HomeMy WebLinkAboutAgenda Report - October 21, 2009 K-03AGENDA ITEM �wa
CITY OF LODI
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Adopt Resolution Authorizing the City Managerto Execute an Option Agreement to
Purchase Real Property Pursuant to the Terms of the Purchase and Development
Agreement with Eden Development, Inc. Regarding Senior Housing Project at
2245 Tienda Drive.
MEETING DATE: October 21,2009
PREPARED BY: Community Development Department
RECOMMENDED ACTION: Adopt a resolution authorizing the City Manager to execute an
Option Agreement to Purchase Real Property pursuant to the terms
of an attached Purchase and DevelopmentAgreement with Eden
Development, Inc. regarding a Senior Housing Project at 2245
Tienda Drive.
BACKGROUND INFORMATION: On April 1 2009, the City Council authorized the City Managerto
negotiate with Eden Housing, Inc. for an agreement to develop an
affordable senior housing project at the property identified as 2245
Tienda Drive.
On August 5, 2009, the City Council subsequently authorized the City Managerto execute an Exclusive
Right to Negotiate (ERN) Agreement with Eden Housing. The ERN also served as the document to
demonstrate the requisite site control in their application to the State of California Department of Housing
and Community Development (HCD) for HOME funding.
The Option Agreement for Eden Development's purchase of the subject property at 2245 Tienda Drive
for the proposed development of affordable senior housing is the next stage in the negotiation process.
This Option Agreement also serves as the documentation to demonstrate requisite site control for Eden's
application to the U.S. Department of Housing and Urban Development (HUD) 202 Program, which
provides funding specificallyfor affordable senior housing development.
The Purchase and Development Agreement sets the terms and conditions for the eventual sale of the
propertyto Eden Development, Inc., as well as the terms and conditions of the loan and subsequent use
and development of the property. The Agreement requires 49% of the units to be affordable. However,
the terms of the federal assistance will require the entire development to be affordable. The purchase
price of $630,000.00 is based upon the most recent fair market appraisal of the land.
air King, City
nager
FISCAL IMPACT: The Agreement requires a deposit of $6,300.00.
FUNDING AVAILABLE: N/A
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Attachments
V --R Wnnraaft Bartla
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community Development Director
OPTION AGREEMENT TO PURCHASE REAL PROPERTY
This Option Agreement to Purchase Real Property (the "Agreement") dated as of
, 2009, is entered into by the City of Lodi, a California municipal corporation (the
"Optionor"), and Eden Development, Inc., a California nonprofit public benefit corporation (the
"Optionee").
A. Optionor owns the unimproved parcel consisting of approximately 3.39 acres located
at 2245 Tienda Drive in the City of Lodi, more particularly described in Exhibit A, attached
hereto and incorporated herein (the "Property").
B. Optionee intends to purchase the Property from Optionor in order to construct, own in
fee title, and operate on the Property two (2) affordable rental housing development projects that
are age restricted for seniors (the "Senior Project").
C. Optionee is not prepared at this time to purchase the Property, therefore Optionee
desires to obtain, and Optionor wishes to grant to Optionee, an option to purchase the Property
on the terms and conditions set forth below.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Optionee and Optionor agree as follows:
1. Grant of Option to Purchase. Optionor hereby grants to Optionee, and Optionee
hereby accepts, the exclusive right to purchase the Property (the "Option") on the following
terms and conditions, set forth in this Agreement.
2. Purchase Price. Optionor and Optionee acknowledge and agree that the purchase
price for the Property shall be Six Hundred And Thirty Thousand Dollars ($630,000.00), as set
forth in the Purchase and Development Agreement, attached hereto as Exhibit B (the "Purchase
Agreement").
3. Option Consideration. Upon execution of this Agreement, Optionee shall deposit
one percent (1%) of the purchase price totaling Six Thousand, Three Hundred Dollars
($6,300.00) as an eaniest money deposit (the "Deposit") with the Optionor. The Deposit,
together with interest at the Optionor's earned rate, shall be applied to the purchase price upon
closing. The Deposit shall be returned to Optionee if through no fault of Optionee, Optionee
fails to obtain financing set forth in Section 6, below.
4. Term of Option. The term of the Option (the "Option Term") shall commence on
the date first written above and shall terminate at 6:00 P.M. on April 15, 2010. The Option Tel -in
shall be renewable by Optionee on.a month-to-month basis, consistent with Section 5, below.
5. Exercise of Option; Extension of Option. At any time during the Option Term or
extended Option Term, Optionee may extend or exercise the Option by delivering written notice
to Optionor that it intends to extend or exercise the Option (the "Notice"). Optionee and
Optionor shall close escrow in accordance with the terms and provisions of the Purchase
Agreement.
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6. Further Actions. Optionee and Optionor each shall take such further action and
execute such other documents' as may be necessary to accomplish the purposes of this
Agreement. This Agreement shall terminate and have no effect if Optionee is not awarded a
Reservation of a Section 202 Capital Grant by the U.S. Department of Housing and Urban Senior
Project prior to
7. City Approvals. Optionee shall be responsible for obtaining all approvals
required by Optionor for the Senior Project in accordance with Optionor's standard application
process for discretionary land use entitlements, including payment for all of Optionor's costs of
processing such approvals. If the City Council of the Optionor is unable for any reason to adopt
or approve the certification of environmental documents required for the Senior Project pursuant
to NEPA, CEQA or to rezone the Property for the Senior Project, Optionee shall have the right to
terminate this Agreement. Nothing set forth herein shall be construed as a grant of any such
approvals, or as an obligation on the part of Optionor to grant such approvals.
8. Memorandum of Option Agreement. The Parties shall execute and record a
Memorandum of this Agreement in the fonn attached as Exhibit C, hereto, giving notice of this
Agreement.
The parties have executed this Agreement as of the date opposite the signatures below.
Optionee:
Eden Development, Inc.,
a California nonprofit public benefit corporation
By:
Linda Mandolini,
Executive Director
Optionor:
City of Lodi,
a California municipal corporation
Blair King, City Manager
am
Date: ,2009
Date:
Approved as to Fon-n:
,2009
D. Ste n Schwabauer, City Attorney
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EXHIBIT A
Legal Description of the Property
Real property in the City of LODI, County of SAN JOAQUIN, State of CALIFORNIA, described
as follows:
PARCEL 1 AS SHOWN ON THE PARCEL MAP FILED NOVEMBER 4, 1996, IN BOOK 20 OF
PARCEL
MAPS, AT PAGE 139, SAN JOAQUIN COUNTY RECORDS.
EXHIBIT B
Purchase and Development Agreement
Exhibit C
Form of Memorandum of Option
Recording Requested By
And When Recorded Mail To:
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
With a Copy to and
Mail Tax Statements to:
Eden Development, Inc.
22645 Grand Street
Hayward, CA 94541-5031
FREE RECORDING REQUESTED
(Gov't Code Section 6103)
MEMORANDUM OF OPTION AGREEMENT
TO PURCHASE REAL PROPERTY
By this Memorandum of Option Agreement to Purchase Real Property
made _, 20 made concurrently with the Option Agreement to Purchase
Real Property ("Agreement") between the same parties covering the same property,
more particularly described as the City of Lodi, a California municipal corporation and
Eden Development, Inc., a California nonprofit public benefit corporation (individually
"Party" and collectively, "Parties") hereby agree the real property commonly known as
approximately 3.39 acres located at 2245 Tienda Drive in the City of Lodi("Property"),
which Property is more particularly described in Exhibit A, attached hereto, shall be
held, maintained and operated pursuant to the terms of the Agreement and the Exhibits
attached, thereto.
This Memorandum may be executed in multiple originals, each of which is deemed an
original, and may be signed in Counterparts.
IN WITNESS WHEREOF, the parties hereto have entered into this Memorandum
as of the date set forth above.
Eden Development, Inc.,
a California nonprofit public benefit corporation
IN
Linda Mandolini,
Executive Director
City cf Lodi,
a California municipal corporation
By:
Blair King, City Manager
ma
K
Date: ,2009
Date: ,2009
Approved as to Form:
D. Stephen Schwabauer, City Attorney
STATE OF CALIFORNIA )
} ss:
COUNTY OF }
On , 20_, before me, , Notary Public, personally
appeared , who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity, and
that by his/her signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
I 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
STATE OF CALIFORNIA )
ss:
COUNTY )
On , 20_, before me, , Notary Public, personally
appeared , who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity, and
that by his/her signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
I 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
K
PURCHASE AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF LODI
AND
EDEN DEVELOPMENT, INC.
PURCHASE AND DEVELOPMENT AGREEMENT
(Lodi Senior Housing, 2245 Tienda Drive, Lodi, CA 95242)
This Purchase and Development Agreement (the "Agreement") is entered into as
of (the "Effective Date"), by and between the City of Lodi, a
California municipal corporation of the State of California (the "Seller") and Eden
Development, Inc., a California nonprofit public benefit corporation (the "Buyer"), with
reference to the following facts:
RECITALS
A. The Seller owns that unimproved 3.39 -acre parcel of real property located at
2245 Tienda Drive in Lodi, more particularly described in Exhibit A, attached hereto and
incorporated herein (the "Property").
B. The Seller has determined that the desired future use of the Property shall be an
affordable residential development that is age restricted for seniors. Accordingly, the Seller
issued a Request for Qualifications ("RFQ") inviting submissions from developers interested in
developing the Property with affordable housing for seniors with restrictions compatible with
the requirements of the City's available funding sources: Community Development Block Grant
Program ("CDBG") and Home Investment Partnership Act ("HOME") financing.
C. Buyer is a nonprofit affordable housing developer with extensive experience in
constructing, owning and operating senior rental housing developments affordable to very low
to lower income households.
D. In response to the Seller's RFQ, the Buyer submitted its proposal to construct,
own and operate on the Property rental housing affordable to very low and lower income
senior households (the "Senior Project"). On April 1, 2009, the Seller's City Council selected
Eden as the Buyer for the Property and directed staff to proceed with the preparation of an
Exclusive Right to Negotiate Agreement ("ERN") for the negotiation of a Purchase Agreement
or a Disposition Development and Loan Agreement, the terms and conditions of which would
govern the conveyance of the Property to the Buyer for the purpose of the development of the
Senior Project by the Buyer.
E. On August 5, 2009, the City Council voted to unanimously approve the ERN,
attached hereto as Exhibit B.
F. The purpose of this Agreement is to set forth Buyer's rights and obligations to
purchase and develop the Property in accordance with the terms of this Agreement.
G. This Agreement sets forth the terms and conditions by which the Seller shall sell
and make a loan or loans to the Buyer of CDBG and HOME funds.
H. This Agreement does not authorize the granting of the Land Use Approvals or
the construction of the Development, as defined in Section 1.1. Such actions may be
authorized and will become possible only upon subsequent discretionary action of the Seller
separate and apart from this Agreement.
I. Notwithstanding anything to the contrary contained herein, the effectiveness of
this Agreement, the Seller's obligations hereunder and the construction of the Development,
defined in Section 1.1, below, are conditioned upon compliance with the California
Environmental Quality Act ("CEQA"). No physical activity, not otherwise exempt from CEQA,
shall commence on the Property without CEQA compliance. The City has (i) prepared a
Negative Declaration in Compliance with CEQA, (ii) issued a Notice of Intent to Adopt a
Negative Declaration, and (iii) established a public review period extending from
, 2009 through , 2009, all as required by law. No comments were
received during the public review period (Confirm). The City council adopted the Negative
Declaration prior to approving and authorizing the execution of this Agreement.
NOW, THEREFORE, in consideration of the recitals hereof and the mutual
promises and covenants set forth in this Agreement, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions. The following capitalized terms have the meanings set forth in
this Section 1.1, wherever used in this Agreement, unless otherwise provided:
1.1.1 "Agreement" means this Purchase and Development Agreement.
1.1.2 "Approved Development Budget" shall mean the proforma development
budget, in the format attached as Exhibit C, including sources and uses of funds, as the
same may be revised from time to time, and which shall be approved by the Seller prior
to the transfer of the Property to Buyer.
1.1.3 "Buyer" means Eden Development, Inc., a California nonprofit public
benefit corporation or its approved successors and assigns.
1.1.4 "CDBG" means the Community Development Block Grant program
referred to in Recital G.
1.1.5 "CEQA" means the California Environmental Quality Act and its
implementing guidelines and regulations.
1.1.6 "County" means the County of San Joaquin, a political subdivision of the
State of California.
1.1.7 "Deed of Trust" or "Seller Deed of Trust" means the deed of trust that will
encumber the Development to secure repayment of the Loan. The form of the Deed of
Trust shall be in substantially the form attached as Exhibit D.
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1. 1.8 "Default" has the meaning set forth in Section 11.1.
1.1.9 "Development" means the Property and the two (2) senior rental housing
development projects and other improvements constructed on the Property.
1.1.10 "Eden Development" means Eden Development, Inc., a California
nonprofit public benefit corporation.
1.1.11 "Effective Date" means the date first set forth above.
1.1.12 "Final Plans" mean the final plans, drawings and specifications for the
Development which are subject to the approval of the Seller. A copy of the Final Plans
shall be maintained on file with the Seller.
1.1.13 "Financing Plan" means the proposal for financing costs of development of
the Development as proposed by Buyer and approved by the Seller as of the date of
this Agreement. The Financing Plan may be revised from time to time with the approval
of Seller. The Financing Plan, in the format attached as Exhibit E, shall be approved by
Buyer and Seller prior to the transfer of the Property to Buyer.
1.1.14 "Land Use Approvals" means the permits and approvals necessary for the
construction of the Development on the Property, including, but not limited to, necessary
general plan and zoning code amendments, overall design and architectural review and
approval by the Seller and any other applicable government entity.
1.1.15 "Loan Documents" or "Seller Loan Documents" means this Agreement,
the Promissory Note, the Deed of Trust, the Regulatory Agreement, and Assignment of
Agreements.
1.1.16 "Loan" means the Seller's loan to the Buyer made pursuant to this
Agreement in the initial principal amount of $1,100,000, which may be increased in
accordance with Article 3, below.
1.1.17 "Promissory Note" means the Promissory Note dated as of the date of this
Agreement evidencing the Buyer's obligation to repay the Loan, which Promissory Note
shall be amended if and when the Loan is increased pursuant to Article 3, below.
1.1.18 "Property" means that certain real property described in Exhibit A.
1.1.19 "Regulatory Agreement" or "Seller Regulatory Agreement" means the
Regulatory Agreement and Declaration of Restrictive Covenants between the Seller and
the Buyer to be recorded against the Property upon acquisition by the Buyer, which
shall regulate the use and occupancy of the Development for not less than Fifty -Five
(55) years.
1.1.20 "Seller" means the City of Lodi, a California municipal corporation.
1.1.21 "Term" means the term of the Regulatory Agreement, which shall
commence on the Effective Date and shall terminate fifty-five (55) years from the date
the final certificate of occupancy is issued following the initial construction of the
Development, unless sooner terminated, pursuant to the terms of this Agreement.
1.1.22 "Transfer" has the meaning set forth in Section 10.3, below.
Section 1.2 Exhibits. The following exhibits are attached to this Agreement and
incorporated into this Agreement by this reference:
Exhibit A
Legal Description of the Property
Exhibit B
Exclusive Negotiating Rights Agreement
Exhibit C
Approved Development Budget
Exhibit D
Form of Deed of Trust
Exhibit E
Financing Plan
Exhibit F
Form of Promissory Note
Exhibit G
Predevelopment Budget
Exhibit H
Assignment of Agreements
Exhibit I
Form of Regulatory Agreement
Exhibit J
Seller Insurance Requirements
Exhibit K
Schedule of Performance
Exhibit L
Scope of Development
Exhibit M
Preliminary Site Plan
Exhibit N
HUD -Required Provisions Rider
Exhibit O
Memorandum of Purchase and Development Agreement
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 2.1 Representations and Warranties. The Buyer hereby represents and
warrants to the Seller as follows:
2.1.1 Organization. The Buyer is a duly organized, validly existing nonprofit
public benefit corporation, is in good standing under the laws of the State of California,
and has the power and authority to own its property and carry on its business as now
being conducted.
2.1.2 Authority of the Buyer. The Buyer has full power and authority to execute
and deliver this Agreement and to make and accept the borrowings contemplated
hereunder, to execute and deliver the Loan Documents and all other documents or
instruments executed and delivered, or to be executed and delivered, pursuant to this
Agreement, and to perform and observe the terms and provisions of all of the above.
2.1.3 Authority of Persons Executing Documents. This Agreement and the
Loan Documents and all other documents or instruments executed and delivered, or to
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be executed and delivered, pursuant to this Agreement have been or will be executed
and delivered by persons who are duly authorized to execute and deliver the same for
and on behalf of the Buyer, and all actions required under the Buyer's organizational
documents and applicable governing law for the authorization, execution, delivery and
performance of this Agreement and the Loan Documents and all other documents or
instruments executed and delivered, or to be executed and delivered, pursuant to this
Agreement, have been duly taken.
2.1.4 Valid Binding Agreements. This Agreement and the Loan Documents and
all other documents or instruments which have been executed and delivered pursuant
to or in connection with this Agreement constitute or, if not yet executed or delivered,
will when so executed and delivered constitute, legal, valid and binding obligations of
the Buyer enforceable against it in accordance with their respective terms.
2.1.5 No Breach of Law or Agreement. Neither the execution nor delivery of this
Agreement and the Loan Documents or of any other documents or instruments
executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor
the performance of any provision, condition, covenant or other term hereof or thereof,
will conflict with or result in a breach of any statute, rule or regulation, or any judgment,
decree or order of any court, board, commission or agency binding on the Buyer, or any
provision of the organizational documents of the Buyer, or will conflict with or constitute
a breach of or a default under any agreement to which the Buyer is a party, or will result
in the creation or imposition of any lien upon any assets or property of the Buyer, other
than liens established pursuant hereto.
2.1.6 Compliance With Laws; Consents and Approvals. The construction of the
Development will comply with all applicable laws, ordinances, rules and regulations of
federal, state and local governments and agencies and with all applicable directions as
of time of building permit issuance, rules and regulations of the fire marshal, health
officer, building inspector and other officers of any such government or agency.
2.1.7 Pending Proceedings. The Buyer is unaware of a known default under
any law or regulation or under any order of any court, board, commission or agency,
and there are no known claims, actions, suits or proceedings pending or, to the
knowledge of the Buyer, threatened against or affecting the Buyer, at law or in equity,
before or by any court, board, commission or agency which might, if determined
adversely to the Buyer, materially affect the Buyer's ability to perform its obligations
contemplated by this Agreement.
2.1.8 Financial Statements. The financial statements of the Buyer and other
financial data and information furnished by the Buyer to the Seller fairly present the
information contained therein. As of the date of this Agreement, there has not been any
adverse, material change in the financial condition of the Buyer from that shown by such
financial statements and other data and information.
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2.1.9 Taxes. The Buyer and its subsidiaries have filed all federal and other
material tax returns and reports required to be filed, and have paid all federal and other
material taxes, assessments, fees and other governmental charges levied or imposed
upon them or their income or their properties otherwise due and payable, except those
which are being contested in good faith by appropriate proceedings and for which
adequate reserves have been provided in accordance with generally accepted
accounting principles. Buyer has no knowledge of a proposed tax assessment against
the Buyer or any of its subsidiaries that could, if made, be reasonably expected to have
a material adverse effect upon the assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the Buyer and its subsidiaries, taken as
a whole, which would be expected to result in a material impairment of the ability of the
Buyer to perform under this Agreement.
ARTICLE 3
LOAN PROVISIONS
Section 3.1 Loan.
3.1.1 City -Controlled CDBG and HOME Funds. Subject to satisfaction of the
conditions set forth in Sections 3.6, 3.7, and 3.8 as applicable, the Seller shall use a
portion of the Seller's CDBG and HOME funds to make and fund a loan to the Buyer in
the original principal amount of One Million One Hundred Thousand Dollars
($1,100,000) (the "Loan") for the purposes set forth in Section 3.3 of this Agreement.
The Loan shall be a residual receipts, limited recourse loan evidenced by, and subject
to the terms and conditions contained in, a Promissory Note in the form attached hereto
as Exhibit F.
3.1.2 State HOME Funds. The Seller and Buyer acknowledge that the Seller
intends to apply to the State of California for a loan of HOME Funds in an amount not to
exceed Four Million Dollars ($4,000,000). If the Seller is awarded HOME Funds for the
Development, this Agreement will be amended to increase the amount of the original
Loan amount. The actual increased Loan amount, if increased, shall be in the amount
subsequently and specifically approved by the Seller, and shall be evidenced by an
amended and restated Promissory Note. Nothing in this Section shall commit the Seller
to approve an increased Loan to the Buyer, over and above the amount set forth in
Section 3.1.1, above.
Section 3.2 Interest.
3.2.1 Rate. Subject to the provisions of Section 3.2.2 below, the outstanding
principal balance of the Loan shall bear Zero Percent (0%) interest from the date of the
Promissory Note evidencing the Loan until the third (3rd) anniversary of the date of the
Promissory Note; thereafter, the outstanding balance of the Loan shall bear simple
interest at the rate of three percent (3%) per annum until the Loan is paid in full.
Notwithstanding the preceding sentence, the Seller shall consider (i) reducing the 3%
interest rate or (ii) changing the interest to a contingent interest (i.e., interest shall not
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accrue, if and to the extent the interest is not paid current annually), if the Buyer shows
that a lower, contingent or other type of interest is necessary to make the Development
financially feasible.
3.2.2 Default Rate. In the event of a Default, interest on the Loan shall begin to
accrue, as of the date of Default and continue until such time as the Loan funds are
repaid in full or the Default is cured, at the default rate of the lesser of ten percent
(10%), compounded annually, or the highest rate permitted by law.
Section 3.3 Use of Funds.
3.3.1 Predevelopment Component. The Buyer shall use the Predevelopment
Component only for predevelopment activities for the Development, generally set forth
in Exhibit G to this Agreement, unless the Seller's City Manager or his/her designee
approves in writing a different use of the funds.
3.3.2 Acquisition Component. The Buyer shall use the Acquisition Component
for acquisition costs of the Property, which shall include all title, escrow and other
closing costs and fees that are necessary for the Buyer to purchase the Property from
the Seller, and such other costs related to the Development that the Seller's City
Manager or his designee may approve in writing.
3.3.3 Construction Component. The Buyer shall use the Construction
Component for construction of the Improvements, construction -related costs like
construction management, construction administration, testing and inspection fees, and
closing costs related to the construction loan closing, unless the Seller's City Manager
or his/her designee approves in writing a different use of the funds. The Parties
acknowledge that all fees and costs required for the issuance of building permits may
be paid from the Construction Component, notwithstanding the fact that the payment of
the fees and costs for the issuance of building permits may be required prior to the
Buyer's construction loan closing.
The Buyer shall not use the Loan for any other purpose without the prior written
consent of the Seller.
Section 3.4 Security.
3.4.1 Assignment of Agreements. Buyer assigns to the Seller its rights and
obligations with respect to certain agreements, plans and specifications, and approvals,
pursuant to the terms of the Assignment of Agreements, Plans and Specifications and
Approvals ("Assignment of Agreements") attached hereto as Exhibit H. The Buyer shall
execute the Assignment of Agreements concurrently with this Agreement. The
Assignment of Agreements shall become effective upon an event of Default of the
Buyer as defined in Section 11. 1, below that remains uncured after expiration of the
applicable cure period. The Seller shall not have any obligation under any contracts or
agreements assigned pursuant to the Assignment of Plans until it expressly agrees in
writing to be bound by such contracts or agreements. Upon an event of Default that has
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not been cured pursuant to this Agreement, the Seller may use any of the foregoing
assigned documents for any purpose for which the Buyer could have used them for
development of the Development subject to the limitations, if any, imposed by the third -
party preparer of the assigned documents, or in the case of the assigned documents
prepared by the Architect, subject to the terms of the Architect's consent executed by
the Architect. The Buyer shall cooperate with the Seller to implement the Assignment of
Plans and immediately deposit with the Seller for the Seller's use all the Documents.
3.4.2 Deed of Trust. Concurrently with Buyer's acquisition of title to the
Property, the Buyer shall execute and record against the Property the Deed of Trust (in
substantially the form attached hereto as Exhibit D) and the Regulatory Agreement (in
substantially the form attached hereto as Exhibit 1). In accordance with Section 3.5
below the Seller agrees to subordinate the Deed of Trust and the Regulatory Agreement
to the lien of the deeds of trust securing the construction loan or loans, permanent
loan(s) and refinancing loan(s) approved by the Seller.
Section 3.5 Subordination. The Deed of Trust and Regulatory Agreement shall be
subordinated to financing approved by the Seller (in each case, a "Senior Lien"), but
only if all of the following conditions are satisfied:
3.5.1 All of the proceeds of the proposed Senior Lien, less any transaction
costs, shall be used to provide predevelopment, acquisition, construction and/or
permanent financing or refinancing for the Development.
3.5.2 The proposed lender (each, a "Senior Lender") must be a state or
federally chartered financial institution, a nonprofit corporation, a recognized affordable
housing lending group such as the Housing Partnership Fund, or a public entity that is
not affiliated with Buyer or any of Buyer's affiliates, other than as a depositor or a lender.
3.5.3 Buyer shall demonstrate to the Seller's reasonable satisfaction that
subordination of the Deed of Trust and/or Regulatory Agreement is necessary to secure
adequate acquisition, construction, permanent financing and/or refinancing to ensure
the viability of the Development, including the operation of the Development as
affordable housing, as required by the Loan Documents. To satisfy this requirement,
Buyer shall provide to the Seller, in addition to any other information reasonably
required by the Seller, evidence demonstrating that the proposed amount of the Senior
Loan is necessary to provide adequate predevelopment, acquisition, construction,
permanent financing or refinancing to ensure the viability of the Development, and
adequate financing for the Development would not be available on similar terms without
the proposed subordination.
3.5.4 The subordination agreement(s) shall be in a form reasonably acceptable
to the Seller, and shall be structured to minimize the risk that the Deed of Trust and/or
Regulatory Agreement would be extinguished as a result of a foreclosure by the Senior
Lender or other holder of the Senior Lien. To satisfy this requirement, the subordination
agreement shall provide the Seller with rights to cure any defaults by Buyer, including:
(i) providing the Seller with copies of any notices of default at the same time and in the
same manner as provided to Buyer; and (ii) providing the Seller with a cure period of at
least sixty (60) days to cure any default.
3.5.5 The subordination(s) described in this Section may be effective only
during the original term of the Senior Loan and/or any extension of its term approved in
writing by the Seller, provided, however, that nothing in this Subsection (e) shall prohibit
the Seller from approving the refinancing of a Senior Loan.
Upon a determination by the Seller's City Manager that the conditions in this
Section have been satisfied, the Seller's City Manager or his/her designee will be
authorized to execute the approved subordination agreement without the necessity of
any further action or approval.
Section 3.6 Predevelopment Disbursement Requirements. The Seller shall disburse
the Predevelopment Component to Buyer in one or more monthly disbursements when
the following conditions to disbursement have been satisfied:
3.6.1 There exists no Default or any act, failure, omission or condition that
would constitute an event of Default under this Agreement, the Promissory Note or
Assignment of Agreements; and
3.6.2 The Buyer has delivered to the Seller an executed original of this
Agreement, the Promissory Note, and Assignment of Agreements; and
3.6.3 The Buyer has delivered to the Seller of each of the following: (i) copy of
Buyer's articles of incorporation and bylaws; (ii) certificate of good standing from the
Secretary of State; and (iii) a certified copy of Buyer's resolution authorizing this
transaction and the person(s) executing this Agreement and the other Seller Loan
Documents; and
3.6.4 The Buyer has delivered to the Seller evidence of insurance coverage in
accordance with the requirements set forth in Exhibit J; and
3.6.5 The Buyer has delivered to the Seller Buyer's written requisition specifying
the amount and use of the requested funds, accompanied by copies of third -party and
Buyer invoices, and such other documentation as the Seller shall reasonably require;
and
3.6.6 Following the initial disbursement of the Predevelopment Component, the
Seller shall have the right to withhold subsequent disbursements of the Predevelopment
Component if it reasonably denies approval, of Buyer's development concept,
preliminary development proposal and preliminary financing plan.
Upon satisfaction of these conditions, the Seller shall from time to time disburse
the Predevelopment Component of the Loan (or so much thereof as is required), for
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items consistent with those shown in Exhibit G. Notwithstanding any other provisions of
this Agreement, the Seller shall have no further obligation to disburse any portion of the
Loan to the Buyer following: (1) termination of this Agreement; or (ii) notification by the
Seller to the Buyer of a Default under the terms of this Agreement that has not been
timely cured.
Section 3.7 Acquisition Disbursement Requirements. The Seller shall disburse the
Acquisition Component to Buyer when the following conditions to disbursement have
been satisfied. The parties contemplate that the Acquisition Component shall be made
in one disbursement through escrow:
3.7.1 The Seller has completed its environmental assessment of the
Development in accordance with the provisions of CEQA and NEPA, if applicable, and
has approved a negative declaration or a mitigated negative declaration in accordance
with the provisions of CEQA; and
and
3.7.2 Buyer's prior satisfaction of the conditions set forth in Section 3.6, above;
3.7.3 The recording of the Deed of Trust and Regulatory Agreement; and
3.7.4 The issuance by a title company satisfactory to the Seller of an ALTA loan
policy of title insurance ("Seller Title Policy") in the amount of the Loan, insuring the
Seller that the lien of the Seller Deed of Trust is subject only to such liens, conditions,
encumbrances, restrictions, easements and exceptions as the Seller may approve in
writing and containing such endorsements as the Seller may reasonably require, with
the cost of the Seller Title Policy to be paid by the Buyer; and
3.7.5 The Seller's receipt of a written requisition for disbursement of funds from
Buyer specifying the amount and use of the requested funds, which may be satisfied by
the title company's estimated settlement statement showing the acquisition price,
closing costs and all other amounts due in escrow for Buyer's acquisition of the
Property.
Section 3.8 Construction Component. The Seller shall not be obligated to make any
disbursements of the Construction Components of the Loan unless the following
conditions precedent are satisfied prior to each such disbursement of the Loan, except
as set forth in paragraph following item (e) below:
3.8.1 The Buyer's prior satisfaction of the conditions set forth in Section 3.6 and
3.7 above; and
3.8.2 The Buyer has delivered to Seller an updated Approved Development
Budget showing that the undisbursed proceeds of the Loan, together with other funds or
firm commitments for funds that the Buyer has obtained in connection with the
Development, are not less than the amount necessary to pay for construction of the
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Development; and
3.8.3 The Buyer has delivered to the Seller copies of the following Development
documents: Final plans and specifications for the Development; the general
contractor's construction contract that the Buyer has entered for construction of the
Development; labor and material (payment) bonds and performance bonds or
alternative form of assurance of completion as approved by the Seller, which approval
shall not be unreasonably withheld, delayed or conditioned; and
3.8.4 The Buyer's other construction loans are ready to close or have issued
commitments to close within thirty (30) days; and
3.8.5 The Seller has received a written draw request from the Buyer, including
certification that the condition set forth in Subsection 3.6(a) continues to be satisfied,
and setting forth the proposed uses of funds consistent with the Approved Development
Budget, the amount of funds needed, and, where applicable, a copy of the bill or invoice
covering a cost incurred or to be incurred. When a disbursement is requested to pay
the general contractor in connection with improvements on the Property, the written
request must be accompanied by (i) certification by the Buyer's architect reasonably
acceptable to the Seller that the work for which disbursement is requested has been
completed; (ii) a copy of the inspection report prepared by the construction lender's
inspector, and (iii) lien releases and/or mechanics lien title insurance endorsements
reasonably acceptable to the Seller. The Buyer shall deliver to Buyer's other
construction lenders copies of all disbursement requests following approval and
execution by the Seller.
Notwithstanding the above conditions precedent to the disbursement of the
Construction Component, the Seller shall disburse the Construction Component for the
following costs and fees upon Buyer meeting the conditions set forth as items (a), (b)
and the first sentence of (e) of this Subsection 3.8: Building permit fees, other fees for
approvals and other items required to be paid prior to the construction loan closing.
The Seller acknowledges that Buyer's senior construction lenders shall require
that the Loan shall be fully disbursed prior to the senior construction lender's
disbursement of the senior construction loan.
