HomeMy WebLinkAboutMINUTES - 10122010 - C.62RECOMMENDATION(S):
APPROVE and AUTHORIZE the Conservation and Development Director, or designee, to
execute required loan documents to provide $1,525,000 in Community Development Block
Grant (CDBG) funds to Berrellesa Palms L.P. for the Berrellesa Palms senior housing
project in Martinez.
FISCAL IMPACT:
No General Fund impact. CDBG funds are provided to the County on a formula allocation
basis through the U.S. Department of Housing and Urban Development (HUD). CFDA#
14.218
BACKGROUND:
The purpose of the Berrellesa Palms project is to increase the supply of multi-family rental
housing affordable to lower income senior households in Central County. The project is a
49-unit apartment building to be constructed at 301 Berrellesa Street, Martinez by
Berrellesa Palms L.P. a subsidiary of Resources for Community Development (RCD). RCD
has developed 12 other projects in Contra Costa.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 10/12/2010 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I
Supervisor
Gayle B. Uilkema, District II
Supervisor
Mary N. Piepho, District III
Supervisor
Susan A. Bonilla, District IV
Supervisor
Federal D. Glover, District V
Supervisor
Contact: Kara Douglas
335-7223
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board
of Supervisors on the date shown.
ATTESTED: October 12, 2010
David J. Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc:
C.62
To:Board of Supervisors
From:Catherine Kutsuris, Conservation & Development Director
Date:October 12, 2010
Contra
Costa
County
Subject:APPROVAL OF COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS LOAN DOCUMENTS FOR
BERRELLESA PALMS SENIOR APARTMENTS IN MARTINEZ
The
BACKGROUND: (CONT'D)
total expected cost developing the apartment building is $21.3 million. Through previous
Board actions, the County has approved the following in support of the project:
1. $1,525,000 in FY 2008/09 Community Development Block Grant (CDBG) to be used
to acquire the site. (April 28, 2009)
2. $1,350,000 in FY 2009/10 Home Investment Partnerships Program (HOME) to be
used for development-related expenses, such as soft costs (e.g., professional, legal, and
financing costs), permits and fees, and construction hard costs. (April 29, 2008)
3. $310,000 in Housing Opportunity for Persons with HIV/AIDs (HOPWA) to be used
for the same purposes as the HOME funds. (June 11, 2009)
Sources of additional funds to complete the development are being evaluated and may
include low income housing tax credits or federal Section 202 Housing for Elderly funds.
The CDBG loan documents may need to be amended in the future to meet the
requirements of the other funding entities.
CDBG funds will be loaned at a three percent interest rate for 55 years. Due to the high
construction costs and limited revenue from the restricted rents, the total amount of the
financing provided to the project will likely exceed the value of the completed project.
Even though the expected tax credit equity investment is substantial compared to the
amount of long term debt, the partnership agreement has numerous safe guards of the
investors equity. These safe guards essentially subordinate the County’s debt to the
investor’s equity. Therefore, the County funds may not be fully secured through the
value of the property.
The CDBG legal documents (Loan Documents) are attached and include the following
documents:
• CDBG Loan Agreement
• Promissory Note
• Regulatory Agreement
• Deed of Trust
This recommended action includes authorization to execute any and all documents and to
take any and all actions necessary to implement the activities authorized under the Loan
Documents, including execution of loan amendments or modifications for the purposes of
agreeing to reasonable extensions of time deadlines, and estoppel certificates concerning
the status of the loan and the existence of Borrower defaults under the Loan Documents.
CEQA Determination:
The Board approved the CEQA Notice of Exemption when it approved predevelopment
loan documents on March 23, 2010.
CONSEQUENCE OF NEGATIVE ACTION:
If the Board does not approve the attached loan documents, the borrower will not be able
to meet the requirements of the purchase agreement and may not be able to negotiate a
longer escrow close. If the purchase agreement is not extended, then this site will not be
available for this affordable housing development.
CHILDREN'S IMPACT STATEMENT:
Not applicable
ATTACHMENTS
Berrellesa Deed of Trust
Berrellesa Promissory Note
Berrellesa Regulatory Agreement
Berrellesa Loan Agreement
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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
Attention: Deputy Director - Redevelopment
No fee for recording pursuant to
Government Code Section 27383
DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, AND FIXTURE FILING
(Berrellesa Palms Senior Housing - CDBG Loan)
THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY
AGREEMENT, AND FIXTURE FILING ("Deed of Trust") is made as of October 1, 2010, by
and among Berrellesa Palms L.P., a California limited partnership ("Trustor"), Chicago 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, IN TRUST, 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;
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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 will 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
863\82\747495.3 3
are 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 secures 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 have
the following meanings in this Deed of Trust:
Section 1.1 The term "Loan" means the loan made by the Beneficiary to the Trustor in
the amount of One Million Five Hundred Twenty-Five Thousand Dollars ($1,525,000).
Section 1.2 The term "Loan Agreement" means that certain CDBG Loan Agreement
between Trustor and Beneficiary, of even date herewith, as such may be amended from time to
time, providing for the Beneficiary to loan to the Trustor One Million Five Hundred Twenty-
Five Thousand Dollars ($1,525,000).
Section 1.3 The term "Loan Documents" means this Deed of Trust, the Note, the Loan
Agreement, and the Regulatory Agreement, and any other debt, loan or security instruments
between Trustor and the Beneficiary relating to the Loan.
Section 1.4 The term "Note" means the Promissory Note in the principal amount of
One Million Five Hundred Twenty-Five Thousand Dollars ($1,525,000) of even date herewith,
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.)
Section 1.5 The term "Principal" means the amount required to be paid under the
Note.
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Section 1.6 The term "Regulatory Agreement" means the Regulatory Agreement and
Declaration of Restrictive Covenants of even date herewith 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 has 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 or 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 exercises its rights as agent of Trustor
only in the event that Trustor fails to take, or fails 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 specifies 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 requires 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
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law, and
as approved, in writing, by Beneficiary.
863\82\747495.3 5
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 will
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 contains 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, 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
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
863\82\747495.3 6
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 will 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 are to 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 is to have access to the books and records used in the
operation and maintenance of the Property and will be liable to account only for those rents
actually received. Beneficiary is not 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 will become part of the Secured Obligations pursuant to Section 3.3 hereof. Unless
Beneficiary and Trustor agree in writing to other terms of payment, such amounts are payable by
Trustor to Beneficiary upon notice from Beneficiary to Trustor requesting payment thereof and
will bear interest from the date of disbursement at the rate stated in Section 3.3.
