HomeMy WebLinkAboutMINUTES - 01242012 - C.48RECOMMENDATION(S):
1. APPROVE $1,523,046 in Neighborhood Stabilization Program 3 (NSP3) funds to Robin
Lane LLC for the Robin Lane Apartments project in Concord.
2.
APPROVE OTHER
RECOMMENDATION OF CNTY
ADMINISTRATOR
RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 01/24/2012 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
Karen Mitchoff, District IV
Supervisor
Federal D. Glover, District V
Supervisor
Contact: 335-7229
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: January 24, 2012
David Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc:
C.48
To:Board of Supervisors
From:Catherine Kutsuris
Date:January 24, 2012
Contra
Costa
County
Subject:Approval of Neighborhood Stabilization Program Funds and Loan Documents for Robin Lane Apartments in
Concord
RECOMMENDATION(S): (CONT'D)
APPROVE and AUTHORIZE the Conservation and Development Director, or designee,
to execute required legal documents to provide $1,523,046 in NSP3 funds to Robin Lane,
LLC for the Robin Lane apartments; and
3. FIND that the project is exempt from the California Environmental Quality Act
[Section 15301(a)]; and
4. DIRECT the Department of Conservation and Development (DCD) to file a Notice of
Exemption for this project with the County Clerk; and
5. DIRECT DCD to arrange for payment of the $50 handling fee to the County Clerk for
filing such Notice of Exemption.
FISCAL IMPACT:
$1,523,046; 100% Federal Department of Housing and Urban Development (HUD)
Neighborhood Stabilization Program 3 formula grant funds. CFDA# 14.218
BACKGROUND:
Robin Lane Apartments, located at 1890 Robin Lane and 1149 Meadow Lane in
Concord, is a 16-unit multi-family housing development. The property consists of two
existing buildings which are currently foreclosed, bank-owned, and vacant of tenants.
The development includes 15 units affordable to households with incomes at or below
50% of the area median income, with one unit being a manager’s unit. The final unit mix
is six one-bedroom apartments and ten two-bedroom apartments.
The ownership entity will be Robin Lane, LLC, a California limited liability company
with AHA Development, Inc. (ADI) serving as the sole member. ADI is wholly owned
by Affordable Housing Associates, a local non-profit housing developer that successfully
owns and manages several affordable housing projects in the Bay Area.
NSP3 funds will be used for acquisition and rehabilitation of the two existing buildings
on the property. The acquisition price is approximately 1.5% below the appraised value.
The rehabilitation will include interior upgrades (flooring, cabinetry, and appliances),
window replacement, installation of energy efficient upgrades (heating and HVAC,
lighting, and water), painting (exterior and interior), fence installation, concrete
repavement, and landscaping. The City of Concord supports the project.
The total project budget is $2,233,046. In addition to the County’s NSP3 funds, the other
sources of funds to complete the project include $560,000 of CalHFA-Mental Health
Service Act funds and $150,000 of Federal Home Loan Bank-Affordable Housing
Program funds.
NSP3 funds will be loaned at a three percent interest rate for 55 years. Due to limited
revenue from the restricted rents, the total amount of the financing provided to the project
may exceed the value of the completed project.
The NSP3 legal documents (Loan Documents) are attached and include the following
documents:
• NSP3 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.
CEQA Determination:
This activity is exempt from CEQA pursuant to 14 CCR 15301(a) and 15061(b)(3).
CONSEQUENCE OF NEGATIVE ACTION:
Negative action would prevent the acquisition and rehabilitation of Robin Lane
Apartments, a 16-unit affordable multi-family housing development, located at 1890
Robin Lane and 1149 Meadow Lane in Concord.
CHILDREN'S IMPACT STATEMENT:
The project will provide affordable multi-family housing, which supports the Children’s
Report Card by helping families become economically self-sufficient and enables
families to be safe, stable and nurturing.
ATTACHMENTS
Loan Agreement
Regulatory Agreement
Promissory Note
Deed of Trust
NSP3 LOAN AGREEMENT
Between
COUNTY OF CONTRA COSTA
and
Robin Lane LLC
dated January 24, 2012
863\88\1072799.2
TABLE OF CONTENTS
Page
i
863\88\1072799.2
ARTICLE 1 DEFINITIONS AND EXHIBITS............................................................................2
Section 1.1 Definitions................................................................................................... 2
Section 1.2 Exhibits....................................................................................................... 7
ARTICLE 2 LOAN PROVISIONS..............................................................................................7
Section 2.1 Loan............................................................................................................ 7
Section 2.2 Interest......................................................................................................... 7
Section 2.3 Use of Loan Funds...................................................................................... 7
Section 2.4 Security....................................................................................................... 8
Section 2.5 Subordination.............................................................................................. 8
Section 2.6 Conditions Precedent to Disbursement of Loan Funds for
Acquisition.................................................................................................. 9
Section 2.7 Conditions Precedent to Disbursement of Loan Funds for
Rehabilitation............................................................................................ 10
Section 2.8 Conditions Precedent to Disbursement of Retention................................ 11
Section 2.9 Repayment Schedule................................................................................. 12
Section 2.10 Reports and Accounting of Residual Receipts.......................................... 12
Section 2.11 Non-Recourse. ...........................................Error! Bookmark not defined.
Section 2.12 AHP Loan Commitment........................................................................... 13
ARTICLE 3 REHABILITATION OF THE DEVELOPMENT.................................................13
Section 3.1 Permits and Approvals.............................................................................. 13
Section 3.2 Bid Package. ............................................................................................. 14
Section 3.3 Construction Contract............................................................................... 14
Section 3.4 Construction Bonds................................................................................... 15
Section 3.5 Commencement of Construction.............................................................. 15
Section 3.6 Completion of Construction...................................................................... 15
Section 3.7 Changes; Construction Pursuant to Plans and Laws................................. 15
Section 3.8 Prevailing Wages...................................................................................... 16
Section 3.9 Accessibility.............................................................................................. 17
Section 3.10 Relocation................................................................................................. 17
Section 3.11 Marketing Plan.......................................................................................... 18
Section 3.12 Equal Opportunity..................................................................................... 18
Section 3.13 Minority and Women-Owned Contractors; Local Hiring......................... 18
Section 3.14 Progress Reports....................................................................................... 19
Section 3.15 Construction Responsibilities................................................................... 19
Section 3.16 Mechanics Liens, Stop Notices, and Notices of Completion.................... 19
Section 3.17 Inspections................................................................................................ 20
Section 3.18 Approved Development Budget; Revisions to Budget............................. 20
Section 3.19 Developer Fee........................................................................................... 20
ARTICLE 4 LOAN REQUIREMENTS.....................................................................................20
Section 4.1 Financial Accountings and Post-Completion Audits................................ 20
Section 4.2 Annual Operating Budget......................................................................... 21
Section 4.3 Information. .............................................................................................. 21
TABLE OF CONTENTS
(continued)
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Section 4.4 Records. .................................................................................................... 21
Section 4.5 County Audits........................................................................................... 22
Section 4.6 NSP3 Requirements.................................................................................. 23
Section 4.7 Hazardous Materials................................................................................. 27
Section 4.8 Maintenance and Damage......................................................................... 29
Section 4.9 Fees and Taxes.......................................................................................... 29
Section 4.10 Notice of Litigation................................................................................... 30
Section 4.11 Operation of Development as Affordable Housing.................................. 30
Section 4.12 Nondiscrimination..................................................................................... 30
Section 4.13 Transfer..................................................................................................... 30
Section 4.14 Insurance Requirements............................................................................ 31
Section 4.15 Anti-Lobbying Certification..................................................................... 32
Section 4.16 Covenants Regarding Approved Financing.............................................. 33
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER........................33
Section 5.1 Representations and Warranties................................................................ 33
ARTICLE 6 DEFAULT AND REMEDIES...............................................................................35
Section 6.1 Events of Default...................................................................................... 35
Section 6.2 Remedies................................................................................................... 36
Section 6.3 Right of Contest........................................................................................ 37
Section 6.4 Remedies Cumulative............................................................................... 37
ARTICLE 7 GENERAL PROVISIONS....................................................................................37
Section 7.1 Relationship of Parties.............................................................................. 37
Section 7.2 No Claims................................................................................................. 38
Section 7.3 Amendments............................................................................................. 38
Section 7.4 Indemnification......................................................................................... 38
Section 7.5 Non-Liability of County Officials, Employees and Agents...................... 38
Section 7.6 No Third Party Beneficiaries.................................................................... 38
Section 7.7 Discretion Retained By County................................................................ 38
Section 7.8 Conflict of Interest.................................................................................... 38
Section 7.9 Notices, Demands and Communications.................................................. 39
Section 7.10 Applicable Law......................................................................................... 40
Section 7.11 Parties Bound............................................................................................ 40
Section 7.12 Attorneys' Fees.......................................................................................... 40
Section 7.13 Severability............................................................................................... 40
Section 7.14 Force Majeure........................................................................................... 40
Section 7.15 County Approval....................................................................................... 40
Section 7.16 Waivers..................................................................................................... 40
Section 7.17 Title of Parts and Sections........................................................................ 41
Section 7.18 Entire Understanding of the Parties.......................................................... 41
Section 7.19 Multiple Originals; Counterpart................................................................ 41
EXHIBIT A Legal Description of the Property
TABLE OF CONTENTS
(continued)
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iii
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EXHIBIT B Approved Development Budget
EXHIBIT C Rehabilitation: Minimum Requirements
NSP3 LOAN AGREEMENT
Robin Lane Apartments
This NSP3 Loan Agreement (the "Agreement") is dated January 24, 2012, and is between
the County of Contra Costa, a political subdivision of the State of California (the "County"), and
Robin Lane LLC, a California limited liability company ("Borrower").
RECITALS
A. Defined terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
B. The County has received Neighborhood Stabilization Program 3 funds ("NSP3
Funds") from the United States Department of Housing and Urban Development ("HUD") under
Section 1497 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
"NSP3 Act"), which amends Title III of Division B of the Housing and Economic Recovery Act
of 2008 ("HERA"). The NSP3 Funds must be used by the County in accordance with 75 F.R.
64322 (Notice of Formula Allocations and Program Requirements for Neighborhood
Stabilization Program Formula Grants) (the "NSP3 Regulations"). Together, the NSP3 Act and
the NSP3 Regulations are the “NSP3 Requirements.”
C. Except as otherwise prescribed by the NSP3 Requirements, the statutory and
regulatory provisions that govern the Community Development Block Grant ("CDBG") program
under Title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.),
as amended (including those at 24 CFR part 570 subparts A, C, D, J, K, and O, as appropriate),
apply with equal force to the NSP3 Funds.
D. Borrower intends to acquire the real property commonly known as 1149 Meadow
Lane and 1890 Robin Lane, located in the City of Concord, County of Contra Costa, State of
California, and more particularly described in Exhibit A (the "Property"). The purchase price of
the Property is One Million Thirty-Five Thousand Dollars ($1,035,000). According to an
appraisal dated November 2, 2011, which was prepared for the Borrower by Thomas E. Dum
Real Estate Appraisers, Inc., the Property was valued at One Million Fifty Thousand Dollars
($1,050,000) as of October 25, 2011. The Property was previously foreclosed upon and
transferred to Great Western Bank by a Trustee's Deed Upon Sale that was recorded on January
31, 2011.
E. The Property is the site of two vacant apartment buildings that contain a total of
sixteen (16) apartments. The buildings and all other improvements to the Property, including all
landscaping, roads, and parking spaces, are referred to herein as the “Improvements,” or as the
"Development." Borrower intends to rehabilitate the Development and rent fifteen (15) of the
apartments to very low income families, reserving one unit as a manager's unit.
F. In furtherance of the NSP3 Project Agreement between the parties dated January
24, 2012 (the “Project Agreement”), Borrower desires to borrow from the County and the
County desires to lend to Borrower One Million Five Hundred Twenty-Three Thousand Forty-
863\88\1072799.2 1
Six Dollars ($1,523,046) in NSP3 Funds (the "Loan") to finance the acquisition and
rehabilitation of the Development. Rehabilitation of the Development will maintain the supply
of affordable rental housing in Contra Costa County.
G. The Loan is (i) evidenced by the Note, (ii) conditioned on the parties entering into
the Regulatory Agreement, and (iii) secured by the Deed of Trust.
H. Due to the assistance provided to Borrower through the Loan, the County is
classifying fifteen (15) units in the Development as NSP3-assisted units (each such unit, a
"County-Assisted Unit").
I. The County has concluded that actions contemplated by this Agreement are
exempt from the California Environmental Quality Act (Public Resources Code Sections 21000
et seq.) ("CEQA").
J. In accordance with the National Environmental Policy Act of 1969, as amended
(42 U.S.C. 4321-4347) ("NEPA"), the County has completed and approved all applicable
environmental review for the activities proposed to be undertaken under this Agreement.
The parties therefore agree as follows:
AGREEMENT
ARTICLE 1 DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
The following terms have the following meanings:
(a) "Accessibility Requirements" has the meaning in Section 3.9.
(b) "Agreement" means this NSP3 Loan Agreement.
(c) "AHP Loan" has the meaning in Section 1.1(g)(ii) below.
(d) "Annual Operating Expenses" means for each calendar year, the following
costs reasonably and actually incurred for operation and maintenance of the Development:
(i) property taxes and assessments imposed on the Development;
(ii) debt service currently due on a non-optional basis (excluding debt
service due from residual receipts or surplus cash of the Development) on loans
associated with development of the Development and approved by the County;
(iii) on-site service provider fees for tenant social services, provided the
County has approved, in writing, the plan and budget for such services before such
services begin;
863\88\1072799.2 2
(iv) property management fees and reimbursements, on–site property
management office expenses, and salaries of property management and maintenance
personnel, not to exceed amounts that are standard in the industry and pursuant to a
management contract approved by the County;
(v) premiums for property damage and liability insurance;
(vi) utility services not paid for directly by tenants, including water,
sewer, and trash collection;
(vii) maintenance and repair;
(viii) any annual license or certificate of occupancy fees required for
operation of the Development;
(ix) security services;
(x) advertising and marketing;
(xi) cash deposited into reserves for capital replacements of the
Development in an amount not to exceed six tenths of one percent (.6%) of the total
development cost of the Development;
(xii) cash deposited into an operating reserve in an amount not to
exceed 3% of Annual Operating Expenses but with the operating reserve capped at six (6)
months gross rent from the Development (as such rent may vary from time to time);
(xiii) payment of any previously unpaid portion of developer fee
(without interest) that may be paid to any entity or entities providing development
services to the Development, not to exceed the amount approved by the County;
(xiv) extraordinary operating costs specifically approved in writing by
the County;
(xv) payments of deductibles in connection with casualty insurance
claims not normally paid from reserves, the amount of uninsured losses actually replaced,
repaired or restored, and not normally paid from reserves, and other ordinary and
reasonable operating expenses approved in writing by the County and not listed above.