Section 3.9 No Obligation to Disburse Proceeds Upon Default. Notwithstanding any
other provision of this Agreement, the Seller shall have no obligation to disburse or
authorize the disbursement of any portion of the Loan proceeds following the failure of
any of the Buyer's representations and warranties made in this Agreement or in
connection with the Loan to be true and correct in all material respects or the
occurrence of an Event of Default under this Agreement or any of the Loan Documents,
which remains uncured beyond any applicable cure period.
Section 3.10 Termination of Agreement for Infeasibility and Other Specified Reasons.
Provided that the Buyer is not in Default under this Agreement, this Agreement may be
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terminated by the Buyer under the following circumstances set forth in a -c, below, by
giving not less than Thirty (30) days prior written notice of such termination to the Seller.
3.10.1 General Plan is not amended with the new Land Use designation allowing
the type development contemplated by this Agreement for the Property; or
3.10.2 The Property in unsuitable for the intended use as set forth in Section
1.1.9; or
3.10.3 The determination by the Buyer in its commercially reasonable discretion
that the development costs associated with the construction of the Development make
the Development financially infeasible.
The Buyer shall meet with the Seller to discuss Buyer's determination that the
Development is financially infeasible and to discuss possible alternate plans acceptable
to the Seller.
Following termination under this Section 3.10, neither party shall have any rights
or obligations under this Agreement, except that the provisions of Sections 4.7, 4.8.1,
4.9, 6.3.6, 6.3.10, 8.5.3 and 12.4 of this Agreement shall survive such termination and
remain in full force and effect. Notwithstanding this Section, Buyer shall be liable for the
amount of the loan more particularly set forth in the Promissory Note attached as Exhibit
F, except as forgiven in Paragraph 3.11, below.
Section 3.11 Forgiveness of a Portion of the Predevelopment Component in Certain
Circumstances The Seller shall forgive up to seventy-five thousand dollars ($75,000) of
the Predevelopment Component of the Loan upon termination of this Agreement
pursuant to Section 3.10, above provided that the Buyer takes all actions necessary to
implement the Assignment of Agreements and deposits the Documents with the Seller.
ARTICLE 4
DISPOSITION OF THE PROPERTY
The Seller shall convey to Buyer, and Buyer shall accept from the Seller, fee
interest in the Property, upon the satisfaction or waiver of all conditions precedent set
forth in this Article.
Section 4.1 Purchase Price. The purchase price for the Property shall be Six Hundred
Fifty Thousand Dollars ($650,000) ("Purchase Price") which shall be paid in cash to
Seller at the close of escrow.
Section 4.2 Escrow and Closing. This transaction shall be completed through an
escrow numbered 54605-918488-09 established with North American Title Company
located at 21060 Redwood Road, Suite 110, Castro Valley, CA 94546, Attention:
Suzanne Smith, Branch Manager. The Buyer shall have the right to select the company
issuing the title policy, notwithstanding North American Title Company acting as the
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escrow holder. Each party shall promptly deposit all funds and documents as required
by the escrow holder to complete this transaction.
Section 4.3 Costs of Closing and Escrow. The Buyer shall pay all title insurance
premiums for policies the Buyer elects to purchase in connection with the lease of the
Property and the financing of the Project, and all conveyance and recording fees,
transfer taxes, escrow fees and closing costs incurred in connection with the transfer of
the Property and the financing of the Project. Property taxes and assessments shall be
prorated as of the date of Closing ("Closing Date").
4.3.1 Escrow Instructions; Deposit of Funds; Recordation of Documents. The
Seller and Buyer shall provide Escrow Agent with copy of this Agreement, which
together with such supplemental instructions as Seller or Buyer may provide and which
are consistent with the intent of this Agreement or which are otherwise mutually agreed
upon by the Seller and Buyer, shall serve as escrow instructions for the conveyance of
Property.
4.3.2 Closing Date. Within the time period set forth in the Schedule of
Performance, the Buyer and the Seller shall deposit into escrow executed copies
documents necessary to close escrow. On the Closing Date and provided that all
conditions precedent to the lease of the Property have been satisfied or waived, the
Escrow Agent shall cause the Grant Deed, the Regulatory Agreement and the Deed of
Trust to be recorded in the Official Records of San Joaquin County.
4.3.3 Closina Documents.
4.3.3.1 Seller Documents. Seller shall execute in Escrow, or deliver to
Escrow Holder for delivery to Buyer at the Close of Escrow, each of the following:
(a) Grant Deed executed by Seller; and
(b) Regulatory Agreement as provided in this Agreement; and
(c) Memorandum of this Agreement.
4.3.3.2 Buyer Documents. Buyer shall execute in escrow, or deliver to
Escrow Holder for delivery to Seller at the Close if Escrow, each of the following:
(a) Promissory Note and Deed of Trust; and
(b) Regulatory Agreement as provided in this Agreement; and
(c) Memorandum of this Agreement; and
(d) The amount the title and escrow costs and expenses and
prorations required by this Agreement; and
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(e) Any other document required by this Agreement which is to
be recorded upon the acquisition of the Property by Buyer.
Section 4.4 Seller Pre -Disposition Requirements. The provisions of this Section 4.4,
below, set forth the conditions precedent to Seller's obligation to convey the Property to
Buyer.
4.4.1 No Default. There shall exist no conditions, event or act which would
constitute a material breach or default under this Agreement, the Promissory Note or
Assignment of Agreements, or which, upon the giving of notice or the passage of time,
or both, would constitute such a material breach or default.
4.4.2 Preliminary Financing Plan. The Buyer shall submit to the Seller for its
review and approval its preliminary plan for the construction and permanent financing of
the Project (the "Preliminary Financing Plan"). The Preliminary Financing Plan shall
indicate all sources of funds necessary to pay, when due, the estimated costs of Project
development, including, without limitation, hard and soft construction costs, and shall
include development and operating proformas which set out the Buyer's preliminary
plan for financing the cost of development, construction and operation of the Project.
The parties acknowledge that the Preliminary Financing Plan is subject to change from
time to time based on the funding sources, Project costs and other factors. Each such
revision to the Preliminary Financing Plan shall be subject to Seller approval.
4.4.3 Execution and Recordation of Documents. Buyer shall have executed,
acknowledged and delivered into Escrow the Promissory Note and Deed of Trust and
Regulatory Agreement.
4.4.4 CEQA; NEPA. The Seller has completed its environmental assessment of
the Development in accordance with the provisions of the California Environmental
Quality Act ("CEQA") and has approved a negative declaration in accordance with the
provisions of CEQA. If HOME Funds are to be loaned to the Buyer, the Seller shall
have fulfilled the requirements of NEPA.
Section 4.5 Buyer's Pre -Disposition Requirements. This Section 4.5 sets forth the
conditions precedent to Buyer's obligation to purchase the Property from the Seller.
4.5.1 No Default. Seller shall not be in default under the terms of this
Agreement, and all representations and warranties of Seller contained herein shall be
true and correct in all material respects.
4.5.2 Title Policy. The Title Company (defined above in Section 4.2) is prepared
to issue to Buyer, at Buyer's cost, an ALTA policy of title insurance, insuring Buyer's
leasehold interest in the Property, subject only to (i) any lien for taxes accrued
subsequent to the conveyance of the Property; (ii) assessments, conditions, covenants,
restrictions or easements of record; (iii) utility easements to service the Property which
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do not interfere with its existing or intended use; and (iv) such other title exceptions that
Buyer shall have approved in its reasonable discretion.
4.5.3 Changed Conditions. There have been no changed conditions with
respect to the permitted uses or condition of the Property which materially and
adversely affect intended use of the Property or substantially increases the Buyer's
Project costs.
Section 4.6 Condition of the Property.
4.6.1 Inspections. The Buyer acknowledges and agrees that: (i) the Buyer shall
inspect the Property and the improvements located thereon, and shall examine the
legal, environmental, zoning, land use, seismic, title, survey and physical characteristics
and condition thereof; (ii) by acquiring title to the Property, the Buyer shall be deemed to
have approved of all such characteristics and conditions; (iii) the Property and the
improvements thereon are to be conveyed to, and accepted by the Buyer in their
present condition "AS IS," "WHERE IS" AND WITH ALL FAULTS with no warranty
expressed or implied regarding the condition of the soil, its geology, or the presence of
known or unknown faults or Hazardous Materials, and no patent or latent defect or
deficiency in the condition of the Property or the improvements thereon whether or not
known or discovered, shall affect the rights of either the Seller or Buyer hereunder. The
Buyer shall rely solely upon its own independent investigation concerning the physical
condition of the Property and its compliance with applicable statutes, ordinances, rules
and regulations. The Seller shall have no responsibility for site preparation, demolition,
or any other removal or replacement of any improvements on the Property. Within
Thirty (30) days of the Effective Date of this Agreement, the Seller shall provide copies
of any documents in their possession, reports, studies, investigations (environmental or
otherwise) and other documents in the possession and control of the Seller, including all
contracts and other documentation in connection with the Seller's site clearance and
demolition work, if any, on the Property during the Seller's ownership of the Property.
Nothing in this Agreement, including this Section 4.6.1, shall limit, waive or relieve the
Seller from any legal duty which the Seller may have to disclose any known defect.
4.6.2 Suitable for Intended Use. If following conveyance of the Property, the
condition of the Property is not in all respects entirely suitable for the uses to which the
Property will be put pursuant to this Agreement, Buyer may terminate this Agreement
without fault pursuant to Section 3.10 provided that the Buyer gives the Seller thirty (30)
days prior written notice of the termination. If the Buyer elects to proceed under this
Agreement, it shall be the sole responsibility and obligation of Buyer to correct any soil,
subsurface or structural conditions, demolish any improvements, and otherwise put the
Property in a condition suitable for the Project to be constructed pursuant to this
Agreement. The Buyer hereby waives any right to seek reimbursement from the Seller
for costs Buyer incurs in connection with the correction of any physical condition on the
Property, except to the extent such costs are related to Hazardous Materials known to
Seller but not disclosed to Buyer.
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4.6.3 Other Obligations.
4.6.3.1 It shall be the sole responsibility of the Buyer, at the Buyer's sole
expense, to investigate and determine the soil conditions of the Property and the
suitability of such soil conditions for the construction of the Project by the Buyer. If the
soil conditions are not in all respects entirely suitable for the use or uses to which the
Property will be put, then it is the sole responsibility and obligation of the Buyer to take
such action as may be necessary to place the soil conditions of the Property in a
condition suitable for development of the Property.
4.6.3.2 The Seller agrees that it shall not charge Buyer a fee to process
the General Plan amendment and land use designation change for the Property.
4.6.3.3 The Seller shall use its due diligence and best efforts to prohibit
the dumping of soil and/or other debris on the Property by any adjacent property owners
or others, and if such dumping occurs have the debris removed and, in the case of soil,
tested for contamination prior to removal from the Property.
4.6.3.4 Seller agrees to cooperate with and assist Buyer in a lot split of
the approximately 3.39 acre Property, which shall be completed prior to the Closing
Date. Buyer shall pay for all costs and expenses for the lot split. Seller's sole
responsibility in connection with the lot split shall be to execute documents as the owner
of the Property. The purpose of the lot split is to divide the Property into a southern
parcel consisting of approximately 1.69 acres and a northern parcel consisting of
approximately 1.7 acres. Buyer will first develop the southern parcel as an affordable
rental housing project for very low to low income seniors. Buyer also intends to
develop the northern parcel as an affordable rental housing project for very low to low
income seniors.
Section 4.7 Access. Prior to conveyance of Property by the Seller, representatives of
the Buyer shall have the right of access to the Property at all reasonable times, upon
not less than two (2) business days written notice to the Seller, for the purpose of
obtaining data and making surveys and tests necessary to carry out this Agreement.
While any of the activities described in this Section are taking place, the Buyer shall
maintain the insurance coverage's described in Section 8.10 and indemnify and hold the
Seller harmless from any injury or damages arising out of any activity pursuant to this
paragraph. The Buyer shall have access to all data and information on the Property
available to the Seller, but without warranty or representation by the Seller as to the
completeness, correctness or validity of such data and information, except as otherwise
set forth in this Agreement.
Section 4.8 Indemnity, Hold Harmless and Waiver.
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4.8.1 Buyer Indemnity. Not withstanding Section 4.8.2, below, the Buyer
agrees, from and after the date of conveyance of the Property under this Agreement, to
defend, indemnify, protect and hold harmless the Seller and their officers, beneficiaries,
employees, agents, attorneys, representatives, legal successors and assigns
("Indemnitees") from, regarding and against any and all liabilities, obligations, orders,
decrees, judgments, liens, demands, actions, Environmental Response Actions, claims,
losses, damages, fines, penalties, expenses, Environmental Response Costs or costs
of any kind or nature whatsoever, together with fees (including, without limitation,
reasonable attorneys' fees and experts' and consultants' fees), whenever arising,
unless caused in whole or in part by the negligence of any of the Indemnitees, resulting
from or in connection with the construction of the Development by the Buyer, the
general contractor or any subcontractor or supplier of or to the Development, the
Buyer's occupancy or use of the Property or the Buyer's performance or non-
performance under or with respect to this Agreement or the actual or claimed
generation, storage, handling, transportation, use, presence, placement, migration
and/or release of Hazardous Materials, at, on, in, beneath or from the Property
(collectively referred to as "Contamination"). The Buyer's defense, indemnification,
protection and hold harmless obligations herein shall include, without limitation, the duty
to respond to any governmental inquiry, investigation, claim or demand regarding the
Contamination, at the Buyer's sole cost. If the Buyer discovers Contamination or other
materials subject to legal requirements or corrective action, the Buyer shall immediately
notify the Seller of the same. Buyer's indemnity obligations under this paragraph shall
not apply to (i) any Contamination caused by the Seller during the Seller's ownership of
the Property, (ii) the Seller's or Seller's failure to disclose any known condition which the
Seller is required to give to any transferee of real property, (iii) any placement of soil or
other debris on the Property by adjacent property owners or others during the Seller's
ownership of the Property, and (iv) liability of the Seller, not as the owner of the Property
but as the owner of any adjacent property for Contamination originating or migrating
from adjacent property owned by the Seller.
4.8.2 CEQA Lawsuit. In the event a CEQA lawsuit is brought which relates to
this Agreement and/or the Development, the Parties shall meet and confer about
whether to proceed with the Development.
4.8.3 Waiver. The Buyer hereby waives all rights, causes of action and claims
the Buyer has or may have in the future against the Indemnitees arising out of or in
connection with any Hazardous Materials, at, on, in, beneath or from the Property,
unless the presence of such Hazardous Materials at, on, in, beneath or from the
Property is caused in whole or in part by any of the Indemnitees, including (i) any
Contamination caused by the Seller during the Seller's ownership of the Property, (ii)
the Seller's or Seller's failure to disclose any known condition which the Seller is
required to give to any transferee of real property, (iii) any placement of soil or other
debris on the Property by adjacent property owners or others during the Seller's
ownership of the Property, and (iv) liability of the Seller, not as the owner of the Property
but as the owner of any adjacent property for Contamination originating or migrating
from adjacent property owned by the Seller.
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4.8.4 Materiality. The Buyer acknowledges and agrees that the defense,
indemnification, protection and hold harmless obligations of the Buyer for the benefit of
the Seller set forth in this Agreement are a material element of the consideration to the
Seller for the performance of its obligations under this Agreement, and that the Seller
would not have entered into this Agreement unless the Buyer's obligations were as
provided for herein. The Buyer further acknowledges and agrees that the paragraph
which extends representations, warranties, indemnifications, and/or covenants of the
Buyer to the benefit of the Seller shall not be satisfied, waived or otherwise extinguished
by Seller's issuance of any Certification of Completion under Section 6.3.9 of this
Agreement.
Section 4.9 Commissions. Each party represents and warrants to the other party that
no broker or finder or other real estate agent is entitled to any commission, finder's fee
or other compensation resulting from any action on its part. The Buyer and Seller each
agree to indemnify the other and defend and hold harmless the other party from and
against any loss, cost, or expense, including attorneys fees, incurred by such party, and
against any claims, causes of action or the like brought by any broker, finder or similar
agent for a commission or fee on account of this Agreement.
ARTICLE 5
PREDEVELOPMENT ACTIVITIES
This Article 5 sets forth various predevelopment obligations and activities that the
Buyer shall seek diligently and in good faith to perform and achieve prior to
commencement of construction of the Development. The tasks described below shall
be completed no later than the dates to be set forth in a Schedule of Performance in the
format attached to this Agreement as Exhibit K, once approved by Buyer and Seller,
subject to Force Majeure. The Schedule of Performance may be modified by the
parties from time to time by attaching an updated Schedule of Performance that is dated
and executed by the Buyer and by the City Manager on behalf of the Seller without
formal amendment of this Agreement.
Section 5.1 CEQA Documentation. Within the time frame set forth in the Schedule,
the Buyer shall prepare and submit to the Seller such plans, specifications, drawings,
and other information, as specified by the Seller, are reasonably necessary for the
Seller to perform the environmental review process required by CEQA. The Buyer shall
provide the Seller any updated documentation of the Project in order to facilitate the
Seller's performance of the CEQA review process.
Section 5.2 CEQA Review. Following execution of this Agreement and within the time
frames set forth in the Schedule of Performance, the Seller, shall diligently complete
any required environmental review of the Project in accordance with CEQA, subject to
any exemption for which the Project may qualify. The Buyer acknowledges that the
environmental review process under CEQA will involve preparation and consideration of
additional information as well as consideration of input from interested organizations
and individuals; that approval or disapproval of the Project following completion of the
environmental review process is within the sole, complete, unfettered and absolute
discretion of the Seller without limitation by or consideration of the terms of this
Agreement; and that the Seller makes no representation regarding the ability or
willingness of the Seller to approve development of the Project at the conclusion of the
environmental review process required by CEQA, or regarding the imposition of any
mitigation measures as conditions of any approval that may be imposed on the Project.
The parties recognize that if as a result of the environmental review process the Project
is not approved for development, both the Seller and the Buyer each have an
independent right to terminate this Agreement. In the event the either party elects to
terminate this Agreement pursuant to this paragraph, neither party shall have any
further obligations under this agreement, except that the provisions of Sections 4.7,
4.8.1, 4.9, 6.3.6, 6.3.10, 8.5.3 and 12.4 of this Agreement shall survive such termination
and remain in full force and effect. In addition, the Buyer acknowledges that any
required approvals by any other local, state or federal agency may require additional
environmental review, and that any approval by the Seller shall not bind any other local,
state or federal agency to approve the Project or to impose mitigation measures which
are consistent with the terms of this Agreement or with the terms of any mitigation
measures required by the Seller pursuant to the Seller's environmental review. The
Seller agrees to cooperate with the Buyer to obtain all necessary approvals by providing
all information and studies in the possession and control of the Seller.
Nothing in this Agreement or otherwise shall bind or otherwise affect the Seller's
discretion in:
5.2.1 The preparation of any CEQA review document in accordance with CEQA
and normal public agency land use entitlement procedures;
5.2.2 Approving or rejecting such CEQA review in accordance with applicable
CEQA standards;
5.2.3 Making or declining to make any findings necessary under CEQA to grant
the Land Use Approvals and the proposed development of the Project contemplated by
this Agreement and the Buyer's application for the Land Use Approvals; or
5.2.4 Imposing such mitigation measure(s) as condition(s) of the Land Approvals
as the Seller deems appropriate under CEQA as a result of its consideration of the CEQA
review documents.
Section 5.3 Preliminary Site Plan. The Buyer shall develop the Property and construct
the Project in accordance with the Scope of Development, which shall be attached hereto
as Exhibit L, when approved by Seller. The Parties agree that the Property and
Improvements shall be developed as generally established in the Preliminary Site Plan as
set forth on Exhibit M attached or to be attached hereto as the same may be updated from
time to time with the approval of the Seller. Any material changes to the Preliminary Site
Plan shall be subject to the approval of the Seller and shall be within the limitations of the
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Scope of Development and consistent with the overall plan for the development of the
Property as provided in this Agreement. Neither party shall unreasonably withhold or
delay consent to any material changes in the Preliminary Site Plan.
Section 5.4 Related Documentation. In addition to the Site Plan, the Buyer shall prepare
all construction plans, drawings and related documents required to be submitted for
approval by the Seller (or other governing body) for the construction of the Project.
Seller's staff and the Buyer shall hold regular monthly progress meetings to coordinate the
preparation of, submission to and review of all such documents, drawings and plans. The
Seller and the Buyer shall communicate and consult informally as frequently as is
necessary to insure that the formal submittal of any documents receives prompt and
speedy consideration.
Section 5.5 Land Use Approvals. The Buyer shall exercise diligent good faith efforts to
obtain all Additional Land Use Approvals necessary for the Development within the time
set forth in the Schedule of Performance. The Buyer acknowledges that execution of this
Agreement by the Seller does not constitute approval by the Seller of any required permits,
applications, allocations, or maps, and in no way limits the discretion of the Seller in the
permit, allocation and approval process.
Section 5.6 Funding Sources.
5.6.1 Tax -Exempt Bond Applications. Within the time set forth in the Schedule of
Performance, the Buyer shall submit a timely and complete application to CDLAC for a
preliminary allocation of tax-exempt bonds; provided, however, Buyer shall not be
required to submit an application for which an allocation would be received anytime
after September of the application year.
5.6.2 Tax Credit Applications. Within the time set forth in the Schedule of
Performance (subject to the limitations set forth in Section 5.6.1, above regarding
submission for a bond allocation from CDLAC) , the Buyer shall submit a timely and
complete application to TCAC for a preliminary reservation of 4% tax credits.
5.6.3 HUD 202 Capital Advance. Within the time set forth in the Schedule of
Performance, the Buyer shall submit a timely and complete application for a HUD 202
Capital Advance Reservation to finance the Development.
5.6.4 Other Funding Sources. The Buyer shall submit timely and complete
applications for the Other Funding Sources within the time set forth in the Schedule of
Performance. The Buyer shall use good faith efforts to maximize the procurement of other
sources of project funding so as to minimize the amount of the Loan.
Section 5.7 Financing Plan. Within the time set forth in the Schedule of Performance,
the Buyer shall submit for Seller approval a Financing Plan (the "Financing Plan")
containing the following:
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5.7.1 An updated development budget (the "Development Budget") showing a
"sources and uses" breakdown of the costs of constructing the Development; and
5.7.2 An operating proforma for the first Thirty (30) years of operation of the
Development including funding for the provision of supportive services. If the
Development does not have a rental subsidy committed, the Financing Plan shall
demonstrate that the target population can pay the proposed rents; and
5.7.3 Copies of all required funding commitments for construction and permanent
financing for the Development, including a preliminary tax credit reservation and an
executed commitment letter from an equity investor acceptable to the Seller; and
5.7.4 Any other information that is reasonably necessary to the Seller in
determining that the Buyer has the financial capability to pay all costs of constructing and
operating the Development.
ARTICLE 6
CONSTRUCTION OF THE IMPROVEMENTS
Section 6.1 Commencement of Construction. The Buyer shall cause the
commencement of construction of the Improvements no later than the date set forth in
the Schedule of Performance, subject to Force Majeure.
Section 6.2 Completion of Construction. The Buyer shall diligently prosecute
construction of the Improvements to completion, and shall cause the completion of the
construction of the Improvements no later than the date set forth in the Schedule of
Performance, subject to Force Majeure. Upon completion of construction Buyer shall
promptly apply for a final certificate of occupancy for the Development.
Section 6.3 Construction Obligations.
6.3.1 Construction Plans Must Be Approved; Construction in Accordance with
Plans and Approvals. The Buyer shall not commence construction of the Development
until the Buyer has received all required permits from the Seller Building Department.
The Buyer shall construct the Development in accordance with the approved
Construction Plans and all other permits and approvals granted by the Seller pertaining
to development of the Development. The Buyer shall comply with all directions, rules
and regulations of any fire marshal, health officer, building inspector or other officer of
every governmental agency having jurisdiction over the Property or the Development.
Each element of the work shall proceed only after procurement of each permit, license
or other authorization that may be required for such element by any governmental
agency having jurisdiction. All design and construction work on the Development shall
be performed by licensed contractors, engineers or architects, as applicable.
6.3.2 Change in Construction Plans. If the Buyer desires to make any material
change in the Construction Plans, the Buyer shall submit the proposed changes to the
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Seller for approval, which approval shall not be unreasonably withheld or delayed if the
Construction Plans, as modified by any proposed change, conform to the requirements
of this Agreement, the Scope of Development, the Development approvals and the
Conditions of Approval. As used in the preceding sentence, "material change" means
(i) any change for which approval of the Seller is required under the Seller's building
approval process, (ii) any structural change, (iii) any change to the exterior of buildings,
elevation, number of units, or increase or decrease of the square footage of the
community building to the Development by more than 10%, or (iv) any single change
order in excess of $50,000 or $250,000 in the aggregate. Unless such proposed
change is rejected within three (3) business days, Seller shall be deemed to have
approved such change. If rejected within such time period, the previously approved
Construction Plans shall continue to remain in full force and effect. This section shall
not apply to any approvals required by the Seller Building Department in connection
with any building, grading or other permits issued for the Development.
Any change in the Construction Plans required in order to comply with applicable
law shall be deemed approved, so long as such changes do not substantially, nor
materially, change the architecture, design, function, use, or other amenities of the
Development as shown on the latest approved Construction Plans.
6.3.3 Defects in Plans. The Seller shall not be responsible to the Buyer or to
any third party for any defect in the Construction Plans or for any structural or other
defect in any work done pursuant to the Construction Plans.
6.3.4 Performance and Payment Bonds. The Buyer shall deliver to the Seller
copies of payment bonds in an amount equal to Fifty Percent (50%) and performance
bonds in an amount equal to One Hundred Percent (100°/x) of the scheduled cost of the
construction of the Improvements (the "Construction Bonds") for the construction of the
Improvements. Such bonds shall (i) be in a form reasonably acceptably to the Seller,
(ii) be issued by a surety licensed to do business in California and reasonably
acceptable to the Seller, and (iii) name the Seller as a co -obligee. In lieu of such
performance and payment bonds, the Buyer may submit evidence satisfactory to the
Seller of the Buyer's ability to commence and complete construction of the Development
in the form of a completion guaranty in a form and from a guarantor acceptable to
Seller. Such evidence must be submitted in approvable form in sufficient time to allow
the Seller to review and approve the information prior to the start of construction.
6.3.5 Construction Period Reporting. During the period of construction, but not
more frequently than once a month, the Buyer shall submit to the Seller a written
progress report of the construction when and as requested by the Seller. The report
shall be in the form of a construction draw report generally submitted by general
contractors with such additional detail as may reasonably be required by the Seller and
shall include a reasonable number of construction photographs taken since the last
report submitted by the Buyer.
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6.3.6 Seller Right of Access. For the purposes of assuring compliance with this
Agreement, representatives of the Seller shall have the reasonable right of access to
the Property without charges or fees and at normal construction hours during the period
of construction for the purposes of this Agreement, including, but not limited to, the
inspection of the work being performed in constructing the Development. Such
representatives of the Seller shall be those who are so identified in writing by the
Seller's City Manager. The Seller shall indemnify the Buyer and hold it harmless from
any damage caused (including any reasonable damages or costs incurred by any
wrongful delays caused by the Seller) or liability arising out of this right to access.
The Buyer acknowledges that the Seller is under no obligation, and Seller neither
undertakes nor assumes any responsibility or duty, to Buyer or to any third party to in
any manner review, supervise, or inspect the progress of construction or the operations
of the Development. Buyer and all third parties shall rely entirely upon its or their own
supervision and inspection in determining the quality and suitability of the materials and
work, and the performance of architects, subcontractors, and material suppliers and all
other matters relating to the construction and operation of the Development. Any review
or inspection undertaken by the Seller is solely for the purpose of determining whether
Buyer is properly discharging its obligations to Seller, and shall not be relied upon by
Buyer or any third party as a warranty or representation by the Seller as to the quality of
the design or construction of the Improvements or otherwise.
6.3.7 Prevailing Wages. The Buyer and all the Buyer's subcontractors shall
comply with the Davis -Bacon Act, 40 U.S.C. §§3141 et seq., California Health and
Safety Code Section 33422.1, California Labor Code Section 1770 et seq., and all
regulations adopted pursuant thereto (referred to herein as, "Prevailing Wage Laws"),
and be responsible for carrying out the requirements of such provisions, if and to the
extent the Prevailing Wage Laws are applicable to this Development. The Buyer shall,
and hereby agrees to, unconditionally indemnify, reimburse, defend, protect and hold
harmless the Seller and their elective and appointive boards, commissions, officers,
agents, attorneys, consultants and employees, and all of their respective successors
and assigns, from and against any and all claims, demands, suits and actions at law or
in equity, and losses, liabilities, expenses, penalties, fines, orders, judgments, injunctive
or other relief, and costs and damages of every kind, nature and description (including
but not limited to attorneys' fees and court costs; with counsel reasonably acceptable to
the Seller), and administrative, enforcement or judicial proceedings, whether known or
unknown, and which directly or indirectly, in whole or in part, are caused by, arise from,
or relate to, or are alleged to be caused by, arise from, or relate to, the payment or
requirement of payment of prevailing wages or the requirement of competitive bidding in
the construction of the Development, the failure to comply with any state or federal labor
laws, regulations or standards in connection with this Agreement, including but not
limited to California Labor Code Section 1770 et seq. and the Prevailing Wage Laws, or
any act or omission of the Buyer related to this Agreement with respect to the payment
or requirement of payment of prevailing wages or the requirement of competitive
bidding, whether or not any insurance policies shall have been determined to be
applicable to any such claims, demands, suits, actions, losses, liabilities, expenses,
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penalties, fines, orders, judgments, injunctive or other relief, costs, damages, or
administrative, enforcement or judicial proceedings. It is further agreed that the Seller
does not, and shall not, waive any rights against the Buyer which they may have by
reason of this indemnity and hold harmless agreement because of the acceptance by
the Seller, or the deposit with the Seller by the Buyer, of any of the insurance policies
described in this Agreement.
6.3.8 Equal Opportunity in Contracting Construction. During the construction of
the Development, the Buyer and all of the Buyer's subcontractors shall not discriminate
on the basis of race, religion, sex, or national origin in the hiring, firing, promoting or
demoting of any person engaged in the construction work and shall require its
contractors and subcontractors to refrain from discrimination on such basis.
6.3.9 Certificate of Completion. Promptly after completion of all construction
and development of the Development, the Seller shall furnish the Buyer with a final
Certificate of Completion upon written request therefore by the Buyer. Buyer agrees not
to submit such written request until after receipt by Buyer of the certificate of occupancy
from the Seller. The final Certificate of Completion shall be, and shall so state,
conclusive determination of satisfactory completion of the construction of the
Development in accordance with the provisions of this Agreement. Such Certificate of
Completion shall be in such form as to permit it to be recorded in the Office of the
County Recorder of San Joaquin County.
A Certificate of Completion shall not constitute evidence of compliance with or
satisfaction of any obligation of the Buyer to any holder of a mortgage or any insurer of
a mortgage securing money loaned to finance the Development.
6.3.10 Compliance with Laws. The Buyer shall carry out the construction of the
Development in conformity with all applicable state, local and federal laws, ordinances,
rules and regulations, including all applicable state and federal labor laws and
standards, the Seller zoning and development standards, building, plumbing,
mechanical and electrical codes, all other provisions of the Seller's Municipal Code, and
all applicable disabled and handicapped access requirements, including without
limitation, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq.,
Government Code Section 4450, et seq., Government Code Section 11135, et seq.,
and the Unruh Civil Rights Act, Civil Code Section 51, et seq..
6.3.11 Liens and Stop Notices. Until the recording of the Certificate of
Completion, the Buyer shall not allow to be placed on the Property or any part thereof
any lien or stop notice on account of materials supplied to or labor performed on behalf
of the Buyer. If a claim of a lien or stop notice is given or recorded affecting the
Development, the Buyer shall within thirty (30) days of such recording or service:
(a) pay and discharge the same; or (b) effect the release thereof by recording and
delivering to the party entitled thereto a surety bond in sufficient form and amount or
provide other assurance satisfactory to Seller that the claim of lien or stop notice will be
paid or discharged.