If the Beneficiary or the receiver enters upon and takes and maintains control of the
Property, neither that act nor any application of rents as provided herein will cure or waive any
default under this Deed of Trust or invalidate any other right or remedy available to Beneficiary
under applicable law or under this Deed of Trust. This assignment of rents of the Property will
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 that are or
may become a lien affecting the Security or any part thereof; provided, however, that Trustor is
not required to pay and discharge any such tax, assessment, charge or levy so long as (a) the
legality thereof is 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
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the Security; provided, however, if such taxes, assessments or charges can 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 may 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 fails to pay any of the items required by this Section to be paid
by Trustor, Beneficiary may (but is 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, will 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, all Secured Obligations secured
hereunder have been fulfilled, and this Deed of Trust has been reconveyed.
All such insurance policies and coverages are to 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, are to 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 fails to maintain the full insurance coverage required by this
Deed of Trust or fails to keep the Security in accordance with the Loan Documents, the
Beneficiary, after at least seven (7) days prior notice to Trustor, may (but is under no obligation
to) (i) take out the required policies of insurance and pay the premiums on the same, and (ii)
make any repairs or replacements that are necessary and provide for payment thereof. All
amounts so advanced by the Beneficiary will become part of the Secured Obligations (together
with interest as set forth below) and will be secured hereby, which amounts the Trustor agrees to
pay on the demand of the Beneficiary, and if not so paid, will bear interest from the date of the
advance at the lesser of ten percent (10%) per annum or the maximum rate permitted by law.
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) the 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
any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the
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Property (collectively, the "Funds") are hereby assigned to and are to 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
to any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary
determines at its sole option. The Beneficiary is 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 will 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) has sufficient funds to rebuild the improvements in substantially
the form that existed prior to the casualty or condemnation.
ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER
ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements 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 employs attorneys or incurs other expenses for the collection of amounts due
hereunder 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. Any such amounts paid by the Beneficiary will be added to the
Secured Obligations, and will 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.
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 is deemed to be fixtures and part of the real property and this Deed of Trust constitutes a
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fixtures filing under the California Commercial Code. As to any personal property not deemed
or permitted to be fixtures, this Deed of Trust constitutes 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 shall
perform all acts that the Beneficiary reasonably requests so as to enable the Beneficiary to
maintain a 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 deems 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, may
inspect the Security, without payment of charges or fees.
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 will be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, age, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor will 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
run with the land.
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
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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 of: (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 Section 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 has 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 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).
Without Beneficiary's prior written consent, which may not be unreasonably withheld,
Trustor may 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,
863\82\747495.3 11
consent decree or compromise might, in Beneficiary's reasonable judgment, impairs the value of
the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent is not
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
notifies 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 will 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 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, will be added to the indebtedness secured by this Deed of Trust and
will be due and payable to the Beneficiary upon its demand made at any time following the
conclusion of such action.
863\82\747495.3 12
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
The following are events of default ("Events of Default") following the expiration of any
applicable notice and cure periods: (i) failure to make any payment to be paid by Trustor under
the Loan Documents; (ii) 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; (iii) failure to make any payment or observe or perform
any of Trustor's other covenants, agreements, or obligations under any Secured Obligations,
which default is not cured within the times and in the manner provided therein; and (iv) failure to
make any payments 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 is not cured within the time and in the manner provided therein.
Section 7.2 Acceleration of Maturity.
If an Event of Default has occurred and is continuing, then at the option of the
Beneficiary, the amount of any payment related to the Event of Default and all unpaid Secured
Obligations are immediately due and payable, and no omission on the part of the Beneficiary to
exercise such option when entitled to do so may 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 has occurred and is 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 Property 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 that 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 will 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 in
possession of the Security, Beneficiary will 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 an Event 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
863\82\747495.3 13
(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 will 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 the Notice of Sale from the Beneficiary, Trustee shall
cause to be recorded, published and delivered to Trustor such Notice of Sale as is then required
by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after the lapse of
that amount of time as is then required by law and after recordation of such Notice of Sale as
required by law, sell the Security, at the time and place of sale set forth in the Notice of Sale,
whether as a whole or in separate lots or parcels or items, as Trustee deems expedient and in
such order as it determines, 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 will 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
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 occurs and is 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, may 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 will have all the usual powers and duties of receivers in
863\82\747495.3 14
like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided
herein, and will 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 will be cumulative and concurrent and will 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 will exhaust or impair any such right, power or
remedy, and may not 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 will 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, will 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 will 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 will any such
act or omission preclude the Beneficiary from exercising any right, power or privilege 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, will the lien of this Deed of Trust be altered thereby.
Section 7.8 Suits to Protect the Security.
The Beneficiary has the 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
863\82\747495.3 15
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, will 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 that becomes 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.
Section 8.3 Notices.
If at any time after the execution of this Deed of Trust it becomes 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 must be in writing and is to 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 is to be addressed to:
863\82\747495.3 16
County of Contra Costa
Department of Conservation and Development
Redevelopment Division
2530 Arnold Dr., Suite 190
Martinez, CA 94553
Attention: Deputy Director – Redevelopment
and (2) if intended for Trustor is to be addressed to:
Berrellesa Palms, L.P.
c/o Resources for Community Development
2220 Oxford Street
Berkeley, CA 94704
Attention: Executive Director
Any notice, demand or communication will 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 also applies to
and binds 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 will 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 will 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.
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 will not affect the balance of
the terms and provisions hereof, which terms and provisions will 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, will be considered to have been first
paid or applied to the full payment of that portion of the debt that is not secured or partially
863\82\747495.3 17
secured by the lien of this Deed of Trust.
Section 8.7 Governing Law.
This Deed of Trust is governed by the laws of the State of California.
Section 8.8 Gender and Number.
In this Deed of Trust the singular includes the plural and the masculine includes 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 also refers to a deed of trust and any
reference to a deed of trust also refers to a mortgage.
Section 8.10 Actions.
Trustor shall 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 will be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution is to 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, will 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.
