislative body.
la" Updated: March 16, 2010
276 Fourth Avenu4! J (hula Vhta I California I 91910 i {619} 691.5101
.....
~~.
~ 'kY'PI
~
17-16
Attachment 3
First Amendment
City HOME Loan Agreement
17-17
FIRST AMENDMENT TO
CONSTRUCTION AND PERMANENT FINANCING LOAN AGREEMENT
(LANDINGS II)
(City HOME Residual Receipts Loan)
THIS FIRST AMENDMENT TO CONSTRUCTION AND PERMANENT
FINANCING LOAN AGREEMENT ("Amendment") dated as of the 10th day of May, 2010, is
made by and between the City of Chula Vista ("City") and Landings II, L.P., a California limited
partnership ("Borrower") as follows:
RECITALS
A. Borrower and the City entered into that certain Construction and Permanent Loan
Agreement dated June 9, 2009 ("HOME Loan Agreement"), which as the result of a clerical
error mis-identified Borrower as "CIC Landings 2, L.P." In addition, the City and Borrower
desire to implement the HOME Loan Agreement, including without limitation for the City to
fund a portion of the "City Loan," as such term is defined in the HOME Loan Agreement.
B. All terms not defined in this Amendment shall have the meanings ascribed to
them in the HOME Loan Agreement.
NOW, THEREFORE, in furtherance of the recitals stated above and the mutual
covenants set forth below, the Borrower and City agree, promise and declare as follows:
1. Correction of Identification of the "Borrower." The term "Borrower" shall mean
Landings II, L.P., a California limited partnership. The Borrower (Landings II, L.P.) agrees and
represents and warrants to the City, that: (i) the Borrower is the "Borrower," as that term is
defined in the HOME Loan Agreement; (ii) despite the clerical error contained in the HOME
Loan Agreement, the Borrower was the "Borrower," as that term is defined in the HOME Loan
Agreement, as of the date of the HOME Loan Agreement; (iii) the Borrower hereby ratifies the
HOME Loan Agreement; (iv) the Borrower is bound by all of the terms, covenants and
conditions contained in the HOME Loan Agreement; and (v) each and every obligation of the
HOME Loan Agreement will be performed and carried out by the Borrower (Landings II, L.P.)
effective as of the date of the HOME Loan Agreement.
1
E:\CLlENTS\Chula Vista\Landings II\City HOME Loan\HOME. Loan AmendmentFinal.doc
17-18
2. Amendment and Restatement of Article I. Article I of the HOME Loan Agreement,
including without limitation, Sections 1.1 and 1.2 thereof, is hereby amended and restated in its
entirety to provide as follows:
Article r. Financing of the Proiect. Borrower intends to finance the Property and
the Project with the City Loan and: (i) approximately $25,755,000.00 of proceeds
from the Housing Authority of the City of Chula Vista Multifamily Housing
Revenue Bonds (The Landings II Apartments), Senior Series 2010A-I and Senior
Series 2010A-2 ("Bond Loan") (of which not more than $11,786,000.00 shall be
for permanent financing); (ii) $14,608,176.00 of four percent (4%) tax credit
equity (the 'Tax Credit Equity"); (iii) a permanent financing loan from the
Redevelopment Agency of the City of Chula Vista utilizing Low and Moderate
Income Housing Funds pursuant to Section 33334.3 of the California Health and
Safety Code in the original principal amount of $4,000,000.00 ("Agency Low-
Mod Loan"); (iv) a construction and permanent financing loan from Winding
Walk Residential LLC in the original principal amount of approximately
$2,752,000.00, utilizing proceeds from the Housing Authority of the City of
Chula Vista Multifamily Housing Revenue Bonds (The Landings II Apartments),
Subordinate Series 2010A-3 (the "Shea C Bond Loan"); (v) a construction and
permanent financing loan from Winding Walk Residential LLC in the original
principal amount of approximately $10,077,998.00 (the "Shea Conventional
Loan"); (vi) deferral of not more than $1,248,649.00 of the Borrower's developer
fee (the "Deferred Developer Fee"); and (vii) a construction and permanent
financing loan from the City of Chula Vista in the original principal amount of
$2,000,000.00 ("City Inclusionary Loan"). This Agreement is being executed in
connection with, and the City's obligation to make the City Inclusionary Loan is
contingent, inter alia, on Borrower closing on the Bond Loan, Tax Credit Equity,
Shea C Bond Loan, Shea Conventional Loan, Agency Low-Mod Loan, City
Inclusionary Loan and deferring the Deferred Developer Fee.
3. Implementation and Omnibus Amendments.
(a) Citv Note. All references to the "City Note" wherever set forth in the HOME
Loan Agreement or any documents executed in conjunction therewith, shall mean that certain
Promissory Note (Landings II) (City HOME Residual Receipts Loan) of even date herewith,
which is being executed by Borrower and delivered to the escrow concurrently with the
execution and delivery of this Amendment. Notwithstanding anything to the contrary set forth in
the HOME Loan Agreement, including without limitation Sections 2.4 or 2.6 thereof: (i) the
definitions of "Residual Receipts," "Gross Revenue" and Reasonable Operating Expenses" shall
have the meanings set forth in the City Note; (ii) Borrower's obligation to make payments to the
City pursuant to the City Loan, and the time therefor, shall be as set forth in the City Note; and
(iii) in the event of a conflict between any provision of the City Note and any provision of the
HOME Loan Agreement, the provisions of the City Note shall apply and the HOME Loan
Agreement shall be deemed to have been amended to conform to the provisions of the City Note.
2
E:\CUENTS\Chula Vista\Landings II\City HOME Loan\HOME - Loan AmendmentFinal.doc
17-19
(b) Declaration. All references to the "Declaration" wherever set forth in the HOME
Loan Agreement or any documents executed in conjunction therewith, shall mean that certain
Declaration of Covenants, Conditions and Restrictions (Tenant Restrictions) (Landings II) (City
HOME Residual Receipts Loan) of even date herewith, which is being executed by Borrower
and delivered to the escrow concurrently with the execution and delivery of this Amendment.
Notwithstanding anything to the contrary set forth in the HOME Loan Agreement, including
without limitation Section 2.3 thereof: (i) the Declaration shall restrict the rent and occupancy of
eleven (11) Affordable Units for twenty (20) years; and (ii) in the event of a conflict between any
provision of the Declaration and any provision of the HOME Loan Agreement, the provisions of
the Declaration shall apply and the HOME Loan Agreement shall be deemed to have been
amended to conform to the provisions of the Declaration.
(c) City Deed of Trust. All references to the "City Deed of Trust" wherever set forth
in the HOME Loan Agreement or any documents executed in conjunction therewith, shall mean
that certain Deed of Trust (Landings II) (City HOME Residual Receipts Loan) of even date
herewith, which is being executed by Borrower and delivered to the escrow concurrently with
the execution and delivery of this Amendment. Notwithstanding anything to the contrary set
forth in the HOME Loan Agreement, including without limitation Section 2.4 thereof: (i) the
City Deed of Trust shall have the lien priority designated in the escrow instructions being
executed by Borrower and the City concurrently herewith; and (ii) in the event of a conflict
between any provision of the City Deed of Trust and any provision of the HOME Loan
Agreement, the provisions of the City Deed of Trust shall apply and the HOME Loan Agreement
shall be deemed to have been amended to conform to the provisions of the City Deed of Trust.
(d) Security Agreement. All references to the "Security Agreement" wherever set
forth in the HOME Loan Agreement or any documents executed in conjunction therewith, shall
mean that certain Security Agreement (Landings II) (City HOME Residual Receipts Loan) of
even date herewith, which is being executed by Borrower and delivered to the escrow
concurrently with the execution and delivery of this Amendment. Notwithstanding anything to
the contrary set forth in the HOME Loan Agreement, in the event of a conflict between any
provision of the Security Agreement and any provision of the HOME Loan Agreement, the
provisions of the Security Agreement shall apply and the HOME Loan Agreement shall be
deemed to have been amended to conform to the provisions of the Security Agreement.
(e) Environmental Indemnitv. The Borrower and the City shall execute and deliver
to escrow an Unsecured Environmental Indemnity Agreement (Landings II) (City HOME
Residual Receipts Loan), concurrently with the execution and delivery of this Amendment.
(I) Loan Documents Defined. "Loan Documents" means collectively, this
Agreement, the City Deed of Trust and the City Note.
3
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17-20
4. Amendment of Section 9.1. Section 9.1 of the HOME Loan Agreement IS hereby
amended to add the following "copy" addresses for notices to the Borrower:
Copy to:
Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, California 94105
Attn. Gary P. Downs
Copy to:
RJ HOF 8 - Landings II L.L.c.
c/o Raymond James Tax Credit Funds, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Ronald M. Diner, President
5. General Provisions.
(a) Counteroarts. This Amendment may be executed in any number of counterparts
and, as so executed, the counterparts shall constitute one and the same agreement. The parties
agree that each such counterpart is an original and shall be binding upon all the parties, even
though all ofthe parties are not signatories to the same counterpart.
(b) Conflicts. In the event of any conflict between the HOME Loan Agreement or
any document executed in conjunction therewith and this Amendment, the provisions of this
Amendment shall apply and the HOME Loan Agreement or document executed in conjunction
therewith, shall be deemed to have been amended to conform to the provisions of this
Amendment.
(c) Recitals Incoroorated. The Recitals to this Amendment are hereby incorporated
in this Amendment by this reference.
(d) Signature Authoritv. All individuals signing this Amendment for a party which is
a corporation, partnership, limited liability company or other legal entity, or signing under a
power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant
to the other parties hereto that they have the necessary capacity and authority to act for, sign and
bind the respective entity or principal on whose behalf they are signing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
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17-21
IN WITNESS WHEREOF, the parties have executed this Amendment on the date first
set forth above.
BORROWER:
Landings II, L.P., a California limited partnership
By: Pacific Southwest Community Development COTporation,
a California nonprofit public benefit corporation
Its: Managing General Partner
By: ~)]
Robert W. Laing I
President / Executive Director
By:Landings II CIC, LLC, a California limited liability company,
Its: Administrative General Partner
By: Chelsea Investment Co oration, a California corporation,
its Manager
By:' 00 .0 I-L
]!mes 1. 8ch'" iden!
ISIc!N:hURES CONTINUED ON FOLLOWING PAGE)
l
5
E.,,cLJENTS'tChula ViSla\UBdiDgs lOCiI)' HOME L.oan\HOME - Loan Am(".lldmmlFilatdoc
17-22
CITY:
City ofChula Vista
By:
James Sandoval, City Manager
Approved as to form:
By:
Bart J. Miesfeld, City Attorney
6
E:\CUENTS\Chula Vista\Landings lI\City HOME Loan\HOill- Loan Amendment.Final.doc
17-23
Attachment 4
City In-lieu Fund Loan Agreement
17-24
ACQUISITION, CONSTRUCTION AND PERMANENT FINANCING
LOAN AGREEMENT
(LANDINGS II)
By and Between
THE CITY OF CHULA VISTA
and
LANDINGS II, L.P
E:\CLlENTS\Chula Vista\Landings II\City Inc!usionary Loan\Inclusionary - Acquisition Construction and Pennanent Loan.FinaLdoc
Loan No. 2-09-0080
17-25
ACQUISITION, CONSTRUCTION AND PERMANENT FINANCING
LOAN AGREEMENT
(LANDINGS II)
(City Inclusionary Residual Receipts Loan)
THIS ACQUISITION, CONSTRUCTION AND PERMANENT FINANCING
LOAN AGREEMENT ("Agreement") dated as of the 10th day of May, 2010, is made by and
between the City of Chula Vista ("City") and Landings II, L.P., a California limited partnership
("Borrower") as follows:
RECITALS
A. Borrower intends to acquire that certain real property generally located at
Discovery Falls Road and Crossroads Street in Chula Vista, California (as more particularly
described on the Property Legal Description attached hereto as Exhibit "A", the "Property").
Borrower is acquiring the Property using, inter alia, a loan from the City in the original principal
amount of Two Million and Noll 00 Dollars ($2,000,000.00) (the "City Inelusionary Loan").
B. The City of Chula Vista by Resolution No. , adopted on
2010, approved the funding by the City of the City Inelusionary Loan. The Loan is being funded
with inelusionary housing in lieu fee funds. Borrower shall construct one hundred forty-one
(141) affordable units ("Affordable Units"), two (2) managers' units and a community room
(collectively, the "Improvements") on the Property.
C. The Property is to be operated as low and very low income housing for fifty-five
(55) years in accordance with the Deelaration of Covenants, Conditions and Restrictions
("Deelaration"), as defined below.
D. Borrower intends to finance the Property and Improvements with the City
Inelusionary Loan and: (i) approximately $25,755,000.00 of proceeds from the Housing
Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings II
Apartments), Senior Series 2010A-I and Senior Series 2010A-2 ("Bond Loan") (of which not
more than $1 1,786,000.00 shall be for permanent financing); (ii) $14,608, I 76.00 of four percent
(4%) tax credit equity (the "Tax Credit Equity"); (iii) a permanent financing loan from the
Redevelopment Agency of the City of Chula Vista utilizing Low and Moderate Income Housing
Funds pursuant to Section 33334.3 of the California Health and Safety Code in the original
principal amount of $4,000,000.00 ("Agency Low-Mod Loan"); (Iv) a construction and
permanent financing loan from Winding Walk Residential LLC in the original principal amount
of approximately $2,752,000.00, utilizing proceeds from the Housing Authority of the City of
Chula Vista Multifamily Housing Revenue Bonds (The Landings II Apartments), Subordinate
Series 2010A-3 (the "Shea C Bond Loan"); (v) a construction and permanent financing loan
from Winding Walk Residential LLC in the original principal amount of approximately
$10,077,998.00 (the "Shea Conventional Loan"); (vi) deferral of not more than $1,248,649.00 of
the Borrower's developer fee (the "Deferred Developer Fee"); and (vii) a construction and
2
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Loan No_ 2-09-0080
17-26
pennanent financing loan from the City of Chula Vista in the original principal amount of
$2,400,000.00 ("City HOME Loan"). This Agreement is being executed in connection with, and
the City's obligation to make the City Inclusionary Loan is contingent, inter alia, on BOrrower
closing on the Bond Loan, Tax Credit Equity, Shea C Bond Loan, Shea Conventional Loan,
Agency Low-Mod Loan, City HOME Loan and deferring the Deferred Developer Fee.
E. The Property and Improvements shall be constructed and operated in accordance
with all applicable law, rules, regulations and conditions of approval from TCAC, the
Redevelopment Agency of the City of Chula Vista, the Internal Revenue Service, the various
lenders involved with the Property and Improvements and the requirements of this Agreement.
NOW, THEREFORE, in furtherance of the recitals stated above and the mutual
covenants set forth below, the Borrower and City agree, promise and declare as follows:
DEFINITIONS
The following tenns shall have the meanings set forth below:
"Affordable Units" means the one hundred forty-one (141) dwelling units to be
constructed by Borrower on the Property, that are restricted for a period of fifty-five (55) years
by the Declaration, which includes restrictions related to the maximum rents which may be
charged, and to the tenants that are eligible to reside in such units.
"Agency" means the Redevelopment Agency ofthe City of Chula Vista.
"Agency Low-Mod Loan" means a construction and pennanent financing loan from the
Agency in the original principal amount of $4,000,000.00.
"Agreement" means this Acquisition, Construction and Pennanent Financing Loan
Agreement.
"Bond Loan" means the mortgage loan being made to Borrower by the Housing
Authority of the City of Chula Vista with the proceeds of the Bonds, in the original principal
amount of $25,755,000.00 to be used for construction of the Project, of which not more than
$11,786,000.00 shall be pennanent financing.
"Bond Deed of Trust" means the deed of trust, made by Borrower, securing the
obligations under the Bonds and the Bond Loan creating a lien on the Property. The Bond Deed
of Trust will be recorded against the Property subordinate to the Declaration, but senior to the
City Inclusionary Deed of Trust.
3
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Loan No. 2-09-0080
17-27
"Bond Regulatory Agreement" means any regulatory agreement or declaration of
covenants, conditions and restrictions restricting or otherwise regulating the use of the Property,
including without limitation the rent and/or occupancy of dwelling units thereon, that is entered
into by Borrower as a condition of receiving the Bond Loan or otherwise with respect to the
Bonds.
"Bonds" means the Housing Authority of the City of Chula Vista Multifamily Housing
Revenue Bonds (The Landings II Apartments), Senior Series 2010A-I and Senior Series 2010A-
2), which are being issued concurrently herewith.
"Borrower" means Landings II, L.P., a California limited partnership. Nothing contained
herein shall prohibit Borrower from changing its name provided that there is no change in the
composition and make up of Borrower, without the express prior consent of City. Provided,
however, the transfer of limited partnership interest in Borrower and the admission of
replacement limited partners of Borrower, which shall not require City approval.
"City" means the City of Chula Vista, a public body, corporate and politic, and any
assignee of or successor to its rights, powers and responsibilities.
"City HOME Loan" means a construction and permanent financing loan from the City of
Chula Vista in the original principal amount of $2,400,000.00.
"City Inclusionary Deed of Trust" means the deed of trust securing the Declaration and
the City Inclusionary Loan, in the form and format approved by the City in the City's sole
discretion, which shall concurrently herewith be recorded as an encumbrance against the
Property. The City Inclusionary Deed of Trust is hereby incorporated herein by reference.
"City Inclusionary Loan" means the loan from City to Borrower as provided in this
Agreement in an original principal amount not to exceed Two Million and NollOO Dollars
($2,000,000.00), and as further defined in this Agreement.
"City Inclusionary Note" means that certain promissory note executed by Borrower in
favor of the City evidencing the City Inclusionary Loan. The City Inclusionary Note is hereby
incorporated herein by reference.
"Cost Certification" means the audited certification prepared by a certified public account
under generally accepted accounting principles with all disclosures and notes, as required by
Title 4 California Code of Regulations Section 10322. The Cost Certification shall reflect all
costs, expenditures and funds used for the project, as identified by the certified public
accountant; and include the California Tax Credit Allocation Commission provided sources and
uses form reflecting actual total costs incurred.
4
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17-28
"Declaration" means the declaration of covenants, conditions and restrictions restricting
the rent and occupancy of the Affordable Units, in a form and format approved by the City in the
City's sole discretion, which shall concurrently herewith be recorded as an encumbrance against
the Property. The Declaration will also restrict the rent and occupancy of the Affordable Units in
accordance with the requirements of the Agency Low-Mod Loan. The Declaration is hereby
incorporated herein by reference.
"Defective Work" means all work, material, or equipment that is unsatisfactory, faulty,
incomplete, or does not conform to industry standards, construction documents, or approved
drawings.
"Deferred Developer Fee" means $1,248,649.00 of the Borrower's developer fee which is
being deferred. The Deferred Developer Fee shall be paid in full no later than December 31,
2023.
"Environmental Laws" means any federal, state or local law, statute, ordinance or
regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous
Materials, including, without limitation, (i) the California Hazardous Waste Control Act
(California Health and Safety Code ~25100 et seq.), (ii) the Carpenter-Presley-Tanner Hazardous
Substance Account Act (California Health and Safety Code ~25300 et seq.), (iii) the Hazardous
Materials Release Response Plans and Inventory (California Health and Safety Code ~25500 et
seq.), (iv) Underground Storage of Hazardous Substances (California Health and Safety Code,
~25280 et seq.), (v) Article 9 or Article II of Title 22 of the California Administrative Code,
Division 4, Chapter 20, (vi) the Safe Drinking Water and Toxic Enforcement Act (California
Health and Safety Code, ~25249 et seq.), (vii) the Porter-cologne Water Quality Control Act
(California Water Code, ~13000 et seq.), (viii) the Federal Water Pollution Control Act (33
U.S.c. ~1271 et seq.), (ix) the Resource Conservation and Recovery Act (42 U.S.c. ~6901 et
seq.), (x) the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.c. ~9601 et seq.), (xi) the Safe Drinking Water Act (14 U.S.C. ~300f et seq.), (xii) the
Hazardous Materials Transportation Act (49 U.S.c. ~5101 et seq.), (xiii) the Toxic Substances
Control Act (15 U.S.C. ~2601 et seq.), (xiv) the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.c. ~ 136, et seq.), (xv) the Clean Air Act, 42 U.S.C. (~7401 et seq.) or (xvi) any state
or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit,
approval, authorization, license, variance or permission required by any governmental authority
having jurisdiction.
"Hazardous Materials" means:
(i) Those substances included within the definitions of "hazardous substance,"
"hazardous waste," "'hazardous material~" "toxic substance," ;"solid waste," "pollutant" or
"contaminant" in the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (42 U.S.c. ~9601 et seq.); the Resource Conservation and Recovery Act (42 U.S.c.
~6901 et seq.); the Clean Water Act (33 U.S.C. ~2601 et seq.); the Toxic Substances Control Act
(15 U.S.C. ~9601 et seq.); the Hazardous Materials Transportation Act (49 U.S.c. ~1801 et seq.);
or under any other Environmental Laws;
5
E:\CLIENTS\Chula Vista\Landings II\City IncJusionary Loan\Inc!usiooary. Acquisition Construction and Pennanent Loan,Final.doc
17-29
(ii) Those substances included within the definitions of "Extremely Hazardous
Waste," "Hazardous Waste," or "Restricted Hazardous Waste," under ~~25115, 25117 or
25122.7 of the California Health and Safety Code, or is listed or identified pursuant to ~~25140
or 44321 of the California Health and Safety Code;
(iii) Those substances included within the definitions of "Hazardous Material,"
"Hazardous Substance," "Hazardous Waste," "Toxic Air Contaminant" or "Medical Waste"
under ~~25281, 25316, 25501, 25501.1, 25023.2 or 39655 of the California Health and Safety
Code;
(iv) Those substances included within the definitions of "Oil" or a "Hazardous
Substance" listed or identified pursuant to ~311 of the Federal Water Pollution Control Act, 33
U.S.c. ~1321, as well as any other hydrocarbonic substance or by-product;
(v) Those substances included within the definitions of "Hazardous Waste,"
Extremely Hazardous Waste" or an "Acutely Hazardous Waste" pursuant to Chapter II of Title
22 of the California Code of Regulations;
(vi) Those substances listed by the State of California as a chemical known by the
State to cause cancer or reproductive toxicity pursuant to ~25249.9(a) of the California Health
and Safety Code;
(vii) Any material which due to its characteristics or interaction with one or more other
substances, chemical compounds, or mixtures, damages or threatens to damage, health, safety, or
the environment, or is required by any law or public agency to be remediated, including
remediation which such law or public agency requires in order for the property to be put to any
lawful purpose;
(viii) Any material whose presence would require remediation pursuant to the
guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual,
whether or not the presence of such material resulted from a leaking underground fuel tank;
(ix) Pesticides regulated under the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. ~136 et seq.;
(x) Asbestos, PCBs, and other substances regulated under the Toxic Substances
Control Act, 15 U.S.c. ~2601 et seq.;
(xi) Any radioactive material including, without limitation, any "source material,"
"special nuclear material," "by-product material," "low-level wastes," "high-level radioactive
waste," "spent nuclear fuel" or "transuranic waste" and any other radioactive materials or
radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C.
~~2011 et seq., the Nuclear Waste Policy Act, 42 U.S.c. ~~10101 et seq., or pursuant to the
California Radiation Control Law, California Health and Safety Code ~~25800 et seq.;
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(xii) Any material regulated under the Occupational Safety and Health Act, 29 U.S.c.
~~65l et seq., or the California Occupational Safety and Health Act, California Labor Code
~~6300 et seq.;
(xiii) Any material regulated under the Clean Air Act, 42 U.S.c. ~~7401 et seq. or
pursuant to Division 26 of the California Health and Safety Code;
(xiv) Those substances listed in the United States Department of Transportation Table
(49 CFR Part 172.101), or by the Environmental Protection Agency, or any successor agency, as
hazardous substances (40 CFR Part 302);
(xv) Other substances, materials, and wastes that are or become regulated or classified
as hazardous or toxic under federal, state or local laws or regulations; and
(xvi) Any material, waste or substance that is:
(a) a petroleum or refined petroleum product;
(b) asbestos;
(c) polychlorinated biphenyl;
(d) designated as a hazardous substance pursuant to 33 U.S.c. ~1321 or listed
pursuant to 33 U.S.c. ~ 1317;
(e) a flammable explosive; or
(I) a radioactive material.
"Improvements" means the one hundred forty-one 0 Affordable Units, two (2) managers'
units and community room to be constructed by Borrower on the Property.
"Loan Documents" means collectively, this Agreement, the City Inclusionary Deed of
Trust and the City Inclusionary Note.
"Partnership Agreement" means Borrower's Second Amended and Restated Agreement
of Limited Partnership (as amended from time to time).
"Placed in Service" means the date the Improvements are placed in service for purposes
of26 U.S.C. ~42.
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"Property" means that certain real property generally located at Discovery Falls Road and
Crossroads Street in Chula Vista, California, more particularly described on the Property Legal
Description attached hereto as Exhibit "A".
"Shea C Bond Loan" means a construction and permanent financing loan to Borrower
from Winding Walk Residential, LLC, in the original principal amount of $2,752,000.00,
utilizing proceeds from the Housing Authority of the City of Chula Vista Multifamily Housing
Revenue Bonds (The Landings II Apartments), Subordinate Series 2010A-3.
"Shea Conventional Loan" means a construction and permanent financing loan to
Borrower from Winding Walk Residential, LLC, in the original principal amount of
$10,077,998.00.
"Statement of Insurance Requirements" means the statement of insurance requirements,
in a form and format approved by the City in the City's sole discretion, which shall be executed
and delivered by Borrower to the City concurrently herewith. The Statement of Insurance
Requirements is hereby incorporated herein by reference.
"Tax Credit Equity" means not less than $14,608,176.00 of four percent (4%) tax credit
equity to be obtained by Borrower.
"TCAC Regulatory Agreement" mean any regulatory agreement or declaration of
covenants, conditions and restrictions restricting or otherwise regulating the use of the Property,
including without limitation the rent andlor occupancy of dwelling units thereon, that is entered
into by Borrower as a condition of receiving the Tax Credit Equity or otherwise with respect to
the Tax Credit Equity.
ARTICLE I.
Loan Provisions - General
Section - 1.1 Acquisition. Construction and Permanent Financing Loan. City will fund the City
Inclusionary Loan to Borrower according to and upon the terms and conditions set forth below.
The proceeds of the City lnclusionary Loan shall be used by Borrower solely for the acquisition,
construction and permanently financing the Property and the Affordable Units.
(a) Loan Amount. The original principal amount of the City Inclusionary Loan shall
not exceed Two Million and NollOO Dollars ($2,000,000.00). Provided, however, in the event
the aggregate amount of the various permanent financing sources exceeds the uses of funds for
construction of the Improvements as evidenced by the final "Cost Certification" (which excess
amount shall be referred the "Excess Funds"), then to the extent any Excess Funds are remaining
after allocation of the Excess Funds pursuant to the Agency Low-Mod Loan (which excess
amount shall be referred the "Remaining Excess Funds") then (i) if the City IncIusionary Loan
has not been fully disbursed, the amount of the City Inclusionary Loan to be disbursed shall be
reduced by an amount equal to the Remaining Excess Funds; (ii) if the Remaining Excess Funds
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exceed the undisbursed amount of the City Inclusionary Loan, then the amount of the City
Inclusionary Loan to be disbursed shall be reduced by an amount equal to the amount by which
the Remaining Excess Funds exceed the undisbursed amount of the City Inclusionary Loan and
Borrower shall immediately use the remaining amount of the Remaining Excess Funds to pay
down the City Inclusionary Loan; or (iii) if the City Inclusionary Loan has been fully disbursed,
Borrower shall immediately use the Remaining Excess Funds to pay down the City Inclusionary
Loan. Borrower shall provide to the City copies of the preliminary cost certification and the
final Cost Certification prepared by an independent accounting firm not later than three (3) days
after the same are completed and received by Borrower.
(b) PromissorY Note.
(1) The City Inclusionary Loan shall be evidenced by the City Inclusionary
Note executed by Borrower, in favor of City, in the amount of Two Million and No/IOO Dollars
($2,000,000.00). Prior to the timely issuance of the temporary certificate of occupancy for all of
the Property and Improvements, the City Inclusionary Loan and the City Inclusionary Note shall
be fully recourse to Borrower. Subsequent to the timely issuance of the temporary certificate of
occupancy for all of the Property and Improvements, the City Inclusionary Loan and the City
Inclusionary Note shall be non-recourse to Borrower and its partners. Borrower shall provide the
City with a copy of the recorded certificate of occupancy for all of the Property and
Improvements (at the address set forth in Section 3.2, below) within thirty (30) days of
Borrower's receipt of the same.
(2) The City Inclusionary Note shall have a term of 55 years and shall bear
interest at three percent (3.0%) per annum beginning on the date the City Inclusionary Loan is
funded. Payments under the Commission Note shall be due and payable as set forth therein. The
principal and interest may be prepaid in whole or in part at any time and from time to time,
without notice or penalty. Any prepayment shall be allocated first to unpaid interest and then to
principal. Prepayment of the City Inclusionary Loan shall not in any manner affect any
obligation or restriction related to maintaining the units as "Affordable Units" during the fifty-
five (55) year term of the Declaration.
(3) Should Borrower agree to or actually sell, convey, transfer, further
encumber or dispose of the Property or any interest in it (except as provided in the City
Inclusionary Note), without first obtaining the written consent of the holder of the City
Inclusionary Note (i.e., the City) as required by Section 1.8, then all obligations secured by the
City Inclusionary Note may be declared due and payable at the option of City. The consent to
one transaction of this type will not constitute a waiver of the right to require consent to future or
successive transactions. The resident tenant restrictions set forth in the Declaration and
referenced in Section 1.5 of this Agreement shall remain in place whether or not City approves
or disapproves a successor-in-interest for the term of fifty-five (55) years. Notwithstanding the
foregoing, the following shall not be sales, conveyances, transfers, further encumbrances or
dispositions, for purposes of this Section 1.l(b)(3): (i) the transfer of limited partnership interest
in Borrower and the admission of replacement limited partners of Borrower (neither of which
shall require City approval); and (ii) recordation of the Bond Deed of Trust, recordation of the
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instruments securing the Bond Loan, recordation of the Bond Regulatory Agreement, recordation
of the instruments securing the Agency Low-Mod Loan, recordation of the TCAC Regulatory
Agreement, recordation of the instruments securing the Shea C Bond Loan, and recordation of
the instruments securing the Shea Conventional Loan.
(4) The parties acknowledge that the City Inclusionary Loan IS not a
purchase money mortgage as defined in Code of Civil Procedure Section 580b.
Section 1.2 - Security.
(a) Deed of Trust. Borrower shall execute, acknowledge, deliver the City
Inclusionary Deed of Trust and cause the City Inclusionary Deed of Trust to be recorded upon
the close of Escrow as security for the City Inclusionary Loan and Declaration. The Deed of
Trust shall be recorded in a position superior and prior to all encumbrances on the Property,
except that the same may be subordinated to the Bond Deed of Trust, the instruments securing
the Bond Loan, the Bond Regulatory Agreement, the instruments securing the Agency Low-Mod
Loan, the TCAC Regulatory Agreement, the instruments securing the Shea C Bond Loan, the
instruments securing the Shea Conventional Loan and the exceptions to title set forth in the City
Lender Instructions being executed concurrently herewith. Such subordinations shall be on
terms and conditions acceptable to the City in its sole discretion.
(b) Additional Security. Borrower shall execute and deliver to City such separate
security agreements, UCC-l financing statements, consents or certificates, assignments and other
documents or instruments as City may require (the "Security Agreement") and reflecting security
interests in the personalty used in connection with the operation of the Property as City may
require. In addition thereto, Borrower shall execute and deliver such security agreements, and
the like, as required by City in connection with the City Inclusionary Deed of Trust.
Specifically, Borrower agrees that any notice of default and/or copy of any notice of sale will be
mailed to City in compliance with Section 2924b of the California Civil Code.
Section 1.3 - Subsequent Financing. Except as set forth in this Agreement, no further loan, deed
of trust, or encumbrance, shall be placed by Borrower upon any portion of the Property or
Improvements, whether by refinancing or otherwise, without first obtaining the express written
consent of City, which shall not be unreasonably withheld. Any such un consented to financing
or refinancing shall constitute a material beach of this Agreement. Further, during any City
approved refinancing or subsequent encumbrance, City shall be provided AL T A title insurance
or endorsements acceptable to it, at the cost and expense of Borrower. Said written consent shall
be at City's sole discretion. Without the express written consent of City such subsequent
financing is void.
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Section 1.4 - Funding. City's obligation to fund the City Inclusionary Loan shall be and is
specifically conditioned upon Borrower closing on the Bond Loan, Tax Credit Equity, Shea C
Bond Loan, Shea Conventional Loan, City HOME Loan, and deferring the Deferred Developer
Fee, City approving the preliminary title reports concerning the Property, payment of all taxes
now due and payable on the Property, issuance of an ALTA Lender's policy insuring the City
lnclusionary Deed of Trust satisfactory to the City Manager, satisfaction of all conditions
precedent to City's obligation to make the City Inclusionary Loan, and satisfaction of those
conditions set forth in Section 1.16 of this Agreement.
Section 1.5 - Declaration of Covenants and Restrictions. The obligation of City to make and
fund the City lnclusionary Loan hereunder is subject to the execution, and recordation against
the Property, of the Declaration. The Declaration shall contain the housing payment and income
level restrictions for the one hundred forty-one (141) Affordable Units for a period of fifty-five
(55) years. Rents will provide affordable housing to households earning between fifty percent
(50%) and sixty percent (60%) of area median income as referenced in the Declaration. The
monthly rental rate shall be as set forth in the Declaration. The rents may be subject to
modification annually as set forth in the Declaration. The Declaration shall be recorded in a
position superior and prior to all monetary encumbrances on the Property.
Section 1.6 - No Partnership or Joint Venture. The relationship between City and Borrower
created by this Agreement shall not be one of partnership or joint venture, but rather shall be one
of secured lender and borrower.
Section 1.7 - Insurance. Borrower, at its sole cost and expense, shall purchase and maintain
public liability, auto liability and property damage insurance with limits of not less than a project
specific $2,000,000.00 per occurrence, combined single limit and $4,000,000 in the aggregate for
injury to or death of one or more persons and/or property damage arising out of a single accident
or occurrence, insuring against any and all liability of City, the Agency, and their employees,
Borrower, its contractors, employees, agents, subcontractors and its authorized representatives,
arising out of or in connection with Borrower's activities at the Property. All public liability
insurance and property damage insurance shall insure the performance of Borrower of the
indemnity provisions set forth in this Agreement. Further, in all such insurance required to be
purchased and maintained by Borrower, City shall be named as an additional insured, Borrowers
coverage to be primary; Liability Additional Insured Endorsement must not exclude Completed
Operations and policy to provide ten year extended reporting period, and the policy shall contain
cross-liability endorsements. Borrower further agrees to purchase and maintain in full force and
affect such policies of worker's compensation insurance as may be required to cover all
employees of Borrower during the term of this Agreement, in a form and amount acceptable to
City. Further, Borrower shall maintain policies of insurance set forth in the Statement of
Insurance Requirements throughout the term of the City Inclusionary Loan and for the duration
of the Covenants, Conditions and Restrictions. Certificates of insurance acceptable to City shall
be filed with City prior to funding of the City Inclusionary Loan. These insurance requirements
may be waived, in writing, in advance, by the City Manager on a case by case basis. The
insurance requirements contained in this section shall not be construed to limit the Borrower's
obligations under this Agreement, including without limitation any indemnities.
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Section 1.8 - Assignability.
(a) Borrower may not assign any interest in this Agreement and shall not transfer any
interest in the same (whether by assignment or novation) without the prior written approval of
City. Any assignment without the prior written consent of City shall be voidable, at the election
of City. Further, Borrower shall not change general partners nor admit new general partners
without the express written consent of City. Provided, however, the transfer of limited
partnership interest in Borrower and the admission ofreplacement limited partners of Borrower,
which shall not require City approval. City shall have full right and authority to assign all or a
part of its rights and delegate all or a part of its duties under this agreement.
(b) Notwithstanding anything to the contrary contained in the Loan Documents, the
removal of Borrower's general partner(s) for cause in accordance with Borrower's Partnership
Agreement, shall not require the consent of the City and shall not constitute a default under any
of the Loan Documents or accelerate the maturity of the City Inclusionary Loan. If such general
partner is removed, or withdraws in lieu of removal, the City shall not unreasonably withhold its
consent to the admission of a substitute general partner.
(c) Notwithstanding anything to the contrary contained in the Loan Documents, the
interests of the Limited Partner shall be freely transferable and any amendment to the Partnership
Agreement to effectuate such transfers shall not require City consent.
(d) In addition to the Option and First Right of Refusal to Purchase Real Property
between the Borrower and the City of even date herewith, and notwithstanding anything to the
contrary contained in the Loan Documents, the execution and delivery of a purchase option
agreement as contemplated in the Partnership Agreement, shall not constitute a default under the
Loan Documents or accelerate the maturity of the City Inclusionary Loan. Provided, however,
the purchase option agreement as contemplated in the Partnership Agreement and the option
created thereby shall at all times be subject and subordinate to the Option and First Right of
Refusal to Purchase Real Property between the Borrower and the City of even date herewith.
Any requisite consent of City to (i) the exercise of such purchase option agreement by the
optionee thereunder and (ii) the assumption without penalty of the City Inclusionary Loan by the
optionee thereunder, and the release of Borrower from such obligations, shall not be
unreasonably withheld. Subject to any such consent requirement, the exercise of the rights under
such purchase option agreement shall not constitute a default or accelerate the maturity of the
City Inclusionary Loan.
(e) Except to the extent that changes are permitted by Section 1.8(a), (b) and (c),
above, Borrower shall not amend, modify restate, revoke or rescind its certificate of limited
partnership or its partnership agreement without the prior written consent of City.
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Section 1.9 - General Contractor and Subcontracting. The guaranteed not to exceed construction
contract, entered into by Borrower with the general contractor for construction of the Project
shall be entered into prior to funding of the City Inclusionary Loan, and shall be subject to the
prior written approval of the City Manager. Borrower shall be fully responsible to the City for
the acts and omissions of Borrower's subcontractors, and of persons either directly or indirectly
employed by Borrower. Borrower shall insert in each subcontract appropriate provisions
requiring compliance with the labor standard provisions of this Agreement, including without
limitation the payment of Federal and State prevailing wages, if required by law.
Section 1.10 - Borrower Liability. Borrower shall be responsible for all injuries to persons
and/or all damages to real or personal property of the City or others, caused by or resulting from
the negligence and/or breach of this Agreement, of Borrower, Borrower's employees,
subcontractors and/or Borrower's agents during construction of or arising out of construction of
the Project and/or the breach of this Agreement. Borrower shall defend and hold harmless and
indemnify the City, the Agency, and all officers and employees of each public body from all
liabilities, claims, causes of action, demands costs, damages, judgments, expenses and claims
(collectively "Claims") by any third party resulting from the negligence and/or breach of this
Agreement, by Borrower, Borrower's employees, subcontractors and/or Borrower's agents,
arising out of the Project and/or the breach of this Agreement, except those arising from the sole
active negligence or sole willful misconduct of the City, the Agency or their respective agents,
officers and employees. Borrower shall defend any Claims against the City and the Agency, at
the sole cost and expense of Borrower, with counsel of the indemnified party's choosing.
Section 1.11 - Ownership of Materials and Documents. Subject to the rights of senior lenders,
any and all sketches, drawings, tracings, field survey notes, computations, plans, details and
other materials and documents prepared by or on behalf of Borrower pertaining to the Property
shall be the property of City upon default by Borrower (to the extent of Borrower's rights in such
documents), and the expiration of all applicable cure period(s), and Borrower shall deliver such
materials and documents to City whenever requested to do so by City. Notwithstanding the
foregoing, the City's rights to the materials delineated in the immediately preceding sentence
shall be subordinate to the rights of the lender making a senior loan with respect to the same.
Subject to the rights of third parties that prepared such documents, City shall have the right to
have duplicate copies of such materials and documents for their file, at the cost and expense of
City, upon written request even if Borrower is not in default under the terms ofthis Agreement.
Section 1.12 - Indemnification.
(a) With respect to any liability, including but not limited to claims asserted,
demands, causes of action, costs, expenses, losses, attorney fees, injuries, or payments for injury
to any person or property, including injury to Borrower's employees, agents, or officer, caused or
claimed to be caused by the acts or omissions of the Borrower, or the Borrower's employees,
agents, and officers, arising out of, arising from, or related to the City Inclusionary Loan; the
design, engineering, or construction of the Improvements; Borrower's ownership or operation of
the Property and the Improvements; or any other work or obligations performed involving this
Agreement, the Borrower agrees to defend, indemnify, protect, and hold harmless the City, the
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City, their respective agents, officers, and employees from and against all liability, losses,
damages, costs or claims, including, but not limited to, claims for injury or death to any person
occurring on the Property and contracts executed by Borrower. Also covered is liability arising
from, connected with, caused by, or claimed to be caused by the active or passive negligent acts
or omissions of the City, its agents, officers, or employees that may be in combination with the
active or passive negligent acts or omissions of the Borrower, its employees, agents or officers,
or any third party. The Borrower's duty to defend, indemnify, protect and hold harmless shall not
include any claims or liabilities arising from the sole negligence or sole willful misconduct of the
City, its agents, officers or employees. This indemnity provision shall survive the repayment of
the City Inclusionary Loan and the term of this Agreement. Notwithstanding anything to the
contrary contained herein, neither Borrower nor any of its partners shall be personally liable for
any indemnification obligation under the Loan Documents to the extent such indemnification
would result in the repayment of principal and/or interest under the City Inclusionary Loan.
(b) Borrower further agrees to defend, indemnify, and hold harmless, the City, the
City, their respective agents, officers and employees from and against any and all costs,
damages, claims, and liabilities, including reasonable attorney fees, foreseeable or unforeseeable,
directly or indirectly, arising from or related to Hazardous Materials located, used, released, or
otherwise present or alleged to be present, used, or released on the Property, or any violation or
alleged violation of Environmental Laws. This indemnity provision shall extend beyond the
term of this Agreement and obligations hereunder shall remain recourse even after completion of
the construction, timely issuance of certificates of occupancy, and the termination of this
Agreement. Neither City, nor the Agency has any obligation or liability whatsoever regarding
toxic contamination or Hazardous Materials on the Property. Provided, however, that the
immediately foregoing sentence shall not eliminate any liability of the City or Agency that would
otherwise result from any affirmative negligent act of the City or Agency which directly causes
such toxic contamination or Hazardous Materials to be on the Property.
(c) The Borrower agrees to pay any and all costs the City or Agency incurs to enforce
the indemnity and defense provisions set forth in Section 1.12.
Section \.13 - Termination. This Agreement and the relationship created herein shall terminate
upon full satisfaction of all of Borrower's obligations, and those of Borrower's successors, if
approved by City, under this Agreement. The obligations of Borrower include, but are not
limited to, those obligations arising under the Declaration, the provisions of which shall survive
repayment of the City Inclusionary Loan.
Section 1.14 - Defective Work.
(a) Correction. Removal. or Replacement. If during the term of this Agreement, or
any duration as may be required by law or regulation, the Improvements are discovered to
contain Defective Work, the Borrower shall promptly and in accordance with the City's or
Agency's written instructions and within the reasonable time limits stated therein, either correct
the Defective Work, or if identified during construction, remove it from the site and replace it
with non-defective and conforming work.
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(b) City's/Agencv's Right to Correct. If circumstances warrant, including but not
limited to an emergency or Borrower's failure to adhere to section 1.14(a), City and/or Agency
may, subject to the rights of senior lenders, correct, remove, or replace the Defective Work. In
such circumstances, Borrower shall not recover costs associated with the Defective Work and
shall reimburse the City and/or Agency for all their costs, whether direct or indirect, associated
with the correction or removal and replacement.
(c) No Limitation on other Remedies. Exercise of the remedies for defects pursuant
to this Section shall not limit the remedies the City and/or Agency may pursue under this
Agreement or law.
Section 1.15 - Default bv Borrower.
(a) In the event of a material default by Borrower in the performance of any of the
terms, covenants and conditions contained in this Agreement, the City Inclusionary Note, the
City Inclusionary Deed of Trust, the Declaration, the Security Agreement or any prior or junior
note secured by an encumbrance on the Property or any portion of it, or any note or deed of trust
given in conjunction herewith, or in the event of the filing of a bankruptcy proceeding by or
against Borrower, all sums disbursed or advanced by City shall, at the option of City,
immediately become due and payable and City shall have no obligation to disburse any further
funds from said account, or otherwise, and City shall be released from any and all obligations to
Borrower under the terms of this Agreement. These remedies shall be in addition to any and all
other rights and remedies available to City, either at law or in equity.
(b) If a non-monetary event of default occurs under the terms of this Agreement, the
City Inclusionary Note, the City Inclusionary Deed of Trust, the Declaration or the Security
Agreement, prior to exercising any remedies hereunder or thereunder, City shall give Borrower
notice of such default. If the default is reasonably capable of being cured within thirty (30)
calendar days after such notice is received or deemed received, Borrower shall have such period
to effect a cure prior to exercise of remedies by City under this Agreement, the Declaration and
the City Inclusionary Deed of Trust. If the default is such that it is not reasonably capable of
being cured within thirty (30) days and Borrower, in City's sole and absolute discretion, (i)
initiates corrective action within said period, and (ii) diligently and in good faith works to effect
a cure as soon as possible, then Borrower shall have such additional time as City, in its sole
discretion determines is reasonably necessary to cure the default prior to exercise of any
remedies by City. If such default is not timely cured, then the City may proceed with all or any
of its rights and remedies available at law or in equity or as set forth herein, in the Declaration
and/or the City Inclusionary Deed of Trust.
(c) In the event of any monetary default by Borrower under the terms of this
Agreement, the City lnclusionary Note, the City Inclusionary Deed of Trust, the Declaration or
the Security Agreement, City shall give Borrower written notice of such default, Borrower shall
have fifteen (15) days from such notice to cure the monetary default. If the default is not timely
cured, City may proceed with all rights and remedies under the terms of the City Inclusionary
Loan or at law.
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(d) The default or defective performance by Borrower under the terms of this
Agreement shall not relieve Borrower from any obligation to correct any incomplete, inaccurate,
or defective work at no further cost to City.
(e) Notwithstanding anything to the contrary contained in the Loan Documents, the
City agrees that any cure of any default made or tendered by the Limited Partner shall be deemed
to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made or
tendered by the Borrower.
(I) The City agrees that, notwithstanding its rights to invoke the remedies permitted
by any Loan Document, the City shall not, so long as the Limited Partner has a continuing
ownership interest in the Borrower, conduct a foreclosure sale of the Property or receive a deed-
in-lieu of foreclosure, until such time as the Limited Partner has first been given 30 days written
notice of such default and has failed, within such 30-day period to cure such default; provided,
however, that the City shall be entitled, during such 30-day period, to continue to accelerate the
City Inclusionary Note and to pursue its remedies.
Section 1.16 - Conditions to City Obligations. The obligation of City to make and fund the City
Inclusionary Loan is subject to all of the conditions set forth in this Section 1.16:
(a) This Agreement, the City Inclusionary Note, City Inclusionary Deed of Trust and
Declaration, fully executed by Borrower, shall have been delivered to City and/or its designee
along with all other fully executed security documents and instruments provided for herein
and/or as required by City. The Declaration and City Inclusionary Deed of Trust have been
recorded against the Property and Borrower has provided and delivered to City at Borrower's
sole expense a standard form AL T A Lender's Policy of Title Insurance, insuring City's security
interest in the Property under the City lnclusionary Deed of Trust and in an amount equal to the
original principal amount of the City Inclusionary Loan.
(b) Legal counsel representing Borrower shall have delivered to City a legal opinion
satisfactory in all respects to City Manager in his/her sole discretion, opining that this
Agreement, the City Inclusionary Note, the Declaration, the City Inclusionary Deed of Trust and
the Security Agreement represent obligations which are valid, binding upon and enforceable
against Borrower (subject to (i) bankruptcy, insolvency or other laws affecting creditors' rights
generally, (ii) application of principles of equity generally, and (iii) laws of the State of
California governing obligations secured by a deed of trust or mortgage).
(c) Borrower shall have strictly complied with, and performed, all terms and
conditions of the documents executed by Borrower in connection with this Agreement and the
City Inclusionary Loan.
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(d) The grant deed vesting fee simple title to the Property III Borrower has been
recorded.
(e) The City has approved all documents with respect to Borrower's acquisition of
the Property
(f) The City has approved all documents executed in connection with the Bond Loan,
Shea C Bond Loan, Shea Conventional Loan, City Inclusionary Loan and City HOME Loan.
(g) Borrower shall have obtained a binding commitment for the Tax Credit Equity.
(h) Borrower will have closed (or will close concurrently with closing the City
Inclusionary Loan) on the Bond Loan, Shea C Bond Loan, Shea Conventional Loan, City
lnclusionary Loan and City HOME Loan.
(i) The City's receipt of lien releases, conditional lien releases, proof of payment and
other documentation reasonably required by City (including, without limitation, documentation
required from Borrower's contractor, subcontractors, laborers and material and equipment
suppliers), which may include posting of a surety bond and indemnification from a title
insurance company as set forth in Section 2.8 below.
G) City's approval of Borrower's Partnership Agreement.
(k) City's approval of an AL TA survey of the Property.
(I) Borrower has paid or caused to be funded an amount into escrow, which is
sufficient to pay for all costs associated with such escrow, including without limitation title fees,
escrow fees and closing costs.
(m) The guaranteed not to exceed construction contract for the work at the Property,
acceptable to the City Manager, shall have been executed by the Borrower and the general
contractor who has been selected to do the work.
(n) There are no actions, suits, material claims, legal proceedings, or any other
proceedings affecting the Borrower or any parties affiliated with the Borrower, at law or in
equity before any court, tribunal, government agency, domestic or foreign, which, if adversely
determined, would materially impair the right or ability of Borrower to execute or perform its
obligations under this Agreement or any documents required hereby to be executed by Borrower,
or which would materially adversely affect the financial condition of the Borrower or any parties
affiliated with the Borrower.
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(0) No attachment, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization, receivership or other proceedings have been filed or are
pending or threatened against the Borrower or any parties affiliated with Borrower, nor are any
of such proceedings contemplated by Borrower or any parties affiliated with Borrower.
(P) Such other conditions as City shall reasonably request, provided, however, that no
such condition shall change the economic terms of the transactions described herein or expand
the liability of the parties hereunder.
Section 1.17 - Borrower's Representations and Warranties. Borrower represents and warrants to
the City that:
(a) Borrower is a validly and lawfully formed limited partnership, and IS In good
standing under California law and will remain such for the term of this Agreement.
(b) Execution of this Agreement, the City Inclusionary Deed of Trust, the Declaration
and all other documents executed in conjunction herewith have been duly authorized by
Borrower's general partners, and such execution shall not result with the passage of time or the
giving of notice or both in breach of or in acceleration of performance under any contract or
document to which Borrower may be a party.
(c) All required approvals have been obtained in connection with Borrower's
execution of this Agreement, and all related agreements and documents to the effect that no
breach of or acceleration of performance under any agreement or document to which Borrower is
a party will result in such execution and all individuals signing this Agreement for a party which
is a corporation, limited liability company, partnership or other legal entity, or signing under a
power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant
to the City that they have the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behalf they are signing.
(d) Funds advanced by City pursuant to the City Inclusionary Loan are advanced
wholly or in part for the benefit of Borrower.
(e) The principal and interest due and payable under the City Inclusionary Loan are
subject to the terms and conditions of this Agreement, any other security documents or
instruments provided for herein.
(f) Borrower agrees to use said funds solely for the acquisition, construction and
permanent financing of the Property and Improvements.
(g) Borrower shall comply with the terms of the Declaration at all times during the
55-year term of the Declaration.
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(h) Borrower acknowledges, that the defective performance by Borrower under the
terms of this Agreement shall not relieve Borrower from any obligation to correct any
incomplete, inaccurate, or defective work at no further cost to City, when such inaccuracies,
defects and incompletions are due to the fault of Borrower, including its subcontractors, agents,
partners, joint venturers and employees.
Section 1.18 Affordabilitv Provision.
(a) Execution of Covenants. Conditions and Restrictions. Borrower agrees to execute
the Declaration and to cause it to be recorded, assuring compliance with the affordability
provisions of this Agreement. Borrower agrees to obtain any and all subordination agreements,
if any, necessary to insure that the Declaration is an encumbrance on the Property prior to all
other encumbrances, liens and taxes. Such subordinations shall be on terms and conditions
acceptable to the City Manager in his/her sole discretion. The Declaration shall be binding and
enforceable against all heirs, successors and assigns of Borrower.
(b) Term of Affordabilitv. Borrower agrees that the Property shall remain affordable
and subject to the Declaration for not less than fifty-five (55) years from the effective date as
referenced in the Declaration.
(c) Cross-Default With the Declaration. Borrower and its successors in interest to the
Property shall strictly comply with all of the terms and conditions of the Declaration. Any
default under the Declaration shall be a default under this Agreement, the City Inclusionary Note
and the City Inclusionary Deed of Trust.
Section 1.19 - Citv Approval of Propertv Manager. At all times during the term of the
Declaration, if the City serves a thirty (30) day written notice of deficiencies in the property
management for the Property, or default under the Declaration or any document executed in
conjunction herewith, which deficiencies or default have not been rectified by Borrower, within
the thirty (30) day period (unless such deficiency or default is not capable of being cured within
such thirty (30) day period, then such amount of time as City determines is needed, not to exceed
one hundred twenty (120) days, provided Borrower commences cure within such thirty (30) day
period and continues to diligently pursue cure), then, City shall have the right, but not the duty,
in its sole discretion: (i) to require the retention of a professional property management firm to
manage the Property; (ii) to approve, in advance and in writing, the retention of any such
property management firm, including the terms of the contract governing such retention; and (iii)
to require Borrower to terminate any such property management firm, provided that such
termination shall comply with the termination provisions of the management contract in
question. Borrower shall cooperate with City to effectuate City's rights.
Section 1.20 - Usurv. If a court of competent jurisdiction determines, by way of final
unappealable order or judgment, that the interest rate charged under the City Inclusionary Note is
usurious, then such rate shall automatically and retroactively be reduced to the maximum rate
allowed under applicable law.
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Section 1.21 - Remedies.
(a) Contract Governed bv Laws of the State of California. This Agreement, its
performance, and all suits and special proceedings under this Agreement, shall be constituted in
accordance with the laws of the State of California and Federal law, to the extent applicable. In
any action, special proceeding, or other proceeding that may be brought arising out of, under or
because of this Agreement, the laws of the State of California and the United States, to the extent
applicable, shall govern to the exclusion of the law of any other forum, without regard to the
jurisdiction in which the action or special proceeding may be instituted.
(b) Standing, Equitable Remedies: Cumulative Remedies. Borrower expressly agrees
and declares that City or any successor or public entity shall be the proper party and shall have
standing to initiate and pursue any and all actions or proceedings, at law or in equity, including
but not limited to foreclosure under any security instrument securing performance hereunder, to
enforce the provisions hereof and/or to recover damages for any default hereunder,
notwithstanding the fact that such damages or the detriment arising from such a default may have
actually been suffered by some other person or by the public at large. Further, Borrower
expressly agrees that receivership, injunctive relief and specific performance are proper pre-trial
and/or post-trial remedies hereunder, and that, upon any default, a receiver may be appointed by
the court to take control of the Property and to assure compliance with this Agreement. Nothing
in this subparagraph, and no recovery to City, shall restrict or limit the rights or remedies of
persons or entities other than City, including but not limited to the Agency, against Borrower in
connection with the same or related acts by Borrower. The remedies set forth in this Section are
cumulative and not mutually exclusive, except the extent that their award is specifically
determined to be duplicative by final order of a court of competent jurisdiction.
(c) Remedies at Law for Breach of Operating Restrictions. In the event of any
material default under the Declaration and/or Section 1.16 and 1.17 hereof regarding restrictions
on the operation and the transfer of the Property, City shall be entitled to, in addition to any and
all other remedies available at law or in equity: (i) declare the City Inclusionary Loan to be all
due and payable immediately and in full; and (ii) recover compensatory damages. If the default
in question involves the violation of Section 1.17, above, including without limitation a default
under the Declaration, the amount of such compensatory damages shall be the product of
multiplying (A) the number of months that the default in question has continued until the time of
trial by (B) the result of subtracting the rents properly chargeable hereunder for the Affordable
Unit(s) in question from the amount actually charged. Borrower and City agree that it would be
extremely difficult or impracticable to ascertain the precise amount of actual damages accruing
to City as a result of such a default and that the foregoing formula is a fair and reasonable
method of approximating such damages. City shall be entitled to seek and to recover damages in
separate actions for successive, separate breaches which may occur. Further, interest shall
accrue on the amount of such damages from the date of the breach in question at the rate of ten
percent (10%) per annum or the maximum rate than allowed by law, whichever is less. Nothing
in this section shall preclude the award of exemplary damages as allowed by law.
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(d) Expert Witness, Attornevs' Fees, and Costs. The parties agree that the prevailing
party in litigation for the breach and/or interpretation and/or enforcement of the terms of this
Agreement shall be entitled to their expert witness fees, if any, as part of their costs of suit, and
attorneys' fees as may be awarded by the court, pursuant to California Code of Civil Procedure
("CCP") Section I 033.5 and any other applicable provisions of California law, including,
without limitation, the provisions of CCP Section 998.
Section 1.22 - Management Fee. The amount of management fees paid by Borrower with
respect to the Property shall be subject to the annual approval of City.
Section 1.23 - Operating and Replacement Reserves. Borrower shall, during the time of the term
of the Declaration, maintain operating and replacement reserves approved by City. Failure to
maintain such reserves shall constitute a material default under the terms of this Agreement.
Borrower shall maintain an operating reserve in accordance with the provisions of Borrower's
partnership agreement, failure to do so shall be a material breach of this Agreement. Each year
during the term of the Declaration, Borrower shall set aside a reserve for replacements in an
account separate from all other funds of Borrower. Such replacement reserve shall be not less
than $75,000.00 per year beginning with the first calendar year after the Improvements are
Placed in Service and shall increase by three percent (3%) each year thereafter. Not less than
One Hundred Thousand and Noll 00 Dollars ($100,000.00) shall be set aside in an account
separate from all other funds of Borrower as an operating reserve. This operating reserve
amount is subject to revision upward as determined by the City Manager, annually, based upon
an increase in the consumer price index for the San Diego Metropolitan Area. The operating and
replacement reserves shall be used for payment of unbudgeted and/or unforeseen expenses in the
operation and maintenance of the Property and Improvements. No disbursements from the
operating reserve or replacement accounts shall be made without the express written consent of
the City Manager or designee. Borrower shall account to City for any monies expended from the
operating reserves and/or replacement accounts, in such form as approved by City.
Section 1.24 - Completion of Construction. All construction of the Improvements, as approved
by City, shall be completed by Borrower to the satisfaction of City and Placed in Service, on or
before December 31, 20 I I. Time is of the essence in the completion of the Improvements;
failure to comply with these requirements shall constitute a material default under the terms of
this Agreement. Completion of the Improvements shall occur upon the filing or the issuance by
the building official of the City of a temporary Certificate of Occupancy for all units at the
Property.
Section 1.25 - Failure to Receive Tax Credit Pavments. The failure of the Tax Credit partner to
fund any of the Tax Credit Equity, in accordance with and subject to the terms of the Borrower's
partnership agreement shall constitute a material default under the terms of this Agreement.
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Section 1.26 - Removal of Managing General Partner bv the City. At all times that any portion
of the City Inclusionary Loan remains unpaid and outstanding and/or the Declaration is in force
and effect, and the City has served a ten (10) day written notice of default under this Agreement,
the Declaration, and/or any other document executed by Borrower with respect to the City
lnclusionary Loan or the Property, which default has not been rectified by Borrower, within the
ten (10) day period (unless such default is not capable of being cured within such ten (10) day
period, then such amount of time as City determines is needed, not to exceed ninety (90)
additional days, provided Borrower commences cure within the original ten (10) day period and
continues to diligently pursue cure), then, City shall have the right, but not the duty, in City's
sole discretion: (i) to require the removal of the Managing General Partner of Borrower and the
termination of the Managing General Partner's interest in the Borrower; and (ii) to require that
Borrower admit a replacement Managing General Partner, acceptable to the City in its sole
discretion. Borrower shall cooperate with City to effectuate City's rights.
Section 1.27 - Funding Mechanism. One Million and No/IOO Dollars ($1,000,000.00) of the
City Inclusionary Loan shall be disbursed to Borrower at closing, the remaining One Million and
Noll 00 Dollars ($1,000,000.00) of the City Inclusionary Loan shall be distributed to Borrower
upon completion of fifty percent (50%) of the construction of the Project.
ARTICLE II
Svecific Loan Provisions
Section 2.1 - Conditions to Citv Obligations and Borrower Representations and Warranties.
(a) Interest of Current or Former Members. Officers or Emplovees. Borrower
represents and warrants that no member, officer, or employee of Borrower, no member of the
governing body of the locality in which City was activated, and no other public official of such
locality or localities who exercises any functions or responsibilities with respect to this
Agreement, shall, during his or her tenure, or for one year thereafter, have any interest direct or
indirect, in this Agreement or the proceeds thereof. Any violation of this section may, at the
option of City, result in unilateral and immediate termination of this Agreement by City.
(b) Unsecured Environmental Indemnitv. Borrower shall enter into an Unsecured
Environmental Indemnity Agreement, as approved by City, in favor of City.
(c) Title Policv. Borrower, shall, at its sole cost and expense, obtain an ALTA
lender's policy naming City as a named insured, and insuring that City's interest is subject to no
superior liens, encumbrances, special assessments or taxes, except for the Bond Deed of Trust,
the instruments securing the Bond Loan, the Bond Regulatory Agreement, the TCAC Regulatory
Agreement, the Agency Low-Mod Loan, the Shea Bond Loan, the Shea Conventional Loan and
the exceptions to title set forth in the City Lender Instructions being executed concurrently
herewith.
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(d) Construction Loan and Contract. City shall be entitled to review, inspect and
approve, without liability, all of the construction being performed at the Property. All
construction shall be performed in accordance with the plans and specifications approved by the
City in accordance with Section 2.3 of this Agreement, without liability to City for review and
observation of the construction. City approval shall be understood to be general approval only,
and shall not relieve Borrower or contractor of the responsibility to design, engineer, and
construct the Improvements in accordance with all applicable laws, codes, regulations, and good
design, construction, and engineering practice. Any deficiencies in construction shall be
corrected by the Contractor, and/or Borrower, upon written notice from City to Borrower, prior
to any additional funding of this Loan, at Borrower's expense and at no cost to the City or the
Agency.
(e) Housing Ouality Standards. Borrower represents and warrants that Affordable
Units shall be maintained, at all times during the term of the Agreement, in complete compliance
with all housing quality standards contained within 24 CFR ~92.251, regardless of whether such
section would apply to the Property. Further, Borrower warrants that all construction shall meet
or exceed the applicable local codes and construction standards, including zoning and building
codes of the City as well as the provisions of the Model Energy Code published by the Council
of American Building Officials. Borrower hereby consents to periodic inspection by City's
designated inspectors and/or designees during regular business hours, including the Code
Enforcement Agents of the City, to assure compliance with said zoning, building codes,
regulations, and housing quality standards.
(f) Approval of City Disclosure Statement. This Agreement is subject to approval by
the City Manager of the executed disclosure statements of Borrower. The City Manager may, in
his/her sole discretion, disapprove of said disclosure statement on or before recordation of the
City Inclusionary Deed of Trust. In the event of such disapproval, this Agreement shall be
terminated and of no further force and effect.
(g) Records and Reports. Each year during the term of the Declaration, Borrower
shall supply City with: (i) a certified rent roll on January 30 for all tenants occupying the
Affordable Units as of the immediately preceding December 31; and (ii) a certified rent roll on
July 30 for all tenants occupying the Affordable Units as of the immediately preceding June 30.
Borrower shall supply City, annually (after completion of the Improvements) not later than April
15, for the immediately preceding calendar year, with such records and reports as are required
and are requested by City. The records and reports include, but are not limited to the following:
(I) Amount of funds expended pursuant to this Agreement;
(2) Eligible Tenant information, including yearly income verifications;
(3) Housing payments charged to resident tenants, to the extent applicable;
(4) On-site inspection results;
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(5) Affirmative marketing records;
(6) Insurance policies and notices;
(7) Equal Employment Opportunity and Fair Housing records;
(8) Labor costs and records;
(9) An audited income and expense statement and balance sheets for
Borrower;
(10) An audited mcome and expense statement and balance sheets for the
Property;
(11) A Management Plan for the calendar year in which the report is prepared
showing anticipated rental income, other income, expenses, anticipated
repairs and replacements to the Improvements, timing of such repairs and
replacements, insurance maintained with respect to the Property, and such
other matters as City shall require, in its sole discretion;
(12) Federal and State income tax returns for the calendar year, ending on the
preceding December 3 1st;
(13) Annual analysis of reserves for repair and replacement;
(14) Annual certification and representation regarding status of all loans,
encumbrances and taxes;
(15) Annual statement regarding condition of the Property and disclosing any
known defects;
(16) Such other and further information and records as City shall request in
writing from Borrower.
Time is of the essence in supplying each and every report required to be supplied to City.
The parties agree that a fee of $25.00 per day shall be paid by Borrower to City for each day that
each report is delinquent. The parties agree that multiple fees may be charged at anyone time,
depending upon the number ofreport(s) and/or information that is delinquent. The parties agree
that a fee of $25.00 per day, per report and/or information is a reasonable estimation of the
damages that will accrue to City as a result of the failure of Borrower to timely submit the
required information and/or reports and that said fees shall be treated as liquidated damages by
the parties, in anticipation of the damages that will be incurred by City as a result of a breach by
Borrower. The parties further agree that it would be difficult, if not impossible, to determine the
exact actual amount of damages suffered by City in the event of a breach by Borrower in the
reporting requirements of this Agreement, including, but not limited to, Section 2.1 (I) and
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Section 1.17( d). Notwithstanding the foregoing or anything to the contrary contained herein,
City shall give Borrower prior written notice of any report and/or information that Borrower has
failed to provide City pursuant to this Section 2.1(i) and Borrower shall have ten (10) business
days to provide such report and/or information to City prior to the assessment of any liquidated
damages.
(h) Monitoring of Activities. Borrower agrees to allow City and the City's agents,
upon twenty-four (24) hours written notice (except in the event of an emergency in which event
no notice shall be required), reasonable access to review and inspect Borrower's activities under
this Agreement as City shall require to perform its monitoring duties. City shall monitor
Borrower's activities without liability for said inspection and review.
(i) Nondiscrimination Covenants. Borrower covenants by and for itself and any
successors in interest that there shall be no discrimination against or segregation of, any person
or group of persons on the basis of race, color, creed, religion, sex, sexual orientation, marital
status, national origin, ancestry, familial status, source of income or disability of any person in
the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall
Borrower or any person claiming under or through it establish or permit any such practice or
practices of discrimination or segregation of any person or group of persons on account of any
basis listed in subdivision (a) or (d) of Section 12955 ofthe Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of
Section 12955, and Section 12955.2 of the Government Code, with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees of the
Property. The foregoing covenants shall run with the land. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or nonsegregation
clauses:
(1) Deeds. In deeds 'The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of race,
color, religion, sex, sexual orientation, disability, medical condition, familial status, source of
income, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 in the land herein conveyed. The foregoing
covenants shall run with the land."
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(2) Leases. In leases 'The lessee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this lease is made
and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, religion, sex, sexual orientation,
disability, medical condition, familial status, source of income, marital status,
national origin or ancestry in the leasing, subleasing, renting, transferring, use,
occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself,
or any person claiming under or through it, establish or permit 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 leased."
(3) Contracts. In contracts for the rental, lease or sale of the Property or any
dwelling unit 'There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, religion, sex, sexual orientation, disability, medical condition,
familial status, source of income, marital status, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee 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, sub lessees or vendees of the land."
G) Effect of Violation of the Terms and Provisions of this Agreement After
Completion of Construction. City is deemed the beneficiary of the terms and provisions of this
Agreement and of the covenants running with the land, for and in its own right and for the
purposes of protecting the interests of the community and other parties, public or private, in
whose favor and for whose benefit this Agreement and the covenants running with the land have
been provided, without regard to whether City has been, remains or is an owner of any land or
interest therein in the Property. City shall have the right, if this Agreement or its covenants are
breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in
equity or other proper proceedings to enforce the curing of such breaches to which it or any other
beneficiaries of this Agreement and covenants may be entitled.
(k) Equal Opportunity and Fair Housing Programs. During the term of this
Agreement, Borrower agrees as follows:
(1) Borrower will not discriminate against any employee, person, or applicant
for employment and/or housing because of race, age, sexual orientation, marital status, color,
religion, sex, handicap, or national origin. Borrower will take affirmative action to ensure that
applicants are employed and/or are housed, and that employees or applicants are treated during
employment and/or housing, without regard to their race, age, sexual orientation, marital status,
color, religion, sex, handicap, or national origin. Such action shall include, but is not limited to
the following: employment, upgrading, demotion, or termination; rates of payor other forms of
compensation; and selection for training, including apprenticeship. Borrower agrees to post in
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conspicuous places, available to employees and applicants for employment, notices to be
provided by City setting forth the provisions of this nondiscrimination clause.
(2) Borrower will, in all solicitations or advertisements for employees and
housing placed by on or behalf of Borrower, state that all qualified applicants will receive
consideration for employment without regard to race, age, sexual orientation, marital status,
color, religion, sex, handicap, or national origin.
(3) Borrower will cause the foregoing provIsIons to be inserted in all
subcontracts for any work covered by this Agreement so that such provisions will be binding
upon each subcontractor, provided that the foregoing provision shall not apply to contracts or
subcontracts for standard commercial supplies of raw materials.
(4) Borrower hereby agrees to comply with the Title VII of the Civil Rights
Act of 1964, as amended, the California Fair Employment Practices Act, and any other
applicable Federal and State laws and regulations.
(5) All activities carried out by Borrower and/or agents of Borrower shall be
in accordance with the requirements of the Federal Fair Housing Act. The Fair Housing
Amendments Act of 1988 became effective on March 12, 1989. The Fair Housing Amendments
Act of 1988 and Title Vlll of the Civil Rights Act of 1968, taken together, constitute The Fair
Housing Act. The Act provides protection against the following discriminatory housing
practices if they are based on race, sex, religion, color, handicap, familial status, or national
origin: denying or refusing to rent housing, denying or refusing to sell housing, treating
differently applicants for housing, treating residents differently in connection with terms and
conditions, advertising a discriminatory housing preference or limitation, providing false
information about the availability of housing, harassing, coercing or intimidating people from
enjoying or exercising their rights under the Act, blockbusting for profit, persuading owner to
sell or rent housing by telling them that people of a particular race, religion, etc. are moving into
the neighborhood, imposing different terms for loans for purchasing, constructing, improving,
repairing, or maintaining a home, or loans secured by housing; denying use or participation in
real estate services, e.g., brokers' organizations, multiple listing services, etc.
The Fair Housing Act gives HUD the authority to hold administrative
hearings unless one of the parties elects to have the case heard in U.S. District Court and to issue
subpoenas. Both civil and criminal penalties are provided. The Fair Housing Act also provides
protection for people with disabilities, and proscribes those conditions under which senior citizen
housing is exempt from the prohibitions based on familial status.
The following State of California Laws also govern housing
discrimination: Fair Employment and Housing Act, Unruh Civil Rights Act of 1959, Ralph Civil
Rights Act of 1976, and Civil Code Section 54.1.
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(I) Flood Insurance. Borrower represents, warrants, and certifies, that no portion of
the Property is located within a Flood Plain or Flood Hazard Zone or Area, as indicated on a
FEMA Map; and that no part of the Property is located within a community participating in the
National Flood Insurance Program.
(m) Accessibility Standards. Borrower represents and warrants that Borrower will
comply with all federal, state and local requirements and regulations concerning access to the
units by the disabled and handicapped persons.
Section 2.2 - Architectural and Design Review. Prior to obtaining building, land development,
public and/or private improvement, subdivision and any other permits for construction and/or
development of the Property and Improvements, or any part thereof, Borrower shall submit plans
for the review and approval of City, which approval shall not be unreasonably withheld or
delayed. In the event, of rejection or disapproval of the plans, Borrower shall cause the design to
be altered to address the concerns of City and shall thereafter resubmit the plans for review and
approval and the process detailed above begin anew. City approval shall be understood to be
general approval only, and shall not relieve Borrower of the responsibility to design, engineer,
and construct the Improvements in accordance with all applicable laws, codes, regulations, and
good design, construction, and engineering practice. Any deficiencies or defects shall be
corrected at Borrower's cost and expense and without any cost to the City or Agency.
Section 2.3 - Commencement of Construction and Compliance with Plans and Specifications.
(a) Completion Deadline. Borrower, following recordation of the City Inclusionary
Deed of Trust and the consummation of the loan, will promptly commence construction of said
improvements and continue such construction diligently and without delay, in a good and
workmanlike manner. Borrower will complete such improvements in accordance with the plans
and specifications approved by City ("Plans and Specifications"), including any additional
specifications prescribed by City, and in compliance with all requirements of governmental
authorities having or asserting jurisdiction. Said construction shall be completed on or before
December 31, 20 I I, as referenced in Section 1.24 of this Agreement.
(b) No Material Changes. Borrower shall not make any changes in the Plans and
Specifications without City's prior written consent if such change: (i) constitutes a material
change in the building material or equipment specifications, or in the architectural or structural
design, value or quality of the Improvements; or (ii) would adversely affect the structural
integrity, quality of building materials, or overall efficiency of operating systems of the
Improvements. Without limiting the above, City agrees that Borrower may make minor changes
in the Plans and Specifications without City's prior written consent, provided that such changes
do not violate any of the conditions specified herein. Borrower shall at all times maintain, for
inspection by City, a full set of working drawings of the Improvements.
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(c) Submission of Documents Related to Changes. Borrower shall submit any
proposed change to the Plans and Specifications to the City at least ten (10) days prior to the
commencement of construction relating to such proposed change whether or not such change is
subject to City's consent. Requests for any change that requires consent shall be accompanied by
working drawings and a written description of the proposed change, submitted on a change order
form acceptable to City, signed by Borrower and, if required by City, also signed by the architect
and the contractor.
Section 2.4 - No Purchase Under Conditional Sales Agreements, Etc. Except for leased cable
and laundry equipment, no supplies, materials, equipment, fixtures, carpets, appliances, or any
part of said improvements shall be purchased or installed under any conditional sales agreement,
lease or under any other arrangement wherein the right is reserved or accrues to anyone to
remove or to repossess any such items. It is expressly agreed that all such items shall be part of
the Property.
Section 2.5 - Securitv Agreement. Borrower hereby grants to City a security interest in all
supplies, materials, fixtures, carpets, appliances, furniture or equipment now or hereafter located
on said Property, together with all proceeds thereof, including insurance proceeds paid or
payable as the result of any loss, injury or damage of the foregoing collateral, whether or not
City is named beneficiary under any such insurance. Upon request, from time to time, Borrower
will furnish City with an inventory of such collateral. Nothing contained in this Section 2.5 shall
affect the provisions of Section 2.6.
Section 2.6 - Stoppage of Work by City. Upon 24 hours notice, except in the event of an
emergency when no such notice shall be required), City or its agents shall have the right to enter
upon said real property and the Improvements during the period of construction. If in the
opinion of the City, the work of construction is not in material conformance with the plans and
specifications, the City shall have the right to order the replacement of any unsatisfactory work
theretofore incorporated in said improvements, and to instruct fund control to withhold all
disbursements from the accounts until it is satisfied with the work. If the work is not made
satisfactory to City, in its sole discretion, within fifteen (15) calendar days from the date of
stoppage by City, such shall constitute a default hereunder. If any unsatisfactory work is such
that it is not reasonably capable of being cured within fifteen (15) calendar days and Borrower,
in City's sole discretion, (i) initiates corrective action within said period, and (ii) diligently and
in good faith works to correct the unsatisfactory work as soon as possible, then Borrower shall
have such additional time as City determines, in its sole discretion, is reasonably necessary to
cure the unsatisfactory work prior to exercise of any remedies by City.
