HomeMy WebLinkAboutMINUTES - 09232008 - C.62 TO: BOARD OF SUPERVISORS .;..rr'�`� t
Contra
Costa
FROM: James Kennedy County
Director, Department of Conservation and Development
T4 10 N
DATE: September 23, 2008 �b
SUBJECT: Casa Adobe Community Development Block Grant Loan Refinance
SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
(1) AUTHORIZE the Deputy Director, Redevelopment or his designee to execute required legal
documents to refinance $550,732 in Community Development Block Grant (CDBG) funds to
San Pablo Senior Associates 11, a California limited partnership (Borrower), for the Casa Adobe
affordable housing project in San Pablo; and
(2) FIND that the project is exempt from the California Environmental Quality Act [Section
15061(b)(3)]; and
(3) DIRECT the Deputy Director, Redevelopment, or designee, to file a Notice of Exemption for this
project with the County Clerk; and
(4) DIRECT the DCD Director, or designee, to arrange for payment of the $50 handling fee to the
County Clerk for filing such Notice of Exemption.
FISCAL IMPACT
No General Fund impact. Community Development Block Grant (CDBG) funds are provided to the
County on a formula allocation basis through the U.S. Department of Housing and Urban
Development (HUD).
CONTINUED ON ATTACHMENT: X YES SIGNATURE:
A/
RECOMMENDATION OF COUNTY ADMINISTRATOR R COMM DATION OF BO D
CO MITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON APPR16VED AS RECOMMENDED ER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN
AYES: NO S: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
SUPERVISORS N THE DATE SHOWN.
Contact; Kara Douglas, 335-7223 ATTESTED 13
Orig: Conservation and Development, DAVID TW , C RK
Redevelopment Division OF THE BOARD OF SUPERVISORS
cc: County Administrator AND C NTY ADMI T ATOR
County Counsel 13
Auditor-Controller D
SUBJECT: San Pablo Senior Housing Associates, Community Development Block Grant Loan Documents
DATE: September 23, 2008
PAGE: 2
BACKGROUND/REASONS FOR RECOMMENDATIONS
On December 11, 1989 San Pablo Senior Housing Associates, a California limited partnership
(Initial Borrower) executed a Promissory Note (Note) through which.it promised to pay the County
$330,000 in CDBG funds. This loan was provided with a three percent interest rate and a thirty
year term. The purpose of the loan was support the development of a 54 unit affordable senior
apartment project on Church Lane in San Pablo.
Casa Adobe was also funded with Low Income Housing Tax Credits (LIHTC). LIHTC were
provided to the Initial Borrower as an equity investment from the partnership's limited partner. The
term of the partnership is for 15 years. At the end of 15 years, the limited partner has received all
of its tax credit benefits and wishes to exit the partnership. Therefore, the general partner, EAH,
has found a new limited partner. The Borrower is now receiving a new allocation of LIHTC and tax
exempt bonds.
On September 16, 2008, the Board of Supervisors approved the sale of$3 million of multi-family
housing revenue bond to fund the acquisition and rehabilitation of the property by the Borrower. In
order to make this project feasible, the Borrower is requesting that the County refinance its Note
with the Initial Borrower through a transfer of the debt from the original partnership to the new
partnership. The Borrower is also requesting that the County Note be changed to zero interest. In
exchange for this action, the Borrower will provide increased affordability and a new 55 year term
of affordability. Casa Adobe has a total of 54 units, 14 of which are CDBG-assisted. The project
originally had 14 units which were affordable to and occupied by seniors earning up to 45 percent
of the area median income (AMI). The remaining units were affordable to and occupied by seniors
earning up to 60 percent AMI. The CDBG units will now include 5 units affordable at 30 percent
AMI, and 9 units affordable at 45 percent AMI. The remaining units will be affordable at 50 percent
AMI.
CEQA
This activity is exempt from CEQA pursuant to 14 CCR 15061(b)(3).
CONSEQUENCES OF NEGATIVE ACTION:
If the County required payment of the current debt, the Borrower would not be able to carry out
necessary repairs and upgrades to the structure. In addition, the Borrower would not be increasing
the depth of affordability.
ATTACHMENT
Notice of Exemption
On file with Clerk of the Board:
CDBG Loan Agreement
Promissory Note
Construction Deed of Trust with Assignment of Rents and Security Agreement
Regulatory Agreement and Declaration of Restrictive Covenants
Intercreditor Agreement
CALIFORNIA ENVIRONMENTAL QUALITY ACT
Notice of Exemption
Contra Costa County Community Development Department
651 Pine Street, 4th Floor- North Wing, McBrien Administration Building
Martinez, CA 94553-0095
Telephone: (925)335-7223 Contact Person: Kara Douglas
Project Description:Casa Adobe Senior Apartments(San Pablo),The activity consists of the refinancing of a Community
Development Block Grant loan in the amount of$550,732.This refinance will support the rehabilitation of an existing 54 unit
affordable senior housing project.
Project Location: 1924 Church Lane, San Pablo CA
This project-is exempt from CEQA as a:
Ministerial Project(Sec. 15268) X Other Statutory Exemption, Section 15332
Declared Emergency(Sec. 15269(a)) X General Rule of Applicability(Section 15061(b)(3)
Emergency Project(Sec. 15269(b)or(c))
Categorical Exemption,
for the following reason(s): This activity is not subject to the California Environmental Quality Act(CEQA) pursuant to
CEQA Section 15061(b)(3). It can be seen with certainty that there is no possibility that the activity may have a significant
adverse effect on the environment.
Date: By:
Community Development Department Representative
AFFIDAVIT OF FILING AND POSTING
I declare that on I received and posted this notice as required by
California Public Resources Code Section 21152(c). Said notice will remain posted for 30
days from the filing date.
Signature Title
Applicant:
San Pablo Senior Housing Associates
33 San Clemente Drive County Clerk Fee$50 Due
Corte Madera, CA 94925
A:\SMSTNOE.FRM
(Form Revised 2/97)
CDBG LOAN AGREEMENT
Between
COUNTY OF'CONTRA COSTA
and
SAN PABLO SENIOR ASSOCIATES II, L.P.
CASA ADOBE APARTMENTS
863\75\572101.4
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND EXHIBITS.......................................................................... 2
Section1.1 Definitions...............................................................................................2
Section1.2 Exhibits. ..................................................................................................5
ARTICLE 2. LOAN PROVISIONS.......................................................:.................................... 5
Section 2.1 Assignment of Original County Loan;New County Loan. .......................5
Section2.2 Interest.....................................................................................................5
Section 2.3 Use of Loan Funds; Disbursement of Loan Funds. ...................................5
Section2.4 Security. ..................................................................................................6
Section 2.5 Subordination. .........................................................................................6
Section 2.6 Conditions Precedent to Closing of Loan. ................................................7
Section 2.7 Repayment Schedule................................................................................. 8
Section 2.8 Non-Recourse..........................................................................................9
ARTICLE 3. REHABILITATION OF THE DEVELOPMENT.................................................. 9
Section 3.1 Permits and Approvals.............................................................................9
Section 3.2 Construction Contract. ........................................................................... 10
Section 3.3 Construction Bonds................................................................................ 10
Section 3.4 Commencement of Rehabilitation. ......................................................... 10
Section 3.5 Completion of Rehabilitation. ................................................................ 10
Section 3.6 Rehabilitation Pursuant to Plans and Laws; Prevailing
Wages; .................................................................................Accessibility.10
Section 3.7. Marketing Plan. ..................................................................................... 12
Section 3.8 Equal Opportunity.................................................................................. 12
Section 3.9 Minority and Women-Owned Contractors.............................................. 13
Section 3.10 Progress Reports.................................................................................... 13
Section 3.11 Construction Responsibilities................................................................. 13
Section 3.12 Mechanics Liens, Stop Notices, and Notices of Completion................... 13
Section 3.13 Inspections.......................................................................................-...... 14
Section 3.14 Approved Development Budget; Revisions to Budget............................ 14
Section 3.15 Developer Fee........................................................................................ 14
Section 3.16 Capital Contributions............................................................................. 14
Section 3.17 NEPA Mitigation Requirements............................................................. 14
ARTICLE 4. LOAN REQUIREMENTS .................................................................................. 15
Section 4.1 Compliance with Project Agreement...................................................... 15
Section 4.2 Financial Accountings and Post-Completion Audits............................... 15
Section 4.3 Annual Operating Budget....................................................................... 15
Section4.4 Information............................................................................................ 15
Section4.5 Records.................................................................................................. 15
Section 4.6 County Audits........................................................................................ 17
Section 4.7 CDBG Requirements. ............................................................................ 17
Section 4.8 Hazardous Materials. .............................................................................20
Section 4.9 Maintenance and Damage......................................................................23
Section 4.10 Fees and Taxes.......................................................................................23
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863V751572101.4
TABLE OF CONTENTS
(continued)
Page
Section 4.11 Notice of Litigation................................................................................23
Section 4.12 Operation of Development as Affordable Housing.................................23
Section 4.13 Nondiscrimination. ................................................................................24
Section 4.14 Transfer.................................................................................................24
Section 4.15 Insurance Requirements.............:...........................................................25
Section 4.16 Anti-Lobbying Certification...................................................................27
Section 4.17 Payment of Other Indebtedness;Notice of Defaults ..............:................27
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BORROWER........................ 27
Section 5.1 Representations and Warranties. ............................................................27
ARTICLE 6. DEFAULT AND REMEDIES............................................................................. 29
Section 6.1 Events of Default. ..................................................................................29
Section6.2 Remedies. ...................................:..........................................................31
Section 6.3 Right of Contest.....................................................................................32
Section 6.4 Remedies Cumulative. ....................................:......................................33
ARTICLE 7. GENERAL PROVISIONS ........................................:......................................... 33
Section 7.1 Relationship of Parties. ..........................................................................33
Section.7.2 . No Claims..............................................................................................33
Section 7.3 Amendments.....................ffi.ffi......ffi.........ffi.ffi......ffi........................................33
Section 7.4 Indemnification........................__.......................................................... 34
Section 7.5 Non-Liability of County Officials, Employees and Agents..................... 34
Section 7.6 No Third Party Beneficiaries.................................................................. 34
Section 7.7 Discretion Retained By County..............................................................34
Section 7.8 Conflict of Interest.............................................................:...................34
Section 7.9 Notices, Demands and Communications. ......................ffi........................ 35
Section 7.10 Applicable Law......................................................................................36
Section 7.11 Parties Bound...................:.....................................................................36
Section 7.12 Attorneys' Fees. .....................................................................................36
Section 7.13 Severability.............................................................................................36
Section 7.14 Force Majeure.....................................................................:.................. 36
Section 7.15 County Approval. ...................................................................................36
Section7.16 Waivers. ..ffi.ffi ffi..................ffiffiffi.ffi.................ffi.................................................37
Section 7.17 Title of Parts and Sections......................................................................37
Section 7.18 Entire Understanding of the Parties........................................................ 37
Section 7.19 Multiple Originals; Counterpart. .........ffi.................................... ............37
EXHIBIT A Legal Description of the Property
EXHIBIT B Approved Development Budget
863\75\572101.4
CDBG LOAN AGREEMENT
CASA ADOBE APARTMENTS
(Loan Modification)
This CDBG Loan Agreement is entered into as of _, 2008, by and
among the County of Contra Costa, a political subdivision of the State of California(the
"County"), EAH Inc., a California nonprofit public benefit corporation("EAH") and San Pablo
Senior Associates 11, L.P., a California limited partnership ("Borrower"),with reference to the
following facts:
A. The County has received funds from the United States Department of Housing
and Urban Development("HUD")under Title I of the Housing and Community Development
Act of 1974, as amended("CDBG Funds"). Such funds must be used by the County in
accordance with 24 C.F.R. Part 570.
B. The County and San Pablo Senior Housing Associates, a California Limited
Partnership ("SPSHA, L.P.")have previously entered into the CDBG Project Agreement 15-65-
CDBG, dated December 1, 1989 (the "Project Agreement"), pursuant to which the County
committed Three Hundred Thirty Thousand Dollars ($330,000) (the "Original County Loan") of
CDBG Funds to assist SPSHA, L.P. for the acquisition of that certain real property located at
1924 Church Lane, in the City of San Pablo, County of Contra Costa, State of California, as
more particularly described in Exhibit A(the "Property") and for predevelopment costs
associated with the fifty four low and very low (54)multifamily apartment units, including one
(1) manager's unit, and attendant site improvements, located on the Property(the
"Development").
C. In furtherance of the Project Agreement, the County provided a loan to SPSHA,
L.P. in the amount of Three Hundred Thirty Thousand Dollars ($330,000), with an interest rate
of three percent(3%) compounded,per annum (the "Original County Loan"). The Original
County Loan is evidenced by a promissory note executed by SPSHA, L.P. dated December 11,
1989 (the "Original County Note") and secured by a deed of trust executed by SPSHA, LP dated
December 11, 1989 and recorded in the official records of the County of Contra Costa(the
"Official Records") as Instrument No. 89-263175 on December 28, 1989 (the "Original County
Deed of Trust"). As of the date of this Agreement, the outstanding principal and accrued interest
accrued on the Original County Loan is Five Hundred Sixty Thousand Eight Hundred Fifty Two
Dollars ($560,852).
D. On 12007 SPSHA sold the Property to EAH and EAH assumed
the Original County Loan.
E. Borrower wishes to acquire the Property from EAH and to subsequently
rehabilitate the Development. To accomplish the acquisition and rehabilitation of the
Development, the County is approving the assumption of the Original County Loan(which
includes all accrued interest on the Original County Loan)by the Borrower and is modifying the
Original County Loan by: (i) extending the term of the Original County Loan for fifty-five(55)
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r
years commencing on the date of execution of this Agreement; (ii) providing for five of the units
currently restricted by the County to be further restricted to be affordable to extremely-low
income households;.(iii) modifying the interest rate of the Original County Loan to zero percent
(0%); and(iv) increasing the total principal amount of the Original County Loan to include all of
the accrued interest of the Original County Loan, thus the total principal amount of the Original
County Loan which the Borrower will assume is Five Hundred Sixty Thousand Eight Hundred
Fifty Two Dollars ($560,852),which loan will be referred to herein as the"Loan".
F. No loan agreement was executed to govern the terms and conditions of the
original County Loan. Consequently,the Parties will enter into this Agreement to set forth the
terms and conditions of the Loan. The Loan will be evidenced by a new promissory note
executed by the Borrower in favor of County and secured by a new deed of trust on the Property.
G. The Loan is being made to finance acquisition costs associated with the
Development in order to help achieve financial feasibility for the Development and to maintain
the supply of affordable rental housing in Contra Costa County.
H. The California Environmental Quality Act(Public Resources Code Sections
21000 et seg) ("CEQA") imposes no conditions on the County's consideration and approval of
this Agreement, because the project undertaken pursuant to this Agreement is exempt from
CEQA requirements under the categorical exemption set forth in 14 CCR 15302.
I. The National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321-
4347) ("NEPA"), imposes no conditions on the County's consideration and approval of this
Agreement,because the project undertaken pursuant to this Agreement is exempt from NEPA
requirements under the categorical exclusion set forth in 24 C.F.R. 58.35(3)(ii).
NOW, THEREFORE,the Parties agree as follows:
ARTICLE a. 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:
(a) '.'Agreement" shall mean this CDBG Loan Agreement.
(b) "Agency" shall mean the City of San Pablo Redevelopment Agency.
(c) "Approved Development Budget" shall mean the proforma development
budget, including sources and uses of funds, as approved by the County, and attached hereto and
incorporated herein as Exhibit B.
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(d) "Approved Financing" shall mean all of the following loans acquired by
the Borrower and approved by the County for the purpose of financing the Development, in
addition to the County Loan:
(i) Loan from the Agency to the Borrower in the approximate amount
of One Million Two Hundred Thirty Thousand Three Hundred Fifty Eight Dollars ($1,230,358)
(the "Agency Loan");
(ii) County multifamily housing revenue tax exempt bond-financed
loan in the approximate amount of Two Million Six Hundred Sixty-Three Thousand Four
Hundred Thirty-One Dollars ($2,663,431) (the "Bond Loan"), which Bond Loan shall be
purchased by (the "Bank");
(iii) Seller carry-back loan from EAH in the approximate amount of
One Million Six Hundred Fifty-Eight Thousand Seven Hundred Twenty-Eight Dollars
($1,658,728) (the "Seller Carry-Back Loan");
(iv) Low Income Housing Tax Credit investor equity funds in the
approximate amount of One Million Three Hundred Seventy Four Thousand Nine Hundred Sixty
Seven Dollars($1,374,967) (the "Tax Credit Investor Equity"); and
(v) Capital contribution from the Borrower's general partner in the
approximate amount of One Thousand Dollars ($1,000) (the "General Partner Equity").
(e) "Bid Package" shall mean the Borrower's proposed construction bid
package to be made available to potential bidders seeking to construct the Development. The
contents of the Bid Package are more particularly described in Section 3.2.
(f) "Bond Loan Regulatory Agreement" shall mean the Regulatory
Agreement and Declaration of Restrictive Covenants dated.of even date herewith between the
County and the Borrower associated with the County Bond Loan.
(g) ."Borrower" has the meaning set forth in the first paragraph of this
Agreement.
(h) "CDBG" shall mean the Community.Development Block Grant program
created pursuant to Title I of the Housing and Community Development Act of 1974 (42 USC
5301 et seq.), as amended.
(i) "County" has the meaning set forth in the first paragraph of this
Agreement.
(j) "Deed of Trust" shall mean the deed of trust dated
20_, among Borrower, as Trustor, Title Company, as trustee, and the County,
as beneficiary, that will encumber the Development to secure repayment of the Loan and
performance of the covenants of the Loan Documents. The form of the Deed of Trust shall be
provided by the County.
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(k) "Default" shall have the meaning set forth in Section 6.1 below.
(1) "Default Rate" shall have the meaning set forth in Section 6.2(c).
(m) "Development" shall mean the Property and the fifty four low and very
low (54) multifamily apartment units, including one (1) manager's unit, and attendant site
improvements, located on the Property.
(n) "Hazardous Materials" shall have the meaning set forth in Section 4.8
below.
(o) "Hazardous Materials Claim" shall have the meaning set forth in Section
4.8 below.
(p) "Hazardous Materials Law" shall have the meaning set forth in Section 4.8
below.
(q) "HUD" has the meaning set forth in Paragraph A of the Recitals.
(r) "Intercreditor Agreement" shall mean the Intercreditor Agreement, dated
of even date herewith, among the County,the Agency, and the Borrower concerning the
Development.
(s) "Loan" shall mean the County loan to Borrower pursuant to this
Agreement in the total principal amount of Five Hundred Sixty Thousand Eight Hundred Fifty
Two Dollars ($560,852), consisting of the CDBG funds.
(t) "Loan Documents" shall mean this Agreement, the Note, the Intercreditor
Agreement, the Regulatory Agreement, and the Deed of Trust.
(u) "Note" shall mean the promissory note dated of even date herewith,
between Borrower and the County evidencing Borrower's obligation to repay the Loan. The
form of the Note shall be provided by the County
(v) "Parties" shall mean the County and Borrower.
(w) "Project Agreements" has the meaning set forth in paragraph B of the
Recitals.
(x) "Property" has the meaning set forth in paragraph B of the Recitals.
(y) "Regulatory Agreement" shall mean the Regulatory Agreement and
Declaration of Restrictive Covenants dated of even date herewith,between the County and the
Borrower associated with the Loan,.to be recorded against the Property.
(z) "Senior Loan shall have the meaning set forth in Section 2.5 below.
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(aa) "Term" shall have the meaning set forth in Section 2.7(a)below.
(bb) "Transfer" shall have the meaning set forth in Section 4.14 below.
(cc) "Unit" means one (1) of the fifty four(54) apartment units to be
constructed on the Property.
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: Approved Development Budget
ARTICLE 2. LOAN PROVISIONS
Section 2.1 Assignment of Oriainal County Loan: New Coun1y Loan.
EAH hereby assigns and Borrower hereby assumes the Original County Loan. Borrower
and the County agree to modify the Original County Loan by adding the interest accrued on the
Original County Loan as of the date of this Agreement to the principal of the Original County
Loan and documenting the loan as a new loan from the County to the Borrower in the amount of
Five Hundred Sixty Thousand Eight Hundred Fifty Two Dollars ($560,852). The County shall
loan to the Borrower the Loan for the purposes set forth in Section 2.3 of this Agreement. The
obligation to repay the Loan shall be evidenced by the Note in the form provided by the County.