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 a pending sale under this Deed of Trust or of any action or
proceeding in which Trustor, Beneficiary, or Trustee is 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, and to the extent applicable,
the Beneficiary acknowledges and agrees that in the event of a foreclosure or deed-in-lieu of
863\82\747495.3 18
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, applies:
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.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Signature page
County Deed of Trust
863\82\747495.3
19
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first
above written.
BERRELLESA PALMS, L.P., a California limited
partnership
By: RCD HOUSING LLC , a California limited
liability company, its general partner
By: 112 Alves Lane, Inc. a California
nonprofit public benefit corporation, its
sole member/manager
By:____________________
Its:____________________
863\82\747495.3
STATE OF CALIFORNIA )
)
COUNTY OF CONTRA COSTA )
On ____________ __, 2010, before me, _______________, Notary Public, personally appeared,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name is
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity, and that by his/her/their signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ________________________________ (seal)
A-1
863\82\747495.3
EXHIBIT A
LEGAL DESCRIPTION
The land is situated in the State of California, County of Contra Costa, and is described as
follows:
863\82\747497.3 1
PROMISSORY NOTE
(Berrellesa Palms Senior Housing CDBG Loan)
$1,525,000 Martinez, California
October 1, 2010
FOR VALUE RECEIVED, the undersigned Berrellesa Palms 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 ("Holder"), the principal amount of One
Million Five Hundred Twenty-Five Thousand Dollars ($1,525,000) plus interest thereon
pursuant to Section 2 below.
1. Borrower's Obligation. This Note evidences Borrower's obligation to repay
Holder the principal amount of up to One Million Five Hundred Twenty-Five Thousand Dollars
($1,525,000) for the funds loaned to Borrower by Holder to finance the acquisition of the
Property pursuant to the CDBG Loan Agreement between Borrower and Holder of even date
herewith (the "Loan Agreement"). All capitalized terms used but not defined in this Note have
the meanings set forth in the Loan Agreement.
2. Interest.
(a) Subject to the provisions of Subsection (b) below, interest will accrue on
the outstanding principal balance of the Loan at a per annum rate of interest equal to three
percent (3%), commencing on the date of disbursement.
(b) If an Event of Default occurs, interest will accrue on all amounts due
under this Note at the Default Rate until such Event of Default is cured by Borrower or waived
by Holder.
3. Term and Repayment Requirements. The unpaid principal balance hereunder,
together with accrued interest thereon, is due and payable no later than the date that is the fifty-
fifth (55th) anniversary of the Completion Date; provided, however, if a record of the Completion
Date cannot be located or established, the Loan will be due and payable on the sixtieth (60th)
anniversary of the date of this Note. This Note is due and payable as set forth in Section 2.8 of
the Loan Agreement.
4. No Assumption. This Note is not assumable by the successors and assigns of
Borrower without the prior written consent of Holder, except as provided in the Loan
Agreement.
5. Security. This Note, with interest, is secured by the Deed of Trust. Upon
execution, the Deed of Trust will be recorded in the official records of Contra Costa County,
California. Upon recordation of the Deed of Trust, this Note will become nonrecourse to
Borrower, pursuant to and except as provided in Section 2.9 of the Loan Agreement. The terms
of the Deed of Trust are hereby incorporated into this Note and made a part hereof.
863\82\747497.3 2
6. Terms of Payment.
(a) Borrower shall make all payments due under this Note in currency of the
United States of America to Holder at 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 may from time to time
designate.
(b) All payments on this Note are without expense to Holder. Borrower shall
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.
(c) 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 that exceeds 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 will automatically
be deducted from the principal balance owing on this Note, so that in no event is Borrower
obligated under the terms of this Note to pay any interest that would exceed the lawful rate.
(d) The obligations of Borrower under this Note are 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.
7. Event of Default; Acceleration.
(a) Upon the occurrence of an Event 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 will, at the option of Holder, become immediately due and
payable without further demand.
(b) Holder's failure to exercise the remedy set forth in Subsection 7(a) above
or any other remedy provided by law upon the occurrence of an Event of Default does not
constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the
same or any other Event of Default. The acceptance by Holder of any payment that is less than
the total of all amounts due and payable at the time of such payment does not constitute a waiver
of the right to exercise any of the foregoing remedies 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
863\82\747497.3 3
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
must not operate to release, discharge, modify, change or affect the original liability of Borrower
under this Note, either in whole or in part.
9. Miscellaneous Provisions.
(a) All notices to Holder or Borrower are to 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.
(c) This Note is governed by the laws of the State of California.
(d) The times for the performance of any obligations hereunder are to be
strictly construed, time being of the essence.
(e) The Loan Documents, of which this Note is a part, contain the entire
agreement between the parties as to the Loan. This Note may not be modified except upon the
written consent of the parties.
IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the day
and year first above written.
BERRELLESA PALMS, L.P., a California limited
partnership
By: RCD HOUSING LLC, a California limited
liability company, its general partner
By: 112 Alves Lane, Inc. a California
nonprofit public benefit corporation, its
sole member/manager
By:____________________
Its:____________________
1
863\82\747598.4
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Contra Costa County
Department of Conservation and Development
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
(Berrellesa Palms Senior Housing
CDBG Funds and HOME Funds)
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement")
is dated October 1, 2010 and is between the County of Contra Costa, a political subdivision of
the State of California (the "County"), and Berrellesa Palms, L.P., a California limited
partnership ("Borrower").
RECITALS
A. Defined Terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
B. Borrower is acquiring a 1.03 parcel of property located at 310 Berrellesa Street in
the City of Martinez, County of Contra Costa, State of California, as more particularly described
in Exhibit A (the "Property"). Borrower intends to construct forty-nine (49) multifamily housing
units on the Property, forty-eight of which will be for rental to low income seniors and one
manager's unit (the "Development"). The Development as well as any additional improvements
on the Property, including all landscaping, roads and parking spaces on the Property, are referred
to as the "Improvements".
C. Pursuant to a predevelopment loan agreement by and between the County and
Resources for Community Development, a California nonprofit public benefit corporation, dated
as of March 24, 2010 (the "Predevelopment Loan Agreement"), the County has made a loan of
Six Hundred Fifty Thousand Dollars ($650,000) of HOME Investment Partnerships Act funds
("HOME Funds") to fund certain predevelopment activities necessary for the construction of the
Improvements (the "HOME Loan").