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6.3.12 Right of Seller to Satisfy Liens on the Property. After the conveyance of
the Property, if the Buyer fails to satisfy or discharge any lien or stop notice on the
Property pursuant to Section 6.3.11 above, the Seller shall have the right, but not the
obligation, to satisfy any such liens or stop notices at Buyer's expense and without
further notice to Buyer. In such event the Buyer shall be liable for and shall immediately
reimburse Seller for such paid lien or stop notice. Alternatively, the Seller may require
Buyer to immediately deposit with Seller the amount necessary to satisfy such lien or
claim pending resolution thereof. The Seller may use such deposit to satisfy any claim
or lien that is adversely determined against Buyer. Buyer shall file a valid notice of
cessation or notice of completion upon cessation of construction of the Improvements
for a continuous period of thirty (30) days or more, and shall take all other reasonable
steps to forestall the assertion of claims or liens against the Property or the
Improvements. The Seller may (but has no obligation to) record any notices of
completion or cessation of labor, or any other notice that the Seller deems necessary or
desirable to protect its interest in the Property and the Improvements.
ARTICLE 7
USE OF THE PROPERTY
Section 7.1 Uses. The Buyer covenants and agrees for itself, its successors and
assigns, that the Buyer and its successors and assignees shall devote the Property to
the uses specified in this Agreement, and that for the term of the Regulatory Agreement,
the Property shall be used as an affordable housing development in accordance with
the terms and conditions thereof.
Section 7.2 Affordable Housing. For a term of Fifty -Five (55) years commencing upon
the issuance of a final certificate of occupancy for the Improvements, the City shall not
require that more than forty-nine percent (49%) of the units on the Property be used
solely for an affordable housing project in which residential units shall be available at
Affordable Housing Rent to eligible very -low income senior or elderly households
pursuant to and in accordance with the Regulatory Agreement.
Section 7.3 Regulatory Agreement. As required by Seller's available funding sources
the Buyer and the Seller will record a Regulatory Agreement substantially in the form
attached to this Agreement as Exhibit I (the "Regulatory Agreement"). The Regulatory
Agreement will restrict rental of each Affordable Unit to an affordable level. The
Regulatory Agreement shall contain such rights to other mechanisms as Seller shall
determine are necessary to insure that the Affordable Units all remain affordable. The
parties acknowledge that blank information relating to the unit breakdown by size and
affordability in the Regulatory Agreement need to be completed subject to the Seller's
approval. In the event the Seller and Buyer are unable for any reason to agree upon
the information to complete the Regulatory Agreement by the time set forth in the
Schedule for Performance, either party may terminate this Agreement. The Seller
agrees to execute, and record at Buyer's cost, subordination agreements to subordinate
the Regulatory Agreement to Buyer's construction and/or permanent loans for the
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Project if (i) such construction and/or permanent financing is provided by (a) the
Department of Housing and Community Development ("HCD"), the California Housing
Financing Seller ("CaIHFA"), HUD, or other public senior lender which requires by
statute or regulation that regulatory agreements with local public entities be
subordinated, or (b) in the case of tax-exempt bond financing, subordination of the
Regulatory Agreement is required by such financing, or (ii) Buyer demonstrates to the
satisfaction of the Seller that, compared to financing available to Buyer if Regulatory
Agreement is subordinated, financing without such subordination will be offered on less
favorable terms. In all cases, the Seller shall be entitled to notice and cure provisions.
ARTICLE 8
ONGOING OBLIGATIONS
Section 8.1 Marketing Plan. No later than three (3) months prior to the projected date
of the completion of the construction of the Development, the Buyer shall submit to the
Seller its plan for marketing the Development to income -eligible senior households as
required pursuant to the Regulatory Agreement, including information on affirmative
marketing efforts and compliance with fair housing laws, including but limited to the
information required under 24 CFR 92.351(a) (the "Marketing Plan").
Section 8.2 Financial Accountings and Post -Completion Audits. No later than ninety
(90) calendar days following completion of construction of the Development, the Buyer
shall provide to Seller a financial accounting of all sources and uses of funds for the
Development. No later than one hundred fifty (150) calendar days following completion
of construction of the Development, the Buyer shall submit an audited financial report
showing the sources and uses of all funds utilized for the Development, as well as a
copy of form 8609 that the Buyer is required to submit to TCAC.
Section 8.3 Records. The Buyer shall keep and maintain at the Development, or
elsewhere with the Seller's written consent, full, complete and appropriate books, record
and accounts relating to the Development, including all such books, records and
accounts necessary or prudent to evidence and substantiate in full detail the Buyer's
compliance with the terms and provisions of this Agreement. Books, records and
accounts relating to the Buyer's compliance with the terms, provisions, covenants and
conditions of this Agreement shall be kept and maintained in accordance with generally
accepted accounting principles consistently applied, and shall be consistent with
requirements of this Agreement. All such books, records, and accounts shall be open to
and available for inspection and copying by the HUD, the Seller, its auditors or other
authorized representatives at reasonable intervals during normal business hours. The
Buyer shall permit any duly authorized representative of the HUD or the Seller to
inspect and copy such records. Copies of all tax returns and other reports that Buyer
may be required to furnish to any governmental Seller shall at all reasonable times be
open for inspection by the Seller at the place that the books, records and accounts of
the Buyer are kept. Such records shall include all invoices, receipts, and other
documents related to expenditures from the Seller Loan funds and must be kept
accurate and current. The Buyer shall maintain complete, accurate, and current records
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pertaining to the Development for a period of not less than five (5) years after the
creation of such records for all other expenditures in compliance with all HUD records
and accounting requirements including but not limited to those set forth in Subpart K of
24 CFR 570 and 24 CFR 92.508. If any litigation, claim, negotiation, audit exception,
monitoring, inspection or other action relating to the use of the Loan is pending at the
end of the record retention period stated herein, then the Buyer shall retain such
records until such action and all related issues are resolved. Such records shall include
but not be limited to:
8.3.1 Records providing a full description of the activities undertaken with the
use of the HOME Funds and CDBG Funds; Records demonstrating that each activity
undertaken meets one of the national objectives of the CDBG program set forth in 24
CFR 570.208;
8.3.2 Records demonstrating compliance with the HUD property standards and
lead-based paint requirements;
8.3.3 Records required to determine the eligibility of activities under CDBG
Regulations set forth in 24 CFR 570 et seq.;
8.3.4 Records demonstrating compliance with the affordability and income
requirements for tenants;
8.3.5 Records documenting compliance with the fair housing, equal opportunity,
and affirmative fair marketing requirements, as applicable;
8.3.6 Financial records as required by 24 CFR 92.505, 24 CFR 570.502, and
OMB Circular A-110 (24 CFR 84);
8.3.7 Records demonstrating compliance with applicable relocation
requirements which must be retained for at least five (5) years after the date by which
persons displaced from the property have received final payments;
8.3.8 Records demonstrating that tenant leases comply with the HOME
Requirements set forth in 24 CFR 92 et seq.; and
8.3.9 Records demonstrating compliance with Section 3 of the Housing and
Urban Development Act of 1968 and other applicable labor requirements listed in
Section 6.3.7 above, including certified payrolls from the Buyer's general contractor
evidencing that applicable prevailing wages have been paid.
The Seller shall notify the Buyer of any records it deems insufficient. The Buyer
shall have Twenty -One (21) calendar days after the receipt of such a notice to correct
any deficiency in the records specified by the Seller in such notice, or if a period longer
than Twenty -One (21) days is reasonably necessary to correct the deficiency, then the
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Buyer shall begin to correct the deficiency within twenty-one (21) days and correct the
deficiency as soon as reasonably possible.
Section 8.4 Audits. The Buyer shall make available for examination at reasonable
intervals and during normal business hours to Seller all books, accounts, reports, files,
and other papers or property with respect to all matters covered by this Agreement, and
shall permit Seller to audit, examine, and make excerpts or transcripts from such
records. Seller may make audits of any conditions relating to this Agreement.
Section 8.5 Hazardous Materials.
8.5.1 Upon acquisition of the Property, the Buyer shall keep and maintain the
Development in compliance with, and shall not cause or permit the Development to be
in violation of any federal, state or local laws, ordinances or regulations relating to
industrial hygiene or to the environmental conditions on, under or about the
Development including, but not limited to, soil and ground water conditions. The Buyer
shall not use, generate, manufacture, store or dispose of on, under, or about the
Development or transport to or from the Development any flammable explosives,
radioactive materials, hazardous wastes, toxic substances or related materials,
including without limitation, any substances defined as or included in the definition of
"hazardous substances," hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations (collectively
referred to hereinafter as "Hazardous Materials") except such of the foregoing as may
be used in construction of the Development or customarily kept and used in and about
residential property of this type.
8.5.2 The Buyer shall immediately advise the Seller in writing if at any time it
receives written notice of (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against the
Buyer or the Development pursuant to any applicable federal, state or local laws,
ordinances, or regulations relating to any Hazardous Materials, ("Hazardous Materials
Law"); (ii) all claims made or threatened by any third party against the Buyer or the
Development relating to damage, contribution, cost recovery compensation, loss or
injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above are hereinafter referred to as "Hazardous Materials Claims"); and (iii) the Buyer's
discovery of any occurrence or condition on any real property adjoining or in the vicinity
of the Development that could cause the Development or any part thereof to be
classified as "border -zone property" under the provision of California Health and Safety
Code, Sections 25220 et sec.., or any regulation adopted in accordance therewith, or to
be otherwise subject to any restrictions on the ownership, occupancy, transferability or
use of the Development under any Hazardous Materials Law.
8.5.3 The Seller shall have the right to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated in connection with any Hazardous
Materials Claims and to have its reasonable attorneys' fees in connection therewith paid
by the Buyer. The Buyer shall defend, indemnify, and hold harmless the Seller and the
Seller and their council members, board members, directors, officers, employees,
agents, successors and assigns from and against any loss, damage, cost, expense or
liability directly or indirectly arising out of or attributable to the use, generation, storage,
release, threatened release, discharge, disposal, or presence of Hazardous Materials
on, under, or about the Development including without limitation: (a) all foreseeable
consequential damages; (b) the costs of any required or necessary repair, cleanup or
detoxification of the Development and the preparation and implementation of any
closure, remedial or other required plans; and (c) all reasonable costs and expenses
incurred by the Seller in connection with clauses (a) and (b), including but not limited to
reasonable attorneys' fees. These obligations to indemnify shall survive termination of
this Agreement. Buyer's indemnity obligations under this paragraph shall not apply to (i)
any Contamination caused by the Seller during the Seller's ownership of the Property,
(ii) the Seller's or Seller's failure to disclose any known condition which the Seller is
required to give to any transferee of real property, (iii) any placement of soil or other
debris on the Property by adjacent property owners or others during the Seller's
ownership of the Property, and (iv) liability of the Seller, not as the owner of the Property
but as the owner of any adjacent property for Contamination originating or migrating
from adjacent property owned by the Seller.
8.5.4 Without the Seller's prior written consent, which shall not be unreasonably
withheld, the Buyer shall not take any remedial action in response to the presence of
any Hazardous Materials on, under or about the Development, nor enter into any
settlement agreement, consent decree, or other compromise in respect to any
Hazardous Material Claims, which remedial action, settlement, consent decree or
compromise might, in the Seller's reasonable judgment, impair the value of the Seller's
security hereunder; provided, however, that the Seller's prior consent shall not be
necessary in the event that the presence of Hazardous Materials on, under, or about the
Development either poses an immediate threat to the health, safety or welfare of any
individual or is of such a nature that an immediate remedial response is necessary and
it is not reasonably possible to obtain the Seller's consent before taking such action,
provided that in such event the Buyer shall notify the Seller as soon as practicable of
any action so taken. The Seller agrees not to withhold its consent, where such consent
is required hereunder, if either (i) a particular remedial action is ordered by a court of
competent jurisdiction, (ii) the Buyer will or may be subjected to civil or criminal
sanctions or penalties if it fails to take a required action; (iii) the Buyer establishes to the
reasonable satisfaction of the Seller that there is no reasonable alternative to such
remedial action which would result in less impairment of the Seller's security hereunder;
or (iv) the action has been agreed to by the Seller.
8.5.5 The Buyer hereby acknowledges and agrees that (i) this Section 8.5 is
intended as the Seller's written request for information (and the Buyer's response)
concerning the environmental condition of the Development as required by California
Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this
Agreement (together with any indemnity obligation applicable to a breach of any such
representation and warranty) with respect to the environmental condition of the
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Development is intended by the Parties to be an "environmental provision" for purposes
of California Code of Civil Procedure Section 736.
8.5.6 In the event that any portion of the Development is determined to be
"environmentally impaired" (as that term is defined in California Code of Civil Procedure
Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California
Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any
way affecting the Seller's or the trustee's rights and remedies under the Deed of Trust,
the Seller may elect to exercise its rights under California Code of Civil Procedure
Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected
portion of the Development and (2) exercise (a) the rights and remedies of an
unsecured creditor, including reduction of its claim against the Buyer to judgment, and
(b) any other rights and remedies permitted by law. For purposes of determining the
Seller right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.5(a), the Buyer shall be deemed to have willfully permitted or
acquiesced in a release or threatened release of hazardous materials, within the
meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or
threatened release of Hazardous Materials was knowingly or negligently caused or
contributed to by any lessee, occupant, or user of any portion of the Development and
the Buyer knew or should have known of the activity by such lessee, occupant, or user
which caused or contributed to the release or threatened release. All costs and
expenses, including (but not limited to) attorneys' fees, incurred by the Seller in
connection with any action commenced under this paragraph, including any action
required by California Code of Civil Procedure Section 726.5(b) to determine the degree
to which the Development is environmentally impaired, plus interest thereon at the rate
specified in the Note until paid, shall be added to the indebtedness secured by the Deed
of Trust and shall be due and payable to the Seller upon its demand made at any time
following the conclusion of such action.
Section 8.6 Maintenance and Damage.
8.6.1 During the course of both construction and operation of the Development,
the Buyer shall maintain the Development in good repair and in a neat, clean and
orderly condition. If there arises a condition in contravention of this requirement, and if
the Buyer has not cured such condition within thirty (30) days after receiving a notice
from the Seller of such a condition, then in addition to any other rights available to the
Seller, the Seller shall have the right to perform all acts necessary to cure such
condition, and to establish or enforce a lien or other encumbrance against the
Development.
8.6.2 Subject to the requirements of senior lenders, and if economically feasible
in the Seller's reasonable judgment after consultation with the Buyer, if any
improvement now or in the future on the Development is damaged or destroyed, then
the Buyer shall, at its cost and expense, diligently undertake to repair or restore such
improvement consistent with the plans and specifications approved by the Seller with
such changes as have been approved by the Seller. Such work or repair shall be
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commenced no later than the later of one hundred twenty (120) days, or such longer
period approved by the Seller in writing, after the damage or loss occurs or thirty (30)
days following receipt of the insurance proceeds, and shall be complete within one (1)
year thereafter. Any insurance proceeds collected for such damage or destruction shall
be applied to the cost of such repairs or restoration and, if such insurance proceeds
shall be insufficient for such purpose, then the Buyer shall make up the deficiency.
Section 8.7 Fees and Taxes. The Buyer shall be solely responsible for payment of all
fees, assessments, taxes, charges, and levies imposed by any public authority or utility
company with respect to the Development to the extent owned by the Buyer, and shall
pay such charges prior to delinquency. However, the Buyer shall not be required to pay
and discharge any such charge so long as (a) the legality thereof is being contested
diligently and in good faith and by appropriate proceedings, and (b) if requested by the
Seller, the Buyer deposits with the Seller any funds or other forms of assurance that the
Seller in good faith from time to time determines appropriate to protect the Seller from
the consequences of the contest being unsuccessful. The parties acknowledge that
Buyer will apply for a welfare exemption from real property taxes.
Section 8.8 Notice of Litigation. The Buyer shall promptly notify the Seller in writing of
any litigation known to the Buyer affecting the Buyer or the Property and of any claims
or disputes that involve a material risk of litigation.
Section 8.9 Non -Discrimination. The Buyer covenants by and for itself and its
successors and assigns that there shall be no discrimination against or segregation of a
person or of a group of persons on account of race, color, religion, creed, sex, sexual
orientation, marital status, familial status, ancestry or national origin in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the Development, nor shall
the Buyer or any person claiming under or through the Buyer 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 Development.
Section 8.10 Insurance Requirements. The Buyer shall maintain the insurance
coverage set forth in Exhibit J throughout the term of this Agreement.
Section 8.11 CDBG and HOME Requirements. The Buyer shall comply with all
applicable laws and regulations governing the use of the CDBG Funds as set forth in 24
CFR 570 et seq. The Buyer shall comply with all applicable laws and regulations
governing the use of the HOME Funds as set forth in 24 CFR 92 et seq. if the Seller
makes a loan to the Buyer using HOME Funds. In the event of any conflict between this
Agreement and applicable laws and regulations governing the use of the Loan funds,
the applicable laws and regulations shall govern. During the first twenty (20) years of
the Term, these requirements shall be federal requirements, implemented by the Seller;
thereafter, these requirements shall be deemed local Seller requirements.
The laws and regulations governing the use of the Loan funds include (but are
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not limited to) the following:
8.11.1 Environmental and Historic Preservation. 24 CFR 58 et seq., which
prescribes procedures for compliance with the National Environmental Policy Act of
1969 (42 USC_4321-4361), and the additional laws and authorities listed at 24 CFR
58.5.
8.11.2 Applicability of OMB Circulars. The applicable policies, guidelines, and
requirements of OMB Circulars Nos. A-87, A-102, Revised, A-110, A-122, and A-133.
8.11.3 Debarred, Suspended or Ineligible Contractors. The prohibition on the
use of debarred, suspended, or ineligible contractors set forth in 24 CFR Part 24.
8.11.4 Civil Rights, Housing and Community Development, and Age
Discrimination Acts. The Fair Housing Act (42 USC 3601 et seq.) and implementing
regulations at 24 CFR 100 et seq.; Title VI of the Civil Rights Act of 1964 as amended;
Title VIII of the Civil Rights Act of 1968 as amended; Section 104(b) and Section 109 of
Title I of the Housing and Community Development Act of 1974 as amended; Section
504 of the Rehabilitation Act of 1973 (29 USC 794 et seq.); the Age Discrimination Act
of 1975 (42 USC_6101 et seq.); Executive Order 11063 as amended by Executive Order
12259 and implementing regulations at 24 CFR 107 et seq.; Executive Order 11246 as
amended by Executive Orders 11375, 12086, 11478, 12107; Executive Order 11625 as
amended by Executive Order 12007; Executive Order 12432; and Executive Order
12138 as amended by Executive Order 12608.
8.11.5 Lead -Based Paint. The requirement of the Lead -Based Paint Poisoning
Prevention Act, as amended (42 USC=4821 et seq.), the Residential Lead -Based Paint
Hazard Reduction Act (42 USC -4851 et seq.), and implementing regulations at 24 CFR
35 et seq.
8.11.6 Relocation. The requirements of the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970 (42 USC 4601 et seq.) and implementing
regulations at 49 CFR 24 et seq.; Section 104(d) of the Housing and Community
Development Act of 1974 and implementing regulations at 24 CFR 42 et seq.; 24 CFR
92.353; and California Government Code 7260 et seq. and implementing regulations at
25 California Code of Regulations 6000 et seq. These requirements do not supplant the
additional relocation requirements listed above in Section 8.3.7.
8.11.7 Discrimination against the Disabled. The requirements of Section 504 of
the Rehabilitation Act of 1973 (29 USC -794), and federal regulations issued pursuant
thereto, which prohibit discrimination against the disabled in any federally assisted
program, the requirements of the Architectural Barriers Act of 1968 (42 USC 4151-
4157) and the applicable requirements of Title II and/or Title III of the Americans with
Disabilities Act of 1990 (42 USC 12131 et seq.), and federal regulations issued pursuant
thereto.
32
8.11.8 Clean Air and Water Acts. The Clean Air Act, as amended, 42 USC_7401
et seq., the Federal Water Pollution Control Act, as amended, 33 USC_1251 et seq.,
and the regulations of the Environmental Protection Seller with respect thereto, at 40
CFR 1500 et seq., as amended from time to time.
8.11.9 Uniform Administrative Requirements — HOME. The provisions of 24 CFR
92.505 regarding cost and auditing requirements.
8.11.10 Uniform Administrative Requirements - CDBG. The provisions of 24
CFR 570.502 regarding cost and auditing requirements.
8.11.11 Training Opportunities. The requirements of Section 3 of the Housing
and Urban Development Act of 1968 ("Section 3"), as amended, 12 USC 1701(u)
requiring that to the greatest extent feasible opportunities for training and employment
be given to lower income residents of the project area and agreements for work in
connection with the project be awarded to business concerns which are located in, or
owned in substantial part by persons residing in, the areas of the project. The Buyer
agrees to include the following language in all subcontracts executed under this
Agreement:
8.11.11.1 The work to be performed under this contract is subject to
the requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 USC Section 1701u. The purpose of Section 3 is to ensure that
employment and other economic opportunities generated by HUD assistance or HUD -
assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed
to low- and very low-income persons, particularly persons who are recipients of HUD
assistance for housing.
8.11.11.2 The parties to this contract agree to comply with HUD's
regulations in 24 CFR 135 et seq., which implement Section 3. As evidenced by their
execution of this contract, the parties to this contract certify that they are under no
contractual or other impediment that would prevent them from complying with the Part
135 regulations.
8.11.11.3 The contractor agrees to send to each labor organization or
representative of workers with which the contractor has a collective bargaining
agreement or other understanding, if any, a notice advising the labor organization or
workers' representative of the contractor's commitments under this Section 3 clause;
and will post copies of the notice in conspicuous places at the work site where both
employees and applicants for training and employment positions can see the notice.
The notice shall describe the Section 3 preference; shall set forth minimum number and
job titles subject to hire; availability of apprenticeship and training positions; the
qualifications for each; the name and location of the person(s) taking applications for
each of the positions; and the anticipated date the work shall begin.
8.11.11.4 The contractor agrees to include this Section 3 clause in
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every subcontract subject to compliance with regulations in 24 CFR 135 et seq., and
agrees to take appropriate action, as provided in an applicable provision of the
subcontract or in this Section 3 clause, upon a finding that the subcontractor is in
violation of the regulations in 24 CFR 135 et seq. The contractor will not subcontract
with any subcontractor where the contractor has notice or knowledge that the
subcontractor has been found in violation of the regulations in 24 CFR 135 et seq.
8.11.11.5 The contractor will certify that any vacant employment
positions, including training positions, that are filled (i) after the contractor is selected
but before the contract is executed, and (ii) with persons other than those to whom the
regulations of 24 CFR 135 et seq. require employment opportunities to be directed,
were not filled to circumvent the contractor's obligations under 24 CFR 135 et seq.
8.11.11.6 Noncompliance with HUD's regulations in 24 CFR 135 et
seg. may result in sanctions, termination of this contract for default, and debarment or
suspension from future HUD assisted contracts.
8.11.11.7 With respect to work performed in connection with Section 3
covered Indian housing assistance, Section 7(b) of the Indian Self -Determination and
Education Assistance Act (25 USC 450(e)) also applies to the work to be performed
under this contract. Section 7(b) requires that to the greatest extent feasible (i)
preference and opportunities for training and employment shall be given to Indians, and
(ii) preference in the award of contracts and subcontracts shall be given to Indian
organizations and Indian -owned Economic Enterprises. Parties to this contract that are
subject to the provisions of Section 3 and Section 7(b) agree to comply with Section 3 to
the maximum extent feasible, but not in derogation of compliance with Section 7(b).
8.11.12 Labor Standards. The applicable labor requirements set forth in 24
CFR 92.354. The prevailing wage requirements of the Davis -Bacon Act and
implementing rules and regulations (40 USC 3141-3148); the Copeland "Anti -Kickback"
Act (40 USC_276(c)) which requires that workers be paid at least once a week without
any deductions or rebates except permissible deductions; the Contract Work Hours and
Safety Standards Act (40 USC 3701-3708) which requires that workers receive
"overtime" compensation at a rate of 1.5 times their regular hourly wage after they have
worked forty (40) hours in one (1) week; and Title 29, Code of Federal Regulations,
Subtitle A, Parts 1, 3 and 5 are the regulations and procedures issued by the Secretary
of Labor for the administration and enforcement of the Davis -Bacon Act, as amended.
8.11.13 Drug Free Workplace. The requirements of the Drug Free
Workplace Act of 1988 (P.L. 100-690) and implementing regulations at 24 CFR Part 24.
8.11.14 Anti -Lobbying; Disclosure Requirements. The disclosure
requirements and prohibitions of 31 USC 1352 et seq. and implementing regulations at
24 CFR 87 et seq.
8.11.15 Historic Preservation. The historic preservation requirements set
34
forth in the National Historic Preservation Act of 1966, as amended (16 USC 470 et
seq.) and the procedures set forth in 36 CFR 800 et seq.
8.11.16 Religious Organizations. If the Buyer is a religious organization, as
defined by the CDBG and/or HOME requirements, the Buyer shall comply with all
conditions prescribed by HUD for the use of CDBG and/or HOME funds by religious
organizations, including the First Amendment of the United States Constitution
regarding church/state principles and the applicable constitutional prohibitions set forth
in 24 CFR 570.2000) and 24 CFR 92.257.
8.11.17 HUD Regulations. Any other HUD regulations present or as may
be amended, added, or waived in the future pertaining to the Seller Loan funds,
including but not limited to HUD regulations as may be promulgated regarding
subrecipients.
8.11.18 Anti -Lobbying Certification. The Buyer certifies, to the best of the
Buyer's knowledge or belief, that:
8.11.18.1 No Federal appropriated funds have been paid or will be
paid, by or on behalf of it, to any person for influencing or attempting to influence an
officer or employee of any Seller, a Member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress in connection with the awarding of
any Federal contract, the making of any Federal grant, the making of any Federal loan,
the entering into of any cooperative agreement, and the extension, continuation,
renewal, amendment, or modification of any Federal contract, grant, loan, or
cooperative agreement;
8.11.18.2 No funds other than Federal appropriated funds have been
paid or will be paid to any person for influencing or attempting to influence an officer or
employee of any Seller, a Member of Congress, an officer or employee of Congress, or
an employee of a Member of Congress in connection with the awarding of any Federal
contract, grant, loan, or cooperative agreement, it will complete and submit Standard
Form -LLL, Disclosure Form to Report Lobbying, in accordance with its instructions.
This certification is a material representation of fact upon which reliance
was placed when this Agreement was made or entered into. Submission of this
certification is a prerequisite for making or entering into this Agreement imposed by 31
USC 1352. Any person who fails to file the required certification shall be subject to a
civil penalty of not less than Ten Thousand Dollars ($10,000) and no more than One
Hundred Thousand Dollars ($100,000) for such failure.
ARTICLE 9
CONDITIONS AFFECTING THIRD PARTY INTERESTS IN THE PROPERTY
Section 9.1 Security Financing; Rights of Holders.
35
9.1.1 No Encumbrances Except Mortgages, Deeds of Trust or Other Financing
for the Project. Mortgages, deeds of trust, or any other form of conveyance required for
any reasonable method of financing are permitted, but only for the purpose of securing
loans of funds to be used for financing or refinancing the construction, reconstruction,
rehabilitation of the Project and any other expenditures necessary and appropriate to
develop, own and operate the Property in accordance with the provisions of this
Agreement. The Buyer shall notify the Seller in advance of any mortgage, deed of trust,
or other form of conveyance for financing unless incorporated in the Financing Plan.
Except as permitted in the Financing Plan approved by the Seller, the Buyer shall not
enter into any such conveyance for financing without the prior written approval of the
Seller and shall promptly notify the Seller of any mortgage, deed of trust, sale and
lease -back or other financing conveyance, encumbrance or lien that has been created
or attached thereto whether by voluntary act of the Buyer or otherwise unless
incorporated in the Financing Plan. The words "mortgage" and "deed of trust," as used
herein, include all other appropriate modes of financing real estate acquisition,
construction and land development. The Seller agrees to enter into a subordination
agreement as requested by Buyer's lender on terms reasonably acceptable to the Seller
and lender to subordinate this Agreement to the security instruments of lender's loan.
9.1.2 Holder Not Obligated to Construct Project. The holder of any mortgage,
deed of trust or other security interest authorized by this Agreement shall in no way be
obligated by the provisions of this Agreement to construct or complete the Project or to
guarantee such construction or completion. Nothing in this Agreement shall be deemed
to construe, permit or authorize any such holder to devote the Property to any uses or to
construct any improvements thereon other than those uses provided for or authorized
by this Agreement.
No Mortgagee (including any Mortgagee who obtains title to Buyer's leasehold
interest in the Property or any part thereof as a result of foreclosure proceedings or
transfer in lieu or foreclosure) shall be obligated by the provisions of this Agreement to
construct the improvements unless Mortgagee expressly assumes such obligation by
written notice to Seller. Whether or not a Mortgagee elects to assume Buyer's
obligation to construct the improvements, nothing in this Agreement shall be construed
to permit such Mortgagee to construct any improvements other than the improvements
authorized under this Agreement. If the Mortgagee elects to assume Buyer's obligation
to construct the improvements, Mortgagee shall not be bound by the Schedule of
Performance, provided that, upon assuming such obligation, Mortgagee and Seller shall
execute a new Schedule of Performance and Mortgagee shall complete the
Improvements in accordance with the new schedule of performance. If, after acquiring
Buyer's interest in the Property, Mortgagee elects not to assume Buyer's obligation to
complete the improvements, Mortgagee shall so notify Seller within sixty (60) days after
Mortgagee's acquisition of the Buyer's interest in the Property, and Mortgagee shall use
good faith efforts to sell such interest within six (6) months after delivery of such notice
to a buyer who will construct the improvements. In the event that Buyer receives a
Section 202 Capital Grant from HUD, if and for so long as the Property is subject to a
HUD 202 Use Agreement, Regulatory Agreement, and/or Deed of Trust, this
36
Agreement, shall be subject to the HUD -Required Provisions Rider attached hereto as
Exhibit N.
9.1.3 Notice of Default to Mortgage, Deed of Trust or Other Security Interest
Holders; Right to Cure. Whenever the Seller shall deliver any notice or demand to the
Buyer with respect to any breach or default by the Buyer in completion of construction of
the Project, the Seller shall at the same time deliver a copy of such notice or demand to
each holder of record of any security interest authorized by this Agreement who has
previously made a written request to the Seller therefore. Each such holder shall
(insofar as the rights of the Seller are concerned) have the right, at its option, within 30
days after the receipt of the notice, to cure or remedy or commence to cure or remedy
any such default and to add the cost thereof to the security interest debt and the lien on
its security interest. In the event there is more than one such holder, the right to cure or
remedy a breach or default of the Buyer under this paragraph shall be exercised by the
holder first in priority or as the holders may otherwise agree among themselves, but
there shall be only one exercise of such right to cure and remedy a breach or default of
the Buyer under this paragraph. Nothing contained in this Agreement shall be deemed
to permit or authorize such holder to undertake or continue the construction or
completion of the Project (beyond the extent necessary to conserve or protect the
Project or construction already made) without first having expressly assumed the
Buyer's obligations to the Seller by written agreement satisfactory to the Seller. The
holder in that event must agree to complete, in the manner provided in this Agreement,
the Project to which the lien of such holder relates and submit evidence satisfactory to
the Seller that it has the qualifications and financial responsibility necessary to perform
such obligations. Any such holder properly completing such Project shall be entitled,
upon written request made to the Seller, to a Certificate of Completion from the Seller.
9.1.4 Failure of Holder to Complete Improvements. In any case where, six (6)
months after a default by the Buyer in completion of construction of the Improvements,
the holder of any mortgage, deed of trust or other security interest creating a lien or
encumbrance upon the Property has not exercised the option to construct, or if it has
exercised the option and has not proceeded diligently with construction, the Seller may
purchase the mortgage, deed of trust or other security interest by payment to the holder
of the amount of the unpaid debt, plus any accrued and unpaid interest. If the Buyer's
interest in the Property has vested in the holder, the Seller, if it so desires, shall be
entitled to the conveyance of such interest in the Property from the holder to the Seller
upon payment to the holder of an amount equal to the sum of the following:
9.1.4.1The unpaid security interest debt at the time the leasehold interest
became vested in the holder (less all appropriate credits, including those resulting from
collection and application of rentals and other income received during foreclosure
proceedings);
9.1.4.2AI1 expenses with respect to the reconveyance;
37
9.1.4.3The net expenses, if any (exclusive of general overhead), incurred
by the holder as a direct result of the subsequent management of the Property and
Project;
9.1.4.4The costs of any authorized improvements made by such holder;
and
9.1.4.5An amount equivalent to the interest that would have accrued on
the aggregate of such amounts had all such amounts become part of the debt and had
the debt continued in existence to the date of payment by the Seller.