Annual Operating Expenses do not include the following: depreciation, amortization,
depletion or other non-cash expenses, any amount expended from a reserve account, and any
capital cost associated with the Development, as determined by the accountant for Borrower.
(e) "Annual Payment" has the meaning in Section 2.9(a).
(f) "Approved Development Budget" means the proforma development
863\88\1072799.2 3
budget, including sources and uses of funds, as approved by the County, and attached hereto and
incorporated herein as Exhibit B.
(g) "Approved Financing" means all of the following loans, grants and equity
obtained by Borrower or to be obtained by Borrower, and approved by the County or to be
approved by the County, for the purpose of financing the acquisition of the Property and
rehabilitation of the Development:
(i) a loan of Mental Health Services Act ("MHSA") funds from the
California Housing Finance Agency ("CalHFA") in the approximate amount of Five
Hundred Sixty Thousand Dollars ($560,000) (the "MHSA Loan"); and
(ii) a loan of Affordable Housing Program ("AHP") funds in the
approximate amount of One Hundred Fifty Thousand Dollars ($150,000) (the "AHP
Loan").
(h) "Bid Package" means the package of documents distributed to potential
bidders as part of the process of selecting subcontractors to rehabilitate the Development. The
Bid Package is to include the following: (i) an invitation to bid, (ii) a copy of the proposed
construction contract; (iii) a form of bid guarantee that is reasonably acceptable to the County
that guarantees, at a minimum, an amount equal to five percent (5%) of the bid price, and (iv) all
Construction Plans.
(i) "Borrower" has the meaning set forth in the first paragraph of this
Agreement.
(j) "CDBG" has the meaning set forth in Paragraph C of the Recitals.
(k) "CEQA" has the meaning set forth in Paragraph I of the Recitals.
(l) "City" means the City of Concord, a municipal corporation.
(m) "Commencement of Construction" has the meaning set forth in Section
3.5.
(n) "Construction Plans" means all construction documentation upon which
Borrower and Borrower's general contractor rely in rehabilitating all the Improvements on the
Property (including the units in the Development, landscaping, parking, and common areas) and
includes, but is not limited to, final architectural drawings, landscaping plans and specifications,
final elevations, building plans and specifications (also known as "working drawings").
(o) "County" has the meaning set forth in the first paragraph of this
Agreement.
(p) "County-Assisted Units" has the meaning set forth in Paragraph H of the
Recitals.
(q) "Deed of Trust" means the Deed of Trust with Assignment of Rents,
Security Agreement, and Fixture Filing of even date herewith among Borrower, as Trustor, Old
863\88\1072799.2 4
Republic Title Company, as trustee, and the County, as beneficiary, that will encumber the
Property to secure repayment of the Loan and performance of the covenants of the Loan
Documents.
(r) "Default Rate" means the lesser of the maximum rate permitted by law
and ten percent (10%) per annum.
(s) "Developer Fee" has the meaning set forth in Section 3.16.
(t) "Development" has the meaning set forth in Paragraph E of the Recitals.
(u) "Event of Default" has the meaning set forth in Section 6.1.
(v) "Gross Revenue" means for each calendar year, all revenue, income,
receipts, and other consideration actually received from the operation and leasing of the
Development. Gross Revenue includes, but is not limited to:
(i) all rents, fees and charges paid by tenants;
(ii) Section 8 payments or other rental subsidy payments received for
the dwelling units;
(iii) deposits forfeited by tenants;
(iv) all cancellation fees;
(v) price index adjustments and any other rental adjustments to leases
or rental agreements;
(vi) net proceeds from vending and laundry room machines;
(vii) the proceeds of business interruption or similar insurance not paid
to senior lenders;
(viii) the proceeds of casualty insurance not used to rebuild the
Development and not paid to senior lenders; and
(ix) condemnation awards for a taking of part or all of the
Development for a temporary period.
Gross Revenue does not include tenants' security deposits (to the extent the security
deposit has not been forfeited), loan proceeds, capital contributions or similar advances.
(w) "Hazardous Materials" has the meaning set forth in Section 4.7.
(x) "Hazardous Materials Claims" has the meaning set forth in Section 4.7.
(y) "Hazardous Materials Law" has the meaning set forth in Section 4.7.
863\88\1072799.2 5
(z) "HERA" has the meaning set forth in Paragraph B of the Recitals.
(aa) "HUD" has the meaning set forth in Paragraph B of the Recitals.
(bb) "Improvements" has the meaning set forth in Paragraph E of the Recitals.
(cc) "Lenders' Share of Residual Receipts" means seventy-five percent (75%)
of Residual Receipts, which share shall be allocated between County and CalHFA-MHSA based
on the relative loan amounts.
(dd) "Loan" has the meaning set forth in Paragraph F of the Recitals.
(ee) "Loan Documents" means this Agreement, the Note, the Regulatory
Agreement, and the Deed of Trust.
(ff) "Marketing Plan" has the meaning set forth in Section 3.11(a).
(gg) "NEPA" has the meaning set forth in Paragraph J of the Recitals.
(hh) "Note" means the Promissory Note of even date herewith that evidences
Borrower's obligation to repay the Loan.
(ii) "NSP3 Act" has the meaning set forth in Paragraph B of the Recitals.
(jj) "NSP3 Funds" has the meaning set forth in Paragraph B of the Recitals.
(kk) "NSP3 Regulations" has the meaning set forth in Paragraph B of the
Recitals.
(ll) "NSP3 Requirements" has the meaning set forth in Paragraph B of the
Recitals.
(mm) "Project Agreement" has the meaning set forth in Paragraph F of the
Recitals.
(nn) "Property" has the meaning set forth in Paragraph D of the Recitals.
(oo) "Regulatory Agreement" means the Regulatory Agreement and
Declaration of Restrictive Covenants, of even date herewith, between the County and Borrower
related to the Loan, to be recorded against the Property.
(pp) "Residual Receipts" means for each calendar year, the amount by which
Gross Revenue exceeds Annual Operating Expenses.
(qq) "Retention Amount" means Ten Thousand Dollars ($10,000) of the Loan,
the disbursement of which is described in Section 2.8.
(rr) "Section 3" has the meaning set forth in Section 4.6(b)(x) below.
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(ss) "Statement of Residual Receipts" has the meaning in Section 2.10(a).
(tt) "Tenant" means the tenant household that occupies a unit in the
Development.
(uu) "Term" means the period of time that commences on the date of this
Agreement, and expires, unless sooner terminated in accordance with this Agreement, on the
fifty-fifth (55th) anniversary of the date of this Agreement, which is January ____, 2067.
(vv) "Transfer" has the meaning set forth in Section 4.13 below.
Section 1.2 Exhibits
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference:
Exhibit A: Legal Description of the Property
Exhibit B: Approved Development Budget
Exhibit C: Rehabilitation: Minimum Requirements
ARTICLE 2 LOAN PROVISIONS
Section 2.1 Loan.
Upon satisfaction of the conditions sets forth in Section 2.6 and Section 2.7 of this
Agreement, the County shall lend to Borrower the Loan for the purposes set forth in Section 2.3
of this Agreement. Borrower's obligation to repay the Loan is evidenced by the Note.
Section 2.2 Interest.
(a) Subject to the provisions of Subsection (b) below, simple 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) Upon the occurrence of an Event of a Default, interest on the Loan will
begin to accrue, beginning on the date of such occurrence and continuing until the date the Loan
is repaid in full or the Event of Default is cured, at the Default Rate.
Section 2.3 Use of Loan Funds.
(a) Borrower shall use the Loan for acquisition and rehabilitation of the
Development, consistent with the Approved Development Budget.
(b) Borrower may not use the Loan proceeds for any other purposes without
the prior written consent of the County.
(c) Borrower shall comply with the Project Agreement in the use of the Loan.
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Section 2.4 Security.
Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by
executing the Deed of Trust, and causing or permitting it to be recorded as a lien against the
Property. Borrower shall also cause or permit the Regulatory Agreement to be recorded against
the Property.
Section 2.5 Subordination.
Any agreement by the County to subordinate the Deed of Trust and/or Regulatory
Agreement to an encumbrance securing and/or evidencing Approved Financing (each such
Approved Financing, a "Senior Loan"), will be subject to the satisfaction of each of the
following conditions:
(a) All of the proceeds of the proposed Senior Loan, less any transaction
costs, are used to provide acquisition, construction and/or permanent financing for the
Development.
(b) The proposed lender of a Senior Loan (each a "Senior Lender") is a state
or federally chartered financial institution, a nonprofit corporation or a public entity that is not
affiliated with Borrower or any of Borrower's affiliates, other than as a depositor or a lender.
(c) Borrower demonstrates to the County's satisfaction that subordination of
the Deed of Trust and the Regulatory Agreement is necessary to secure adequate acquisition,
construction, rehabilitation and/or permanent financing to ensure the viability of the
Development, including the operation of the Development as affordable housing, as required by
the Loan Documents. To satisfy this requirement, Borrower must provide to the County, in
addition to any other information reasonably required by the County, evidence demonstrating
that the proposed amount of the Senior Loan is necessary to provide adequate acquisition,
construction, rehabilitation and/or permanent financing to ensure the viability of the
Development, and adequate financing for the Development would not be available without the
proposed subordination.
(d) The subordination agreement(s) is structured to minimize the risk that the
Deed of Trust and the Regulatory Agreement will be extinguished as a result of a foreclosure by
the Senior Lender or other holder of the Senior Loan. To satisfy this requirement, the
subordination agreement must provide the County with adequate rights to cure any defaults by
Borrower, including: (i) providing the County or its successor with copies of any notices of
default at the same time and in the same manner as provided to Borrower; and (ii) providing the
County with a cure period of at least sixty (60) days to cure any default.
(e) The subordination(s) of the Loan is effective only during the original term
of the Senior Loan and any extension of its term that is approved in writing by the County.
(f) The subordination does not limit the effect of the Deed of Trust and the
Regulatory Agreement before a foreclosure, nor require the consent of the Senior Lender prior to
the County exercising any remedies available to the County under the Loan Documents.
863\88\1072799.2 8
(g) Upon a determination by the County's Deputy Director – Current Planning
that the conditions in this Section have been satisfied, the Deputy Director – Current Planning or
his/her designee will be authorized to execute the approved subordination agreement without the
necessity of any further action or approval.
Section 2.6 Conditions Precedent to Disbursement of Loan Funds for Acquisition.
The County is not obligated to disburse any portion of the Loan for the acquisition of the
Property, or to take any other action under the Loan Documents, unless all of the following
conditions have been and continue to be satisfied:
(a) There exists no Event of Default nor any act, failure, omission or
condition that would constitute an Event of Default under this Agreement or the Project
Agreement;
(b) Borrower is acquiring title to the Property simultaneously with the
disbursement of the Loan proceeds;
(c) The purchase price of the Property does not exceed the purchase price set
forth in the Approved Development Budget;
(d) Borrower has delivered to the County a copy of a corporate resolution
evidencing that Borrower’s governing body has duly authorized Borrower to obtain the Loan and
all other Approved Financing, execute the Loan Documents, and acquire and rehabilitate the
Property;
(e) There exists no material adverse change in the financial condition of
Borrower from that shown by the financial statements and other data and information furnished
by Borrower to the County prior to the date of this Agreement;
(f) Borrower has furnished the County with evidence of the insurance
coverage meeting the requirements of Section 4.14 below;
(g) Borrower has executed and delivered to the County the Loan Documents,
and has caused all other documents, instruments, and policies required under the Loan
Documents to be delivered to the County;
(h) The Deed of Trust and the Regulatory Agreement will be recorded against
the Property in the Office of the Recorder of the County of Contra Costa simultaneously with the
disbursement of the Loan proceeds;
(i) A title insurer reasonably acceptable to the County is unconditionally and
irrevocably committed to issuing an LP-10 2006 ALTA Lender's Policy of title insurance
insuring the priority of the Deed of Trust in the amount of the Loan, subject only to such
exceptions and exclusions as may be reasonably acceptable to the County, and containing such
endorsements as the County may reasonably require. The Borrower shall provide whatever
documentation (including an indemnification agreement), deposits or surety is reasonably
required by the title company in order for the County's Deed of Trust to be senior in lien priority
863\88\1072799.2 9
to any mechanics liens in connection with any start of construction that has occurred prior to the
recordation of the Deed of Trust against the Property in the Office of the Recorder of the County
of Contra Costa.
(j) All environmental review necessary for the acquisition of the Property and
rehabilitation of the Development has been completed, and Borrower has provided the County
evidence of compliance with all NEPA requirements and mitigation measures;
Section 2.7 Conditions Precedent to Disbursement of Loan Funds for Rehabilitation.
The County is not obligated to make a disbursement of Loan funds for rehabilitation costs
in the amount set forth in the Approved Development Budget, or to take any other action under
the Loan Documents unless the following conditions precedent are satisfied:
(a) All of the conditions precedent set forth in Section 2.6 have been timely
satisfied;
(b) There exists no Event of Default nor any act, failure, omission or
condition that would constitute an Event of Default under this Agreement or the Project
Agreement;
(c) Borrower has obtained all permits and approvals necessary for the
rehabilitation of the Development;
(d) The County has received and approved the Bid Package for the
subcontractors for the rehabilitation of the Development pursuant to Section 3.4 below;
(e) The County has received and approved the general contractor's
construction contract, if Borrower hires a general contractor, or all major subcontracts in the
event Borrower does not hire a general contractor, that the Borrower has entered or proposed to
enter for the rehabilitation of the Development pursuant to Section 3.5 below;
(f) The County has received and approved labor and material (payment)
bonds and performance bonds pursuant to Section 3.6 below;
(g) Borrower has signed commitments for the Approved Financing and has
already received or is eligible to receive the funds; and
(h) The County has received a written draw request from Borrower, including
(i) certification that the condition set forth in Section 2.7b) continues to be satisfied, (ii)
certification that the proposed uses of funds is consistent with the Approved Development
Budget, (iii) the amount of funds needed, and, (iv) where applicable, a copy of the bill or invoice
covering a cost incurred or to be incurred. When a disbursement is requested to pay any
contractor in connection with improvements on the Property, the written request must be
accompanied by (i) certification by the Borrower's architect reasonably acceptable to the County
that the work for which disbursement is requested has been completed (although the County
reserves the right to inspect the Property and make an independent evaluation); and (ii) lien
releases and/or mechanics lien title insurance endorsements reasonably acceptable to the County.