Section 2.2 Interest.
(a) Subject to the provisions of Section 2.2(b)below, the outstanding
principal balance of the Loan shall not accrue interest.
(b) In the event of a Default, interest on the Loan shall begin to accrue, as of
the date of Default and continuing until such time as the Loan is repaid in full or the Default is
cured, at the default rate of the lesser of ten percent(10%), compounded annually, and the
highest rate permitted by law.
Section 2.3 Use of Loan Funds: Disbursement of Loan Funds.
(a) The Borrower shall use the Loan funds to fund the acquisition of the
Property consistent with the Approved Development Budget.
(b) The Borrower shall not use the Loan for any other purposes without the
prior written consent of the County.
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(c) The Borrower shall comply with the Project Agreement in the use of the
Loan;provided, however, in the event of any conflict between the Project Agreement and this
Agreement, the terms of this Agreement shall prevail.
(d) The entire principal balance of the Loan was already disbursed to SPSHA,
L.P., Borrower's predecessor in interest. Prior to the date of this Agreement, SPSHA. L.P.
transferred the Property and assigned the Loan to EAH. Borrower has succeeded to EAH's
interests in the Property and in the Loan.
Section 2:4 Security.
Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by
executing the Deed of Trust, and recording it as a lien against the Property, equal in lien priority
(pursuant to the Intercreditor Agreement)to the deed of trust securing the Agency Loan,junior in
lien priority to the deed of trust securing the Bond Loan, and senior in lien priority to the deed of
trust securing the Seller Carry-Back Loan. Borrower shall also cause or permit the Intercreditor
Agreement and Regulatory Agreement to be recorded against the Property.
Section 2.5 Subordination.
The Deed of Trust and/or Regulatory Agreement may be subordinated to other Approved
Financing (in each case, a "Senior Loan"),but only on condition that all of the following
conditions are satisfied:
(a). All of the proceeds of the proposed Senior Loan, less any,transaction
costs, must be used to provide acquisition, rehabilitation and/or permanent financing for the
Development.
(b) The proposed lender(each, a "Senior Lender")must be a state or federally
chartered financial institution, a nonprofit corporation 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 must demonstrate to the County's reasonable satisfaction that
subordination of the Deed of Trust and/or Regulatory Agreement is necessary to secure adequate
acquisition, rehabilitation and/or permanent financing 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 must provide to the County, in addition to
any other information reasonably required by the County, evidence demonstrating that the
proposed amount of the Senior Loan is necessary to provide adequate acquisition, rehabilitation
and/or permanent financing to ensure the viability of the Development, and adequate financing
for the Development would not be available without the proposed subordination.
(d) The subordination agreement(s) must 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 Loan. To satisfy this requirement,
the subordination agreement must provide the County with adequate rights to cure any defaults
by Borrower, including: (i)providing the County or its successor with copies of any notices of
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default at the same time and in the same manner as provided to Borrower; and(ii) providing the
County 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 any extension of its term approved in writing by
the County.
(f) No subordination may limit the effect of the Deed of Trust and/or
Regulatory Agreement before a foreclosure,nor require consent of the holder of the Senior Loan
to exercise of any remedies by the County under the Loan Documents.
(g) Upon a determination by the County's Deputy Director—Redevelopment
that the conditions in this Section have been satisfied, the Deputy Director—Redevelopment or
his/her designee will be authorized to execute the approved subordination agreement without the
necessity of any further action or approval.
(h) In the event there is a foreclosure of the Property, the Regulatory
Agreement shall be revived according to its original terms if, during the original Regulatory
Agreement 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.
Section 2.6 Conditions Precedent to Closing of Loan.
The County shall not be obligated to finalize the Loan or take any other action under the
Loan Documents unless the following conditions precedent are satisfied prior to closing of the
Loan:
(a) There exists no Default nor any act, failure, omission or condition that
would constitute an event of Default under this Agreement;
(b) The Borrower holds title to the Property or is acquiring title
simultaneously with the closing of the Loan;
(c) Borrower has delivered to the County a copy of a corporate resolution
authorizing Borrower's execution of the Loan Documents;
(d) The Borrower has furnished the County with evidence of the insurance
coverage meeting the requirements of Section 4.15 below;
(e) Borrower has caused to be executed and delivered to the County all
County Loan Documents and any other instruments, and policies required under the Loan
Documents;
(f) The Deed of Trust, the Regulatory Agreement and the Intercreditor
Agreement have been recorded against the Property in the Office of the Recorder of the County
of Contra Costa;
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(g) A title insurer reasonably acceptable to the County is unconditionally and
irrevocably committed to issuing an LP-10 ALTA Lender's Policy of title insurance insuring the
priority of the Deed of Trust'in the amount of the Loan, subject only to such exceptions and
exclusions as may be reasonably acceptable to the County, and containing such endorsements as
the County may reasonably require. The Borrower shall provide whatever documentation
(including an indemnification agreement), deposits or surety is reasonably required by the title
company in order for the County's Deed of Trust to be senior in lien priority to any mechanics
liens in connection with any early start of construction;
(h) The County has determined that the undisbursed proceeds of the Loan,
together with other funds or firm commitments for funds that the Borrower has obtained in.
connection with the Development, are not less than the amount that is necessary to pay for
rehabilitation of the Development and to satisfy all of the covenants contained in this Agreement
and the Regulatory Agreement;
(i) Borrower has obtained all permits and approvals necessary for the
'rehabilitation of the Development, as required by Section 3.1, and County has received a copy of
the building permit required to rehabilitate the Development;
(j) The County has received and approved the final plans and specifications
for the rehabilitation of the Development, as required pursuant to Section 3.2 below;
(k) The County has received and approved the general contractor's
construction contract that the Borrower-has entered or proposed to enter for rehabilitation of the
Development as required pursuant to Section 3.3 below;
(1) The County has received copies of labor and material(payment) bonds
and performance bonds as required pursuant to Section 3.4 below;
(m) Borrower-has closed all Approved Financing described in Section 1.1(d)(i)
through (iii) and is eligible to receive the proceeds thereof; and
(n) Borrower has obtained a commitment letter from a tax credit equity
investor, in form, substance, and amount consistent with the Approved Development Budget, and
acceptable to and approved by the County in its reasonable exercise of discretion.
Section 2.7 Repayment Schedule.
The Loan shall be repaid as follows:
(a) The Loan and this Agreement shall have a term that expires on the date
fifty-five (55) years after the date of this Agreement(the "Term").
(b) Commencing on May 1, 2010, and on May 1 of each year thereafter for
the Tenn of the Loan,.Borrower shall make repayments of the Loan equal to the County's Prorata
Percentage of the Lenders' Share of Residual Receipts (all as defined in the Intercreditor
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Agreement). Payments made shall be credited first against accrued interest and then against
,:outstanding principal.
(c) Borrower shall make a special repayment from Net Proceeds of Permanent
Financing, if any, as defined in and set forth in the Intercreditor Agreement.
(d) All principal and accrued interest (if any) on the Loan shall be due in full
on the earlier to occur of(i)the date of any Transfer not authorized by the County, (ii) the date of
any Default, and(iii)the expiration of the Term.
(e) The Borrower shall have the right to prepay the Loan at any time without
penalty. However, the Regulatory Agreement and the Deed of Trust shall remain in effect for
the entire term of the Regulatory Agreement, regardless of any prepayment.
Section 2.8 Non-Recourse.
Except as provided below, neither the Borrower, nor any general or limited partner of the
Borrower, shall have any direct or indirect personal liability for payment of the principal of, and
interest on,the Loan or the performance of the covenants of the Borrower under the Deed of
Trust. Following recordation of the Deed of Trust, the sole recourse of the County with respect
to the principal of, and interest on, the Note and defaults by Borrower in the performance of its
covenants under the Deed of Trust 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 Note of all the rights and remedies of the
County thereunder, or(b)be deemed in any way to impair the right of the County to assert the
unpaid principal amount of the Note as demand for money within the meaning and intendment of
Section 431.70 of the California Code of Civil Procedure or any successor provision thereto.
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 Note and the performance of the Borrower's
obligations under the Deed of Trust, except as hereafter set forth; nothing contained herein is
intended to relieve the Borrower of its obligation to indemnify the County under Sections 3.7,
4.7, 4.8 and 7.4 of this 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 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.
ARTICLE 3. REHABILITATION OF THE DEVELOPMENT
Section 3.1 Permits and Approvals. .
All permits and approvals necessary for the rehabilitation of the Development on the
Property must be received no later than _, 20_, or such later date that the County
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may approve, or the County, at its option, and with thirty(30) days' written notice and
opportunity to cure, may declare Borrower in default hereunder.
Section 3.2 Construction Contract.
(a) Not later than thirty(30) days prior to the proposed commencement of
rehabilitation of the Development, the Borrower shall submit to the County for its approval the
proposed construction contract for the Development. All rehabilitation work and professional
services shall be performed by persons or entities licensed or otherwise authorized to perform the
applicable construction work or service in the State of California. Each contract that the
Borrower enters for rehabilitation of the Development shall provide that at least ten percent
(10%) of the costs incurred shall be payable only upon completion of construction, subject to
early release of retention for specified subcontractors upon approval by the County. The
construction contract shall include all applicable CDBG requirements set forth in Section 4.7
below. The County's approval of the construction contract shall in no way be deemed to
constitute approval of or concurrence with any term or condition of the construction contract
except as such term or condition may be required by this Agreement.
(b) Upon receipt by the County of the proposed construction contract, the
County shall promptly review same and approve or disapprove it within ten working(10) days.
If the construction contract is not approved by the County, the County shall set forth in writing
and notify the Borrower of the County's reasons for withholding such approval. The Borrower
shall thereafter submit a revised construction contract for County approval, which approval shall
be granted or denied in ten(10) working days in accordance with the procedures set forth above.
Any construction contract executed by the Borrower for the Development shall be in the form
approved by the County.
Section 3.3 Construction Bonds.
Prior to commencement of rehabilitation of the Development, the Borrower shall deliver
to the County copies of labor and material bonds and performance bonds for the rehabilitation of
the Development in an amount equal to one hundred percent(100%) of the scheduled cost of the
Development. Such bonds shall name the County as a co-obligee.
Section 3.4 Commencement of Rehabilitation.
Borrower shall cause the commencement of rehabilitation of the Development no later
than or such later date that the County may approve.
Section 3.5 Completion of Rehabilitation.
Borrower shall diligently prosecute rehabilitation of the Development to completion, and
shall cause the completion of the construction of the Development no later than
or such later date that the County may approve.
Section 3.6 Rehabilitation Pursuant to Plans and Laws; Prevailing Wages:
Accessibility.
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i
(a) Borrower shall rehabilitate the Development in conformance with the
plans and specifications approved by the City of San Pablo Building Inspection Department.
Borrower shall notify the County in a timely manner of any changes in the work required to be
performed under this Agreement, including any additions, changes, or deletions to the plans and
specifications approved by the City of San Pablo. A written change order authorized by the
County must be obtained before any of the following changes, additions, or deletions in work for
the Development may be performed: (1) any change in the work the cost of which exceeds
Fifteen Thousand Dollars ($15,000);.or(ii) any set of changes in the work the cost of which
cumulatively exceeds Fifty Thousand Dollars ($50,000) or ten percent(10%)of the Loan
amount, whichever is less; or(iii) any material change in building materials or equipment,
specifications, or the structural or architectural design or appearance of the Development as
provided for in the plans and specifications approved by the County. Consent to any additions,
changes, or deletions to the work shall not relieve or release Borrower from any other obligations
under this Agreement, or relieve or release Borrower or its surety from any surety bond.
(b) Borrower shall cause all work performed in connection with the
Development to be performed in compliance with (i)all applicable laws, ordinances, rules and
regulations of federal, state, county or municipal governments or agencies now in force or that
may be enacted hereafter, including without limitation and to the extent applicable,the
prevailing wage provisions of the federal Davis-Bacon Act and implementing rules and
regulations, as further set forth in subsection(c) below, and state prevailing wages pursuant to
California Labor Code Section 1770 et seq., and the regulations pursuant thereto, as further set
forth in subsection(d)below; (ii) the property standards set out in 24 C.F.R. Section 5.701 et
seg., and 24 C.F.R. Section 92.251; and(iii) all directions, rules and regulations of any fire
marshal, health officer,building inspector, or other officer of every governmental agency now
having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of
each permit, license, or other authorization that may be required by any governmental agency
having jurisdiction, and Borrower shall be responsible to the County for the procurement and
maintenance thereof, as may be required of Borrower and all entities engaged in work on the
Development.
(c) This Agreement has been prepared with the intention that the Loan is
financing the acquisition of the Property and not for rehabilitation or construction, therefore the
general requirements that the Borrower shall cause construction of the Development to be in
compliance with the prevailing wage requirements of the federal Davis-Bacon Act(40 U.S.C.
Sections 3141-3148) do not apply;however, nothing in this Agreement constitutes a
representation or warranty by any party regarding the applicability of the provisions of 40 U.S.C.
Sections 3141-3148. To the extent required by applicable law, the Borrower shall pay and shall
cause the contractor and subcontractors to pay prevailing wages as determined pursuant to the
prevailing wage provisions of the federal Davis-Bacon Act and implementing rules and
regulations in connection with the rehabilitation of the Development or any other work
undertaken or in connection with the Property. The requirements in this Subsection shall survive
repayment of the Loan and the reconveyance of the Deed of Trust.
(d) This Agreement has been prepared with the intention that the Loan meets
the exemption set forth in California Labor Code Section 1720(c)(6)(E) to the general
requirements that state prevailing wages be paid in connection with the construction work that is
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paid for in whole or in part out of public funds; provided, however, that nothing in this
Agreement constitutes a representation or warranty by any party regarding the applicability of
the provisions of California Labor Code Section 1720 et seq.To the extent required by
applicable law, the Borrower shall pay and shall cause the contractor and subcontractors to pay
prevailing wages in the rehabilitation of the Development as those wages are determined
pursuant to Labor Code Sections 1720 et seq., to employ apprentices as required by Labor Code
Sections 1777.5 et seq., and the implementing regulations of the Department of Industrial
Relations (the "DIR"). The Borrower shall and shall cause the contractor and subcontractors to
comply with the other applicable provisions of Labor Code Sections 1720 et sec., 1777.5 et seq.,
and implementing regulations of the DIR. The Borrower shall and-shall cause the contractor and
subcontractors to keep and retain such records as are necessary to determine if such prevailing
wages have been paid as required pursuant to Labor Code Sections 1720 et sem., and apprentices
have been employed as required by Labor Code Sections 1777.5 et M. Copies of the currently
applicable current per diem prevailing wages are available from DIR. During the rehabilitation
of the Development, Borrower shall or shall cause the contractor to post at the Property the
applicable prevailing rates of per diem wages. The Borrower shall indemnify, hold harmless and
defend(with counsel reasonably acceptable to the County) the County against any claim for
damages, compensation, fines, penalties or other amounts arising out of the failure or alleged
failure of any person or entity(including Borrower, its contractor and subcontractors)to pay
prevailing wages as determined pursuant to Labor Code Sections 1720 et M.,to employ
apprentices pursuant to Labor Code Sections 1777.5 et seq., and implementing regulations of the
DIR or to comply with the other applicable provisions of Labor Code Sections 1,720 et seg.,
1777.5 et seq., and the implementing regulations of the DIR in connection with the rehabilitation
of the Development or any other work undertaken or in connection with the Property. The
requirements in this Subsection shall survive the repayment of the Loan, and the reconveyance of
the Deed of Trust.
(e) In compliance with Section 504 of the Rehabilitation Act of 1973 (29 USC
794, et seg.), a minimum of three (3) Units shall be constructed to be fully accessible to
households with a mobility impaired member and an additional two(2)Units shall be fully
accessible to hearing and/or visually impaired persons.
Section 3.7 Marketing Plan.
(a) No later than six (6)months prior to the projected date of the completion
of the Development, Borrower shall submit to the County for approval its plan for marketing the
Development to income-eligible households as required pursuant to the Regulatory Agreement,
including information on affirmative marketing efforts and compliance with fair housing laws.
(b) Upon receipt of the Marketing Plan, the County shall promptly review the
Marketing Plan and shall approve or disapprove it within fifteen (15) days after submission. If
the Marketing Plan is not approved, Borrower shall submit a revised Marketing Plan within
fifteen (15) days. If the County does not approve the revised Marketing Plan, Borrower shall be
in default hereunder.
Section 3.8 Equal Opporhmity.
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During the rehabilitation of the Development there shall be no discrimination on the basis
of race, color, creed, religion, age, sex, sexual orientation,marital status, national origin,
ancestry, or disability in the hiring, firing,promoting, or demoting of any person engaged in the
rehabilitation work.
Section 3.9 Minority and Women-Owned Contractors.
Borrower will use its best efforts to afford minority-owned and women-owned business
enterprises the maximum practicable opportunity to participate in the rehabilitation of the
Development. Borrower shall, at a minimum, notify applicable minority-owned and women-
owned business firms located in Contra Costa County of bid opportunities for the rehabilitation
of the Development. Documentation of such notifications shall be maintained by Borrower and
available to the County as requested.
Section 3.10 Progress Reports.
Until such time as Borrower has received a building permit completion sign-off by the
City of San Pablo for the rehabilitation of the Development, Borrower shall provide the County
with quarterly progress reports,regarding the status of the construction of the Development,
including a certification that the actual construction costs to date conform to the Approved
Development Budget, as it may be amended from time to time pursuant to Section 3.14 below.
Section 3.11 Construction Responsibilities.
(a) It shall be the responsibility of Borrower to.coordinate and schedule the
work to be performed so that commencement and completion of the rehabilitation will take place
in accordance with this Agreement.
(b) Borrower shall be solely responsible for all aspects of Borrower's conduct
in connection with the Development, including (but not limited to) the quality and suitability of
the plans and specifications, the supervision of rehabilitation work, and the qualifications,
financial condition, and performance of all architects, engineers, contractors, subcontractors,
suppliers, consultants, and property managers. Any review or inspection undertaken by the
County with reference to the Development is solely for the purpose of determining whether
Borrower is properly discharging its obligations to the County, and should not be relied upon by
Borrower or by any third parties as a warranty or representation by the County as to the quality
of the design or rehabilitation of the Development.
Section 3.12 Mechanics Liens, Stop Notices, and Notices of Completion.
(a) If any claim of lien is filed against the Property or a stop notice affecting
the Loan is served on the County or any other lender or other third party in connection with the
Development, then Borrower shall, within twenty(20) days after such filing or service, either
pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by
delivering to the County a surety bond in sufficient form and amount, or provide the County with
other assurance satisfactory to the County that the claim of lien or stop notice will be paid or
discharged.
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(b) If Borrower fails to discharge any lien, encumbrance, charge, or claim in
the manner required in this Section,then in addition to any other right or remedy, the County
may(but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at
Borrower's expense. Alternately,the County may require Borrower to immediately deposit with
the County the amount necessary to satisfy such lien or claim and any costs,pending resolution
thereof. The County may use such deposit to satisfy any claim or lien that is adversely
determined against Borrower.
(c) Borrower shall file a valid notice of cessation or notice of completion
upon cessation of rehabilitation on the Development for a continuous period of thirty(30) days
or more, and take all other reasonable steps to forestall the assertion of claims of lien against the
Property. Borrower authorizes the County, but without any obligation, to record any notices of
completion or cessation of labor, or any other notice that the County deems necessary or
desirable to protect its interest in the Development and the Property. -
Section 3.13 Inspections.
Borrower shall permit and facilitate, and shall require its contractors.to permit and
facilitate, observation and inspection at the Development by the County and by public authorities
during reasonable business hours for the purposes of determining compliance with this
Agreement.
Section 3.14 Approved Development Budget; Revisions to Budget.
As of the date of this Agreement, the County has approved the Approved Development
Budget. Borrower shall submit any required amendments to the Approved Development Budget
to the County for approval within five (5) days of the date Borrower receives information
indicating that actual costs of the Development vary or will vary from the costs shown on the
Approved Development Budget. Written consent of the County shall be required to amend the
Approved Development Budget.
Section 3.15 Developer Fee.