In the event that Buyer receives a Section 202 Capital Grant from HUD, if and for
so long as the Property is subject to a HUD 202 Use Agreement, Regulatory
Agreement, and/or Deed of Trust, this Agreement, shall be subject to the HUD -Required
Provisions Rider attached hereto as Exhibit N.
9.1.5 Riaht of Seller to Cure Securitv Interest Default. In the event of a default
or breach by the Buyer of a mortgage, deed of trust or other security interest with
respect to the Property prior to completion of the Project and the holder has not
exercised its option to complete the Project, the Seller may cure the default prior to
completion of any foreclosure. In such event, the Seller shall be entitled to
reimbursement from the Buyer of all costs and expenses incurred by the Seller in curing
the default. The Seller shall also be entitled to a lien upon the Buyer's interest in the
Property to the extent of such costs and disbursements. Any such lien shall be subject
to mortgages, deeds of trust or other security interests executed for the sole purpose of
obtaining funds to develop the Property as authorized herein.
ARTICLE 10
CHANGES IN BUYER
Section 10.1 Changes only Pursuant to this Agreement. The qualifications, experience
and expertise of the Buyer are of particular concern to the Seller. It is because of these
qualifications, experience and expertise that the Seller has entered into this Agreement.
No voluntary or involuntary successor in interest to the Buyer shall acquire any rights or
powers under this Agreement, other than pursuant to a Transfer permitted in Section
10.3. Any attempt to assign this Agreement or transfer any interest of the Buyer under
this Agreement without the prior written consent of the Seller shall be null and void and
shall confer no rights or privileges upon the purported assign.
Section 10.2 Prohibition Against Transfer of Property and Assignment of Agreement
Prior To Completion. Prior to the recording of the Notice of Completion, the Buyer shall
not voluntarily or involuntarily make or attempt any total or partial sale, transfer,
conveyance, assignment or lease ("Transfer") of the whole or any part of the Property or
the buildings or structures thereon or this Agreement without the prior written approval
of the Seller which Seller may withhold in its sole and absolute discretion.
If the Buyer proposes a Transfer of the Property or a portion thereof, other than
as authorized in Section 10.3, the proposed transferee shall have the qualifications and
financial resources necessary and adequate as may be reasonably determined by the
Seller to fulfill the obligations undertaken in this Agreement by the Buyer. Any
transferee, by instrument in writing satisfactory to the Seller and in form recordable
among the land records, for itself and its successors and assigns, and for the benefit of
the Seller shall expressly assume all of the obligations of the Buyer under this
Agreement relating to the Property and agree to be subject to all the conditions and
restrictions to which the Buyer is subject. There shall be submitted to the Seller for
review all instruments and other legal documents proposed to affect any such Transfer;
and if approved by the Seller its approval shall be indicated to the Buyer in writing. This
Section 10.2 shall not be deemed to prevent the granting of easements, rights of way,
licenses or permits to facilitate the development of the Property.
In the absence of specific written agreement by the Seller, no Transfer by the
Buyer shall be deemed to relieve the Buyer or any other party from any obligations
under this Agreement.
Section 10.3 Permitted Transfers With Prior Approval; Seller Pre -Approved Transfers.
10.3.1 Except as permitted under Subsections 10.3.2, 10.3.3, 10.3.4 and 10.3.5,
any Transfer shall be permitted only after (1) the Seller, in its reasonable discretion, has
delivered to the Buyer its prior written approval of such Transfer, and (2) the transferee
has assumed the Buyer's obligations under this Agreement by signing an assignment
assumption and release agreement, in a form prepared by the Seller, and such other
reasonable documentation as the Seller may reasonably require to evidence such
transferee's assumption of the Buyer's duties and obligations under the Loan
Documents.
10.3.2 Buyer anticipates syndicating the low income housing tax credits that will
be generated by the Development, which syndication will require (i) formation of a
limited partnership, the general partner of which shall be a wholly -controlled affiliate of
Buyer (the "Partnership" or the "Borrower") and the initial limited partner shall be Buyer
or a wholly -controlled affiliate of Buyer and (ii) a subsequent transfer of the limited
partner interest in Borrower to the initial investor limited partner(s). The Seller hereby
approves the initial Transfer of the limited partner interest in Borrower, provided that (i)
the amended and restated partnership agreement is submitted to the Seller for review
and approval; and (ii) the partnership documents do not conflict with the Loan
Documents.
10.3.3 The Seller hereby approves future Transfers of the investor limited
partner(s) interest(s) in the Partnership provided that: (i) such Transfers do not affect
the timing and amount of the limited partner capital contributions provided for in the
amended partnership agreement approved by the Seller; and (ii) in subsequent
Transfers, a wholly-owned or wholly -controlled affiliate of the initial investor limited
39
partner retains a membership or partnership interest and/or serves as a managing
member or managing general partner of the successor limited partner.
10.3.4 The Seller hereby approves a Transfer of the Property from the Borrower
to Eden Housing Inc. ("Eden") or wholly -controlled affiliate of Eden, and an assumption
of the Seller Loan by such transferee at or before the end of the fifteen (15) -year
compliance period as described in Section 42(1)(1) of the Internal Revenue Code,
pursuant to an option agreement as described or to be described in the Partnership
agreement (the "Option Agreement"), provided that the transferee expressly assumes
the obligations of the Partnership under the Loan Documents, utilizing a form of
assignment and assumption agreement to be provided by the Seller.
10.3.5 In the event the general partner of the Borrower is removed by the
investor limited partner of the Borrower for cause following default under the partnership
agreement, the Seller hereby approves the Transfer of the general partner interest to a
501(c)(3) tax exempt nonprofit corporation selected by the limited partner and approved
by the Seller, which approval shall not be withheld unreasonably.
ARTICLE 11
DEFAULT AND REMEDIES
Section 11.1 Events of Default. Each of the following shall constitute a "Default" by the
Buyer under this Agreement:
11.1.1 Failure to Obtain Approvals. Failure of the Buyer to diligently and in good
faith cause satisfaction of any of the conditions set forth in Article 3.
11.1.2 Failure to Make Payment. Failure of the Buyer to repay the principal and
any interest on the Seller Loan that is due and payable to the Seller pursuant to the
Loan Documents following written notice by the Seller of such failure and ten (10) days
opportunity to cure.
11.1.3 Failure to Construct. Notwithstanding Sec 3.10(c), failure of the Buyer to
commence and prosecute to completion, construction of the Development within the
time frames set forth in Schedule of Performance.
11.1.4 Breach of Covenants. Other than the failures addressed above in
Subsections 11.1.1, 11.1.2 and 11.1.3, failure of the Buyer to duly perform, comply with,
or observe any of the conditions, terms, or covenants of any of the Loan Documents,
and such failure having continued uncured for thirty (30) days after receipt of written
notice thereof from the Seller to the Buyer or, if the breach cannot be cured within thirty
(30) days, the Buyer shall not be in breach so long as the Buyer is diligently undertaking
to cure such breach and such breach is cured within sixty (60) days; provided, however,
that if a different period or notice requirement is specified under any other provision of
this Article 11, the specific provisions shall control.
M
11. 1.5 Default Under Other Loans. A default is declared under any Approved
Financing by the lender of such Approved Financing (subject to applicable notice and
cure).
11.1.6 Insolvency. A court having jurisdiction shall have made or entered any
decree or order (i) adjudging the Buyer to be bankrupt or insolvent, (ii) approving as
properly filed a petition seeking reorganization of the Buyer or seeking any arrangement
for the Buyer under the bankruptcy law or any other applicable debtor's relief law or
statute of the United States or any state or other jurisdiction, (iii) appointing a receiver,
trustee, liquidator, or assignee of the Buyer in bankruptcy or insolvency or for any of
their properties, (iv) directing the winding up or liquidation of the Buyer, if any such
decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed
or undischarged for a period of ninety (90) days; or (v) the Buyer shall have admitted in
writing its inability to pay its debts as they fall due or shall have voluntarily submitted to
or filed a petition seeking any decree or order of the nature described in clauses (i) to
(iv), inclusive. The occurrence of any of the events of Default in this paragraph shall act
to accelerate automatically, without the need for any action by the Seller, the
indebtedness evidenced by the Note.
11.1.7 Assignment; Attachment. The Buyer shall have assigned its assets for the
benefit of its creditors or suffered a sequestration or attachment of or execution on any
substantial part of its property, unless the property so assigned, sequestered, attached
or executed upon shall have been returned or released within ninety (90) days after
such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or
execution. The occurrence of any of the events of default in this Subsection shall act to
accelerate automatically, without the need for any action by the Seller, the indebtedness
evidenced by the Note.
11. 1.8 Suspension; Dissolution. The Buyer shall have voluntarily suspended its
business or the dissolution of the Buyer.
11.1.9 Liens on Property and the Development. There shall be filed any claim of
lien (other than liens approved in writing by the Seller) against the Development, or any
part thereof, or any interest or right made appurtenant thereto, or the service of any
notice to withhold proceeds of the Loan and the continued maintenance of said claim of
lien or notice to withhold for a period of twenty (20) days without discharge or
satisfaction thereof or provision therefore (including, without limitation, the posting of
bonds) satisfactory to the Seller.
11.1.10 Condemnation. The condemnation, seizure, or appropriation of all or
the substantial part of the Property and the Development, except that condemnation by
the Seller or the Seller shall cause the Seller Loan to accelerate but shall not be a
Default.
11.1.11 Unauthorized Transfer. Any Transfer other than as permitted by Article
10.
41
11.1.12 Representation or Warranty Incorrect. Any representation or warranty of
the Buyer contained in this Agreement, or in any application, financial statement,
certificate, or report submitted to the Seller in connection with any of the Loan
Documents, proves to have been incorrect in any material and adverse respect when
made.
11.1.13 Applicability to General Partner. In the event the Buyer is a partnership,
the occurrence of any of the events set forth in Subsection 11.1.6, Subsection 11.1.7 or
Subsection 11. 1.8 in relation to the general partner of the Buyer.
Section 11.2 Remedies. The occurrence of any Default hereunder following the
expiration of all applicable notice and cure periods will, either at the option of the Seller
or automatically where so specified, relieve the Seller of any obligation to make or
continue the Seller Loan and shall give the Seller the right to proceed with any and all
remedies set forth in this Agreement and the Loan Documents, including but not limited
to the following:
11.2.1 Acceleration of Note. Subject to the non-recourse provision in the
Promissory Note and Section 3.11 above, the Seller shall have the right to cause all
indebtedness of the Buyer to the Seller under this Agreement and the Note, together
with any accrued interest thereon, to become immediately due and payable. The Buyer
waives all right to presentment, demand, protest or notice of protest or dishonor. The
Seller may proceed to enforce payment of the indebtedness and to exercise any or all
rights afforded to the Seller as a creditor and secured party under the law including the
Uniform Commercial Code, including foreclosure under the Deed of Trust. The Buyer
shall be liable to pay the Seller on demand all reasonable expenses, costs and fees
(including, without limitation, reasonable attorney's fees and expenses) paid or incurred
by the Seller in connection with the collection of the Loan and the preservation,
maintenance, protection, sale, or other disposition of the security given for the Loan.
11.2.2 Assignment Agreement. The Seller may exercise all rights under the
Assignment Agreement. The Buyer shall promptly deliver to the Seller copies of all
plans and specifications for the Development, all permits and approvals obtained in
connection with the Development, and all applications for permits and approvals not yet
obtained but needed in connection with the Development.
11.2.3 Specific Performance. The Seller shall have the right to mandamus or
other suit, action or proceeding at law or in equity to require the Buyer to perform its
obligations and covenants under the Loan Documents or to enjoin acts or things which
may be unlawful or in violation of the provisions of the Loan Documents.
11.2.4 Special Remedy for Breach of Use Requirement. Pursuant to 24 CFR
570.503(b)(7)(ii), if after acquisition of the Property, the Buyer changes the planned use
of the Property to a non-CDBG eligible use, or if after completion of construction of the
Improvements, the Buyer ceases to use the Development as required by this
42
agreement, the Seller shall have the right to require the Buyer to pay the Seller an
amount equal to the current market value of the Development (as determined by
appraisal) less any portion of that value attributable to non-CDBG Funds used for the
development of the Development (based on a pro rata allocation of funds used by Buyer
in its development of the Development). Funds recovered from Buyer pursuant to this
Subsection shall be credited against amounts outstanding under the Note.
11.2.5 Right of Contest. The Buyer shall have the right to contest in good faith
any claim, demand, levy, or assessment the assertion of which would constitute a
Default hereunder. Any such contest shall be prosecuted diligently and in a manner
unprejudicial to the Seller or the rights of the Seller hereunder.
11.2.6 Remedies Cumulative. Subject to the non-recourse provisions contained
in the Promissory Note, no right, power, or remedy given to the Seller by the terms of
this Agreement or the Loan Documents is intended to be exclusive of any other right,
power, or remedy; and each and every such right, power, or remedy shall be cumulative
and in addition to every other right, power, or remedy given to the Seller by the terms of
any such instrument, or by any statute or otherwise against the Buyer and any other
person. Neither the failure nor any delay on the part of the Seller to exercise any such
rights and remedies shall operate as a waiver thereof, nor shall any single or partial
exercise by the Seller of any such right or remedy preclude any other or further exercise
of such right or remedy, or any other right or remedy.
ARTICLE 12
GENERAL PROVISIONS
Section 12.1 Relationship of Parties.
12.1.1 Nothing contained in this Agreement shall be interpreted or understood by
any of the parties, or by any third persons, as creating the relationship of employer and
employee, principal and agent, limited or general partnership, or joint venture between
the Seller and the Buyer or the Buyer's agents, employees or contractors, and the Buyer
shall at all times be deemed an independent contractor and shall be wholly responsible
for the manner in which it or its agents, or both, perform the services required of it by
the terms of this Agreement for the development of the Development. In regards to the
development of the Development, the Buyer shall be solely responsible for all matters
relating to payment of its employees, including compliance with Social Security,
withholding and all other laws and regulations governing such matters, and shall include
requirements in each contract that contractors shall be solely responsible for similar
matters relating to their employees. The Buyer agrees to be solely responsible for its
own acts and those of its agents and employees.
12.1.2 The Architect has been selected by the Buyer as the architect for the
Development, and the Buyer may, from time to time, select other consultants and
vendors for the Development. Notwithstanding the preceding paragraph, the Seller
shall have the right to provide input regarding the selection and, if necessary, the
43
replacement of such other consultants or vendors employed by the Buyer to perform the
construction contemplated by this Agreement, and shall have the right to provide input
regarding the replacement of the previously selected Architect, if necessary. The Buyer
shall consider in good faith such input from the Seller, and shall confer with the Seller,
upon request, regarding such selection and replacement decisions.
Section 12.2 No Claims. Nothing contained in this Agreement shall create or justify any
claim against the Seller, by any person the Buyer may have employed or with whom the
Buyer may have contracted relative to the purchase of materials, supplies or equipment,
or the furnishing or the performance of any work or services with respect to the
construction of the Development.
Section 12.3 Amendments. No alteration or variation of the terms of this Agreement
shall be valid unless made in writing by the parties.
Section 12.4 Indemnification. Except as caused by the Seller's willful misconduct, the
Buyer agrees to indemnify, protect, hold harmless and defend (by counsel reasonably
satisfactory to the Seller) the Seller and its respective council members, officers and
employees, from all suits, actions, claims, causes of action, costs, demands, judgments
and liens arising out of the performance or non-performance of the obligations under
this Agreement by the Buyer Parties, the purchase and ownership of the Property by the
Buyer, the development, marketing, rental, operation and management of the
Development by the Buyer Parties, or any documents executed by the Buyer in
connection with the Development. The provisions of this Section 12.4 shall survive
termination of this Agreement. The "Buyer Parties" shall mean the Buyer and its general
partner, agents and representatives. Notwithstanding the foregoing, Section 4.8.2 shall
apply.
Section 12.5 Non -Liability of Officials, Employees and Agents. No member, official,
employee or agent of the Seller shall be personally liable to the Buyer Parties or their
successors, in the event of any Default or breach by the Seller, or for any amount which
may become due to the Buyer Parties or their successors or on any obligation under the
terms of this Agreement. No director, officer, employee or agent of the Buyer Parties
shall be personally liable to the Seller in the event of any Default or breach by the
Buyer, or for any amount which may become due to the Seller or on any obligation
under the terms of this Agreement.
Section 12.6 No Third Party Beneficiaries. There shall be no third party beneficiaries to
this Agreement.
Section 12.7 Action by the Seller. Except as may be otherwise specifically provided
herein, whenever any approval, notice, direction, consent, request, extension of time,
waiver of condition, termination, or other action by the Seller is required or permitted
under this Agreement, such action may be given, made, or taken by the Seller's City
Manager or his/her designee without further approval by the Seller's City Council, and
any such action shall be in writing. The amount of the Loan may not be increased and
the intended uses of the property may not be changed, without approval of the Seller's
City Council.
Section 12.8 Waivers. Any waiver by the Seller of any obligation or condition in this
Agreement must be in writing. No waiver will be implied from any delay or failure by the
Seller to take action on any breach or default of the Buyer or to pursue any remedy
allowed under this Agreement or applicable law. Any extension of time granted to the
Buyer to perform any obligation under this Agreement shall not operate as a waiver or
release from any of its obligations under this Agreement. Consent by the Seller to any
act or omission by the Buyer shall not be construed to be consent to any other or
subsequent act or omission or to waive the requirement for the Seller's written consent
to future waivers.
Section 12.9 Notices, Demands and Communications. Formal notices, demands, and
communications between the Seller and the Buyer shall be sufficiently given if and shall
not be deemed given unless dispatched by registered or certified mail, postage prepaid,
return receipt requested, or delivered by express delivery service, return receipt
requested, or delivered personally, or faxed with a copy mailed within one business day
of facsimile transmission, emailed with a copy mailed within one business day of
emailed transmission to the principal office of the Seller and the Buyer as follows:
Seller:
Cityof Lodi
P.O. Box 3006
Lodi, CA 95241-1910
Attention: City Manager
With a copy to: The City Attorney and Housing Manager
Buyer:
Eden Development, Inc.
22645 Grand Street
Hayward, California 94541-5031
Attention: Executive Director
Such written notices, demands and communications may be sent in the same
manner to such other addresses as the affected party may from time to time designate
by mail as provided in this Section. Receipt shall be deemed to have occurred on the
date shown on a written receipt for delivery or refusal of delivery.
Section 12.10 Parties Bound. Except as otherwise limited herein, the provisions of
this Agreement shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, legal representatives, successors and assigns.
45
Section 12.11 Attorneys' Fees. If any lawsuit is commenced to enforce any of the
terms of this Agreement, the prevailing party will have the right to recover its reasonable
attorneys' fees and costs of suit from the other party.
Section 12.12 Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the
provisions shall continue in full force and effect unless the rights and obligations of the
parties have been materially altered or abridged by such invalidation, voiding or
unenforceability.
Section 12.13 Future Seller Actions. The parties acknowledge and agree that this
Agreement does not constitute Seller approval of the Land Use Approvals or
construction of the Development. The Seller retains full discretion to approve or
disapprove the Land Use Approvals and construction of the Development; and
Section 12.14 Counterparts; Multiple Originals. This Agreement may be signed in
one or more counterparts, each of which shall be deemed an original, and all of which
taken together shall constitute this Agreement.
Section 12.15 Force Majeure. In addition to specific provisions of this Agreement,
performance by either party shall not be deemed to be in default where delays or
defaults are due to war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires;
quarantine restrictions; freight embargoes; lack of transportation; or court order; or any
other similar causes (other than lack of funds of Buyer or Buyer's inability to finance the
construction of the Development) beyond the control or without the fault of the Party
claiming an extension of time to perform. An extension of time for any cause will be
deemed granted if notice by the party claiming such extension is sent to the other within
ten (10) business days from the commencement of the cause and such extension of
time is not rejected in writing by the other party within ten business (10) days of receipt
of the notice. In no event shall the Seller be required to agree to cumulative delays in
excess of one hundred eighty (180) days.
Section 12.16 Time is of the Essence. Time is of the essence in this Agreement.
Any reference to days means calendar days, unless otherwise specifically stated.
Section 12.17 Integration Clause. This Agreement, including all exhibits, contains
the entire agreement between the parties and supersedes whatever oral or written
understanding they may have had prior to the execution of this Agreement. This
Agreement shall not be amended or modified except by a written agreement executed
by each of the parties hereto.
Section 12.18 Law Governing. This Agreement shall in all respects be governed by
and construed under the law of the State of California. Litigation arising out of or
connected with this Agreement shall be instituted and maintained in the courts of San
Joaquin County in the State of California, and the parties consent to jurisdiction over
their person and over the subject matter of any such litigation in such courts, and
consent to service of process issued by such courts.
Section 12.19 Ambiguity. The parties acknowledge that this is a negotiated
agreement, that they have had the opportunity to have this Agreement reviewed by their
respective legal counsel, and that the terms and conditions of this Agreement are not to
be construed against any party on the basis of such party's draftsmanship thereof.
Section 12.20 Gender. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identifications of the
person or persons, firm or firms, corporation or corporations may require.
Section 12.21 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 12.22 Investor Limited Partner Provisions. If and when the Buyer transfers
the Property and assigns the Loan to a limited partnership in accordance with Section
10.3 to qualify for low income housing tax credit financing, the Seller agrees to the
following provisions for the benefit of Buyer's investor limited partner:
12.22.1 The Seller will give the limited partner a copy of any written notice (at
the limited partner's address set forth in the Regulatory Agreement) that the Seller gives
to Buyer under this Agreement, the Regulatory Agreement and the other Seller Loan
Documents;
12.22.2 The Seller will give the limited partner Ten (10) days after the limited
partner's receipt of such notice to cure a non-payment of any sum due under the Seller
Loan Documents;
12.22.3 The Seller will give the limited partner Thirty (30) days after the limited
partner's receipt of such notice to cure any other default under this Agreement, the
Regulatory Agreement and other Seller Loan Documents;
12.22.4 If a default is incapable of being cured within Thirty (30) days, the
Seller will give the limited partner an additional Ninety (90) days to cure such default
provided the limited partner has commenced to cure such default and is diligently
proceeding to cure such default through the end of such period;
12.22.5 If the limited partner makes any such payment or otherwise cures such
default, the Seller will accept such action as curing such default as if such payment or
cure were made by Buyer;
12.22.6 The Seller will permit the limited partner to transfer the limited partner's
interest to any person or entity at any time provided that, if at the time of such transfer
the limited partner has not made 100% of the capital contributions the limited partner is
47
required to make to Buyer, the limited partner shall remain liable to Buyer for such
capital contributions;
12.22.7 The Seller will permit the limited partner to remove the general partner
of Buyer in accordance with the Partnership Agreement, provided that the substitute
general partner is reasonably acceptable to Seller; and
12.22.8 The Seller will permit insurance and condemnation proceeds to be
used to rebuild the Development provided that (i) sufficient funds are provided from
other sources to effectively rebuild the Development to a lawful multifamily housing
complex, and (ii) subject to the rights of any senior lenders, Seller shall hold all such
proceeds and disburse them based on the progress of construction, subject to such
additional reasonable conditions as Seller may impose
Section 12.23 HUD Required Provisions. If the Buyer receives a Section 202 Capital
Grant from HUD and the Property and Buyer are subject to the HUD Use Agreement
and HUD Regulatory Agreement, then upon the recordation of the HUD Use Agreement
and HUD Regulatory Agreement against the Property, the Seller and Buyer agree to
comply with the provisions contained in the HUD -Required Provisions Rider attached
hereto as Exhibit N.
Section 12.24 Memorandum of Purchase and Development Agreement. The Parties
shall execute and record a Memorandum of this Agreement in the form attached as
Exhibit O hereto, giving notice of this Agreement.
[signature page to follow]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
shown below the name of each of the parties.
Eden Development, Inc., a California nonprofit public
benefit corporation
0
Approved as to Form:
City Attorney
Attest:
City Clerk
AGREEMENT LodiSr 043009
Linda Mandolini, Executive Director
City of Lodi, a municipal corporation
By:
Its:
City Manager
EXHIBIT A
Legal Description of the Property
Real property in the City of LODI, County of SAN JOAQUIN, State of CALIFORNIA, described
as follows:
PARCEL 1 AS SHOWN ON THE PARCEL MAP FILED NOVEMBER 4, 1996, IN BOOK 20 OF
PARCEL
MAPS, AT PAGE 139, SAN JOAQUIN COUNTY RECORDS.
EXHIBIT B
Exclusive Negotiating Rights Agreement
EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
fhb Exclusive Right to Negotiate Agreement ("Agreement") is entered into effective as of
2009 ("Effective Date"), by and between the City of Lodi, a municipal
corporation ("City") and Eden Development, Inc., a California nonprofit public benefit
corporation ("Eden"). City and Eden are referred to collectively as the "Parties."
RECITALS
A. The City owns that unimproved parcel consisting of approximately 3.39 acres
located at 2245 Tienda Drive in the City of Lodi, more particularly described in Exhibit A attached
hereto (the "Property").
B. The City has determined that the desired future use of the Property shall be an
affordable rental residential development that is age restricted for seniors. Accordingly, the City
issued a Request for Qualifications ("RFQ") inviting submissions from developers interested in
developing the Property with affordable rental housing for seniors with restrictions compatible
with the financing requirements of the Community Development Block Grant Program ("CDBG"),
the Home Investment Partnership Act ("HOME") and the Department of Housing and Urban
Development ("HUD") Section 202 Supportive Housing for the Elderly Program ("HUD 202").
C. In response to the City's RFQ, Eden submitted its qualifications to construct, own
and operate rental housing affordable to very low and low income senior households at the
Property (the "Senior Project"). On April 1, 2009, the City Council selected Eden as the
developer for the Property and directed staff to proceed with the preparation of this Agreement for
the exclusive right to negotiate an agreement whose terms and conditions would govern the
conveyance of the Property to Eden for the development of the Senior Project, by Eden.
D. In reliance on the City Council's selection of Eden as the developer of the Property,
Eden will commence its due diligence and predevelopment activities for the acquisition of the
Property and development of the Senior Project, including submitting applications for project
financing, which include but are not limited to CDBG, HOME and HUD 202 funds.
E. Until such time that the appropriate environmental assessment of the Senior Project
is complete in accordance with the provisions of the California Environmental Quality Act
("CEQA") and the National Enviromnental Policy Act ("NEPA"), an Option to Purchase and
Purchase Agreement ("Purchase Agreement") or a Disposition Development and Loan Agreement
("DDLA")cannot be entered into by the Parties. This Agreement is expressly conditioned on a
subsequent determination to proceed with, modify or cancel the Senior Project based on the
required environmental review, pursuant to CEQA and NEPA requirements.
F. The purpose of this Agreement is to set forth the Parties' common understanding
that Eden shall have the exclusive right to negotiate a Purchase Agreement or a DDLA to develop
the Property, and that for the term set fortli in this Agreement, the City shall not discuss or
negotiate development opportunities or rights with respect to the Property with any other person or
entity other than Eden, and that the Parties shall enter into a Purchase Agreement or DDLA, to be
negotiated, upon environmental approval of the Senior Project.
G. As more fully set forth in this Agreement, the Parties acknowledge and agree that
this Agreement does not grant Eden the right to acquire the Property or construct the Senior
Project, nor does it obligate Eden to any activities or costs to acquire the Property or construct the
Senior Project
H. In addition to the purpose set forth in Recital F, this Agreement provides evidence
of the Parties intention regarding Eden's site control of the Property for the future acquisition and
development of the Property, to induce potential project lenders to accept Eden's applications for
project financing for the Senior Project.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
below and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows.
Disposition, Development and Loan Agreement. The Parties shall use their best efforts to
successfully negotiate a Purchase Agreement or DDLA which shall describe the terms and
conditions governing disposition of the Property for the development of the Senior Project. The
Parties agree that a Purchase Agreement or DDLA shall include, without limitation, the
following terms; provided however, nothing herein is intended to or shall limit the City's
discretionary authority to approve, deny or condition specific land use entitlements for the
Senior Project based on the required environmental review.
1.1. Senior Project.
1.1.1. Development Concept. The concept for the Senior Project includes the
development of up to Ninety (90) rental housing units serving low-income seniors.
The concept of "aging in place" (i.e., making sure that seniors can live independently
even as they become frail), will be integral to the Senior Project. Accessibility will
also be a priority. The Senior Project will have an elevator, include community
spaces, laundry facilities and management offices, and all units will be fully adaptable
and/or accessible.
1.1.2. Affordability Requirements. Upon conveyance of the Property to Eden, the
Property will be subject to a recorded regulatory agreement between Eden and the
City that will require Forty Nine Percent (49%) of the rental units be offered for rent
and occupancy by very low and low income senior households at an affordable rent
for a term of not less than Fifty Five (55) years.
1.2. Financial Terms.
1.2.1. Purchase Price. The purchase price for the Property shall be Six Hundred Thirty
Dollars ($630,000), as is substantiated by a qualified appraisal dated July 2, 2009.
1.2.2. Financing.
1.2.2. I.City CDBG and/or HOME Loan to Eden. Eden shall apply to the City for a
CDBG and HOME loan of funds which have been set aside by the City in the
amount of $1,100,000.00, to finance the closing cost for Eden's acquisition of
the Property, with the balance of the loan proceeds used to finance
predevelopment costs for the Senior Project. The City loan to Eden shall have,
at a minimum, the following terms: be a nonrecourse loan secured by the
Property; repaid on a residual receipts basis; shall be bear interest at a simple
rate not to exceed 3% per annum and shall be contingent (i.e., no accrual of
interest if the interest is not paid current annually) if necessary to make the
Senior Project financially feasible; and shall mature 55 years from the final
certificate of occupancy issued for the Senior Project.
1.2.2.2. State HOME Funds. On or before August 14, 2009, Eden shall apply to the
State of California ("State") for a State HOME grant of funds in the approximate
amount of $2, 800,000.00 to finance pre -development and development costs.
1.2.2.3. HUD Section 202 Funds. On or around September, 2009, Eden shall apply for
HUD 202 funds in response to HUD's 2009 Notice of Funding Availability
("NOFA"). If the Senior Project is not selected for 2009 funding, Eden shall
submit for HUD 202 financing in 2010 and 2011.
3 City Approvals. Eden -shall be responsible for obtaining all approvals required by City for
the Senior Project in accordance with City's standard application process for
discretionary land use entitlements, including payment for all of City's costs of
processing such approvals. Nothing set forth herein shall be construed as a grant of
any such approvals, or as an obligation an the part of City to grant such approvals.
2. Purchase Agreement or DDLA Acknowledgments, The Parties agree that they shall use good
faith efforts to seek City Council approval of a Purchase Agreement or DDLA by April 30,
2010. Eden expressly acknowledges that a Purchase Agreement or DDLA resulting from
negotiations contemplated by this Agreement shall become effective only if a Purchase
Agreement or DDLA is approved by the City Council following notice and hearing as required
by applicable law and compliance with all other requirements of law, including without
limitation CEQA and NEPA requirements. Without limiting the generality of the foregoing,
this Agreement does not impose a binding obligation on the City to convey the Property to
Eden, nor does it obligate the City to grant any approvals or authorizations required for the
Senior Project. The Parties acknowledge that approval and execution of a Purchase
Agreement or DDLA may precede formal approval and adoption of entitlements necessary for
the development of the Senior Project, and the Parties agree that a Purchase Agreement or
DDLA will provide that conveyance of the Property will be expressly contingent upon City
Council approval, as applicable, of all discretionary entitlements required for the Senior
Project.
Eden's Exclusive Right to Negotiate with City; Tenn. Fora period of two (2) years
commencing on the Effective Date (the "Term"), the City agrees that it will not, during the
Tenn of this Agreement, directly or indirectly, through any officer, employee, agent, or
otherwise, solicit, the submission of bids, offers or proposals by any person or entity with
respect to the acquisition of any interest in the Property or the development of the Property,
and the City shall not engage any broker, financial adviser or consultant to initiate or
encourage proposals or offers from other parties with respect to the disposition or development
of the Property or any portion thereof.
4. Eden's Studies, Right of Entrv. During the Term, Eden shall use its best efforts to prepare, at
Eden's expense, any studies, surveys, plans, specifications and reports ("Eden's Studies")
Eden deems necessary or desirable in Eden's sole discretion, to determine the suitability of the
Property for the Senior Project. Such studies may include, without limitation, title
investigation, relocation plans, marketing, feasibility, soils, seismic and environmental studies,
financial feasibility analyses and design studies. Eden shall be responsible for obtaining the
City's advance written permission from the City Manager or his designee for access to the
Property as may be necessary to prepare Eden's Studies. In connection with entry onto the
Property, Eden shall and hereby agrees to indemnify, defend (with counsel approved by the
City) and hold harmless the Indemnities (defined in Section 11) from and against all Claims
(defined in Section 11) resulting from or arising in connection with entry upon the Property by
Eden or Eden's agents, employees, consultants, contractors or subcontractors.