Section 2.7 - Cessation of Work, Completion by City. Should the work of constructing the
improvements cease, and continues for a period of thirty (30) consecutive days, or should said
work for any reason whatsoever not progress continuously in a manner satisfactory to City, in its
sole discretion, then City may, at its option and without notice, declare Borrower to be in default
hereunder, and City may thereupon, should it so elect, take possession of said property and let
contracts for the completion of said improvements and pay the cost thereof, plus a fee of fifteen
percent (15%) for supervision of construction, disbursing all or any part of the loan for such
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purposes; and should the cost of completing said improvements plus such fee exceed the
undisbursed balance of the loan, then the amount of such excess may be expended by City, in
which event such amount shall be considered an additional loan to Borrower, and the repayment
thereof, together with interest thereon at the rate provided in City Inclusionary Note, shall be
secured by the City Inclusionary Deed of Trust and shall be repaid within thirty (30) days after
the completion of said improvements, and Borrower agrees to pay the same; Borrower further
authorizes City at its option at any time, upon a default by any contractor under any contract in
connection with construction of the Improvements which is not cured within thirty (30) days
following notice to Borrower, either in its own name or in the name of Borrower, to do any act
or thing necessary or expedient in the opinion of City to secure the performance of construction
contracts and assure the completion of construction of the improvements substantially in
accordance with the plans and specifications, disbursing all or any part of the loan funds for such
purposes. In addition to the specific rights and remedies hereinabove mentioned, City shall have
the right to avail itself of any other rights or remedies to which it may be entitled under any
existing law or laws.
Section 2.8 - Mechanic's Liens and Notices to Withhold. Borrower shall use its best efforts to
prevent any lien or stop notice from being place on the Improvements or Property. If a claim of
lien or stop work notice is given or recorded affecting the Property or Improvements, the
Borrower shall within thirty (30) calendar days of such recording or service: (i) pay and
discharge same; (ii) effect a release thereof by recording and delivering to City a surety bond in
sufficient form and amount; or (iii) provide City with indemnification from a title insurance
company reasonably acceptable to City against such lien or other assurance which the City, in its
sole discretion, deems to be satisfactory for the payment of such lien or stop notice and for the
full and continuous protection of City from the effect of such lien or notice. In the event of the
filing with City of a notice to withhold or the recording of a mechanic's lien pursuant to Division
3, Part 4, Title 15 of the Civil Code of the State of California, City may summarily refuse to
honor any requests for payment pursuant to this Agreement. In the event Borrower fails to
furnish City with a bond causing such notice or lien to be released (or alternatively issuance of a
title policy or endorsement in the full amount of the City Inclusionary Loan, which title policy or
endorsement excludes such lien as an exception to title) within thirty (30) days after the filing or
recording thereof, such failure shall at the option of City constitute a default under the terms of
this Agreement.
Section 2.9 - Involvement of City in Legal Proceedings. City shall have the right to commence,
to appear in, or to defend any action or proceeding purporting to affect the rights or duties of the
parties hereunder or the payment of any funds in connection with this City Inclusionary Loan
and to payout of funds not yet disbursed, necessary expenses, employ and pay counsel, all of
which the undersigned, jointly and severally, agree to repay to City upon demand. Provided,
however, such costs and expenses shall not be due and owing to City, if they are incurred as a
result of the breach of the Agreement by City or its sole negligence or willful misconduct.
Section 2.1 0 - Books and Records. Borrower shall require that the general contractor maintain
complete and accurate books and records showing all of the income and disbursements made in
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connection with the work of improvements and such books and records shall be available for
inspection and copy by City upon request and during regular business hours.
ARTICLE III
Miscellaneous Provisions
Section 3.1 - Governmental Requirements Superior. All provisions of this Agreement and all the
other documents relating to the City Inclusionary Loan shall be subject and subordinate to any
and all applicable federal, state and local statutes, regulations and ordinances and shall be subject
to modification to comply therewith.
Section 3.2 - Notices. All notices under this Agreement shall be in writing and sent (a) by
certified or registered mail, return receipt requested, in which case notice shall be deemed
delivered seven (7) business days after deposit, postage prepaid in the United States Mail, (b)
overnight by a nationally recognized overnight courier such as UPS Overnight, or FedEx, in
which case notice shall be deemed delivered One (1) business day after deposit with that courier,
or (c) by personal delivery, in which case notice shall be deemed delivered upon the actual date
of delivery. All notices shall be delivered to the following addresses:
City:
City of Chula Vista
Redevelopment and Housing
276 Fourth Avenue
Chula Vista, California, 91910
Copy to:
Chula Vista City Attorney
276 Fourth Avenue
Chula Vista, California 91910
If to Borrower, then to:
Landings II, L.P.
c/o Chelsea Investment Corporation
5993 A venida Encinas, Suite 101
Carlsbad, CA 92008
Attention: James 1. Schmid
Copy to:
Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, California 94105
Attn. Gary P. Downs
Copy to:
RJ HOF 8 - Landings II L.L.c.
c/o Raymond James Tax Credit Funds, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Ronald M. Diner, President
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Section 3.3 - Severabilitv. If any provIsIon of this Agreement is deemed to be invalid or
unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest
of this Agreement and the remaining provisions shall continue in full force and effect.
Section 3.4 - Nonwaiver of Citv's Rights. No right, remedy, or power of City in this Agreement
shall be deemed to have been waived by any act or conduct on the part of City or by any failure
to exercise or delay in exercising such right, remedy, or power. Every such right, remedy or
power of City shall continue in full force and effect until specifically waived or released by an
instrument in writing executed by City.
Section 3.5 - Entire Agreement. This Agreement, along with the various documents being
executed by the City and Borrower with respect to the City lnclusionary Loan, contain the entire
understanding between the Parties concerning the subject matter contained herein. There are no
representations, agreements, arrangements or understandings, oral or written, between or among
the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed
and/or referred to herein.
Section 3.6 - Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are
hereby incorporated in this Agreement by this reference, regardless of whether or not the exhibits
are actually attached to this Agreement. The Recitals to this Agreement are hereby incorporated
in this Agreement by this reference.
Section 3.7 - Construction of the Agreement. The provisions contained in this Agreement shall
not be construed in favor of or against either party but shall be construed as if both parties
contributed equally to its preparation. This Agreement shall be construed in accordance with the
laws of the State of California.
Section 3.8 - City's Reliance on Statements and Disclosures of Borrower. Borrower has made
certain statements in order to induce City to make said loan and enter into this Agreement, and in
the event Borrower has made material misrepresentations or failed to disclose any material fact,
City may treat such misrepresentation or omission as a breach of this Agreement, and the act of
doing so shall not affect any remedies City may have under the deed of trust securing said loan
for such misrepresentation or concealment.
Section 3.9 - Citv Not Liable for Acts of Omissions of Borrower or Others. City shall in no way
be liable for any acts or omissions of Borrower, any agent or contractor employed by Borrower,
or any person furnishing labor and/or materials used in or related to the construction of said
improvements.
Section 3.10 - Time of the Essence. Time is of the essence of this Agreement and of each and
every provision hereof. The waiver by City of any breach or breaches hereof shall not be
deemed, nor shall the same constitute, a waiver of any subsequent breach or breaches.
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Section 3.11 - Assignment. Borrower shall not assign Borrower's rights nor delegate Borrower's
duties under this Agreement without the prior written consent of City. Any attempt at the
assignment or delegation in violation of this Section 3.11 shall be void. City shall have full right
and authority to assign all or a part of the City's rights and delegate all or a part of the City's
duties under this Agreement.
Section 3.12 - Integration. This Agreement represents the entire agreement between the Parties
of the subject matter of this Agreement and supersedes any other agreements, promises, or
representations oral or written pertaining to such subject matter, including without limitation, any
and all agreements, promissory notes, and deeds of trust, along with any amendments and
modifications to such agreements, promissory notes and deeds of trust entered into by and
between City and Borrower.
Section 3.13 - Participation. At the request of City, Borrower shall cause the fact that City has
provided funds to be referenced in any advertisements, press releases, brochures or information
sheets where funding for the Property or Improvements is discussed, and on all project
designation placards placed on the Property or other sites, as approved in advance, by City. The
design, content and format of the press releases, brochures, information sheets, and all project
designation placards containing a reference to the City are subject to the written approval ofthe
City Manager with respect to all references to the City. City, at its sole option, reserves the right
to request, in writing, that the references to the participation of City not be included in any, or all,
advertisements, press releases, brochures, information sheets, and/or project designation
placards.
Section 3.14 - Approvals. Consents and Other Determinations. Unless otherwise provided, in
any approval, consent, or other determination by City or Borrower required under this
Agreement or any of the other loan documents evidencing and/or securing the City Inclusionary
Loan, City and Borrower shall act reasonably, in good faith and without delay.
Section 3.15 - Counterparts. This Agreement may be executed in any number of counterparts
and, as so executed, the counterparts shall constitute one and the same Agreement. The parties
agree that each such counterpart is an original and shall be binding upon all the parties, even
though all of the parties are not signatories to the same counterpart.
Section 3.16 - Non-Liability of Officials and Employees of City. No member, official or
employee of City or the Agency shall be personally liable to Borrower, or any successor in
interest, in the event of any default or breach of this Agreement or for any amount which may
become due to Borrower or its successors, or on any obligations under the terms of this
Agreement.
Section 3. I 7 - City Approvals and Actions. Whenever a reference is made herein to an action or
approval to be undertaken by City, City Manager or his or her designee is authorized to act on
behalf of City unless specifically herein provided otherwise or the context should require
otherwise.
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Section 3J 8 - Waiver and Amendment. No provision of this Agreement, or breach of any
provision, can be waived except in writing. Waiver of any provision or breach shall not be
deemed to be a waiver of any other provision, or of any subsequent breach of the same or other
provision. Except as otherwise provided herein, this Agreement may be amended, modified or
rescinded only in writing signed by Borrower and the City Manager or designee.
Section 3.19 _ No Novation. The parties hereby acknowledge and agree that this agreement is
not an amendment or novation of any other agreement, instrument or document to which the
City, the Agency and/or the Borrower is a party or third-party beneficiary, including without
limitation the documents evidencing the City HOME Loan and the documents evidencing the
Agency Low-Mod Loan.
Section 3.20 - Capacity and Authoritv. An individuals sillDing this Agreement for a party which
is a corporation, limited liability company, partnership dr other lega! entity, or signing W1der a
power of anorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant
to the City that they have the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behalf they are signing.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
set forth above.
BORROWER:
Landings n, L.P., a California limited partnership
By: Pacific Southwest Community Development COJporation,
a California nonprofit public benefit corporntion
!Is: Managing Genernl Partner
By:
!lwt@1
Robert W. Laing (
President / Executive Director
By: Landings 11 CIC, LLC, a California limited liability company,
Its: Administrative General Partner
By...:. Chelsea Investment COIporation, a California corpornrion,
(. .ts Manager ~
By:
es J. Schmid! P
ISIGNirmrnS CONTINUED ON FOLLOWING PAGE]
!:J
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CITY:
City of Chula Vista
By:
James Sandoval, City Manager
Approved as to form:
By:
Bart J. Miesfeld, City Attorney
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Exhibit "A"
Property Legal Description
All that certain real property situated in the County of San Diego, State of California, described
as follows:
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Redevelopment Agency of the City of Chula Vista
PERMANENT FINANCING LOAN AGREEMENT
17-61
Attachment 5
PERMANENT FINANCING LOAN AGREEMENT
(LANDIN GS II)
By and Between
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA
and
LANDINGS II, L.P
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Loan No. 2-09-0080
17-62
PERMANENT FINANCING LOAN AGREEMENT
(LANDINGS II)
(Redevelopment Agency Low Mod Amortizing Loan)
THIS PERMANENT FINANCING LOAN AGREEMENT ("Agreement") dated as of
the 10th day of May, 2010, is made by and between the Redevelopment Agency of the City of
Chula Vista ("Agency") and Landings 11, L.P., a California limited partnership ("Borrower") as
follows:
RECITALS
A. In furtherance of the objective of the California Community Redevelopment Law
to increase, improve, and preserve the community's supply of low and moderate income housing,
and to effectuate the Redevelopment Plan for the Chula Vista Redevelopment Project Areas
(collectively, the "Project Area"), Agency desires to assist Borrower with the redevelopment of
certain real property generally located at Discovery Falls Road and Crossroads Street in Chula
Vista, California (as more particularly described on the Property Legal Description attached
hereto as Exhibit "A", the "Property").
B. Borrower shall construct one hundred forty-one (141) affordable units
("Affordable Units"), two (2) managers' units and a community room (collectively, the
"Improvements") on the Property. The Agency to agrees to make a permanent financing loan to
Borrower from the Agency's Low and Moderate Income Housing Fund established pursuant to
Section 33334.3 of the California Health and Safety Code (the "Low-Mod Funds") in the
original principal amount of not more than Four Million and NollOO Dollars ($4,000,000.00)
(the "Agency Loan").
C. The Property is to be operated as low and very low income housing for fifty-five
(55) years in accordance with the Declaration of Covenants, Conditions and Restrictions
("Declaration"), as defined below.
D. The Redevelopment Agency of the City of Chula Vista by Resolution No.
, adopted on , 20 I 0, approved the funding by the Agency of the Agency
Loan. The Property is outside of the Project Area, however, the Agency has made all finding
necessary in order to fund the Agency Loan. The development of the Property pursuant to this
Agreement, the fulfillment generally of this Agreement and the construction of the
Improvements pursuant to the terms of this Agreement, are in the vital and best interest of the
City of Chula Vista and the health, safety, morals and welfare of its residents, and in accord with
the public purposes and provisions of applicable state and local laws and requirements.
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E. Borrower intends to finance the Property and Improvements with the Agency
Loan and: (i) approximately $25,755,000.00 of proceeds from the Housing Authority of the City
of Chula Vista Multifamily Housing Revenue Bonds (The Landings II Apartments), Senior
Series 2010A-I and Senior Series 2010A-2 ("Bond Loan") (of which not more than
$11,786,000.00 shall be for permanent financing); (ii) $14,608,176.00 of four percent (4%) tax
credit equity (the "Tax Credit Equity"); (iii) a construction and permanent financing loan from
Winding Walk Residential LLC in the original principal amount of approximately
$2,752,000.00, utilizing proceeds from the Housing Authority of the City of Chula Vista
Multifamily Housing Revenue Bonds (The Landings II Apartments), Subordinate Series 2010A-
3 (the "Shea C Bond Loan"); (iv) a construction and permanent financing loan from Winding
Walk Residential LLC in the original principal amount of approximately $10,077,998.00 (the
"Shea Conventional Loan"); (v) deferral of not more than $1,248,649.00 of the Borrower's
developer fee (the "Deferred Developer Fee"); (vi) a construction and permanent financing loan
from the City of Chula Vista in the original principal amount of $2,000,000.00 ("City
Inclusionary Loan"); and (vii) a construction and permanent financing loan from the City of
Chula Vista in the original principal amount of $2,400,000.00 ("City HOME Loan"). This
Agreement is being executed in connection with, and the Agency's obligation to make the
Agency Loan is contingent, inter alia, on Borrower obtaining the Bond Loan, Tax Credit Equity,
Shea C Bond Loan, Shea Conventional Loan, City Inclusionary Loan, City HOME Loan and
deferring the Deferred Developer Fee.
F. The Property and Improvements shall be constructed and operated in accordance
with all applicable law, rules, regulations and conditions of approval from TCAC, the City of
Chula Vista, the Internal Revenue Service, the various lenders involved with the Property and
Improvements and the requirements of this Agreement.
NOW, THEREFORE, in furtherance of the recitals stated above and the mutual
covenants set forth below, the Borrower and Agency agree, promise and declare as follows:
DEFINITIONS
The following terms shall have the meanings set forth below:
"Affordable Units" means the one hundred forty-one (141) dwelling units to be
constructed by Borrower on the Property, that are restricted for a period of fifty-five (55) years
by the Declaration, pursuant to the requirements of the California Health & Safety Code, which
includes restrictions related to the maximum rents which may be charged, and to the tenants that
are eligible to reside in such units, all of which are in furtherance of the Agency's goals of
making available homes, either for rent or for sale, to that section of population who cannot
afford to buy or rent locally on the open market.
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"Agency" means the Redevelopment Agency of the City of Chula Vista, a public body,
corporate and politic, exercising governmental functions and powers and organized and existing
under Chapter 2 of the Community Redevelopment Law of the State of California, and any
assignee of or successor to its rights, powers and responsibilities.
"Agency Deed of Trust" means the deed of trust securing the Declaration and the Agency
Loan, in the form and format approved by the Agency in the Agency's sole discretion, which
shall concurrently herewith be recorded as an encumbrance against the Property. The Agency
Deed of Trust is hereby incorporated herein by reference.
"Agency Loan" means the loan from Agency to Borrower as provided in this Agreement
in an original principal amount not to exceed Four Million and Noll 00 Dollars ($4,000,000.00),
and as further defined in this Agreement.
"Agency Note" means that certain promissory note executed by Borrower in favor of the
Agency evidencing the Agency Loan. The Agency Note is hereby incorporated herein by
reference.
"Agreement" means this Permanent Financing Loan Agreement.
"Bond Loan" means the mortgage loan being made to Borrower by the Housing
Authority of the City of Chula Vista with the proceeds of the Bonds, in the original principal
amount of $25,755,000.00 to be used for construction of the Project, of which not more than
$11,786,000.00 shall be permanent financing.
"Bond Deed of Trust" means the deed of trust, made by Borrower, securing the
obligations under the Bonds and the Bond Loan creating a lien on the Property. The Bond Deed
of Trust will be recorded against the Property subordinate to the Declaration, but senior to the
Agency Deed of Trust.
"Bond Regulatory Agreement" means any regulatory agreement or declaration of
covenants, conditions and restrictions restricting or otherwise regulating the use of the Property,
including without limitation the rent and/or occupancy of dwelling units thereon, that is entered
into by Borrower as a condition of receiving the Bond Loan or otherwise with respect to the
Bonds.
"Bonds" means the Housing Authority of the City of Chula Vista Multifamily Housing
Revenue Bonds (The Landings II Apartments), Senior Series 2010A-l and Senior Series 2010A-
2), which are being issued concurrently herewith.
"Borrower" means Landings II, L.P., a California limited partnership. Nothing contained
herein shall prohibit Borrower from changing its name provided that there is no change in the
composition and make up of Borrower, without the express prior consent of Agency. Provided,
however, the transfer of limited partnership interest in Borrower and the admission of
replacement limited partners of Borrower, which shall not require Agency approvaL
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"City" means the City of Chula Vista.
"City HOME Loan" means a construction and permanent financing loan from the City in
the original principal amount of $2,400,000.00.
"City Inclusionary Loan" means a construction and permanent financing loan from the
City in the original principal amount of $2,000,000.00.
"Cost Certification" means the audited certification prepared by a certified public account
under generally accepted accounting principles with all disclosures and notes, as required by
Title 4 California Code of Regulations Section 10322. The Cost Certification shall reflect all
costs, expenditures and funds used for the project, as identified by the certified public
accountant; and include the California Tax Credit Allocation Commission provided sources and
uses form reflecting actual total costs incurred.
"Declaration" means the declaration of covenants, conditions and restrictions restricting
the rent and occupancy of the Affordable Units, in a form and format approved by the Agency in
the Agency's sole discretion, which shall concurrently herewith be recorded as an encumbrance
against the Property. The Declaration will also restrict the rent and occupancy of the Affordable
Units in accordance with the requirements of the City Inclusionary Loan. The Declaration is
hereby incorporated herein by reference.
"Defective Work" means all work, material, or equipment that is unsatisfactory, faulty,
incomplete, or does not conform to industry standards, construction documents, or approved
drawings.
"Deferred Developer Fee" means $1,248,649.00 of the Borrower's developer fee which is
being deferred. The Deferred Developer Fee shall be paid in full no later than December 31,
2023.
"Environmental Laws" means any federal, state or local law, statute, ordinance or
regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous
Materials, including, without limitation, (i) the California Hazardous Waste Control Act
(California Health and Safety Code ~25100 et seq.), (ii) the Carpenter-Presley-Tanner Hazardous
Substance Account Act (California Health and Safety Code ~25300 et seq.), (iii) the Hazardous
Materials Release Response Plans and Inventory (California Health and Safety Code ~25500 et
seq.), (iv) Underground Storage of Hazardous Substances (California Health and Safety Code,
~25280 et seq.), (v) Article 9 or Article 11 of Title 22 of the California Administrative Code,
Division 4, Chapter 20, (vi) the Safe Drinking Water and Toxic Enforcement Act (California
Health and Safety Code, ~25249 et seq.), (vii) the Porter-cologne Water Quality Control Act
(California Water Code, ~13000 et seq.), (viii) the Federal Water Pollution Control Act (33
U.S.c. ~1271 et seq.), (ix) the Resource Conservation and Recovery Act (42 U.S.c. ~690l et
seq.), (x) the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.c. ~9601 et seq.), (xi) the Safe Drinking Water Act (14 U.S.c. ~300f et seq.), (xii) the
Hazardous Materials Transportation Act (49 U.S.C. ~5101 et seq.), (xiii) the Toxic Substances
5
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Control Act (15 U.S.c. ~2601 et seq.), (xiv) the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. ~136, et seq.), (xv) the Clean Air Act, 42 U.S.C. (97401 et seq.) or (xvi) any state
or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit,
approval, authorization, license, variance or permission required by any governmental authority
having jurisdiction.
"Hazardous Materials" means:
(i) Those substances included within the definitions of "hazardous substance,"
"hazardous waste/' "hazardous material," "toxic substance," "solid waste/' '''pollutant'' or
"contaminant" in the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (42 U.S.c. ~9601 et seq.); the Resource Conservation and Recovery Act (42 U.S.C.
~6901 et seq.); the Clean Water Act (33 U.S.C. ~2601 et seq.); the Toxic Substances Control Act
(15 U.S.C. ~9601 et seq.); the Hazardous Materials Transportation Act (49 U.S.C. ~ 1801 et seq.);
or under any other Environmental Laws;
(ii) Those substances included within the definitions of "Extremely Hazardous
Waste," "Hazardous Waste," or "Restricted Hazardous Waste," under ~~25115, 25117 or
25122.7 of the California Health and Safety Code, or is listed or identified pursuant to ~~25140
or 44321 of the California Health and Safety Code;
(iii) Those substances included within the definitions of "Hazardous Material,"
"Hazardous Substance," "Hazardous Waste," "Toxic Air Contaminant" or "Medical Waste"
under ~~25281, 25316, 25501, 25501.1, 25023.2 or 39655 of the California Health and Safety
Code;
(iv) Those substances included within the definitions of "Oil" or a "Hazardous
Substance" listed or identified pursuant to ~311 of the Federal Water Pollution Control Act, 33
U.S.C. ~1321, as well as any other hydrocarbonic substance or by-product;
(v) Those substances included within the definitions of "Hazardous Waste,"
Extremely Hazardous Waste" or an "Acutely Hazardous Waste" pursuant to Chapter II of Title
22 of the California Code of Regulations;
(vi) Those substances listed by the State of California as a chemical known by the
State to cause cancer or reproductive toxicity pursuant to ~25249.9(a) of the California Health
and Safety Code;
(vii) Any material which due to its characteristics or interaction with one or more other
substances, chemical compounds, or mixtures, damages or threatens to damage, health, safety, or
the environment, or is required by any law or public agency to be remediated, including
remediation which such law or public agency requires in order for the property to be put to any
lawful purpose;
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(viii) Any material whose presence would require remediation pursuant to the
guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual,
whether or not the presence of such material resulted from a leaking underground fuel tank;
(ix) Pesticides regulated under the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.c. 9136 et seq.;
(x) Asbestos, PCBs, and other substances regulated under the Toxic Substances
Control Act, 15 U.S.c. 92601 et seq.;
(xi) Any radioactive material including, without limitation, any "source material,"
"special nuclear material," "by-product material," "low-level wastes," "high-level radioactive
waste," "spent nuclear fuel" or "transuranic waste" and any other radioactive materials or
radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.c.
992011 et seq., the Nuclear Waste Policy Act, 42 U.S.C. gglOIOI et seq., or pursuant to the
California Radiation Control Law, California Health and Safety Code gg25800 et seq.;
(xii) Any material regulated under the Occupational Safety and Health Act, 29 U .S.C.
9g651 et seq., or the California Occupational Safety and Health Act, California Labor Code
996300 et seq.;
(xiii) Any material regulated under the Clean Air Act, 42 U.S.C. gg740 I et seq. or
pursuant to Division 26 of the California Health and Safety Code;
(xiv) Those substances listed in the United States Department of Transportation Table
(49 CFR Part 172.10 I), or by the Environmental Protection Agency, or any successor agency, as
hazardous substances (40 CFR Part 302);
(xv) Other substances, materials, and wastes that are or become regulated or classified
as hazardous or toxic under federal, state or local laws or regulations; and
(xvi) Any material, waste or substance that is:
(a) a petroleum or refined petroleum product;
(b) asbestos;
(c) polychlorinated biphenyl;
(d) designated as a hazardous substance pursuant to 33 U.S.C. 91321 or listed
pursuant to 33 U.S.C. g1317;
(e) a flammable explosive; or
(t) a radioactive material.
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"Improvements" means the one hundred forty-two (141) Affordable Units, two (2)
managers' units and community room to be constructed by Borrower on the Property.
"Loan Documents" means collectively, this Agreement, the Agency Deed of Trust and
the Agency Note.
"Low-Mod Funds" means the Agency's Low and Moderate Income Housing Fund
established pursuant to Section 33334.3 of the California Health and Safety Code.
"Partnership Agreement" means Borrower's Second Amended and Restated Agreement
of Limited Partnership (as amended from time to time).
"Placed in Service" means the date the Improvements are placed in service for purposes
of26 U.S.C. 942.
"Project Area" means all Chula Vista Redevelopment Project Areas.
"Property" means that certain real property generally located at Discovery Falls Road and
Crossroads Street in Chula Vista, California, more particularly described on the Property Legal
Description attached hereto as Exhibit "A".
"Shea C Bond Loan" means a construction and permanent financing loan to Borrower
from Winding Walk Residential, LLC, in the original principal amount of $2,752,000.00,
utilizing proceeds from the Housing Authority of the City of Chula Vista Multifamily Housing
Revenue Bonds (The Landings II Apartments), Subordinate Series 20IOA-3.
"Shea Conventional Loan" means a construction and permanent financing loan to
Borrower from Winding Walk Residential, LLC, in the original principal amount of
$10,077,998.00.
"Statement of Insurance Requirements" means the statement of insurance requirements,
in a form and format approved by the Agency in the Agency's sole discretion, which shall be
executed and delivered by Borrower to the Agency concurrently herewith. The Statement of
Insurance Requirements is hereby incorporated herein by reference.
'Tax Credit Equity" means not less than $14,608,176.00 of four percent (4%) tax credit
equity to be obtained by Borrower.
"TCAC Regulatory Agreement" mean any regulatory agreement or declaration of
covenants, conditions and restrictions restricting or otherwise regulating the use of the Property,
including without limitation the rent and/or occupancy of dwelling units thereon, that is entered
into by Borrower as a condition of receiving the Tax Credit Equity or otherwise with respect to
the Tax Credit Equity.
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ARTICLE I.
Loan Provisions - General
Section - 1.1 Pennanent Financing Loan and Authorization. Agency will fund the Agency
Loan to Borrower according to and upon the tenns and conditions set forth below. The proceeds
of the Agency Loan shall be used by Borrower solely for pennanently financing the Affordable
Units. This Agreement and the Agency Loan are in furtherance of and authorized by the
provisions of the California Community Redevelopment Law (California Health and Safety
Code Section 33000 et seq.), pursuant to which: (i) the Agency has deposited funds derived from
the Project Area into the Agency's Low and Moderate Income Housing Fund; (ii) the Agency
has found that the use of the Property and the Improvements pursuant to this Agreement will be
of benefit to the City; and (iii) the Affordable Units are to be used exclusively to provide housing
for "very low income and lower income families" as defined in the Sections 50105 and 50079.5
of the California Health & Safety Code, respectively, at "affordable rents" as defined by Section
50053(a) of the California Health & Safety Code.
(a) Loan Amount. The original principal amount of the Agency Loan shall not
exceed Four Million and No/IOO Dollars ($4,000,000.00). Provided, however, in the event the
aggregate amount of the various pennanent financing sources exceeds the uses of funds for
construction of the Improvements as evidenced by the final "Cost Certification" (which excess
amount shall be referred the "Excess Funds"), then (i) if the Agency Loan has not been fully
disbursed, the amount of the Agency Loan to be disbursed shall be reduced by an amount equal
to the Excess Funds; (ii) if the Excess Funds exceed the undisbursed amount of the Agency
Loan, then the amount of the Agency Loan to be disbursed shall be reduced by an amount equal
to the amount by which the Excess Funds exceed the undisbursed amount of the Agency Loan
and Borrower shall immediately use the remaining amount of the Excess Funds to pay down the
Agency Loan; or (iii) if the Agency Loan has been fully disbursed, Borrower shall immediately
use the Excess Funds to pay down the Agency Loan. Borrower shall provide to the Agency
copies of the preliminary cost certification and the final Cost Certification prepared by an
independent accounting finn not later than three (3) days after the same are completed and
received by Borrower.
(b) Promissory Note.
(1) The Agency Loan shall be evidenced by the Agency Note executed by
Borrower, in favor of Agency, in the amount of Four Million and NolIOO Dollars
($4,000,000.00). The Agency Loan and the Agency Note shall be a nonrecourse obligation of
Borrower (except with respect to Paragraph 9(b) of the Agency Note).
(2) The Agency Note shall be amortized over 25 years beginning on the date
the Agency Loan is funded and shall bear interest at three and six tenths percent (3.6%) per
annum beginning on the date the Agency Loan is funded. The principal and interest may be
prepaid in whole or in part at any time and from time to time, without notice or penalty. Any
prepayment shall be allocated first to unpaid interest and then to principal. Prepayment of the
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Agency Loan shall not in any manner affect any obligation or restriction related to maintaining
the units as "Affordable Units" during the fifty-five (55) year term.
(3) Concurrently with the execution and delivery of this Agreement, the
Agency, Borrower and U.S. Bank National Association are entering into a Subordination
Agreement ("Subordination Agreement"). In the event U.S. Bank National Association invokes
its right to any two-year "Stand Still Period" (as defined in Section 11.1 of the Subordination
Agreement) with respect to a default resulting from the Borrower having insufficient operating
income or operating reserves to pay in-full any installment of principal and/or interest due with
respect to the Agency Loan, then the provisions of this Section 1.1(b)(3) shall apply.
(A) If, prior to the expiration of the two-year "Stand Still Period," the
Borrower brings the Agency Loan current by paying in full of all due and owing principal,
interest and default interest at the rate of 10% per annum from the date of the default, then the
default shall be deemed cured.
(B) If Borrower does not cure the default as set forth in Section
1.1 (b )(3)(A), above, then provided the Borrower pays to the Agency all default interest at the
rate of 10% per annum (commencing on the date each missed payment) on all missed payments,
prior to the expiration of the two-year "Stand Still Period," then the Agency Loan shall be re-
amortized over its remaining term.
(C) Notwithstanding the foregoing, Borrower shall not have the right
to re-instate or re-amortize the Agency Loan, as set forth in Sections 1.1 (b)(3)(A) or (B), above,
unless the default resulted from the Borrower having insufficient operating income or operating
reserves to pay in-full any installment of principal and/or interest due with respect to the Agency
Loan.
(4) Should Borrower agree to or actually sell, convey, transfer, further
encumber or dispose of the Property or any interest in it (except as provided in the Agency
Note), without first obtaining the written consent of the holder of the Agency Note (Le., the
Agency) as required by Section 1.8, then all obligations secured by the Agency Note may be
declared due and payable at the option of Agency. The consent to one transaction of this type
will not constitute a waiver of the right to require consent to future or successive transactions.
The resident tenant restrictions set forth in the Declaration and referenced in Section 1.5 of this
Agreement shall remain in place whether or not Agency approves or disapproves a successor-in-
interest for the term of fifty-five (55) years. Notwithstanding the foregoing, the following shall
not be sales, conveyances, transfers, further encumbrances or dispositions, for purposes of this
Section 1.l(b)(3): (i) the transfer of limited partnership interest in Borrower and the admission of
replacement limited partners of Borrower (neither of which shall require Agency approval); and
(ii) recordation of the Bond Deed of Trust, recordation of the instruments securing the Bond
Loan, recordation of the Bond Regulatory Agreement, recordation of the instruments securing
the Agency Low-Mod Loan, recordation of the TCAC Regulatory Agreement, recordation of the
instruments securing the Shea C Bond Loan, and recordation of the instruments securing the
Shea Conventional Loan
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(5) The parties acknowledge that the Agency Loan is not a purchase money
mortgage as defined in Code of Civil Procedure Section 580b.
Section 1.2 - Security.
(a) Deed of Trust. Borrower shall execute, acknowledge, deliver the Agency Deed of
Trust and cause the Agency Deed of Trust to be recorded upon the close of Escrow as security
for the Agency Loan and Declaration. The Deed of Trust shall be recorded in a position superior
and prior to all encumbrances on the Property, except that the same may be subordinated to the
Bond Deed of Trust, the Bond Regulatory Agreement, the instruments securing the Bond Loan,
the TCAC Regulatory Agreement and the exceptions to title set forth in the Agency Lender
Instructions being executed concurrently herewith. Such subordinations shall be on terms and
conditions acceptable to the Agency in its sole discretion.
(b) Additional Securitv. Borrower shall execute and deliver to Agency such separate
security agreements, UCC-I financing statements, consents or certificates, assignments and other
documents or instruments as Agency may require (the "Security Agreement") and reflecting
security interests in the personalty used in connection with the operation of the Property as
Agency may require. In addition thereto, Borrower shall execute and deliver such security
agreements, and the like, as required by Agency in connection with the Agency Deed of Trust.
Specifically, Borrower agrees that any notice of default and/or copy of any notice of sale will be
mailed to Agency in compliance with Section 2924b of the California Civil Code.
Section 1.3 - Subsequent Financing. Except as set forth in this Agreement, no further loan, deed
of trust, or encumbrance, shall be placed by Borrower upon any portion of the Property or
Improvements, whether by refinancing or otherwise, without first obtaining the express written
consent of Agency, which shall not be unreasonably withheld. Any such unconsented to
financing or refinancing shall constitute a material beach of this Agreement. Further, during any
Agency approved refinancing or subsequent encumbrance, Agency shall be provided AL T A title
insurance or endorsements acceptable to it, at the cost and expense of Borrower. Said written
consent shall be at Agency's sole discretion. Without the express written consent of Agency
such subsequent financing is void.
Section 1.4 - Funding. The Agency Loan is a permanent financing loan and shall not be funded
prior to the date the Improvements are Placed in Service. Agency's obligation to fund the
Agency Loan shall be and is specifically conditioned upon Borrower obtaining the Bond Loan,
Tax Credit Equity, Shea C Bond Loan, Shea Conventional Loan, City Inclusionary Loan, City
HOME Loan, and deferring the Deferred Developer Fee, Agency approving the preliminary title
reports concerning the Property, payment of all taxes now due and payable on the Property,
issuance of an AL T A Lender's policy insuring the Agency Deed of Trust satisfactory to
Agency's Executive Director, satisfaction of all conditions precedent to Agency's obligation to
make the Agency Loan, and satisfaction of those conditions set forth in Section 1.16 of this
Agreement.
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Section 1.5 - Declaration of Covenants and Restrictions. The obligation of Agency to make and
fund the Agency Loan hereunder is subject to the execution, and recordation against the
Property, of the Declaration. The Declaration shall contain the housing payment and income
level restrictions for the one hundred forty-one (141) Affordable Units for a period of fifty-five
(55) years. Rents will provide affordable housing to households earning between fifty percent
(50%) and sixty percent (60%) of area median income as referenced in the Declaration. The
monthly rental rate shall be as set forth in the Declaration. The rents may be subject to
modification annually as set forth in the Declaration. The Declaration shall be recorded in a
position superior and prior to all monetary encumbrances on the Property.
Section 1.6 - No Partnership or Joint Venture. The relationship between Agency and Borrower
created by this Agreement shall not be one of partnership or joint venture, but rather shall be one
of secured lender and borrower.
Section 1.7 - Insurance. Borrower, at its sole cost and expense, shall purchase and maintain
public liability, auto liability and property damage insurance with limits of not less than a project
specific $2,000,000.00 per occurrence, combined single limit and $4,000,000 in the aggregate for
injury to or death of one or more persons and/or property damage arising out of a single accident
or occurrence, insuring against any and all liability of Agency, the City, and their employees,
Borrower, its contractors, employees, agents, subcontractors and its authorized representatives,
arising out of or in connection with Borrower's activities at the Property. All public liability
insurance and property damage insurance shall insure the performance of Borrower of the
indemnity provisions set forth in this Agreement. Further, in all such insurance required to be
purchased and maintained by Borrower, Agency shall be named as an additional insured,
Borrowers coverage to be primary; Liability Additional Insured Endorsement must not exclude
Completed Operations and policy to provide ten year extended reporting period, and the policy
shall contain cross-liability endorsements. Borrower further agrees to purchase and maintain in
full force and affect such policies of worker's compensation insurance as may be required to
cover all employees of Borrower during the term of this Agreement, in a form and amount
acceptable to Agency. Further, Borrower shall maintain policies of insurance set forth in the
Statement of Insurance Requirements throughout the term of the Agency Loan and for the
duration of the Covenants, Conditions and Restrictions. Certificates of insurance acceptable to
Agency shall be filed with Agency prior to funding of the Agency Loan. These insurance
requirements may be waived, in writing, in advance, by the Executive Director of the Agency on
a case by case basis. The insurance requirements contained in this section shall not be construed
to limit the Borrower's obligations under this Agreement, including without limitation any
indemnities.
Section 1.8 - Assignability.
(a) Borrower may not assign any interest in this Agreement and shall not transfer any
interest in the same (whether by assignment or novation) without the prior written approval of
Agency. Any assignment without the prior written consent of Agency shall be voidable, at the
election of Agency. Further, Borrower shall not change general partners nor admit new general
partners without the express written consent of Agency. Provided, however, the transfer of
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limited partnership interest in Borrower and the admission of replacement limited partners of
Borrower, which shall not require Agency approval. Agency shall have full right and authority
to assign all or a part of its rights and delegate all or a part of its duties under this agreement.
(b) Notwithstanding anything to the contrary contained in the Loan Documents, the
removal of Borrower's general partner(s) for cause in accordance with Borrower's Partnership
Agreement, shall not require the consent of the Agency and shall not constitute a default under
any of the Loan Documents or accelerate the maturity of the Agency Loan. If such general
partner is removed, or withdraws in lieu of removal, the Agency shall not unreasonably withhold
its consent to the admission of a substitute general partner.
(c) Notwithstanding anything to the contrary contained in the Loan Documents, the
interests of the Limited Partner shall be freely transferable and any amendment to the Partnership
Agreement to effectuate such transfers shall not require Agency consent.
(d) In addition to the Option and First Right of Refusal to Purchase Real Property
between the Borrower and the Agency of even date herewith, and notwithstanding anything to
the contrary contained in the Loan Documents, the execution and delivery of a purchase option
agreement as contemplated in the Partnership Agreement, shall not constitute a default under the
Loan Documents or accelerate the maturity of the Agency Loan. Provided, however, the
purchase option agreement as contemplated in the Partnership Agreement and the option created
thereby shall at all times be subject and subordinate to the Option and First Right of Refusal to
Purchase Real Property between the Borrower and the Agency of even date herewith. Any
requisite consent of Agency to (i) the exercise of such purchase option agreement by the
optionee thereunder and (ii) the assumption without penalty of the Agency Loan by the optionee
thereunder, and the release of Borrower from such obligations, shall not be unreasonably
withheld. Subject to any such consent requirement, the exercise of the rights under such
purchase option agreement shall not constitute a default or accelerate the maturity of the Agency
Loan.
(e) Except to the extent that changes are permitted by Section l.S(a), (b) and (c),
above, Borrower shall not amend, modify restate, revoke or rescind its certificate of limited
partnership or its partnership agreement without the prior written consent of Agency.
Section 1.9 - General Contractor and Subcontracting. The guaranteed not to exceed construction
contract, entered into by Borrower with the general contractor for construction of the Project
shall be entered into prior to funding of the Agency Loan, and shall be subject to the prior
written approval of the Executive Director of the Agency. Borrower shall be fully responsible to
the Agency for the acts and omissions of Borrower's subcontractors, and of persons either
directly or indirectly employed by Borrower. Borrower shall insert in each subcontract
appropriate provisions requiring compliance with the labor standard provisions of this
Agreement, including without limitation the payment of Federal and State prevailing wages, if
required by law.
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Section 1.1 0 - Borrower Liability. Borrower shall be responsible for all injuries to persons
and/or all damages to real or personal property of the Agency or others, caused by or resulting
from the negligence and/or breach of this Agreement, of Borrower, Borrower's employees,
subcontractors and/or Borrower's agents during construction of or arising out of construction of
the Project and/or the breach of this Agreement. Borrower shall defend and hold harmless and
indemnify the Agency, the City, and all officers and employees of each public agency from all
liabilities, claims, causes of action, demands costs, damages, judgments, expenses and claims
(collectively "Claims") by any third party resulting from the negligence and/or breach of this
Agreement, by Borrower, Borrower's employees, subcontractors and/or Borrower's agents,
arising out of the Project and/or the breach of this Agreement, except those arising from the sole
active negligence or sole willful misconduct of the Agency, the City or their respective agents,
officers and employees. Borrower shall defend any Claims against the Agency and the City, at
the sole cost and expense of Borrower, with counsel of the indemnified party's choosing.
Section 1.11 - Ownership of Materials and Documents. Subject to the rights of senior lenders,
any and all sketches, drawings, tracings, field survey notes, computations, plans, details and
other materials and documents prepared by or on behalf of Borrower pertaining to the Property
shall be the property of Agency upon default by Borrower (to the extent of Borrower's rights in
such documents), and the expiration of all applicable cure period(s), and Borrower shall deliver
such materials and documents to Agency whenever requested to do so by Agency.
Notwithstanding the foregoing, the Agency's rights to the materials delineated in the
immediately preceding sentence shall be subordinate to the rights of the lender making a senior
loan with respect to the same. Subject to the rights of third parties that prepared such
documents, Agency shall have the right to have duplicate copies of such materials and
documents for their file, at the cost and expense of Agency, upon written request even if
Borrower is not in default under the terms of this Agreement.
Section 1.12 - Indemnification.
(a) With respect to any liability, including but not limited to claims asserted,
demands, causes of action, costs, expenses, losses, attorney fees, injuries, or payments for injury
to any person or property, including injury to Borrower's employees, agents, or officer, caused or
claimed to be caused by the acts or omissions of the Borrower, or the Borrower's employees,
agents, and officers, arising out of, arising from, or related to the Agency Loan; the design,
engineering, or construction of the Improvements; Borrower's ownership or operation of the
Property and the Improvements; or any other work or obligations performed involving this
Agreement, the Borrower agrees to defend, indemnify, protect, and hold harmless the Agency,
the City, their respective agents, officers, and employees from and against all liability, losses,
damages, costs or claims, including, but not limited to, claims for injury or death to any person
occurring on the Property and contracts executed by Borrower. Also covered is liability arising
from, connected with, caused by, or claimed to be caused by the active or passive negligent acts
or omissions of the City, its agents, officers, or employees that may be in combination with the
active or passive negligent acts or omissions of the Borrower, its employees, agents or officers,
or any third party. The Borrower's duty to defend, indemnify, protect and hold harmless shall not
include any claims or liabilities arising from the sole negligence or sole willful misconduct of the
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City, its agents, officers or employees. This indemnity provision shall survive the repayment of
the Agency Loan and the term of this Agreement. Notwithstanding anything to the contrary
contained herein, neither Borrower nor any of its partners shall be personally liable for any
indemnification obligation under the Loan Documents to the extent such indemnification would
result in the repayment of principal and/or interest under the Agency Loan.
(b) Borrower further agrees to defend, indemnify, and hold harmless, the Agency, the
City, their respective agents, officers and employees from and against any and all costs,
damages, claims, and liabilities, including reasonable attorney fees, foreseeable or unforeseeable,
directly or indirectly, arising from or related to Hazardous Materials located, used, released, or
otherwise present or alleged to be present, used, or released on the Property, or any violation or
alleged violation of Environmental Laws. This indemnity provision shall extend beyond the
term of this Agreement and obligations hereunder shall remain recourse even after completion of
the construction, timely issuance of certificates of occupancy, and the termination of this
Agreement. Neither Agency, nor the City, has any obligation or liability whatsoever regarding
toxic contamination or Hazardous Materials on the Property. Provided, however, that the
immediately foregoing sentence shall not eliminate any liability of the City or Agency that would
otherwise result from any affirmative negligent act of the City or Agency which directly causes
such toxic contamination or Hazardous Materials to be on the Property.
(c) The Borrower agrees to pay any and all costs the Agency or City incurs to enforce
the indemnity and defense provisions set forth in Section 1.12.
Section 1.13 - Termination. This Agreement and the relationship created herein shall terminate
upon full satisfaction of all of Borrower's obligations, and those of Borrower's successors, if
approved by Agency, under this Agreement. The obligations of Borrower include, but are not
limited to, those obligations arising under the Declaration, the provisions of which shall survive
repayment of the Agency Loan.
Section 1.14 - Defective Work.
(a) Correction. RemovaL or Replacement. If during the term of this Agreement, or
any duration as may be required by law or regulation, the Improvements are discovered to
contain Defective Work, the Borrower shall promptly and in accordance with the Agency's or
City's written instructions and within the reasonable time limits stated therein, either correct the
Defective Work, or if identified during construction, remove it from the site and replace it with
non-defective and conforming work.
(b) Agencv's/CiIY's Right to Correct. If circumstances warrant, including but not
limited to an emergency or Borrower's failure to adhere to section 1.14(a), Agency and/or City
may, subject to the rights of senior lenders, correct, remove, or replace the Defective Work. In
such circumstances, Borrower shall not recover costs associated with the Defective Work and
shall reimburse the Agency and/or City for all their costs, whether direct or indirect, associated
with the correction or removal and replacement.
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(c) No Limitation on other Remedies. Exercise of the remedies for defects pursuant
to this Section shall not limit the remedies the Agency and/or City may pursue under this
Agreement or law.
Section 1.15 - Default bv Borrower.
(a) In the event of a material default by Borrower in the performance of any of the
terms, covenants and conditions contained in this Agreement, the Agency Note, the Agency
Deed of Trust, the Declaration, the Security Agreement or any prior or junior note secured by an
encumbrance on the Property or any portion of it, or any note or deed of trust given in
conjunction herewith, or in the event of the filing of a bankruptcy proceeding by or against
Borrower, all sums disbursed or advanced by Agency shall at the option of Agency immediately
become due and payable and Agency shall have no obligation to disburse any further funds from
said account, or otherwise, and Agency shall be released from any and all obligations to
Borrower under the terms of this Agreement. These remedies shall be in addition to any and all
other rights and remedies available to Agency, either at law or in equity.
(b) If a non-monetary event of default occurs under the terms of this Agreement, the
Agency Note, the Agency Deed of Trust, the Declaration or the Security Agreement, prior to
exercising any remedies hereunder or thereunder, Agency shall give Borrower notice of such
default. If the default is reasonably capable of being cured within thirty (30) calendar days after
such notice is received or deemed received, Borrower shall have such period to effect a cure
prior to exercise of remedies by Agency under this Agreement, the Declaration and the Agency
Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty
(30) days and Borrower, in Agency's sole and absolute discretion, (i) initiates corrective action
within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible,
then Borrower shall have such additional time as Agency, in its sole discretion determines is
reasonably necessary to cure the default prior to exercise of any remedies by Agency. If such
default is not timely cured, then the Agency may proceed with all or any of its rights and
remedies available at law or in equity or as set forth herein, in the Declaration and/or the Agency
Deed of Trust.
(c) In the event of any monetary default by Borrower under the terms of this
Agreement, the Agency Note, the Agency Deed of Trust, the Declaration or the Security
Agreement, Agency shall give Borrower written notice of such default, Borrower shall have
fifteen (15) days from such notice to cure the monetary default. If the default is not timely cured,
Agency may proceed with all rights and remedies under the terms of the Agency Loan or at law.
(d) The default or defective performance by Borrower under the terms of this
Agreement shall not relieve Borrower from any obligation to correct any incomplete, inaccurate,
or defective work at no further cost to Agency.
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(e) Notwithstanding anything to the contrary contained in the Loan Documents, the
Agency agrees that any cure of any default made or tendered by the Limited Partner shall be
deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if
made or tendered by the Borrower.
(f) The Agency agrees that, notwithstanding its rights to invoke the remedies
permitted by any Loan Document, the Agency shall not, so long as the Limited Partner has a
continuing ownership interest in the Borrower, conduct a foreclosure sale of the Property or
receive a deed-in-lieu of foreclosure, until such time as the Limited Partner has first been given
30 days written notice of such default and has failed, within such 3D-day period to cure such
default; provided, however, that the Agency shall be entitled, during such 3D-day period, to
continue to accelerate the Agency Note and to pursue its remedies.
Section 1.16 - Conditions to Agencv Obligations. The obligation of Agency to make and fund
the Agency Loan is subject to all of the conditions set forth in this Section 1.16:
(a) This Agreement, the Agency Note, Agency Deed of Trust and Declaration, fully
executed by Borrower, shall have been delivered to Agency and/or its designee along with all
other fully executed security documents and instruments provided for herein and/or as required
by Agency. The Declaration and Agency Deed of Trust have been recorded against the Property
and Borrower has provided and delivered to Agency at Borrower's sole expense a standard form
AL TA Lender's Policy of Title Insurance, insuring Agency's security interest in the Property
under the Agency Deed of Trust and in an amount equal to the original principal amount of the
Agency Loan.
(b) Legal counsel representing Borrower shall have delivered to Agency a legal
opinion satisfactory in all respects to Agency's Executive Director in hislher sole discretion,
opining that this Agreement, the Agency Note, the Declaration, the Agency Deed of Trust and
the Security Agreement represent obligations which are valid, binding upon and enforceable
against Borrower (subject to (i) bankruptcy, insolvency or other laws affecting creditors' rights
generally, (ii) application of principles of equity generally, and (iii) laws of the State of
California governing obligations secured by a deed of trust or mortgage).
(c) Borrower shall have strictly complied with, and performed, all terms and
conditions of the documents executed by Borrower in connection with this Agreement and the
Agency Loan.
(d) The City has issued a certificate of occupancy for all of the Property and
Improvements.
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(e) The Agency has approved all financing documents with respect to the Property,
Borrower and Improvements, which shall not be unreasonably withheld.
(f) All of the Tax Credit Equity required to be funded under Borrower's partnership
agreement at such time, shall have been funded or will fund concurrently with funding of the
Agency Loan.
(g) Borrower will have closed (or will close concurrently with closing the Agency
Loan) on the Bond Loan, Shea C Bond Loan, Shea Conventional Loan, City Inclusionary Loan
and City HOME Loan.
(h) The Agency's receipt of lien releases, conditional lien releases, proof of payment
and other documentation reasonably required by Agency (including, without limitation,
documentation required from Borrower's contractor, subcontractors, laborers and material and
equipment suppliers), which may include posting of a surety bond and indemnification from a
title insurance company as set forth in Section 2.8 below.
(i) Agency's approval of the Partnership Agreement.
GJ Agency's approval of an AL T A survey of the Property and the completed
Improvements.
(k) Borrower has paid or caused to be funded an amount into escrow, which is
sufficient to pay for all costs associated with such escrow, including without limitation title fees,
escrow fees and closing costs.
(I) The guaranteed not to exceed construction contract for the work at the Property,
acceptable to the Agency's Executive Director, shall have been executed by the Borrower and
the general contractor who has been selected to do the work.
(m) There are no actions, suits, material claims, legal proceedings, or any other
proceedings affecting the Borrower or any parties affiliated with the Borrower, at law or in
equity before any court, tribunal, government agency, domestic or foreign, which, if adversely
determined, would materially impair the right or ability of Borrower to execute or perform its
obligations under this Agreement or any documents required hereby to be executed by Borrower,
or which would materially adversely affect the financial condition of the Borrower or any parties
affiliated with the Borrower.
(n) No attachment, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization, receivership or other proceedings have been filed or are
pending or threatened against the Borrower or any parties affiliated with Borrower, nor are any
of such proceedings contemplated by Borrower or any parties affiliated with Borrower.
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(0) Such other conditions as Agency shall reasonably request, provided, however,
that no such condition shall change the economic terms of the transactions described herein or
expand the liability of the parties hereunder.
Section 1.17 - Borrower's Representations and Warranties. Borrower represents and warrants to
the Agency that:
(a) Borrower is a validly and lawfully formed limited partnership, and is in good
standing under California law and will remain such for the term of this Agreement.
(b) Execution of this Agreement, the Agency Deed of Trust, the Declaration and all
other documents executed in conjunction herewith have been duly authorized by Borrower's
general partners, and such execution shall not result with the passage of time or the giving of
notice or both in breach of or in acceleration of performance under any contract or document to
which Borrower may be a party.
(c) All required approvals have been obtained in connection with Borrower's
execution of this Agreement, and all related agreements and documents to the effect that no
breach of or acceleration of performance under any agreement or document to which Borrower is
a party will result in such execution and all individuals signing this Agreement for a party which
is a corporation, limited liability company, partnership or other legal entity, or signing under a
power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant
to the Agency that they have the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behalf they are signing.
(d) Funds advanced by Agency pursuant to the Agency Loan are advanced wholly or
in part for the benefit of Borrower.
(e) The principal and interest due and payable under the Agency Loan are subject to
the terms and conditions of this Agreement, any other security documents or instruments
provided for herein.
(f) Borrower agrees to use said funds solely for the permanent financing of the
Property and Improvements.
(g) Borrower shall comply with the terms of the Declaration at all times during the
55-year term of the Declaration.
(h) Borrower acknowledges, that the defective performance by Borrower under the
terms of this Agreement shall not relieve Borrower from any obligation to correct any
incomplete, inaccurate, or defective work at no further cost to Agency, when such inaccuracies,
defects and incompletions are due to the fault of Borrower, including its subcontractors, agents,
partners, joint venturers and employees.
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Section 1.18 Affordabilitv Provision.
(a) Execution of Covenants, Conditions and Restrictions. Borrower agrees to execute
the Declaration and to cause it to be recorded, assuring compliance with the affordability
provisions of this Agreement. Borrower agrees to obtain any and all subordination agreements,
if any, necessary to insure that the Declaration is an encumbrance on the Property prior to all
other encumbrances, liens and taxes. Such subordinations shall be on terms and conditions
acceptable to the Executive Director of the Agency in hisfher sole discretion. The Declaration
shall be binding and enforceable against all heirs, successors and assigns of Borrower.
(b) Term of Affordabilitv. Borrower agrees that the Property shall remain affordable
and subject to the Declaration for not less than fifty-five (55) years from the effective date as
referenced in the Declaration.
(c) Cross-Default With the Declaration. Borrower and its successors in interest to the
Property shall strictly comply with all of the terms and conditions of the Declaration. Any
default under the Declaration shall be a default under this Agreement, the Agency Note and the
Agency Deed of Trust.
Section 1.19 - Agencv Aooroval of Prooertv Manager. At all times during the term of the
Declaration, if the Agency serves a thirty (30) day written notice of deficiencies in the property
management for the Property, or default under the Declaration or any document executed in
conjunction herewith, which deficiencies or default have not been rectified by Borrower, within
the thirty (30) day period (unless such deficiency or default is not capable of being cured within
such thirty (30) day period, then such amount of time as Agency determines is needed, not to
exceed one hundred twenty (120) days, provided Borrower commences cure within such thirty
(30) day period and continues to diligently pursue cure), then, Agency shall have the right, but
not the duty, in its sole discretion: (i) to require the retention of a professional property
management firm to manage the Property; (ii) to approve, in advance and in writing, the
retention of any such property management firm, including the terms of the contract governing
such retention; and (iii) to require Borrower to terminate any such property management firm,
provided that such termination shall comply with the termination provisions of the management
contract in question. Borrower shall cooperate with Agency to effectuate Agency's rights.
Section 1.20 - Usurv, If a court of competent jurisdiction determines, by way of final
unappealable order or judgment, that the interest rate charged under the Agency Note is usurious,
then such rate shall automatically and retroactively be reduced to the maximum rate allowed
under applicable law.
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Section 1.21 - Remedies.
(a) Contract Governed bv Laws of the State of California. This Agreement, its
performance, and all suits and special proceedings under this Agreement, shall be constituted in
accordance with the laws of the State of California and Federal law, to the extent applicable. In
any action, special proceeding, or other proceeding that may be brought arising out of, under or
because of this Agreement, the laws of the State of California and the United States, to the extent
applicable, shall govern to the exclusion of the law of any other forum, without regard to the
jurisdiction in which the action or special proceeding may be instituted.
(b) Standing. Equitable Remedies; Cumulative Remedies. Borrower expressly agrees
and declares that Agency or any successor or public agency shall be the proper party and shall
have standing to initiate and pursue any and all actions or proceedings, at law or in equity,
including but not limited to foreclosure under any security instrument securing performance
hereunder, to enforce the provisions hereof and/or to recover damages for any default hereunder,
notwithstanding the fact that such damages or the detriment arising from such a default may have
actually been suffered by some other person or by the public at large. Further, Borrower
expressly agrees that receivership, injunctive relief and specific performance are proper pre-trial
and/or post-trial remedies hereunder, and that, upon any default, a receiver may be appointed by
the court to take control of the Property and to assure compliance with this Agreement. Nothing
in this subparagraph, and no recovery to Agency, shall restrict or limit the rights or remedies of
persons or entities other than Agency, including but not limited to the City, against Borrower in
connection with the same or related acts by Borrower. The remedies set forth in this Section are
cumulative and not mutually exclusive, except the extent that their award is specifically
determined to be duplicative by final order of a court of competent jurisdiction.
(c) Remedies at Law for Breach of Ooerating Restrictions. In the event of any
material default under the Declaration and/or Section 1.16 and 1.17 hereofregarding restrictions
on the operation and the transfer of the Property, Agency shall be entitled to, in addition to any
and all other remedies available at law or in equity: (i) declare the Agency Loan to be all due and
payable immediately and in full; and (ii) recover compensatory damages. If the default in
question involves the violation of Section 1.17, above, including without limitation a default
under the Declaration, the amount of such compensatory damages shall be the product of
multiplying (A) the number of months that the default in question has continued until the time of
trial by (B) the result of subtracting the rents properly chargeable hereunder for the Affordable
Unites) in question from the amount actually charged. Borrower and Agency agree that it would
be extremely difficult or impracticable to ascertain the precise amount of actual damages
accruing to Agency as a result of such a default and that the foregoing formula is a fair and
reasonable method of approximating such damages. Agency shall be entitled to seek and to
recover damages in separate actions for successive, separate breaches which may occur. Further,
interest shall accrue on the amount of such damages from the date of the breach in question at the
rate of ten percent (10%) per annum or the maximum rate than allowed by law, whichever is
less. Nothing in this section shall preclude the award of exemplary damages as allowed by law.
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(d) Expert Witness, Attornevs' Fees, and Costs, The parties agree that the prevailing
party in litigation for the breach and/or interpretation and/or enforcement of the terms of this
Agreement shall be entitled to their expert witness fees, if any, as part of their costs of suit, and
attorneys' fees as may be awarded by the court, pursuant to California Code of Civil Procedure
("CCP") Section 1 033.5 and any other applicable provisions of California law, including,
without limitation, the provisions of CCP Section 998.
Section 1.22 - Management Fee. The amount of management fees paid by Borrower with
respect to the Property shall be subject to the annual approval of Agency.
Section 1.23 - Operating and Replacement Reserves. Borrower shall, during the time of the term
of the Declaration, maintain operating and replacement reserves approved by Agency. Failure to
maintain such reserves shall constitute a material default under the terms of this Agreement.
Borrower shall maintain an operating reserve in accordance with the provisions of Borrower's
partnership agreement, failure to do so shall be a material breach of this Agreement. Each year
during the term of the Declaration, Borrower shall set aside a reserve for replacements in an
account separate from all other funds of Borrower. Such replacement reserve shall be not less
than $75,000.00 per year beginning with the first calendar year after the Improvements are
Placed in Service and shall increase by three percent (3%) each year thereafter. An amount
equal to not less than six (6) months of operating expenses for the Property shall initially be set
aside in an account separate from all other funds of Borrower as an operating reserve. This
operating reserve amount is subject to revision upward as determined by the Executive Director
of the Agency, annually, based upon an increase in the consumer price index for the San Diego
Metropolitan Area. The operating and replacement reserves shall be used for payment of
unbudgeted and/or unforeseen expenses in the operation and maintenance of the Property and
Improvements. No disbursements from the operating reserve or replacement accounts shall be
made without the express written consent of the Executive Director of the Agency, or designee.
Borrower shall account to Agency for any monies expended from the operating reserves and/or
replacement accounts, in such form as approved by Agency.
Section 1.24 - Completion of Construction. All construction of the Improvements, as approved
by Agency, shall be completed by Borrower to the satisfaction of Agency and Placed in Service
as that term is used in the Internal Revenue Code, on or before December 31, 20 II. Time is of
the essence in the completion of the Improvements; failure to comply with these requirements
shall constitute a material default under the terms of this Agreement. Completion of the
Improvements shall occur upon the filing or the issuance by the building official of the City of a
temporary Certificate of Occupancy for all units at the Property.
Section 1.25 - Removal of Managing General Partner bv the Agencv. At all times that any
portion of the Agency Loan remains unpaid and outstanding and/or the Declaration is in force
and effect, and the Agency has served a ten (10) day written notice of default under this
Agreement, the Declaration, and/or any other document executed by Borrower with respect to
the Agency Loan or the Property, which default has not been rectified by Borrower, within the
ten (10) day period (unless such default is not capable of being cured within such ten (10) day
period, then such amount of time as Agency determines is needed, not to exceed ninety (90)
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additional days, provided Borrower commences cure within the original ten (10) day period and
continues to diligently pursue cure), then, Agency shall have the right, but not the duty, in
Agency's sole discretion: (i) to require the removal of the Managing General Partner of
Borrower and the termination of the Managing General Partner's interest in the Borrower; and
(ii) to require that Borrower admit a replacement Managing General Partner, acceptable to the
Agency in its sole discretion. Borrower shall cooperate with Agency to effectuate Agency's
rights.
ARTICLE II
Specific Loan Provisions
Section 2.1 - Conditions to Agencv Obligations and Borrower Representations and Warranties.
(a) Interest of Current or Former Members. Officers or Emplovees. Borrower
represents and warrants that no member, officer, or employee of Borrower, no member of the
governing body of the locality in which Agency was activated, and no other public official of
such locality or localities who exercises any functions or responsibilities with respect to this
Agreement, shall, during his or her tenure, or for one year thereafter, have any interest direct or
indirect, in this Agreement or the proceeds thereof. Any violation of this section may, at the
option of Agency, result in unilateral and immediate termination of this Agreement by Agency.
(b) Unsecured Environmental Indemnitv. Borrower shall enter into an Unsecured
Environmental Indemnity Agreement, as approved by Agency, in favor of Agency.
(c) Title Policv. Borrower, shall, at its sole cost and expense, obtain an AL TA
lender's policy naming Agency as a named insured, and insuring that Agency's interest is subject
to no superior liens, encumbrances, special assessments or taxes, except for the Bond Deed of
Trust, the instruments securing the Bond Loan, the Bond Regulatory Agreement, the TCAC
Regulatory Agreement and the exceptions to title set forth in the Agency Lender Instructions
being executed concurrently herewith.
(d) Construction Loan and Contract. Agency shall be entitled to review, inspect and
approve, without liability, all of the construction being performed at the Property. All
construction shall be performed in accordance with the plans and specifications approved by the
Agency in accordance with Section 2.3 ofthis Agreement, without liability to Agency for review
and observation of the construction. Agency approval shall be understood to be general approval
only, and shall not relieve Borrower or contractor of the responsibility to design, engineer, and
construct the Improvements in accordance with all applicable laws, codes, regulations, and good
design, construction, and engineering practice. Any deficiencies in construction shall be
corrected by the Contractor, and/or Borrower, upon written notice from Agency to Borrower,
prior to any additional funding of this Loan, at Borrower's expense and at no cost to the Agency
or City.
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(e) Housing Ouality Standards. Borrower represents and warrants that Affordable
Units shall be maintained, at all times during the term of the Agreement, in complete compliance
with all housing quality standards contained within 24 CFR ~92.251, regardless of whether such
section would apply to the Property. Further, Borrower warrants that all construction shall meet
or exceed the applicable local codes and construction standards, including zoning and building
codes of the City as well as the provisions of the Model Energy Code published by the Council
of American Building Officials. Borrower hereby consents to periodic inspection by Agency's
designated inspectors and/or designees during regular business hours, including the Code
Enforcement Agents of the City, to assure compliance with said zoning, building codes,
regulations, and housing quality standards.
(f) Approval of Agencv Disclosure Statement. This Agreement is subject to approval
by Agency's Executive Director of the executed disclosure statements of Borrower. Agency's
Executive Director may, in his/her sole discretion, disapprove of said disclosure statement on or
before recordation of the Agency Deed of Trust. In the event of such disapproval, this
Agreement shall be terminated and of no further force and effect.
(g) Records and Reports. Each year during the term of the Declaration, Borrower
shall supply Agency with: (i) a certified rent roll on January 30 for all tenants occupying the
Affordable Units as of the immediately preceding December 31; and (ii) a certified rent roll on
July 30 for all tenants occupying the Affordable Units as of the immediately preceding June 30.
Borrower shall supply Agency, annually (after completion of the Improvements) not later than
April 15, for the immediately preceding calendar year, with such records and reports as are
required and are requested by Agency. The records and reports include, but are not limited to the
following:
(I) Amount of funds expended pursuant to this Agreement;
(2) Eligible Tenant information, including yearly income verifications;
(3) Housing payments charged to resident tenants, to the extent applicable;
(4) On-site inspection results;
(5) Affirmative marketing records;
(6) Insurance policies and notices;
(7) Equal Employment Opportunity and Fair Housing records;
(8) Labor costs and records;
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(9) An audited income and expense statement and balance sheets for
Borrower;
(10) An audited Income and expense statement and balance sheets for the
Property;
(II) A Management Plan for the calendar year in which the report is prepared
showing anticipated rental income, other income, expenses, anticipated
repairs and replacements to the Improvements, timing of such repairs and
replacements, insurance maintained with respect to the Property, and such
other matters as Agency shall require, in its sole discretion;
(12) Federal and State income tax returns for the calendar year, ending on the
preceding December 31 st;
(13) Annual analysis ofreserves for repair and replacement;
(14) Annual certification and representation regarding status of all loans,
encumbrances and taxes;
(15) Annual statement regarding condition of the Property and disclosing any
known defects;
(16) Such other and further information and records as Agency shall request in
writing from Borrower.
Time is of the essence in supplying each and every report required to be supplied to
Agency. The parties agree that a fee of$25.00 per day shall be paid by Borrower to Agency for
each day that each report is delinquent. The parties agree that multiple fees may be charged at
anyone time, depending upon the number ofreport(s) and/or information that is delinquent. The
parties agree that a fee of $25.00 per day, per report and/or information is a reasonable
estimation of the damages that will accrue to Agency as a result of the failure of Borrower to
timely submit the required information and/or reports and that said fees shall be treated as
liquidated damages by the parties, in anticipation of the damages that will be incurred by Agency
as a result of a breach by Borrower. The parties further agree that it would be difficult, if not
impossible, to determine the exact actual amount of damages suffered by Agency in the event of
a breach by Borrower in the reporting requirements of this Agreement, including, but not limited
to, Section 2.1 (I) and Section 1.17( d). Notwithstanding the foregoing or anything to the contrary
contained herein, Agency shall give Borrower prior written notice of any report and/or
information that Borrower has failed to provide Agency pursuant to this Section 2.1 (i) and
Borrower shall have ten (10) business days to provide such report and/or information to Agency
prior to the assessment of any liquidated damages.
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(h) Monitoring of Activities. Borrower agrees to allow Agency and the Agency's
agents reasonable access to review and inspect Borrower's activities under this Agreement as
Agency shall require to perform its monitoring duties. Agency shall monitor Borrower's
activities without liability for said inspection and review.
(i) Nondiscrimination Covenants. Borrower covenants by and for itself and any
successors in interest that there shall be no discrimination against or segregation of, any person
or group of persons on the basis of race, color, creed, religion, sex, sexual orientation, marital
status, national origin, ancestry, familial status, source of income or disability of any person in
the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall
Borrower or any person claiming under or through it establish or permit any such practice or
practices of discrimination or segregation of any person or group of persons on account of any
basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (P) of
Section 12955, and Section 12955.2 of the Government Code, with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the
Property. The foregoing covenants shall run with the land. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or nonsegregation
clauses:
(1) Deeds. In deeds "The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of race,
color, religion, sex, sexual orientation, disability, medical condition, familial status, source of
income, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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, sub lessees or vendees in the land herein conveyed. The foregoing
covenants shall run with the land."
(2) Leases. In leases 'The lessee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this lease is made
and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, religion, sex, sexual orientation,
disability, medical condition, familial status, source of income, marital status,
national origin or ancestry in the leasing, subleasing, renting, transferring, use,
occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself,
or any person claiming under or through it, establish or permit 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 leased."
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(3) Contracts. In contracts for the rental, lease or sale of the Property or any
dwelling unit "There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, religion, sex, sexual orientation, disability, medical condition,
familial status, source of income, marital status, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee 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, sub lessees or vendees of the land."
OJ Effect of Violation of the Terms and Provisions of this Agreement After
Completion of Construction. Agency is deemed the beneficiary of the terms and provisions of
this Agreement and of the covenants running with the land, for and in its own right and for the
purposes of protecting the interests of the community and other parties, public or private, in
whose favor and for whose benefit this Agreement and the covenants running with the land have
been provided, without regard to whether Agency has been, remains or is an owner of any land
or interest therein in the Property. Agency shall have the right, if this Agreement or its
covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits
at law or in equity or other proper proceedings to enforce the curing of such breaches to which it
or any other beneficiaries of this Agreement and covenants may be entitled.
(k) Equal Opportunity and Fair Housing Programs. During the term of this
Agreement, Borrower agrees as follows:
(I) Borrower will not discriminate against any employee, person, or applicant
for employment and/or housing because of race, age, sexual orientation, marital status, color,
religion, sex, handicap, or national origin. Borrower will take affirmative action to ensure that
applicants are employed and/or are housed, and that employees or applicants are treated during
employment and/or housing, without regard to their race, age, sexual orientation, marital status,
color, religion, sex, handicap, or national origin. Such action shall include, but is not limited to
the following: employment, upgrading, demotion, or termination; rates of payor other forms of
compensation; and selection for training, including apprenticeship. Borrower agrees to post in
conspicuous places, available to employees and applicants for employment, notices to be
provided by Agency setting forth the provisions of this nondiscrimination clause.
(2) Borrower will, in all solicitations or advertisements for employees and
housing placed by on or behalf of Borrower, state that all qualified applicants will receive
consideration for employment without regard to race, age, sexual orientation, marital status,
color, religion, sex, handicap, or national origin.
(3) Borrower will cause the foregoing provIsIons to be inserted in all
subcontracts for any work covered by this Agreement so that such provisions will be binding
upon each subcontractor, provided that the foregoing provision shall not apply to contracts or
subcontracts for standard commercial supplies of raw materials.
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(4) Borrower hereby agrees to comply with the Title VII of the Civil Rights
Act of 1964, as amended, the California Fair Employment Practices Act, and any other
applicable Federal and State laws and regulations.
(5) All activities carried out by Borrower and/or agents of Borrower shall be
in accordance with the requirements of the Federal Fair Housing Act. The Fair Housing
Amendments Act of 1988 became effective on March 12, 1989. The Fair Housing Amendments
Act of 1988 and Title VIII of the Civil Rights Act of 1968, taken together, constitute The Fair
Housing Act. The Act provides protection against the following discriminatory housing
practices if they are based on race, sex, religion, color, handicap, familial status, or national
origin: denying or refusing to rent housing, denying or refusing to sell housing, treating
differently applicants for housing, treating residents differently in connection with terms and
conditions, advertising a discriminatory housing preference or limitation, providing false
information about the availability of housing, harassing, coercing or intimidating people from
enjoying or exercising their rights under the Act, blockbusting for profit, persuading owner to
sell or rent housing by telling them that people of a particular race, religion, etc. are moving into
the neighborhood, imposing different terms for loans for purchasing, constructing, improving,
repairing, or maintaining a home, or loans secured by housing; denying use or participation in
real estate services, e.g., brokers' organizations, multiple listing services, etc.
The Fair Housing Act gives HUD the authority to hold administrative
hearings unless one of the parties elects to have the case heard in U.S. District Court and to issue
subpoenas. Both civil and criminal penalties are provided. The Fair Housing Act also provides
protection for people with disabilities, and proscribes those conditions under which senior citizen
housing is exempt from the prohibitions based on familial status.
The following State of California Laws also govern housing
discrimination: Fair Employment and Housing Act, Unruh Civil Rights Act of 1959, Ralph Civil
Rights Act of 1976, and Civil Code Section 54.1.
(1) Flood Insurance. Borrower represents, warrants, and certifies, that no portion of
the Property is located within a Flood Plain or Flood Hazard Zone or Area, as indicated on a
FEMA Map; and that no part of the Property is located within a community participating in the
National Flood Insurance Program.
(m) Accessibility Standards. Borrower represents and warrants that Borrower will
comply with all federal, state and local requirements and regulations concerning access to the
units by the disabled and handicapped persons.
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Section 2.2 - Architectural and Design Review. Prior to obtaining building, land development,
public and/or private improvement, subdivision and any other permits for construction and/or
development of the Property and Improvements, or any part thereof, Borrower shall submit plans
for the review and approval of Agency, which approval shall not be unreasonably withheld or
delayed. In the event, ofrejection or disapproval of the plans, Borrower shall cause the design to
be altered to address the concerns of Agency and shall thereafter resubmit the plans for review
and approval and the process detailed above begin anew. Agency approval shall be understood
to be general approval only, and shall not relieve Borrower of the responsibility to design,
engineer, and construct the Improvements in accordance with all applicable laws, codes,
regulations, and good design, construction, and engineering practice. Any deficiencies or defects
shall be corrected at Borrower's cost and expense and without any cost to the City or Agency.
Section 2.3 - Commencement of Construction and Compliance with Plans and Specifications.
(a) Completion Deadline. Borrower, following recordation of the Agency Deed of
Trust and the consummation of the loan, will promptly commence construction of said
improvements and continue such construction diligently and without delay, in a good and
workmanlike manner. Borrower will complete such improvements in accordance with the plans
and specifications approved by Agency ("Plans and Specifications"), including any additional
specifications prescribed by Agency, and in compliance with all requirements of governmental
authorities having or asserting jurisdiction. Said construction shall be completed on or before
December 31, 201 I, as referenced in Section 1.24 of this Agreement.
(b) No Material Changes. Borrower shall not make any changes in the Plans and
Specifications without Agency's prior written consent if such change: (i) constitutes a material
change in the building material or equipment specifications, or in the architectural or structural
design, value or quality of the Improvements; or (ii) would adversely affect the structural
integrity, quality of building materials, or overall efficiency of operating systems of the
Improvements. Without limiting the above, Agency agrees that Borrower may make minor
changes in the Plans and Specifications without Agency's prior written consent, provided that
such changes do not violate any of the conditions specified herein. Borrower shall at all times
maintain, for inspection by Agency, a full set of working drawings of the Improvements.
(c) Submission of Documents Related to Changes. Borrower shall submit any
proposed change to the Plans and Specifications to the Agency at least ten (10) days prior to the
commencement of construction relating to such proposed change whether or not such change is
subject to Agency's consent. Requests for any change that requires consent shall be accompanied
by working drawings and a written description of the proposed change, submitted on a change
order form acceptable to Agency, signed by Borrower and, if required by Agency, also signed by
the architect and the contractor.