D. Pursuant to a loan agreement by and between the County and Borrower of even
date herewith (the "CDBG Loan Agreement"), the County has made a loan to Borrower of One
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Million Five Hundred Twenty-Five Thousand Dollars ($1,525,000) of Community Development
Block Grant funds (the "CDBG Funds") for acquisition purposes (the "CDBG Loan"). The
HOME Loan and the CDBG Loan are collectively referred to as the "Loan".
E. The County has the authority to lend the Loan to Borrower pursuant to
Government Code Section 26227 which authorizes counties to spend county funds for programs
that will further a county's public purposes. In addition, the County has the authority to loan the
HOME Funds pursuant to 24 C.F.R. 92.205, and has authority to loan the CDBG Funds pursuant
to 24 C.F.R. 570.201.
F. The County has agreed to make the Loan on the condition that the Development
be maintained and operated in accordance with restrictions concerning affordability, operation,
and maintenance that are set forth in this Agreement and in the related documents evidencing the
HOME Loan and the CDBG Loan.
G. In consideration of receipt of the Loan at an interest rate substantially below the
market rate, Borrower agrees to observe all the terms and conditions set forth below.
The parties therefore agree as follows.
ARTICLE 1
DEFINITIONS
1.1 Definitions.
The following terms have the following meanings:
(a) "Actual Household Size" means the actual number of persons in the
applicable household.
(b) "Adjusted Income" means the total anticipated annual income of all
persons in the Tenant household as calculated pursuant to 24 C.F.R. 92.203(b)(1).
(c) "Agreement" has the meaning set forth in the first paragraph of this
Agreement.
(d) "Assumed Household Size" means the household size "adjusted for family
size appropriate to the unit" as such term is defined in Health & Safety Code Section 50052.5(h).
(e) "CDBG" means the Community Development Block Grant Program,
funded pursuant to Title I of the Housing and Community Development Act of 1974 (42 USC
5301, et seq.).
(f) "CDBG Deed of Trust" means the Deed of Trust with Assignment of
Rents, Security Agreement and Fixture Filing of even date herewith by and among Borrower, as
trustor, Chicago Title Company, as trustee, and the County, as beneficiary, that will encumber
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the Property to secure repayment of the CDBG Loan and Borrower's performance of the
covenants set forth in the documents evidencing the CDBG Loan.
(g) "CDBG Funds" has the meaning set forth in Paragraph D of the Recitals.
(h) "CDBG Loan" has the meaning set forth in Paragraph D of the Recitals.
(i) "CDBG Loan Agreement" has the meaning set forth in Paragraph D of the
Recitals.
(j) "CDBG Note" means the promissory note that evidences Borrower's
obligation to repay the CDBG Loan, as such may be amended form time to time.
(k) "City" means the City of Martinez, a municipal corporation.
(l) "Completion Date" means the date that the City has certified completion
of the Development, evidenced by issuance of a final certificate of occupancy, or equivalent
document, for the Development.
(m) "County-Assisted Units" means the twenty-four (24) Units within the
Development designated as assisted by the County pursuant to this Agreement.
(n) "Development" has the meaning set forth in Paragraph B of the Recitals.
(o) "Forty Percent Income Household" means a household with an Adjusted
Income that does not exceed forty percent (40%) of Median Income, adjusted for Actual
Household Size.
(p) "Forty Percent Units" means the Units which, pursuant to Section 2.1(c)
below, are required to be occupied by Forty Percent Income Households.
(q) "High HOME Rent" means a monthly Rent amount not exceeding the
maximum rent published by HUD for a Low Income Household for the applicable bedroom size
as set forth in 24 C.F.R. 92.252(a).
(r) "HOME" means Home Investment Partnerships Act Program funded
pursuant to the Cranston-Gonzales National Housing Act of 1990.
(s) "HOME Deed of Trust" means the Deed of Trust with Assignment of
Rents, Security Agreement and Fixture Filing of even date herewith by and among Borrower, as
trustor, Chicago Title Company, as trustee, and the County, as beneficiary, that will encumber
the Property to secure repayment of the HOME Loan and Borrower's performance of the
covenants set forth in the documents evidencing the HOME Loan.
(t) "HOME Funds" has the meaning set forth in Paragraph C of the Recitals.
(u) "HOME Loan" has the meaning set forth in Paragraph C of the Recitals.
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(v) "HOME Note" means the promissory note that evidences Borrower's
obligation to repay the HOME Loan, as such may be amended form time to time.
(w) "HOME Regulations" means the regulations set forth in 24 C.F.R. 92 et
seq.
(x) "HOME Term" means the period beginning on the date of this Agreement
and ending on the twentieth (20th) anniversary of the date of this Agreement.
(y) "HUD" means the United States Department of Housing and Urban
Development.
(z) "Loan" has the meaning set forth in Paragraph C of the Recitals.
(aa) "Loan Documents" means the documents executed by Borrower
evidencing the HOME Loan and the CDBG Loan including the CDBG Note, HOME Note,
CDBG Deed of Trust, HOME Deed of Trust, CDBG Loan Agreement, and Predevelopment
Loan Agreement.
(bb) "Low HOME Rent" means a monthly Rent amount not exceeding the
maximum rent published by HUD for a Very Low Income Household for the applicable bedroom
size as set forth in 24 C.F.R. 92.252(b).
(cc) "Low Income Household" means a Tenant household with an Adjusted
Income that does not exceed eighty percent (80%) of Median Income, with adjustments for
smaller and larger families, except that HUD may establish income ceilings higher or lower than
eighty percent (80%) of Median Income on the basis of HUD findings that such variations are
necessary because of prevailing levels of construction costs or fair market rents, or unusually
high or low family incomes, as such definition may be amended pursuant to 24 C.F.R. Section
92.2.
(dd) "Median Income" means the median gross yearly income, adjusted for
Actual 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) months, the County
shall provide Borrower with other income determinations that are reasonably similar with respect
to methods of calculation to those previously published by HUD.
(ee) "Predevelopment Loan Agreement" has the meaning set forth in Paragraph
C of the Recitals.
(ff) "Property" has the meaning set forth in Paragraph B of the Recitals.