4.1. Right of Entry Agreement, Copies of Reports/Tests. The City may require Eden to
execute a right of entry agreement satisfactory to the City prior to entry onto the Property.
The City Manager or his designee shall have authority to sign such agreement without
further approval of the Council. Eden's inspection, examination, survey and review of
the Property shall be at Eden's sole expense. Eden shall provide the City with copies of all
reports and test results within ten (10) days following completion of such reports and
testing, whether or not such reports and test results are completed prior to or after the
expiration or earlier termination of this Agreement.
4.2. Property Condition. Eden shall repair, restore and return the Property to its condition
immediately preceding Eden's entry thereon at Eden's sole expense. Eden shall at all
times keep the Property free and clear of all liens and encumbrances affecting title to the
Property. Eden's indemnification obligations, obligations to provide reports and test
results, and obligations to discharge liens that attach to the Property as set forth in Section
11 shall survive the expiration or earlier termination of this Agreement.
5. The City's Reports and Studies. Within fifteen (15) days following the Effective Date, the
City shall make available to Eden for review or copying, at Eden's expense, all non -privileged
studies, non -confidential surveys, plans, specifications, reports, and other documents
concerning the physical condition of the Property that the City has in its possession or control.
6. Relationship of Parties. The Parties agree that nothing in this Agreement is intended to or shall
be deemed or interpreted to create among them the relationship of buyer and seller, or of
partners or joint venturers.
T Confidentialit • Dissemination of Information. During the Term, each Party shall obtain the
consent of the other Party prior to issuing or permitting any of its officers, employees or agents
to issue any press release or other information to the press with respect to this Agreement;
provided however, no Party shall be prohibited from supplying any information to its
representatives, agents, attorneys, advisors, financing sources and others to the extent
necessary to accomplish the activities contemplated hereby so long as such representatives,
agents, attorneys, advisors, financing sources and others are made aware of the terms of this
Section. Nothing contained in this Agreement shall prevent any Party at any time from
complying with the California Public Records Act, Furnishing any required information to any
govermnental entity or authority pursuant to a legal requirement or from complying with its
legal or contractual obligations.
Termination.
8.1. Mutual Consent. This Agreement may be terminated at any time by mutual written
consent of the Parties.
8.2. City's Right to Terminate. The City shall have the right to terminate this Agreement upon
its good faith and reasonable determination that Eden is not proceeding diligently and in
good faith to carry out its obligations pursuant to this Agreement. The City shall exercise
such right by providing at least thirty (30) days' advance written notice to Eden which
notice shall describe the nature of Eden's default hereunder. Notwithstanding the
foregoing, if Eden commences to cure such default within such thirty (30) day period and
diligently prosecutes such cure to completion within the earliest feasible time, but not later
than thirty (30) days following the date of the notice, this Agreement shall remain in
effect.
8.3. Eden's Right to Terminate.
8.3.1. Financial or Physical Infeasibility. Eden shall have the right to terminate this
Agreement, effective upon thirty (30) days' written notice to the City that Eden has
determined the Senior Project is financially or physically infeasible and the City has
reviewed and agreed, in its reasonable discretion, with Eden's determination.
8.3.2. Environmental and/or Entitlement Infeasibility. if the City Council is unable for
any reason to adopt or approve the certification of environmental documents required
for the Senior Project pursuant to NEPA, CEQA or to rezone the Property for the
Senior Project, Eden shall have the right to terminate this Agreement and the City
shall reimburse Eden for its actual out-of-pocket costs paid to third parties for
predevelopment activities in connection with the proposed development of Property,
provided the amount to be reimbursed shall not exceed Fifty Thousand Dollars
($50,000.00).
9. Effect of Termination or Expiration of the Term. Upon termination as provided herein, or
upon the expiration of the Term (and any extensions thereof) without the Parties having
successfully negotiated a Purchase Agreement or DDLA, this Agreement shall be void, and
there shall be no further liability or obligation on the part of any of the Parties or their
respective officers, employees, agents or other representatives; provided however, the
provisions of Section 4.2, Section 7 Section 8.3.2 and Section 11, shall survive such
termination.
10. Notices. Each notice, demand or other document required to be given hereunder ("Notice")
shall be in writing and shall be delivered personally (including messenger or courier service
with evidence of receipt) or sent by the United States Postal Service ("USPS"), certified mail,
return receipt requested, with proper postage prepaid, addressed to the parties at the respective
addresses set forth below. Each Notice shall be effective upon being so deposited, but the time
period in which a response to any such Notice must be given or any action taken with respect
thereto shall commence to run from the date of receipt of the Notice by the addressee thereof.
if to the City: City of Lodi Community Development Department
221 W. Pine Street
Lodi, CA 95240
Attention: Joseph Wood, Neighborhood Services Manager
If to Eden: Eden Development, Inc.
22645 Grand Street
Hayward, CA 94541-5031
Attention: Executive Director
Copy to: D. Stephen Schwabauer, City Attorney
City of Lodi
221 W. Pine Street
Lodi, CA 95240
11. Indemnification. Eden hereby covenants to indemnify, hold harmless and defend the City and their
respective elected and appointed officials, officers, agents, representatives and employees (all of the
foregoing, collectively the "Indemnities") from and against all liability, loss, cost, claim, demand,
action, suit, legal or administrative proceeding, penalty, deficiency, fine, damage and expense
(including, without limitation, reasonable attorney's fees and costs of litigation) (all of the foregoing,
collectively the "Claims") arising out of any act of negligence, misfeasance or willful misconduct of
Eden in connection with this Agreement or the activities contemplated hereby. Eden shall have no
indemnification obligation with respect to the negligence, misfeasance or willful misconduct of the
City or for any Claims arising from the presence of any hazardous materials on the Property prior to
conveyance of the Property to Eden. Eden's indemnification obligations set forth in this Section 11,
shall survive the expiration or earlier termination of this Agreement. Nothwithstanding the foregoing,
in the event a CEQA or NEPA lawsuit is brought which relates to this Agreement, and a Purchase
Agreement or DDLA to be negotiated, and/or the Senior Project, the Parties shall meet and confer
about whether to proceed with the Senior Project. If the parties are unable to agree, either party may
terminate this Agreement without further obligation.
12. Severability. if any term or provision of this Agreement or the application thereof shall, to any
extent, be held to be invalid or unenforceable, such term or provision shall be ineffective to the
extent of such invalidity or unenforceability without invalidating or rendering unenforceable
the remaining terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or unenforceable
unless an essential purpose of this Agreement would be defeated by loss of the invalid or
unenforceable provision.
13. Amendments; Counterparts. This Agreement may be amended only by a written instrument
executed by the Parties or their successors in interest. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which together shall
constitute one agreement.
14. Successors and Assigns; No Third -Party Beneficiaries, This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and assigns; provided
however, that Eden shall not transfer or assign any of its rights hereunder by operation of law
or otherwise without the prior written consent of the City, and any such transfer or assignment
without such consent shall be void. Subject to the immediately preceding sentence, this
Agreement is not intended to benefit, and shall not run to the benefit of or be enforceable by,
any other person or entity other than the Parties and their permitted successors and assigns.
The Parties acknowledge that Eden shall have the right to have a Purchase Agreement or
DDLA entered into by, or assigned to, a limited partnership in which the general partner is a
wholly -controlled affiliate of Eden.
15. Captions. The captions of the sections and articles of this Agreement are for convenience only
and are not intended to affect the interpretation or construction of the provisions hereof.
16. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of California without regard to principles of conflicts of law.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above,
CITY OF LODI
a California municipal corporation
By:
Blair King, Cit ger
APPROVED AS TO FORM:
By:
vpL, City Attorney
ATTI
EDEN DEVELOPMENT, INC.,
a California nonprofit public benefit corporation
B , :�14u1�a�
Name: Terese McNamee
Its: Chief Financial Officer and Acting Executive Director
EXHIBIT A
Legal Description of the Property
Real property in the City of LODI, County of SAN JOAQUIN. State of CALIFORNIA, described
as follows:
PARCEL 1 AS SHOWN ON THE PARCEL MAP FILED NOVEMBER 4, 1996, IN BOOK 20 OF
PARCEL
MAPS, AT PAGE 139, SAN JOAQUIN COUNTY RECORDS.
EXHIBIT C
Approved Development Budget
Roget Park Senior Housing
Estimated Acquistion and Predevelopment Budget Dae a+5og
SOURCSS of FUNDS
Auq,lPradey.
AcgJPndev.
Predevelo9menl Loan
5
Other Predr•vElonmerx Loan Edo. LOC
S
5 050.000
CDBG funds
f
t 10000D By 630-10
HOME furls (GAP)
$
058 793 Eat 5-2010
HUC COPAIM AtivanCe
S
$
T,1x Exempt Constnidon Loan
$
FHLB AHP
$
LIH Ta Cradd-LP Cspd61 Conlnhulon
$
Envrmnmerdal RemedLoW n
LIH Tax Credd-GP Capitol Cantnbulcn
S
S
Permanent Finanong
$
$ 5.000
Peroiancol Financmg -2nd Mortgage
S
$ 2500
Delayed Developer Fee
5
7D AL SOURCES
1,758,793
HUD app • 6+09
lw%DD. 4,0 CMAC w"d- 7 n
SurDiuslfDeficilf o SLIC A4411mton - 0-10 Perml S.b1-nal-IDAD Cone ,Kc MCt0-0.1211
(iEESoiFUNDS
Auq,lPradey.
.- fdawalio. _ _ ,M11.16Jurt11 JWil�aat!-
LANDAMPROVIIIIIIIENTI:
Land Coal
S 650 ODD
5 050.000
S
Extensions
$
S
Permanent Rebcaton
$
f
owncarllon
5
5
Envrmnmerdal RemedLoW n
$
S
SRO Manlenance It a Se rdy. CleenUp)
$ 5.000
f 2500
$ 2500
Sde Value Beyond Cost
f
$
T0IO d Eamo - Lend Acqumdnn
S 10.000
S 10.000
S
Legal • Land Acquedlon
S 5,000
S 5 ODE)
S
S 07010H
S 885 000
$ 2.300
s 2 500
Total Land E Ins rravamenls
DESIGNi IN
CONSULTG: -
-- - - --- - - -
_ ..._.... . _ ....
_.. ...
-
-- -
ArChded
% 810.000
It 324',VC
$ 202.000
Jonl Trandl Willy Do gn
S 10.300
5 8.150
S 8,150
Corterudlon Estunalblg+Management Senv s
$ 10.000
S 5000
S 5.000
Englneenng ROPuds II a Tapu. Now. Soda Traffic Biology)
S 50.00(1
$ 50,000
Emeronmerdal
S 20,000
f 20,000
Tealusg A lnspec0on
$
S
Total Design d Consulting
S 112,300
$ 401'm
S 705 150
S
O8 -Sae Improvemenls
§
S
on•Sde Improvemenls
$
$
CommdrxaYChidcare Conelruclgn
S
Relei7fenant Impmvemenfs
i
S
UM Com lnmtion
S
;
Podia (Garage
S
S
General Requremenls
S
S
GC Cordingeacy
S
Contractor Cwmeed 5 Pmfd
f
S
Contractors Bond E Insuence
$
S
Pncalq Escal atiorJDealgn Couloge"
s
S
Fumrlua Fuduss B Equpmefi (mm on was)
f
f
Constnrclon Contmgency
S
$
Total Comtnwllon
S
;
S
S
Persists 8 Fees (not Ind bulldog permit and rotated fees)
; 200.000
$ 50.00D
$ 100.000
S 50.00(l
Lagnl Fee% - Canal( Loon Cbamg
S
Legal Fees - Perm Loan Cbaog
S
Legal Fees. - Organaoton
$ 8.000
$ 0ODD
Acdll Fsea
S
Sponsor Admnistraton
5 50.000
f 50 DDD
Appraisal
; 3 500
S 3 500
Markel Study
$ 9.500
$ 9.5DU
Ren(OUp MwIceling
5
Resalvas
S
Marketeg S Bond Reserves
S
IMual Services Reserve
S
Operating Reserve
$
MHP Interest Reserve
S
Partnership Management
S
Investor Selvxes Fee Reaerve
$
HUD MCI
S
Son Costs. Card,ngency
5 35 000
$ 11 BO7
S 11.807
S 11.007
TOUR Indirect Costs
f 301 000
f 130,887
$ 111 867
S 81.961
_.._-
LiahldylCOC Ineuence
f
Real Eelam Taxes
;
Predevelopment Loan Intereot lndudeo lend Cent')
$
Coste et Issuance (Boole)
5
Conelmdron Loan Fees d Expenses
$
Conainrgron Loan lnteresl
$
Permanent PrmnwV Fees 8 Expenses
5
TRIO S Escrow - Conslructcn Lawn
S
Tdle S Escrow- Permanent Loon
$
Lender•Appralsaf, Legal S Consulting (Impactions Incl)
$ E 000
$ 8.000
Total Flnmes 3 Carry Costs
S 8000
S
S -
$ 8 000
AIIZREDffWWVN1)"TION MWE NIEI:
ICAC Appkcatm Fee
S 2 000
S 2 000
TCAC Reservation Fee
; 9 502
S 9.582
TCAC Pedormanee Depoed
S
TCAC Pedormance Deposit Refund
S
TCAC Monitoring Fee
$
CDLAC Pedonnence Deposit
S 47.910
S 47 910
CDLAC Perinnnance Depoed Refund
S
Syrdrraton Consultant
$ 6,00c
S 5 000
Syrxicouon Legal Fees
f
Syndmotominvaslor Legal
S
SyndrrauDn Other Brdge Loon Fees.
$
5yndrraton Other Bndge LoaNDaV Fee Interest
Is
Total TCACISyndbatloa
f 64,403
S
1 S 84,493
S
Prepared by ProleM Pevebpnura 8116re%M Page 1
EXHIBIT D
Form of Deed of Trust
FORM OF CITY DEED OF TRUST
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City ofd►
Exempt from recording fees pursuant to Gov. Code Sec. 6103
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST AND ASSIGNMENT OF RENTS
A.P.N.
THIS DEED OF TRUST (this "Deed of Trust") is made as of ,
OW between , L.P., a California limited partnership
("Trustor"), FIRST AMERICAN TITLE INSURANCE COMPANY as "Trustee," and the CITY
OF a chartered city ("Beneficiary"). Trustor is the fee owner of the Property
described below.
This Deed of Trust witnesseth:
That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN
TRUST, WITH POWER OF SALE, that certain real property in County,. California,
described as:
See Exhibit A, attached hereto and incorporated herein by this reference.
TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right,
power, and authority hereinafter given to and conferred upon Beneficiary to collect and apply
such rents, issues, and profits; and together with all buildings and improvements of every land
and description now or hereafter erected or placed thereon, and all fixtures, including but not
limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces,
heating equipment, laundry equipment, steam and hot water boilers, stoves, ranges, elevators and
motors, bath tubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating
fixtures, mantels, cabinets, refrigerating plant and refrigerators, whether mechanical or
otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and
other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent
permitted by law be deemed to be permanently affixed to and a part of the realty; and
Together with all building materials and equipment now or hereafter delivered to the premises
and intended to be installed therein; and
Together with all articles of personal property owned by the Trustor now or hereafter attached to
or used in and about the building or buildings now erected or hereafter to be erected on the lands
described which are necessary to the complete and comfortable use and occupancy of such
building or buildings for the purposes for which they were or are to be erected, including all
other goods and chattels and personal property as are ever used or furnished in operating a
building, or the activities conducted therein, similar to the one herein described and referred to,
and all renewals or replacements thereof or articles in substitution therefor, whether or not the
same are, or shall be attached to the building or buildings in any manner. All of the foregoing,
together with the real property, is herein referred to as the "Property."
To have and to hold the Property, together with appurtenances to the Trustee, its or its successors
and assigns forever.
For the Purpose of Securing:
(a) Performance of each agreement of Trustor herein contained.
(b) Payment of the indebtedness evidenced by that certain promissory note (the "Note")
of even date herewith, and any extension or renewal thereof, in the stated principal sum of
$ , executed by Trustor in favor of Beneficiary or order.
(c) Payment of such further sums as the then record owner of the Property hereafter may
borrow from Beneficiary, when evidenced by another note (or notes) reciting it is so secured.
(d) Performance by Trustor of all of Trustor's obligations arising under that certain
Regulatory Agreement (the "Regulatory Agreement") dated and recorded concurrently herewith
between Trustor and Beneficiary.
(e) Performance of each obligation of Trustor set forth in that certain Acquisition and
Development Agreement (the "Agreement") dated as of entered into by and
between Trustor's predecessors -in -interest and Beneficiary.
To Protect the Security of This Deed of Trust, Trustor Agrees:
(1) That it shall faithfully perform each and every covenant contained in the Note,
Regulatory Agreement, and the Agreement.
(2) That it will not permit or suffer the use of any of the Property for any purpose other than
the use described in the Regulatory Agreement and the Agreement as they may be amended from
time to time.
(3) To keep the Property in good condition and repair; not to remove or demolish any
building thereon; to complete or restore promptly and in good workmanlike manner any building
which may be constructed, damaged or destroyed thereon and to pay when due all claims for
labor performed and materials furnished therefor; to comply with all laws affecting the Property,
or requiring any alterations or improvements to be made thereon; not to commit or permit waste
thereof; not to commit, suffer or permit any act upon the Property in violation of law; to
cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use
of the Property may be reasonably necessary, the specific enumerations herein not excluding the
general.
(4) To provide, maintain and deliver to Beneficiary fire and extended coverage insurance
with endorsements for vandalism, malicious mischief, and special extended perils, in the full
replacement value of the improvements (excluding footings and foundations with no co-
insurance penalty provision), and with endorsements for increases in costs due to changes in
code and inflation, and any other insurance requested by Beneficiary, and with loss payable to
Beneficiary, and any other insurance required by the Agreement. The amount collected under
any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured
hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire
amount so collected or any part thereof may be released to Trustor. Such application or release
shall not cure or waive any default or notice of default hereunder or invalidate any act done
pursuant to such notice. Beneficiary shall have the right to pay any insurance premiums when
due should Trustor fail to make them, and all such payments made by the Beneficiary shall be
added to the principal sum secured hereby. Beneficiary shall release all insurance or
condemnation proceeds to Trustor to be used to reconstruct the Project on the Property provided
that such Beneficiary determines that such restoration, repair or rebuilding is economically
feasible.
(5) To appear in and defend any action or proceeding purporting to affect the security hereof
or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including
cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding
in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose
this Deed of Trust.
(6) To pay: at least ten (10) calendar days before delinquency all taxes and assessments
affecting the Property, including assessments on appurtenant water stock; when due, all
encumbrances, charges and liens, with interest, on the Property or any part thereof, which appear
to be prior or superior hereto; all costs, fees and expenses of this Trust.
(7) Should Trustor fail to make any payment or to do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in
such manner and to such extent as either may deem necessary to protect the security hereof,
Beneficiary or Trustee being authorized to enter upon the Property for such purposes with
written notice to Trustor; appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or
compromise any encumbrance, charge or lien which in the judgment of either appears to be prior
or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel
and pay its reasonable fees.
(8) To pay immediately and without demand all sums so expended by Beneficiary or Trustee,
with interest from date of expenditure at the amount allowed by law in effect at the date hereof,
and to pay for any statement provided for by law in effect at the date hereof regarding the
obligation secured hereby, any amount demanded by the Beneficiary not to exceed the maximum
allowed by law at the time the statement is made.
(9) The Trustor further covenants that it will not voluntarily create, suffer, or permit to be
created against the Property any lien or liens except as authorized by Beneficiary and further that
it will keep and maintain the Property free from the claims of all persons supplying labor or
materials which will enter into the construction of any and all buildings now being erected or to
be erected on the Property, or will cause the release of or will provide a bond against any such
liens within ten (10) days of Trustor's receipt of notice of the lien or liens.
(10) That any award of damages in connection with any condemnation for public use of or
injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary who
may apply or release such moneys it receives in the same manner and with the same effect as
above provided for disposition of proceeds of fire or other insurance.
(11) That by accepting payment of any sum secured hereby after its due date, Beneficiary does
not waive its right either to require prompt payment when due of all other sums so secured or to
declare default for failure so to pay.
(12) That at any time or from time to time, without liability therefor and without notice, upon
written request of Beneficiary and presentation of this Deed of Trust and the Note for
endorsement, and without affecting the personal liability of any person for payment of the
indebtedness secured hereby, Trustee may: reconvey any part of the Property; consent to the
making of any map or plat thereof; join in granting any easement thereon; or join in any
extension agreement or any agreement subordinating the lien or charge hereof.
(13) That upon written request of Beneficiary stating that all sums secured hereby have been
paid or forgiven by Beneficiary, and upon surrender of this Deed of Trust and the Note to
Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey,
without warranty, the Property then held hereunder. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such
reconveyance may be described as "the person or persons legally entitled thereto." In addition,
upon Beneficiary's satisfaction that the subdivision process for the creation of commercial
condominiums for the ground level commercial/retail spaces on the Property in accordance with
state law has been completed, Beneficiary shall make written request to Trustee for the partial
reconveyance of the portion of the Property consisting of those condominiums, and the
encumbrance of this Deed of Trust shall be reconveyed without warranty as to that portion of the
Property only.
(14) That Trustor hereby absolutely and unconditionally assigns and transfers to Beneficiary
all the rents, income and profits of the property encumbered hereby, and hereby give to and
confer upon Beneficiary the right, power and authority to collect such rent, income, and profits,
and Trustor irrevocably appoints Beneficiary Trustor's true and lawful attorney at the option of
Beneficiary, at any time, to give receipts, releases and satisfactions and to sue, either in the name
of Trustor or in the name of Beneficiary, for all income, and apply the same to the indebtedness
secured hereby; provided, however, so long as no default by Trustor in the payment of any
indebtedness secured hereby shall exist and be continuing, Trustor shall have the right to collect
all rent, income and profits from the Property and to retain, use and enjoy the same. Upon any
such default, Beneficiary may at any time without notice, either in person, by agent, or by a
receiver to be appointed by a court, and without regard to the adequacy of any security for the
indebtedness hereby secured, enter upon and take possession of the Property or any part thereof,
in its own name sue for or otherwise collect such rents, issues and profits, including those past
due and unpaid, and apply the same, less costs and expenses of operation and collection,
including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as
Beneficiary may determine. The entering upon and taking possession of the Property, the
collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure
or waive any default or notice of default hereunder or invalidate any act done pursuant to such
notice.
(15) That upon default by Trustor in payment of any indebtedness secured hereby, or in
performance of any agreement hereunder, Beneficiary may declare all sums secured hereby
immediately due and payable by delivery to Trustee of written declaration of default and demand
for sale and of written notice of default and election to cause to be sold the Property, which
notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this
Deed of Trust, the Note and all documents evidencing expenditures secured hereby. After the
lapse of such time as may then be required by law following the recordation of the notice of
default, and notice of sale having been given as then required by law, Trustee, without demand
on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a
whole or in separate parcels, and in such order as it may determine, at public auction to the
highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee
may postpone sale of all or any portion of the Property by public announcement at such time and
place of sale, and from time to time thereafter may postpone such sale by public announcement
at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed
conveying the property so sold, but without any covenant or warranty, express or implied. The
recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at
the sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of
evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of:
all sums expended under the terms hereof, not then repaid, with accrued interest at the amount
allowed by law in effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons Iegally entitled thereto.
(16) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may
from time to time, by instrument in writing, substitute a successor or successors to any Trustee
named herein or acting hereunder, which instrument, executed by the Beneficiary and duly
acknowledged and recorded in the office of the recorder of the county or counties where the
Property is situated, shall be conclusive proof of proper substitution of such successor Trustee or
Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title
estate, rights, powers and duties. The instrument must contain the name of the original Trustor,
Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded and
the name and address of the new Trustee.
(17) That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto,
their heirs, legatees, devisees, administrators, executors, successors and assigns. The term
Beneficiary shall mean the owner and holder, including pledgees, of the Note, whether or not
named as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the
masculine gender includes the feminine and/or neuter, and the singular number includes the
plural.
(18) That Trustee accepts this Trust when this Deed of Trust, duly executed and
acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any
party hereto of pending sale under any Deed of Trust or of any action or proceeding in which
either Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
(19) If Trustor shall die or sell, convey, hypothecate, transfer, encumber or alienate the
Property, or any part thereof, or any interest therein, or shall be divested of title or any interest
therein in any manner or way, whether voluntarily or involuntarily, without the written consent
of the Beneficiary being first had and obtained, or if Trustor shall fail to make any payments due
under the Note, or fail to perform any other obligation under this Deed of Trust, the Note, the
Regulatory Agreement, or the Agreement, or any other deed of trust encumbering the Property or
the promissory note or other agreement secured thereby, then Beneficiary shall have the right, at
its option, to declare any indebtedness or obligations secured hereby, irrespective of the maturity
date specified in any note evidencing the same, immediately due and payable.
(20) That Trustor shall promptly pay when due the payments of interest, principal, and all
other charges accruing under any superior or prior trust deed, mortgage, or other instrument
encumbering the Property. Upon any breach of the Agreement, Beneficiary shall have the right
to declare all sums secured hereby immediately due and payable. Beneficiary shall have the
right, but not the obligation, to cure any defaults on any superior or prior deed of trust or
promissory note secured thereby and upon curing such default Trustor shall immediately
reimburse Beneficiary for all costs and expenses incurred thereby, together with interest thereon
at the maximum legal rate permitted to be charged by non-exempt lenders under the State of
California, and Trustor's failure to pay such amount on demand shall be a breach hereof.
Trustor's breach or default of any covenant or condition of any superior or prior trust deed,
mortgage or other instrument encumbering the Property shall be a default under this Deed of
Trust.
(21) That the improvements now existing or to be constructed upon the Property, and all plans
and specifications, comply with all municipal ordinances and regulations and all.other
regulations made or promulgated, now or hereafter, by lawful authority, and that the same will
upon completion comply with all such municipal ordinances and regulations and with the rules
of the applicable fire rating or inspection organization, bureau, association or office.
The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale
hereunder be mailed to it at the following address:
Signature of Trustor , L.P.
a California limited partnership
By: _
Name:
Title:
STATE OF CALIFORNIA
ss.
COUNTY OF
On before me, _ , Not Public, personally
appeared personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
Notary Public
STATE OF CALIFORNIA
ss.
COUNTY OF
On ', before me, , Notary Public, personally
appeared personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
Notary Public
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT E
Financing Plan
Tiends Drive Senior Housing
SOURCES AND USES OF FUNDS
F.oivad by P,00136eW~ 10142009 page i
SIDUACKS'01PFUND.3
TOTAL
A00ft.WW'
- 0011101111*6011
- NMWARd-
PlTrUftlt_
Atwumptjon* reitms.
PIC—
722170
S (722 I To)
$
0 Co.. S
Oir. 1 un 4- LIP,
i
i
& .
$
000%
111 J LM•XSr,-.4:iUE fv .11
'a�j --'; LA E %+*
i 311011.31111
S 4000 DOC
$
23244S 50 000
0,11 55 Y1 clefIffmcl "n C 3% wnpi.
I ,.ww Lj
5.011.110
L
.
5 501, I To
34 M% S 73849
-A-
8070355
S 14070355 1
000% S -
650%,1,1 Loan a
1
790, 041
790 00
&
4 5gr4 S 9876
L 0- - iC y46f 00,y,w, 0%
L*T.I�LU
4. w%w
L
$ 1147885
5 3 442 M
2867% & 57343
70 '0W,
[�1:,a%7 �,Tn
5 022A8
$ 422998
478% S 10207
00% S
000% $
0W.
1
1
TaFAL30URCES
EERIMII
-211.4351
1111 0 0 Oil
gWidt
godMillft A!
Amon
Law Coal
S mom
S5
7475
S 0
bla,neiv-
S
$
$
$
P—narl
$
N.(Wd.n
$ .
S
Enwon,oOntmi R4rnadmton
$
$ .
S
5,1* MMM.nanta f.6 SOCuniv cwUP.
2 5 DCD S 5 DO
S
S
S 5000
$ 03
$ 0
SAO Vjd.* Beyond Coal
9 '3 '
S
$
$ -
S .
S
T,% & E�vf - Lend Acqucl*r,
IeIjlic 3 100004
$
S
S 126
Legal - LAW Aoqw,Vm
_not 3 6 000
3
$
$
S a,
Total Land 4 leaprow..00ts
S 550,000 Is 450,000
1$
$
5,00018
11,126
A 0
AlcNact (CW irgAuded be HUE)l
ale DDO
$ 154 UOU
a.
770000
$ 9 2t
a
5
Join[ Trench Utiliv Donn
1430 0
S
5 10 300
S 2DA
$
ConslIKUPn E0,,*hnVM*g*�nt Swwol,
5 10000
05000
S
76W
$ I"'
I
Eng ""u'l Rept. a Topc No,N 5o44 Tralf. B.",,
S 60000
S
sow
$ 025
1
on
W n,
S 20000
5
$
20000
$ 250
5 a
T.1t'v & insp.(on
5 100000
$
S 100 CDn
S 1250
5 1
T.��17D!!n C222""
1 '.37 sags
A 71ZM
4 3%000
5
3 1,031,30
$ 12,801,
L 14
C4 GITM, '2.
Q+ Sft ImpmNments
S 1 301 837
S S 1 301837
S
S eso G% S to 27;I9
5400 000
Brown
Brown ESL -1. 7 31 09
$ 5
$ - .
: I a
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Mi
F.oivad by P,00136eW~ 10142009 page i
EXHIBIT F
Promissory Note
PROMISSORY NOTE
[$1,100,000] Lodi, California
, 20`
FOR VALUE RECEIVED, Eden Development, Inc., a California nonprofit public benefit
corporation ("Borrower"), promises to pay to the City of Lodi, a municipal corporation ("Seller"),
in lawful money of the United States of America, the principal sum of One Million One Hundred
Thousand Dollars ($1,100,000) or so much thereof as may be advanced by Seller pursuant to
the Purchase and Development Agreement referred to below, together with interest on the
outstanding principal balance at the rate of three percent (3%) simple interest per annum,
commencing upon the earlier of three (3) years from the date of this Note or the date of the
permanent loan closing for the Development. Interest shall be calculated on the basis of a year of
360 days, and charged for the actual number of days elapsed.
1. PURCHASE AND DEVELOPMENT AGREEMENT. This Promissory Note ("Note") has
been executed and delivered pursuant to and in accordance with that Purchase and
Development Agreement executed by and between Borrower and Seller dated as of
2009 ("Agreement"), which is incorporated by this reference herein.
Capitalized terms used but not defined herein shall have the meaning set forth in the
Agreement.
2. REPAYMENT
2.1. PAYMENTS, MATURITY DATE. This Promissory Note shall be paid only on a residual
receipts basis from the Residual Receipts (as defined and calculated below) generated by the
Development. Payments shall be credited first to any unpaid late charges and other costs and
fees thea due, then to accrued interest, and then to principal. No amount due under this
Promissory Note shall become subject to any rights, offset, deduction or counterclaim on the
part of Borrower. The entire outstanding principal balance of this Promissory Note, together
with interest accrued thereon and any other sums accrued hereunder shall be payable in full on
the earlier of (a) the fifty-fifth (55th) anniversary of the date upon which City of Lodi issues a final
certificate of occupancy for the Development or (b) �_ ] ("Maturity Date").
2.2. ANNUAL PAYMENTS FROM RESIDUAL RECEIPTS. By no later than June 1 of each
year following the issuance of a final certificate of occupancy for the Development, Borrower
shall pay to Seller fifty percent (50%) of all Residual Receipts generated by the Development
during the previous calendar year to reduce the indebtedness owed under this Promissory Note.
No later than May 1 of each year following the issuance of a final certificate of occupancy for the
Development, Borrower shall provide to Seller Borrower's calculation of Residual Receipts for
the previous calendar year, accompanied by such supporting documentation as Seller may
reasonably request, including without limitation, an independent audit prepared for the
Development by a certified public accountant in accordance with generally accepted accounting
principles. No later than November 15 of each year following issuance of the final certificate of
occupancy for the Development, Borrower shall provide to Seller a projected budget for the
following calendar year which shall include an estimate of Residual Receipts.