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Section 2.4 - No Purchase Under Conditional Sales Agreements, Etc. Except for leased cable
and laundry equipment, no supplies, materials, equipment, fixtures, carpets, appliances, or any
part of said improvements shall be purchased or installed under any conditional sales agreement,
lease or under any other arrangement wherein the right is reserved or accrues to anyone to
remove or to repossess any such items. It is expressly agreed that all such items shall be part of
the Property.
Section 2.5 - Securitv Agreement. Borrower hereby grants to Agency a security interest in all
supplies, materials, fixtures, carpets, appliances, furniture or equipment now or hereafter located
on said Property, together with all proceeds thereof, including insurance proceeds paid or
payable as the result of any loss, injury or damage of the foregoing collateral, whether or not
Agency is named beneficiary under any such insurance. Upon request, from time to time,
Borrower will furnish Agency with an inventory of such collateral. Nothing contained in this
Section 2.5 shall affect the provisions of Section 2.6.
Section 2,6 - Stoppage of Work bv Agencv. Upon 24 hours notice, except in the event of an
emergency when no such notice shall be required), Agency or its agents shall have the right to
enter upon said real property and the Improvements during the period of construction. If in the
opinion of the Agency, the work of construction is not in material conformance with the plans
and specifications, the Agency shall have the right to order the replacement of any unsatisfactory
work theretofore incorporated in said improvements, and to instruct fund control to withhold all
disbursements from the accounts until it is satisfied with the work. If the work is not made
satisfactory to Agency, in its sole discretion, within fifteen (15) calendar days from the date of
stoppage by Agency, such shall constitute a default hereunder. If any unsatisfactory work is
such that it is not reasonably capable of being cured within fifteen (I5) calendar days and
Borrower, in Agency's sole discretion, (i) initiates corrective action within said period, and (ii)
diligently and in good faith works to correct the unsatisfactory work as soon as possible, then
Borrower shall have such additional time as Agency determines, in its sole discretion, is
reasonably necessary to cure the unsatisfactory work prior to exercise of any remedies by
Agency.
Section 2.7 - Cessation of Work, Completion bv Agencv. Should the work of constructing the
improvements cease, and continues for a period of thirty (30) consecutive days, or should said
work for any reason whatsoever not progress continuously in a manner satisfactory to Agency, in
its sole discretion, then Agency may, at its option and without notice, declare Borrower to be in
default hereunder, and Agency may thereupon, should it so elect, take possession of said
property and let contracts for the completion of said improvements and pay the cost thereof, plus
a fee of fifteen percent (15%) for supervision of construction, disbursing all or any part of the
loan for such purposes; and should the cost of completing said improvements plus such fee
exceed the undisbursed balance of the loan, then the amount of such excess may be expended by
Agency, in which event such amount shall be considered an additional loan to Borrower, and the
repayment thereof, together with interest thereon at the rate provided in Agency Note, shall be
secured by the Agency Deed of Trust and shall be repaid within thirty (30) days after the
completion of said improvements, and Borrower agrees to pay the same; Borrower further
authorizes Agency at its option at any time, upon a default by any contractor under any contract
30
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in connection with construction of the Improvements which is not cured within thirty (30) days
following notice to Borrower, either in its own name or in the name of Borrower, to do any act
or thing necessary or expedient in the opinion of Agency to secure the performance of
construction contracts and assure the completion of construction of the improvements
substantially in accordance with the plans and specifications, disbursing all or any part of the
loan funds for such purposes. In addition to the specific rights and remedies hereinabove
mentioned, Agency shall have the right to avail itself of any other rights or remedies to which it
may be entitled under any existing law or laws.
Section 2.8 - Mechanic's Liens and Notices to Withhold. Borrower shall use its best efforts to
prevent any lien or stop notice from being place on the Improvements or Property. If a claim of
lien or stop work notice is given or recorded affecting the Property or Improvements, the
Borrower shall within thirty (30) calendar days of such recording or service: (i) pay and
discharge same; (ii) effect a release thereof by recording and delivering to Agency a surety bond
in sufficient form and amount; or (iii) provide Agency with indemnification from a title
insurance company reasonably acceptable to Agency against such lien or other assurance which
the Agency, in its sole discretion, deems to be satisfactory for the payment of such lien or stop
notice and for the full and continuous protection of Agency from the effect of such lien or notice.
In the event of the filing with Agency of a notice to withhold or the recording of a mechanic's
lien pursuant to Division 3, Part 4, Title 15 of the Civil Code of the State of California, Agency
may summarily refuse to honor any requests for payment pursuant to this Agreement. In the
event Borrower fails to furnish Agency with a bond causing such notice or lien to be released (or
alternatively issuance of a title policy or endorsement in the full amount of the Agency Loan,
which title policy or endorsement excludes such lien as an exception to title) within thirty (30)
days after the filing or recording thereof, such failure shall at the option of Agency constitute a
default under the terms of this Agreement.
Section 2.9 - Involvement of Agencv in Legal Proceedings. Agency shall have the right to
commence, to appear in, or to defend any action or proceeding purporting to affect the rights or
duties of the parties hereunder or the payment of any funds in connection with this Agency Loan
and to payout of funds not yet disbursed, necessary expenses, employ and pay counsel, all of
which the undersigned, jointly and severally, agree to repay to Agency upon demand. Provided,
however, such costs and expenses shall not be due and owing to Agency, if they are incurred as a
result of the breach of the Agreement by Agency or its sole negligence or willful misconduct.
Section 2.10 - Books and Records. Borrower shall require that the general contractor maintain
complete and accurate books and records showing all of the income and disbursements made in
connection with the work of improvements and such books and records shall be available for
inspection and copy by Agency upon request and during regular business hours.
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ARTICLE III
Miscellaneous Provisions
Section 3.1 - Governmental Requirements Superior. All provisions of this Agreement and all the
other documents relating to the Agency Loan shall be subject and subordinate to any and all
applicable federal, state and local statutes, regulations and ordinances and shall be subject to
modification to comply therewith.
Section 3.2 - Notices. All notices under this Agreement shall be in writing and sent (a) by
certified or registered mail, return receipt requested, in which case notice shall be deemed
delivered seven (7) business days after deposit, postage prepaid in the United States Mail, (b)
overnight by a nationally recognized overnight courier such as UPS Overnight, or FedEx, in
which case notice shall be deemed delivered one (1) business day after deposit with that courier,
or (c) by personal delivery, in which case notice shall be deemed delivered upon the actual date
of delivery. All notices shall be delivered to the following addresses:
Agency:
Redevelopment Agency of the City of Chula Vista
c/o City of Chula Vista
Redevelopment and Housing
276 Fourth Avenue
Chula Vista, California, 91910
Copy to:
Chula Vista City Attorney
276 Fourth Avenue
Chula Vista, California 91910
If to Borrower, then to:
Landings 11, L.P.
c/o Chelsea Investment Corporation
5993 Avenida Encinas, Suite 101
Carlsbad, CA 92008
Attention: James J. Schmid
Copy to:
Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, California 94105
Attn. Gary P. Downs
Copy to:
RJ HOF 8 - Landings II L.L.c.
c/o Raymond James Tax Credit Funds, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Ronald M. Diner, President
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Section 3.3 - Severabilitv. If any provIsIOn of this Agreement is deemed to be invalid or
unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest
of this Agreement and the remaining provisions shall continue in full force and effect.
Section 3.4 - Nonwaiver of Agencv's Rights. No right, remedy, or power of Agency in this
Agreement shall be deemed to have been waived by any act or conduct on the part of Agency or
by any failure to exercise or delay in exercising such right, remedy, or power. Every such right,
remedy or power of Agency shall continue in full force and effect until specifically waived or
released by an instrument in writing executed by Agency.
Section 3.5 - Entire Agreement. This Agreement, along with the various documents being
executed by the Agency and Borrower with respect to the Agency Loan, contain the entire
understanding between the Parties concerning the subject matter contained herein. There are no
representations, agreements, arrangements or understandings, oral or written, between or among
the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed
and/or referred to herein.
Section 3.6 - Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are
hereby incorporated in this Agreement by this reference, regardless of whether or not the exhibits
are actually attached to this Agreement. The Recitals to this Agreement are hereby incorporated
in this Agreement by this reference.
Section 3.7 - Construction of the Agreement. The provisions contained in this Agreement shall
not be construed in favor of or against either party but shall be construed as if both parties
contributed equally to its preparation. This Agreement shall be construed in accordance with the
laws of the State of California.
Section 3.8 - Agencv's Reliance on Statements and Disclosures of Borrower. Borrower has
made certain statements in order to induce Agency to make said loan and enter into this
Agreement, and in the event Borrower has made material misrepresentations or failed to disclose
any material fact, Agency may treat such misrepresentation or omission as a breach of this
Agreement, and the act of doing so shall not affect any remedies Agency may have under the
deed oftrust securing said loan for such misrepresentation or concealment.
Section 3.9 - Agencv Not Liable for Acts of Omissions of Borrower or Others. Agency shall in
no way be liable for any acts or omissions of Borrower, any agent or contractor employed by
Borrower, or any person furnishing labor and/or materials used in or related to the construction
of said improvements.
Section 3.10 - Time of the Essence. Time is of the essence of this Agreement and of each and
every provision hereof. The waiver by Agency of any breach or breaches hereof shall not be
deemed, nor shall the same constitute, a waiver of any subsequent breach or breaches.
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Section 3.11 - Assignment. Borrower shall not assign Borrower's rights nor delegate Borrower's
duties under this Agreement without the prior written consent of Agency. Any attempt at the
assignment or delegation in violation of this Section 3.11 shall be void. Agency shall have full
right and authority to assign all or a part of the Agency's rights and delegate all or a part of the
Agency's duties under this Agreement.
Section 3.12 - Integration. This Agreement represents the entire agreement between the Parties
of the subject matter of this Agreement and supersedes any other agreements, promises, or
representations oral or written pertaining to such subject matter, including without limitation, any
and all agreements, promissory notes, and deeds of trust, along with any amendments and
modifications to such agreements, promissory notes and deeds of trust entered into by and
between Agency and Borrower.
Section 3.13 - Participation. At the request of Agency, Borrower shall cause the fact that Agency
has provided funds to be referenced in any advertisements, press releases, brochures or
information sheets where funding for the Property or Improvements is discussed, and on all
project designation placards placed on the Property or other sites, as approved in advance, by
Agency. The design, content and format of the press releases, brochures, information sheets, and
all project designation placards containing a reference to the Agency are subject to the written
approval of the Executive Director of the Agency with respect to all references to the Agency.
Agency, at its sole option, reserves the right to request, in writing, that the references to the
participation of Agency not be included in any, or all, advertisements, press releases, brochures,
information sheets, and/or project designation placards.
Section 3.14 - Approvals, Consents and Other Determinations. Unless otherwise provided, in
any approval, consent, or other determination by Agency or Borrower required under this
Agreement or any of the other loan documents evidencing and/or securing the Agency Loan,
Agency and Borrower shall act reasonably, in good faith and without delay.
Section 3.15 - Counterparts. This Agreement may be executed in any number of counterparts
and, as so executed, the counterparts shall constitute one and the same Agreement. The parties
agree that each such counterpart is an original and shall be binding upon all the parties, even
though all of the parties are not signatories to the same counterpart.
Section 3.16 - Non-Liability of Officials and Emplovees of Agencv. No member, official or
employee of Agency or the City shall be personally liable to Borrower, or any successor in
interest, in the event of any default or breach of this Agreement or for any amount which may
become due to Borrower or its successors, or on any obligations under the terms of this
Agreement.
Section 3.17 - Agencv Approvals and Actions. Whenever a reference is made herein to an action
or approval to be undertaken by Agency, the Executive Director of Agency or his or her designee
is authorized to act on behalf of Agency unless specifically herein provided otherwise or the
context should require otherwise.
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Section 3.18 - Waiver and Amendment No provision of this Agreement, or breach of any
provision, can be waived except in writing. Waiver of any provision or breach shall not be
deemed to be a waiver of any other provision, or of any subsequent breach of the same or other
provision, Except as otherwise provided herein, this Agreement may be amended, modified or
rescinded only in writing signed by Borrower and the Executive Director ofthe Agency.
Section 3.! 9 - No Novation. The parties hereby acknowledge and agree that this agreement is
not an amendment or novation of any other agreement, instrument or document to which the
Agency, the CIty andlor the Borrower is a party or third-party beneficiary, including without
limitation the documents evidencing the City HOME Loan and the documents evidencing the
City Inclusionary Loan,
Section 3.20 - Capacity and Authority. All individuals signing this Agreement for a party which
is a corporation, limited liability company, partnersbip or other legal entity, or signing under a
power of attorney. or as a trustee, guardian, conservator" or in any other legal capacity, covenant
to the Agency that they bave the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behaJfthey are signing.
LJIj WITNESS WHEREOF, the parties have executed this Agreement on tbe date first
set forth above.
BORROWER:
Landings II, LP., a California limited partnership
By: Pacific Southwest Community Development Corporation,
a California nonprofit public benefit cOJporation
Its: Managing General Partner
By: ~~.
Robert W. Laing
President I Executive Director
By:Landings II CIC, LLC, a California limited liability company,
Its: Administrative General Partner
,/
By: Chelsea Investment Corporation, a California corporation,
its Manager
J;;h,es i Schmis! es ent
,
{SIGNATURES CONTINUED ON FOLLOWING PAGEl
/
35
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AGENCY:
Redevelopment Agency of the City ofChula Vista
By:
James Sandoval, Executive Director
Approved as to form:
By:
Bart J. Miesfeld, City Attorney
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Exhibit "A"
Property Legal Description
All that certain real property situated in the County of San Diego, State of California, described
as follows:
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Due to the size of the documents, the following Attachments are on file in the Office
of the City Clerk:
6. Bond Regulatory Agreement
7. Master Pledge and Agreement
8. Loan Agreement
9. Master Agency Agreement
17-99
RESOLUTION NO. 2010-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA [A ] APPROPRIATING $2,400,000 FROM HOME
INVESTMENT PARTNERSHIP FUNDS AND $2,000,000 FROM
HOUSING AUTHORITY IN LIEU FEES FOR THE
DEVELOPMENT OF THE LANDINGS II: AND [B]
AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AMENDMENT TO THE HOME LOAN AGREEMENT AND A
LOAN AGREEMENT BY AND BETWEEN THE CITY OF
CHULA VISTA, AND LANDINGS II, L.P. AND ALL OTHER
AGREEMENTS AND DOCUMENTS NECESSARY FOR THE
FINANCING OF THE LANDINGS II AFFORDABLE
APARTMENT PROJECT
WHEREAS, Brookfield Shea Otay, LLC proposed to build 207 affordable for-sale units (92
low-income and 115 moderate-income) in Neighborhood R-19 ofOtay Ranch Village Eleven to
satisfy its affordable housing obligations; and
WHEREAS, a 92-unit affordable rental development was completed in satisfaction of the
low-income housing obligation on Lot 2 of Map No. 15479 and the 115 moderate-income obligation
remains but due to the current financial climate, the Project is infeasible to finance as a moderate
income development; and,
WHEREAS, Landings II, L.P. (the "Developer") proposes to construct a 143-unit multifamily
rental development, with units affordable to very low households at 50 percent ofthe Area Median
Income (AMI) and to low households at 60 percent of the Area Median Income (AMI) within the
Winding Walk master planned community on a vacant site (Lot I of Map No. 15479) located at the
north west comer of Discovery Falls Drive and Crossroads Street in the City of Chula Vista
("Project," or "Landings II") in satisfaction of the remaining 115 moderate-income housing
obligation; and
WHEREAS, Developer has received an allocation of Multifamily Housing Revenue Bonds
from the California Debt Limit Allocation Committee (CD LAC) in a principal and aggregate amount
of $30,000,000; and
WHEREAS, Developer is applying for four percent (4%) tax credits from the Tax Credit
Allocation Committee (TCAC); and
WHEREAS, the City has determined, based on the evaluation of the development budget,
55-year operating pro forma, sources and uses for the Project, that additional financing is appropriate
and necessary in order to make the Project feasible; and
17-100
Resolution No. 2010-
Page 2
WHEREAS, on June 9, 2009, pursuant to Resolution No. 2009-132, the City Council
approved financial assistance in an amount not to exceed $2,400,000 from the City's HOME
Investment Partnership Program (HOME) funds for the development of the Landings II Affordable
Apartments and authorized execution of a Loan Agreement, subject to future appropriation; and
WHEREAS, an Amendment to the Loan Agreement for the HOME funds is necessary to
accurately reflect the name of the Developer and to provide consistency with other City and Agency
Loan Agreements and other financing documents for the Project; and
WHEREAS, on April 8, 2008, the City Council approved execution of an "Agreement to
Post Security for Affordable Housing Obligation" (the "Agreement") wherein the parties to the
Agreement acknowledged and agreed to the requirement of twenty-five (25) low income housing
units (the "Housing Obligation") as a result of the development of an 18.4 acre parcel within
Eastlake III as a 494-unit senior housing complex ("Seniors Project") and The Eastlake Company
("Eastlake") agreed to post a bond for the benefit of the City to secure satisfaction of the Housing
Obligation prior to issuance of any building permits for the Seniors Project; and
WHEREAS, on October 20,2009, pursuant to Resolution No. 2009-255, the City Council
amended the Agreement to allow Eastlake to provide payment of $2,000,000 to the City for the use
and transfer of 25 low income housing unit credits to satisfy their Housing Obligation and to
facilitate development of the Project; and
WHEREAS, on the 30th day of September, 2009, the City's Housing Advisory Commission,
held a public meeting to consider said request for financial assistance; and
WHEREAS, the Housing Advisory Commission, upon hearing and considering all testimony,
if any, of all persons desiring to be heard, and considering all factors relating to the request for the
Agency Loan, has recommended to the Agency that a loan be approved and the Agreement be
amended to allow a contribution from The Eastlake Company on the condition that all other
necessary financing be secured for the Project; and
WHEREAS, the City has adopted a Housing Element ofthe General Plan which sets forth the
objective of providing balanced and varied housing opportunities throughout the City to satisfy the
needs and desires of various age, income and ethnic groups of the community, and which specifically
provides for the construction of new affordable rental housing units through City assistance.
NOW, THEREFORE, BE IT RESOLVED by the City Council ofthe City ofChula Vista as follows:
1. That it authorizes the establishment of a new non-CIP project - "Landings II Project" and amends
the FY 20 I 0 Home Program Budget to appropriate $2,400,000 in grant funds from Housing and
Urban Development to the "Landings II Project" for a loan related to the development of the
Landings II project and expenses related to the processing ofthe loan; and,
17-101
Resolution No. 2010-
Page 3
2. That it amends the FY 2010 Housing Authority Budget to appropriate $2,000,000 in Affordable
Housing In-Lieu Funds to the "Landings II Project" for a loan related to the development of the
Landings II project and expenses related to the processing of the loan; and,
3. That it authorizes the City Manager to execute the First Amendment to the Construction and
Permanent Financing Agreement (City HOME Loan) and a loan agreement for $2,000,000 from
the Affordable Housing In-lieu funds between the City ofChula Vista and Landings II, L.P. and
all other agreements and documents necessary for the financing of the Landings II Affordable
Apartments.
Gary Halbert, AICP, PE
Deputy City Manager/Director of
Development Services
/)
Presented by
17-102
RESOLUTION NO. 2010-
RESOLUTION OF THE CITY OF CHULA VISTA
REDEVELOPMENT AGENCY AUTHORIZING THE
EXECUTIVE DIRECTOR TO EXECUTE A LOAN
AGREEMENT BY AND BETWEEN THE REDEVELOPMENT
AGENCY AND LANDINGS II, L.P. AND ALL OTHER
AGREEMENTS AND DOCUMENTS NECESSARY FOR THE
FINANCING OF THE LANDINGS II AFFORDABLE
APARTMENT PROJECT
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, Landings II, L.P. (the "Developer") proposes to construct a I 43-unit
multifamily rental development, with units affordable to very low households at 50 percent of
the Area Median Income (AMI) and to low households at 60 percent of the Area Median Income
(AMI) within the Winding Walk master planned community on a vacant site (Lot I of Map No.
15479) located at the north west comer of Discovery Road and Crossroads Street in the City of
Chula Vista ("Project," or "Landings II"); and
17-103
RDA Resolution No. 2010-
Page 2
WHEREAS, the Agency has detennined, based on the evaluation of the development
budget, 55-year operating pro fonna, sources and uses for the Project, that additional financing is
appropriate and necessary in order to make the Project feasible; and
WHEREAS, on October 20, 2009, the Agency conditionally approved a loan of four
million dollars ($4,000,000) from its Housing Fund to assist with the financing gap for the
construction of the Project; and
WHEREAS, in order to carry out and implement the Redevelopment Plan for the
Agency's redevelopment projects and the affordable housing requirements and goals thereof, the
Agency proposes to enter into a Loan Agreement (the "Loan Agreement") with the Developer,
pursuant to which the Agency would make a loan to the Developer (the "Agency Loan"), and the
Developer would agree to develop all of the apartment units in the Project for occupancy of very
low and lower income households and rent those units at an affordable housing cost; and
WHEREAS, in accordance with California Health and Safety Code Section 33334.2 (g),
staff is recommending that the Agency find and detennine that even though the Proj ect is to be
located outside the City's redevelopment project areas, those areas will benefit through the
creation of jobs in the project area and elsewhere in the City by providing housing for persons
who work within the City's redevelopment project areas, and through the policies served by
dispersing affordable housing throughout the jurisdiction rather than clustering it all in one area;
and
WHEREAS, the Agency has adopted an Implementation Plan pursuant to Health and
Safety Code Section 33490, which sets forth the objective of providing housing to satisfy the
needs and desires of various age, income and ethnic groups of the community; and
WHEREAS, on the 8th day of October, 2009, the Chula Vista Redevelopment
Corporation (CVRC), held a public meeting to consider said request for an Agency Loan; and
WHEREAS, the CVRC, upon hearing and considering all testimony, if any, of all
persons desiring to be heard, and considering all factors relating to the request for an Agency
Loan has recommended to the Agency that the loan be conditionally approved subject to the
Agency's approval of an affordable housing regulatory and loan agreement; and
WHEREAS, the Environmental Review Coordinator reviewed the proposed Project for
compliance with the California Environmental Quality Act (CEQA) and has detennined that the
proposed project was adequately covered in previously adopted Final Second Tier
Environmental Impact Report, EIR 01-02. Thus, no further CEQA review or documentation is
necessary.
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA does hereby authorize the Executive Director to execute a loan agreement between the
Redevelopment Agency and Landings II, L.P. and all other agreements and documents necessary
for the financing of the Landings II Affordable Apartments.
17-104
RDA Resolution No. 2010-
Page 3
Gary Halbert, AICP, PE
Deputy City Manager/Director of
Development Services
Approved as to for~by
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Presented by
17-105
RESOLUTION NO. HA 2010-
RESOLUTION OF THE HOUSING AUTHORlTY OF THE CITY
OF CHULA VISTA AUTHORlZING THE ISSUANCE OF
MULTIFAMILY HOUSING BONDS IN AN AGGREGATE
PRlNCIPAL AMOUNT NOT TO EXCEED $30,000,000 FOR THE
PURPOSE OF FINANCING THE ACQUISITION,
CONSTRUCTION AND EQUIPPING OF THE LANDINGS II
MULTIFAMILY RENTAL HOUSING PROJECT, APPROVING
AND AUTHORlZING THE EXECUTION AND DELIVERY OF
ANY AND ALL DOCUMENTS NECESSARY TO ISSUE THE
BONDS AND IMPLEMENT THIS RESOLUTION, AND
RATIFYING AND APPROVING ANY ACTION HERETOFORE
TAKEN IN CONNECTION WITH THE BONDS
WHEREAS, pursuant to Chapter I of Part 2 of Division 24 of the California Health and
Safety Code ("Act"), the Housing Authority of the City of Chula Vista (the "Authority") is
empowered to issue revenue bonds for the purpose of financing the acquisition, construction,
rehabilitation or development oflow income and very low income multifamily rental housing; and
WHEREAS, Landings II, L.P., a California limited partnership (the "Borrower"), intends to
acquire, construct and equip a multifamily housing project of 141 units plus two manager's units
within the Winding Walk master-planned community in the City of Chula Vista, California (the
"Project"); and
WHEREAS, the Borrower has requested the Authority to issue tax-exempt multifamily
housing mortgage revenue bonds in one or more series and loan the proceeds of the bonds to the
Borrower to finance the acquisition, construction and equipping of the Project; and
WHEREAS, the Authority desires to make a portion of the units in the Project available for
very low income persons or families, and in order to accomplish such purpose it is desirable for the
Authority to provide for the issuance of the bonds and a portion of the financing ofthe Project; and
WHEREAS, the Authority intends to issue its Housing Authority of the City of Chula Vista
Multifamily Housing Revenue Bonds (Landings II Apartments) Series 2010A-I through A-3 in an
aggregate principal amount not to exceed $30,000,000 (collectively, the "Bonds"),
WHEREAS, the Series 2010A-I Bonds and the Series 2010A-2 Bonds shall be purchased by
U.S. Bank National Association (the "Holder") in a private placement to the Holder, and the Series
2010A-3 Bonds, which shall be subordinate in priority of payment to the Series 2010A-I Bonds and
the Series 2010A-2 Bonds, shall be placed in a private placement to the seller of the Project, or an
affiliate thereof; and
WHEREAS, the Authority will loan the proceeds of the Bonds to the Borrower and the
Borrower will use the proceeds of the Bonds exclusively to finance the costs of acquisition,
construction and equipping of the Project and the costs of issuing the Bonds; and
DOCSOC/1400957v 3/024036-0052
Page 1 of 5
17-106
Resolution HA 2010-_
WHEREAS, Government Code Section 8869.85 requires a local agency to file an application
with the California Debt Limit Allocation Committee (the "Committee") prior to the issuance of tax-
exempt multifamily housing revenue bonds; and
WHEREAS, the Committee has allocated to the Project $30,000,000 of the State of
California 2008 State ceiling for private activity bonds under section 146 of the Internal Revenue
Code of 1986, which the Committee transferred to the Authority (the "Allocation"); and
WHEREAS, there have been prepared and presented to the Board of Directors of the
Authority (the "Board") for consideration at this meeting the forms of various documents as
described herein; and
WHEREAS, it appears that each of the documents and instruments described herein now
before this meeting is in appropriate form and is an appropriate instrument to be executed and
delivered for the purposes intended;
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing
Authority of the City of Chula Vista, as follows:
Section 1. Authorization of Bonds, In accordance with the Act and pursuant to the
Master Pledge and Assignment (hereinafter defined), the Authority is authorized to issue the Bonds
in one or more series, which series may be senior or subordinate in priority of payment, in an
aggregate principal amount not to exceed $30,000,000, with an interest rate or rates, a maturity date
or dates and other terms as provided in the Master Pledge and Assignment as finally executed for the
Bonds; provided, however, that the maximum interest rate on the Bonds shall not exceed 12 percent
per annum. The outstanding principal amount ofthe Bonds shall be in the amounts advanced by the
owner of the Bonds from time to time to fund the loan to the Borrower, not to exceed the aggregate
principal amount of $30,000,000. The Bonds shall be in the form set forth in and otherwise in
accordance with the Master Pledge and Assignment, and shall be executed on behalf of the Authority
by the manual or facsimile signature of the Chairperson of the Authority (the "Chairperson") or the
Executive Director of the Authority (the "Executive Director"), and the manual or facsimile seal of
the Authority shall be impressed or reproduced thereon and the Bonds shall be attested by the manual
or facsimile signature of the Secretary of the Authority.
Section 2. Approval of the Master Pledge and Assignment. The form of the Master
Pledge and Assignment (the "Master Pledge and Assignment"), between the Authority and U.S.
Bank National Association, as agent (the "Agent") and the Holder in substantially the form presented
to the Board is hereby approved for the Bonds. The Chairperson or the Executive Director, or any
designee thereof (each, an "Authorized Officer") is authorized to execute, and the Secretary of the
Authority is authorized to attest, the Master Pledge and Assignment in substantially said form, with
such additions thereto and changes therein as such Authorized Officer may approve or recommend in
accordance with Section 6 hereof. Subject to the limitations set forth in Section I above, the
principal amount, date, maturity date or dates, interest rate or rates, interest payment dates,
denominations, form, registration privileges, manner of execution, place of payment, terms of
redemption, and other terms of the Bonds shall be as provided in the Master Pledge and Assignment
as finally executed,
Section 3. Approval of the Master Agencv Agreement. The form of the Master Agency
Agreement (the "Master Agency Agreement"), between the Authority and the Agent in substantially
the form presented to the Board, is hereby approved for the Bonds. Any Authorized Officer is
DOCSOC/ 140095 7v3/024036-0052
Page 2 of 4
17-107
Resolution HA 2010-
authorized to execute, and the Secretary of the Authority is authorized to attest, the Master Agency
Agreement in substantially said form, with such additions thereto and changes therein as such
Authorized Officer may approve or recommend in accordance with Section 6 hereof.
Section 4. Approval of Regulatorv Agreement. The form of regulatory agreement and
declaration of restrictive covenants (the "Regulatory Agreement"), by and between the Authority and
the Borrower, in substantially the form presented to the Board, is hereby approved. Any Authorized
Officer is authorized to execute, and the Secretary of the Authority is authorized to attest, the
Regulatory Agreement, in substantially said form, with such additions thereto and changes therein as
such Authorized Officer may approve or recommend in accordance with Section 6 hereof.
Section 5. Approval of Loan Agreement. The form of loan agreement (the "Loan
Agreement"), by and between the Agent and the Borrower, in substantially the form presented to the
Board, is hereby approved as it relates to the terms of the Bonds, with such modifications, changes or
additions to the Loan Agreement as may be necessary or advisable, and approved by an Authorized
Officer in accordance with Section 6 hereof and which do not impose financial liability on the
Authority.
Section 6. Approval of Changes to Documents. Any Authorized Officer executing a
document approved herein, in consultation with Stradling Y occa Carlson & Rauth, a Professional
Corporation ("Bond Counsel"), is authorized to approve and make such modifications, changes or
additions to the Master Pledge and Assignment, the Master Agency Agreement, the Regulatory
Agreement, the Loan Agreement or other document as may be necessary or advisable, and the
approval of any modification, change or addition to any of the aforementioned agreements shall be
evidenced conclusively by the execution and delivery thereof by such Authorized Officer.
Section 7. Actions Ratified and Authorized. All actions heretofore taken by the officers,
employees and agents of the Authority with respect to the issuance and sale of the Bonds are
approved, confirmed and ratified, and the officers, employees and agents of the Authority are
authorized and directed, for and in the name and on behalf of the Authority, to do any and all things
and take any and all actions and execute and deliver any and all certificates, agreements and other
documents, including, but not limited to, those documents described in the Master Pledge and
Assignment, Loan Agreement, Regulatory Agreement, Master Agency Agreement and the other
documents herein approved, which they, or any of them, may deem necessary or advisable in order to
consummate the lawful issuance and delivery of the Bonds and to effectuate the purposes thereof and
of the documents herein approved in accordance with this resolution and resolutions heretofore
adopted by the Board. Further, any Authorized Officer, acting alone, is authorized to execute any
and all documents referred to in the documents herein approved or otherwise necessary or
appropriate with respect to the implementation of the financing of the Project, and which do not
impose financial liability on the Authority. In the event that the Secretary of the Authority is
unavailable to sign any document related to the Bonds, any Deputy Secretary of the Authority may
sign on behalf of the Secretary.
Section 8. Further Consents. Approvals and Other Actions. All consents, approvals,
notices, orders, requests and other actions permitted or required by any of the documents authorized
by this resolution or otherwise appropriate in the administration of the Bonds and the lending
program financed thereby, including, without limitation, any of the foregoing which may be
necessary or desirable in connection with any amendment of such documents, any transfer of the
Project, any substitution of security for the Bonds, or any redemption of the Bonds may be taken or
given by the Chairperson or Executive Director, without further authorization by the Board, and the
DOC 50C/1400957v 3/024036-0052
Page 3 of 4
17-108
Resolution HA 2010-
Chairperson and the Executive Director are hereby authorized and directed to give any such consent,
approval, notice, order or request and to take any such action which such officer may deem necessary
or desirable to further the purposes of this resolution.
Section 9. Conflicting Resolutions Repealed. All prior resolutions or parts thereof in
conflict with this resolution herewith are, to the extent of such conflict, repealed.
Section 10. Severabilitv. If any section, paragraph or provision of this resolution shall be
held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any remaining sections, paragraphs or provisions of this
resolution.
Section 11.
adoption.
Effective Date. This resolution shall take effect immediately upon its
ADOPTED, SIGNED AND APPROVED and effective as ofthe 4th day of May, 2010.
Presented by
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( /f~Attorney
Amanda Mills
Redevelopment and Housing Manager
DOC50C/1400957v 3/024036-0052
Page 4 of 4
17-109
Attachment 6
Housing Authority of the City of Chula Vista
BOND REGULATORY AGREEMENT
Stradling Yocca Carlson & Rauh
Draft dated April 26, 2070
Recording Requested By and
When Recorded Mail To:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attn: Bradley R. Neal, Esq.
[Space above for recorder.]
This document is exempt from the
payment of a recording fee pursuant to
Government Code Section 27383.
REGULATORY AGREEMENT
AND DECLARATION OF RESTRICTIVE COVENANTS
By and Between
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
and
LANDINGS II, L.P., a California limited partnership
Dated as of 1, 2010
Relating to
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-1
and
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS H APARTMENTS)
SENIOR SERIES 2010A-2
and
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SUBORDINATE SERIES 2010A-3
DOC SOC/ 1400880v3/024036-0052
TABLE OF CONTENTS
Pace
Section 1. Definitions and Interpretation ............................................................................ ...............2
Section 2. Acquisition, Construction and Equipping of the Project ................................... ...............6
Section 3. Residential Rental Property ............................................................................... ...............6
Section 4. Very Low Income Units ..................................................................................... ...............8
Section 5. Tax Status of the Bonds ..................................................................................... .............11
Section 6. Modification of Special Tax Covenants ............................................................. .............1 1
Section 7. Indemnification .................................................................................................. .............12
Section 8. Consideration ..................................................................................................... .............14
Section 9. Reliance .............................................................................................................. .............14
Section 10. Sale or Transfer of the Project; Syndication ...................................................... .............14
Section 11. Term ................................................................................................................... .............15
Section 12. Covenants to Run With the Land ....................................................................... .............16
Section 13. Burden and Benefit ............................................................................................ .............16
Section 14. Uniformity; Common Plan ................................................................................ .............16
Section 15. Enforcement ....................................................................................................... .............17
Section 16. Recording and Filing .......................................................................................... .............18
Section 17. Payment of Fees ................................................................................................. .............18
Section 18. Governing Law .................................................................................................. .............18
Section 19. Amendments ...................................................................................................... .............18
Section 20. Notice ................................................................................................................. .............19
Section 2l. Severability ........................................................................................................ .............19
Section 22. Multiple Counterparts ........................................................................................ .............19
Section 23. Compliance by Borrower ................................................................................... .............20
Section 24. General Obligation of Borrower; Limitations on Recourse to Borrower .......... .............20
Section 25. Third-Party Beneficiary ..................................................................................... .............20
Section 26. CDLAC Requirements ....................................................................................... .............20
Section 27. Damage, Destruction or Condemnation of the Project ...................................... .............20
EXHIBIT A LEGAL DESCRIPTION ................................................................................ ...........A-1
EXHIBIT B CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE .............. ...........B-1
EXHIBIT C INCOME COMPUTATION AND CERTIFICATION ................................. ...........C-1
EXHIBIT D CDLAC RESOLUTION ................................................................................ ...........D-1
EXHIBIT E CDLAC COMPLIANCE CERTIFICATE ..................................................... ........... E-1
DOCSOC/ 1400R80v3/024036-0052
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS (the "Regulatory Agreement"), dated as of 1, 2010, by and between the
Housing Authority of the City of Chula Vista, a public body corporate and politic, duly organized
and existing under the Constitution and the laws of the State of California (together with any
successor to its rights, duties and obligations, the "Issuer") and Landings II, L.P., a California limited
partnership (the "Borrower").
WITNESSETH
WHEREAS, the Issuer is a Califomia housing authority acting under the Housing Authorities
Law, Chapter 1 of Part 2 of Division 24 of the Califomia Health and Safety Code (the "Act"); and
WHEREAS, pursuant to the Act, the Issuer is authorized to issue bonds to finance the
acquisition, construction and equipping of multifamily rental housing for families and individuals of
low income and very low income within the City of Chula Vista, Califomia (the "City"); and
WHEREAS, the Issuer is a political subdivision (within the meaning of that term in the
Regulations of the Department of Treasury and the rulings of the Intemal Revenue Service
prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code of 1986, as
amended (the "Code")); and
WHEREAS, on [May 4, 2010], the legislative body of the Issuer adopted a resolution (the
"Resolution") authorizing the issuance of revenue bonds in connection with financing the acquisition,
construction and equipping of a 141 unit plus 2 manager's units multifamily rental housing project
located in the City (the "Project"); and
WHEREAS, in furtherance of the purposes of the Act and the Resolution and as a part of the
Issuer's plan of financing residential rental housing, the Issuer has issued its $
Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings II
Apartments), Senior Series 2010A-1 (the "Series A-l Bonds"), $ Housing
Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings 11
Apartments), Senior Series 2010A-2 (the "Series A-2 Bonds," and, together with the Series A-1
Bonds, the "Senior Bonds"), and $ Housing Authority of the City of Chula
Vista Multifamily Housing Revenue Bonds (The Landings 1I Apartments), Subordinate Series
2010A-3 (the "Series A-3 Bonds," and, together with the Series A-1 Bonds and Series A-2 Bonds,
the "Bonds"), the proceeds of which will be loaned to the Borrower by U.S. Bank National
Association (the "Agent"), acting as agent for and on behalf of the Issuer, which will use the
proceeds of the Bonds to finance the acquisition, constmction and equipping of the Project for the
public purpose of providing decent, safe and sanitary housing for families and individuals of very
low income; and
WHEREAS, the Borrower and the Agent have entered into a Loan Agreement, dated as of
the date hereof (the "Loan Agreement"), providing the terms and conditions under which the Agent,
UOCSOC/1400880v3/024036-0052
for the account of the Issuer, will make the Loan to the Borrower to finance the acquisition,
construction and equipping of the Project; and
WHEREAS, all things necessary to make the Bonds, when issued as provided in the Master
Pledge and Assignment (defined herein), the valid, binding, and limited obligations of the Issuer
according to the import thereof, and to constitute the Master Pledge and Assignment a valid
assignment of the amounts pledged to the payment of the principal of, and premium, if any, and
interest on the Bonds have been done and performed, and the creation, execution, and delivery of the
Master Pledge and Assignment and the execution and issuance of the Bonds, subject to the terms
thereof, in all respects have been duly authorized; and
WHEREAS, the Issuer has obtained an allocation for the Project of a portion of the State of
California s private activity bond volume cap, within the meaning of Section 146 of the Code, in
accordance with the procedures established by the California Debt Limit Allocation Committee; and
WHEREAS, the Code and the regulations and rulings promulgated with respect thereto and
the Act prescribe that the use and operation of the Project be restricted in certain respects and in
order to ensure that the Project will be owned and operated in accordance with the Code and the Act,
the Issuer and the Borrower have determined to enter into this Regulatory Agreement in order to set
forth certain terms and conditions relating to the acquisition, construction, equipping and operation of
the Project;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth
herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the Issuer and the Borrower hereby agree as follows:
Section 1. Definitions and Interpretation. The following terms shall have the respective
meanings assigned to them in this Section 1, unless the context in which they are used clearly
requires otherwise:
"Adjusted Income" -The adjusted income of all persons who intend to reside in one
residential unit, calculated in the manner determined by the Secretary of the Treasury pursuant to
Section 142(d)(2)(B) of the Code.
"Affiliated Party" - (1) a Person whose relationship with the Borrower would result in a
disallowance of losses under Section 267 or 707(6) of the Code, (2) a Person who together with the
Borrower are members of the same controlled group of corporations (as defined in Section 1563(a) of
the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place
it appears therein), (3) a partnership and each of its partners (and their spouses and minor children)
whose relationship with the Borrower would result in a disallowance of losses under Section 267 or
707(6) of the Code or (4) an S Corporation and each of its shareholders (and their spouses and minor
children) whose relationship with the Borrower would result in a disallowance of losses under
Section 267 or 707(6) of the Code.
"Area" -The San Diego County, California Primary Statistical Area.
"Bonds" -Collectively, the Housing Authority of the City of Chula Vista Multifamily
Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-1, in a principal
amount not to exceed $ ,the Housing Authority of the City of Chula Vista
2
DOCSOC/ 1400880v3/024036-0052
Multifamily Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-2, in a
principal amount not to exceed $ ,and the Housing Authority of the City of Chula
Vista Multifamily Housing Revenue Bonds (The Landings II Apartments), Subordinate Series
2010A-3, in a principal amount not to exceed $
"Borrower's Tax Certificate" -The certificate of the Borrower, dated as of the Closing Date,
with respect to certain Project Costs delivered to the Issuer by the Borrower.
"CDLAC" -The California Debt Limit Allocation Committee.
"CDLAC Resolution" -Resolution No. 10-15 adopted by CDLAC on March 24, 2010.
"Certificate of Continuing Program Compliance" -The certificate with respect to the Project
to be filed by the Borrower with the Issuer, which shall be substantially in the form attached hereto as
Exhibit B.
"Closing Date" -May _, 2010.
"Completion Date" -The date on which the Project is completed, as "completion" is
determined under the Loan Agreement.
"Conversion Date" -shall have the meaning set forth in the Master Pledge and Assignment.
"Costs of Issuance" - (a) The fees, costs and expenses of (i) the Issuer, the Issuers counsel
and the Issuer's financial advisor, (ii) Bond Counsel, (iii) the Agent and the Agent's counsel, (iv) the
Holder the Holder's counsel, and (v) the Borrower's counsel; and (b) all other fees, costs and
expenses directly associated with the authorization, issuance, sale and delivery of the Bonds,
including printing costs, costs of reproducing documents, filing and recording fees, and any fees,
costs and expenses required to be paid to the Agent in connection with the origination of the Loan.
"Income Certification"- The Income Computation and Certification Form in substantially the
form attached hereto as Exhibit C.
"Inducement Date" -May ]2, 2009.
"Issuer Fee" -The administrative fee of the Issuer payable on the Closing Date in the amount
of [$37,500], and (i) the ongoing administrative fee payable every six (6) months commencing
[November 1, 2010] in the amount of [$37,500] until the Conversion Date, and (ii) on the first
1 or 1 following the Conversion Date and thereafter, the ongoing administrative
fee payable every six (6) months shall equal one-half (1/2) of one-eighth of one percent (1/8%) of the
aggregate principal amount of the Bonds outstanding immediately after the Conversion Date.
"Limited Partner" - RJ HOF 8 -Landings ^, LLC, a Florida limited liability company, and
its successors and assigns.
"Loan" -The Loan made by the Agent for the account of the Issuer to the Borrower pursuant
to the Loan Agreement for the purpose of providing funds to the Borrower to finance the acquisition,
construction and equipping of the Project.
DOC SOC/ 1400880v3/024036-0052
"Master Pledge and Assignment" -The Master Pledge and Assignment, dated as of the date
hereof, by and among the Issuer, the Agent and U.S. Bank National Association, as Holder of the
Bonds ("Holder"), pursuant to which the Bonds have been issued, as amended or supplemented from
time to time.
"Median Income for the Area" -The median gross income for the Area as most recently
determined by the Secretary of Treasury pursuant to Section 142(d)(2)(B) of the Code.
"Project"-The Project Facilities and the Project Site.
"Project Costs" - To the extent authorized by the Code, the Regulations and the Act, any and
all costs incurred by the Borrower with respect to the acquisition, construction and equipping of the
Project, whether paid or incurred prior to or after the sixtieth day preceding the Inducement Date,
including, without limitation, costs for site preparation, the planning of housing and related facilities
and improvements, the acquisition of property, the removal or demolition of existing structures, the
construction of housing and related facilities and improvements, and all other work in connection
therewith, and all costs of financing including, without limitation, the costs of consultant, accounting
and legal services, other expenses necessary or incident to determining the feasibility of the Project,
administrative and other expenses necessary or incident to the Project and the financing thereof
(including reimbursement to any municipality, county or entity for expenditures made for the
Project) and all other costs approved by Bond Counsel.
"Project Facilities" -The buildings, structures and other improvements on the Project Site
that are being financed with proceeds of the Bonds, and all fixtures and other property owned by the
Borrower and located on, or used in connection with, such buildings, structures and other
improvements.
"Project Site" -The parcel or parcels of real property described in Exhibit "A", which is
attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto
appertaining in which the Borrower has a leasehold estate.
"Qualified Project Costs" -The Project Costs (excluding Costs of Issuance) incurred after
the sixtieth day preceding the ]nducement Date, which either constitute land or property of a
character subject to the allowance for depreciation under Section 167 of the Code or are chargeable
to a capital account with respect to the Project for federal income tax and financial accounting
purposes, or would be so chargeable either with a proper election by the Borrower or but for the
proper election by the Borrower to deduct those amounts within the meaning of Regulation
Section 1.103-8(a)(1)(i); provided, however, that only such portion of interest accrued during
construction of the Project shall constitute a Qualified Project Cost as bears the same ratio to all such
interest as the Qualified Project Costs bear to all Project Costs paid from Bond proceeds and interest
earnings thereon; and provided further that interest accruing after the Completion Date shall not
constitute a Qualified Project Cost; and provided still further that if any portion of the Project is
being constructed by an Affiliated Party (whether as a general contractor or a subcontractor),
"Qualified Project Costs" shall include only the actual out-of-pocket costs incurred by such Affiliated
Party in constructing the Project (or any portion thereof] within the meaning of Section 147(d)(2) of
the Code, as provided in the Tax Certificate.
"Qualified Project Period" -The period beginning on the first day on which at least ten
percent (10%) of the dwelling units in the Project are first occupied and ending on the later of (a) the
4
DOC SOC/ 1400880x3/024036-0052
date which is 55 years after the date on which fifty percent (50%) of the dwelling units in the Project
are occupied, (b) the first day on which no tax exempt bonds with respect to the Project are
Outstanding, or (c) the date on which any assistance provided with respect to the Project under
Section 8 of the United States Housing Act of 1937 terminates.
"Very Low Income Tenants" -Individuals or families with Adjusted Income which does not
exceed 50 percent of the Median Income for the Area as adjusted in a manner consistent with the
determination of lower income families under Section 8 of the United States Housing Act of 1937
and as adjusted for household size as set Forth below. In no event, however, will the occupants of a
residential unit be considered to be Very Low Income Tenants if all the occupants are students, as
defined in Section l5l(c)(4) of the Code, as such may be amended, no one of which is entitled to file
a joint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual
enrolled as a full-time student during each of 5 calendar months during the calendar year in which
occupancy of the unit begins at an educational organization which normally maintains a regular
faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an
individual pursuing afull-time course of institutional on-farm training under the supervision of an
accredited agent of such an educational organization or of a state or political subdivision thereof.
Household Size Adjustment
1 70%
2 80%
3 90%
4 100%
5 108%
6 116%
7 124%
8 ]32%
"Very Low Income Units" -The dwelling units in the Project designated for occupancy by
Very Low Income Tenants pursuant to Section 4(a) of this Regulatory Agreement.
Capitalized terms which are not defined herein shall have the meanings assigned to them in
the Master Pledge and Assignment.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of
the masculine, feminine or neuter gender shall be construed to include each other gender when
appropriate and words of the singular number shall be construed to include the plural number, and
vice versa, when appropriate. This Regulatory Agreement and all the terms and provisions hereof
shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof.
The defined terms used in the preamble and recitals of this Regulatory Agreement have been
included for convenience of reference only, and the meaning, construction and interpretation of all
defined terms shall be determined by reference to this Section 1 notwithstanding any contrary
definition in the preamble or recitals hereof. The titles and headings of the sections of this
Regulatory Agreement have been inserted for convenience of reference only, and are not to be
considered a part hereof and shall not in any way modify or restrict any of the terms or provisions
hereof or be considered or given any effect in construing this Regulatory Agreement or any
provisions hereof or in ascertaining intent, if any question of intent shall arise.
5
DOCSOG] 400880v3/024036-0052
Section 2. Acquisition, Construction and Equipping of the Project. The Borrower
hereby represents, as of the date hereof, and covenants, warrants and agrees as follows:
(a) The Borrower has incurred a substantial binding obligation to acquire, construct and
equip the Project, pursuant to which the Borrower is obligated to expend at least five percent of the
net sale proceeds of the Bonds.
(b) The Borrower's reasonable expectations respecting the total cost of the acquisition,
construction and equipping of the Project and the disbursement of Bond proceeds are accurately set
forth in the Borrower's Tax Certificate attached to the Tax Certificate which has been delivered to
the Issuer.
(c) The Borrower will proceed with due diligence to complete the acquisition,
construction and equipping of the Project and expects to expend the full amount of the proceeds of
the Loan for Project Costs prior to the date which is three years after the Closing Date.
(d) The statements made in the various certificates delivered by the Borzower to the
Issuer, the Agent or the Holder are true and correct as of the Closing Date.
(e) Money on deposit in any fund or account in connection with the Bonds, whether or
not such money was derived from other sources, shall not be used by or under the direction of the
Borrower, in a manner which would cause the Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Code, and the Borzower specifically agrees that the investment of money in any
such fund shall be restricted as may be necessary to prevent the Bonds from being "arbitrage bonds"
under the Code.
(f) The Borrower (and any person related to it within the meaning of Section 147(a)(2)
of the Code) will not take or omit to take, as is applicable, any action if such action or omission
would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary
to the requirements of the Master Pledge and Assignment, the Loan Agreement or this Regulatory
Agreement. Neither the Borrower nor any Affiliated Party shall purchase any Bonds and shall not
take any action that would cause the Bonds to be considered federally guaranteed within the meaning
of Section 149(b)(2)(B)(ii) of the Code.
(g) The Borrower shall comply with all applicable requirements of Section 65863.10 of
the California Government Code, including, if applicable, the requirements for providing notices in
Sections (b), (c), (d) and (e) thereof.
(h) The representations of the Borzower in the Loan Agreement are accurate in all
material respects as of the date of recordation of this Regulatory Agreement and are incorporated by
reference herein.
Section 3. Residential Rental Property. The Borzower hereby acknowledges and agrees
that the Project will be owned, managed and operated as a "qualified residential rental project"
(within the meaning of Section 142(d) of the Code) until the expiration of the Qualified Project
Period. To that end, and for the term of this Regulatory Agreement, the Borrower hereby represents,
as of the date hereof, and covenants, warrants and agrees as follows:
6
DOCSOC/ 1400880x3/024036-0052
(a) The Project is being acquired, constructed and equipped for the purpose of providing
multifamily residential rental property, and the Borrower shall own, manage and operate the Project
as a project to provide multifamily residential rental property comprised of a building or structure or
several interrelated buildings or structures, together with any functionally related and subordinate
facilities, and no other facilities, in accordance with applicable provisions of Section 142(d) of the
Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such
requirements as may be imposed thereby on the Project from time to time.
(b) All of the dwelling units in the Project will be similarly constructed units, and, to the
extent required by the Code and the Regulations, each dwelling unit in the Project will contain
complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a
single person or a family, including a sleeping area, bathing and sanitation facilities and cooking
facilities equipped with a cooking range, refrigerator and sink; provided that any tenant may, but
shall not be obligated to, provide a refrigerator for the unit to be occupied.
(c) None of the dwelling units in the Project will at any time be utilized on a transient
basis, or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming
house, nursing home, hospital, sanitarium, rest home, retirement house or trailer court or park.
(d) No part of the Project will at any time be owned or used as a condominium or by a
cooperative housing corporation, nor shall the Borrower take any steps in connection with a
conversion to such ownership or uses. Other than obtaining a final subdivision map on the Project
and a Final Subdivision Public Report from the California Department of Real Estate, the Borrower
and has not and shall not take any steps in connection with a conversion of the Project to a
condominium or cooperative ownership except with the prior written approving opinion of Bond
Counsel that by reason of any such action the interest on the Bonds will not become includable in
gross income for federal income tax purposes.
(e) All of the dwelling units (except for up to one (1) manager's unit described in
(g) below) will be available for rental on a continuous basis to members of the general public and the
Borrower has not and will not give preference to any particular class or group in renting the dwelling
units in the Project, except to the extent that dwelling units are required to be leased or rented to Very
Low Income Tenants and to holders of Section 8 certificates or vouchers.
(f) The Project Site consists of a parcel or parcels that are contiguous except for the
interposition of a road, street or stream, and all of the Project Facilities will comprise a single
geographically and functionally integrated project for residential rental property, as evidenced by the
ownership, management, accounting and operation of the Project.
(g) No dwelling unit in any building in the Project shall be occupied by the Borrower
unless the building contains five or fewer dwelling units may be occupied by the Borrower or by
persons related to or affiliated with the Borrower such as a resident manager or maintenance
personnel. Subject to the foregoing limitation, up to a total of one (1) unit in the Project may be
occupied by resident managers or maintenance personnel.
(h) Should involuntary noncompliance with the provisions of Section 1.103-8(b) of the
Regulations be caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of
foreclosure, change in a federal law or an action of a federal agency after the Closing Date which
prevents the Issuer from enforcing the requirements of the Regulations, or condemnation or similar
DOCSOC/1400880v3/024036-0052
7
event, the Borrower covenants that, within a "reasonable period" determined in accordance with the
Regulations, it will either prepay the Loan and cause the Bonds to be redeemed or apply any
proceeds received as a result of any of the preceding events to reconstruct the Project to meet the
requirements of Section 142(d) of the Code and the Regulations.
(i) The Borrower shall not discriminate on the basis of race, religion, creed, color, ethnic
group identification, sex, sexual preference, source of income (e.g. AFDC, SSI), mental or physical
disability, age, national origin or marital status in the rental, lease, use or occupancy of the Project or
in connection with the employment or application for employment of persons for the operation and
management of the Project.
(j) Following the expiration or termination of the Qualified Project Period, Very Low
Income Units shall remain available to the Very Low Income Tenants then occupying such units at
the date of expiration or termination of the Qualified Project Period at a rent not greater than the rent
determined pursuant to Section 4(a) and (ii) below until the earliest of any of the following occurs:
(i) The household's income exceeds 140 percent of the income at which such
household would qualify as a Very Low Income Tenant.
(ii) The household voluntarily moves or is evicted for "good cause." For these
purposes, "good cause" means the nonpayment of rent or allegation of facts necessary to prove
major, or repeated minor, violations of material provisions of the lease agreement which
detrimentally affect the health and safety of other persons or the structure, the fiscal integrity of the
Project, or the purposes or special programs of the Project.
(iii) The Borrower pays the relocation assistance and benefits to such Very Low
Income Tenants, as provided in Section 7264(b) of the Government Code of the State of California.
(k) The Issuer may but shall not be required to monitor the Borrower's compliance with
the provisions of subparagraph (j) above.
Section 4. Ver~Low Income Units. Pursuant to the requirements of Section 142(d) of
the Code and applicable provisions of the Act, the Borrower hereby represents, as of the date hereof,
and warrants, covenants and agrees as follows:
(a) During the Qualified Project Period, not less than twenty percent (20%) of the units
in the Project shall be designated as Very Low Income Units and shall be continuously occupied by
or held available for occupancy by Very Low Income Tenants at monthly rents which do not exceed
one-twelfth of the amount obtained by multiplying 30% times 50% of the Median Income for the
Area, as adjusted for household size utilizing the percentages set forth above under the definition of
Very Low Income Tenant less a reasonable deduction for utilities paid by the tenant as determined by
the Issuer and assuming (solely for purposes of the above-described limit on the amount of monthly
rent, and not for purposes of determining whether individuals or families are Very Low Income
Tenants for purposes of Section 142(d) of the Code), the following unit sizes and household sizes:
DOCSOC/ 1400880v3/024036-0052
8
Unit Size Household Size
Studio Units One Person
One Bedrooms Two Persons
Two Bedrooms Three Persons
Three Bedrooms Four Persons
Such Very Low Income Units shall be of comparable quality and offer a range of sizes and number
of bedrooms comparable to those units which are available to other tenants and shall be distributed
throughout the Project.
A unit occupied by a Very Low Income Tenant who at the commencement of the occupancy
is a Very Low Income Tenant shall be treated as occupied by a Very Low Income Tenant until a
recertification of such tenant's income in accordance with Section 4(c) below demonstrates that such
tenant no longer qualifies as a Very Low Income Tenant and thereafter such unit shall be treated as
any residential unit of comparable or smaller size in the Project occupied by a new resident other
than a Very Low Income Tenant. Moreover, a unit previously occupied by a Very Low Income
Tenant and then vacated shall be considered occupied by a Very Low Income Tenant until
reoccupied, other than for a temporary period, at which time the character of the unit shall be
redetermined. In no event shall such temporary period exceed thirty-one (31) days.
(b) Immediately prior to a Very Low Income Tenant's occupancy of a Very Low Income
Unit, the Borrower will obtain and maintain on file an Income Certification from each Very Low
Income Tenant occupying a Very Low Income Unit, dated immediately prior to the initial occupancy
of such Very Low Income Tenant in the Project. In addition, the Borrower will provide such further
information as may be required in the future by the State of California, the Issuer, the Act,
Section 142(d) of the Code and the Regulations, as the same may be amended from time to time, or
in such other form and manner as may be required by applicable rules, rulings, policies, procedures
or other official statements now or hereafrer promulgated, proposed or made by the Department of
the Treasury or the ]nternal Revenue Service with respect to obligations issued under Section 142(d)
of the Code. The Borrower shall verify that the income provided by an applicant is accurate by
taking one or more of the following steps as a part of the verification process: (1) obtain a federal
income tax return for the most recent tax year, (2) obtain a written verification of income and
employment from the applicant's current employer, (3) if an applicant is unemployed or did not file a
tax return for the previous calendar year, obtain other verification of such applicant's income
satisfactory to the Issuer or (4) such other information as may be reasonably requested by the Issuer.
Copies of the most recent Income Certifications for Very Low Income Tenants shall be
attached to the quarterly report to be filed with the Issuer as required in (d) below.
(c) Immediately prior to the first anniversary date of the occupancy of a Very Low
Income Unit by one or more Very Low Income Tenants, and on each anniversary date thereafter, the
Borrower shall recertify the income of the occupants of each Very Low Income Unit by obtaining a
completed Income Certification based upon the current income of each occupant of the unit. In the
event the recertification demonstrates that such household's income exceeds 140% of the income at
which such household would qualify as Very Low Income Tenants, such household will no longer
qualify as Very Low Income Tenants and to the extent necessary to comply with the requirements of
Section 4(a) above, the Borrower will rent the next available unit of comparable or smaller size to
one or more Very Low Income Tenants.
9
DOCSOC/ 1400880v3/024036-0052
(d) Upon commencement of the Qualified Project Period, and within 15 days of the last
day of each quarter thereafter during the term of this Regulatory Agreement, the Borrower shall
advise the Issuer of the status of the occupancy of the Project by delivering to the Issuer a Certificate
of Continuing Program Compliance.
(e) The Borrower shall maintain complete and accurate records pertaining to the Very
Low Income Units, and shall permit any duly authorized representative of the Issuer, the Agent, the
Holder, the Department of the Treasury or the Internal Revenue Service to inspect the books and
records of the Borrower pertaining to the Project, including those records pertaining to the occupancy
of the Very Low Income Units.
(f) The Borrower shall submit to the Secretary of the Treasury annually on the
anniversary date of the start of the Qualified Project Period, or such other date as is required by the
Secretary, a certification that the Project continues to meet the requirements of Section 142(d) of the
Code, and shall provide a copy of such certification to the Issuer.
(g) The Borrower shall accept as tenants on the same basis as all other prospective
tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to
the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The
Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that are more
burdensome than criteria applied to all other prospective tenants. The Borrower shall not collect any
additional fees or payments from a Very Low Income Tenant except security deposits or other
deposits required of all tenants. The Borrower shall not collect security deposits or other deposits
from Section 8 certificate or voucher holder in excess of those allowed under the Section 8 Program.
The Borrower shall not discriminate against applicants for Very Low Income Units on the basis of
source of income (i.e., AFDC or SSI), and the Borrower shall consider a prospective tenant's
previous rent history of at least one year as evidence of the ability to pay the applicable rent (ability
to pay shall be demonstrated if an applicant can show that the same percentage or more of the
applicant's income has been paid for rent in the past as will be required to be paid for the rent
applicable to the Very Low Income Unit to be occupied, provided that such Very Low Income
Tenant's expenses have not materially increased).
(h) Each lease pertaining to a Very Low Income Unit shall contain a provision to the
effect that the Borrower has relied on the Income Certification and supporting information supplied
by the applicant in determining qualification for occupancy of the Very Low Income Unit, and that
any material misstatement in such certification (whether or not intentional) will be cause for
immediate termination of such lease. Each lease will also contain a provision that failure to
cooperate with the annual recertification process reasonably instituted by the Borrower pursuant to
Section 4(c) above may, at the option of the Borrower, disqualify the unit as a Very Low Income
Unit, or provide grounds for termination of the lease.
(i) Prior to the Closing Date, the Borrower agrees to provide to the Issuer a copy of the
form of application and lease to be provided to prospective Very Low Income Tenants. The term of
the lease shall be not less than thirty (30) days.
]0
DOCSOC/ 1400880v3/024036-0052
Section 5. Tax Status of the Bonds. The Borrower and the Issuer each hereby
represents, as of the date hereof, and warrants, covenants and agrees that:
(a) It will not knowingly take or permit, or omit to take or cause to be taken, as is
appropriate, any action that would adversely affect the exclusion from gross income for federal
income tax purposes or the exemption from California personal income taxation of the interest on the
Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will
take all lawful actions necessary to rescind or correct such actions or omissions promptly upon
obtaining knowledge thereof;
(b) It will take such action or actions as may be necessary, in the written opinion of Bond
Counsel filed with the Issuer, the Agent and the Holder to comply fully with the Act and all
applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated,
proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to
obligations issued under Section 142(d) of the Code to the extent necessary to maintain the exclusion
from gross income for federal income tax purposes of interest on the Bonds; and
(c) The Borrower, at the Borrower's expense, will file of record such documents and take
such other steps as are necessary, in the written opinion of Bond Counsel filed with the Issuer, the
Agent and the Holder, in order to insure that the requirements and restrictions of this Regulatory
Agreement will be binding upon all owners of the Project, including, but not limited to, the execution
and recordation of this Regulatory Agreement in the real property records of the County of San
Diego.
The Borrower hereby covenants to notify any subsequent owner of the Project of the
requirements and restrictions contained in this Regulatory Agreement in any documents transferring
any interest in the Project to another person to the end that such transferee has notice of such
restrictions, and to obtain the agreement from any transferee to abide by all requirements and
restrictions of this Regulatory Agreement; provided that the covenants contained in this paragraph
shall not apply to the Holder should the Holder become the owner of the Project by foreclosure, deed
in lieu of foreclosure or comparable conversion of the Loan Documents.
Section 6. Modification of Special Tax Covenants. The Borrower and the Issuer hereby
agree as follows:
(a) To the extent any amendments to the Act, the Regulations or the Code shall, in the
written opinion of Bond Counsel filed with the Issuer, the Agent and the Holder, impose
requirements upon the ownership or operation of the Project more restrictive than those imposed by
this Regulatory Agreement which must be complied with in order to maintain the exclusion from
gross income for federal income tax purposes of interest on the Bonds, this Regulatory Agreement
shall be deemed to be automatically amended to impose such additional or more restrictive
requirements.
(b) To the extent any amendments to the Act, the Regulations or the Code shall, in the
written opinion of Bond Counsel filed with the Issuer, the Agent, the Holder and the Borrower,
impose requirements upon the ownership or operation of the Project less restrictive than imposed by
this Regulatory Agreement, this Regulatory Agreement may be amended or modified to provide such
less restrictive requirements but only by written amendment approved and signed by the Issuer and
the Borrower, approved by the Holder and approved by the written opinion of Bond Counsel that
DOCSOC/1400880v3/024036-0052
such amendment will not affect the exclusion from gross income for federal income tax purposes of
interest on the Bonds.
(c) The Borrower and the Issuer shall execute, deliver and, if applicable, file of record
any and all documents and instruments, necessary to effectuate the intent of this Section 6, and the
Borrower appoints the Issuer as its true and lawful attorney-in-fact to execute, deliver and, if
applicable, file of record on behalf of the Borrower, as is applicable, any such document or
instrument (in such form as may be approved in writing by Bond Counsel) if the Borrower defaults in
the performance of its obligations under this subsection (c); provided, however, that the Issuer shall
take no action under this subsection (c) without first notifying the Borrower.
Section 7. Indemnification. The Borrower hereby releases the Issuer, the Agent, their
officers and employees from, and covenants and agrees to indemnify, hold harmless and defend the
Issuer, the Agent, their officers, members, directors, officials, agents and employees and each of
them (collectively, the "Indemnified Parties" and individually, an `Indemnified Party") from and
against, any and all claims, losses, costs, damages, demands, expenses, taxes, suits, judgments,
actions and liabilities of whatever nature, joint or several (including, without limitation, actual
out-of-pocket costs of investigation, reasonable attorneys' fees, actual out-of-pocket litigation and
court costs, amounts paid in settlement, and amounts paid to discharge judgments), made directly or
indirectly (a) by or on behalf of any person arising from any cause whatsoever in connection with
transactions contemplated hereby or otherwise in connection with the Project, the Bonds, or the
execution or amendment of any document relating thereto; (b) arising from any cause whatsoever in
connection with the approval of financing for the Project, the making of the Loan or otherwise;
(c) arising from any act or omission of the Borrower or any of its agents, servants, employees or
licensees, in connection with the Loan or the Project; (d) arising in connection with the issuance and
sale, resale or reissuance of any Bonds or any certifications or representations made by any person
(other than the Issuer or the party seeking indemnification in connection therewith) or the canying
out by the Borrower of any of the transactions contemplated by the Bonds, the Master Pledge and
Assignment, the Loan Agreement or this Regulatory Agreement; (e) arising in connection with the
operation of the Project, or the conditions, environmental or otherwise, occupancy, use, possession,
conduct or management of work done in or about, or from the planning, design, acquisition,
construction or equipping of, the Project or any part thereof; and (f) arising out of or in connection
with the Agent's exercise of its powers or duties under the Loan Agreement, this Regulatory
Agreement, the Master Pledge and Assignment or any other agreements in connection therewith to
which it is a party; except (1) in the case of the foregoing indemnification of the Agent or any of its
officers, members, directors, agents and employees, to the extent such damages are caused by the
negligence or willful misconduct of such person and (2) in the case of the foregoing indemnification
of the Issuer or any of its officers, members, directors, officials, agents and employees, to the extent
such damages are caused by the willful misconduct of such person.
This indemnification shall extend to and include, without limitation, all reasonable costs,
counsel fees, expenses and liabilities incurred in connection with any such claim, or proceeding
brought with respect to such claim, except (i) in the case of the foregoing indemnification of the
Agent or any of its Indemnified Parties to the extent such damages are caused by the negligence or
willful misconduct of such Indemnified Party, and (ii) in the case of the foregoing indemnification of
the Issuer or any of its Indemnified Parties to the extent such damages are caused by the willful
misconduct of such Indemnified Party.
12
OOCSOC/ 1400880v3/024036-0052
In the event that any action or proceeding is brought against any Indemnified Party with
respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the
Indemnified Party, shall assume the investigation and defense thereof, including the employment of
counsel selected by the Indemnified Party and approved by the Borrower (which approval shall not
be unreasonably withheld); and the Borrower shall assume the payment of all reasonable fees and
expenses related thereto, with full power to litigate, compromise or settle the same in its sole
discretion; provided that the Issuer shall have the right to review and approve or disapprove any such
compromise or settlement. The Borrower specifically acknowledges and agrees that it has an
immediate and independent obligation to defend each Indemnified Party from any claim which
actually or potentially falls within this Section 7 even if such claim is or may be groundless,
fraudulent or false, which obligation arises at the time such claim is tendered to the Borrower by any
Indemnified Party and continues at all times thereafter. Each Indemnified Party shall have the right
to employ separate counsel in any such action or proceeding and participate in the investigation and
defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate
counsel; provided, however, that unless such separate counsel is employed with the approval of the
Borrower, which approval shall not be unreasonably withheld, the Borrower shall not be required to
pay the fees and expenses of such separate counsel unless the Indemnified Party reasonably
determines that a conflict exists between the interests of the Borrower and such Indemnified Party, in
which case the Borrower shall pay the reasonable fees and expenses of such separate counsel.
The Borrower also shall pay and discharge and shall indemnify and hold harmless the Issuer
and the Agent from (i) any lien or charge upon payments by the Borrower to the Issuer and the Agent
hereunder arising out of Borrower's actions or inactions and (ii) any taxes (including, without
limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges in
respect of any portion of the Project. If any such claim is asserted, or any such lien or charge upon
payments, or any such taxes, assessments, impositions or other charges, are sought to be imposed, the
Issuer shall give prompt notice to the Borrower, and the Borrower shall have the sole right and duty
to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the
same in its sole discretion.
Notwithstanding any transfer of the Project to another owner in accordance with the
provisions of Section 10 of this Regulatory Agreement, the Borrower shall remain obligated to
indemnify the Indemnified Parties pursuant to this Section 7 for all claims arising from events
occurring prior to such transfer, unless at the time of transfer the Issuer has consented to
indemnification under this Section 7 from such subsequent owner for all claims arising from events
occurring prior to such transfer. If the Issuer has consented to any transfer of the Project in
accordance with the provisions of Section ]0 of this Regulatory Agreement, the Borrower shall not
be obligated to indemnify the Indemnified Parties pursuant to this Section 7 for actions or inactions
of the transferee arising after such transfer, but shall remain obligated to provide indemnity for
claims related to actions or inactions occurring prior to such transfer.
In addition to the foregoing, the Borrower will pay upon demand all of the fees and expenses
paid or incurred by the Agent and/or the Issuer in enforcing the provisions hereof.
The provisions of this Section 7 shall survive the term of the Bonds and this Regulatory
Agreement.
The obligations of the Borrower under this Section are independent of any other contractual
obligation of the Borrower to provide indemnity to the Indemnified Parties, and the obligation of the
13
DOCSOC/ 1400880v3/024036-0052
Borrower to provide indemnity hereunder shall not be interpreted, construed or limited in light of any
other separate indemnification obligation of the Borrower. The Indemnified Parties shall be entitled
simultaneously to seek indemnity under this Section and any other provision under which they are
entitled to indemnity.
Section 8. Consideration. The Issuer has issued the Bonds to make the Loan to finance
the Project, all for the purpose, among others, of inducing the Borrower to acquire, construct, equip
and operate the Project. In consideration of the issuance of the Bonds by the Issuer, the Borrower
has entered into this Regulatory Agreement and has agreed to restrict the uses to which the Project
can be put on the terms and conditions set forth herein.
Section 9. Reliance. The Issuer and the Borrower hereby recognize and agree that the
representations, warranties, covenants and agreements set forth herein may be relied upon by all
persons interested in the legality and validity of the Bonds, and in the exclusion from gross income
for federal income tax purposes of interest on the Bonds and the exemption from California personal
income taxation of the interest on the Bonds. ]n performing their duties and obligations hereunder,
the Issuer and the Agent may rely upon statements and certificates of the Borrower, the Very Low
Income Tenants, and upon audits of the books and records of the Borrower pertaining to the Project.
In addition, the Issuer and the Agent may consult with counsel, and the opinion of such counsel shall
be full and complete authorization and protection in respect of any action taken or suffered by the
Issuer or the Agent under this Regulatory Agreement in good faith and in conformity with such
opinion; provided, however, if there are conflicting opinions among the counsel selected by such
parties, the opinion of Bond Counsel shall govern the interpretation and enforcement of this
Regulatory Agreement.
Section 10. Sale or Transfer of the Project; Syndication. The Borrower intends to hold
the Project for its own account, has no current plans to sell, transfer or otherwise dispose of the
Project, and hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project, or
any portion thereof (other than for individual tenant use as contemplated hereunder), without
obtaining the prior written consent of the Issuer (except as provided in the next succeeding
paragraph) and upon receipt by the Issuer (except as provided in the next succeeding paragraph) of
(i) such certifications as deemed necessary by the Issuer to establish that the Borrower shall not be in
default under this Regulatory Agreement or under the Loan Agreement or, if any such defaults exist,
the purchaser or assignee undertakes to cure such defaults to the satisfaction of the Issuer; (ii) a
written instrument by which the Borrower's purchaser or transferee has assumed in writing and in
full the Borrower's duties and obligations under this Regulatory Agreement, (iii) an opinion of
counsel for the transferee that the transferee has duly assumed the obligations of the Borrower under
this Regulatory Agreement and that such obligations and this Regulatory Agreement are binding on
the transferee, (iv) documentation from the transferee reflecting the transferee's experience or,
should the transferee choose to have a property manager run the Project, a property manager's
experience with owning and/or operating multifamily housing projects such as the Project and with
use and occupancy restrictions similar to those contained in this Regulatory Agreement, and (v) an
opinion of Bond Counsel addressed to the Issuer to the effect that such transfer will not cause interest
on the Bonds, to become includable in the gross income of the recipients thereof for federal income
tax purposes.
No transfer of the Project shall operate to release the Borrower from its obligations under this
Regulatory Agreement with respect to any action or inaction taken prior to such transfer. Nothing
contained in this Section ] 0 shall affect any provision of the Loan Documents to which the Borrower
DOCSOC/ 1400880v 3/024036-0052
14
is a party which requires the Borrower to obtain the consent of the Agent or Holder as a precondition
to sale, transfer or other disposition of, or any direct or indirect interest in, the Project or of any direct
or indirect interest in the Borrower or which gives the Agent or the Holder the right to accelerate the
maturity of the Loan made pursuant to the Loan Agreement, or to take some other similar action with
respect to the Loan, upon the sale, transfer or other disposition of the Project. Notwithstanding
anything contained in this Section 10 to the contrary, neither the consent of the Issuer nor the
delivery of items (i) through (v) of the preceding paragraph shall be required in the case of a
foreclosure or deed in lieu of foreclosure or comparable conversion of the Loan made pursuant to the
Loan Agreement, whereby Holder or its designee, or a third party purchaser from the Holder,
becomes the owner of the Project, and nothing contained in this Section 10 shall otherwise affect the
right of the Holder or its designee, or any such third party purchaser, to foreclose on the Project or to
accept a deed in lieu of foreclosure or to effect a comparable conversion of the Loan made pursuant
to the Loan Agreement. Consent of the Issuer and delivery of items (i) through (v) of the preceding
paragraph shall be required for any future transfer of the Project to be made subsequent to any
transfer described in the preceding sentence.
It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the
Project in violation of this Section 10 shall be null, void and without effect, shall cause a reversion of
title to the Borrower, and shall be ineffective to relieve the Borrower of its obligations under this
Regulatory Agreement. Not less than 30 days prior to consummating any sale, transfer or disposition
of any interest in the Project, the Borrower shall deliver to the Issuer, the Agent and Holder a notice
in writing explaining the nature of the proposed transfer.
Notwithstanding the above, the following transfers will be permitted: (a) a transfer of
partnership interests in Borrower to or by the tax credit investor (the "Tax Credit Investor") under the
amended and restated partnership agreement of the Borrower (the "Partnership Agreement") and/or
the special limited partner of the Borrower, if any, under the Partnership Agreement (the "Special
Limited Partner"), or its or their respective designee pursuant to the Partnership Agreement; (b) a
transfer of the limited partner interests in the Borrower of the Tax Credit Investor and/or the Special
Limited Partner to an affiliate of such Tax Credit Investor and/or Special Limited Partner, (c) a
transfer of the limited liability company interests in the Tax Credit ]nvestor and/or the Special
Limited Partner to nonaffiliates of such Tax Credit Investor and/or Special Limited Partner with
notice to the Agent; (d) the removal and replacement of the general partner of the Borrower under the
Partnership Agreement (the "General Partner") pursuant to the Partnership Agreement. Prior to any
transfer of partnership interests or removal of the General Partner permitted in (a) through (d) above,
the Issuer shall receive an opinion of Bond Counsel acceptable to the Issuer to the effect that such
transfer will not cause interest on the Bonds, to become includable in the gross income of the
recipients thereof for federal income tax purposes.