863\88\1072799.2 10
(i) The undisbursed proceeds of the Loan, together with other funds or firm
commitments for funds that Borrower has obtained in connection with the rehabilitation of the
Development, are not less than the amount that the County determines is necessary to pay for the
acquisition of the Property and rehabilitation of the Development and to satisfy all of the
covenants contained in this Agreement and the Regulatory Agreement; and
(j) Borrower has signed commitments for the Approved Financing described
in Section 1.1(f).
Section 2.8 Conditions Precedent to Disbursement of Retention.
The County is not obligated to disburse the Retention Amount unless the following
conditions precedent are satisfied:
(a) The County has received a completion report from Borrower setting forth
(i) the income, household size, race, and ethnicity of Tenants of the County-Assisted Units, (ii)
and the unit size, rent amount and utility allowance for all County-Assisted Units.
(b) The County has received from Borrower a financial accounting of all
sources and uses of funds for the rehabilitation of the Development.
(c) The County has received from Borrower copies of the certificate of
occupancy or equivalent final permit sign-offs for the Development.
(d) The County has received from Borrower current evidence of the insurance
coverage meeting the requirements of Section 4.14 below.
(e) The County has received from Borrower a form of Tenant lease.
(f) The County has received from Borrower a Marketing Plan.
(g) The County has received from Borrower evidence of marketing for any
vacant County-Assisted Unit in the Development such as copies of flyers, list of media ads, list
of agencies and organizations receiving information on availability of such units, as applicable.
(h) The County has received from Borrower all relevant contract activity
information, including compliance with Section 3, and local hiring and MBE/WBE requirements
as set forth in Section 3.13 below.
(i) If Borrower was required to comply with relocation requirements, the
County has received from Borrower evidence of compliance with all applicable relocation
requirements.
(j) The County has received from Borrower a copy of the management
agreement and contact information for the property manager of the Development and the name
and phone number of the on-site property manager.
(k) If Borrower is required to pay prevailing wages under the Davis-Bacon
863\88\1072799.2 11
Act (40 U.S.C. 3141-3148), the County has received confirmation that Borrower has submitted
all certified payrolls to the County, and any identified payment issues have been resolved, or
Borrower is working diligently to resolve any such issues.
(l) The County has received a written draw request from Borrower, including
certification that the condition set forth in Section 2.7(b) continues to be satisfied, and setting
forth the proposed uses of funds consistent with the Approved Development Budget, and, where
applicable, a copy of the bill or invoice covering a cost incurred or to be incurred. Borrower
shall apply the disbursement for the purpose(s) requested.
Section 2.9 Repayment Schedule.
(a) Annual Payments. Commencing on May 1, 2013, and on May 1 of each
year thereafter during the Term, Borrower shall make a loan payment in an amount equal to the
portion of the Lenders' Share of Residual Receipts payable to the County (each, an "Annual
Payment"). The County shall apply all Annual Payments as follows: (1) first, to accrued interest,
and (2) second, to principal.
(b) Payment in Full. Borrower shall pay all outstanding principal and accrued
interest on the Loan, in full, on the earliest to occur of (i) a Transfer, (ii) an Event of Default, and
(iii) the expiration of the Term.
(c) Prepayment. Borrower may prepay the Loan at any time without premium
or penalty. However, the Regulatory Agreement and the Deed of Trust will remain in effect for
the entire Term, regardless of any prepayment or Transfer.
Section 2.10 Reports and Accounting of Residual Receipts.
In connection with the Annual Payment of the Loan, Borrower shall furnish to the
County:
(a) An itemized statement of Residual Receipts for the relevant period (the
"Statement of Residual Receipts"). Borrower shall cause the first Statement of Residual Receipts
to cover the period that begins immediately following certificate of occupancy and ends on
December 31 of that same year. Borrower shall cause subsequent statements of Residual
Receipts to cover the twelve-month period that ends on December 31 of each year;
(b) A statement from the independent public accountant that audited the
Borrower's financial records for the relevant period, which statement must confirm that
Borrower's calculation of the Lender's Share of Residual Receipts is accurate based on Gross
Revenue and Annual Operating Expenses; and
(c) Any additional documentation reasonably required by the County to
substantiate Borrower's calculation of Lender's Share of Residual Receipts.
The receipt by the County of any statement pursuant to subsection (a) above or any
payment by Borrower or acceptance by the County of any Loan repayment for any period does
not bind the County as to the correctness of such statement or payment. The County may audit
863\88\1072799.2 12
the Residual Receipts and all books, records, and accounts pertaining thereto in accordance with
Section 4.5 below.
Section 2.11 Non-Recourse.
Except as provided below, Borrower will not have any direct or indirect personal liability
for payment of the principal of, and interest on, the Loan or the performance of the covenants of
Borrower under the Deed of Trust. Following recordation of the Deed of Trust, the sole recourse
of the County with respect to the principal of, or interest on, the Note and defaults by Borrower
in the performance of its covenants under the Deed of Trust will be to the property described in
the Deed of Trust; provided, however, that nothing contained in the foregoing limitation of
liability limits or impairs the enforcement of all the rights and remedies of the County against all
such security for the Note, or impairs the right of County to assert the unpaid principal amount of
the Note as demand for money within the meaning and intendment of Section 431.70 of the
California Code of Civil Procedure or any successor provision thereto. The foregoing limitation
of liability is intended to apply only to the obligation to repay the principal of, and payment of
interest on the Note and the performance of Borrower's obligations under the Deed of Trust.
Except as hereafter set forth; nothing contained herein is intended to relieve Borrower of its
obligation to indemnify the County under Sections 3.8, 3.9, 3.10, 4.7, and 7.4 of this Agreement,
or liability for (i) loss or damage of any kind resulting from waste, fraud or willful
misrepresentation; (ii) the failure to pay taxes, assessments or other charges which may create
liens on the Property that are payable or applicable prior to any foreclosure under the Deed of
Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of
any personal property or fixtures removed or disposed of by Borrower other than in accordance
with the Deed of Trust; and (iv) the misappropriation of any proceeds under any insurance
policies or awards resulting from condemnation or the exercise of the power of eminent domain
or by reason of damage, loss or destruction to any portion of the Property.
Section 2.12 AHP Loan Commitment.
Borrower shall submit a timely and complete application for a commitment of the AHP
Loan in the first AHP application round of 2012, currently scheduled for April 2012. Borrower
shall use diligent good faith efforts secure a commitment for the AHP Loan by August 31, 2012.
If Borrower does not obtain a commitment for the AHP Loan by August 31, 2012, Borrower and
the County shall meet and confer in good faith for a period not to exceed sixty (60) days to
determine if the Borrower should submit a further application for AHP funds or if a feasible and
mutually acceptable alternate arrangement may be made to finance the rehabilitation of the
Development. If no agreement is reached by the parties within such 60-day period, the County
may declare an Event of Default and pursue any and all remedies available to it under this
Agreement and under law.
ARTICLE 3 ACQUISITION AND REHABILITATION OF THE DEVELOPMENT
Section 3.1 Acquisition.
Borrower shall complete the acquisition of the Development in accordance with the
Approved Development Budget.
863\88\1072799.2 13
Section 3.2 Permits and Approvals.
Borrower shall apply for all permits and approvals necessary for the rehabilitation of the
Development no later than December 31, 2012, or by such later date that the County approves in
writing.
Section 3.3 Scope of Work.
Borrower shall cause the rehabilitation of the Development to be completed in a timely
manner and to include the improvements described in Exhibit C.
Section 3.4 Bid Package.
(a) Not later than thirty (30) days prior to Borrower's proposed date for
advertising the Bid Package, Borrower shall submit to the County a copy of Borrower's general
contractor's proposed Bid Package. The County’s Deputy Director – Current Planning, or his or
her designee, shall approve or disapprove the Bid Package within fifteen (15) business days after
receipt of the Bid Package by the County. If the County rejects the proposed Bid Package, the
reasons therefore must be given to Borrower. The Borrower will then have fifteen (15) days to
revise the proposed Bid Package and resubmit it to the County. The County will then have
fifteen (15) days to review and approve Borrower's new or corrected Bid Package.
(b) The provisions of this Section will continue to apply until a proposed Bid
Package has been approved by the County. Borrower may not publish a proposed Bid Package
until it has been approved by the County.
Section 3.5 Construction Contract.
(a) Not later than thirty (30) days prior to the proposed Commencement of
Construction, Borrower shall submit to the County for its approval a draft of the proposed
construction contract for the Development. All construction work and professional services are
to be performed by persons or entities licensed or otherwise authorized to perform the applicable
construction work or service in the State of California. Each contract that Borrower enters for
rehabilitation of the Development is to provide that at least ten percent (10%) of the costs
incurred will be payable only upon completion of the rehabilitation, subject to early release of
retention for specified subcontractors upon approval by the County. The construction contract
will include all applicable NSP3 requirements set forth in Section 4.6 below. The County's
approval of the construction contract may not be deemed to constitute approval of or concurrence
with any term or condition of the construction contract except as such term or condition may be
required by this Agreement.
(b) Upon receipt by the County of the proposed construction contract, the
County shall promptly review same and approve or disapprove it within ten (10) days. If the
construction contract is not approved by the County, the County shall set forth in writing and
notify Borrower of the County's reasons for withholding such approval. Borrower shall
thereafter submit a revised construction contract for County approval, which approval is to be
granted or denied in ten (10) days in accordance with the procedures set forth above. Any
construction contract executed by Borrower for the Development is to be in the form approved
863\88\1072799.2 14
by the County.
Section 3.6 Construction Bonds.
Not later than thirty (30) days prior to the proposed Commencement of Construction
Borrower shall deliver to the County copies of labor and material bonds and performance bonds
for the rehabilitation of the Development in an amount equal to one hundred percent (100%) of
the scheduled cost of the rehabilitation of the Development. Such bonds must name the County
as a co-obligee.
Section 3.7 Commencement of Construction.
Borrower shall cause the Commencement of Construction of the Development to occur
no later than December 31, 2012, or such later date that the County approves in writing. For the
purposes of this Agreement, "Commencement of Construction" means the date set for the start of
rehabilitation of the Development in the notice to proceed issued by Borrower to Borrower's
general contractor.
Section 3.8 Completion of Construction.
Borrower shall diligently prosecute rehabilitation of the Development to completion, and
shall cause rehabilitation of the Development to be completed no later than December 31, 2013,
or such later date that the County approves in writing.
Section 3.9 Changes; Construction Pursuant to Plans and Laws.
(a) Changes. Borrower shall rehabilitate the Development in conformance
with (i) the plans and specifications approved by the City's Building Inspection Department, and
(ii) the Approved Development Budget. Borrower shall notify the County in a timely manner of
any changes in the work required to be performed under this Agreement, including any additions,
changes, or deletions that affect the requirements set forth in Exhibit C. Written authorization
from the County must be obtained before any of the following changes, additions, or deletions in
the rehabilitation may be performed: (i) any change in the work the cost of which exceeds Ten
Thousand Dollars ($10,000); or (ii) any set of changes in the work the cost of which
cumulatively exceeds Fifty Thousand Dollars ($50,000) or ten percent (10%) of the Loan
amount, whichever is less; or (iii) any material change in building materials or equipment,
specifications, or the structural or architectural design or appearance of the Development as
provided for in the plans and specifications approved by the County. The County’s consent to
any additions, changes, or deletions to the work does not relieve or release Borrower from any
other obligations under this Agreement, or relieve or release Borrower or its surety from any
surety bond.
(b) Compliance with Laws. Borrower shall cause all work performed in
connection with the Development to be performed in compliance with:
(i) all applicable laws, ordinances, codes (including building codes),
rules and regulations of federal, state, county or municipal governments or agencies now
in force or that may be enacted hereafter;
863\88\1072799.2 15
(ii) the property standards set out in 24 C.F.R. Section 5.701 et seq.;
and
(iii) all directions, rules and regulations of any fire marshal, health
officer, building inspector, or other officer of every governmental agency now having or
hereafter acquiring jurisdiction. Borrower may permit the work to proceed only after
procurement of each permit, license, or other authorization that may be required by any
governmental agency having jurisdiction, and Borrower is responsible to the County for
the procurement and maintenance thereof.
(c) Energy Efficiency. Borrower shall cause the rehabilitation of the
Development to be in compliance with the Energy Star Qualified New Homes standards, to the
extent feasible and to the extent applicable (i.e. older products and appliances such as windows,
doors, lighting, hot water heaters, furnaces, refrigerators must be replaced with Energy-Star
labeled products and water efficient toilets, showers, and faucets such as those with the
WaterSense label must be installed). Borrower is encouraged to incorporate environmentally-
friendly ("green") and other energy efficient elements in the Development as recommended in
Attachment C to the NSP3 Regulations.
(d) Asbestos Abatement and Lead Paint Remediation. Borrower shall ensure
that all asbestos abatement and lead paint remediation is performed by a contractor(s) licensed
and certified to perform such abatement and remediation. Borrower shall also ensure that all
such abatement and remediation is performed in accordance with applicable local, state and
federal law.
Section 3.10 Prevailing Wages.
(a) Davis Bacon. Borrower shall cause rehabilitation of the Development to
be in compliance with the prevailing wage requirements of the federal Davis-Bacon Act (40
U.S.C. 3141-3148). Borrower shall indemnify, hold harmless and defend (with counsel
reasonably acceptable to the County) the County against any claim for damages, compensation,
fines, penalties or other amounts arising out of the failure or alleged failure of any person or
entity (including Borrower, its contractor and subcontractors) to pay prevailing wages as
determined pursuant to the prevailing wage provisions of the federal Davis-Bacon Act and
implementing rules and regulations in connection with the rehabilitation of the Development or
any other work undertaken or in connection with the Property. The requirements in this
Subsection survive repayment of the Loan and the reconveyance of the Deed of Trust.
(b) State Prevailing Wages. To the extent applicable, Borrower shall pay and
shall cause the contractor and subcontractors to pay prevailing wages in the rehabilitation of the
Development as those wages are determined pursuant to California Labor Code Section 1720 et
seq., to employ apprentices as required by California Labor Code Sections 1777.5 et seq., and the
implementing regulations of the Department of Industrial Relations (the "DIR"). Borrower shall
and shall cause the contractor and subcontractors to comply with the other applicable provisions
of California Labor Code Sections 1720 et seq., 1777.5 et seq., and implementing regulations of
the DIR. Borrower shall and shall cause the contractor and subcontractors to keep and retain
such records as are necessary to determine if such prevailing wages have been paid as required
pursuant to California Labor Code Section 1720 et seq., and apprentices have been employed are
863\88\1072799.2 16
required by California Labor Code Section 1777.5 et seq. Copies of the currently applicable
current per diem prevailing wages are available from DIR. During the rehabilitation of the
Development, Borrower shall or shall cause the contractor to post at the Property the applicable
prevailing rates of per diem wages. Borrower shall indemnify, hold harmless and defend (with
counsel reasonably acceptable to the County) the County against any claim for damages,
compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any
person or entity (including Borrower, its contractor and subcontractors) to pay prevailing wages
as determined pursuant to California Labor Code Section 1720 et seq., to employ apprentices
pursuant to California Labor Code Section 1777.5 et seq., and implementing regulations of the
DIR or to comply with the other applicable provisions of California Labor Code Sections 1720 et
seq., 1777.5 et seq., and the implementing regulations of the DIR in connection with the
rehabilitation of the Development or any other work undertaken or in connection with the
Property. The requirements in this Subsection survive the repayment of the Loan, and the
reconveyance of the Deed of Trust.