The maximum cumulative developer fee that may be paid to any entity or entities
providing development services to the Development, whether paid up-front or on a deferred
basis, shall not exceed Three Hundred Eight Thousand Thirty Seven Dollars ($308,037).
Section 3.16 Capital Contributions,
The Borrower shall cause its general partner and limited partner to make the capital
contributions described in subsection. 1.1(d)(iv) and(v) above, and shall utilize such funds to pay
costs of the Development, consistent with the Approved Development Budget.
Section 3.17 NEPA Mitigation Requirements.
Because the project undertaken pursuant to this Agreement is exempt from NEPA
requirements under the categorical exclusion set forth in 24 C.F.R. 58.35(3)(ii), the Borrower
need not undertake NEPA mitigation requirements.
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ARTICLE 4. LOAN REQUIREMENTS
Section 4.1 Compliance with Project Agreement.
Borrower shall comply with the terms of the Project Agreement, and any breach under
the Project Agreements subject to the notice and cure periods set forth in Section 6.1(c)below,
shall be considered a Default under this Agreement. The Project Agreement a hereby
incorporated into this Agreement by this reference.
Section 4.2 Financial Accountings and Post-Completion Audits.
No later than sixty(60) days following completion of rehabilitation of the Development,
Borrower shall provide to County a financial accounting of all sources and uses of funds for the
Development. No later than one hundred fifty (150) days following completion of rehabilitation
of the Development, Borrower shall submit an audited financial report showing the sources and
uses of all funds utilized for the Development.
Section 4.3 Annual Operating Budget.
At the beginning of each year of the Term, Borrower shall provide to the County an
annual budget for the operation of the Development. Unless rejected by the County in writing
within fifteen (15) days after receipt of the budget, said budget shall be deemed accepted. If
rejected by the County in whole or in part, Borrower shall submit a new or corrected budget
within thirty(30) calendar days of notification of the County's rejection and the reasons
therefore. The provisions of this Section relating to time periods for resubmission of new or
corrected budgets shall continue to apply until such budget has been approved by the County.
Section 4.4 Information.
Borrower shall provide any information reasonably requested by the County in
connection with the Development, including (but not limited to) any information required by
HUD in connection with Borrower's use of the Loan funds.
Section 4.5 Records.
(a) The Borrower shall keep and maintain at the Development, or elsewhere
with the County'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 Borrower's compliance with the terms and provisions
of this Agreement. Books, records and accounts relating to Borrower's compliance with the
terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in
accordance with generally accepted accounting principles consistently applied,and shall be
consistent with requirements of this Agreement. All such books, records, and accounts shall be
open to and available for inspection and copying by HUD, the County, its auditors or other
authorized representatives at reasonable intervals during normal business hours. Copies of all
tax returns and other reports that Borrower may be required to furnish to any governmental
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agency shall at all reasonable times be open for inspection by the County at the place that the
books,records and accounts of the Borrower are kept. The Borrower shall preserve such records
for a period of not less than five (5)years after the creation of such records in compliance with
all HUD records and accounting requirements including but not limited to those set forth in 24
C.F.R. Section 570.506 and Section 570.502(b). 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 Borrower shall retain such records until
such action and all related issues are resolved. Such records shall include all invoices, receipts,
and other documents related to expenditures from the Loan funds. Records must be kept
accurate and current. Such records shall include but not be limited to:
(i) Records providing a full description of the activities undertaken
with the use of the CDBG Loan Funds;.
(ii) _Records demonstrating that each activity undertaken meets one of
the national objectives of the CDBG program set forth in 24 C.F.R. 570.208;
(iii) Records demonstrating compliance with the HUD property
standards and lead-based paint requirements;
(iv) Records demonstrating compliance with the affordability and
income requirements for tenants;
(v) Records required to determine the eligibility of activities;
(vi) Records documenting compliance with the fair housing and equal
opportunity requirements, as applicable;
(vii) Records demonstrating compliance with Section 3, and labor
requirements, including certified payrolls from the Borrower's general contractor evidencing that
applicable prevailing wages have been paid;
(viii) Financial records as required by 24 C.F.R. 570.502, and OMB
Circular A-110 (24 C.F.R. Part 84);
(ix) Other records necessary to document compliance with Subpart K
of 24 C.F.R. Part 570 and 24 C.F.R. 92.508; and
(x) Certified payrolls from the Borrower's general contractor
evidencing that applicable prevailing wages have been paid.
(b) The County shall notify Borrower of any records it deems insufficient.
Borrower shall have fifteen(15) calendar days after the receipt of such a notice to correct any
deficiency in the records specified by the County in such notice, or if a period longer than fifteen
(15) days is reasonably necessary to correct the deficiency, then Borrower shall begin to correct
the deficiency within fifteen(15) days and correct the deficiency as soon as reasonably possible.
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Section 4.6 County Audits.
Each year, Borrower shall provide the County with a copy of Borrower's annual audit,
which shall include information on all of Borrower's activities and not just those pertaining to the
Development. In addition, the County or any designated agent or employee of the County at any
time shall be entitled to audit all of Borrower's books,records, and accounts pertaining thereto.
Such audit shall be conducted during normal business hours at the principal place of business of
Borrower and other places where records are kept. Immediately after the completion of an audit,
the County shall deliver a copy of the results of such audit to Borrower.
Section 4.7 CDBG Requirements.
(a) Borrower shall comply with all applicable laws and regulations governing
the use of the CDBG Loan Funds as set forth in 24 C.F.R. Part 570, including but not limited to,
the requirements of the Regulatory Agreement and the Project Agreement. 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 County;
thereafter,these requirements shall be deemed local County requirements.
(b) The laws and regulations governing the use of the Loan funds include (but
are not limited to) the following:
(i) Environmental and Historic Preservation. 24 C.F.R. Part 58,
which prescribes procedures for compliance with the National Environmental Policy Act of 1969
(42 U.S.C. Sections 4321-4361), and the additional laws and authorities listed at 24 C.F.R.
Section 58.5.
(ii) 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.
(iii) Debarred, Suspended or Ineligible Contractors. The prohibition on
the use of debarred, suspended, or ineligible contractors set forth in 24 C.F.R. Part 24.
(iv) Civil Rights,Housing and Community Development, and Age
Discrimination Acts. The Fair Housing Act(42 U.S.C. Section 3601 et seq.)and implementing
regulations at 24 C.F.R. Part 100; 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 U.S.C. Section 794, et seq.);the Age Discrimination Act of 1975
(42 U.S.C. Section 6101, et seq.); Executive Order 11063 as amended by Executive Order 12259
and implementing regulations at 24 C.F.R. Part 107; Executive Order 11246 as amended by
Executive Orders 11375, 12086, 11478, 12107; Executive Order 11625 as amended by
Executive Order 12007; Executive Order 12432; Executive Order 12138 as amended by
Executive Order 12608.
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(v) Lead-Based Paint. The requirement of the Lead-Based Paint
Poisoning Prevention Act, as amended(42 U.S.C. Section 4821 et seq.),the Residential Lead-
Based Paint Hazard Reduction Act(42 U.S.C. Section 4851 et seg.), and implementing
regulations at 24 C.F.R. Part 35.
(vi) Relocation. The requirements of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. Section 4601, et seMc.),
and implementing regulations at 49 C.F.R. Part 24; Section 104(d) of the Housing and
Community Development Act of 1974 and implementing regulations at 24 C.F.R. Part 42; 24
C.F.R. Section 570.606; and California Government Code Section 7260 et seg. and
implementing regulations at 25 California Code of Regulations Sections 6000 et sem. If and to
the extent that rehabilitation of the Development results in the permanent or temporary
displacement of residential tenants, homeowners, or businesses, then Borrower shall comply with
all applicable local, state, and federal statutes and regulations with respect to relocation planning,
advisory assistance, and payment of monetary benefits. Borrower shall prepare and.submit a
relocation plan to the County for approval. Borrower shall be solely responsible for payment of .
any relocation benefits to any displaced persons and any other obligations.associated with
complying with such relocation laws. The Borrower shall indemnify, defend (with counsel
reasonably chosen by the County), and hold harmless the County against all claims which arise
out of relocation obligations to residential tenants, homeowners, or businesses permanently or
temporarily displaced by the Development.
(vii) Discrimination against the Disabled. The requirements of Section
504 of the Rehabilitation Act of 1973 (29 U.S.C. Section 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 U.S.C. Sections 4151-
4157) and the applicable requirements of Title II and/or Title III of the Americans with
Disabilities Act of 1990 (42 U.S.C. Section 12131 et SeMc.), and federal regulations issued
pursuant thereto.
(viii) Clean Air and Water Acts. The Clean Air Act, as amended, 42
U.S.C. Section 7401 et seg., the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 et seq., and the regulations of the Environmental Protection Agency with respect
thereto, at 40 C.F.R. Part 1500, as amended from time to time.
(ix) Uniform Administrative Requirements - CDBG. The requirements
of 24 C.F.R. 570.502 regarding cost and auditing requirements.
(x) Training Opportunities. The requirements of Section 3 of the
Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u ("Section 3"),
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
Development be awarded to business concerns which are located in, or owned in substantial part
by persons residing in, the areas of the Development. Borrower agrees to include the following
language in all subcontracts executed under this Agreement.
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(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 U.S.C. 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.
(2) The parties to this contract agree to comply with HUD's
regulations in 24 C.F.R. Part 135, 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.
(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.
(4) The contractor agrees to include this Section 3 clause in
every subcontract subject to compliance with regulations in 24 C.F.R. Part 135, 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
C.F.R. Part 135. 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 C.F.R. Part 135.
(5) The contractor will certify that any vacant employment
positions, including training positions, that are filled (1) after the contractor is selected but before
the contract is executed, and(2) with persons other than those to whom the regulations of 24
C.F.R. Part 135 require employment opportunities to be directed, were not filled to circumvent
the contractor's obligations under 24 C.F.R. Part 135.
(6) Noncompliance with HUD's regulations in 24 C.F.R. Part
135 may result in sanctions, termination of this contract for default, and debarment or suspension
from future HUD assisted contracts.
(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 U.S.C. Section 450e) 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)
r
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agree to comply with Section 3 to the maximum extent feasible, but not in derogation of
compliance.with section 7(b).
(xi) Labor Standards. The prevailing wage requirements of the Davis-
Bacon Act and implementing rules and regulations (40 U.S.C. Sections 3141-3148); the
Copeland "Anti-Kickback" Act (40 U.S.C. Section 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—CWHSSA (40 U.S.C. Sections 3701-3708)
which requires that workers receive 'overtime" compensation at a rate of 1-1/2 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.
(xii) Drug Free Workplace. The requirements of the Drug Free
Workplace Act of 1988 (P.L. 100-690) and implementing regulations at 24 C.F.R. Part 24.
(xiii) Anti-Lobbying: Disclosure Requirements. The disclosure
requirements and prohibitions of 31 U.S.C. Section 1352 and implementing regulations at 24
C.F.R. Part 87.
(xiv) Historic Preservation. The Borrower shall comply with the historic
preservation requirements set forth in the National Historic Preservation Act of 1966, as
amended(16 U.S.C. Section 470) and the procedures set forth in 36 C.F.R. Part 800.
(xv) HUD Regulations. Any other HUD regulations present or as may
be amended, added, or waived in the future pertaining to the Loan funds, including but not
limited to HUD regulations as may, be promulgated regarding subrecipients.
(xvi) Religious Organizations. If Borrower is a religious organization,
as defined by the CDBG requirements, Borrower shall comply with all conditions prescribed by
HUD for the use of CDBG 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 C.F.R. Section 570.2000).
Section 4.8 Hazardous Materials.
(a) Borrower shall keep and maintain the Property in compliance with, and
shall not cause or permit the Property 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 Property including,but not limited to, soil and ground water conditions.
Borrower shall not use, generate, manufacture, store or dispose of on,under, or about the
Property or transport to or from the Property 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
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foregoing as may be customarily used in construction of projects like the Development or kept
and used in and about residential property of this type.
(b) Borrower shall immediately advise the County in writing if at any time it
receives written notice'o£ (i) any and all enforcement, cleanup, removal or other governmental
or regulatory,actions instituted, completed or threatened against Borrower or the Property
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 Borrower or the Property 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)
Borrower's discovery of any occurrence or condition on any real property adjoining or in the
vicinity of the Property that could cause the Property or any part thereof to be classified as
"border-zone property" (as defined in California Health and Safety Code Section 25117.4)under
the provision of California Health and Safety Code Sections 25220 et seq., or any regulation
adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under any Hazardous Materials Law.
(c) The County 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 Borrower.,
Borrower shall indemnify and hold harmless the County and its boardmembers, supervisors,
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 Property including without limitation: (i) all foreseeable consequential
damages; (ii)the costs of any required or necessary repair, cleanup or detoxification of the
Property and the preparation and implementation of any closure, remedial or other required
plans; and(iii) all reasonable costs and expenses incurred by the County,in connection with
clauses (i) and (ii), including but not limited to reasonable attorneys' fees and consultant's fees.
This indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision
include,but are not limited to: (1) losses attributable to diminution in the value of the Property;
(2) loss or restriction of use of rentable space on the Property; (3) adverse effect on the
marketing of any rental space on the Property: and(4)penalties and fines levied by, and
remedial or enforcement actions of any kind issued by any regulatory agency (including but not
limited to the costs of any required testing, remediation, repair, removal, cleanup or
detoxification of the Property and surrounding properties). This obligation to indemnify shall
survive termination of this Agreement.
(d) Without the County's prior written consent,which shall not be
unreasonably withheld, Borrower shall not take any remedial action in response to the presence
of any Hazardous Materials on, under or about the Property, 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 County's
reasonable judgment, impair the value of the County's security hereunder;provided, however,
that the County's prior consent shall not be necessary in the event that the presence of Hazardous
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Materials on, under, or about the Property 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 County's consent before taking such
action, provided that in such event Borrower shall notify the County as soon as practicable of
any action so taken. The County agrees not to withhold its consent, where such consent is
required hereunder, if(i) a particular remedial action is ordered by a court of competent
jurisdiction; (ii) Borrower will or may be subjected to civil or criminal sanctions or penalties if it,
fails to take a required action; (iii)Borrower establishes to the reasonable satisfaction of the
County that there is no reasonable alternative to such remedial action which would result in less
impairment of the County's security hereunder; or(iv) the action has been agreed to by the
County.
(e) Borrower hereby acknowledges and agrees that(i) this Section is intended
as the County's written request for information(and Borrower's response) concerning the
environmental condition of the Property 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 Property is intended by the Parties to be an
"environmental provision" for purposes of California Code of Civil Procedure Section 736.
(f) In the event that any portion of the Property 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
County's or the trustee's rights and remedies under the Deed of Trust, the County 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 Property and(2) exercise (i)the
rights and remedies of an unsecured creditor, including reduction of its claim against the
borrower to judgment, and (ii) any other rights and remedies permitted by law. For purposes of
determining the County's right to proceed as an unsecured creditor under California Code of
Civil Procedure Section 726.5(a), the Borrower 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 Property and the Borrower 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 County 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 Property is environmentally impaired, plus interest thereon at the lesser of ten
percent(10%) and the maximum rate permitted by law,until paid, shall be added to the
indebtedness secured by the Deed of Trust and shall be due and payable to the County upon its
demand made at any time following the conclusion of such action.
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Section 4.9 Maintenance and Damage.
(a) During the course of both rehabilitation and operation of the
Development,Borrower shall maintain the Development and the Property in good repair and in a
neat, clean and orderly condition. If there arises a condition in contravention of this requirement,
and if Borrower has not cured such condition within thirty(30)days after receiving a County
notice of such a condition,then in addition to any other rights available to the County, the
County 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 Property.
(b) Subject to the requirements of senior lenders, and if economically feasible
in the County's reasonable judgment after consultation with the Borrower, if any improvement
now or in the future on the Property is damaged or destroyed,then Borrower shall, at its cost and
expense, diligently undertake to repair or restore such improvement consistent with the plans and
specifications approved by the County with such changes as have been approved by the County.
Such work or repair shall be commenced no later than the later of one hundred twenty(120)
days, or such longer period approved by the County 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 Borrower shall make up the deficiency. If Borrower does not
make repairs, then any insurance proceeds collected for such damage or destruction shall be
distributed as if such proceeds were Residual Receipts (as defined in the Intercreditor
Agreement), subject to the rights of the Senior Lenders.
Section 4.10 Fees and Taxes.
Borrower 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 Property or the
Development to the extent owned by Borrower, and shall pay such charges prior to.delinquency.
However, Borrower 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 County, Borrower deposits with the County any funds or other forms•
of assurance that the County in good faith from time to time determines appropriate to protect the
County from the consequences of the contest being unsuccessful.
Section 4.11 Notice of Liti ag tion.
Borrower shall promptly notify the County in writing of any litigation which has the
potential to materially affect Borrower or the Property and of any claims or disputes that involve
a material risk of such litigation.
Section 4.12 Operation of Development as Affordable Housing.
(a) Promptly after completion of rehabilitation, the Borrower shall operate the
Development as an affordable housing development consistent with HUD's requirements for use
of the CDBG Loan Funds and the Regulatory Agreement.
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(b) Before leasing any Unit in the Development, Borrower shall submit its
proposed form of lease agreement for the County's review and approval.
(c) Before leasing the Development, the Borrower must provide the County,
for its review and approval,with Borrower's written Tenant Selection Plan.
(d) Borrower must determine the income eligibility of each Tenant household
in the Development pursuant to the County's approved tenant certification procedures within
sixty(60) days before the household's expected occupancy of one of the Development's Units.
The Borrower shall certify each Tenant's income on an annual basis.
(e) The maximum household income of a Tenant in'the Development, and the
total charges for rent,utilities, and related services to each Tenant, shall be maintained as
provided in the Regulatory Agreement.
Section 4.13 Nondiscrimination.
The Borrower 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, age; disability, sex, sexual orientation, marital status, ancestry or
national origin in the sale, lease, sublease, transfer,use, occupancy,tenure or enjoyment of the
Property, nor shall the Borrower or any person claiming under or through the 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, subtenants, sublessees or
vendees in the Property. The foregoing covenant shall run with the land.
Section 4.14 Transfer
(a) For purposes of this Agreement, "Transfer" shall mean any sale,
assignment, or transfer, whether voluntary or involuntary, of(i) any rights and/or duties under
this Agreement, and/or(ii) any interest in the Development, including (but not limited to) a fee
simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a
security interest, or an interest evidenced by a land contract by which possession of the
Development is transferred and Borrower retains title. "Transfer" shall exclude the leasing of
any single unit in the Development to an occupant in compliance with the Regulatory
Agreement. The County Deputy Director—Redevelopment is authorized to execute assignment
and assumption agreements on behalf of the County to implement any approved Transfer.
(b) No Transfer shall be permitted without the prior written consent of the
County, which the County may withhold in its sole discretion. The Loan shall automatically
accelerate and be due in full upon any Transfer made without the prior written consent of the
County.
(c) The County approves the grant of the security interests in the Property
described in Section 2.4 above.
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(d) Borrower anticipates syndicating the low income housing tax credits that
will be generated by the Development, which syndication will require the transfer of limited
partnership interests in the Borrower. The County hereby approves the initial Transfer of the
limited partnership interest in the Borrower,provided that: (i)the amended partnership
agreement of the Borrower provides for capital contributions of the general and limited partners
of the Borrower consistent with Subsections 1.1(d)(iv)and (v)above and is first approved by the
County; (ii) all documents associated with the low income housing tax credit syndication of the
Development are submitted to the County for approval prior to execution,which approval shall
not be unreasonably withheld.
(e) The County hereby approves future Transfers of the limited partner
interest 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
County; and (ii)in subsequent Transfers, a wholly owned affiliate of the initial limited partner
retains a membership or partnership interest and serves as a managing member or managing
general partner of the successor limited partner. The limited partner may Transfer its interest in
the Borrower to a non-affiliated entity, subject to the prior written consent of the County, which
consent shall not be unreasonably withheld.
(f) The County hereby approves the Transfer of the general partner interest in
Borrower to a nonprofit affiliate of EAH controlled by EAH.