Section 11. Term. Except as provided in Section 3Q) and Section 7 above, which
provisions shall continue beyond the Qualified Project Period, and, except as provided in the second
paragraph of this Section 1 1, this Regulatory Agreement and all and several of the terms hereof shall
become effective upon its execution and delivery and shall remain in full force and effect during the
Qualified Project Period, or for such longer period as is provided in Sections 3Q) and 7 above, and in
the CDLAC Resolution referred to in Section 26 below, it being expressly agreed and understood
that the provisions hereof are intended to survive the retirement of the Bonds and expiration of the
Master Pledge and Assignment, the Loan Agreement and the Loan. Notwithstanding any other
provisions of this Regulatory Agreement to the contrary, this entire Regulatory Agreement, or any of
the provisions or sections hereof, may be terminated prior to the expiration of the Qualified Project
DOCSOC/1400880v3/024036-0052
15
Period upon agreement by the Issuer, the Agent and the Holder (if any Bonds are outstanding) and
the Borrower only if there shall have been received by the Issuer an opinion of Bond Counsel that
such termination will not adversely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds or the exemption from State personal income taxation of the
interest on the Bonds.
The terms of this Regulatory Agreement to the contrary notwithstanding (except as to the
provisions of Section 7), this Regulatory Agreement, and each and all of the terms hereof, shall
terminate and be of no further force or effect in the event of an involuntary noncompliance by the
Borrower with the provisions of this Regulatory Agreement caused by (i) fire, seizure, requisition,
change in a federal law or an action of a federal agency after the Closing Date which prevents the
Issuer from enforcing the provisions of this Regulatory Agreement, or (ii) foreclosure on the Project
or delivery of a deed in lieu of foreclosure or condemnation or a similar event, but only if within a
reasonable period thereafter the Bonds are redeemed or retired or amounts received as a consequence
of such event are used to provide a project that meets the requirements of the Code set forth in this
Regulatory Agreement; provided, however, that the preceding provisions of this sentence shall cease
to apply and the restrictions contained herein shall be reinstated if, at any time subsequent to the
termination of such provisions as the result of the foreclosure on the Project or the delivery of a deed
in lieu of foreclosure or a similar event, the Borrower or any Affiliated Party obtains an ownership
interest in the Project for federal income tax purposes. Upon the termination of the terms of this
Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate
instruments of release and discharge of the terms hereof; provided, however, that the execution and
delivery of such instruments shall not be necessary or a prerequisite to the termination of this
Regulatory Agreement in accordance with its terms. Borrower agrees that the reasonable fees and
costs of the Issuer and Agent and their respective legal counsel in connection with the termination of
this Regulatory Agreement shall be paid by the Borrower.
Section 12. Covenants to Run With the Land. The Borrower hereby subjects the Project
(including the Project Site) to the covenants, reservations and restrictions set forth in this Regulatory
Agreement. The Issuer and the Borrower hereby declare their express intent that the covenants,
reservations and restrictions set forth herein shall be deemed covenants running with the land and
shall pass to and be binding upon the Borrower's successors in title to the Project; provided,
however, that on the termination of this Regulatory Agreement said covenants, reservations and
restrictions shall expire. Each and every contract, deed or other instrument hereafter executed
covering or conveying the Project or any portion thereof shall conclusively be held to have been
executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless
of whether such covenants, reservations and restrictions are set forth in such contract, deed or other
instruments.
Section 13. Burden and Benefit. The Issuer and the Borrower hereby declare their
understanding and intent that the burden of the covenants set forth herein touch and concern the land
in that the Borrower's legal interest in the Project is rendered less valuable thereby. The Issuer and
the Borrower hereby further declare their understanding and intent that the benefit of such covenants
touch and concern the land by enhancing and increasing the enjoyment and use of the Project by
Very Low Income Tenants and by furthering the public purposes for which the Bonds were issued.
Section 14. Uniformity: Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan
for the use, development and improvement of the Project Site.
DOC SOC/ 1400880x3/024036-0052
16
Section 15. Enforcement. If the Borrower defaults in the performance or observance of
any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement, and if
such default remains uncured for a period of 60 days after notice thereof shall have been given (i) by
the Issuer to the Agent, the Borrower and the Holder or (ii) by the Agent to the Issuer, the Borrower
and the Holder (provided, however, that the Issuer may at its sole option extend such period if the
Borrower provides the Issuer, the Agent and the Holder with an opinion of Bond Counsel to the
effect that such extension will not adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds), then the Issuer may declare an "Event of Default" to
have occurred hereunder and shall provide written notice thereof to the Borrower and the Holder and
the Issuer or the Agent, as applicable, and, at its option may take any one or more of the following
steps:
(i) by mandamus or other suit, action or proceeding at law or in equity, require
the Borrower to perform its obligations and covenants hereunder or enjoin any acts or things which
may be unlawful or in violation of the rights of the Issuer hereunder;
(ii) have access to and inspect, examine and make copies of all of the books and
records of the Borrower pertaining to the Project; or
(iii) take such other action at law or in equity as may appear necessary or
desirable to enforce the obligations, covenants and agreements of the Borrower hereunder.
The Borrower hereby agrees that specific enforcement of the Borrower's agreements
contained herein is the only means by which the Issuer may fully obtain the benefits of such
agreements made by the Borrower herein, and the Borrower therefore agrees to the imposition of the
remedy of specific performance against it in the case of any Event of Default by the Borrower
hereunder.
The Agent shall have the right, in accordance with this Section 15 and subject to the
provisions of the Master Pledge and Assignment and the Master Agency Agreement, to exercise any
or all of the rights or remedies of the ]ssuer hereunder; provided that prior to taking any such act the
Agent shall give the Issuer written notice of its intended action. All fees, costs and expenses of the
Agent (including, without limitation, reasonable attorneys fees) incurred in taking any action
pursuant to this Section 15 shall be the sole responsibility of the Borrower.
Notwithstanding anything contained in this Regulatory Agreement or the Master Pledge and
Assignment to the contrary, the occurrence of an Event of Default under this Regulatory Agreement
shall not be deemed, under any circumstances whatsoever, to be a default under the Loan Documents
except as may be otherwise specified in the Loan Documents.
The Issuer may not, upon the occurrence of an event of default under this Regulatory
Agreement, seek, in any manner, to foreclose on the Mortgage, to cause the Agent to redeem the
Bonds or to declare the principal of the Bonds and the interest accrued on the Bonds to be
immediately due and payable or to cause the Agent to take any action under any of the Loan
Documents, the Master Pledge and Assignment or any other documents which action would or could
have the effect of achieving any one or more of the actions, events or results described above. The
occurrence of an Event of Default under this Regulatory Agreement shall not impair, defeat or render
invalid the lien of the Mortgage.
DOCSOC/ 1400880v3/024036-0052
17
The rights of the Agent under this Section are in addition to all rights conferred upon the
Agent under the Master Pledge and Assignment and the other Loan Documents and in no way limit
those rights.
Section 16. Recording and Filing. The Borrower shall cause this Regulatory Agreement
and all amendments and supplements hereto and thereto, to be recorded and filed in the real property
records of the County of San Diego and in such other places as the Issuer or the Agent may
reasonably request. The Borrower shall pay all fees and charges incurred in connection with any
such recording.
Section 17. Payment of Fees. On the date of issuance of the Bonds, the Issuer shall be
paid aone-time fee of [$37,500]. Thereafter, the Borrower shall pay to the Issuer the semi-annual
Issuer Fee on the dates and in the amounts set forth in the definition thereof. Notwithstanding any
prepayment of the Loan and notwithstanding adischarge of the Master Pledge and Assignment,
except as set forth in the following paragraph, throughout the term of this Regulatory Agreement, the
Borrower shall continue to pay to the Issuer the Issuer Fee, and, following an Event of Default, to the
Issuer and to the Agent reasonable compensation for any services rendered by either of them
hereunder and reimbursement for all expenses reasonably incurred by either of them as a result of
such Event of Default. The Issuer Fee referenced in this section shall in no way limit amounts
payable by the Borrower under Section 7 hereof, or arising after an Event of Default in connection
with the Issuer's or the Agent's enforcement of the provisions of this Regulatory Agreement.
In the event that the Bonds are prepaid in part or in full prior to the end of the term of this
Regulatory Agreement, the Issuer Fee for the remainder of the term of this Regulatory Agreement, at
the option of the Issuer, shall continue to be payable to the Issuer for the number of years remaining
under the Regulatory Agreement. At the option of the Issuer, the Issuer Fee shall be paid by the
Borrower at the time of the prepayment of the last of the Bonds and shall be a lump sum amount
equal to the present value (based on a discount rate equal to the yield on the Bonds, as determined by
the Issuer at the time of prepayment) of the Issuer Fee for the number of years remaining in the
Qualified Project Period under this Regulatory Agreement.
During any period that the Holder owns the Project, it shall be responsible to make payments
under this Section 17 accruing during such period. Neither the Holder nor the Agent shall be liable
for the payment of any compensation or any fees, costs, expenses or penalties otherwise payable for
any period of time that it was not or is not the owner of the Project.
Section 18. Governing Law. This Regulatory Agreement shall be governed by the laws
of the State of California.
Section 19. Amendments. Except as provided in Section 6(a) hereof, this Regulatory
Agreement shall be amended (i) only with the prior written consent of the Holder and (ii) by a
written instrument executed by the parties hereto or their successors in title, and duly recorded in the
real property records of the County of San Bernardino. The parties hereto acknowledge that for so
long as the Bonds are outstanding, the Holder and the owners of the Bonds are third party
beneficiaries to this Regulatory Agreement. Any amendment to this Regulatory Agreement shall be
accompanied by an opinion of Bond Counsel to the effect that such amendment will not adversely
affect the exclusion from gross income for federal income tax purposes of interest on the Bonds.
DOCSOG 1400880v3/024036-0052
18
Section 20. Notice. All notices, certificates or other communications shall be sufficiently
given and shall be deemed given on the date personally delivered or on the third business day
following the date on which the same have been mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
Issuer: Housing Authority of the City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
Agent: U.S. Bank National Association
4747 Executive Drive, 3`d Floor
San Diego, California 9272]
Attention: Loan Administration
Holder: U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, California 92121
Attention: Loan Administration
Borrower: Landings 11, L.P.,
c/o Chelsea Asset Corporation
5993 Avenida Encinas, Suite 101
Carlsbad, California 92008
Attn: James J. Schmid
with copy to: Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, California 94105-2228
Attn: Gary Downs, Esq.
with copy to: Raymond James Tax Credit Funds, Inc.
1250 Linda Street, Suite 101
Rocky River, OH 44116
Attention:
Any of the foregoing parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, documents or other communications
shall be sent. Copies of notices sent by any party hereto shall be sent concurrently to the Holder.
Section 21. Severability. If any provision of this Regulatory Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof
shall not in any way be affected or impaired thereby.
Section 22. Multiple Counterparts. This Regulatory Agreement may be executed in
multiple counterparts, all of which shall constitute one and the same instrument, and each of which
shall be deemed to be an original.
19
DOCSOC/ 1400SSOv3/024036-0052
Section 23. Compliance by Borrower. The Agent shall not be responsible for monitoring
or verifying compliance by the Borrower with its obligations under this Regulatory Agreement.
Section 24. General Obligation of Borrower; Limitations on Recourse to Borrower.
Except as provided in Section 7 of this Regulatory Agreement, no subsequent owner of the Project
shall be liable or obligated to pay damages for the breach or default of any obligation of or covenant
by any prior owner (including the Borrower) under this Regulatory Agreement. Such obligations are
the obligations of the person who was the owner at the time the default or breach was alleged to have
occurred, and such owner shall remain liable for any and all damages occasioned thereby even after
such person ceases to be the owner of the Project, and no person seeking such damages shall have
recourse against the Project.
Section 25. Third-Party Beneficiary. The parties to this Regulatory Agreement recognize
and agree that the terms of this Regulatory Agreement and the enforcement of those terms are
essential to the security of the Holder and are entered into for the benefit of the Holder. The Holder
shall have contractual rights in this Regulatory Agreement and shall be entitled (but not obligated) to
enforce, separately or jointly with the ]suer, or to cause the Issuer to enforce, the terms of this
Regulatory Agreement. The Holder is intended to be and shall be a third-parry beneficiary of this
Regulatory Agreement, and the Holder shall have the right (but not the obligation) to enforce the
terms of this Regulatory Agreement insofar as this Regulatory Agreement sets forth obligations of
the Borrower.
Section 26. CDLAC Requirements. The acquisition, construction, equipping and
operation of the Project and the financing thereof are and shall be in compliance with the conditions
set forth in Exhibit A to the CDLAC Resolution, a copy of which is attached hereto as Exhibit D,
which conditions are incorporated herein by reference and are made a part hereof. The Issuer shall
monitor and enforce the Borrower's compliance with the provisions of this Section 26. The
Borrower shall prepare and submit to CDLAC on each anniversary of the Closing Date, and on such
other date as is reasonably requested by CDLAC, a Certificate of Compliance in substantially the
form attached hereto as Exhibit E, executed by an authorized representative of the Borrower.
CDLAC shall be a third-party beneficiary of this Regulatory Agreement solely for purposes of
enforcing the terms of the CDLAC Resolution. CDLAC shall have the right to enforce the terms of
the CDLAC Resolution through an action for specific performance or any other available remedy;
provided, however, that CDLAC shall not take any action or enforce any remedy that would be
materially adverse to the interests of the Holder and any such action or enforcement shall otherwise
be subject to the terms, conditions and limitations applicable to the enforcement of remedies under
this Regulatory Agreement.
Section 27. Damage Destruction or Condemnation of the Proiect In the event that the
Project is damaged or destroyed or title to the property, or any part thereof, is taken through the
exercise or the threat of the exercise of the power of eminent domain, the Borrower shall comply
with all applicable requirements of the other Loan Documents.
DOCSOC/1400880v3/024036-0052
20
IN WITNESS WHEREOF, the Issuer and the Borrower have executed this Regulatory
Agreement by duly authorized representatives, all as of the date first written hereinabove.
HOUSING AUTHORITY OF CITY OF CHULA
VISTA, CALIFORNIA
By:
Executive Director
ATTEST:
Secretary
[signatures continued on next page]
S-1
DOCSOC/ 1400R80v3/024036-0052
[signature page to Regulatory Agreement continued)
Landings II, L.P., a California limited partnership
By: Pacific Southwest Community Development Corporation,
a Califomia nonprofit public benefit corporation,
its Managing General Partner
By:
Robert W. Laing
President/ Executive Director
By: Landings II CIC, LLC, a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation, a Califomia corporation,
its Manager
By:
James J. Schmid, President
S-2
DOCSOC/ 1400880v3/024036-0052
ACKNOWLEDGMENT
State of California
County of
On before me,
(here insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
1 certify under PENALTY OF PERJURY under the Taws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
llOCSOC/ 1400880v3/024036-0052
ACKNOWLEDGMENT
State of California
County of
On
personally appeared
before me,
(here insert name and title of the officer)
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
1 certify under PENALTY OF PERJURY under the laws of the State of Califomia that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
DOC SOC/ 1400RROv3/024036-0052
ACKNOWLEDGMENT
State of California
County of
On before me, ,
(here insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
1 certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
DOCSOGI400880v3/024036-0052
EXHIBIT A
LEGAL DESCRIPTION
The estate or interest in the land described below and which is encumbered is:
Real property in the City of Chula Vista, County of San Diego, State of California, described as
follows:
[TO COME]
A-]
DOCSOC/ 14008SOv3/024036-0052
EXHIBIT B
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
The undersigned, ,being duly authorized to execute this certificate
on behalf of Landings II, L.P., a California limited partnership (the "Borrower"), hereby represents
and warrants that:
1. The undersigned has read and is familiar with the provisions of the following
documents associated with the Borrower's participation in the Housing Authority of the City of
Chula Vista (the "Issuer") Multifamily Housing Revenue Bonds (Ceres Way Apartments) 2010
Series A-1 through A-3, such documents including:
(a) the Regulatory Agreement and Declaration of Restrictive Covenants (the
"Regulatory Agreement") dated as of 1, 2010 among the Borrower, the lssuer and U.S. Bank
National Association;
(b) the Notes, each dated as of 1, 2010 from the Borrower to the Agent, as
agent of the Issuer, representing the Borrower's obligation to repay the Loan.
2. As of the date of this certificate, the following percentages of residential units in the
Project (i) are occupied by Very Low Income Tenants (as such term is defined in the Regulatory
Agreement) or (ii) are currently vacant and being held available for such occupancy and have been so
held continuously since the date a Very Low Income Tenant vacated such unit; as indicated:
Studio 1 Bedroom 2 Bedrooms 3 Bedrooms Total
Occupied by Very
Low Income Tenants: % Unit Nos.:
Held vacant for occupancy
continuously since last
occupied by a Very Low
Income Tenant: % Unit Nos.:
3. The Borrower hereby certifies that to the best of its knowledge the Borrower is not in
default under any of the terms of the above documents and no event has occurred which, with the
passage of time, would constitute an event of default thereunder, with the exception of the following
[state actions being taken to remedy default].
LANDINGS Il, L.P.,
a California limited partnership
By:
Its:
B-1
DOCSOC/ 1400880v3/024036-0052
EXHIBIT C
INCOME COMPUTATION AND CERTIFICATION
NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual
Income in accordance with the method set forth in the Department of Housing and Urban
Development ("HUD") Regulations (24 CFR 5.609). You should make certain that this form is at all
times up to date with the HUD Regulations. All capitalized terms used herein shall have the meaning
set forth in the Regulatory Agreement.
Re: [Address of Apartment Building]
I/We, the undersigned state that 1/we have read and answered fully, frankly and personally
each of the following questions for all persons who are to occupy the unit being applied for in the
above apartment project. Listed below are the names of all persons who intend to reside in the unit:
Name of Members
of the
Household
Relationship to
Head of
Household
HEAD
SPOUSE
Social Security
Number
Place of
Age Employment
C-1
DOCSOC/1400880v3/024036-0052
Income Computation
6. The total anticipated income, calculated in accordance with this paragraph 6, of all persons
(except children under 18 years) listed above for the 12-month period beginning the earlier of
the date that I/we plan to move into a unit or sign a lease for a unit is $
Included in the total anticipated income listed above are:
(a) The full amount, before any payroll deductions, of wages and salaries, overtime pay,
commissions, fees, tips and bonuses, and other compensation for personal services;
(b) The net income from the operation of a business or profession. Expenditures for
business expansion or amortization of capital indebtedness shall not be used as
deductions in determining net income. An allowance for depreciation of assets used
in a business or profession may be deducted, based on straight line depreciation, as
provided in Internal Revenue Service regulations. Any withdrawal of cash or assets
from the operation of a business or profession will be included in income, except to
the extent the withdrawal is reimbursement of cash or assets invested in the operation
by the family;
(c) Interest, dividends, and other net income of any kind from real or personal property.
Expenditures for amortization of capital indebtedness shall not be used as deductions
in determining net income. An allowance for depreciation is permitted only as
authorized in paragraph (6)(b) of this section. Any withdrawal of cash or assets from
an investment will be included in income, except to the extent the withdrawal is
reimbursement of cash or assets invested by the family. Where the family has net
family assets in excess of $5000, annual income shall include the greater of the actual
income derived from all net family assets or a percentage of the value of such assets
based on the current passbook savings rate, as determined by the Department of
Housing and Urban Development;
(d) The full amount of periodic amounts received from Social Security, annuities,
insurance policies, retirement funds, pensions, disability or death benefits, and other
similar types of periodic receipts, including alump-sum amount or prospective
monthly amounts for the delayed start of a periodic amount except deferred periodic
amounts from supplemental security income and social security benefits that are
received in a lump sum amount or in prospective monthly amounts;
(e) Payments in lieu of earnings, such as unemployment and disability compensation,
worker's compensation and severance pay except lump-sum additions to family
assets, such as inheritances, insurance payments (including payments under health
and accident insurance and worker's compensation), capital gains and settlement for
personal or property losses (excluding payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation and severance
PaY);
C-2
DOCSOC/1400880v3/024036-0052
(f) Welfare assistance. If the welfare assistance payment includes an amount
specifically designated for shelter and utilities that is subject to adjustment by the
welfare assistance agency in accordance with the actual cost of shelter and utilities,
the amount of welfare assistance income to be included as income shall consist of:
(]) The amount of the allowance or grant exclusive of the amount specifically
designated for shelter or utilities; plus
(2) The maximum amount that the welfare assistance agency could in fact allow
the family for shelter and utilities. If the family's welfare assistance is ratably
reduced form the standard of need by applying a percentage, the amount
calculated under this paragraph shall be the amount resulting from one
application of the percentage;
(g) Periodic and determinable allowances, such as alimony and child support payments,
and regular contributions or gifts received from organizations or from persons not
residing in the dwelling;
(h) All regular pay, special pay and allowances of a member of the Armed Forces except
the special pay to a family member serving in the Armed Forces who is exposed to
hostile fire.
Excluded from such anticipated income are:
(a) Income from employment of children (including foster children) under the age of 18
years;
(b) Payments received for the care of foster children or foster adults (usually persons
with disabilities, unrelated to the tenant family, who are unable to live alone);
(c) Lump-sum additions to family assets, such as inheritances, insurance payments
(including payments under health and accident insurance and worker's
compensation), capital gains and settlement for personal or property losses except
payments in lieu of earnings, such as unemployment and disability compensation,
worker's compensation and severance pay;
(d) Amounts received by the family that are specifically for, or in reimbursement of, the
cost of medical expenses for any family member;
(e) Income of a live-in aide, as defined by 24 CFR §5.403;
(f) The full amount of student financial assistance paid directly to the student or to the
educational institution;
(g) The special pay to a family member serving in the Armed Forces who is exposed to
hostile fire;
(h) (1) Amounts received under training programs funded by the Department of
Housing and Urban Development;
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DOCSOC/ 1400880v3/024036-0052
(2) Amounts received by a person with a disability that are disregarded for a
limited time for purposes of Supplemental Security Income eligibility and
benefits because they are set aside for use under a Plan to Attain Self-
Sufficiency (PASS);
(3) Amounts received by a participant in other publicly assisted programs which
are specifically for or in reimbursement of out-of-pocket expenses incurred
(special equipment, clothing, transportation, child care, etc.) and which are
made solely to allow participation in a specific program;
(4) Amounts received under a resident service stipend. A resident service stipend
is a modest amount (not to exceed $200 per month) received by a resident for
performing a service for the Public Housing Authority or owner, on a part-
time basis, that enhances the quality of life in the development. Such services
may include, but are not limited to, fire patrol, hall monitoring, lawn
maintenance, and resident initiatives coordination. No resident may receive
more than one such stipend during the same period of time;
(5) ]ncremental earnings and benefits resulting to any family member from
participation in qualifying State or local employment training programs
(including training programs not affiliated with a local govemment) and
training of a family member as resident management staff. Amounts
excluded by this provision must be received under employment training
programs with clearly defined goals and objectives, and are excluded only for
the period during which the family member participates in the employment
training program;
(i) Temporary, nonrecurring or sporadic income (including gifts);
(j) Reparation payments paid by a foreign government pursuant to claims filed under the
laws of that government by persons who were persecuted during the Nazi era;
(k) Earnings in excess of $480 for each full-time student 18 years old or older (excluding
the head of household and spouse);
(1) Adoption assistance payments in excess of $480 per adopted child;
(m) Deferred periodic amounts from supplemental security income and social security
benefits that are received in a lump sum amount or in prospective monthly amounts.
(n) Amounts received by the family in the form of refunds or rebates under State or local
law for property taxes paid on the dwelling unit;
(o) Amounts paid by a State agency to a family with a member who has a developmental
disability and is living at home to offset the cost of services and equipment needed to
keep the developmentally disabled family member at home; or
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DOCSOC/1400880v3/024036-0052
(p) Amounts specifically excluded by any other Federal statute from consideration as
income for purposes of determining eligibility or benefits under a category of
assistance programs that includes assistance under any program to which the
exclusions set forth in 24 CFR §5.6O9(c) apply.
7. Do the persons whose income or contributions are included in item 6 above
(a) have savings, stocks, bonds, equity in real property or other form of capital
investment (excluding the values of necessary items of persona] property such as
furniture and automobiles and interests in Indian trust land)?
Yes No
(b) have they disposed of any assets (other than at a foreclosure or bankruptcy sale)
during the last two years at less than fair market value?
Yes _ No
(c) If the answer to (a) or (b) above is yes, does the combined total value of all such
assets owned or disposed of by all such persons total more than $5,000?
Yes No
(d) If the answer to (c) above is yes, state:
(1) the combined total value of all such assets: $ ,
(2) the amount of income expected to be derived from such assets in the
] 2-month period beginning on the date of initial occupancy in the unit that
you propose to rent: $ ,and
(3) the amount of such income, if any, that was included in item 6 above:
8. (a) Are all of the individuals who propose to reside in the unit full-time students*?
Yes _ No
*A full-time student is an individual enrolled as a full-time student during each of 5
calendar months during the calendar year in which occupancy of the unit begins at an
educational organization which normally maintains a regular faculty and curriculum
and normally has a regularly enrolled body of students in attendance or is an
individual pursuing afull-time course of institutional on farm training under the
supervision of an accredited agent of such an educational organization or of a state or
political subdivision thereof.
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DOC SOC/ 1400880v3/024036-0052
(b) If the answer to 8(a) is yes, is at least 2 of the proposed occupants of the unit a
husband and wife entitled to file a joint federal income tax return?
_ Yes No
9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner of the
rental housing project in which the unit is located (hereinafter the "Borrower"), has any
family relationship to the Borrower; or owns directly or indirectly any interest in the
Bon•ower. For purposes of this paragraph, indirect ownership by an individual shall mean
ownership by a family member, ownership by a corporation, partnership, estate or trust in
proportion to the ownership or beneficial interest in such corporation, partnership, estate or
trust held by the individual or a family member; and ownership, direct or indirect, by a
partner of the individual.
]0. This certificate is made with the knowledge that it will be relied upon by the Borrower to
determine maximum income for eligibility to occupy the unit; and I/we declare that all
information set forth herein is true, correct and complete and based upon information I/we
deem reliable and that the statement of total anticipated income contained in paragraph 6 is
reasonable and based upon such investigation as the undersigned deemed necessary.
11. I/we will assist the Borrower in obtaining any information or documents required to verify
the statements made herein, including either an income verification from my/our present
employer(s) or copies of federal tax returns for the immediately preceding calendar year.
12. I/we acknowledge that I/we have been advised that the making of any misrepresentation or
misstatement in this declaration will constitute a material breach of my/our agreement with
the Borrower to lease the unit and will entitle the Borrower to prevent or terminate my/our
occupancy of the unit by institution of an action for ejection or other appropriate proceedings.
1/we declare under penalty of perjury that the foregoing is true and correct.
Executed this day of in the County of San Diego, California.
Applicant
Applicant
[Signature of all persons (except children under the age of 18 years) listed in number 2 above
required)
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DOCSOC/1400880v3/024036-0052
FOR COMPLETION BY BORROWER ONLY:
Calculation of eligible income:
a. Enter amount entered for entire household in 6 above:
b. (1) If the answer to 7(c) above is yes, enter the total
amount entered in 7(d)(2), subtract from that figure
the amount entered in 7(d)(3) and enter the remaining
balance ($ )
(2) Multiply the amount entered in 7(d)(1) times the
current passbook savings rate as determined by HUD
to determine what the total annual earnings on the
amount in 7(d)(l) would be if invested in passbook
savings ($ ), subtract from that figure the
amount entered in 7(d)(3) and enter the remaining
balance ($ );
(3) Enter at right the greater of the amount calculated
under (1) or (2) above:
c. TOTAL ELIGIBLE INCOME
(Line ].a plus line 1.6(3)):
2.
The amount entered in line l.c:
Qualifies the applicant(s) as a Very Low ]ncome Tenant(s)
Does not qualify the applicant(s) as a Very Low Income
Tenant(s).
3.
Number of apartment unit assigned:
Bedroom Size
Rent: $
4. This apartment unit [was/was not] last occupied for a period of 31 or
more consecutive days by persons whose aggregate anticipated annual
income as certified in the above manner upon their initial occupancy
of the apartment unit qualified them as Very Low Income Tenants.
5. Method used to verify applicant(s) income:
Employer income verification.
Copies of tax returns.
Other ( )
Manager
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DOCSOC/ 1400880v3/024036-0052
INCOME VERIFICATION
(for employed persons)
The undersigned employee has applied for a rental unit located in a project financed under the Chula
Vista Housing Authority Multifamily Housing Revenue Bond Program for persons of lower income.
Every income statement of a prospective tenant must be stringently verified. Please indicate below
the employee's current annual income from wages, overtime, bonuses, commissions or any other
form of compensation received on a regular basis.
Annual wages
Overtime
Bonuses
Commissions
Other Income
Total current income
hereby certify that the statements above are true and complete to the best of my knowledge.
Signature
Date Title
I hereby grant you permission to disclose my income to in order that
they may determine my income eligibility for rental of an apartment located in their project which
has been financed under the Chula Vista Housing Authority Multifamily Housing Revenue Bond
Program.
Signature
Please send to:
Date
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DOCSOC/1400880v3/024036-0052
INCOME VERIFICATION
(for self-employpersons)
I hereby attach copies of my individual federal and state income tax retums for the immediately
preceding calendar year and certify that the information shown in such income tax returns is true and
complete to the best of my knowledge.
Signature
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Date
DOCSOC/ 1400R80v 3/024036-0052
EXHIBIT D
CDLAC RESOLUTION
RESOLUTION NO. 10-15
(QUALIFIED RESIDENTIAL RENTAL PROJECT)
2.
4.
5.
6.
7.
8.
9.
]0.
Ll.
12.
13.
14.
15.
Applicant: Housing Authority of the City of Chula Vista
Application No.: 10-008
Project Sponsor: Landings 11, L.P. (Pacific Southwest Community
Development Corporation and Chelsea Investment
Corporation Landings 2)
Project Name: Landings II Apartments
Type of Project: New Construction/Family
Location: Chula Vista, CA
Private Placement Purchaser: Winding Walk Residential, LLC and U.S. Bank National
Association
The Private Placement Purchaser at the time of issuance will be the same as represented in
the application. Applicable
Total Number of Units: 141 plus 2 manager units
Total Number of Restricted Rental Units: 141
The term of the income and rental restrictions for the Project will be at least 55 years.
The Project will utilize Gross Rents as defined in Section 2 of the Committee's Procedures.
Not Applicable
Income and Rental Restrictions:
For the entire term of the income and rental restrictions, the Project will have:
At least 28 Qualified Residential units rented or held vacant for rental for persons or families
whose income is at 50% or below of the Area Median Income.
At least 113 Qualified Residential units rented or held vacant for rental for persons or
families whose income is at 60% or below of the Area Median Income.
For acquisition and rehabilitation projects, a minimum of $10,000 in hard construction costs
will be expended for each Project unit. Not Applicable
A minimum of $4,400,000 of public funds will be expended for the Project. Applicable
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DOCSOC/ 1400880v3/024036-0052
16. At a minimum, the financing for the Project shall include a Taxable Tail in the amount of
$0,000. Taxable debt may only be utilized for Project related expenses, not for the cost of
issuance, for which the Project Sponsor could otherwise have used tax-exempt financing.
Not Applicable
17. if the Project received points for having large family units, for the entire term of the income
and rental restrictions, the Project will have at least 141 three-bedroom or larger units.
Applicable
18. For a period often (]0) years after the Project is placed in use, the Project will provide to
Project residents high-speed Internet service in each Project unit. Not Applicable
] 9. For a period often (10) years after the Project is placed in use, the Project will offer to
Project residents an after school program of an ongoing nature on-site or there must be an
afrer school program available to Project residents within 1/4 mile of the Project.
Not Applicable
20. For a period often (10) years after the Project is placed in use, the Project will offer to
Project residents educational classes on-site or there must be educational classes available to
Project residents within l/4 mile of the Project. Not Applicable
21. For a period often (10) years afrer the Project is placed in use, the Project will offer to
Project residents 20 hours or more per week of licensed childcare on-site or there must be 20
hours or more per week of licensed childcare available to Project residents within 1/4 mile of
the Project Not Applicable
22. For a period often (] 0) years after the Project is placed in use, the Project will offer to
Project residents contracts for services on-site or such service must be available to the Project
residents within 1/4 mile of the Project. Not Applicable
23. All projects that receive points for being a Federally Assisted At-Risk Project will renew all
Section 8 HAP Contracts or equivalent Project-based subsidies for their full term, and will
seek additional renewals, if available, throughout the Project's useful life. Not Applicable
24. All projects that receive points for being a Federally Assisted At-Risk Project based on an
expiring Low Income Housing Tax Credit Regulatory Agreement or Tax-Exempt Bond
Regulatory Agreement shall have a plan in place to re-certify the incomes of the existing
tenants and shall not cause involuntary displacement of any tenant whose income may exceed
the Project's income limits.
Not Applicable
25. The project is a New Construction or Adaptive Reuse Project exceeding Title 24 Energy
Standards by at least ] 0%. Not Applicable
26. The Project will incorporate the following energy efficient items:
a. Energy Star rated ceiling fans in all bedrooms and living rooms; or use of a whole
house fan; or use of an economizer cycle on mechanically cooled HVAC systems.
Not Applicable
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DOCSOC/ 1400880v3/024036-0052
b. At least one of the following recycled materials at the designated levels: a) cast-in-
place concrete (20% flyash); b) carpet (25%); c) road base, fill or landscape
amendments (30%). Not Applicable
c. Either a) orb) as follows: a) flow restrictors on kitchen faucets (2 gallons per minute
or less) and bathroom faucets (1.5 gallons per minute or less) or b) at least one High
Efficiency Toilet (1.3 gallons per flush) or dual flush toilets per unit. Not
Applicable
d. For rehabilitation projects not subject to Title 24 requirements, use of fluorescent
light fixtures for at least 75% of -ight fixtures or comparable energy saving lighting
for the project's total lighting (including community rooms and any common space)
throughout the compliance period. Not Applicable
e. Either a) or b) as follows: a) no VOC interior paint (5 grams per liter or less),
Carpet/Rug Institute Green-]abel, low-VOC carpeting and pad and low-VOC
adhesives 25 grams per liter or less), or b) bathroom fans in all bathrooms that
exhaust to the outdoors and are equipped with a humidistat sensor or timer. Not
Applicable
£ Either a) or b) as follows: a) material for all cabinets, countertops and shelving that is
free of added formaldehyde or fully sealed on all six sides by laminates and/or a low-
VOC primer or sealant (150 gram per liter or less); or b) formaldehyde-free
insulation. Not Applicable
g. Design the project to retain, infiltrate and/or treat on-site the first one-half inch of
rainfall in a 24-hour period. Not Applicable
h. Include in the Project specifications a Construction Indoor Air Quality Management
plan that requires the following: a) protection of construction materials from water
damage during construction; b) capping of ducts during construction; c) cleaning of
ducts upon completion of construction; and d) for rehabilitation projects,
implementation of a dust control plan that prevents particulates from migrating into
occupied areas.Not Applicable
Project design incorporates the principles of Universal Design in at least half of the
project's units by including: accessible routs of travel to the dwelling units with
accessible 34"minimum clear-opening-width entry and interior doors with lever
hardware and 42" minimum width hallways; accessible full bathroom on primary
floor with 30"x 60" clearance parallel to the entry to 60" wide accessible showers
with grab bars, anti-scald valves and lever faucet/ shower handles, and reinforcement
applied to walls around toilet for future grab bar installation; accessible kitchen with
30"x 48" clearance parallel to and centered on front of all major fixtures and
appliances. Not Applicable
j. Project will contain nonsmoking buildings or sections of buildings. Nonsmoking sections
must consist of at least half the units within the building, and those units must be contiguous. Not
Applicable
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DOCSOC/1400880v3/024036-0052
EXHIBIT E
CERTIFICATE OF COMPLIANCE
Project Name: Landings II Apartments
CDLAC Application No.: 10-008
Pursuant to Section 14 of Resolution No. ] 0-15 (the "Resolution"), adopted by the California
Debt Limit Allocation Committee (the "Committee") on March 24, 2010, I, , an
Officer of the Project Sponsor, hereby certify under penalty of perjury that, as of the date of this
Certification, the above-mentioned Project is in compliance with all of the terms and conditions set
forth in the Resolution.
l further certify that I have read and understand Section 3 of the Resolution, which specifies
that once the Bonds are issued, the terms and conditions set forth in the Resolution shall be
enforceable by the Committee through an action for specific performance or any other available
remedy (as further explained in Section 13 of the Resolution).
Signature of Officer Date
Printed Name of Officer
Title of Officer
Phone Number
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DOCSOC/ 1400880v3/024036-0052
Attachment 7
Housing Authority of the City of Chula Vista
MASTER PLEDGE AND ASSIGNMENT
Stradling Yocca Carlson & Rauth
Draft Dated April 26, 2010
MASTER PLEDGE AND ASSIGNMENT
among
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA,
as Issuer
and
U.S. BANK NATIONAL ASSOCIATION,
as Agent
and
U.S. BANK NATIONAL ASSOCIATION,
as Holder
Dated as of , 2010
Relating to
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-1
S
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-2
and
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SUBORDINATE SERIES 2010A-3
DOC SOC/ 1400R77v5/024036-0052
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
Section 1.1
Definitions ..................................................................................................................... 3
ARTICLE 2
BONDS
Section 2.1
Section 2.2
Section 2.3
Section 2.4
Section 2.5
Section 2.6
Section 2.7
Section 2.8
Section 2.9
Section 2.10
Section 2.11
Section 2.12
Section 2.13
Section 2.14
Section 2.15
Section 2.16
Issuance of Bonds to Fund Loan; Draw-Down Bonds ......................................... .........9
Form, Amount and Delivery of Bonds ................................................................. .........9
Principal; Maturity Date ....................................................................................... .........9
Interest .................................................................................................................. .......10
Limited Obligation of Issuer and Agent to Make Payments ................................ ....... l 1
Corresponding Payments ..................................................................................... ....... l 1
Replacement of Bonds ......................................................................................... .......11
Registration and Transferability ........................................................................... .......1 l
Mandatory Purchase on Remarketing Date; Establishment of Remarketing
Date ...................................................................................................................... .......12
Remarketing Agent .............................................................................................. .......13
Qualifications of Remarketing Agent .................................................................. .......13
Remarketing of Series A-1 Bonds ........................................................................ .......14
Redemption of Series A-1 Bonds Not Remarketed ............................................. .......15
Circumstances of Redemption of the Bonds ........................................................ .......15
No Notice of Redemption .................................................................................... .......16
Effect of Redemption ........................................................................................... .......16
ARTICLE 3
SECURITY FOR THE BONDS
Section 3.1 Delivery of Collateral ..................................................................................................16
Section 3.2 Agent the Mortgagee of Record ..................................................................................17
Section 3.3 Subordination ..............................................................................................................17
ARTICLE 4
SERVICING THE LOAN AND THE BONDS
Section 4.1 Servicing the Loan ......................................................................................................17
Section 4.2 Paying Agent for the Bonds; Investments ...................................................................18
Section 4.3 Standard of Care ..........................................................................................................19
Section 4.4 Indemnification of Issuer by Agent .............................................................................19
DOCSOC/ 1400877v5/024036-0052
ARTICLE 5
DEFAULTS ON LOAN
Section 5.1 Defaults on Loan .........................................................................................................19
Section 5.2 Action After Consultation with Holder .......................................................................20
Section 5.3 Losses and Expenses Upon Exercise of Rights ...........................................................21
Section 5.4 Notice to Issuer ...........................................................................................................21
ARTICLE 6
REPRESENTATIONS AND COVENANTS BY AGENT AND ISSUER
Section 6. ] Representations by Agent ...........................................................................................21
Section 6.2 Representations by Issuer ............................................................................................21
Section 6.3 Tax-Exempt Status of the Bonds .................................................................................22
ARTICLE 7
BOOKS AND RECORDS; REPORTS
Section 7.1 Books and
Section 7.2 Reports ....
ARTICLE 8
NONRECOURSE; OBLIGATIONS NOT DEBT OF ISSUER, AGENT OR STATE
Section 8.1 Limited Obligations ....................................................................................................22
ARTICLE 9
DEFAULTS UNDER THIS PLEDGE AND ASSIGNMENT AGREEMENT
Section 9.1 Events of Default ................................................................................................... ......23
Section 9.2 Remedies ............................................................................................................... ......24
Section 9.3 Continuance of Obligations Upon Default by Agent ............................................ ......25
Section 9.4 Continuance of Obligations and Servicing by Agent Upon Default by Issuer ..... ......25
Section 9.5 Holder Authorized to Execute Assignments, Etc .................................................. ......25
Section 9.6 Waiver of Appraisal, Evaluation, Etc ................................................................... ......26
Section 9.7 Application of Proceeds of Sale ............................................................................ ......26
Section 9.8 Right of Holder to Perform Covenants of the Issuer and the Agent ..................... ......26
Section 9.9 No Waiver, Etc ...................................................................................................... ......26
Section 9.10 Remedies Cumulative, Etc .................................................................................... ......26
ARTICLE ]0
MISCELLANEOUS
Section ]0.1 Provisions Subject to Applicable Law ........................................................................27
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DOCSOC/ 1400877v5/024036-0052
Section 10.2 Applicable Law, Venue .................................................................................. .............27
Section 10.3 Compromise of Action, Etc ............................................................................ .............27
Section 10.4 Notices, Etc .................................................................................................... .............27
Section 10.5 Termination .................................................................................................... .............28
Section 10.6 Duty of Issuer ................................................................................................. .............28
Section 10.7 Consent to Assignment .................................................................................. .............28
Section 10.8 Amendments, Successors and Assigns, Headings and Counterparts ............. .............28
EXHIBIT A-1 FORM OF SENIOR SERIES A-1 BONDS ......................................................... A-]-1
EXHIBIT A-2 FORM OF SENIOR SERIES A-2 BONDS ......................................................... A-2-1
EXHIBIT A-3 FORM OF SUBORDINATE SERIES A-3 BONDS ........................................... A-3-1
EXHIBIT B-1 FORM OF SENIOR BONDS PURCHASER LETTER .......................................B-1-1
EXHIBIT B-2 FORM OF SUBORDINATE BONDS PURCHASER LETTER .........................B-2-1
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DOCSOC/ 1400877 v5/024036-0052
MASTER PLEDGE AND ASSIGNMENT
THIS MASTER PLEDGE AND ASSIGNMENT, dated as of 2010, (this
"Pledge and Assignment"), from the Housing Authority of the City of Chula Vista, a public body
corporate and politic, duly organized and existing under the Constitution and the laws of the State of
California (together with any successor to its rights, duties and obligations, the "Issuer") and U.S.
Bank National Association, a national banking association organized under the laws of the United
States of America (the "Agent"), under and pursuant to that certain Agency Agreement (as
hereinafter defined), to U.S. Bank National Association, a national banking association organized
under the laws of the United States of America, as initial holder of the Senior Bonds described herein
and as Bondowner Representative, and any successors or assigns thereof (the "Holder").
WITNESSETH:
WHEREAS, the Issuer is, concurrently herewith, issuing its Housing Authority of the City of
Chula Vista Multifamily Housing Revenue Bonds (The Landings II Apartments), Senior Series
2010A-i in a principal amount not to exceed $ (the "Series A-1 Bonds"), its
Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings 11
Apartments), Senior Series 2010A-2 in a principal amount not to exceed $ (the
"Series A-2 Bonds," and, together with the Series A-] Bonds, the "Senior Bonds"), and its Housing
Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings ll
Apartments), Subordinate Series 2010A-3 in a principal amount not to exceed $
(the "Series A-3 Bonds" or "Subordinate Bonds," and, together with the Series A-1 Bonds and
Series A-2 Bonds, the "Bonds"), to evidence the obligation to repay the advances to be made
hereunder by the Holder and the Subordinate Holder (as hereinafter defined) to the Agent for the
account of the Issuer.
WHEREAS, the proceeds of the Bonds will be advanced by the Agent for the account of the
Issuer to Landings ll, L.P., a California limited partnership (the "Borrower"), for the purpose of
funding loans from the proceeds of the Bonds (collectively, the "Loan") to the Borrower to finance
the Borrower's acquisition, construction and development of a 141 unit plus 2 manager's units
multifamily rental housing project located in the City of Chula Vista, California and known as the
"Landings II Apartments" (the "Project");
WHEREAS, the Loan will be made to the Borrower by the Agent for the account of the
Issuer pursuant to a loan agreement of even date herewith (the "Loan Agreement"), by and between
the Agent (for the account of the Issuer) and the Borrower;
WHEREAS, the Borrower's obligation to repay the Loan will be evidenced by three
promissory notes (the `emotes"), made by the Borrower to the order of the Agent for the account of
the Issuer and secured by, among other things, the Mortgage (as hereinafter defined), of even date
herewith, executed by the Borrower, as trustor, and naming the Agent, in its capacity as agent for the
Issuer, as beneficiary, together with the other "Loan Documents" as defined in the Loan Agreement;
WHEREAS, the Holder, as a condition to its purchase of the Senior Bonds, and the
Subordinate Holder (as hereinafter defined), as a condition to its purchase of the Subordinate Bonds,
has required that the Issuer and the Agent execute and deliver this Pledge and Assignment.
DOCSOC/ 1400877v 5/024036-0052
NOW, THEREFORE, as an inducement to the Holder to purchase the Senior Bonds and as
an inducement to the Subordinate Holder to purchase the Subordinate Bonds, as provided herein, and
as an inducement to the Agent, as agent for the Issuer and for the account of the Issuer, to make and
disburse the proceeds of the Bonds to make the Loan as provided herein, and in consideration of the
premises and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Issuer and the Agent, in order to secure the due and punctual payment of the
Senior Bonds and other sums due the Holder hereunder or thereunder, do hereby pledge, grant,
bargain, sell, convey, assign, mortgage and transfer, and grant on a senior basis a security interest in,
all of the Issuer's and the Agent's right, title and interest in and to the following described property,
whether real or personal (the "Senior Collateral"), to the Holder, and in order to secure the due and
punctual payment of the Subordinate Bonds and other sums due the Subordinate Holder hereunder or
thereunder, do hereby pledge, grant, bargain, sell, convey, assign, mortgage and transfer, and grant
on a subordinate basis a security interest in, all of the Issuer's and the Agent's right, title and interest
in and to the following described property, whether real or personal (the "Subordinate Collateral,"
and together with the Senior Collateral, the "Collateral"), to the Subordinate Holder; provided,
however, that this Pledge and Assignment and the agreements and covenants made hereunder shall
not be construed to constitute a general obligation of the Issuer or the Agent, and any obligations
hereunder are limited obligations of the Issuer and the Agent to be paid and satisfied solely from the
following described Collateral:
(i) the Loan, including without limitation, the Notes, the Mortgage (as
hereinafter defined), and all other Loan Documents (as hereinafter defined) to which either the Issuer
or the Agent now is, or hereafter may be, a party or a direct beneficiary, together with all rights,
powers, privileges and other benefits of the Agent and the Issuer under the Loan Documents, other
than the Issuer's rights, powers and privileges under the Regulatory Agreement (as hereinafter
defined) and its Reserved Rights (as hereinafter defined), including, subject to the provisions hereof
and of Section 3 of the Master Agency Agreement, the right to make all waivers and agreements, to
give and receive duplicate copies of all notices and other instruments or communications, to take
such action upon the occurrence of any default under the Loan Documents, including the
commencement, conduct and consummation of legal, administrative or other proceedings, as shall be
permitted by the Loan Documents or by law, and to do any and all other things whatsoever which the
Issuer or the Agent is or may be entitled to do under the Loan Documents;
(ii) any and all payments of principal, interest, premium and late payment fees
made on the Loan at any time hereafter by the Borrower;
(iii) the proceeds of the sale of the Bonds to the extent they have not been applied
to fund the Loan;
(iv) all tax, insurance or other similar escrows now or hereafter held with respect
to the Loan; and
(v) any and all proceeds received under any policy of title insurance, hazard
insurance, or other such insurance with respect to the Project, proceeds received from Condemnation
(as hereinafter defined), and revenues, proceeds and other payments and tenders received from any
foreclosure (or payments in lieu of foreclosure) of the Mortgage or from enforcement of the
Mortgage or any other Loan Documents, and any and all proceeds from the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquidated claims;
2
DOCSOC/1400R77v5/024036-0052
SUBJECT, HOWEVER, to (a) the interest of the Borrower, to the extent provided in the
Loan Documents, with respect to the tax, insurance or other similar escrows and with respect to any
property insurance proceeds or Condemnation awards or proceeds of foreclosure, (b) the right of the
Agent and the Issuer (subject to the terms of the Master Agency Agreement) to exercise, without the
consent of the Holder until an Event of Default shall have occurred and be continuing, all rights,
powers, privileges and other benefits under the Loan Documents, including the right to make all
waivers and agreements, to give and receive duplicate copies of all notices and other instruments or
communications, and to take such action upon the occurrence of any default under the Loan
Documents, including the commencement, conduct and consummation of legal, administrative or
other proceedings, as shall be permitted by the Loan Documents or by law, but subject to, and only
upon, the terms and conditions of Article 5 hereof, and (c) any of the rights of the Issuer and the
Agent and their respective directors, officers, elected officials, attorneys, accountants, employees,
agents and consultants to be held harmless and indemnified thereunder, to be paid fees as described
therein, to be reimbursed for attorneys' fees and expenses thereunder and to give or withhold consent
to amendments, changes, modifications and alterations to and to enforce the provisions of the
Regulatory Agreement (as hereinafter defined); provided that payment to the Issuer of any fees,
expenses and indemnification amounts under this subpart (c), other than the Issuer's annual fee and
amounts payable to the United States government with respect to any rebate liability, shall be
subordinate and junior in right of payment to the right of the Holder to be paid in full all amounts
owing to it under the Bonds and other expenses as set forth in Section 5.1 hereof.
SUBJECT FURTHER, HOWEVER, that, anything contained in this Pledge and Assignment
to the contrary notwithstanding, the Subordinate Bonds shall be secured solely by, and payable solely
from, the Subordinate Collateral and, as provided in this Pledge and Assignment, shall be junior and
subordinate in all respects to the Senior Bonds and to the senior and superior pledge of the Senior
Collateral; the rights of the owners of the Subordinate Bonds shall be expressly limited as provided
in this Pledge and Assignment.
IT IS HEREBY COVENANTED by the parties hereto that the Collateral is to be held and
applied subject to the further covenants, conditions, uses and trusts herein set forth; and the Issuer
and the Agent, for themselves and their respective successors and assigns, hereby covenant and agree
with the Holder as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms shall, for all purposes of this Pledge and
Assignment, have the following respective meanings:
"Act" means Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code.
"Affiliate" means any entity of which the ultimate parent corporation is the same as that of
U.S. Bank National Association (or any successor to U.S. Bank National Association as the Holder),
including such parent corporation.
"Aeency Agreement" means the Master Agency Agreement, of even date herewith, between
the Issuer and the Agent, as it may be supplemented or amended from time to time in accordance
with its terms.
3
DOCSOG1400877v5/024036-0052
"Authorized Denomination" means with respect to each series of Bonds, the outstanding
principal amount of such series of Bonds.
"Bond Counsel" means an attorney or a firm of attorneys of nationally recognized standing in
matters pertaining to the tax status of interest on bonds issued by states and their political
subdivisions, who is or are acceptable to the Issuer and duly admitted to the practice of law before
the highest court of any state of the United States of America or the District of Columbia.
"Bondowner Representative" means the initial holder of the Senior Bonds representing its
interest as the holder of the Senior Bonds and the interests of the holder of the Subordinate Bonds.
"Bonds" means, collectively, the Series A-I Bonds, the Series A-2 Bonds and the Series A-3
Bonds.
"Borrower" means Landings ll, L.P., a California limited partnership.
"Closing Date" means the first date of original delivery of the Bonds.
"Code" means the Intemal Revenue Code of 1986, as amended; each reference to the Code
shall be deemed to include (a) any successor Intemal revenue law and (b) the applicable regulations
whether final, temporary or proposed under the Code or such successor law; any reference to a
particular provision of the Code shall be deemed to include (a) any successor provision of any
successor internal revenue law and (b) the applicable regulations, whether final, temporary or
proposed, under such successor provision.
"Collateral" has the meaning set forth in the recitals to this Pledge and Assignment.
"Condemnation" means a taking of all or any part of the Project or any real property on
which the Project is situated or any interest therein or right accruing thereto as a result of or in lieu of
or in anticipation of the exercise of the right of condemnation, eminent domain, change of grade,
appropriation or confiscation.
"Conversion Date" means [May 1, 2012], subject to extension to [November 1, 20]2] in
accordance with the Series A-1 Note.
"Intercreditor and Subordination Agreement" means that certain Intercreditor and
Subordination Agreement, dated as of , 2010, by and among the Issuer, U.S. Bank National
Association, as Agent, the Subordinate Holder, as holder of the Series A-3 Bonds, and the Borrower.
"Interest Payment Date" means the first Business Day of each month, commencing [June 1,
2010].
"Limited Partner" means RJ HOF 8-Landings II, L.L.C. a Florida limited liability company,
its successors and assigns.
"Loan" means the mortgage loan made by the Agent for the account of the Issuer to the
Borrower pursuant to the Loan Agreement.
DOCSOC/ 1400877v5/024036-0052
"Loan Agreement" means the Loan Agreement, dated as of _, 2010, by and
between the Agent, in its capacity as agent for the Issuer, and the Borrower, as it may be amended or
supplemented in accordance with its terms.
"Loan Documents" means all of the following documents or instruments entered into with
respect to the Loan and Project: the Notes, the Mortgage, the Loan Agreement, the Guaranty, the
Regulatory Agreement, the lntercreditor and Subordination Agreement and all other documents
evidencing, securing or otherwise pertaining to the Loan.
"Maximum Lawful Rate" means the highest per annum rate of interest permissible under the
Act and the laws of the State, calculated by taking into account all available exceptions.
"Mortgage" means, collectively, the Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing, executed as of , 2010 by the Borrower, as trustor, for
the benefit of the Agent, for the account of the Issuer, as beneficiary, and First American Title
Company, as trustee, securing payment of the Senior Bonds and encumbering (among other things)
the Project and the Subordinate Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing, executed as of , 2010 by the Borrower, as trustor, for the benefit of the
Agent, for the account of the Issuer, as beneficiary, and First American Title Company, as trustee,
securing payment of the Series A-3 Bonds and encumbering (among other things) the Project,
securing the Loan and recorded in the official records of the County of San Diego, State of
California.
Note.
"Note" means, as applicable, the Series A-1 Note, the Series A-2 Note or the Series A-3
"Notes" means, collectively, the Series A-1 Note, the Series A-2 Note and the Series A-3
Note.
"Permitted Investments" means, to the extent permitted by applicable law, any of the
following:
(1) direct obligations of the United States of America (including obligations issued or
held in book-entry form on the books of the Department of the Treasury of the United States of
America) or obligations the timely payment of the principal of and interest on which are fully
guaranteed by the United States of America, including instruments evidencing an ownership interest
in securities described in this clause (1);
(2) obligations, debentures, notes or other evidences of indebtedness issued or guaranteed
by any of the following: Federal Home Loan Bank System, Export-Import Bank of the United
States, Federal Financing Bank, Federal Land Banks, Government National Mortgage Association,
Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation or
Federal Housing Administration;
(3) repurchase agreements (including those of the Agent) fully secured by collateral
security described in clause (]) or (2) of this definition, which collateral (a) is held by the Agent or a
third party agent approved by the Holder during the term of such repurchase agreement, (b) is not
subject to liens or claims of third parties and (c) has a market value (determined at least once every
(14 days) at least equal to the amount so invested;
DOCSOG1400877v5/024036-0052
(4) certificates of deposit of, or time deposits or deposit accounts in, any bank (including
the Agent) or savings and Loan association (a) the debt obligations of which (or in the case of the
principal bank of a holding company, the debt obligations of the bank holding company of which)
have been rated A or better by S&P, or (b) which are fully insured by the Federal Deposit Insurance
Corporation, or (c) which are secured at all times, in the manner and to the extent provided by law,
by collateral security (described in clause (1) or (2) of this definition) of a market value (valued at
least quarterly) of no less than the amount of money so invested;
(5) investment agreements of financial institutions or insurance companies, in each case
having uninsured, unsecured and unguaranteed obligations rated AA- or better by S&P, provided,
however, that any such investment may be provided by a financial institution or insurance company
having uninsured, unsecured and unguaranteed obligations not rated AA- or better by S&P, if such
investment is unconditionally insured, guaranteed or enhanced by an entity whose uninsured,
unsecured and unguaranteed obligations are rated AA- or better by S&P;
(6) shares in any investment company registered under the federal Investment Company
Act of 1940 whose shares are registered under the federal Securities Act of 1933 and whose only
investments are government securities described in clause (1) or (2) of this definition and repurchase
agreements fully secured by government securities described in clause (]) or (2) of this definition
and/or other obligations rated AAA by S&P, including investment companies and master repurchase
agreements from which the Agent or an affiliate derives a fee for investment advising or other
service;
(7) tax-exempt obligations of any state of the United States, or political subdivision
thereof, which are rated A or better by S&P or mutual funds invested only in such obligations;
(8) units of a taxable or nontaxable government money-market portfolio composed of
government securities described in clause (1) and repurchase agreements collateralized by such
obligations;
(9) commercial paper rated A or better by S&P;
(10) corporate notes or bonds with one year or less to maturity and rated A or better by
S&P; or
(1 1) any other investment approved in writing by the Holder.
"Post Remarketing Date Rate" means the rate of interest to be borne by the Series A-1 Bonds
afrer the Remarketing Date, determined pursuant to Section 2.4 of this Pledge and Assignment.
"Project" means the 141 unit plus 2 manager's units multifamily rental housing project
known as "Landing Il Apartments" and located in the City of Chula Vista, California.
"Purchaser's Letter" means the Purchaser's Letter in the form attached hereto as Exhibit B-1
or Exhibit B-2, as appropriate.
"Put Purchase Price" means the then outstanding principal amount of the Series A-1 Bonds
plus accrued interest to the Remarketing Date (or, if the Put Purchase Price is not timely paid to the
Holder on the Remarketing Date, plus accrued interest (including default interest) to the date such
Put Purchase Price has been paid to the Holder).
DOCSOC/ 1400877v 5/024036-0052
"Qualified Institutional Bum" has the meaning set forth in Rule 144A of the Securities Act
of 1933.
"Qualified Project Costs" means costs paid with respect to the Project that are (i) properly
chargeable to a capital account (or would be so chargeable with a proper election by the Borrower
but for a proper election by the Borrower to deduct such costs) in accordance with general Federal
income tax principles and in accordance with United States Treasury Regulations §1.103-8(a)(1),
(ii) are paid with respect to a qualified residential rental project or projects within the meaning of
Section ] 42(d) of the Code, (iii) are paid after the earlier of 60 days prior to the date of a declarations
of "official intent" to reimburse costs paid with respect to the Project (within the meaning of
§1.150-2 of the United States Treasury Regulations) or the date of issue of the Bonds, and (iv) if
project costs were previously paid and are to be reimbursed with proceeds of the Bonds, such costs
were (A) costs of issuance of the Bonds, (B) preliminary capital expenditures (within the meaning of
United States Treasury Regulations §].150-2(f)(2)) with respect to the Project (such as architectural,
engineering and soil testing services) incurred before commencement of acquisition or construction
of the Project that do not exceed 20% of the issue price of the Bonds (as defined in United States
Treasury Regulations §1.148-1), or (C) were capital expenditures with respect to the Project that are
reimbursed no later than 18 months after the later of the date the expenditure was paid or the date the
Project is placed in service (but in no event later than three years after the expenditure is paid).
"Remarketine Agent" means the Remarketing Agent acting as such pursuant to Section 2.10
of this Pledge and Assignment.
"Remarketing_Agreement" means the Remarketing Agreement entered into by the Borrower
and the Remarketing Agent pursuant to Section 2.10 of this Pledge and Assignment.
"Remarketine Date" means, with respect to the Series A-1 Bonds, [May 1, 2027], or such
later date as may be established by Section 2.9 hereof.
"Regulator~Agreement" means that certain Regulatory Agreement and Declaration of
Restrictive Covenants relating to the Project, dated as of 1, 2010, by and between the
Issuer and the Borrower, as it may be supplemented or amended in accordance with its terms.
"Reserved Rights" shall mean those certain rights of the Issuer, as "Issuer" under the Loan
Agreement, the Regulatory Agreement and this Pledge and Assignment to indemnification and to
payment or reimbursement of fees and expenses of the Issuer, its right to receive notices and to
enforce notice and reporting requirements, its right to inspect and audit the books, records and
premises of the Borrower, its right to collect attorneys' fees and related expenses, its right to
specifically enforce the Borrower's covenant to comply with applicable federal tax law and State law
(including the Act and the rules and regulations of the Issuer, if any), and its right to give or withhold
consent to amendments, changes, modifications and alterations to the Loan Agreement, the
Regulatory Agreement and the Pledge and Assignment and its Reserved Rights.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc., or any successor thereto.
"Senior Bonds" means, collectively, the Series A-] Bonds and the Series A-2 Bonds.
"Senior Collateral" shall have the meaning assigned to such term in the recitals above.
DOCSOC/1400877v5/024036-0052
"Senior Morteaee" means the Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, executed as of , 2010 by the Borrower, as trustor, for the
benefit of the Agent, for the account of the Issuer, as beneficiary, and First American Title Company,
as trustee, securing payment of the Senior Bonds and encumbering (among other things) the Project.
"Senior Notes" means, collectively, the Series A-1 Note and the Series A-2 Note
"Series" or "series" means either the Series A-1 Bonds, the Series A-2 Bonds or the
Series A-3 Bonds, as applicable.
"Series A-1 Bonds" means the Housing Authority of the City of Chula Vista Multifamily
Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-1, issued and delivered
hereunder in the aggregate principal amount not to exceed $
"Series A-1 Note" means that certain Promissory Note relating to the Series A-1 Bonds in the
maximum face principal amount of $ executed by the Borrower to the order of the
Agent, as agent for the Issuer, evidencing the obligation to repay a portion of the Loan.
"Series A-2 Bonds" means the Housing Authority of the City of Chula Vista Multifamily
Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-2, issued and delivered
hereunder in the aggregate principal amount not to exceed $
"Series A-2 Note" means that certain Promissory Note relating to the Series A-2 Bonds in the
initial face principal amount of $ ,executed by the Borrower to the order of the Agent,
as agent for the Issuer, evidencing the obligation to repay a portion of the Loan.
"Series A-3 Bonds" means the Housing Authority of the City of Chula Vista Multifamily
Housing Revenue Bonds (The Landings II Apartments), Subordinate Series 2010A-3, issued and
delivered hereunder in the aggregate principal amount not to exceed $
"Series A-3 Note" means that certain Promissory Note relating to the Series A-3 Bonds in the
initial face principal amount of $ ,executed by the Borrower to the order of the Agent, as
agent for the Issuer, evidencing the obligation to repay a portion of the Loan.
"State" means the State of California.
"Subordinate Bonds" means the Series A-3 Bonds.
"Subordinate Collateral" shall have the meaning assigned to such term in the recitals above.
"Subordinate Holder" means the registered owner of the Series A-3 Bonds, initially Winding
Walk Residential LLC, a California limited liability company.
"Subordinate Note" means the Series A-3 Note.
"Tax Certificate" means the Tax Certificate, dated the Closing Date, executed and delivered
by the Issuer and the Borrower, including all exhibits thereto, as amended in accordance with its
terms.
DOC SOC/ 1400877v5/024036-0052
ARTICLE 2
BONDS
Section 2.1 Issuance of Bonds to Fund Loan; Draw-Down Bonds. This Pledge and
Assignment is entered into by the Issuer to assist in the acquisition and construction of the Project by
providing financing for the Project through the issuance of the Bonds, the proceeds of which shall be
advanced by the Holder, with respect to the Series A-1 Bonds and the Series A-2 Bonds, and the
Subordinate Holder, with respect to the Series A-3 Bonds, directly to the Agent for the account of the
Issuer as and when needed by the Agent to make each advance under the Loan Agreement and shall
be applied by the Agent for the account of the Issuer to the funding of the Loan pursuant to the terms
of the Loan Agreement. As consideration for the issuance and delivery of the Senior Bonds, the
Holder agrees to purchase, at par, the Series A-1 Bonds in an original principal amount of up to
$ and the Series A-2 Bonds in an original principal amount of up to $ ,and
the Subordinate Holder agrees to purchase, at par, and the Series A-3 Bonds in an original principal
amount of up to $ Concurrently with each advance of principal by the Agent, for the
account of the ]suer, to the Borrower under the Loan Agreement of the proceeds of the Loan, the
Holder shall deliver to the Agent, for the account of the Issuer, and on account of the Holder's
purchase of a corresponding amount of the Series A-1 Bonds or Series A-2 Bonds, or on account of
the Subordinate Holder's purchase of a corresponding amount of Series A-3 Bonds, as applicable, as
designated by the Holder, an amount equal to the amount so advanced by the Agent, on account of
the Issuer, to the Borrower under the Loan Agreement. The principal amount of the Loan so
advanced shall be allocated to the payment, or reimbursement for the payment of Qualified Project
Costs. Subject to the terms and conditions of the Loan Agreement, the Agent agrees to advance to
the Borrower under the Loan Agreement, and the Holder agrees to deliver to the Agent for the
account of the Issuer, at least $51,000 on the Closing Date, and the Holder agrees to purchase Senior
Bonds in at least such amount on the Closing Date.
Section 2.2 Form Amount and Deliver~of Bonds. The Bonds secured hereby are
designated "Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (The
Landings II Apartments), Senior Series 2010A-1," "Housing Authority of the City of Chula Vista
Multifamily Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-2" and
"Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (The
Landings ll Apartments), Subordinate Series 2010A-3," are to be issued substantially in the forms
attached hereto as ExhibitA-l, A-2 and A-3, respectively, are being issued in the face principal
amounts of $ $ and $ ,respectively, and will be payable and
mature as provided therein. The Bonds shall be dated the Closing Date, issued and held in
Authorized Denominations, executed, either manually or by facsimile, by the Executive Director or a
member of the Board of Commissioners of the ]suer and shall be delivered to the Holder or the
Subordinate Holder, as appropriate, in certificate form upon the Holder's or Subordinate Holder's,
respectively, execution of the appropriate Purchaser's Letter.
Section 2.3 Principal; Maturity Date. The outstanding principal amount of a series of
Bonds as of any given date shall be the total amount advanced by the Holder to the Agent on account
of the Holder's purchase of the Series A-1 Bonds and the Series A-2 Bonds and by the Subordinate
Holder to the Agent on account of the Subordinate Holder's purchase of the Series A-3 Bonds, and
advanced or constructively advanced by the Agent to the Borrower as proceeds of the Loan, less any
payments of principal previously received by such Holder on such series of Bonds. The principal
amount of the Bonds and interest thereon shall be payable on the basis specified in Sections 2.4 and
9
DOCSOC/ 1400877v5/024036-0052
2.6. The Series A-1 Bonds shall be subject to redemption as provided in Sections 2.13 and 2.14 and
shall mature, and become due and payable in full, together with all accrued and unpaid interest
thereon, on [November 1, 2045] and are subject to mandatory tender for purchase in accordance with
Section 2.9 hereof. The Series A-2 Bonds shall be subject to redemption as provided in Section 2.14
and shall mature and become due and payable in full, together with all accrued and unpaid interest
thereon, on [May 1, 2012] unless extended to [November 1, 2012] as described in the Series A-2
Note. The Series A-3 Bonds shall, subject to Section 2.5 hereof, be subject to redemption as
provided in Section 2.14 and shall mature and become due and payable in full, together with all
accrued and unpaid interest thereon, on [November 1, 2045].
Section 2.4 Interest. Interest shall be paid on the outstanding principal amount of the
Series A-1 Bonds, from and after the Closing Date with respect thereto to, but not including the
Remarketing Date, at the rate or rates equal to the interest rate in effect from time to time on the
Series A-1 Note, payable on each Interest Payment Date. Interest on the Series A-1 Bonds during
such period shall be calculated as provided in the Series A-1 Note; provided that in no event shall
interest on the Series A-1 Bonds exceed the Maximum Lawful Rate.
From and after the Remarketing Date, and until maturity, the Series A-1 Bonds shall bear
interest at the Post Remarketing Date Rate, payable on each Interest Payment Date following the
Remarketing Date, calculated on the basis of a 360-day year, for the actual number of days elapsed.
The Post Remarketing Date Rate shall be that rate, determined by the Remarketing Agent on the
Remarketing Date which, in the judgment of the Remarketing Agent, having due regard for
prevailing financial market conditions, would be required, but would not exceed the rate that would
be required, to be borne by the Series A-1 Bonds in order for the market value of the Series A-1
Bonds on such date to be par (disregarding accrued interest); provided that in no event shall the Post
Remarketing Date Rate exceed the Maximum Lawful Rate. The determination of the Post
Remarketing Date Rate by the Remarketing Agent shall (in the absence of manifest error) be
conclusive and binding on the holder of such instrument, any other owners of Bonds, the Issuer, the
Borrower and the Remarketing Agent, and each shall be protected by relying on such rate.
Interest shall be paid on the outstanding principal amount of the Series A-2 Bonds from and
after the Closing Date with respect thereto to, but not including, the maturity date thereof, at the rate
or rates equal to the interest rate or rates in effect from time to time on the Series A-2 Note, payable
on each Interest Payment Date; provided that in no event shall interest on the Series A-2 Bonds
exceed the Maximum Lawful Rate. Interest shall be calculated as provided in the Series A-2 Note.
Interest shall be paid on the outstanding principal amount of the Series A-3 Bonds, from and
after the Closing Date with respect thereto to, but not including the maturity date thereof, at the rate
or rates equal to the interest rate in effect from time to time on the Series A-3 Note, payable on each
Interest Payment Date; provided that in no event shall interest on the Series A-3 Bonds exceed the
Maximum Lawful Rate. Interest on the Series A-3 Bonds during such period shall be calculated as
provided in the Series A-3 Note.
Each Bond shall bear interest from the date to which interest has been paid on the Bonds next
preceding the date of its authentication, unless it is authenticated as of an Interest Payment Date for
which interest has been paid, in which event it shall bear interest from such Interest Payment Date, or
unless it is authenticated on or before the first Interest Payment Date, in which event it shall bear
interest from its Closing Date.
]0
DOCSOC/ 1400877v 5/024036-0052
Section 2.5 Limited Obligation of Issuer and Agent to Make Pavments. The payments of
principal, interest, premiums, late payment fees and all other amounts to be made on the Series A-1
Bonds and the Series A-2 Bonds to the Holder thereof shall be made in accordance with the terms of
the Series A-1 Bonds and the Series A-2 Bonds and the payments of principal, interest, premiums,
late payments, fees and all other amounts to be made on the Series A-3 Bonds to the Subordinate
Holder thereof shall be made in accordance with the terms of the Series A-3 Bonds. ]n no event,
however, shall the Issuer or the Agent have any obligation to make or remit such payments to the
Holder or the Subordinate Holder unless and until moneys are received therefor by the Issuer or the
Agent, as the case may be, from or with respect to the Loan.
The Series A-3 Bonds shall not be subject to prepayment, redemption, defeasance,
termination or cancellation, in whole or in part, at any time while the Series A-1 Note, the Series A-2
Note, the Senior Bonds or any portion of any of the foregoing remains outstanding in accordance
with its terms and the provisions of the Loan Documents.
Section 2.6 Corresponding Pavments. The payment or prepayment of principal and
interest, premiums, late payment fees and other amounts due on the Series A-1 Bonds, the Series A-2
Bonds and the Series A-3 Bonds shall be identical with and shall be made on the same dates, terms
and conditions as the principal, interest, premiums, late payment fees and other amounts due on the
Series A-1 Note, the Series A-2 Note and the Series A-3 Note, respectively. Any payment or
prepayment made by the Borrower of principal, interest, premiums, late payment fees and other
amounts due on a Note shall be deemed to be like payments or prepayments of principal, interest,
premiums, late payment fees and other amounts due on the corresponding series of Bonds. Payments
or prepayments by the Borrower under a Note shall be deemed to have been constructively received
by the Holder or Subordinate Holder, as appropriate, as payments or prepayments on the Senior
Bonds or the Subordinate Bonds, respectively, on the date of receipt of such payments by the Agent,
and interest with respect to each principal payment or prepayment shall cease to accrue upon receipt
thereof by the Agent. Payments or prepayments of principal, interest, premiums, late payment fees
and other amounts due shall be remitted immediately by the Agent to the Holder or Subordinate
Holder, as appropriate.
Section 2.7 Replacement of Bonds. Upon receipt of evidence reasonably satisfactory to
the Issuer of the loss, thefr, destruction or mutilation of the Bonds, or any replacement Bonds, and, in
the case of any such loss, theft, or destruction, upon the delivery of an indemnity agreement
reasonably satisfactory to the Issuer or, in the case of any mutilation, upon the surrender and
cancellation of such mutilated Bond, the Issuer, at the expense of the Holder or Subordinate Holder
of such Bond, will issue a new Bond, of like tenor and series, in lieu of such lost, destroyed or
mutilated Bond.
Section 2.8 Registration and Transferability. The Bonds shall be in fully registered form,
registered in the name of the Holder or Subordinate Holder, as applicable, upon the registration
books of the Agent (the "Bond Register") at the office of the Agent, such registration to be noted on
the Bonds, afrer which no transfer shall be valid unless made in compliance with this Section 2.8 and
noted on the Bond Register and on the Bonds.
The Bonds (and any participation interests therein) shall be sold, assigned, transferred or
otherwise disposed of only in Authorized Denominations. Subsequent to the initial purchase of the
Bonds, with the exception of a transfer to an Affiliate of Holder, the Bonds (and any participation
interests therein) shall not be sold, assigned, transferred or otherwise disposed of unless (i) the
DOCSOC/ 1400877v 5/024036-0052
purchaser of Bonds (or of any such participation interest therein) is a Qualified Institutional Buyer,
provides a Purchaser's Letter substantially in the form attached hereto as Exhibit B-1 or Exhibit B-2,
as appropriate, and acknowledges in writing that it shall have no right to pursue any action or claim
against the Issuer; provided that the Holder or Subordinate Holder, as appropriate, agrees to and shall
indemnify, hold harmless and defend the Issuer, its officers, directors, officials, agents and
employees, and each of them, against all loss, costs, damages, expenses, suits, judgments, actions and
liabilities of whatever nature (including, without limitation, attorneys' fees, litigation and court costs,
amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting
from or arising out of or related to any such sale, transfer or participation, or (ii) the Issuer consents
in writing in its sole and absolute discretion to such sale, assignment, transfer, participation, or other
disposition of the Bonds. The Holder or Subordinate Holder, as appropriate, shall provide written
notice to the Issuer identifying any person or entity acquiring a participation interest in the Bonds.
No sale of participation interests in the Series A-1 Bonds or Series A-2 Bonds by the Holder shall
relieve the Holder of its obligation to advance the proceeds of the Bonds when required by this
Pledge and Assignment. The Holder or Subordinate Holder, as appropriate, may disclose to any
purchasers or prospective purchasers any information or other data or material in the Holder's or
Subordinate Holder's possession relating to the Issuer, the Bonds and the Project, without the consent
of or notice to the Issuer, but must inform any such purchasers or prospective purchasers in writing
that such information was not provided by the Issuer.
Section 2.9 Mandatory Purchase on Remarketine Date• Establishment of Remarketine
Date. The owners of the Series A-1 Bonds shall be required to tender their Bonds to the Agent for
purchase on the Remarketing Date, at a purchase price equal to one hundred percent (100%) of the
principal amount of the Series A-1 Bonds then outstanding, plus accrued interest to the Remarketing
Date, payable from the sources described below. The Agent shall make payment for any Series A-1
Bond purchased pursuant to this Section on or before 4:00 p.m., Pacific Time, on the Remarketing
Date, from funds received from or made available on behalf of the Borrower (whether by the
Remarketing Agent or otherwise) on or before 10:00 a.m., Pacific Time, on the Remarketing Date an
amount equal to the Put Purchase Price.
Otherwise, the Agent shall give each registered holder of a Series A-1 Bond no less than six
(6) days' prior written notice of such mandatory tender, which notice shall specify the Remarketing
Date and that the Series A-1 Bond must be tendered on such date or that it will be deemed tendered
on such date.