Section 3.11 Accessibility.
Borrower shall rehabilitate 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 ("Section 504"); Title II
and/or Title III of the Americans with Disabilities Act; and Title 24 of the California Code of
Regulations (collectively, the "Accessibility Requirements"). In compliance with Section 504, if
the rehabilitation is substantial as defined in 24 C.F.R. 8.23(a), a minimum of one (1) Unit of all
Units must be rehabilitated to be fully accessible to households with a mobility impaired member
and an additional one (1) Unit of all Units must be rehabilitated to be fully accessible to hearing
and/or visually impaired persons. Non-substantial alterations must comply with 24 C.F.R.
8.23(b) including the requirement that any alterations to common areas and parts of the
Development affecting accessibility must, to the maximum extent feasible, be made accessible.
In compliance with Section 504 Borrower shall provide the County with a certification from the
Development architect that to the best of the architect's knowledge, the Development complies
with all federal and state accessibility requirements applicable to the Development. Borrower
shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the County)
the County against any claim for damages, compensation, fines, penalties or other amounts
arising out of the failure or alleged failure of any person or entity (including Borrower, its
architect, contractor and subcontractors) to rehabilitate the Development in accordance with the
Accessibility Requirements. The requirements in this Subsection survive repayment of the Loan
and the reconveyance of the Deed of Trust.
Section 3.12 Relocation.
(a) Borrower represents and warrants to the County that at the time of
acquisition of the Property, the Property will be vacant. If and to the extent that rehabilitation of
the Improvements results in the permanent or temporary displacement of residential tenants,
homeowners, or businesses, Borrower shall comply with all applicable local, state, and federal
statutes and regulations with respect to preparation of a relocation plan, relocation planning,
advisory assistance, and payment of monetary benefits, including, without limitation, the
requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act
of 1970 (42 USC 4601 et seq.) and implementing regulations at 49 CFR 24 et seq. (as modified
863\88\1072799.2 17
by the NSP3 Requirements); Section 104(d) of the Housing and Community Development Act of
1974 and implementing regulations at 24 C.F.R. Part 42 and 24 C.F.R. 570.606; and California
Government Code 7260 et seq., and implementing regulations at 25 California Code of
Regulations 6000 et seq. (together, the “Relocation Laws”).
(b) If and to the extent that rehabilitation of the Improvements results in the
permanent or temporary displacement of residential tenants, homeowners, or businesses,
Borrower shall prepare and submit a relocation plan to the County for approval.
(c) Borrower is solely responsible for payment of any relocation benefits to
any displaced persons and for compliance with the Relocation Laws.
(d) Borrower shall indemnify, defend and hold harmless, (with counsel
reasonably acceptable to the County), the County and its boardmembers, supervisors, directors,
officers, employees, agents, successors and assigns, against any claim for damages,
compensation, fines, penalties, relocation payments or other amounts and expenses (including
reasonable attorneys' fees) arising out of the failure or alleged failure of any person or entity
(including Borrower, or the County) to satisfy relocation obligations related to the Development.
This obligation to indemnify shall survive termination of this Agreement.
Section 3.13 Marketing Plan.
(a) No later than six (6) months prior to the projected date of the completion
of the rehabilitation of the Development, Borrower shall submit to the County for approval its
plan for marketing the Development to income-eligible households, as required by the
Regulatory Agreement (the "Marketing Plan"). The Marketing Plan must include information on
affirmative marketing efforts and compliance with fair housing laws.
(b) Upon receipt of the Marketing Plan, the County will promptly review the
Marketing Plan and will approve or disapprove it within fifteen (15) days after submission. If
the Marketing Plan is not approved, Borrower shall submit a revised Marketing Plan within
fifteen (15) days. Borrower shall follow this procedure for resubmission of a revised Marketing
Plan until the Marking Plan is approved by the County. If the Borrower does not submit a
revised Marketing Plan that is approved by the County by three (3) months prior to the projected
date of the completion of the Development, Borrower will be in default of this Agreement.
Section 3.14 Equal Opportunity.
During the rehabilitation of the Development, discrimination on the basis of race, color,
creed, religion, age, sex, sexual orientation, marital status, national origin, ancestry, or disability
in the hiring, firing, promoting, or demoting of any person engaged in the construction work is
not allowed.
Section 3.15 Minority and Women-Owned Contractors; Local Hiring.
(a) Borrower shall use its best efforts to afford minority-owned and women-
owned business enterprises the maximum practicable opportunity to participate in the
rehabilitation of the Development. Borrower shall, at a minimum, notify applicable minority-
863\88\1072799.2 18
owned and women-owned business firms located in Contra Costa County of bid opportunities for
the rehabilitation of the Development. A listing of minority owned and women owned
businesses located in the County and neighboring counties is available from the County.
Documentation of such notifications must be maintained by Borrower and available to the
County upon request.
(b) Pursuant to Section II.U. of the NSP3 Regulations, Borrower shall, to the
maximum extent feasible, provide for the hiring of employees who reside in the "vicinity" of the
Development and shall contract with "small businesses" that are owned and operated by persons
residing in the vicinity of the Development. For the purposes of this Section, "vicinity" means
the Monument Corridor of the City of Concord, and "small business" means a business that
meets the criteria set forth in Section 3(a) of the Small Business Act.
Section 3.16 Progress Reports.
Until such time as Borrower has received a certificate of occupancy from the City for the
Development, Borrower shall provide the County with quarterly progress reports regarding the
status of the rehabilitation of the Development, including a certification that the actual
construction costs to date conform to the Approved Development Budget, as it may be amended
from time to time pursuant to Section 3.20 below.
Section 3.17 Construction Responsibilities.
(a) Borrower is responsible for the coordination and scheduling of the work to
be performed so that commencement and completion of the rehabilitation of the Development
take place in accordance with this Agreement.
(b) Borrower is solely responsible for all aspects of Borrower's conduct in
connection with the Development, including (but not limited to) the quality and suitability of the
plans and specifications, the supervision of construction work, and the qualifications, financial
condition, and performance of all architects, engineers, contractors, subcontractors, suppliers,
consultants, and property managers. Any review or inspection undertaken by the County with
reference to the Development is solely for the purpose of determining whether Borrower is
properly discharging its obligations to the County, and may not be relied upon by Borrower or by
any third parties as a warranty or representation by the County as to the quality of the design or
rehabilitation of the Development.
Section 3.18 Mechanics Liens, Stop Notices, and Notices of Completion.
(a) If any claim of lien is filed against the Property or a stop notice affecting
the Loan is served on the County or any other lender or other third party in connection with the
Development, then Borrower shall, within twenty (20) days after such filing or service, either
pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by
delivering to the County a surety bond in sufficient form and amount, or provide the County with
other assurance satisfactory to the County that the claim of lien or stop notice will be paid or
discharged.
(b) If Borrower fails to discharge any lien, encumbrance, charge, or claim in
863\88\1072799.2 19
the manner required in this Section, then in addition to any other right or remedy, the County
may (but is under no obligation to) discharge such lien, encumbrance, charge, or claim at
Borrower's expense. Alternately, the County may require Borrower to immediately deposit with
the County the amount necessary to satisfy such lien or claim and any costs, pending resolution
thereof. The County may use such deposit to satisfy any claim or lien that is adversely
determined against Borrower.
(c) Borrower shall file a valid notice of cessation or notice of completion
upon cessation of construction work on the Development for a continuous period of thirty (30)
days or more, and take all other steps necessary to forestall the assertion of claims of lien against
the Property. Borrower authorizes the County, but the County has no obligation, to record any
notices of completion or cessation of labor, or any other notice that the County deems necessary
or desirable to protect its interest in the Development and Property.
Section 3.19 Inspections.
Borrower shall permit and facilitate, and shall require its contractors to permit and
facilitate, observation and inspection at the Development by the County and by public authorities
during reasonable business hours for the purposes of determining compliance with this
Agreement.
Section 3.20 Approved Development Budget; Revisions to Budget.
As of the date of this Agreement, the County has approved the Approved Development
Budget set forth in Exhibit B. Borrower shall submit any required amendments to the Approved
Development Budget to the County for approval within five (5) days of the date Borrower
receives information indicating that actual costs of the Development vary or will vary from the
costs shown on the Approved Development Budget. Written consent of the County will be
required to amend the Approved Development Budget.
Section 3.21 Developer Fee.
The maximum cumulative Developer Fee that may be paid to any entity or entities
providing development services to the Development, whether paid up-front or on a deferred
basis, is not to exceed One Hundred Fifty Nine Thousand One Hundred Thirteen Dollars
($159,113) (the "Developer Fee").
ARTICLE 4 LOAN REQUIREMENTS
Section 4.1 Financial Accountings and Post-Completion Audits.
No later than sixty (60) days following completion of rehabilitation of the Development,
Borrower shall provide to the County for its review and approval a financial accounting of all
sources and uses of funds for the Development.
863\88\1072799.2 20
No later than one hundred fifty (150) days following completion of rehabilitation of the
Development, Borrower shall submit an audited financial report showing the sources and uses of
all funds utilized for the Development.
Section 4.2 Annual Operating Budget.
At the beginning of each year of the Term, Borrower shall provide to the County an
annual budget for the operation of the Development. Unless rejected by the County in writing
within fifteen (15) days after receipt of the budget, the budget will be deemed accepted. If
rejected by the County in whole or in part, Borrower shall submit a new or corrected budget
within thirty (30) calendar days of notification of the County's rejection and the reasons therefor.
The provisions of this Section relating to time periods for resubmission of new or corrected
budgets will continue to apply until such budget has been approved by the County.
Section 4.3 Information.
Borrower shall provide any information reasonably requested by the County in
connection with the Development, including (but not limited to) any information required by
HUD in connection with Borrower's use of the Loan funds.
Section 4.4 Records.
(a) Borrower shall keep and maintain at the principal place of business of the
Borrower set forth in Section 7.9 below, or elsewhere with the County's written consent, full,
complete and appropriate books, records and accounts relating to the Development, including all
such books, records and accounts necessary or prudent to evidence and substantiate in full detail
Borrower's calculation of Residual Receipts and disbursements of Residual Receipts. Books,
records and accounts relating to Borrower's compliance with the terms, provisions, covenants
and conditions of this Agreement are to be kept and maintained in accordance with generally
accepted accounting principles consistently applied, and are to be consistent with requirements
of this Agreement. All such books, records, and accounts are to be open to and available for
inspection and copying by HUD, the County, its auditors or other authorized representatives at
reasonable intervals during normal business hours. Copies of all tax returns and other reports
that Borrower may be required to furnish to any governmental agency are to be open for
inspection by the County at all reasonable times at the place that the books, records and accounts
of Borrower are kept. Borrower shall preserve such records for a period of not less than five (5)
years after the creation of such records in compliance with all HUD records and accounting
requirements including. If any litigation, claim, negotiation, audit exception, monitoring,
inspection or other action relating to the use of the Loan is pending at the end of the record
retention period stated herein, then Borrower shall retain the records until such action and all
related issues are resolved. The records are to include all invoices, receipts, and other documents
related to expenditures from the Loan funds. Borrower shall cause records to be accurate and
current and in such a form as to allow the County to comply with the record keeping
requirements contained in 24 C.F.R. 570.506 and the NSP3 Regulations. Such records are to
include but are not limited to:
863\88\1072799.2 21
(i) Records providing a full description of the activities undertaken
with the use of the Loan funds.
(ii) Records demonstrating the eligibility of activities under CDBG
regulations set forth in 24 CFR 570 et seq. and that use of the NSP3 Funds meets one of
the national objectives of the CDBG program set forth in 24 CFR 570.208;
(iii) Records demonstrating compliance with the HUD property
standards and lead-based paint requirements;
(iv) Records documenting compliance with the fair housing, equal
opportunity, and affirmative fair marketing requirements;
(v) Financial records as required by 24 C.F.R. 570.502, and OMB
Circular A-110 (24 C.F.R. Part 84);
(vi) Records demonstrating compliance with local hiring and
MBE/WBE requirements;
(vii) Records demonstrating compliance with Section 3;
(viii) Records demonstrating compliance with applicable acquisition and
relocation requirements, which must be retained for at least five (5) years after the date
by which persons displaced from the property have received final payments;
(ix) Records demonstrating compliance with labor requirements
including certified payrolls from Borrower's general contractor evidencing that applicable
prevailing wages have been paid.
(b) The County shall notify Borrower of any records it deems insufficient.
Borrower has fifteen (15) calendar days after the receipt of such a notice to correct any
deficiency in the records specified by the County in such notice, or if a period longer than fifteen
(15) days is reasonably necessary to correct the deficiency, then Borrower must begin to correct
the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible.
Section 4.5 County Audits.
(a) Each year, Borrower shall provide the County with a copy of Borrower's
annual audit, which is to include information on all of Borrower's activities and not just those
pertaining to the Development. Borrower shall also follow audit requirements of the Single
Audit Act and OMB Circulars A-122 and 110.
(b) In addition, the County may, at any time, audit all of Borrower's books,
records, and accounts pertaining to the Development, including but not limited to the Residual
Receipts. Any such audit is to be conducted during normal business hours at the principal place
of business of Borrower and wherever records are kept. Immediately after the completion of an
audit, the County shall deliver a copy of the results of the audit to Borrower.
863\88\1072799.2 22
(c) If, as a result of an audit, it is determined that there has been a deficiency
in an Annual Payment to the County, the total amount of such deficiency (the “Shortfall”) will
immediately be due and payable with interest at the Default Rate, from the date the deficient
amount should have been paid. In addition, if the audit determines that Residual Receipts have
been understated for any year by more than five percent (5%), then Borrower shall pay, in
addition to the Shortfall and interest charges, all of the County's costs and expenses incurred as a
result of the audit or review of Borrower's accounts and records.
Section 4.6 NSP3 Requirements.