(g) The County hereby approves a Transfer of the Property from the Borrower
to EAH or a non-profit affiliate of EAH, and an assumption of the 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 of 1986 (26 U.S.C. Section 42 (i)(1)), pursuant to an option agreement as
described in Borrower's partnership agreement(the "Option Agreement") or a right of first
refusal as described in 26 U.S.C. Section 42(i)(7) (the-"Right of First Refusal"), provided that the
transferee expressly assumes the obligations of the Borrower under the Loan Documents,
utilizing a form of assignment and assumption agreement to be provided by the County. The
County also hereby approves a Transfer of the limited partner interest in the Borrower to EAH or
non-profit affiliate of EAH pursuant to the Option Agreement or the Right of First Refusal.
(h) In the event the general partner of Borrower is removed by the limited
partner of Borrower for cause following default under the Borrower's partnership agreement, the
County 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 County, which
approval shall not be withheld unreasonably.
Section 4.15 Insurance Requirements.
The Borrower shall maintain the following insurance coverage throughout the Term of
the Loan:
(a) Worker's Compensation insurance to the extent required by law, including
Employer's Liability coverage, with limits not less than One Million Dollars (51,000,000) each
accident.
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863\751572101.4
r
(b) Comprehensive General Liability insurance with limits not less than Two
Million Dollars ($2,000,000)each occurrence combined single limit for Bodily Injury and
Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform
Property Damage, Products and Completed Operations.
(c) Comprehensive Automobile Liability insurance with limits not less than
One Million Dollars ($1,000,000) each'occurrence combined single limit for Bodily Injury and
Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable.
(d) Builders' Risk insurance during the course of the rehabilitation, and, upon
completion of the rehabilitation,property insurance covering the Development, in form
appropriate for the nature of such property, covering all risks of loss, excluding earthquake, for
one hundred percent(100%) of the replacement value, with deductible, if any, acceptable to the
County,naming the County as a Loss Payee, as its interests may appear. Flood insurance shall
be obtained if required by applicable federal regulations.
(e) The Borrower shall cause any general contractor, agent, or subcontractor
working on the Development under direct contract with the Borrower or subcontract to maintain
insurance of the types and in at least the minimum amounts described in subsections (a), (b), and
(c) above, except that the limit of liability for comprehensive general liability insurance for
subcontractors shall be One Million Dollars ($•1,000,000), and shall require that such insurance
shall meet all of the general requirements of subsections (f), (g), and(h)below, including,
without limitation, the requirement of subsection(g). Liability and Comprehensive Automobile
Liability insurance to be maintained by such contractors and agents pursuant to this subsection
shall name as additional insureds the; County, its officers, agents, employees and members of the.
County Board of Supervisors.
(f) The required insurance shall be provided under an occurrence form, and
Borrower shall maintain the coverage described in subsections (a) through (d) 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
three'times the occurrence limits specified above.
(g) Comprehensive General Liability, Comprehensive Automobile Liability
and Property insurance policies shall be endorsed to name as an additional insured the County
and its officers, agents, employees and members of the County Board of Supervisors.
(h) All policies and bonds shall contain (i)the agreement of the insurer to give
the County at least thirty(30) days' notice prior to cancellation (including, without limitation, for
non-payment of premium) or any material change in said policies; (ii)an agreement that such
policies are primary and non-contributing with any insurance that may be carried by the County;
(iii) a provision that no act or omission of the Borrower shall affect or limit the obligation of the
insurance carrier to pay the amount of any loss sustained; and(iv) a waiver by the insurer of all
rights of subrogation against the County and its authorized parties in connection with any loss or
damage thereby insured against.
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Section 4.16 Anti-Lobbving Certification.
The Borrower certifies,to the best of Borrower's knowledge or belief, that:
(a) 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 agency, 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.
(b) If any 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
agency, 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.
(c) 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,U.S.0 Section 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.
Section 4.17 Payment of Other Indebtedness:Notice of Defaults
. (a) Borrower shall promptly pay the principal and interest when due on any
other indebtedness related to the Development.
(b) Borrower shall promptly notify the County in writing of any defaults
declared under any other financing for the Development by the lender of such financing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1 Representations and Warranties.
Borrower hereby represents and warrants to the County as follows:
(a) Organization. Borrower is a duly organized California limited
partnership, validly existing and 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.
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863\75\572101.4
(b) Authority of Borrower. Borrower 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.
(c) Authority of Persons Executing Documents. 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 executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all
actions required under Borrower'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.
(d) 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 Borrower enforceable
against it in accordance with their respective terms.
(e) 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 whatsoever binding on Borrower, or any provision of the organizational
documents of Borrower, or will conflict with or constitute a breach of or a default under any
agreement to which Borrower is a party,or will result in the creation or imposition of any lien
upon any assets or property of Borrower, other than liens established pursuant hereto.
(f) Compliance With Laws; Consents and Approvals. The rehabilitation 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, rules and
regulations of the fire marshal,health officer,building inspector and other officers of any such
government or agency.
(g) Pending Proceedings. Borrower is not in default under any law or
regulation or under any order of any court,board, commission or agency whatsoever, and there
are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened
against or affecting Borrower or the Development, at law or in equity, before or by any court,
board, commission or agency whatsoever which might, if determined adversely to Borrower,
materially affect Borrower's ability to repay the Loan or impair the security to be given to the
County pursuant hereto.
(h) Title to Land. At the time of recordation of the Deed of Trust, Borrower
will have good and marketable fee title to the Development and there will exist thereon or with
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863\75\572101.4
respect thereto no mortgage, lien,pledge or other encumbrance of any character whatsoever
other than liens for current real property taxes and liens in favor of the County or approved in
writing by the County.
(i) Financial Statements. The financial statements of Borrower and other
financial data and information furnished by Borrower to the County fairly and accurately present
the information contained therein as of the date thereof. As of the date of this Agreement,there
has not been any adverse, material change in the financial condition of Borrower from that
shown by such financial statements and other data and information.
0) Sufficient Funds. Borrower holds sufficient funds and/or binding
commitments for sufficient funds to complete the acquisition of the Property and the
rehabilitation of the Development in accordance with the plans and specifications approved by
the County.
(k) Taxes. Borrower 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 the Property 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. There is no proposed tax assessment
against Borrower or any of its subsidiaries that could, if made,be reasonably expected to have a
material adverse effect upon the Property, liabilities (actual or contingent), operations, condition
(financial or otherwise)or prospects of the Borrower and its subsidiaries, taken as a whole,
which would be expected to result in a material impairment of the ability of Borrower to perform
under any Loan Document to which it is a party, or a material adverse effect upon the legality,
validity, binding effect or enforceability against Borrower of any Loan Document.
ARTICLE 6. DEFAULT AND REMEDIES
Section 6.1 Events of Default.
Each of the following shall constitute a 'Default"by Borrower under this Agreement:
(a) Failure to Construct. Failure of Borrower to,commence and complete
rehabilitation of the Development within the times set forth in Article 3 above;
(b) Failure to Make Payment. Failure to repay the principal and any interest
on the Loan within ten(10) days after receipt of written notice from the County to the borrower
and to any limited partner of the Borrower who has requested written notice from the County of
such failure (the "Permitted Limited Partner"), that such payment is due pursuant to the Loan
Documents.
(c) Breach of Covenants. Failure by Borrower 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 County to the Borrower and to the Permitted Limited Partner or, if the breach cannot be
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863\75\572101.4
cured within thirty(30) days, the Borrower shall not be in breach so long as Borrower is
diligently undertaking to cure such breach and such breach is cured within ninety(90) days;
provided, however, that if a different period or notice requirement is specified under any other
section of this Article 6, the specific provisions shall control. The Permitted Limited Partner
shall have thirty(30) additional days to cure a breach beyond the cure periods for the Borrower
described in this subsection. If a Permitted Limited Partner cannot cure a Default because the
Borrower's general partner is in bankruptcy and/or because the cure requires removal of the
general partner of the Borrower and the Permitted Limited Partner is proceeding diligently to
remove the general partner of the Borrower in order to effect a cure of the Default,the cure
period shall be extended for such reasonable time as is necessary for the Permitted Limited
Partner to effect a cure of the Default, but in no event longer than one hundred eighty(180) days
after the date of receipt by the Permitted Limited Partner of written notice of Default.
(d) Default Under Other Loans. A default is declared under any other
financing for the Development by the lender of such financing, subject to applicable notice and
cure period in such financing documents.
(e) Insolvency. A. court having jurisdiction shall have made or entered any
decree or order:
(i) adjudging Borrower or Borrower's general partner, if Borrower is a
partnership, or Borrower's managing member, if Borrower is a limited liability company,to be
bankrupt or insolvent,
(ii) approving as properly filed a petition seeking reorganization of
Borrower or Borrower's general partner, if Borrower is a partnership, or Borrower's managing
member, if Borrower is a limited liability company, or seeking any arrangement for Borrower or
Borrower's general partner, if Borrower is a partnership, or Borrower's managing member, if
Borrower is a limited liability company,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 Borrower
or Borrower's general partner, if Borrower is a partnership, or Borrower's managing member, if
Borrower is a limited liability company, in bankruptcy or insolvency or for any of their
properties,
(iv) directing the winding up or liquidation of Borrower or Borrower's
general partner, if Borrower is a partnership, or Borrower's managing member, if Borrower is a
limited liability company,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) calendar days; or
(v) Borrower or Borrower's general partner, if Borrower is a
partnership, or Borrower's managing member, if Borrower is a limited liability company, 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.
30
863\75572101.4
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 County, the indebtedness
evidenced by the Note.
(f) Assignment, Attachment. Borrower or Borrower's general partner, if
Borrower is a partnership, or Borrower's managing member, if Borrower is a limited liability
company, 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) calendar 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
paragraph shall act to accelerate automatically,without the need for any action by the County,
the indebtedness evidenced by the Note.
(g) Suspension, Termination. Borrower or Borrower's general partner, if
Borrower is a partnership, or Borrower's managing member, if Borrower is a limited liability
company, shall have voluntarily suspended its business or, if Borrower is a partnership, the
partnership shall have been dissolved or terminated, other than a technical termination of the
partnership for tax purposes.
(h) Liens on Property and the Development. There shall be filed any claim of
lien(other than liens approved in writing by the County) 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 County.
(i) Condemnation. The condemnation, seizure, or appropriation of all or the
substantial part of the Property and the Development.
(j) Unauthorized Transfer. Any Transfer other than as permitted by
Section 4.15.
(k) Representation or Warranty Incorrect. Any Borrower representation or
warranty contained in this Agreement, or in any application, financial statement, certificate, or
report submitted to the County in connection with any of the Loan Documents,proving to have
been incorrect in any material respect when made. After issuance of the certificates of
occupancy for the Development, Default may be declared under this subsection only if the
failure of representation or warranty also has a material adverse effect on the operation of the
Development.
Section 6.2 Remedies.
The occurrence of any Default hereunder following the expiration of all applicable notice
and cure periods will, either at the option of the County or automatically where so specified,
relieve the County of any obligation to make or continue the Loan and shall give the County the
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863\75572101.4
right to proceed with any and all remedies set forth in this Agreement and the Loan Documents,
including but not limited to the following:
(a) Acceleration of Note. The County shall have the right to cause all
indebtedness of the Borrower to the County under this Agreement and the Note, together with
any accrued interest thereon, to become immediately due and payable. The Borrower waives all
right to presentment, demand, protest or notice of protest or dishonor. The County may proceed
to enforce payment of the indebtedness and to exercise any or all rights afforded to the County as
a creditor and secured party under the law including the Uniform Commercial Code, including
foreclosure under the Deed of Trust. The Borrower shall be liable to pay the County on demand
all reasonable expenses, costs and fees (including,without limitation,reasonable attorney's fees
and expenses)paid or incurred by the County in connection with the collection of the Loan and
the preservation, maintenance, protection, sale, or other disposition of the security given for the
Loan.
(b) Specific Performance. The County shall have the right to mandamus or
other suit, action or proceeding at law or in equity to require Borrower to perform its obligations
and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or
in violation of the provisions of the Loan Documents.
(c) Right to Cure at Borrower's Expense. The County shall have the right (but
not the obligation)to cure any monetary default by Borrower under a loan other than the Loan.
The Borrower agrees to reimburse the County for any funds advanced by the County to cure a
monetary default by Borrower upon demand therefore, together with interest thereon at the lesser
of the maximum rate permitted by law and ten percent(10%)per annum (the "Default Rate")
from the date of expenditure until the; date of reimbursement.
(d) Special Remedy for Breach of Use Requirement. Pursuant to 24 C.F.R.
570.503(b)(7)(ii), if after acquisition of the Property, the Borrower changes the planned use of
the Property to a non-CDBG eligible use,or if after completion of construction of the
Development,the Borrower ceases to use the Development to primarily benefit low and
moderate income persons, the County shall have the right to require the Borrower to pay to the
County an amount equal to the current market value'of the Development(as determined by
appraisal) less any portion of that value attributable to non-County Loan funds used for the
development of the Development(based on a pro-rata allocation of funds used by Borrower in its
development of the Development). Funds recovered from Borrower pursuant to this subsection
shall be credited against amounts outstanding under the Note.
Section 6.3 Right of Contest.
Borrower 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 County or the rights of the County
hereunder.
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863V75\572101.4
Section 6.4 Remedies Cumulative.
No right, power, or remedy given to the County 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 County by the terms of any such instrument, or by any statute or
otherwise against Borrower and any other person. Neither the failure nor any delay on the part
of the County to exercise any such rights and remedies shall operate as a waiver thereof, nor
shall any single or partial exercise by the County of any such right or remedy preclude any other
or further exercise of such right or remedy, or any other right or remedy.
ARTICLE 7. GENERAL PROVISIONS
Section 7.1 Relationship of Parties.
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 County and Borrower or
its agents, employees or contractors, and Borrower 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. Borrower has and retains the
right to exercise full control of employment, direction, compensation, and discharge of all
persons assisting in the performance of services under the Agreement. In regards to the
rehabilitation and operation of the Development, Borrower 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. Borrower shall be solely responsible for its own acts and those of its
agents and employees.
Section 7.2 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the County
by any person that Borrower may have employed or with whom Borrower 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 purchase of the Property, the rehabilitation or
operation of the Development, and Borrower shall include similar requirements in any contracts
entered into for the rehabilitation or operation of the Development.
Section 7.3 Amendments.
No alteration or variation of the terms of this Agreement shall be valid unless made in
writing by the Parties. The County Deputy Director—Redevelopment is authorized to execute
on behalf of the County amendments to the Loan Documents or amended and restated Loan
Documents as long as any material change in the amount or terms of this Agreement is approved
by the County Board of Supervisors, or in the event the amounts or terms of financing provided
33
863\75\572101.4
by other parties for the Development is revised, requiring conforming amendments to the County
Loan documents.
Section 7.4 Indemnification.
The Borrower shall indemnify, defend and hold the County harmless against any and all
claims, suits, actions, losses and liability of every kind, nature and description made against it
and expenses (including reasonable attorneys' fees) which arise out of or in connection with this
Agreement, including but not limited to the purchase of the Property, development;
rehabilitation, marketing and operation of the Development, except to the extent such claim
arises from the grossly negligent or willful misconduct of the County, its agents, and its
employees. The provisions of this Section shall survive the expiration of the Term and the
reconveyance of the Deed of Trust.
Section 7.5 Non-Liability of County Officials, Employees and Agents.'
No member, official, employee or agent of the County shall be personally liable to
Borrower in the event of any default or breach by the County or for any amount which may
become due to Borrower or its successor or on any obligation under the terms of this Agreement.
Section 7.6 No Third Party Beneficiaries.
There shall be no third party beneficiaries to this Agreement.
Section 7.7 Discretion Retained By County.
The County's execution of this Agreement in no way limits the discretion of the County
in the permit and approval process in connection with the rehabilitation of the Development.
Section 7.8 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs, no person
described in Section 7.8(b)below who exercises or has exercised any functions or
responsibilities with respect to the activities funded pursuant to this Agreement or who is in a
position to participate in a decision-making process or gain inside information with regard to
such activities, may obtain a personal or financial interest or benefit from the activity, or have an
interest in any contract, subcontract or agreement with respect thereto, or the proceeds
thereunder, either for themselves or those with whom they have family or business ties, during,
or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that
the prohibition in this Section 7.8(a) is followed.
(b) The conflict of interest provisions of Section 7.8(a) above apply to any
person who is an employee, agent, consultant, officer, or any immediate family member of such
person, or any elected or appointed official of the County, or any person related within the third
(3rd) degree of such person.
(c) In accordance with California Government Code Section 1090 and the
Political Reform Act, California Government Code section 87100 et sem., no person who is a
director, officer,partner, trustee or employee or consultant of the Borrower, or immediate family
34
863\75\572101.4
member of any of the preceding, shall make or participate in a decision, made by the County or a
County board, commission or committee, if it is reasonably foreseeable that the decision will
have a material effect on any source of income, investment or interest in real property of that
person or Borrower. Interpretation of this section shall be governed by the definitions and
provisions used in the Political Reform Act, California Government Code Section 87100 et seq.,
its implementing regulations manual and codes, and Government Code Section 1090.
(d) Borrower shall comply with the conflict of interest provisions set forth in
24 C.F.R. Section 570.611.
Section 7.9 Notices, Demands and Communications.
Formal notices, demands, and communications between the Parties 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, to the principal office of the Parties as follows:
County:
County of Contra Costa
County Department of Conservation and Development—
Redevelopment Division
2530 Arnold Drive, Suite 190
Martinez, CA 94553
Attention: Deputy Director - Redevelopment
Borrower:
San Pablo Senior Associates 11, L.P.
c/o EAH
2169 East Francisco Boulevard
Suite B
San Rafael, CA 94901
Attention: Executive Director
With a copy to:
Attention:
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 as the
date of delivery or refusal of delivery(or attempted delivery if undeliverable).
35
863\75\572101.4
Section 7.10 Applicable Law.
This Agreement shall be governed by and construed in accordance with California law.
Section 7.11 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. This Agreement is intended to run with the land and
shall bind Borrower and its successors and assigns in the Property and the Development for the
entire Term, and the benefit hereof shall inure to the benefit of the County and its successors and
assigns.
Section 7.12 Attorneys' Fees.
i
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 7.13 Severabilitv.
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 7.14 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. 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) days from the
commencement of the cause and such extension of time is not rejected in writing by the other
Party within ten(10) days of receipt of the notice. In no event shall the County be required to
agree to cumulative delays in excess of one hundred eighty (180) days.
Section 7.15 County Approval.
The County has authorized the County Deputy Director-Redevelopment to execute the
Loan Documents and deliver such approvals or consents as are required by this Agreement, and
to execute estoppel certificates concerning the status of the Loan and the existence of Borrower
defaults under the Loan Documents. Any consents or approvals required under this Agreement
shall not be unreasonably withheld or made, except where it is specifically provided that a sole
discretion standard applies. The County shall not unreasonably delay in reviewing and
approving or disapproving any proposal by Borrower made in connection with this Agreement.
36
863\751572101.4
Section 7.16 Waivers.
Any waiver by the County of any obligation or condition in this Agreement must be in
writing. No waiver will be implied from any delay or failure by the County to take action on any
breach or default of Borrower or to pursue any remedy allowed under this Agreement or
applicable law. Any extension of time granted to Borrower 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 County to any act or omission by Borrower shall not be construed to
be a consent to any other or subsequent act or omission or to waive the requirement for the
County's written consent to future waivers.
Section 7.17 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and shall be disregarded in interpreting any part of the Agreement's provisions.
Section 7.18 Entire Understanding of the Parties
This Agreement constitutes the entire understanding and agreement of the Parties with
respect to the Loan. If there is any conflict between this Agreement and the Project Agreement,
then this Agreement shall control
Section 7.19 Multiple Originals; Counterpart.
This Agreement may be executed in multiple originals, each of which is deemed to be an
original, and may be signed in counterparts.
Remainder of Page Left Intentionally Blank
37
863\75\572101.4
• l
WHEREAS, this Agreement has been entered into by the undersigned as of the date first
above written.
COUNTY:
COUNTY OF CONTRA COSTA, a political
subdivision of the State of California
By:
James Kennedy
Deputy Director—Redevelopment
Form Approved by
Contra Costa County Counsel
on ' 2008 BORROWER:
SAN PABLO SENIOR ASSOCIATES II, L.P.,
a California limited partnership
By:
General Partner
By:
Name:
s
Its:
EAH:
EAH INC., a California nonprofit public benefit
corporation
By:
Name:
Its:
38
863\75\572101.4
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The land is situated in the State of California, County of Contra Costa, and is described as
follows:
A-1
863\75\572101.4
PROMISSORY NOTE
(Casa Adobe Apartments Loan Modification- CDBG)
$560,852 Martinez, California
, 2008
FOR VALUE RECEIVED, the undersigned San Pablo Senior Associates 11, L.P, a
California limited partnership ("Borrower") hereby promises to pay to the order of the County of
Contra Costa, a political subdivision of the State of California, 2530 Arnold Drive, Suite 190,
Martinez, California 94553 ("Holder"), a principal amount of up to Five Hundred Sixty .
Thousand Eight Hundred Fifty Two Dollars ($560,852) or so much thereof as is disbursed to
Borrower pursuant to the Loan Agreement (as defined below),plus interest thereon pursuant to
Section 2 below.
1. Borrower's Obli ag tion. This promissory note(the "Note") evidences Borrower's
obligation to pay Holder the principal amount of up to Five Hundred Sixty Thousand Eight
Hundred Fifty Two Dollars ($560,852) for the funds loaned to Borrower by Holder to finance the
acquisition and rehabilitation of the Property pursuant to the CDBG Loan Agreement between
Borrower and Holder of even date herewith (the "Loan Agreement"). All capitalized terms not
otherwise defined in this Note shall have the meanings set forth in the Loan Agreement.
2. Interest.
(a) The principal balance of this Note shall bear simple interest at the rate of
zero percent(0%)per annum from the date of this Note.
(b) Provided,however, if a Default occurs, interest on all of the Loan shall
begin to accrue,as of the date of Default and continuing until such time as the Loan funds are
repaid in full or the Default is cured, at the Default Rate.
3. Term and Repayment Requirements. The term of this Note shall commence on
the date of this Note and shall expire on the date which is fifty-five (55) years from the date the
date of this Note (the"Term"). This Note shall be due and payable as set forth in Section 2.7 of
the Loan Agreement and in the Intercreditor Agreement. All principal and interest (if any) for
this Loan shall be due in full on the earlier to occur of: (i)the date of any Transfer not authorized
by the Holder; (ii)the date of any Default under the Loan Documents; or(iii) the expiration of
the Term.
4. No Assumption. This Note shall not be assumable by the successors and assigns
of Borrower without the prior written consent of Holder.
1
863\75\579681.2
5. Security. This Note is to be secured by the Deed of Trust on the Property,
wherein Borrower is the trustor and.Holder is the beneficiary.
6. Terms of Payment.
(a) All payments due under this Note shall be paid in currency of the United
States of America, which at the time of payment is lawful for the payment of public and private
debts.
(b) All payments on this Note shall be paid to Holder at County Department
of Conservation and Development—Redevelopment Division, 2530 Arnold Drive, Suite 190,
Martinez, CA 94553, Attention: Deputy Director-Redevelopment, or to such other place as
Holder of this Note may from time to time designate.
(c) All payments on this Note shall be without expense to Holder, and
Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable
attorney's fees of Holder, incurred in connection with the payment of this Note and the release of
any security hereof.
(d) Notwithstanding any other provision of this Note, or any instrument
securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment
of any sums by Borrower pursuant to the terms of this Note would result in the payment of
interest which would exceed the amount that Holder may legally charge under the laws of the
State of California, then the amount by which payments exceed the lawful interest rate shall
automatically be deducted from the principal balance owing on this Note, so that in no event
shall Borrower be obligated under the terms of this Note to pay any interest which would exceed
the lawful rate.
(e) This Note shall become nonrecourse to Borrower,pursuant to and except
as provided in Section 2.8 of the Loan Agreement.
7. Default.
(a) Any of the following shall constitute an event of default under thisNote:
(i) Any failure to pay, in full, any payment required under this Note
when due following written notice by the Holder to Borrower and the Permitted Limited Partner,
of such failure and ten (10) days opportunity to cure;
(ii) Any failure in the performance by Borrower of any term,
condition, provision or covenant set forth in this Note subject to the notice and cure period set
forth in Section 6.1(c) of the Loan Agreement;
(iii) The occurrence of any event of default under the Loan Agreement,
the Deed of Trust, or the Regulatory Agreement, or other instrument securing the obligations of
2
863\75\579681.2
Borrower under this Note or under any other promissory notes hereafter issued by Borrower to
Holder pursuant to the Loan Agreement or the Deed of Trust, subject to notice and cure periods,
if any, set forth therein.
(b) Upon the occurrence of one or more of the foregoing events of default, the
entire unpaid principal balance, together with all interest thereon, and together with all other
sums then payable under this Note and the Deed of Trust shall at the option of Holder become
immediately due and payable upon written notice by Holder to Borrower without further
demand.
(c) Holder's failure to exercise the remedy set forth in Subsection 7(b) above
or any other remedy provided by law upon the occurrence of one or more of the foregoing events
of default shall not constitute a waiver of the right to exercise any remedy at any subsequent time
in respect to the same or any other default. The acceptance by Holder hereof of any payment
which is less than the total of all amounts due and payable at the time of such payment shall not
constitute a waiver of the right to exercise any of the foregoingremedies or options at that time
or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the
express consent of Holder, except as and to the extent otherwise provided by law.
8. Waivers.
(a) Borrower hereby waives diligence,presentment, protest and demand, and
notice of protest, notice of demand,notice of dishonor and notice of non-payment of this Note.
Borrower expressly agrees that this Note or any payment hereunder may be extended from time
to time, and that Holder may accept further security or release any.security for this Note, all
without in any way affecting the liability of Borrower.
(b) Any extension of time for payment of this Note or any installment hereof
made by agreement of Holder with any person now or hereafter liable for payment of this Note
shall not operate to release, discharge, modify, change or affect the original liability of Borrower
under this Note, either in whole or in part.
(c)' The obligations of Borrower under this Note shall be absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due
under this Note for any reason whatsoever.
9. Miscellaneous Provisions.
(a) All notices to Holder or Borrower shall be given in the manner and at the
addresses set forth in the Loan Agreement, or to such addresses as Holder and Borrower may
therein designate.
(b) Borrower promises to pay all costs and expenses, including reasonable
attorney's fees, incurred by Holder in the enforcement of the provisions of this Note, regardless
of whether suit is filed to seek enforcement.
3
863\75\579681.2
(c) This Note may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change, modification or discharge
is sought.
(d) This Note shall be governed by and construed in accordance with the laws
of the State of California.
(e) The times for the performance of any obligations hereunder shall be
strictly construed, time being of the essence.
(f) This document, together with the Loan Documents, contains the entire
agreement between the parties as to the Loan. It may not be modified except upon written
consent of the parties.
BORROWER:
SAN PABLO SENIOR ASSOCIATES II, LP,
a California limited partnership
By.
a California nonprofit public benefit
corporation, its general partner
By:
Name:
Its:
APPROVED AS TO FORM:
Silvano B. Marchesi
County Counsel
By:
Keiko Kobayashi
Deputy County Counsel
4
86M75\579681.2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Contra Costa County
County Department of Conservation and Development—
Redevelopment Division
2530 Arnold Drive, Suite 190
Martinez, CA 94553
Attention: Deputy Director- Redevelopment
No fee for recording pursuant to
Government Code Section 27383
CONSTRUCTION AND PERMANENT
DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY AGREEMENT, AND
FIXTURE FILING
(Casa Adobe - Loan Modification)
THIS CONSTRUCTION AND PERMANENT DEED OF TRUST WITH
ASSIGNMENT OF RENTS, SECURITY AGREEMENT,AND FIXTURE FILING("Deed of
Trust") is made as of this day of 2008,by and among San Pablo Senior
Associates 11, L.P., a California limited partnership ("Trustor"), Title Company, a
California corporation("Trustee"), and the County of Contra Costa, a political subdivision of the
State of California("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created,the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, INTRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor's fee interest in the property located in the County of Contra Costa,
State of California,that is described in the attached Exhibit A, incorporated herein by this
reference (the "Property").
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH all easements, rights-of-way and rights used in connection therewith
or as a means of access thereto, including(without limiting the generality of the foregoing) all
tenements,hereditaments and appurtenances thereof and thereto;
TOGETHER WITH any and all buildings and improvements of every kind and
description now or hereafter erected thereon, and all property of the Trustor now or hereafter
affixed to or placed upon the Property;
TOGETHER WITH all building materials and equipment now or hereafter delivered to
said property and intended to be installed therein;
1
863\751579700.1
TOGETHER WITH all right, title and interest of Trustor,now owned or hereafter
acquired, in and to any land lying within the right-of-way of any street, open or proposed,
adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to
or used in connection with the Property;
TOGETHER WITH all estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property,both in law and in equity, including, but
not limited to, all deposits made with or other security given by Trustor to utility companies, the
proceeds from any or all of such property, including the Property, claims or demands with
respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may
hereafter acquire, any and all awards made for the taking by eminent domain or by any
proceeding or purchase in lieu thereof of the whole or any part of such property, including
without limitation, any awards resulting from a change of grade of streets and awards for
severance damages to the extent Beneficiary has an interest in such awards for taking as
provided in Paragraph 4.1 herein;
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures
now or hereafter attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Property 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 said building or buildings in any
manner;"and
TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment,
work in process and other personal property to be incorporated into the Property; all goods,
materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other
personal property now or hereafter appropriated for use on the Property, whether stored on the
Property or elsewhere, and used or to be used in connection with the Property; all rents, issues
and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance
and condemnation awards and proceeds, trade names, trademarks and service marks arising from
or related to the Property and any business conducted thereon by Trustor; all replacements,
additions, accessions and proceeds; and all"books, records and files relating to any of the
foregoing.
All of the foregoing, together with the Property, is herein referred to as the "Security."
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS (the "Secured
Obligations"):
(a) Payment to Beneficiary of all sums at any time owing under or in connection with
the Note (defined in Section 1.4 below)until paid or cancelled and any other amounts owing
under the Loan Documents (defined in Section 1.3 below). Said principal and other payments
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shall be due and payable as provided in the Note or other Loan Documents, as applicable. The
Note and all its terms are incorporated herein by reference, and this conveyance shall secure any
and all extensions thereof,however evidenced;
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to
the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to
advance said sums and the expiration of any applicable cure period,with interest thereon as
provided herein;
(c) Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents; and
(d) All modifications, extensions and renewals of any of the Secured Obligations
(including without limitation, (i)modifications, extensions or renewals at a different rate of
interest, or(ii) deferrals or accelerations of the required principal payment dates or interest
payment dates or both, in whole or in part), however evidenced, whether or not any such
modification, extension or renewal is evidenced by a new or additional promissory note or notes.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall
have the following meanings in this Deed of Trust:
Section 1.1 The term"Intercreditor Agreement" means that certain Intercreditor
Agreement between Trustor, Beneficiary, and the Redevelopment Agency of the City of San
Pablo, dated 12008.
Section 1.2 The term"Loan Agreement" means that certain CDBG Loan Agreement
between Trustor and Beneficiary, dated 2008, providing for the Beneficiary to
loan to the Trustor Five Hundred Sixty Thousand Eight Hundred Fifty Two Dollars ($560,852)
for the construction of fifty-four(54) apartment units and appurtenant improvements on the
Property.
Section 1.3 The term"Loan Documents" means this Deed of Trust, the Note, the Loan
Agreement, the Regulatory Agreement, and the Intercreditor Agreement and any other debt, loan
or security instruments between Trustor and the Beneficiary relating to the Property.
Section 1.4 The term"Note" means the promissory note in the principal amount of
Five Hundred Sixty Thousand Eight Hundred Fifty Two Dollars ($560,852) dated
2008, executed by Trustor in favor of the Beneficiary, as it may be amended or
restated, the payment of which is secured by this Deed of Trust. (A copy of the Note is on file
with the Beneficiary and terms and provisions of the Note are incorporated herein by reference.)
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Section 1.5 The term"Principal" means the amount required to be paid under the
Note.
Section 1.6 The term "Regulatory Agreement" means the regulatory agreement dated
2008,by and between the Beneficiary and the Trustor.
ARTICLE 2
MAINTENANCE AND MODIFICATION OF THE PROPERTY
AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment and performance of the,Secured
Obligations, the Trustor will, at the Trustor's own expense, maintain,preserve and keep the
Security or cause the Security to be maintained and preserved in good condition. The Trustor
will from time to time make or cause to be made all repairs, replacements and renewals deemed
proper and necessary by it. The Beneficiary shall have no responsibility in any of these matters
or for the making of improvements or additions to the Security.
Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty(30) days or
more, and to take all other reasonable steps to forestall the assertion of claims of lien against the
Security of any part thereof. Trustor irrevocably appoints;-designates and authorizes Beneficiary
as its agent(said agency being coupled with an interest) with the,authority, but without any
obligation, to file for record any notices of completion or cessation of labor or any other notice
that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the
Loan Documents;,provided, however, that Beneficiary shall exercise its rights as agent of Trustor
only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those
actions as hereinbefore provided.
Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or
claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons
who have furnished or claim to have furnished labor, services or materials in connection with the
Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or
services which Trustor in good faith disputes and is diligently contesting provided that Trustor
shall, within thirty(30) days after the filing of any claim of lien, record in the Office of the
Recorder of Contra Costa County, a surety bond in an amount 1 and 1/2 times the amount of
such claim item to protect against a claim of lien.
Section 2.2 Granting?of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in
the nature of easements with respect to any property or rights included in the Security except
those required or desirable for installation and maintenance of public utilities including, without
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limitation, water,gas, electricity, sewer, telephone and telegraph, or those required by law, and
as approved, in writing,by Beneficiary.
Section 2.3 Assignment of Rents.
As part of the consideration for the indebtedness evidenced by the Note, Trustor hereby
absolutely and unconditionally assigns and transfers to Beneficiary all the rents and revenues of
the Property including those now due,past due, or to become due by virtue of any lease or other
agreement for the occupancy or use of all or any part of the Property, regardless of to whom the
rents and revenues of the Property are payable. Trustor hereby authorizes Beneficiary or
Beneficiary's agents to collect the aforesaid rents and revenues and hereby directs each tenant of
the Property to pay such rents to Beneficiary or Beneficiary's agents; provided, however, that
prior to written notice given by Beneficiary to Trustor of the breach by Trustor of any covenant
or agreement of Trustor in the Loan Documents, Trustor shall collect and receive all rents and
revenues of the Property as trustee for the benefit of Beneficiary and Trustor to apply the rents
and revenues so collected to the Secured Obligations with the balance, so long as no such breach
has occurred, to the account of Trustor, it being intended by Trustor and Beneficiary that this
assignment of rents constitutes an absolute assignment and not an assignment for additional
security only. Upon delivery of written notice by Beneficiary to Trustor of the breach by Trustor
of any covenant or agreement of Trustor in the Loan Documents, and without the necessity of
Beneficiary entering upon and taking and maintaining full control of the Property in person,by
agent or by a court-appointed receiver,Beneficiary shall immediately be entitled to possession of
all rents and revenues of the Property as specified in this Section 2.3 as the same becomes due
and payable, including but not limited to rents then due and unpaid, and all such rents shall
immediately upon delivery of such notice be held by Trustor as trustee for the benefit of
Beneficiary only; provided, however, that the written notice by Beneficiary to Trustor of the
breach by Trustor shall contain a statement that Beneficiary exercises its rights to such rents.
Trustor agrees that commencing upon delivery of such written notice of Trustor's breach by
Beneficiary to Trustor, each tenant of the Property shall make such rents payable to and pay such
rents to Beneficiary or Beneficiary's agents on Beneficiary's written demand to each tenant
therefor, delivered to each tenant personally,by mail or by delivering such demand to each rental
unit, without any liability on the part of said tenant to inquire further as to the existence of a
default by Trustor.
Trustor hereby covenants that Trustor has not executed any prior assignment of said rents
other than assignments in connection with Approved Financings, that Trustor has not performed,
and will not perform, any acts or has not executed and will not execute, any instrument which
would prevent Beneficiary from exercising its rights under this Section 2.3, and that at the time
of execution of this Deed of Trust, there has been no anticipation or prepayment of any of the
rents of the Property for more than two (2) months prior to the due dates of such rents. Trustor
covenants that Trustor will not hereafter collect or accept payment of any rents of the Property
more than two (2)months prior to the due dates of such rents. Trustor further covenant that
Trustor will execute and deliver to Beneficiary such further assignments of rents and revenues of
the Property as Beneficiary may from time to time request.
Upon Trustor's breach of any covenant or agreement of Trustor in the Loan Documents,
Beneficiary may in person,by agent or by a court-appointed receiver, regardless of the adequacy
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863\751574700.1
�l
of Beneficiary's security, enter upon and take and maintain full control of the Property in order to
perform all acts necessary and appropriate for the operation and maintenance thereof including,
but not limited to, the execution, cancellation or modification of leases, the collection of all rents
and revenues of the Property, the making of repairs to the Property and the execution or
termination of contracts providing for the management or maintenance of the Property, all on
such terms as are deemed best to protect the security of this Deed of Trust. In the event
Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of
any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to
the appointment of such receiver. Beneficiary or the receiver shall be entitled to receive a
reasonable fee for so managing the Property.
All rents and revenues collected subsequent to delivery of written notice by Beneficiary
to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan
Documents shall be applied first to the costs, if any, of taking control of and managing the
Property and collecting the rents, including,but not limited to, attorney's fees, receiver's fees,
premiums on receiver's bonds, costs of repairs to the Property, premiums on insurance policies,
taxes, assessments and other charges on the Property, and the costs of discharging any obligation
or liability of Trustor as lessor or landlord of the Property and then to the sums secured by this
deed of Trust. Beneficiary or the receiver shall have access to the books and records used in the
operation and maintenance of the Property and shall be liable to account only for those rents
actually received. Beneficiary shall not be liable to Trustor, anyone claiming under or through
Trustor or anyone having an interest in the Property by reason of anything done or left undone by
Beneficiary under this Section 2.3.
If the rents of the Property are not sufficient to meet the costs, if any, of taking control of
and managing the Property and collecting the rents, any funds expended by Beneficiary for such
purposes shall become part of the Secured Obligations pursuant to Section 3.3 hereof. Unless
Beneficiary and Trustor agree in wril:ing to other terms of payment, such amounts shall be
payable upon notice from Beneficiary to Trustor requesting payment thereof and shall bear
interest from the date of disbursement at the rate stated in Section 3.3.
Any entering upon and taking and maintaining of control of the Property by Beneficiary
or the receiver and any application of rents as provided herein shall not cure or waive any default
hereunder or invalidate any other right or remedy of Beneficiary under applicable law or
provided herein. This assignment of rents of the Property shall terminate at such time as this
Deed of Trust ceases to secure the Secured Obligations.
ARTICLE 3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior to the date of delinquency, all taxes,
assessments, charges and levies imposed by any public authority or utility company which are or
may become a lien affecting the Security or any part thereof;provided,however,that Trustor
shall not be required to pay and discharge any such tax, assessment, charge or levy so long as (a)
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the legality thereof shall be promptly and actively contested in good faith and by appropriate
proceedings, and(b) Trustor maintains reserves adequate to pay any liabilities contested pursuant
to this Section 3.1. With respect to taxes, special assessments or other similar governmental
charges, Trustor shall pay such amount in full prior to the attachment of any lien therefor on any
part of the Security;provided,however, if such taxes, assessments or charges may be paid in
installments,Trustor may pay in such installments. Except as provided in clause (b) of the first
sentence of this paragraph, the provisions of this Section 3.1 shall.not be construed to require that
Trustor maintain a reserve account, escrow account, impound account or other similar account
for the payment of future taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this
Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to)pay the
same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to
fully pay such items within seven(7)business days after receipt of such notice. Any amount so
advanced therefor by Beneficiary, together with interest thereon from the date of such advance at
the maximum rate permitted by law, shall become part of the Secured Obligations secured
hereby, and Trustor agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the
Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid and all Secured Obligations
secured hereunder fulfilled, and this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost and
expense. Certificates of insurance for all of the above insurance policies, showing the same to be
in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time
prior to Trustor's satisfaction of the Secured Obligations.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust or shall fail to keep the Security in accordance with the Loan Documents, the
Beneficiary, after at least seven (7) days prior notice to Trustor, may (but shall be under no
obligation to)take out the required policies of insurance and pay the premiums on the same or
may make such repairs or replacements as are necessary and provide for payment thereof, and all
amounts so advanced therefor by the Beneficiary shall become part of the Secured Obligations
(together with interest as set forth below) and shall be secured hereby, which amounts the
Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest
from the date of the advance at the lesser of ten percent (10%)per annum or the maximum rate
permitted by law.
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ARTICLE 4
DAMAGE, DESTRUCTION OR.CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection
with or in lieu of(1) taking of all or any part of or any interest in the Property by or under
assertion of the power of eminent domain, (2) any damage to or destruction of the Property or in
any part thereof by insured casualty, and(3) any other injury or damage to all or any part of the
Property(collectively, the "Funds") are hereby assigned to and shall be paid to the Beneficiary
by a,check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but
not required) to collect and receive any Funds and is authorized to apply them in whole or in part
upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary
shall determine at its sole option. The Beneficiary shall be entitled to settle and adjust all claims .
under insurance policies provided under this Deed of Trust and may deduct and retain from the
proceeds of such insurance the amount of all expenses incurred by it in connection with any such
settlement or adjustment. All or any part of the amounts so collected and recovered by the
Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for
its disposition. Application of all or any part of the Funds collected and received by the
Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust.
The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior
mortgage lender. The Beneficiary shall release the Funds to Trustor to be used to reconstruct the
improvements on the Property provided that Beneficiary reasonably determines that Trustor
(taking into account the Funds, and Trustor's agreement to use its own funds to cover any
shortfall)has sufficient funds to rebuild the improvements in substantially the form they existed
prior to the casualty or condemnation.
ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER
ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other A rg eements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default(as defined in Section 7.1) hereunder, and if the
Beneficiary should employ attorneys or incur other expenses for the collection of amounts due or
the enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred
by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the Secured
Obligations, and shall bear interest from the date such expenses are incurred at the lesser of ten
percent(10%)per annum or the maximum rate permitted by law.
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Section 5.3 Payment of the Principal.
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and by the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed of
Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall
constitute a fixturesfiling under the California Commercial Code. As to any personal property
not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement
under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements
pursuant to the appropriate statutes, and any other documents or instruments as are required to
convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees
to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary
to maintain such valid perfected security interest in the Security in order to secure the payment of
the Note in accordance with its terms. The Beneficiary is authorized to file a copy of any such
financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order
to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
The Trustor shall operate the Security(and, in case of a transfer of a portion of the
Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in
full compliance with the Loan Documents.
Section 5.7 Inspection of the Security.
At any and all reasonable times upon seventy-two (72)hours' notice,the Beneficiary and
its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall
have the right, without payment of charges or fees,to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, age (except for lawful senior housing in accordance with applicable state and federal
law), sex, sexual orientation, marital status, national origin or ancestry in the sale, lease,
sublease, transfer,use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor
itself or any person claiming under or through it establish or permit any such practice or practices
of discrimination or segregation with reference to the selection, location,number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing
covenants shall run with the land.
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ARTICLE 6
HAZARDOUS WASTE
Trustor shall keep and maintain the Property in compliance with, and shall not cause or
permit the Property 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 Property
including,but not limited to, soil and ground water conditions. Trustor shall not use, generate,
manufacture, store or dispose of on, under, or about the Property or transport to or from the
Property 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 customarily used
in construction or operation of a multi-family residential development.
Trustor shall immediately advise Beneficiary in writing if at any time it receives written
notice o£ (i) any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against Trustor or the Property 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 Trustor or the Property 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) Trustor's discovery
of any occurrence or condition on any real property adjoining or in the vicinity of the Property
that could cause the Property or any part thereof to be classified as "border-zone property" (as
defined in California Health and Safety Code Section 25117.4)under the provision of California
Health and Safety Code, Sections 25220 et seq., or any regulation adopted in accordance
therewith, or to be otherwise subject to any restrictions on the ownership, occupancy,
transferability or use of the Property under any Hazardous Materials Law.
Beneficiary 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 Trustor. Trustor shall
indemnify and hold harmless Beneficiary and its boardmembers, supervisors, 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 Property including without limitation: (a) all foreseeable consequential damages; (b)the
costs of any required or necessary repair, cleanup or detoxification of the Property and the
preparation and implementation of any closure, remedial or other required plans; and (c) all
reasonable costs and expenses incurred by Beneficiary in connection with clauses (a) and (b),
including but.not limited to reasonable attomeys' fees and consultant's fees. This
indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision
include,but are not limited to: (1) losses attributable to diminution in the value of the Property;
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863\75\579700.1 -
(2) loss or restriction of use of rentable space on the Property; (3) adverse effect on the
marketing of any rental space on the Property; and(4)penalties and fines levied by, and remedial
or enforcement actions of any kind issued by any regulatory agency(including but not limited to
the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the
Property and surrounding properties).
Without Beneficiary's prior written consent, which shall not be unreasonably withheld,
Trustor shall not take any remedial action in response to the presence of any Hazardous
Materials on, under or about the Property, 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 Beneficiary's reasonable judgement,
impair the value of the Beneficiary's security hereunder;provided,however, that Beneficiary's
prior consent shall not be necessary in the event that the presence of Hazardous Materials on,
under, or about the Property 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 Beneficiary's consent before taking such action,provided that
in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken.
Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if(i) a
particular remedial action is ordered by a court of competent jurisdiction; (ii) Trustor will or may
be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii)
Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable
alternative to such remedial action which would result in less impairment of Beneficiary's
security hereunder;.or(iv)the action has been agreed to by Beneficiary.
The Trustor hereby acknowledges and agrees that(i) this Article is intended as the
Beneficiary's written request for information(and the Trustor's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure
Section 726.5, and(ii) each representation and warranty in this Deed of Trust or any of the other
Loan Documents (together with any indemnity applicable to a breach of any such representation
and warranty) with respect to the environmental condition of the property is intended by the
Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code
of Civil Procedure Section 736.
In the event that any portion of the Property 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 Beneficiary's or the
Trustee's rights and remedies under this Deed of Trust, the Beneficiary 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 Property and(2) exercise (a) the rights and
remedies of an unsecured creditor, including reduction of its claim against the Trustor to
judgment, and (b) any other rights and remedies permitted by law. For purposes of determining
the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.5(a), the Trustor 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,
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occupant, or user of any portion of the Property and the Trustor 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 Beneficiary 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 Property is environmentally impaired,plus interest thereon at the default rate
specified in the Loan Agreement until paid, shall be added to the indebtedness secured by this
Deed of Trust and shall be due and payable to the Beneficiary upon its demand made at any time
following the conclusion of such action.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
The following shall constitute events of default("Events of Default") following the
expiration of any applicable notice and cure periods: (a) failure to make any payment to be paid
by Trustor under the Loan Documents; (b) failure to observe or perform any of Trustor's other
covenants, agreements or obligations under the Loan Documents, including, without limitation,
the provisions concerning discrimination; (c) failure to make any payment or observe or perform
any of Trustor's other covenants, agreements, or obligations under any other debt instrument or
regulatory agreement secured by the Property, which default shall not be cured within the times
and in the manner provided therein; or(d) a default is declared under the Approved Financing by
the lender of such Approved Financing.
Section 7.2 Acceleration of Maturity.
If an Event of Default shall have occurred and be continuing, then at the option of the
Beneficiary, the amount of any payment related to the Event of Default and all unpaid Secured
Obligations shall immediately become due and payable, upon written notice by the Beneficiary
to the Trustor(or automatically where so specified in the Loan Documents), and no omission on
the part of the Beneficiary to exercise such option when entitled to do so shall be construed as a
waiver of such right.
Section 7.3 The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its
security, enter upon the Security and take possession thereof(or any part thereof) and of any of
the Security, in its own name or in the name of Trustee, and do any acts which it deems
necessary or desirable to preserve the value or marketability of the Property, or part thereof or
interest therein, increase the income therefrom or protect the security thereof. The entering upon
and taking possession of the Security shall not cure or waive any Event of Default or Notice of
Sale (as defined in Section 7.3(c),below) hereunder or invalidate any act done in response to
such Event of Default or pursuant to such Notice of Sale, and, notwithstanding the continuance
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in possession of the Security, Beneficiary shall be entitled to exercise every right provided for in
this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to
exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage,
appoint a receiver, or specifically enforce any of the covenants hereof;
(c) Deliver to Trustee a written declaration of default and demand for sale,
and a written notice of default and election to cause Trustor's interest in the Security to be sold
("Notice of Sale"), which notice Trustee or Beneficiary shall cause to be duly filed for record in
the Official Records of Contra Costa County; or
(d) Exercise all other rights and remedies provided herein, in the instruments
by which the Trustor acquires title to any Security, or in any other document or agreement now
or hereafter evidencing, creating or securing the Secured Obligations.
Section 7.4 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained,the Beneficiary shall deliver to the Trustee the Notice of Sale and shall deposit with
Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be deemed to
constitute evidence that the Secured Obligations are immediately due and payable), and such
receipts and evidence of any expenditures made that are additionally secured hereby as Trustee
may require.
(a). Upon receipt of such Notice of Sale from the Beneficiary, Trustee shall
cause to be recorded,published and delivered to Trustor such Notice of Sale as then required by
law and by this Deed of Trust. Trustee shall,without demand on Trustor, after lapse of such
time as may then be required by law and after recordation of such Notice of Sale having been
given as required by law, sell the Security, at the time and place of sale fixed by it in the Notice
of Sale, whether as a whole or in separate lots or parcels or items as Trustee shall deem
expedient and in such order as it may determine unless specified otherwise by the Trustor
according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for
cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to
such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the
property so sold, but without any covenant or warranty, express or implied. The recitals in such
deed or any matters of facts shall be conclusive proof of the truthfulness thereof. Any person,
including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale.
(b) After deducting all reasonable costs, fees and expenses of Trustee,
including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds
of sale to payment of. (i)the unpaid Principal amount of the Note; (ii) all other Secured
Obligations owed to Beneficiary under the Loan Documents; (iii) all other sums then secured
hereby; and(iv)the remainder, if any,to Trustor.
(c) 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, and without
13
863W5\579700.1
further notice make such sale at the time fixed by the last postponement, or may, in its discretion,
give a new Notice of Sale.
Section 7.5 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of
right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest of Trustor therein, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers of the Security(or a part
thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice
of any application therefor. Any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of
entry as provided herein, and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 7.6 Remedies Cumulative.
No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 7.7 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or
remedy accruing upon any Event of Default shall exhaust or impair any such right,power or
remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence
therein; and every right, power and remedy.given by this Deed of Trust to the Beneficiary may
be exercised from time to time and as often as may be deemed expeditious by the Beneficiary.
Beneficiary's express or implied consent to breach, or waiver of, any obligation of the Trustor
hereunder shall not be deemed or construed to be a consent to any subsequent breach, or further
waiver, of such obligation or of any other obligations of the Trustor hereunder. Failure on the
part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default,
irrespective of how long such failure continues, shall not constitute a waiver by the Beneficiary
of its right hereunder or impair any rights, power or remedies consequent on any Event of
Default by the Trustor.
(b) If the Beneficiary (i) grants forbearance or an extension of time for the
payment or performance of any Secured Obligation, (ii) takes other or additional security or the
payment of any sums secured hereby, (iii) waives or does not exercise any right granted in the
Loan.Documents, (iv)releases any part of the Security from the lien of this Deed of Trust, or
otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents,
(v) consents to the granting of any easement or other right affecting the Security, or(vi) makes or
consents to any agreement subordinating the lien hereof, any such act or omission shall not
release, discharge,modify, change or affect the original liability under this Deed of Trust, or any
other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or
any maker, co-signer, endorser, surety or guarantor(unless expressly released); nor shall any
such act or omission preclude the Beneficiary from exercising any right, power or privilege
14
863\75\579700.1
herein granted or intended to be granted in any Event of Default then made or of any subsequent
Event of Default, nor, except as otherwise expressly provided in an instrument or instruments
executed by the Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 7.8 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Security and the rights of the
Beneficiary as may be unlawful or any violation of this Deed of Trust, (b)preserve or protect its
interest(as described in this Deed of Trust) in the Security, and(c) restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
Section 7.9 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of the Beneficiary
allowed in such proceedings and for any additional amount which may become due and payable
by the Trustor hereunder after such date.
Section 7.10 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor,notice of
protest and nonpayment, protest,notice of interest on interest and late charges, and diligence in
taking any action to collect any Secured Obligations or in proceedings against the Security, in
connection with the delivery, acceptance, performance, default, endorsement or guaranty of this
Deed of Trust.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Amendments.
This Deed of Trust cannot be waived, changed, discharged or terminated orally, but only
by an instrument in writing signed by Beneficiary and Trustor.
Section 8.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all Secured Obligations have been paid
or forgiven, and all obligations under the Loan Documents have been performed in full,and
upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment
by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor, or to the
person or persons legally entitled thereto.
15
863\75\579700.1 -
Section 8.3 Notices.
If at any time after the execution of this Deed of.Trust it shall become necessary or '
convenient for one of the parties hereto to serve any notice, demand or communication upon the
other party, such notice, demand or communication shall be in writing and shall be served
personally or by depositing the same in the registered United States.mail, return receipt
requested,postage prepaid and (1) if intended for Beneficiary shall be addressed to:
Borrower: San Pablo Senior Associates II, L.P.
c/o EAH
2169 East Francisco Boulevard
Suite B
San Rafael, CA 94901
Attention: Executive Director
With a copy to:
County: County of Contra Costa
County Department of Conservation and
Development—Redevelopment Division
2530 Arnold Dr., Suite 190
Martinez, CA 94553
Attention: Deputy Director -.Redevelopment
Any notice, demand or communication shall be deemed given, received, made or communicated
on the date personal delivery is effected or, if mailed in the manner herein specified, on the
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either
party may change its address at any time by giving written notice of such change to Beneficiary
or Trustor as the case may be, in the manner provided herein, at least ten(10) days prior to the
date such change is desired to be effective.
Section 8.4 Successors and Joint Trustors.
Where an obligation created herein is binding upon Trustor, the obligation shall also
apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust
have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be
deemed to be a joint and several obligation of the Trustor and such transferee. Where Trustor is
more than one entity or person, all obligations of Trustor shall be deemed to be a joint and
several obligation of each and every entity and person comprising Trustor.
Section 8.5 Captions.
The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
16
863\75\579700.1
t
Section 8.6 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or
partially secured by the lien of this Deed of Trust.
Section 8.7 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of the
State of California.
Section 8.8 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
Section 8.9 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
Section 8.10 Actions.
Trustor agrees to appear,in and defend any,action or proceeding purporting to affect the
Security.
Section 8.11 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to
this Deed of Trust and its.place of record, which,when duly recorded in the proper office of the
county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
Section 8.12 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured
by this Deed of Trust is hereby waived to the full extent permissible by law.
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863\75\579700.1
Section 8.13 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is
made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
Section 8.14 Tax Credit Provisions.
Notwithstanding anything to the contrary contained herein or in any documents secured
by this Deed of Trust or contained in any subordination agreement, the Beneficiary
acknowledges and agrees that in the event of a foreclosure or deed-in-lieu of foreclosure
(collectively, "Foreclosure") with respect to the Security encumbered by this Deed of Trust, the
following rule contained in 26 U.S.C. Section 42(h)(6)(E)(ii), as amended, shall apply:
For a period of three (3) years from the date of Foreclosure, with respect to any unit that
had been regulated by the Regulatory Agreement with the California Tax Credit Allocation
Committee, (i)none of the tenants occupying those units at the time of Foreclosure may be
evicted or their tenancy terminated (other than for good cause), (ii)nor may any rent be
increased except as otherwise permitted under Section 42 of the Internal Revenue Code.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and
year first above written.
TRUSTOR:
SAN PABLO SENIOR ASSOCIATE_ S II, L.P.,
a California limited partnership
By: a
California nonprofit public benefit
corporation, its general partner
By:
Name:
APPROVED AS TO FORM:
Its:
Silvan B. Marchesi
County Counsel
By:
Keiko Kobayashi
Deputy County Counsel
18
863\75V479700.1
STATE OF CALIFORNIA )
COUNTY OF )
On 20 before me,
Noiary 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 (Seal)
863\75\579700.1 l
I
EXHIBIT A
LEGAL DESCRIPTION
The land is situated in the State of California, County of Contra Costa, and is described as
follows:
1
NO FEE DOCUMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Contra Costa County
Department of Conservation and Development -
Redevelopment Division
2530 Arnold Drive, Suite 190
Martinez, CA 94553
Attn: Deputy Director -Redevelopment
No fee for recording pursuant to
Government Code Section 27383
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(CDBG Loan)
Casa Adobe
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement")
is made and entered into as of _, 2008,by and between the County of Contra
Costa, a political subdivision of the State of California ("County"), and San Pablo Senior
Associates II, L.P., a California limited partnership ("Borrower").
RECITALS
A. Pursuant to the Loan Agreement(as defined in Section 1.1 below)the County has
provided to Borrower a loan of Five Hundred Sixty Thousand Eight Hundred Fifty Two Dollars
($560,852) in CDBG funds to develop on the real property located at 1924 Church Lane in the
City of San Pablo, County of Contra Costa, State of California, as more particularly described in
Exhibit A attached here to (the "Property"). The Property is improved with fifty-four(54) rental
units affordable to extremely low and very low income households and one manager's unit.
Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the
Loan Agreement.
B. The County Loan is funded with Community Development Block Grant funds
received by the County from HUD pursuant to Title I of the Housing and Community
Development Act of 1974(42 U.S.C. Section 5301, et seq).
C. The County has agreed to make the County 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 Loan Agreement.
, 1
863\75\578903.3
D. In consideration of receipt of the County Loan at an interest rate substantially
below the market rate, Borrower has further agreed to observe all the terms and conditions set
forth below.
E. In order to ensure that the entire Development will be used and operated in
accordance with these conditions and restrictions, County and Borrower wish to enter into this
Agreement.
THEREFORE, County and Borrower hereby agree as follows.
ARTICLE 1
DEFINITIONS
1.1 Definitions.
When used in this Agreement, the following terms shall have the respective meanings
assigned to them in this Article 1.
(a) "Actual Household Size" shall mean the actual number of persons in the
applicable household.
(b) "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).
(c) "Assumed Household Size" shall mean the household size "adjusted for
family size appropriate to the unit" as defined in California Health & Safety Code Section
50052.5(h).
(d) "CDBG" shall mean the Community Development Block Grant Program
operated pursuant to Title I of the Housing and Community Development Act of 1974 (42 U.S.C.
Section 5301, et seq.)
(e) "Certificate of Occupancy" shall mean the certificate of occupancy issued
by the City of San Pablo certifying that the Development may be legally occupied.
(f) "Completion Date" shall mean the date of issuance of the Certificate of
Occupancy for the Development.
(g) "County-Assisted Units" shall mean the fourteen(14) Units designated as
assisted by the County.
(h) "County Deed of Trust" shall mean the deed of trust dated
2008 by and among Borrower,.as trustor, Title Company, as
trustee and the County, as beneficiary, on the Property which secures repayment of the County
Loan and the performance of the Loan Agreement and this Agreement.
2
863\751578903.3
(i) "County Loan" shall mean all funds loaned to Borrower by County
pursuant to the Loan Agreement.
(j) "County'Note" shall mean the promissory note from the Borrower to the
County, dated , 2008, evidencing the County Loan.
(k) "Development" shall mean the Property and the fifty four(54) 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.
(1) "Extremely Low Income Household" shall mean a household with an
Adjusted Income which does not exceed thirty percent (30%) of Median Income, adjusted for
Actual Household Size.
(m) "Extremely Low Income Rent" shall mean the maximum allowable rent
for an Extremely Low Income Unit pursuant to Section 2.2(a)below.
(n) "Extremely Low Income Units" shall mean the County-Assisted Units
which,pursuant to Section 2.1(a)below, are required to be occupied by Extremely Low Income
Households.
(o) "Forty-Five Percent Household" shall mean a household with an Adjusted
Income that does not exceed forty-five percent(45%) of Median Income, adjusted for Actual
Household Size.
(p) "Forty-Five Percent Rent" shall mean the maximum allowable rent for a
Forty-Five Percent Unit pursuant to Section 2.2(d) below.
(q) "Forty-Five Percent Units" shall mean the County-Assisted Units which,
pursuant to Section 2.1(d)below, are required to be occupied by Forty-Five Percent Households.
(r) "HUD" shall mean the United States Department of Housing and Urban
Development.
(s) "Loan Agreement" shall mean the CDBG Loan Agreement entered into by
and between the County and the Borrower, dated February 15, 2008.
(t) "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 CDBG
Program as defined in 24 C.F.R. Section 92.2.
(u) "Low Income Rent" shall mean the maximum allowable rent for a Low
Income Unit under the HOME Program as defined in 24 CFR 92.252..
(v) "Median Income" shall mean the median gross yearly income, adjusted for
Actual Household Size or Assumed Household Size as specified herein, in the County of Contra
Costa, 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)
3
863V75\578903.3
months, County shall provide Borrower with other income determinations which are reasonably
similar with respect to methods of calculation to those previously published by HUD.
(w) "Rent" shall mean the total of monthly payments by the Tenant of a Unit
for the following: use and occupancy of the Unit and land and associated facilities, including
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.
(x) "Tenant" shall mean a household occupying a Unit.
(y) "Term" shall mean the term of this Agreement, which shall commence on
the date of this Agreement and shall continue until the fifty-fifth (55th) anniversary of the
Completion Date.
(z) "Unit" shall mean one of the fifty four(54)rental units included in the
Development, excluding the one (1) manager's unit.
(aa) "Very Low Income Household" shall mean a household with an Adjusted
Income that does not exceed the qualifying limit for very, low income families under the HOME
Program as defined in 24 C.F.R. Section 92.2.
(bb) "Very Low Income Rent" shall mean the maximum allowable rent for a
Very Low Income Unit under the HOME Program as defined in 24 CFR 92.252.
(cc) "Very Low Income Units" shall mean the Units as described in Section
2.3(b)
ARTICLE 2
AFFORDABILITY AND OCCUPANCY COVENANTS
2.1 Occupancy Requirements.
(a) Extremely Low Income Units. Five (5) of the County-Assisted Units shall
be rented to and occupied by or, if vacant, available for occupancy by Extremely Low Income
Households.
(b) Forty-Five Percent Units. Nine (9) of the County-Assisted Units shall be
rented to and occupied by, or, if vacant, available for occupancy by Forty-Five Percent
Households.
(c) Intermingling of Units. The County-Assisted Units shall be intermingled
with all the other Units in the Development. All County-Assisted Units shall be one bedroom
units.
4
.863\75\578903.3
(d) Disabled Persons Occupancy. The Development shall be operated at all
times in compliance with the provisions of. (i) the Unruh Act; (ii) the California Fair
Employment and Housing Act; (iii) Section 504 of the Rehabilitation Act of 1973; (iv) the
United States Fair Housing Act, as amended; and (v) any other applicable law or regulation
(including the Americans With Disabilities Act,to the extent applicable to the Development).
Borrower agrees to indemnify,protect,hold harmless and defend (with counsel reasonably
satisfactory to County) County, and its boardmembers, officers and employees, from all suits,
actions, claims; causes of action, costs, demands,judgments and liens arising out of Borrower's
failure to comply with applicable legal requirements related to housing for persons with
disabilities. The provisions of this subsection shall survive expiration of the Term or other
termination of this Agreement, and shall remain in full force and effect.
(e) Senior Occupancy. Except for the resident manager's unit, if used as such,
all Units in the Development shall be occupied or held available for occupancy by households
containing"elderly" or"senior citizen" residents. The Development shall be operated at all times
in compliance with the provisions of. (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
C.F.R. 100.304, which relate to lawful senior housing; (c)the California Fair Employment and
Housing Act, Government Code Section 12900 et seg., which relates to lawful senior housing;
and (d) any other applicable law or regulation(including the Americans With Disabilities Act, to
the extent applicable to the Development). Borrower shall develop and implement appropriate
age verification procedures to ensure compliance with,the requirements of this Section. The
Borrower shall provide County with a copy of its written verification procedures. Borrower
agrees to indemnify, protect, hold harmless and defend(by counsel reasonably satisfactory to
Cot znty) County, and its boardmembers, officers and employees, from all suits, actions, claims,
causes of action, costs, demands,judgments and liens arising out of Borrower's failure to comply
with applicable legal requirements related to housing for seniors. The provisions of this
subsection shall survive expiration of the Term or other termination of this Agreement, and shall
remain in full force and effect.
2.2 Allowable Rent.
(a) Extremely Low Income Rent. Subject to the provisions of Section 2.3
below, the Rent paid by Tenants of Extremely Low Income Units, shall not exceed one-twelfth
(1/12'b) of thirty percent (30%) of thirty percent(30%) of Median Income, adjusted for Assumed
Household Size..
(b) Forty-Five Percent Rent. Subject to the provisions of Section 2.3 below,
the Rent paid by Tenants of Forty-Five Percent Units, shall not exceed one-twelfth (1/12th) of
thirty percent (30%) of forty-five percent(45%) of Median Income, adjusted for Assumed
Household Size.
(c) Rent Increases. Rent for the Units shall be increased no more than once
annually based upon income recertifications described in Article 3. Households shall be given at
least sixty(60) days' written notice prior to any Rent increase.
5
863\751578903.3
(d) 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.
(e) Initial and Subsequent Rents. Initial Rents for all County-Assisted Units
shall be approved by County prior to occupancy. All Rent increases shall also be subject to
County review for compliance with the terms of this Agreement. County shall provide Borrower
with a schedule of maximum permissible Rents for the Units annually.
2.3 Increased Income of Tenants.
(a) Increased Income to Forty-Five Percent. In the event, upon recertification
of an occupant household's income, the Borrower discovers that an Extremely Low Income
Household.no longer qualifies as an Extremely Low Income Household(but does qualify as a
Forty-Five Percent Household), such household's Unit shall be considered a Forty-Five Percent
Unit (and the Rent may be increased to one-twelfth (1/12`h) of thirty percent (30%) of forty-five
percent(45%) of Median Income upon sixty(60) days' written notice to the household) and the
Borrower shall rent the next available Unit to an Extremely Low Income Household to comply
with the requirements of Section 2.1 above.
(b) Increased Income Above Forty-Five Percent But Below Very Low Income
Limit. In the event that,upon recertification of an occupant household's income, the Borrower
discovers that an Extremely Low Income Household or Forty-Five Percent Household, no longer
qualifies as an Extremely Low Income Household or a Forty-Five Percent Household, but does
qualify as a Very Low Income Household, such household's Unit shall be considered a Forty-
Five Percent Unit(and the Rent may be increased to Very Low Income Rent upon sixty(60)
days' written notice to the household) and the Borrower shall rent the next available Unit to an
Extremely Low Income Household or Forty-Five Percent Household, as applicable, to comply
with the requirements of Section 2.1 above.
(c) Increased Income Above Very Low Income But Below Low Income
Limit. In the event that, upon recertification of an occupant household's income, the income of
an Extremely Low Income Household, or a Forty-Five Percent Household, increases above the
qualifying limit for a Very Low Income Household,but not above the qualifying income for a
Low Income Household as defined under the HOME Program in 24 C.F.R. Section 92.2, such
household's Unit shall be considered a Forty-Five Percent Unit (and the Rent may be increased to
Low Income Rent upon sixty(60) days' written notice to the household), and the next available
Unit shall be rented to an Extremely Low Income Household or Forty-Five Percent Household,
as necessary to meet the requirements of Section 2.1 above.
(d) Non-Qualifying Household. If, upon recertification of the income of a
Tenant, the Borrower determines that a former Extremely Low Income Household or Forty-Five
Percent Household has an Adjusted Income exceeding the maximum qualifying income for a'
Low Income Household, such Tenant shall be permitted to continue occupying the Unit and
upon expiration of the Tenant's lease and uon sixty (60) days' written notice, the Rent shall be
increased to the lesser of one-twelfth (1/121) 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 an
6
863\75\578903.3
Extremely Low Income Household or Forty-Five Percent Household, as applicable, to meet the
requirements of Section 2.1 above.
(e) Termination of Occupancy. Upon termination of occupancy of a County-
Assisted 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.
2.4 Units Available to the Disabled.
In compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. Section 794,
et seq.), a minimum of three (3)Unit shall be fully accessible to households with a mobility
impaired member and an additional two (2)Units shall be fully accessible to hearing and/or
visually impaired persons.
ARTICLE 3
INCOME CERTIFICATION AND REPORTING
3.1 Income Certification.
Borrower will obtain, complete and maintain on file, immediately prior to initial
occupancy and annually thereafter, income certifications from each Tenant renting any of the
County-Assisted Units. Borrower shall make a good faith effort to verify that the income
provided by an applicant or occupying household 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(f) if the applicant is unemployed and has no such tax
return, obtain another form of independent verification. Copies of Tenant income certifications
shall be available to County upon request.
3.2 Annual Report to County.
Borrower shall submit to County(a) not later than the forty-fifth (45`h) day after the close
of each calendar year, or such other date as may be requested by County, a statistical report,
including income 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 County in order to comply with reporting requirements of HUD, the State of
California, or the County.
3.3 Additional Information.
7
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Borrower shall provide any additional information reasonably requested by County.
County shall have the right to examine and make copies of all books, records or other documents
of Borrower which pertain to the Development.
3.4 Records.
Borrower shall maintain complete, accurate and current records pertaining to the
Development, and shall permit any duly authorized representative of County 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 County,
in a reasonable condition for proper audit and subject to examination during business hours by
representatives of County. 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. Section 92.502.
3.5 On-site Inspection.
County shall have the right to perform an on-site inspection of the Development at least
one (1)time per year. Borrower agrees to cooperate in such inspection.
ARTICLE 4
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 Compliance with Loan Agreement.
Borrower shall comply with all the terms and provisions of the Loan Agreement.
43 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
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.
8
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ARTICLE 5
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. County shall have no responsibility over management of the Development. The
Borrower shall retain a professional property management company approved by County 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 County, with demonstrated ability to operate residential facilities like
the Development in a manner that will provide decent, safe, and sanitary housing (as approved,
the "Management Agent"). The Borrower shall submit for County's approval the identity of any
proposed Management Agent(and County hereby pre-approves EAH, Inc, a California nonprofit
public benefit corporation 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 County 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, County shall approve the proposed management agent by notifying the Borrower
in writing. Unless the proposed management agent is disapproved by County within thirty(30)
days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall
be deemed approved.
5.3 Performance Review.
County reserves the right to conduct an annual (or more frequently, if deemed necessary
by County) review of the management practices and financial status of the Development. The
purpose of each periodic review will be to enable County 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 County in such reviews.
5.4 Replacement of Management Agent.
If, as a result of a periodic review, County 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, County shall deliver notice to Borrower of its
intention to cause replacement of the Management Agent, including the reasons therefore.
Within fifteen(15) days after receipt by Borrower of such written notice, County 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.
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863\75\578903.3
If, after such meeting, County 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 County 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 County may enforce
this provision through legal proceedings as specified in Section 6.8 below.
5.5 Approval of Management Policies.
The Borrower shall submit its written management policies with respect to the
Development to County 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 claiming jurisdiction and all their respective
departments, bureaus, and officials, and in accordance with the following maintenance
conditions:
County places prime importance on quality maintenance to protect its investment and to
ensure that all County and County-assisted affordable housing projects within County are not
allowed to deteriorate due to below-average maintenance. Normal wear and tear of the
Development will be acceptable to County assuming the Borrower agrees to provide all
necessary improvements to assure the Development is maintained in good condition. The
Borrower shall make all repairs and replacements necessary to keep the improvements in good
condition and repair.
In the event that the Borrower breaches any of the covenants contained in this section and
such default continues for a period of five(5) days after written notice from County with respect
to graffiti,,debris, waste material, and general maintenance or thirty(30) days after written notice
from County with respect to landscaping and building improvements,then County, 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, County 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 preser✓ation by County and/or costs of such cure, which amount
shall be promptly paid by the Borrower to County upon demand.
10
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ARTICLE 6
MISCELLANEOUS
6.1 Lease Provisions.
In leasing the Units, Borrower shall use a form of Tenant lease approved by the County.
The form of Tenant lease shall also comply with all requirements of this Agreement and the
Loan 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 an Extremely Low Income or Forty-
Five Percent 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, however Rent may not be raised more often than once a year.
Borrower will provide each Tenant with at least sixty(60) days'written notice of any increase in
Rent applicable to such Tenant, and with such further notice as may be required by Section 2.3
above.
6.2 Lease Termination.
Any termination of a lease or refusal to renew a lease for a Unit 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, and Senior 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, 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.
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863\75\578903.3
6.4 Term.
The provisions of this Agreement shall apply to the Property for the entire Term even if
the entire County Loan is paid in full prior to the end of the Term. This Agreement shall bind
any 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 County. County
makes the County Loan on the condition, and in consideration of, this provision, and would not
do so otherwise.
6.5 Compliance with Loan 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 Loan Agreement; and (ii) all requirements imposed on projects
assisted under the CDBG Program as contained in 42 U.S.C. Section 5301, et seg., 24 C.F.R.
Part 570, and other implementing rules and regulations.
6.6 Notice of Exiration of Term.
At least six (6) months prior to the expiration of the Term, Borrower shall provide by
first-class mail,postage prepaid, a notice to all Tenants containing(a) the anticipated date of the
expiration of the Term, (b) any anticipated increase in Rent upon the expiration of the Term, (c)
a statement that a copy of such notice will be sent to County, and(d) a statement that a public
hearing may be held by County on the issue and that the Tenant will receive notice of the hearing
at least fifteen(15) days in advance of any such hearing. Borrower shall also file a copy of the
above-described notice with the Deputy Director—Redevelopment of the County. In addition,
Borrower shall comply with the requirements set forth in California Government Code Sections
65863.10 and 65863.11.
6.7 Covenants to Run With the Land.
County and Borrower hereby declare their express intent that the covenants and
restrictions set forth in this Agreement.shall run with 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 County expressly releases such conveyed portion of the Property
from the requirements of this Agreement.
6.8 Enforcement by Count.
If Borrower fails to perform any obligation under this Agreement, and fails to cure the
default within thirty(30) days after County has notified in writing Borrower and any limited
partner of the Borrower who has requested written notice from the County of such failure
("Permitted Limited Partner") of the default, or, if the default cannot be cured within thirty(30)
days, failed to commence to cure within thirty(30) days and thereafter diligently pursue such
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863\75\578903.3
cure and complete such cure within ninety(90)days, County shall have the right to enforce this
Agreement by any or all of the following actions, or any other remedy provided by law:
(a) Calling the County Loan. County may declare a default under the County
Note, accelerate the indebtedness evidenced by the County Note, and proceed with foreclosure
under the County Deed of Trust.
(b) Action to Compel Performance or for Damages. County may bring an
action at law or in equity to compel Borrower's performance of its obligations under this
Agreement, and/or for damages.
(c) Remedies Provided Under Loan Agreement. County may exercise any
other remedy provided under the Loan Agreement.
The County agrees that any cure of a default by a Permitted Limited Partner of the
Borrower shall be deemed to be a cure by the Borrower, and shall be accepted or rejected on the
same basis as if made or tendered by the Borrower.
6.9 Attorneys' Fees and Costs.
In any action brought to enforce this Agreement, the prevailing party shall be entitled to
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.
6.10 Recording and Filing.
County and Borrower shall cause this Agreement, and all amendments and supplements
to it, to be recorded in the Official Records of the County of Contra Costa.
6.11 Governing Law.
This Agreement shall be governed by the laws of the State of California.
6.12 Waiver of Requirements.
Any of the requirements of this Agreement may be expressly waived by County in
writing, but no waiver by County of any requirement of this Agreement shall, or shall be deemed
to, extend to or affect any other provision of this Agreement.
6.13 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 County of
Contra Costa.
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863\75\578903.3
6.14 Notices.
Any notice requirement set forth herein shall be deemed to be satisfied three (3) days
after mailing of the notice first-class United States certified mail,postage prepaid, addressed to
the appropriate party as follows:
Borrower: San Pablo Senior Associates IL, L.P.
c/o EAH
2169 East Francisco Boulevard
Suite B
San Rafael, CA 94901
Attention: Executive Director
With a copy to:
County: County of Contra Costa
County Department of Conservation and
Development—Redevelopment Division
2530 Arnold Dr., Suite 190
Martinez, CA 94553
Attention: Deputy Director- Redevelopment
Such addresses may be changed by notice to the other party given in the same manner as
provided above.
6.15 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.
6.16 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.
6.17 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.
14 -
863\751578903.3
WHEREAS,this Agreement has been entered into by the undersigned as of the date first
above written.
COUNTY:-
COUNTY OF CONTRA COSTA, a political
subdivision of the State of California
By:
James Kennedy
Deputy Director—Redevelopment
Approved as to form:
Silvano B. Marchesi
County Counsel
By:
Keiko Kobayashi
Deputy County Counsel
BORROWER:
SAN PABLO SENIOR ASSOCIATES II, L.P., a
California limited partnership
By: a California nonprofit public
benefit corporation, its general partner
By,:
Name:
Its:
15
863\75\578903.3
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 (Seal)
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(;)
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)
863\75\578903.3 ;
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
863\75\578903.3
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................................................................................2
1.1 Definitions. ..................................................................................................................2
ARTICLE 2 AFFORDABILITY AND OCCUPANCY COVENANTS......................................4
2.1 Occupancy Requirements..............................................................................................4
2.2 Allowable Rent............................................................................................................5
2.3 Increased Income of Tenants........................................................................................6
2.4 Units Available to the Disabled....................................................................................7
ARTICLE 3 INCOME CERTIFICATION AND REPORTING..................................................7
3.1 Income Certification. ...................................................................................................7
3.2 Annual Report to County. ............................................................................................7
3.3 Additional Information.................................................................................................7
3.4 Records........................................................................................................................ 8
3.5 On-site Inspection. .......................................................................................................8
ARTICLE 4 OPERATION OF THE DEVELOPMENT.............................................................8
4.1 Residential Use. ........................................................................................................... 8
4.2 Compliance with Loan Agreement...............................................................................8
4.3 Taxes and Assessments.....................................................................................................8
ARTICLE 5 PROPERTY MANAGEMENT AND MAINTENANCE........................................9
5.1 Management Responsibilities.......................................................................................9
5.2 Management Agent; Periodic Reports..........................................................................9
5.3 Performance Review....................................................................................................9
5.4 Replacement of Management Agent.............................................................................9
5.5 Approval of Management Policies.............................................................................. 10
5.6 Property Maintenance. ............................................................................................... 10
ARTICLE 6 MISCELLANEOUS............................................................................................. 11
6.1 Lease Provisions. ....................................................................................................... 11
6.2 Lease Termination. .................................................................................................... 11
6.3 Nondiscrimination....................:.............:................................................................... 11
6.4 Term. ......................................................................................................................... 12
6.5 Compliance with Loan Agreement and Program Requirements.................................. 12
6.6 Notice of Expiration of Term. ................................................................................... 12
6.7 Covenants to Run With the Land................................................................................ 12
863\75\578903.3
TABLE OF CONTENTS
Page
6.8 Enforcement by County. ......................:..................................................................... 12
6.9 Attorneys' Fees and Costs.......................................................................................... 13
6.10 Recording and Filing.................................................................................................. 13
6.11 Governing Law. ......................................................................................................... 13
6.12 Waiver of Requirements............................................................................................. 13
6.13 Amendments............................................................................... ............................. 13
6.14 Notices....................................................................................................................... 14
6.15 Severability................................................................................................................ 14
6.16 Multiple Originals; Counterparts................................................................................ 14
6.17 Revival of Agreement after Foreclosure. .................................................................... 14
EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY
863\75\578903.3
RECORDING REQUESTED PURSUANT
AND WHEN RECORDED MAIL TO:
Contra Costa County
Department of Conservation and Development-
Redevelopment Division
2530 Arnold Drive, Suite 190
Martinez, CA 94553
Attn: Deputy Director- Redevelopment.
No fee for recording pursuant to
Government Code Section 27383
FIRST AMENDED AND RESTATED INTERCREDITOR AGREEMENT
(Casa Adobe Apartments)
This First Amended and Restated Intercreditor Agreement(the "Agreement") is made as
of 2008,by and among the Redevelopment Agency of the City of San Pablo, a
public body, corporate and politic (the "Agency"), the County of Contra Costa, a political
subdivision of the State of California (the "County"), and San Pablo Senior Associates, L.P., a
California limited partnership (the "Borrower"), with reference to the following facts:
A. The Borrower intends to acquire and rehabilitate fifty-four(54)units of
multifamily housing (the "Development") on certain real property located at 1924 Church Lane
in the City of San Pablo, County of Contra Costa, as further described on the attached Exhibit A
(the "Property").
B. Pursuant to the Disposition, Development and Loan Agreement dated as of June
5, 1989, as amended from time to time, (the "Agency Agreement"), the Agency has previously
agreed to loan San Pablo Senior Housing Associates, a California Limited Partnership ("SPSHA,
L.P.")Eight Hundred Twenty.Four Thousand Six Hundred Seventy Dollars (824,670), with a
simple interest rate of three percent(3%) (the "Original Agency Loan"), consisting of
Redevelopment Agency Low and Moderate Income Housing Funds. The Original Agency Loan
is evidenced by a promissory note by SPSHA, L.P. in favor of the Agency. The Borrower's
obligation to repay the Original Agency Loan, as evidenced by the promissory note from
SPSHA,L.P.was secured by a deed of trust on the Property executed by SPSHA, L.P. dated
December 11, 1989 and recorded in the official records of the County of Contra Costa(the
"Official Records") as Instrument No. 89-263175 on December 28, 1989 (the "County/Agency
Deed of Trust"). As of the date of this Agreement,the outstanding principal and interest
accrued on the Original Agency Loan is One Million Two Hundred Thirty Thousand Dollars
Three Hundred Fifty Eight Dollars (1,230,358).
C. Pursuant to a CDBG Project Agreement 15-65 dated as of December 1, 1989,
(the "Project Agreement"),by and between the County and SPSHA, L.P.,the County had agreed
to loan SPSHA, L.P. a total of Three Hundred Thirty Thousand Dollars, with an interest rate of
three percent(3%) compounded, annually (the "Original County Loan"). The Original County
1
863\75\579829.3
Loan is evidenced by a promissory note executed by SPSHA, L.P. dated December 11, 1989 and
secured by the County/Agency Deed.of Trust. As of the date of this Agreement, the outstanding
principal and interest accrued on the Original County Loan is Five Hundred Sixty Thousand
Eight Hundred Fifty Two Dollars ($560,852).
D. In connection with the Original Agency Loan and the Original County Loan, the
Agency and the County entered into that certain Intercreditor Agreement dated December 20,
1989 and recorded in the Official Records as instrument No. 89-263174 (the "Original
Intercreditor Agreement"), where the Agency and the County agreed to secure their respective
loans to SPSHA, L.P. with the County/Agency Deed of Trust.
E. On , 2007 SPSHA sold the Property to EAH, Inc., a
California nonprofit public benefit corporation("EAH"), and EAH assumed the Original Agency
Loan and the Original County Loan.
F. Borrower wishes to acquire the Property from EAH and to subsequently
rehabilitate the Development.
G. The Agency and the County wish to assist the Borrower in acquiring and
rehabilitating the Development,by assigning the Original Agency Loan and the Original County
Loan to the Borrower and modifying the terms of the Original Agency Loan and the Original
County Loan.
H. The modified terms of the Original Agency Loan include increasing the total
principal amount of the Original Agency Loan to include all of the accrued interest on the
Original Agency Loan as of the date of this Agreement, so that the total principal amount of the
Original Agency Loan which the Borrower will assume is One Million Two Hundred Thirty
Thousand three Hundred Fifty Eight Dollars ($1,230,358) (the "New Agency Loan"). The New
Agency Loan is evidenced by a promissory note by Borrower in favor of the Agency (the
"Agency Note"), which will be secured be a deed of trust on the Property(the "Agency Deed of
Trust") (collectively, the Agency Note and the Agency Deed of Trust shall be referred to as the
"Agency Documents").
L The modified terms of the Original County Loan include increasing the total
principal amount of the loan to include all of the accrued interest on the Original County Loan as
of the-date of this Agreement, so that the total amount of the loan is Five Hundred Sixty
Thousand Eight Hundred Fifty Two Dollars ($560,852) (the "County Loan"). Pursuant to that
certain CDBG Loan Agreement dated of even date herewith by and among the County, the
Borrower, and EAH, the County has agreed to assign and advance the County Loan to the
Borrower, consisting of Community Development Block Grant funds. The County Loan is
evidenced by a promissory note by Borrower in favor of the County(the "County Note"), which
will be secured be a deed of trust on the Property(the "County Deed of Trust").
J. The Agency,the County, and the Borrower(the "Parties")wish the Agency Loan
Deed of Trust and the County Deed of Trust(collectively, the "Deeds of Trust")to be equal in
lien priority and for the Parties to share,based on the Prorata Percentages (as defined below), in
the Lender's Share of Residual Receipts of the Development(defined below) and in any proceeds
2
863\75\579829.3 '
derived from a foreclosure of any of the Deeds of Trust. This Agreement amends, restates and
replaces the Original Intercreditor Agreement in its entirety.
NOW, THEREFORE, the Parties agree as follows:
1. Definitions. The following definitions shall apply for purposes of this
Agreement:
(a) "Annual Operating Expenses" with respect to a particular calendar year
shall mean the following costs reasonably and actually incurred for 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 imposed on the Development; debt service currently due on a
non-optional basis (excluding debt service due from residual receipts or surplus cash of the
Development) on loans associated with development of the Development and approved by the
County and the Agency; issuer fees; property management fees and reimbursements, not to
exceed fees and reimbursements which are standard in the industry and pursuant to a
management contract approved by the County and the Agency;premiums for property damage
and liability insurance;utility services not paid for directly by tenants, including water, sewer,
and trash collection; maintenance and repair; any annual license or certificate of occupancy fees
required for operation of the Development; security services; advertising and marketing; cash
deposited into reserves for capital replacements of the Development in an amount not to exceed
six tenths of one percent(.6%) of the total development cost of the Development; cash deposited
into an operating reserve in an amount not to exceed three percent(3%) of Annual Operating
Expenses or the amount required in connection with any permanent loans for the Development
and the tax credit syndication, whichever is greater(or any greater amount approved by the
County and the Agency)but with the operating reserve capped at six(6) months gross rent from
the Development(as such rent may vary from time to time); tenant services in an amount
approved by the County and the Agency and pursuant to a tenant services plan approved
annually by the County and the Agency; payment of any previously unpaid portion of the
developer fee due Borrower(or Borrower's sponsor organization) (without interest) not
exceeding a cumulative developer fee due Borrower(or Borrower's sponsor organization) in the
maximum amount set forth in the Agency Documents and the County Loan Agreement;
extraordinary operating costs specifically approved by the County and the Agency; and other
ordinary and reasonable operating expenses not listed above. Annual Operating Expenses shall
not include the following: depreciation, amortization, depletion or other non-cash expenses; any
amount expended from a reserve account; and any capital cost with respect to the Development,
as determined by the accountant for the Development.
(b) "Gross Revenue" with respect to a particular calendar year shall mean all
revenue, income, receipts, and other consideration actually received from 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; net proceeds from vending and
laundry room machines; the proceeds of business interruption or similar insurance and not paid
to senior lenders; the proceeds of casualty insurance not used to rebuild the Development and not
paid to senior lenders; and condemnation awards for a taking of part or all of the Development
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for a temporary period and not paid to senior lenders. Gross Revenue shall not include tenants'
security deposits, loan proceeds, capital contributions or similar advances.
(c) "Lenders' Share of Residual Receipts" shall mean seventy-five percent
(75%) of the Residual Receipts.
(d) "Net Proceeds of Permanent Financing" shall mean the portion of the
Approved Financing (as defined in the County Loan Agreement)that is not required to pay the
costs of acquisition and rehabilitation of the Development(including, but not limited to,the
funding of reserves). Net Proceeds of Permanent Financing, if any, shall be determined pursuant
to the procedures set forth in Section 4 below.
(e) "Prorata Percentages" means, at any time any determination thereof is to
be made, (i) for the Agency, the percentage resulting from dividing the Agency Loan funds
disbursed to the Borrower in accordance with the Agency Documents by the sum of such
Agency Loan funds and County Loan funds disbursed to the Borrower in accordance with the
applicable agreements, and(ii) for the County, the percentage resulting from dividing the County
Loan funds disbursed to the Borrower in accordance with the County Loan Agreement over the
sum of such County Loan funds and Agency Loan funds disbursed to the Borrower in
accordance with the applicable agreements. In calculating the Prorata Percentages, Agency Loan
funds and County Loan funds that have been repaid shall be deemed not to have ever been
disbursed.
(f) "Residual Receipts" in a particular calendar year shall mean the amount by
which Gross Revenue (as defined above) exceeds Annual Operating Expenses (as defined above)
for that calendar year.
2. Loans. The Agency shall make the Agency Loan to the Borrower in accordance
with the Agency Agreement. The County shall make the County Loan to the Borrower in
accordance with the County Loan Agreement.
3. Prorata Payment.
(a) No later than May 1 of each calendar year, commencing on May 1, 2010,
the Borrower shall pay the County and the Agency, respectively, their Prorata Percentages of the
Lenders' Share of Residual Receipts. Payments to the County under this subsection shall be
credited as repayments to the County Loan. Payments to the Agency under this subsection shall
be credited as repayments of the Agency Loan.
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(b) The Agency Loan shall be repaid by the Borrower pursuant to the
repayment terms in the Agency Documents, subject to applicable notice and cure periods,.
pursuant to the Agency Documents. In the event of any conflict between the repayment terms
and provisions of the Agency Documents and this Agreement, the provisions of this Agreement
shall apply. The Agency shall not consent to any amendment or waiver of such repayment terms
that might reasonably be considered to impair the County's security under the County Loan
without the County's prior written approval, which the County may withhold in its sole
discretion.
(c) The County Loan shall be repaid by the Borrower pursuant to the
repayment terms in the County Loan Agreement and the County Note. The County shall not
consent to any amendment or waiver of such repayment terms that might reasonably be
considered to impair the Agency's security under the Agency Loan without the Agency's prior
written approval, which the Agency may withhold in its sole discretion.
4. Special Repayments from Net Proceeds of Permanent Financing. Borrower shall
make special repayments of the Agency Loan and the County Loan in a total amount equal to the
Net Proceeds of Permanent Financing, which amount shall be allocated between the Agency
Loan and the County Loan in accordance with the Agency's and County's Prorata Percentages.
The amount of the Net Proceeds of Permanent Financing shall be determined by the Borrower
and submitted to the County and Agency for approval on the date the Borrower submits the final
cost audit for the Development to the California Tax Credit Allocation Committee. The amount
of the Net Proceeds of Permanent Financing shall be calculated using the actual amount of the
permanent Approved Financing realized by the Borrower,provided that Borrower provides
sufficient evidence that the actual amount of permanent Approved Financing realized by
Borrower is the maximum amount that Borrower could secure for the Development applying
reasonable underwriting standards. The Borrower shall also submit to the County and Agency
any additional documentation sufficient to verify the amount of the Net Proceeds of Permanent
Financing. The County and Agency shall each approve or disapprove Borrower's determination
of the amount of the Net Proceeds of Permanent Financing in writing within thirty(30) days of
their receipt of Borrower's cost audit and supplemental documentation. If Borrower's
determination is disapproved by the County or Agency, Borrower shall re-submit documentation
to the County and Agency until both County and Agency approval is obtained. The County's and
Agency's shares of the Net Proceeds of Permanent Financing shall be due the County and
Agency from the Borrower no later than five (5) days following the date Borrower receives its
final capital contribution from the Borrower's limited partner investor. As of the date of this
Agreement,this final capital contribution is expected to be received on or before
5. Reports and Accounting of Residual Receipts.
(a) Audited Financial Statement. In connection with the annual repayment of
the Agency Loan and the County Loan,the Borrower shall furnish to the Agency and the County
an audited statement duly certified by an independent firm of certified public accountants
approved by the Agency and the County, setting forth in reasonable detail the computation and
amount of Residual Receipts during the preceding calendar year.
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y
:V
(b) Books and Records. The Borrower shall keep and maintain at Borrower's
office, or elsewhere with the County's and Agency'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 Borrower's
calculation of Residual Receipts. Books, records and accounts relating to Borrower's compliance
with the terms, provisions, covenants and conditions of this Agreement shall be kept and
maintained in accordance with generally accepted accounting principles consistently applied, and
shall be consistent with requirements of this Agreement which provide for the calculation of
Residual Receipts on a cash basis. All such books,records, and accounts shall be open to and
available for inspection by the County and the Agency. Their auditors or other authorized
representatives at reasonable intervals during normal business hours. Copies of all tax returns
and other reports that Borrower may be required to furnish any governmental agency shall at all
reasonable times be open for inspection by the County and the Agency at the place that the
books, records and accounts of the Borrower are kept. The Borrower shall preserve records on
which any statement of Residual Receipts is based for a period of not less than five (5)years
after such statement is rendered, and.for any period during which there is an audit undertaken
pursuant to subsection(c)below then pending.
(c) County and A gencv Audits. The receipt by the County or the Agency of
any statement pursuant to subsection (a) above or any payment by Borrower or acceptance by the
County or the Agency of any loan repayment for any period shall not bind the County or the
Agency as to the correctness of such statement or such payment. Within three (3)years after the
receipt of any such statement, the County or the Agency or any designated agent or employee of
the County and/or the Agency at any time shall be entitled to audit the Residual Receipts and all
books, records, and accounts pertaining thereto. Such audit shall be conducted during normal
business hours at the principal place of business of Borrower and other places where records are
kept. Immediately after the completion of an audit, the County or the Agency shall deliver a
copy of the results of such audit to Borrower. If it shall be determined as a result of such audit
that there has been a deficiency in a loan repayment to the County and/or the Agency, then such
deficiency shall become immediately due and payable with interest at the Default Rate set forth
in the County Loan Agreement or the Agency Documents, as applicable, determined as of and
accruing from the date that said payment should have been made. In addition, if Borrower's
auditor's statement for any calendar year shall be found to have understated Residual Receipts by
more than five percent(5%) and the County and/or the Agency are entitled to any additional
County Loan and Agency Loan repayment as a result of said understatement, then Borrower
shall pay, in addition to the interest charges set forth in the preceding sentence referenced
hereinabove, all of the County's and/or the Agency's reasonable costs and expenses connected
with any audit or review of Borrower's accounts and records.
6. Deeds of Trust. The Agency shall secure the Agency Loan with the Agency Deed
of Trust. The County shall secure the County Loan with the County Deed of Trust. The Agency
Deed of Trust shall be recorded in prior lien position to the County Deed of Trust, but the two
Deeds of Trust shall share co-equal lien priority, and the Agency and the County agree to share
foreclosure, insurance, and condemnation proceeds in accordance with the Prorata Percentages.
Upon recordation of the Agency Deed of Trust,the County Deed of Trust and this Agreement,
the County/Agency Deed of Trust shall be reconveyed and the Original Intercreditor Agreement
shall be terminated.
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7. Notice of Default.
(a) The County and the Agency shall each notify the other promptly upon
declaring a default or learning of the occurrence of any material event of default, or any event
which with the lapse of time would become a material event of default, under its respective loan
documents for the Agency Loan and the County Loan.
(b) Each of the Agency and the County agrees not to make a demand for
payment from Borrower or accelerate the County Note or the Agency Note, as the case may be,
or commence enforcement of any of the rights and remedies under the Agency Deed of Trust or
County Deed of Trust, as the case may be, until the date which is five (5)business days
following delivery of written notice by the Party enforcing its rights (the "Enforcing Party")to
the other Party stating that a "Default" (as defined in the relevant Deed of Trust)has occurred
and is continuing and that the Enforcing Party is requesting the other Party's assistance in
foreclosure pursuant to Section 8.
8. Cooperation in Foreclosure.
(a) In the event of a default under the Agency Loan and/or the County Loan,
after expiration of any applicable cure periods, the party who is the lender on the defaulted loan
shall cooperate with the other party to coordinate any foreclosure proceedings or other
appropriate remedies.
(b) Neither the County nor the Agency shall contest the validity, perfection
priority or enforceability of the lien granted by the respective Deed of Trust to the other Party.
Notwithstanding any failure of a party to perfect its lien on the Property or any other defect in the
security interests or obligations owing to such Party, the priority and rights as between the
Parties hereto shall be as set forth herein.
9. Foreclosure Proceeds. If there is a foreclosure, or any other action,judicial or
nonjudicial,under either or both of the Deeds of Trust(including the giving of a deed in lieu of
foreclosure), then the Agency and the County shall be entitled to share in any proceeds which
shall ensue from such action, after any and all senior lienholders have been satisfied, and after
payment of all reasonable expenses of both Parties incurred in connection with the action in
accordance with each of their Prorata Percentages.
10. Title to Property. If either of the Agency or the County is entitled to title to the
Property as a consequence of the Borrower's default, then title shall be held in tenancy in
common by both of them, with the percentage ownership of each based on the Prorata
Percentages. Subsequent decisions to hold or sell the Property shall be made by joint decision of
the Agency and the County.
11. Notices. Formal notices, demands, and communications between the Parties shall
not be deemed given unless dispatched by certified mail, return receipt requested, or express
delivery service with a delivery receipt, or personal delivery with a delivery receipt,to the
principal office of the Parties as follows:
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863\75\579829.3
Agency: Redevelopment Agency of the City of San Pablo
13831 San Pablo Avenue
San Pablo CA 94806
Attention: Executive Director
County: County of Contra Costa
County Department of Conservation and Development—
Redevelopment Division
2530 Arnold Drive, Suite 190
Martinez, CA 94553
Attention: Deputy Director- Redevelopment
Borrower: San Pablo Senior Associates II,L.P.
c/o EAH, Inc.
2169 East Francisco Boulevard, Suite B
San Rafael, CA 94901
Attention: Executive Director
With a copy to:
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 as provided in this Section.
Receipt shall be deemed to have occurred on the date marked on a written receipt as the date of
delivery or refusal of delivery(or attempted delivery if undeliverable).
12. Titles. Any titles of the sections or subsections of this Agreement are inserted for
convenience of reference only and shall be disregarded in interpreting any part of the
Agreement's provisions.
13. California Law. This Agreement shall be interpreted under and pursuant to the
laws of the State of California.
14. Severability. If any term of this Agreement is held in a final disposition by a
court of competent jurisdiction to be invalid, then the remaining terms shall continue in full force
unless the rights and obligations of the Parties have been materially altered by such holding of
invalidity.
15. Legal Actions. If any legal action is commenced to interpret or to enforce the
terms of this Agreement or to collect damages as a result of any breach of this Agreement, then
863\75\579829.3 8
the Party prevailing in any such action shall be entitled to recover against the Party not prevailing
all reasonable attorneys' fees and costs incurred in such action.
16. Entire Agreement. This Agreement constitutes the entire understanding and
agreement of the Parties with respect to the distribution of proceeds upon foreclosure of or other
remedies under the Deeds of Trust.
17. Counterparts. This Agreement may be executed in multiple originals, each of
which is deemed to be an original, and may be signed in counterparts.
18. Amendments. This Agreement shall not be modified except by written instrument
executed by and between the Parties. The County shall not, without the written consent of the
Agency, agree to an amendment of the County Loan Agreement or the County Note that would
reasonably be expected to materially adversely affect the Agency. The Agency shall not, without
the written consent of the County, agree to an amendment of the Agency Documents that would
reasonably be expected to materially adversely affect the County.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
written above.
COUNTY OF CONTRA COSTA,
a political subdivision of the State of California
By:
James Kennedy, Deputy Director
Redevelopment
APPROVED AS TO FORM:
Silvano B. Marchesi
County Counsel
By:
Keiko Kobayashi
Deputy County Counsel
SAN PABLO SENIOR ASSOCIATES II, L.P.,
a California limited partnership
By:
a California nonprofit public benefit
corporation, its general partner
By:
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863\75\579829.3
Name:
Its:
REDEVELOPMENT AGENCY OF THE CITY
OF SAN PABLO, a public body coiporate and
politic
By:
Name:
Its:
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863\75\579829.3
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 (Seal)
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 (Seal)
863\75\579829.3
STATE OF CALIFORNIA )
COUNTY OF )
On 120 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 ofthe State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
863\75\579829.3
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
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A-1
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863\75\579829.3