Notwithstanding any contrary provision set forth herein, including without limitation, the
definition of Residual Receipts, if and for so long as the Property is encumbered by a HUD Use
Agreement or HUD Regulatory Agreement executed by or in favor of the U.S. Department of
Housing and Urban Development ("HUD") in connection with a Section 202 Capital Grant, the
HUD -required provisions set forth in any Rider to the Agreement, shall govern.
2.2.1. "Residual Receipts" shall mean for each calendar year during the term of this
Promissory Note, the amount by which Gross Revenue (defined below) exceeds Annual
Operating Expenses (defined below) for the Development. Residual Receipts shall also include
net cash proceeds realized from any refinancing of the Development, less fees and closing
costs reasonably incurred in connection with such refinancing, and any Seller -approved uses of
the net cash proceeds of the refinancing.
2.2.2. "Gross Revenue" shall mean for each calendar year during the term of this
Promissory Note, all revenue, income, receipts and other consideration actually received by
Borrower from the operation and leasing of the Development. Gross Revenue shall include, but
not be limited to: all rents, fees and charges paid by tenants; Section 8 payments or other rental
subsidy payments received for the dwelling units; deposits forfeited by tenants; all cancellation
fees, price index adjustments and any other rental adjustments to leases or rental agreements;
proceeds from vending and laundry room machines; the proceeds of business interruption or
similar insurance; the proceeds of casualty insurance; and condemnation awards for a taking of
part or all of the Development for a temporary period. Gross Revenue shall include any release
of funds from replacement and other reserve accounts to Borrower other than for costs
associated with the Development. Gross Revenue shall not include tenant security deposits,
loan proceeds, capital contributions or similar advances.
2.2.3. "Annual Operating Expenses" shall mean for each calendar year during term
hereof, the following costs reasonably and actually incurred for the operation and maintenance
of the Development to the extent that they are consistent with an annual independent audit
performed by a certified public accountant using generally accepted accounting principles:
property taxes and assessments; debt service currently due and payable on a non -optional
basis (excluding debt service due from residual receipts or Residual Receipts of the
Development) on loans which have been approved by the Seller and which are secured by
deeds of trust senior in priority to the Seller Deed of Trust ("Approved Senior Loans"); property
management fees and reimbursements in amounts in accordance with industry standards for
similar residential projects; property management staff salaries; premiums for property damage,
liability and other insurance; utility service costs not paid for directly or indirectly by tenants;
maintenance and repair costs; fees for licenses and permits required for the operation of the
Development; organizational costs (e.g., annual franchise tax payments) and costs associated
with accounting, tax preparation and legal fees of Borrower incurred in the ordinary course of
business; expenses for security services; advertising and marketing costs; payment of
deductibles in connection with casualty insurance claims not paid from reserves; tenant services
and activities; the amount of uninsured losses actually replaced, repaired or restored and not
paid from reserves; cash deposits into reserves for capital replacements and for tenant services
in the amount reasonably required the lender of an Approved Senior Loan or by Borrower with
the written approval of Seller; partnership management fees payable to the general partner of
Buyer in the maximum aggregate sum of $25,000 per year payable only for so long as Buyer is
a limited partnership; an asset management fee not to exceed $10,000 per year, increasing by
3% per year annually after the first three years (plus any accrued but unpaid amount for prior
years) payable to the investor limited partner of Buyer; any previously unpaid portion of the
developer fee (without interest) due Eden Housing, Inc.; cash deposits into operating reserves in
the amount (if any) required by the lender of an Approved Senior Loan or reasonably required
by Borrower and approved in writing by Seller; other ordinary and reasonable operating
expenses; and extraordinary operating costs approved in writing by the Seller. Payments to
Borrower, its partners or affiliates in excess of the limitations set forth in this Section shall not be
counted toward Annual Operating Expenses for the purpose of calculating Residual Receipts.
Notwithstanding the above, if HUD Section 202 financing is used the parties agree to
amend this Promissory Note to specifically provide that Borrower shall be entitled to pay Eden
Housing, Inc. its full developer fee without deferment and that the following reserve accounts
shall be funded prior to the Development's permanent loan closing in the amounts necessary to
capitalize the monthly or annual payments by the lender of an Approved Senior Loan, or by
Borrower and approved by the Seller in its reasonable discretion: operating; tenant services;
partnership management fee; investor asset management fee; and bond issuer fees and other
bond -related fees, if any. The parties acknowledge that Development costs not allowed by HUD
to be paid prior to HUD's determination of Residual Receipts or residual receipts must be
capitalized and placed in reserve accounts for the benefit of the Development. Interest earned
on the above reserves shall become a part of each reserve and used only for the purpose for
which each reserve is established.
2.2.4. EXCLUSIONS FROM ANNUAL OPERATING EXPENSES. Annual Operating
Expenses shall exclude the following: developer fees and interest on any deferred developer
fees (except as permitted pursuant to Section 2.2.3); contributions to Development operating
reserves (except as permitted pursuant to Section 2.2.3); debt service payments on any loan
which is not an Approved Senior Loan, including without limitation, unsecured loans or loans
secured by deeds of trust which are subordinate to the Seller Deed of Trust; depreciation,
amortization, depletion or other non-cash expenses; expenses paid for with disbursements from
any reserve account; distributions to partners; any amount paid to Borrower, any general partner
of Borrower, or any entity controlled by the persons or entities in control of Borrower or any
general partner of Borrower. Notwithstanding the foregoing limitation regarding payments to
Borrower and related parties, the following fees shall be included in Annual Operating Expenses
in accordance with the limitations set forth in Section 2.2.3 above even if paid to an affiliate of
Borrower or a partner of Borrower, if any: fees paid to a property management agent or resident
services agent, partnership management fees, and asset management fees.
2.3. DUE ON SALE; ASSIGNMENT. The entire unpaid principal balance and all interest
and other sums accrued hereunder shall be due and payable upon the Transfer (as defined in
Section 10.2 of the Agreement) without Seller consent, of all or any part of the Development or
any interest therein other than a Transfer permitted without Seller consent pursuant to the
Agreement. Without limiting the generality of the foregoing, this Promissory Note shall not be
assigned without Seller's prior written consent, which consent may be granted or denied in
Seller's sole discretion; provided however, this Promissory Note may be assigned in connection
with a permitted Transfer described in Section 10.3 of the Agreement.
3. PREPAYMENT. Borrower may, without premium or penalty, at any time and from time to
time, prepay all or any portion of the outstanding principal balance due under this Promissory
Note. Prepayments shall be applied first to any unpaid late charges and other costs and fees
then due, then to accrued but unpaid interest, and then to principal.
4. MANNER OF PAYMENT. All payments of principal and interest on this Promissory Note
shall be made to Seller at 221 West Pine Street, Lodi, CA 95240 or such other place as Seller
shall designate to Borrower in writing, or by wire transfer of immediately available funds to an
account designated by Seller in writing.
5. DEFAULT; DEFAULT RATE. If Borrower does not pay the above payments within the 30
calendar days of the date due, Borrower will be in default under this Promissory Note. During
the time that any default exists under this Promissory Note, interest shall automatically be
increased upon written notice to the default rate of the lesser of ten percent (10%), compounded
annually, or the highest rate permitted by law (the "Default Rate"). When Borrower is no longer
in default, the Default Rate shall no longer apply and the interest rate shall once again be the
non -default rate. Notwithstanding the foregoing provisions, if the interest rate charged exceeds
the maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The
imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default
under this Promissory Note or prevent the Seller from exercising any of its other rights or
remedies.
6. SECURITY; REMEDIES. Prior to Borrower's acquisition of the Property described in
Exhibit A to the Agreement, this Promissory Note is secured by that Assignment of Agreements
executed by the Borrower for the benefit of the Seller. From and after the time the Borrower
acquires title to the Property this Promissory Note is secured by a Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing ("Deed of Trust") executed by Borrower for the
benefit of Seller and encumbering the Property in San Joaquin County. Upon the failure of the
Borrower to perform or observe any provision of this Promissory Note or Deed of Trust, at the
option of the Seller and with thirty (30) days' prior written notice, the entire unpaid principal and
interest, if any, owing on this Promissory Note shall become immediately due and payable, and
the Seller may exercise its rights or remedies hereunder or thereunder. This Promissory Note is
executed and delivered in the State of California and shall be governed by the laws of the State
of California.
7. WAIVER; COSTS. Borrower waives presentment, demand, protest, notices of dishonor
and of protest, and all defenses and pleas on the ground of any extension or extensions of the
time of payment or of any due date under this Promissory Note, in whole or in part, whether
before or after maturity and with or without notice. The Borrower hereby agrees to pay court
costs and expenses, which may be incurred by the Seller, in the enforcement of this Promissory
Note.
8. TIME IS OF THE ESSENCE. Time is of the essence with respect to every provision of
this Promissory Note.
9. NONRECOURSE. The nonrecourse provision set forth in this Section 9 shall apply from
and after the Borrower acquires title to the Property described in the Agreement and records the
Deed of Trust for the benefit of the Seller.
(a) Except as set forth in paragraph (b) below, the Borrower shall not have any direct or
indirect personal liability for payment of the principal of, or interest on, the Loan, and the sole
recourse of the Seller with respect to the principal of, or interest on, the Promissory Note shall
be to the property described in the Deed of Trust; provided, however, that nothing contained in
the foregoing limitation of liability shall (a) limit or impair the enforcement against all such
security for the Promissory Note of all the rights and remedies of the Seller thereunder, or (b) be
deemed in any way to impair the right of the Seller to assert the unpaid principal amount of the
Promissory Note as demand for money within the meaning and intent of Section 431.70 of the
California Code of Civil Procedure or any successor provision thereto.
(b) The foregoing limitation of liability is intended to apply only to the obligation for the
repayment of the principal of, and payment of interest on the Promissory Note, except as
hereafter set forth. Nothing contained herein is intended to relieve the Borrower of its obligation
to indemnify the Seller under Sections 4.7, 4.8.1, 4.9, 6.3.10, .8.5.3 and 12.4 of the Agreement,
or liability for (i) fraud or willful misrepresentation; (ii) the failure to pay taxes, assessments or
other charges which may create liens on the Property that are payable or applicable prior to any
foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other
charges); (iii) the fair market value of any personal property or fixtures removed or disposed of
by Borrower other than in accordance with the Deed of Trust; and (iv) the misappropriation of
any proceeds of the loan or under any insurance policies or awards resulting from
condemnation or the exercise of the power of eminent domain or by reason of damage, loss or
destruction to any portion of the Property.
10. HUD -Required Provisions Rider.
During the term of the HUD 202 Capital Advance, the Seller agrees to comply with the
provisions set forth in the HUD -Required Provisions Rider attached hereto and incorporated into
this Agreement, as Attachment A.
IN WITNESS WHEREOF, Borrower has executed and delivered this
Promissory Note as of the date first written above.
BORROWER
Eden Development, Inc.,
a California nonprofit public benefit corporation
ATTACHMENT A
HUD -REQUIRED PROVISIONS RIDER
For value received, the undersigned agree that the following provisions shall be
incorporated into and made a part of the following documents as amended (the "Junior
Loan Documents") relating to the property commonly known as Senior Housing
(the "Project"): That certain Purchase and Development Agreement dated , 2009
("Agreement") and memorandum thereof recorded as series no.
of San Joaquin County by the City of Lodi (the "Lender") and Eden Development, Inc.,
its successors and assigns (the "Borrower"); that Regulatory Agreement recorded
as series no. (the "Lender Regulatory Agreement"); that Promissory
Note dated as of 2009 secured by that certain Deed of Trust recorded
as series no.
In the event of any conflict, inconsistency or ambiguity between the provisions
of this Rider and the provisions of the Junior Loan Documents, the provisions of this
Rider shall control. All capitalized terms used herein and not otherwise defined herein
shall have the meaning given to such terms in the Junior Loan Documents. As used
in this Rider, the term "HUD Loan Documents" shall mean the following documents
relating to the HUD Section 202 Capital Advance for the Project (HUD Project No.
121-EE-NP-WAH).
A. Deed of Trust recorded concurrently herewith on the Property
among Borrower as trustor, North American Title Company as
trustee and Eden Development, Inc. as beneficiary, which beneficial
interest will be assigned to HUD by that collateral assignment at
closing (the "HUD Deed of Trust");
B. Regulatory Agreement between Borrower and HUD recorded currently
herewith on the Property ("HUD Regulatory Agreement");
C. Capital Advance Program Use Agreement between Borrower and HUD
recorded concurrently herewith on the Property (the "HUD Use
Agreement"), incorporated by reference in the HUD Deed of Trust;
D. HUD Security Agreement between Borrower as the debtor and Eden
Development, Inc. as the secured party, which interest shall be
assigned to HUD by that collateral assignment (the "HUD Security
Agreement");
E. HUD Project Rental Assistance Contract (the "PRAC); and
F. Other HUD Capital Advance documents.
1. Term of Rider. Notwithstanding anything else in this Rider to the contrary, the
provisions of this Rider shall be and remain in effect only so long as any of the HUD
Loan Documents are in effect; thereafter, this Rider and its requirements shall be
deemed no longer in effect.
2. Subordination. The covenants contained in the Junior Loan Documents shall be
subordinate to the rights of HUD under the HUD Loan Documents, and to the HUD rules
and regulations pertaining thereto; and furthermore, the Junior Loan Documents shall
not be enforceable against the HUD Secretary, his or her successors and assigns,
should the HUD Secretary acquire title to the Project by power of sale, foreclosure, or
by deed -in -lieu of foreclosure. In addition, so long as the HUD Loan Documents are in
effect, in the event that there are any conflicts between the terms and conditions in the
Junior Loan Documents and the terms and conditions of the HUD Loan Documents and
HUD rules and regulations pertaining thereto, the HUD Loan Documents and HUD rules
and regulations shall prevail. No default may be declared under the Junior Loan
Documents without prior written HUD consent.
3. HUD Rules. During the time period in which Section 202 or the PRAC regulations
apply to the Project, rents approved by HUD pursuant to the Section 202 program and
the PRAC shall be deemed to be in compliance with the Lender Regulatory Agreement,
and compliance by the Borrower with the Section 202 Regulations and the PRAC with
respect to continued occupancy by households whose incomes exceed the eligible
income limitations in Section 2 of the Lender Regulatory Agreement, or other matters
set forth in the Lender Regulatory Agreement, shall be deemed to be in compliance with
the requirements of the Junior Loan Documents. Nothing in the Junior Loan Documents
shall in any way limit, interfere or conflict with the rights of HUD with respect to
development, operation and management of the Project; nor can the Junior Loan
Documents in any way jeopardize the continued operation of the project on terms at
least as favorable to existing as well as future tenants.
4. Maturity Date. The Junior Note may not mature, and may not bear a maturity date,
prior to the date on which the HUD Note matures. The term of the Junior Loan
Documents shall be extended if the Junior Note matures, there are no residual receipts
or non -Project funds available for repayment and the HUD Mortgage has not been
retired in full or if HUD grants a deferment of amortization or forbearance that results in
an extended maturity of the HUD Loan Documents.
5. Residual Receipts. As long as HUD, its successors or assigns, is the holder of the
HUD Documents, any payments due from Project income from the Section 202 units
under the Junior Loan Documents, or any prepayments made with Project income from
the Section 202 units, shall be payable only from residual receipts of the Project, as that
term is defined in the HUD Regulatory Agreement between HUD and the Borrower, and
subject to the availability of residual receipts in accordance with the provision of said
HUD Regulatory Agreement. No payments or prepayments using residual receipts can
be made without HUD approval. Borrowers may make payments or prepayments at
any time without HUD approval using funds that do not come from Project income from
the Section 202 units. The restrictions on payment imposed by this paragraph shall not
excuse any default caused by the failure of the makers to pay the indebtedness
evidenced by the Lender's junior Note.
6. Indemnification. Enforcement by the Lender of any indemnification provisions in the
Junior Loan Documents will not and shall not result in any monetary claim against the
Project, the HUD Capital Advance proceeds, any reserve or deposit required by HUD in
connection with the HUD Capital Advance, or the rents or other income from the Section
202 units in the Project other than residual receipts authorized for release by HUD,
without the prior written consent of HUD, but Lender shall have the right to add any
amounts due the Lender pursuant to indemnification provisions in the Junior Loan
Documents to the principal amount of the Loan and the Note and interest shall accrue
thereon commencing on the date indemnification payments are due. In addition, any
indemnification provisions shall not be enforceable against the HUD Secretary, his or
her successors and assigns, should the HUD Secretary acquire title to the Project by
power of sale, foreclosure, or by deed -in -lieu of foreclosure.
7. Transfer. Approval by HUD of a Transfer of Physical Assets (as defined in
Handbook 4350.1, REV -1, Chapter 13) ("TPA") shall constitute approval of the transfer
by the Lender, and the Borrower shall deliver to the Lender at the same time as its
delivery to HUD, any application for HUD's approval of a proposed transfer. Also, the
Borrower shall require the transferee to expressly assume the Borrower's obligations
under the Junior Loan Documents; provided, however, HUD shall not be required to
enforce the requirements of this sentence and if Borrower and any transferee fail to
include such assumption in transfer documents, such failure shall not affect the validity
of the transfer. The Lender shall have the right to specifically enforce the requirement
that any transferee assume the Borrower's obligations under the Junior Loan
Documents. In the absence of such written assumption, no transfer shall be deemed to
relieve the transferor from any obligations under the Junior Loan Documents.
8. Default under Junior Loan Documents. The Lender shall not declare a default under
the Junior Loan Documents unless it has received the prior written approval of HUD,
and the right of the Lender to accelerate the Junior Note during the term of the HUD
Loan Documents shall be enforceable only with the prior written approval of HUD.
9. Receiver. The Lender, for itself, its successors and assigns, further covenants and
agrees that in the event of the appointment of a receiver in any action by the Lender, its
successors and assigns, to foreclose the Lender's junior Deed of Trust, no rents,
revenue or other income of the Project collected by the receiver or by the mortgagee -in -
possession shall be utilized for the payment of interest, principal, or any other charges
due and payable under the Lender's junior Deed of Trust, except from Residual
Receipts, if any, as the term is defined in the HUD Regulatory Agreement. The
appointment of a receiver shall require approval by the Secretary of HUD, and pursuant
to HUD regulations, as long as the Lender is beneficiary under the Deed of Trust, the
Lender cannot be mortgagee -in -possession. In the event of the appointment, by any
court, of any person, other than HUD, the Lender, as a receiver or a mortgagee or party
in possession, or in the event of any enforcement of any assignment of leases, rents,
issues, profits, or contracts contained in the Junior Loan Documents, with or without
court action, no rents, revenue or other income of the Project collected by the receiver,
person in possession or person pursuing enforcement as aforesaid, shall be utilized for
the payment of interest, principal or any other amount due and payable under the
provisions of the Junior Loan Documents, except from Residual Receipts in accordance
with the HUD Regulatory Agreement. The receiver, person in possession or person
pursuing enforcement shall operate the Project in accordance with all provisions of the
HUD Documents.
10.Deed-in-Lieu of Foreclosure. In the event that HUD acquires title to the Project by
deed -in -lieu of foreclosure, the lien of the Lender's junior Deed of Trust will
automatically terminate subject to the conditions as hereinafter described. HUD may
cure a default under the HUD Deed of Trust prior to conveyance by deed -in -lieu of
foreclosure. HUD shall give written notice to the Lender of a proposed tender of title in
the event HUD decides to accept a deed -in -lieu of foreclosure. HUD will only give such
written notice if, at the time of the placing of the subordinate lien against the Property,
HUD receives a copy of an endorsement to the title policy of the Borrower or Lender
which indicates that (a) the Lender's junior Deed of Trust has been recorded, and (b)
HUD is required to give notice of any proposed election or tender of a deed -in -lieu of
foreclosure. Such notice shall be given at the address stated in the Lender's junior Deed
of Trust or such other addresses as later on provided to HUD by written notice, and
designated by the Lender as its legal business address. The Lender shall have thirty
(30) days to cure the default after notice of intent to accept a deed -in -lieu of foreclosure
is mailed.
11.13orrower's Notice to City. Notwithstanding the requirements set forth in Paragraph
10 above, in the event that Borrower contemplates executing a deed -in -lieu of
foreclosure, Borrower shall first give the Lender thirty (30) days prior written notice;
provided, however, that the failure of the Borrower to give said notice shall have no
effect on the right of HUD to accept a deed -in -lieu of foreclosure.
12.Sale, Transfer or Assignment of the Junior Note. The Lender's junior Note is non-
negotiable and may not be sold, transferred, assigned or pledged by the Lender except
with the prior approval of HUD.
13.Amendment. No amendment to the Junior Loan Documents made after the date of
this Rider shall have any force or affect until and unless such amendment is approved in
writing by HUD.
[signature page to follow]
IN WITNESS WHEREOF, the undersigned have executed this Rider as follows:
EDEN DEVELOPMENT, INC. a California CITY OF LODI
Nonprofit Public Benefit Corporation
By -
M1 y:
M1
Name:
City Manager
EXHIBIT G
Budget for Predevelopment Component
In accordance with Section 3.3.1 of the Agreement, the proceeds
of the Predevelopment Component may be used only for the following
predevelopment costs or activities, unless the Seller's City Manager or his designee
approves in writing a different use of the funds:
Architectural
Appraisal
City Planning Fees
Civil Engineering
Construction Cost Estimating
Engineering Reports
Environmental (Phase I, II, etc.) Reports
Financial Consulting
Hydrology & Drainage
Joint Trench Utility Design
Legal
Market Study
Noise & Vibration Study
Permits & Fees
Predevelopment Interest
Site Maintenance
Soils Reports
Survey
Sponsor administration/buyer fee
TCAC Fees
Traffic and other studies
EXHIBIT H
ASSIGNMENT OF AGREEMENTS, PLANS AND SPECIFICATIONS, AND APPROVALS
EDEN DEVELOPMENT, INC.
FOR VALUE RECEIVED, the undersigned, Eden Development, Inc., a California
nonprofit public benefit corporation (the "Buyer"), hereby assigns and transfers to the Seller of
Lodi, a municipal corporation (the "Seller"), all of its right, title and interest in and to:
(1) All architectural, design, engineering, and construction contracts and development
agreements, and any and all amendments, modifications, supplements, addenda and general
conditions thereto (collectively "Agreements"), heretofore or hereafter entered into by any
Contractor (as defined below) relating to the Property (identified in the Purchase and
Development Agreement defined below)
(2) All studies and analyses, surveys, plans and specifications, shop drawings,
working drawings, amendments, modifications, changes, supplements, general conditions and
addenda thereto (collectively "Studies, Plans and Specifications") heretofore or hereafter
prepared by any Contractor (as defined below); and
(3) All land use approvals, building permits, and other governmental approvals of any
nature obtained for the Development (collectively, the "Land Use Approvals").
This Assignment is made pursuant to the terms of the Purchase and Development
Agreement, dated as of , 2009 entered into between the Buyer and the Seller
(the "Purchase and Development Agreement" or "Agreement"). Capitalized terms used but not
defined in this Assignment shall have the meanings set forth in the Agreement.
For purposes of this Assignment, the term "Contractor" means any consultant, architect,
construction contractor, engineer or other person or entity entering into Agreements with the
Buyer and/or preparing Studies, Plans and Specifications for the Buyer with respect to the
Development.
The Buyer hereby irrevocably appoints the Seller as its attorney-in-fact (which Seller is
coupled with an interest) to, upon the occurrence of a Default by Buyer (after notice and
opportunity to cure) or an event which, with notice or the passage of time or both would
constitute a Default (after notice and opportunity to cure) under and as defined in Article 11 of
the Agreement, demand, receive, and enforce any and all of the Buyer's rights with respect to
the Studies, Plans and Specifications, Agreements and Land Use Approvals, and perform any
and all acts in the name of the Buyer or in the name of the Seller with the same force and effect
as if performed by the Buyer in the absence of this Assignment.
The Buyer represents and warrants to the Seller that no previous assignment(s) of its
rights or interest in or to the Studies, Plans and Specifications, Agreements, and/or Land Use
Approvals, has or have been made, and the Buyer agrees not to assign, sell, pledge, transfer,
mortgage, or hypothecate its rights or interest therein (without prior written approval of the Seller
Manager) so long as the Seller holds or retains any security interest under the Agreement.
This Assignment is made to secure: (1) payment to the Seller of all sums now or
hereafter owing under the Promissory Note dated as of the date hereof made by the Buyer to
the Seller, and any and all additional advances, modifications, extensions, renewals and
amendments thereof; and (2) payment and performance by the Buyer of all its obligations under
the Agreement.
This Assignment shall be governed by the laws of the State of California, except to the
extent that Federal laws preempt the laws of the State of California, and the Buyer consents to
the jurisdiction of any federal or State Court within the State of California having proper venue
for the filing and maintenance of any action arising hereunder and agrees that the prevailing
party in any such action shall be entitled, in addition to any other recovery, to reasonable
attorneys' fees and costs.
This Assignment shall be binding upon and inure to the benefit of the heirs, legal
representatives, assigns, and successors -in -interest of the Buyer and the Seller; provided,
however, this shall not be construed and is not intended to waive the restrictions on assignment,
sale, transfer, mortgage, pledge, hypothecation or encumbrance by the Buyer contained in the
Agreement.
Executed by the Buyer on , 2009.
BUYER
EDEN DEVELOPMENT, INC., a California nonprofit
public benefit corporation
IS
ARCHITECT'S/ENGINEER'S CONSENT
The undersigned architect and/or engineer (collectively referred to as "Architect") hereby
consents to the foregoing Assignment of Agreements, Plans and Specifications, and Approvals
("Assignment"), of which this Architect's/Engineer's Consent ("Consent") is a part, and
acknowledges that there presently exists no unpaid claims presently due to the Architect except
as disclosed to the Seller with a copy to Architect arising out of the preparation and delivery of
the Plans and Specification to the Buyer and/or the performance of the Architect's obligations
under the Agreements, as the term "Agreements" is defined in the Assignment.
Architect agrees that if, at any time, the Seller shall become the owner of said Property,
or, pursuant to its rights under the Agreement, elects to undertake or cause the completion of
construction of the Development on any of the Property, in accordance with the Plans and
Specifications, and gives Architect written notice of such election; then so long as the Architect
has received, receives or continues to receive the compensations called for under the
Agreements, the Seller may, at Its option, use and rely on the Plans and Specifications for the
purposes for which they were prepared, and Architect will continue to perform its obligations
under the Agreements for the benefit and account of the Seller in the same manner as if
performed for the benefit or account of the Buyer in the absence of this Assignment.
Architect further agrees that, in the event of a breach by the Buyer of the Agreements, or
any agreement entered into with Architect in connection with the Plans and Specifications, so
long as the Buyer's interest in the Agreements and Plans and Specifications is assigned to the
Seller, Architect will give written notice to the Seller at the address shown below of such breach.
The Seller shall have thirty (30) days from the receipt of such written notice of Default to remedy
or cure said Default; provided, however, nothing herein shall require the Seller to cure said
Default or to undertake completion of construction of the Improvements.
Architect warrants and represents that it/he/she has no knowledge of any prior
assignment(s) of any interest in either the Plans and Specifications and/or the Agreements.
Except as otherwise defined herein, the terms used herein shall have the meanings given them
in the Assignment or the Predevelopment Loan Agreement, as applicable.
Executed by the Architect on , 20_
Address of Seller:
City of Lodi
Community Development Dept.
221 W. Pine Street, Lodi, CA 945240
(P.O. Box 3006, Lodi, CA 95241-1910)
Attention: Manager,
Neighborhood Services Division
Community Improvement
Address of Architect:
Architect:
By:
Its:
EXHIBIT I
Form of Regulatory Agreement
EXHIBIT I
RECORDING REQUESTED BY &
AFTER RECORDING, MAIL TO:
City of Lodi
221 West Pine Street
Lodi, CA 95240
Attention: City Manager
No fee for recording pursuant to
Government Code Section 27383
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Lodi Senior Housing, 2245 Tienda Drive, Lodi, CA 95242)
This Agreement is entered into as of ,by and between the City of Lodi, a
California municipal corporation of the State of California (the "City") and Eden Development,
Inc., a California nonprofit public benefit corporation (the "Owner"), in connection with the
following facts:
A. Pursuant to the Development Agreement (as defined below) between the City and
Borrower, the City will provide to Borrower a loan in the amount of One Million One Hundred
Thousand Dollars ($1,100,000) to acquire that parcel of real property located at 2245 Tienda
Drive in Lodi, as more particularly described in Exhibit A attached hereto (the "Property") and
for predevelopment costs associated with the development thereon. Borrower intends to
construct, own and operate on the Property U units of rental housing for rental to
very low-income senior households and one resident manager's unit. Capitalized terms used but
not defined in this Agreement shall have the meanings set forth in the Development Agreement.
B. Dollars ($ of the City Loan is funded with HOME Investment
Partnership Program funds received by the City from HUD pursuant to the Cranston -Gonzales
National Affordable Housing Act of 1990 (42 U.S.C. Section 12705, et se and Dollars
($ ) is funded with Community Development Block Grant funds, received by the City from
HUD pursuant to Title I of the Housing and Community Development Act of 1974 (42 USC
5301, et sea.).
C. The City has agreed to make the City Loan to Borrower on the condition that the
Development be maintained and operated in accordance with restrictions concerning
affordability, operation, and maintenance of the Development, as specified in this Agreement
and the Development Agreement.
Therefore, in consideration of the City Loan and other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and to ensure that the Property will be used
Lodi Eden Regulatory Agmt 1
and the Development operated in accordance with these conditions and restrictions, the City and
Borrower agree as follows:
I.
DEFINITIONS
1.1 Definitions.
When used in this Agreement, the following terms shall have the respective meanings
assigned to them in this Article 1.
"Actual Household Size" shall mean the actual number of persons in the
applicable household.
2. "Adjusted Income" shall mean the total anticipated annual income of all
persons in a household as calculated in accordance with 24 C.F.R. Section 92.203 (b)( 1).
3. "Assumed Household Size" shall mean the following assumed household
sizes to be utilized to calculate permissible Rents hereunder: one bedroom, two persons; two
bedrooms, three persons; and three bedrooms, four persons, except that if any federal statutes or
regulations require use of alternate household size assumptions in calculating rents, such
federally -mandated household size assumptions shall be used instead of the assumptions
provided below. In the event Borrower receives funding under the State of California
Multifamily Housing Program ("MHP"), the assumed household sizes utilized under the MHP
Program may be utilized instead of the assumed sizes provided in this subsection.
4. 'Borrower" means Eden Development, Inc., a California nonprofit public
benefit corporation or its successor -in -interest, assignee or transferee.
5. "CDBG" shall mean the Community Development Block Grant Program,
operated pursuant to Title I of the Housing and Community Development Act of 1974 (42 USC
5301, et sea.).
6. "CDBG Regulations" shall mean the regulations governing the use of the
CDBG Funds as set forth in 24 CFR 570 et sea.
7. "CertificateNotice" shall mean the document to be recorded by Borrower
upon issuance of the final certificate of occupancy by the City of Lodi for the Development,
which recites the date of issuance of the final certificate of occupancy for the purposes of
determining the Term of this Agreement.
8. "City" shall mean the City of Lodi.
9. "City HOME -Assisted Units" shall mean the Units designated
as assisted with HOME funds.
Lodi Eden RegulatoryAgmt 2
10. "City Deed of Trust" shall mean the deed of trust dated by
and among Borrower, as trustor, North American Title Company, as trustee and the City, as
beneficiary, recorded on the Property which secures repayment of the City Loan and the
performance of the Development Agreement and this Agreement.
11. "City Loan" shall mean all funds loaned to Borrower by City pursuant to
the Development Agreement.
12. "City Note" shall mean the promissory note from the Borrower to the City,
dated , evidencing the City Loan.
13. "Development" shall mean the Property and the residential
units to be developed on the Property, as well as any additional improvements, and all
landscaping, roads and parking spaces existing thereon, as the same may from time to time exist.
14. "HOME" shall mean the HOME Investment Partnership Act Program
pursuant to the Cranston -Gonzales National Housing Act of 1990, as amended.
15. "HOME Regulations" shall mean the regulations governing the use of
HOME Funds as set forth in 24 CFR 92 et seq.
16. "HOME Reporting Term" shall mean the period beginning on the date of
this Agreement and ending on the twentieth (20th) anniversary of the date of this Agreement.
17. "HUD" shall mean the United States Department of Housing and Urban
Development.