(a) Borrower shall comply with all applicable laws and regulations governing
the use of the NSP3 Funds as set forth in the NSP3 Requirements, and with the requirements of
the Regulatory Agreement and the Project Agreement. In the event of any conflict between this
Agreement and applicable laws and regulations governing the use of the Loan funds, the
applicable laws and regulations govern.
(b) The laws and regulations governing the use of the Loan include (but are
not limited to) the following:
(i) Environmental and Historic Preservation. 24 C.F.R. Part 58,
which prescribes procedures for compliance with the National Environmental Policy Act
of 1969 (42 U.S.C. 4321-4361), and the additional laws and authorities listed at 24 C.F.R.
58.5.
(ii) Applicability of OMB Circulars. The applicable policies,
guidelines, and requirements of OMB Circulars Nos. A-87, A-102, Revised, A-110, A-
122, and A-133.
(iii) Debarred, Suspended or Ineligible Contractors. The prohibition on
the use of debarred, suspended, or ineligible contractors set forth in 24 C.F.R. Part 24.
(iv) Civil Rights, Housing and Community Development, and Age
Discrimination Acts. The Fair Housing Act (42 U.S.C. 3601 et seq.) and implementing
regulations at 24 C.F.R. Part 100; Title VI of the Civil Rights Act of 1964 as amended;
Title VIII of the Civil Rights Act of 1968 as amended; Section 104(b) and Section 109 of
Title I of the Housing and Community Development Act of 1974 as amended; Section
504 of the Rehabilitation Act of 1973 (29 USC 794, et seq.); the Age Discrimination Act
of 1975 (42 USC 6101, et seq.); Executive Order 11063 as amended by Executive Order
12259 and implementing regulations at 24 C.F.R. Part 107; Executive Order 11246 as
amended by Executive Orders 11375, 12086, 11478, 12107; Executive Order 11625 as
amended by Executive Order 12007; Executive Order 12432; Executive Order 12138 as
amended by Executive Order 12608.
(v) Lead-Based Paint. The requirement of the Lead-Based Paint
Poisoning Prevention Act, as amended (42 U.S.C. 4821 et seq.), the Residential Lead-
Based Paint Hazard Reduction Act (42 U.S.C. 4851 et seq.), and implementing
regulations at 24 C.F.R. Part 35.
863\88\1072799.2 23
(vi) Relocation. The requirements of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601, et seq.),
and implementing regulations at 49 C.F.R. Part 24(as modified by the NSP3
Requirements); 24 C.F.R. 570.606; Section 104(d) of the Housing and Community
Development Act of 1974 and implementing regulations at 24 C.F.R. 42 et seq.; and
California Government Code Section 7260 et seq. and implementing regulations at 25
California Code of Regulations Sections 6000 et seq.
(vii) Discrimination against the Disabled. The requirements of the Fair
Housing Act (42 U.S.C. 3601 et seq.) and implementing regulations at 24 C.F.R. Part
100; Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and federal
regulations issued pursuant thereto, which prohibit discrimination against the disabled in
any federally assisted program, the requirements of the Architectural Barriers Act of
1968 (42 U.S.C. 4151-4157) and the applicable requirements of Title II and/or Title III of
the Americans with Disabilities Act of 1990 (42 U.S.C. 12131 et seq.), and federal
regulations issued pursuant thereto.
(viii) Clean Air and Water Acts. The Clean Air Act, as amended, 42
U.S.C. 7401 et seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C.
1251 et seq., and the regulations of the Environmental Protection Agency with respect
thereto, at 40 C.F.R. Part 1500, as amended from time to time.
(ix) Uniform Administrative Requirements. The provisions of 24
C.F.R. 570.502 regarding cost and auditing requirements to the extent applicable.
(x) Training Opportunities. The requirements of Section 3 of the
Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u ("Section
3"), requiring that to the greatest extent feasible opportunities for training and
employment be given to lower income residents of the project area and agreements for
work in connection with the project be awarded to business concerns which are located
in, or owned in substantial part by persons residing in, the areas of the project. Borrower
agrees to include the following language in all subcontracts executed under this
Agreement:
(1) The work to be performed under this contract is subject to
the requirements of Section 3 of the Housing and Urban Development Act of
1968, as amended, 12 U.S.C. 1701u. The purpose of Section 3 is to ensure that
employment and other economic opportunities generated by HUD assistance or
HUD-assisted projects covered by Section 3, shall, to the greatest extent feasible,
be directed to low- and very low-income persons, particularly persons who are
recipients of HUD assistance for housing.
(2) The parties to this contract agree to comply with HUD's
regulations in 24 C.F.R. Part 135, which implement Section 3. As evidenced by
their execution of this contract, the parties to this contract certify that they are
under no contractual or other impediment that would prevent them from
complying with the Part 135 regulations.
863\88\1072799.2 24
(3) The contractor agrees to send to each labor organization or
representative of workers with which the contractor has a collective bargaining
agreement or other understanding, if any, a notice advising the labor organization
or workers’ representative of the contractor's commitments under this Section 3
clause; and will post copies of the notice in conspicuous places at the work site
where both employees and applicants for training and employment positions can
see the notice. The notice shall describe the Section 3 preference; shall set forth
minimum number and job titles subject to hire; availability of apprenticeship and
training positions; the qualifications for each; the name and location of the
person(s) taking applications for each of the positions; and the anticipated date the
work shall begin.
(4) The contractor agrees to include this Section 3 clause in
every subcontract subject to compliance with regulations in 24 C.F.R. Part 135,
and agrees to take appropriate action, as provided in an applicable provision of the
subcontract or in this Section 3 clause, upon a finding that the subcontractor is in
violation of the regulations in 24 C.F.R. Part 135. The contractor will not
subcontract with any subcontractor where the contractor has notice or knowledge
that the subcontractor has been found in violation of the regulations in 24 C.F.R.
Part 135.
(5) The contractor will certify that any vacant employment
positions, including training positions, that are filled (1) after the contractor is
selected but before the contract is executed, and (2) with persons other than those
to whom the regulations of 24 C.F.R. Part 135 require employment opportunities
to be directed, were not filled to circumvent the contractor's obligations under 24
C.F.R. Part 135.
(6) Noncompliance with HUD's regulations in 24 C.F.R. Part
135 may result in sanctions, termination of this contract for default, and
debarment or suspension from future HUD assisted contracts.
(7) With respect to work performed in connection with Section
3 covered Indian housing assistance, section 7(b) of the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450e) also applies to the work to be
performed under this contract. Section 7(b) requires that to the greatest extent
feasible (i) preference and opportunities for training and employment shall be
given to Indians, and (ii) preference in the award of contracts and subcontracts
shall be given to Indian organizations and Indian-owned Economic Enterprises.
Parties to this contract that are subject to the provisions of Section 3 and section
7(b) agree to comply with Section 3 to the maximum extent feasible, but not in
derogation of compliance with section 7(b).
(xi) Labor Standards. The labor requirements set forth in 24 C.F.R.
Section 570.603; the prevailing wage requirements of the Davis-Bacon Act and
implementing rules and regulations (40 U.S.C. 3141-3148); the Copeland "Anti-
863\88\1072799.2 25
Kickback" Act (40 U.S.C. 276(c)) which requires that workers be paid at least once a
week without any deductions or rebates except permissible deductions; the Contract
Work Hours and Safety Standards Act – CWHSSA (40 U.S.C. 3701-3708) which
requires that workers receive "overtime" compensation at a rate of 1-1/2 times their
regular hourly wage after they have worked forty (40) hours in one (1) week; and Title
29, Code of Federal Regulations, Subtitle A, Parts 1, 3 and 5 are the regulations and
procedures issued by the Secretary of Labor for the administration and enforcement of
the Davis-Bacon Act, as amended.
(xii) Drug Free Workplace. The requirements of the Drug Free
Workplace Act of 1988 (P.L. 100-690) and implementing regulations at 24 C.F.R. Part
24.
(xiii) Anti-Lobbying; Disclosure Requirements. The disclosure
requirements and prohibitions of 31 U.S.C. 1352 and implementing regulations at 24
C.F.R. Part 87.
(xiv) Historic Preservation. The historic preservation requirements set
forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. Section
470) and the procedures set forth in 36 C.F.R. Part 800. If archeological, cultural, or
historic period resources are discovered during construction, all construction work must
come to a halt and Borrower shall immediately notify the County. Borrower shall not
shall alter or move the discovered material(s) until all appropriate procedures for “post-
review discoveries” set forth in Section 106 of the National Historic Preservation Act
have taken place, which include, but are not limited to, consultation with the California
State Historic Preservation Officer and evaluation of the discovered material(s) by a
qualified professional archeologist.
(xv) Flood Disaster Protection. The requirements of the Flood Disaster
Protection Act of 1973 (P.L. 93-234) (the "Flood Act"). No portion of the assistance
provided under this Agreement is approved for acquisition or construction purposes as
defined under Section 3(a) of the Flood Act, for use in an area identified by HUD as
having special flood hazards which is not then in compliance with the requirements for
participation in the national flood insurance program pursuant to Section 201(d) of the
Flood Act. The use of any assistance provided under this Agreement for such acquisition
or construction in such identified areas in communities then participating in the National
Flood Insurance Program is subject to the mandatory purchase of flood insurance
requirements of Section 102(a) of the Flood Act. If the Property is located in an area
identified by HUD as having special flood hazards and in which the sale of flood
insurance has been made available under the National Flood Insurance Act of 1968, as
amended, 42 U.S.C. 4001 et seq., the property owner and its successors or assigns must
obtain and maintain, during the ownership of the Property, such flood insurance as
required with respect to financial assistance for acquisition or construction purposes
under -Section 102(s) of the Flood Act. Such provisions are required notwithstanding the
fact that the construction on the Property is not itself funded with assistance provided
under this Agreement.
863\88\1072799.2 26
(xvi) HUD Regulations. Any other HUD regulations present or as may
be amended, added, or waived in the future pertaining to the Loan funds.
Section 4.7 Hazardous Materials.
(a) Borrower shall keep and maintain the Property in compliance with, and
may not cause or permit the Property to be in violation of any federal, state or local laws,
ordinances or regulations relating to industrial hygiene or to the environmental conditions on,
under or about the Property including, but not limited to, soil and ground water conditions.
Borrower may not use, generate, manufacture, store or dispose of on, under, or about the
Property or transport to or from the Property any flammable explosives, radioactive materials,
hazardous wastes, toxic substances or related materials, including without limitation, any
substances defined as or included in the definition of "hazardous substances," hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or state laws or
regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the
foregoing as may be customarily used in construction of projects like the Development or kept
and used in and about residential property of this type.
(b) Borrower shall immediately advise the County in writing if at any time it
receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against Borrower or the Property pursuant
to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazardous Materials Law"), (ii) all claims made or threatened by any third party
against Borrower or the Property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above are hereinafter referred to as "Hazardous Materials Claims"), and (iii) Borrower's
discovery of any occurrence or condition on any real property adjoining or in the vicinity of the
Property that could cause the Property or any part thereof to be classified as "border-zone
property" (as defined in California Health and Safety Code Section 25117.4) under the provision
of California Health and Safety Code, 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.
(c) The County 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 Borrower. Borrower
shall indemnify and hold harmless the County and its board members, supervisors, directors,
officers, employees, agents, successors and assigns from and against any loss, damage, cost,
expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (i) all foreseeable consequential
damages, (ii) the costs of any required or necessary repair, cleanup or detoxification of the
Property and the preparation and implementation of any closure, remedial or other required
plans, and (iii) all reasonable costs and expenses incurred by the County in connection with
clauses (i) and (ii), including but not limited to reasonable attorneys' fees and consultant's fees.
This indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision
863\88\1072799.2 27
include, but are not limited to: (1) losses attributable to diminution in the value of the Property,
(2) loss or restriction of use of rentable space on the Property, (3) adverse effect on the marketing
of any rental space on the Property, and (4) penalties and fines levied by, and remedial or
enforcement actions of any kind issued by any regulatory agency (including but not limited to
the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the
Property and surrounding properties). This obligation to indemnify will survive termination of
this Agreement.
(d) Without the County's prior written consent, which will not be
unreasonably withheld, Borrower 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, consent decree or compromise might, in the County's
judgment, impair the value of the County's security hereunder; provided, however, that the
County'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 the County's consent before taking such action, provided that in
such event Borrower shall notify the County as soon as practicable of any action so taken. The
County agrees not to withhold its consent, where such consent is required hereunder, if (i) a
particular remedial action is ordered by a court of competent jurisdiction, (ii) Borrower will or
may be subjected to civil or criminal sanctions or penalties if it fails to take a required action,
(iii) Borrower establishes to the satisfaction of the County that there is no reasonable alternative
to such remedial action which would result in less impairment of the County's security
hereunder, or (iv) the action has been agreed to by the County.
(e) Borrower hereby acknowledges and agrees that (i) this Section is intended
as the County's written request for information (and Borrower's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure
Section 726.5, and (ii) each representation and warranty in this Agreement (together with any
indemnity obligation applicable to a breach of any such representation and warranty) with
respect to the environmental condition of the Property is intended by the Parties to be an
"environmental provision" for purposes of California Code of Civil Procedure Section 736.
(f) In the event that any portion of the Property is determined to be
"environmentally impaired" (as that term is defined in California Code of Civil Procedure
Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of
Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the
County's or the trustee's rights and remedies under the Deed of Trust, the County may elect to
exercise its rights under California Code of Civil Procedure Section 726.5(a) to (i) waive its lien
on such environmentally impaired or affected portion of the Property and (ii) exercise (1) the
rights and remedies of an unsecured creditor, including reduction of its claim against Borrower
to judgment, and (2) any other rights and remedies permitted by law. For purposes of
determining the County's right to proceed as an unsecured creditor under California Code of
Civil Procedure Section 726.5(a), Borrower 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
863\88\1072799.2 28
Hazardous Materials was knowingly or negligently caused or contributed to by any lessee,
occupant, or user of any portion of the Property and Borrower knew or should have known of the
activity by such lessee, occupant, or user which caused or contributed to the release or threatened
release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by the
County in connection with any action commenced under this paragraph, including any action
required by California Code of Civil Procedure Section 726.5(b) to determine the degree to
which the Property is environmentally impaired, plus interest thereon at the lesser of ten percent
(10%) and the maximum rate permitted by law, until paid, will be added to the indebtedness
secured by the Deed of Trust and is due and payable to the County upon its demand made at any
time following the conclusion of such action.
Section 4.8 Maintenance and Damage.