(gg) "Rent" means the total 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
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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.
(hh) "Tenant" means the tenant household that occupies a Unit in the
Development.
(ii) "Term" means the term of this Agreement which commences as of the
date of this Agreement, and unless sooner terminated pursuant to the terms of this Agreement,
expires on the date fifty-five (55) years from the Completion Date; provided, however, if the
Completion Date is unable to be established, the Term will expire sixty (60) years after the date
of this Agreement.
(jj) "Thirty-Five Percent Income Household" means a household with an
Adjusted Income that does not exceed thirty-five percent (35%) of Median Income, adjusted for
Actual Household Size.
(kk) "Thirty-Five Percent Units" means the Units which, pursuant to Section
2.1(b) below, are required to be occupied by Thirty-Five Percent Income Households.
(ll) "Twenty Percent Income Household" means a household with an Adjusted
Income that does not exceed twenty percent (20%) of Median Income, adjusted for Actual
Household Size.
(mm) "Twenty Percent Units" means the Units which, pursuant to Section 2.1(a)
below, are required to be occupied by Twenty Percent Income Households.
(nn) "Unit(s)" means one (1) or more of the units in the Development.
(oo) "Very Low Income Household" means a household with an Adjusted
Income that does not exceed fifty percent (50%) of Median Income, with adjustments for smaller
and larger families, except that HUD may establish income ceilings higher or lower than fifty
percent (50%) of Median Income on the basis of HUD findings that such variations are necessary
because of prevailing levels of construction costs or fair market rents, or unusually high or low
family incomes, as set forth in 24 C.F.R. Section 92.2.
(pp) "Very Low Income Units" means the Units which, pursuant to Section
2.1(d) below, are required to be occupied by Very Low Income Households.
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ARTICLE 2
AFFORDABILITY AND OCCUPANCY COVENANTS
2.1 Occupancy Requirements.
(a) Twenty Percent Income Units. During the Term, Borrower shall rent three
(3) Units and ensure that these Units are occupied or, if vacant, available for occupancy, by
Twenty Percent Income Households.
(b) Thirty-Five Percent Income Units. During the Term, Borrower shall rent
seven (7) Units and ensure that these Units are occupied or, if vacant, available for occupancy,
by Thirty-Five Percent Income Households.
(c) Forty Percent Income Units. During the Term, Borrower shall rent five
(5) Units, and ensure that these Units are occupied or, if vacant, available for occupancy, by
Forty Percent Income Households.
(d) Very Low Income Units. During the Term, Borrower shall rent nine (9)
Units, and ensure that these Units are occupied or, if vacant, available for occupancy, by Very
Low Income Households.
(e) Intermingling of Units. The County-Assisted Units are to be intermingled
throughout the Development and of comparable quality to all other Units. All Tenants must have
equal access to and enjoyment of all common facilities in the Development.
(f) Disabled Persons Occupancy. Borrower shall cause the Development to
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) the Americans With
Disabilities Act of 1990, which relate to disabled persons access. Borrower shall indemnify,
protect, hold harmless and defend (with counsel reasonably satisfactory to the County) the
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 will survive expiration of the Term or other termination of this Agreement, and
remain in full force and effect.
(g) Senior Occupancy. Borrower has elected to operate the Development as a
senior housing development and as such to require all Units in the Development, except for the
resident manager's unit, to be occupied or held available for occupancy by households containing
"elderly" or "senior citizen" residents. Borrower shall operate the Development at all times in
compliance with the provisions of: (i) the Unruh Act, (ii) the United States Fair Housing Act, as
amended, and (iii) the California Fair Employment and Housing Act, which relate to lawful
senior housing. Borrower shall develop and implement appropriate age verification procedures
to ensure compliance with the requirements of this Section. Borrower shall provide the County
with a copy of its written verification procedures. Borrower shall indemnify, protect, hold
harmless and defend (by counsel reasonably satisfactory to the County) the County, and its
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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 indemnification provisions of this subsection
will survive expiration of the Term or other termination of this Agreement, and remain in full
force and effect.
2.2 Allowable Rent.
(a) Twenty Percent Income Rent. Subject to the provisions of Section 2.3
below, the Rent paid by Tenants of the Twenty Percent Income Units, may not exceed one-
twelfth (1/12th) of thirty percent (30%) of twenty percent (20%) of Median Income, adjusted for
Assumed Household Size.
(b) Thirty-Five Percent Income Rent. Subject to the provisions of Section 2.3
below, the Rent paid by Tenants of the Thirty-Five Percent Income Units, may not exceed one-
twelfth (1/12th) of thirty percent (30%) of thirty-five percent (35%) of Median Income, adjusted
for Assumed Household Size.
(c) Forty Percent Income Rent. Subject to the provisions of Section 2.3
below, the Rent paid by Tenants of Forty Percent Income Units, may not exceed one-twelfth
(1/12th) of thirty percent (30%) of forty percent (40%) of Median Income, adjusted for Assumed
Household Size.
(d) Very Low Income Rent. Subject to the provisions of Section 2.3 below,
the Rent paid by Tenants of Very Low Income Units, may not exceed the Low HOME Rent.
(e) No Additional Fees. Borrower may not charge any fee, other than Rent, to
any Tenant of the County-Assisted Units for any housing or other services provided by
Borrower.
2.3 Rent Increases; Increased Income of Tenants.
(a) Rent Increases. The initial Rents and subsequent Rents for all County-
Assisted Units must be approved by the County prior to occupancy and are subject to the HOME
Regulations. All Rent increases for all County-Assisted Units are also subject to County
approval. The Rent for such Units may be increased no more than once annually based upon the
annual income certification described in Article 3. Tenants are to be given at least sixty (60)
days written notice prior to any Rent increase. The County will provide Borrower with a
schedule of maximum permissible Rents for the County-Assisted Units annually.