The purchase price of Series A-1 Bonds tendered as required by this Section 2.9 shall be
payable solely from funds representing the Put Purchase Price paid by or on behalf of the Borrower
(whether by the Remarketing Agent or otherwise) to the Agent.
Any Series A-1 Bond which is not tendered on the Remarketing Date will be nevertheless
deemed to have been tendered to the Agent on the Remarketing Date and, so long as the Agent
timely receives the full Put Purchase Price on such date and pays such amounts to the owners of the
Series A-1 Bonds on such date, from and after such date, each such Series A-1 Bond shall cease to
bear interest. In the event that the Agent timely receives an amount equal to the full Put Purchase
Price on the Remarketing Date, and any owner of a Series A-1 Bond fails to deliver a Series A-1
Bond to the Agent on the Remarketing Date, such owner of a Series A-1 Bond will not be entitled to
any payment (including any interest that might otherwise accrue from and after the Remarketing
Date) other than the Purchase Price for such untendered Series A-1 Bond. The Issuer shall sign, and
the Agent shall authenticate and deliver for redelivery to the purchaser or purchasers thereof, a new
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Series A-1 Bond in replacement for any untendered Series A-1 Bond and the Agent shall make any
necessary amendments to the Series A-1 Note to evidence the foregoing.
The Remarketing Date shall be [May 1, 2027]; provided that, if at least six (6) days prior to
[May 1, 2027] the Holder delivers to the Remarketing Agent and the Issuer its direction to establish a
later Remarketing Date as set forth in such direction (accompanied by an opinion of Bond Counsel to
the effect that the change in Remarketing Date will not adversely affect the exclusion of the interest
on the Series A-1 Bonds from gross income for federal income tax purposes), the Remarketing Date
shall be such later date and during the period from [May 1, 2027] until such later Remarketing Date,
the Bonds shall bear interest at the "Note Rate" (as defined in the Note), subject to Section 2.4 of this
Pledge and Assignment; provided in no event shall the Note Rate exceed the Maximum Lawful Rate.
Any Remarketing Date established under the provision in the preceding sentence may be further
extended from time to time if at least six (6) days prior to the most recently established Remarketing
Date there is delivered to the Remarketing Agent and the Issuer the written direction of the Holder
extending the Remarketing Date and an opinion of Bond Counsel as described in the preceding
sentence, in which event the Remarketing Date shall be such later date.
Section 2.10 Remarketing Agent. At least thirty (30) days prior to the Remarketing Date,
the Borrower, with notice to the Issuer and the prior written consent of the Holder (which consent
shall not be withheld, conditioned or delayed unreasonably), shall appoint a Remarketing Agent for
the Series A-1 Bonds, subject to the conditions set forth in Section 2.11 hereof, and shall enter into
the Remarketing Agreement, in a form acceptable to the Holder, with the Remarketing Agent. The
Remarketing Agent shall designate to the Agent its principal office and signify its acceptance of the
duties and obligations imposed upon it hereunder by execution of the Remarketing Agreement. The
Remarketing Agent shall, and shall agree in the Remarketing Agreement to, do each of the following:
(a) hold all moneys delivered to it hereunder for the purchase of the Bonds in
trust for the benefit of the person which shall have so delivered such moneys until the Series A-1
Bonds purchased with such moneys shall have been delivered to or for the account of such person,
and not commingle such moneys with other funds of the Remarketing Agent;
(b) keep such books and records as shall be consistent with prudent industry
practice and make such books and records available for inspection by the Issuer, the Agent and the
Holder at all reasonable times; and
(c) perform the duties and comply with the provisions set forth in Sections 2.11
through 2.13 hereof, inclusive.
Section 2.11 Qualifications of Remarketine Agent.
(a) The Remarketing Agent and any successor Remarketing Agents shall be a
national banking association or a member of the National Association of Securities Dealers, Inc., or
such other entity agreed upon by the Issuer, the Holder and the Borrower, in any case authorized by
law to perform all the duties imposed upon it by this Pledge and Assignment and the Remarketing
Agreement.
(b) The Remarketing Agent may, not less than 15 days prior to the Remarketing
Date, resign and be discharged of the duties and obligations created by this Pledge and Assignment
by giving at least five (5) days' written notice to the Issuer, the Borrower, the Holder and the Agent,
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but any such resignation shall not be effective until a successor is appointed in accordance with this
Section 2.11 and has accepted such appointment.
(c) The Remarketing Agent may be removed at any time, and a successor
Remarketing Agent appointed at the direction of the Borrower (with notice to the Issuer and the prior
written consent of the Holder) or the Issuer (with notice to the Borrower and the prior written consent
of the Holder), upon delivery by the Borrower or the Issuer of an instrument directing such removal
and appointment, signed by the Borrower or the Issuer, as applicable (and approved by the Issuer, if
such direction is from the Borrower and the Holder) and Fled with the Issuer, the Remarketing
Agent, the Holder and the Agent. No removal of the Remarketing Agent shall be effective until a
successor is appointed and has accepted such appointment in a written instrument to be provided to
the Issuer, the Borrower and the Agent, and no removal of the Remarketing Agent may occur less
than 15 days prior to the Remarketing Date.
(d) In the event of the resignation or removal of the Remarketing Agent, the
Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held by it in such
capacity to its successor.
(e) Any failure by the Borrower to designate a Remarketing Agent or in the event
there is no Remarketing Agent for any reason, the Borrower shall, under all circumstances, be
required to pay the Put Purchase Price on the Remarketing Date or the mandatory redemption price
of the Series A-1 Bonds as set forth in Section 2.14 hereof.
Section 2.12 Remarketing. of Series A-1 Bonds. Prior to the Remarketing Date, the
Remarketing Agent shall offer for sale and use its best efforts to remarket, on or prior to the
Remarketing Date, all of the Series A-1 Bonds at the Post Remarketing Date Rate for the Series A-1
Bonds for a purchase price equal to the Put Purchase Price for the Series A-1 Bonds; provided,
however, that the Remarketing Agent shall not offer for sale or sell any Series A-1 Bond to the
Issuer, the Borrower or any of their affiliates, and provided, further that the Series A-1 Bonds shall
be remarketed only to a single purchaser who shall be a Qualified Institutional Buyer as required in
Section 2.8 hereof, unless the Series A-1 Bond shall have received a rating of "A" or better (without
regard to any modifier) by S&P, Moody's Investors Service, or another nationally recognized rating
agency acceptable to the Issuer.
The Remarketing Agent shall instruct the purchasers of the Series A-1 Bond to deliver to it,
no later than 8:30 a.m. Pacific Time on the Remarketing Date, in same day funds, the Put Purchase
Price for the Series A-1 Bonds. Upon receipt by the Remarketing Agent of the Put Purchase Price
for the Series A-1 Bonds from such purchasers and receipt by the Agent of the Series A-1 Bond
tendered for purchase, at or prior to 8:30 a.m. Pacific Time on the Remarketing Date in good form
for delivery along with, if applicable, the documentation required by Section 2.8 hereof relating to
requirements for an owner of the Series A-] Bond, the Remarketing Agent will give written
instructions to the Agent, as bond registrar and authenticating agent, to transfer the registered
ownership of the Series A-1 Bond to the purchasers, and will make available the Series A-1 Bond to
such purchasers which shall thereafter be the Holder for all purposes of this Pledge and Assignment.
The Remarketing Agent shall remit the Put Purchase Price of the Series A-1 Bond to the Agent, for
payment to the Holder and any other owner of the Series A-1 Bond, no later than 10:00 a.m. Pacific
Time, on the Remarketing Date.
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The Issuer hereby agrees that it will not purchase the Series A-1 Bond from the Remarketing
Agent or otherwise.
A failed remarketing in whole or in part for any reason shall not affect in any manner
Borrower's obligation to pay the Put Purchase Price on the Remarketing Date or the mandatory
redemption price of the Series A-1 Bonds as described in Section 2.14 hereof.
Section 2.13 Redemption of Series A-1 Bonds Not Remarketed. ]f the Agent receives
written notice from the Remarketing Agent, on or before 10:00 a.m., Pacific Time, on the
Remarketing Date, that the Remarketing Agent has not been able to remarket all of the outstanding
Series A-1 Bonds for a purchase price equal to the full Put Purchase Price, or, if by 10:00 a.m.,
Pacific Time, on the Remarketing Date, the Agent has not received the full Put Purchase Price of the
Series A-1 Bonds from the Remarketing Agent or otherwise, the Series A-1 Bonds shall be subject to
mandatory redemption in whole, in accordance with Section 2.14(d) below.
Section 2.14 Circumstances of Redemption of the Bonds. Subject to Section 2.5 hereof
with respect to the Series A-3 Bonds, the Bonds are subject to redemption upon the circumstances,
on the dates and at the prices set forth as follows:
(a) Each series of Bonds shall be subject to redemption in whole or in part, as
applicable, on any Interest Payment Date, at a redemption price equal to the outstanding principal
amount of the applicable series of Bonds to be redeemed plus interest accrued thereon to the date
fixed for redemption, together with any applicable premium, upon prepayment of the Loan under the
terms of the applicable Note in whole or in part, as applicable.
(b) Each series of Bonds shall be subject to redemption in whole on any date at a
redemption price equal to the outstanding principal amount of the applicable series of Bonds to be
redeemed plus interest accrued thereon to the date fixed for redemption, together with any applicable
premium, upon acceleration of the Loan in whole following an Event of Default (as defined in the
Loan Agreement).
(c) Each series of Bonds shall be subject to redemption in whole or in part on any
date at a redemption price equal to the outstanding principal amount of the applicable series of Bonds
to be redeemed plus accrued interest to the redemption date, together with any applicable premium,
from the proceeds of any mandatory prepayment of the Loan under the terms of the applicable Note
or the Loan Agreement.
(d) The Series A-1 Bonds shall be subject to redemption in whole on any date on
or after the Remarketing Date, at the direction of the Holder at a redemption price equal to the
outstanding principal amount of the Series A-1 Bonds plus interest thereon to the redemption date,
together with any applicable premium (i) if all of the Series A-1 Bonds are not remarketed on the
Remarketing Date, for a purchase price equal to the full Put Purchase Price, or (ii) if all of the
Series A-1 Bonds are so remarketed, if the Holder does not timely receive the full Put Purchase Price
in accordance with Section 2.12 above.
(e) The Series A-2 Bonds shall be subject to redemption in whole on the
Conversion Date.
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The premium due in connection with any of the foregoing redemption provisions shall be an
amount equal to the amount paid on the applicable Note and/or the Loan in connection with such
redemption that is in excess of the principal and interest on the Bonds otherwise due on the
redemption date.
If less than all the Outstanding Bonds are called for redemption, outstanding Series A-3
Bonds shall be called for redemption only afrer all outstanding Senior Bonds have been redeemed.
The Holder is hereby authorized and directed, and hereby agrees, to fix the date for any such
redemption, and, if moneys provided from the sources contemplated by this Pledge and Assignment
and the Loan Agreement are available, to redeem the Bonds so called on the date so fixed by the
Holder. The Holder shall give written notice of such redemption to the Issuer.
Section 2.15 No Notice of Redemption. No notice of redemption of the Bonds need be
given to the Holder or other owners of the Bonds.
Section 2.16 Effect of Redemption. The Bonds so called for redemption shall, on the
redemption date selected by the Holder become due and payable at the redemption price specified
herein, and if moneys provided from the sources contemplated by this Pledge and Assignment and
the Loan Agreement for payment of the redemption price are then held by the Holder, interest on the
Bonds so called for redemption shall cease to accrue, said Bonds shall cease to be entitled to any lien,
benefit or security under this Pledge and Assignment, and the holders of said Bonds shall have no
rights in respect thereof except to receive payment of the redemption price thereof.
All Bonds fully redeemed pursuant to the provisions of Section 2.13 or Section 2.14 shall be
destroyed by the Agent, which shall thereupon note such destruction in the registration books
maintained by the Agent pursuant to Section 2.8 of this Pledge and Assignment.
ARTICLE 3
SECURITY FOR THE BONDS
Section 3.1 Deliverv of Collateral To provide security for the payment of the Bonds, the
Agent and the Issuer have pledged, assigned, transferred, conveyed and granted their respective right,
title and interest in the Loan and other security constituting the Senior Collateral to the Holder and
the Subordinate Collateral to the Subordinate Holder. In connection with such pledge, assignment,
transfer and conveyance, the Agent shall deliver to the Holder and the Subordinate Holder the
following documents or instruments promptly following their execution:
(a) The Notes endorsed without recourse by the Agent;
(b) An originally executed Loan Agreement and Regulatory Agreement;
(c) An originally executed Mortgage and all other Loan Documents constituting
the Collateral existing at the time of delivery of the Notes and a collateral assignment of the
Mortgage from Agent to Holder, in recordable form;
(d) Uniform Commercial Code financing statements or other chattel security
documents giving notice of the Holder's status as an assignee of the Agent's security interest in any
personal property forming part of the Project, in form suitable for filing; and
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(e) Uniform Commercial Code financing statements giving notice of the pledge
by the Issuer and the Agent of the Collateral pledged under this Pledge and Assignment.
The Agent and the Issuer shall deliver and deposit with the Holder such additional
documents, financing statements, and instruments as the Holder may reasonably require from time to
time for the better perfecting and assuring to the Holder of its lien and security interest in and to the
Senior Collateral. Also, the Agent and the Issuer shall deliver and deposit with the Subordinate
Holder such additional documents, financing statements, and instruments as the Subordinate Holder
may reasonably require from time to time for the better perfecting and assuring to the Subordinate
Holder of its lien and security interest in and to the Subordinate Collateral.
Section 3.2 Agent the Mortgagee of Record. Notwithstanding the pledge, transfer and
conveyance hereunder of the Loan and the other Collateral to the Holder, the Agent shall, except as
otherwise provided in Section 9.2 of this Pledge and Assignment upon the occurrence of an Event of
Default, be and remain the mortgagee of record for the Loan, and is fully authorized and empowered
to service and administer the Loan as provided in Section 4.1 hereof. Notwithstanding anything
herein to the contrary, upon U.S. Bank National Association no longer being the Holder of the Senior
Bonds, subject to the requirements of the Agency Agreement, U.S. Bank National Association may
resign from its duties as Agent and upon such resignation, U.S. Bank National Association shall
cooperate in such transfers and assignments to a new mortgagee of record selected by the
Subordinate Holder with the written consent of the Issuer; provided that all such activity shall be
undertaken at the sole cost and expense of the Borrower.
Section 3.3 Subordination. The Series A-3 Bonds shall be subject and subordinate in all
respects to the Senior Bonds (including payments, if any, under the Senior Notes in respect of Senior
Bonds) and to all terms, covenants, conditions and liens of the Loan Documents affecting the Bonds.
Payment of the indebtedness evidenced by the Series A-3 Bonds is and shall be subject and
subordinate in all respects, including in respect of the right to payment, to the prior payment in full of
all amounts due and payable in respect of the Senior Bonds (including payments under the Senior
Notes in respect of Senior Bonds). The owners of Series A-3 Bonds expressly subject and
subordinate all of their right, title and interest in and to the Series A-3 Bonds in all respects to (1) the
Senior Collateral, (2) the payment in full of the Senior Bonds (including payments under the Senior
Notes in respect of Senior Bonds) and (3) the liens of the Senior Mortgage and of the Senior
Collateral.
ARTICLE 4
SERVICING THE LOAN AND THE BONDS
Section 4.] Servicin¢ the Loan. The Agent shall take all steps necessary to maintain its
qualifications to act hereunder as mortgagee, and shall service and administer the Loan in accordance
with standard mortgage banking practices, taking all steps and exercising the same degree of care and
skill with respect to the Loan, Project and Loan Documents that it would take or exercise under the
circumstances in protecting its own interests as a mortgage lender or investor therein. Except as
specifically noted below, the Agent shall have full power and authority, acting alone, to do any and
all things in connection with such servicing and administration of the Loan that it may deem
necessary or desirable, including, without limitation, the following:
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(a) The making of advances on the Loan directly to or for the account of the
Borrower, pursuant to the Loan Agreement and other Loan Documents, in accordance with law and
the Agent's usual practices and procedures in administering similar projects and mortgage loans.
(b) Recording and filing of documents and statements to create, preserve and
release the lien of the Mortgage on the Project and the site on which it is located, site inspections,
obtaining title updates and endorsements, processing change orders, and maintaining required
insurance and escrow funds.
(c) The collection, holding and disbursement in accordance with the
requirements of the Loan Documents and any applicable laws, of all payments of principal and
interest due under the Loan, and any other payments or sums due under or with respect to the Loan,
the Mortgage or other Loan Documents, including, without limitation, all payments for taxes,
assessments, hazard insurance premiums, service charges and late payment fees, all proceeds of title
and hazard insurance policies, letters of credit, and all condemnation awards.
(d) The preservation, administration and enforcement of the Loan and the Loan
Documents, and in this connection the Agent may do, or refrain from doing, all acts which are
permitted under the terms of the Loan or the Loan Documents and which in its sole judgment may be
appropriate; provided, however, that, except as otherwise permitted in accordance with Section 5.2
hereof upon the happening of a default by the Borrower under the Loan Agreement, the Notes or the
Mortgage, the Agent may not take any action that would cause interest on the Bonds to be included
in the gross income of the owners thereof for purposes of federal income taxation without the prior
written consent of the Issuer, the Holder and the Subordinate Holder or do any of the following
without the prior written consent of the Holder:
(i) consent to or permit modification of the maximum face principal
amount of the Loan, reduce the interest rate thereon, or extend the maturity date thereof or the due
date of any principal payment thereof or the date for commencement of amortization, or
(ii) make or consent to any release of the Borrower from any liability
under the Loan or any of the Loan Documents;
or without the prior written consent of the Subordinate Holder, consent to or permit modification of
the maximum face principal amount of the Series A-3 Note, reduce the interest rate thereon, or
extend the maturity date thereof or the due date of any principal payment thereof or the date for
commencement of amortization.
(e) The preservation and administration of all escrow funds required by any of
the Loan Documents, in accordance with the requirements of the Loan Documents.
Section 4.2 mina Agent for the Bonds; Investments. The Agent shall serve as paying
agent for the Bonds and on behalf of the Issuer, and shall remit, directly to the Holder, the payments
of principal, interest, premiums, late payment fees and all other amounts due on the Series A-1 Bonds
and the Series A-2 Bonds, and to the Subordinate Holder, the payments of principal, interest,
premiums, late payment fees and all other amounts due on the Series A-3 Bonds, required by, and in
accordance with, Sections 2.3, 2.4, 2.5, 2.6, 2.12, 2.13 and 2.14 hereof. The Agent shall invest any
undisbursed Bond proceeds in Permitted Investments, as directed by the Borrower and as approved
by the Holder.
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Permitted Investments may be purchased at such prices as the Agent may in its discretion
determine or as may be directed by written request of the Borrower, approved by the Holder,
provided that, except as hereinafter provided in the next sentence, all Permitted Investments acquired
with the proceeds of the Bonds (within the meaning of Section 148 of the Code) shall be acquired,
disposed of and valued (as of the date that valuation is required by the Code) at Fair Market Value.
Investments of such proceeds that are subject to a yield restriction under applicable provisions of the
Code shall be valued at their present value (within the meaning of Section 148 of the Code). All
Permitted Investments relating to the Bonds shall be acquired subject to any additional limitations set
forth in the Tax Certificate, dated the Closing Date, executed by the Issuer and the Borrower.
Section 43 Standard of Care. In servicing and administering the Loan and acting as a
paying agent for the Bonds pursuant to Sections 4.1 and 4.2 hereof, the Agent shall act in the best
interests of the Holder and the Subordinate Holder, but the Agent shall not be liable to the Holder or
the Subordinate Holder or to any other person or entity if, in so servicing and administering the Loan
and the Bonds, the Agent exercises that degree of ordinary prudence and skill which it would
exercise under the circumstances in protecting its own interests as if it were the Holder or the
Subordinate Holder, and further, the Agent shall not have any liability when the Agent acts, or
refrains from acting, pursuant to the specific written instructions of the Holder or the Subordinate
Holder. The Issuer shall have no liability to the Holder or the Subordinate Holder for actions taken
by the Agent in servicing and administering the Loan or acting as paying agent for the Bonds,
including, but not limited to, liability for the errors or omissions, willful misconduct or negligence of
the Agent. Subsequent to the Closing Date, the Agent shall not be responsible for filing UCC
financing statements with respect to the Subordinate Collateral or any portion thereof.
Section 4.4 Indemnification of Issuer by Agent. The Holder and the Subordinate Holder
acknowledge that notwithstanding any other provision of this Pledge and Assignment, Agent is
acting as an independent contractor and not as the agent of Issuer in servicing and administering the
Loan. Agent agrees to indemnify, hold harmless and defend Issuer and its board members, officers,
officials, agents and employees and each of them, against all loss, costs, damages, expenses, suits,
judgments, actions and liabilities of whatever nature (including, without limitation, attorneys' fees,
litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments)
directly or indirectly resulting from or arising out of or related to any act or omission on the part of
Agent under this Pledge and Assignment.
The provisions of this Section shall survive the termination of this Pledge and Assignment.
Nothing within this Section 4.4 shall limit the rights of the Issuer and its board members,
officers, officials, agents, attorneys and employees and each of them to indemnity under Section 7 of
the Regulatory Agreement.
ARTICLE 5
DEFAULTS ON LOAN
Section 5.1 Defaults on Loan. Except as provided in Section 5.2 hereof, upon the
happening of any default which extends beyond any applicable notice and cure period by the
Borrower under the Loan Agreement, the Notes or the Mortgage, the Agent shall (i) promptly notify
the Holder and Subordinate Holder of such default, (ii) take such action as it is directed to take by the
Holder (as it relates to Series A-3 Bonds, the Subordinate Holder) to enforce the Loan Documents,
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and (iii) promptly apply all proceeds realized upon enforcement of the Loan Documents, if any, in
the following order of priority:
(a) To reimburse the Agent for its expenses (including reasonable attorneys'
fees) incurred in taking such action to enforce the Loan Documents;
(b) To pay to the Holder any interest accrued on the Senior Bonds, without
preference or priority of any installment of such interest over any other installment of such interest;
(c) To pay to the Holder all principal outstanding on the Senior Bonds and any
corresponding unpaid premium and late payment fees, without preference or priority of any
installment or amount of such principal, premium or fees over any other installment of principal,
premium or fees;
(d) To reimburse the Holder for any losses or expenses incurred by it in
connection with such default and the Senior Bonds;
(e) To pay on a subordinate basis to the Subordinate Holder but solely to the
extent of Residual Receipts, if any, any interest accrued on the Subordinate Bonds, without
preference or priority of any installment of such interest over any other installment of such interest;
(f) To pay on a subordinate basis to the Subordinate Holder but solely to the
extent of Residual Receipts, if any, all principal outstanding on the Subordinate Bonds and any
corresponding unpaid premium and late payment fees, without preference or priority of any
installment or amount of such principal, premium or fees over any other installment of principal,
premium or fees;
(g) To reimburse on a subordinate basis the Subordinate Holder but solely to the
extent of Residual Receipts, if any, for any losses or expenses incurred by it in connection with such
default and the Subordinate Bonds; and
(h) To pay to the Issuer any unpaid fees or expenses
The balance, if any, of such proceeds shall be applied in accordance with the Loan
Documents, if applicable, and otherwise in accordance with the applicable law or as determined by
the Agent and the Issuer.
In the event that Agent or Holder accepts a deed in lieu of a foreclosure or credit bids at the
foreclosure sale and subsequently takes title to the Project, Holder may request that the Issuer effect a
termination of the Regulatory Agreement, but only in accordance with the terms of the Regulatory
Agreement. In the event that the Agent accepts a deed in lieu of foreclosure or makes a credit bid at
a foreclosure sale and subsequently takes title to the Project, the Agent shall take appropriate action
to cause such deed to be delivered to the Holder.
The Issuer shall have no obligation to take any action or to incur any expense with respect to
any default by the Borrower and shall have no liability to the Holder, the Agent or any other person
for any losses or expenses incurred as a result of such a default.
Section 5.2 Action After Consultation with Holder. Upon the happening of any default
by the Borrower under the Loan Agreement, the Notes or Mortgage, the Agent shall notify the
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Holder and Subordinate Holder of such circumstance. The Agent may request consent of the Holder
(and with respect to Series A-3 Bonds, the Subordinate Holder), with a written copy of such request
being delivered to the Issuer, to a course of action which is other than the enforcement of the Loan
Documents but which is considered reasonable or appropriate by the Agent. Such course of action
may include, but shall not be limited to, waiver of payments to any escrow under the Mortgage,
deferral of payment of principal of or interest on the Loan, entering into a forbearance agreement
with the Borrower, and any similar work-out arrangement; provided, however, that no such course of
action shall be pursued which, in the opinion of Bond Counsel, would cause interest on the Bonds to
be included in gross income for purposes of federal income taxation. In the event the Holder shall
approve in writing any such course of action, the Agent shall take such course of action.
Section 5.3 Losses and Expenses Upon Exercise of Riehts. Any and all losses or
expenses incurred in enforcing the Loan Documents, or as a result of an alternate course or courses
of action approved by the Holder shall be borne by the Borrower. Such losses or expenses may
include, but shall not be limited to:
(a) Subject to the non-recourse provisions set forth in the Loan Agreement, loss
resulting from nonpayment of interest on or principal of the Loan or from receipt of interest at a rate
other than the rate specified in the Notes.
(b) Reimbursement of Agent for expenditures made voluntarily by it for taxes,
assessments, water rates, hazard insurance and similar items with respect to the Project or the Loan,
or for the completion and preservation of the Project.
(c) Expenses of Foreclosure (including reasonable attorney's fees and court costs)
in the event the Agent forecloses the Mortgage.
(d) Loss resulting from interest on the Bonds becoming includable in gross
income for purposes of federal income taxation.
(e) Costs and expenses resulting from any indemnification provided pursuant to
Section 4.4 hereof or otherwise.
Section 5.4 Notice to Issuer. The Agent shall provide the Issuer a copy of any notices
given by it or delivered to it regarding the acceleration of the Loan or the foreclosure of the
Mortgage.
ARTICLE 6
REPRESENTATIONS AND COVENANTS BY AGENT AND ISSUER
Section 6.1 Representations by Agent. The Agent hereby represents and warrants to the
Holder and Subordinate Holder that as of the date of execution of this Pledge and Assignment, the
Agent is a national banking association duly organized and validly existing and in good standing
under the laws of the United States of America, and has all requisite power and authority to enter into
this Pledge and Assignment and to carry out its obligations hereunder.
Section 6.2 Representations by Issuer. The Issuer hereby represents and warrants to the
Holder and Subordinate Holder, that as of the date of execution of this Pledge and Assignment:
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DOC SOC/ 1400877v 5/024036-0052
(a) The Issuer is a public body corporate and politic, duly organized and existing
under the laws of the State of California.
(b) The Bonds have been duly authorized and issued in accordance with the Act
and other applicable laws of the State and constitute valid and binding limited obligations of the
Issuer payable solely from the Collateral, to the extent provided herein.
(c) The Issuer has all requisite power and authority to enter into this Pledge and
Assignment and to carry out its obligations hereunder.
Section 6.3 Tax-Exempt Status of the Bonds. It is the intention of the parties hereto that
interest on the Bonds shall be and remain excluded from gross income for federal income tax
purposes and to that end the Issuer agrees to comply with all the requirements set forth in the Tax
Certificate.
ARTICLE 7
BOOKS AND RECORDS; REPORTS
Section 7.1 Books and Records. The Agent shall at all times keep proper books, accounts
and records relating to the Loan, the Project, the Loan Documents and the Bonds in a manner
conforming to normal banking practices and in accordance with generally accepted accounting
principles. All such books, accounts and records shall be accessible for inspection or duplication by
the Holder, the Subordinate Holder or the Issuer, or their respective representatives during normal
business hours or at any other reasonable times.
Section 7.2 RepOrtS. Upon request, the Agent shall issue a written report to the Holder,
the Subordinate Holder and the Issuer of any material adverse condition known to the Agent which,
in its reasonable judgment, could result in a default under the Loan or the Loan Documents promptly
upon learning of such condition. Upon written request, the Agent shall furnish to the Holder, the
Subordinate Holder and the Issuer a statement of the principal balance outstanding on the Bonds.
ARTICLE 8
NONRECOURSE; OBLIGATIONS NOT DEBT OF ISSUER, AGENT OR STATE
Section 8.1 Limited Obli ate ions. The Bonds and the interest thereon are limited
obligations of the Issuer, payable solely from the Collateral and the proceeds thereof, which is hereby
specifically assigned and pledged to such purposes in the manner and to the extent provided herein.
None of the Issuer, the State, any political subdivision thereof (except the Issuer, to the limited extent
set forth in this Pledge and Assignment), any public agency or the Agent shall in any event be liable
for the payment of the principal of, premium (if any) or interest on the Bonds or for the performance
of any pledge, obligation or agreement of any kind whatsoever, except as set forth above, and none
of the Bonds or any of the Issuer's agreements or obligations shall be construed to constitute an
indebtedness of or a pledge of the faith and credit of or a loan of the credit of any of the foregoing
within the meaning of any constitutional or statutory provision whatsoever.
The Bonds, together with the interest and premium (if any) thereon and the purchase price
thereof, shall not be deemed to constitute a debt or liability of the Issuer (except to the limited extent
22
DOCSOG 1400877v5/024036-0052
payable from the Collateral) or the State or of any public agency or a pledge of the faith and credit of
the Issuer or the State or any political subdivision thereof, but shall be payable solely from the
Collateral provided therefor pursuant to this Pledge and Assignment. The Bonds are only a limited
obligation of the Issuer as provided by the Act, and the Issuer shall under no circumstances be
obligated to pay the Bonds except from the Collateral.
Neither the faith and credit of the Issuer, nor the faith and credit or taxing power of the State,
any public agency or any political subdivision of the State, is pledged to the payment of the principal
of, premium, if any, purchase price of or interest on the Bonds, nor is the State, the Issuer, any public
agency or any political subdivision of the State, in any manner obligated to make any appropriation
for such payment. The Issuer has no taxing power.
No recourse shall be had for the payment of the principal of, premium, if any, or interest on
the Bonds or for any claim based thereon or upon any obligation, covenant or agreement in this
Pledge and Assignment contained (except from the Collateral and proceeds thereof), against the
Issuer, or the Agent, its officers, attorneys, accountants, financial advisors, agents or staff, or the
officers, attorneys, accountants, financial advisors, agents or staff of any successor public entity, as
such, either directly or through the Issuer or any successor public entity, under any rule of law or
penalty or otherwise, and all such liability of the Issuer, and its officers, attorneys, accountants,
financial advisors, agents and staff is hereby, and by the acceptance of the Bonds, expressly waived
and released as a condition of, and in consideration for, the execution of this Pledge and Assignment
and the issuance of the Bonds.
It is recognized that notwithstanding any other provision of this Pledge and Assignment, that
except with respect to the Collateral and proceeds thereof, none of the Borrower, the Agent, or any
Holder shall look to the Issuer, or its directors, officers, attorneys, accountants, financial advisors,
agents or staff or any successor or public entity for monetary damages suffered by the Agent or such
Holder as a result of the failure of the Issuer to perform any covenant, undertaking or obligation
under this Pledge and Assignment, the Agency Agreement, the Bonds, the Regulatory Agreement or
any of the other documents referred to herein, or as a result of the incorrectness of any representation
made by the Issuer in any of such documents, nor for any other reason. Although this Pledge and
Assignment recognizes that such documents shall not give rise to any pecuniary liability of the
Issuer, nothing contained in this Pledge and Assignment shall be construed to preclude in any way
any action or proceeding (other than that element of any action or proceeding involving a claim for
monetary damages against the Issuer) in any court or before any governmental body, agency or
instrumentality or otherwise against the Issuer or any of its officers or employees to enforce the
provisions of any of such documents that the Issuer is obligated to perform and the performance of
which the Issuer has not assigned to the Agent or any other person.
ARTICLE 9
DEFAULTS UNDER THIS PLEDGE AND ASSIGNMENT AGREEMENT
Section 9.1 Events of Default. Each of the following events shall constitute an event of
default ("Event of Default") under this Pledge and Assignment:
(a) Any failure by the Agent to remit to the Holder or the Subordinate Holder, as
appropriate, any payment to be made on the Bonds received by the Agent in accordance with the
provisions of this Pledge and Assignment or the Bonds on the due date thereof;
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(b) If the Agent shall fail tc> conform or comply with any other terms or
provisions of this Pledge and Assignment or the Bonds other than any failure by the Agent to remit to
the Holder or the Subordinate Holder, as appropriate, any payment to be made on the Bonds in
accordance with the provisions of this Pledge and Assignment or the Bonds on the due date thereof
and such failure shall continue for more than thirty (30) days after notice thereof to the Agent from
the Holder, or the Subordinate Holder, as appropriate, or, where such default is not subject to cure
within such thirty (30) day period, if the Agent within such period shall not have commenced with
due diligence and dispatch the curing of such default or thereafter shall fail to prosecute and
complete with due diligence and dispatch and within a reasonable time the curing of such default;
(c) If any material representation or warranty made by the Agent or by the Issuer
contained in this Pledge and Assignment shall prove to have been false or incorrect in any material
respect on the date as of which made;
(d) If the Issuer shall fail or refuse, or be unable after sixty (60) days' notice from
the Agent or the Holder to perform or comply with any term or provision of this Pledge and
Assignment to be performed or complied with by the Issuer;
(e) If an action or proceeding shall be brought, or judgment rendered, against or
relating to the Agent or the Issuer, which has the effect of substantially impairing the rights and
obligations of the Agent or the Issuer hereunder or under the Bonds or with respect to the Loan;
(f) If either the Agent (during the term of its agency) or the Issuer shall make a
general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts
as they become due, or shall file a voluntary petition in bankruptcy, or shall be adjudicated a
bankrupt or insolvent, or shall file any petition or answer seeking, consenting to, or acquiescing in
reorganization, arrangement, adjustment, composition, liquidation, dissolution, or similar relief under
any present or future statute, law or regulation, or shall file an answer admitting or shall fail to deny
or contest the material allegations of a petition against it for any such relief, but only if any such
event adversely impacts the payment of debt service on the Bonds; or
(g) If, with respect to either the Agent (during the term of its agency) or the
Issuer, a trustee, receiver or liquidator of any material part of its properties or assets shall be
appointed with its consent or acquiescence, or if any such appointment, if not so consented to or
acquiesced in, shall remain unvacated or unstayed for sixty (60) days, but only if any such event
adversely impacts the payment of debt service on the Bonds.
Notwithstanding the foregoing, or anything else to the contrary herein, no default by the
Borrower under the Loan Documents shall constitute an Event of Default with respect to the Bonds
(including, without limitations, a failure to make any payment due with respect to the Bonds as a
consequence of the Borrower's failure to make any payment due under the Loan Documents). The
Holder's remedies with respect to a default under the Loan Documents shall be as set forth under the
Loan Documents.
Section 9.2 Remedies. If any Event of Default shall have occurred and be continuing, the
Holder shall promptly give notice to the Issuer and Subordinate Holder and shall have all rights,
powers, and remedies with respect to the Collateral as are available under the Uniform Commercial
Code applicable thereto or as are available under any other applicable law at the time in effect and,
DOCSOC/ 1400877v5/024036-0052
24
without limiting the generality of the foregoing, the Holder may proceed at law or in equity or
otherwise, to the extent permitted by applicable law:
(a) to take possession of the Collateral or any part thereof, with or without legal
process, and to hold, service, administer and enforce any rights thereunder or thereto, and otherwise
exercise all rights of ownership thereof, including (but not limited to) the sale of all or part of the
Collateral;
(b) to become mortgagee of record for the Loan and to service and administer the
same with the same power, authority and standard of care as had been provided for the Agent under
Sections 4.1 and 4.3 hereof;
(c) to service and administer the Bonds as agent and on behalf of the Issuer or
otherwise, and, if applicable, to take such actions necessary to enforce the Loan Documents on its
own behalf, and to take such alternative courses of action, as it may deem appropriate; or
(d) to take such steps to protect and enforce its rights whether by action, suit or
proceeding in equity or at law for the specific performance of any covenant, condition or agreement
in the Bonds, this Pledge and Assignment, or the Loan Documents, or in and of the execution of any
power herein granted, or for foreclosure hereunder, or for enforcement of any other appropriate legal
or equitable remedy or otherwise as the Holder may elect.
Section 9.3 Continuance of Obligations Upon Default by Agent. Notwithstanding any
other provision of this Pledge and Assignment, upon the occurrence and continuance of any Event of
Default caused by or resulting from action, inaction or other condition on the part of the Agent (a) the
Bonds shall for all purposes hereof remain outstanding and shall continue in full force and effect
until paid in full or cancelled, and (b) the Holder shall have the right, in its sole discretion, to exercise
such rights, powers and remedies hereunder or at law as may be required to become the mortgagee of
record for the Loan and to service and administer the Loan and the Bonds, and shall thereupon
service and administer the Loan as mortgagee of record, or shall have the right to retain another
mortgagee to so service and administer the Loan on its own behalf and administer the Bonds as agent
and on behalf of the Issuer, in accordance with Sections 4.1, 4.2, 4.3, 5.1, 5.2 and 5.3 hereof, until
retirement of the Bonds. Further, notwithstanding any such Event of Default, the provisions set forth
in Section 4.5 hereof shall continue in full force and effect.
Section 9.4 Continuance of Obligations and Servicing by A eg nt Upon Default by Issuer.
Notwithstanding any other provision of this Pledge and Assignment, upon the occurrence and
continuance of any Event of Default caused by or resulting from action, inaction or other condition
on the part of the Issuer, and not caused by action, inaction or other condition on the part of the
Agent, then, unless otherwise specified to the contrary by the Holder (a) the Bonds shall, to the
extent possible under the law and in the best interests of the Holder, for all purposes remain
outstanding and shall continue in full force and effect, (b) the Holder shall not take possession of the
Collateral, become mortgagee of record for the Loan or otherwise exercise its remedies hereunder or
at law, and (c) the Agent shall, to the extent possible under the law and in the best interests of the
Holder, continue to service the Loan as mortgagee of record and continue to service and administer
the Bonds as agent and on behalf of the Issuer in accordance herewith until retirement of the Bonds.
Section 9.5 Holder Authorized to Execute Assignments, Etc. Subject to Section 2.8
hereof, the Issuer and the Agent each hereby irrevocably appoints the Holder the true and lawful
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attorney of such party, in its name and stead and on its behalf, for the purpose of effectuating any
sale, assignment, transfer or other disposition for the enforcement of this Pledge and Assignment and
the Bonds, to execute and deliver all assignments and other instruments as the Holder may consider
necessary or appropriate, with full power of substitution, the Issuer and the Agent each hereby
ratifying and confirming all that its said attorney or any substitute shall lawfully do by virtue hereof.
[f so requested by the Holder, the Issuer or the Agent shall ratify and confirm any such permitted or
approved sale, assignment, transfer or other disposition by executing and delivering to the Holder all
proper assignments, releases and other instruments as may be designated in any such request.
Notwithstanding the foregoing, the Holder shall not have the right to delegate the Holder's obligation
to make advances to the Agent for the account of the Issuer.
Section 9.6 Waiver of Appraisal, Evaluation, Etc. The Issuer and the Agent each hereby
waives, to the full extent it may lawfully do so, the benefit of all appraisal, evaluation, stay, extension
and redemption laws now or hereafter in force and all rights of marshaling in the event of any sale
hereunder or any taking of possession by the Holder, of the Collateral or any part thereof or any
interest therein.
Section 9.7 Application of Proceeds of Sale. The proceeds of any sale hereunder of the
Collateral or any part thereof or any interest therein shall be applied in the order of priorities set forth
in Section 5.1 hereof.
Section 9.8 l~ht of Holder to Perform Covenants of the Issuer and the Agent. If the
Issuer or the Agent shall fail to take any action or to perform any obligation required of it hereunder
following written notice from the Holder of not less than ten (]0) business days, the Holder, without
further notice to or demand upon the Issuer or the Agent and without waiving or releasing of any
obligation or default, may (but shall be under no obligation to) at any time thereafter take such action
or perform such obligation for the account of the Issuer (at no expense to the Issuer) or the Agent
and, in the case of the Agent, at the Agent's expense. All sums paid by the Holder or costs incurred
(including, without limitation, reasonable attorneys' fees and expenses) together with interest thereon
at the maximum legal rate from the date of payment by the Holder, shall be paid by the Agent.
Section 9.9 No Waiver, Etc. No failure by the Holder to insist upon the strict
performance of any term hereof or of the Bonds or the Loan Documents or to exercise any right,
power or remedy consequent upon a breach thereof, shall constitute a waiver of any such term or of
any such breach. No waiver of any breach shall affect or alter this Pledge and Assignment, which
shall continue in full force and effect until the Bonds are paid in full or cancelled, or the rights of the
Holder with respect to any other then existing or subsequent breach.
Section 9.10 Remedies Cumulative, Etc. Each right, power and remedy of the Holder
provided for in this Pledge and Assignment or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right,
power or remedy provided for in this Pledge and Assignment or now or hereafter existing at law or in
equity or by statute or otherwise; each such right, power or remedy may be exercised by any such
person in any order or sequence; and the exercise or beginning of the exercise by any such person of
any one or more of such rights, powers and remedies shall not preclude the simultaneous or later
exercise of any or all such rights, powers or remedies. No failure or delay on the part of the Holder
to exercise any such right, power or remedy shall operate as a waiver thereof.
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DOCSOC/1400877v5/024036-0052
ARTICLE 10
MISCELLANEOUS
Section 10.1 Provisions Subject to Applicable Law. All rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and are intended to be limited to the extent necessary so that they will
not render this Pledge and Assignment invalid, unenforceable or not entitled to be rendered,
registered or filed under the provisions of any applicable law. If any term of this Pledge and
Assignment or any application thereof shall be invalid or unenforceable, the remainder of this Pledge
and Assignment and any other application of such term shall not be affected thereby.
Section 10.2 Apnlicable Law, Venue. This Pledge and Assignment, the Bonds and the
Loan Documents are contracts made under the laws of the State, shall be governed by and construed
in accordance with the Constitution and laws applicable to contracts made and performed in the
State, and shall be enforceable in the State, and any action arising out of this Pledge and Assignment,
the Bonds, and the Loan Documents shall be filed and maintained in the County of San Diego,
California, unless the Issuer waives this requirement.
Section 10.3 Compromise of Action. Etc. Any action, suit or proceeding brought by the
Holder pursuant to any of the terms of this Pledge and Assignment or the Bonds or otherwise, and
any claim made by the Holder hereunder or under the Bonds, may be compromised, withdrawn or
otherwise dealt with by the Holder following reasonable written notice to the Issuer and the Agent
and without the approval of such parties.
Section ] 0.4 Notices, Etc. All notices, demands, requests, consents, approvals and other
instruments under this Pledge and Assignment shall be in writing and shall be deemed to have been
properly given if mailed by first class registered or certified mail, postage prepaid, to the following
addresses, or to such other addresses as the parties hereto may designate to each other by notice.
To the Issuer: Housing Authority of the City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
To the Agent: U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, California 92121
Attention: Loan Administration
To the Holder: U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, California 92121
Attention: Loan Administration
To the Subordinate Holder: Winding Walk Residential LLC
Attention:
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DOC SOC/ 1400877v5/024036-0052
To the Borrower: Landings II, L.P.,
c/o Chelsea Asset Corporation
5993 Avenida Encinas, Suite 101
Carlsbad, California 92008
Attention: James J. Schmid
with a copy to: Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, California 94105-2228
Attention: Gary Downs, Esq.
with a copy to: Raymond James Tax Credit Funds, Inc.
1250 Linda Street, Suite 101
Rocky River, OH 44116
Attention:
Section 10.5 Termination. This Pledge and Assignment shall cease and terminate when
the Bonds have been surrendered and finally paid and all obligations secured hereby shall have been
observed.
Section 10.6 Duty of Issuer. Except for the actions set forth herein, the Issuer shall not be
required to take any action or incur any expense not expressly provided for in this Pledge and
Assignment. The Issuer shall not be obligated to take any action that might, in its reasonable
judgment, involve the Issuer in any expense or liability unless it shall have been furnished with
reasonable indemnity for the Issuer, its officers, directors, agents and employees.
Section 10.7 Consent to Assi ng ment. The Issuer agrees that the U.S. Bank National
Association shall have the right to assign all of the rights that it holds under this Pledge and
Assignment, either as "Agent" or as "Holder," to any Affiliate or other permitted successor or assign
of a majority interest in the Bonds. The Issuer will execute and deliver to the Agent any documents
necessary to effectuate such assignment, and will not take any action to impair the Agent's right to
assign pursuant to this Section 10.7.
Section 10.8 Amendments, Successors and Assigns, Headings and Counterparts. Any of
the terms of this Pledge and Assignment and the Bonds may be amended or waived only by an
instrument signed by the Issuer, the Agent and the Holder. All of the terms of this Pledge and
Assignment shall be binding upon the successors and assigns of and all persons claiming under or
through the Issuer and the Agent or any such successor or assign, and shall inure to the benefit of and
be enforceable by the successors and assigns of the Holder. The headings of this Pledge and
Assignment are for convenience of reference only and shall not limit or otherwise affect the meaning
hereof. This Pledge and Assignment may be executed in several counterparts, each of which shall be
an original, and all of which shall constitute one and the same instrument.
[Remainder of This Page Intentionally Left Blank]
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DOC SOC/ 1400877v5/024036-0052
IN WITNESS WHEREOF, the Issuer, the Agent and the Holder have each caused this Pledge
and Assignment to be executed in their respective names as of the date first written above.
HOUSING AUTHORITY OF CITY OF CHULA
VISTA, CALIFORNIA
Executive Director
ATTEST:
Secretary
S-1
DOC SOC/ 1400877v5/024036-0052
AGENT
U.S. BANK NATIONAL ASSOCIATION, as Agent
Vice President
HOLDER
U.S. BANK NATIONAL ASSOCIATION, as Holder
Vice President
S-2
DOCSOC/1400877v5/024036-0052
EXHIBIT A-1
FORM OF SENIOR SERIES 2010A-1 BOND
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF ] 933. THE TRANSFERABILITY HEREOF IS RESTRICTED BY THE
TERMS OF THE PLEDGE AND ASSIGNMENT DESCRIBED HEREIN,
INCLUDING THE PROVISION THEREOF LIMITING OWNERSHIP OF THIS
BOND TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN THE
PLEDGE AND ASSIGNMENT), SUBJECT TO CERTAIN EXCEPTIONS..
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BOND
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-]
Maximum
Principa! Amount
HOLDER:
AMOUNT:
Current Principal
Amount
See Attached
Principal
Schedule
Interest Rate
(Prior to
Remarketing
Date)
As determined in
the below-
defined Note A-1
Maturity Date Dated Date
[November 1, 2045] Date of Delivery
DOLLARS
The Housing Authority of the City of Chula Vista, a public body corporate and politic, duly
organized and existing under the laws of the State of Califomia (the "Issuer"), for value received,
hereby promises to pay, but only from the Collateral or the proceeds thereof (as that term is defined
in the Master Pledge and Assignment hereinafter described), to the order of the Holder specified
above, or registered assign (the "Holder"), at its office in San Diego, California, or such other place
as the Holder may designate in writing, from the source and in the manner hereinafter provided, the
principal sum of ($ ), or such lesser amount as may be
deemed outstanding hereunder with interest on the unpaid balance of this Bond from the Dated Date
until this Bond is fully paid, at the rate computed as specified below, in any coin or currency which at
the time or times of payment is legal tender for the payment of public or private debts in the United
States of America. All capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement, Note A-1 or the Pledge and Assignment
hereinafter defined.
This Bond constitutes all or part of an issue in the total authorized face principal amount of
$ issued by the Issuer to provide moneys to fund a portion loan (the "Loan") to be made
for the account of the Issuer to Landings II, L.P. a California limited partnership (the "Borrower"),
for the purpose of financing a portion of the construction and development of an 141 unit plus 2
A-1-1
DOCSOC/1400877v5/024036-0052
manager's units multifamily rental housing project located in the City of Chula Vista, California, and
known as "Landings 1I Apartments " (the "Project"). Simultaneously with the issuance of this Bond,
the Issuer is also issuing on a parity basis its Housing Authority of the City of Chula Vista
Multifamily Housing Revenue Bonds (The Landings 11 Apartments), Senior Series 2O1OA-2 and is
issuing on a subordinate basis its Housing Authority of the City of Chula Vista Multifamily Housing
Revenue Bonds (The Landings II Apartments), Subordinate Series 2O1OA-3, to fund additional loans
relating to the Project.
The obligations of the Borrower under the Loan will be evidenced by that certain Promissory
Note, dated , 2010, in the amount of $ ("Note A-I") made by the Borrower
to the order of U.S. Bank National Association, as agent (the "Agent") for the Issuer pursuant to a
Master Agency Agreement dated as of , 2010, between the Issuer and the Agent. This
Bond is secured by a Master Pledge and Assignment (the "Pledge and Assignment"), dated as of
2010, by and among the Issuer, the Agent and the Holder.
This Bond shall mature on the Maturity Date set forth above, and the entire unpaid principal
balance of and any accrued interest on this Bond shall be paid in full on or before such date. This
Bond is subject to mandatory purchase on the Remarketing Date set forth above (as such date may be
extended pursuant to the terms of the Pledge and Assignment) at a purchase price equal to the
outstanding principal amount of this Bond on such Remarketing Date plus interest due and payable
hereon to such Remarketing Date as set forth in the Pledge and Assignment. In the event that there
are insufficient proceeds from such remarketing of the Bonds to pay such purchase price on the
Remarketing Date, the Bonds shall be subject to mandatory redemption on the Remarketing Date.
Prior to the Remarketing Date set forth above (the "Remarketing Date"), this Bond shall bear
interest as provided in Note A-1. On and following the Remarketing Date, this Bond shall bear
interest at the Post Remarketing Date Rate as defined in and determined pursuant to the Pledge and
Assignment.
This is a draw-down Bond. The principal amount of this Bond as of any given date shall be
equal to (i) the aggregate amount of principal advanced by the Agent, on behalf of the Issuer, to the
Borrower under the Loan Agreement in respect of the Loan, less (ii) any payment of principal on this
Bond received by the Holder thereof. Principal amounts advanced to the Borrower under the Loan
Agreement in respect of the Loan and payments of principal on this Bond shall be noted on the
Principlal Schedule attached hereto or otherwise recorded by the Holder with periodic statements
provided, upon request, to the Issuer.
This Bond shall bear interest from the date to which interest has been paid on the Bonds next
preceding the date of its authentication, unless it is authenticated as of an Interest Payment Date for
which interest has been paid, in which event it shall bear interest from such Interest Payment Date, or
unless it is authenticated on or before the first Interest Payment Date, in which event it shall bear
interest from its Closing Date.
The payment or prepayment of the principal, interest, premium, late payment fees and other
amounts due on this Bond shall be identical with and shall be made on the same terms and conditions
as the payments or prepayments of principal, interest, premium, late payment fees and other amounts
due on Note A-1. Any payments or prepayments made by the Borrower of principal, interest,
premium, late payment fees and other amounts due on Note A-1 shall be deemed to be like and
corresponding payments or prepayments of principal, interest, premium late payment fees and all
DOCSOC/ 1400877v5/024036-0052
A-1-2
other amounts due on this Bond. Said payments or prepayments by the Borrower shall be deemed to
have been constructively received by the Holder as payments or prepayments on this Bond on the
date of receipt by the Agent under Note A-1, and interest on this Bond with respect to each principal
payment or prepayment shall cease to accrue upon receipt thereof by the Agent. Payments or
prepayments of principal, interest, premium, late payment fees and other amounts due shall be
remitted to the Holder by the Agent immediately.
This Bond shall be subject to redemption as provided in the Pledge and Assignment.
This Bond (or any participation interest therein) may be sold, assigned, transferred,
participated or otherwise disposed of only in Authorized Denominations (as defined in the Pledge
and Assignment). This Bond (or any participation interest therein) may not be sold, assigned,
transferred, participated or otherwise disposed of, in whole or in part, except upon satisfaction of the
requirements of the Pledge and Assignment, including, but not limited to, the requirement that this
Bond be sold or assigned only to Qualified Institutional Buyers (as defined in the Pledge and
Assignment), upon receipt from the purchaser of a Purchaser's Letter in the form attached to the
Pledge and Assignment as Exhibit B-1.
Subject to the foregoing, this Bond is transferable upon the books of the Agent, by the
registered Holder hereof in person or by its attorney duly authorized in writing, upon surrender of
this Bond together with a written instrument of transfer satisfactory to the Agent, duly executed by
the registered Holder or its duly authorized attorney. Upon such transfer, the Agent will note the date
of registration and the name and address of the newly registered Holder on the books of the Issuer
and in its records. The Issuer may deem and treat the person in whose name this Bond is last
registered upon the books of the Agent, with such registration noted on this Bond, as the absolute
owner hereof for the purpose of receiving payment of or on account of the principal or interest and
for all other purposes; all such payments so made to the registered Holder or upon his order shall be
valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or
sums so paid, and the Issuer shall not be affected by any notice to the contrary.
If any of the payments required by the terms hereof shall not be paid when the same becomes
due, or if the payment due on the Maturity Date is not paid when due, whether by acceleration or
otherwise, or upon the occurrence of an Event of Default under the Pledge and Assignment, then, or
at any time thereafter, the whole of the unpaid principal and interest owing on this Bond shall, at the
option of Holder and without notice, become immediately due and payable. This option may be
exercised at any time after any such event and the acceptance of one or more installments or other
payments from any person thereafter shall not constitute a waiver of Holder's option. Holder's
failure to exercise said option in connection with any particular event or series of events shall not be
construed as a waiver of the provisions hereof as regards any subsequent event.
All of the agreements, covenants, conditions, limitations, provisions and stipulations
contained in the Pledge and Assignment are hereby made a part of this Bond to the same extent and
with the same effect as if they were fully set forth herein. If any payment of the principal of, interest
hereon or other payments due hereunder are not made when due in accordance with the terms and
conditions of this Bond, then the Holder may at its right and option declare immediately due and
payable the principal of this Bond and interest accrued hereon to the date of declaration of such
default, together with any reasonable attorneys' fees incurred by the Holder in collecting or enforcing
payment hereof, whether suit be brought or not, and all other sums due hereunder or under the Pledge
and Assignment, notwithstanding anything to the contrary therein and payment thereof may be
A-1-3
DOC SOC/ 1400877v5/024036-0052
enforced and recovered in whole or in part, at any time, by one or more of the remedies provided in
this Bond or the Pledge and Assignment.
The remedies of the Holder upon an Event of Default, as provided herein and in the Pledge
and Assignment, may be pursued at the sole discretion of the Holder and may be exercised as often
as occasion therefor shall occur. The failure to exercise any such right or remedy shall in no event be
construed as a waiver or release thereof. Any default under the Pledge and Assignment shall
constitute a default under this Bond.
The Holder shall not be deemed, by any act of omission or commission, to have waived any
of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and then
only to the extent specifically set forth in the writing. A waiver with reference to one event shall not
be construed as a continuing waiver or as a bar to or waiver of any right or remedy as to a subsequent
event.
This Bond may not be amended without the prior written consent of the lssuer, the Holder
and the Agent.
THIS BOND AND THE INTEREST HEREON IS A LIMITED OBLIGATION OF
THE ISSUER, PAYABLE SOLELY FROM THE COLLATERAL AND THE PROCEEDS
THEREOF. NEITHER THE ISSUER, THE STATE OF CALIFORNIA (THE "STATE"),
NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE
LIMITED EXTENT SET FORTH IN THE PLEDGE AND ASSIGNMENT) NOR ANY
PUBLIC AGENCY SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE
PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THIS BOND OR FOR THE
PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND
WHATSOEVER EXCEPT AS SET FORTH HEREIN AND IN THE PLEDGE AND
ASSIGNMENT, AND NONE OF THE BONDS OR ANY OF THE ISSUER'S AGREEMENTS
OR OBLIGATIONS SHALL BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF
OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE CREDIT OF OR
AMORAL OBLIGATION OF ANY OF THE FOREGOING WITHIN THE MEANING OF
ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER
HAS NO TAXING POWER.
No recourse shall be had for the payment of the principal of, premium, if any, or interest on
the Bonds or far any claim based thereon or upon any obligation, covenant or agreement in this
Pledge and Assignment contained (except from the Collateral and proceeds thereof), against the
lssuer, or the Agent, its officers, attorneys, accountants, financial advisors, agents or staff, or the
officers, attorneys, accountants, financial advisors, agents or staff of any successor public entity, as
such, either directly or through the Issuer or any successor public entity, under any rule of law or
penalty or otherwise, and all such liability of the Issuer, and its officers, attorneys, accountants,
financial advisors, agents and staff is hereby, and by the acceptance of the Bonds, expressly waived
and released as a condition of, and in consideration for, the execution of this Pledge and Assignment
and the issuance of the Bonds.
None of the Borrower, the Agent or any Holder shall look to the Issuer, or its directors,
officers, attorneys, accountants, financial advisors, agents or staff or any successor or public entity
for damages suffered by the Agent or such Holder as a result of the failure of the Issuer to perform
any covenant, undertaking or obligation under this Pledge and Assignment, the Agency Agreement,
A-1-4
DOCSOC/1400877v5/024036-0052
the Bonds, the Regulatory Agreement or any of the other documents referred to herein, or as a result
of the incorrectness of any representation made by the Issuer in any of such documents, nor for any
other reason. Although the Pledge and Assignment recognizes that such documents shall not give
rise to any pecuniary liability of the Issuer, nothing contained in this Pledge and Assignment shall be
construed to preclude in any way any action or proceeding (other than that element of any action or
proceeding involving a claim for monetary damages against the Issuer) in any court or before any
governmental body, agency or instrumentality or otherwise against the Issuer or any of its officers or
employees to enforce the provisions of any of such documents that the Issuer is obligated to perform
and the performance of which the Issuer has not assigned to the Agent or any other person.
It is intended that this Bond is made with reference to and shall be construed as a contract
governed by the laws of the State.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
benefit or security under the Pledge and Assignment unless this Bond is authenticated by the Agent
by execution of the Certificate of Authentication appearing hereon.
IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to
exist, happen and be performed precedent to or in the issuance of this Bond do exist, have happened
and have been performed in regular and due form as required by law.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed and attested on its
behalf by the manual or facsimile signatures of its duly authorized officers, all as of the date first set
forth above.
HOUSING AUTHOWTY OF THE CITY OF
CHULA VISTA
ATTEST:
Secretary
By:
Chair
A-1-5
DOCSOC/ 1400877v5/024036-0052
FORM OF CERTIFICATE OF AUTHENTICATION
(Agent)
This is to certify that this Bond is one of the Bonds referred to in the within mentioned
Pledge and Assignment.
U.S. BANK NATIONAL ASSOCIATION, as
Agent
Dated:
By:
Authorized Signatory
A-1-6
DOCSOC/1400877v5/024036-0052
PROVISIONS AS TO REGISTRATION
The ownership of the unpaid principal balance of this Bond and the interest accruing thereon is
registered on the books of the Agent in the name of the registered Holder last noted below.
Name of Registered Principal Amount
Date of Registration Holder Outstanding Signature of Agent
A-1-7
OOCSOC/ 1400877v5/024036-0052
PRINCIPAL SCHEDULE
Amount
Advanced on the Principal Paid on Current Principal
Date Loan the Bond of the Bond
Signature of
Agent
A-1-8
DOCSOC/ 1400877v5/024036-0052
EXHIBIT A-2
FORM OF SENIOR SERIES 2010A-2 BOND
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIF,S ACT
OF 1933. THE TRANSFERABILITY HEREOF IS RESTRICTED BY THE
TERMS OF THE PLEDGE AND ASSIGNMENT DESCRIBED HEREIN,
INCLUDING THE PROVISION THEREOF LIMITING OWNERSHIP OF THIS
BOND TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN THE
PLEDGE AND ASSIGNMENT), SUBJECT TO CERTAIN EXCEPTIONS..
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BOND
(THE LANDINGS II APARTMENTS)
SERIES 2010A-2
Maximum
Principal
Amount
Current
Principal
Amount
See Attached
Principal
Schedule
HOLDER:
AMOUNT:
DOLLARS
The Housing Authority of the City of Chula Vista, a public body corporate and politic, duly
organized and existing under the laws of the State of California (the "Issuer"), for value received,
hereby promises to pay, but only from the Collateral or the proceeds thereof (as that term is defined
in the Master Pledge and Assignment hereinafter described), to the order of the Holder specified
above, or registered assign (the "Holder"), at its office in San Diego, California, or such other place
as the Holder may designate in writing, from the source and in the manner hereinafter provided, the
principal sum of ($ ), or such lesser amount as may be deemed
outstanding hereunder with interest on the unpaid balance of this Bond from the Dated Date until this
Bond is fully paid, at the rate computed as specified below, in any coin or currency which at the time
or times of payment is legal tender for the payment of public or private debts in the United States of
America. All capitalized terms used but not otherwise defined herein shall have the meanings
ascribed thereto in the Loan Agreement, Note A-2 or the Pledge and Assignment hereinafter defined.
This Bond constitutes all or part of an issue in the total authorized face principal amount of
$ issued by the Issuer to provide moneys to fund a portion loan (the "Loan") to be made
for the account of the Issuer to Landings I1, L.P. a California limited partnership (the "Borrower"),
for the purpose of financing a portion of the construction and development of an 141 unit plus 2
managers units multifamily rental housing project located in the City of Chula Vista, California, and
known as "Landings II Apartments " (the "Project"). Simultaneously with the issuance of this Bond,
Interest Rate Maturity Date Dated Date
As determined in [November 1, 2012] Date of Delivery
the below-defined
Note A-2
A-2-1
DOCSOC/ 1400877v5/024036-0052
the Issuer is also issuing on a parity basis its Housing Authority of the City of Chula Vista
Multifamily Housing Revenue Bonds (The Landings 11 Apartments), Senior Series 2010A-1 and is
issuing on a subordinate basis its Housing Authority of the City of Chula Vista Multifamily Housing
Revenue Bonds (The Landings it Apartments), Subordinate Series 2010A-3, to fund additional loans
relating to the Project.
The obligations of the Borrower under the Loan will be evidenced by that certain Promissory
Note, dated , 2010, in the amount of $ ("Note A-2") made by the Borrower
to the order of U.S. Bank National Association, as agent (the "Agent") for the Issuer pursuant to a
Master Agency Agreement dated as of , 2010, between the Issuer and the Agent. This
Bond is secured by a Master Pledge and Assignment (the "Pledge and Assignment"), dated as of
_, 2010, by and among the Issuer, the Agent and the Holder.
This Bond shall mature on the Maturity Date set forth above, and the entire unpaid principal
balance of and any accrued interest on this Bond shall be paid in full on or before such date. .
This is a draw-down Bond. The principal amount of this Bond as of any given date shall be
equal to (i) the aggregate amount of principal advanced by the Agent, on behalf of the Issuer, to the
Borrower under the Loan Agreement in respect of the Loan, less (ii) any payment of principal on this
Bond received by the Holder thereof. Principal amounts advanced to the Borrower under the Loan
Agreement in respect of the Loan and payments of principal on this Bond shall be noted on the
Principal Schedule attached hereto or otherwise recorded by the Holder with periodic statements
provided, upon request, to the Issuer.
This Bond shall bear interest from the date to which interest has been paid on the Bonds next
preceding the date of its authentication, unless it is authenticated as of an Interest Payment Date for
which interest has been paid, in which event it shall bear interest from such Interest Payment Date, or
unless it is authenticated on or before the first Interest Payment Date, in which event it shall bear
interest from its Closing Date.
The payment or prepayment of the principal, interest, premium, late payment fees and other
amounts due on this Bond shall be identical with and shall be made on the same terms and conditions
as the payments or prepayments of principal, interest, premium, late payment fees and other amounts
due on Note A-2. Any payments or prepayments made by the Borrower of principal, interest,
premium, late payment fees and other amounts due on Note A-2 shall be deemed to be like and
corresponding payments or prepayments of principal, interest, premium late payment fees and all
other amounts due on this Bond. Said payments or prepayments by the Borrower shall be deemed to
have been constructively received by the Holder as payments or prepayments on this Bond on the
date of receipt by the Agent under Note A-2, and interest on this Bond with respect to each principal
payment or prepayment shall cease to accrue upon receipt thereof by the Agent. Payments or
prepayments of principal, interest, premium, late payment fees and other amounts due shall be
remitted to the Holder by the Agent immediately.
This Bond shall be subject to redemption as provided in the Pledge and Assignment.
This Bond (or any participation interest therein) may be sold, assigned, transferred,
participated or otherwise disposed of only in Authorized Denominations (as defined in the Pledge
and Assignment). This Bond (or any participation interest therein) may not be sold, assigned,
transferred, participated or otherwise disposed of, in whole or in part, except upon satisfaction of the
A-2-2
DOCSOC/ 1400877v5/024036-0052
requirements of the Pledge and Assignment, including, but not limited to, the requirement that this
Bond be sold or assigned only to Qualified Institutional Buyers (as defined in the Pledge and
Assignment), upon receipt from the purchaser of a Purchaser's Letter in the form attached to the
Pledge and Assignment as Exhibit B-1.
Subject to the foregoing, this Bond is transferable upon the books of the Agent, by the
registered Holder hereof in person or by its attorney duly authorized in writing, upon surrender of
this Bond together with a written instrument of transfer satisfactory to the Agent, duly executed by
the registered Holder or its duly authorized attorney. Upon such transfer, the Agent will note the date
of registration and the name and address of the newly registered Holder on the books of the Issuer
and in its records. The Issuer may deem and treat the person in whose name this Bond is last
registered upon the books of the Agent, with such registration noted on this Bond, as the absolute
owner hereof for the purpose of receiving payment of or on account of the principal or interest and
for all other purposes; all such payments so made to the registered Holder or upon his order shall be
valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or
sums so paid, and the Issuer shall not be affected by any notice to the contrary.
If any of the payments required by the terms hereof shall not be paid when the same becomes
due, or if the payment due on the Maturity Date is not paid when due, whether by acceleration or
otherwise, or upon the occun•ence of an Event of Default under the Pledge and Assignment, then, or
at any time thereafter, the whole of the unpaid principal and interest owing on this Bond shall, at the
option of Holder and without notice, become immediately due and payable. This option may be
exercised at any time after any such event and the acceptance of one or more installments or other
payments from any person thereafter shall not constitute a waiver of Holder's option. Holder's
failure to exercise said option in connection with any particular event or series of events shall not be
construed as a waiver of the provisions hereof as regards any subsequent event.
All of the agreements, covenants, conditions, limitations, provisions and stipulations
contained in the Pledge and Assignment are hereby made a part of this Bond to the same extent and
with the same effect as if they were fully set forth herein. If any payment of the principal of, interest
hereon or other payments due hereunder are not made when due in accordance with the terms and
conditions of this Bond, then the Holder may at its right and option declare immediately due and
payable the principal of this Bond and interest accrued hereon to the date of declaration of such
default, together with any reasonable attorneys' fees incurred by the Holder in collecting or enforcing
payment hereof, whether suit be brought or not, and all other sums due hereunder or under the Pledge
and Assignment, notwithstanding anything to the contrary therein and payment thereof may be
enforced and recovered in whole or in part, at any time, by one or more of the remedies provided in
this Bond or the Pledge and Assignment.
The remedies of the Holder upon an Event of Default, as provided herein and in the Pledge
and Assignment, may be pursued at the sole discretion of the Holder and may be exercised as often
as occasion therefor shall occur. The failure to exercise any such right or remedy shall in no event be
construed as a waiver or release thereof. Any default under the Pledge and Assignment shall
constitute a default under this Bond.
The Holder shall not be deemed, by any act of omission or commission, to have waived any
of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and then
only to the extent specifically set forth in the writing. A waiver with reference to one event shall not
DOCSOC/1400877v5/024036-0052
A-2-3
be construed as a continuing waiver or as a bar to or waiver of any right or remedy as to a subsequent
event.
This Bond may not be amended without the prior written consent of the Issuer, the Holder
and the Agent.
THIS BOND AND THE INTEREST HEREON IS A LIMITED OBLIGATION OF
THE ISSUER, PAYABLE SOLELY FROM THE COLLATERAL AND THE PROCEEDS
THEREOF. NEITHER THE ISSUER, THE STATE OF CALIFORNIA (THE "STATE"),
NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE
LIMITED EXTENT SET FORTH IN THE PLEDGE AND ASSIGNMENT) NOR ANY
PUBLIC AGENCY SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE
PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THIS BOND OR FOR THE
PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND
WHATSOEVER EXCEPT AS SET FORTH HEREIN AND IN THE PLEDGE AND
ASSIGNMENT, AND NONE OF THE BONDS OR ANY OF THE ISSUER'S AGREEMENTS
OR OBLIGATIONS SHALL BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF
OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE CREDIT OF OR
AMORAL OBLIGATION OF ANY OF THE FOREGOING WITHIN THE MEANING OF
ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER
HAS NO TAXING POWER.
No recourse shall be had for the payment of the principal of, premium, if any, or interest on
the Bonds or for any claim based thereon or upon any obligation, covenant or agreement in this
Pledge and Assignment contained (except from the Collateral and proceeds thereof), against the
Issuer, or the Agent, its officers, attorneys, accountants, financial advisors, agents or staff, or the
officers, attorneys, accountants, financial advisors, agents or staff of any successor public entity, as
such, either directly or through the Issuer or any successor public entity, under any rule of law or
penalty or otherwise, and all such liability of the Issuer, and its officers, attorneys, accountants,
financial advisors, agents and staff is hereby, and by the acceptance of the Bonds, expressly waived
and released as a condition of, and in consideration for, the execution of this Pledge and Assignment
and the issuance of the Bonds.
None of the Borrower, the Agent or any Holder shall look to the Issuer, or its directors,
officers, attomeys, accountants, financial advisors, agents or staff or any successor or public entity
for damages suffered by the Agent or such Holder as a result of the failure of the Issuer to perform
any covenant, undertaking or obligation under this Pledge and Assignment, the Agency Agreement,
the Bonds, the Regulatory Agreement or any of the other documents referred to herein, or as a result
of the incorrectness of any representation made by the Issuer in any of such documents, nor for any
other reason. Although the Pledge and Assignment recognizes that such documents shall not give
rise to any pecuniary liability of the Issuer, nothing contained in this Pledge and Assignment shall be
construed to preclude in any way any action or proceeding (other than that element of any action or
proceeding involving a claim for monetary damages against the Issuer) in any court or before any
governmental body, agency or instrumentality or otherwise against the Issuer or any of its officers or
employees to enforce the provisions of any of such documents that the Issuer is obligated to perform
and the performance of which the Issuer has not assigned to the Agent or any other person.
It is intended that this Bond is made with reference to and shall be construed as a contract
governed by the laws of the State.
A-2-4
DOC SOC/ 1400877v5/024036-0052
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
benefit or security under the Pledge and Assignment unless this Bond is authenticated by the Agent
by execution of the Certificate of Authentication appearing hereon.
IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to
exist, happen and be performed precedent to or in the issuance of this Bond do exist, have happened
and have been performed in regular and due form as required by law.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed and attested on its
behalf by the manual or facsimile signatures of its duly authorized officers, all as of the date first set
forth above.
HOUSING AUTHORITY OF THE CITY OF
CHULA VISTA
ATTEST:
Secretary
By:
Chair
A-2-5
DOC SOC/ 1400877v5/024036-0052
FORM OF CERTIFICATE OF AUTHENTICATION
(Agent)
This is to certify that this Bond is one of the Bonds referred to in the within mentioned
Pledge and Assignment.
U.S. BANK NATIONAL ASSOCIATION, as
Agent
Dated:
By:
Authorized Signatory
A-2-6
DOCSOC/ 1400877v5/024036-0052
PROVISIONS AS TO REGISTRATION
The ownership of the unpaid principal balance of this Bond and the interest accruing thereon is
registered on the books of the Agent in the name of the registered Holder last noted below.
Name oJ'Registered Principal Amount
Date of Registration Holder Outstanding Signature ojAgent
A-2-7
DOCSOC/ 1400877v5/024036-0052
PRINCIPAL SCHEDULE
Amount
Advanced on the Principal Paid on Current Principal
Date Loan the Bond ojthe Bond
A-2-8
Signature of
Agent
DOCSOC/ 1400877v5/024036-0052
EXHIBIT A-3
FORM OF SUBORDINATE SERIES 2010A-3 BOND
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THE TRANSFERABILITY HEREOF IS RESTRICTED BY THE
TERMS OF THE PLEDGE AND ASSIGNMENT DESCRIBED HEREIN,
INCLUDING THE PROVISION THEREOF LIMITING OWNERSHIP OF THIS
BOND TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN THE
PLEDGE AND ASSIGNMENT), SUBJECT TO CERTAIN EXCEPTIONS..
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BOND
(THE LANDINGS II APARTMENTS)
SUBORDINATE SERIES 2010A-3
Maximum Current Principal
Principal Amount Amount
See Attached
Principal
Schedule
REGISTERED OWNER:
AMOUNT:
Interest Rate
As determined in
the below-
defined Note A-3
Maturity Date Dated Date
[November 1, 2045] Date of Delivery
DOLLARS
The Housing Authority of the City of Chula Vista, a public body corporate and politic, duly
organized and existing under the Taws of the State of California (the "Issuer"), for value received,
hereby promises to pay, but only from the Subordinate Collateral or the proceeds thereof (as that
term is defined in the Master Pledge and Assignment hereinafter described), to the order of the
Holder specified above, or registered assign (the "Registered Owner"), at its office in
,California, or such other place as the Holder may designate in
writing, from the source and in the manner hereinafrer provided, the principal sum of
($ ), or such lesser amount as may be deemed outstanding
hereunder with interest on the unpaid balance of this Subordinate from the Dated Date until this
Subordinate is fully paid, at the rate computed as specified below, in any coin or currency which at
the time or times of payment is legal tender for the payment of public or private debts in the United
States of America. All capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement, Note A-3 or the Pledge and Assignment
hereinafrer defined.
This Subordinate constitutes all or part of an issue in the total authorized face principal
amount of $ issued by the Issuer to provide moneys to fund a portion loan (the "Loan") to
be made for the account of the Issuer to Landings Il, L.P. a California limited partnership (the
"Borrower"), for the purpose of financing a portion of the construction and development of an 141
unit plus 2 manager's units multifamily rental housing project located in the City of Chula Vista,
A-3-1
DOCSOG] 400877v5/024036-0052
California, and known as "Landings II Apartments " (the "Project"). Simultaneously with the
issuance of this Subordinate, the Issuer is also issuing on a senior basis its Housing Authority of the
City of Chula Vista Multifamily Housing Revenue Bonds (The Landings II Apartments), Senior
Series 2010A-1 and its Housing Authority of the City of Chula Vista Multifamily Housing Revenue
Bonds (The Landings 11 Apartments), Senior Series 2010A-1 (collectively, the "Senior Bonds"), to
fund additional loans relating to the Project.
The obligations of the Borrower under the Loan will be evidenced by that certain Promissory
Note, dated _, 2010, in the amount of $ ("Note A-3") made by the Borrower
to the order of U.S. Bank National Association, as agent (the "Agent") for the Issuer pursuant to a
Master Agency Agreement dated as of , 2010, between the Issuer and the Agent. This
Subordinate Bond is secured by a Master Pledge and Assignment (the "Pledge and Assignment"),
dated as of _, 2010, by and among the Issuer, the Agent and U.S. Bank National
Association, as Holder of the Senior Bonds (the "Holder").
This Subordinate Bond shall mature on the Maturity Date set forth above, and the entire
unpaid principal balance of and any accrued interest on this Subordinate Bond shall be paid in full on
or before such date.
This is a draw-down Subordinate Bond. The principal amount of this Subordinate Bond as of
any given date shall be equal to (i) the aggregate amount of principal advanced by the Agent, on
behalf of the Issuer, to the Borrower under the Loan Agreement, less (ii) any payment of principal on
this Bond received by the Subordinate Holder thereof. Principal amounts advanced to the Borrower
under the Loan Agreement in respect of the Loan and payments of principal on this Bond shall be
noted on the Principal Schedule attached hereto or otherwise recorded by the Subordinate Holder
with periodic statements provided, upon request, to the Issuer.