(a) During the course of both rehabilitation and operation of the
Development, Borrower shall maintain the Development and the Property in good repair and in a
neat, clean and orderly condition. If there arises a condition in contravention of this requirement,
and if Borrower has not cured such condition within thirty (30) days after receiving a County
notice of such a condition, then in addition to any other rights available to the County, the
County may perform all acts necessary to cure such condition, and to establish or enforce a lien
or other encumbrance against the Property, subject to the provisions provided in subsection (b)
below.
(b) Subject to the requirements of senior lenders, and if economically feasible
in the County’s judgment after consultation with Borrower, if any improvement now or in the
future on the Property is damaged or destroyed, then Borrower shall, at its cost and expense,
diligently undertake to repair or restore such improvement consistent with the plans and
specifications approved by the County with such changes as have been approved by the County.
Such work or repair is to be commenced no later than the later of one hundred twenty (120) days,
or such longer period approved by the County in writing, after the damage or loss occurs or thirty
(30) days following receipt of the insurance proceeds, and is to be complete within one (1) year
thereafter. Any insurance proceeds collected for such damage or destruction are to be applied to
the cost of such repairs or restoration and, if such insurance proceeds are insufficient for such
purpose, then Borrower shall make up the deficiency. If Borrower does not promptly make such
repairs then any insurance proceeds collected for such damage or destruction are to be promptly
delivered by Borrower to the County as a special repayment of the Loan, subject to the rights of
the Senior Lenders, if any.
Section 4.9 Fees and Taxes.
Borrower is solely responsible for payment of all fees, assessments, taxes, charges, and
levies imposed by any public authority or utility company with respect to the Property or the
Development, and shall pay such charges prior to delinquency. However, Borrower is not
required to pay and discharge any such charge so long as (i) the legality thereof is being
contested diligently and in good faith and by appropriate proceedings, and (ii) if requested by the
County, Borrower deposits with the County any funds or other forms of assurance that the
County in good faith from time to time determines appropriate to protect the County from the
consequences of the contest being unsuccessful.
863\88\1072799.2 29
Section 4.10 Notice of Litigation.
Borrower shall promptly notify the County in writing of any litigation that has the
potential to materially affect Borrower or the Property and of any claims or disputes that involve
a material risk of such litigation.
Section 4.11 Operation of Development as Affordable Housing.
(a) Borrower shall operate the Development as an affordable housing
development consistent with (i) HUD's requirements for use of the NSP3 Funds, (ii) the
Regulatory Agreement, and (iii) any other regulatory requirements imposed on Borrower
including but not limited to the regulatory agreement associated with the MHSA Loan.
(b) Before leasing any unit in the Development, Borrower shall submit its
proposed form of lease agreement for the County's review and approval. The form of lease must,
at a minimum, comply with Sections 6.1 and 6.2 of the Regulatory Agreement.
(c) Before leasing any unit in the Development, Borrower shall provide the
County, for its review and approval, with Borrower's written tenant selection plan pursuant to
Section 3.2 of the Regulatory Agreement.
(d) Borrower shall evaluate the income eligibility of each Tenant household in
County-Assisted Units pursuant to the County's approved Tenant certification procedures set
forth in Section 3.1 of the Regulatory Agreement.
(e) Borrower shall maintain all documents setting forth the household income
of each household occupying a County-Assisted Unit, and the total amount for rent, utilities, and
related services charged to each household occupying the Development, as prescribed by the
Regulatory Agreement.
Section 4.12 Nondiscrimination.
Borrower covenants by and for itself and its successors and assigns that, except as
required pursuant to any regulatory agreement entered into between Borrower and CalHFA with
respect to the MHSA Loan funds, there will be no discrimination against or segregation of a
person or of a group of persons on account of race, color, religion, creed, age (except for lawful
senior housing in accordance with state and federal law), familial status, disability, sex, sexual
orientation, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, nor may 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, subtenants, sublessees or vendees in the Property. The foregoing covenant will run with
the land.
Section 4.13 Transfer.
(a) For purposes of this Agreement, "Transfer" means any sale, assignment,
863\88\1072799.2 30
or transfer, whether voluntary or involuntary, of (i) any rights and/or duties under this
Agreement, and/or (ii) any interest in the Development, including (but not limited to) a fee
simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a
security interest, or an interest evidenced by a land contract by which possession of the
Development is transferred and Borrower retains title. The term "Transfer" excludes the leasing
of any single unit in the Development to an occupant in compliance with the Regulatory
Agreement.
(b) No Transfer is permitted without the prior written consent of the County,
which the County may withhold in its sole discretion. The Loan will automatically accelerate and
be due in full upon any Transfer made without the prior written consent of the County.
(c) The County hereby approves the grant of the security interests in the
Development for Approved Financing.
Section 4.14 Insurance Requirements.
(a) Borrower shall maintain the following insurance coverage throughout the
Term of the Loan:
(i) Worker's Compensation insurance to the extent required by law,
including Employer's Liability coverage, with limits not less than One Million Dollars
($1,000,000) each accident.
(ii) Commercial General Liability insurance with limits not less than
Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily
Injury and Property Damage, including coverages for Contractual Liability, Personal
Injury, Broadform Property Damage, Products and Completed Operations.
(iii) Commercial Automobile Liability insurance with limits not less
than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily
Injury and Property Damage, including coverages for owned, non-owned and hired
vehicles, as applicable.
(iv) Builder's Risk insurance during the course of construction, and
upon completion of construction, property insurance covering the Development, in form
appropriate for the nature of such property, covering all risks of loss, excluding
earthquake, for one hundred percent (100%) of the replacement value, with deductible, if
any, acceptable to the County, naming the County as a Loss Payee, as its interests may
appear. Flood insurance must be obtained if required by applicable federal regulations.
(v) Commercial crime insurance covering all officers and employees,
for loss of Loan proceeds caused by dishonesty, in an amount approved by the County,
naming the County a Loss Payee, as its interests may appear.
(b) Borrower shall cause any general contractor, agent, or subcontractor
working on the Development under direct contract with Borrower or subcontract to maintain
insurance of the types and in at least the minimum amounts described in subsections (i), (ii), and
863\88\1072799.2 31
(iii) above, except that the limit of liability for comprehensive general liability insurance for
subcontractors must be One Million Dollars ($1,000,000), and must require that such insurance
will meet all of the general requirements of subsections (d) and (e) below.
(c) The required insurance must be provided under an occurrence form, and
Borrower shall maintain the coverage described in subsections (a) continuously throughout the
Term. Should any of the required insurance be provided under a form of coverage that includes
an annual aggregate limit or provides that claims investigation or legal defense costs be included
in such annual aggregate limit, such annual aggregate limit must be three times the occurrence
limits specified above.
(d) Comprehensive General Liability, Comprehensive Automobile Liability
and Property insurance policies must be endorsed to name as an additional insured the County
and its officers, agents, employees and members of the County Board of Supervisors.
(e) All policies and bonds are to contain (i) the agreement of the insurer to
give the County at least thirty (30) days notice prior to cancellation (including, without
limitation, for non-payment of premium) or any material change in said policies; (ii) an
agreement that such policies are primary and non-contributing with any insurance that may be
carried by the County; (iii) a provision that no act or omission of Borrower shall affect or limit
the obligation of the insurance carrier to pay the amount of any loss sustained; and (iv) a waiver
by the insurer of all rights of subrogation against the County and its authorized parties in
connection with any loss or damage thereby insured against.
Section 4.15 Anti-Lobbying Certification.
Borrower certifies, to the best of Borrower's knowledge or belief, that:
(a) No Federal appropriated funds have been paid or will be paid, by or on
behalf of it, to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, the making of any
Federal grant, the making of any Federal loan, the entering into of any cooperative agreement,
and the extension, continuation, renewal, amendment, or modification of any Federal contract,
grant, loan, or cooperative agreement;
(b) If any funds other than Federal appropriated funds have been paid or will
be paid to any person for influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, grant, loan, or
cooperative agreement, it will complete and submit Standard Form-LLL, Disclosure Form to
Report Lobbying, in accordance with its instructions.
This certification is a material representation of fact upon which reliance was placed
when this Agreement was made or entered into. Submission of this certification is a prerequisite
for making or entering into this Agreement imposed by Section 1352, Title 31, U.S. Code. Any
person who fails to file the required certification shall be subject to a civil penalty of not less
863\88\1072799.2 32
than Ten Thousand Dollars ($10,000) and no more than One Hundred Thousand Dollars
($100,000) for such failure.
Section 4.16 Covenants Regarding Approved Financing.
(a) Borrower shall promptly pay the principal and interest when due on any
Approved Financing.
(b) Borrower shall promptly notify the County in writing of the existence of
any default under any documents evidencing Approved Financing whether or not a default has
been declared by the lender and provide the County copies of any notice of default.
(c) Borrower may not amend, modify, supplement, cancel or terminate any
documents related to any loan that is part of the Approved Financing without the prior written
consent of the County.
(d) Borrower may not incur any indebtedness of any kind other than
Approved Financing or encumber the Development with any liens (other than liens for Approved
Financing approved by the County) without the prior written consent of the County.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1 Representations and Warranties.
Borrower hereby represents and warrants to the County as follows and acknowledges,
understands, and agrees that the representations and warranties set forth in this Article 5 are
deemed to be continuing during all times when any portion of the Loan remains outstanding:
(a) Organization. Borrower is duly organized, validly existing and in good
standing under the laws of the State of California and has the power and authority to own its
property and carry on its business as now being conducted.
(b) Authority of Borrower. Borrower has full power and authority to execute
and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to
execute and deliver the Loan Documents and all other documents or instruments executed and
delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and
observe the terms and provisions of all of the above.
(c) Authority of Persons Executing Documents. This Agreement and the
Loan Documents and all other documents or instruments executed and delivered, or to be
executed and delivered, pursuant to this Agreement have been executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all
actions required under Borrower's organizational documents and applicable governing law for
the authorization, execution, delivery and performance of this Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Agreement, have been duly taken.
863\88\1072799.2 33
(d) Valid Binding Agreements. The Loan Documents and all other
documents or instruments executed and delivered pursuant to or in connection with this
Agreement constitute or, if not yet executed or delivered, will when so executed and delivered,
constitute legal, valid and binding obligations of Borrower enforceable against it in accordance
with their respective terms.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of
the Loan Documents or of any other documents or instruments executed and delivered, or to be
executed or delivered, pursuant to this Agreement, nor the performance of any provision,
condition, covenant or other term hereof or thereof, will (i) conflict with or result in a breach of
any statute, rule or regulation, or any judgment, decree or order of any court, board, commission
or agency whatsoever that is binding on Borrower, or conflict with any provision of the
organizational documents of Borrower, or conflict with any agreement to which Borrower is a
party, or (ii) result in the creation or imposition of any lien upon any assets or property of
Borrower, other than liens established pursuant hereto.
(f) Compliance with Laws; Consents and Approvals. The rehabilitation of
the Development will comply with all applicable laws, ordinances, rules and regulations of
federal, state and local governments and agencies and with all applicable directions, rules and
regulations of the fire marshal, health officer, building inspector and other officers of any such
government or agency.
(g) Pending Proceedings. Borrower is not in default under any law or
regulation or under any order of any court, board, commission or agency whatsoever, and there
are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened
against or affecting Borrower or the Development, at law or in equity, before or by any court,
board, commission or agency whatsoever which might, if determined adversely to Borrower,
materially affect Borrower's ability to repay the Loan or impair the security given to the County
pursuant hereto.
(h) Title to Land. At the time of recordation of the Deed of Trust, Borrower
will have good and marketable fee title to the Development and there will exist thereon or with
respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever
other than liens for current real property taxes and liens in favor of the County or approved in
writing by the County.
(i) Financial Statements. The financial statements of Borrower and other
financial data and information furnished by Borrower to the County fairly and accurately present
the information contained therein. As of the date of this Agreement, there has not been any
material adverse change in the financial condition of Borrower from that shown by such financial
statements and other data and information.
(j) Sufficient Funds. Borrower holds sufficient funds and/or binding
commitments for sufficient funds to complete the acquisition of the Property and the
rehabilitation of the Development in accordance with the terms of this Agreement.
(k) Taxes. Borrower and its subsidiaries have filed all federal and other
material tax returns and reports required to be filed, and have paid all federal and other material
863\88\1072799.2 34
taxes, assessments, fees and other governmental charges levied or imposed upon them or their
income or the Property otherwise due and payable, except those that are being contested in good
faith by appropriate proceedings and for which adequate reserves have been provided in
accordance with generally accepted accounting principles. There is no proposed tax assessment
against Borrower or any of its subsidiaries that could, if made, be reasonably expected to have a
material adverse effect on the property, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of Borrower and its subsidiaries, taken as a whole, or which
could result in (i) a material impairment of the ability of Borrower to perform under any loan
document to which it is a party, or (ii) a material adverse effect upon the legality, validity,
binding effect or enforceability against Borrower of any Loan Document.
ARTICLE 6 DEFAULT AND REMEDIES
Section 6.1 Events of Default.
Each of the following constitutes an "Event of Default" by Borrower under this
Agreement:
(a) Failure to Construct. Failure of Borrower to obtain permits, commence,
and prosecute to completion, rehabilitation of the Development within the times set forth in
Article 3 above;
(b) Failure to Make Payment. Failure to make any payment when such
payment is due pursuant to the Loan Documents.
(c) Breach of Covenants. Failure by Borrower to duly perform, comply with,
or observe any of the conditions, terms, or covenants of any of the Loan Documents or the
Project Agreement (other than obligations described in subsections (a) and (b) above), and
Borrower fails to cure such default within thirty (30) days after receipt of written notice thereof
from the County to Borrower; provided, however, that if a different period or notice requirement
is specified under any other section of this Article 6, the specific provisions shall control.
(d) Default Under Other Loans. A default is declared under any other
financing for the Development by the lender of such financing and such default remains uncured
following any applicable notice and cure period.
(e) Insolvency. A court having jurisdiction makes or enters any decree or
order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly filed a
petition seeking reorganization of Borrower, or seeking any arrangement for Borrower under the
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower
in bankruptcy or insolvency or for any of their properties, (iv) directing the winding up or
liquidation of Borrower if any such decree or order described in clauses (i) to (iv), inclusive, is
unstayed or undischarged for a period of ninety (90) calendar days; or (v) Borrower admits in
writing its inability to pay its debts as they fall due or will have voluntarily submitted to or filed
a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The
occurrence of any of the Events of Default in this paragraph will act to accelerate automatically,
863\88\1072799.2 35
without the need for any action by the County, the indebtedness evidenced by the Note.
(f) Assignment; Attachment. Borrower assigns its assets for the benefit of its
creditors or suffers a sequestration or attachment of or execution on any substantial part of its
property, unless the property so assigned, sequestered, attached or executed upon is returned or
released within ninety (90) calendar days after such event or, if sooner, prior to sale pursuant to
such sequestration, attachment, or execution. The occurrence of any of the events of default in
this paragraph shall act to accelerate automatically, without the need for any action by the
County, the indebtedness evidenced by the Note.