18. "HUD 202 Capital Advance" means a capital advance provided by HUD
to the Borrower for construction and/or permanent financing for the Development pursuant to
Section 202 of the Housing Act of 1959, as amended.
19. "Development Agreement" shall mean the HOME Development
Agreement entered into by and between the City and Borrower, dated
20. "Low Income Household" shall mean a household with an Adjusted Income
that does not exceed the qualifying limit for a low-income family under the HOME Program as
defined in 24 C.F.R. Section 92.2.
21. "Median Income" shall mean the median gross yearly income, adjusted for
Actual Household Size as specified herein, in the County of San Joaquin, California, as
published from time to time by HUD. In the event that such income determinations are no
longer published, or are not updated for a period of at least eighteen (18) months, City shall
provide Borrower with other income determinations which are reasonably similar with respect to
methods of calculation to those previously published by HUD.
22. "Rent" shall mean the total of monthly payments by a Tenant of a Unit for
the following: use and occupancy of the Unit and land and associated facilities, including
Lodi Eden Regulatory Agmt 3
parking; any separately charged fees or service charges assessed by Borrower which are required
of all Tenants, other than security deposits; an allowance for the cost of an adequate level of
service for utilities paid by the Tenant, including garbage collection, sewer, water, electricity,
gas and other heating, cooking and refrigeration fuel, but not telephone service or cable TV; and
any other interest, taxes, fees or charges for use of the land or associated facilities and assessed
by a public or private entity other than Borrower, and paid by the Tenant.
amended.
23. "Section 202" means Section 202 of the Housing Act of 1959, as
24. "Tenant" shall mean a household legally occupying a Unit.
25. "Term" shall mean the term of this Agreement, which shall commence on
the date of this Agreement and shall continue until the date fifty-five (5 5) years from the date the
City issues a final certificate of occupancy for the Development as set forth in the Certificate
Notice.
26. "Unit" shall mean one of the (__) rental units included in the
Development, excluding the one (1) resident manager's unit.
27. "Very Low Income Household" shall mean a Tenant with an Adjusted
Income that does not exceed fifty percent (50%) of Median Income, with adjustments for smaller
and larger families, except that HUD may establish income ceilings higher or lower than fifty
percent (50%) of Median Income on the basis of HUD findings that such variations are
necessary because of prevailing levels of construction costs or fair market rents, or unusually
high or low family incomes, as set forth in 24 CFR 92.2.
"Very Low Income Rent" shall mean the maximum allowable rent for a
Very Low Income Unit pursuant to Section 2.2(a) below.
"Very Low Income Units" shall mean the Units which, pursuant to Section
2.1(a) below, are required to be occupied by Very Low Income Households.
11.
AFFORDABILITY AND OCCUPANCY COVENANTS
2.1 Occupancy Requirements.
1. Very Low Income Units. The City under this Agreement shall not require
more than forty-nine percent (49%) of the Units shall be rented to and occupied by or, if vacant,
available for occupancyby Very Low Income Households.
2. City HOME -Assisted Units. Of the Very Low Income Units referred to in
the preceding paragraph, () Units shall be designated as the City HOME -Assisted Units,
which includes " one bedroom units and " two bedroom units.
Lodi Eden Regulatory Agmt
3. Intermingling of Units. The City HOME -Assisted Units and City -required
Very Low Income Units shall be intermingled throughout the Development and be of
comparable quality to all other Units on the Property. Tenants in all Units shall have equal
access to and enjoyment of all common facilities in the Development.
4. Senior OccupancX. The Borrower has elected to operate the Development
as a senior housing development and as such to require all Units in the Development, except for
the resident manager's unit, if used as such, to be occupied or held available for occupancy by
households containing "elderly" residents as defined in the Section 202 program requirements.
The Development shall be operated at all times in compliance with the provisions of the Section
202 program requirements, and to the extent applicable: (a) the Unruh Act, including but not
limited to California Civil Code Sections 51.2, 51.3 and 51.4 which relate to the requirements for
lawful senior housing; (b) the United States Fair Housing Act, as amended, 42 U.S.C. Section
3607(b) and 24 CFR 100.304,which relate to lawful senior housing; (c) the California Fair
Employment and Housing Act, Government Code Section 12900 et seq., which relates to lawful
senior housing; and (d) any other applicable law or regulation. Borrower shall develop and
implement appropriate age verification procedures to ensure compliance with the requirements
of this Section.
5. Other Applicable Laws. The Development shall be operated at all times in
compliance with the provisions of all other applicable laws, including without limitation: (i)
Section 504 of the Rehabilitation Act of 1973; and (ii) any other applicable law or regulation
(including the Americans With Disabilities Act, to the extent applicable to the Development).
2.2 Allowable Rent.
1. Very Low Income Rent for City HOME-AssistedUnits. Subjectto the
provisions of Section 2.3 below, the Rent paid by Tenants of the Very Low Income Units shall
not exceed the maximum rent published by HUD for a Very Low Income Household for the
applicable bedroom size as set forth in 24 CFR 92.252(b) (also known as "Low HOME Rent").
2. Very Low Income Rent for City-RequiredVery Low Income Units.
Subjectto the provisions of Section 2.4 below, the Rent (including the Utility Allowance) paid
by Tenants of the Very Low Income Units shall not exceed one -twelfth (1 /12 h) of thirty percent
(30%) of fifty percent (50%) of Median Income, adjusted for Assumed Household Size.
3. No Additional Fees. The Borrower shall not charge any fee, other than
Rent, to any resident of the Units for any housing or other services provided by Borrower
pursuant to the Loan Documents.
2.3 Increase in Income of Tenants of City HOME -Assisted Units
1. Increase to Low Income Limit. In the event that, upon recertification of
the income of a Tenant of a City HOME -Assisted Unit, the Borrower determines that a former
Very Low Income Household's Adjusted Income has increased and exceeds the qualifying
income for a Very Low Income Household but does not exceed the qualifying limit for a Low
Income Household, the Tenant may continue to occupy the Unit, and, upon expiration of such
Lodi Eden RegulatoryAgmt 5
Tenant's lease, and upon sixty (60) days written notice to the Tenant, the Borrower may increase
the Tenant's Rent to the maximum rent published by HUD for a Low Income Household for the
applicable bedroom size as set forth in 24 C.F.R. 92.252(a)(also known as "High HOME Rent"_.
The Borrower shall then rent the next available Unit to a Very Low Income Household, to
comply with the requirements of Section 2.1 above.
2. Non -Qualifying Household. If, upon recertification of the income of a
Tenant of a City HOME -Assisted Unit, the Borrower determines that a former Very Low -
Income Household's Adjusted Income has increased and exceeds the qualifying the qualifying
income for a Low Income Household, such tenant shall be permitted to continue to occupy the
Unit, and, upon expiration of such Tenant's lease, and sixty (60) days' written notice to the
Tenant, the Rent shall be increased to the lesser of one -twelfth (1 /1 2h) of thirty percent (30%) of
actual Adjusted Income of the Tenant, or fair market rent (subject to 24 CFR 92.252(i)(2)
regarding low income housing tax credit requirements). The Borrower shall rent the next
available Unit to a Very Low Income Household to comply with the requirements of Section
2.1(c) above.
2.4 Increased Income of City -Required Very Low Income Tenants.
1. Increased income above VM Low but below Low Income Limit. In the
event that, upon recertification of the income of a Tenant of a Very Low Income Unit, the
Borrower determines that the Tenant no longer qualifies as a Very Low Income Household, but
does qualify as a Low Income Household, the Tenant may continue to occupy the Unit and, upon
sixty (60) days written notice to the Tenant, the Rent shall be increased to the HOME Low
Income Rent. The Borrower shall then rent the next available Unit to a Very Low Income
Household, to comply with the requirements of Section 2.1 above.
2. Non-Qualifyiniz Household. If, upon recertification of the income of a
Tenant, the Borrower determines that a former Very Low Income Household has an Adjusted
Income exceeding the maximum qualifying income for an Low Income Household, such Tenant
shall be permitted to continue occupying the Unit and upon expiration of the Tenant's lease and
upon sixty (60) days' written notice, the Rent shall be increased to the lesser of one -twelfth
(1 /12`h)of thirty percent (30%) of actual Adjusted Income of the Tenant, or fair market rent, and
the Borrower shall rent the next available Unit to a Very Low Income Household to meet the
requirements of Section 2.1 above.
2.5 Termination of Occupancv. Upon termination of occupancy of a Unit by a Tenant, such
Unit shall be deemed to be continuously occupied by a household of the same income level as
the initial income level of the vacating Tenant, until such Unit is reoccupied, at which time the
income character of the Unit shall be redetermined to meet the occupancy requirements of
Section 2.1.
2.6 Compliance with Regulatory Agreements. So long as the Property is encumberedby any
regulatory agreement between the Borrower and HUD, the State or State agency required by the
financing for the Development and approved by the City, the Borrower's compliance with the
terms of such regulatory agreement(s) shall be deemed to be in compliance with the occupancy,
rent, and income restrictions set forth above.
Lodi Eden Regulatory Agmt
11L
INCOME CERTIFICATION AND REPORTING
3.1 Income Certification.
Borrower will obtain, complete and maintain on file, immediatelyprior to initial
occupancy and annually thereafter, income certifications from each Tenant renting any of the
City -Assisted Units. Borrower shall make a good faith effort to verify that the income provided
by an applicant or occupying Tenant in an income certification is accurate by taking two or more
of the following steps as a part of the verification process: (a) obtain a pay stub for the most
recent pay period; (b) obtain an income tax return for the most recent tax year; (c) conduct a
credit agency or similar search; (d) obtain an income verification form from the applicant's
current employer; (e) obtain an income verification form from the Social Security
Administration and/or the California Department of Social Services if the applicant receives
assistance from either of such agencies; or (0 if the applicant is unemployed and has no such tax
return, obtain another form of independent verification. Borrower shall also complete and/or
have the Tenants of the City -Assisted Units complete and sign the "Income Computation and
Certification" and the "Owner's Certification of Household Income" both of which are attached
hereto as Exhibit B and/or any other forms related to Tenants' income approvedby the City or
that provide income information that is sufficient to determine an applicant's income as required
by this Section 3.1. Copies of Tenant income certifications shall be available to the City upon
request.
3.2 Annual Report to the City.
The Borrower shall submit to the City (a) not later than the sixtieth (60`") day after the
close of each calendar year, or such other date as may be requested by the City, a statistical
report, including income, occupancy, and rent data for all Units, setting forth the information
called for therein, and (b) within fifteen (15) days after receipt of a written request, any other
information or completed forms requested by the City in order to comply with reporting
requirements of HUD or the State of California, if applicable.
Upon request of the City, Borrower shall furnish, within fifteen (15) days, copies of all
Tenant agreements for the City HOME-AssistedUnits. Within fifteen (15) days after receipt of
a written request from the City, Borrower shall also submit any other information or completed
forms requested by the City in order to comply with reporting requirements of HUD, (provided,
however, that the Borrower shall in no event be obligated to provide any information that it
cannot legally obtain as a housing provider), the State of California, or any other government
entity or lender to Borrower.
3.3 Additional Information.
Borrower shall provide any additional information reasonably requested by the City. The
City shall have the right to examine and make copies of all books, records or other documents of
Borrower which pertain to the Development.
Lodi Eden Regulatory Agmt
3.4 Tenant Records.
Borrower shall maintain complete, accurate and current records pertaining to the
Development, and shall permit any duly authorized representative of the City and HUD to
inspect records, including records pertaining to income and household size of Tenants. All
Tenant lists, applications and waiting lists relating to the Development shall at all times be kept
separate and identifiable from any other business of Borrower and shall be maintained as
required by the City, in a reasonable condition for proper audit and subj ect to examination during
business hours by representatives of the City and HUD. Borrower shall retain copies of all
materials obtained or produced with respect to occupancy of the Units for a period of at least five
(5) years. The Borrower is subject to the audit requirements set forth in 24 C.F.R. 570.502.
3.5 HOME Record Requirements.
For the period of the HOME Reporting Term all records maintained by Borrower
pursuant to Section 3.4 above shall be (i) maintained in compliance with all applicable HUD
records and accounting requirements, and (ii) open to and available for inspection and copying
by HUD and its authorized representatives at reasonable intervals during normal business hours;
provide however, records pertaining to Tenant income verifications, Rents, and Development
inspections shall be subject to HUD inspection for five (5) years after expiration of the HOME
Reporting Term. Borrower is subject to the audit requirements set forth in 24 CFR 92.505
during the HOME Reporting Term.
3.6 On-site Inspection.
City shall have the right to perform an on-site inspection of the Development when
deemed necessary by the City, in any event at least one (1) time per year upon reasonable notice
to the Borrower. Borrower agrees to cooperate in such inspection. If the City desires to inspect
the interior of the residential units, the City shall give Borrower sufficient notice to allow
Borrower to give not less than seventy-two (72) hours written notice to residents.
IV.
OPERATION OF THE DEVELOPMENT
4.1 Residential Use.
The Development shall be operated only for residential use. No part of the Development
shall be operated as transient housing.
4.2 Taxes and Assessments.
Borrower shall pay all real and personal property taxes, assessments and charges and all
franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed
against it, or payable by it, at such times and in such manner as to prevent any penalty from
accruing, or any line or charge from attaching to the Property; provided, however, that Borrower
Lodi Eden RegulatoryAgmt
shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event
Borrower exercises its right to contest any tax, assessment, or charge against it, Borrower, on
final determination of the proceeding or contest, shall immediately pay or discharge any decision
or judgment rendered against it, together with all costs, charges and interest. The City
acknowledges that the Borrower intends to apply for welfare exemption under Tax and Revenue
Code Sections 214(f) or 214(g), as applicable.
V.
PROPERTY MANAGEMENT AND MAINTENANCE
5.1 Management Responsibilities.
The Borrower is responsible for all management functions with respect to the
Development, including without limitation the selection of tenants, certification and
recertification of household size and income, evictions, collection of rents and deposits,
maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and
security. City shall have no responsibility over management of the Development. The Borrower
shall retain a professional property management company approved by City in its reasonable
discretion to perform its management duties hereunder. A resident manager shall also be
required.
5.2 Management Agent; Periodic Reports.
The Development shall at all times be managed by an experienced management agent
reasonably acceptable to City, with demonstrated ability to operate residential facilities like the
Development in a manner that will provide decent, safe, and sanitary housing (as approved, the
"ManagementAgent"). The Borrower shall submit for City's approval the identity of any
proposed Management Agent (and City hereby pre -approves Eden Housing Management, Inc. as
the initial Management Agent). The Borrower shall also submit such additional information
about the background, experience and financial condition of any proposed management agent as
is reasonably necessary for City to determine whether the proposed management agent meets the
standard for a qualified management agent set forth above. If the proposed management agent
meets the standard for a qualified management agent set forth above, City shall approve the
proposed management agent by notifying the Borrower in writing. Unless the proposed
management agent is disapproved by City within thirty (30) days, which disapproval shall state
with reasonable specificity the basis for disapproval, it shall be deemed approved. The City
acknowledges that the Management Agent may be removed by the Permitted Limited Partner (as
defined in the Development Agreement) pursuant to the First Amended and Restated Limited
Partnership Agreement between Borrower and the Permitted Limited Partner.
5.3 Performance Review.
City reserves the right to conduct an annual (or more frequently, if deemed necessary by
City) review of the management practices and financial status of the Development. The purpose
of each periodic review will be to enable City to determine if the Development is being operated
and managed in accordance with the requirements and standards of this Agreement. The
Borrower shall cooperate with City in such reviews.
Lodi Eden RegulatoryAgmt 9
5.4 Replacement of Management Agent.
If, as a result of a periodic review, City determines in its reasonable judgment that the
Development is not being operated and managed in accordance with any of the material
requirements and standards of this Agreement, City shall deliver notice to Borrower of its
intention to cause replacement of the Management Agent, including the reasons therefor. Within
twenty-one (2 1) days after receipt by Borrower of such written notice, City staff and the
Borrower shall meet in good faith to consider methods for improving the financial and operating
status of the Development, including, without limitation, replacement of the Management Agent.
If, after such meeting, City staff recommends in writing the replacement of the Management
Agent, Borrower shall promptly dismiss the current Management Agent, and shall appoint as the
Management Agent a person or entity meeting the standards for a management agent set forth in
Section 5.2 above and approved by City pursuant to Section 5.2 above.
Any contract for the operation or management of the Development entered into by
Borrower shall provide that the Management Agent may be dismissed and the contract
terminated as set forth above. Failure to remove the Management Agent in accordance with the
provisions of this Section shall constitute default under this Agreement, and City may enforce
this provision through legal proceedings as specified in Section 6.8 below.
5.5 Approval of Management Policies.
Upon request, the Borrower shall submit its written management policies with respect to
the Development to City for its review, and shall amend such policies in any way necessary to
ensure that such policies comply with the provisions of this Agreement.
5.6 Property Maintenance.
The Borrower agrees, for the entire Term of this Agreement, to maintain all interior and
exterior improvements, including landscaping, on the Property in good condition and repair (and,
as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules,
ordinances, orders and regulations of all federal, state, county, municipal, and other
governmental agencies and bodies having or claimingjurisdiction and all their respective
departments, bureaus, and officials.
In the event that the Borrower breaches any of the covenants contained in this section and
such default continues for a period of ten (10) days after written notice from City with respect to
graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice
from City with respect to landscaping and building improvements, then City, in addition to
whatever other remedy it may have at law or in equity, shall have the right to enter upon the
Property and perform or cause to be performed all such acts and work necessary to cure the
default. Pursuant to such right of entry, City shall be permitted (but is not required) to enter
upon the Property and perform all acts and work necessary to protect, maintain, and preserve the
improvements and landscaped areas on the Property, and to attach a lien on the Property, or to
assess the Property, in the amount of the expenditures arising from such acts and work of
protection, maintenance, and preservation by City and/or costs of such cure, which amount shall
Lodi Eden Regulatory Agmt 10
be promptly paid by the Borrower to City upon demand.
VI.
MISCELLANEOUS
6.1 Lease Provisions.
In leasing the Units, Borrower shall use a form of Tenant lease approved by the City.
The lease shall not contain any provision which is prohibited by 24 C.F.R. Section 92.253 (b) and
any amendments thereto. The form of Tenant lease shall also comply with all requirements of
this Agreement and the Development Agreement, and shall, among other matters:
(a) provide for termination of the lease and consent by the Tenant to
immediate eviction for failure: (i) to provide any information required under this
Agreement or reasonably requested by Borrower to establish or recertify the Tenant's
qualification, or the qualification of the Tenant's household, for occupancy in the
Development in accordance with the standards set forth in this Agreement, or (ii) to
qualify as a Very Low Income Household, as a result of any material misrepresentation
made by such Tenant with respect to the income computation.
(b) Be for an initial term of not less than one (1) year, unless by mutual
agreement between the Tenant and Borrower, and provide for no increase in Rent during
such year. After the initial year of tenancy, the lease may be month to month by mutual
agreement of Borrower and the Tenant. Notwithstanding the above, any rent increases
shall be subject to the requirements of Section 2.2.
6.2 Lease Termination.
Any termination of a lease or refusal to renew a lease for a Unit must be in conformance
with 24 C.F.R. Section 92.253(c) and must be preceded by not less than sixty (60) days' written
notice to the tenant by the Borrower specifying the grounds for the action.
6.3 Nondiscrimination.
All of the Units shall be available for occupancy on a continuous basis to members of the
general public who are income eligible. Borrower shall not give preference to any particular
class or group of persons in renting or selling the Units, except to the extent that the Units are
required to be leased to income eligible households pursuant to this Agreement. There shall be
no discrimination against or segregation of any person or group of persons, on account of race,
color, creed, religion, sex, sexual orientation, marital status, national origin, source of income
(e.g., SSI), ancestry, age (except for lawful senior housing) or disability, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit nor shall Borrower or
any person claiming under or through Borrower, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use,
or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of any Unit or in connection
with the employment of persons for the construction, operation and management of any Unit.
Lodi Eden Regulatory Agent 11
6.4 Section 8 Voucher and Certificate Holders.
The Borrower will 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 housing certificate program or the Housing Choice Voucher Program under Section 8 of
the United States Housing Act, or its successor. The Borrower shall not apply selection criteria
to Section 8 certificate or voucher holders that are more burdensome than the criteria applied to
all other prospective Tenants, nor shall the Borrower apply or permit the application of
management policies or lease provisions with respect to the Development which have the effect
of precluding occupancy of units by such prospective Tenants.
6.5 Compliance with Development Agreement and Program Requirements.
Borrower's actions with respect to the Property shall at all times be in full conformity
with: (i) all requirements of the Development Agreement; (ii) all requirements imposed on
projects assisted under the HOME Investment Partnership Program as contained in 42 U.S.C.
Section 12701, gt seq., 24 C.F.R. Part 92, and other implementing rules and regulations; and (ii)
all requirements imposed on projects assisted under the CDBG Program as contained in 42 USC
5301 et sea., 24 CFR Part 570, and other implementing rules and regulations. Borrower shall
ensure that the Development meets the Housing Quality Standards pursuant to 24 C.F.R. Section
92.251 throughout the Term.
6.6 Prohibition Against Transfer of Property and Assignment of Agreement Prior To
Completion.
Prior to the recording of the Notice of Completion, the Borrower shall not voluntarily or
involuntarily make or attempt any total or partial sale, transfer, conveyance, assignment or lease
("Transfer") of the whole or any part of the Property or the buildings or structures thereon or this
Agreement without the prior written approval of the City which City may withhold in its sole
and absolute discretion.
If the Borrower proposes a Transfer of the Property or a portion thereof, other than as
authorized in Section 10.3, the proposed transferee shall have the qualifications and financial
resources necessary and adequate as may be reasonably determinedby the City to fulfill the
obligations undertaken in this Agreement by the Borrower. Any transferee, by instrument in
writing satisfactory to the City and in form recordable among the land records, for itself and its
successors and assigns, and for the benefit of the City shall expressly assume all of the
obligations of the Borrower under this Agreement relating to the Property and agree to be subject
to all the conditions and restrictions to which the Borrower is subject. There shall be submitted
to the City for review all instruments and other legal documents proposed to affect any such
Transfer; and if approved by the City its approval shall be indicated to the Borrower in writing.
This Section 10.2 shall not be deemed to prevent the granting of easements, rights of way,
licenses or permits to facilitate the development of the Property.
In the absence of specific written agreement by the City, no Transfer by the Borrower
shall be deemed to relieve the Borrower or any other party from any obligations under this
Lodi Eden Regulatory Agmt 12
Agreement,
6.7 Permitted Transfers With Prior Approval; City Pre -Approved Transfers.
Except as permitted under this Section 6.7, any Transfer shall be permitted only after (1)
the City, in its reasonable discretion, has delivered to the Borrower its prior written approval of
such Transfer, and (2) the transferee has assumed the Borrower's obligations under this
Agreement by signing an assignment assumption and release agreement, in a form prepared by
the City, and such other reasonable documentation as the City may reasonably require to
evidence such transferee's assumption of the Borrower's duties and obligations under the Loan
Documents.
Borrower anticipates syndicating the low income housing tax credits that will be
generated by the Development, which syndication will require (i) formation of a limited
partnership, the general partner of which shall be a wholly -controlled affiliate of Borrower (the
"Partnership" or the "Borrower") and the initial limited partner shall be Borrower or a wholly -
controlled affiliate of Borrower and (ii) a subsequent transfer of the limited partner interest in
Borrower to the initial investor limited partner(s). The City hereby approves the initial Transfer
of the limited partner interest in Borrower, provided that (i) the amended and restated partnership
agreement is submitted to the City for review and approval; and (ii) the partnership documents
do not conflict with the Loan Documents.
The City hereby approves future Transfers of the investor limited partner(s) interest(s) in
the Partnership provided that: (i) such Transfers do not affect the timing and amount of the
limited partner capital contributions provided for in the amended partnership agreement
approved by the City; and (ii) in subsequent Transfers, a wholly-owned or wholly -controlled
affiliate of the initial investor limited partner retains a membership or partnership interest and/or
serves as a managing member or managing general partner of the successor limited partner.
The City hereby approves a Transfer of the Property from the Borrower to Eden Housing
Inc. (`Eden")or wholly -controlled affiliate of Eden, and an assumptionof the City Loan by such
transferee at or before the end of the fifteen (15) -year compliance period as described in Section
42(i)( 1) of the Internal Revenue Code, pursuant to an option agreement as described or to be
described in the Partnership agreement (the "OptionAgreement"),provided that the transferee
expressly assumes the obligations of the Partnership under the Loan Documents, utilizing a form
of assignment and assumption agreement to be provided by the City.
In the event the general partner of the Borrower is removed by the investor limited
partner of the Borrower for cause following default under the partnership agreement, the City
hereby approves the Transfer of the general partner interest to a 501(c)(3) tax exempt nonprofit
entity selected by the limited partner and approved by the City, which approval shall not be
withheld unreasonably.
6.8 Term.
The provisions of this Agreement shall apply to the Property for the entire Term even if
the entire City Loan is paid in full prior to the end of the Term. This Agreement shall bind any
Lodi Eden Regulatory Agmt 13
successor, heir or assign of Borrower, whether a change in interest occurs voluntarily or
involuntarily, by operation of law or otherwise, except as expressly released by City. City makes
the City Loan on the condition, and in consideration of, this provision, and would not do so
otherwise.
6.9 Notice of Expiration of Term.
Borrower shall comply with the requirements set forth in California Government Code
Sections 65863.10 and 65863.11.
6.10 Covenants to Run With the Land.
City and Borrower hereby declare their express intent that the covenants and restrictions
set forth in this Agreement shall rLmwith the land, and shall bind all successors in title to the
Property, provided, however, that on the expiration of the Term of this Agreement said
covenants and restrictions shall expire. Each and every contract, deed or other instrument
hereafter executed covering or conveying the Property or any portion thereof, shall be held
conclusively to have been executed, delivered and accepted subject to such covenants and
restrictions, regardless of whether such covenants or restrictions are set forth in such contract,
deed or other instrument, unless City expressly releases such conveyed portion of the Property
from the requirements of this Agreement.
6.11 Enforcement by City.
If Borrower fails to perform any obligation under this Agreement, and fails to cure the
default within thirty (3 0) days after City has notified Borrower and the Investor Limited Partner
(as defined in the Development Agreement) in writing of the default or, if the default cannot be
cured within thirty (3 0) days, failed to commence to cure within thirty (3 0) days and thereafter
diligently pursue such cure and complete such cure within ninety (90) days, City shall have the
right to enforce this Agreement by any or all of the following actions, or any other remedy
provided by law, provided that the Investor Limited Partner shall have the right but not the
obligation to cure as set out in Section 12.21 of the Development Agreement:
1. Calling the City Loan. City may declare a default under the City Note,
accelerate the indebtedness evidenced by the City Note, and proceed with foreclosure
under the City Deed of Trust.
2. Action to Compel Performance or for Damages. City may bring an action
at law or in equity to compel Borrower's performance of its obligations under this
Agreement and/or for damages.
3. Remedies Provided Under Development Agreement. City may exercise
any other remedy provided under the Development Agreement.
6.12 Attorneys' Fees and Costs.
In any action brought to enforce this Agreement, the prevailing party shall be entitled to
Lodi Eden RegulatoryAgmt 14
all costs and expenses of suit, including reasonable attorneys' fees. This section shall be
interpreted in accordance with California Civil Code Section 1717 and judicial decisions
interpreting that statute.
6.13 No Liability of Officials, Directors, Employees, and Agents.
No member, official, employee, or agent of the City shall be personally liable to the
Owner in the event of any default or breach by City or for any amount which may become due to
the Owner or successor or on any obligation under the terms of this Agreement. No director,
officer, employee, agent of the Owner, or limited partner if Owner is a limited partnership, shall
be personally liable to the City in the event of any default or breach by the Owner or for any
amount which may become due to the City or successor or on any obligation under the terms of
this Agreement.
6.14 Recording and Filing.
City and Borrower shall cause this Agreement, and all amendments and supplements to
it, to be recorded in the Official Records of the County of San Joaquin.
6.15 Subordination.
This Agreement shall be subordinated to financing approved by the City (in each case, a
"Senior Lien"), but only if all of the following conditions are satisfied:
(a) All of the proceeds of the proposed Senior Lien, less any transaction costs, shall
be used to provide predevelopment, acquisition, construction and/or permanent financing or
refinancing for the Development.
(b) The proposed lender (each, a "Senior Lender") must be a state or federally
chartered financial institution, a nonprofit corporation, a recognized affordable housing lending
group such as the Housing Partnership Fund, or a public entity that is not affiliated with
Borrower or any of Borrower's affiliates, other than as a depositor or a lender.
(c) Borrower shall demonstrate to the City's reasonable satisfaction that
subordination of the Deed of Trust and/or Regulatory Agreement is necessary to secure adequate
acquisition, construction, permanent financing and/or refinancing to ensure the viability of the
Development, including the operation of the Development as affordable housing, as required by
the Loan Documents. To satisfy this requirement, Borrower shall provide to the City, in addition
to any other information reasonably required by the City, evidence demonstrating that the
proposed amount of the Senior Loan is necessary to provide adequate predevelopment,
acquisition, construction, permanent financing or refinancing to ensure the viability of the
Development, and adequate financing for the Development would not be available on similar
terms without the proposed subordination.
(d) The subordination agreement(s) shall be in a form reasonably acceptable to the
City, and shall be structured to minimize the risk that the Deed of Trust and/or Regulatory
Agreement would be extinguished as a result of a foreclosure by the Senior Lender or other
Lodi Eden Regulatory Agmt 15
holder of the Senior Lien. To satisfy this requirement, the subordination agreement shall provide
the City with rights to cure any defaults by Borrower, including: (i) providing the City with
copies of any notices of default at the same time and in the same manner as provided to
Borrower; and (ii) providing the City with a cure period of at least sixty (60) days to cure any
default.
(e) The subordination(s) described in this Section may be effective only during the
original term of the Senior Loan and/or any extension of its term approved in writing by the City,
provided, however, that nothing in this subsection (e) shall prohibit the City from approving the
refinancing of a Senior Loan. Upon a determinationby the City's City Manager that the
conditions in this Section have been satisfied, the City's City Manager or his/her designee will
be authorized to execute the approved subordination agreement without the necessity of any
further action or approval.
6.16 No Impairment of Lien.
No violation or breach of the covenants, conditions, restrictions, provisions or limitations
contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge
of any mortgage, deed of trust or other financing or security instrument.
6.17 Governing Law.
This Agreement shall be governed by the laws of the State of California.
6.18 Waiver of Requirements.
Any of the requirements of this Agreement may be expressly waived by City in writing,
but no waiver by City of any requirement of this Agreement shall, or shall be deemed to, extend
to or affect any other provision of this Agreement.
6.19 Amendments.
This Agreement may be amended only by a written instrument executed by all the parties
hereto or their successors in title, and duly recorded in the real property records of City of
Alameda.
6.20 Notices.
Formal notices, demands, and communicationsbetween the City and Borrower shall be
sufficiently given if and shall not be deemed given unless dispatched by registered or certified
mail, postage prepaid, return receipt requested, or delivered by express delivery service, return
receipt requested, or delivered personally, or faxed with a copy mailed within one business day
of facsimile transmission, emailed with a copy mailed within one business day of emailed
transmission to the principal office of the City and Borrower as follows:
City: City of Lodi
221 West Pine Street
Lodi Eden Regulatory Agmt 16
Lodi, CA 95240
Attention: City Manager
With a copy to:
The City Attorney and the Housing Manager
Borrower: Eden Development, Inc.
22645 Grand Street
Hayward, CA 94541-5031
Attention: Executive Director
With a copy to:
[Address of investor limitedpartner to be
provided]
Such written notices, demands and communications may be sent in the same manner to such
other addresses as the affected party may from time to time designate by mail as provided in this
Section. Receipt shall be deemed to have occurred on the date shown on a written receipt for
delivery or refusal of delivery.
6.21 Severability.
If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining portions of this Agreement shall not in any way be
affected or impaired thereby.
6.22 Multiple Originals; Counterparts.
This Agreement may be executed in multiple originals, each of which is deemed to be an
original, and may be signed in counterparts.
6.23 Revival of Agreement after Foreclosure.
This Agreement shall be revived according to its original terms if, during the original
Term, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that
includes the former owner or those with whom the former owner has or had family or business
ties, obtains an ownership interest in the Development or Property.