(b) Increased income above Forty Percent Income but below Very Low
Income Limit. Subject to Subsection (a) above, if, upon the annual certification of the income of
a Tenant of a County-Assisted Unit, Borrower determines that the income of a Twenty Percent
Income Household, Thirty-Five Percent Income Household, or Forty Percent Income Household
has increased above the qualifying limit for a Forty Percent Income Household, but not above the
qualifying income for a Very Low Income Household, the Tenant may continue to occupy the
Unit and the Tenant's Rent may be increased to the Low HOME Rent. Borrower shall then rent
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the next available Unit to a Twenty Percent Income Household, Thirty-Five Percent Income
Household, or Forty Percent Income Household, as applicable, to comply with the requirements
of Section 2.1 above, at a Rent not exceeding the maximum Rent specified in Section 2.2, or re-
designate another comparable Unit in the Development with a Twenty Percent Income
Household, Thirty-Five Percent Income Household, or Forty Percent Income Household, as
applicable, a County-Assisted Unit, to comply with the requirements of Section 2.1 above. Upon
renting the next available Unit in accordance with Section 2.1 or re-designating another Unit in
the Development as a County-Assisted Unit, the Unit with the over-income Tenant will no
longer be considered a County-Assisted Unit.
(c) Increased income above Very Low but below Low Income Limit. Subject
to Subsection (a) above, if, upon the annual certification of the income of a Tenant of a County-
Assisted Unit, Borrower determines that the income of a Twenty Percent Income Household,
Thirty-Five Percent Income Household, Forty Percent Income Household, or Very Low Income
Household has increased above the qualifying limit for a Very Low Income Household, but not
above the qualifying income for a Low Income Household, the Tenant may continue to occupy
the Unit and the Tenant's Rent may be increased to the High HOME Rent. Borrower shall then
rent the next available Unit to a Twenty Percent Income Household, Thirty-Five Percent Income
Household, Forty Percent Income Household, or Very Low Income Household, as applicable, to
comply with the requirements of Section 2.1 above, at a Rent not exceeding the maximum Rent
specified in Section 2.2, or re-designate another comparable Unit in the Development with a
Twenty Percent Income Household, Thirty-Five Percent Income Household, Forty Percent
Income Household, or Very Low Income Household, as applicable, a County-Assisted Unit, to
comply with the requirements of Section 2.1 above. Upon renting the next available Unit in
accordance with Section 2.1 or re-designating another Unit in the Development as a County-
Assisted Unit, the Unit with the over-income Tenant will no longer be considered a County-
Assisted Unit.
(d) Non-Qualifying Household. If, upon the annual certification of the income
a Tenant of a County-Assisted Unit, Borrower determines that the income of a Twenty Percent
Income Household, Thirty-Five Percent Income Household, Forty Percent Income Household, or
Very Low Income Household has increased above the qualifying limit for a Low Income
Household, such Tenant shall be permitted to retain the Unit and upon expiration of the Tenant's
lease and upon sixty (60) days written notice, the Rent must be increased to the lesser of one-
twelfth (1/12th) of thirty percent (30%) of the actual Adjusted Income of the Tenant, or fair
market rent (subject to 24 C.F.R. 92.252(i)(2) regarding low income housing tax credit
requirements), and Borrower shall rent the next available Unit to a Twenty Percent Income
Household, Thirty-Five Percent Income Household, Forty Percent Income Household, or Very
Low Income Household, as applicable, to comply with the requirements of Section 2.1 above, at
a Rent not exceeding the maximum Rent specified in Section 2.2, or re-designate another
comparable Unit in the Development with a Twenty Percent Income Household, Thirty-Five
Percent Income Household, Forty Percent Income Household, or Very Low Income Household,
as applicable, as a County-Assisted Unit, to meet the requirements of Section 2.1 above. Upon
renting the next available Unit in accordance with Section 2.1 or re-designating another Unit in
the Development as a County-Assisted Unit, the Unit with the over-income Tenant will no
longer be considered a County-Assisted Unit.
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(e) Termination of Occupancy. Upon termination of occupancy of a County-
Assisted Unit by a Tenant, such Unit will 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 categorization of the Unit will be established based on the occupancy
requirements of Section 2.1.
2.4 Units Available to the Disabled. Borrower shall construct the Development in
compliance with all applicable federal and state disabled persons accessibility requirements
including but not limited to the Federal Fair Housing Act; Section 504 of the Rehabilitation Act
of 1973; Title II and/or Title III of the Americans with Disabilities Act; and Title 24 of the
California Code of Regulations. In compliance with Section 504 of the Rehabilitation Act,
Borrower shall construct a minimum of three (3) Units to be fully accessible to households with
a mobility impaired member, and an additional one (1) Unit to be fully accessible to hearing
and/or visually impaired persons.
ARTICLE 3
INCOME CERTIFICATION AND REPORTING
3.1 Income Certification. Borrower shall 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 the accuracy of the income provided by the applicant or occupying household, as the case
may be, in an income certification. To verify the information Borrower shall take two or more of
the following steps: (i) obtain a pay stub for the most recent pay period; (ii) obtain an income
tax return for the most recent tax year; (iii) conduct a credit agency or similar search; (iv) obtain
an income verification form from the applicant's current employer; (v) 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 (vi) if the
applicant is unemployed and does not have a tax return, obtain another form of independent
verification. Copies of Tenant income certifications are to be available to the County upon
request.
3.2 Reporting Requirements. Borrower shall submit to the County (a) not later than
the forty-fifth (45th) day after the close of each calendar year, or such other date as may be
requested by the 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 the County in order to comply
with reporting requirements of HUD, the State of California, and the County.
3.3 Additional Information. Borrower shall provide any additional information
reasonably requested by the County.
3.4 Records. Borrower shall maintain complete, accurate and current records
pertaining to the Development, and shall permit any duly authorized representative of the County
to inspect records, including records pertaining to income and household size of Tenants. All
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Tenant lists, applications and waiting lists relating to the Development are to be at all times: (i)
separate and identifiable from any other business of Borrower, (ii) maintained as required by the
County, in a reasonable condition for proper audit, and (iii) subject to examination during
business hours by representatives of the 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 County may examine and make copies of all books, records or other documents of Borrower
that pertain to the Development.
3.5 HOME Record Requirements. For the period of the HOME Term all records
maintained by Borrower pursuant to Sections 3.2 and 3.4 above are to be (i) maintained in
compliance with all applicable HUD records and accounting requirements, and (ii) open to and
available for inspection and copying by HUD and its authorized representatives at reasonable
intervals during normal business hours; provided however, records pertaining to Tenant income
verifications, Rents, and Development inspections are subject to HUD inspection for five (5)
years after expiration of the HOME Term. Borrower is subject to the audit requirements set
forth in 24 CFR 92.505 during the HOME Term.