This Subordinate Bond shall bear interest from the date to which interest has been paid on the
Subordinate Bonds next preceding the date of its authentication, unless it is authenticated as of an
Interest Payment Date for which interest has been paid, in which event it shall bear interest from such
Interest Payment Date, or unless it is authenticated on or before the first Interest Payment Date, in
which event it shall bear interest from its Closing Date.
The payment or prepayment of the principal, interest, premium, late payment fees and other
amounts due on this Subordinate Bond shall be identical with and shall be made on the same terms
and conditions as the payments or prepayments of principal, interest, premium, late payment fees and
other amounts due on Note A-3. Any payments or prepayments made by the Bon•ower of principal,
interest, premium, late payment fees and other amounts due on Note A-3 shall be deemed to be like
and corresponding payments or prepayments of principal, interest, premium late payment fees and all
other amounts due on this Subordinate Bond. Said payments or prepayments by the Borrower shall
be deemed to have been constructively received by the Registered Owner as payments or
prepayments on this Subordinate Bond on the date of receipt by the Agent under Note A-3, and
interest on this Subordinate Bond with respect to each principal payment or prepayment shall cease
to accrue upon receipt thereof by the Agent. Payments or prepayments of principal, interest,
premium, late payment fees and other amounts due shall be remitted to the Registered Owner by the
Agent immediately.
This Subordinate Bond shall not be subject to prepayment, redemption, defeasance,
termination or cancellation, in whole or in part, at any time while the Senior Bonds or any portion
A-3-2
DOC SOC/ 1400877v5/024036-0052
thereof remains outstanding in accordance with its terms and the provisions of the Pledge and
Assignment.
This Subordinate Bond shall be subject to redemption as provided in the Pledge and
Assignment.
This Subordinate Bond shall be subject and subordinate in all respects to the Senior Bonds
(including payments, if any, under the Senior Notes in respect of Senior Bonds) and to all terms,
covenants, conditions and liens of the Loan Documents affecting the Senior Bonds and Subordinate
Bonds. Payment of the indebtedness evidenced by this Subordinate Bond is and shall be subject and
subordinate in all respects, including in respect of the right to payment, to the prior payment in full of
all amounts due and payable in respect of the Senior Bonds (including payments under the Senior
Notes in respect of Senior Bonds). The owners of this Subordinate Bond expressly subject and
subordinate all of their right, title and interest in and to this Subordinate Bond in all respects to
(1) the Senior Collateral, (2) the payment in full of the Senior Bonds (including payments under the
Senior Notes in respect of Senior Bonds) and (3) the liens of the Senior Mortgage and of the Senior
Collateral.
This Subordinate Bond (or any participation interest therein) may be sold, assigned,
transferred, participated or otherwise disposed of only in Authorized Denominations (as defined in
the Pledge and Assignment). This Subordinate Bond (or any participation interest therein) may not
be sold, assigned, transferred, participated or otherwise disposed of, in whole or in part, except upon
satisfaction of the requirements of the Pledge and Assignment, including, but not limited to, the
requirement that this Subordinate Bond be sold or assigned only to Qualified Institutional Buyers (as
defined in the Pledge and Assignment), upon receipt from the purchaser of a Purchaser's Letter in the
form attached to the Pledge and Assignment as Exhibit B-2.
Subject to the foregoing, this Subordinate Bond is transferable upon the books of the Agent,
by the Registered Owner hereof in person or by its attorney duly authorized in writing, upon
surrender of this Subordinate Bond together with a written instrument of transfer satisfactory to the
Agent, duly executed by the Registered Owner or its duly authorized attorney. Upon such transfer,
the Agent will note the date of registration and the name and address of the newly Registered Owner
on the books of the Issuer and in its records. The Issuer may deem and treat the person in whose
name this Subordinate Bond is last registered upon the books of the Agent, with such registration
noted on this Subordinate Bond, as the absolute owner hereof for the purpose of receiving payment
of or on account of the principal or interest and for all other purposes; all such payments so made to
the Registered Owner or upon his order shall be valid and effectual to satisfy and discharge the
liability upon this Subordinate Bond to the extent of the sum or sums so paid, and the Issuer shall not
be affected by any notice to the contrary.
All of the agreements, covenants, conditions, limitations, provisions and stipulations
contained in the Pledge and Assignment are hereby made a part of this Subordinate Bond to the same
extent and with the same effect as if they were fully set forth herein. If any payment of the principal
of, interest hereon or other payments due hereunder are not made when due in accordance with the
terms and conditions of this Subordinate Bond, then the Registered Owner may at its right and option
declare immediately due and payable the principal of this Subordinate Bond and interest accrued
hereon to the date of declaration of such default, together with any reasonable attorneys' fees
incurred by the Registered Owner in collecting or enforcing payment hereof, whether suit be brought
or not, and all other sums due hereunder or under the Pledge and Assignment, notwithstanding
DOCSOG ] 400877v5/024036-0052
A-3-3
anything to the contrary therein and payment thereof may be enforced and recovered in whole or in
part, at any time, by one or more of the remedies provided in this Subordinate Bond or the Pledge
and Assignment.
The remedies of the Registered Owner, as provided herein and in the Pledge and Assignment,
may be pursued at the sole discretion of the Registered Owner and may be exercised as ofren as
occasion therefor shall occur. The failure to exercise any such right or remedy shall in no event be
construed as a waiver or release thereof.
The Registered Owner shall not be deemed, by any act of omission or commission, to have
waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the
Registered Owner and then only to the extent specifically set forth in the writing. A waiver with
reference to one event shall not be construed as a continuing waiver or as a bar to or waiver of any
right or remedy as to a subsequent event.
This Subordinate Bond may not be amended without the prior written consent of the Issuer,
the Registered Owner and the Agent.
THIS BOND AND THE INTEREST HEREON IS A LIMITED OBLIGATION OF
THE ISSUER, PAYABLE SOLELY FROM THE SUBORDINATE COLLATERAL AND
THE PROCEEDS THEREOF. NEITHER THE ISSUER, THE STATE OF CALIFORNIA
(THE "STATE"), NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE
ISSUER, TO THE LIMITED EXTENT SET FORTH IN THE PLEDGE AND
ASSIGNMENT) NOR ANY PUBLIC AGENCY SHALL IN ANY EVENT BE LIABLE FOR
THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THIS
BOND OR FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR
AGREEMENT OF ANY KIND WHATSOEVER EXCEPT AS SET FORTH HEREIN AND
IN THE PLEDGE AND ASSIGNMENT, AND NONE OF THE BONDS OR ANY OF THE
ISSUER'S AGREEMENTS OR OBLIGATIONS SHALL BE CONSTRUED TO
CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF
OR A LOAN OF THE CREDIT OF OR A MORAL OBLIGATION OF ANY OF THE
FOREGOING WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING POWER.
No recourse shall be had for the payment of the principal of, premium, if any, or interest on
the Subordinate Bonds or for any claim based thereon or upon any obligation, covenant or agreement
in this Pledge and Assignment contained (except from the Subordinate Collateral and proceeds
thereof), against the Issuer, or the Agent, its officers, attorneys, accountants, financial advisors,
agents or staff, or the officers, attorneys, accountants, financial advisors, agents or staff of any
successor public entity, as such, either directly or through the Issuer or any successor public entity,
under any rule of law or penalty or otherwise, and all such liability of the Issuer, and its officers,
attorneys, accountants, financial advisors, agents and staff is hereby, and by the acceptance of the
Subordinate Bonds, expressly waived and released as a condition of, and in consideration for, the
execution of this Pledge and Assignment and the issuance of the Subordinate Bonds.
None of the Bonower, the Agent or any Registered Owner shall look to the Issuer, or its
directors, officers, attorneys, accountants, financial advisors, agents or staff or any successor or
public entity for damages suffered by the Agent or such Registered Owner as a result of the failure of
the Issuer to perform any covenant, undertaking or obligation under this Pledge and Assignment, the
DOCSOC/1400877v5/024036-0052
A-3-4
Agency Agreement, the Senior Bonds, the Subordinate Bonds, the Regulatory Agreement or any of
the other documents referred to herein, or as a result of the incorrectness of any representation made
by the Issuer in any of such documents, nor for any other reason. Although the Pledge and
Assignment recognizes that such documents shall not give rise to any pecuniary liability of the
Issuer, nothing contained in this Pledge and Assignment shall be construed to preclude in any way
any action or proceeding (other than that element of any action or proceeding involving a claim for
monetary damages against the Issuer) in any court or before any governmental body, agency or
instrumentality or otherwise against the lssuer or any of its officers or employees to enforce the
provisions of any of such documents that the Issuer is obligated to perform and the performance of
which the Issuer has not assigned to the Agent or any other person.
It is intended that this Subordinate Bond is made with reference to and shall be construed as a
contract governed by the laws of the State.
This Subordinate Bond shall not be valid or become obligatory for any purpose or be entitled
to any benefit or security under the Pledge and Assignment unless this Subordinate Bond is
authenticated by the Agent by execution of the Certificate of Authentication appearing hereon.
IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to
exist, happen and be performed precedent to or in the issuance of this Subordinate Bond do exist,
have happened and have been performed in regular and due form as required by law.
IN WITNESS WHEREOF, the Issuer has caused this Subordinate Bond to be executed and
attested on its behalf by the manual or facsimile signatures of its duly authorized officers, all as of the
date first set forth above.
HOUSING AUTHORITY OF THE CITY OF
CHULA VISTA
By:
Chair
ATTEST:
Secretary
A-3-5
DOCSOC/14-00877v5/024036-0052
FORM OF CERTIFICATE OF AUTHENTICATION
(Agent)
This is to certify that this Subordinate Bond is one of the Subordinate Bonds referred to in the
within mentioned Pledge and Assignment.
U.S. BANK NATIONAL ASSOCIATION, as
Agent
Dated:
By:
Authorized Signatory
A-3-6
UOCSOC/ 1400877v5/024036-0052
PROVISIONS AS TO REGISTRATION
The ownership of the unpaid principal balance of this Subordinate Bond and the interest accruing
thereon is registered on the books of the Agent in the name of the Registered Owner last noted
below.
Name of Registered Principal Amount
Date of Registration Owner Outstanding Signature of Agent
A-3-7
DOCSOC/ 1400877v5/024036-0052
EXHIBIT B-1
FORM OF SENIOR BONDS PURCHASER LETTER
[Date)
Housing Authority of the City of Chula Vista
Riverside, California
Re: $ HousingAuthority of the Ciry of Chula Vista Multifamily
Housing Revenue Bonds (77ae Landings 77 Apartments), Senior Series 2010A-1
and
$ Housing Authority of the City of Chula Vista Multifamily
Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-2
Ladies and Gentlemen
The undersigned, as purchaser (the "Purchaser") of the above referenced Bonds (the
"Bonds") issued pursuant to a Master Pledge and Assignment, dated as of 1, 2010 (the
"Pledge and Assignment "), among the Housing Authority of the City of Chula Vista (the "Issuer"),
U.S. Bank National Association, in its capacity as agent for the lssuer (the "Agent"), and U.S. Bank
National Association, in its capacity as initial Holder of the Bonds (the "Holder"), hereby represents
that:
1. The Purchaser has sufficient knowledge and experience in financial and business
matters with respect to the evaluation of residential real estate developments such as the Project to be
able to evaluate the risk and merits of the investment represented by the Bonds. The Purchaser is
able to bear the economic risks of such investment.
2. The Purchaser acknowledges that it has either been supplied with or been given
access to information, including financial statements, information relating to any swap or other
derivative arrangements which the Borrower may have entered relating to the Bonds, documents
relating to the Bonds and other financial information, to which a reasonable investor would attach
significance in making investment decisions. The Purchaser has had the opportunity to ask questions
and receive answers from knowledgeable individuals concerning the Issuer, the Borrower, the
Project, the use of proceeds of the Bonds and the Bonds and the security therefor so that, as a
reasonable investor, the Purchaser has been able to make its decision to purchase the Bonds. The
Purchaser acknowledges that it has not relied upon the addressee hereof for any information in
connection with the Purchaser's purchase of the Bonds.
3. The Purchaser is an "Qualified Institutional Buyer" (as defined in the Pledge and
Assignment).
4. The Purchaser acknowledges that it is purchasing the Bonds for investment for its
own account and not with a present view toward resale or the distribution thereof, in that it does not
now intend to resell or otherwise dispose of all or any part of its interests in the Bonds; provided,
however, that the Purchaser acknowledges and agrees that it may transfer the Bonds to a single
B-1-1
DOCSOC/1400877v5/024036-0052
Qualified Institutional Buyer which executes and delivers a purchaser's letter in accordance with
Section 2.8 of the Pledge and Assignment.
5. The Purchaser understands that (a) the Bonds are limited obligations of the Issuer,
payable solely from funds and moneys pledged and assigned under the Pledge and Assignment, and
that the liabilities and obligations of the Issuer with respect to the Bonds are expressly limited as set
forth in the Pledge and Assignment and related documents, (b) the Bonds are not secured by any
pledge of any moneys received or to be received from taxation by the State of California or any
political subdivision thereof and that the Issuer has no taxing power, and (c) the Bonds do not and
will not represent or constitute a general obligation or a pledge of the faith and credit of the Issuer,
any program participant of the Issuer, the State of Califomia or any political subdivision thereof.
6. The Purchaser has authority to purchase the Bonds and to execute this letter and any
other instructions and documents required to be executed by the Purchase in connection with the
purchase of the Bonds. The undersigned is a duly appointed qualified and acting officer of the
Purchaser and is authorized to execute this letter on behalf of the Purchaser.
7. The Purchaser understands that the Bonds are not registered under the Act and that
such registration is not legally required as of the date hereof; and further understands that the Bonds
(a) are not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations
of any state, (b) will not be listed in any stock or other securities exchange, (c) will not carry a rating
from any rating agency, (d) are currently exempt from the requirements of Rule 15c2-12 of under the
Securities Exchange Act of 1934, and that the Issuer has not undertaken to provide any continuing
disclosure with respect to the Bonds, nor will any such information be provided subsequent to the
date of issuance of the Bonds, and (e) will not be delivered in a book-entry only form. The Purchaser
agrees that it will comply with any applicable state and federal securities laws then in effect with
respect to any disposition of the Bonds by it, and further acknowledges that any current exemption
from registration of the Bonds does not affect or diminish such requirements.
8. In entering into this transaction the Purchaser has not relied upon any representations
or opinions of the Issuer relating to the legal consequences or other aspects of the Purchaser's
investment in the Bonds, nor has it looked to, nor expected, the Issuer to undertake or require any
credit investigation or due diligence reviews relating to the Borrower, its financial condition or
business operations, the Project (including the financing or management thereof), or any other matter
pertaining to the merits or risks of the transaction, or the adequacy of the funds pledged to secure
repayment of the Bonds.
9. The Purchaser understands that the Bonds are not secured by any pledge of any
moneys received or to be received from taxation by the State of California or any political
subdivision or taxing district thereof, including, without limitation, the Issuer; that the Bonds will
never represent or constitute a general obligation or a pledge of the faith and credit of the Issuer, the
State of California or any political subdivision thereof; that no right will exist to have taxes levied by
the Issuer, the State of California or any political subdivision thereof for the payment of principal and
interest on the Bonds; and that the liability of the Issuer with respect to the Bonds is subject to further
limitations as set forth in the Bonds and the Pledge and Assignment.
] 0. The Purchaser agrees to indemnify and hold harmless the Issuer, each board member,
officer, director, partner or employee of the Issuer (collectively called the "Indemnified Parties"),
against any and all losses, claims, damages, liabilities or expenses (including any legal or other
DOCSOC/ 1400R77v5/024036-0052
B-1-2
expenses incurred by it in connection with investigating any claims against it and defending any
actions) whatsoever arising out of (i) any sale, transfer or other disposition of the Bonds, or any
interest therein, by Purchaser, or (ii) any untrue statement or misleading statement or alleged untrue
statement or alleged misleading statement of a material fact related to the Bonds or any omission or
alleged omission of any material fact related to the Bonds; provided, however, that the Purchaser
shall not be liable to an Indemnified Party in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any written information furnished by such
Indemnified Party. No Indemnified Party shall be indemnified hereunder for any losses, claims,
damages or liabilities resulting from the willful misconduct of such parties.
The Purchaser acknowledges that the sale of the Bonds to the Purchaser by the Issuer is made
in reliance upon the certifications, representations and warranties herein by the addressees hereto.
Capitalized terms used herein and not otherwise defined have the meanings given such terms
in the Pledge and Assignment.
[PURCHASER]
By
B-1-3
DOC SOC/ 1400877v5/024036-0052
EXHIBIT B-2
FORM OF SUBORDINATE BONDS PURCHASER LETTER
[Date]
Housing Authority of the City of Chula Vista
Chula Vista, California
Re: ~ Housing Authority of the City of Chula Vista Multifamily
Housing Revenue Bonds (77ae Landings ]I Apartments), Subordinate Series 2010A-3
Ladies and Gentlemen:
The undersigned, as purchaser (the "Purchaser") of the above referenced Subordinate Bonds
(the "Subordinate Bonds") issued pursuant to a Master Pledge and Assignment, dated as of
I, 20]0 (the "Pledge and Assignment "), among the Housing Authority of the City of
Chula Vista (the "Issuer"), U.S. Bank National Association, in its capacity as agent for the Issuer (the
"Agent"), and U.S. Bank National Association, in its capacity as initial Holder of the Senior Bonds
(as defined in the Pledge and Assignment) (the "Holder"), hereby represents that:
1. The Purchaser has sufficient knowledge and experience in financial and business
matters with respect to the evaluation of residential real estate developments such as the Project to be
able to evaluate the risk and merits of the investment represented by the Subordinate Bonds. The
Purchaser is able to bear the economic risks of such investment.
2. The Purchaser acknowledges that it has either been supplied with or been given
access to information, including financial statements, information relating to any swap or other
derivative arrangements which the Borrower may have entered relating to the Subordinate Bonds,
documents relating to the Subordinate Bonds and other financia- information, to which a reasonable
investor would attach significance in making investment decisions. The Purchaser has had the
opportunity to ask questions and receive answers from knowledgeable individuals concerning the
Issuer, the Borrower, the Project, the use of proceeds of the Subordinate Bonds and the Subordinate
Bonds and the security therefor so that, as a reasonable investor, the Purchaser has been able to make
its decision to purchase the Subordinate Bonds. The Purchaser acknowledges that it has not relied
upon the addressee hereof for any information in connection with the Purchaser's purchase of the
Subordinate Bonds.
The Purchaser is an "Qualified Institutional Buyer" (as defined in the Pledge and
Assignment).
4. The Purchaser acknowledges that it is purchasing the Subordinate Bonds for
investment for its own account and not with a present view toward resale or the distribution thereof,
in that it does not now intend to resell or otherwise dispose of all or any part of its interests in the
Subordinate Bonds; provided, however, that the Purchaser acknowledges and agrees that it may
transfer the Subordinate Bonds to a single Qualified Institutional Buyer which executes and delivers
a purchaser's letter in accordance with Section 2.8 of the Pledge and Assignment.
B-2-1
DOCSOC/1400877v5/024036-0052
5. The Purchaser acknowledges that (i)the Bonds shall be secured solely by, and
payable solely from, the Subordinate Collateral and, as provided in the Pledge and Assignment, shall
be junior and subordinate in all respects to the Senior Bonds; the rights of the owners of the Bonds
shall be expressly limited as provided in the Pledge and Assignment and (ii) notwithstanding
anything in the Series A-3 Note or any of the Loan Documents or the Bonds or any documents
related thereto to the contrary, any amount due and payable under the Series A-3 Note or the Bonds
and any such payment under such instruments shall, in each instance, be subject to the foregoing
payment limitation set forth in subparagraph (i) above and in addition shall be subject to the
Intercreditor and Subordination Agreement (as defined in the Series A-3 Note) and the respective
provisions thereof in all respects.
6. The Purchaser acknowledges that the amounts due and payable under the Series A-3
Note, which are the sole amounts available to pay the principal of and interest on the Bonds, shall be
paid only from Residual Receipts at set forth in the Series A-3 Note.
7. The Purchaser acknowledges that the Series A-3 Note shall not be subject to
prepayment, redemption, defeasance, termination or cancellation, in whole or in part, at any time
while the Series A-1 Note, the Series A-2 Note, the Senior Bonds or any portion of any of the
foregoing remains outstanding in accordance with its terms and the provisions of the Loan
Documents and the Bond Documents.
8. The Purchaser has authority to purchase the Subordinate Bonds and to execute this
letter and any other instructions and documents required to be executed by the Purchase in
connection with the purchase of the Subordinate Bonds. The undersigned is a duly appointed
qualified and acting officer of the Purchaser and is authorized to execute this letter on behalf of the
Purchaser.
9. The Purchaser understands that the Subordinate Bonds are not registered under the
Act and that such registration is not legally required as of the date hereof; and further understands
that the Subordinate Bonds (a) are not being registered or otherwise qualified for sale under the
"Blue Sky" laws and regulations of any state, (b) will not be listed in any stock or other securities
exchange, (c) will not carry a rating from any rating agency, (d) are currently exempt from the
requirements of Rule 15c2-12 of under the Securities Exchange Act of 1934, and that the Issuer has
not undertaken to provide any continuing disclosure with respect to the Subordinate Bonds, nor will
any such information be provided subsequent to the date of issuance of the Subordinate Bonds, and
(e) will not be delivered in a book-entry only form. The Purchaser agrees that it will comply with
any applicable state and federal securities laws then in effect with respect to any disposition of the
Subordinate Bonds by it, and further acknowledges that any current exemption from registration of
the Subordinate Bonds does not affect or diminish such requirements.
10. In entering into this transaction the Purchaser has not relied upon any representations
or opinions of the Issuer relating to the legal consequences or other aspects of the Purchaser's
investment in the Subordinate Bonds, nor has it looked to, nor expected, the Issuer to undertake or
require any credit investigation or due diligence reviews relating to the Borrower, its financial
condition or business operations, the Project (including the financing or management thereof), or any
other matter pertaining to the merits or risks of the transaction, or the adequacy of the funds pledged
to secure repayment of the Subordinate Bonds.
DOCSOC/ 1400877v5/024036-0052
B-2-2
11. The Purchaser understands that the Subordinate Bonds are not secured by any pledge
of any moneys received or to be received from taxation by the State of California or any political
subdivision or taxing district thereof, including, without limitation, the Issuer; that the Subordinate
Bonds will never represent or constitute a general obligation or a pledge of the faith and credit of the
Issuer, the State of Califomia or any political subdivision thereof; that no right will exist to have
taxes levied by the Issuer, the State of California or any political subdivision thereof for the payment
of principal and interest on the Subordinate Bonds; and that the liability of the Issuer with respect to
the Subordinate Bonds is subject to further limitations as set forth in the Subordinate Bonds and the
Pledge and Assignment.
12. The Purchaser agrees to indemnify and hold harmless the Issuer, each board member,
officer, director, partner or employee of the Issuer (collectively called the "Indemnified Parties"),
against any and all losses, claims, damages, liabilities or expenses (including any legal or other
expenses incurred by it in connection with investigating any claims against it and defending any
actions) whatsoever arising out of (i) any sale, transfer or other disposition of the Subordinate Bonds,
or any interest therein, by Purchaser, or (ii) any untrue statement or misleading statement or alleged
untrue statement or alleged misleading statement of a material fact related to the Subordinate Bonds
or any omission or alleged omission of any material fact related to the Subordinate Bonds; provided,
however, that the Purchaser shall not be liable to an Indemnified Party in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in any written
information furnished by such Indemnified Party. No Indemnified Party shall be indemnified
hereunder for any losses, claims, damages or liabilities resulting from the willful misconduct of such
parties.
The Purchaser acknowledges that the sale of the Subordinate Bonds to the Purchaser by the
Issuer is made in reliance upon the certifications, representations and warranties herein by the
addressees hereto.
Capitalized terms used herein and not otherwise defined have the meanings given such terms
in the Pledge and Assignment.
[PURCHASER]
By
B-2-3
DOCSOC/ 1400877v5/024036-0052
Stradling Yocca Carlson & Rauth
Draft Dated Aprdl 26, 2010
MASTER AGENCY AGREEMENT
between
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
and
U.S. BANK NATIONAL ASSOCIATION
as Agent
Dated as of 1, 2010
Relating to
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-1
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-2
and
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SUBORDINATE SERIES 2010A-3
DOC SOC/ 140087Av3/024036-0052
MASTER AGENCY AGREEMENT
This MASTER AGENCY AGREEMENT, dated as of 1, 2010 (this
"Agreement"), between Housing Authority of the City of Chula Vista, a public body corporate and
politic, duly organized and existing under the Constitution and the laws of the State of California
(together with any successor to its rights, duties and obligations, the "Issuer") and U.S. Bank
National Association, a national banking association organized under the laws of the United States of
America, (the "Agent"):
WITNESSETH:
WHEREAS, the Issuer is authorized pursuant to Chapter 1 of Part 2 of Division 24 of the
California Health and Safety Code, as amended (the "Act"), to issue revenue bonds to finance and
refinance the acquisition, construction, development and rehabilitation of multifamily rental housing
projects to be occupied by persons of low and very low income, to dedicate the revenue from such
projects to the repayment of such bonds and to take such action and do all things that may be
necessary or appropriate to carry out the powers and duties specifically granted to the Issuer by the
Act;
WHEREAS, the Issuer is authorized by the Act to make loans to any person, firm,
partnership or corporation licensed to do business in the State of Califomia (the "State") in
furtherance of the purposes and activities stated in the Act;
WHEREAS, the Issuer has determined to engage in a program of financing the acquisition,
construction, rehabilitation and development of multifamily rental housing projects pursuant to the
Act to benefit persons of low and very low income, and has determined to borrow funds for such
purpose by the issuance of revenue bonds authorized by the Act and to dedicate the revenue from
said program to the repayment of said bonds;
WHEREAS, the Issuer has determined to issue its Housing Authority of the City of Chula
Vista Multifamily Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-1 in
a principal amount not to exceed $ (the "Series A-1 Bonds"), its Housing Authority
of the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings lI Apartments),
Senior Series 2010A-2 in a principal amount not to exceed $ (the "Series A-2
Bonds," and, together with the Series A-l Bonds, the "Senior Bonds"), and its Housing Authority of
the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings [I Apartments),
Subordinate Series 2010A-3 in a principal amount not to exceed $ (the "Series A-3
Bonds" or "Subordinate Bonds," and, together with the Series A-1 Bonds and Series A-2 Bonds, the
"Bonds"), to evidence the obligation to repay the advances to be made hereunder by the Holder and
the Subordinate Holder (as hereinafter defined) to the Agent for the account of the Issuer, secured by
a Master Pledge and Assignment dated the date hereof (the "Pledge and Assignment"), by and among
the Issuer, the Agent and U.S. Bank National Association, a national banking association organized
under the laws of the United States of America, as initial holder of the Senior Bonds (the "Holder"),
to provide financing to Landings 11, L.P., a Califomia limited partnership (the "Borrower"), for the
construction and development of a 141 unit plus two manager's units multifamily rental housing
project located within the Winding Walk master-planned community in the City of Chula Vista,
California, and generally known as "Landings II Apartments" (the "Project"); and
DOCSOC/ 1400878v3 /024036-0052
WHEREAS, it is necessary and desirable for the Issuer and the Agent to enter into this
Agreement to provide for the appointment and duties of the Agent; and
WHEREAS, all conditions, things and acts required by the Act, and by all other laws of the
State to exist, to have happened and to have been performed as a condition precedent to and in
connection with the issuance of the Bonds do exist, have happened, and have been performed in due
time, form and manner as required by law, and the Issuer is now duly authorized and empowered,
pursuant to each and every requirement of law, to issue the Bonds for the purpose, in the manner and
upon the terms therein provided;
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter
contained, the parties hereto agree as follows:
Section 1. Apnointment of Agent. The Issuer hereby appoints the Agent as its agent
with full authority and power to act on its behalf for the purposes set forth herein and to do all other
acts necessary or incidental to the performance and execution thereof. The appointment provided for
in this Section 1 is coupled with an interest and is irrevocable except as expressly set forth herein.
Section 2. presentations of the Issuer and the Agent.
(i) The Issuer represents and warrants to the Agent that the Issuer is a
public body corporate and politic, duly organized and existing under the Constitution and the laws of
the State of California, with full power and authority to issue the Bonds and to enter into the
transactions contemplated by this Agreement and the Pledge and Assignment.
(ii) The Agent represents and warrants to the Issuer that the Agent is a
national association organized and existing under the laws of the United States of America with full
power and authority to enter into the transactions contemplated by this Agreement and the Pledge
and Assignment and to serve as the agent of the Issuer for the purpose of making the Loan (as that
term is defined in the Pledge and Assignment) to the Borrower as provided in the Loan Documents
(as that term is defined in the Pledge and Assignment).
Section 3. Authority and Aereements of the Agent. The Agent is authorized and agrees
to enter into, execute and deliver the Pledge and Assignment and, in its capacity as agent for the
Issuer, to execute and deliver and the Loan Documents and, pursuant to the terms thereof, advance
moneys on behalf of the Issuer to fund the Loan upon satisfaction of the conditions set forth therein
and otherwise to act on behalf of the Issuer as provided therein. The Agent is hereby irrevocably
authorized, directed and empowered to exercise all of the rights, powers and remedies of the Issuer
under the Loan Agreement (as that term is defined in the Pledge and Assignment) and the other Loan
Documents, and to make all determinations and exercise all options and elections thereunder, without
the necessity of further advice to or consultation with, or consent or authorization by, the Issuer, and
all actions taken by the Agent under the Loan Agreement or any of the other Loan Documents shall
be as valid, and shall have the same force and effect, as if taken by the Issuer. The Agent agrees to
provide the Issuer, upon the Issuer's request, with copies of any policies of insurance provided by or
on behalf of the Borrower under the Loan Documents that are required to name the Issuer as an
additional insured and to provide Issuer, at the Issuer's request, with copies of any notices of default
given by, or delivered to, the Agent pursuant to the Loan Agreement or any other information it
maintains on behalf of the Issuer with respect to the Bonds or the Project.
2
DOCSOC/ 1400878v3/024036-0052
Section 4. Agent as Independent Contractor. Except as otherwise expressly set forth
herein, in the performance of its duties as Agent hereunder, the Agent is an independent contractor
acting on its own behalf and for its own account and without authority, express or implied, to act for
or on behalf of the Issuer in any capacity other than as expressly provided herein and in no other
respect.
The Agent agrees to indemnify, hold harmless and defend the Issuer, its officers, contractors,
consultants, directors and employees against al] loss, costs, damages, expenses, suits, judgments,
actions and liabilities of whatever nature (including, without limitation, attorneys' fees, litigation,
arbitration and court costs, amounts paid in settlement, and amounts paid to discharge judgments)
directly or indirectly resulting from or arising out of or related to any unlawful, negligent or tortious
act or omission on the part of the Agent under this Agreement.
Section 5. Standard of Performance. The Agent will perform its duties hereunder in
accordance with sound commercial banking practice, and in accordance with the Pledge and
Assignment.
Section 6. Successor Agent. Anything herein to the contrary notwithstanding, any
corporation or association into which the Agent may be converted or merged or with which it may be
consolidated or to which it may sell or transfer its business and assets as a whole or substantially as a
whole or any corporation or association resulting from any conversion, sale, merger, consolidation or
transfer to which it is a party will, ipso facto, be and become successor Agent hereunder and vested
with all of the title to the whole property and all the powers, discretion, immunities, privileges,
obligations and all other matters as was its predecessor, without the execution or filing of any
instruments or any further act, deed or conveyance on the part of the parties hereto.
Section 7. Termination. Neither the Issuer nor the Agent may terminate this agreement
so long as Agent or any Affiliate (as that term is defined in the Pledge and Assignment) of the Agent
is the Holder of the Senior Bonds. In the event the Senior Bonds are sold, assigned, transferred or
otherwise disposed of in accordance with the provisions of Sections 4.4 and 9.5 of the Pledge and
Assignment, other than to an Affiliate of the Agent, either the Issuer or the Agent may terminate this
Agreement upon the terms hereinafter provided in this Section 7 by giving thirty (30) days' written
notice to the other party, the Borrower, the Investor Limited Partner (as defined in the Regulatory
Agreement and at the address set forth in the Loan Agreement) and the Holder. Such termination
shall take effect, except as to the duties of the Agent under Section 8 below, upon the appointment of
a successor agent by the Issuer, as directed by the Borrower, Holder or other owners of the Bonds
with the consent, which shall not be unreasonably withheld, of the Issuer (such consent not being
required if such Agent is the subsequent Holder of all of the Bonds or an Affiliate thereof) and the
execution, acknowledgment and delivery by the successor Agent of an instrument in substantially the
form of this Agreement. The Agent shall be entitled to reasonable compensation payable by the
Borrower for it fees and expenses during any period (i) it serves as Agent and the initial Holder or
any affiliate is not the holder of the Senior Bonds or (ii) the Senior Bonds are no longer outstanding.
Section 8. Obligations of Agent in the Event of Termination. From and after the
effective date of termination of this Agreement pursuant to Section 7 above, the Agent will be
relieved of further responsibility in connection with the Pledge and Assignment and the Loan
Documents. In the event of such termination, the Agent will pay over to the Issuer or, if the Issuer
shall so direct, to any successor agent appointed by the Issuer, all moneys collected and held by it
pursuant to this Agreement and/or pursuant to any other agreement, letter or arrangement relative to
3
DOCSOC/ 1400878v3/024036-0052
the Pledge and Assignment and the Loan Documents simultaneously with such termination, and tum
over to the successor agent appointed by the Issuer, as provided above, all documents and records in
connection with the Pledge and Assignment and the Loan Documents simultaneously with such
termination. The Agent will deliver to the successor agent a full accounting, including a statement
showing the monthly payments collected by it and a statement of moneys held in escrow by it for the
payment of taxes, maintenance or other charges in respect of the Pledge and Assignment and the
Loan Documents simultaneous with such termination. The Agent will execute and deliver to its
successor, without recourse, representation or warranty of any kind, such instruments as are required
to assign to the successor all its right, title and interest in all property of whatever nature which it
holds as Agent of the Issuer. Where necessary, all such instruments must be filed and/or recorded in
each office where such instruments are required to be filed and/or recorded. In addition, Agent shall
provide to the Issuer an opinion of counsel to the Agent to the effect that all instruments necessary to
transfer to the successor agent all property held by the Agent as Agent hereunder have been duly
executed and delivered.
Section 9. Term of Agreement. Unless sooner terminated as herein provided, this
Agreement will continue from the date hereof until payment in full of the Bonds.
Section 10. GoverningLaw• Severabilit~gtions~ Definitions. This Agreement will be
construed in accordance with the laws of the State. In the event any provision of this Agreement is
held invalid by any court of competent jurisdiction, such holding will not invalidate or render
unenforceable any other provision hereof. Any headings of divisions of this Agreement are solely
for convenience of reference and will neither constitute a part of this Agreement nor affect its
meaning, construction or effect. All capitalized terms used but not defined herein shall have the
meanings given to such terms in the Pledge and Assignment.
Section 11. Notices. Any notice provided for herein must be in writing and shall be
deemed to have been given when delivered personally or when deposited in the United States mail,
registered and postage prepaid, addressed as follows:
If to the Issuer: Housing Authority of the City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
If to the Agent: U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, California 9212]
Attention: Loan Administration
If to the original owner
of the Bonds: U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, California 92121
Attention: Loan Administration
4
DOCSOC/1400878v3/024036-0052
To the Subordinate Holder:
To the Borrower:
with a copy to:
Winding Walk Residential LLC
Attention:
Landings Il, L.P.,
c/o Chelsea Asset Corporation
5993 Avenida Encinas, Suite 101
Carlsbad, California 92008
Attention: James J. Schmid
Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, California 94105-2228
Attention: Gary Downs, Esq.
with a copy to: Raymond James Tax Credit Funds, Inc.
1250 Linda Street, Suite 101
Rocky River, OH 441 16
Attention:
or at such other address as any of them may designate by notice duly given in accordance with this
Section 11 to the others.
Section 12. Consent to Assi n¢ ment. In addition to the assignments otherwise permitted
or required by this Agreement, the Issuer agrees that Agent shall have the right to assign all of its
rights under this Agreement, and under all instruments and documents executed by it as Agent of the
Issuer pursuant to this Agreement, to an Affiliate or to a subsequent owner of a majority of the Bonds
or an Affiliate thereof. The ]suer will execute and deliver to the Agent any documents necessary to
effectuate such assignment, and will not take any action to impair Agent's right to assign such rights
pursuant to this Section ]2.
Section 13. Execution Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts. Each such counterpart will constitute an original but all
of such counterparts taken together will constitute one agreement.
DOCSOC/1400878v3/024036-0052
IN WITNESS WHEREOF, the Issuer and the Agent have each caused this Agreement to be
executed in their respective names as of the date first above written.
HOUSING AUTHORITY OF CITY OF CHULA
VISTA, CALIFORNIA
By:
Executive Director
ATTEST:
Secretary
S-1
DOCSOC/1400878v3/024036-0052
U.S. BANK NATIONAL ASSOCIATION, as Agent
Vice President
S-2
DOCSOC/ 1400878v3/024036-0052
Attachment 8
Housing Authority of the City of Chula Vista
LOAN AGREEMENT
KUTAK ROCK LLP
DRAFT 04/23/10
LOAN AGREEMENT
Between
U.S. BANK NATIONAL ASSOCIATION,
as Agent
and
LANDINGS II, L.P.,
a California limited partnership,
as Borrower
Dated as of May , 2010
4840-8179-6358.2
Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
TABLE OF CONTENTS
Page
1. DEFINITIONS AND INTERPRETATION .............................................................. ........ 2
1.1 Defined Terms ............................................................................................... ........ 2
1.2 Exhibits Incorporated ..................................................................................... ........2
2. THE LOANS ............................................................................................................. ........ 3
2.1 Amount and Purpose; Timing ........................................................................ ........3
2.2 Fees ................................................................................................................ ........3
2.3 Payments ........................................................................................................ ........3
2.4 Prepayment .................................................................................................... ........ 4
2.5 Interest ............................................................................................................ ........ 4
2.6 Remargining of Convertible Loan ................................................................. ........ 4
3. DISB URSEMENT PROCEDURES .......................................................................... ........4
3.1 Disbursement Requests .................................................................................. ........4
3.2 Manner of Disbursement; Order of Disbursement ......................................... ........ 5
33 Cost Overruns ................................................................................................ ........ 6
3.4 Cost Savings ................................................................................................... ........ 7
3.5 Retainage ........................................................................................................ ........7
3.6 Disbursement Agreement ............................................................................... ........ 7
3.7 Contingency ................................................................................................... ........7
3.8 Waiver of Disbursement Conditions ............................................................. ......... 8
3.9 No Liability for Disbursements .................................................................... ......... 8
3.10 Site Improvements ........................................................................................ ......... 8
3.11 No Liability for Failure to Convert the Convertible Loan or the
Subordinate Loan .......................................................................................... .........8
3.12 Development Fees ......................................................................................... ......... 9
4. CONDITIONS TO ISSUANCE OF BONDS AND TO DISBURSEMENTS ......... .........9
4.1 Issuance of Bonds; Initial Disbursements ..................................................... .........9
4.2 Any Disbursement ........................................................................................ ....... 14
4.3 Final Disbursement ....................................................................................... ....... 16
5. REPRESENTATIONS AND WARRANTIES ......................................................... ....... 17
5.1 Formation, Qualification and Compliance .................................................... ....... 17
5.2 Execution and Performance of Loan Documents ......................................... ....... 17
5.3 Financial and Other Information ................................................................... .......19
5.4 No Material Adverse Change ........................................................................ .......19
5.5 Tax Liability .................................................................................................. .......19
5.6 Governmental Requirements ........................................................................ ....... 20
5.7 Rights of Others ............................................................................................ ....... 20
5.8 Approved Budget .......................................................................................... .......20
4840-8179-6358.2 i Landings ll Loan Agreement
DOCSOC/ 1406214v 1/024036-0052
5.9 Litigation .......................................................................................... ....................21
5.10 Hazazdous Materials ........................................................................ ....................21
5.11 Project Agreements .......................................................................... ....................21
5.12 Name and Principal Place of Business ............................................. .................... 2 ]
5.13 Formation, Qualification and Authority of Partners ........................ .................... 21
5.14 Delivery of Documents .................................................................... ....................21
5.15 Continuing Nature of Representations and Warranties ................... ....................21
5.16 Conversion Date ............................................................................... .................... 21
5.17 No Reliance on Issuer or Lender for Advice ................................... ....................22
6. PROJ ECT COVENANTS ........................................................................... .................... 22
6.1 Completion of Project and Construction of Improvements within each
Phase ......................................................................................................... ........... 22
6.2 Offsite Improvements ............................................................................... ........... 23
6.3 Conformity With Plans ............................................................................. ...........23
6.4 Change Orders .......................................................................................... ........... 23
6.5 Entry and Inspection ................................................................................. ...........24
6.6 Project Information ................................................................................... ...........24
6.7 Permits and Warranties ............................................................................. ...........24
6.8 Project Agreements ................................................................................... ...........24
6.9 Protection Against Liens ........................................................................... ...........25
6.10 Independent Engineer ............................................................................... ........... 25
6.11 Property Management Agreements ........................................................... ...........25
7. MAINTENANCE, OPERATION, PRESERVATION AND REPAIR OF
PROPERTY .......................................................................................................... ........... 26
7.1 Alterations and Repair .............................................................................. ........... 26
7.2 Compliance ............................................................................................... ...........26
7.3 Changes in Property Restrictions .............................................................. ........... 26
7.4 Taxes and Impositions .............................................................................. ........... 26
7.5 Books and Records ................................................................................... ...........27
7.6 Tenant Security Deposits .......................................................................... ...........27
7.7 Underground Storage Tanks ..................................................................... ........... 27
8. OTHER AFFIRMATIVE COVENANTS ............................................................ ........... 28
8.1 Existence ................................................................................................... ...........28
8.2 Protection of Liens ................................................................................... ............28
8.3 Title Insurance Endorsements .................................................................. ............ 28
8.4 Tax Returns .............................................................................................. ............28
8.5 Lists of Personal Property ........................................................................ ............28
8.6 Notice of Certain Matters ......................................................................... ............ 28
8.7 Additional Reports and Information ........................................................ ............29
8.8 Further Assurances ................................................................................... ............30
8.9 Annual Financial Statements ................................................................... ............ 30
4840-8179-6358.2 jj Landings II Loan Agreement
DOCSOC/1406214v l /024036-0052
8.10 [Reserved.] .............................................................................................
8.11 Monthly Operating Statements ..............................................................
8.12 Bond Documents, City Loan Documents and Rate Lock Agreement ...
8.13 Keeping Guarantor Informed .................................................................
8.14 Equity Construction Deposits ................................................................
8.15 Tax Certificate .......................................................................................
8.16 Tax Returns and Financial Information from Guarantor .......................
8.17 Compliance Reporting ...........................................................................
8.18 Exemption from Property Taxation .......................................................
8.19 Partner Information ................................................................................
8.20 HAP Contract .........................................................................................
8.21 City Loan Documents ............................................................................
8.22 ARRA Funds ..........................................................................................
8.23 Appraisals ..............................................................................................
9.
]0.
.............. 30
.............. 30
.............. 31
..............31
.............. 31
.............. 31
.............. 31
.............. 31
.............. 32
.............. 32
..............32
.............. 33
.............. 33
.............. 34
ADDITIONAL NEGATIVE COVENANTS .................................................................. 34
9.1 Liens on Property .......................................................................................
9.2 Liens on Personal Property ........................................................................
9.3 Sale or Lease of Property ...........................................................................
9.4 Removal of Personal Property ...................................................................
9.5 Management Agreements ..........................................................................
9.6 Assessment and Community Facilities Districts ........................................
9.7 Bond Documents, City Loan Documents and Rate Lock Agreement .......
9.8 Required Debt Service Coverage Ratio; Limitations on Distributions.....
9.9 Limitations on Additional Indebtedness and Other Transactions .............
.......... 34
.......... 34
.......... 35
..........36
.......... 36
.......... 36
.......... 36
........... 36
........... 38
TAX AND OTHER COVENANTS ................................................................................ 38
10.1 Payment of Issuer Fees and Expenses ................................................................. 38
10.2 Cooperation in Enforcement of Regulatory Agreement ...................................... 38
11. INSURANCE, CASUALTY AND CONDEMNATION ................................................ 39
11.1 Policies Required ................................................................................................. 39
11.2 Claims and Proceedings .......................................................................................39
11.3 Delivery of Proceeds ............................................................................................40
11.4 Application of Casualty Insurance Proceeds ....................................................... 40
11.5 Restoration ...........................................................................................................41
11.6 Treatment of Compensation .................................................................................41
12. DEFAULTS AND REMEDIES ...................................................................................... 42
12.1 Events of Default ................................................................................................. 42
12.2 Remedies Upon Default .......................................................................................45
12.3 Cumulative Remedies; No Waiver ......................................................................46
4R40-8179-6358.2 jii Landings tl Loan Agreement
DOCSOC/1406214v l /024036-0052
13. MISCELLANEOUS ........................................................................................... ............. 47
13.1 Nonliability ............................................................................................. .............47
13.2 Indemnification of the Lender and Bondowner Representative ............. ............. 48
13.3 Reimbursement of Lender and Bondowner Representative ................... .............49
13.4 Obligations Unconditional and Independent .......................................... .............49
13.5 Notices .................................................................................................... ............. 50
13.6 Survival of Representations and Warranties ........................................... ............. 51
13.7 Signs ........................................................................................................ .............51
13.8 No Third Parties Benefited ..................................................................... ............. 51
13.9 Binding Effect; Assignment of Obligations ............................................ ............. 51
13.10 Counterparts ............................................................................................ .............52
13.11 Prior Agreements; Amendments; Consents ............................................ ............. 52
13.12 Governing Law ....................................................................................... ............. 52
13.13 SeverabilityofProvisions ....................................................................... .............52
13.14 Headings ................................................................................................. ............. 52
13.15 Conflicts ................................................................................................. ..............52
13.16 Time of the Essence ............................................................................... .............. 52
13.17 Transfer and Participation in Senior Bonds ........................................... .............. 52
13.18 Hazardous Materials Agreement ............................................................ .............. 53
13.19 Guaranties Unsecured ............................................................................ ..............53
13.20 Limitation on Liability After Conversion Date ..................................... .............. 53
13.21 Limited Liability of Issuer ..................................................................... .............. 54
13.22 Waiver of Right to Trial by Jury ............................................................ .............. 54
13.23 Assigrunents by Lender .......................................................................... .............. 54
13.24 Subordination to Extended Use Agreement ........................................... .............. 55
13.25 Information Regarding the Project ......................................................... .............. 55
13.26 Right of Setoff ....................................................................................... ..............55
13.27 Limitation on Liability of Managing General Partner ........................... .............. 56
13.28 USA PATRIOT Act Notice ................................................................... .............. 56
13.29 Additional Banking Laws ...................................................................... .............. 56
13.30 Tax Shelter Disclosure ........................................................................... .............. 56
EXHIBIT A -LEGAL DESCRIPTION
EXHIBIT B - DEFINITIONS AND INTERPRETATION
EXHIBIT C -COMMERCIAL REAL ESTATE STANDARD INSURANCE
REQUIREMENTS
EXHIBIT D -PERMITTED ENCUMBRANCES
EXHIBIT E -DISBURSEMENT REQUEST
EXHIBIT F -LOAN DOCUMENTS
EXHIBIT G - SCHEDULE OF REQUIRED EQUITY CONSTRUCTION DEPOSITS*
EXHIBIT H -APPROVED BUDGET
4840-8179-6358.2 iy Landings 0 Loan Agreement
DOCSOC/ 1406214v I /024036-0052
LOAN AGREEMENT
This Loan Agreement ("Agreement") is executed as of May 2010, by and
between U.S. BANK NATIONAL ASSOCIATION, a national banking association
("U.S. Bank") as agent (in such capacity, "Agent") for the HOUSING AUTHORITY OF THE
CITY OF CHULA VISTA, a body corporate and politic, duly organized and validly existing
under the Constitution and the laws of the State of Califomia ("Issuer"), under and pursuant to
that certain Master Agency Agreement (as amended from time to time, the "Master Agency
Agreement") dated as of May , 2010 by and between Issuer, as principal, and Agent, as
agent. Agent is executing this Agreement, and, subject to the other terms and conditions of this
Agreement, shall disburse the proceeds of and provide loan servicing for the "Loans" (as defined
below) to LANDINGS II, L.P., a California limited partnership, its successors and permitted
assigns (collectively, "Borrower"), in its capacity as agent for Issuer. Issuer and its successors in
interest in and to this Agreement, acting through Agent during the term of Agent's agency and
acting on their own behalf or through other agents thereafter, are referred to herein along with
Agent as "Lender." All of the rights, powers, elections, determinations, remedies, duties and
functions of Issuer as Lender hereunder may be exercised and performed on behalf of Issuer by
Agent unless and until Agent's agency pursuant to the Master Agency Agreement is terminated
in accordance with the provisions of the Master Agency Agreement.
RECITALS
A. Borrower owns or will own certain real property (the "Property") located in the
County of San Diego, State of California, and more particularly described in Exhibit "A"
attached to this Agreement.
B. Borrower intends to acquire and construct a lA3-unit multifamily affordable
housing apartment project (as more fully described herein, the "Project") on the Properly to be
known as The Landings II Apartments.
C. Issuer has determined to issue its Multifamily Housing Revenue Bonds (The
Landings II Apartments), Senior Series 2010A-1, in the maximum aggregate principal amount of
$~~ ("2010 Series A-1 Bonds").
D. Issuer has also determined to issue its Multifamily Housing Revenue Bonds (The
Landings II Apartments), Senior Series 2010A-2, in the maximum aggregate principal amount of
$~~ ("2010 Series A-2 Bonds").
E. Issuer has also determined to issue its Multifamily Housing Revenue Bonds (The
Landings II Apartments), Subordinate Series 2010A-3, in the original aggregate principal
amount of $~~ ("2010 Series A-3 Bonds" and, together with the 2010 Series A-1 Bonds
and the Series 2010 A-2 Bonds, the "Bonds"). Without affecting the foregoing definitions, the
2010 Series A-1 Bonds and the 2010 Series A-2 Bonds are sometimes referred to herein as the
"Senior Bonds" and the 2010 Series A-3 Bonds are sometimes referred to herein as the
"Subordinate Bonds."
~~~1[~4v1/024036-0052 Landings II Loan Agreement
F. The proceeds from the sale of the 2010 Series A-1 Bonds will be loaned
("Convertible Loan") to the Borrower to provide funds to finance a portion of the costs of
acquiring and constructing the Project.
G. The proceeds from the sale of the 2010 Series A-2 Bonds will be loaned
("Construction Loan" and together with the Convertible Loan, the "Senior Loans") to the
Borrower to provide funds to finance a portion of the costs of acquiring and constructing the
Project.
H. The proceeds from the sale of the 2010 Series A-3 Bonds will be loaned
("Subordinate Loan" and, together with the Senior Loans, the "Loans") to the Borrower to
provide funds to finance a portion of the costs of acquiring and constructing the Project.
I. In connection with U.S. Bank's purchase of the 2010 Series A-1 Bonds, Borrower
and U.S. Bank have entered into that certain Fixed Rate Lock and Indemnity Agreement dated as
of May , 2010 ("Rate Lock Agreement"), pursuant to which a fixed rate of interest per
annum is established for the Convertible Loan and the 2010 Series A-1 Bonds.
J. Upon issuance of the Bonds, all right, title and interest of Issuer under and in
connection with the Senior Loans will be assigned by Lender to U.S. Bank, as the initial
purchaser and holder of the Senior Bonds and all right, title and interest of Issuer under and in
connection with the Subordinate Loan will be assigned on a subordinate basis by Lender to
Subordinate Bondholder, as the initial purchaser and holder of the Subordinate Bonds, pursuant
to that certain Master Pledge and Assignment (as amended from time to time, the "Master Pledge
and Assignment"), dated May 2010, among Issuer, Agent and U.S. Bank, as initial
purchaser and holder of the Senior Bonds (in such capacity, U.S. Bank is sometimes referred to
herein as "Senior Bondholder"); provided that Subordinate Bondholder's rights and remedies
shall only be available and exercisable to the extent of such Subordinate Bondholder's interests
in the Subordinate Bonds and the subordinate pledges created in the Master Pledge and
Assignment relative and proportionate to the interests of the Senior Bondholder, subject in each
instance to any and all intercreditor and subordination arrangements between and among all
purchasers and holders of Bonds from time to time, including without limitation the Intercreditor
and Subordination Agreement; and provided further that the Senior Bondholder is also referred
to herein and in the Bond Documents as the "Bondowder Representative").
K. Subject to the issuance of the Bonds and the terms and conditions of this
Agreement, Issuer, through Agent, is willing to make the Loans to Borrower and, in order to
provide for the orderly making and administration of the Loans, Issuer has appointed Agent as
Issuer's agent for such purposes under the Master Agency Agreement.
1. Definitions and Intemretation.
1.1 Defined Terms. All capitalized terms used in this Agreement and not
otherwise defined in this Agreement are defined in Exhibit "B" attached hereto.
1.2 Exhibits Incorporated. All exhibits to this Agreement, as now existing and
as the same may from time to time be modified, are incorporated fully herein by this
reference.
4840-8 ] 79-6358.2 2 Landings II Loan Agreemem
UOCSOC/ ] 406214v 1/024036-0052
2. The Loans.
2.1 Amount and Puroose; Timin>;. Subject to the terms of this Agreement,
Lender agrees to make, and Borrower agrees to take (i) the Convertible Loan in the
principal amount of up to $[_~ and evidenced by the Convertible Note, (ii) the
Construction Loan in the principal amount of up to $~ ~ and evidenced by the
Construction Note, and (iii) the Subordinate Loan in the principal amount of up to
$~] and evidenced by the Subordinate Note. Proceeds of the Loans shall be
used to finance the acquisition and construction of the Project (all as more particularly
described in the Plans) and for the other purposes set forth in the Approved Budget; and
provided that Lender shall only make advances of the proceeds of the Loans to the extent
proceeds of the related series of Bonds are made available for such purposes from time to
time by the respective purchasers thereof, and Issuer and Agent shall have no
responsibility for funding the Loans or any of them or any portion of the foregoing from
any other sources of funds. It is understood and agreed that Lender shall make advances
of the proceeds of the Loans for deposit in the Project Funds Account, provided that there
is no uncured Event of Default or a prospective default hereunder or under any of the
Loan Documents including without limitation, the Rate Lock Agreement, or Bond
Documents.
2.2 Fees. On the Issuance Date, Borrower shall pay to (i) U.S. Bank, for U.S.
Bank's sole account in immediately available funds, the construction loan fees specified
in the Construction Note and the Convertible Note, and (ii) to
[ ~ for its sole account in immediately available funds, the
origination fee specified in the Subordinate Note. On the Conversion Date, Borrower
shall pay to U.S. Bank, for U.S. Bank's sole account in immediately available funds, the
term loan fee specified in the Convertible Note. In the event of any extension of the
Termination Date, Borrower shall pay to U.S. Bank, for U.S. Bank's sole account in
immediately available funds, the extension fees specified in the Construction Note and
the Convertible Note. All fees payable pursuant to this Section 2.2 shall be deemed fully
earned when due and shall be nonrefundable when paid.
2.3 Payments. (a) Borrower shall repay the Loans, with interest, in
accordance with the respective provisions of the Notes and this Agreement, including
without limitation, Section 2.3(b) below. Except as otherwise provided, all payments
shall be applied first to interest and then to principal. All principal payments properly
made on account of the Convertible Loan shall be applied against the Convertible Note,
all principal payments properly made on account of the Construction Loan shall be
applied against the Construction Note, and all principal payments properly made on
account of the Subordinate Loan shall be applied against the Subordinate Note. Amounts
repaid in respect of any Loan may not be reborrowed.
(b) Notwithstanding anything to the contrary in this
Agreement, the Borrower's obligation to repay the Subordinate Loan shall
be subordinate and junior to its obligation to repay the Convertible Loan
and the Construction Loan and any payment purported to be made in
respect of the Subordinate Loan shall, in each instance, be subject to the
4840-8179-635R.2 3 Landings II Loan agreement
DOCSOC/1406214v 1 /024036-0052
terms and conditions of the Intercreditor and Subordination Agreement
and the subordinate pledge and lien created under the Master Pledge and
Assignment. Without limiting the foregoing, payments in respect of the
Subordinate Loan shall only be made to the extent of seventy-five percent
(75%) of Available Net Cash Flow as further described in the Subordinate
Note.
2.4 Prepayment. The Loans shall be prepayable only in accordance with the
respective terms and conditions of the Notes relating to the prepayment of such Notes.
Borrower understands, acknowledges and agrees that (i) as further described in
Section 9.10 hereof, the terms and conditions of such prepayment with respect to the
Convertible Loan include, without limitation, potential termination of the Rate Lock
Agreement and the payment of termination fees, changes or other amounts calculated in
accordance with the terms of the Rate Lock Agreement, and (ii) the Subordinate Loan
shall not be subject to prepayment, in whole or in part, at any time while the Construction
Loan and the Convertible Loan or any portion of either remains outstanding. Such terms
and conditions of prepayment of the Convertible Loan include, without limitation, the
payment of the "Breakfunding Prepayment Fee" or similaz amounts due under the Rate
Lock Agreement.
2.5 Interest. The Notes shall beaz interest at the rates per annum set forth in
the respective provisions thereof.
2.6 RemarQining of Convertible Loan. Borrower understands, acknowledges
and agrees that under certain circumstances the Convertible Loan is subject to
remazgining in accordance with the terms and conditions of the Convertible Note,
including without limitation, Section 2.4(d) thereof.
3. Disbursement Procedures.
3.1 Disbursement Requests. Except as otherwise provided herein, the
proceeds of the Loans shall be disbursed from time to time by Agent to or for the account
of Borrower only in accordance with, and upon the satisfaction of the conditions
precedent contained herein and in the Disbursement Agrcement, including, with respect
to each Disbursement, the delivery of a Requisition (as defined below) signed by
Borrower and approved in writing by Bondowner Representative. The requisite approval
of any Requisition for a Disbursement shall only be given in accordance with this
Agreement and shall be subject to the prior satisfaction of all of the conditions precedent
to such Disbursement contained in this Agreement and the Disbursement Agreement,
including, but not limited to, Sections 4.1, 4.2, and 4.3 hereof, as the case may be. The
proceeds of the Loans (and all funds now or hereafter on deposit in the Disbursement
Agreement) shall be disbursed on a line-item by line-item basis in accordance with the
Approved Budget and subject to the conditions in Articles 3 and 3.11 hereof. In no event
shall Bondowner Representative have any obligation to consent to any disbursement on
account of any item if the amount to be disbursed on account of that item, when taken in
the aggregate with all amounts previously disbursed on account of that item, exceeds the
amount allocated to such item in the Approved Budget (as reallocated from time to time
4840-8179-6358.2 4 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
in accordance with Section 3.3, below and subject to Section 6.4 hereof). Disbursements
shall be made only upon Borrower's written request in the form attached hereto as
Exhibit "E" (a "Requisition") showing all costs which Borrower intends to fund with
such Disbursement, itemized in such detail as Bondowner Representative may reasonably
require, accompanied in each case by (a) an Application and Certificate for Payment
(AIA Documents G702 and G703), or other document acceptable to Bondowner
Representative containing certifications by Contractor and Architect that construction to
the date of the Disbursement Request is in accordance with the Plans and all
recommendations contained in any approved soils report, (b) invoices and lien releases
satisfactory to Bondowner Representative including in any event partial lien releases
executed by each contractor and subcontractor who has received any payment for work
performed, (c) CLTA 122 endorsements to the Title Policy in form and substance
satisfactory to Bondowner Representative, and (d) all other documents and information
reasonably required by Bondowner Representative. Disbursement Requests shall be
submitted in duplicate no less than ten (10) Banking Days prior to the date of the
requested Disbursement, and shall not be submitted more often than once monthly;
however, Borrower may submit a second Disbursement Request within the same month
provided that, along with such Disbursement Request, Borrower also submits $500 in
immediately available funds to Bondowner Representative as payment for processing
said Disbursement. Notwithstanding the foregoing, Bondowner Representative may, in
its reasonable discretion, make (or direct Agent to so make) Disbursements from time to
time, in the absence of a Disbursement Request, to pay Lender and/or Bondowner
Representative fees and interest on the Construction Loan or the Convertible Loan or
either of them as the case may be from funds allocated for that purpose in the Approved
Budget, to make payments reasonably deemed advisable by Bondowner Representative
to protect the Property or Lender's and/or Bondowner Representative's interests under
any Loan Document, and to fulfill any reimbursement obligation of Borrower under
Section 13.3 that Borrower has not timely fulfilled; provided, however, that so long as no
Event of Default or other event or condition which, with the giving of notice or the
passage of time, or both, would be an Event of Default, shall have occurred and be
continuing, Bondowner Representative shall give Borrower five (5) days' prior written
notice of any Disbursement (other than a Disbursement to pay interest) to be made under
the authority granted pursuant to this sentence. To the extent that a Disbursement has
been made without requiring Borrower then to strictly comply with the terms of this
Agreement, that leniency shall not constitute a waiver or grounds for estoppel and at any
time thereafter the respective party in interest may insist on strict compliance to avoid
default by Borrower. Funds aze to be disbursed solely for work in place. In no event will
Bondowner Representative be required to consent to Disbursements for materials not
incorporated into the Project; provided, however, that Bondowner Representative at its
sole election, shall consent to Disbursements for materials stored securely on-site if such
materials are insured, are available for inspection and will be incorporated into the
Project within a reasonable time. Disbursements will be subject to withholding for stop
notice claims pursuant to California Civil Code Section 3162 and mechanic's lien claims.
In no event shall any Disbursements be made after the Conversion Date.
3.2 Manner of Disbursement; Order of Disbursement. Any Disbursement may
be made by directly depositing such amounts in a checking account maintained by
4840-8179-6358.2 5 Landings II Loan Agreement
DOCSOC/1406214v 1/024036-0052
Borrower with Agent, by check payable to Borrower, or by check payable jointly to
Borrower and any contractor, subcontractor or other claimant, or directly to any such
claimant, or by any other means or in any other manner selected by Borrower and
approved. In no event shall Bondowner Representative have any obligation to consent to
Disbursements of more than $~ 1 in the aggregate, under this Agreement.
Unless Bondowner Representative determines otherwise in its sole discretion, proceeds
of the Loans shall be used to make Disbursements in the following order: first, from the
Subordinate Loan; second, from the Convertible Loan; and third, from the Construction
Loan.
3.3 Cost Ovemms. In the event that, at any time and for any reason but
subject to Section 6.4 hereof, (a) the actual cost reasonably estimated by Bondowner
Representative or Borrower to be required to complete all matters included in any line
item in the Approved Budget exceeds the amount allocated to that line item in the
Approved Budget, or (b) Project Costs for any matters not covered by a specific line item
in the Approved Budget have been or will be incurred, or (c) the undisbursed portion of
the Loans (together with the undisbursed portion of the Project Funds Account, including
the undisbursed portion of Investor Limited Partner's Equity Commitment and proceeds
of the City Loan held or to be held under the Disbursement Agreement) is or may be
insufficient to pay all Project Costs that may be payable under the Loan Documents, the
Bond Documents, the City Loan Documents and otherwise in connection with the Project
or the Loans (including, without limitation, a reserve for interest), Borrower shall, within
five (5) days after Bondowner Representative gives Borrower written notice of such
determination, do one or more of the following:
(a) provide satisfactory evidence to Bondowner Representative
that Borrower has previously paid such excess or Project Costs or
otherwise provided for such insufficiency (collectively, the "Excess
Costs") with funds from a source other than the Loans;
(b) reallocate sufficient funds to pay the Excess Costs from
funds allocated to "Contingency" in the Approved Budget; provided,
however, that the consent of Bondowner Representative to any such
reallocation shall be required under Section 3.7, below, unless the
reallocated funds were originally transferred to "Contingency" from cost
savings pursuant to this Agreement; or
(c) deposit an amount equal to the Excess Costs in the Project
Funds Account under the Disbursement Agreement from which
withdrawals may be made only in accordance with the Disbursement
Agreement.
Bondowner Representative shall have no obligation to consent to further Disbursements until
Borrower has paid or otherwise provided for the Excess Costs as required above. Amounts
deposited by Borrower in the Project Funds Account in accordance with Section 3.3(c) for any
line item shall be disbursed prior to the disbursement of any remaining proceeds of the Loans for
such line item. As additional security for all of Borrower's respective obligations under the Loan
4840-8179-6358.2 ( Landings II Loan Agreement
DOCSOC/1406214v l /024036-0052
Documents to Lender, Borrower hereby pledges to Lender, and grants to Lender a security
interest in, the Project Funds Account, all amounts now or hereafter on deposit in the Project
Funds Account, all interest and other earnings on the Project Funds Account, if any, all
additions, increases, modifications, renewals, rollovers, substitutions and replacements to and/or
for the foregoing collateral, and all proceeds and/or products of the foregoing collateral, whether
voluntary or involuntary. The foregoing security interest and pledges shall be subject to the
priority status described herein and in the Master Pledge and Assignment.
3.4 Cost Savings. Upon completion of and disbursement for all matters
covered by any line item in the Approved Budget, any remaining undisbursed amounts
allocated to that line item shall (unless agreed to otherwise by the Bondowner
Representative) be reallocated to the "Contingency" line item in the Approved Budget
and thereafter be available for disbursement in accordance with the terms of this
Agreement.
3.5 Retainage. As to each "hard cost" item in the Approved Budget,
Disbursements shall be made for such item in the amount of 95% of the costs for such
item properly incurred and substantiated by Borrower during the course of the Project,
with a retainage of 5% of the total cost of work then completed. Each Disbursement for
the Contractor's overhead and profit (or any portion thereof) shall be subject to retainage
of 10% until such time as the construction of the Project is determined, in the reasonable
judgment of the Bondowner Representative, to be 45% complete; thereafter, the retainage
shall be reduced to 5%. All amounts so retained shall be disbursed upon satisfaction of
all conditions to the final Disbursement set forth in Section 4.3.
3.6 Disbursement Agreement. Borrower shall deposit into the Project Funds
Account under the Disbursement Agreement (a) all amounts required to be deposited into
the Project Funds Account pursuant to Section 3.3, above, (b) all Equity Construction
Deposits, (c) proceeds of the Loans, (d) proceeds of the City Loan, and (e) amounts
described in Article XI of this Agreement. All amounts deposited in the Project Funds
Account under the Disbursement Agreement shall be disbursed solely to pay Project
Costs or, if applicable with respect to amounts described in Article XI hereof, to repair,
rebuild and restore the Project on the same terms, and subject to the same conditions, that
proceeds of the Loans are to be disbursed under this Agreement. All funds in the Project
Funds Account are subject to the pledges described in Section 3.3, above.
3.7 Contin eg ncy. Bondowner Representative shall not have any obligation to
consent to any disbursement from funds allocated in the Approved Budget to the
"Contingency" line item, or to consent to any reallocation to any other line item of funds
allocated in the Approved Budget to the "Contingency" line item; provided, however,
Bondowner Representative shall not unreasonably withhold, condition or delay its
consent to any reallocation of funds allocated to "Contingency" in the Approval Budget
so long as, immediately following such reallocation, the undisbursed portion of the funds
allocated to the "Contingency" line item, expressed as a percentage of the total funds
allocated to the "Contingency" line item in the original Approved Budget, does not
exceed that portion of the Project then remaining to be completed and paid for, expressed
as a percentage of the total Project to be completed and paid for.
4840-8199-6358.2 '] Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
3.8 Waiver of Disbursement Conditions. Unless otherwise agreed to in
writing the required consent by any party to any Disbursement with the knowledge that
any condition to such Disbursement is not fulfilled shall constitute a waiver of such
condition only with respect to the particular Disbursement made, and such condition shall
be a condition to all further Disbursements until fulfilled.
3.9 No Liability for Disbursements. Under no circumstances shall Bondowner
Representative be responsible or liable to any person for or on account of any
Disbursement of, or the failure to disburse, any of the proceeds of the Loans (or any of
them). The foregoing shall be in addition to all other limitations on the responsibility and
liability of Bondowner Representative and/or Lender set forth in this Agreement,
including without limitation, Section 13.1 hereof.
3.10 Site Improvements
(a) As used herein and in the other Loan Documents, the term
"Improvements" shall include site improvements.
(b) Proceeds of the Loans allocated to the payment of the costs
of Improvements that are site improvements shall be applied to the
payment of the claims of claimants (as defined in Civil Code Section
3085). No portion of such proceeds of the Loans shall be paid to
Borrower in the absence of satisfactory evidence that all such claims have
been paid or that the time for recording claims of liens has expired and no
such claims have been recorded. The foregoing shall not be construed as
imposing on Lender or Bondowner Representative any obligation or duty
to any third party or as creating any third party beneficiary of the
foregoing covenants and agreements.
(c) If Lender or Bondowner Representative believes that a
mechanic's lien with respect to Improvements that are site improvements
has or may have gained priority over the Deed of Trust pursuant to Civil
Code Section 3137, then upon written demand, Borrower shall
immediately, and in any case before the completion of the Improvements,
procure a payment bond in accordance with the requirements of Civil
Code Section 3139 and record the same in the official records of the
County. Borrower hereby appoints Lender and Bondowner
Representative as its attorneys in fact for procuring and recording such
payment bonds. Such appointments are each coupled with an interest and
are irrevocable. Upon demand, Borrower shall pay to Lender or
Bondowner Representative (as the case may be) the cost of procuring and
recording such payment bonds. Any sums so advanced to procure and
record such bonds shall be advanced to protect the security of the Deed of
Trust and shall be secured thereby.
3.11 No Liability for Failure to Convert the Convertible Loan or the
Subordinate Loan. Under no circumstances shall Lender or Bondowner Representative
4840-8179-6358.2 8 Landings 11 Loan Agreement
DOCSOC/ 1406214v l /024036-0052
be responsible or liable to any Person for or on account of a failure to achieve the
Conditions to Conversion or for the Convertible Loan and/or the Subordinate Loan to
convert from the construction phase to the permanent phase. The foregoing shall be in
addition to all other limitations on the responsibility and liability of Lender and
Bondowner Representative set forth in this Agreement or in any of the Loan Documents.
3.12 Develonment Fees. Development fees earned by and payable to the
Developer (as defined in the Development Agreement) shall be paid in accordance with
the following schedule:
Schedule Amount Percent of Total
Close of Construction Loan $~~ 23%
25% Complete $(_] 6%
50% Complete $[] 6%
75% Complete $[_~ 6%
100% Complete $~~ 6%
Conversion $[_~ 2%
8609 $(_] 19%
Deferred $~ ~ 29%
Total $[_~ 100%
Notwithstanding the foregoing, the aggregate development fees payable to the Developer
hereunder afrer the Completion Date may be increased up to the maximum amount permitted by
CTCAC, if, on or prior to the First Tax Credit Year (as defined in the Partnership Agreement),
the Developer demonstrates to the satisfaction of the Special Limited Partner and Bondowner
Representative that Designated Proceeds (as defined in the Partnership Agreement) are available
to pay such increased amount in accordance with the terms hereof and the terms of the
Development Agreement. The extent of any such increase shall be limited to the then-current
amount of Designated Proceeds (as defined in the Partnership Agreement), and shall be subject
to the written approval of Bondowner Representative and any required approval of the CTCAC.
4. Conditions to Issuance of Bonds and to Disbursements.
4.1 Issuance of Bonds; Initial Disbursements. Issuer's obligation to issue the
Bonds, to enter into the Bond Documents, the Lender's obligations to enter into this
Agreement and the other Loan Documents and to make the initial Disbursement of the
Subordinate Loan on the Closing Date under this Agreement are subject to the
satisfaction, or waiver by Bondowner Representative, as applicable, of all of the
following conditions precedent:
4.1.1 Bondowner Representative shall have received each of the
documents listed in Exhibit "F" attached hereto, each in form and substance
satisfactory to Bondowner Representative.
4840-8179-6358.2 (~ Landings II Loan Agreement
DOC S OC/ 14062 14v 1 /02403 6-0052
4.1.2 The Regulatory Agreement shall have been duly executed,
acknowledged and delivered by Borrower to Lender and Bondowner
Representative.
4.1.3 Bondowner Representative shall have received and approved in
writing, or shall have waived in writing the requirement of, (a) a soils report for
the Property, (b) a full set of the plans and specifications ("Plans") prepared for
the construction of the Project, certified as complete by the Architect and the
Engineer and containing evidence of all necessary or appropriate approvals of
Governmental Agencies then obtainable, (c) copies of all material Project
Agreements, (d) copies of all permits and similar permits, licenses, approvals and
other authorizations of Governmental Agencies required in connection with the
development of the Project, other than the final grading permits ("Grading
Permit") and final building permits ("Building Permit") which shall be the subject
of a so-called permit ready letter in form and substance satisfactory to Bondowner
Representative; provided that Bondowner Representative shall receive the
Building Permit upon completion of grading of the Project, and (e) copies of all
environmental documents prepared, adopted, certified or filed by or with any
Governmental Agency in connection with any approval described in
subclause 4.1.3(d), above, including, without limitation, any initial study, negative
declaration, mitigated negative declaration, environmental impact report, notice of
determination or notice of exemption prepared, adopted, certified or filed by or
with any Governmental Agency pursuant to the requirements of the California
Environmental Quality Act. In addition to the foregoing, the Bondowner
Representative shall have received satisfactory comfort and assurances that all
applicable wetlands and stormwater management permits and regulations
applicable to the Property have been obtained (or waived in writing) and complied
with such that the Project, including without limitation its design, engineering and
construction, will not be adversely affected by the application and enforcement of
such permits and/or regulations.
4.1.4 Bondowner Representative shall have received and accepted a
Phase I Site Assessment prepared by a licensed and registered environmental
engineer or other qualified party satisfactory to Bondowner Representative, in
each case stating that no Hazardous Substances are present in, on, under or around
the Property, except for Hazardous Materials that will be removed from the
Property in accordance with environmental laws prior to commencing
construction of the Improvements, and that no condition or circumstance
warranting further investigation now exists.
4.1.5 The City Regulatory Agreement, the Regulatory Agreement, the
Deed of Trust, the Assignment of Leases, the Deed of Trust Assignment, the
Intercreditor and Subordination Agreement, the City Recorded Documents and
the City Subordination Agreement shall have been recorded, in that order, in the
real property records of the County.
4840-8179-5358.2 10 Landings II Loan Agreement
DOCSOC/1406214v I /024036-0052
4.1.6 The Project Financing Statements shall have been filed with the
Secretazy of State, and Bondowder Representative shall have received a
certificate of the Secretary of State showing such Project Financing Statements to
be subject to no prior filings.
4.1.7 Borrower shall, at its sole expense, have delivered to Bondowner
Representative an ALTA extended lender's coverage title insurance policy,
without further revision or amendment, or evidence of an irrevocable commitment
therefor satisfactory to Bondowner Representative, in form and substance and
issued by an insurer satisfactory to Bondowner Representative, together with all
other endorsements and binders required by the foregoing, naming Bondowner
Representative as the insured, in a policy amount of not less than $~ ~
showing the Borrower as the fee owner with respect to the Property and insuring
the Deed of Trust to be a valid first priority lien on the Property, subject only to
the Permitted Encumbrances.
4.1.8 Borrower shall, at its sole expense, have delivered to Bondowner
Representative, in form and substance reasonably satisfactory to Bondowder
Representative:
(a) an ALTA survey which (i) shows all "setbacks" and other
restrictions applicable to the Property pursuant to requirements of
Governmental Agencies and applicable covenants, conditions and other
private restrictions, (ii) shows all easements, licenses and other rights of
way, (iii) shows no encroachments onto the Property or from the Property
onto adjoining property, and (iv) certifies the legal description of the
Property as insured in the Title Policy; and
(b) a certificate ("Surveyor's Certificate") pursuant to which
the person who prepared the ALTA survey certifies to Bondowder
Representative and the applicable title insurer that the survey was made on
the ground and in accordance with the Minimum Standard Detail
Requirements for ALTA/AGSM Land Title Surveys as adopted by the
American Land Title Association and the American Congress on
Surveying and Mapping, and is correct and complete; that access to the
Property, and utilities shown on the survey, are sufficient and in
accordance with applicable requirements; that the Property does not fall
within a designated flood or earthquake hazazd azea; and as to such other
matters as Bondowner Representative reasonably requires.