(g) Suspension; Termination. Borrower voluntarily suspends its business or,
the partnership is dissolved or terminated, other than a technical termination of the partnership
for tax purposes.
(h) Liens on Property and the Development. Any claim of lien (other than
liens approved in writing by the County) is filed against the Development or any part thereof, or
any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds
of the Loan and the continued maintenance of said claim of lien or notice to withhold for a
period of twenty (20) days, without discharge or satisfaction thereof or provision therefor
(including, without limitation, the posting of bonds) satisfactory to the County.
(i) Condemnation. The condemnation, seizure, or appropriation of all or the
substantial part of the Property and the Development.
(j) Unauthorized Transfer. Any Transfer other than as permitted pursuant to
Section 4.13.
(k) Representation or Warranty Incorrect. Any Borrower representation or
warranty contained in this Agreement, or in any application, financial statement, certificate, or
report submitted to the County in connection with any of the Loan Documents, proves to have
been incorrect in any material respect when made.
Section 6.2 Remedies.
Upon the occurrence of an Event of Default and until such Event of Default is cured or
waived, the County is relieved of any obligation to disburse any portion of the Loan. In addition,
upon the occurrence of an Event of Default and following the expiration of all applicable notice
and cure periods, the County may proceed with any and all remedies available to it under law,
this Agreement, and the other Loan Documents. Such remedies include but are not limited to the
following:
(a) Acceleration of Note. The County may cause all indebtedness of
Borrower to the County under this Agreement and the Note, together with any accrued interest
thereon, to become immediately due and payable. Borrower waives all right to presentment,
demand, protest or notice of protest or dishonor. The County may proceed to enforce payment of
the indebtedness and to exercise any or all rights afforded to the County as a creditor and secured
party under the law including the Uniform Commercial Code, including foreclosure under the
Deed of Trust. Borrower is liable to pay the County on demand all reasonable expenses, costs
863\88\1072799.2 36
and fees (including, without limitation, reasonable attorney's fees and expenses) paid or incurred
by the County in connection with the collection of the Loan and the preservation, maintenance,
protection, sale, or other disposition of the security given for the Loan.
(b) Specific Performance. The County has the right to mandamus or other
suit, action or proceeding at law or in equity to require Borrower to perform its obligations and
covenants under the Loan Documents or to enjoin acts on things that may be unlawful or in
violation of the provisions of the Loan Documents.
(c) Right to Cure at Borrower's Expense. The County has the right (but not
the obligation) to cure any monetary default by Borrower under a loan other than the Loan.
Upon demand therefore, Borrower shall reimburse the County for any funds advanced by the
County to cure such monetary default, together with interest from the date of expenditure until
the date of reimbursement at the Default Rate.
Section 6.3 Right of Contest.
Borrower may contest in good faith any claim, demand, levy, or assessment the assertion
of which would constitute an Event of Default hereunder. Any such contest is to be prosecuted
diligently and in a manner unprejudicial to the County or the rights of the County hereunder.
Section 6.4 Remedies Cumulative.
No right, power, or remedy given to the County by the terms of this Agreement or the
other Loan Documents is intended to be exclusive of any other right, power, or remedy; and each
and every such right, power, or remedy is cumulative and in addition to every other right, power,
or remedy given to the County by the terms of any such instrument, or by any statute or
otherwise against Borrower and any other person. Neither the failure nor any delay on the part
of the County to exercise any such rights and remedies will operate as a waiver thereof, nor does
any single or partial exercise by the County of any such right or remedy preclude any other or
further exercise of such right or remedy, or any other right or remedy.
ARTICLE 7 GENERAL PROVISIONS
Section 7.1 Relationship of Parties.
Nothing contained in this Agreement is to be interpreted or understood by any of the
Parties, or by any third persons, as creating the relationship of employer and employee, principal
and agent, limited or general partnership, or joint venture between the County and Borrower or
its agents, employees or contractors, and Borrower will at all times be deemed an independent
contractor and to be wholly responsible for the manner in which it or its agents, or both, perform
the services required of it by the terms of this Agreement. Borrower has and retains the right to
exercise full control of employment, direction, compensation, and discharge of all persons
assisting in the performance of services under the Agreement. In regards to the rehabilitation
and operation of the Development, Borrower is solely responsible for all matters relating to
payment of its employees, including compliance with Social Security, withholding, and all other
laws and regulations governing such matters, and must include requirements in each contract that
863\88\1072799.2 37
contractors are solely responsible for similar matters relating to their employees. Borrower is
solely responsible for its own acts and those of its agents and employees.
Section 7.2 No Claims.
Nothing contained in this Agreement creates or justifies any claim against the County by
any person that Borrower may have employed or with whom Borrower may have contracted
relative to the purchase of materials, supplies or equipment, or the furnishing or the performance
of any work or services with respect to the purchase of the Property, the rehabilitation or
operation of the Development, and Borrower shall include similar requirements in any contracts
entered into for the rehabilitation or operation of the Development.
Section 7.3 Amendments.
No alteration or variation of the terms of this Agreement is valid unless made in writing
by the Parties. The County Deputy Director – Current Planning is authorized to execute on
behalf of the County amendments to the Loan Documents or amended and restated Loan
Documents as long as any discretionary change in the amount or terms of this Agreement is
approved by the County’s Board of Supervisors.
Section 7.4 Indemnification.
Borrower shall indemnify, defend and hold the County and its board members,
supervisors, directors, officers, employees, agents, successors and assigns harmless against any
and all claims, suits, actions, losses and liability of every kind, nature and description made
against it and expenses (including reasonable attorneys' fees) which arise out of or in connection
with this Agreement, including but not limited to the purchase of the Property, and the
development, construction, marketing and operation of the Development, except to the extent
such claim arises from the grossly negligent or willful misconduct of the County, its agents, and
its employees. The provisions of this Section will survive the expiration of the Term and the
reconveyance of the Deed of Trust.
Section 7.5 Non-Liability of County Officials, Employees and Agents.
No member, official, employee or agent of the County is personally liable to Borrower in
the event of any default or breach of this Agreement by the County, or for any amount that may
become due from the County pursuant to this Agreement.
Section 7.6 No Third Party Beneficiaries.
There are no third party beneficiaries to this Agreement.
Section 7.7 Discretion Retained By County.
The County's execution of this Agreement in no way limits any discretion the County
may have in the permit and approval process related to the rehabilitation of the Development.
Section 7.8 Conflict of Interest.
863\88\1072799.2 38
(a) Except for approved eligible administrative or personnel costs, no person
described in Section 7.8(b) below who exercises or has exercised any functions or
responsibilities with respect to the activities funded pursuant to this Agreement or who is in a
position to participate in a decision-making process or gain inside information with regard to
such activities, may obtain a personal or financial interest or benefit from the activity, or have an
interest in any contract, subcontract or agreement with respect thereto, or the proceeds
thereunder, either for themselves or those with whom they have family or business ties, during,
or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that
the prohibition in this Section 7.8(a) is followed.
(b) The conflict of interest provisions of Section 7.8(a) above apply to any
person who is an employee, agent, consultant, officer, or any immediate family member of such
person, or any elected or appointed official of the County, or any person related within the third
(3rd) degree of such person.
(c) In accordance with California Government Code Section 1090 and the
Political Reform Act, California Government Code section 87100 et seq., no person who is a
director, officer, partner, trustee or employee or consultant of Borrower, or immediate family
member of any of the preceding, may make or participate in a decision, made by the County or a
County board, commission or committee, if it is reasonably foreseeable that the decision will
have a material effect on any source of income, investment or interest in real property of that
person or Borrower. Interpretation of this section is governed by the definitions and provisions
used in the Political Reform Act, California Government Code Section 87100 et seq., its
implementing regulations manual and codes, and California Government Code Section 1090.
(d) Borrower shall comply with the conflict of interest provisions set forth in
24 C.F.R. 570.611.
Section 7.9 Notices, Demands and Communications.
All notices required or permitted by any provision of this Agreement must be in writing
and sent by registered or certified mail, postage prepaid, return receipt requested, or delivered by
express delivery service, return receipt requested, or delivered personally, to the principal office
of the Parties as follows:
County: County of Contra Costa
Department of Conservation and Development
30 Muir Road
Martinez, CA 94553
Attention: Affordable Housing Program Manager
Borrower: Robin Lane LLC
1250 Addison Street, Suite G
Berkeley, CA 94702
Attn: Executive Director
Such written notices, demands and communications may be sent in the same manner to such
other addresses as the affected Party may from time to time designate by mail as provided in this
863\88\1072799.2 39
Section. Receipt will be deemed to have occurred on the date shown on a written receipt as the
date of delivery or refusal of delivery (or attempted delivery if undeliverable).
Section 7.10 Applicable Law.
This Agreement is governed by the laws of the State of California.
Section 7.11 Parties Bound.
Except as otherwise limited herein, this Agreement binds and inures to the benefit of the
parties and their heirs, executors, administrators, legal representatives, successors, and assigns.
This Agreement is intended to run with the land and to bind Borrower and its successors and
assigns in the Property and the Development for the entire Term, and the benefit hereof is to
inure to the benefit of the County and its successors and assigns.
Section 7.12 Attorneys' Fees.
If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing
Party will have the right to recover its reasonable attorneys' fees and costs of suit from the other
Party.
Section 7.13 Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions will continue in full force and effect
unless the rights and obligations of the Parties have been materially altered or abridged by such
invalidation, voiding or unenforceability.
Section 7.14 Force Majeure.
In addition to specific provisions of this Agreement, performance by either Party will not
be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock-
outs, riots, floods, earthquakes, fires, quarantine restrictions, freight embargoes, lack of
transportation, or court order. An extension of time for any cause will be deemed granted if
notice by the Party claiming such extension is sent to the other within ten (10) days from the
commencement of the cause and such extension of time is not rejected in writing by the other
Party within ten (10) days of receipt of the notice. In no event will the County be required to
agree to cumulative delays in excess of one hundred eighty (180) days.
Section 7.15 County Approval.
The County has authorized the County Deputy Director-Current Planning to execute the
Loan Documents and deliver such approvals or consents as are required by this Agreement, and
to execute estoppel certificates concerning the status of the Loan and the existence of Borrower
defaults under the Loan Documents.
Section 7.16 Waivers.
863\88\1072799.2 40
Any waiver by the County of any obligation or condition in this Agreement must be in
writing. No waiver will be implied from any delay or failure by the County to take action on any
breach or default of Borrower or to pursue any remedy allowed under this Agreement or
applicable law. Any extension of time granted to Borrower to perform any obligation under this
Agreement does not operate as a waiver or release from any of its obligations under this
Agreement. Consent by the County to any act or omission by Borrower may not be construed to
be consent to any other or subsequent act or omission or to waive the requirement for the
County's written consent to future waivers.
Section 7.17 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and are to be disregarded in interpreting any part of the Agreement's provisions.
Section 7.18 Entire Understanding of the Parties
The Loan Documents and the Project Agreement constitute the entire agreement of the
Parties with respect to the Loan; provided, however, if there is a conflict between the Project
Agreement and the Loan Documents, the terms of the Loan Documents will prevail.
Section 7.19 Multiple Originals; Counterpart.
This Agreement may be executed in multiple originals, each of which is deemed to be an
original, and may be signed in counterparts.
Remainder of Page Left Intentionally Blank
863\88\1072799.2 41
WHEREAS, this Agreement has been entered into by the undersigned as of the date first
above written.
COUNTY:
COUNTY OF CONTRA COSTA, a political
subdivision of the State of California
By: ______________________
Its: ______________________
APPROVED AS TO FORM:
SHARON L. ANDERSON
County Counsel
By: ______________________
Kathleen Andrus
Deputy County Counsel
BORROWER:
ROBIN LANE LLC, a California limited liability
company
By: AHA Development, Inc., a California
nonprofit public benefit corporation, its sole
member
By:____________________
Its:____________________
A-1
863\88\1072799.2
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The land is situated in the State of California, County of Contra Costa, and is described as
follows:
A-2
863\88\1072799.2
EXHIBIT B
APPROVED DEVELOPMENT BUDGET
Robin Lane Apartments
Development Budget
Land Cost 1,035,000
Acquisition T&R 10,000
Acquisition Holding Costs/Transfer Taxes 1,139
Unit Construction 556,569
Hard Cost Contingency 139,142
56,000 Architecture
Survey 5,000
Engineering 15,000
Enviro Testing - Phase 1, Asbestos, Toxics 25,000
Construction Loan Fees - MHSA Origination 5,600
Construction Lender Costs/Expenses 8,920
Owner Legal - Org of Partnership 5,000
Operating Reserve (3 months) 33,391
RE Taxes 31,050
Planning Fees 16,040
Building & Plan Check 10,436
PG&E 10,000
AT&T 10,000
Builders Risk Insurance 25,000
General Liability Insurance 20,000
Appraisal 5,000
Market Study 5,000
Marketing & Leasing 25,000
Soft Cost Contingency 15,947
Developer Fee 156,313
Accountant Fee (Audit/Cost Cert) 7,500
2,233,046 Total
Sources of Funds
AHP loan
150,000
Neighborhood Stabilization Program 1,523,046
MHSA Capital 560,000
Total
2,233,046
863\88\1072799.2 B-1
EXHIBIT C
REHABILITATION: MINIMUM REQUIREMENTS
The Development consists of two buildings, each two stories. The rehabilitation of the
two buildings will include interior upgrades (flooring, cabinetry, bathroom fixtures,
exhaust fans, and appliances), electrical upgrades, window replacement, installation of
energy efficient upgrades (heating and HVAC, lighting, and water), painting (exterior
and interior), and exterior upgrades (fascia boards, handrails, stairs, fencing, paving and
landscaping). The rehabilitation work will also include converting two of the existing
two-bedroom apartments to provide: 1) an ADA accessible one-bedroom apartment on
the ground floor and 2) an on-site manager’s unit with separate, adjacent office. The
modifications will result in a final unit mix of six one-bedroom apartments (including the
resident manager’s unit) and ten two-bedroom apartments.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Contra Costa County
Department of Conservation and Development
30 Muir Road
Martinez, CA 94553
Attn: Affordable Housing Program Manager
No fee for recording pursuant to
Government Code Section 27383
__________________________________________________________________________
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Robin Lane NSP3 Funds)
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement")
is dated January__, 2012 and is between the County of Contra Costa, a political subdivision of
the State of California (the "County"), and Robin Lane LLC, a California limited liability
company ("Borrower").