6.24 Investor Limited Partner Provisions.
If and when the Borrower transfers the Property and assigns the Loan to a limited
partnership in accordance with Section_ to qualify for low income housing tax credit
financing, the City agrees to the following provisions for the benefit of Borrower's investor
limited partner:
Lodi Eden Regulatory Agmt 17
(a) The City will give the limited partner a copy of any written notice (at the
limited partner's address set forth in the Regulatory Agreement) that the City gives to Borrower
under this Agreement and the other City Loan Documents;
(b) The City will give the limited partner Ten (10) days after the limited
partner's receipt of such notice to cure a non-payment of any sum due under the City Loan
Documents;
(c) The City will give the limited partner Thirty (30) days after the limited
partner's receipt of such notice to cure any other default under this Agreement and other City
Loan Documents;
(d) If a default is incapable of being cured within Thirty (30) days, the City
will give the limited partner an additionalNinety (90) days to cure such default provided the
limited partner has commenced to cure such default and is diligently proceeding to cure such
default through the end of such period;
(e) If the limited partner makes any such payment or otherwise cures such
default, the City will accept such action as curing such default as if such payment or cure were
made by Borrower;
(f) The City will permit the limited partner to transfer the limited partner's
interest to any person or entity at any time provided that, if at the time of such transfer the
limited partner has not made 100% of the capital contributions the limited partner is required to
make to Borrower, the limited partner shall remain liable to Borrower for such capital
contributions;
The City will permit the limited partner to remove the general partner of
Borrower in accordance with the Partnership Agreement, provided that the substitute general
partner is reasonably acceptable to City; and
(h) The City will permit insurance and condemnation proceeds to be used to
rebuild the Development provided that (i) sufficient funds are provided from other sources to
effectively rebuild the Development to a lawful multifamily housing complex, and (ii) subject to
the rights of any senior lenders, City shall hold all such proceeds and disburse them based on the
progress of construction, subject to such additional reasonable conditions as City may impose
6.25 HUD -Required Provisions Rider.
During the term of the HUD 202 Capital Advance the City agrees to comply with the
provisions set forth in the HUD -Required Provisions Rider attached hereto as Exhibit C and
incorporated into this Agreement.
Lodi Eden Regulatory Agmt 18
WHEREAS, this Agreement has been entered into by the undersigned as of the date first
above written.
CITY:
City of Lodi
By:
Its:
I: • ' ' 6I"i%S
Eden Development, Inc., a California nonprofit
public benefit corporation, its general partner
By:
Linda Mandolini, Executive Director
Lodi Eden Regulatory Agmt 19
STATE OF CALIFORNIA
COUNTY OF
On , 20_ before me,
Notary Public, 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.
I 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
STATE OF CALIFORNIA )
COUNTY OF )
On , 20_ before me,
Notary Public, personally appeared
(Seal)
f
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.
I 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)
Lodi Eden Regulatory Agmt 20
EXHIBIT A
Legal Description of the Property
Lodi Eden Regulatory Agmt 21
EXHIBIT B
FORM OF INCOME CERTIFICATION
INCOME COMPUTATION AND CERTIFICATION
Lodi Eden Regulatory Agmt 22
EXHIBIT C
HUD -Required Provisions Rider
This HUD -Required Provisions Rider (the "Rider") is dated as of , and is attached
to and made a part of that certain Purchase and Development Agreement by and between
(the 'Borrower"), and the City of Lodi (the "City") (the "Development Agreement"), a
Promissory Note from Borrower to City (the "City Note") in the amount of One Million One
Hundred Thousand Dollars ($1,100,000) (the "Loan"), a Regulatory Agreement by and between
Borrower and the City (the 'Regulatory Agreement"), and a Deed of Trust with Assignment of
Rents, Security Agreement and Fixture Filing by Borrower to the City (the "City Deed of
Trust"), all dated (collectively, the "City Documents"), relating to the property
commonly known as Lodi Senior Housing (the "Development"). In the event of any conflict,
inconsistency or ambiguity between the provisions of this Rider and the provisions of the City
Documents, the provisions of this Rider shall control. All capitalized terms used herein and not
otherwise defined herein shall have the meaning given to such terms in the City Documents. As
used in this Rider, the term "HUD Documents" shall mean the following documents relating to
the HUD Section 202 Capital Advance for the Development, HUD Project No.
A. Deed of Trust from Borrower to the general partner of Borrower which shall be
assigned to HUD to be recorded against the Property (the "HUD Deed of Trust");
B. Capital Advance Program Regulatory Agreement between Borrower and HUD to
be recorded against the Property ("HUD Regulatory Agreement");
C. Capital Advance Program Use Agreement between Borrower and HUD to be
recorded against the Property (the "HUD Use Agreement");
D. HUD Security Agreement between Borrower and the general partner of Borrower
which shall be assigned to HUD (the "HUD Security Agreement"); and
E. HUD Project Rental Assistance Contract (the "PRAC").
1. Term of Rider. Notwithstanding anything else in this Rider to the contrary, the
provisions of this Rider shall be and remain in effect only so long as the HUD
Documents, or any of them, are in effect; thereafter, this Rider and its requirements shall
be deemed no longer in effect.
2. Subordination. The covenants contained in the City Documents shall be subordinate to
the rights of HUD under the HUD Documents, and to the HUD rules and regulations
pertaining thereto; and furthermore, the City Documents shall not be enforceable against
the HUD Secretary, his or her successors and assigns, should the HUD Secretary acquire
title to the Property by power of sale, foreclosure, or by deed in lieu of foreclosure. In
addition, so long as the HUD Documents are in effect, in the event that there are any
conflicts between the terms and conditions in the City Documents and the terms and
conditions of the HUD Documents and HUD rules and regulations pertaining thereto, the
Lodi Eden Regulatory Agmt 23
HUD Documents and HUD rules and regulations shall prevail. No default may be
declared under the City Documents without HUD prior written consent.
3. HUD Rules. During the time period in which Section 202 or the PRAC regulations apply
to the Development, rents approved by HUD pursuant to the Section 202 program and the
PRAC shall be deemed to be in compliance with the City Regulatory Agreement, and
compliance by the Borrower with the Section 202 Regulations and the PRAC with
respect to continued occupancy by households whose incomes exceed the eligible income
limitations of the City Regulatory Agreement, or other matters set forth in the City
Regulatory Agreement, shall be deemed to be in compliance with the requirements of the
City Documents. Nothing in the City Documents shall in any way limit, interfere or
conflict with the rights of HUD with respect to the management, operation or occupancy
of the Development; nor can the City Documents in any way j eopardize the continued
operation of the Development on terms at least as favorable to existing as well as future
tenants.
4. City Loan Disbursement. Upon continued satisfaction of the conditions precedent to loan
disbursement set forth in the Loan Agreement, the City shall disburse the City Loan
proceeds to Borrower from time to time following approval by the City of Borrower's
requisitions in accordance with the City Documents. Requisitions shall be submitted
only to the City for approval and disbursement pursuant to the Loan Agreement.
5. Residual Receipts. Any whole or partial repayment of the principal and any other
payments as set forth in the City Documents that are made after initial occupancy of the
Development and after the PRAC has been executed shall be made only from Residual
Receipts (as defined in the HUD Documents), and then only after obtaining the prior
written approval of HUD, or from the Borrower's own funds.
6. Indemnification. Enforcement by the City of any indemnificationprovisions in the City
Documents will not and shall not result in any monetary claim against the Development,
the HUD Capital Advance proceeds, any reserve or deposit required by HUD in
connection with the HUD Capital Advance, or the rents or other income from the
Development other than Residual Receipts authorized for release by HUD, without the
prior written consent of HUD, but City shall have the right to add any amounts due the
City pursuant to indemnification provisions in the City Documents to the principal
amount of the City Loan and the City Note, and interest shall accrue thereon commencing
on the date indemnificationpayments are due.
7. Transfer. Approval by HUD of a Transfer of Physical Assets (as defined in Handbook
4350-1 Rev -1) ("TPA") shall constitute approval of the transfer by the City and the
Borrower shall deliver to the City, at the same time as its delivery to HUD, any
application for HUD's approval of a proposed transfer. Also, the Borrower shall require
the transferee to expressly assume the Borrower's obligations under the City Documents;
provided, however, HUD shall not be required to enforce the requirements of this
sentence and if Borrower and any transferee fail to include such assumption in transfer
documents, such failure shall not affect the validity of the transfer. The City shall have
the right to specifically enforce the requirement that any transferee assume the
Lodi Eden Regulatory Agmt 24
Borrower's obligations under the City Documents. In the absence of such written
assumption, no transfer shall be deemed to relieve the transferor from any obligations
under the City Documents.
8. Default under Citv Documents. The City shall not declare a default under the City
Documents unless it has received the prior written approval of HUD, and the City's right
to accelerate the City Note during the term of the HUD Documents shall be enforceable
only with the prior written approval of HUD.
9 Receiver. The City, for itself, its successors and assigns further covenants and agrees
that in the event of the appointment of a receiver in any action by the City, its successors
or assigns, to foreclose the City Deed of Trust, no rents, revenue or other income of the
Development collected by the receiver or by the mortgagee-in-possessionshall be
utilized for the payment of interest, principal, or any other charges due and payable under
the City Deed of Trust, except from Residual Receipts, if any. The appointment of a
receiver shall require approval by the Secretary of HUD, and pursuant to HUD
regulations, as long as the City is the beneficiary under the City Deed of Trust, the City
cannot be a mortgagee -in -possession. In the event of the appointment, by any court, of
any person, other than HUD or the City, as a receiver or a mortgagee or party in
possession, or in the event of any enforcement of any assignment of leases, rents, issues,
profits, or contracts contained in the City Documents, with or without court action, no
rents, revenue or other income of the Development collected by the receiver, person in
possession or person pursuing enforcement as aforesaid, shall be utilized for the payment
of interest, principal or any other amount due and payable under the provisions of the
City Documents, except from Residual Receipts in accordance with the HUD Regulatory
Agreement. The receiver, person in possession or person pursuing enforcement shall
operate the Development in accordance with all provisions of the HUD Documents.
10. Deed -in -Lieu of Foreclosure. In the event that HUD acquires title to the Property by
deed -in -lieu of foreclosure, the lien of the City Deed of Trust will automaticallyterminate
subject to the conditions as hereinafter described. The City may cure a default under the
HUD Deed of Trust prior to conveyanceby deed -in -lieu of foreclosure. HUD shall give
written notice to the Borrower of a proposed tender of title in the event HUD decides to
accept a deed -in -lieu of foreclosure. HUD will only give such written notice if, at the
time of the placing of the City Deed of Trust against the Property, HUD receives a copy
of an endorsementto the title policy of the Borrower or the City which indicates that (a)
the City Deed of Trust has been recorded and (b) HUD is required to give notice of any
proposed election or tender of a deed -in -lieu of foreclosure. Such notice shall be given at
the address stated in the City Deed of Trust or such other address as may subsequently,
upon written notice to HUD, be designatedby the City as its legal business address. The
City shall have thirty (30) days to cure the default after notice of intent to accept a deed -
in -lieu of foreclosure is mailed.
11. Borrower's Notice to the City. Notwithstanding the requirements set forth in Paragraph
10 above, in the event that Borrower contemplates executing a deed -in -lieu of
foreclosure, Borrower shall first give the City thirty (30) days' prior written notice;
Lodi Eden Regulatory Agmt 25
provided, however, that the failure of the Borrower to give said notice shall have no effect
on the right of HUD to accept a deed -in -lieu of foreclosure.
12. Amendment. No amendment to the City Documents made after the date of this Rider
shall have any force or effect until and unless such amendment is approved in writing by
HUD.
Lodi Eden Regulatory Agmt 26
EXHIBIT J
Seller Insurance Requirements
USE THE FOLLOWING ONLY IF THE SELLER DOES NOT HAVE ITS OWN INSURANCE
REQUIREMENTS.
The Buyer shall maintain and keep in force, at the Buyer's sole cost and expense,
the following insurance applicable to the Development in a form acceptable to the Seller's
Executive Director with evidence of such coverage provided to the Seller's Executive Director
within ten (10) days of execution of this Agreement, but in no event later than the initial
disbursement of Loan funds pursuant to this Agreement:
(a) Workers' Compensation insurance to the extent required by law, including
Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each
accident.
(b) Commercial General Liability insurance with limits not less than Two Million
Dollars ($2,000,000) each occurrence for Bodily Injury and Property Damage, including
coverage for Contractual Liability, Personal Injury, Broadform Property Damage, and
Products and Completed Operations.
(c) Comprehensive Automobile Liability insurance with limits not less than One
Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverage for owned, non -owned and hired vehicles, as
applicable; provided, however, that if the Buyer does not own or lease vehicles for purposes
of this Agreement, then no automobile insurance shall be required.
(d) Upon acquisition of the Property, property insurance, including during the
course of construction builder's risk insurance, covering the Development, in form
appropriate for the nature of such property, covering all risks of loss, excluding earthquake,
for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable
to the Seller, naming the Seller as a Loss Payee, as its interests may appear. Flood
insurance shall be obtained if required by applicable federal regulations.
(e) For any design professionals working on the Development, errors and
omission coverage in a minimum amount of One Million Dollars ($1,000,000).
(f) The Buyer shall cause any general contractor or subcontractor working on
the Development under direct contract with the Buyer or subcontract, to maintain insurance
of the types and in at least the minimum amounts described in Subsections (a), (b), and (c)
above, except that each subcontractor shall only be required to maintain the
abovementioned insurance to the extent that such coverage is customarily maintained by
such subcontractor and shall require that such insurance shall meet all of the general
requirements of subsections (i), (j) and (k) below.
(g) The required insurance shall be provided under an occurrence form, and
the Buyer shall maintain such coverage continuously throughout the Term. Should any of
the required insurance be provided under a form of coverage that includes an annual
aggregate limit or provides that claims investigation or legal defense costs be included in
such annual aggregate limit, such annual aggregate limit shall be two times the occurrence
limits specified above; provided, however, that for subcontractors the general aggregate
shall not be required to apply on a per project basis.
(h) Commercial General Liability and Comprehensive Automobile Liability
insurance policies shall be endorsed to name as an additional insured the Seller and its
officers, agents, employees and members of the Seller Council.
(i) All policies and bonds shall contain (a) the agreement of the insurer to give
the Seller at least thirty (30) days' notice prior to cancellation (including, without limitation, for
non payment of premium) or any material change in said policies; (b) an agreement that
such policies are primary and non contributing with any insurance that may be carried by the
Seller; (c) a provision that no act or omission of the Buyer shall affect or limit the obligation
of the insurance carrier to pay the amount of any loss sustained; and (d) a waiver by the
insurer of all rights of subrogation against the Seller and its authorized parties in connection
with any loss or damage thereby insured against. Buyer shall provide certificates of
insurance and original written endorsements as evidence of the required insurance
coverage.
(j) If in connection with the use of the Seller Loan funds, death, serious
personal injury, or substantial property damage occurs, Buyer shall immediately notify the
Seller. Buyer shall promptly submit to the Seller a written report, in such form as may be
required by the Seller, of all accidents which occur in connection with this Agreement. This
report shall include the following information. (1) name and address of the injured or
deceased person(s); (2) name and address of Buyer's contractor or subcontractor, if any; (3)
name and address of Buyer's liability insurance carrier; and (4) a detailed description of the
accident and whether any of the Seller's equipment, tools or material were involved.
EXHIBIT K
Schedule of Performance
ROGET PARK SENIOR HOUSING
Preliminary HUD Schedule
June 4, 2009
(All dates set firth below are preliminary and are subject to change as the process moves forward. Each performance deadline is
conditioned upon all prior performance deadlines being met in a timely manner.)
Pro eet Milestone
Est. Target Date - - - - - -
1. Predevelopment activities started
May 2009
by Developer
2. Developer submitted development
concept to City for review.
3. Developer to submit to the City for
June 2009
review and approval the
Preliminary Financing Plan
4. City to introduce development
concepts to key community
members
5. Developer submits preliminary
development proposal to City for
review.
6. Community Meeting - Introduce
Development Team and present
Proposed Site
7. City to approve or disapprove
Developer's Preliminary
Financing Plan; City approves
predevelopment and acquisition
loan request
8. City commences CEQA/NEPA
9. Execute DDLA
10. Developer submits application to
Est. August 2009 (Developer intends to apply for
HUD for grant under Section 202 Housing
HUD 202 funds in response to the 2009 NOFA;
for the Elderly
however, if the project is not selected, Developer
shall submit for HUD 202 Financing in 2010 and
2011)
11. Developer submits for Project
Approx. 4 months from item #2
Entitlements
12. HUD 202 awards announced
Approx. 4 months from item # 10
13. City completes environmental
Approx. 5 months from item #11
assessment in accordance with CEQA.
14. Developer obtains Project
Entitlements
15. City publishes Notice of Intent to
45 days prior to item #16
Release funds (NOI{RROF)
16. Close of Escrow and Funding of
No later than June 30, 2010
CDBG Loan
17. Developer submits HUD "Firm
After receipt of HUD 202 Award and after the project
Commitment Application"
is "permit ready"
18. Gap Financing Identified and
Not later than 60 days prior to CDLAC/TCAC
Approved by City.
application submittal date.
19. Developer submits applications for
Borrower shall monitor HUD's processing of the
bond financing through California Debt
HUD Firm Commitment and shall submit the
Limit Allocation Committee (CDLAC)
CDLAC application when it is reasonable to project
and 4% Tax Credits through State Tax
that HUD will be able to issue the Firm Commitment
Credit Allocation Committee (TCAC)
within the 90-day CDLAC construction start
CDLAC and TCAC applications
deadline. Borrower shall not be obligated to obtain a
CDLAC or TCAC allocation after September of any
year.
20. Close on Construction Financing and
Within 90 days of CDLAC and TCAC allocations
Commencement of Construction
21. Construction Completion
Within 24 months of commencement of construction,
or within deadlines established by funding source
used, HUD, TCAC and/or CDLAC
22. 100% Occupancy
Within 6 months of construction completion
EXHIBIT L
Scope of Development
[to be inserted when approved by Seller]
EXHIBIT M
Preliminary Site Plan
EXHIBIT N
HUD -REQUIRED PROVISIONS RIDER
For value received, the undersigned agree that the following provisions shall be
incorporated into and made a part of the following documents as amended (the "Junior
Loan Documents") relating to the property commonly known as Senior Housing
(the "Project"): That certain Purchase and Development Agreement dated , 2009
("Agreement") and memorandum thereof recorded as series no.
of San Joaquin County by the City of Lodi (the "Lender") and Eden Development, Inc.,
its successors and assigns (the "Borrower"); that Regulatory Agreement recorded
as series no. (the "Lender Regulatory Agreement"); that Promissory
Note dated as of , 2009 secured by that certain Deed of Trust recorded
as series no.
In the event of any conflict, inconsistency or ambiguity between the provisions
of this Rider and the provisions of the Junior Loan Documents, the provisions of this
Rider shall control. All capitalized terms used herein and not otherwise defined herein
shall have the meaning given to such terms in the Junior Loan Documents. As used
in this Rider, the term "HUD Loan Documents" shall mean the following documents
relating to the HUD Section 202 Capital Advance for the Project (HUD Project No.
121-EE-NP-WAH).
A. Deed of Trust recorded concurrently herewith on the Property
among Borrower as trustor, North American Title Company as
trustee and Eden Development, Inc. as beneficiary, which beneficial
interest will be assigned to HUD by that collateral assignment at
closing (the "HUD Deed of Trust");
B. Regulatory Agreement between Borrower and HUD recorded currently
herewith on the Property ("HUD Regulatory Agreement");
C. Capital Advance Program Use Agreement between Borrower and HUD
recorded concurrently herewith on the Property (the "HUD Use
Agreement"), incorporated by reference in the HUD Deed of Trust;
D. HUD Security Agreement between Borrower as the debtor and Eden
Development, Inc. as the secured party, which interest shall be
assigned to HUD by that collateral assignment (the "HUD Security
Agreement");
E. HUD Project Rental Assistance Contract (the PRAC ); and
F. Other HUD Capital Advance documents.
1. Term of Rider. Notwithstanding anything else in this Rider to the contrary, the
provisions of this Rider shall be and remain in effect only so long as any of the HUD
Loan Documents are in effect; thereafter, this Rider and its requirements shall be
deemed no longer in effect.
2. Subordination. The covenants contained in the Junior Loan Documents shall be
subordinate to the rights of HUD under the HUD Loan Documents, and to the HUD rules
and regulations pertaining thereto; and furthermore, the Junior Loan Documents shall
not be enforceable against the HUD Secretary, his or her successors and assigns,
should the HUD Secretary acquire title to the Project by power of sale, foreclosure, or
by deed -in -lieu of foreclosure. In addition, so long as the HUD Loan Documents are in
effect, in the event that there are any conflicts between the terms and conditions in the
Junior Loan Documents and the terms and conditions of the HUD Loan Documents and
HUD rules and regulations pertaining thereto, the HUD Loan Documents and HUD rules
and regulations shall prevail. No default may be declared under the Junior Loan
Documents without prior written HUD consent.
3. HUD Rules. During the time period in which Section 202 or the PRAC regulations
apply to the Project, rents approved by HUD pursuant to the Section 202 program and
the PRAC shall be deemed to be in compliance with the Lender Regulatory Agreement,
and compliance by the Borrower with the Section 202 Regulations and the PRAC with
respect to continued occupancy by households whose incomes exceed the eligible
income limitations in Section 2 of the Lender Regulatory Agreement, or other matters
set forth in the Lender Regulatory Agreement, shall be deemed to be in compliance with
the requirements of the Junior Loan Documents. Nothing in the Junior Loan Documents
shall in any way limit, interfere or conflict with the rights of HUD with respect to
development, operation and management of the Project; nor can the Junior Loan
Documents in any way jeopardize the continued operation of the project on terms at
least as favorable to existing as well as future tenants.
4. Maturity Date. The Junior Note may not mature, and may not bear a maturity date,
prior to the date on which the HUD Note matures. The term of the Junior Loan
Documents shall be extended if the Junior Note matures, there are no residual receipts
or non -Project funds available for repayment and the HUD Mortgage has not been
retired in full or if HUD grants a deferment of amortization or forbearance that results in
an extended maturity of the HUD Loan Documents.
5. Residual Receipts. As long as HUD, its successors or assigns, is the holder of the
HUD Documents, any payments due from Project income from the Section 202 units
under the Junior Loan Documents, or any prepayments made with Project income from
the Section 202 units, shall be payable only from residual receipts of the Project, as that
term is defined in the HUD Regulatory Agreement between HUD and the Borrower, and
subject to the availability of residual receipts in accordance with the provision of said
HUD Regulatory Agreement. No payments or prepayments using residual receipts can
be made without HUD approval. Borrowers may make payments or prepayments at
any time without HUD approval using funds that do not come from Project income from
the Section 202 units. The restrictions on payment imposed by this paragraph shall not
excuse any default caused by the failure of the makers to pay the indebtedness
evidenced by the Lender's junior Note.
6. Indemnification. Enforcement by the Lender of any indemnification provisions in the
Junior Loan Documents will not and shall not result in any monetary claim against the
Project, the HUD Capital Advance proceeds, any reserve or deposit required by HUD in
connection with the HUD Capital Advance, or the rents or other income from the Section
202 units in the Project other than residual receipts authorized for release by HUD,
without the prior written consent of HUD, but Lender shall have the right to add any
amounts due the Lender pursuant to indemnification provisions in the Junior Loan
Documents to the principal amount of the Loan and the Note and interest shall accrue
thereon commencing on the date indemnification payments are due. In addition, any
indemnification provisions shall not be enforceable against the HUD Secretary, his or
her successors and assigns, should the HUD Secretary acquire title to the Project by
power of sale, foreclosure, or by deed -in -lieu of foreclosure.
7. Transfer. Approval by HUD of a Transfer of Physical Assets (as defined in
Handbook 4350.1, REV -1, Chapter 13) ("TPA") shall constitute approval of the transfer
by the Lender, and the Borrower shall deliver to the Lender at the same time as its
delivery to HUD, any application for HUD's approval of a proposed transfer. Also, the
Borrower shall require the transferee to expressly assume the Borrower's obligations
under the Junior Loan Documents; provided, however, HUD shall not be required to
enforce the requirements of this sentence and if Borrower and any transferee fail to
include such assumption in transfer documents, such failure shall not affect the validity
of the transfer. The Lender shall have the right to specifically enforce the requirement
that any transferee assume the Borrower's obligations under the Junior Loan
Documents. In the absence of such written assumption, no transfer shall be deemed to
relieve the transferor from any obligations under the Junior Loan Documents.
8. Default under Junior Loan Documents. The Lender shall not declare a default under
the Junior Loan Documents unless it has received the prior written approval of HUD,
and the right of the Lender to accelerate the Junior Note during the term of the HUD
Loan Documents shall be enforceable only with the prior written approval of HUD.
9. Receiver. The Lender, for itself, its successors and assigns, further covenants and
agrees that in the event of the appointment of a receiver in any action by the Lender, its
successors and assigns, to foreclose the Lender's junior Deed of Trust, no rents,
revenue or other income of the Project collected by the receiver or by the mortgagee -in -
possession shall be utilized for the payment of interest, principal, or any other charges
due and payable under the Lender's junior Deed of Trust, except from Residual
Receipts, if any, as the term is defined in the HUD Regulatory Agreement. The
appointment of a receiver shall require approval by the Secretary of HUD, and pursuant
to HUD regulations, as long as the Lender is beneficiary under the Deed of Trust, the
Lender cannot be mortgagee -in -possession. In the event of the appointment, by any
court, of any person, other than HUD, the Lender, as a receiver or a mortgagee or party
in possession, or in the event of any enforcement of any assignment of leases, rents,
issues, profits, or contracts contained in the Junior Loan Documents, with or without
court action, no rents, revenue or other income of the Project collected by the receiver,
person in possession or person pursuing enforcement as aforesaid, shall be utilized for
the payment of interest, principal or any other amount due and payable under the
provisions of the Junior Loan Documents, except from Residual Receipts in accordance
with the HUD Regulatory Agreement. The receiver, person in possession or person
pursuing enforcement shall operate the Project in accordance with all provisions of the
HUD Documents.
10.Deed-in-Lieu of Foreclosure. In the event that HUD acquires title to the Project by
deed -in -lieu of foreclosure, the lien of the Lender's junior Deed of Trust will
automatically terminate subject to the conditions as hereinafter described. HUD may
cure a default under the HUD Deed of Trust prior to conveyance by deed -in -lieu of
foreclosure. HUD shall give written notice to the Lender of a proposed tender of title in
the event HUD decides to accept a deed -in -lieu of foreclosure. HUD will only give such
written notice if, at the time of the placing of the subordinate lien against the Property,
HUD receives a copy of an endorsement to the title policy of the Borrower or Lender
which indicates that (a) the Lender's junior Deed of Trust has been recorded, and (b)
HUD is required to give notice of any proposed election or tender of a deed -in -lieu of
foreclosure. Such notice shall be given at the address stated in the Lender's junior Deed
of Trust or such other addresses as later on provided to HUD by written notice, and
designated by the Lender as its legal business address. The Lender shall have thirty
(30) days to cure the default after notice of intent to accept a deed -in -lieu of foreclosure
is mailed.
11. Borrower's Notice to City. Notwithstanding the requirements set forth in Paragraph
10 above, in the event that Borrower contemplates executing a deed -in -lieu of
foreclosure, Borrower shall first give the Lender thirty (30) days prior written notice;
provided, however, that the failure of the Borrower to give said notice shall have no
effect on the right of HUD to accept a deed -in -lieu of foreclosure.
12.Sale, Transfer or Assignment of the Junior Note. The Lender's junior Note is non-
negotiable and may not be sold, transferred, assigned or pledged by the Lender except
with the prior approval of HUD.
13.Amendment. No amendment to the Junior Loan Documents made after the date of
this Rider shall have any force or affect until and unless such amendment is approved in
writing by HUD.
[signature page to follow]
IN WITNESS WHEREOF, the undersigned have executed this Rider as follows:
EDEN DEVELOPMENT, INC. a California CITY OF LODI
Nonprofit Public Benefit Corporation
Name:
City Manager
EXHIBIT O
Memorandum of Purchase and Development Agreement
Recording Requested By
And When Recorded Mail To:
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
With a Copy to and
Mail Tax Statements to:
Eden Development, Inc.
22645 Grand Street
Hayward, CA 94541-5031
FREE RECORDING REQUESTED
(Gov't Code Section 6103)
MEMORANDUM OF PURCHASE AND
DEVELOPMENT AGREEMENT
By this Memorandum of Purchase and Development Agreement made _,
20_ made concurrently with1he Purchase and Development Agreement ("Agreement")
between the same parties covering the same property, more particularly described as
the City of Lodi, a California municipal corporation and Eden Development, Inc., a
California nonprofit public benefit corporation (individually "Party" and collectively,
"Parties") hereby agree the real property commonly known as approximately 3.39 acres
located at 2245 Tienda Drive in the City of Lodi("Property"), which Property is more
particularly described in Exhibit A, attached hereto, shall be held, maintained and
operated pursuant to the terms of the Agreement and the Exhibits attached, thereto.
This Memorandum may be executed in multiple originals, each of which is deemed an
original, and may be signed in Counterparts.
IN WITNESS WHEREOF, the parties hereto have entered into this Memorandum
as of the date set forth above.
Eden Development, Inc.,
a California nonprofit public benefit corporation
MM
Linda Mandolini,
Executive Director
City of Lodi,
a California municipal corporation
in
Blair King, City Manager
go
K
Date: .2009
Date: .2009
Approved as to Form:
D. Stephen Schwabauer, City Attorney
STATE OF CALIFORNIA }
} ss:
COUNTY OF )
On , 20_, before me, , Notary Public, personally
appeared , who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity, and
that by his/her signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
I 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
STATE OF CALIFORNIA )
ss:
COUNTY )
On , 20_, before me, , Notary Public, personally
appeared , who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity, and
that by his/her signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
I 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
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RESOLUTION NO. 2009-150
A RESOLUTION OF THE LODI CITY COUNCIL
AUTHORIZING THE CITY MANAGERTO EXECUTE
AN OPTION AGREEMENT TO PURCHASE REAL
PROPERTY PURSUANT TO THE TERMS OF THE
PURCHASEAND DEVELOPMENT AGREEMENT WITH
EDEN HOUSING, INC. REGARDING SENIOR HOUSING
PROJECTAT 2245 TIENDA DRIVE
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize the City Manager to execute an Option Agreement to purchase real property
pursuant to the terms of the Purchase and Development Agreement with Eden Housing,
Inc., a California corporation, for the development of an affordable senior housing
project known as the "Tienda Drive Senior Housing Project."
Dated: October 21, 2009
hereby certify that Resolution No. 2009-150 was passed and adopted by the
City Council of the City of Lodi in a regular meeting held October 21, 2009, by the
following vote:
AYES: COUNCIL MEMBERS— Hitchcock, Johnson, Katzakian, Mounce,
and Mayor Hansen
NOES: COUNCIL MEMBERS— None
ABSENT: COUNCIL MEMBERS— None
ABSTAIN: COUNCIL MEMBERS— None
J L
JOHL
City Clerk
2009-150
Option Agreement
Purchase Development
Agreement
Project
• April 1, 2009
• City Council authorized City Manager to negotiate with
Eden Housing, Inc. for an agreement to develop an
affordable senior housing project at 2245 Tienda Drive
• August 5, 2009
• City Council authorized City Manager to execute an
Exclusive Right to Negotiate Agreement with Eden
Housing, Inc.
Project
• Extensive Community Outreach
• Refined Preliminary Site Plans
• Determined That Proj ect Should Be Phased
9 Preparing Submittal to Planning Commission
Purchase
• Next Stage of Negotiation Process
• Requisite document to demonstrate Site Control for HUD
202 application.
• Establishes Eden Housing's Intent
• To Purchase, Construct, Own and Operate
• Purchase price : $630,000
• Option Consideration
• 1% Earnest Money Deposit - $6300
9 References Purchase and Development Agreement
Agreement
• Establishes Terms and Conditions
• Sale of the Property
• Loan
• Subsequent Use and Development as Affordable Senior
Housing
• Further Defines City's Participation in Funding
Amendment To Agreements
• Agreement and Resolution references to Eden
Development, Inc. to be amended to Eden Housing, Inc.
• Recent HUD 202 Application Workshop
• Determined that Agreements must be with Project Sponsor, Eden
Housing, Inc. rather than Project Developer, Eden Development,
Inc.