4.1.9 Bondowner Representative shall have received and approved an
executed original of each of the following opinions, in each case addressed to
Lender, Bondowner Representative and Subordinate Bondholder and in each case
in form and substance reasonably approved by the foregoing: (a) the opinion of
counsel to Borrower, Borrower's General Partners and the Guarantor, opining as
to the due formation, qualification and good standing of Borrower, Borrower's
General Partners and Guarantor, the due authorization by Borrower, Borrower's
4840-8179-6358.2 1 1 Landings ]I Loan Agreement
DOC S OC/ 1406214 v l /024036-005 2
General Paztners and the Guazantor of the execution, delivery and performance, as
the case may be, of the Loan Documents, the Guaranty, the Bond Documents, and
the City Loan Documents to which it or they are a party and the enforceability of
the Loan Documents, the Guaranty, the Bond Documents and the City Loan
Documents to which it or they aze a party and covering such other matters as
Bondowner Representative may reasonably require, including without limitation,
that the Property will be eligible for a real property tax exemption by all relevant
Governmental Agencies (initially the California Boazd of Equalization) based on
the partnership structure of the Borrower and the nature and use of the Project;
and (b) an opinion of "bond counsel," addressed to the Senior Bondholder and the
Subordinate Bondholder, opining as to the due execution, delivery and
performance by the Issuer of the Master Pledge and Assignment and the Master
Agency Agreement, the enforceability of the Master Pledge and Assignment and
the Master Agency Agreement, and the availability of an exemption from federal
income taxation for all interest accruing on the Bonds.
4.1.10 Bondowner Representative shall have received and approved such
financial statements, tax returns and other financial information as it may require
regarding the financial condition of Borrower, each Partner of Borrower,
Guazantor and/or the Property.
4.1.11 Bondowner Representative shall have received satisfactory
assurances that Borrower is diligently pursuing for subsequent review and
approval by Bondowner Representative (i) a listing of all costs and expenses of
issuance of the Bonds, and (ii) all sources for payment of such costs and expenses.
4.1.12 Bondowner Representative shall have received (i) a satisfactory
guaranteed maximum fixed price construction contract ("Construction Contract")
for the Project between Borrower and Contractor, within the cost allocations
established under the Approved Budget and otherwise in form and substance
satisfactory to Bondowner Representative, (ii) all material subcontracts for the
Project, and (iii) all other material Project Agreements reasonably required by
Bondowner Representative.
4.1.13 Borrower shall have delivered to Bondowner Representative all
certificates of insurance (including without limitation, any required flood and
earthquake insurance) for all policies required pursuant to this Agreement, as well
as any environmental insurance required as a condition to Borrower's acquisition
of the Property.
4.1.14 (i) Bondowner Representative and Lender shall have received an
original copy of the Paztnership Agreement for Borrower duly executed by the
General Partners and the Investor Limited Partner, pursuant to which Investor
Limited Partner agrees to make capital contributions to Borrower in accordance
with the schedule of required Equity Construction Deposits attached hereto as
Exhibit "G" and in accordance with the terms of the Partnership Agreement; and
(ii) Bondowner Representative and Lender shall have received all resolutions,
4840-8179-6358.2 12 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
certificates, incumbency certificates, partnership agreements, certificates of
partnership, limited liability company agreements, operating agreements, limited
liability company certificates, good standing certificates, determination letters,
and other similar documents as Lender and Bondowner Representative may
reasonably require to evidence the due formation and good standing of the
Investor Limited Partner and the due authorization and due execution and delivery
by Investor Limited Partner of the Partnership Agreement.
4.1.15 Borrower shall have paid in immediately available funds, (a) all
fees payable by Borrower pursuant to Section 2.2; and (b) all costs and expenses
incurred by the Issuer, Agent, Senior Bondholder and Subordinate Bondholder, as
the case may be, in connection with the issuance of the Bonds, the making of the
Loans and the negotiation, preparation and closing of the Loan Documents and
Bond Documents, including, but not limited to, all costs and expenses described
in Section 13.2.
4.1.16 Investor Limited Partner shall have delivered its initial capital
contribution of $[~ to Lender subject to the terms of the Partnership
Agreement for deposit in the Project Funds Account under the Disbursement
Agreement.
4.1.17 Borrower shall provide or cause to be provided a fully executed
copy of the validly issued and effective Preliminary Reservation allocating
sufficient Code Section 42 federal low income housing tax credits to support the
full investment by Investor Limited Partner in an amount equal to the aggregate
amount of the Equity Construction Deposits.
4.1.18 After review by Bondowner Representative and its counsel, all of
the City Loan Documents shall have been executed and full and complete copies
thereof shall have been delivered to Bondowner Representative together with all
other related documents and materials executed and/or delivered by Borrower in
connection with the City Loan; provided that the City Subordination Agreement,
in form and substance satisfactory to Bondowner Representative shall be executed
and delivered and shall be recorded in the real property records of the County
along with the City Recorded Documents.
4.1.19 Loans shall have been made by the City to Borrower pursuant to
the City Loan Agreement in the aggregate principal amount of $4,000,000 ("City
Loan") for purposes of financing a portion of the costs incurred by Borrower in
connection with the acquisition and construction of the Property; and the City,
Lender and the Borrower shall have entered into the City Subordination
Agreement subordinating the liens of the City Deed of Trust.
4.1.20 Bondowner Representative shall have received a complete cost
analysis for the Project, in form and substance satisfactory to Bondowner
Representative, and Borrower shall have addressed, to the satisfaction of
4840-8179-6358.2 ] 3 Landings II Loan Agreement
DOCSOC/1406214v I /024036-0052
Bondowner Representative, all recommendations of Bondowner Representative
regazding said cost analysis.
4.2 Any Disbursement. The obligation to consent to any Disbursement
(excluding the initial Disbursements made on the Closing Date but including all
subsequent Disbursements through and including the final Disbursement) is subject to the
satisfaction, or waiver by Bondowner Representative, as the case may be, of the
following conditions precedent:
4.2.1 All of the conditions precedent set forth in Section 4.1 shall have
been timely satisfied.
4.2.2 Borrower shall have made payment to Contractor for the amounts
covered by all prior Disbursement Requests.
4.2.3 With respect to the proceeds of the Loans, all prior Disbursements
shall have been made in accordance with Section 3.2 hereof.
4.2.4 Bondowner Representative shall have reasonably determined,
based upon inspections or other evidence satisfactory to it, that the Project is
being constructed in a good and workmanlike manner by appropriate means in
accordance with the Plans and that all required inspections and approvals have
been obtained as and when necessary.
4.2.5 The Title Company shall be prepared to issue a date down
endorsement to the Title Policy in the nature of a CLTA 122 endorsement
insuring that the lien of the Deed of Trust is a first, prior and paramount lien
against the Property and the Project, securing all previous disbursements and the
disbursement then being requested, and that nothing has intervened to affect the
validity or priority of the Deed of Trust.
4.2.6 The Loans are "in balance" in accordance with the Approved
Budget in the judgment of Bondowner Representative and, in the reasonable
judgment of the Bondowner Representative, Borrower can complete the Project
and pay for it without obtaining additional funds (other than the Equity
Construction Deposits and proceeds of the City Loan).
4.2.7 Bondowner Representative has received in form and substance
acceptable to Bondowner Representative a Disbursement Request and all required
supporting documentation, including work progress certifications by Contractor,
and approval from the independent third-party inspector named by Bondowner
Representative, as well as invoices and mechanic's lien claim waivers and
releases.
4.2.8 The representations and warranties in Article 5 of this Agreement
and in the Bond Documents, the City Loan Documents and the other Loan
Documents shall be correct as of the date of the Disbursement as though made as
4840-8179-6358.2 14 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
of that date, and Bondowner Representative shall have received a certificate to
that effect signed by a Designated Representative.
4.2.9 No Event of Default shall remain uncured and no event shall have
occurred or condition exist which, with the giving of notice or the passage of time
or both, would constitute an Event of Default, and Bondowner Representative
shall have received a certificate to that effect signed by a Designated
Representative.
4.2.]0 No stop notice (whether bonded or not) shall have been served
upon or otherwise delivered to Lender or Bondowner Representative in
connection with the development of the Project or otherwise in connection with
any of the Loans, unless Borrower shall have (a) paid and discharged the same, or
(b) effected the release thereof by delivering to Bondowner Representative a
surety bond complying with the requirements of applicable Laws for such release.
4.2.11 No claim of lien, notice and claim of mechanic's lien or other
similar document or instrument shall have been recorded against the Property or
any portion thereof, unless Borrower shall have (a) paid and dischazged the same,
or (b) effected the release thereof by delivering to Bondowner Representative a
surety bond complying with the requirements of applicable Laws for such release,
or (c) subject to the terms and conditions of Section 6.9, below, deposited cash or
other security with Bondowner Representative in lieu of the surety bond described
in clause (b), above, in accordance with Section 6.9, below.
4.2.12 All amounts then due and owing in respect of the Equity
Construction Deposits shall have been paid or otherwise provided for to the
reasonable satisfaction of Bondowner Representative in the amounts and at the
times set forth in Exhibit "G" attached hereto.
4.2.13 Bondowner Representative shall have received, in form and
substance acceptable to Bondowner Representative, (i) executed subcontracts
from all subcontractors providing services on the Property in the following trades:
HVAC, electrical, plumbing, framing, and concrete; provided, however,
Bondowner Representative shall have power and authority, in its sole discretion,
to substitute a different trade for any of the foregoing trades; and (ii) payment and
performance bonds (naming Bondowner Representative as a dual obligee) from
each subcontractor that has started providing services on the Property.
4.2.14 Bondowner Representative shall have received the final Plans and
the Grading Permit in accordance with Section 4.1.3(d) above.
4.2.15 Upon completion of grading of the Project, Bondowner
Representative shall have received the Building Permit in accordance with
Section 4.1.3(d) above.
4840-8179-6358.2 15 Landings II Loan Agreement
DOCSOC/ 1406214v l /024036-0052
4.2.16 [Reserved].
4.3 Final Disbursement. Bondowner Representative's obligation to consent to
the final disbursement of that portion of the proceeds of the Loans retained pursuant to
Section 3.5 is subject to the satisfaction, or waiver by Bondowner Representative, as
applicable, of the following additional conditions precedent:
4.3.1 The construction of the Project shall be complete, as such
completion is defined in Section 6.1.
4.3.2 Bondowner Representative shall have received, in form and
substance acceptable to Bondowner Representative:
(i) Evidence that Borrower has accepted the Project as
complete;
(ii) A temporary certificate of occupancy and other evidence
acceptable to Bondowner Representative, from official sources, that the
construction and its intended use are in compliance with all applicable
building, zoning and other requirements of all Government Agencies;
(iii) A report from an inspector named by Bondowner
Representative that, based upon personal inspections during construction,
all work has been completed in a good workmanlike manner and
substantially in accordance with the Plans (as amended by change orders
made in compliance with this Agreement), and in accordance with
applicable governmental requirements;
(iv) Evidence that all construction costs shall, upon making the
final disbursement, have been paid in full; provided, however, that
Borrower, as a condition to the disbursement of amounts retained under
Section 3.5, above, shall not be required to satisfy this condition as to any
disputed mechanics' lien claim so long as such mechanics' lien is being
contested by Borrower in compliance with Section 6.9, below;
(v) Evidence that the period for filing mechanic's liens has
expired without the filing of any lien or delivery to Bondowner
Representative of executed lien releases in form and substance satisfactory
to Bondowner Representative; provided, however, that Borrower, as a
condition to the disbursement of amounts retained under Section 3.5,
above, shall not be required to satisfy this condition as to any disputed
mechanic's lien claim so long as such mechanic's lien is being contested
by Borrower in compliance with Section 6.9, below;
(vi) Evidence of full payment (or other satisfactory provision
for payment) for personal property in which Lender has a security interest
4840-8179-6358.2 16 Landings II Loan Agreement
DOCSOC/ 1406214v l /024036-0052
in connection with or under the Loan Documents (including without
limitation the Security Documents);
(vii) A certificate satisfactory to Bondowner Representative
from the Architect regarding compliance with Access Laws (as defined in
Section 5.13 of the Deed of Trust);
(viii) If required by Bondowner Representative, afinal as-built
survey showing the location; and
(ix) A rewrite or date down of the Title Policy as requested by
Bondowner Representative.
4.3.3 Borrower shall, if required by the Bondowner Representative or
the Title Company, have signed an indemnity agreement to permit a rewrite or
date down of the Title Policy to be issued showing the Deed of Trust as a first
priority lien upon the Property and the Project (subject to the Permitted
Encumbrances), without exception for mechanic's or materialmen's liens.
5. Representations and Warranties. As a material inducement to Lender's entry into
this Agreement and the purchase of the Bonds by the respective purchasers thereof, Borrower
represents and warrants to Lender, Senior Bondholder and Subordinate Bondholder that:
5.1 Formation Qualification and Compliance. Borrower (a) is a limited
partnership validly existing and in good standing under the laws of the State of
California, (b) has all requisite authority to conduct its business and own and lease its
properties, and (c) is qualified and in good standing in every jurisdiction in which the
nature of its business makes qualification necessary or where failure to qualify could
have a material adverse effect on its financial condition or the performance of its
obligations under the Loan Documents, the Bond Documents and the City Loan
Documents to which it is a party. Borrower is in compliance in all material respects with
all Laws applicable to its business and has obtained or will obtain prior to the need
therefor all approvals, licenses, exemptions and other authorizations from, and has
accomplished all filings, registrations and qualifications with, any Governmental Agency
that are necessary for the transaction of its business. Each Guarantor that is not a natural
person, if any, is validly existing and in good standing in the jurisdiction of its
organization and formation, has all requisite authority to conduct its business and own
and lease its properties, and has complied with all applicable requirements of
Governmental Agencies.
5.2 Execution and Performance of Loan Documents.
5.2.1 Borrower and Guarantor have all requisite authority to execute,
deliver, and perform their obligations under, the Loan Documents, the Bond
Documents to which it is a party, the City Loan Documents and the Guaranty, as
the case may be.
4840-8179-6358.2 ]'] Landings II Loan Agreement
DOC SOC/ 1406214v 1 /024036-0052
5.2.2 The execution and delivery by Borrower and Guazantor of, and the
performance by Borrower and Guarantor of their obligations under, the Loan
Documents, the Bond Documents and the City Loan Documents to which it is a
party and the Guazanty, as the case may be, have been authorized by all necessazy
action and do not and will not:
(a) require any consent or approval not heretofore obtained of
any Person having any interest in Borrower or Guarantor;
(b) violate any provision of, or require any consent or approval
not heretofore obtained under, any partnership agreement, articles of
incorporation, by-laws, operating agreements, trust agreements or other
organizational or governing document applicable to Borrower, Guarantor,
or any General Partner of Borrower or Guarantor;
(c) result in or require the creation of any lien, claim, charge or
other right of others of any kind (other than under or as provided for in the
Loan Documents, the Bond Documents to which it is a party and the City
Loan Documents) on or with respect to any property now or hereafter
owned or leased by Borrower or Guarantor;
(d) violate any provision of any Law presently in effect; or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement,
lease or other agreement or document to which Borrower or Guazantor is a
party or by which Borrower or Guarantor or any of their property is
bound.
5.2.3 Neither Borrower nor Guazantor is in default in any respect that is
materially adverse to any of Lender's, Senior Bondholder's or Subordinate
Bondholder's respective interests in or under the Loan Documents, the Bond
Documents to which it is a party and the City Loan Documents or the Guaranty,
as the case may be in any other respect that would have any material adverse
effect on the financial condition of Borrower or Guarantor or the conduct of their
respective businesses, under any Law, contract, lease or other agreement or
document described in subparagraph (d) or (e) of the previous Subsection.
5.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Agency is required in
connection with:
(a) the execution by Borrower and Guarantor of, and the
performance by Borrower and Guarantor of their obligations under, the
Loan Documents or the Guaranty (other than building permits and a
certificate of occupancy required in connection with the construction of
the Project (if any)); and
4840-8199-6358.2 ] g Landings II Loan Agreement
DOCSOC/] 406214v 1/024036-0052
(b) the creation of the liens described in the Regulatory
Agreement, City Loan Documents and the Loan Documents (other than
recording the Deed of Trust, the Assignment of Leases, the Assignment of
the Deed of Trust, Intercreditor and Subordination Agreement, City
Subordination Agreement, and the City Recorded Documents, and filing
of the Financing Statements).
5.3 Financial and Other Information. All financial information furnished to
Lender and/or Bondowner Representative with respect to Borrower, each Partner and
Guarantor in connection with the Loans (a) is complete and correct in all material
respects as of the date or dates indicated (or if no date or dates are indicated, then as of
the date of delivery), (b) accurately presents the financial condition of Borrower, each
Partner and Guazantor as of the date or dates indicated (or if no date or dates aze
indicated, then as of the date of delivery) and (c) has been prepazed in accordance with
generally accepted accounting principles consistently applied or in accordance with such
other principles or methods as aze reasonably acceptable to Bondowner Representative;
provided that, irrespective of any treatment accorded under generally accepted
accounting principles consistently applied, all off-balance sheet transactions shall have
been disclosed in writing and accompany such other financial information submitted in
accordance with this Section 5.3. All other documents and information famished to
Lender and/or Bondowner Representative with respect to Borrower, each Partner and
Guazantor in connection with the Loans are correct in all material respects as of the date
or dates indicated (or if no date or dates aze indicated, then as of the date of delivery) and
complete insofar as completeness is necessary to give Lender and Bondowner
Representative an accurate knowledge of their subject matter. Neither Borrower, any
Partner nor Guazantor has any material liability or contingent liability not disclosed to
Lender and Bondowner Representative in writing and there is no material lien, claim,
charge or other right of others of any kind (including liens or retained security titles of
conditional vendors) on any property of any such Person not disclosed in such financial
statements or otherwise disclosed to Lender and Bondowner Representative in writing.
Without limiting the generality of the foregoing, Borrower has furnished Lender and
Bondowner Representative with true and complete copies of all Bond Documents and the
City Loan Documents.
5.4 No Material Adverse Change. There has been no material adverse change
in the condition, financial or otherwise, or the properties or businesses of Borrower, any
General Partner or Guazantor since the dates of the latest financial statements furnished to
Lender and Bondowner Representative. Since those dates, none of Borrower, any Partner
or Guazantor has entered into any material transaction not disclosed in such financial
statements or otherwise disclosed to Lender and Bondowner Representative in writing.
5.5 Tax Liability. Borrower has filed all required federal, state and local tax
returns and has paid, prior to delinquency, all taxes payable by Borrower (including
interest and penalties, but subject to lawful extensions disclosed to Lender and
Bondowner Representative in writing) other than taxes being promptly and actively
contested in good faith and by appropriate proceedings. Borrower agrees to maintain
adequate reserves for tax liabilities (including contested liabilities) in accordance with
4840-8179-6358.2 1 c) Landings II Loan Agreement
I)OCSOC/1406214v I /024036-0052
generally accepted accounting principles or in accordance with such other principles or
methods as are reasonably acceptable to Bondowner Representative.
5.6 Governmental Requirements.
5.6.1 To the best of Borrower's knowledge, Borrower is in material
compliance with all Laws relating to the Property and all licenses, exemptions,
approvals and other authorizations of Governmental Agencies required in
connection with the Property and the development, use and ownership of the
Project; provided that, with respect to each of the following, Borrower is in
compliance to the best of its knowledge after due investigation, including each of
the following as applicable:
(a) zoning, land use and planning requirements, including
requirements arising from, or relating to the adoption or amendment of,
any applicable general plan;
(b) subdivision and parcel map requirements;
(c) environmental requirements, including requirements of the
California Environmental Quality Act and the National Environmental
Policy Act and the preparation and approval of all required environmental
impact statements and reports;
(d) requirements in connection with use, occupancy and
building permits;
(e) requirements of public utilities; and
(f) all wetlands and stormwater management regulations and
other regulations of similaz import and effect.
5.6.2 Borrower has obtained or will obtain all permits, licenses,
approvals and other authorizations of Governmental Agencies required in
connection with the ownership, development and use of the Property and the
Project, other than the Building Permit and other than certificates of occupancy
customarily not capable of being obtained prior to the completion of the
Improvements.
5.7 Rights of Others. To the best of Borrower's knowledge after due
investigation, Borrower is in material compliance with all covenants, conditions,
restrictions, easements, rights of way and other rights of third parties relating to the
Property.
5.8 Approved Budget. The Approved Budget is based on information deemed
reliable by Borrower and represents Borrower's best estimate of all costs required to
complete the Project.
4840-8179-6358.2 20 Landings II Loan Agreement
DOCSOG 1406214v 1 /024036-0052
5.9 Litigation. There are no material actions or proceedings pending or, to the
best of Borrower's knowledge, threatened against or affecting the Project, Borrower, any
Partner, Guarantor or any property of any of them before any Governmental Agency,
except as disclosed to Lender and Bondowner Representative in writing prior to the
execution of this Agreement.
5.10 Hazardous Materials. Except as set forth in the Phase I Site Assessment
for the Property, Borrower has no knowledge, after due investigation, of the presence on,
under or about the Property, now or in the past, of any Hazardous Materials, or of the
transportation to or from the Property of any Hazazdous Materials.
5.11 Proiect Agreements. Borrower has delivered to Lender and Bondowner
Representative true and complete copies of all Project Agreements, together with all
modifications thereto. Except as otherwise disclosed to Lender and Bondowner
Representative in writing, all such agreements are in full force and effect and no parry is
in default under any such agreement.
5.12 Name and Principal Place of Business. Borrower presently uses no trade
name other than its actual name. Borrower's principal place of business is 5993 Avenida
Encinas, Suite 101, Carlsbad, California 92008.
5.13 Formation Qualification and Authority of Partners. Each General and
Limited Partner that is not a natural person, if any, is duly organized and validly existing
and in good standing in all appropriate jurisdictions and has all requisite authority to
conduct its business, to own and lease its properties, to act as a Paztner, and to execute
and perform its obligations under the Loan Documents, the Bond Documents, the City
Loan Documents and the Partnership Agreement, as the case may be.
5.14 Delivery of Documents. Borrower has delivered to Lender and
Bondowner Representative true and complete copies of each existing lease, contract and
other document that grants rights to, or imposes obligations on, Borrower in connection
with the Property, and has fully disclosed to Lender and Bondowner Representative in
writing the material terms of all existing oral agreements granting or imposing any such
rights or obligations.
5.15 Continuing Nature of Representations and Warranties. Borrower
acknowledges, understands, and agrees that the representations and warranties set forth in
this Article 5 shall be deemed to be continuing during all times when any or all of the
Bonds and the Notes remain outstanding and such representations and warranties shall be
restated and made effective as of each date a Disbursement is requested and made in
accordance herewith.
5.16 Conversion Date. On and as of the Conversion Date, Borrower will
represent, warrant and certify that there shall not have occurred: (i) any material adverse
change in the business, operations, or financial condition of Borrower or any Guazantor;
(ii) any material diminution of value of the collateral for the Convertible Loan or the
Subordinate Loan, in each case determined by Lender and Bondowner Representative in
4840-8179-6358.2 21 Landings ]I Loan Agreement
DOCSOC/1406214v 1 /024036-0052
comparison to the date of the most recent quarterly financial statements and the date of
Lender's and Bondowner Representative's most recent analysis of such collateral;
(iii) discovery of any adverse environmental conditions which cannot be adequately
resolved to Lender's and Bondowner Representative's satisfaction; (iv) any change in the
management, ownership or control of Borrower or Guarantor or in the Property or any
security for the Convertible Loan or the Subordinate Loan unless otherwise permitted by
the Loan Documents or approved by Bondowner Representative; or (v) Borrower fails to
disclose any facts which would have a material adverse impact upon the Bondowner
Representative.
5.17 No Reliance on Issuer or Lender for Advice. The Borrower
acknowledges, represents and warrants that it understands the nature and structure of the
transactions relating to the financing of the Project; that it is familiar with the provisions
of all of the documents and instruments relating to such financing to which the Borrower
is a party or of which it is a beneficiary, including the Master Pledge and Assignment and
the senior and subordinate pledges made by Issuer therein; that it understands the risks
inherent in such transactions; and that it has not relied on the Issuer or Lender for any
guidance or expertise in analyzing the financial or other consequences of the transactions
contemplated by the Bond Documents, the City Loan Documents, the Loan Documents
and the Master Pledge and Assignment or otherwise relied on the Issuer or Lender for
any advice.
6. Protect Covenants.
6.1 Completion of Project and Construction of Improvements within each
Phase.
(a) Borrower shall commence construction of the Project no
later than thirty (30) days after the Issuance Date and diligently proceed
with the Project. In any event, Borrower shall complete the construction
of the Improvements no later than ~ , 20~ ("Completion
Date"). The construction of the Improvements shall be considered
complete for purposes of this Agreement only when (a) the construction of
the Improvements has been completed substantially in accordance with the
Plans and has been fully paid for subject to Borrower's right to contest the
payment of any disputed mechanics' lien claim in accordance with
Section 6.9, below and all notices of completion have been filed and
recorded as the case may be, (b) all work requiring inspection or
certification by any Governmental Agency has been completed and all
requisite certificates, approvals and other necessary authorizations
(including any required certificates of occupancy) have been obtained,
(c) notice of completion has been filed or recorded, and (d) streets and
offsite utilities located within or pertaining to the Project have been
completed to the satisfaction of all applicable authorities. The time within
which the construction of the Improvements must be completed shall be
extended for a period equal to the period of any delay directly affecting
the construction work which is caused by governmental orders, decrees or
4840-8179-6358.2 22 Landings II Loan Agreement
DOCSOC/14062 ] 4v l /024036-0052
regulations, acts of God, strikes or any other cause beyond Borrower's
reasonable control, provided Borrower furnishes Bondowner
Representative with written notice of any such delay within ten (10)
Banking Days from the occurrence of any such delay. In no event,
however, shall the time for completion of such Improvements be extended
beyond the date occurring ninety (90) days after the completion date set
forth above for such Improvements.
6.2 Offsite Improvements. To the extent applicable, Borrower shall promptly
commence and diligently complete all offsite improvements of the public streets, walks,
sewers, utilities and like areas and facilities adjoining the Property, and provide utilities
and other facilities, in accordance with the requirements of all Governmental Agencies.
6.3 Conformity With Plans. Borrower shall construct the Improvements in
substantial conformity with the Plans and in such a manner as not to encroach upon or
overhang any easement, right of way or land of others. If any aspect of the Project is not
in substantial conformity with the Plans or encroaches upon easements, rights of way or
land of others, Bondowner Representative shall have the right to stop the work and order
repair or reconstruction in accordance with the Plans and to withhold further
Disbursements until the Project is in substantial compliance with the Plans and/or does
not so encroach. Upon written notice from Bondowner Representative (or Borrower's
discovery irrespective of such notice) that any aspect of the Project is not in substantial
conformity with the Plans or encroaches upon easements, rights of way or land of others,
Borrower shall promptly commence correcting the deviation or encroachment and shall
prosecute such work diligently to completion, which in no event shall be later than
forty-five (45) days after such notice or discovery.
6.4 Change Orders. The Plans shall not be modified except pursuant to
Change Orders. Each Change Order:
(a) shall be in writing, numbered in sequence, signed by
Borrower and, with regard to "Material Change Orders" (as defined
below), submitted to Bondowner Representative prior to the proposed
effectiveness thereof and accompanied by working drawings and a written
narrative of the proposed change;
(b) shall contain an estimate by Borrower of all increases and
decreases in itemized Project Costs that would be caused by the change, as
well as the aggregate amount of all changes in estimated Project Costs
(both increases and decreases) previously made;
(c) shall contain a certification by Borrower stating the
aggregate amount, including both increases and decreases, of all changes
in Project Costs reflected in Change Orders for which Bondowner
Representative's written approvals have not been obtained or have not
been required hereunder;
4840-8179-6358.2 23 Landings II Loan Agreement
DOCSOC/ 1406214v 1 /024036-0052
(d) shall be certified by Borrower to be in compliance with all
applicable Laws and other requirements; and
(e) shall be subject to Bondowner Representative's prior
written approval, which approval shall not be unreasonably withheld, if
the Change Order (i) would decrease the number, mix, or density of units
within the Project; (ii) would decrease the number, mix, or density of
bedroom units contemplated by the Plans; (iii) would affect any structural
component of the Project; or (iv) involves changes, including both
increases and decreases, in estimated Project Costs of $5,000 or more for
each change or series of related changes, or if such Change Order, together
with Change Orders not approved by Bondowner Representative in
writing, involve an aggregate amount, including both increases and
decreases, of over $25,000 (each change requiring Bondowner
Representative's approval under this subparagraph (e) being referred to
herein as a "Material Change Order").
6.5 Entrv and Inspection. Upon reasonable notice to Borrower (which notice
may be written or oral) and during normal business hours (except during periods when
Bondowner Representative reasonably believes emergency or exigent circumstances
exist), Lender, Bondowner Representative and their respective agents shall, subject to
reasonable and customary safety procedures, have (a) the right of free access to the
Property and all sites away from the Property where materials for the Project are stored,
(b) the right to inspect all labor performed and materials furnished for the Project and
(c) during Borrower's normal business hours the right to inspect and copy all documents
pertaining to the Project.
6.6 Project Information. From time to time during the course of the Project,
within fifteen (15) days following Bondowner Representative's written demand therefor,
Borrower shall furnish Bondowner Representative with reports of Project Costs, progress
schedules and contractors' cost breakdowns for the Project, itemized as to trade
description and item, showing the name of the contractor(s) and/or subcontractor(s), and
including such indirect costs as real estate taxes, legal and accounting fees, insurance,
architects' and engineers' fees, loan fees, interest during construction and contractor's
overhead.
6.7 Permits and Warranties. Promptly upon receipt of the same by Borrower,
Borrower shall furnish Bondowner Representative with true and complete copies of
(a) all licenses, permits, approvals, exemptions and other authorizations required in
connection with the Project and (b) all warranties and guaranties received from any
Person furnishing labor, materials, equipment, fixtures or furnishings in connection with
the Project.
6.8 Project Agreements. Borrower shall employ Contractor as general
contractor for the Project pursuant to a guaranteed fixed price contract approved in
writing by Bondowner Representative. Borrower shall not terminate, or modify in any
material respect, any such contract without Bondowner Representative's prior written
4840-8179-6358.2 Z4 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
consent, which consent shall not be unreasonably withheld. Borrower shall not enter into
any other agreement with any Person with respect to the construction and/or development
of the Project without the prior written consent of Bondowner Representative. From time
to time during the course of construction of the Project, within fifteen (15) days after
Bondowner Representative's written demand therefor, Borrower shall deliver or caused
to be delivered to Bondowner Representative lists of all contractors and subcontractors
employed in connection with the Project. Each such list shall show the name, address
and telephone number of each contractor and subcontractor, a general statement of the
nature of the work to be done, the labor and materials to be supplied, the names of
materialmen, if known, the approximate dollar value of labor, work and materials
itemized with respect to each contractor, subcontractor and materialman, and the unpaid
portion and status of such work or whether such materials have been delivered.
Bondowner Representative and its agents shall have the right (but not the obligation) to
directly contact each contractor, subcontractor and materialman to verify the facts
disclosed by any such list. Bondowner Representative may require that Contractor
furnish a performance and/or labor and materials payment bond in an amount, in form
and content and issued by a bonding company satisfactory to Bondowner Representative.
6.9 Protection A ainst Liens. Borrower shall diligently file a valid notice of
completion upon completion of the Project, diligently file a notice of cessation in the
event of a cessation of labor on the Project for a period of thirty (30) days or more, and
take all actions reasonably required to prevent the assertion of claims of lien against the
Property. In the event that any claim of lien is asserted against the Property or any stop
notice or claim is asserted against Lender or Bondowner Representative by any Person
furnishing labor or materials to the Project, Borrower shall immediately give notice of the
same to Bondowner Representative and shall, promptly and in any event within ten (10)
Banking Days after Bondowner Representative's written demand, (a) pay and discharge
the same, or (b) effect the release thereof by delivering to Bondowner Representative a
surety bond complying with the requirement of applicable Laws for such release.
Notwithstanding the foregoing, Bondowner Representative shall have the right, but not
the obligation, to accept a cash deposit or other security in lieu of the surety bond
described in clause (b) of the immediately preceding sentence. In no event shall Lender
or Bondowner Representative be liable to any contractor, design professional,
subcontractor, materialman or any other Person providing, furnishing or delivering
services, labor, equipment or material to the Project.
6.10 Independent En tg'neer. Borrower hereby agrees to pay or reimburse
Bondowner Representative for the reasonable costs charged by the independent engineer
retained by Bondowner Representative in connection with review and approval of all
plans, specifications, contracts, budgets and related matters, inspection of the Project, and
approval of Disbursement Requests.
6.11 Property Management Agreements. Borrower shall employ property
managers for the Project pursuant to usual and customary property management
agreements for residential rental facilities and approved in writing by Bondowner
Representative. Borrower shall not terminate, or modify in any material respect, any
such property management contract without prior written notice to Bondowner
4840-8179-6358.2 25 Landings II Loan Agreement
DOCSOC/14062 ] 4v I /024036-0052
Representative. In connection with the execution or delivery of any such property
management agreement, the Borrower shall execute and deliver, in form and substance
satisfactory to Bondowner Representative, anassignment of such property management
agreement, accompanied contemporaneously by the written consent and subordination of
the interested property manager and any sub-managers.
7. Maintenance Operation, Preservation and Repair of Property. Borrower shall
maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas)
in good condition and repair, shall operate the Property in a businesslike manner, shall prudently
preserve and protect both its own and Lender's and Bondowner Representative's respective
interests in connection with the Property, shall not commit or permit any waste or deterioration
of the Property, shall not abandon any portion of the Property, and shall not otherwise act, or fail
to act, in such a way as to unreasonably increase the risk of any damage to the Property or of any
other impairment of Lender's or Bondowner Representative's interests under the Loan
Documents. Without limiting the generality of the foregoing, and except as otherwise agreed by
Bondowner Representative in writing from time to time, Borrower shall promptly and faithfully
perform and observe each of the following provisions:
7.1 Alterations and Repair. Borrower shall not remove, demolish or
materially alter any Improvement except to make non-structural repairs which preserve or
increase the Property's value, and shall promptly restore, in a good and workmanlike
manner, any Improvement (or other aspect or portion of the Property) that is damaged or
destroyed from any cause.
7.2 Compliance. Borrower shall comply with all Laws and requirements of
Governmental Agencies (including, without limitation, all requirements relating to the
obtaining of licenses and permits), and all rights of third parties, relating to Borrower, the
Property or Borrower's business thereon.
7.3 Changes in Property Restrictions. Borrower shall not initiate, join in or
consent to any change in any applicable zoning ordinance, general plan or similaz law, or
to any private restrictive covenant or any similar public or private restriction on the use of
the Property, except with the prior written consent of Bondowner Representative, which
consent shall not be unreasonably withheld.
7.4 Taxes and Impositions. Borrower shall pay, prior to delinquency, all of
the following (collectively, the "Impositions"): (a) all general and special real property
taxes if not abated and assessments due and owing on the Property; (b) all other due and
owing taxes and assessments and charges of every kind that are assessed upon the
Property (or upon the owner and/or operator of the Property) and that create or may
create a lien upon the Property (or upon any personal property or fixtures used in
connection with the Property), including without limitation non-governmental levies and
assessments pursuant to applicable covenants, conditions or restrictions; and (c) all
license fees, taxes and assessments imposed on Bondowner Representative which aze
measured by or based upon (in whole or in part) the amount of the obligations secured by
the Property. If permitted by law, Borrower may pay any Imposition in installments
(together with any accrued interest). Immediately upon request of Bondowner
4840-5179-6358.2 26 Landings II Loan Agreement
DOCSOG 1406214v 1 /024036-0052
Representative, Borrower shall establish with Bondowner Representative an escrow
account or other impound in form and substance satisfactory to Bondowner
Representative with respect to any Imposition (whether or not delinquent) and thereafter
commence monthly deposits thereto in the amount specified by Bondowner
Representative as necessary to pay such Impositions from time to time when due and
payable. The immediately foregoing sentence shall apply in each instance without regard
to Borrower pursuant of exemptions for such Impositions whether in respect of real
property taxes or otherwise.
7.4.1 Right to Contest. Borrower shall not be required to pay any
Imposition so long as (a) its validity is being actively contested in good faith and
by appropriate proceedings and (b) Borrower has demonstrated to Bondowner
Representative's reasonable satisfaction that leaving such Imposition unpaid
pending the outcome of such proceedings could not result in conveyance of the
Property in satisfaction of such Imposition or otherwise impair Lender's or
Bondowner Representative's interests under the Loan Documents; provided that
Bondowner Representative may require Borrower to furnish Bondowner
Representative with a bond or other security satisfactory to Bondowner
Representative in an amount not less than 150% of the applicable claim.
7.4.2 Evidence of Payment; Tax Reporting Service. Upon written
demand by Bondowner Representative from time to time, Borrower shall
(a) deliver to Bondowner Representative within thirty (30) days following the due
date of any Imposition, evidence of payment reasonably satisfactory to
Bondowner Representative, and (b) furnish to Bondowner Representative a tax
reporting service for the Property of a type and duration, and with a company,
reasonably satisfactory to Bondowner Representative.
7.5 Books and Records. Borrower shall maintain complete books of account
and other records reflecting the operations of the Property in accordance with generally
accepted accounting principles applied on a consistent basis or in accordance with such
other principles or methods as are reasonably acceptable to Bondowner Representative.
7.6 Tenant Security Deposits. If required by Lender acting at the direction of
Bondowner Representative, Borrower shall deposit or cause to be deposited, when
received, in one or more accounts maintained at U.S. Bank ("Security Deposit Account"),
all tenant security deposits related to the lease of residential dwelling units at the Project
(collectively, "Security Deposits"); provided that in the event Lender agrees that Security
Deposits may be held by or on behalf of Borrower in accounts maintained at financial
institutions other than U.S. Bank, the Borrower and such other financial institution enter
into a deposit account control agreement in form and substance satisfactory to Lender, all
at the cost and expense of the Borrower.
7.7 Underground Storage Tanks. Notwithstanding the Phase I Site
Assessment provided to Bondowner Representative on the Closing Date, in the event one
or more underground storage tanks are discovered during construction of the Project,
Borrower shall, at its sole expense, arrange for the removal of any and all such
4840-8179-6358.2 27 Landings II Loan Agreement
DOCSOC/ 1406214v 1 /024036-0052
underground storage tanks and provide Bondowner Representative with satisfactory
evidence that no Hazardous Substances are present in, on, under or around the Property
which evidence shall include, if required by Bondowner Representative, areport prepazed
by a licensed and registered environmental engineer or the other qualified party
satisfactory to Bondowner Representative.
8. Other Affirmative Covenants. While any obligation of Borrower or Guazantor
under the Loan Documents or the Guaranty, as the case may be, remains outstanding, the
following provisions shall apply, except to the extent that Bondowner Representative otherwise
consent in writing:
8.1 Existence. Borrower shall maintain its existence as a limited partnership
in good standing under the Laws of the State of California.
8.2 Protection of Liens. Borrower shall maintain the lien of the Deed of Trust
as a valid first priority lien on the Property and the Project, subject only to the Permitted
Encumbrances (including the subordinate interests identified in such defined term), and
take all actions, and execute and deliver to Lender and the Senior Bondholder all
documents, reasonably required by any of them from time to time in connection therewith
in each instance with the prior approval of the Bondowner Representative; and maintain
the liens of the Security Documents on the collateral described therein and take all
actions, and execute and deliver to the Senior Bondholder all documents, reasonably
required by the Senior Bondholder from time to time in connection therewith in each
instance with the prior approval of the Bondowner Representative, including
supplemental security agreements, financing statements and other documents extending
or perfecting security interests in such collateral as they exists from time to time.
8.3 Title Insurance Endorsements. Borrower shall deliver to Bondowner
Representative, at Borrower's sole expense and in form and content reasonably
satisfactory to Bondowner Representative, all endorsements and binders to the Title
Policy reasonably required by Bondowner Representative from time to time.
8.4 Tax Returns. if required by Lender, Borrower shall deliver to Bondowner
Representative within thirty (30) days after same are filed, a copy of the federal income
tax return filed for Borrower for the prior calendaz year, in each case prepared by a
certified public accountant reasonably acceptable to Bondowner Representative.
8.5 Lists of Personal Property. Borrower shall deliver to Bondowner
Representative from time to time, within fifteen (15) days of Bondowner
Representative's request therefor, a list of all Personal Property then in existence.
8.6 Notice of Certain Matters. Borrower shall give notice to Bondowner
Representative within fifteen (15) days after Borrower obtains actual knowledge thereof,
of each of the following:
(a) any litigation or claim affecting or relating to the Property
and involving an amount in excess of $25,000; and any litigation or claim
4840-8179-6358.2 28 Landings 11 Loan Agreement
DOC SOC/ 1406214v 1 /024036-0052
that might subject Borrower or any Partner or Guarantor to liability in
excess of $100,000, whether covered by insurance or not;
(b) any dispute between Borrower and any Governmental
Agency relating to the Property, the adverse determination of which might
materially affect the Property;
(c) any trade name hereafter used by Bon•ower and any change
in Borrower's principal place of business;
(d) any circumstance that renders the Approved Budget
materially inaccurate with respect to any estimated Project Cost;
(e) any aspect of the Project that is not in substantial
conformity with the Plans;
(f) any Event of Default or event which, with the giving of
notice or the passage of time or both, would constitute an Event of
Default;
(g) any default by Borrower or any other party under any
Project Agreement, or the receipt by Borrower of any notice of default
under any Project Agreement;
(h) the creation or imposition of any mechanics' lien or other
lien against the Property;
(i) any default under any Bond Document or any Loan
Document, or the receipt by Borrower of any notice of default under any
Bond Document, any City Loan Document or any Loan Document
(including without limitation the Rate Lock Agreement);
(j) the presence of any Hazardous Materials on, under or about
the Property; any enforcement, clean-up, removal or other action or
requirement of any Governmental Agency relating to any such Hazardous
Materials; and the existence of any occurrence or condition on any
property in the vicinity of the Property that could cause any portion of the
Property to be classified as "border-zone property" under the provisions of
the California Health and Safety Code or any related regulations, or that
could cause the Property to be otherwise subject to any restrictions
relating to Hazardous Materials; and
(k) any material adverse change in the financial condition of
Borrower, any General Partner or Guarantor.
8.7 Additional Reports and Information. Borrower shall deliver to
Bondowner Representative, in form and substance reasonably satisfactory to Bondowner
Representative and within fifteen (15) days of Bondowner Representative's written
4840-8179-6358.2 29 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
request therefor from time to time, (a) copies of all financial statements and reports that
Borrower sends to its partners, (b) copies of all reports which are available for public
inspection or which Borrower is required to file with any Governmental Agency, and
(c) all other information relating to Borrower, the Property, Guarantor or the Loans (or
the collateral and security therefor) reasonably required by Bondowner Representative
from time to time.
8.8 Further Assurances. Borrower shall execute and acknowledge (or cause to
be executed and acknowledged) and deliver to Lender and Bondowner Representative all
documents, and take all actions, reasonably required by Lender and Bondowner
Representative from time to time to confirm the rights created or now or hereafter
intended to be created under the Loan Documents, to protect and further the validity,
priority and enforceabiliTy of the SecuriTy Documents, to subject to the Security
Documents any property intended by the terms of any Loan Document to be covered by
the SecuriTy Documents, or otherwise to carry out the purposes of the Loan Documents
and the transactions contemplated thereunder.
8.9 Annual Financial Statements. Borrower shall deliver to Bondowner
Representative, within one hundred eighty (180) days after the end of each Fiscal Yeaz,
(a) an audited balance sheet for Borrower as of the end of such Fiscal Year and an
audited statement of profit and loss for Borrower and for Borrower's operations in
connection with the Property for such Fiscal Year, together with all supporting schedules
and (b) the certificate of a certified public accountant acceptable to Bondowner
Representative stating that such documents (i) were prepared in accordance with
generally accepted accounting principles applied on a consistent basis, (ii) fairly present
Borrower's financial condition, (iii) show all material liabilities, direct and contingent,
(iv) fairly present the results of Borrower's operations, and (v) disclose the existence of
any off-balance sheet transactions. Borrower shall also deliver to Bondowner
Representative, concurrently with Borrower's delivery of the annual financial statement
described above, audited financial statements (including statements of income, cash flow
and changes in position) for each Guazantor prepared in accordance with generally
accepted accounting principles consistently applied by a certified public accountant
acceptable to Bondowner Representative.
8.10 [Reserved.]
8.11 Monthly Operating Statements. From and after the completion of the
Project until the one year anniversary of the Conversion Date, Borrower shall deliver to
Bondowner Representative, in form and substance reasonably satisfactory to Bondowner
Representative and within fifteen (15) days after the end of each calendar month, an
operating statement for the Property for the calendaz month then ended together with a
current rent roll for the Property, and a current lease status report, all certified by
Borrower as being true and correct in all material respects and in form and substance
satisfactory to Bondowner Representative. Borrower shall also deliver to Bondowner
Representative, concurrently with Borrower's delivery of the monthly operating
statement and a monthly rent roll for the Property described above, a cash flow statement
for the Property for the month then ended (to the extent not reflected in the monthly
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DOCSOC/ 1406214v l /024036-0052
operating statement), in form and substance satisfactory to Bondowner Representative.
From and after the one year anniversary of the Conversion Date until the Maturity Date,
Borrower shall deliver to Bondowner Representative, in form and substance reasonably
satisfactory to Bondowner Representative and within fifteen (15) days after the end of
each calendaz quarter, the deliverables specified above in this Section 8.11.
8.12 Bond Documents, City Loan Documents and Rate Lock Agreement.
Borrower shall timely perform its obligations under the Bond Documents, City Loan
Documents and the Rate Lock Agreement.
8.13 Keeping Guazantor Informed. Borrower must keep Guazantor informed of
Borrower's financial condition and business operations, the condition and all uses of the
Property, including all changes in condition or use, and any and all other circumstances
that might affect Borrower's ability to pay or perform its obligations under the Loan
Documents and the Bond Documents. In addition, Borrower must deliver to Guazantor
all of the financial information described in Article 8 of this Agreement within the times
given in that article.
8.14 Eauity Construction Deposits. Borrower shall take all actions necessary to
cause Investor Limited Partner to timely make the Equity Construction Deposits
described in Exhibit "G." All such Equity Construction Deposits shall be promptly
deposited by Borrower into the Project Funds Account under the Disbursement
Agreement.
8.15 Tax Certificate. Borrower shall timely comply with all of its obligations
under the Tax Certificate (which Tax Certificate is hereby incorporated herein as fully as
if set forth at length herein).
8.16 Tax Returns and Financial Information from Guazantor. If required by
Lender, Borrower shall deliver to Bondowner Representative within thirty (30) days after
the same are filed, a copy of the signed federal income tax return (inclusive of all
schedules and other attachments) for each Guarantor. Borrower shall also deliver to
Bondowner Representative, within sixty (60) days after the end of each calendaz yeaz, an
audited annual financial statement (which need not be distributed if such statement is
identical to the statements of Guarantor provided pursuant to Section 8.9 hereof) and
complete real estate schedules for the Guazantor, each in form and substance satisfactory
to Bondowner Representative. Borrower shall also cause to be delivered to Bondowner
Representative a Liquidity Statement (as defined in the Guaranty) in the form and at the
intervals required by the Guaranty. In addition to the foregoing, during the period prior
to the Conversion Date if required by the Lender, Borrower shall also deliver to
Bondowner Representative internally-prepared, quarterly financial and operating
statements for the Guarantor within forty-five (45) days after the end of each quarterly
period commencing with the quarter ending [Mazch 31, 2010].
8.17 Compliance Reportin¢. Within ninety (90) days after the end of each
calendar year, Borrower shall deliver to Bondowner Representative its certificate signed
by a Designated Representative to the effect that at all times during the then ended annual
4840-8179-6358.2 31 Landings II Loan Agreement
DOCSOC/1406214v I /024036-0052
period, the Project was in full and complete compliance with all local, state and federal
affordability requirements applicable to the Project, including without limitation, those
set forth in the City Loan Documents and the Regulatory Agreement as well as any rent
limitations imposed in connection with the Code Section 42 federal low income housing
tax credits allocated to the Project. Such certificate shall also contain a statement to the
effect that for the immediately preceding annual period no default or Event of Default
shall have occurred under any of the Bond Documents, City Loan Documents, the
Guazanty or Loan Documents and that as of the end of the immediately preceding annual
period and as of the date of such certificate, no conditions, circumstances, or occurrences
exist that would result in, or would, with the passage of time or giving of notice (or both),
reasonably be expected to result in, a default or Event of Default under any or all of such
documents.
8.18 Exemption from Property Taxation. Within ninety (90) days after the
Conversion Date and thereafter within ninety (90) days after the end of each calendar
year, there shall be provided to Bondowner Representative letters from all Government
Agencies having real property taxing power over the Property (initially the California
Boazd of Equalization) to the effect that the Property is and will remain exempt from all
real property taxation for the immediately succeeding calendaz year or, if different, the
immediately succeeding real property taxation assessment, levy and collection cycle for
such taxing authority; provided that, in lieu of such letters, Borrower may, with the prior
written consent of Bondowner Representative, provide such other comfort as to real
property taxation exemption matters as is deemed to be satisfactory in form and
substance and from sources (including without limitation, opinions of counsel)
satisfactory to Bondowner Representative.
8.19 Partner Information. Borrower shall deliver to Lender, within thirty (30)
days after the same aze filed, a copy of the signed federal income tax return (inclusive of
all schedules and other attachments) for each General Partner. Borrower shall deliver to
Bondowner Representative, within one hundred twenty (120) days after the end of each
Fiscal Yeaz, (a) an audited balance sheet for each General Partner as of the end of such
Fiscal Yeaz and an audited statement of profit and loss for each General Partner and for
each General Partner's operations in connection with the Property for such Fiscal Year,
together with all supporting schedules and (b) the certificate of a certified public
accountant acceptable to Bondowner Representative stating that such documents (i) were
prepazed in accordance with generally accepted accounting principles applied on a
consistent basis, (ii) fairly present each General Partner's financial condition, (iii) show
al] material liabilities, direct and contingent, (iv) fairly present the results of each General
Partner's operations, and (v) disclose the existence of any off-balance sheet transactions.
8.20 HAP Contract. Borrower hereby agrees to notify Lender and Bondowner
Representative as soon as possible after Borrower commences communication with the
United States Department of Housing and Urban Development or any agent thereof
("HUD") in connection with any housing assistance payment contract relating to the
Project, including without limitation, contracts for project based housing assistance
payments made pursuant to Section 8 of the United States Housing Act of 1937, as
amended (each a "HAP Contract"). Borrower further agrees that (i) Lender and
4840-8179-6358.2 32 Landings II Loan Agreement
DOCSOC/1406214v I /024036-0052
Bondowner Representative (and its or their counsel) shall be given a reasonable
opportunity to review and provide comments on any draft HAP Contract prior to its
execution and delivery by the parties thereto, and (ii) concurrently with the execution and
delivery of any HAP Contract, Borrower shall execute and deliver to Lender and
Bondowner Representative, in form and substance satisfactory to such parties, an
absolute, unconditional and irrevocable assignment of Borrower's right, title and interest
in, to, and under such HAP Contract, together with the right and power to enforce the
same. Borrower shall not modify, terminate or surrender any HAP Contract without the
prior, written consent of Lender and Bondowner Representative, which consent shall not
be unreasonably withheld. Lender and Bondholder Representative hereby acknowledge
that Borrower does not currently contemplate obtaining a HAP Contract for the Project.
8.21 City Loan Documents. Borrower agrees that
(a) Lender and Bondowner Representative and its or their counsel
shall (at the cost of Borrower) be provided an opportunity to review and approve
the City Loan Documents prior to the execution and delivery thereof.
(b) The terms and conditions upon which the City Loan will be made
will be pursuant to the understandings memorialized in the City Loan Documents
as provided to and approved by Lender and its counsel as of the date of this
Agreement.
(c) The City Loan Documents shall be the only documents,
agreements and understandings with respect to the City Loan, other than the usual
and customary Uniform Commercial Code financing statements, which Lender
and its counsel shall (at the cost of Borrower) have been given an opportunity to
review and approve.
(d) Borrower acknowledges and agrees that City shall be required to
enter into the City Subordination Agreement at or prior to the time the City Loan
Documents are expected to be executed and delivered.
8.22 ARRA Funds.
(a) Lender and Bondowner Representative and its or their counsel
shall (at the cost of Borrower) be provided an opportunity to review and approve
the ARRA Loan Documents prior to the execution and delivery thereof.
(b) The terms and conditions upon which the ARRA Loan will be
made will be pursuant to the understandings memorialized in the gap financing
application, as provided to Lender and its counsel.
(c) The ARRA Loan Documents shall be the only documents,
agreements and understandings with respect to the ARRA Loan, other than the
usual and customary Uniform Commercial Code financing statements, which
Lender and its counsel shall (at the cost of Borrower) shall be given an
opportunity to review and approve.
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DOCSOC/1406214v I /024036-0052
(d) For all purposes of this Agreement, all documents relating to the
ARRA Loan shall be considered subordinate loan documents, the ARRA Loan
shall constitute a subordinate loan, and Borrower acknowledges and agrees that
the maker of the ARRA Loan shall, at the request of Lender, be required to enter
into an intercreditor and subordination agreement in the form and substance
acceptable to Lender and its counsel at or prior to the time the ARRA Loan
Documents are expected to be executed and delivered.
8.23 Appraisals. Borrower agrees that Lender and Bondowner Representative
shall have the right to obtain, at Borrower's expense, an appraisal of the Property
prepazed by an appraiser acceptable to Lender and Bondowner Representative and in
substantial conformance with governmental regulations applicable to Lender and
Bondowner Representative and approved by Lender and Bondowner Representative at
any time that (a) an Event of Default has occurred hereunder, (b) any damage or
destruction of the Property occurs, (c) Lender and Bondowner Representative determine
in their sole reasonable opinion that the security for the Loans has been physically or
financially impaired in any material manner, or (d) such appraisal is required by then
current banking laws or regulations. In the event that Lender or Bondowner
Representative shall elect to obtain such an appraisal, Lender and Bondowner
Representative may immediately commission an appraiser acceptable to Lender and
Bondowner Representative, at Borrower's cost and expense, to prepare the appraisal and
Borrower shall fully cooperate with Lender and Bondowner Representative and the
appraiser in obtaining the necessary information to prepaze such appraisal. In the event
such appraisal is required by reason of the damage or destruction of a portion of the
Property, the fair mazket value shall be calculated on the Property after restoration of the
Improvements, but subject only to then existing leases which will remain in full force and
effect following such restoration.
9. Additional Neeative Covenants. While any obligation of Borrower or Guazantor
under the Loan Documents remains outstanding, the following provisions shall apply, except to
the extent that Bondowner Representative otherwise consents in writing:
9.1 Liens on Propertv. Except as otherwise provided in this Agreement,
Borrower shall not cause or suffer to become effective any lien, restriction or other title
limitation affecting any part of the Property other than (i) the City Regulatory Agreement,
the Regulatory Agreement, the Deed of Trust, the Assignment of Leases, the Deed of
Trust Assignment, the Intercreditor and Subordination Agreement, the City
Subordination Agreement and the Permitted Encumbrances and (ii) taxes not delinquent.
Borrower acknowledges that, with any project of the magnitude contemplated by this
Agreement, modifications of the Plans and Loan Documents may be necessary from time
to time and that the existence of junior lienholders (other than the holders of Permitted
Encumbrances), who would be required to consent to such modifications in order to
protect the priority of the Deed of Trust, could therefore impair the expeditious
completion of the Project, to the detriment of all parties.
9.2 Liens on Personal Property. Borrower shall not install in, or use in
connection with, the Property any personal property which any Person other than Lender
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DOCSOC/ 1406214v l /024036-0052
or Bondowner Representative has the right to remove or repossess under any
circumstances, or on which any Person other than Lender or Bondowner Representative
has a lien (other than Permitted Liens).
9.3 Sale or Lease of Property. Except for a Permitted Transfer, Borrower
shall not sell, lease or otherwise transfer (each, a "Transfer") any interest in the
Borrower, the Property or the Personal Property (other than the lease of residential units
within the Property for a term of one-year or less entered into in the ordinary course of
Borrower's business and otherwise in compliance with the Regulatory Agreement and
dispositions of Personal Property expressly permitted by the Loan Documents) without
the prior written consent of Bondowner Representative, which consent may be withheld
in Bondowner Representative's absolute discretion. In connection with the foregoing
consent requirements, Borrower acknowledges that Bondowner Representative relied
upon Borrower's particular expertise in entering into this Agreement and that they
continue to rely on such expertise to ensure the satisfactory completion of the Project and
operation of the Property.
9.3.1 Except to extent constituting a Permitted Transfer, Transfers
requiring Bondowner Representative's prior written consent shall include, without
limitation, the following:
(a) involuntary transfers and transfers by operation of law;
(b) liens and assignments as security for obligations, whether
voluntary or involuntary; and
(c) except as otherwise expressly permitted by the terms of the
Deed of Trust, the issuance, sale, assignment, disposition, encumbering or
other transfer of any direct or indirect ownership interest in Borrower, any
Partner or any partner, member or shareholder of any Partner, whether
voluntary or involuntary, by operation of law or otherwise.
9.3.2 No sale, lease or other transfer shall relieve Borrower from
primary liability for its obligations under the Loan Documents or relieve
Guarantor from any liability under any Guaranty, and Borrower shall deliver to
Lender all documents reasonably required by Lender and/or Bondowner
Representative to evidence its or their continuing liability.
9.3.3 No consent by Bondowner Representative under this Section 9.3
shall constitute (a) a consent by Issuer under the Regulatory Agreement to any
sale, assignment, encumbrance, transfer or other disposition of all or any part of
the Property, or any direct or indirect interest therein, (b) a waiver by Issuer of
any term or condition of the Regulatory Agreement, or (c) any waiver by a party
in interest under the City Loan Documents or any of them.
9.3.4 No transfer of a General Partner interest or any substitution
replacement or addition of a General Partner shall, under any circumstances,
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DOCSOC/ 1406214v 1 /024036-0052
adversely affect the exemption or availability or eligibility for an exemption from
real property taxes for the Property.
9.4 Removal of Persona] Property. Borrower shall not cause or permit the
removal from the Property of any items of Personal Property (other than tools and
equipment used in the development of the Project) unless (i) no Event of Default remains
uncured and (ii) Borrower promptly substitutes and installs on the Property other items of
equal or greater value in the operation of the Property, all of which items shall be free of
liens (other than Permitted Liens) and shall be subject to the liens of the Deed of Trust
and the Security Agreement, and executes and delivers to Bondowner Representative all
documents required by Bondowner Representative in connection with the attachment of
such liens to such items. Borrower shall keep detailed records of each such removal and
shall make such records available to Bondowner Representative upon written request
from time to time.
9.5 Manauement Agreements. Without the prior written consent of
Bondowner Representative (which shall not be unreasonably withheld), Borrower shall
not enter into any agreement providing for the management, leasing or operation of any
portion of the Property, other than the initial management agreement with CIC
Management, Inc., as property manager, which is assigned to Lender with the written
consent of such property manager pursuant to Section 6.11 hereof.
9.6 Assessment and Community Facilities Districts. Unless otherwise
required by applicable law, Borrower shal] not, without Bondowner Representative's
prior written consent, which consent shall not be unreasonably withheld, cause or suffer
to become effective or otherwise consent to the formation of any community facilities
district which includes the Property or any part of the Property pursuant to the
Mello-Roos Community Facilities Act of 1982, any assessment district which includes
the Property or any part of the Property pursuant to the Municipal Improvement Act of
1913, or any other comparable or similar district, azea or temtory which includes the
Property or any part of the Property pursuant to any Law, or cause or otherwise consent
to the levying of special taxes by any community facilities district against the Property or
any part thereof, the levying of assessments by any such assessment district against the
Property or any part thereof, or the levying of assessments, taxes and/or other impositions
by any such district, azea or territory.
9.7 Bond Documents City Loan Documents and Rate Lock Agreement.
Borrower shall not enter into any new Bond Document, City Loan Document, or Rate
Lock Agreement, or amend, modify, supplement, cancel or terminate any Bond
Document, any City Loan Document, or the Rate Lock Agreement, without the prior
written consent of Bondowner Representative.
9.8 Required Debt Service Coverage Ratio; Limitations on Distributions.
(a) From and afrer the Conversion Date, the Borrower shall
maintain on an annual basis a Debt Service Coverage Ratio of 1.20 (or
more) to 1.00 based on the operating data and Project performance for the
4840-8179-6358.2 36 Landings II Loan Agreement
DOCSOC/1406214v1/024036-0052
immediately preceding calendar year; provided that, in the event the Debt
Service Coverage Ratio falls below 1.20 to 1.00 for any calendar year the
same shall not, in and of itself, constitute an Event of Default hereunder so
long as the remainder of the requirements of this section are timely
satisfied. In the event the Debt Service Coverage Ratio for any annual
period is less than 1.20 to 1.00, Borrower agrees to prepaze and submit to
Bondowner Representative within forty-five (45) days after written notice
that the Debt Service Coverage Ratio test has not been met a statement
explaining in sufficient detail why the Debt Service Coverage Ratio was
less than 1.20 to 1.00 for the immediately preceding calendaz year and
what steps will be taken and diligently pursued to ensure that the required
Debt Service Ratio will be met for the then current calendaz year. In the
event the Debt Service Coverage Ratio is less than 1.00 to 1.00 for any
annual period, Borrower agrees that, within five (5) days of notice of any
shortfall, Borrower shall deposit an amount in immediately available funds
equal to the amount required, on an annualized basis to achieve the
required minimum 1.00 debt service cover, which amounts are hereby
pledged to and shall be held by Bondowner Representative in a blocked
account for use in Bondowner Representative's sole discretion to pay debt
service and operating expenses to the extent gross revenues from the
Property are insufficient to pay the same. Once the Debt Service
Coverage Ratio for any subsequent annual period is restored to at least
1.00 to 1.00 then any amounts held by Bondowner Representative in such
pledged account shall be released to or on the written order of the
Borrower; provided that no such release shall in the reasonable judgment
of the Bondowner Representative adversely affect Borrower's ability to
achieve and maintain the required minimum 1.00 debt service cover. Any
failure to timely provide a written statement, make a required deposit or
the making of a prohibited distribution (as described in this
subpazagraph (b) of this Section 9.8) shall constitute an immediate Event
of Default hereunder. Should the Debt Service Coverage Ratio drop
below 1.00 to 1.00, funds from the Operating Reserve may be used to fund
the shortfall. Any funds released from the Operating Reserve must be
replenished within six (6) months of the draw from the Operating Reserve
Account.
(b) No distributions of Net Cash Flow shall be made to
Guazantor, or any Partner or Affiliate of Borrower or Guarantor for any
purpose on or prior to the Conversion Date, other than development fees
and interest payments with regazd to the Subordinate Note, each in
accordance with the Approved Budget. After the Conversion Date, no
distributions of Net Cash Flow shall be made to Guazantor, or any Partner
or Affiliate of Borrower or Guarantor during any period when the Debt
Service Coverage Ratio for the Property is less than 1.05 to 1.00. In the
event the Debt Service Coverage Ratio is at least LOS to 1.00 for any
calendar yeaz period, distributions of Net Cash Flow from the Project
(after payment of debt service and provided that all required reserves are
4840-8179-6358.2 37 Landings II Loan Agreement
DOCSOC/ 1406214v 1 /024036-0052
fully funded) shall be permitted, but only to the extent that, on a pro forma
basis, the Debt Service Coverage Ratio for such calendar year period
would have not been less than 1.00 to 1.00 had the amount of the then
proposed distribution been treated as a reduction in the amount of
operating income generated by the Project for purposes of determining Net
Cash Flow for the same period.
(c) For purposes of this Section 9.8, the Debt Service Coverage Ratio
shall be determined in accordance with the methodology set forth in the definition
of "Conditions to Conversion" set forth in the Convertible Note.
9.9 Limitations on Additional Indebtedness and Other Transactions.
Borrower shall not, without the prior written consent of Bondowner Representative incur
any indebtedness of any kind other than the ARRA Loan or the City Loan; provided that
in the instance of the City Loan, the City Subordination Agreement shall remain in full
force and effect and of record in the real property records of the County at all times while
any portion of the Loans or the amounts payable under or in respect of the Loan
Documents remain unpaid. In addition to the foregoing, Borrower shall not, without the
prior written consent of Bondowner Representative, engage in any off balance sheet or
hedge transactions, including without limitation, interest rate swaps.
10. Tax and Other Covenants. While any obligation of Borrower or Guarantor under
the Loan Documents remains outstanding, the following provisions shall apply, except to the
extent Issuer otherwise consents in writing:
10.1 Payment of Issuer Fees and Expenses.
(a) The Borrower hereby agrees to pay, when due, the
amounts, if any ("Issuer Fees"), described in the Bond Documents.
(b) The Borrower agrees to pay to the Issuer, within thirty (30)
days after receipt of request for payment thereof, all reasonable
out-of-pocket expenses of the Issuer related to the Project and the
financing thereof that are not otherwise required to be paid by the
Borrower under the terms of this Agreement and are not paid from
disbursements of the Loans, including, without limitation, reasonable legal
fees and expenses incurred in connection with the interpretation,
performance, enforcement or amendment of any documents relating to the
Project or the Bonds.
10.2 Cooperation in Enforcement of Re>?ulatorv Agreement. The Borrower
hereby covenants and agrees as follows:
(a) to comply with all provisions of the Regulatory Agreement;
(b) to advise Issuer and Bondowner Representative in writing
promptly upon learning of any default with respect to the covenants,
4840-8179-6358.2 38 Landings II Loan agreement
DOCSOC/ 1406214v 1 /024036-0052
obligations and agreements of the Borrower set forth in the Regulatory
Agreement;
(c) upon written direction by the Issuer, to cooperate fully and
promptly with the Issuer in enforcing the terms and provisions of the
Regulatory Agreement; and
(d) to file in accordance with the time limits established by the
Regulatory Agreement all reports and certificates required thereunder, and
the Certification to the Secretary of the Treasury required by the
Regulatory Agreement.
Neither Lender nor Bondowner Representative shall incur any liability in the event of any breach
or violation of the Regulatory Agreement by the Borrower, and the Borrower agrees to
indemnify the Lender and Bondowner Representative from any claim or liability for such breach
pursuant to Section 13.2 hereof.
11. Insurance, Casualty and Condemnation.
11.1 Policies Required. While any obligation of Borrower or Guarantor under
any Loan Document remains outstanding, Borrower shall maintain at Borrower's sole
expense, with insurers approved by Bondowner Representative, the policies of insurance
in form and substance reasonably satisfactory to Bondowner Representative and
described in Exhibit C attached hereto. In addition to the foregoing, Borrower shall also
maintain at its sole expense with insurers approved by Bondowner Representative all
other insurance reasonably required by Bondowner Representative from time to time for
commercial loans made for residential rental properties.
All such insurance shall meet all of the requirements set forth in Exhibit C, unless
specifically waived in writing by Bondowner Representative, and shall provide that it may not be
cancelled or materially modified without thirty (30) days' prior written notice to Lender and
Bondowner Representative. No such insurance shall include deductible amounts to which
Bondowner Representative has not previously consented in writing. Certificates of insurance for
the above policies (and/or original policies, if required by Bondowner Representative) shall be
delivered to Bondowner Representative annually and from time to time within ten (10) days after
demand therefor. All policies insuring against damage to the Improvements shall contain an
agreed value clause sufficient to eliminate any risk of co-insurance. No less than thirty (30) days
prior to the expiration of each policy, Borrower shall deliver to Bondowner Representative
evidence of renewal or replacement of such policy reasonably satisfactory to Bondowner
Representative.
Without limiting the generality of the language of this Section 11.1, the specific
insurance requirements during the construction period are set forth in section LA of Exhibit C
attached hereto and the other specific insurance requirements of Bondowner Representative are
set forth in section LB of Exhibit C attached hereto.
11.2 Claims and Proceedings. Borrower shall give Bondowner Representative
immediate notice of any casualty to any portion of the Property and of the institution or,
4R40-8179-6358.2 39 Landings Il Loan Agreement
DOCSOC/1406214v1/024036-0052
if Borrower obtains actual knowledge of any threatened institution, such threatened
institution, of any proceeding for the condemnation or other taking for public or
quasi-public use of any portion of the Property (collectively, "Condemnation"), and shall
provide Bondowner Representative with copies of all documents in Borrower's
possession which pertain to any such casualty or Condemnation. Borrower shall take all
action reasonably required by Bondowner Representative in connection therewith to
protect the interests of Borrower and/or Bondowner Representative, and Bondowner
Representative shall be entitled (without regazd to the adequacy of its security) to
participate in any action, claim, adjustment or proceeding and to be represented therein
by counsel of its choice.
11.3 Delivery of Proceeds. In the event that, notwithstanding the "Lender's
loss payable endorsement" requirement set forth above, the proceeds of any casualty
insurance policy described herein are paid to Borrower, Borrower shall deliver such
proceeds to the Bondowner Representative immediately upon receipt.
11.4 Application of Casualty Insurance Proceeds. Any proceeds collected
("Proceeds") under any casualty insurance policy described in this Agreement shall be
held in the Project Funds Account under the Disbursement Agreement and disbursed to
Borrower as provided below, but only upon fulfillment of each of the following
conditions ("Restoration Conditions") within one hundred twenty (120) days following
the occurrence of the damage for which the Proceeds are collected:
(a) Borrower shall have demonstrated to Bondowner
Representative's reasonable satisfaction that the Proceeds (together with
amounts deposited by Borrower pursuant to subparagraph (b)) will be
adequate to repair the Improvements and to restore the fair market value of
the Property, within a time period reasonably determined by Bondowner
Representative, to at least the value it had immediately prior to sustaining
the damage. Such demonstration shall include delivery to Bondowner
Representative of (i) plans and specifications reasonably satisfactory to
Bondowner Representative and (ii) a construction contract in form and
content, and with a contractor, reasonably satisfactory to Bondowner
Representative.
(b) To the extent that the Proceeds aze insufficient to
accomplish the restoration required above, Borrower shall have delivered
funds ("Shortfall Funds") in the amount of such shortfall, which funds
shall be assigned to Lender as security for Borrower's obligation
hereunder and held and disbursed in the same manner as the Proceeds.
(c) Borrower shall have executed such documents as
Bondowner Representative requires to evidence and secure Borrower's
obligation to use all amounts disbursed for the diligent restoration of the
Property.
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DOCSOGI406214v 1 /024036-0052
(d) No Event of Default shall remain uncured (other than any
Event of Default which relates to such casualty and will be cured by
completion of the repair or restoration).
11.4.2 Any Proceeds and Shortfall Funds to be disbursed to Borrower
shall be held by Bondowner Representative in the Project Funds Account under
the Disbursement Agreement and disbursed in accordance with the disbursement
procedures thereof and related provisions of this Agreement and all other
disbursement provisions then customarily required by Bondowner Representative.
Any amounts remaining undisbursed following completion of such restoration
shall be returned to Borrower up to the amount of any Shortfall Funds deposited
by Borrower, and any other amounts remaining shall either be paid to Borrower or
applied, at Bondowner Representative's direction, against any obligations to
Lender or Bondowner Representative that are secured by a lien on the Property, as
Bondowner Representative elects in its absolute discretion.
11.4.3 In the event that Borrower cannot or fails to fulfill the Restoration
Conditions within one hundred twenty (120) days (unless a longer period is
agreed to in writing by Bondowner Representative prior to the 120`h day)
following the date on which the damage occurs, the Proceeds shall be applied
against any obligations to Lender and Bondowner Representative that are secured
by a lien on the Property, and the selection of which such obligations to apply the
Proceeds against shall be made by Bondowner Representative in its absolute
discretion.
11.5 Restoration. Nothing in this Article 11 shall be construed to excuse
Borrower from repairing and restoring all damage to the Property in accordance with
other Loan Document provisions, regardless of whether insurance proceeds are available
or sufficient.
11.6 Treatment of Compensation. Borrower hereby assigns to Lender and
Bondowner Representative, as security for all obligations to Lender and Bondowner
Representative secured by a lien on the Property, all amounts payable to Borrower in
connection with any Condemnation, and any proceeds of any related settlement
(collectively, "Compensation"). Borrower shall deliver all Compensation to the
Bondowner Representative immediately upon receipt. In the event the Bondowner
Representative chooses, in its absolute discretion, to waive the Event of Default described
in Section 12.1(1), any Compensation received shall be (i) deposited in the Project Funds
Account under the Disbursement Agreement and disbursed to Borrower for repairs and
reconstruction in accordance with the rights, procedures and other provisions set forth in
this Agreement for the application of casualty insurance proceeds (including, without
limitation, requirements with respect to Borrower's deposit of Shortfall Funds) and/or
(ii) applied against obligations to Lender and Bondowner Representative secured by a
lien on the Property in such order as Bondowner Representative shall determine in its
absolute discretion.