RECITALS
A. Defined terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
B. The County has received Neighborhood Stabilization Program 3 funds ("NSP3
Funds") from the United States Department of Housing and Urban Development ("HUD") under
Section 1497 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
"NSP3 Act"), which amends Title III of Division B of the Housing and Economic Recovery Act
of 2008 ("HERA"). The NSP3 Funds must be used by the County in accordance with 75 F.R.
64322 (Notice of Formula Allocations and Program Requirements for Neighborhood
Stabilization Program Formula Grants) (the "NSP3 Regulations"). Together, the NSP3 Act and
the NSP3 Regulations are the “NSP3 Requirements.”
C. Except as otherwise prescribed by the NSP3 Requirements, the statutory and
regulatory provisions that govern the Community Development Block Grant ("CDBG") program
under Title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.),
as amended (including those at 24 CFR part 570 subparts A, C, D, J, K, and O, as appropriate),
(the "CDBG Regulations"), apply with equal force to the NSP3 Funds. The County has adopted
the Home Investment Partnerships Act ("HOME") program standards at 24 C.F.R. Part 92 (the
"HOME Regulations") to define the affordable rents, continued affordability standards, and
enforceability mechanisms governing the use of the NSP3 Funds.
1
863\88\1072818.1
D. Borrower intends to acquire the real property commonly known as 1149 Meadow
Lane and 1890 Robin Lane, located in the City of Concord, County of Contra Costa, State of
California, and more particularly described in Exhibit A (the "Property"). The purchase price of
the Property is One Million Thirty-Five Thousand Dollars ($1,035,000). According to an
appraisal dated November 2, 2011, which was prepared for the Borrower by Thomas E. Dum
Real Estate Appraisers, Inc., the Property was valued at One Million Fifty Thousand Dollars
($1,050,000) as of October 25, 2011. The Property was previously foreclosed upon and
transferred to Great Western Bank by a Trustee's Deed Upon Sale that was recorded on January
31, 2011.
E. The Property is the site of two vacant apartment buildings that contain a total of
sixteen (16) apartments. The buildings and all other improvements to the Property, including all
landscaping, roads, and parking spaces, are referred to herein as the “Improvements,” or as the
"Development." Borrower intends to rehabilitate the Development and rent fifteen (15) of the
apartments to very low income families, reserving one unit as a manager's unit.
F. Pursuant to a loan agreement of even date herewith between the County and
Borrower (the "Loan Agreement"), the County is lending to Borrower One Million Five Hundred
Twenty Three Thousand Forty Six Dollars ($1,523,046) in NSP3 Funds (the "Loan") to finance
the acquisition and rehabilitation of the Development.
G. 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
NSP3 Funds pursuant to Section 2301(c)(3)(B) of HERA, and 24 C.F.R. 570.202 of the CDBG
Regulations.
H. The County has agreed to make the Loan on the condition that the Borrower
maintain and operate the Development in accordance with restrictions set forth in this Agreement
and in the related documents evidencing the Loan.
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.
AGREEMENT
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.
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(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" has the meaning set forth in Paragraph C of the Recitals.
(f) "CDBG Regulations" has the meaning set forth in Paragraph C of the
Recitals.
(g) "City" means the City of Concord, a municipal corporation.
(h) "County-Assisted Units" means the fifteen (15) Units within the
Development designated as assisted by the County pursuant to this Agreement.
(i) "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,
Old Republic Title Company, as trustee, and the County, as beneficiary, that will encumber the
Property to secure repayment of the Loan and Borrower's performance of the covenants set forth
in the documents evidencing the Loan.
(j) "Development" has the meaning set forth in Paragraph E of the Recitals.
(k) "HERA" has the meaning set forth in Paragraph B of the Recitals.
(l) "HOME" has the meaning set forth in Paragraph C of the Recitals.
(m) "HOME Regulations" has the meaning set forth in Paragraph C of the
Recitals.
(n) "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.
(o) "HUD" has the meaning set forth in Paragraph B of the Recitals.
(p) "Loan" has the meaning set forth in Paragraph F of the Recitals.
(q) “Loan Agreement” has the meaning set forth in Paragraph F of the
Recitals.
(r) "Loan Documents" means this Agreement, the Note, the Deed of Trust,
and the Loan Agreement.
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(s) "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).
(t) "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.
(u) "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.
(v) "Note" means the promissory note of even date herewith that evidences
Borrower's obligation to repay the Loan.
(w) "NSP3 Act" has the meaning set forth in Paragraph B of the Recitals.
(x) "NSP3 Funds" has the meaning set forth in Paragraph B of the Recitals.
(y) "NSP3 Regulations" has the meaning set forth in Paragraph B of the
Recitals.
(z) "NSP3 Requirements" has the meaning set forth in Paragraph B of the
Recitals.
(aa) "Property" has the meaning set forth in Paragraph D of the Recitals.
(bb) "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
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.
(cc) "Tenant" means the tenant household that occupies a Unit in the
Development.
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(dd) "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 date of this Agreement.
(ee) "Unit(s)" means one (1) or more of the units in the Development.
(ff) "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.
(gg) "Very Low Income Units" means the Units which, pursuant to Section
2.1(a) below, are required to be occupied by Very Low Income Households.
ARTICLE 2
AFFORDABILITY AND OCCUPANCY COVENANTS
2.1 Occupancy Requirements.
(a) Very Low Income Units. During the Term, Borrower shall rent fifteen
(15) Units, and ensure that these Units are occupied or, if vacant, available for occupancy, by
Very Low Income Households. The County-Assisted Units are comprised of five (5) one-
bedroom Units and ten (10) two-bedroom Units.
(b) 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.
2.2 Allowable Rent.
(a) 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.
(b) 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
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Borrower. All Tenants must have equal access to and enjoyment of all common facilities in the
Development.
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 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 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 will remain at the Low HOME Rent. When the Tenant vacates the Unit,
the Borrower shall rent the Unit to a Very Low Income Household, to comply with the
requirements of Section 2.1 above.
(c) 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 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. When the
Tenant vacates the Unit, the Borrower shall rent the Unit to a Very Low Income Household, to
comply with the requirements of Section 2.1 above.
(d) Termination of Occupancy. Upon termination of occupancy of a Unit by a
Tenant, Borrower shall rent such Unit to a Very Low Income Household to comply with the
requirements of Section 2.1 above.
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
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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 Tenant Selection Plan. Before leasing any Unit in the Development Borrower
shall submit to County for review and approval, a written tenant selection plan. Borrower's
tenant selection plan must, at a minimum, meet the requirements for tenant selection set out in 24
C.F.R. 92.253(d) and any modifications thereto. Borrower may not make material modifications
to its tenant selection plan without the prior written approval of the County, which approval shall
not be unreasonably withheld or delayed.
3.3 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.
3.4 Additional Information. Borrower shall provide any additional information
reasonably requested by the County.
3.5 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 the selection of Tenants, and income and
household size of Tenants. All 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.
3.6 HOME Record Requirements. For the period of the HOME Term all records
maintained by Borrower pursuant to Sections 3.3 and 3.5 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.
3.7 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.
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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 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
NSP3 Funds, and (iii) any other regulatory requirements imposed on the Development.
4.3 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.
4.4 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,
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 approves Affordable Housing
Associates, Inc. as the 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
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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 therefor. 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
provisions of this Section constitutes a default under this Agreement, and the County may
enforce this provision through legal proceedings as specified in Section 6.7 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:
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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) business 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
6.1 Lease Provisions. In newly leasing the Units within the Development, Borrower
shall use a form of lease approved by the County, which approval shall not be unreasonable
withheld or delayed. 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 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 3.11 of the Loan Agreement and who is not in need
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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 or
except as required pursuant to any regulatory agreement entered into between Borrower and the
California Housing Finance Agency with respect to the Mental Health Services Act funds.
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.
(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 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
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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 County's Deputy Director – Current
Planning.
(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's Deputy Director – Current Planning) 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.
6.6 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.
6.7 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 Loan. The County may declare a default under the Note,
accelerate the indebtedness evidenced by the Note, and proceed with foreclosure under the Deed
of Trust.
(b) 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.
(c) Remedies Provided Under Loan Documents. The County may exercise
any other remedy provided under the Loan Documents.
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6.8 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.
6.9 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.
6.10 Governing Law. This Agreement is governed by the laws of the State of
California.
6.11 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
this Agreement extends to or affects any other provision of this Agreement, and may not be
deemed to do so.
6.12 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.
6.13 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
30 Muir Road
Martinez, CA 94553
Attn: Affordable Housing Program
Manager
Borrower: Robin Lane LLC
1250 Addison Street, Suite G
Berkeley, CA 94702
Attn: Executive Director
Such addresses may be changed by notice to the other party given in the same manner as
provided above.
6.14 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.
6.15 Multiple Originals; Counterparts. This Agreement may be executed in multiple
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originals, each of which is deemed to be an original, and may be signed in counterparts.
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15
Signature page
County Regulatory Agreement
863\88\1072818.1
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: __________________
Its:____________________
Approved as to form:
SHARON L. ANDERSON
County Counsel
By:
Kathleen Andrus
Deputy County Counsel
BORROWER:
Robin Lane LLC, a California limited liability
company
By: AHA Development, Inc., a California
nonprofit public benefit corporation, its sole
member
By:____________________
Its:____________________
STATE OF CALIFORNIA )
)
COUNTY OF CONTRA COSTA )
On ____________ __, 2012, 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 ____________ __, 2012, 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)
863\88\1072818.1
EXHIBIT A
Legal Description
The land is situated in the State of California, County of Contra Costa, and is described as
follows:
A-1
863\88\1072818.1
PROMISSORY NOTE
(Robin Lane NSP3 Loan)
$1,523,046 Martinez, California
January 24, 2012
FOR VALUE RECEIVED, the undersigned Robin Lane LLC, a California
limited liability company ("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 Three Thousand Forty Six Dollars ($1,523,046) plus
interest thereon pursuant to Section 2 below.
All capitalized terms used but not defined in this Note have the meanings set forth in the
Loan Agreement.
1. Borrower's Obligation. This Note evidences Borrower's obligation to repay
Holder the principal amount of One Million Five Hundred Twenty Three Thousand Forty Six
Dollars ($1,523,046) with interest for the funds loaned to Borrower by Holder to finance the
acquisition and rehabilitation of the Development pursuant to the NSP3 Loan Agreement
between Borrower and Holder of even date herewith (the "Loan Agreement").
2. Interest.
(a) Subject to the provisions of Subsection (b) below, this Note bears simple
interest at a rate of three percent (3%) per annum from the date of disbursement until full
repayment of all principal.
(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 date of this Note, which is January____, 2067. This Note is due
and payable as set forth in Section 2.9 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 2.11 of the Loan Agreement. The terms
of the Deed of Trust are hereby incorporated into this Note and made a part hereof.
863\88\1072812.1 1
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, 30 Muir
Road, Martinez, CA 94553, Attention: Affordable Housing Program Manager, 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\88\1072812.1 2
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.
Robin Lane LLC, a California limited liability
company
By: AHA Development, Inc., a California
nonprofit public benefit corporation, its sole
member
By:____________________
Its:____________________
863\88\1072812.1 3
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Contra Costa County
Department of Conservation and Development
30 Muir Road
Martinez, CA 94553
Attn: Affordable Housing Program Manager
No fee for recording pursuant to
Government Code Section 27383
DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, AND FIXTURE FILING
(Robin Lane)
THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY
AGREEMENT, AND FIXTURE FILING ("Deed of Trust") is made as of January 24, 2012, by
and among Robin Lane LLC, a California limited liability company ("Trustor"), Old Republic
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;
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,
863\88\1072815.1 1
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
are due and payable as provided in the Note or other Loan Documents, as applicable. The Note
863\88\1072815.1 2
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 Three Thousand Forty Six Dollars
($1,523,046).
Section 1.2 The term "Loan Agreement" means that certain NSP3 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 Trustor One Million Five Hundred Twenty Three
Thousand Forty Six Dollars ($1,523,046).
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 Three Thousand Forty Six Dollars ($1,523,046) 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.
863\88\1072815.1 3
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\88\1072815.1 4
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, subject to the rights of senior lenders. 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
except in connection with the Bond Loan, 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
863\88\1072815.1 5
and revenues of the Property, the making of repairs to the Property and the execution or
termination of contracts providing for the management or maintenance of the Property, all on
such terms as are deemed best to protect the security of this Deed of Trust. In the event
Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of
any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to
the appointment of such receiver. Beneficiary or the receiver 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,
863\88\1072815.1 6
Trustor shall pay such amount in full prior to the attachment of any lien therefor on any part of
the Security; provided, however, if such taxes, assessments or charges 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.
863\88\1072815.1 7
ARTICLE 4
DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
Subject to the rights of senior lenders, 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 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.
863\88\1072815.1 8
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
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.
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ARTICLE 6
HAZARDOUS WASTE
Trustor shall keep and maintain the Property in compliance with, and shall not cause or
permit the Property to be in violation of any federal, state or local laws, ordinances or regulations
relating to industrial hygiene or to the environmental conditions on, under or about the Property
including, but not limited to, soil and ground water conditions. Trustor shall not use, generate,
manufacture, store or dispose of on, under, or about the Property or transport to or from the
Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or
related materials, including without limitation, any substances defined as or included in the
definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations (collectively referred to
hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily used
in construction or operation of a multi-family residential development.
Trustor shall immediately advise Beneficiary in writing if at any time it receives written
notice 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
863\88\1072815.1 10
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,
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
863\88\1072815.1 11
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.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
The following are events of default following the expiration of any applicable notice and
cure periods (each an "Event of Default"): (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
863\88\1072815.1 12
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
(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
863\88\1072815.1 13
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
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
863\88\1072815.1 14
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
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.
863\88\1072815.1 15
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:
County of Contra Costa
Department of Conservation and Development
30 Muir Road
Martinez, CA 94553
Attention: Affordable Housing Program Manager
and (2) if intended for Trustor is to be addressed to:
Robin Lane LLC
1250 Addison Street, Suite G
Berkeley, CA 94702
Attn: 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
863\88\1072815.1 16
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
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.
863\88\1072815.1 17
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first
above written.
Robin Lane LLC, a California limited liability
company
By: AHA Development, Inc., a California
nonprofit public benefit corporation, its sole
member
By:____________________
Its:____________________
Signature page
County Deed of Trust
863\88\1072815.1
18
STATE OF CALIFORNIA )
)
COUNTY OF CONTRA COSTA )
On ____________ __, 2012, 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)
863\88\1072815.1
EXHIBIT A
LEGAL DESCRIPTION
The land is situated in the State of California, County of Contra Costa, and is described as
follows:
A-1
863\88\1072815.1