3.6 On-Site Inspection. The County may perform an on-site inspection of the
Development at least one (1) time per year. Borrower shall cooperate in such inspection.
ARTICLE 4
OPERATION OF THE DEVELOPMENT
4.1 Residential Use. Borrower shall operate the Development for residential use
only. No part of the Development may be operated as transient housing.
4.2 Taxes and Assessments. Borrower shall pay all real and personal property taxes,
assessments and charges and all franchise, income, employment, old age benefit, withholding,
sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to
prevent any penalty from accruing, or any lien or charge from attaching to the Property;
provided, however, that Borrower may 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, will immediately pay or
discharge any decision or judgment rendered against it, together with all costs, charges and
interest.
4.3 Property Tax Exemption. Borrower shall not apply for a property tax exemption
for the Property under any provision of law except California Revenue and Taxation Section
214(g) without the prior written consent of the County.
ARTICLE 5
PROPERTY MANAGEMENT AND MAINTENANCE
5.1 Management Responsibilities. Borrower is responsible for all management
functions with respect to the Development, including without limitation the selection of Tenants,
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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. The County has no responsibility for management of the Development.
Borrower shall retain a professional property management company approved by the County in
its reasonable discretion to perform Borrower's management duties hereunder. An on-site
property manager is also required.
5.2 Management Agent. Borrower shall cause the Development to be managed by an
experienced management agent reasonably acceptable to the County, with a demonstrated ability
to operate residential facilities like the Development in a manner that will provide decent, safe,
and sanitary housing (the "Management Agent"). The County pre-approves the John Stewart
Company as the initial Management Agent. Borrower shall submit for the County's approval the
identity of any proposed subsequent management agent. Borrower shall also submit such
additional information about the background, experience and financial condition of any proposed
management agent as is reasonably necessary for the 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, the County shall approve the proposed management agent by notifying Borrower in
writing. Unless the proposed management agent is disapproved by the County within thirty (30)
days, which disapproval is to state with reasonable specificity the basis for disapproval, it shall
be deemed approved.
5.3 Periodic Performance Review. The County reserves the right to conduct an
annual (or more frequently, if deemed necessary by the County) review of the management
practices and financial status of the Development. The purpose of each periodic review will be
to enable the County to determine if the Development is being operated and managed in
accordance with the requirements and standards of this Agreement. Borrower shall cooperate
with the County in such reviews.
5.4 Replacement of Management Agent. If, as a result of a periodic review, the
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,
the 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, the County staff and Borrower shall meet in good faith to
consider methods for improving the financial and operating status of the Development,
including, without limitation, replacement of the Management Agent.
If, after such meeting, County staff recommends in writing the replacement of the
Management Agent, Borrower shall promptly dismiss the then-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 the 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
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provisions of this Section constitutes a default under this Agreement, and the County may
enforce this provision through legal proceedings as specified in Section 6.8 below.
5.5 Approval of Management Policies. Borrower shall submit its written
management policies with respect to the Development to the 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. Borrower shall maintain, for the entire Term of this
Agreement, 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:
The County places prime importance on quality maintenance to protect its investment and
to ensure that all County and County-assisted affordable housing projects within the County are
not allowed to deteriorate due to below-average maintenance. Normal wear and tear of the
Development will be acceptable to the County assuming Borrower agrees to provide all
necessary improvements to assure the Development is maintained in good condition. Borrower
shall make all repairs and replacements necessary to keep the improvements in good condition
and repair.
In the event that 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 the County with
respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after
written notice from the County with respect to landscaping and building improvements, then the
County, in addition to whatever other remedy it may have at law or in equity, has 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, the County is permitted (but is not required)
to enter upon the Property and to perform all acts and work necessary to protect, maintain, and
preserve the improvements and landscaped areas on the Property, and to attach a lien on the
Property, or to assess the Property, in the amount of the expenditures arising from such acts and
work of protection, maintenance, and preservation by the County and/or costs of such cure,
which amount shall be promptly paid by Borrower to the County upon demand.
ARTICLE 6
MISCELLANEOUS
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6.1 Lease Provisions. In leasing the Units within the Development, Borrower shall
use a form of lease approved by the County. The lease must not contain any provision which is
prohibited by 24 C.F.R. Section 92.253(b) and any amendments thereto. The form of lease must
comply with all requirements of this Agreement, the other Loan Documents and must, among
other matters:
(a) provide for termination of the lease for failure to: (i) 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) qualify
as a Twenty Percent Income Household, Thirty-Five Percent Income Household, Forty Percent
Income Household, or Very Low Income Household as a result of any material misrepresentation
made by such Tenant with respect to the income computation.
(b) be for an initial term of not less than one (1) year, unless by mutual
agreement between the Tenant and Borrower, and provide for no increase in Rent during such
year. After the initial year of tenancy, the lease may be month-to-month by mutual agreement of
Borrower and the Tenant. Notwithstanding the above, any rent increases are subject to the
requirements of Section 2.3 (a) above.
(c) include a provision which requires a Tenant who is residing in a Unit
required to be accessible pursuant to Section 2.4 and who is not in need of an accessible Unit to
move to a non-accessible Unit when a non-accessible Unit becomes available and another Tenant
or prospective Tenant is in need of an accessible Unit.
6.2 Lease Termination. Any termination of a lease or refusal to renew a lease for a
County-Assisted Unit within the Development must be in conformance with 24 C.F.R.
92.253(c), and must be preceded by not less than sixty (60) days written notice to the Tenant by
Borrower specifying the grounds for the action.
6.3 Nondiscrimination.
(a) All of the Units must be available for occupancy on a continuous basis to
members of the general public who are income eligible. Borrower may not give preference to
any particular class or group of persons in renting or selling the Units, except to the extent that
the Units are required to be leased to income eligible households pursuant to this Agreement.
Borrower herein covenants by and for Borrower, assigns, and all persons claiming under or
through Borrower, that there exist 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 will 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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(b) Borrower shall accept as Tenants, on the same basis as all other
prospective Tenants, persons who are recipients of federal certificates for rent subsidies pursuant
to the existing housing program under Section 8 of the United States Housing Act, or its
successor. Borrower may not apply selection criteria to Section 8 certificate or voucher holders
that is more burdensome than criteria applied to all other prospective Tenants, nor will Borrower
apply or permit the application of management policies or lease provisions with respect to the
Development which have the effect of precluding occupancy of units by such prospective
Tenants.