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DOCSOC/ 1406214 v 1 /024036-0052
12. Defaults and Remedies.
12.1 Events of Default. The occurrence of any of the following, whatever the
reason therefor, shall constitute an Event of Default; provided that cure shall be accepted
from the Investor Limited Partner, any other limited partner of Borrower or any Affiliate
of any such limited partner within the periods for timely performance or observance of
obligations as set forth below:
(a) Borrower fails to make any payment of principal and/or
interest under the Notes (or any of them) as and when such payments first
become due and payable and does not cure such failure within five (5)
days; provided a failure to make payments in respect of the Subordinate
Note on account of the unavailability of Available Net Cash Flow shall
not, in and of itself, constitute an Event of Default hereunder; or
(b) Borrower fails to perform any other obligation for the
payment of money (other than (1) payments described in subpazagraph (a),
above, or (2) amounts due for the maintenance, protection and/or
preservation of collateral and security and (interests therein and proceeds
of any kind therefrom) in respect of the Borrower's obligations under any
Loan Document) within three (3) days after Bondowner Representative
gives Borrower written notice that such obligation has not been
performed; or
(c) Borrower fails to timely perform any obligation (other than
obligations described in subpazagraphs (a) and (b) above) under any Loan
Document executed by Borrower within thirty (30) days after Bondowner
Representative gives Borrower and the Investor Limited Partner written
notice that such obligation was not performed; provided that Borrower is
entitled to an additional thirty (30) day period to perform if, in the
reasonable judgment of Bondowner Representative, the obligation is one
that is not susceptible to cure within the initial thirty (30) day period and;
provided further, that in each instance and at all times during the cure
periods, Borrower is diligently and continually pursuing the appropriate
performance, waiver, or cure, as the case may be; or
(d) Guazantor fails to perform any obligation (following any
applicable notice and cure period) under any Guaranty executed by
Guarantor; or
(e) Any representation or warranty in any Loan Document
proves to have been incorrect in any material respect when made; or
(f) All or any material portion of the Property is condemned,
seized or appropriated by a Governmental Agency; or
4840-8179-6358.2 42 Landings II Loan Agreement
DOCSOC/ 1406214v l /024036-0052
(g) The Property is materially damaged or destroyed by fire or
other casualty unless Borrower fulfills the Restoration Conditions set forth
in the insurance provisions of this Agreement; or
(h) Prior to the Conversion Date, work on the Project ceases
for thirty (30) consecutive days for any reason other than governmental
orders, decrees or regulations, acts of God, strikes or other causes beyond
Borrower's reasonable control, provided that the same do not, in the
aggregate and in Bondowner Representative's reasonable judgment,
threaten to delay the completion of the Project beyond the required
completion date (together with any extensions thereof) set forth in this
Agreement; or
(i) Prior to the Conversion Date, work on the Project ceases
for forty-five (45) days in the aggregate for any reason; or
(j) Any contractor for the Project whose contract (or
aggregation of contracts) exceeds $100,000 in value materially breaches
such contract, and Borrower fails to enter into an agreement with a
substitute contractor acceptable to Bondowner Representative within the
Approved Budget allocation for such contract, within thirty (30) days after
such event; or
(k) Borrower or any Partner or Guarantor is dissolved,
liquidated or terminated, or all or substantially all of the assets of
Borrower or any Partner or Guarantor aze sold or otherwise transferred
without Bondowner Representative's prior written consent, or, except for
any Permitted Transfer, any Partner withdraws as a partner of Borrower;
or
(1) Borrower or any Partner or Guarantor is the subject of an
order for relief by a bankruptcy court, or is unable or admits its inability to
pay its debts as they mature, or makes an assignment for the benefit of
creditors; or Borrower or any Partner or Guazantor applies for or consents
to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or any part of its property;
or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed without the application or consent of Borrower
or any Partner or Guarantor, as the case may be, and the appointment
continues undischarged or unstayed for sixty (60) days; or Borrower or
any Partner or Guazantor institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
custodianship, conservatorship, liquidation, construction or similar
proceeding relating to it or any part of its property; or any similaz
proceeding is instituted without the consent of Borrower or any Partner or
Guarantor, as the case may be, and continues undismissed or unstayed for
sixty (60) days; or any judgment, writ, warrant of attachment or execution,
4840-8179-6358.2 43 Landings II Loan Agreement
DOCSOC/ 1406214v l /024036-0052
or similar process is issued or levied against any property of Borrower or
any Partner or Guarantor and is not released, vacated or fully bonded
within thirty (30) days after its issue or levy; or
(m) Any Guaranty is repudiated, revoked or terminated, in
whole or in part, without Bondowner Representative's prior written
consent; or Guazantor claims that its Guazanty is ineffective or
unenforceable, in whole or in part and for any reason, with respect to
amounts then outstanding or amounts that might in the future be
outstanding; or
(n) Prior to the release of the Guaranty in accordance with its
terms, the Guarantor (if a natural person) dies, unless, within ninety (90)
days after Guazantor's death, the estate of the deceased Guarantor or
another substitute guarantor approved by Bondowner Representative shall
have assumed all of Guarantor's obligations under Guarantor's Guaranty
pursuant to a written assumption agreement duly authorized, executed and
delivered by such assuming guazantor to Bondowner Representative and
otherwise in form and substance reasonably acceptable to Bondowner
Representative; or
(o) Borrower is enjoined or otherwise prohibited by any
Govermnental Agency from constructing and/or occupying the
Improvements and such injunction or prohibition continues unstayed for
thirty (30) days or more for any reason; or
(p) Any Bond Document or Loan Document is amended,
modified or terminated without Bondowner Representative's prior written
consent; or a default occurs under any Bond Document, within any
applicable notice and/or cure period set forth therein; or
(q) Any Equity Construction Deposit shown on Exhibit "G" is
not made or otherwise provided to the reasonable satisfaction of the
Bondowner Representative on the date such Equity Construction Deposit
is scheduled to be made as shown on Exhibit "G"; or
(r) Any "Event of Default" occurs under any Bond Document,
any City Loan Document or any other Loan Document including without
limitation, the Rate Lock Agreement; or
(s) Interest on the Bonds is no longer excludable from the
gross income of the holders thereof for federal income tax purposes or any
payment due in respect of the Bonds (or any of them), including without
limitation the amounts due in respect of the 2010 Series A-1 Bonds in the
event they are not remarketed in whole on the Remazketing Date in
accordance with the Master Pledge and Assignment, is not timely made
when due; or
4840-8179-6358.2 44 Landings II Loan Agreement
DOCSOC/ 1406214v 1 /024036-0052
(t) Any City Loan Document is amended, modified or
terminated without Bondowner Representative's prior written consent; or
a default occurs under any City Loan Document, which default is not
cured within any applicable cure period set forth therein; or
(u) Any failure to timely provide an annual report or a written
statement, make a required deposit as required under Section 9.8(a)
hereof, or the making of a prohibited distribution (as described in
subparagraph (b) of Section 9.8).
12.2 Remedies Upon Default. Upon the occurrence of any Event of Default,
Lender shall take such action or actions as Bondowner Representative may direct, at
Bondowner Representative's option and in its absolute discretion, including, but not
limited to, any or all of the following actions:
(a) Terminate any obligation to make further advances of
proceeds of the Bonds and any further disbursements of proceeds of Loans
or amounts held in the Project Funds Account under the Disbursement
Agreement;
(b) Declaze the outstanding principal balance of the Loans,
together with all accrued interest thereon and other amounts owing in
connection therewith, to be immediately due and payable in full,
regardless of any other specified due date; provided that any Event of
Default described in Section 12.1(1) shall automatically, without notice or
other action on Lender's or Bondowner Representative's part, cause all
such amounts to be immediately due and payable in full;
(c) In its own right or by acourt-appointed receiver, take
possession of the Property, enter into contracts for and otherwise proceed
with the completion of the Project, and pay the costs thereof out of the
proceeds of the Bonds and funds in the Project Funds Account; and in the
event that such costs exceed the total of such funds, Lender and
Bondowner Representative shall have the right, but not the obligation, to
pay such excess costs by expenditure of their own respective funds; and/or
(d) Exercise any of its rights under the Loan Documents and
any rights provided by Law or in equity, including the right to foreclose on
any security and exercise any other rights with respect to any security, all
in such order and mazmer as Bondowner Representative elects in its
absolute discretion.
(e) Without limiting the generality of the foregoing and
regazdless of the availability of any other remedy hereunder or under
applicable Law or in equity, the Bondowner Representative shall also have
the right, to the fullest extent permitted under applicable Law, to declare
the outstanding principal amount of the Loans (or any portion thereof),
4840-8179-6358.2 45 Landings II Loan Agreement
DOCSOC/1406214v1/024036-0052
together with all accrued interest thereon and other amounts owing in
connection therewith, to be immediately due and payable regardless of any
specified due date without similazly or simultaneously accelerating the
Bonds (or any portion thereof). Any such election by the Bondowner
Representative to so accelerate the Loans (or any portion thereof) without
accelerating the Bonds (or any portion thereof), if made, may be revoked
or rescinded by the Bondowner Representative in whole or in part acting
in its sole and absolute discretion at any time without notice.
(f) Without limiting the generality of the foregoing, the
exercise of any rights and/or remedies pursuant to this Section 12.2 and
the application of any proceeds, recoveries, legal remedies, equitable
remedies, and any other rights in respect thereof, shall, in each instance, be
subject to the Intercreditor and Subordination Agreement and while any
portion of the Senior Bonds remains outstanding, the Bondowner
Representative shall have the sole right to exercise any such rights and/or
remedies.
12.3 Cumulative Remedies; No Waiver. Lender's and Bondowner
Representative's rights and remedies under the Loan Documents aze cumulative and in
addition to all rights and remedies provided by Law or in equity from time to time. The
exercise or direction to exercise by Lender or Bondowner Representative of any right or
remedy shall not constitute a cure or waiver of any default, nor invalidate any notice of
default or any act done pursuant to any such notice, nor prejudice Lender or Bondowner
Representative in the exercise of any other right or remedy. No waiver of any default
shall be implied from any omission by Lender or Bondowner Representative to take
action on account of such default if such default persists or is repeated. No waiver of any
default shall affect any default other than the default expressly waived, and any such
waiver shall be operative only for the time and to the extent stated. No waiver of any
provision of any Loan Document shall be construed as a waiver of any subsequent breach
of the same provision. The consent by Lender or Bondowner Representative to any act
by Borrower requiring further consent or approval shall not be deemed to waive or render
unnecessary Lender's or Bondowner Representative's consent to or approval of any
subsequent act. Lender's or Bondowner Representative's acceptance of the late
performance of any obligation shall not constitute a waiver by Lender or Bondowner
Representative of the right to require prompt performance of all further obligations;
Lender's or Bondowner Representative's acceptance of any performance following the
sending or filing of any notice of default shall not constitute a waiver of Lender's or
Bondowner Representative's right to proceed with the exercise of remedies for any
unfulfilled obligations; and Lender's or Bondowner Representative's acceptance of any
partial performance shall not constitute a waiver by Lender or Bondowner Representative
of any rights relating to the unfulfilled portion of the applicable obligation.
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DOCSOC/1406214v1/024036-0052
13. Miscellaneous.
13.1 Nonliability. Borrower acknowledges and agrees that:
(a) the relationship among Borrower, Lender and Bondowner
Representative is and shall remain solely that of Borrower, Lender, and
Bondowner Representative and none of Lender or Bondowner
Representative undertakes nor assumes any responsibility to review,
inspect, supervise, approve or inform Borrower of any matter in
connection with the Project, including matters relating to: (i) the Plans,
(ii) architects, engineers, contractors, subcontractors and materialmen, or
the workmanship of or materials used by any of them, or (iii) the progress
of the Project and its conformity with the Plans; and Borrower shall rely
entirely on its own judgment with respect to such matters and
acknowledges that any review, inspection, supervision, approval or
information supplied to Borrower by Lender or Bondowner Representative
in connection with such matters is solely for the protection of Lender and
Bondowner Representative and that neither Borrower nor any third party
is entitled to rely on it;
(b) notwithstanding any other provision of any Loan
Document: (i) neither Lender nor Bondowner Representative is or shall
be deemed a partner, joint venturer, alter-ego, manager, controlling person
or other business associate or participant of any kind of Borrower and
none of Lender or Bondowner Representative intends to ever assume any
such status; (ii) neither Lender's nor Bondowner Representative's
respective or collective activities in connection with the Loans or any of
them shall be "outside the scope of the activities of a lender of money"
within the meaning of California Civil Code Section 3434, as modified or
recodified from time to time, and neither Lender nor Bondowner
Representative intends to ever assume any responsibility to any Person for
the quality or safety of the Property; and (iii) neither Lender nor
Bondowner Representative shall be deemed responsible for or a
participant in any acts, omissions or decisions of Borrower;
(c) Neither Lender nor Bondowner Representative shall be
directly or indirectly liable or responsible in any way for any loss, cost,
damage, penalty, expense, liabilities or injury of any kind to any Person or
property resulting from any construction of, or development, occupancy,
ownership, management, operation, possession, condition, or use of, the
Property (except to the extent proximately caused by Lender's or
Bondowner Representative's proven gross negligence or willful
misconduct), including without limitation those resulting or arising
directly or indirectly, from: (i) any defect in any building, grading,
landscaping or other onsite or offsite improvement; (ii) any act or
omission of Borrower or any of Borrower's agents, employees,
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DOCSOC/1406214v I /024036-0052
independent contractors, licensees or invitees; or (iii) any accident on the
Property or any fire or other casualty or hazard thereon; and
(d) By accepting or approving anything required to be
performed or given to Lender or Bondowner Representative under the
Loan Documents, including any certificate, financial statement, survey,
appraisal or insurance policy, neither Lender nor Bondowner
Representative shall be deemed to have warranted or represented the
sufficiency or legal effect of the same, and no such acceptance or approval
shall constitute a warranty or representation by Lender or Bondowner
Representative to anyone.
13.2 Indemnification of the Lender and Bondowner Representative.
(a) Borrower shall defend (by counsel satisfactory to
Bondowner Representative), indemnify and save and hold harmless
Lender, Bondowner Representative and their respective officials,
directors, officers, agents, members and employees (collectively, the
"Indemnitces") for, from and against all claims, demands, actions, losses,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs, amounts paid in settlement and amounts
paid to discharge judgments) directly or indirectly arising from or relating
to (i) the making of the advances or the Loans and issuing the Bonds, as
the case may be; (ii) a claim, demand or cause of action that any Person
has or asserts against Borrower, any Partner or any Guarantor; (iii) the
payment of any commission, chazge or brokerage fee incurred in
connection with the Loans; (iv) any actor omission of Borrower, any of its
agents, employees, licensees, contractor, subcontractor or material
supplier, engineer, architect or other Person with respect to the Loans or
the Property; (v) the construction, development, ownership, occupancy,
management, operation, possessing condition or use of the Property;
(vi) any declaration of taxability of interest on the Bonds or allegations (or
regulatory inquiry) that interest on the Bonds is taxable for federal income
tax purposes; (vii) the Loan Documents, the Bond Documents or the City
Loan Documents, or the execution or amendment thereof, or in connection
with any of the transactions contemplated thereby, including without
limitation, the making of the Loans and the issuance, sale, holding, resale
or repricing of the Bonds; and (viii) any lien or charge upon payments by
the Borrower to the Agent and/or the Bondowner Representative
hereunder, or any taxes (including, without limitation, ad valorem taxes
and sales taxes), assessments, impositions and other charges imposed in
respect of all or any portion of the Project.
Borrower's obligations under this Section 13.2 shall not be construed to include
any obligation of Borrower set forth in the Hazardous Materials Agreement.
Notwithstanding the foregoing, Borrower shall not be obligated to indemnify
Agent or Bondowner Representative, as applicable with respect to the
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DOCSOC/ 1406214v l /024036-0052
consequences of any act of negligence or willful misconduct of Agent or
Bondowner Representative, asthe case may be. Borrower's obligations under
this Section 13.2 shall survive the repayment and cancellation of the Notes and
the release and reconveyance of the Security Documents.
Notwithstanding any transfer of the Project to another owner in accordance with
the provisions of this Agreement, the Borrower shall remain obligated to
indemnify each Indemnitee pursuant to this Section 13.2 if such subsequent owner
fails to indemnify any party entitled to be indemnified hereunder, unless such
Indemnitee has consented to such transfer and to the assignment of the rights and
obligations of the Borrower hereunder.
(b) The rights of any persons to indemnity hereunder and rights
to payment of fees and reimbursement of expenses pursuant to this
Agreement shall survive the final payment or defeasance of the Bonds
and, in the case of the Agent and Bondowner Representative, any
resignation by the Agent or any transfer, negotiation or participation of the
Bonds or interests therein. The provisions of this Section 13.2 shall
survive the termination of this Agreement.
13.3 Reimbursement of Lender and Bondowner Renresentative. Borrower
shall reimburse Lender and Bondowner Representative, as the case may be, promptly
upon written demand for all costs reasonably incurred by Lender and Bondowner
Representative, as the case may be (including the reasonable fees and expenses of
attorneys, accountants, appraisers and other consultants, whether the same are
independent contractors or employees of Lender and Bondowner Representative, as the
case may be) in connection with the negotiation, preparation, execution, delivery,
administration, modification, performance and enforcement of the Loan Documents
(other than the Hazardous Materials Agreement, the obligations under which are separate
from those under the other Loan Documents) and all related matters, including the
following. (a) Lender's and/or Bondowner Representative's, as the case may be,
commencement of, appearance in, or defense of any action or proceeding purporting to
affect the rights or obligations of the parties to any Loan Document; and (b) all claims,
demands, causes of action, liabilities, losses, commissions and other costs against which
Lender and/or Bondowner Representative, as the case may be, is indemnified under the
Loan Documents. Such reimbursement obligations shall bear interest following written
demand at the Default Rate, and shall be secured by the Security Documents. Such
reimbursement obligations shall survive the cancellation of the Notes and the release and
reconveyance of the Security Documents.
13.4 Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of Lender or Bondowner
Representative, as the case may be, to Borrower, or any other claim by Borrower against
Lender or Bondowner Representative, as the case may be, in connection with the Loans
or otherwise, Borrower hereby waives any right it might otherwise have (a) to offset any
such obligation, liability or claim against Borrower's obligations under the Loan
Documents or (b) to claim that the existence of any such outstanding obligation, liability
4840-5179-6355.2 49 Landings II Loan Agreement
DOCSOC/1406214v]/024036-0052
or claim excuses the nonperformance by Borrower of any of its obligations under the
Loan Documents.
13.5 Notices. All notices, demands, approvals and other communications
provided for in the Loan Documents shall be in writing and be delivered to the
appropriate party at its address as follows:
If to Borrower:
Landings II, L.P.
c/o Chelsea Asset Corporation
5993 Avenida Encinas, Suite 101
Carlsbad, CA 92008
Attention: James Schmid
Facsimile: (760) 456-6001
Telephone: (760) 456-6000, ext. 104
Also:
with a copy to:
and with a copy to:
If to Lender in care of Agent:
Pacific Southwest Community Development
Corporation
16935 West Bernardo Drive, Suite 238
San Diego, CA 92127
Attention: Robert Laing
Facsimile: (858) 675-0702
Telephone: (858) 675-0506
Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, CA 94105
Attention: Gary P. Downs, Esq.
Facsimile: (415) 983-1200
Telephone: (415) 983-1000
[ADDRESS]
Attention: [PLEASE PROVIDE]
Facsimile: [PLEASE PROVIDE]
Telephone: [PLEASE PROVIDE]
U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, CA 92121
Attention: Paul Shipstead
Facsimile: (858) 334-0798
Telephone: (858) 334-0704
4840-8179-6358.2 50 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
If to Bondowner Representative:
With a copy to:
If to Limited Partner:
U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, CA 92121
Attention: Paul Shipstead
Facsimile: (858) 334-0798
Telephone: (858)334-0704
Kutak Rock LLP
8601 North Scottsdale Road, Suite 300
Scottsdale, AZ 85253
Attention: Public Finance Department
[ADDRESS]
Attention: [PLEASE PROVIDE]
Facsimile: [PLEASE PROVIDE]
Telephone: [PLEASE PROVIDE]
Addresses for notice may be changed from time to time by written notice to all other parties. All
communications shall be effective when actually received; provided, however, that nonreceipt of
any communication as the result of a change of address of which the sending party was not
notified or as the result of a refusal to accept delivery shall be deemed receipt of such
communication.
13.6 Survival of Representations and Warranties. All representations and
warranties of Borrower, each General Partner and Guarantor in the Loan Documents shall
survive the making of the Loans and have been or will be relied on by Lender and
Bondowner Representative notwithstanding any investigation made by Lender or
Bondowner Representative, as the case may be.
13.7 Signs. Lender and Bondowner Representative may each place signs on
the Property reasonably acceptable to Borrower during the term of the Loans stating that
financing is being provided by and through Lender and Bondowner Representative and
any other participant in the Loans.
13.8 No Third Parties Benefited. This Agreement is made for the purpose of
setting forth rights and obligations of Borrower, Lender, Bondowner Representative, the
Senior Bondholder and the Subordinate Bondholder, and no other Person shall have any
rights hereunder or by reason hereof.
13.9 Bindin>? Effect: Assignment of Obli atg ions. This Agreement shall bind,
and shall inure to the benefit of, Borrower, Lender and Bondowner Representative and
their respective successors and assigns. Borrower shall not assign any of its rights or
obligations under any Loan Document without the prior written consent of Lender, which
4840-8179-6358.2 51 Landings II Loan Agreement
UOCSOC/1406214v 1 /024036-0052
consent may be withheld in Lender's absolute discretion. Any such assignment without
such consent shall be void.
13.10 Countemarts. Any Loan Document, other than the Notes, may be
executed in counterparts, all of which, taken together, shall be deemed to be one and the
same document.
13.11 Prior Agreements; Amendments; Consents. This Agreement (together
with the other Loan Documents) contains the entire agreement among Lender, Borrower
and Bondowner Representative with respect to the Loans, and all prior negotiations,
understandings and agreements (including, but not limited to, the commitment letter
issued by U.S. Bank to Borrower (or one of Borrower's affiliates)) are superseded by this
Agreement and such Loan Documents. No modification of any Loan Document
(including waivers of rights and conditions) shall be effective unless in writing and
signed by the party against whom enforcement of such modification is sought, and then
only in the specific instance and for the specific purpose given. Notwithstanding the
foregoing, Bondowner Representative shall have the right to waive or modify,
conditionally or unconditionally, the conditions to its approvals and consents hereunder,
without the consent of any party other than Borrower. Consents and approvals to be
obtained from Bondowner Representative shall be in writing.
13.12 Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California without
regazd to the conflicts of laws principles thereof; provided that if Lender, Senior
Bondholder or Bondowner Representative have greater rights or remedies under federal
law, then such rights and/or remedies under federal law shall also be available to Lender,
Senior Bondholder or Bondowner Representative, as the case may be.
13.13 Severability of Provisions. No provision of any Loan Document that is
held to be unenforceable or invalid shall affect the remaining provisions, and to this end
all provisions of the Loan Documents aze hereby declared to be severable.
13.14 Headings. Article and section headings are included in the Loan
Documents for convenience of reference only and shall not be used in construing the
Loan Documents.
13.15 Conflicts. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, this Agreement shall prevail;
provided however that, with respect to any matter addressed in both such documents, the
fact that one document provides for greater, lesser or different rights or obligations than
the other shall not be deemed a conflict unless the applicable provisions are inconsistent
and could not be simultaneously enforced or performed.
13.16 Time of the Essence. Time is of the essence of all of the Loan
Documents.
13.17 Transfer and Participation in Senior Bonds. U.S. Bank may transfer, or
sell participations in, the Senior Bonds and/or the Loan Documents (including without
4840-8179-6358.2 52 Landings 11 Loan Agreement
DOCSOC/1406214v 1 /024036-0052
limitation, the Rate Lock Agreement) at any time, in whole and in part, and may furnish
any transferee or participant or prospective transferee or participant with all documents
and information relating to Borrower, each Partner, Guarantor, the Bonds and the Loans
that U.S. Bank deems advisable in connection therewith. Borrower's indemnity
obligations under the Loan Documents shall also apply with respect to any transferee or
participant and the directors, officers, agents and employees of any transferee or
participant.
13.18 Hazardous Materials Agreement. In consideration of Lender's entry into
this Agreement and U.S. Bank's purchase of the Senior Bonds, Borrower shall deliver the
Hazardous Materials Agreement. Notwithstanding any other provision of any Bond
Document or Loan Document to the contrazy, express or implied, Borrower's obligations
under such Hazardous Materials Agreement shall not be secured, directly or indirectly, by
the Deed of Trust or any other real property (or any interest therein) now or hereafter
granted to or for the benefit of Lender or Bondowner Representative as security for any
Bond Document or Loan Document.
13.19 Guaranties Unsecured. The Security Documents shall secure Borrower's
obligations under the Loan Documents. Notwithstanding the fact that the Loan
Documents may now or hereafter include one or more Guaranties and/or other documents
creating obligations of Persons other than Borrower, and notwithstanding the fact that
any Security Document may now or hereafter contain general language to the effect that
it secures "the Loan Documents," no Security Document shall secure any Guazanty, or
any other obligation of any Person other than Borrower, unless such Security Document
specifically describes such Guazanty or other obligation as being secured thereby.
13.20 Limitation on Liability After Conversion Date. Notwithstanding anything
to the contrary contained in any Loan Document, if the Conditions to Conversion (as
defined in the Convertible Note) are timely satisfied on or before the Conversion Date,
then, from and after the Conversion Date, neither Borrower nor any General Partner shall
be personally liable for the payment of any portion of the indebtedness evidenced by the
Notes or any other Loan Document; provided, however, that the foregoing shall in no
way affect any liability of the Borrower or any such General Partner (subject to Section
13.27 hereof) to Lender and Bondowner Representative for (a) loss or damage of any
kind resulting from waste, fraud or willful misrepresentations; (b) any rental income or
other income arising with respect to the Property received by Borrower after Lender or
Bondowner Representative has given notice to Borrower of the occurrence of an Event of
Default or any such occurrence of which Borrower has notice; (c) diminution of the fair
mazket value, as of the date referred to in (b), above, of any personalty and fixtures
removed by Borrower after such date; (d) all legal costs and expenses reasonably
incurred by Lender or Bondowner Representative after the giving to Borrower of notice
of the occurrence of an Event of Default, other than those customarily incurred by lenders
in realizing upon its lien in an uncontested foreclosure sale after an undisputed default;
(e) Borrower's failure to pay taxes, assessments or other chazges which would create
liens on any portion of the Property that are payable or applicable prior to any foreclosure
under the Deed of Trust (to the full extent of any such taxes, assessments or other
charges); (f) any amounts owing to Lender or Bondowner Representative under
4840-8179-6358.2 53 Landings 11 Loan Agreement
DOCSOC/ 1406214v 1 /024036-0052
indemnity provisions contained in the Loan Documents (not including repayment of the
Loans); (g) any amounts owing to Lender or Bondowner Representative under any
hazardous materials or access indemnities; (h) the amount, if any, by which the sum of all
amounts realized by Lender through the sale (or other reasonable disposition) of all assets
pledged and/or assigned to Lender under the Security Documents is exceeded by the
obligations secured thereunder, but only to the extent that any such deficiency is directly
attributable to Borrower's failure to insure any such asset(s) in accordance with the
requirements of the Loan Documents; and (i) any loss or damage of any kind resulting
from violation or alleged violation of any criminal laws, including without limitation the
Fraud Enforcement and Recovery Act of 2009 or any portion thereof. Notwithstanding
anything to the contrary contained herein or in any of the Loan Documents, any payment
obligations hereunder or under any of the Loan Documents shall be non-recourse to the
limited partners of Borrower.
13.21 Limited Liabilitv of Issuer. The Issuer, in its capacity as the Lender
(albeit acting through Agent) and/or as Issuer of the Bonds, shall not be liable for any
costs, expenses, losses, damages, claims or actions, of any conceivable kind on any
conceivable theory, under or by reason of or in connection with this Agreement, the
Bonds or any of the other Loan Documents, except only to the extent amounts are
received for the payment thereof from the Bonower under this Agreement. All
obligations and any liability of the Issuer, in its capacity as Lender and/or as Issuer of the
Bonds, shall be further limited as further expressly provided in the Master Agency
Agreement.
13.22 Waiver of Ri>;ht to Trial by Jurv. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY
LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
13.23 Assignments by Lender. Borrower acknowledges that, concurrently
herewith, and in accordance with the allonges to each of the Notes, Lender has assigned
all of its right, title and interest in, to, and under this Agreement and the Senior Notes to
U.S. Bank, as the initial purchaser and holder of the Senior Bonds, and Lender has
assigned on a subordinate basis all of its rights, title and interest in, to, and under the
Subordinate Note to Subordinate Bondholder, as the initial purchaser and holder of the
4840-8179-6358.2 54 Landings II Loan Agreement
DOCSOC/1406214v1/024036-0052
Subordinate Bonds,; provided that, the foregoing assignments shall, in each instance, be
subject to the Intercreditor and Subordination Agreement.
13.24 Subordination to Extended Use Agreement. In order to receive an
allocation of federal low income housing tax credits, Borrower will be required to record
in the real property records of the County in which the property is located, an "extended
low-income housing commitment" (as defined in Code Section 42(h)(6)(B)) (the
"Extended Use Agreement"). If Borrower demonstrates to the reasonable satisfaction of
Bondowner Representative that the Tax Credit Allocation Committee of the State of
California or applicable federal law requires that the lien of the Deed of Trust be
subordinated to the Extended Use Agreement, then U.S. Bank shall execute a sepazate
subordination agreement (the "Tax Credit Subordination Agreement"), wherein the lien
of the Deed of Trust is subordinated to the Extended Use Agreement, provided, however,
that the following conditions are met:
(a) under the terms of the Extended Use Agreement and the
Tax Credit Subordination Agreement, if Bondowner Representative or its
successors or assigns (collectively, the "REO Owner") acquires the
Property and Improvements by foreclosure (or instrument in lieu of
foreclosure), then the "extended use period" (as defined in Code
Section 42(h)(6)(D)) shall terminate, except for the obligation of the REO
Owner to comply with the limitations on evictions, termination of tenancy
and increase in rents for the three year period following the REO Owner's
acquisition of the Property, as set forth in Code Section 42(h)(6)(E)(ii);
and
(b) the Tax Credit Subordination Agreement shall otherwise be
in a form, and shall contain terms, reasonably acceptable to Bondowner
Representative and, as between the Senior Bond Holder and the
Subordinate Bondholder, the Tax Credit Subordination Agreement shall
have no effect on the Intercreditor and Subordination Agreement.
13.25 Information Re>?azding the Proiect. U.S. Bank shall have the right to
discuss the affairs of the Borrower with any Partner thereof, including but not limited to
the Limited Partner, and to discuss the course of construction, lease-up, operation and
management of the Project, the financial condition of the Borrower, any Guarantor and
the Project, and to disclose any information received by U.S. Bank regarding the
Borrower, any Guarantor or the Project or any Partner of the Borrower with any other
Partner of the Borrower, singularly or together as U.S. Bank may determine in its sole
discretion.
13.26 Ri>?ht of Setoff. Borrower grants to Bondowner Representative a
contractual security interest in, and hereby assigns, conveys, delivers, pledges, and
transfers to Bondowner Representative all Borrower's right, title and interest in and to,
Borrower's accounts with Bondowner Representative (whether checking, savings, or
some other account), including without limitation all accounts held jointly with someone
else and all accounts Borrower may open in the future, excluding however all IRA and
4840-8179-6358.2 55 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
Keogh accounts, and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Bondowner Representative, to the extent
permitted by applicable law, to charge or setoff all sums owing on the Notes against any
and all such accounts.
13.27 Limitation on Liability of Managing General Partner. Notwithstanding
any other provision of this Agreement or any related or ancillazy agreement between the
parties, including, but not limited to the Loan Documents, the Lender and Bondowner
Representative shall have no recourse against Pacific Southwest Community
Development Corporation, a California nonprofit public benefit corporation, or any of its
officers, directors or employees (collectively, the "Managing General Partner"), except as
a result of acts or omissions as a result of Managing General Partner's negligence and/or
willful misconduct, and the Lender and Bondowner Representative shall look solely to
Borrower, the other General Partners of Borrower and any Guazantor for satisfaction of
Borrower's obligations under this Agreement, and the Loan Documents except in
instances of Managing General Partner's negligence and/or willful misconduct. The
Managing General Partner shall have no obligation to indemnify, defend or hold harmless
any Indemnitee against any liability, including without limitation under Section 13.2 of
this Agreement, except in instances of Managing General Partner's negligence and/or
willful misconduct. Except in instances of Managing General Partner's negligence
and/or willful misconduct, the liability of the Managing General Partner to the Lender
and Bondowner Representative or any other Person under this Agreement and the Loan
Documents shall be limited to the partnership interest of the Managing General Partner in
the Borrower and the liability of the Managing General Partner shall not extend to or be
enforceable against any other assets of the Managing General Partner.
13.28 USA PATRIOT Act Notice. U.S. Bank (for itself and not on behalf of any
other party) hereby notifies the Borrower that, pursuant to the requirements of the USA
PATRIOT Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 ("Act"), it is
required to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information that
will allow U.S. Bank to identify the Borrower in accordance with the Act.
13.29 Additional Banking Laws. The Borrower shall (a) ensure, and cause each
Affiliate to ensure, that no person who owns a controlling interest in or otherwise
controls the Borrower or any Affiliate is or shall be listed on the "Specially Designated
Nationals and Blocked Person List" or other similaz lists maintained by the Office of
Foreign Assets Control ("OFAC"), the Department of the Treasury, or included in any
Executive Orders, (b) not use or permit the use of the proceeds of the Loans or the Bonds
to violate any of the foreign asset control regulations of OFAC or any enabling statute or
Executive Order relating thereto, and (c) comply, and cause each Affiliate to comply,
with all applicable Bank Secrecy Act laws and regulations, as amended.
13.30 Tax Shelter Disclosure. None of Borrower, Guarantor, Subordinate
Bondholder or any Affiliate or subsidiary of any of the foregoing intends to treat the
Loans or the Bonds or the transactions contemplated by this Agreement and the other
Loan Documents and the Bond Documents as being a "reportable transaction" (within the
4840-8179-6358.2 5C Landings 11 Loan Agreement
DOCSOC/ 1406214 v 1 /024036-0052
meaning of Regulation Section 1.6011-4). If Borrower, or any other party determines to
take any action inconsistent with such intention, Borrower shall promptly notify U. S.
Bank thereof in writing. If Borrower so notifies U.S. Bank, Borrower acknowledges that
U.S. Bank may treat the Loans and the Bonds as part of a transaction that is subject to
Regulation Section 301.6112-1, and U.S. Bank will maintain the lists and other records,
including the identity of the applicable party to the Loans and the Bonds as required by
such Regulation.
[Remainder of page left blank intentionally]
4840-8179-6358.2 $7 Landings II Loan Agreement
DOCSOC/ 1406214v l /024036-0052
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
BORROWER:
LANDINGS II, L.P., a California limited partnership
By: Pacific Southwest Community Development
Corporation, a California nonprofit public benefit
corporation, its Managing General Partner
By:
Robert W. Laing
President /Executive Director
By: LANDINGS II CIC, LLC, a California limited
liability company, its Administrative General
Partner
By: CHELSEA INVESTMENT CORPORATION, a
California corporation, its Manager
By:
James J. Schmid
President
LENDER:
U.S. BANK NATIONAL ASSOCIATION,
a national banking association, as Agent
By:
Name: Paul Shipstead
Title: Vice President
[Signature Page to Loan Agreement]
17UCJ-Ul,% 1'4WZi4v l/024036-0052 Landings ]I Loan Agreement
EXHIBIT A
LEGAL DESCRIPTION
[TO COME]
~~~7L~4vl/024036-0052 Landings II Loan Agreement
EXHIBIT B
DEFINITIONS AND INTERPRETATION
1. Definitions. As used in this Agreement (and in all other Loan Documents, unless
otherwise defined), the following capitalized terms shall have the following meanings:
"Acceptable Leases" means, with respect to residential rental units at the Project,
legally valid, binding and enforceable written lease agreements with bona fide tenants
(excluding Guazantor, Borrower, Subordinate Bondholder or the employees, contractors
and agents of the Borrower or any Affiliate or Partner of Borrower, the Guarantor, or the
Subordinate Bondholder) providing for initial lease terms of not less than six months and
complying with all applicable law, including all requirements set forth in the Loan
Documents and the Bond Documents.
"Affiliate" means, with respect to any Person, (a) any other Person which directly
or indirectly through one or more intermediazies controls, or is controlled by, or is under
common control with, (i) such Person or (ii) any general partner of such Person; (b) any
other Person 50% or more of the equity interest of which is held beneficially or of record
by (i) such Person or (ii) any general partner of such Person, and (c) any general or
limited partner of (i) such Person or (ii) any general partner of such Person. As used in
the previous sentence, "control" means the possession, directly or indirectly, of the power
to cause the direction of the management of a Person, whether through voting securities,
by contract, family relationship or otherwise.
"Approved Budget" means the line item budget for the Loans as reviewed and
approved by Bondowner Representative and set forth in Exhibit "H" attached hereto, and
as modified from time to time in accordance with the Agreement.
"Architect" means ~ h or any licensed architect for the
Project approved by Bondowner Representative from time to time.
"ARRA Loan" means the American Recovery and Reinvestment Act of 2009 gap
financing loan requested by Borrower.
"ARRA Loan Documents" means, collectively, any loan agreement, promissory
note, deed of trust, or other instrument executed and delivered by Borrower with respect
to the ARRA Loan.
"Assignment of Leases" means the Assignment of Unrecorded Leases and Rents
dated as of May , 2010, given by Borrower in favor of Lender.
"Available Net Cash Flow" shall have the meaning given such term in the
Subordinate Note.
"Banking Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on
which Bondowner Representative is open and conducting customary banking transactions
in the State of California.
~~Z~11~4v1/024036-0052 Landings II Loan Agreement
"Bond Documents" means, collectively, the Bonds, the Master Agency
Agreement, Master Pledge and Assignment, Regulatory Agreement, the Deed of Trust
Assignment, the UCC-1 and UCC-2 Financing Statements and any other document (other
than the Loan Documents) now or hereafter executed by Borrower, Issuer, Lender,
Agent, Bondowner Representative, Senior Bondholder and/or Subordinate Bondholder in
connection with the Bonds.
"Bonds" has the meaning given that term in Recital E.
"Change Orders" means changes in the Plans pursuant to the Agreement
"City" means the Community Development Commission of the City of Santee, a
public body corporate and politic.
"City Deed of Trust" means the deed of trust, made by Borrower, as trustor, for
the benefit of City, as beneficiary, securing the repayment of the Loan and encumbering
the Property.
"City Loan" means the loan made by the City to the Borrower in the amount of
$4,000,000 in connection with the Project.
"City Loan Agreement" means the loan agreement dated May 2010
between the Borrower and the City.
"City Loan Documents" means, collectively, the City Loan Agreement, the City
Note, the City Deed of Trust, the City Regulatory Agreement and the City Subordination
Agreement, the foregoing being all of the documentation relating to the City Loan.
"City Note" means the promissory note of Borrower evidencing its obligation in
respect to payment of the City Loan.
"City Regulatory Agreement" means that certain regulatory agreement by and
between the City and the Borrower.
"City Recorded Documents" means, collectively, the City Deed of Trust, the City
Regulatory Agreement, and where the context requires, the City Subordination
Agreement.
"City Subordination Agreement" means the Subordination Agreement among the
Borrower, the Lender, and the City.
"Closing Date" means May , 2010.
"Completion and Repayment Guazanty" means the Guazanty Agreement
(Completion and Repayment) dated as of May , 2010, given by Chelsea Investment
Corporation, a Califomia corporation, and Chelsea Asset Corporation, a California
corporation, in favor of the Lender.
4840-8179-6358.2 B_2, Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
"Construction Note" means that certain promissory note of even date herewith in
the original principal amount of $~ ~ executed by Borrower to evidence the
obligation of Borrower to repay the Constmction Loan.
"Contractor" means [J.F. Shea Co., Inc.], or any general contractor for the Project
approved by Bondowner Representative from time to time.
"Conversion Date" has the meaning given that term in the Convertible Note.
"Convertible Note" means that certain promissory note of even date herewith in
the original principal amount of $~_], executed by Borrower to evidence the
obligation of Borrower to repay the Convertible Loan.
"County" means the County of San Diego, California.
"Debt Service Coverage Ratio" has the meaning given that term in the
Convertible Note.
"Deed of Trust" means the deed of trust, made by Borrower, as trustor, in favor of
Title Company, as trustee, for the benefit of Lender, as beneficiary, securing the
repayment of the Senior Bonds and encumbering the Property.
"Deed of Trust Assignment" means that certain Assignment of Deed of Tmst and
Other Loan Documents dated as of May , 2010, by Lender in favor of Bondowner
Representative with respect to the Senior Bonds.
"Default Rate" means, as to a Note, a per annum interest rate that is equal to the
rate of interest then applicable under such Note (each a "Note Rate"), plus 5.00%, but
subject to the terms of the Notes.
"Designated Representative" means the Person authorized in writing delivered to
Bondowner Representative by Borrower from time to time, who has been delegated full
and proper authority to serve as such representative of Borrower for purposes of
delivering certificates, Disbursement Requests and other documents on behalf of
Borrower pursuant to the Loan Documents.
"Development Agreement" means that certain Development Agreement between
Borrower and ~ 1, a Califomia limited liability company.
"Disbursement Agreement" means that Disbursement Agreement dated as of
May , 2010, by and among Agent, Bondowner Representative, City and Borrower.
"Disbursement Requests" means requests by Borrower for Disbursements in
accordance with the Agreement.
"Disbursements" means, as the case may be, disbursements by Lender and/or
Bondowner Representative of (a) proceeds of the Loans, (b) Equity Construction
4840-8179-6358.2 B_3 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
Deposits, (c) proceeds of the City Loan, and (d) other funds on deposit from time to time
in the Project Funds Account.
"Equity Commitment" means the commitment of Investor Limited Partner under
the Partnership Agreement to make $( ~ of capital contributions to the capital
of the Partnership.
"Equity Construction Deposits" means the capital contributions shown on the
schedule attached to the Agreement as Exhibit "G."
"Event of Default" means any event so designated in the Agreement
"Financing Statements" means, collectively, each UCC-1 and/or UCC-2 financing
statement required pursuant to the Agreement.
"Fiscal Yeaz" means Borrower's fiscal year, ending on December 31 of each
calendar year.
"General Partner" means, collectively, Pacific Southwest Community
Development Corporation, a California nonprofit public benefit corporation, and
Landings Il CIC, LLC, a California limited liability company, and any other Person that
now or hereafter owns a general partnership interest in Borrower.
"Governmental Agency" means any governmental or quasi-governmental agency,
boazd, bureau, commission, department, court, administrative tribunal or other
instrumentality or authority, and any public utility.
"Guaranties" means any Guaranty required pursuant to this Agreement and any
guaranty pursuant to which any Person now or hereafter partially or fully guarantees the
payment or performance of any indebtedness or other obligation to Lender and/or
Bondowner Representative under any Loan Document and, initially, means (i) the
Completion and Repayment Guaranty and (ii) the Completion Guaranty.
"Guarantor" means Chelsea Investment Corporation, a California corporation,
Chelsea Asset Corporation, a California corporation, and any Person who now or
hereafter partially or fully guarantees the payment or performance of any indebtedness or
other obligation to Lender under any Loan Document.
"Hazardous Materials" means flammable materials, explosives, radioactive
materials, hazardous wastes, toxic substances and similar substances and materials,
including all substances and materials defined as hazazdous or toxic wastes, substances or
materials under any applicable Law, including without limitation the Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et
seq., as amended.
4840-R179-6358.2 B_4 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
"Hazardous Materials Agreement" means that certain Unsecured Environmental
Indemnity dated as of May , 2010, executed by Borrower and Guazantor in favor of
Lender.
"improvements" means all improvements and fixtures now or hereafter
comprising any portion of the Property.
"Intercreditor and Subordination Agreement" means the Intercreditor and
Subordination Agreement, dated as of May , 2010, among the Senior Bondholder,
the Subordinate Bondholder, Borrower and Guarantor.
"Investor Limited Partner" means [RJ HOF 8-Landings, Il, L.L.C., a Florida]
limited liability company, and any successor investor limited partner of the Borrower
admitted under the terms of the Partnership Agreement and constituting a Permitted
Transfer.
"Issuance Date" means the date upon which the Bonds are issued.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments,
injunctions, decrees or awards of the United States or any state, county, municipality or
other Governmental Agency.
"Limited Partners" means, collectively, Investor Limited Partner and any other
Person that now or hereafter owns a limited partnership interest in Borrower.
"Loans" means, collectively, the Convertible Loan, the Construction Loan and the
Subordinate Loan made to Borrower pursuant to the Agreement.
"Loan Documents" means, collectively, this Agreement, the Notes, the Rate Lock
Agreement, the documents (other than Bond Documents or any of the documents which
by their terms are unsecured, including without limitation the Guaranty and the
Hazardous Materials Agreement) set forth in Exhibit "F" and any other agreement,
document or instrument that Lender and/or Bondowner Representative requires in
connection with the execution of this Agreement or from time to time to effectuate the
purposes of this Agreement.
"Manager" means, initially CIC Management, Inc., and any property manager for
the Project approved by Bondowner Representative from time to time.
"Managing General Partner" means Pacific Southwest Community Development
Corporation and the persons identified in Section 13.27 of the Agreement, the managing
general partner of the Borrower.
"IVet Cash Flow" has the meaning given that term in the Convertible Note.
"Notes" means, collectively, Convertible Note, Construction Note and the
Subordinate Note, each as amended, modified and supplemented from time to time.
4840-8179-6358.2 B_5 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
"Operating Reserve Agreement" means that certain Operating Reserve and
Security Agreement dated as of May , 2010, made by Borrower in favor of Lender.
"Partner" means any General Partner or Limited Partner.
"Partnership Agreement" means that certain Second Amended and Restated
Agreement of Limited Partnership of Borrower by and between the General Partner,
Investor Limited Partner, and the special limited partner identified therein dated as of
May , 2010.
"Party" means any Person (other than Lender or Bondowner Representative) who
is a party or signatory to any Loan Document.
"Permitted Encumbrances" means, collectively, all matters listed on Exhibit "D"
to this Agreement as permitted title insurance exceptions.
"Permitted Liens" means, collectively, all liens on the Personal Property approved
by Bondowner Representative in writing.
"Permitted Transfer" means any transfer of interests expressly permitted pursuant
to Section 1.19(c) of the Deed of Trust.
"Person" means any entity, whether an individual, trustee, corporation,
partnership, limited liability company, trust, unincorporated organization, Governmental
Agency or otherwise.
"Personal Property" means all of Borrower's right, title and interest, whether now
existing or hereafter acquired, in and to all furniture, furnishings, fixtures, machinery,
equipment, inventory and other personal property of every kind, tangible and intangible,
now or hereafter (i) located on or about the Property, (ii) used or to be used in connection
with the Property, or (iii) relating or azising with respect to the Property.
"Plans" and "Plans and Specifications" each mean the plans and specifications for
the Project received by Bondowner Representative pursuant to Section 4.1.3 of this
Agreement, as modified in accordance with this Agreement.
"Preliminary Reservation" means that certain initial preliminary reservation letter
issued by the California Tax Credit Allocation Committee ("CTCAC") with respect to the
Project.
"Project" means the acquisition of the Property and the construction of the
Improvements on the Property in substantial accordance with the Plans and all applicable
Laws.
"Project Agreements" means, collectively, all agreements entered into by
Borrower with Persons other than Lender or Bondowner Representative in connection
with the Project.
4840-R179-6358.2 B_( Landings II Loan Agreement
DOCSOC/ 1406214v l /024036-0052
"Project Costs" means all costs of any nature incurred in connection with the
Project.
"Project Financing Statements" means the Financing Statements described in
paragraph 1 of Exhibit "F."
"Project Funds Account" means the Project Funds Account created and
maintained under the Disbursement Agreement.
"Property" means all of Borrower's right, title and interest, whether now existing
or hereafter acquired, in and to the real property described in Exhibit "A" to the
Agreement together with all easements and other rights now or hereafrer made
appurtenant thereto, all improvements and fixtures now or hereafrer located thereon, and
all additions and accretions thereto.
"Rate Lock Agreement" means the Fixed Rate Lock Indemnity Agreement dated
May , 2010, between the Borrower and U.S. Bank National Association, relating to
the Convertible Loan and the Convertible Note.
"Regulatory Agreement" means that certain Regulatory Agreement and
Declazation of Restrictive Covenants dated as of May 1, 2010, between Issuer and
Borrower.
"Replacement Reserve Agreement" means that certain Replacement Reserve and
Security Agreement dated as of May , 2010, made by Borrower in favor of Lender.
"Secretary of State" means the Secretary of State of the State of California.
"Security Documents" means, collectively, the Deed of Trust, the Replacement
Reserve Agreement, the Operating Reserve Agreement, the Disbursement Agreement, the
Project Financing Statements, the Assignment of Leases, the Deed of Trust Assignment
and any other mortgage, deed of trust, security agreement or assignment now, heretofore
or hereafrer executed to secure the obligations of Borrower to Lender, Senior Bondholder
and/or Subordinate Bondholder under any Loan Document.
"Senior Bonds" means, collectively, the 2010 Series A-1 Bonds and the 2010
Series A-2 Bonds.
"Stabilized Occupancy" has the same meaning as the meaning of the term
"Stabilized Rental Period" in the Guazanty.
"Subordinate Bondholder" means [ h a [Delawaze
limited partnership].
"Subordinate Bonds" means the 2010 Series A-3 Bonds.
"Subordinate Loan Documents" means the Subordinate Note.
4840-8179-6358.2 B_'J Landings II Loan Agreement
DOCSOC/ 1406214v 1 /024036-0052
"Subordinate Note" means that certain promissory note of even date herewith in
the original principal amount of $l h executed by Borrower to evidence the
obligation to repay, on a subordinate basis, the Subordinate Loan.
"Tax Certificate" means that certain Tax Certificate and Agreement dated the
Closing Date, relating to the Bonds.
"Title Company" means the title company which issues the Title Policy.
"Title Policy" means the ALTA lender's policy of title insurance required by
Senior Bondholder pursuant to this Agreement.
2. Singular and Plural Terms. Any defined term used in the plural in any Loan
Document shall refer to all members of the relevant class and any defined term used in the
singular shall refer to any number of the members of the relevant class.
3. Accounting Principles. Any accounting term used and not specifically defined in
any Loan Document shall be construed in conformity with, and all financial data required to be
submitted under any Loan Document shall be prepazed in conformity with, generally accepted
accounting principles applied on a consistent basis or in accordance with such other principles or
methods as are reasonably acceptable to Bondowner Representative.
4. References and Other Terms. Any reference to any Loan Document or other
document shall include such document both as originally executed and as it may from time to
time be modified. References herein to Articles, Sections and Exhibits shall be construed as
references to the Agreement unless a different document is named. References to subparagraphs
shall be construed as references to the same Section in which the reference appeazs. The term
"document" is used in its broadest sense and encompasses agreements, certificates, opinions,
consents, instruments and other written material of every kind. The terms "including" and
"include" mean "including (include) without limitation."
4840-8179-6358.2 B_8 Landings 11 Loan Agreement
DOCSOC/1406214v ] /024036-0052
EXHIBIT C
COMMERCIAL REAL ESTATE STANDARD INSURANCE REQUIREMENTS
T. PROPERTY INSURANCE
A. DURING CONSTRUCTION
An ORIGINAL (or certified copy) Builder's All-Risk, Completed Value,
Non-Reporting Form Policy or ORIGINAL Acord 28 (2003/10) Certificate of
Insurance naming the borrowing entity as an insured, reflecting coverage of 100%
of the replacement cost, and written by a carrier approved by Lender with a
current A.M. Best's Insurance Guide Rating of at least A- IX (which is authorized
to do business in the state in which the property is located) that affirmatively
includes the following:
1. Mortgagee Clause naming U.S. Bank National Association as Mortgagee
with a 30-day notice to Lender in the event of cancellation, non-renewal or
material change
2. Lender's Loss Payable Endorsement (ISO 1218 or similar) with a
Severability of Interest Clause with a 30-day notice to Lender in the event
of cancellation, non-renewal or material change
3. Replacement Cost Endorsement
4. No Exclusion for Acts of Terrorism
5. No Coinsurance Clause
6. Flood Insurance
7. Coastal and Other Wind Coverage
8. Collapse and Earthquake Coverage
9. Vandalism and Malicious Mischief Coverage
10. Boiler and Machinery Coverage (aka Electrical and Mechanical
Breakdown)
11. Demolition, Increased Cost of Construction Coverage
12. In-Transit Coverage
13. Partial Occupancy Permitted
14. Borrower's coverage is primazy and non-contributory with any insurance
or self-insurance carried by U.S. Bank National Association
~~~1i11'4v I /024036-0052 Landings II Loan Agreement
15. Waiver of Subrogation against any party whose interest are covered in the
policy
16. Delay in Completion or Delay in Rents/Startup Coverage
17. Coverage to be effective upon the date of the Notice to Proceed, the date
of site mobilization or the start of any shipment of materials, machinery or
equipment to the site, whichever is earlier, and to remain in effect until
replaced by permanent All Risk Property Insurance described below, or
until such other time as may be mutually agreed upon by U.S. Bank
National Association and Borrower.
18. Coverage should be non-cancellable through term of project with
automatlc extension provision of at least 60 days.
B. UPON COMPLETION
An ORIGINAL (or certified copy) All-Risk Hazard Insurance Policy or
ORIGINAL Acord 28 (2003/10) Certificate of Insurance naming the borrowing
entity as an insured, reflecting coverage of 100% of the replacement cost, and
written by a carver approved by Lender with a current A.M. Best's Insurance
Guide Rating of at least A- IX (which is authorized to do business in the state in
which the property is located) that affirmatively includes the following:
1. Mortgagee Clause naming the Lender as Mortgagee with a 30-day notice
to Lender in the event of cancellation, non-renewal or material change
2. Lender's Loss Payable Endorsement with a Severability of Interest Clause
with a 30-day notice to Lender in the event of cancellation, non-renewal or
material change
3. Replacement Cost Endorsement
4. No Exclusion for Acts of Terrorism
5. No Coinsurance Clause
6. Boiler and Machinery Coverage (aka Electrical and Mechanical
Breakdown)
7. Sprinkler Leakage Coverage
8. Vandalism and Malicious Mischief Coverage
9. Flood Insurance
10. Loss of Rents Insurance in an amount of not less than 100% of one year's
Rental Value of the Project. "Rental Value" shall include:
4840-8179-6358.2 C_2 Landings Il Loan Agreement
DOCSOC/1406214v1/024036-0052
a) The total projected gross rental income from tenant occupancy of
the Project as set forth in the Budget,
b) The amount of all charges which are the legal obligation of tenants
and which would otherwise be the obligation of Borrower, and
c) The fair rental value of any portion of the Project which is
occupied by Borrower.
11. One year's business interruption insurance in an amount acceptable to
Lender.
12. Collapse and Earthquake Coverage
13. Coastal & Other Wind Coverage
14. Extra Expense Coverage
I5. Borrower's coverage is primary and non-contributory with any insurance
or self-insurance carried by U.S. Bank National Association
16. Waiver of Subrogation against any party whose interest are covered in the
policy
17. Demolition and Increased Cost of Construction
II.
LIABILITY INSURANCE
An ORIGINAL Acord 25-S Certificate of General Comprehensive Liability Insurance
naming the borrowing entity as an insured, providing coverage on an "occurrence" rather
than a "claims made" basis and written by a carrier approved by the Lender, with a
current A.M. Best's Insurance Guide Rating of at least A- IX (which is authorized to do
business in the state in which the property is located) that affirmatively includes the
following:
1. Combined general liability policy limit of at least $5,000,000.00 each
occurrence and aggregate applying liability for Bodily Injury, Personal
Injury, Property Damage, Contractual, Products and Completed
Operations which combined limit may be satisfied by the limit afforded
under the Commercial General Liability Policy, or by such Policy in
combination with the limits afforded by an Umbrella or Excess Liability
Policy (or policies); provided, the coverage afforded under any such
Umbrella or Excess Liability Policy is at least as broad in all material
respects as that afforded by the underlying Commercial General Liability
Policy. Such policies must contain a Separations of Insureds / Severability
of Interest clause.
2. No Exclusion for Acts of Terrorism
4840-8179-6355.2 C_3 Landings II Loan Agreement
DOCSOC/1406214v 1 /024036-0052
3. Aggregate limit to apply per location
4. Borrower's coverage is primary and non-contributory with any insurance
or self-insurance carved by U.S. Bank National Association
5. Waiver of Subrogation against any party whose interest are covered in the
policy
6. Additional Insured Endorsement naming U.S. Bank National Association
as an additional insured with a 30-day notice to Lender in the event of
cancellation, non-renewal or material change. A Severability of Interests
provision should be included.
III. WORKER'S COMPENSATION
An ORIGINAL Certificate indicating Worker's Compensation coverage in the statutory
amount and Employer's Liability Coverage with minimum limits of $500,000 / $500,000
/ $500,000 naming the General Contractor and written by a carrier approved by Lender.
4840-8179-6358.2 C_4 Landings II Loan Agreement
DOCSOC/1406214v1/024036-0052
EXHIBIT D
PERMITTED ENCUMBRANCES
As utilized in this Agreement, the defined term "Permitted Encumbrances" shall have the
same meaning ascribed thereto in the Deed of Trust.
~~~lil~4vl/024036-0052 Landings II Loan Agreement
EXHIBIT E
Disbursement No.
DISBURSEMENT REQUEST
The undersigned, on behalf of Borrower, hereby requests a Disbursement in the amount, and on
the date, set forth below, pursuant to that certain Loan Agreement (the "Agreement") dated
May , 2010, between Landings II, L.P., a California limited partnership, and U.S. Bank
National Association, as agent (in such capacity, the "Agent"). Capitalized terms used and not
otherwise defined herein shall have the meanings set forth for them in the Agreement.
REQUESTED AMOUNT:
REQUESTED DATE:
Borrower hereby represents and warrants to Agent and Bondowner Representative that:
1. The requested Disbursement is for a portion of the proceeds of the [Construction]
[Convertible][Subordinate] Loan (as defined in the Agreement) and shall be applied to pay
Project Costs in accordance with the Approved Budget and the itemized payment request
attached hereto.
2. All costs shown in all prior Disbursement Requests (and payment requests) have been
paid in full, Borrower has received valid lien releases or waivers from all contractors,
subcontractors and materialmen with respect to all payments made for work and materials, and
Borrower has no knowledge of any mechanic's lien claims (or any basis therefor) against the
Property.
3. The Project is being constructed in accordance with the Plans, all recommendations in the
approved soils report, and all applicable governmental requirements, and work on the Project has
progressed to the point indicated on the attached payment request.
4. The attached payment request is an accurate and complete statement of all amounts
previously paid or now due and all amounts expected to be incurred in connection with the
completion of the Project.
5. All changes in the Plans, if any, have been made in accordance with the Agreement and
there has been no changes in the Approved Budget or the expectations of the Borrower that the
Project will be timely completed and within the scope of the Approved Budget.
6. All representations and warranties in the Agreement are true and correct as of the date of
this request, no Event of Default remains uncured, and no event has occurred which, with the
giving of notice or the passage of time or both, would constitute an Event of Default.
DATE:
Designated Representative
i~~~lG~4vl/024036-0052 Landings II Loan Agreement
Contractor hereby certifies that the representations, warranties and certifications set forth in
Pazagraphs 1 through 6, above, are true and correct to the best of Contractor's knowledge after
due investigation and verification.
Contractor
CONSENTED TO BY APPROVED BY
BONDOWNER REPRESENTATIVE: [ENGINEER] [ARCHITECT]:
[APPROVED CHANGE ORDERS:]
[Order No. Work Item Amount Approved Date]
4840-8179-63582 E-2
DOCSOC/ 1406214v 1 /024036-0052
Landings II Loan Agreement
EXHIBIT F
LOAN DOCUMENTS
The instruments and documents required to be executed, acknowledged (if necessary for
recording) and delivered to Lender and Bondowner Representative, in each case in form and
content satisfactory to Lender and Bondowner Representative, are as follows:
l . Documents to be executed and delivered by Borrower:
Senior Bond Documents:
(a) Loan Agreement;
(b) Promissory Note (Convertible Loan)
(c) Promissory Note (Construction Loan);
(d) Deed of Trust;
(e) Assignment of Leases;
(f) Deed of Trust Assignment
(g) Replacement Reserve and Security Agreement;
(h) Operating Expenses Reserve and Security Agreement;
(i) Disbursement Agreement;
(j) Hazardous Materials Agreement;
(k) Access Laws Certificate and Indemnity;
(1) Assignment of Contractor's Contract;
(m) Assignment of Architect's Contract and Plans and Specifications;
(n) Assignment of Engineer's Contract;
(o) Assignment of Property Management Contract;
(p) Assignment of Development Contract;
(q) Collateral Assignment of Rights to Tax Credits, Capital
Contributions and Partnership Interests
(r) Intercreditor and Subordination Agreement;
~~7.~7~'4vl/024036-0052 Landings II Loan Agreement
(s) City Subordination Agreement;
(t) Rate Lock Agreement; and
(u) California Judicial Reference Agreement.
Subordinate Bond Documents:
(a) Subordinate Promissory Note (Subordinate Loan).
2. Documents to be executed by Guarantor:
(a) Guaranty executed by Guarantor;
(b) Hazardous Materials Agreement; and
(c) Access Laws Certificate and Indemnity.
3. Other documents to be executed by third parties:
(a) Master Agency Agreement;
(b) Master Pledge and Assignment;
(c) Regulatory Agreement;
(d) Deed of Trust Assignment;
(e) Consent to Assignment of Contractor's Contract, executed by
Contractor;
(f) Consent to Assignment of Architect's Contract, executed by
Architect;
(g) Consent to Assignment of Engineer's Contract, executed by
Engineer;
(h) Consent to Assignment of Property Management Contract,
executed by Property Manager;
(i) Consent to Assignment of Development Contract, executed by
Developer;
(J)
(k)
Disbursement Agreement; and
City Loan Documents.
4840-8179-6358.2 F_4 Landings II Loan Agreement
DOCSOC/ 1406214v l /024036-0052
4. Formation and authorization-related documents:
(a) a partnership borrowing authorization pursuant to which all of the
General Partners and Limited Partner authorize the execution,
delivery and performance of the Loan Documents;
(b) copies of Borrower's limited partnership agreement, the certificate
of limited partnership that has been recorded, the certificate of
limited partnership that has been filed with the Secretary of State,
the partnership agreement and applicable statement or certificates
of partnership or articles and by-laws of any General Partner that is
a partnership or corporation, and all modifications to any of them,
all certified to be true and complete by each General Partner;
(c) a certificate of all of the partners of any partnership that is a
General Partner, and a certified copy of a corporate resolution of
any corporation that is a General Partner, in each case authorizing
such partnership or corporation to serve as a General Partner and to
sign the Loan Documents as a General Partner;
(d) a certificate of the secretary or an assistant secretary of any
corporation that is a General Partner with respect to the
incumbency of the officers who sign the Loan Documents; and
(e) copies of all organizational documents, certification,
authorizations, and other evidence of similar importance as
described in subpazagraph (a) through (d) above with respect to
each Guazantor.
5. Other documents:
(a) all financial statements of Borrower, each Partner and Guarantor
(i) required by Lender or Bondowner Representative or
(ii) necessary to provide Lender and Bondowner Representative
with a true and complete knowledge of the financial condition of
Borrower and Guarantor;
(b) a certified copy of any recorded parcel map applicable to the
Property;
(c) true and complete copies of all leases, contracts and other
agreements which grant rights to, and/or impose obligations on,
Borrower in connection with the Property, and an estoppel
certificate (containing subordination provisions, if Lender or
Bondowner Representative so requires) from each tenant,
subtenant and other contracting party with respect to the status of
its lease or contract, defaults, and all other matters that Lender or
Bondowner Representative reasonably requires; and
4840-8179-6358.2 F_4 Landings II Loan Agreement
DOCSOC/1406214v 1/024036-0052
(d) all other documents, opinions, instruments, certificates and other
materials reasonably required by Lender or Bondowner
Representative, including without limitation, judgment and lien
searches in appropriate jurisdictions for the Borrower, its Partners
and the Guarantor, and an approving opinion of bond counsel and
an opinion of counsel to Borrower as to due formation,
authorization, and enforceability of the Loan Documents.
4840-8179-6358.2 F'_4 Landings II Loan Agreement
DOCSOG1406214v 1 /024036-0052
EXHIBIT G
SCHEDULE OF REQUIRED EQUITY CONSTRUCTION DEPOSITS*
INSTALLMENT
First
Second
Third
AMOUNT OF DEPOSIT
$[~
$ ~_]
$~~
* Subject to the operative terms and conditions of the Partnership Agreement set forth in the
Partnership Agreement as of the Closing Date (as defined in this Agreement). Unless
otherwise specified, terms with initial capital letters in this Exhibit "G" shall have the
meanings ascribed thereto in the Partnership Agreement.
~~~7iL~4vl/024036-0052 Landings 11 Loan Agreement
EXHIBIT H
APPROVED BUDGET
[TO COME]
4840-8199-63582
Landings II Loan Agreement
DOC SOC/ 140621 4v 1 /024036-0052
Print Map Page Page 1 of 1
http://gishome/website/gisviewer/Print_Process.asp 04/27/2010
Attachment 9
Housing Authority of the City of Chula Vista
MASTER AGENCY AGREEMENT
Stradling Yocca Carlson & Rauth
Draft Dated Aprfl 26, 2010
MASTER AGENCY AGREEMENT
between
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
and
U.S. BANK NATIONAL ASSOCIATION
as Agent
Dated as of 1, 2010
Relating to
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-1
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SENIOR SERIES 2010A-2
and
HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
MULTIFAMILY HOUSING REVENUE BONDS
(THE LANDINGS II APARTMENTS)
SUBORDINATE SERIES 2010A-3
DOCSOC/ 1400878v3/024036-0052
MASTER AGENCY AGREEMENT
This MASTER AGENCY AGREEMENT, dated as of 1, 2010 (this
"Agreement"), between Housing Authority of the City of Chula Vista, a public body corporate and
politic, duly organized and existing under the Constitution and the laws of the State of Califomia
(together with any successor to its rights, duties and obligations, the "Issuer") and U.S. Bank
National Association, a national banking association organized under the laws of the United States of
America, (the "Agent"):
WITNESSETH:
WHEREAS, the Issuer is authorized pursuant to Chapter 1 of Part 2 of Division 24 of the
California Health and Safety Code, as amended (the "Act"), to issue revenue bonds to finance and
refinance the acquisition, construction, development and rehabilitation of multifamily rental housing
projects to be occupied by persons of low and very low income, to dedicate the revenue from such
projects to the repayment of such bonds and to take such action and do all things that may be
necessary or appropriate to carry out the powers and duties specifically granted to the Issuer by the
Act;
WHEREAS, the Issuer is authorized by the Act to make loans to any person, firm,
partnership or corporation licensed to do business in the State of California (the "State") in
furtherance of the purposes and activities stated in the Act;
WHEREAS, the Issuer has determined to engage in a program of financing the acquisition,
construction, rehabilitation and development of multifamily rental housing projects pursuant to the
Act to benefit persons of low and very low income, and has determined to borrow funds for such
purpose by the issuance of revenue bonds authorized by the Act and to dedicate the revenue from
said program to the repayment of said bonds;
WHEREAS, the Issuer has determined to issue its Housing Authority of the City of Chula
Vista Multifamily Housing Revenue Bonds (The Landings II Apartments), Senior Series 2010A-1 in
a principal amount not to exceed $ (the "Series A-1 Bonds"), its Housing Authority
of the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings II Apartments),
Senior Series 2010A-2 in a principal amount not to exceed $ (the "Series A-2
Bonds," and, together with the Series A-1 Bonds, the "Senior Bonds"), and its Housing Authority of
the City of Chula Vista Multifamily Housing Revenue Bonds (The Landings ll Apartments),
Subordinate Series 2010A-3 in a principal amount not to exceed $ (the "Series A-3
Bonds" or "Subordinate Bonds," and, together with the Series A-1 Bonds and Series A-2 Bonds, the
"Bonds"), to evidence the obligation to repay the advances to be made hereunder by the Holder and
the Subordinate Holder (as hereinafter defined) to the Agent for the account of the Issuer, secured by
a Master Pledge and Assignment dated the date hereof (the "Pledge and Assignment"), by and among
the Issuer, the Agent and U.S. Bank National Association, a national banking association organized
under the laws of the United States of America, as initial holder of the Senior Bonds (the "Holder"),
to provide financing to Landings II, L.P., a California limited partnership (the "Borrower"), for the
construction and development of a 141 unit plus two manager's units multifamily rental housing
project located within the Winding Walk master-planned community in the City of Chula Vista,
Califomia, and generally known as "Landings II Apartments" (the "Project"); and
DOCSOC/140087Rv3/024036-0052
WHEREAS, it is necessary and desirable for the Issuer and the Agent to enter into this
Agreement to provide for the appointment and duties of the Agent; and
WHEREAS, all conditions, things and acts required by the Act, and by all other laws of the
State to exist, to have happened and to have been performed as a condition precedent to and in
connection with the issuance of the Bonds do exist, have happened, and have been performed in due
time, form and manner as required by law, and the Issuer is now duly authorized and empowered,
pursuant to each and every requirement of law, to issue the Bonds for the purpose, in the manner and
upon the terms therein provided;
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter
contained, the parties hereto agree as follows:
Section 1. Apnointment of Agent. The Issuer hereby appoints the Agent as its agent
with full authority and power to act on its behalf for the purposes set forth herein and to do all other
acts necessary or incidental to the performance and execution thereof. The appointment provided for
in this Section 1 is coupled with an interest and is irrevocable except as expressly set forth herein.
Section 2. Representations of the Issuer and the Agent.
(i) The Issuer represents and warrants to the Agent that the Issuer is a
public body corporate and politic, duly organized and existing under the Constitution and the laws of
the State of California, with full power and authority to issue the Bonds and to enter into the
transactions contemplated by this Agreement and the Pledge and Assignment.
(ii) The Agent represents and warrants to the Issuer that the Agent is a
national association organized and existing under the laws of the United States of America with full
power and authority to enter into the transactions contemplated by this Agreement and the Pledge
and Assignment and to serve as the agent of the Issuer for the purpose of making the Loan (as that
term is defined in the Pledge and Assignment) to the Borrower as provided in the Loan Documents
(as that term is defined in the Pledge and Assignment).
Section 3. Authority and Agreements of the Agent. The Agent is authorized and agrees
to enter into, execute and deliver the Pledge and Assignment and, in its capacity as agent for the
Issuer, to execute and deliver and the Loan Documents and, pursuant to the terms thereof, advance
moneys on behalf of the Issuer to fund the Loan upon satisfaction of the conditions set forth therein
and otherwise to act on behalf of the Issuer as provided therein. The Agent is hereby irrevocably
authorized, directed and empowered to exercise all of the rights, powers and remedies of the Issuer
under the Loan Agreement (as that term is defined in the Pledge and Assignment) and the other Loan
Documents, and to make all determinations and exercise all options and elections thereunder, without
the necessity of further advice to or consultation with, or consent or authorization by, the Issuer, and
all actions taken by the Agent under the Loan Agreement or any of the other Loan Documents shall
be as valid, and shall have the same force and effect, as if taken by the Issuer. The Agent agrees to
provide the Issuer, upon the Issuer's request, with copies of any policies of insurance provided by or
on behalf of the Borrower under the Loan Documents that are required to name the Issuer as an
additional insured and to provide Issuer, at the Issuer's request, with copies of any notices of default
given by, or delivered to, the Agent pursuant to the Loan Agreement or any other information it
maintains on behalf of the Issuer with respect to the Bonds or the Project.
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Section 4. Agent as Independent Contractor. Except as otherwise expressly set forth
herein, in the performance of its duties as Agent hereunder, the Agent is an independent contractor
acting on its own behalf and for its own account and without authority, express or implied, to act for
or on behalf of the Issuer in any capacity other than as expressly provided herein and in no other
respect.
The Agent agrees to indemnify, hold harmless and defend the Issuer, its officers, contractors,
consultants, directors and employees against all loss, costs, damages, expenses, suits, judgments,
actions and liabilities of whatever nature (including, without limitation, attorneys' fees, litigation,
arbitration and court costs, amounts paid in settlement, and amounts paid to discharge judgments)
directly or indirectly resulting from or arising out of or related to any unlawful, negligent or tortious
act or omission on the part of the Agent under this Agreement.
Section 5. Standard of Performance. The Agent will perform its duties hereunder in
accordance with sound commercial banking practice, and in accordance with the Pledge and
Assignment.
Section 6. Successor Agent. Anything herein to the contrary notwithstanding, any
corporation or association into which the Agent may be converted or merged or with which it may be
consolidated or to which it may sell or transfer its business and assets as a whole or substantially as a
whole or any corporation or association resulting from any conversion, sale, merger, consolidation or
transfer to which it is a party will, ipso facto, be and become successor Agent hereunder and vested
with all of the title to the whole property and all the powers, discretion, immunities, privileges,
obligations and all other matters as was its predecessor, without the execution or filing of any
instruments or any further act, deed or conveyance on the part of the parties hereto.
Section 7. Termination. Neither the Issuer nor the Agent may terminate this agreement
so long as Agent or any Affiliate (as that term is defined in the Pledge and Assignment) of the Agent
is the Holder of the Senior Bonds. In the event the Senior Bonds are sold, assigned, transferred or
otherwise disposed of in accordance with the provisions of Sections 4.4 and 9.5 of the Pledge and
Assignment, other than to an Affiliate of the Agent, either the Issuer or the Agent may terminate this
Agreement upon the terms hereinafter provided in this Section 7 by giving thirty (30) days' written
notice to the other party, the Borrower, the Investor Limited Partner (as defined in the Regulatory
Agreement and at the address set forth in the Loan Agreement) and the Holder. Such termination
shall take effect, except as to the duties of the Agent under Section 8 below, upon the appointment of
a successor agent by the Issuer, as directed by the Borrower, Holder or other owners of the Bonds
with the consent, which shall not be unreasonably withheld, of the Issuer (such consent not being
required if such Agent is the subsequent Holder of all of the Bonds or an Affiliate thereof) and the
execution, acknowledgment and delivery by the successor Agent of an instrument in substantially the
form of this Agreement. The Agent shall be entitled to reasonable compensation payable by the
Borrower for it fees and expenses during any period (i) it serves as Agent and the initial Holder or
any affiliate is not the holder of the Senior Bonds or (ii) the Senior Bonds are no longer outstanding.
Section 8. Obligations of Agent in the Event of Termination. From and after the
effective date of termination of this Agreement pursuant to Section 7 above, the Agent will be
relieved of further responsibility in connection with the Pledge and Assignment and the Loan
Documents. In the event of such termination, the Agent will pay over to the Issuer or, if the Issuer
shall so direct, to any successor agent appointed by the Issuer, all moneys collected and held by it
pursuant to this Agreement and/or pursuant to any other agreement, letter or arrangement relative to
DOC SOC/ 1400878v3/024036-0052
3
the Pledge and Assignment and the Loan Documents simultaneously with such termination, and turn
over to the successor agent appointed by the Issuer, as provided above, all documents and records in
connection with the Pledge and Assignment and the Loan Documents simultaneously with such
termination. The Agent will deliver to the successor agent a full accounting, including a statement
showing the monthly payments collected by it and a statement of moneys held in escrow by it for the
payment of taxes, maintenance or other charges in respect of the Pledge and Assignment and the
Loan Documents simultaneous with such termination. The Agent will execute and deliver to its
successor, without recourse, representation or warranty of any kind, such instruments as are required
to assign to the successor all its right, title and interest in all property of whatever nature which it
holds as Agent of the Issuer. Where necessary, all such instruments must be filed and/or recorded in
each office where such instruments are required to be filed and/or recorded. In addition, Agent shall
provide to the Issuer an opinion of counsel to the Agent to the effect that all instruments necessary to
transfer to the successor agent all property held by the Agent as Agent hereunder have been duly
executed and delivered.
Section 9. Term of Agreement. Unless sooner terminated as herein provided, this
Agreement will continue from the date hereof until payment in full of the Bonds.
Section 10. Governing Law; Severability; Captions; Definitions. This Agreement will be
construed in accordance with the laws of the State. In the event any provision of this Agreement is
held invalid by any court of competent jurisdiction, such holding will not invalidate or render
unenforceable any other provision hereof. Any headings of divisions of this Agreement are solely
for convenience of reference and will neither constitute a part of this Agreement nor affect its
meaning, construction or effect. All capitalized terms used but not defined herein shall have the
meanings given to such terms in the Pledge and Assignment.
Section 11. Notices. Any notice provided for herein must be in writing and shall be
deemed to have been given when delivered personally or when deposited in the United States mail,
registered and postage prepaid, addressed as follows:
]f to the Issuer: Housing Authority of the City of Chula Vista
276 Fourth Avenue
Chula Vista, California 91910
Attention: Executive Director
Ifto the Agent: U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, Califomia 92121
Attention: Loan Administration
If to the original owner
of the Bonds: U.S. Bank National Association
4747 Executive Drive, 3rd Floor
San Diego, California 92121
Attention: Loan Administration
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DOCSOC/ 1400878 v3/024036-0052
To the Subordinate Holder: Winding Walk Residential LLC
Attention:
To the Borrower: Landings II, L.P.,
c/o Chelsea Asset Corporation
5993 Avenida Encinas, Suite 101
Carlsbad, Califomia 92008
Attention: James J. Schmid
with a copy to: Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, Califomia 94105-2228
Attention: Gary Downs, Esq.
with a copy to: Raymond James Tax Credit Funds, Inc.
1250 Linda Street, Suite l01
Rocky River, OH 44116
Attention:
or at such other address as any of them may designate by notice duly given in accordance with this
Section 1 1 to the others.
Section 12. Consent to Assignment. In addition to the assignments otherwise permitted
or required by this Agreement, the Issuer agrees that Agent shall have the right to assign all of its
rights under this Agreement, and under all instruments and documents executed by it as Agent of the
Issuer pursuant to this Agreement, to an Affiliate or to a subsequent owner of a majority of the Bonds
or an Affiliate thereof. The Issuer will execute and deliver to the Agent any documents necessary to
effectuate such assignment, and will not take any action to impair Agent's right to assign such rights
pursuant to this Section 12.
Section 13. Execution CounterRarts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts. Each such counterpart will constitute an original but all
of such counterparts taken together will constitute one agreement.
DOCSOC/ 1400878v3/024036-0052
IN WITNESS WHEREOF, the Issuer and the Agent have each caused this Agreement to be
executed in their respective names as of the date first above written.
HOUSING AUTHORITY OF CITY OF CHULA
VISTA, CALIFORNIA
By:
Executive Director
ATTEST:
Secretary
S-1
DOC SOC/ 1400878v3/024036-0052
Agent
U.S. BANK NATIONAL ASSOCIATION, as Agent
By:
Vice President
S-2
DOCSOC/ 1400878v3/024036-0052