6.4 Term. The provisions of this Agreement apply to the Property for the entire Term
even if the Loan is paid in full prior to the end of the Term. This Agreement binds 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
is making the Loan on the condition, and in consideration of, this provision, and would not do so
otherwise.
6.5 Compliance with Loan Documents 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 Documents; (ii) all requirements imposed on projects assisted with
HOME Funds as contained in 42 U.S.C. Section 12701, et seq., 24 C.F.R. Part 92, and other
implementing rules and regulations, and (iii) all requirements imposed on projects assisted with
CDBG Funds as contained in 42 U.S.C. Section5301, et seq., 24 C.F.R. Part 570, and other
implementing rules and regulations,.
6.6 Notice of Expiration of Term.
(a) 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 (i) the anticipated
date of the expiration of the Term, (ii) any anticipated increase in Rent upon the expiration of the
Term, (iii) a statement that a copy of such notice will be sent to the County, and (iv) a statement
that a public hearing may be held by the 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.
(b) In addition to the notice required above, Borrower shall comply with the
requirements set forth in California Government Code Sections 65863.10 and 65863.11. Such
notice requirements include: (i) a twelve (12) month notice to existing tenants, prospective
tenants and Affected Public Agencies (as defined in California Government Code Section
65863.10(a), which would include the County Housing Director) prior to the expiration of the
Term, (ii) a six (6) month notice requirement to existing tenants, prospective tenants and
Affected Public Agencies prior to the expiration of the Term; (iii) a notice of an offer to purchase
the Development to "qualified entities" (as defined in California Government Code Section
65863.11(d)), if the Development is to be sold within five (5) years of the end of the Term; (iv) a
notice of right of first refusal within the one hundred eighty (180) day period that qualified
entities may purchase the Development.
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6.7 Covenants to Run With the Land. The County and Borrower hereby declare their
express intent that the covenants and restrictions set forth in this Agreement run with the land,
and bind all successors in title to the Property, provided, however, that on the expiration of the
Term of this Agreement said covenants and restrictions expire. Each and every contract, deed or
other instrument hereafter executed covering or conveying the Property or any portion thereof, is
to be held conclusively to have been executed, delivered and accepted subject to the covenants
and restrictions, regardless of whether such covenants or restrictions are set forth in such
contract, deed or other instrument, unless the County expressly releases such conveyed portion
of the Property from the requirements of this Agreement.
6.8 Enforcement by The County. If Borrower fails to perform any obligation under
this Agreement, and fails to cure the default within thirty (30) days after the County has notified
Borrower in writing of the default or, if the default cannot be cured within thirty (30) days, fails
to commence to cure within thirty (30) days and thereafter diligently pursue such cure and
complete such cure within ninety (90) days, the County may enforce this Agreement by any or
all of the following actions, or any other remedy provided by law:
(a) Calling the CDBG Loan. The County may declare a default under the
CDBG Note, accelerate the indebtedness evidenced by the CDBG Note, and proceed with
foreclosure under the CDBG Deed of Trust.
(b) Calling the HOME Loan. The County may declare a default under the
HOME Note, accelerate the indebtedness evidenced by the HOME Note, and proceed with
foreclosure under the HOME Deed of Trust.
(c) Action to Compel Performance or for Damages. The County may bring
an action at law or in equity to compel Borrower's performance of its obligations under this
Agreement, and may seek damages.
(d) Remedies Provided Under Loan Documents. The County may exercise
any other remedy provided under the Loan Documents.
6.9 Attorneys’ Fees and Costs. In any action brought to enforce this Agreement, the
prevailing party must be entitled to all costs and expenses of suit, including reasonable attorneys'
fees. This section must be interpreted in accordance with California Civil Code Section 1717
and judicial decisions interpreting that statute.
6.10 Recording and Filing. The 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 is 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 the County in writing, but no waiver by the County of any requirement of
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this Agreement extends to or affects any other provision of this Agreement, and may not be
deemed to do so.
6.13 Amendments. This Agreement may be amended only by a written instrument
executed by all the parties hereto or their successors in title that is duly recorded in the official
records of the County of Contra Costa.
6.14 Notices. Any notice requirement set forth herein will 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:
County: County of Contra Costa
Department of Conservation and Development
2530 Arnold Drive, Suite 190
Martinez, CA 94553
Attn: Deputy Director- Redevelopment
Borrower: Berrellesa Palms, L.P.
c/o Resources for Community Development
2220 Oxford Street
Berkeley, CA 94704
Attention: Executive Director
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 is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining portions of this Agreement will 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. In the event there is a foreclosure of the
Property, this Agreement will revive according to its original terms if, during the 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.
[Remainder of Page Left Intentionally Blank]
17
Signature page
County Regulatory Agreement
863\82\747598.4
WHEREAS, this Agreement has been entered into by the undersigned as of the date first
written above.
COUNTY:
COUNTY OF CONTRA COSTA, a political
subdivision of the State of California
By: _________________________________
James Kennedy
Deputy Director - Redevelopment
Approved as to form:
SHARON L. ANDERSON
County Counsel
By:
Kathleen Andrus
Deputy County Counsel
BORROWER:
BERRELLESA PALMS, L.P., a California limited
partnership
By: RCD HOUSING LLC , a California limited
liability company, its general partner
By: 112 Alves Lane, Inc. a California nonprofit
public benefit corporation, its sole
member/manager
By:____________________
Its:____________________
863\82\747598.4
STATE OF CALIFORNIA )
)
COUNTY OF CONTRA COSTA )
On ____________ __, 2010, before me, _______________, Notary Public, personally appeared,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name is
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity, and that by his/her/their signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ________________________________ (seal)
STATE OF CALIFORNIA )
)
COUNTY OF CONTRA COSTA )
On ____________ __, 2010, before me, _______________, Notary Public, personally appeared,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name is
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity, and that by his/her/their signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ________________________________ (seal)
A-1
863\82\747598.4
EXHIBIT A
Legal Description
The land is situated in the State of California, County of Contra Costa, and is described as
follows: