HomeMy WebLinkAbout FULL PACKET_2019-04-16MINUTES OF THE REGULAR MEETING
OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA, CALIFORNIA
MARCH 19, 2019
CLOSED SESSION MEETING
CALLED TO ORDER COUNCIL CHAMBER
22 CIVIC CENTER PLAZA
5:12 P.M.
ATTENDANCE COUNCILMEMBERS Present:
MIGUEL A. PULIDO, Mayor
JUAN VILLEGAS, Mayor Pro Tem
CECILIA IGLESIAS
DAVID PENALOZA
JOSE SOLORIO (5:13 P.M.)
COUNCILMEMBERS Absent:
VICENTE SARMIENTO
WARD 4 VACANT*
STAFF Present:
STEVEN MENDOZA, Acting City Manager
SONIA R. CARVALHO, City Attorney
NORMA MITRE, Acting Clerk of the Council
* Ward 4 councilmember representative resigned on Friday, March 1, 2019.
PUBLIC COMMENTS — NONE
COUNCIL RECESSED TO Room 147 for Closed Session discussion at 5:13 P.M.
CLOSED SESSION ITEMS - The Brown Act permits legislative bodies to discuss certain matters without
members of the public present. The City Council finds, based on advice from the City Attorney, that discussion
in open session of the following matters will prejudice the position of the City in existing and anticipated litigation:
CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION pursuant to
Paragraph (1) of subdivision (d) of Section 54956.9 of the Government Code:
a) City of Santa Ana v. Robert Marlin, Trustee, et al., Orange County Superior
Court, Case No. 30-2017-00938943
CITY COUNCIL MINUTES
1OA-1
MARCH 19, 2019
VA
[t�
El
b) Amber Machowski, et al. v. Bird Rides, Inc., et al., USDC Case No. 2-19-cv-
01014-JAK-MRW
c) Norma Dominguez v. City of Santa Ana; Orange County superior Case
No. 30-2017-00935598-C U -PO -CJ C
CONFERENCE WITH LABOR NEGOTIATOR pursuant to Government Code
Section 54957.6(a):
Agency Negotiators: Human Resources Executive Director, Steven
Pham and Peter Brown, Liebert Cassidy.
Employee Organizations:
• Santa Ana Police Management Association
(PMA)
• Service Employees' International Union
(SEIU) Full -Time Employees
• Service Employees' International Union
(SEIU) Part-time Civil Service Employees
• Service Employees' International Union (SEIU)
Part -Time
• Confidential Association of Santa Ana (CASA)
• Santa Ana Management Association
(SAMA)
PUBLIC EMPLOYEE EMPLOYMENT / APPOINTMENT pursuant to
Government Code 54957(b)(1)
Title: City Manager, Acting City Manager, or Interim City Manager
PUBLIC EMPLOYEE EMPLOYMENT / APPOINTMENT pursuant to
Government Code 54957(b)(1)
Title: Clerk of the Council, Acting Clerk of the Council, or Interim Clerk of the
Council
CLOSED SESSION REPORT - See Agenda Item 19A for reportable action.
ADJOURNED CLOSED SESSION AND CONVENED TO THE REGULAR OPEN SESSION
AT 6:21 P.M.
CITY COUNCIL MINUTES 2 MARCH 19, 2019
10A-2
CALLED TO ORDER
REGULAR OPEN SESSION
COUNCIL CHAMBER
22 CIVIC CENTER PLAZA
SANTA ANA, CA
6:21 P.M.
ATTENDANCE COUNCILMEMBERS Present:
MIGUEL A. PULIDO, Mayor
JUAN VILLEGAS, Mayor Pro Tem
CECILIA IGLESIAS
DAVID PENALOZA
JOSE SOLORIO
COUNCILMEMBERS Absent:
VICENTE SARMIENTO
WARD 4 VACANT*
STAFF Present:
STEVEN MENDOZA, Acting City Manager
SONIA R. CARVALHO, City Attorney
NORMA MITRE, Acting Clerk of the Council
* Ward 4 councilmember representative resigned on Friday, March 1, 2019.
PLEDGE OF ALLEGIANCE
INVOCATION
CEREMONIAL PRESENTATIONS
MAYOR PULIDO
BOB BARNETT, POLICE CHAPLAIN
• INTRODUCTION OF ORANGE COUNTY FIRE AUTHORITY DIVISION CHIEF JAMES
HENERY by MAYOR PULIDO
• CERTIFICATE OF RECOGNITION presented by MAYOR PULIDO recognizing Joseph
Hawa for contributions to the community.
CLOSED SESSION REPORT — See Agenda Item 19A for reportable action.
PUBLIC COMMENTS — (Agendized items) See 19F and 32B.
CITY COUNCIL MINUTES 3 MARCH 19, 2019
10A-3
CONSENT CALENDAR ITEMS
MOTION. Approve staff recommendations on the following Consent Calendar
items10A through 32C, with the following modifications:
• Councilmember Iglesias, pulled Agenda Item 11A, 19C, 19E, 19F, 22A, and 25D
for separate discussion.
• Councilmember Solorio, pulled Item 19E for separate discussion.
• Mayor Pro Tem Villegas, requested reconsideration of Item 32A.
MOTION: Solorio SECOND: Villegas
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 councilmember representative resigned on Friday, March 1, 2019.
ADMINISTRATIVE MATTERS
MINUTES
10A. MINUTES FROM THE REGULAR AND SPECIAL MEETING OF MARCH 5,
2019 {STRATEGIC PLAN NO. 5, 1 } — Clerk of the Council Office
MOTION: Approve Minutes.
ORDINANCES/SECOND READING
In the event a Councilmember recorded an "abstention" before consideration of the following ordinance(s)
on first reading, such abstention will also be reflected in the minutes for second reading.
11A. ADOPT AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA
ANA AMENDING CITY MANAGER'SCONTRACTING AUTHORITY FOR
NON-PUBLIC WORKS AND PUBLIC WORKS CONTRACTS {STRATEGIC
PLAN NO. 5,1} - Clerk of the Council Office
Placed on first reading at the March 5, 2019 City Council meeting and approved
by a vote of 5-1 (Iglesias dissented).
CITY COUNCIL MINUTES 4 MARCH 19, 2019
10A-4
Published in the Orange County Reporter on March 8, 2019.
MOTION: Place ordinance on second reading and adopt.
ORDINANCE NO. NS -2963 - AN ORDINANCE OF THE CITY COUNCIL OF
THE CITY OF SANTA ANA AMENDING SECTION 2-1, SECTION 2-801, AND
SECTION 33-201 OF THE SANTA ANA MUNICIPAL CODE RELATING TO
THE CITY MANAGER'S AUTHORITY TO BIND THE CITY TO NON-PUBLIC
WORKS AND PUBLIC WORKS CONTRACTS, INCREASING THE CITY
MANAGER'S CONTRACT AUTHORITY FOR NON-PUBLIC WORKS
CONTRACTS TO $50,000 AND PUBLIC WORKS CONTRACTS TO $250,000,
AND REORGANIZING THE CITY MANAGER'S CONTRACT AUTHORITY
UNDER CHAPTER 2, ARTICLE VII OF THE SANTA ANA MUNICIPAL CODE
MOTION: Solorio
VOTE: AYES
NOES:
ABSTAIN:
ABSENT:
Ward 4 representative vacant.
NOTICE OF PUBLIC HEARINGS
SECOND: Penaloza
Penaloza, Pulido, Solorio, Villegas (4)
Iglesias (1)
None (0)
Sarmiento (1)
12A. ADOPT A RESOLUTION OF INTENT TO VACATE A PORTION OF FIFTH
STREET BETWEEN SUNSET STREET AND HAWLEY STREET,
ABANDONMENT NO. 19-01 {STRATEGIC PLAN NOS. 3, 2; 5, 31 - Public
Works Agency
MOTION:
1. Adopt a resolution.
RESOLUTION NO. 2019-018 - A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF SANTA ANA DECLARING ITS INTENTION TO VACATE A
PORTION OF FIFTH STREET BETWEEN SUNSET STREET AND HAWLEY
STREET, SETTING A PUBLIC HEARING THEREON, AND DIRECTING
NOTICE THEREOF TO BE POSTED AND PUBLISHED (ABANDONMENT
NO. 19-01)
2. Set a public hearing for April 16, 2019.
CITY COUNCIL MINUTES
5
10A-5
MARCH 19, 2019
MISCELLANEOUS ADMINISTRATION
19A. CONFIRMATION OF CLOSED SESSION ACTION(S) — City Attorney's Office
CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION pursuant to
Paragraph (1) of subdivision (d) of Section 54956.9 of the Government Code:
a) City of Santa Ana v. Robert Marlin, Trustee, et al., Orange County Superior
Court, Case No. 30-2017-00938943
MOTION: City Council approved a settlement for the purchase of
property in relation to the Bristol Street widening by a vote of 5-0
(Sarmiento absent, and Ward 4 Vacant).
b) Norma Dominguez v. City of Santa Ana; Orange County superior Case
No. 30 -2017 -00935598 -CU -PO -CJ C
MOTION: City Council agreed to a settlement in the amount $250,000
by a vote of 5-0 vote (Pulido and Sarmiento absent; and Ward 4 Vacant).
19B. EXCUSED ABSENCES — Clerk of the Council Office
MOTION: Excuse the absence of Councilmember Sarmiento from the
December 4, 2018 City Council meeting.
19C DESTRUCTION OF OBSOLETE CITY RECORDS {STRATEGIC PLAN NO.
5, 11 - Finance and Management Services; and Parks, Recreation and
Community Services Agency
MOTION: Approve the requests for the destruction of obsolete records
from Finance and Management Services; and Parks, Recreation and
Community Services Agency in accordance with the retention schedule
outlined in City Council Resolution 2013-014. The Citywide Records
Retention Schedule has specific retention periods for many City
documents. The Schedule is modeled after the California Secretary of
State's sample for local government and incorporates other statutory
periods applicable to Santa Ana. These are minimum retention periods.
Each department makes discretionary decisions on whether to retain
records past the minimum requirements.
CITY COUNCIL MINUTES
10A-6
MARCH 19, 2019
MOTION: Villegas SECOND: Penaloza
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
19D. RECEIVE AND FILE STRATEGIC PLAN MONTHLY REPORT FOR JANUARY
AND FEBRUARY 2019 {STRATEGIC PLAN NO. 5, 11 - City Manager's Office
The Strategic Plan Monthly Reports are available on the City's website at:
https://www.santa-ana.orq/cm/creating-our-future-strategic-planning-process .
MOTION: Receive and file.
19E. RECEIVE AND FILE HOMELESS SERVICES QUARTERLY REPORT FOR
OCTOBER 2018 THROUGH DECEMBER 2018 {STRATEGIC PLAN NOS. 1
6; 5, 4; 5, 6) — Community Development Agency
Councilmember Solorio, directed staff to provide City Council with update on
Yale Street facility, to communicate to County city's opposition to opening of
Armory shelter, and expansion quality of life team.
MOTION: Receive and file.
MOTION: Iglesias SECOND: Solorio
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
19F. AUTHORIZE SUBMISSION OF CITY OF SANTA ANA GENERAL PLAN
HOUSING ELEMENT ANNUAL PROGRESS REPORT {STRATEGIC PLAN
NO. 5, 313) — Planning and Building Agency
CITY COUNCIL MINUTES 7 MARCH 19, 2019
10A-7
The following spoke on the matter:
Dale Helvig, in support of item and of affordable housing.
Council discussion ensued.
Councilmember Iglesias, requested staff to research if affordable housing in
excess of the minimum requirement can be carried over to the next reportable
period.
MOTION: It is recommended that the City Council authorize submittal of
the General Plan Housing Element Annual Progress Report to the State of
California Housing and Community Development (HCD).
MOTION: Solorio SECOND: Iglesias
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
BUDGETARY MATTERS
APPROPRIATION ADJUSTMENTS
20A. APPROVE REIMBURSEMENT AGREEMENT WITH THE CITY OF GARDEN
GROVE AND APPROVE RELATED APPROPRIATION ADJUSTMENT AND
FUND REALLOCATION TO AWARD A $985,301 CONSTRUCTION
CONTRACT TO R.J. NOBLE COMPANY FOR THE EUCLID STREET
REHABILITATION PROJECT (PROJECT NO. 18-6915) {STRATEGIC PLAN
NO. 6, 1 B; 1 C; 1 G} — Public Works Agency
1. Authorize the City Manager and Clerk of the Council to execute a
Cooperative Cost Reimbursement Agreement with the City of Garden
Grove for improvements within the Garden Grove jurisdiction from
Hazard Avenue to Westminster Avenue, subject to non -substantive
changes approved by the City Manager and City Attorney (AGMT. No.
2019-046).
CITY COUNCIL MINUTES 8 MARCH 19, 2019
10A-8
2. Approve an appropriation adjustment. (Requires five affirmative
votes).
APPROPRIATION ADJUSTMENT NO. 2019-103 - Recognizing $315,148 in
cost reimbursement from the City of Garden Grove into the Select Street
Construction revenue account, and appropriating the same amount to the
Select Street Construction expenditure account for the Euclid Street
Rehabilitation Project.
Award a contract to R.J. Noble, the lowest responsible bidder, in
accordance with the base bid in the amount of $985,301, for
construction of the Euclid Street Rehabilitation Project from Hazard
Avenue to Westminster Avenue, for the term beginning upon execution
of the contract and ending upon project completion, and authorize the
City Manager and the Clerk of the Council to execute the
contract subject to non -substantive changes approved by the City
Manager and the City Attorney.
4. Authorize the reallocation of $239,319 in unspent Fiscal Year 2017-18
Select Street Construction Road Maintenance and Rehabilitation
Account fund from projects 18-6916 and 18-6917 to the Euclid Street
Rehabilitation Project.
5. Approve the Project Cost Analysis for a total estimated construction
delivery cost of $1,208,892, which includes the contract bid amount,
administration, inspection and testing, and an authorized contingency
of $98,530.
20B. APPROVE APPROPRIATION ADJUSTMENT IN THE AMOUNT OF
$1,224,850 RECOGNIZING EQUITABLE SHARING FUNDS FROM THE
FEDERAL DEPARTMENT OF JUSTICE {STRATEGIC PLAN NO.1.3} — Santa
Ana Police Department
MOTION: Approve an appropriation adjustment. (Requires Five
affirmative votes).
APPROPRIATION ADJUSTMENT NO. 2019-102 - Recognizing $1,224,850 in
Equitable Sharing revenue accounts and appropriate same to Equitable Sharing
expenditure accounts.
GRANTS/APPLICATIONS
21 A. REQUEST FOR TIME EXTENSION OF MEASURE M2 COMPREHENSIVE
TRANSPORTATION FUNDING PROGRAM FOR WARNER AVENUE
IMPROVEMENTS PHASE 1 (PROJECT NO. 146802) (NON -GENERAL FUND)
{STRATEGIC PLAN NO 6, 1 G} — Public Works Agency
CITY COUNCIL MINUTES 9 MARCH 19, 2019
LLl m '
MOTION: Authorize the Public Works Agency to request a one-time, two-
year time extension of Measure M2 Comprehensive Transportation
Funding Program construction funds for the Warner Avenue
Improvements from Main Street to Oak Street project.
SPECIFICATIONS — PURCHASE OF EQUIPMENT AND SERVICES
22A. APPROVE CONTRACT AMENDMENT WITH ORANGE COUNTY STRIPING
SERVICE, INC., FOR TRAFFIC LINEPAINTING AND TRAFFIC SIGN
MAINTENANCE BY $460,000 AND AMEND` THE TWO REMAINING.
RENEWALS BY $250,000 (SPECIFICATION NO. 16-075) {STRATEGIC PLAN'
NO. 6, 1 C} Finance and Management Services Agency; and Public Works
Agency
MOTION: Amend the amount of the existing contract with Orange County
Striping Services, Inc., for traffic line painting and sign maintenance by
$460,000, for a new total annual not -to -exceed amount of $983,000 for the
term expiring July 30, 2019, and amend the amount for the two remaining
years by $250,000, for a new total annual amount not to exceed $773,000,
subject to non -substantive changes approved by the City Manager and
the City Attorney.
MOTION: Villegas
VOTE: AYES:
NOES:
ABSTAIN:
ABSENT:
* Ward 4 representative vacant.
Mqg*172501W.. .
Penaloza, Pulido, Solorio, Villegas (4)
Iglesias (1)
None (0)
Sarmiento (1)
22B. AWARD CONTRACT TO C3 TECHNOLOGY SERVICES FOR SHARP
COPIERS ($900,000) (SPECIFICATION NO. 19-013) {STRATEGIC PLAN NO.
6, 11 - Finance and Management Services Agency; and Information Technology
Department
MOTION: Award a contract to C3 Technology Services for sharp copiers
for a four-year period expiring February 28, 2023, in the amount of
$700,000, plus a contingency of $200,000, for a total amount not exceed
$900,000, subject to non -substantive changes approved by the City
Manager and City Attorney.
CITY COUNCIL MINUTES 10 MARCH 19, 2019
10A-10
AGREEMENTS
25A. APPROVAL OF VARIOUS HISTORIC PROPERTY PRESERVATION
AGREEMENTS {STRATEGIC PLAN NOS. 5, 2; 5, 31 — Planning and Building
Agency
RECOMMENDED ACTION: Authorize the City Manager and Clerk of the
Council to execute the attached Mills Act agreements with the below -
referenced property owners for the identified structures, subject to non -
substantive changes approved by the City Manager and City Attorney.
25B. APPROVE AN AGREEMENT WITH GREENPLAY, LLC FOR AN AMOUNT
NOT TO EXCEED $76,998 TO EVALUATE AND REPORT ON THE
CONDITION OF THE PARKS, RECREATION AND COMMUNITY SERVICES
AGENCY {STRATEGIC PLAN NO. 4, 1 D) — Parks, Recreation and Community
Services Agency
MOTION: Authorize the City Manager and Clerk of the Council to execute
an agreement with Greenplay, LLC to conduct a comprehensive
evaluation and report on the condition of the Parks, Recreation and
Community Services Agency for an amount not -to -exceed $76,998, which
includes a 10% contingency, for a term of one year to expire on March 18,
2020, subject to non -substantive changes approved by the City Manager
and City Attorney (AGMT. No. 2019-050).
25C. APPROVE AN AGREEMENT WITH A&H REFRIGERATION, INC. IN THE
AMOUNT OF $153,750 FOR REPLACEMENT OF THE POLICE
DEPARTMENT EVIDENCE SECTION REFRIGERATOR/FREEZER UNIT
{STRATEGIC PLAN NO. 1, 3A) — Police Department
CITY COUNCIL MINUTES 11 MARCH 19, 2019
10A-11
Property
Historic Property
Address/House
Vote by HRC
Agmt. No.
Owner(s)
Preservation
Agmt. No.
1.
Chad De
2018-02
1721 North Bush
7:0 (Rush &
2019-047
Costa and
Street
Contreras-
Elisabetta
Leo absent)
Siccardi
2.
Victoria A.
2018-03
810 North French
7:0 (Rush &
2019-048
Betancourt
Street
Contreras -
Leo absent
3.
Spurgeon
2018-04
202-208 West
7:0 (Rush &
2019-049
DTOC, LLC
Fourth Street and
Contreras -Leo
and KOA
318-320 North
absent)
Investments,
Sycamore Street
LLC
25B. APPROVE AN AGREEMENT WITH GREENPLAY, LLC FOR AN AMOUNT
NOT TO EXCEED $76,998 TO EVALUATE AND REPORT ON THE
CONDITION OF THE PARKS, RECREATION AND COMMUNITY SERVICES
AGENCY {STRATEGIC PLAN NO. 4, 1 D) — Parks, Recreation and Community
Services Agency
MOTION: Authorize the City Manager and Clerk of the Council to execute
an agreement with Greenplay, LLC to conduct a comprehensive
evaluation and report on the condition of the Parks, Recreation and
Community Services Agency for an amount not -to -exceed $76,998, which
includes a 10% contingency, for a term of one year to expire on March 18,
2020, subject to non -substantive changes approved by the City Manager
and City Attorney (AGMT. No. 2019-050).
25C. APPROVE AN AGREEMENT WITH A&H REFRIGERATION, INC. IN THE
AMOUNT OF $153,750 FOR REPLACEMENT OF THE POLICE
DEPARTMENT EVIDENCE SECTION REFRIGERATOR/FREEZER UNIT
{STRATEGIC PLAN NO. 1, 3A) — Police Department
CITY COUNCIL MINUTES 11 MARCH 19, 2019
10A-11
MOTION: Authorize the City Manager and Clerk of the Council to execute
a one-year agreement, with A&H Refrigeration, Inc. for the replacement of
the Police Department Evidence Section refrigerator/freezer unit, for the
period of March 19, 2019 through March 18, 2020, in the amount of
$153,750 (including a $25,000 contingency), subject to non -substantive
changes approved by the City Manager and City Attorney (AGMT. No.
2019-051).
25D. APPROVE AGREEMENT TO APPOINT KRISTINE RIDGE AS CITY
MANAGER EFFECTIVE MAY 1, 2019 - Human Resources Department
MOTION: Continue consideration of matter to an Adjourned Regular
Meeting on Friday, March 22, 2019 at 5:00 p.m.
MOTION: Villegas SECOND: Pulido
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
LAND USE MATTERS
TENTATIVE PARCEL/TRACT MAPS
32A.
RECEIVE AND FILE STAFF REPORT APPROVING TENTATIVE TRACT MAP
NO. 2018-01 TO SUBDIVIDE TWO LOTS INTO SIX LOTS TO FACILITATE`
THE CONSTRUCTION OF SIX SINGLE-FAMILY RESIDENTIAL UNITS'
LOCATED AT 1514 AND 1516 NORTH ENGLISH STREET — MARWAN
ALRIFAI, APPLICANT{STRATEGIC PLAN NOS. 3, 2) -Planning and Building
Agency
Planning Commission approved recommended action on February 25, 2019
by a vote of 7-0.
Mayor Pro Tem Villegas, requested reconsideration of vote after the Consent
Calendar vote occurred. Mayor Pulido called for item to be reconsidered.
CITY COUNCIL MINUTES 12 MARCH 19, 2019
10A-12
MOTION TO RECONSIDER:
MOTION: Villegas SECOND: Pulido
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
Mayor Pro Tem Villegas, unsupportive of item as presented. Supportive of
continuing item.
Councilmember Iglesias, supportive of continuing item.
AMENDED MOTION: Consideration of matter continued 30 days.
MOTION: Villegas
VOTE: AYES:
NOES
/s1:i,1111#_11x1
ABSENT:
* Ward 4 representative vacant.
Motion failed.
SECOND: Iglesias
Iglesias, Pulido, Villegas (3)
Penaloza, Solorio (2)
None (0)
Sarmiento (1)
Acting City Manager Mendoza, requested item to be pulled and allow staff to
review legal issues with City Attorney's Office and bring back consideration of
matter to a future City Council meeting.
32B. RECEIVE AND FILE STAFF REPORT APPROVING TENTATIVE PARCEL
MAP NO. 2017-02 (COUNTY MAP NO. 2017-157) TO SUBDIVIDE A PARCEL
INTO TWO LOTS AT 200 EAST FIRST AMERICAN WAY — KI RYU,
APPLICANT {STRATEGIC PLAN NOS. 3, 2) — Planning and Building Agency
Zoning Administrator approved recommended action on January 16, 2019.
The following spoke on the matter:
CITY COUNCIL MINUTES 13 MARCH 19, 2019
10A-13
Dale Helvig, unsupportive of item.
MOTION: It is recommended that the City Council receive and file the
staff report approving Tentative Parcel Map No. 2017-02 (County Map No.
2017-157) as conditioned.
32C. RECEIVE AND FILE STAFF REPORT APPROVING TENTATIVE PARCEL
MAP NO. 2017-03 TO COMBINE FIVE LOTS AND CREATE TWO PARCELS
AT 521-645 NORTH ROSS STREET, 620 NORTH BROADWAY AND 333
WEST SANTA ANA BOULEVARD — COUNTY OF ORANGE, APPLICANT
{STRATEGIC PLAN NOS. 3,2} — Planning and Building Agency
Zoning Administrator approved recommended action on January 16, 2019.
MOTION: It is recommended that the City Council receive and file the
staff report approving Tentative Parcel Map No. 2017-03 as conditioned.
**END OF CONSENT CALENDAR**
BUSINESS CALENDAR ITEMS
ORDINANCESIFIRST READING
50A. ORDINANCE FIRST READING: AMENDING SANTA ANA MUNICIPAL CODE
SECTION 10-153 RELATED TO LOUD AND RAUCOUS NOISE (STRATEGIC
PLAN GOAL 1, 5) — Police Department
MOTION: Place ordinance on first reading and authorize publication of
title.
ORDINANCE NO. NS -2964 AN ORDINANCE OF THE CITY COUNCIL OF
THE CITY OF SANTA ANA AMENDING SECTION 10-153 OF THE SANTA
ANA MUNICIPAL CODE RELATING TO LOUD AND RAUCOUS NOISES TO
CLARIFY PERSONS SUBJECT TO ENFORCEMENT AND ESTABLISH
PROCEDURES FOR ISSUANCE OF FINES
MOTION: Villegas
SECOND: Solorio
VOTE: AYES:
Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES:
None (0)
ABSTAIN:
None (0)
CITY COUNCIL MINUTES 14 MARCH 19, 2019
1 OA -14
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
RESOLUTIONS
55A. REAFFIRM ADOPTION OF A RESOLUTION TO DESIGNATE SANTA ANA AS
A RECYCLING MARKET DEVELOPMENT ZONE (RMDZ) {STRATEGIC PLAN
NO. 3, 3, C} - Community Development Agency and Public Works Agency
MOTION:
1. Adopt a resolution.
RESOLUTION NO. 2019-019 - A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA ANA REAFFIRMING THE DESIGNATION OF
THE CITY OF SANTA ANA AS A RECYCLING MARKET DEVELOPMENT
ZONE
2. Authorize the City Manager to forward the Resolution to the City of
Huntington Beach for inclusion in the regional Recycling Market
Development Zone application to CalRecycle.
MOTION: Solorio
VOTE: AYES:
NOES
ABSTAIN
ABSENT:
* Ward 4 representative vacant.
REPORTS
SECOND: Penaloza
Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
None (0)
None (0)
Sarmiento (1)
65A. APPROVE THE COUNCIL COMMITTEES, APPOINTEES, AND AMENDED
PROPOSED SCHEDULE {STRATEGIC PLAN NO. 5, 1) — City Manager's
Office
AMENDED MOTION:
1. Consider appointment of members to the Legislative Affairs, Ethics,
Transparency and Communications Council Committee at a future City
Council Meeting along with:
CITY COUNCIL MINUTES 15 MARCH 19, 2019
10A-15
a. Review of Resolution No. 2017-076 to consider removing
restrictions on the number of committees a councilmember wishes
to serve during their two-year term.
2. Approved the list of members for the established Council Committees
2019-2020.
3. Approved the amended proposed schedule instead of the current
schedule for the Council Committees 2019-2020.
CITY COUNCIL MINUTES 16 MARCH 19, 2019
10A-16
PROPOSED
COMMITTEE
MEMBERS
MEETING
LEAD AGENCY
SCHEDULE
QUARTERLY
Community
1. Iglesias
Feb., May, Aug., Nov.
Development
2. Penaloza
Economic
3. Solorio
Advisory:
Development,
2nd Monday, 5:00 pm.
• Planning & Building
Infrastructure, Budget
• Public Works
and Technology
• Finance
• Information
Technology
QUARTERLY
Public Safety, Code
1. Penaloza
Mar., June, Sept., Dec.
Police Department
Enforcement and
2. Villegas
Neighborhood
2"d Tuesday, 5:30 pm.
Advisory:
Empowerment
• Planning & Building
Biannually
Feb. & Aug.
City Manager's
Legislative Affairs,
Office
Ethics, Transparency
4th Wednesday, 12 noon
and Communications
Advisory:
• City Attorney
• Clerk of the Council
QUARTERLY
Youth, Education and
1. Iglesias
Jan., April, July & Oct.
Parks, Recreation
Community Services
2. Solorio
and Community
Committee
3. Villegas
3rd Monday, 5:30 p.m.
Services Agency
AND
QUARTERLY
Joint Santa Ana Unified
Jan., April, July & Oct.
School District and City
4th Monday, 5:30 p.m.
Council Committee
CITY COUNCIL MINUTES 16 MARCH 19, 2019
10A-16
MOTION: Solorio SECOND: Iglesias
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
65B. DESIGNATE A VOTING DELEGATE AND ALTERNATE FOR THE
SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS (SCAG)
REGIONAL CONFERENCE AND GENERAL ASSEMBLY MEETING
{STRATEGIC PLAN NO. 5, 11 — Clerk of the Council Office
MOTION: Designate Councilmember Iglesias as the voting delegate and
Councilmember Solorio as the alternate for the 54th SCAG's Regional
Conference and General Assembly scheduled for May 2-3, 2019.
MOTION: Solorio SECOND: Villegas
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
65C. REVIEW APPLICATIONS SUBMITTED FOR WARD 4 CITY COUNCIL
OFFICE VACANCY; CONDUCT INTERVIEWS OF CANDIDATES TO FILL
WARD 4 CITY COUNCIL OFFICE VACANCY; AND CONSIDER MAKING AN
APPOINTMENT TO FILL VACANCY IN CITY COUNCIL OFFICE, WARD 4
{STRATEGIC PLAN NOS. 7, 1) — Clerk of the Council Office
Mayor Pulido, advised to allow applicants to introduce themselves to council. In
addition, since Councilember Sarmiento is absent, advised that consideration
of Item 65C to be continued to the Adjourned Regulart meeting on Friday, March
22, 2019 at 5:00 P.M.
CITY COUNCIL MINUTES 17 MARCH 19, 2019
1OA-17
The following applicants were present and addressed council to request
consideration to be appointed to Ward 4 office:
• Marcela Vallejo
• Kenneth Ngyuen
• Jennifer Oliva
• Gale Lee Oliver, Jr
• Phil Bacerra
The following spoke on the matter:
• Dale Helvig, supportive of appointing Phil Bacerra to Ward 4 seat.
• Connie Hamilton, supportive of appointing Phil Bacerra to Ward 4 seat.
• Dr. Kimberly Ho, Vice Mayor of City of Westminster, on behalf of Mayor Tri Ta
expressed support of appointing Kenneth Nguyen to Ward 4 seat.
• Maricela Valejo, addressed City Council to request consideration to be appointed
to Ward 4 office.
• Kenneth Nguyen, addressed City Council to request consideration to be appointed
to Ward 4 office.
• Jennifer Oliva, addressed City Council to request consideration to be appointed to
Ward 4 office.
• Gale Lee Oliver, Jr., addressed City Council to request consideration to be
appointed to Ward 4 office.
• Phillip Perez Ortiz, Jr., addressed City Council to request consideration to be
appointed to Ward 4 office.
• Phil Bacerra, addressed City Council to request consideration to be appointed to
Ward 4 office.
Council discussion ensued.
Councilmember Iglesias, requested City Attorney to develop list of candidate
questions and to provide list to candidates and City Council 30 minutes prior to
Adjourned Regular City Council meeting scheduled for March 22, 2019.
Councilmember Penaloza, supportive of City Attorney to develop list of
candidate questions and to provide list to candidates and City Council 30
minutes prior to Adjourned Regular City Council meeting scheduled for March
22, 2019.
AMENDED MOTION:
1. Continue consideration of matter to an Adjourned Regular Meeting on
Friday, March 22, 2019 at 5:00 p.m.
CITY COUNCIL MINUTES 18 MARCH 19, 2019
10A-18
2. Direct staff to develop list of candidate questions and make list
available 30 minutes prior to the Adjourned Regular City Council
meeting.
MOTION: Villegas
VOTE: AYES:
NOES
ABSTAIN
ABSENT:
* Ward 4 representative vacant.
PUBLIC HEARINGS
SECOND: Solorio
Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
None (0)
`=QYJ
Sarmiento (1)
75A. PUBLIC HEARING — ZONING ORDINANCE AMENDMENT NO. 2019-01 TO
AMEND CHAPTER 41 (ZONING) TO ADD A DEFINITION FOR "SCHOOLS'
AND TO ALLOW SCHOOLS AS A PERMITTED USE IN THE SPECIFIC
DEVELOPMENT NO. 82 ZONING DISTRICT AT 2601- 2617 WEST FIFTH
STREET {STRATEGIC PLAN NOS. 3,2} — Planning and Building Agency
Planning Commission recommended City Council approve Zoning Ordinance
Amendment No. 2019-01 on February 11, 2019 by a vote of 5-0 (Alderete and
Verino absent).
Legal Notice published in the Orange County Reporter on March 8, 2019 and
notices mailed on March 7, 2019.
MOTION: Continue consideration of matter to a future Council Meeting
and re -notice public hearing, at the request of staff.
MOTION: Solorio SECOND: Villegas
VOTE: AYES: Penaloza, Pulido, Solorio, Villegas (4)
NOES: Iglesias (1)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
75B. PUBLIC HEARING - TO APPROVE AGREEMENT WITH 10 FRANCHISED
VEHICLE DEALERS IN SANTA ANA FOR ESTABLISHMENT OF THE
CITY COUNCIL MINUTES 19 MARCH 19, 2019
10A-19
RESIDENT VEHICLE INCENTIVE PROGRAM (VIP) IN THE ANNUAL
AMOUNT OF $1,700,000, NOT TO EXCEED $8,500,000 OVER 5 YEARS AND
APPROVE RELATED APPROPRIATION ADJUSTMENT {STRATEGIC PLAN
NO. 3, 3C) - Community Development Agency
Legal Notice published in the Orange County Register on March 9, 2019.
Mayor Pulido opened the Hearing. The following spoke on the matter:
Peter, addressed City Council and opined program will be a benefit to the
community.
There were no other speakers and the Hearing closed.
Councilmember Penaloza, supportive of item.
Councilmember Solorio, directed staff to ensure verification of residency by
requiring supportive documents and to present guidelines component to City
Council.
Councilmember Penaloza, supportive of comments made by Councilmember
Solorio. Supportive of requiring utility bill and driver's license to verify residency.
Mayor, supportive of encouraging residents to purchase locally.
MOTION.
Conduct a Public Hearing required pursuant to California Government
Code 53083.
Authorize the City Manager and Clerk of the Council to execute an
agreement with Orange County Auto Dealers Association (OCADA)
comprised of: Audi South Coast, Crevier BMW, Crevier Mini, Freeway
Honda, Guaranty Chevrolet, Lincoln South Coast, Subaru Orange
Coast, Tom's Truck Center, Volkswagen South Coast, Volvo of Orange
County to establish the Resident Vehicle Incentive Program (VIP) for
the period of April 1, 2019 to March 31, 2021, with one 2 -year extension
option and one additional year option, for a total of $1,700,000 per year
of the agreement, for an amount not to exceed $8,500,000 over a five
year period, subject to non -substantive changes approved by the City
Manager and City Attorney (AGMT. No. 2019 -XXX).
3. Authorize $25,000 annually for the administration of the Resident VIP
program to be budgeted in the Sales Rebate account.
4. Approve an appropriation adjustment. (Requires five affirmative
votes).
APPROPRIATION ADJUSTMENT NO. 2019-105 - Allocating funds in the
amount of $440,000 from the General Non -Departmental Reserve for
CITY COUNCIL MINUTES 20 MARCH 19, 2019
1 OA -20
Appropriation account and appropriate the same amount to the Community
Development Agency, Sales Tax Rebate account for the Resident Vehicle
Incentive Program for expenditure in Fiscal Year 2018-19.
MOTION: Iglesias SECOND: Villegas
VOTE: AYES: Iglesias, Penaloza, Pulido, Villegas (4)
NOES: Solorio(1)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
Motion failed. Appropriation Adjustment requires five affirmative votes.
Council discussion continued:
Councilmember Solorio, requested additional clause that indicates not valid until
verifiable residency documents and comparable documentation forthe business
license fees are identified are brought back to council for approval.
City Attorney Carvalho, advised whoever made motion to make a friendly
amendment to make motion conditioned upon those standards coming back to
council.
It was noted that program is effective April 1, 2019,
Acting City Manager, advised to approve agreements tonight; and staff will bring
back the guidelines to Council for consideration after April 2, 2019.
Mayor Pulido advised that discussion between staff and auto dealers take place
to determine type of documents for residency verification while council
considers additional business items.
DELIBERATION OF ITEM 75B CONTINUED AFTER THE RECESS TAKEN AFTER
DISCUSSION OF ITEM 85B.
AMENDED MOTION:
1. Conducted a Public Hearing required pursuant to California
Government Code 53083.
CITY COUNCIL MINUTES 21 MARCH 19, 2019
1 OA -21
2. Approve program as presented this evening with a 90 -day test
program, after which staff would return to council with a report. In
addition to registering the car in the City of Santa Ana, this program
would require one of the following:
a. Driver's License
b. Property Tax Bill
c. Utility Bill
d. Proof of insurance
e. Santa Ana Business License or
f. Bank statement.
3. Authorize the City Manager and Clerk of the Council to execute an
agreement with Orange County Auto Dealers Association (OCADA)
comprised of: Audi South Coast, Crevier BMW, Crevier Mini, Freeway
Honda, Guaranty Chevrolet, Lincoln South Coast, Subaru Orange
Coast, Tom's Truck Center, Volkswagen South Coast, Volvo of Orange
County to establish the Resident Vehicle Incentive Program (VIP) for
the period of April 1, 2019 to March 31, 2021, with one 2 -year extension
option and one additional year option, for a total of $1,700,000 per year
of the agreement, for an amount not to exceed $8,500,000 over a five
year period, subject to non -substantive changes approved by the City
Manager and City Attorney
4. Authorize $25,000 annually for the administration of the Resident VIP
program to be budgeted in the Sales Rebate account.
5. Approve an appropriation adjustment. (Requires five affirmative
votes).
APPROPRIATION ADJUSTMENT NO. 2019-105 - Allocating funds in the
amount of $440,000 from the General Non -Departmental Reserve for
Appropriation account and appropriate the same amount to the Community
Development Agency, Sales Tax Rebate account for the Resident Vehicle
Incentive Program for expenditure in Fiscal Year 2018-19.
MOTION: Iglesias SECOND: Villegas
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
CITY COUNCIL MINUTES 22 MARCH 19, 2019
1 OA -22
COUNCIL AGENDA ITEMS
Pursuant to Santa Ana Charter Section 411, any member of the City Council may place
items on the City Council Agenda to be considered by the City Council.
85A. DISCUSS AND CONSIDER DIRECTING STAFF TO DRAFT A RESOLUTION
SUPPORTING CALIFORNIA SENATE BILL 689 WHICH WILL RESTRICTTHE
CALIFORNIA DEPARTMENT OF PUBLIC HEALTH (CDPH) FROM
AUTHORIZING OR RE -AUTHORIZING NEEDLE AND SYRINGE EXCHANGE
PROGRAMS UNLESS A CITY OR COUNTY HAS APPROVED THE
REQUEST — Councilmember Penaloza
Councilmember Penaloza, supportive of needle exchange program but noted
manner in which program has been carried out in the City of Santa Ana has
been detrimental to the community.
Mayor Pro Tem Villegas, supportive of item.
Councilmember Iglesias, echoed comments made by Councilmember
Penaloza.
MOTION: Direct staff to send letter of support.
MOTION: Penaloza SECOND: Pulido
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
85B. DISCUSS AND CONSIDER DIRECTING STAFF TO PURSUE THE
PURCHASE OF THE STATE BUILDING LOCATED WITHIN THE SANTA ANA
CIVIC CENTER AT 605 W. SANTA ANA BLVD FOR VARIOUS PURPOSES
SUCH AS FUTURE DEVELOPMENTS OF THE CIVIC CENTER — Mayor Pro
Tem Villegas
Council discussion ensued:
Mayor Pro Tem in favor of purchasing land and building for a future permanent
or temporary Council Chamber and City Hall site. Advised the importance of
taking advantage of this designated Opportunity Zone, which is a census tract
CITY COUNCIL MINUTES 23 MARCH 19, 2019
1 OA -23
designated by state and federal governments targeted for economic
development.
Executive Director Fuad Sweiss, provided an overview of steps to be taken
before purchasing building.
MOTION: Direction given to staff regarding the purchase of the State
Building to take advantage of an opportunity zone.
MOTION: Villegas SECOND: Penaloza
VOTE: AYES: Iglesias, Penaloza, Pulido, Solorio, Villegas (5)
NOES: None (0)
ABSTAIN: None (0)
ABSENT: Sarmiento (1)
* Ward 4 representative vacant.
COUNCIL RECESSED AT 8:53 P.M. and RECONVENED AT 9:11 P.M. with same members
present.
CONSIDERATION OF ITEM 75B CONTINUED AFTER THE RECESS
85C. DISCUSS AND GIVE DIRECTION TO STAFF TO SCHEDULE A MARCH 2019
SPECIAL BUDGET WORKSHOP FOR THE CITY COUNCIL —
Councilmembers Iglesias, Penaloza and Solorio
Councilmember Iglesias, supportive of item. Directed staff to schedule
workshop no later than March 30, 2019.
Councilmember Solorio, supportive of item. Directed staff to schedule
workshop no later than mid-April 2019, staff to draft budget, and to work with
Councilmembers to calendar.
Councilmember Penaloza, supportive of item.
Direction given to staff to check council's schedule for a special meeting.
CITY COUNCIL MEETING RECESSED AT 8:59 P.M. AND CONVENED THE HOUSING
AUTHORITY MEETING. CITY COUNCIL MEETING RECONVENED TO THE CITY
COUNCIL MEETING AT 9:01 P.M
CITY COUNCIL MINUTES 24 MARCH 19, 2019
1 OA -24
COMMENTS
PUBLIC COMMENTS (Non-Agendized Items)
• Rose Finnegan, expressed concern over food vending trucks and negative impact to the
community.
• Romel Diaz, expressed concern over food vending trucks and negative impact to the
community.
• Silvia Almanza, expressed concern over food vending trucks and negative impact to the
community.
• Irma Macias, expressed concern over food vending trucks and requested City Council to
address concerns.
• Alonzo Lugo, expressed interest in serving on the Measure X Committee.
90A. CITY MANAGER'S COMMENTS
City Manager Mendoza, informed City Council of anticipated attendance by
Supervisor Do at next City Council meeting.
90B. CITY COUNCILMEMBER COMMENTS
Councilmember Solorio, expressed concern over insufficient code enforcement
staff. Directed staff to provide City Council with status of ongoing parking study,
of scooter program, and recommendation from staff as to what reports should
be provided to City Council for review.
Councilmember Penaloza, directed staff to provide food vending truck policy.
Provided report on attendance report at Santa Ana Police Department award
ceremony.
Councilmember Iglesias, provided report on attendance at Southern California
Association of Governments meeting on March 7, 2019, Economic
Development, Infrastructure, Budget and Technology Committee meeting on
March 11, 2019, Orange County Sanitation District Administration meeting on
March 13, 2019, and Santa Anita Neighborhood Association meeting. Directed
staff to review community center lighting and restroom conditions, and to reach
out to Santa Anita neighborhood residents to address concerns. Supportive of
moving forward with Centennial park ad hoc committee.
Mayor Pro Tem Martinez, noted fire near Willard Elementary and Santa Police
and Orange County Fire Authority actions to address incident.
CITY COUNCIL MINUTES 25 MARCH 19, 2019
1 OA -25
ADJOURNMENT - 9:27 P.M. The next meeting of the City Council is scheduled for Tuesday,
April 2, 2019 at 5:00 p.m. for the Closed Session Meeting immediately
followed by the Regular Open Business Meeting at 5:45 p.m. in the
Council Chamber, 22 Civic Center Plaza, Santa Ana, California.
Norma Mitre
Acting Clerk of the Council
FUTURE AGENDA ITEMS
• CONSIDERATION OF SEVENTEENTH AND TUSTIN ANNEXATION
• GENERAL PLAN UPDATE
CITY COUNCIL MINUTES 26
1 OA -26
MARCH 19, 2019
REQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
CLERK OF COUNCIL USE ONLY:
APRIL 16, 2019
TITLE:
APPROVED
ADOPT A RESOLUTION AFFIRMING
❑ As Recommended
PROJECTS FOR SB1 FUNDING IN THE
❑ As Amended
❑ Ordinance on Reading
AMOUNT OF $5,598 541 FOR FISCAL YEAR
❑ 2n
Ordinance on tl Reading
2019-20 CAPITAL IMPROVEMENT
❑ Implementing Resolution
PROGRAM
❑ Set Public Hearing For
(STRATEGIC PLAN NO. 6, 1G)
CONTINUED TO
FILE NUMBER
CITY MANAGER
RECOMMENDED ACTION
Adopt a Resolution affirming the Fiscal Year 2019-20 SB -1 Projects List and anticipated funding in
the amount of $5,598,541, which is required to be submitted to the California Transportation
Commission (CTC) for budgeting the Fiscal Year 2019-20 Capital Improvement Program (CIP) and
for City eligibility to receive Road Maintenance and Rehabilitation Account Funding.
DISCUSSION
Senate Bill 1 (SB -1), the Road Repair and Accountability Act of 2017 (Chapter 5, Statutes of 2017),
was passed by the Legislature and signed into law by the Governor in April 2017, to address basic
road maintenance, rehabilitation, and critical safety needs on both the state highway and the local
streets systems. The funding guidelines specify that before local agencies can receive their
apportionment of RMRA funds in a given fiscal year, they are required to adopt a resolution with a
list of proposed projects (Exhibit 1).
The City will receive an estimated $5,598,541 in FY 2019-20 from RMRA funds, but to maintain
eligibility, the City must submit a resolution with the project list to the CTC by May 1, 2019. Each
RMRA-funded project must be specifically differentiated from the Highway Users Tax Account
funding, and project nominations must include a project description, specific location, proposed
schedule for its completion, and the estimated useful life.
The proposed projects are being incorporated into the FY 2019-20 Capital Improvement Program
(CIP) Budget, and staff has prepared FY 2019-20 CIP Project Sheets (Exhibit 2) for each of the
projects.
The City must annually submit proposed RMRA projects list to the CTC, and as required, provide
updates on the project progress. Therefore, staff recommends that the City Council adopt a
resolution recognizing the proposed project list which will utilize FY 2019-20 RMRA funds.
55A-1
Resolution — FY 2019-20 SB -1 RMRA Project List
April 16, 2019
Page 2
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal #6 - Community Facilities &
Infrastructure, Objective #1 (Establish and Maintain a Community Investment Plan for All City
Assets), Strategy G (Develop and Implement the City's Capital Improvement Program in
Coordination with the Community Investment and Deferred Maintenance Plans).
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
Pursuant to the California Transportation Commission's Annual Reporting Guidelines for Local
Streets and Roads Funding, staff has identified six CIP projects to be funded with anticipated FY
2019-20 RMRA revenues (02917002-52321) in the table shown below. The proposed FY 2019-20
CIP budget (05917665-66220) was prepared using the California Department of Finance RMRA
January 2019 estimate of $5,598,541.
Fiscal Year 2019-20 — Potential SB 1 Road Repair and Accountability Act Projects
PROJECT
LOCATION
DESCRIPTION
COST
Euclid Street
McFadden Avenue to First Street
Road Rehabilitation
$1,100,000
Euclid Street
First Street to Hazard Avenue
Road Rehabilitation
$1,200,000
MacArthur Boulevard
Flower Street to Main Street
Road Rehabilitation
$1,100,000
Euclid Street
City Limit to McFadden Avenue
Road Rehabilitation
$970,000
Main Street
Warner Avenue to Edinger Avenue
Road Rehabilitation
$1,148,541
MacArthur Boulevard
Santa Ana River to Harbor Boulevard
Road Rehabilitation
$80,000
Grand Total:
$5,598,541
.-1 APPROVED AS TO FUNDS AND ACCOUNTS:
s✓ 4.-�vv�
Fuad S. S eiss, PE, PLS Kathryn Downs, CPA a
Executive :rector Executive Director �' 1
Public Wo r Agency Finance and Management Services Agency
FSS/JG/HG
Exhibits: 1. Resolution and Proposed FY 2019-20 List of Projects
2. FY 2019-20 RMRA CIP Project Sheets
55A-2
jmf 4/1/19
RESOLUTION NO. 2019 -XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA ADOPTING A LIST OF PROJECTS TO BE
FUNDED BY SB 1: THE ROAD REPAIR AND
ACCOUNTABILITY ACT
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1, The City Council of the City of Santa Ana hereby finds, determines and
declares as follows:
A. Senate Bill 1 (SB 1), the Road Repair and Accountability Act of 2017, was
passed by the Legislature and signed into law by the Governor in April 2017 in order to
address the significant multi -modal transportation funding shortfalls statewide.
B. SB 1 includes accountability and transparency provisions that will ensure
the residents of the City of Santa Ana are aware of the projects proposed for funding in
our community and which projects have been completed each fiscal year,
C. The City of Santa Ana must establish a list of all projects to receive funding
from the Road Maintenance and Rehabilitation Account (RMRA), created by SB 1, which
must include a description and the location of each proposed project, a proposed
schedule for the project's completion, and the estimated useful life of the improvement.
D. The City will receive an estimated $5,363,588 in RMRA funding in Fiscal
Year 2019-20 from SB 1.
E. The City used a Pavement Management System to develop the SB 1 project
list to ensure revenues are being used on the most high-priority and cost-effective projects
that also meet the priorities of the community for transportation investment.
F. The funding from SB 1 will help the City maintain and rehabilitate local
streets and roads and provide resources for similar projects in the future.
G. Modernizing the local street and road system is critical for interconnectivity,
multimodal needs, and commerce.
H. The SB 1 project list and overall investment in our local streets and roads
infrastructure with a focus on basic maintenance, safety, and investing in complete streets
will have significant benefits statewide.
Resolution No. 2019•XXX
EYffX13 Page 1 of 3
Section 2. The
to be funded with Road
Fiscal Year 2019/20.
jmf 4/1/19
City of Santa Ana adopts the following list of projects planned
Maintenance and Rehabilitation Account (RMRA) revenues for
Section 3, This Resolution shall take effect immediately upon its adoption by
the City Council, and the Clerk of the Council shall attest to and certify the vote adopting
this Resolution.
ADOPTED this — day of 2019.
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By Ate.
John M. Funk
Assistant City Attorney
Miguel A. Pulido
Mayor
55A-4
Resolution No, 2019 -XXX
Page 2 of 3
Proposed
Estimated
Project Name
Location
Description
Project
Useful Life
Completion
Road Projects:
Euclid Street
McFadden Avenue to 18� Street
Road Rehabilitation
12/31/20
20 YR
Euclid Street
1st Street to Hazard Avenue
Road Rehabilitation
12/31/20
20 YR
MacArthur
Flower Street to Main Street
Road Rehabilitation
12/31/20
20 YR
Boulevard
Euclid Street
City Limit to McFadden Avenue
Road Rehabilitation
12/31/20
20 YR
Main Street
Warner Avenue to Edinger Avenue
Road Rehabilitation
12/31/20
20 YR
MacArthur
Santa Ana River to Harbor
Road Rehabilitation
12/31/20
20 YR
Boulevard
Boulevard
Section 3, This Resolution shall take effect immediately upon its adoption by
the City Council, and the Clerk of the Council shall attest to and certify the vote adopting
this Resolution.
ADOPTED this — day of 2019.
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By Ate.
John M. Funk
Assistant City Attorney
Miguel A. Pulido
Mayor
55A-4
Resolution No, 2019 -XXX
Page 2 of 3
jmf 4/1/19
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Norma Mitre, Acting Clerk of the Council, do hereby certify the attached Resolution No.
2019- to be the original resolution adopted by the City Council of the City of Santa
Ana on 2019.
Acting Clerk of the Council
City of Santa Ana
Resolution No. 2019 -XXX
Page 3 of 3
55A-5
y
REQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
CLERK OF COUNCIL USE ONLY:
APRIL 16, 2019
TITLE:
APPROVED
ADOPT A RESOLUTION AND AUTHORIZE
❑ As Recommended
GRANT APPLICATION SUBMISSION IN THE
El El
ElOOrrdinance
AMOUNT UP TO $1,500,000 FOR THE SMART
on ta' Reading
❑ Ordinance on 2"e Reading
WATER METER AND ENERGY EFFICIENCY
❑ Implementing Resolution
PROGRAM
❑ set Public Hearing For
(NONGENERAL FUND)
(STRATEGIC PLAN NO. 6, 1G)
CONTINUED TO
n
J------
FILE NUMBER
CITY MANAGER
RECOMMENDED ACTION
Adopt a Resolution agreeing to the terms of participation in the Bureau of Reclamation
WaterSMART Water and Energy Efficiency Grant Program for the Automated Meter
Infrastructure capital improvement project.
Authorize the Executive Director of Public Works to submit a grant application for Department
of the Interior, Bureau of Reclamation's WaterSMART Water and Energy Efficiency Program,
for the Automated Meter Infrastructure Project, in the amount up to $1,500,000.
DISCUSSION
The City of Santa Ana provides potable water for all of the City's businesses and residents. The
City charges for water used by these customers via traditional mechanical meters (analog meters),
which must be read manually by City staff and have no additional capabilities. The City is in the
planning stages of an Automated Meter Infrastructure (AMI) project. The proposed future AMI
Project involves, among other things, the transition of existing meters to new smart meters that
communicate via radio or similar technology and enable the City to implement technological
enhancements such as automated meter reads, leak detection and usage notifications, and
interactive customer portals.
By upgrading to an AMI system, customers can be supplied with on -demand, real-time water
consumption data, enabling them to make more informed decisions about their water use. Case
studies have shown that communities which upgrade to AMI systems can achieve water
consumption savings of up to 15 percent.
5513-1
Adopt a Resolution and Authorize a Grant Application for the
Water Smart Meter and Energy Efficiency Program
April 16, 2019
Page 2
In 2016, the City completed an AMI feasibility study to evaluate the applicability and costs
associated with an AMI project. The cost of fully deploying such a project for the City is
approximately $14,000,000. If a WaterSMART Water and Energy Efficiency Program grant
application is successful, the grant funding would offset a significant portion of the cost of the
project.
The Department of the Interior offers grants through its Bureau of Reclamation's WaterSMART
(Sustain and Manage America's Resources for Tomorrow) Water and Energy Efficiency Program
to stretch and secure water supplies. This year's funding opportunity includes a total of $24 million.
The program provides two levels of funding for $300,000 and up to a maximum of $1.5 million in
grant funding for projects resulting in water efficiency, but not to exceed 50 percent of the total
project cost.
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal #6 — Community Facilities &
Infrastructure, Objective #1 (establish and maintain a Community Investment Plan for all City
assets), Strategy G (develop and implement the City's Capital Improvement Program in
coordination with the Community Investment and Deferred Maintenance Plans),
FISCAL IMPACT
There is no fiscal impact associated with this action. Staff will return to Council with a request for
ap r val to accept any award under these applications and programs, and will indicate the fiscal
irpacof any such awards and associated expenditures at that time.
7
Fuad
ExecuM Director
Public Mrks Agency
FM/N
Exhibit 1: Resolution Authorizing Grant Application for the AMI Project
55B-2
jmf 3/19/19
RESOLUTION NO. 2019 -XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA AUTHORIZING AN APPLICATION FOR GRANT
FUNDING BY THE BUREAU OF RECLAMATION'S
WATERSMART WATER AND ENERGY EFFICIENCY GRANT
PROGRAM FOR THE AUTOMATED METER
INFRASTRUCTURE PROJECT
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines
and declares as follows:
A. The City of Santa Ana provides potable water for all of the City's businesses
and residents. The City charges for water used by these customers using traditional
mechanical meters that must be read manually by the City and have no additional
capabilities.
B. The City is in the planning stages of an Automated Meter Infrastructure (AMI)
Project. The proposed future AMI Project involves, among other things, the replacement
of existing water meters with new smart meters that communicate via radio or similar
technology and enable the City to implement technological enhancements such as
automated meter reads, usage notifications, leak detection, and interactive customer
portals.
C. By upgrading to an AMI system, customers can be supplied with on -demand,
real time water consumption data enabling them to make more informed decisions about
their water use. Case studies have shown that communities that upgrade to AMI systems
can achieve significant savings on water consumption.
D. In 2016, the City completed an AMI feasibility study to evaluate the
applicability and costs associated with an AMI project. The cost of fully deploying such a
project for the City is approximately $14,000,000.
E. The United States Department of the Interior offers financial assistance in the
form of grant funding through its Bureau of Reclamation's WaterSMART (Sustain and
Manage America's Resources for Tomorrow) Water and Energy Efficiency Grant Program
for this type of project. The program provides two levels of funding and up to a maximum
of $1,500,000 in grant funding, but not to exceed 50% of the total project cost.
F. The City desires to fund part of the cost of the AMI Project with grant funding
from the WaterSMART Water and Energy Efficiency Grant Program.
Section 2. The City Council of the City of Santa Ana hereby authorizes and
directs the Executive Director of Public Works, or his or her designee, to sign and submit,
Resolution No. 2019 -XXX
Page 1 of 3
55B-3
jmf 3/19/19
for and on behalf of the City of Santa Ana, a grant application from the Bureau of
Reclamation's WaterSMART Water and Energy Efficiency Grant Program for the AMI
Project up to the amount of $1,500,000.
Section 3. The Executive Director of Public Works, or his or her designee, is
designated to provide the assurances, certifications, and commitments required for the
grant application, including executing a financial assistance or similar agreement with the
Bureau of Reclamation within established deadlines and any amendments or changes
thereto.
Section 4. The Executive Director of Public Works, or his or her designee, is
designated to represent the City of Santa Ana in carrying out the City's responsibilities
under the grant agreement, including certifying disbursement requests on behalf of the City
and compliance with applicable state and federal laws.
Section 5. If a grant award is made by the Bureau of Reclamation, the City of
Santa Ana commits to providing up to $1,500,000 in matching funds for the AMI Project
plus any remaining balance.
Section 6. This Resolution shall take effect immediately upon its adoption by the
City Council, and the Clerk of the Council shall attest to and certify the vote adopting this
Resolution.
ADOPTED this day of 2019.
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By..
John M. Funk
Assistant City Attorney
AYES:
NOES:
ABSTAIN:
NOT PRESENT
Councilmembers
Councilmembers
Councilmembers
Councilmembers
Miguel A. Pulido
Mayor
55B-4
Resolution No. 2019 -XXX
Page 2 of 3
jmf 3/19/19
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Norma Mitre, Acting Clerk of the Council, do hereby certify the attached Resolution No.
2019- to be the original resolution adopted by the City Council of the City of Santa
Ana on 2019.
Date:
Acting Clerk of the Council
City of Santa Ana
55B-5
Resolution No. 2019 -XXX
Page 3 of 3
55B-6
REQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
APRIL 16, 2019
TITLE:
PUBLIC HEARING: ABANDONMENT
NO. 19-01 TO VACATE A PORTION OF
FIFTH STREET
{STRATEGIC PLAN NOS. 3,2; 5, 3}
CITY MANAGER
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
APPROVED
❑ As Recommended
❑ As Amended
❑ Ordinance on 15' Reading
❑ Ordinance on 2nd Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
Hold a Public Hearing and thereafter adopt a resolution vacating a portion of Fifth Street.
DISCUSSION
On January 19, 2018, the City Council adopted Ordinance No. NS 2935 approving Specific
Development (SD) 92 for the Tiny Tim's Plaza properties located at 2223 and 2237 West Fifth
Street. The Specific Plan allows the development of a 51 -unit affordable residential community
project. A condition of the project requires excess right-of-way consisting of a 12 -foot -wide strip on
Fifth Street to be vacated as shown on Exhibit 1.
On March 16, 2019, Council adopted a resolution declaring the City's intent to vacate a portion of
Fifth Street. The requested street vacation ordered by Resolution (Exhibit 2) will narrow Fifth Street
consistent with adjacent segments, and would result in reduced automobile speeds and improved
walkability in the area. The resulting street width of 60 feet is consistent with segments of Fifth
Street east and west of the subject parcels and is consistent with the City's Circulation Element.
According to a title report and City records, the City owns a street easement over the northern 12
feet of Fifth Street which, if vacated, would revert to the Tiny Tim's Plaza property. After vacation,
the strip of property will be incorporated into the affordable residential community development
project. The added area reduces the site's constraints and improves overall site function, such
as setbacks, building location, and site accessibility. The development will improve Fifth Street
consistent with adjacent properties by constructing new curb, gutter, sidewalk, and landscape
parkway. Other improvements will include trees and street lights, and a bulb -out at Fifth Street
and Hawley Street, contributing to neighborhood traffic calming. Parking will continue to be
allowed along Fifth Street.
Utilities, other government agencies, and City agencies have been advised of the street vacation.
In addition, the Tiny Tim's Plaza revitalization would be required to complete any necessary utility
relocations.
75A-1
Public Hearing - Resolution to
April 16, 2019
Page 2
Vacate a portion of Fifth Street
STRATEGIC PLAN ALIGNMENT
This item supports the City's efforts to meet Goal #3 - Economic Development, Objective #2
(create new opportunities for business/job growth and encourage private development through
new General Plan and Zoning Ordinance policies); and Goal #5 — Community Health, Livability,
Engagement & Sustainability, Object #3 (facilitate diverse housing opportunities and support
efforts to preserve and improve the livability of Santa Ana neighborhoods).
FISCAL IMPACT
is no fiscal impact associated with this action.
Neiss, PE, PLS
Director
Public Wdfks Agency
Exhibits: 1. Street Vacation Area Map
2. Resolution
75A-2
75A-3
75A-4
Exhibit 2 jmf4/1/19
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA VACATING A PORTION OF FIFTH STREET
BETWEEN SUNSET STREET AND HAWLEY STREET
(ABANDONMENT NO. 19-01)
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines
and declares as follows:
A. California Streets and Highways Code Section 8300 et seq. authorizes the
City of Santa Ana to vacate all or any portion of any street or highway within its boundaries
and under its jurisdiction to terminate the public's right to use such street.
B. The City Council of the City of Santa Ana desires to vacate its ownership
interest, if any, of a portion of Fifth Street between Sunset Street and Hawley Street, as
shown on Exhibit A attached hereto and incorporated herein by this reference ("Vacation
Area").
C. On March 19, 2019, the City Council adopted Resolution No. 2019-018
wherein it declared its intention to vacate the Vacation Area, pursuant to and in accordance
with the provisions of Chapter 3 of Part 3 of Division 9 of the Streets and Highways Code.
D. Resolution No. 2019-018 gave notice that at its regular meeting of April 16,
2019, at 5:45 p.m. or as soon as possible thereafter, the City Council would hear any and
all persons interested in or objecting to the vacation described above.
E. The City Council finds that Resolution No. 2019-018 was published in the
manner prescribed by law.
F. The City Council further finds that the notices of said proposed vacation
stating the purposes of said Resolution and the time and place set for hearing were posted
as directed by the Council and required by law.
G. The City Council, at the time and place set for hearing, heard any and all
persons interested in or objecting to said proposed vacation of the Vacation Area and
received and considered all evidence submitted.
H. The City Council finds from all the evidence submitted that the Vacation Area
is unnecessary for present or prospective public use, based upon the following findings of
fact:
1. The Vacation Area is not necessary to provide access to abutting
property owners; and
Resolution No. 2019 -XXX
Page 1 of 3
75A-5
jmf 4/1/19
2. The Vacation Area is unnecessary for present or prospective public
use.
Section 2. This vacation is categorically exempt from the California
Environmental Quality Act under Section 15301(c) (existing highways and streets) of the
State CEQA Guidelines.
Section 3. The Vacation Area is hereby vacated, except for the reservation of
easement described herein with respect to a portion of the Vacation Area that is shown on
Exhibit B attached hereto and incorporated herein by this reference.
Section 4. As only to the portion of the Vacation Area that is shown on Exhibit B,
the City hereby reserves and excepts from vacation, pursuant to section 8340 of the
California Streets and Highways Code, the easement and right at any time, or from time to
time, to construct, maintain, operate, replace, remove, and renew sanitary sewers and
storm drains and appurtenant structures in, upon, over, and across a street or highway
proposed to be vacated and, pursuant to any existing franchise or renewals thereof, or
otherwise, to construct, maintain, operate, replace, remove, renew, and enlarge lines of
pipe, conduits, cables, wires, poles, and other convenient structures, equipment, and
fixtures for the operation of gas pipelines, telegraphic and telephone lines, railroad lines,
and for the transportation or distribution of electric energy, petroleum and its products,
ammonia, and water, and for incidental purposes, including access to protect these works
from all hazards in, upon, and over the street or highway proposed to be vacated.
Section 5. The Clerk of the Council is hereby directed to cause a certified copy
hereof, attested under seal, to be recorded in the Office of the Recorder of Orange County.
Section 6. The Vacation Area shall not be deemed vacated until this Resolution
is recorded.
Section 7. The Clerk of the Council shall attest to and certify the vote adopting
this Resolution.
ADOPTED this 16th day of April, 2019.
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
Jahn M. Funk
Assistant City Attorney
Miguel A. Pulido
Mayor
75A-6
Resolution No. 2019 -XXX
Page 2 of 3
jmf 4/1/19
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Norma Mitre, Acting Clerk of the Council, do hereby certify the attached Resolution No.
2019- to be the original resolution adopted by the City Council of the City of Santa
Ana on April 16, 2019.
Date:
Acting Clerk of the Council
City of Santa Ana
75A-7
Resolution No. 2019 -XXX
Page 3 of 3
I I
I I
Lu
L N 89°49725" E 139.38'
W. LINE
LOT 39
rliD
I zfill�
n �'?
N
FIFTH
CURVE TABU
CURVE #
DELTA
RADIUS
I ARG DISTANCE
C1
90°26'50"
-� 10.00'
�,mm 96.79'
C2
90°26'60"
25.D0'
39.47'
o
wilwoAl
I
LOT 39 I
TR 1341
BOOK 67, PAGES 47-48
U)
�' I
E, LINE-�.�
LOT 39
AREA TO BE
ABANDONED
STREET
75A-8
POINT OF
BEGINNING
0 25 60
SCALE: V=50'
ORIGINAL GRAPHIC SCALE
L
Lu
Lu
■
w N89°49'25"E 138.38'
W. LINE
Z I LOT 39
0
of
}
�z w
i— 30'--1
S00010'35"E 6.43'^'
LOT 39
TR 1341
BOOK 57, PAGES 47-48
LIM
N
o�
0
E. LINE
LOT 39
Lo
O 71
z p io
LD¢ co z�
r' Q � � N00010'35"W 6.43'
f�
143.97" _ 131.30'
l_ /1/�/1 N
7� 4z=
S89049'25"W 290.36'
b PROPOSED PUBLIC
';'' _.. UTILITY EASEMENT _.
CURVE TABLE
CURVE #
DELTA
RADIUS
ARC DISTANCE
Cl
90"26'50"
10.00'
15.79-
C2
90°26'56'
25.00'
39.47-
FIFTH STREET
75A-9
0 25 50
EASEMENT AREA
d SCALE: 1" = 50'
ORIGINAL GRAPHIC SCALE
75A-10
REQUEST FOR COUNCIL/
HOUSING AUTHORITY
ACTION
CITY COUNCIL MEETING DATE:
APRIL 16, 2019
TITLE:
APPROVE TWO LOAN AGREEMENTS
WITH TINY TIM LP FOR THE TINY TIM
PLAZA AFFORDABLE HOUSING
PROJECT - GRANT FUNDED
{STRATEGIC PLAN NO 5,3)
CITY MANAGER
EXECUTIVE DIRECTOR
RECOMMENDED ACTION
CITY COUNCIL
CLERK OF COUNCIL USE ONLY:
.5006 _117
❑ As Recommended
❑ As Amended
❑ Ordinance on V1 Reading
❑ Ordinance on 2nd Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
Authorize the City Manager and the Clerk of the Council to execute a Loan Agreement with
Tiny Tim LP (c/o Community Development Partners) for $1,300,000 in Inclusionary Housing
Funds to create 51 units of affordable housing at 2223 West Fifth Street in Santa Ana, subject
to non -substantive changes approved by the City Manager and City Attorney.
2. Authorize the City Manager and Clerk of the Council to execute a Subordination Agreement
with Citibank, N.A., for the City's Inclusionary Housing Loan Agreement with Tiny Tim LP,
subject to non -substantive changes approved by the City Manager and City Attorney.
HOUSING AUTHORITY
1. Authorize the Executive Director of the Housing Authority and the Recording Secretary to
execute a Loan Agreement with Tiny Tim LP (c/o Community Development Partners) for
$4,700,000 in Low and Moderate Income Housing Asset Funds to create 51 units of
affordable housing at 2223 West Fifth Street in Santa Ana, subject to non -substantive
changes approved by the Executive Director and Authority General Counsel.
2. Authorize the Executive Director of the Housing Authority and the Recording Secretary to
execute a Subordination Agreement with Citibank, N.A., for the Housing Authority's Loan
Agreement with Tiny Tim LP, subject to non -substantive changes approved by the Executive
Director and Authority General Counsel.
80A-1
Loan Agreements with Tiny Tim LP
April 16, 2019
Page 2
DISCUSSION
On June 20, 2017 City Council / Housing Authority approved a pre -loan commitment of funds for
the development of an affordable housing project at Tiny Tim Plaza located at 2223 West Fifth
Street ("Project") to be developed by Community Development Partners ("Developer") by a vote
of 6:1 (Martinez opposed). City Council / Housing Authority approved a pre -loan commitment of
$4.7 million in funds from the Housing Successor Agency ("Agency") and $1.3 million in funds
from the City's Inclusionary Housing Funds. The $4.7 million in funds from the Housing
Successor Agency come from loan repayments from the former Redevelopment Agency. These
funds are officially referred to as the Low and Moderate Income Housing Asset Funds (LMIHAF).
The $1.3 million in funds from the City's Inclusionary Housing Funds are funds generated through
the payment of in -lieu fees when developers opt -out of developing affordable housing on-site and
instead pay a fee. The Staff Report from June 20, 2017 is attached as Exhibit 1 and the pre -loan
commitment is attached as Exhibit 2.
After City Council / Housing Authority approves a commitment of funding for an affordable
housing project, it can often take a substantial amount of time for a developer to secure their
remaining financing. The majority of large multi -family affordable housing projects require Low -
Income Housing Tax Credits which are very competitive for the higher value 9% Tax Credits with
only two application deadlines a year and more difficult to finance with the lower value 4% Tax
Credits. The Tiny Tim Plaza project received a commitment of $6 million in funding from City
Council and after almost two years, the developer has now secured their remaining financing and
they are prepared to close on their financing by May 1 and begin building the project. Now that
the developer is ready to close, staff are returning to City Council with the two Loan Agreements
tied to the commitment of funds issued by the City and Housing Authority nearly two years ago.
Specifically, after receiving the pre -loan commitment letter from the City and Housing Authority
on June 20, 2017, the Developer secured their entitlements from the City's Planning Commission
on November 27, 2017 and then worked to secure all of their necessary financing and funding for
the construction and operation of the Project. The Developer worked with City staff to apply for
Affordable Housing and Sustainable Communities (AHSC) Grant funds and on December 19,
2017, City Council adopted a resolution supporting Community Development Partners submittal
of a funding application for the AHSC Grant Program in the amount not to exceed $6.7 million.
However, the Developer's application was not successful. On July 2, 2018, the Developer
submitted an application for competitive 9% Low -Income Housing Tax Credits. And in October
2018, the Developer was notified that they were pulled off a waiting list and approved for an
award. Following their award of 9% Tax Credits, the Developer had secured all of their
necessary financing and funding to develop the Project and must now close on their financing
and pull their building permit before May 6, 2019.
There are two Loan Agreements for this Project: one Housing Successor Agency Loan
Agreement for the $4.7 million in LMIHAF funds and one City Loan Agreement for $1.3 million in
Inclusionary Housing Funds. The Housing Successor Agency Loan Agreement is attached as
Exhibit 3 and the City Inclusionary Housing Loan Agreement is attached as Exhibit 4. Both Loan
Agreements have the following basic terms:
80A-2
Loan Agreements with Tiny Tim LP
April 16, 2019
Page 3
• $6,000,000 principal amount:
o $4,700,000 from LMIHAF
o $1,300,000 from Inclusionary Housing Fund
s 3% simple interest per annum;
• Repayment from 50% of Residual Receipts (pro -rata with payments due in connection with
other financing provided by the City/Agency) (after payment of operating expenses, debt
service, any deferred developer fee, and partnership fees to be described in the
Agreement) with the remaining 50% to be disbursed to the Developer;
• Remaining principal and accrued interest due upon the 55th anniversary of the issuance of
Certificate of Occupancy and/or final building permits or earlier upon sale, refinancing or
default. On that date, the City/Agency agrees to review the performance of the property
and consider in good faith any reasonable request by Community Development Partners
to modify the terms or extend the term of the City/Agency Promissory Notes. Additionally,
the City/Agency will receive 50% of the net proceeds received from any sale or refinancing
of the Project, after payment of outstanding debt and payment in full of any deferred
developer fee and establishment of any reserves and transaction costs; and
• Cost savings from the Project, if any, will be applied first to pay down the Loans, subject to
compliance with the Tax Credit Allocation Committee ("TCAC") Regulations and California
Health and Safety Code.
Regarding the two Subordination Agreements with Citibank, N.A., the City's / Agency's total loan
for this project is approximately 19.2% of the total Project cost. As a subordinate loan for a large
affordable housing project such as this, it is not uncommon for a senior lender to request a
Subordination Agreement for the City and Housing Authority's smaller Loan Agreements that
allow the senior lender to complete their underwriting and commit their private market financing.
As such, the two Subordination Agreements will allow Citibank to commit their private market
financing for the Project. The Subordination Agreement for the Housing Successor Agency's
Loan Agreement is attached as Exhibit 5 and the Subordination Agreement for the City's
Inclusionary Housing Loan Agreement is attached as Exhibit 6.
If the two Loan Agreements are not approved by City Council and the Housing Authority, the
Developer will have to decline their award of 9% Tax Credits and the Project will not move
forward.
Project Description
The Tiny Tim Plaza redevelopment provides a prototypical example of revitalizing the suburban
style strip retail center in order to serve the surrounding community. The project retains and
provides fagade improvements to the two primary, existing commercial buildings and creates
community serving uses including outdoor common areas, and the new construction of a
residential building providing 51 -units of affordable housing, including a residential courtyard,
fitness space, and large ground floor spaces for nonprofit partners and supportive services.
• U1 .
Loan Agreements with Tiny Tim LP
April 16, 2019
Page 4
Tiny Tim Plaza was first developed between 1962 and 1963 as a commercial center consisting of
two freestanding, single -story commercial buildings and a separate automotive repair facility.
Since its construction in the early 1960s, minor alterations to the site have been constructed,
mostly in the form of interior tenant improvements to individual businesses. In 2013, following
approval of a conditional use permit to allow the sale of alcoholic beverages for onsite
consumption, the site's landscaping, parking lot, and trash enclosure were upgraded.
In late 2016, the Community Development Partners ("CDP) first submitted plans to construct the
proposed project. Following input from the community and from the City's Development Review
Committee, the plans were revised to lessen the number of residential units, increase the number
of onsite parking spaces for the residential component of the project, and to enhance the onsite
amenities and architecture. In addition, CDP eliminated all studio and one -bedroom units and
revised the project to satisfy the City's goal of providing family-oriented affordable housing. The
new project design was approved in November 2017.
Ownership
The project will be owned and operated through a partnership between CDP and Mercy House.
Community Development Partners will be the lead developer for the project. CDP is focused on
transformative change responsible for creating life -changing affordable development projects that
adhere to strict standards of environmentally, socially, and economically responsible buildings
and communities. CDP is an experienced multifamily and mixed-use developer focused
exclusively on creating and preserving vibrant housing communities. The company's principals
have over 30 years of combined experience working with cities and public agencies to bring new
investment into existing neighborhoods. As the primary developer and the representative lead for
the project team, CDP will ensure the success of the future development. Formed in 2011 by
leaders in the field of residential housing development, CDP has successfully built a portfolio of
22 unique projects comprising over 1,650 units and $350 million in total development costs.
CDP is committed to improving the communities in which it works by not only providing quality
affordable housing developments, but also ensuring that all CDP developments are sustainable
and enhance the fabric of the overall community. Their infill communities are more than just
housing. Their designs focus on creating activated centers of culture and education for the
surrounding community in addition to fulfilling the basic housing needs of low-income residents.
CDP has a strong focus on the integration of the arts community by incorporating artwork and
ongoing art programming into the supportive services through partnerships with local artists.
CDP currently operates 18 affordable rental -housing properties, with over 1,450 units. Included in
those properties is The Orchard in Santa Ana, which provides all 71 units of supportive housing
for chronically homeless persons, in partnership with Mercy House. In addition, Mercy House and
CDP are scheduled to begin construction in 2019 on Aqua Housing, a new 57 -unit supportive
housing property in Santa Ana.
Mercy House will be the lead service provider offering high-quality supportive services that are
designed to help low-income and formerly homeless residents maintain stable housing and
generate positive changes in their lives. Mercy House has been providing supportive services
• I .
Loan Agreements with Tiny Tim LP
April 16, 2019
Page 5
and comprehensive case management to families, individuals, and veterans in Orange County
for over 27 years. Mercy House staff has extensive knowledge of needs and barriers faced by the
low-income residents in our community, as well as a variety of resources helpful to their success.
Mercy House has, since it's founding in 1988, focused on the creation and operation of facilities
that provide more than simply beds and roofs. In its care for the dignity of the individual person, it
has a commitment to high quality facilities that provide the best that can be given through
professional staff and case management. It's first property, now called Joseph House, provided a
transitional residence for employable homeless adult men in Santa Ana. Today, Mercy House
provides housing and comprehensive supportive services for a variety of populations, which
include families, adult men and women, mothers and their children, persons living with HIV/
AIDS, individuals overcoming substance addictions and some who are physically and mentally
disabled. Mercy House is a partner with CDP at The Orchard and The Cove, a 12 -unit
affordable/senior property/homeless veteran in Newport Beach. In addition, it owns and operates
several other permanent supportive housing properties.
Project Design
The project was designed with the support of City Fabrick, a nonprofit design studio dedicated to
enhancing communities in need through collaborate public interest design, planning, and policy
development. Based in Southern California, City Fabrick operates with a global view, drawing
upon precedents near and far while fostering innovation that can be applicable to other commu-
nities. City Fabrick is an independent, nonprofit organization that works beyond the conventional
client -consultant framework, having the capacity to collaborate with community partners on
mission -related work as well as help initiate positive change in the community.
The new construction at Tiny Tim will provide 51 units of new, high quality, affordable rental
homes targeting large families, while also enhancing the existing businesses through
rehabilitation of the retail center. Upon completion, the project will serve as a community social
node where housing, local businesses and community services interact to promote a healthier
neighborhood.
The first component of the project includes demolition of the existing, vacant automotive repair
structure at 2237 West Fifth Street (corner of Fifth and Hawley streets). In its place, the applicant
proposes to construct the subject affordable residential community. The residential community
will be a four -level single structure. The first level will contain community rooms and management
offices serving the residents. On grade, residential parking for both bicycles and automobiles is
made possible through the construction of a podium deck. On top of the podium deck, a
courtyard and three levels of residential units will be constructed. The courtyard will be
landscaped and provide playground equipment, outdoor kitchen, and an artificial turf play
surface. The structure has been designed with a contemporary architectural style that uses large
facades, repetitive window placement, and areas for vegetation and murals. Additional site
amenities include a zocalo or community plaza in the northeast corner of the site, community
gardens, and mini park with outdoor gym equipment and a jogging track around the perimeter.
The project will also provide fagade upgrades to the existing commercial structures at the north
and east portions of the project site, and street improvement modifications along Fifth and
Loan Agreements with Tiny Tim LP
April 16, 2019
Page 6
Hawley streets. These improvements will tie the entire project site together and establish a
uniform contemporary architectural style among all buildings on the project site.
Resident Services
Mercy House will provide on-site services for residents at Tiny Tim. Service Programs will be
designed to meet the specific needs of the residents and at minimum will include a Service
Coordinator and Adult education classes. The Service Coordinator's duties include but are not
limited to: Providing tenants with information about available services in the community, assisting
tenants to access services through referral and advocacy, and organizing community -building
and/or enrichment activities for tenants (such as holiday events, tenant council, etc.). Mercy
House will also provide adult educational, health and wellness, or skill building classes. This
includes but is not limited to financial literacy, computer training, homebuyer education, GED,
resume building, ESL, nutrition, exercise, health information/awareness, art, parenting, on-site
food cultivation and preparation, and smoking cessation classes. Educational classes will be
provided for a minimum of 84 hours of each year.
Parking
CDP was required to provide on-site parking at a ratio of 0.5 spaces per unit pursuant to AB 744
because the site is within one-half mile of a major transit stop. However, following extensive
community input, the applicant revised the plans to incorporate car lifts, raising the parking ratio
to 1.8 parking spaces per unit, which is more than three times what the State requires and above
similar, recently approved affordable housing developments. The project will be providing 91
spaces of residential, garage parking and an additional 57 spaces to service the commercial
tenants and customers.
Affordability Mix
The new rental units are 100% affordable to households earning between 30% and 60% of the
Area Median Income. The unit mix, which includes a manager's unit, will consist of 2, 3 and 4 -
bedroom units, which are anticipated to primarily serve families. At least fifteen (15) of the units
will be affordable to family households earning no more than 30% of the Area Median Income
("AMI"); five (5) of the units affordable to family households earning no more than 50% of the
AMI; and thirty (30) of the units affordable to family households earning no more than 60% of the
AMI. Office space within the development will be provided for use as a police substation, which
at a minimum will have room for a desk, phone, and computer that could be set up by the Santa
Ana Police Department, dependent upon their available staffing and resources. The unit mix
consists of:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
Loan Agreements with Tiny Tim LP
April 16, 2019
Page 7
Total Project Costs
Project Costs
Amount
Per Unit
Acquisition Costs/Closing
$4,268,000
$83,686
Architecture/Fees & Permits
$2,419,131
$47,434
Construction Cost
$19,857,914
$389,371
Indirect Construction/Legal
$636,153
$12,474
Developer's Fee
$1,887,099
$37,002
Rent -Up Costs/Reserves
$202,322
$3,967
Financing Costs
$2,010,664
$39,425
Total
$31,281,283
$613,358
Permanent Funding Sources
Amount
Permanent Loan
$8,095,352
Tax Credit Equity
$15,105,973
Deferred Fee
$1,584,174
City of Santa Ana Funds
$6,000,000
NOI During Construction
$495,784
Total
$31,281,283
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal # 5 - Community Health, Livability,
Engagement & Sustainability, Objective # 3 (Facilitate diverse housing opportunities and support
efforts to preserve and improve the livability of Santa Ana neighborhoods), Strategy C (Provide
that Santa Ana residents, employees, artists and veterans receive priority for affordable housing
created under the City's Housing Opportunity Ordinance or with City funding to the extent allowed
under state law).
FISCAL IMPACT
Funds are available in the Loans and Grants accounts for expenditure in FY 2018-19 as follows:
Program Name Account No.
Amount
Low and Moderate Income Housing Asset Fund 60718830-69152
$4,700,000
Inclusionary Housing Fund 41718820-69152
$1,300,000
Total
$6,000,000
Steven A. Mendoza
Executive Director
Community Development Agency
APPROVED AS TO FUNDS AND ACCOUNTS:
K`a hryn Downs, CPA !�
Executive Director
Finance and Management Services Agency
80A-7
Loan Agreements with Tiny Tim LP
April 16, 2019
Page 8
Exhibits: 1. Staff Report from June 20, 2017
2. Pre -Loan Commitment Letter
3. Housing Successor Agency Loan Agreement
4. City Inclusionary Housing Loan Agreement
5. Subordination Agreement with Citibank for Housing Successor Agency Loan
6. Subordination Agreement with Citibank for Inclusionary Housing Loan
REQUESTO
HOUSING AUTHORITY
ACTION +
CITY COUNCIL MEETING DATE:
JUNE 20, 2017
TITLE:
DISCUSSION ON AFFORDABLE HOUSING
DEVELOPMENT PROJECTS, APPROVAL.
OF CITY FINANCIAL ASSISTANCE, AND
APPROVAL OF APPROPRIATION
ADJUSTMENT
(STRATEGIC PL N O, 6, 3C)
0
CITY ANAGE EXECUTIVE DIRECTOR
EXHIBIT 1
CLERK OF COUNCIL USE ONLY:
APPROVED
❑ As Recommended
❑ As Amended
❑ Ordinance on 1 e Reading
❑ Ordinance on 04 Reading
❑ Implementing Resolution
❑ Set Publlc Hesdng For
CONTINUED TO
FILE NUMBER
As recommended by the Ad Hoc Committee, discuss the various Affordable Housing
Development projects requesting City financial assistance and seek City Council direction on the
allocation of current and available affordable housing development funds. Following are options
for City Council discussion and consideration:
A) Santa Ana Arts Collective, Meta Housing Corporation:
Option #1: Amend the project's original award by an additional amount up to $2.9
million per Keyser Marston Associates gap analysis report.
Option #2: Amend the project's original award by an additional amount up to
$1,481,215, per CSG Advisors gap analysis report. City financial
assistance to be negotiated by CSG Advisors and Meta Housing.
Option #3: Take no additional action to fund the project at this time.
B) First Street Apartments, AMCAL Mu&Housing:
Option 91: Award of affordable housing development funds for an amount up to
$8,522,740, per CSG Advisors gap analysis report.
Option #2: Award of affordable housing development funds for an amount up to
$8,795,000, per Keyser Marston Associates gap analysis report.
Option #3: Take no additional action to fund the project at this time.
. 11
EXHIBIT 1
Discussion on Affordable Housing Development Projects, Approval of City Financial Assistance,
and Approval of Appropriation Adjustment
June 20, 2017
Page 2
C) Aqua Housing, Community Development Partners:
Option #1: Amend the original project award with an additional 31 project -based
vouchers.
Option #2: Take no additional action to fund the project at this time.
D) Tiny Tim Plaza, Community Development Partners:
Option #1: Commit to a future award of affordable housing funds for an amount of $6
million up to $11.7 million per CSG Advisors gap analysis report. Award of
funds to follow the approval of the project by the Planning Commission and
City Council pending the availability of funds.
Option #2: Take no action to fund the project at this time.
JOINT RECOMMENDED ACTIONS:
1. Staff recommends the approval of option Al, option B1, option C1, and option D1.
2. Direct staff to develop a policy and criteria for the allocation of future affordable housing
development funds.
3, Approve a conditional pre -loan commitment, pending the approval of the Site Plan Review by
the Planning Commission and City Council for the Tiny Tim Plaza project, as follow:
CITY COUNM ACTIONS:
1. Staff recommends the approval of the following actions regarding loan documents and
commitment letters:
a. Direct staff to amend the Inclusionary Housing loan agreement for the Santa Ana Arts
Collective project for an additional amount not to exceed $2,900,000 in Inclusionary
Housing funds and provide for City Council consideration at the July 5, 2017 meeting.
2. Approve an appropriation adjustment. (Requires rive affirmative votes).
Housing
City Council -
Development Project
Successor
Inclusionary
Agency Funds
Housing Funds
Tiny Tim Plaza
$4,700,000
$1,300,000
CITY COUNM ACTIONS:
1. Staff recommends the approval of the following actions regarding loan documents and
commitment letters:
a. Direct staff to amend the Inclusionary Housing loan agreement for the Santa Ana Arts
Collective project for an additional amount not to exceed $2,900,000 in Inclusionary
Housing funds and provide for City Council consideration at the July 5, 2017 meeting.
2. Approve an appropriation adjustment. (Requires rive affirmative votes).
EXHIBIT 1
Discussion on Affordable Housing Development Projects, Approval of City Financial Assistance,
and Approval of Appropriation Adjustment
June 20, 2017
Page 3
APPROPRIATION ADJUSTMENT NO. 2017-148 - Recognizing the Inclusionary Housing
Fund balance In the amount of $4,200,000 in revenue account (no. 41718002-50001) and
appropriating same to the Inclusionary Housing Fund's Loans and Grants expenditure account
no. (41718820-69152) for the Santa Ana Arts Collective project and conditional pre -loan
commitment for the Tiny Tim Plaza project.
HOUSING AUTHORITY ACTIONS:
Staff recommends the approval of the following actions regarding loan documents and
commitment letters:
a. Approve a pre -loan commitment in an amount not to exceed $8,522,740 for the First
Street Apartments project.
b. Approve an award of 31 additional project based vouchers to Community Development
Partners with Mercy Housing Living Centers as the service provider for the Aqua
Housing project and authorize the Executive Director of the Housing Authority to
execute an amendment to the Agreement to Enter into a Project -Based Vouchers
Housing Assistance Payments contract for an additional 31 vouchers for the Aqua
Housing project.
3. Approve an appropriation adjustment. (Requires rive affirmative votes).
APPROPRIATION ADJUSTMENT NO. 2017-149 - Recognizing the Housing Successor
Agency's fund balance In the amount of $8,633,785 in revenue account no. (60718002-50001)
and appropriating same to the Low and Moderate Income Housing Asset Fund's Loans and
Grants expenditure account no. (60718830-69152) for the First Street Apartments project's
pre -loan commitment and conditional pre -loan commitment for the Tiny Tim Plaza project,
On February 21, 2017, City Council established an Ad Hoc Committee to provide
recommendations on how to move forward on affordable housing development projects In the
queue and to return to the City Council with options for consideration. The Ad Hoc Committee
met on February 28, and requested that staff seek the assistance of CSG Advisors, an
independent affordable housing development finance firm, to prepare:
• A second opinion financial gap analysis for the Santa Ana Arts Collective and First Street
Apartments projects to compare to the previously completed financial gap analysis reports
prepared by Keyser Marston Associates (KMA), and
80A-11
Discussion on Affordable Housing Development Projects, Approval of City Financial Assistance,
and Approval of Appropriation Adjustment
June 20, 2017
Page 4
Financial gap analysis reports on Aqua Housing and Tiny Tim Plaza affordable housing
development projects seeking City financial assistance.
On May 17, 2017, the Ad Hoc Committee met and recommended staff bring the four projects to
City Council for discussion and seek direction based on the results of the financial gap analysis.
In addition, the Ad Hoc Committee requested that staff provide the currently available affordable
housing development funds (Exhibit 1), estimate of potential future funding, restrictions and uses
of those funds (Exhibit 2), and development schedule for each project (Exhibit 3).
Following is the description, history and status of each of the four projects seeking City financial
assistance:
Santa Ana Arts Collective, Meta Housing Corporation: 1666 North Main Street
The Santa Ana Arts Collective is an artist focused affordable housing development project that
consists of a 57 -unit adaptive reuse project to convert an existing five -story office building to
residential units and ground -floor commercial and community space. The unit mix consists of 26
one bedroom units, 14 two bedroom units and 17 three bedroom units for 30%, 50% and 60% of
the Area Median Income (AM]).
This project applied to the City for financial assistance through a competitive Request for
Proposals (RFP) process on August 21, 2015. On November 3, 2015, the City Council awarded
$4,635,000 in funding for the project from Its Community Development Block Grant (CDBG
$500,000), Inclusionary Housing Funds ($1.875 million), and a pre -commitment of HOME
Investment Partnerships Program funds ($2.26 million), As conditioned in the City's approval, the
developer Meta Housing Corporation (Meta Housing) then gathered the balance of awards
projected to fully finance the project. In October 2015, the project was awarded Affordable
Housing and Sustainable Communities (AHSC) funds by the California Department of Housing
and Community Development (CA HOD). In November 2016, Meta Housing was competitively
awarded 9% Low Income Housing Tax Credits (LIHTC). Under normal circumstances a LIHTC
allocation is the final piece of financing needed for a project to move forward. However, since the
November 2016 presidential elections, anticipated federal tax reform has upended LIHTC equity
markets and resulted in a financial gap that, absent additional funds, renders the project
infeasible. On December 14, 2016, Meta Housing submitted a request for an additional $3.1 in
City funds due to the financial gap created by lower tax credit equity pricing and rising interest
rates. The request was submitted to KMA for review.
In December of 2016, City staff informed Meta Housing of other alternatives such as a hybrid 9
percent14 percent tax credit structure proposed by the Californla Tax Credit Allocation Committee.
Meta Housing applied and was unsuccessful in securing the hybrid tax credits. On March 1, 2017,
KMA completed a financial gap analysis and determined $2,900,000 as the financial gap for the
project If the City required the Developer to defer or forgo $600,000 of the developer fee included
In the Project's budget (Exhibit 4). Later as requested by the Ad Hoc Committee, CSG Advisors
completed a second opinion financial gap analysis on May 9 and determined $1,481,215 as the
financial gap for the project If the City required Meta Housing to contribute a portion of its
80A-12
EXHIBIT 1
Discussion on Affordable Housing Development Projects, Approval of City Financial Assistance,
and Approval of Appropriation Adjustment
June 20, 2017
Page 5
developer fee to the partnership In the form of a $1 million General Partner Capital Contribution
(Exhibit 5). The developer fee would need to be negotiated. Meta Housing has informed city staff
that $1.4M in financial assistance would limit their ability'to complete the project.
Meta must pull their first building permit for the project by July 28, 2017 or they will lose their 9%
LIHTC award.
First Street Apartments, AMCAL Multi -Housing: 1440 East First Street
The First Street Apartments project will provide 69 units of affordable workforce housing, The
rental units (less one manager's unit) are 100% affordable to family households earning between
30% and 60% of the AMI. The unit mix currently consists of six four-bedroom units, 28 three-
bedroom units and 35 two-bedroom units (one being a manager's unit).
This project initially applied to the City for financial assistance through a competitive RFP process
for project based vouchers (PSVs) and was awarded eight PEVs by the Housing Authority on
May 5, 2015. On February 2, 2016, the City Council approved the Planning Commission's
recommendation to direct Heritage Village OC LLC (Heritage Village) Incluslonary housing funds
to AMCAL and also directed the City Manager to lead discussions on the project. On April 15,
2016, KMA completed a financial gap analysis and determined $8,795,000 as the City's financial
assistance (Exhibit 6). On December 20, 2016, the City Council authorized the City Manager to
execute a conditional loan commitment letter with AMCAL for $2,600,000 of Inclusionary housing
in -Ileo fees contingent an the City's receipt of an in -lieu fee payment of $2,600,000 from Heritage
Village. In addition, the Housing Authority also authorized the drafting of loan agreements in an
amount not to exceed $6,195,000 for a total of $8,795,000 pre -committed for the project. On
February 21, 2017, staff agendized the City conditional loan and Housing loan agreements for
City Council consideration. The City Council tabled the agreements and requested that an Ad
Hoc Committee review the project as well as other projects in the queue.
As requested by the Ad Hoc Committee, CSG Advisors completed a second opinion financial gap
analysis on May 12, 2017, and determined $8,522,740 as the financial gap for the project (Exhibit
7). On May 16, 2017, AMCAL submitted a letter informing the City that Heritage Village will not be
making the initial payment of $2.6M In In -lieu fees in time for the June 28 tax credit application
deadline, The delay in payment was also confirmed by a representative from Heritage Village,
As such, AMCAL requests that the City bridge the $2.6M of in -lieu fees with currently available
City affordable housing development funds in order to meet the tax credit application deadline.
The developer is preparing to apply for 9 percent competitive tax credits on June 28, 2017.
Aqua Housing, Community Development Partners: 317 East 171i Street
The Aqua Housing project consists of a 57 -unit new construction permanent supportive housing
development, for chronically homeless individuals with wrap-around supportive services provided
on-site by Mercy Housing Living Centers. The unit mix currently consists of 12 studio units and
45 one -bedroom units for 30% and 60% of the AMI, including a single one -bedroom property
manager's unit.
Discussion on Affordable Housing Development Projects, Approval of City Financial Assistance,
and Approval of Appropriation Adjustment
June 20, 2017
Page 6
This project applied to the City for financial assistance through a competitive RFP process for 66
project based vouchers (PBVs) on January 31, 2017. On April 4, 2017, the Housing Authority
awarded 25 project -based vouchers to the project. However, the project will need an additional
31 PBVs to be feasible and for the developer to apply for the June 28th 9 percent tax credit
deadline. Planning staff have been reviewing the project since the approval of the Initial 25 PBVs
and the City has invested resources in the required NEPA environmental review. On May 22, the
Planning Commission approved the entitlements for the project. The developer is preparing to
apply for 9 percent competitive tax credits on June 28, 2017.
As requested by the Ad Hoc Committee, CSG Advisors Is conducting a financial gap analysis for
affordable housing development funds in the event that the additional 31 PBVs are not awarded.
Tiny Tim Plaza, Community Development Partners: 2223 West 5th Street
The Tiny Tim Plaza project consists of a 51 -unit new construction affordable housing
development targeting low-income families making 30%-60% AMI, including 5 units targeting at -
risk homeless families. This development was identified as one of the projects in the queue and
as such, on February 28, 2017, the Ad Hoc Committee requested a financial gap analysis be
conducted to determine the financial assistance for the project.
On May 18, 2017, the developer, Community Development Partners, requested that the City
commit affordable housing funds during the month of June as the commitment will provide for a
favorable outcome in the acquisition of land and closing of escrow tentatively scheduled for July.
The developer is requesting $6 million in City financial assistance for the project, On May 24, as
requested by the Ad Hoc Committee, CSG Advisors completed the financial gap analysis and
determined $11.7 million as the financial gap for the project (Exhibit 8) if the developer does not
receive new market tax credits, Section 8 vouchers, or other State funding, The project will apply
for 4 percent non-competitive tax credits in October 2017.
Currently, the project is In planning development review and anticipated to be reviewed by the
Planning Commission on September 11, 2017. Planning staff estimates that the project will be
agendlzed for City Council consideration on October 3, 2017.
Additional Ad Hoc Committee Recommendations:
The Ad Hoc Committee recommended that the City Council direct staff to develop a policy and
criteria for the allocation of future affordable housing development funds. It is anticipated that
future federal funding for affordable housing may decrease requiring the City to prioritize projects
for funding. The selection criteria would include elements such as; 1) affordability, 2) number of
units, 3) operating costs to tenants, and 4) gap analysis. Upon the direction of the City Council,
staff will conduct research and prepare options and recommendations for City Council
consideration at a later date.
Regarding the availability of affordable housing development funds, the Ad Hoc recommended
that staff provide the City Council with the current available funds on hand and to estimate future
funding. As provided In the May 2, 2017 quarterly report of Housing division projects and
EXHIBIT 1
Discussion on Affordable Housing Development Projects, Approval of City Financial Assistance,
and Approval of Appropriation Adjustment
June 20, 2017
Page 7
activities, the currently available affordable housing development funds amount is $18,661,468.
This value includes Housing Successor Agency, Inclusionary Housing, HOME program and
CDBG available funds as detailed in Exhibit 1.
In addition, staff estimates that the City will receive future Inclusionary Housing Funds from the
Heritage Project (est. $9,7M) and 421 N. Harbor Blvd mixed use market -rate development project
(est. $717,388). The future sale of Housing Successor Agency properties (four developable
sites) may generate an estimated $4 million. Lastly, the allocation of 2017-18 CDBG funds for
multi -family housing will provide an additional $300,000 and is dependent on the allocation of
federal funds.
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal 95 - Community Health, Livability,
Engagement & Sustainability, Objective #3 (Facilitate diverse housing opportunities and support
efforts to preserve and Improve the livability of Santa Ana neighborhoods), Strategy C (Provide
that Santa Ana residents, employees, artists and veterans receive priority for affordable housing
created under the City's Housing Opportunity Ordinance or with City funding to the extent allowed
under state law).
FISCAL IMPACT
Approval of the City Council appropriation adjustment will recognize $4,200,000 in the
Inclusionary Housing Fund's revenue account (no. 41718002-50001) and increase the Loan and
Grants expenditure account no. (41718820-69152) by the same amount In the FY 2016-17
budget, for the Santa Ana Arts Collective project and a portion of the conditional pre -loan
commitment for the Tiny Tim Plaza project, Both loans from the Inclusionary Housing Fund are
estimated to be fully expended in FY 2017-18, pending changes to the project schedules for both
projects.
Funds in the amount of $4,588,955 are available in the Low and Moderate Income Housing Asset
Fund, Loans and Grants account (no. 60718830-69152) for a portion of the pre -loan commitment
for the First Street Apartments project. Approval of the Housing Authority appropriation
adjustment will recognize $8,633,785 in the Low and Moderate Income Housing Asset Fund's
revenue account (no. 60718002-50001) and Increase the Loan and Grants expenditure account
no. (60718830-69152) by the same amount In the FY 2016-17 budget, for the remaining First
Street Apartments project commitment and the Tiny Tim Plaza project conditional predoan
commitment. Both loans from the Low and Moderate Income Housing Asset Fund are estimated
to be fully expended in FY 2017-18, pending changes to the project schedules for both projects.
EXHIBIT 1
Discussion on Affordable Housing Development Projects, Approval of City Financial Assistance,
and Approval of Appropriation Adjustment
June 20, 2017
Page 8
Development Project
Housing
Successor
A enc Funds
Incluslonary
Housing Funds
Santa Ana Arts Collective
$2,900,000
First Street Apartments
$8,522,740
Tiny Tim Plaza
$4,700,000
,$1,300,000
Totals
$13,222,740
$4,200,000
The housing assistance payments for the Aqua Housing project (31 project based vouchers) are
expected to be $366,260 annually. The payments will not commence until the completion of the
project and tenant occupation of the units. Funds will be budgeted in future fiscal years in the
Housing Choice Voucher Program, Housing Assistance Payment account (no. 1361876069168)
for anticipated expenditure beginning in FY 2016-20.
RobertVort�
Acting Executive Director
Community Development Agency
APPROVED AS TO FUNDS AND ACCOUNTS:
Francisco Gutierrez WO
Executive Director
Finance and Management Services Agency
Exhibits: 1. Available Funds for Affordable Housing Development Projects
2. Restrictions and Uses of Funds
3. Development Schedules for Affordable Housing Projects
4. KMA Analysis for the Santa Ana Arts Collective
6. CSG Advisors Analysis for the Santa Ana Arts Collective
6. KMA Analysis for the First Street Apartments
7. CSG Advisors Analysis for the First Street Apartments
8. CSG Advisors Analysis for Tiny Tim Plaza
9. First Street Apartments project pre -loan commitment letter
10. Aqua Housing project award letter
11. Tiny Tim Plaza project conditional pre -loan commitment letter
EXHIBIT 1
Exhibit 1
Available Funds for Affordable Housing Development Projects
As of March 31, 2017
Housing Successor Agency (Housing Authority)
$14,602,716 Cash on Hand
($769,853) Reconciling amount (ROPE Projects)
($338,032) Habitat for Humanity Disposition and Deveioprnent Agreement
($250,000) Administrative Costs Allowance
$13,224,831 Available Funds
Incluslonary Housing Funds
$6,625,980 Cash on Hand 2
($2,061,381) Santa Ana Arts Collective Pre -Commitment loan & Associated Project Costs a
($98,594) Adminlstrative Costs Allowance (CDAiP6A)
$4,466,005 Available Funds (*Excludes $9,695,725.60 anticipated from Heritage Village)
HOME Program
$2,923,410 Funds to Drawdown
($2,260,000) Santa Ana Arts Collective Pre -Commitment Loan
($332,778) Community Housing Development Organizations (CHDO) Set -Aside °
$330,632 Available Funds to Drawdown
CDSG Program (Acquisition/Rehabilitation Projects Only) 5
$1,140,000 Funds to Drawdown
($500,000) Santa Ana Arts Collective Pre -Commitment Loan
$640,000 Available Funds to Drawdown
$ 18,661,468 Total Available Funds
' The Housing successor Agency ream on Walluhle cash elfulm him monitoring and compliance (undone misted to the famer Redeveopment Aga,oys housing loans.
a Includes S767,600peyment from the Ventana Welkprojeat(1506W. mistreat) waived In March Y017.
a Predoon amount Is $1,875,D00.
d Th. $332,778 lnctutlea emtla currently evenehla aenoled hi The February], 2017 CItyCounca Aga,da bm=An eddittonsf$171.771.00 Is estimated lnfulure funding.
I NI unencumbered funds at fatal yearend are aspected to be called over to the Umuni mpdated Balance for WEIG Captlal Projects In FYI7110.
80A-17
EXHIBIT 1
EXHIBIT 2
RESTRICTIONS AND USES OF AFFORDABLE
HOUSING FUNDS
Housing Successor Aaencv_(Housing Auth
The Housing Authority assumed the role of the Housing Successor Agency to the
former Redevelopment Agency when the Redevelopment Agency was dissolved in
February 2012, which includes the funds and properties in the Low and Moderate
Income Housing Asset Fund. Funds must be used to develop, acquire, rehabilitate,
acquire long-term affordability covenants for, or preserve lower Income housing (at or
below 80% of the area median income (AMI)).
At least 30% of the funds must be spent on extremely low income housing (at or below
30% AMI) and no more than 20% of the funds may be spent on housing for households
earning between 60-80% AMI. These requirements must be met over a 5 -year period. If
an agency fails to meet these requirements In any 5 -year period, at least 50% of the
funds in each fiscal year must be spent for extremely low income households until the
extremely low income target is met. If the agency exceeds the expenditure limits for
households earning between 60-80% AMI, the agency is prohibited from spending
funds on housing in that income range until the limit is met.
Units developed with these funds have the following affordability requirements: 55 -years
for rental units and 45 -years for for-sale/ownership units. Rent, affordable sales price
and income limits are determined by methodologies set by the State of California.
If the Agency has fulfilled all replacement, affordable housing production, and
monitoring, database compilation and web site publication requirements, it may spend
up to $250,000 per fiscal year on homeless prevention and rapid rehousing services.
InclusigPafv Housing Funds
The City's Inclusionary Housing Ordinance prescribes the use of the monies deposited
Into the Inclusionary Housing Fund, which are to "be used to increase and improve the
supply of housing affordable to Moderate, Low, Very Low and Extremely Low Income
Households in the City Funds shall be used In accordance with the City's Housing
Element, Consolidated Plan, or subsequent plan adopted by the City Council to
construct, rehabilitate, or subsidize affordable housing or assist other government
entities, private organizations, or Individuals to do so.
The Inclusionary Housing Fund may be used for the benefit of both rental and owner -
occupied housing, Eligible uses include, but are not Ilmited to, assistance to housing
development corporations, equity participation loans, grants, pre -home ownershlp co -
EXHIBIT 1
investment, pre -development loan funds, participation leases, or other public-private
partnership arrangements.
HOME Investment Partnerships Prouram (HOME) Funds
HOME eligible program activities include: (1) Homeowner Rehabilitation; (2) Homebuyer
Activities; (3) Rental Housing; and (4) Tenant -Based Rental Assistance (TBRA). For
affordable housing development, the City of Santa Ana provides HOME funds as a loan
to affordable housing developers, with a 3% interest rate for a 55 -year term repaid by
residual receipt payments.
HOME funds can be used for the following costs; new construction projects;
rehabilitation; reconstruction; conversion; site improvements; acquisition of property;
acquisition of vacant land; demolition; relocation costs; refinancing; capitalization of
project reserves; and project -related soft costs.
Prohibited activities and costs under the HOME program include: project reserve
accounts; TBRA for certain purposes; match for other federal programs; public housing;
acquisition of city -owned property; payment of delinquent taxes, fees, or charges; and
project -based rental assistance.
Requirements for HOME -funded projects include, but are not limited, to the following
requirements. HOME funds must be used for households at or below 817% AMI with
HOME rents determined annually by U.S. Department of Housing and Urban
Development (HUD). HOME -funded properties must meet certain minimum property
standards, which are outlined in the City's Property Standards. The HOME affordability
period is 5 to 20 years depending on the HOME assistance; however, the City's
affordability period is 55 -years for all rental projects. The City monitors these units
during the affordability period for compliance through on-site physical inspections,
review of tenant files and programmatic requirements, and annual reports. The City is
required to meet prescribed timeliness requirements to commit within 2 -years and
expend within 5 -years of receiving the HOME funds, Allocation of funds must go
through a competitive Request for Proposals (RFP) process per 24 CFR PART 85
Administrative Requirements for Grants.
CommunityDevetopment Block Grant (CDBG) Fun
CDBG eligible program activities related to housing include: (1) homeowner assistance;
(2) rental rehabilitation activities; (3) homeowner rehabilitation activities; (4) housing
services In connection with the HOME Program; and (5) acquisition of existing housing,
Prohibited activities and costs under the CDBG program, as related to affordable
housing development, includes: operating and maintenance expenses, and new
housing construction projects.
FORAM
R A
EXHIBIT 1
For multi -family rental housing, at least 51% of the units must be occupied by low- or
moderate -income households. Qualified households must have incomes at or below
80% of the AMI. All CDBG-assisted rental units must bring the properties up to local
codes and standards. The City monitors rental units through on-site physical
inspections, review of tenant files and programmatic requirements, and annual reports.
Allocation of funds must go through a competitive RFP process per 24 CFR PART 85
Administrative Requirements for Grants.
Project -Based Voucher (PBV) Funds:
Project -based vouchers are a component of a public housing authority's (PHA) Housing
Choice Voucher Program. A FHA can attach up to 20 percent of its voucher assistance
to specific housing units if the owner agrees to either rehabilitate or construct the units,
or the owner agrees to set-aside a portion of the units In an existing development.
Funding for project -based vouchers comes from funds already obligated by HUD to a
PHA under its annual contributions contract (ACC). The PHA can use up to 20 percent
of its housing choice vouchers for project based vouchers.
Under the tenant -based Housing Choice Voucher Program, the PHA Issues an eligible
family a voucher and the family selects a unit of its choice. If the family moves cut of the
unit, the contract with the owner ends and the family can move with continued
assistance to another unit, Under the project -based voucher program, a PHA enters
into an assistance'contract with the owner for specified units and for a specified term.
The PHA refers families from Its waiting list to the project owner to fill vacancies.
Because the assistance is tied to the unit, a family who moves from the project -based
unit does not have any right to continued housing assistance. However, they may be
eligible for a tenant based voucher when one becomes avallable. Allocation of funds
must go through a competitive RFP process per 24 § 983.51.
FOODMIKII
EXHIBIT 1
EXHIBIT 3
Santa Ana Arks Collective
Project Schedule
Milestone Date
9 City RFP Award 1.1/3/2011 J
Escrow Land Closing Date - - 1/11/2016
9% Tax Credit Avolication Submittal 6/28/2016
Estimated Tax Credit Partnership Closing 7/28/2017
Estimated Construction Completion 10/28/2018
80A-21
W/RGlril
EXHIBIT 3
First Street Apartments
Project Schedule
Milestone Date
f City Council Approval of Project Based Section 8 Vouchers 5/5/2015
Escrow Land Closing Date 8/31/2015
Estimated 9% Tax Credit Application Submittal 6/28/2017
Estimated Tax Credit Partnership Closing 2/28/2018
Estimated Construction Completion 9/1/2019
80A-22
EXHIBIT 1
EXHIBIT 3
Aqua Housing
Project Schedule
Milestone Date
City'1 FP Award of 25 Project Based Vouchers 4/4/2017
Planning Commission Approval of Entitlements 5/22/2017
Estiated 90%iax C edit A „plication Submittal 6/28 2017__
Estimated Escrow Land Closine 6/29/2017
Estimated Construction Start 2/15/2018
19
EXHIBIT 1
EXHIBIT 3
Tiny Tim Plaza
Project Schedule
Milestone slate
Estimated 44% TE Bond / LIHTC Award 12/13/2017
Estimated Construction Start 6/11/2018
• I .
>1rl{{,.>
KEYSER MARSTON ASSOCIATES,
ADVISOR& IN PUBLIC/PRIVATE REAL ESTATE DEVELOPMENT
MEMORANDUM
AWILOar INI
Real Eamm
To:
Judson Brown, Housing Division Manager
Redevelopment
Affordable Housing
City of Santa Ana
Economic Development
SAN PBAKISCO
A. Jerry Keyser
From:
Kathleen Head
TlmothyC Kelly
Tim Bretz
Kate Earle Rank
Debbie M. Kern
Reed T. Kzwahara
David Doezems
ec:
Natalie Verlinfch, Housing Programs Analyst
L05AN4rteS
Kathleen Fh Head
Date:
March 1, 2017
fames A. Rabe
Gregory A Soo -Hou
KevinE.Engsnom
Subject:
Santa Ana Arts Collective: FinanciaiGapAnalysls
Julie L. Romey
SAN 01060
Paul G More
EXHIBIT 4
At your request, Keyser Marston Associates, Inc. (KMA) prepared a financial gap analysis for the
Santa Ana Arts Collective project being proposed by Meta Housing Corporation (Developer).
The purpose of the KMA analysls is to quantify the maximum amount of Ill nonclal assistance
necessary to provide the proposed affordable housing units.
EXECUTIVE SUMMARY
The Developer acquired an existing office building located at 1666 North Main Street (Site) and
is proposing to convert the building through adaptive reuse into a 58 -unit apartment project
(Project). Fifty-seven (57) of the units will be subject to long-term income and affordability
covenants, and one unit will be provided to an on-site manager. The Developer proposes to
target a tenant population that consists of working artistfamilles.
Previous Financial Assistance Request
The Developer submitted an initial proposal for the Project in Fall 2015. In that proposal, the
Developer requested $4.64 million in financial assistance from the City of Santa Ana (City), KMA
reviewed the Developer's proposal and confirmed that the financial assistance request was
warranted by the Project economics at that time.
500 SOUTH GRAND AVENUE, SUITE 1480 Y LOS ANGELES, CAUrORNIA 0071% PHONE 293,622.8095
W W W.KEYSERMARSTON.COM
1709001:SNA:TRe
19090.014.007
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 2
Additional Financial Assistance Request
Between 2015 and the present, a numberof factors created an additional financial gap. The
Developer estimates this gap at $3.49 million. If the City fills this Increased gap, the City's total
financial assistance would be increased to $8.13 million.'
The Developer Is currently pursuing to options for obtaining Increased outside funding, If they
are successful, the unfunded gap will be eliminated, If additional outside funding cannot be
obtained, at a minimum, (MA recommends that the City require the Developerto defer or forgo
$600,000 of the $2.0 million Developer Fee that is Included In the Project budget. This would
decrease the Project's unfunded financial gap to opproximately$2.90 million. In that case, the
City's total financial assistance would equal approximately $7.54 million.
BACKGROUND
Outside Funding Sources
The fallowing outside funding sources are proposed to be used to finance the Project:
1. A conventional permanent loan;
2. The Federal 9% Low Income Housing Tax Credits (9% Tax Credits) that are competitively
awarded by the Calffornia Tax Credit Allocation Committee (TCAC); and
3. Funding from multiple programswithin the Affordable Housing and Sustainable
Communities Program (AHSQ administered by the California Department of Housing
and Community Development (HCD).
Reasons for Additional Financial Assistance Request
The Developer provided the following primary reasons for the unfunded financlal gap:
Development Cost Increases
The total development costs in the Developer's Fall 2015 proposal were estimated at $26.56
million. The Developer is currently estimating the total development costs at $34.18 million,
' it is our understanding that the City has not determined the specific breakdown of City funds
that would be utilized to fulfill the Developer's financial assistance request.
17030019NA:TRB
19090.014.007
Le ' • TJ
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 3
which equates to an approximately $7.6 million increase In development costs. The Developer
provided the following reasons for the increase in development costs;
1. The Project Includes the acquisition of an existing office building that was 50% occupied
at the time of purchase. Many of these tenants had termination options in their leases,
which the Developer did not anticipate. Relocation costs were underestimated by
approximately $828,000.
2. The AHSC Program is requiring a $1.29 million bike lane as a part of the funding
commitment that was not Included In the original proposal. However, Itis importahtto
note that the AHSC Program is providing a $1.29 million grant to off -set these costs.
31 The scope of construction necessary to convert the existing office building Into a
residential use was underestimated in the original proposal.
4. Labor and materials costs have Increased slgnlficantly over previous years, Asa result,
current cost estimates are substantially higher than the cast estimates obtained for the
original proposal. KMAconcurs with statement.
Tax Credit Equity Rate Decreases
Due to uncertainties related to prospective corporate tax changes, the financial markets are
currently experiencing substantiafvolatility, This uncertainty is creating direct impacts on the
Tax Credit equity markets, both In terms of demand and pricing. Given this uncertainty, Tax
Credit equity rates have dropped significantly.
The Project was previously assuming a Tax Credit equity rate of $1.07 per gross Tax Credit dollar.
Currently, the Developer is estimating the Tax Credit equity rate at $0.99 per gross Tax Credit
dollar. This estimate Is validated by the fact that the majority of the projects that KMAis
currently reviewing are estimating Tax Credit equity rates between $0.95 to $1.00 per grass Tax
Credit dollar.
AMSC Program Requirements
Affordability Mix
To be more competitive for the AHSC Program, the Developer altered the affordability mix of
the original proposal to include a larger number of units restricted to extremely -low and very -
low income households. This decreased the Project's not operating Income, which in turn,
decreased the conventional permanent loan that could be supported by the Project.
1703001:SNATa6
19090.014,007
80A-27
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page
RX, Ral •.t_u
In October 2016, the Developer was awarded $7.80 million in capital funds from the AHSC
Program. However, AHSC Program Loan Limits are primarily based on the type of Tax Credits
utilized, and 9% Tax Credit projects must utilize lower loan limits than 4% Tax Credit projects.
When the Project was awarded 9% Tax Credits in November 2016, the AHSC award was reduced
by approximately $3 million — from $7.80 million to $4.90 million.
POTENTIAL FUNDING SOURCES FOR THE UNFUNDED FINANCIAL GAP
Additional Funding Sources
The Developer Is pursing two options to obtain additional funding from outside funding sources.
If the Developer is successful with eitherof the two outside funding options, It is anticipated
that the Project will not exhibit an unfunded financial gap. As such, the Developer would not
request additional funds from the City. The two options being pursued areas follows:
9% Tax Credit1496 Tax Credit Hybrid structure
The volatility in the Tax Credit markets, and the subsequent drop in Tax Credit equity rates, have
created additional financial gape for many Tax Credit projects. To mitigate this loss, TCAC is
proposing to create a 9%/4% Hybrid Structure to help fund a portion of impacted projects'
financial gaps, This structure requires the developer to subdivide or legally separate a project
Into two separate projects with one project receiving the awarded 9% Tax Credits and the other
project receiving a new award of 4% Tax Credits. The creation of a separate 4% Tax Credit
project generates additional Tax Credit equity. However, this structure has never been
undertaken before, and thus, there are many uncertainties regarding its viability.
The AHSC award also creates potential Impediments to using this proposed hybrid Tax Credit
structure. The Developer is corresponding with HCD regarding the following issues:
1. Given that the Project would need to be legally separated Into two projects, the AHSC
award would also need to be separated. HCD has no programmatic process to
accomplish this, and is uncertain if they have the flexiblllty to implement a new process.
2. HCD will require separate deeds of trust for the 9% project and the 4% project. The
Developer's legal counsel advised that It may be difficult to obtain approval of this
structure from HCD's legal counsel.
The Developer has not yet obtained a definitive answer from HCR as to whetherthis is a viable
option. If the Developer can pursue this structure, it is likely that it will produce sufficient
17030011MA:7a6
19080,014.007
FO •
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page S
additional financing to fill the Project's unfunded financial gap, In that case, the Developer
would not need any additional financial assistance from the City.
If it is determined that this structure Is viable, KMA recommends re -analyzing a more finalized
version of the Developer's pro forma to ensure that the City's previous financial assistance
package is still warranted by the Project economics.
Increase In AHSC Program Funds
As discussed above, the Developer was required to utilize 9% tax Credit Loan Limits, and
subsequently reduce the amount of the original AHSC award. However, due to the decrease in
Tax Credit equity rates being experienced by all Tax Credit projects, the Developer is working
with HCD to allow the Project to use the higher 4% Tax Credit Loan Limits ratherthan the 9% Tax
Credit Loan Limits. If HCD approves this request, the Project will not require additional funds
from the City.
No Additional Outside Financial Assistance
Given the uncertainty of successfully obtaining additional funding through either of the two
options outlined above, the Developer is requesting $3.49 million in additional finaWei
assistance from the City.
Developer Proposal
KMA analyzed the information provided by the Developer, and prepared a financial gap analysis
for the Project, The following table compares the KMA and Developer financial gap estimates
based on the assumption that no additional outside funding sou rtes are available:
Developer
KMA
Difference
Total Development Cost $34,178,000
$34,145,000
$33,000
Available Funding Sources 30,687,000
90,694,000
{$7,000}
Unfunded Financial Gap $3,491,000
$3,451,000
$40,000
As shown in the preceding table, based on the Developer's proposal, KMA estimates the
Project's unfunded financial gap at $3.45 million. Comparatively, the Developer is requesting
$3.49 million In additlonal financial assistance from the City. This equates to a $40,000, or less
than 1% differential, which can be considered inconsequential,
1703001;SNAIRO
19090.014.007
• ' A •
LF
Judson Brown, qty of Santa Ana March 1, 2017
Santa Ana Arts Coliective: Financial Gap Analysis page 6
KMA Recommendatlon
The Project's budget Includes a $2.0 million Developer Fee, which Is the maximum amount
allowed for 9% Tax Credit transactions. If the Developer is unable to obtain additional outside
funding, KMA recommends that the City require the Developer to defer or forgo the $600,000
component of this Fee that exceeds the $1.40 million that can be included in the Project's Tax
Credit eligible basis. This would decrease the Project's unfunded financial gap to approximately
$2.90 million.
The City previously committed $4.64 million to the Project. If the City grants the Develeper's
request for $3.49 million In additional financial assistance, the City assistance package would
total $8.13 million. If the City requires the Developer to defer or forgo $600,000 of the
Developer Fee, the City's assistance would total $7.54 million.
PROJECT IDESCRI PTION
The proposed scope of development can be described as follows:
1. The Site is comprised of 1.0 acre, or43,560 square feet of land area.
2. The 58 -unit Project represents a density of 58 units per acre,
3. The Project's unit mix is as follows:
4. The existing building Is five stories In height and consists of approximately 66,800 square
feet of gross building area (GBA).
S. The existing building contains a 142 -space subterranean parking garage.
6. The Project's proposed affordability mix is as follows:
1703001SNA:T11B
19090.014.007
FO R
Number of
Unit Size
Units
(SF)
One -Bedroom Units
26
550
Two -Bedroom Units
15
871
Three -Bedroom Units
17
1,252
Total / Weighted Average
58
839
4. The existing building Is five stories In height and consists of approximately 66,800 square
feet of gross building area (GBA).
S. The existing building contains a 142 -space subterranean parking garage.
6. The Project's proposed affordability mix is as follows:
1703001SNA:T11B
19090.014.007
FO R
A": ai
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 7
Low HOME/ AHSC/Tax Credit@ 30% Median
20
Low HOME/ AHSC/Tax Credit@ 35% Median
6
Low HOME / AHSC f Tax Credit @ 40% Median
6
Low HOME/AHSC/Tax Credit @ 60% Median
25
Unrestricted On -Site Manager's Unit
1
Total Units
58
FINANCIAL GAP ANALYSIS
KMA prepared pro forma analysis to assist in evaluating the Developer's proposal assuming that
no additional financial assistance from outside funding sources can be obtained. The analysis is
located at the end of this memorandum, and is organized as follows:
Table 1:
Estimated Development Costs
Table 2:
Stabilized Net Operating Income
Table 3:
unfunded Financial Gap Calculation
Estimated Development Costs (Table 3)
KMA reviewed the Developer's development cost estimate, and then Independently prepared a
pro forma analysis for the Project. The development cost estimates used in this analysis are as
follows:
Property Assemblage Costs
The following summarizes the property assemblage costs:
1. The purchase price for the Site was $7.20 million. The Developer submitted an appraisal
prepared by BC Valu on August 21, 2015 that estimated the market value of the Site at
$7.15 million, which is approximately equal to the purchase price.
2. The building was approximately 50% occupied with office tenants when it was acquired
by the Developer, and the Developer initially estimated the relocation costs for these
tenants at $782,000. However, the Developer has since stated that there are lease
270300LSNA:r11a
19090,034.007
80A-31
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page
termination options that were understated by the Developer's appraiser. The
Developer currently estimates these costs at $1.61 million.°
3. The Developer included $30,000 In closing costs.
The total property assemblage costs are estimated at $8.84 million.
Direct Casts
The direct costs estimates assume thatthe Project will be subject to prevailing wage
requirements. The direct costs applied In this analysis can be summarized as follows:
1. The Developer estimates the AHSC infrastructure costs at $1,29 m1111on.
2. The Developer estimates the Clty-required off-site improvement costs at $1.13 million.
City staff should verify the scope and accuracy of the off-site improvements required to
serve the Project.
3. The Developer did not include a specific line Item estimate for on-site improvement
costs. It is assumed these costs are included in the residential building costs line Item.
4. The Developer estimates the residential building costs are estimated at $207,100 per
unit, or $12.01 million.
5. The Developer Included a $275,000 allowance for furnishings, fixtures and equipment.
6. A 10% allowance for contractorfees and general requirements is provided.
7. An allowance for construction bonds / general liability insurance at 2% of construction
costs Is provided.
8. A direct cost contingency allowance equal to 5% of other direct costs Is provided.
KMA estimates the total direct costs at $17.26 million. This equates to $297,500 per unit.'
a The Developer provided a breakdown of ralocatlon payments that total $1.41 million. KMA assumes
that the additional $200,000 in costs are related to administering relocation activities.
a The Developer originally provided Independently prepared cost estimates that range from $12.81 to
$15.13 million for off -sites, building, contractor and insurance costs. The Developer currently estimates
these costs at $14.36 million, however, contractors' bids have not yet been obtained for the Project,
1703001;5NA:TRa
19090.014.007
80A-32
EXHIBIT 1
Judson [crown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 9
Indirect Costs
KMA utilized the following assumptions In estimatingthe indirect costs:
1. The architecture, engineering and consulting costs are estimated at 10% of direct costs,
2. The Developer estimated the public permits and fees costs at $1.40 million, or$24,080
per unit. City staff should verify the accuracy of this estimate.
3. The taxes, Insurance, legal and accounting costs are estimated at 3% of direct costs.
4. An approximately $1,000 per unit allowance for marketing and leasing costs is provided.
5. The Developer Fee is set at $2.0 million, which is the maximum amount allowed for the
Project by TCAC,
6. An Indirect cost contingency allowance equal to 5%of other indirect costs is provided.
KMA estimates the total Indirect costs at $5,99 million,
Financing Costs
The financing costs for the Project are estimated as follows:
1. The Developer estimates the Interest costs for the acquisition/ predevelopment loan at
$617,000, This estimate is based on a $6.04 million loan amount, a 15 -month
predevelopment period, an 18 -month construction period, and a 5% interest rate,
2. The interest costs on the construction loan are estimated at $855,000. These costs are
based on the following assumptions:
a, The construction period Interest costs are based on a 3.52% interest rate, an 113 -
month construction period, and a 60% average outstanding balance.
b. The absorption period Interest costs are based on a three-month absorption
period and a 100% average outstanding balance.
3. The financing fees are estimated at $349,000, and are based on 1.50 points for the
construction and permanent loans.
1703001:5NATRB
39090.094.007
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 10
4, A $146,000 capitalized operating reserve Is provided. This equates to three months of
operating expenses and debt service payments on the permanent loan supported by the
Project's income.
S. The Tax Credit fees are estimated at $97,000 based on the following:
a. A $2,000 application fee;
b, A $410 per unit monitoring fee; and
C. Four percent (4%) of the gross Tax Credit proceeds for one year.
KMA estimates the total financing costs at $2.06 million,
Total Development Costs
As shown in Table 1, KMA estimates the total development costs at $34.13 million, which
equates to approximately $588,700 per unit. In comparison, the Developer estimates the total
development costs at $34,18 million, or $589,300 per unit. This equates to a less than 1%
differential, which can be considered Inconsequential,
Stabilized Net Operating Income
The Project's funding sources are likely to include City Housing Opportunity Ordinance (HOO) in -
lieu fees, HOME Program funds, CDSG funds, AHSC funds, and 9% Tax Credits. The Project's
income and affordability standards must comport with the most stringent of the following
standards;
1. income Restrictions: The tenants' household incomes cannot exceed the strictest of:
a. HOME Program income restrictions as defined under United States Code, Title
26, Section 142(d)(2)(B),
b. Federal Low Income Housing Tax Credits income restrictions defined under
United States Code, Title 26, Section 142(d)(2)(B).
2. Affordability Restrictions; Rents applied to all the units must reflect the most stringent
of.-
a.
f:
a. HOME Program rents published annually by HUD; and
b. Tax Credit rents published annually by ICAC,
17030015NAma!
19090,014.007
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis page 11
Achievable Rent Income
The rents used in this analysis are based on 2016 Information published by ICAC and the HOME
Program. The maximum allowable rents, net of the appropriate utility allowances, are
estimated as follows:'
'The monthly utility allowances are estimated at: $42 for one -bedroom units; $52 for two-bedroom units;
and $79 for three-bedroom units.
1703001:5NA:TRB
19090.014.007
FO '
One-
Two-
Three -
Bedroom
Bedroom
Bedroom
Rent Restriction
Units
Units
Units
Low HOME / TC @ 30% Median
HOME Rents
$872
$1,045
$1,188
TCAC Rents
$506
$606
$681
Applicable Rents
$506
$606
$681
Low HOME/TC @ 35% Median
HOME Rents
$872
TCAC Rents
$598
Applicable Rents
$558
Low HOME /TC @ 40% Median
HOME Rents
$872
TCAC Rents
$689
Applicable Rents
$689
Low HOME/TC @ 60% Median
HOME Rents
$1,395
$1,584
TCAC Rents
$1,265
$1,442
Applicable Rents
$1,265
$1,442
'The monthly utility allowances are estimated at: $42 for one -bedroom units; $52 for two-bedroom units;
and $79 for three-bedroom units.
1703001:5NA:TRB
19090.014.007
FO '
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 12
KMA estimates the Project's gross residential income at $639,100, which Includes laundry and
miscellaneous Income averaging $10 per unit per month. After applying a 5% vacancy and
collection allowance, KMA estimates the resulting effective gross income at $607,100.
The residentlal operating expenses are estimated as follows:
1. Based on the Developer's estimates, the general operating expenses are estimated at
$5,990 per unit per year.
2. KMA assumes the Developer will apply for the property tax abatement that is accorded
to non-profit housing organizations that own and operate low Income apartments. The
Developer estimates the property tax assessment overrides at $2,500 per year.
3, The Developer estimates the social services costs at $40,000 peryear.
4. The AHSC Program requires mandatory annual debt service payments equal to .42%of
the Affordable Housing Capital Loan amount. The annual debt service payment is
estimated at $20,800 based on a $4.94 million loan amount.
51 The annual capital replacement reserve deposit is estimated at $600 per unit peryear,
which is assumed to be a requirement of the AHSC Program.
As shown In Table 2, the residential operating expenses are estimated to total $445,500, or
approxlmateiy$7,680 per unit. When the Project's effective gross Income Is reduced by the
residential operating expenses, KMA estimates the stabilized net operating income at $161,600.
Available Funding Sources
The avallable funding sources committed to the Project can he described as follows:
Conventional Permanent Loan
To estimate the maximum permanent loan that can be supported by the Project's stabilized net
operating Income, KMA assumed that the loan would be underwritten at a 117% debt service
coverage ratio, a 5,6596 interest rate, and a 35 -year amortization period. Based on these
assumptions, KMA estimates that the $161,100 In stabilized net operating Income can support a
$2,10 million permanent loan.
Tax Credit Proceeds
in November 2016, the Project was awarded gross Tax Credits with a value of $17.90 million
paid out over a 10 -year period. These Tax Credits are sold on the secondary market, and the net
1703001:5NAINIS
19099,014407
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 13
syndication value Is ultimately determined based on competitive market conditions and on the
timing of the disbursements. Based on currently available information, KMA and the Developer
estimate the proceeds at $0.99 per gross Tax Credit dollar. As such, the total net Tax Credit
proceeds are estimated at $17.70 million.
AMSC Program Funds
The Developer received a total of $6.26 million in funding from the AHSC Program. The specific
sources for these funds are as follows:
1. A $4.94 million AHSC Affordable Housing Capital Loan;
2. A $1.29 million AHSC Sustainable Transportation Infrastructure (STI) Grant; and
3. A $23,000 AHSC Program Activities (PRG) Grant.
Deferred Developer Fee
The Developer did not include a deferral of any portion of the Developer Fee as a funding source
forthe Project. However, KMA does not agree with this assumption, which Is discussed
subsequently in this memorandum.
Previous City Commitment
The City previously committed to provide $4.64 million In financial assistance to the Project.
Total Avallabie Funding Sources
As shown In Table 3, KMA estimates the total available funding sources at $30.69 million.
Unfunded Financial Gap Calculation
Based on the assumptions outlined In this analysis, KMA estimates the Project's financial gap as
follows:
Total Development Costs
$34,145,000
(Less) Total Available Funding Sources
(30,694,000)
Unfunded Financial Gap
$3,451,001)
Per Unit
$59,500
1103001:SNA7Pa
1990.014.007
80A-37
EXHIBIT 1
Judson Brown, City of Santa Ana March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis page 14
The Developer is requesting $3.49 million in additional fin anclal assistance from the City, which
is $40,000 more than the unfunded financial gap Identified in the KMA financial analysis. This
less than 1% differential can be considered inconsequential. As such, KMA concludes that the
Developer's request for $3.49 million In financial assistance is warranted by the Project
economics under the following assumptions:
1. No additional financial assistance from outside funding sources Is available, and
2. The City does not require the Developer to defer any of the Developer Fee Included in
the Project's budget.
Deferred Developer Fee
Under the TCAC regulations, the proposed Project can include a Developer Fee of up to $2.0
million in the Project's budget. However, for 9% Tax Credit projects, TCAC only allows up to
$1.40 million of the Developer Fee to be included in the Project's eligible Tax Credit basis, As
such, any amount of Developer Fee above $1.40 million does not generate Tax Credit equity for
the project, and unless this portion of the Developer Fee Is deferred, it directly adds to the
Project's financial gap,
Given the Developer's request for additional financial assistance from the City, KMA
recommends that the $600,000 of the total $2.0 million Developer Fee (the amount above $1.40
million) be deferred and repaid out of the Project's cash flow, or be given up by the Developer.
This requirement would decrease the unfunded financial gap to approximately $2.90 million,
which Is approximately $600,000 less than the Developers additional financial assistance
request.
It should be noted that the IAS requires the deferred Developer Fee to be repaid within 15 years.
If the total deferred Developer Fee is not repaid within 15 years, there will be tax ramifications
for the limited partnership that purchased the Tax Credits. KMA estimates that the Project's
cash flow supports the repayment of approximately $198,000 during the first 15 years. Thus,
the Developer may decide to do one of the following:
1. Set the Developer Fee at $2.0 million, and defer $600,000 of that Fee. In this case the
Developer and limited partner would be taking the risk that the full amount of the
deferral will not be able to be paid from the Project's cash flow within 15 years, That
will trigger tax consequences unless the Tax Credit Investor and/or the Developer stepin
to fund the shortfall.
1703001u5NAMO
19090.014.007
FOODIMFOO
Judson Brown, City of Santa Ana
EXHIBIT 1
March 1, 2017
Santa Ana Arts Collective: Financial Gap Analysis Page 15
2. Set the total Developer Fee at $1,588,000, and defer $188,000 of this amount. In this
case, it Is projected that sufficient cash flow will be generated within 15 years to repay
the entire deferred amount.
CONCLUSIONS
The following summarizes the conclusions KMA has derived from the preceding analysis:
1. KMA recommends that the City require the Developer to pursue additional financing
from the outside funding sources prior to approving the Developer's additional financial
assistance request. The two options Identified are:
e. Pursue TCAC's 9916/4% Hybrid Structure; and
Pursue utilizing the AHSC 4% Tax Credit Loan Limits instead of the lower AHSC
9% Tax Credit Loan Limits.
2. If the Developer Is unable to obtain additional outside funding, KMA estimates the
Project's unfunded financial gap as follows:
a. KMA recommends that the City require the Developer to defer or forgo
$600,000 of the Developer Fee included In the Project's budget, This would
decrease the warranted additional financial assistance to $2.90 million.
b. If the City does not require the Developer to defer or forgo $600,000 of the total
Developer Fee, the Developer's request for $3.49 million in additional financial
assistance would be warranted by the Project economics.
The City should require the Developer to produce the following documents priorto the
disbursement of any City funds:
The Developer should be required to produce formal contractors' bids for the
currently proposed scope of development.
b. The Developer estimated that the Project could support a $2.09 million
permanent loan. This is based on a 1.17 debt service coverage ratio and lower
than typical projected increases in managementfees and social services costs.
The Developer should be required to provide evidencethat $2.09 million in
permanent loan funds have been committed to the Project.
vosoaa-SNA:raa
19090or4.007
EXHIBIT 1
TABLE 1
ESTIMATED DEVELOPMENT COSTS
DEVELOPER PROPOSAL: $20 MILLION DEVELOPER FEE WITH NO DEFERRAL
SANTA ANA ARTS COLLECTIVE
SANTA ANA, CALIFORNIA
1. Property Assemblage Costs
Property Acquisition Costs
a
43,560 Sf Land
$165
/Sf Land
$7,200,000
Relocation Costs
s
11610,000
Closing Costs
0.4% Purchase Price
80,000
Total Property Assemblage Costs
$8,840,000
O, Direct Costs
s
AHSC Infrastructure Costs
$1,288,000
Off -alta Improvements
1,126,000
On•alte Improvements
43,560 Sf Land
$0
/Sf Land
0
Residential Adaptive Reuse Costs
d
58 Units
$207,100
/Unit
12,012,000
Furnishings, Fixtures & Equipment
275,000
Contractor Fees/General Requirements
10% Construction Costs
7.,443,000
Construction Bonds
2% Construction Costs
289,000
Contingency Allowance
5% Other Direct Costs
$22,000
Total Direct Costs
S8 Units
$297,500
/Unit
17,255,000
III. Indirect Costs
Arch, Eng, Consulting & Construction Mgt
10% Direct Costs
$1,726,OD0
Public Permits & Fees
5
58 Units
$24,080
/Unit
1,397,000
Taxes, Insurance, Legal & Accounting
3% Direct Costs
518,000
Marketing & Leasing
58 Units
$1,034
/Unit
60,000
Developer Fee
s
8% Eligible Basis
2,000,000
Contingency Allowance
5% Other Indirect Costs
285,000
Total Indirect Costs
$519861000
IV, Ffnancing Casts
Interest During Construction
Predevolopment Loan
7
$617,000
Construction Loon
s
$21,128,000 Loanpmount
3.52%
Interest
855,000
Flnandng Fees
Construction Loan
$21,128,000 Loon Amount
150
Points
317,000
Permanent Loan
$2,100,000 Loan Amount
7.50
Points
32,000
Operating Reserve
3 Months Operating Expenses/Debt Service
146,000
TCAC Fees
'
97,000
Totd Financing Costs
$2,064,000
V.
Total Construction Costs
58 Units
$436,300
/Unit
25,305,000
Total Development Costs
$8 Units
$588,700
/Unit
$34,1419,000
r An appraisal prepared an August 21, 2015 by BC Valu estimates the fair market value of the property at 7,150,000.
2 Based on Developer estimate. A relocation plan was not provided far review.
' Estimates assume prevailing wage requirements will be Imposed on the Project,
4 Based on Developer estimate. A physical needs assessment or contractor's bid was not provided for review.
' Based on Developer estimate. The estimate should be verified by City staff.
This is the maximum amount allowed to be Included in the Project by TCAC.
Based on Developer estimate,
' Includes debt on the 80% of the Tax Credit Equity which will not be funded during construction Assumes an 18 -month construction period with a
60% average outstanding balance and a 3 -month absorption period with a 100% average outstanding balance.
Includes a $2,ODO application fee; $410/unit monitoring fee; and 4% of the gross Tax Credit proceeds for one year,
Pmpored by; Keyser Marston Assodates, Inc.
Filoname: Mata_2 2617; PF 9%; trb
1:*AVMII: to
TABLE 2
STABILIZED NET OPERATING INCOME
DEVELOPER PROPOSAL: $2.0 MILLION DEVELOPER PEE WITH NO DEFERRAL
SANTA ANA ARTS COLLECTIVE
SANTA ANA, CALIFORNIA
I. GcRall oill entlal lneame`
Manager's Unit
1
Unit
$0
/Unit/Month
$0
Law HOMEIAHSC/TC 60 30%Median
1 -Bedroom Units @ (550-Sf)
14
Units
$506
/Unit/Month
85,000
2 -Bedroom Units @ (871-59
2
Units
$606
/Unit/Month
14,500
3 -Bedroom Units @ (1,252.51)
4
Units
$681
/Unit/Month
82,700
Law HOME/AHSCITC fat 3546 Median
1 -Bedroom Units @ (SSD.Sf)
6
Units
$598
/Unit/Month
43,100
Low HQME/6115C/7C @ 40% Median
1-Badroom Units@ (550-50
6
Units
$609
/Unit/Month
49,600
High HOME/AHSCITC is 6096 Median
2 -Bedroom Units @ (871-Sf)
12
Units
$1„265
/Unit/Month
182,200
3 -Bedroom Units @ (1,252Sf)
13
Units
$1,442
/Unit/Month
225,000
Laundry/Miscellaneous Income
58
Units
$10
/Unit/Month
7,000
Gross Base Income
$639,100
(Less) Vacancy & Collection Allowance
5%
Gross Base l ncome
(32,000)
Effective Gross Base Income
$607,100
II. Ooeratlns Exnenses
General Operating Expenses
58
Units
$5,990
/Unit
$347,400
Property Taxes
58
Units
$43
/Unit
2,500
Services
58
Units
$690
/Unit
40,000
HCD Required Debt Service
0.42%
AHSC Loan Amount
20,800
Replacement Reserve
58
Units
$600
/Unit
34,800
Total Operating Expenses
$445,50D
ill. Net Operating Income 161,600
s Based on Orange County Incomes distributed by HUD/HCI). As pertinent, the rents are based on those published In 2016 by TCAC, and the HOME
Program. Utility Allowances per the Developer: $42 for 1-Bdrm units; $52 for 2-Bdrm units; and $79 for 3-Bdrm units.
' Based on Developer estimate. Assumes that the Developer will receive the property tax abatement accorded to non-proflt housing organizatlons
that develop Incoms-restricted apartments.
Prepared by; Keyser Marston Associates, Inc.
rilenama; Meta_22617; PF_9%; Irb
EXHIBIT 1
TABLE 3
FINANCIAL GAP CALCULATION
DEVELOPER PROPOSAU $2.0 MILLION DEVELOPER FEE WITH NO DEFERRAL
SANTA ANA ARTS COLLECTIVE
SANTA ANA, CALIFORNIA
1. Available Funding Sources
Permanent Loan
Net Operating Income
r $161,600 NOI(See Table 2)
Income Available for Mortgage
1.17 DCR
$137,800 Debt Service
IntarastRate
5.65% Interest Rate
6.56% Mortgage Constant
Permanent Loan
$2,100,000
Tax Credit Eouity
°
Gross Tax Credit Valu a
$17,908,000
Syndication Rete
$0.99 /Tax Credlt Pollar
Net Tax Credit Equity
$17,704,000
AHSC Affordable Housing Capital
a
$4,444,000
ANSC STI
a
$1,288,000
AHSC PRG
s
$23,DDD
Deferred Developer Fee
a
$0
City of Santa Ana Commitment
$4,635,000
Total Available PUnd1n95ourc®9
$30,694,000
11. Unfunded Financial Gqp Calculation
Total Available Funding Sources
$30,694,000
(Less) Total Development Costs
(94,145,000)
Unfunded Financial Clap $3,451000
t Assumes a 35 -year amortization term.
1 Assumes an $15.9 million requested unadjusted eligible basis, which includes a $776,000 million voluntary basis reduction, a 130% difficult -to -
develop premium, a 9.0% Tax Credit rate and an applicabte fraction of 100%,
a 8asedon0eveloperestimate.
Prepared by: Keyser Mardon Associates, Inc,
Fllaname: Ma1a_22SI7;PF_0%;Irb
EXHIBIT 1
EXHIBIT 5
CSG j advisors I Post Street, Suite 575
Son Francisco, CA 94104
tel. 415,956.2454
Memorandum
To: Judson Brown, City of Santa Ana
From: John Hamilton, CSG Advisors
Dates May 9, 2017
Re: Santa Ana Arts Coffective Financial Feasibility Review
SUMMARY
Project Overview and the Proposed
Meta Housing proposes to develop the Santa Ana Arts Collective (the "Project"), a 58 -unit adaptive reuse
of a mid -rise building located In the City of Santa Ana (the "City"). The Project would target artists, and
would be affordable to Individuals and families earning from 30% AMI to 60% AM].
The Proposed Financl
The Developer proposes to finance the Project though funds committed through the California Housing
and Community Development's (HCD) Affordable Housing and Sustainable Communities (AHSC)
program, equity from the syndication of 9% federal Low Income Housing Tax Credits (LIHTC), and funds
from the City of Santa Ana. The Project has received an allocation of 9% LIHTC from the California Tax
Credit Allocation Committee (CTCAC) in the annual amount (for 10 yrs) of $1,790,841; a commitment of
$4,635,000 from the City of Santa Ana; and $6,254,630 of funds from AHSC,
The Developer has secured senior lender commitments from Wells Fargo (as construction lender) and
CCRC (as permanent lender).
Conclusion
The Project, as analyzed using most recent CTCAC rents and certain budget modifications as proposed
by CSG, demonstrates a financial shortfall of ($1,481,215). The City may choose to fill this financing deficit
on behalf of the Developer, or require the Developer to pursue other sources.
PROJECT FINANCIAL ANALYSIS
Project Description
Meta Housing (the "Developer"), an experienced developer of affordable housing, proposes an
"adaptive reuse" of an existing mid -rise office building. The Project, the Santa Ana Arts Collective, is
located at 1666 North Main Street, in Santa Ana. The Developer proposes to convert the building to 58
units (57 affordable units plus 1 unrestricted manager's unit). The Developer proposes to finance the
Project with an allocation of 9% low-income housing tax credits (LIHTC), committed funds from the City,
end committed funds from HCDs AHSC program.
The Developer proposes to target artists as the building's primary residents.
The Project would contain affordable units as indicated in Table 1, below.
SAN FRANCISCO ATLANTA 8 ANGELES > NEW YORK
EXHIBIT 1
Judson Brown, City of Santa Ana
May 9, 2017
Santa Ana Arts Collective Financial Feasibility
Pape 2 of 5
Table 1: Proposed Units and Affordability
Restriction (AMI) 1 -Dgdrpom 2•aedroom 3„Taedmom
30% AM( (flaw HOME*) 5 2 4
LOW
11
30°%AM]
9
9
35% AM[
6
6
40% AMI
6
6
60% AMI
12 13
25
Manager's Unit
I
1
Total
26 1s 17
58
* These HOME units will be "floating"I.e., not assigned to specific units
Request for Funds
In addition to the $4,635,000 funds already committed by the City, the Developer has requested
addltlonal City financing to eliminate an expected financing deficit. The Developer's budget Indicates a
financing deficit of approximately $3,500,000.
Financial Plan Ana
We have focused our analysis on a review of the Project's sources and uses in the context of the Project's
proposed 9% tax credit financing. Table 2, below, provides a consolidated form of the Developer's
budget, and modifications proposed by CSG. In creating this analysis and variance, we have used the
Developer ,'s assumptions (except, as noted) and modeled the Project using the CTCAC application form
applicable to the existing credit reservation, updating where necessary (e.g„ 2017 rents),
Table 2: Variance Analysis of Developer's Budget
USES
8udaet Item Developer CSG Variance gxplanotion of Variance
Total Land CosWalus
$7,230,000
$7,230,000
$0
Total Acquisition Cost
$2,413,522
$2,413,522
$a _
Total New Construction Costs _ _ _
_ $13,236,620
$13,236,620
$0
Total Architectural Costs
$830,000
$830,000
_
$0
Total Survey and Engineering
$800,000,$800,000
$o
Total Constructlon Interest and Fees
$1 A67,534
$1,467,534
$0
Total Permanent Financing Costs
$30,934
$37,095
^_
$6,161 origination fee for higher loan amount
Total Attorney Costs
$205,001
_ $205,001
$0
Total Reserve Costs
$140,564
_
$140,564
$0
Total Appraisal Costs
$5,700_
$5,700
$0
Total Contingency Cost
$1,330,262
$1,330,262
$0
CSG Iadvisors SAN FRANCISCO
LOS ANGELES NEW YORK
EXHIBIT 1
Judson Brown, City of Santa Ana
May 9, 2417
Santa Ana Arts Collective Financial Feasibility
Page 3of5
Table 2: Variance Analysis of Developer's Budget (Cont.)
Budget Item
Devalaoar
,{;,$,G,
Varl—an ca
HxoleMtlen of Variance
Developer has provided documentation
CCRC
$2,093,389
$2,709,532
$616,143
supporting $1,486,811 of Relocation wets,
Clty of Santa Ano —
--� $4,635,000
$4,635,000
$0
rather than the $1,610,00 Included In the
AHSC
$22,500
$22500
$0
budget. We have therefore reduced the
Total Other Costs
14ALS627
$4.365.435
($123,189)
Relocation by the difference (i.e.,$123,1$9)
Subtotal Development Costs
$32,178,764
$32,061,736($119_,028)
$0
Cevald rOverhesd/Pro$t
1)0.00
$2,000,01V
$0
Correction of deferred fee to net present
I,TatalProProject Coat
$34,175,744,
$34,061,736'__
($ 94&55
value of maximum 1 S•year cash flaw
Federal Tak Credit Equity _ $17,704,254 17 .163 11417 $7developer _ _
rTotal Sources -_ --$34,178,757____ $32,580,522 ($1,364,180)_ __^_ ____ _ ____ _ ,__ _4I
.,FINANCING GAP. _ �a .... ($7)_` ($1,481,215}
Discussion ofTpb„I,e 1
The "Uses" portion of Table 1 shows the Developer's budget, contrasted with necessary modifications
proposed by CSG.
Total Permanent Financing Costs: The Developer's budget reflects origination fee of 1 % (per CCRC
term sheet) of a permanent loan amount of $2,093,389. We have adjusted the fee to reflect a loan
amount of $2,709,532 (reflecting higher 2017 restricted rents as publlshed by CTCAC), The loan
amount reflects;
Debt
mladvlsors SAN FRANCISCO LOS ANGELES NEW YORK
Increase loan amount assuming 2017 CTCAC
rents and underwriting rate of 5.65%
CCRC
$2,093,389
$2,709,532
$616,143
(conaistent with CCRC termsheat)
Clty of Santa Ano —
--� $4,635,000
$4,635,000
$0
AHSC
$22,500
$22500
$0
—_
AHSC
$1,258,000
$1,288,000
$0
AHSC
$4,944,130
$4,944,130
$0
Correction of deferred fee to net present
value of maximum 1 S•year cash flaw
available after asset and partnership
Federal Tak Credit Equity _ $17,704,254 17 .163 11417 $7developer _ _
rTotal Sources -_ --$34,178,757____ $32,580,522 ($1,364,180)_ __^_ ____ _ ____ _ ,__ _4I
.,FINANCING GAP. _ �a .... ($7)_` ($1,481,215}
Discussion ofTpb„I,e 1
The "Uses" portion of Table 1 shows the Developer's budget, contrasted with necessary modifications
proposed by CSG.
Total Permanent Financing Costs: The Developer's budget reflects origination fee of 1 % (per CCRC
term sheet) of a permanent loan amount of $2,093,389. We have adjusted the fee to reflect a loan
amount of $2,709,532 (reflecting higher 2017 restricted rents as publlshed by CTCAC), The loan
amount reflects;
Debt
mladvlsors SAN FRANCISCO LOS ANGELES NEW YORK
Judson Brown, City of Santa Ana
May 9, 2017
Santa Ana Arts Collective Financial Feasibility
Pace 4 of 5
Debt $ervico
Term
• Total Other Costs; The Developer's budget includes Relocation costs of $1,610,000, However, the
Developer has provided supporting documentation for only $1,486,811. We have adjusted the cost
to reflect the supporting documantatlon.
The "Sources" portion of the table illustrates proposed corrections to certain of the sources.
CCRC: We have adjusted the CCRC permanent can to reflect the most recently released 2107
restricted rents, as illustrated below
Table 3: 2016 vs 2017 Restricted Rents
2016 Low
Homo Rent
AMI (by bedroom
2016 CTCAC 2017 CTCAC Utility
Bedroom S17o Restriction 21111a,
Rent, Renta Allowance Net Rent
1 Bedroom 30% $553
$548 $887 $43 $544
3 Bedrooms 30% 51,267 $760 $813 S71 $742
3 Bedrooms 60% NA $1,520 $1,627 $71 $1,556
• Deferred Developer Fee: The Developer budgets shows $3.4M of deferred developer fee, The
Developer has Indicated that this was Intended to demonstrate the size of the financing deficit (the
project only can earn, per CTCAC restrictions, a $2M developer fee).
General Partner (GP) Capital Contribution, CSG proposes that the Developer/GP contribute a
portion of its Developer Fee to the partnership In the form of a GP capital contribution. This amount
Is subject to negotiation between the Developer and the City land may be limited bytax concerns),
but is suggested as tool to reduce the remaining financial deficit. Based on the project's cashflows,
approximately $371,912 is available to repay of Developer Fee within 14 years. We have discounted
the annual cashflows by 4% (i.e., a risk adjustment) in order to derive a net amount of fee to be
deferred (i.e., $250,526). The suggested GP capital contribution, when subtracted from the total
Developer Fee of $2,000,000, yields the total Developer fee to be paid In cash — to be allocated
between the net present value of deferred fee paid over time and cash fee received during
development and construction. The amount of suggested GP capitat contribution, therefore, equals:
' HUD, 04/2016
2 California Tax Credit Allocation Committee, April 2016
3 California Tax Credit Allocation Committee, April 2017
m1advisors SAN FRANCISCO LOS ANGELES NEW Y09K
EXHIBIT 1
Judson Brown, City of Santa Ana
May 9, 2017
Santa Ana Arts Collective Financial Feasibility
Facie 5 of 5
1• Total Developer Fee $2,000,000
> leas GP CapitaIContribution 910-0.1mc
> Equais Fee to be Paid in Cash (both current and deferred) $1,000,000
> Less allowable deferred fee" AMQM
> Equals currant Developer Fat (.a, paid during development $749,474
Process)
The deferred Fee Is calculated as the net present value (NPV) of the amounts available to pay deferred developer fee
payments over 14 years, discounted ata 4% estimated cap rate for Class A multifamily properties in Santa Ana (Source;
Marcus & Mllllchap Multifamlly Research Market Report, Fourth Quarter 2016)
Financing Deflclt
Based on the Sources and Uses as adjusted by CSG, the Project financing demonstrates a ($1,481,215)
financing shortfall. The Developer must identify other financing sources— either the City or other sources,
such as Federal Home Loan Banks Affordable Housing Program (AHP) — to alleviate the Financing
shortfall.
Expenses and Operating Pro Forma
The Developer proposes annual operating expenses per unit of approximately $6,725 per unit not
including reserves, and approximately $7,325 per unit including reserves. CSG has not examined specific
support for these estimates, but they appear reasonable based on our recent experience with other
projects.
The Developer's proposed operating pro forma uses standard underwriting requirements for tax -credit
and bond financing projects: annual Income inflation at 2.5aA and annual expense Inflation of 3,5%;
vacancy of 5% annually. These underwriting assumptions along with calculated debt service on the CCRC
senior permanent mortgages results in an Initial year debt service coverage (DCR) of 1.15, with increasing
DCR each yearthere after. The Developer's proposed operating pro forma indicates a healthy project
from an operational perspective.
CONCLUSION
The Project, as analyzed using most recent C7CAC rents and certain budget modifications as proposed
by CSG, demonstrates a financial shortfall of ($1,481,215). The City may choose to fill this financing deficit
on behalf of the Developer, or require the Developer to pursue other sources.
CSGJadvisors SAN FRANCI8CO LOS ANGELES
80A-47
NEW YORK
0AT 11 till
EXHIBIT 6
ms's
KEYSER MARSTON ASSOCIATES,
ADVISORS IN PUE61c/PRIVATE REAL ESTATE DEVELOPMENT
MEMORANDUM
ADWSONSINi
Real Estate
To:
Natalie Verlinich, Housing Programs Analyst
Redevelopment
Affordable Housing
City of Santa Ana
Economic Development
SAN FRANOSaO
From:
Kathleen Head
A, Jerry Keyser
Timothy C. Kelly
Tim Bretz
Kate Earle Funk
Debble M. Kern
Reed T. Kawahara
Date:
April 15, 2016
David Douzerne
LosANDsus
Kathleen H. Head Subject: First Street Apartments: Financial Gap Analysis
James A. Rabe
Gregory D. Sao -Hoo
Kevin E. Engstrom
Julie L. Romay
SAN DI600 At your request, Keyser Marston Associates, Inc. (KMA) prepared a financial gap analysis
Paul C. Marra forthe First Street Apartments project being proposed by AMCAL Multi -Housing Inc,
(Developer). The purpose of the KMA analysis is to quantify the amount of financial
assistance necessary to provide the proposed affordable housing units,
EXECUTIVE SUMMARY
The Developer Is proposing to develop the 2,15 -acre site located at 1440 East First
Street (Site) wfth a 69 -unit apartment project (Project). Sixty-eight (68) of the units will
be subject to long-term Income and affordability covenants, and one unit will be
provided to an on-site manager.
Estimated Financial Gap
KMA conducted an independent pro forma analysis of the Project. While the KMA
analysis varied on a line -by- line item basis from the Developer's proposal, KMA's
estimate of the Project's financial gap is approximately equal to the Developer's request
for financial assistance.
500 SOUTH ISLAND AVENUE, SUITE 1480:: LOS ANGELES, CALIFORNIA 90071 l PHONE 213.6218095
1604007,SA;TR3
19D8n,014,001
.O � ' •
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 2
The following outlines the financial gap calculations derived from the KMA pro forma
analysis:
Total Development Cost $28,506,000
(Less) Available Outside Funding Sources (19,711,000)
Estimated Financial Gap $8,795,000
As shown in the preceding table, KMA estimates the financial gap at $8.79 million, This
Is $105,000 less than the Developer's request fro $8.9 million In financial assistance.
This represents a 2% differential, which can be considered insignificant. As such, KMA
concludes that the Developer's financial assistance request Is necessary to provide the
proposed affordable housing units.
Available Funding Sources
KMA estimates that $19.71 million In outside funding sources are available to the
Project as follows:
1. The net operating income generated from the affordable rents supports
approximately $7.02 million in permanent financing,
2. The revenue generated from the Project -Based Section B rental assistance
vouchers (PBVs) provided by the Santa Ana Housing Authority (Housing
Authority) supports approximately $1.46 mllllon In permanent financing.
3. The Developer anticipates receiving an allocation of 9% Federal Low Income
Housing Tax Credits (Tax Credits) that are competitively awarded by the
California Tax Credit Allocation Committee (TCAC). KMA estimates the net Tax
Credit proceeds at $11.23 million.
The Developer Is requesting $8,9 million in financial assistance from the City for the
Project. The Developer intends to utilize in -lieu fee funds generated by the Housing
Opportunity Ordinance (H00) as the funding source for this financial assistance request.
PROJECT DESCRIPTION
The proposed scope of development can be described as follows:
1604007:SA;Ta6
19090.014.001
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 3
1. The Site Is comprised of 2.15 acres, or 93,654 square feet of land area.
2. The Project's unit mix is as follows:
3. The Project's gross building area (GBA) is estimated at 81,218 square feet, and is
comprised of the following;
a. The residential GBA is estimated at 63,549 square feet; and
b. The circulation / common area GBA is estimated at 17,669 square feet.
4. The Project Includes 119 tuck -under parking spaces, which equates to
approximately 1.7 parking spaces per unit.
5. The Project's proposed affordability mix is as follows:
Very -Low Inc H&SC / Tax Credit @ 30%7C Median 1 7
Very -Law Inc H&SC / Tax Credit @ 35%TC Median 7
Very -Low Inc H&SC / Tax Credit @ 40% TC Median 7
Very -Low Inc H&SC/ Tax Credit @ 45% TC Median z 7
Low Inc H&SC/Tax Credit @ 50% TC Median 7
Moderate Inc H&SC / Tax Credit @ 60% TC Median 33
Unrestricted On -Site Manager's Unit 1
Total Units
0
H&SC= the California Health and safety Code, and the "Median" represents the Orange County Median
Income published by HCD. The median Income published by ICAC is referred to as the TC Median.
'The Developer's rent for 2 -Bedroom units at 45% of the TC Median is higher than th a H&SC Very -Low
Income rent. The Developer's pro forma should be updated to reflect the H&SC very -low income rent.
1004007:9k-TR8
19090.014.001
FO R
Numberof
Unit5fze
Units(Sr)
Two -Bedroom Units
35
782
Three -Bedroom Units
28
1,031
Four -Bedroom Units
6
1,219
Total / Weighted Average
69
921
3. The Project's gross building area (GBA) is estimated at 81,218 square feet, and is
comprised of the following;
a. The residential GBA is estimated at 63,549 square feet; and
b. The circulation / common area GBA is estimated at 17,669 square feet.
4. The Project Includes 119 tuck -under parking spaces, which equates to
approximately 1.7 parking spaces per unit.
5. The Project's proposed affordability mix is as follows:
Very -Low Inc H&SC / Tax Credit @ 30%7C Median 1 7
Very -Law Inc H&SC / Tax Credit @ 35%TC Median 7
Very -Low Inc H&SC / Tax Credit @ 40% TC Median 7
Very -Low Inc H&SC/ Tax Credit @ 45% TC Median z 7
Low Inc H&SC/Tax Credit @ 50% TC Median 7
Moderate Inc H&SC / Tax Credit @ 60% TC Median 33
Unrestricted On -Site Manager's Unit 1
Total Units
0
H&SC= the California Health and safety Code, and the "Median" represents the Orange County Median
Income published by HCD. The median Income published by ICAC is referred to as the TC Median.
'The Developer's rent for 2 -Bedroom units at 45% of the TC Median is higher than th a H&SC Very -Low
Income rent. The Developer's pro forma should be updated to reflect the H&SC very -low income rent.
1004007:9k-TR8
19090.014.001
FO R
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financlal Gap Analysis Page 4
FINANCIAL GAP ANALYSIS
KMA prepared a pro forma analysis to assist In evaluating the Developer's proposal. The
analysis is located at the end of this memorandum, and is organized as follows:
Table 1: Estimated Development Costs
Table 2: Stabilized Net Operating Income
Table 3: Financial Gap Calculation
Estimated Development Costs (Table 1)
KMA reviewed the Developer's development cost estimates, and then Independently
prepared a pro forma analysis for the Project. The resulting development costs are
estimated as follows:
Property Assemblage Costs
The total property assemblage costs are estimated at $5.47 million, and they are
comprised of the following components:
1. The proposed purchase price for the Site is $4.5 million, or $48 per square foot
of land area. The Developer submitted an appraisal prepared by Lidgard and
Associates, Inc. on January 20, 2015 to validate the purchase price. The appraisal
estimated the market value of the Site at $4.55 million, which Is approximately
equal to the purchase price.
2. The Developer included a $942,000 allowance for relocation expenses. A
relocation plan prepared by Overland, Pacific & Cutter, Inc. on December 18,
2015 estimates the relocation costs at $865,000. The additional $77,000 in costs
are assumed to represent the estimated costs to implement the relocation plan.
3. The Developer included $25,000 in closing costs.
16040UMA;THB
19090.014.001
80A-51
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 5
Direct Costs
The direct cost estimates assume that the Project will not be subject to State of
California or Federal Davis Bacon prevailing wage requirements. The direct costs
applied in this analysis are estimated at $14.38 million, and can be summarized as
follows:
1. A $550,000 allowance for remedial work and demolition costs Is provided,
2, The Developer estimated the off-site improvement costs at $319,000. City staff
should verify the scope and cost of the off-site improvements required to serve
the Project.
31 The on-site improvement costs are estimated at $17 per square foot of land
area, or $1.63 million.
4. The residential shell costs are estimated at $115 per square foot of residential
GOA, or $9.34 million.
5. A $76,000 allowance for furnishings, fixtures and equipment is provided.
6. A 106 allowance for contractor fees and general requirements Is provided.
7. An allowance for construction bonds /general liability insurance at 2% of
construction costs is provided.
8. A direct cost contingency allowance equal to 5% of other direct costs is provided.
indirect Costs
KMA estimated the indirect costs at approximately $6.5 million, based on the following
assumptions:
1. The architecture, engineering and consulting costs are estimated at 10% of direct
costs.
2. The Developer estimated the public permits and fees costs at $2.2 million, or
$31,900 per unit. City staff should verify the accuracy of this estimate.
M4007SA?a8
19080.014.003
80A-52
iWOMMI MI
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 6
3. The taxes, Insurance, legal and accounting costs are estimated at 3% of direct
costs.
4. A $1,700 per unit allowance for marketing and leasing costs is provided.
5. The Developer Fee is set at $2,0 million, which Is the maximum amount allowed
for the Project by TCAC.
6. An Indirect cost contingency allowance equal to 5% of other indirect costs is
provided.
Financing Costs
KMA estimated the Project's financing costs at $2.17 million. The financing cost
assumptions are as follows:
1. The Developer purchased the property in part with a $3.74 million loan from the
Low Income Investment Fund (LIIF). The estimated loan term is 30 months, and
the loan carries a 4.70% Interest rate. The interest costs are estimated at
$440,000,
2. The Developer provided a $1.15 million loan to the Project to fund acquisition
and predevelopment expenses. The estfmated loan term is 30 months at a
stated interest rate of 10%. However, KMA contends that the interest rate on a
loan provided by a party related to the Project should be in line with the Interest
charged on similar loans. In this case, the Developer obtained a predevelopment
loan with an interest rate of 5.2S%. KMA applied this same interest rate to the
Developer's $1.15 million acquisition and predevelopment loan. The Interest
costs are estimated at $151,000,
3. The Developer obtained a $2.21 million predevelopment loan with a 30 -month
loan term and a 5.25% interest rate. The interest costs are estimated at
$290,000.
4. The interest costs on the approximately $17 million construction loan are
estimated at $446,000. These costs are based an the following assumptions:
1604007SA;TNB
19090.014.041
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 7
a. The Interest costs Incurred during the construction period are estimated
based on a 23% interest rate, a 16 -month construction perlod, and a 60%
average outstanding loan balance.
b. The absorption period interest costs are based on a three-month
absorption period and a 100% average outstanding loan balance,
5. The financing fees are estimated at $547,000, and are based on 1.0 point for the
LIIF acquisition loan, and 2.0 points forthe construction and permanent loans,
6. A $221,000 capitalized operating reserve account is provided. This equates to
approximately three months of operating expenses and debt service payments
on the permanent loans supported by the Project's base income and PBV
income.
7. The Tax Credit fees are estimated at $71,000 based an the following:
a. A $2,000 application fee;
b. A $410 per unit monitoring fee; and
C. Four percent (4%) of gross Tax Credit proceeds for one year.
Total development Costa
As shown in Table 1, the total development costs at $25.51 million, which equates to
approximately $413,100 per unit.
Stabilized Net Operating Income (Table 2)
The Project's funding sources include City HOO in -lieu fees, Tax Credits, and PBVs, The
Project's Income and affordability standards must comport with the most stringent of
the following standards:
1. Income Restrictions: The tenants' household Incomes cannot exceed the
strictest of:
1604007:SNIR0
19090.014.001
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Rage 8
a. H&SC Section 50105 forvery-low Income households, 50079.5 for low
Income households and Section 50093 for moderate Income households;
and
b. Federal Low Income Housing Tax Credits income restrictions defined
under United States Code, Title 25, Section 142(d)(2)(B),
2. Affordability Restrictions: Rents applied to all of the units must reflect the most
stringent of:
a. H&SC very -low, low and moderate income rents based on the calculation
methodology defined in Section 50053; and
b. Tax Credit rents published annually by TCAC.
Achievable Rent Income
The rents used in this analysis are based on 2016 information published by TCAC, and
2015 information published by HCD.s The maximum allowable rents, net of the
appropriate utlllty allowances, are estimated as follows 4
Rent Restriction
H&SC
Rents
TCAC
Rents
Applicable
Rents
Two -Bedroom Units
VL Inc H&SC/TC @ 30% TC, Median
$902
$579
$579
VL Inc H&SC/TC @ 35% TC Median
$902
$689
$689
VL Inc H&SC/TC @ 40% TC Median
$902
$799
$799
VL Inc H&SC /TC @ 45% TC Median
$902
$908
$902
Low Inc H&SC / TC @ 50% TC Median
$1,099
$1,018
$1,018
Mod Inc H&SC /TC @ 60% TC Median
$2,080
$1,238
$1,238
3 As of April 1S, ].pili, HCO has not yet published the 2016 household Income information required to
calculate the affordable rents under H&SC Section 50053.
4 The monthly utility allowances are estimated at: $79 fortwo-bedroom units; $115 for three-bedroom
units; and $128 for four-bedroom units,
1604007:SA;TRa
19080.014.001
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 9
H&SC
Rent Restriction Rents
TCAC
Rents
Applicable
Rents
Three -Bedroom Units
Rents
Rents
VL Inc H&SC / TC @ 30%TC Median $575
$645
$645
VL Inc H&SC/TC@35MTCMedian $975
$772
$772
Mod Inc H&SC/ TC @ 60% TC Median $2,283
$1,406
$1,406
H&SC
TCAC
Applicable
Rents
Rents
Rents
Rent Restriction
Four -Bedroom Units
VL Inc H&SC/TC@30%TCMedian $1,050
$720
$720
Mod Inc H&SC /TC @ 60% TC Median $2,463
$1,568
$1,568
The Developer is proposing that the Housing Authority provide eight PBVs to the
Project, The PBV payments are equal to the difference between the tenants' rent
payments and the fair market rents (FMRs) approved by the Housing Authority. The
2016 FMRs for the Project are as follows:
Two-BedYoom Units $1,543
Threw-Bedraorn
Its $2,160
The PBVs are proposed to be applied as follows:
1. Three 2 -bedroom units at 3CM of the TC Median;
21 Three 3 -bedroom units at 30% of the TC Median;
3. One 2 -bedroom unit at 35% of the TC Median; and
4. One 3 -bedroom unit at 35% of the TC Median.
The PBV assistance Is estimated at $106,900 per year.
1604007',A'TRB
19090034401
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 10
Estimated Effective Gross Income
KMA estimates the Project's effective gross Income at approximately $962,100 based on
the following assumptions:
1. The base rental income is estimated at $898,300.
2. The PBV income is estimated at $106,900.
3. Laundry and miscellaneous Income is estimated to average $9 per unit per
month for a total of $7,500 per year.
4. A vacancy and collection allowance equal to SYDof gross income is provided. This
equates to $50,600.
Estimated Operating Expenses
The residential operating expenses are estimated at $371,700 based on the following
assumptfons:
1. The general operating expenses are estimated at $4,790 per unit per year.
2. KMA assumes the Developer will apply for the property tax abatement that is
accorded to non-profit housing organizations that own and operate apartment
units that are restricted to households earning less than 80% of the Median. The
Developer estimates that the Project will Incur $2,500 per year in property tax
assessment override costs.
3. The Developer is proposing to provide social services at an estimated cost of
$18,000 per year,
4. Annual deposits to a capital replacement reserve account are estimated at $300
per unit per year. This exceeds the minimum amount required by TCAC.
Stabilized Net Operating Income
The Project's effective gross income is estimated at $962,100, and the operating
expenses are estimated at $371,700. This results in an estimated stabilized net
operating income of $590,400.
80A-57
1604007SA,TRa
19090.014.001
EXHIBIT 1
Natalie Verlinlch, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 11
Financial Gap Calculation (Table 3)
Available Fundln0 Sources
The outside funding sources anticipated to be received by the Project are estimated at
$19.71 million. These funding sources can be described as follows:
Permanent Loan — Base Net Operating Income
To estimate the maximum permanent loan that can be supported by the Project's base
Income, KMA assumed that the loan would be underwritten at a 115% debt service
coverage ratio, a 5.0% interest rate, and a 35 -year amortization period. Based on these
assumptions, KMA estimates that the $488,800 in Base Net Operating Income can
support a $7.02 million permanent loan.
Permanent Loan — PBV Subsidy
To estimate the maximum permanent loan that can be supported by the eight PBVs,
KMA assumed that the loan would be underwritten at a 115% debt service coverage
ratio, a 5.0% interest rate, and a 35 -year amortization period. Based on these
assumptions, KMA estimates that the $101,600 in PBV income can support a $1.46
million permanent loan.
Tax Credit Proceeds
Tax Credit Basis
It can be assumed that the Project's eligible Tax Credit basis is equal to the lesser of the
depreciable costs for the 69 Tax Credit units, or the basis limits established byTCAC.
KMA calculated the eligible Tax Credit basis as follows:
1. The Project's depreciable costs are estimated at $20.39 million, and the
threshold basis limits applied byTCACequal $17.67 million.
2. The threshold basis limit Is less than the depreciable costs. As such, the Project's
eligible basis is set at $17.67 million.
1604007;6A;7RR
19090.014.001
FOODIMTOO
EXHIBIT 1
Natalie Verlinlch, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 12
31 The Developer targeted a 46% tiebreakerscore for the competitive TCAC
application process. To obtain this tiebreaker score it is necessary to reduce the
Prcject's requested eligible Tax Credit basis to $8.65 million.
Tax Credit Proceeds
KMA estimates the net Tax Credit proceeds at $11.23 million based on the following
assumptions:
1. KMA calculated the gross Tax Credit amount for the Project at $10.12 million
based on the following assumptions:
a. The Project is located in a designated "Difficult to Develop" census tract.
This allows the requested eligible Tax Credit basis to be Increased by 30%.
b. The current Tax Credit regulatlons set the annual Tax Credit rate at 9.0%.
This rate is applied over the 10-yearTax Credit period.
C. 100% of the Project's building area is located in units that qualify forTax
Credits.
2. The net syndication value supported by the Tax Credit Is ultimately determined
based on competitive market conditions and on the timing of the disbursements.
Based on currently available information, KMA and the Developer estimated the
proceeds at $1.11 per gross Tax Credit dollar.
Estimated Financia! Gap
Based on the assumptions outlined In this analysis, KMA estimates the Project's financial
gap as follows:
Total Development Costs
(Less) Total Available Outside Funding Sources (19,711,000)
Financial Gap
Per Unit
• ' A •
L�
$8,795,000
$127,500
1604007:5k -TRE
19090.014.001
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 13
The Developer is requesting $8.9 million in financial assistance from the City, which is
$105,000 higher than the financial gap Identified In the KMA financial analysis. This less
than 2% differential can be considered inconsequential. As such, KMA concludes that
the Developers requestfor$8.9 million in financial assistance is warranted by the
Project economics.
ADDITIONAL FINANCIAL CONSIDERATIONS
Tax Credit Consideration
Approximately 40% of the Project's funding is anticipated to be derived from the receipt
of competitively awarded 9% Tax Credits. While the Project is structured to achieve the
maximum available points in the competitive process, the Tax Credit Program Is
consistently oversubscribed. As a result, ICAC created an allocation process that
distributes Tax Credits on a geographical basis, and applies a tie-breaker formula in each
region. The tie-breaker calculation is weighted heavily towards the amount of outside
financial assistance as a function of the project's development costs.
The Orange County region receives funding for one or two projects in each Tax Credit
allocation round, Hlstorlcally, there have not been sufficient Tax Credit dollars to fund
all the projects submitted, and thus the tie-breaker formula comes into play, As
currently structured, the Project generates a tie-breaker score of 46%. This score falls
within the range of the tie-breaker scores that have received Tax Credit awards in the
Orange County region during recent Tax Credit allocation rounds. However, the tie-
breaker scores have been volatile in Orange County, so it uncertain what tie-breaker
score will win in any Tax Credit allocation round.
Developer Fee
UnderTCAC regulations, the proposed Project qualifies for a Developer Fee of up to $2.0
million. However, it is important to note that only $1.4 million of the Developer Fee can
be included in the Project's eligible Tax Credit basis. In some cases, it would be
financially prudent to require the Developer to defer payment of $600,000 of the
Developer Fee, and to recoup those funds from the cash flow generated by the Project
over time. To test this concept, KMA prepared pro forma analyses for the Project with
and without the requirement that $600,000 of the Developer Fee be deferred. The
results of this comparative analysis Indicate that given tiebreaker considerations
104007:5AMB
39999,014.901
Fi N • F
EXHIBIT 1
Natalie Verlinich, City of Santa Ana April 15, 2016
First Street Apartments: Financial Gap Analysis Page 14
associated with the competitively awarded 9% Tax Credits, the financial gap is
approximately equal under both scenarios. As such, it is KMA's recommendation that
no Developer Fee deferral be required.
CONCLUSION
Based on the results of the preceding analysis, the Developer's request for $8,9 million
in direct financial assistance from the City is warranted by the Project economics,
1504007:SA,'TR0
19090,014.001
TABLE 1
ESTIMATED DEVELOPMENT COSTS
FIRST STREET APARTMENTS
SANTA ANA, CALIFORNIA
1. Property Assemblage Costs
Property Acquisition Cost%
Relocation Costs
Closing Costs
Total Property Assemblage Costs
Direct Costs
Re medlel Work / Demolition
Off-site Improvements
On-site Improvements
Resldantial Shell Costs
Furnishings, Fixtures & Equipment
Contractor Fees/ GeneralRgts
Construction Bonds
Contingency All owanca
Total Olrect Costs
Indirect Costs
Architecture, Englnoering &Consulting
PublIc Permits & Fees
Taxes, Insurance, Legal &Accounting
Marketing & Leasing
Developer Fee
Contingency Allowance
Total Indirect Casts
IV. Financing Costs
Interest During Construction
Acquisltlon Loan #1
Acquisition Loan N2
Predavelopment Loan
Construction Loan
Financing Fees
Acquisition Loan Al
Construction Loan
Permanent Loan
Operating Reserve
TCAC Fees
Total Financing Costs
EXHIBIT 1
1 93,854 Sf Land
$48
/Sf Land
$4,500,000
z
21201,000
3% Direct Costs
942,000
a 0.6% Purchase Price
69 Units
$1,700 /Unit
25,000
s 11% Eligible Basis
2,000,000
$5,467,00tl
s
309,000
4
$3,743,000 Loan Amount
4.70% Interest
$550,000
r $1,151,000 Loan Amount
9,25% Interest
151,000
319,000
93,654 Sf Land
$17
/Sftand
1,628,000
81,218 Sf GSA
$115
/5fGBA
9,840,000
$16,992,000 Loan Amount
2.00 Points
340,000
76,OOD
14% Construction Costs
170,000
3 Months Operating Exp / Debt Svc
1,580,000
2% Construction Costs
7L000
226,000
591 Other Direct Costs
658,000
81,218 Sf GSA $177 /Sf GBA
$14,377,000
10% Diract Costs
$1,438,000
s 69 Units
$31,900 /Unit
21201,000
3% Direct Costs
43LOOO
69 Units
$1,700 /Unit
117,000
s 11% Eligible Basis
2,000,000
5% Other Indlmct Costs
309,000
$6,496,000
$3,743,000 Loan Amount
4.70% Interest
$440,000
r $1,151,000 Loan Amount
9,25% Interest
151,000
$2,209,000 Loan Amount
5.2S% Interest
290,000
a $16,992,000 Loan Amount
2.50M Interest
446,000
$3,743,000 Loan Amount
1.00 Points
370000
$16,992,000 Loan Amount
2.00 Points
340,000
$8,477,000 Loan Amount
2.00 Points
170,000
3 Months Operating Exp / Debt Svc
22L000
s
7L000
$2,166,000
V. Total Development costs 86 Units $413100 Unit $28,S06,000
1 Bosed on Developer estimate and supported by an appraisal prepared by Lidgam and Associates, Ina. on January2D, 2015.
e Based on Developer estimate. Overland, Pacific &Colter, Inc. prepared a relocation plan on Docomber 18, 2015, and estimated the relocation
expenses at $865,000. The $77,000 in additional costs are assumed to be the estimated casts to Implement the reloca#lon plan.
a Based on Develop or estimate.
4 Estimates assume prevailing wage requirements will not be imposed on the Project.
a Based on Developer estimate. The estimate should be verified by Clry staff.
a This represents the maximum amount allowed by TCAC to be Included in the Project's total development costs.
The Developer provided an acquisition loan to the Project with a 10% interest rate. KMA contends that the maximum Interest rate that should be
charged on this loan is 5.25% which Is equal the interest rate on the predevelupment loan.
s Includes debt on the 80% of the Tax Credit Equltythotwlll not befunded during construction. Assumes a 16 -month construction period with a 60%
average outstanding balance and a 3 -month absorption period with a 100% average outstanding balance,
s Includes a$2,000 applicatlon fee;$410/unit monitoring fea;and 4% ofthe gross Tax Credit proceeds for one year.
Prepared by, Keyser Marston Associates, Inc.
Flle name! AMCAL 4 1516; PP_.9%; tris
L4* 1 M •
EXHIBIT 1
TABLE 2
STABILIZED NET OPERATING INCOME
FIRST STREET APARTMENTS
SANTA ANA, CALIFORNIA
I. jp5¢111Q L
Manager's Unit
1
Unit
$0 /Unit/Month
$0
2 -Bedroom Units 0 (782-5}
VL Inc H&SC/TC@30%TC Median
3
Units
$579 /Unit/Month
20,800
VL Inc H&SC/TC @ 35% TC Median
6
Units
$689 /Unit/Month
49,600
VL Inc H&SC/fC @ 40% TC Median
7
Units
$799 /Unit/MCnth
67,$00
VL Inc H&SC/TC @ 45% TC Median
7
Units
$902 /Unit/Manth
75,800
Low Inc H&SC/TC @ 50% TC Median
7
Units
$1,018 /Unit/Month
85,500
Mad Inc H&SC/TC @ 60% TC Median
A
Units
$1,238 /Unit/Month
59,400
3 -Bedroom UNts @ (1,031-Sfl
VL Inc H&SC/TC @ 30% TC Median
3
Units
$645 /Unit/Month
23,200
VL Inc H&SC/TC @ 35% TC Median
1
Unit
$772 /Unit/Month
9,300
Mod Inc H&SC/fC @ 60% TC Median
24
Units
$1,406 /Unit/Month
404,900
4-Badroom Units @ 11.219-Sfl
VL Inc H&SC/TC@30%TC Median
1
Unit
$720 /Unit/Month
81600
Mod Inc H&SC/TC @ 60% TC Median
5
Units
$1,568 /Unit/Month
94,100
PBV Subsidy 2
VL Inc H&SC/TC @ 30% TC Median
2 -Bedroom Units @ (782-Sf)
3
Units
$885 /Unit/Month
$1,900
3 -Bedroom Units @ (1,031-Sfl
3
Units
$1,400 /Unit/Month
50,400
VL Inc H&SC/TC to 35% TC Median
2 -Bad room Units @ (782-Sf)
1
Unit
$775 /Unit/Month
9,300
B -Bedroom Units @ (1,031-Sf)
1
Unit
- $1,273 /Unit/Month
15,300
Laundry/Miscellaneous Income
69
Units
$9 /Unit/Month
7,500
Gross Income
$1,012,700
(Less) Vacancy & Collection Allowance
5%
Gross Base Income
(50,600)
Effective Gross Income
$962,100
R. Operating Expenses
General Operating Expenses
69
Units
$4,790 /Un[t
$330,500
Property Taxes s
69
Units
$36 /Unit
21500
Services
69
Units
$261 /Unit
18,000
Replacement Reserve
69
Units
$300 /Unit
20,700
Total Operating Expenses
69
Units
$5,400 /Unit
$371,700
III, IStabilIzed Net Operating Income $590,400
1 As pertinent, rents are based on the 2016 rents published by ICAC, and the rents calculated under H&SC Section 50053. The H&SC Section 50053
rents aro calculated based on 2015 Income information published by HCD. Utility Allowances per the Developer: $79 for 2-Bdrm units; $115 for 3-
Bdrm units; and $128 for 4-Bdrm units.
r Thu Sectlon 8 subsidy is equal to the difference between the Fair Market Rent (FMR) established by HUD and the rent paid bythe tenant.
a Based on Developer estimate. Assumes that the Developer will receive the property tax abatement accorded to non-proflt housing organisations
that own and operate apartment units that are restricted to households earning less than 80% of the County median Income.
Prepared by; Xeyser Marston Associates, Inc.
File name! AMCAL_41516; PF 9%; trb
FO ' 1 •Y
TABLE B
FINANCIAL GAP CALCULATION
FIRST STREET APARTMENTS
SANTAANA, CALIFORNIA
I, Available Funding Sources '
pe,tmanont Loan - Base Income
Net Operating Income
Income Available for Mortgage
Interest Rate
Permanent Loan - Base Income
Permonent Loan - PBV Subsidy
Net Operating Income
Income Avallabfa for Mortgage
Interest Rate
Permanent Loan - PBV Subsidy
Tax Credit Eoulty
Grass Tax Credit Value
Syndication Rate
Net Tax Credit Equity
Deferred Developer Fee
Total Available Funding Sources
II, Financial Gap Celeulatignn
Total Available Funding Sources
(Los)Total Development Costs
I
$488,845 NOI (See Table 2)
1.15 DCR $425,100 Debt Service
5.00% Interest Rate 6.06% Mortgage Constant
$7,019,000
$101,555 EGI
1,15 DCR $88,309 Debtservlce
5,60% Interest Rate 6,06% Mortgage Constant
$10,121,000
$1,11 /Tax Credit Dollar
$1,458,000
$11,234,000
$19,7L1,Otltl
(zaso6,DDtl)
$19,711,000
Finantml Gap Ca1CUleClon 69 Units $127,500 /Unit $8,795,000
III. Estimated Tie-areaker Score
I Assume$a 35 -year amortization term.
a Assumes a 85 -year amortization term.
a Assumes an $8,7 million requested unadjusted eligible basis, which Includes a $9,017,000 voluntary basis reduction, a 130% difficult-to,develop
premium, a 9.0% Tax Credit rate and an applicable fraction of 100%,
Properedby: Keyser Marstan Associates,lnc,
File name: AMCA1,.,41915; PF 9%; trb
46%
EXHIBIT 1
EXHIBIT 7
CSG I advisors L Post Street, Suite 575
San Francisco, CA 94104
tel. 415956,2454
Memorandum
To: Judson Brown, City of Santa Ana
From: John Hamilton, CSG Advisors
Date: May 12, 2017
Re: First Street Apartments Financial Feasibility Review
SUMMARY
Overview and the Proposed Project
AMCAL Enterprises (the "Developer") to develop the First Street Apartments (the "Project"), a 69 -unit
new construction family housing project located In the City of Santa Ana (the "City"), The Project would
target families and would be affordable to individuals and families earning from 30% AMI to 60% AM[.
The Proposed Fina
the Daveloper proposes to finance the Project though private senior first mortgage loans, subordinate
financing from the City of Santa Ana, and equity from the syndication of 9% federal Low Income Housing
Tax Credits (LIHTC). The Developer proposes to submit an application for an allocation of Low Income
Housing Tax Credits to the 2017 second application round of the California Tax Credit Allocation
Committee (CTCAC).
The Developer has tentative secured senior construction and permanent loan commitment from
JFMorgan CHASE Bank
Conclusion
The Project will be competing for 9% low Income Housing Tax Credits. Absent the CTCAC particular tie-
breaker— and maximum deferred developer fee —the project would net require funds from the City.
However, the nature of the CTCAC competition requires committed public funds in order to be
successful. The City must decide the level of tie-breaker it wishes to target In combination with the
amount of City funds necessary to achieve that target.
PROJECT FINANCIAL ANALYSIS
act Description
AMCAL Enterprises (the "Developer"), an experienced developer of affordable housing, proposes to
develop a 69 -unit affordable housing development, for families, to be located at 1440 East First Street, in
the City of Santa Ana. The Developer has already purchased the site from an un -related party, Grand
Frontier Investments, LLC. The Developer proposes to construct 7 buildings: 6 buildings would house 6B
affordable units and one manager's unit; 1 building would be a non-residential community building. The
Developer proposes to finance the Project with an allocation of 9% low-income housing tax credits
(UHTC), committed funds from the City, and seniorfirst mortgage financing for JPMorgan CHASE or
another lender,
SAN FRANCISCO ATLANTA ANGELES NEW YORK
.O R M •
W01006
Judson Brown, City of Santa Ana
May 12, 2017
First Street Apartments Financial Feasibility
Page 2 of 7
Eight units will be the recipients of a project -based Section 8 contract awarded through the City of Santa
Ana.
The Project would contain affordable units as indicated in Table 1, below.
Table 1: Proposed Units and Affordability
Restrict_,_�___fotrL{AM 11. 11edroom &aedroom $_Badroem law
30%AMI 29* 4* 1 34
50°%AMI 4 17 21
60%AMI 1 7 5 13
Manager's Unit 1 1
Total 35 2B 6 69
"four 2•bdm 30%AMI unls and 4 3-bdm 30% AMI units will be subject to a Section 8 HAP contract
Table 2: Units Rents
section 8
AMI 2017 CTCAC Utility Contract
46adrooms 604E $1,815 $71 $1,744
Request for Funds
On January 18, 2017, the City notified the Developer that the City had provided a "pre -commitment" for
a subordinate loan In the amount $2,600,000, The City's obligation to fund the loan In respect of its pre -
commitment is subject to certain conditions, including receipt bythe City of a certain In -Lieu Fee
payment necessary to fund the loan.
The City, through the Housing Authority of the City of Santa Ana, acting as successor agency to the
Redevelopment Agency of the City of Santa Ana, has also provided a pre -commitment for a subordinate
loan up to the amount of $6,195,000
Financial Plan Analysis
We have focused our analysis on a review of the Project's sources and uses In the context of the Project's
proposed 9% tax credit financing. In most cases, subordinate financing from public agencies finances the
"affordability gap" i.e., the financial gap resulting from the addition of affordable units. In the case of
First Street Apartments, the subordinate financing, arguably, is not necessary to close an affordability gap
but, rather, his necessary to finance the financial gap necessitated by the completion for 9% tax credits.
csaladvlsors SAN FRANCISCO
LOS ANGELES I NEW YORK
EXHIBIT 1
Judson Brown, City of Santa Ana
May 12, 2017
First Street Apartments Financial Feasibility
Paas 3 of 7
Understanding this clearly should assist the City in understanding the ultimate purpose of its funds and
therefore, the amount it N willing to provide In order to achieve the desired outcome. (In order to cause
a winner among perfectly scoring projects, CTCAC institutes a "tie-breaker" that largely relies on public
subsidy to determine winners. I.e., the more public subsidy, the more likely a project to "win" the tie-
breaker.)
In order to achieve the foregoing, the analysis proceeds as follows
• Side-by-side comparison of the Developer's sources and uses budget with a "Base Budget"
constructed by CSG, with explanation of variances.
• Building upon the CSG Base Budget, comparison of the Developer's sources and use budget
with in CSG -constructed budget including deferred developer fee.
Each of the above maintains the same tie-breaker score (44,73'0) targeted by the Developer.
We then provide three financing scenarios, starting from no City financing, and the resulting tie-breaker
score, and two additional scenarios with Increasing higher fie -breaker scores and the resulting City funds
necessary to achieve them.
Table 3, below, provides a consolidated form of the Developer's budget compered to the CSG "Base
Budget" showing modifications proposed by CSG. In creating this analysis and variance, we have used
the Developer's assumptions (except as noted) and modeled the Project using the CTCAC application
form applicable to the upcoming application round.
Table 3: Variance Analysis of Developer's Budget to CSG "Base Budget"
USES
Audoet item
Total Land Cost
Developer
$4,x94,375
CSG
$4,894,375
Variance
$0
Explanation of Variance
Total Acqulsitlon Cost
_ $98,039
$98,039
$0
$225,000
Prodovelopment Interest/Holding
wCoet
$826991
$824991
$0
—__....
See Discussion below
Site Remediation
$175,00_0
$175,000
$0
_m
Relocation Expenses
$955,161
$955,161
$0
See Discussion, below
Total New Construction Costs
$13,683,815
$13,683,815
$0
See Discussion, below
Total ArchRectural Costs
$520,550
$520,550
$0
Total Survsy and Engineering
$1,130,140
$1,130,140
$0
Construction Loan Interest
$1,017,061
$675,955
($341,106)
See Discussion, below
Construction Loan
Origination Fee
Other Construction Interest and Fees
$1931857
$442.398
_ $130,392
$442.398
($63,4651
.i"0
0_.75% commitment Fee per chase letter
T
Permanen� 1 tlrlglnation Fee
$6x,600
$0
No Comm ltment Fee per Chase letter
Other Permanent Financing Costs
$4$,000
$45,000
x($65,600)
to
Total Attorney Costs
$225,000
$225,000
$0
Total Reserve Costs
$214,053
$214,053
($0)
Total Appraisal Costs
$15,00u
WWI)
$0
Total C_ontingancy Coats
$716,593
$716593
$0
_
csaIadvisors SAN FRANCISCO
LOS ANGELES NEW YORK
FOOMME
EXHIBIT 1
Judson Brown, City of Santa Ana
May 12, 2017
First Street Apartments Financial Feasibility
Paqe 4 of 7
Total Other Costa
$2,781,280
$2,781,280
$0
Subtotal Project Costs
$27,999,913
$27,529,742
($0.70,171)
Developer Fee
$2,199,087
$2,205,612
$6,525
Total Development Costs $30,199,000 $29,735,354 ($463,646)
PERMANENT SOURCES
JPMorgan Chase -Perm Loan
$5,109,022
$5,413,350
$304,328
See Discussion, below_ _
JPMorgan Chase -Section $ Loan _ _ _
_ $1,451,023
$1,537,459
$86,436
See Discussion, below
Reduction to balance budget while
maintaining same approximate CTCAC tle-
CiyofSantaAna-Inclusionary Funda
$2600,000
$2,327,740
($272,260)
breaker
CRy of Santa Ane -Housing Funds
$6195,000
$6,195,000
$0
Deferred Developer Fee
$0
$0
$0
Low Income Housing Tax Credit
SJ/SPLU$/iDERSCrt) to $0 $0 I
Discussion of Table 3
The "Uses" portion of Table 3 shows the Developer's budget, contrasted with modifications proposed by
CSG.
• Pradevelopmant Interest/Holding Costs: The Developer's sources for acquiring the site include an
unsecured note from a davaleper-related entity (AMCAL 1440 Santa Ana Fund) in the amount of
$1,151,000 at an Interest rate of 10%. The interest rate would appear high given the relationship of
the parties: because the transaction Is extant, the City may want to provide consideration of this cost
In other aspects of the transaction.
• Total New Construction Casts. CSG has not received information from the developer concerning Its
estimates of construction costs. The Developer proposes to use a related entity, AMCAL General
Contractors, to serve as the general contractor for the project. While such an arrangement may
provide for cost savings, It also can result in abuses. The City may want to consider requiring
competitive bidding not only for the sub -contractors, but also for the general contractor.
• Relocation Costs: The Developer has provided a relocation pian prepared by Overland, Pacific &
Cutler indication total relocation costs of only $865,000. The City should require the Developer to
provide justification for their budgeted amount.
• Construction Loan Interest. Perthe Chase commitment letter, the base rate today would be 0.99%
plus Indicated spread of 2%. The total rate would be 2.99%. We have added 0.25% "cushion" to
total 3.24% annual interest. Considering the Developer's construction loan amount of $17,385,665
and a total construction period (I.e., to conversion), the Developer's construction loan interest of
$1,017,061 would represent an average outstanding balance of 90%, which is unlikely, given the other
sources. A more typical underwriting would be 60% average outstanding balance. So underwritten,
the outstanding construction Interest is reduced to approximately $676,000.
• Origination Fee. The Chase commitment letter indicates a 0.75% construction loan origination fee.
0.7S% of the construction loan amount equals the Indicated orlg)nation fee.
C,sQ Iadvisors SAN FRANCISCO I , LOS ANGELES NEW YORK
EXHIBIT 1
Judson Brown, City of Santa Ana
May 12, 2017
First Street Apartments Financial Feasibility
Pace 5 of 7
• Permanent Origination Fee, The Chase commitment letter does not Indicate a permanent
origination fee.
The "Sources" portion of the table illustrates proposed corrections to certain of the sources.
• Chase: We have evaluated the interest rate and terms contained In the Chase commitment letter
(also taking Into account the Developer's Indication that the California Community Reinvestment
Corporation (CCRC) may provide the permanent loan) with recent proposals from CCRC as well as
published rates from Citibank. Recent indications from CCRC have been in the 5.65% range
(including for the Santa Ana Arts Collective). Citibank, in its "Cltl Community Capital's Multifamily
Housing Indicative Rates and Terms" publication (May 10, 2017) Indicates, for a forward commitment
loan for 946 UHTC project (1 Syr term, 30-35yr amortization), all-ir rates of 5.41%— 5,91%. We have,
therefore lowered the underwriting rate from 6.5°/ to 6.0%. The calculation of the permanent loans
Is as Indicated below:
Tax Credit Rents Section 8 Increment
EffectMe Gross Rents $806,573 per Developer units mix and 5% $120,977
City of Santa Ana Inclusionary Funds and Low Income Housing Tax Credit Equity: these two entries
are "toggles" to eliminate the financing gap and maintain the targeted CTCAC tle-breaker,
CSG Base -Budget with Deferred Developer Fee.
Forthis scenario, we have adjusted the sources of the CSG Base Budget to reflect the addition of
deferred Developer Fee. The amount of deferred fee was calculated as the sum of all cashflows in years
1-12. The amount of City loan and Low Income Housing Tax Credit Equity were "toggles" to maintain
the 44,7% tie-breaker target and eliminate financing deficits. A summary of the Scenario follows in Table
4 below,
USES
Table 4: CSG Base -Budget with Deferred Developer Fee
cubist Item Devalooer 0A YAdaa_ce Exolanation of variance
Total Development Costs $30119900 $29,735,354 ($463,646)
PERMANENT SOURCES
JPMorgan Chase -Perm Loan $5,109,022 $5,413,350 $304,320 Perabove
JPMorgan C_hese-Sectlor 8 Loan $1,451,023 $1,537,459 $86,436 Per ahcva
Reduction to balance budget while
maintaining some approximate CTCAC tie-
CRyofSanta Ana -Inclusionary Funds $2,600,000 $1,986,876 ($613,124) breaker
caGladviscris SAN FRANCISCO LOB ANGELES NEW YORK
LFOODIN1101
EXHIBIT 1
Judson Brown, City of Santa Ana
May 12, 2017
First Street Apartments Financial Feasibility
Page 6 of 7
City of Santa Ana -Housing Funds
$6,195,000
$6,195,000
$0
Total Development Costs
Deferred Developer Fee
$0
$1,2841518
$1,284,518
Max. deferred@ 12ym cash flow.
Low Income Housing Tax Credit
J PMorgan Chase -Perm Loan
$5,413,350
$5,413,350
rET.!ty
$14,043,95_5 TT
$13131051
($1,525,804)
Reduced a� necessar forfaa_siblltt_,v �
I TOTAL SOURCES
$30,1999000 _
$29,735,354
($463,646).
„_„
f SURPLUS/ (DEFICIT) $0 _ $0 $0
Additional Tle-Breaker Scenarios
The attached tables illustrate the detail of three additional tie-breaker scenarios. These scenarios allow
the City to compare varying tie-breaker scores—and the amount of City subsidy necesssry to achieve
them —with the tie-breaker scores of recently successful CTCAC 9% peolects. A summary of the scenarios
follows below in Table 5
Table 5: Summary of Tie -Breaker Scenarios
Scenario
Tie Breaker Target
15.15%
37.6%
40.0%
Total Development Costs
$29,735,354
$29,735,354
$29,735,354
PERMANENT SOURCES
J PMorgan Chase -Perm Loan
$5,413,350
$5,413,350
$5,413,350
JFMorgan Chase -Section 8 Loan
$1,537,459
$1,537,459
$1,537,459
C lty of Santa Ana-Induslonary Funds
$0
$20,447
$685,145
City of Banta Ana -Housing Funds
$0
$6,195,000
$6,195,000
Defarred Developer Fee
$1,284,518
$1,284,518
$1,284,518
Low Income Hcusing Tax Credit
L 121ALRURCE5 ,,,_ „�,�
$21_5000027
$2-9735,354
_
$15,284,580 _
$29,735,354
- $1_4,619,-882
$29135,354
SURPLUS/IDEFICIij $0
The above tie -breakers can be compared with the tie -breakers of recently successful projects (not
including wait -list projects) in the Orange County geographic region
Table 6; Tie -Breakers Scores of Recently Successful Orange County Region
CTCAC 9% Projects
at
Housing
35.765%
27.669%
CSO �advisor8 SAN FRANCISCO LDS ANGELES I NEW YORK
FO M
EXHIBIT 1
Judson Brown, City of Santa Ana
May 12, 2017
First Street Apartments Financial Feasibility
Page 7 of 7
Financing Deficit
As noted, absent the need achieve a successful tlebreaker score In the CTCAC completion for 9% credits,
the Project would not exhibit a financing deficit, The City must decide, based on an expectation of the
successful tle-breaker score, the amount of subsidy necessary to achieve that score.
and Operating Pro Forma
I me ueveioper proposes annual operating expenses per unit of approximately $4,920 per unit not
including reserves, based on expenses of its recently completed projects in the region, e,g., Ocean
Apartments in Huntington Beach. CSG has not examined specific support for these estimates; they seem
on the lower end of the spectrum but not out of the question for an efficient manager.
The Developer's proposed operating pro forma uses standard underwriting requirements for tax -credit
and bond financing projects: annual income inflation at 2.5% and annual expense inflation of 3.5%;
vacancy of S% annually. These underwriting assumptions along with calculated debt service on the CCRC
senior permanent mortgages results in an initial year debt service coverage QCR) of 1.1 S, with increasing
DCR each year thereafter. The Develcpei's proposed operating pro forma indicates a healthy project
from an operational perspective.
CONCLUSION
The Project will be competing for 9% Low Income Housing Tax Credits. Absent the CTCAC particular tie•
breaker— and maximum deferred developer fee --the project would not require funds from the City.
However, the nature of the CTCAC competition requires committed public funds in order to be
successful. The City must decide the level of tie-breaker it wishes to target in combination with the
amount of City funds necessary to achieve that target.
mala visors SAN FRANCISCO LOS ANGELES NEW YORK
80A-71
y5O
N
EXHIBIT 1
PMN@ V W qq V' Yi 01 tl�n N 0 0 MI O T D] V .-I N Yf u n g �I gg M M N� V N b
ii nS4"4� Koa �iwat,m m Rqa o Inrv1;u ^i m �� Yvw 11� � 4a.�h a� a
mm
�4,n rP xInLv�w�an�oa ry6n c vei in n �w'Gn l`. l
.,.w
M II VI R qN Vy N' vdn
rpt o "l w cq "vi .gJF.^O l. ^s�7 Y .firy1 0nml n ury�o�i mN Imp �I 4 µ4.}T •i q
iM1 �., il1 N vl N -✓ Ul
O
y 2
w O W O Nryry CJ Qf {Oa N1 el yy w6..•1N I��Iv�v� �
�3 m 'I� �.i 6'd �i �i iw � a� r� , h�i rn�e { S' MIS FYI ryp M bo" 'i m N.
Q+ ..1 p1 yy�� .ry N ry �y {�1 M NI m
G a�1NYf�N �4V�N+/F UVi �iIF Vn�N KN� VF YA MfI�vn +nlN N NN�N1 m� p
�°1rn ol"y�vai .Y v�fa"i��o o�'I g.�•N ml'�o ul°� a � mmw �� �
1� �a 4� "'Sc v�I+Si m �� �$ Gi ri n'io" � rv�c n 4�tm m S w t•4a .�.+
�(]{�' p to n ui a�p}uCty+ ti� �{I aia unn�•rn�`9w� �.�ppi �Mi Syhy�� a
p pppb�,� uyt� aryry py �1rp i��i ry 1V N �ryy� hW 1[lV� h ,�N1j �M�jj �4'pp1 � N h ,V] w N�
r1 V M, 1/n � N» Nµ � N � v� 41 N VF i/r v} n} ry' M � N Mi'UI N Il rl $% ffff•�N•••VVVV!!!!l M1I N 'I
a VVVVVV}}F}}F Vi NN Vi I AV! iR V! N " N
�W 1
LA
O Ipn` N M rj N Un N •min 1/F Vn 44IN N f l RR
YM1 N
m � d
m ids e��LL a E
C
Cilo 9 a
e ,SY§i t
rr arrr cio1. ow,al°I-r°rrr 19 Fwgm �p �
80A-72
EXHIBIT 1
CSG I advisors 1 Post Street, Suite 575
San Francisca, CA 94104
rel. 415.4561454
Memorandum
To: Judson Brown, City of Santa Ana
From: John Hamilton, CSG Advisors
Date: May24,2017
Re: Tiny Tim Plaza Apartments Financial Feasibility Review
SUMMARY
Ject Overview and the Proposed
Community Development Partners proposes to develop a 51 -unit affordable housing development, to be
located at 2223 and 2237 West 51h Street, in the City of Santa Ana. The Developer proposes to purchase
the existing site, which is currently a strip mall and parking lot. The Developer would rehabilitate and "re -
purpose" the existing commercial for use by non -profits and community agencies, and newly develop 51
units of affordable housing, Units in the Project would be affordable to families earning between 30%
and 60% of area median income.
The Proposed Financing
The Developer proposes to finance the Project using the proceeds of the issuance of tax-exempt bonds
along with the equity derived from the sale of 4% low-income housing tax credits and deferred Developer
fee. In addition, the Developer proposes to obtain five Section 8 vouchers, and funds from the State of
California's Affordable Housing Sustainable Communities (AHSC) program and New Market Tax Credits
to eliminate the Project's financing deficit.
Conclusion
The Project has a financing deficit of approximately $11.7M. The Developer proposes, in addition to
funds requested from the City, to close the financing clef icft with a permanent loan funded by commercial
rents; and funds from the AHSC, New Market Tax Credits, and the use of Section 8 vouchers. The project
has not yet applied for these sources. The suitability of the Project for those sources and the likelihood of
success in obtaining those sources should be the source of a separate analysis.
PROJECT FINANCIAL ANALYSIS
ct
Community Development Partners (the "Developer"), an experienced developer of affordable housing,
proposes to develop a 51 -unit affordable housing development, to be located at 2223 and 22237 West 51'
Street (the "Site"), In the City of Santa Ana. The Developer proposes to purchase the existing site, which
Is currently a strip mall and parking lot. The Developer would rehabilitate and "re -purpose" the existing
commercial for use by non -profits and community agencies, and newly develop 51 units of affordable
housing.
The Developer proposes to finance the Project using the proceeds of the issuance of tax-exempt bonds
along with the equity derived from the sale of 4% low-income housing tax credits.
SAN FRANCISCO ATLANTA 3ANGELES NEW YORK
EXHIBIT 1
Judson Brown, City of Santa Ane
May 24 2017
Tiny Tim Plaza Apartments Financial Feasibility
Page 2 of 6
The Site
The Virginia A. Nicholas Trust (Seller) currently owns the Site. On May 1, 2016, Magis Realty entered Into
a Purchase and Sale Agreement (PSA), as amended, with the Seller for the purchase of the Site. Magis
Realty assigned its interest under PSA to the Developer pursuantto an Assignment of Buyers Interest
(Assignment). Please note thatthe Assignment as provided for CSG's review required execution by six
members of the Seller; however, only one Seller's signature was present. Therefore, CSG cannot
conclude that the Developer actually controls the Site. Note, further, that the amendment to the PSA
requires close of escrow by June 1, 2017. In the absence of a further amendment extending the period to
close escrow, the Developer must purchase the Sito in order to retain control. According to an email
from the Developer to the City dated March 16, 2017, the Developer plans to use an acquisition loan from
the Low Income Investment Fund (I -IIF) to purchase the Site; the Developer would like a commitment of
soft financing from the City before purchasing the Site.
Units And Affordability
The Developer proposes affordability and unit mix as described Table 1, below.
Table 1: Proposed Units and Affordability
Restrlcticn (AMB2-Bedr gay 15adtssm 4-Badroom _Total
30% AMI 2 3 5
50%AMI
60%AMI 17 26 1 44
Manager's Unit 1 1
Total 20 29 2 51
Table 2: Units Rents
Section a
AMI 2017 CTCAC Utility Contract
30% $813
3 Bedrooms
$105 $836
$105 $1,744
Note that CSG has adjusted the Developer's pro forma rents (i.e., Increased) to conform with the 2017
CTCAC rents applicable to Orange County
Reauest for Funds
The Developer has requested, via email to the City, subordinated financing In the amount of $6,000,000.
The Developerwould like a commitment of these funds before purchasing the Site before the expiration
of the escrow period (June 1, 2017).
CSG I advisors BAN PRAN01800 LOS ANGELES NEW YORK
EXHIBIT 1
Judson Brown, City of Santa Ana
May 24 2017
Tiny Tim Plaza Apartments Financial Feasibility
Pape 3 of 6
Financia( Plan Analvsis
The Developer proposes to use 4% tax credits and tax-exempt bands to financing, In part, the Project.
In addition, the Developer proposes;
• Funding to be obtained through the State of California's Affordable Housing Sustainable
Communities program;
• New Market Tax Credits
• Section 8 vouchers for the five 30% AMI units.
However, as the Devefoper has neither obtained, applied for, nor provided draft applications for these
sources, CSG has notaccounted for them in this analysis. Nor have we evaluated the Project for
competitiveness or suitability for any of the above.
We have focused our analysis on a review of the Project's sources and uses in the context of the Project's
proposed 4% tax credit financing.
In order to achieve the foregoing, the analysis proceeds as follows
• Side-by-side comparison of the Developer's sources and uses budget with a "Base Budget"
constructed by CSG, with explanation of variances,
+ Building upon the CSG Base Budget, comparison of the Developer's sources and use budget
with a CSG -constructed budget including deferred developer fee,
Table 3, below, provides a consolidated form of the Developer's budget compared to the CSG "Base
Budget" showing modifications proposed by CSG. In creating this analysis and variance, we have used
the Developer's assumptions (except as noted) and modalad the Project using the applicable CTCAC
application form.
Table 3: Variance Analysis of Developer's Budget to CSG "Base Budget"
USES
Budgetftem Developer CSG variance Notes/Exolaaatipnaf Variance
Total Land /Accluisalon Cost
$3,996,300
$3,996,300
Includes land and holding costs
Total New Construction Costs _
$15,270,291
$15,270,291
Total Construction Contingency (5%)
$763,515
$763,515
Total Architectural Costs
$350,000
$350,000
Total Survey and Englneering
$1501500
$150,500
Constructlon Loan Interest
$690,000
$976,990
$236,990 See desuaston below
Construction Loan
Origination Fee
$221,000
$221,000
0.75% commitment Fee par chase letter
Permanent Origination Fee
$10000
$10000
Typical Citf"Conversion Nee"
Total Attorney Costs
$165,000
$165,000
_
Total Reserve Costs
$371,930
$371,938
6 mos, Operating R6aarve typical of Citi
underwriting
Total Appraisal Costs
10,000
10,000
csv'Y`. I advisors SAN FRANCISCO r LOS ANGE1,43 NEW YORK
EXHIBIT 1
Judson Brown, City of Santa Ana
May 24 2017
Tlny Tim Plaza Apartments Financial Feasibility
Pace 4 of 6
Costs of Bond Issuance
$93,314
$93,314
Permits and Feee
$90010M
$900,000
Soft Costs
$508,786
$508,786
Other Costs
$400,000
$400,000
Subtotal Project Costs
$23,890,144
$24,127,134 _
Developer Fee
gam
Max Developer Fee per CTCAC (assuming
sam205 i],j5,2os.15 eligible basis of approx.$17,174,701)
Total Development Cost*
$26,290,144
$26,703,339 $413,195
PERMANENT SOURCES
Permanent Loan -Residential
$8,420,587
$7,829,652
($590,935]
See Discussion, below
Permanent Loan - Retail
$2,113,746
$0
($2,113,7461
See Discussion, below
DSCR
Cash Flow Available to Support Da6t
$459,309mm
Reflects total 12 -year cash flow (after
partnership and asset management fees
starting at $18,500) available forpaym•nt of
Deferred Developer Fees
$1,014,984
$1,330,993
$316,009
deferred fees.
Low Income Housing Tax Credit
Equity
029
681 326
$70,498
Sao Discussion, Below
I TOTAL SOURCES
$17.320.145
15001977
($565,769)
1 SURPLUS/(DEFICI'q ($8,969,99.91{$11,701368) �.{$966,963) !
*Developer's budget total of $26,320,144 does not correctly total by $30,000 (error in Developer's "Indirect
Construction" total)
Discussion of Table 3
The "Uses" portlon of Table 3 shows the Developer's budget, contrasted with modifications proposed by
CSG.
• Total New Construction Costs: Supported by a "Conceptual Estimate' provided by the Advent
Companies. Le., these are very preliminary estimates based on conceptual drawings,
• Construction Loan Interest: CSG has applied typical underwriting criteria i.e., 60% average
outstanding balance, during the term (24 mos), at the underwriting Interest rate (3.65%).
• Developer Fee: CSG has adjusted the Developer Fee to reflect 15% of unadjusted eligible basis (i.e..
$17,174,701) not including the Developer Fee as allowed by CTCAC for 4% tax credit projects.
The "Sources" portion of the table Illustrates proposed corrections to certain of the sources.
• Permanent Loan - Residential: We have sized the Permanent Loan with out reference to Section 8,
because the developer has not applied for or secured an award of Sectlon 8 vouchers. The
calculation of the permanent loans is as indicated below based on terms consistent with the market
and typical Citibank tax-exempt bond transactions:
(+•SjG Iadvisors SAN FRANCISCO LOS ANGELES NEW YORK
Tex Credit Rents
Effective Gross Rents
$793,406 (per Developer units mix and 55%
vacancy)
Oparatingonses and ftasorves5,i9Q1
_
Net Cash Flow
$528,206
DSCR
Cash Flow Available to Support Da6t
$459,309mm
(+•SjG Iadvisors SAN FRANCISCO LOS ANGELES NEW YORK
I01AO
Judson Brown, City of Santa Ana
May 24 2017
Tiny Tim Plaza Apartments Financial Feasibility
Pape 5 of 6
interest rata/Amortization Term 4.75%135yra
Loan Amount $7,629,692
Note that the Effective Gross Rents reflect 2017 CTCAC rents for Orange County.
Permanent Loan - Retail: Lender and investor underwriting of the retail space would be atypical for
affordable lending and, as CSG has not received substantiation of Lender willingness to underwrite
the retail, CSG has eliminated this source,
Low -Income Housing Tax Credit Equity: The LIHTC equity reflects slightly adjusted eligible basis as
compared to the Developer Budget. The LIHTC equity calculation is as follows (per the CTCAC
application form);
Total Eligible Basis
$19,750,906
OCT basis boost
100%
Total Adjusted Eligible Basis
$19,760,906
Applicable Fraction
100.00%
Total Ouallfied Basis
$19,750,906
Applicable Percentage
$.25%
Annual Federal Credit
$641,904
Total Federal Credit
$6,419,040
Tex Credit Factor
$0.91
LIH7C Equity
$5,841,326
Financing Deficit
Based on the adjustments• noted above, the Project has a financing deficit of approximately $11.7M. The
Developer has proposed to close this financing deficit with permanent financing based on the
commercial rents; and with funds from City, the State of California's AHSC program, Section 8 vouchers,
and New Market Tax credits. This analysis has not addressed the Project's suitability or likelihood of
success for the latter three programs.
Operating Expenses and Operating Pro Forma
The Developer proposes annual operating expenses per unit of approximately $4,900 per unit not
Including reserves, based on expenses of its recently completed projects in the region, e.g., Guest House
apartments,
The Developer's proposed operating pro forma uses standard underwriting requirements fortax-credit
and bond financing projects: annual Income inflation at 2.5% and annual expense inflation of 3.5%;
vacancy of 5% annually. These underwriting assumptions along with calculated debt service an the first
Permanent Loan results in an Initial year debt service coverage (DCR) of 1,15, with increasing DCR each
year. there after. The Developer's proposed operating pro forma indicates a healthy project from an
operational perspective.
CONCLUSION
The Project has a financing deficit of approximately $117M. The Developer proposes, in addition to
funds requested from the City, to close the financing deficit with permanent financing based on the
commercial rents; and with funds from the AHSC, New Market Tax Credits, and the use of Section 8
csGI advisors SAN FRANCISCO LOS ANGELES NEW YORK
80A-77
EXHIBIT 1
Judson Brown, City of Santa Ana
May 24 2017
Tiny Tim Plaza Apartments Financial Feasibility
Page 6 of 6
vouchers. The project has not yet applied for these sources. The suitability of the Project for those
sources and the likelihood of success in obtaining those sources should be the source of a separate
analysis,
csGjadvlaors SAN FRANCISCO • LOS ANGELES NEW YORK
FOODIM461
MAYOR
Mlgual A. Pulldo
MAYOR PRO TEM
Whole Mart(nez
COUNCILMEMBERS
P. Oavld Benevides
vloente Sarmlento
Jose Solorlo
Sal Tfnalero
Juan Mllegas
June 20, 2017
Exhibit 9
CITY OF SANTA ANA
20 Civlo Center Plaza • P.O. Box 1908
Santa Ana, California 92702
714-047.0900
WWW.santa-ana.aro
AMCAL 1440 Santa Ana Fund, L.P.
AMCAL Multi -housing, Inc.
Attn: Mario Turnor, Vice President Development
17862 E. 17th Street, Suite 209
Tustin, CA 92780
SUBJECT: 69 Unit Multi -Family Housing Project
1440 East First Street, Santa Ana, California
Dear Mr, Turner,
L:MI :161
INTERIM CITY MANAGER
Cynthla Kurtz
CITY ATTORNEY
Sonla R. Carvalho
CLERK OF THE COUNCIL
Made D. Hulzar
AMCAL 1440 Santa Ana Fund, L.P., a California limited partnership ("Developer")
requested financial assistance in connection with the proposed development of a 69 unit affordable
housing complex to be located at 1440 East First Street, Santa Ana, California ("Projcce" , The
Housing Authority of the City of Santa Ana ("Housing Authority") has reviewed the Developer's
request for assistance and at the Housing Authority meeting on June 20, 2017, the Housing Authority
Board authorized and approved issuance of this pre -commitment letter evidencing the preliminary
award of $8,522,740 of funds to the Project (the "Agency Assistance"), which Agency Assistance
shall be funded exclusively from the Low and Moderate Income Housing Asset Fund (the
"LMIHAF") held by the Housing Authority of the City of Santa Ana acting as the Housing Successor
Agency (the "Agency"). The Agency and the Developer have mutually agreed upon the pre -
commitment of Agency Assistance in the maximum amount of $8,522,740.
The purpose of this letter is to provide a pre -commitment from the Agency for a loan of up to
$8,522,740 ("Agency Loan") from the LNHAF held by the Housing Successor Agency. The Agency
intends that this letter evidence the Agency's pre -commitment of the Agency Assistance to the
Developer for the Project subject to the conditions described below. The Agency Loan Agreement
for these funds requires Housing Authority Board approval prior to execution by the Developer and
the Agency.
The amount of the proposed Agency Loan has been determined based upon the Agency's
review of the Developer's request for the receipt of the Agency Assistance and the development
SANTA ANA CITY COUNCIL
MlguelA. Pulldo MI.W. M.M.4 Yoanlaawmlanlo Joe. War. RO.Nd DOMONdaa duan M115gae Oat Tmejoo
Mayor Malar Pro Tam. Ward 2 Word ward VAd4 Werra Wards
m9u1tlo(@.g1jg,ananm 011... ax�senleana.am vsaimlenlolb.enin-ena.uro .� lea od.�sawa.vnanry tlbena4tlasf@sanlaane.vm IvinvamIDsenle.en..ore gllnalamaaeaMe.ana.ora
• A •
l�'
EXHIBIT 1
AMCAL 1440 Santa Ana Fund, L.P.
June 20,2017
Page 2
proforma and projected cash flows for the Project submitted by the Developer to the Agency as of
March 18, 2016 ("Profnrma'D. The Housing Authority's Executive Director has authority to approve
revised developmentproformas and projected cash flows for the Project; provided, however, that the
Agency Assistance is not materially increased or extended,
In relation to this Agency Loan, the City Council approved a conditional, pre -commitment
letter of up to $8,795,000 on April 19, 2016, to be funded exclusively from Inclusionary housing in -
lieu fee payments made pursuant to the City's Housing Opportunity Ordinance (Article XVIILI of
Chapter 41 of the Santa Ana Municipal Code) by the market rate developer of that certain mixed-use
development to he located at 2001 East Dyer Road, Santa Ana, California (the "In -Lieu Fee"), The
Developer and the City agree that the issuance of this pre -commitment letter from the Agency for a
loan of up to $8,522,740 from the LMI14AF hold by the Housing Successor Agency hereby releases
the City of its commitment of the $8,795,000 in the conditional, pre -commitment letter approved by
City Council on April 19, 2016, from funds to be received by the City from the In -Lieu Fee at a future
date. As such, the conditional, pre -commitment letter of up to $8,795,000 approved by City Council
on April 19, 2016, is hereby terminated by all parties and made null and void.
The Developer's Project is intended to serve, in part, a target population of Very -Low and
Extremely -Low Income persons using LMIHAF from the Agency, pursuant to California Health and
Safety Code Section 34176.1. Section 34176.1(a)(3)(13) requires that the Agency must require at least
30% of the LMIHAF to be expended for development of rental housing affordable to and occupied
by households earning 30% or less of the Area Median Income ("AMI'), Ifthe Agency fails to comply
with the Extremely -Low Income requirement in any five-year reporting period, then the Agency must
ensure that at least 50% of the funds remaining in the LMIHAF be expended in each fiscal year
following the latest fiscal year following the report on households earning 30% or less of the AMI
until the Agency demonstrates compliance with the Extremely -Low Income requirement. In order
for the Agency to meet this five-year Extremely -Low Income Test, the Agency and the Developer
have mutually agreed that at least 50% of the units in the project, 34 of 68 total affordable Housing
Units, will be affordable to and occupied by households earning 30% or less of the AMI.
The Agency Loan, should it be issued, will have the following terms;
• $8,522,740 principal amount, or as much thereof as is disbursed for acquisition costs
and hard and soft costs in constructing the Project;
• 3% simple interest per annum;
• Repayment from 50% of Residual Receipts (aftarpaymentofoperating expenses, debt
service, any deferred developer fee, and partnership fees to be described in the Agency
Loan Agreement) with the remaining 50% to be disbursed to the Developer;
• Remaining principal and accrued interest due upon the 55th anniversary of the
issuance of Certificate of Occupancy and/or final building permits or earlier upon sale,
refinancing or default. On that date, the Agency agrees to review the performance of
the property and consider in good faith any reasonable request by A'MCAL to modify
the terms or extend the term of the Agency Promissory Note. Additionally, the
Agency will receive 50% of the net proceeds received from any sale orrefmancing of
,:1 M :1
EXHIBIT 1
AMCAL 1440 Santa Ana Fund, L.P.
June 20, 2017
Page 3
the Project, after payment of outstanding debt and payment in full of any deferred
developer fee and establishment of any reserves and transaction costs; and
Cost savings from the Project, if any, will be applied first to pay down the Agency
Loan, subject to compliance with the Tax Credit Allocation Committee ("TCAC")
Regulations and California Health and Safety Code.
The Agency's obligation to provide the Agency Loan to the Project are subject to each of the following
conditions:
1. Review and approval of the documents evidencing the Agency Loan by the Housing
Authority of the City of Santa Ana acting as the Housing Successor Agency.
2, Compliance with California Health and Safety Code and applicable regulations set
forth in Section 34176.
3. Compliance with and completion of an environmental review of the Project pursuant
to the California Environmental Quality Act ("CEQA") and approval thereof.
4. The funding of $8,522,740 is from the Low and Moderate Income Housing Asset
Fund which requires legal restrictions which the Agency cannot amend or repeal. 68
of the 69 "Housing Units" at the Project shall and will be restricted to "Affordable
Rents" as defined by the TCAC Regulations for a period not less than 55 years
pursuant to conditions, covenants and restrictions recorded against the Project in the
Official Records, County of Orange, California. 34 of the 68 Housing Units at the
Project shall and will be restricted to households eaming 30% or less of the AMI. One
(1) Housing Unit will be rented to an on-site property manager; the manager's unit
will not be rent -restricted.
5. The Agency Loan Agreement shall provide that each of the following conditions shall
be met prior to the disbursement of any portion of the Agency Loan:
a. All grading permits shall have been issued and the City shall have issued a
letter stating that building permits are ready to issue, subject only to payment
of fees and the completion of grading of the Project site.
b. Developer shall have secured all necessary financing and funding for the
construction and operation of the Project. Such financing and funding shall
be sufficient to pay all Project development costs, through lease -up, as set
forth in a final budget consistent with the approved Proforma (or as otherwise
approved by the Agency).
C. The Developer shall have provided evidence to the Agency that the developer
has obtained insurance policies and certificates or endorsements acceptable to
the Agency, as described in the Agency Loan Agreement.
d. The Developer shall have provided construction security in favor of the
Agency, which may include a completion guarantee from AMCAL
EXHIBIT 1
AMCAL 1440 Santa Ana Fund, L,P.
June 20, 2017
Page 4
Multi -Horsing, Inc. and/or a letter of credit and/or performance & payment
bonds from the general contractor for the Project (or some combination of
these), in an amount sufficient to ensure the Project will be completed and
placed in service within the time set forth in the Project schedule approved by
the Agency.
e. Developer shall submit and obtain Executive Director of the Housing
Authority's approval of the construction contract, Developer's limited
partnership agreement for the limited partnership entity to be formed to own
and operate the Project, and management, marketing and tenant selection
plans for the Project.
6. The Agency's obligation to provide the Agency Loan is and shall remain subject to all
covenants, conditions, and restrictions set forth in the Agency Loan Agreement, and
in particular Agency's analysis of the available funding sources and development and
operating costs of the Project and the overall economic feasibility of the Project.
This pre -commitment letter for the Project will expire two (2) years from issuance of the letter to the
Developer. The Developer and the Agency agree in the Agency Loan Agreement that the provision
of any funds to the Project is and shall be conditioned on the Agency's determination to proceed with,
modify or cancel the Agency Assistance based on the results of a subsequent CEQA environmental
review and the outcome of Subsidy layering Review.
If you have any questions or require any additional information regarding this award letter, please
contact Judson Brown, Housing Division Manager, by telephone at (714)_667-2241 or by e-mail
at ibrown@,16nta-ana.ore,
Sincerely,
Cynthia Kurtz
Interim City Manager
City of Santa Ana I
Housing Authority of the City of Santa Ana
FOODIX46Y
MAYOR
Miguel A. Pulldo
MAYOR PRO TEM
Michele Martinez
COUNCILMEMBERS
P. David Banavides
Vicente Sarmiento
Jose solorio
Sal Tlnalero
Juan Vlllegas
June 20, 2017
Exhibit 10
CITY QF SANTA ANA
29 Civic Center Plaza • P.O. Box 1986
Santa Ana, Callfamla 92702
714.047.8960
ymmonla•ana.orn
Kyle Paine
Community Development Partners
3416 Via Oporto, Suite 301
Newport Beach, CA 92663
Re: Project Based Vouchers Award
Aqua Housing -- 317 East 17th Street, Santa Ana, CA 92706
Dear Mr. Paine,
EXHIBIT 1
INTERIM CITY MANAGER
Cynthia Kurtz
CIN ATTORNEY
Sonia R. Carvalho
CLERK OF THE COUNCIL
Made D. Hulzar
On April 4, 2017, the Housing Authority of the City of Santa ("SAHA") approved your
proposal for twenty-five (25) project -based vouchers ("PBVs") for permanent supportive
housing to be used at the Aqua Housing project located at 317 East 17th Street, Santa
Ana, CA 92706 ("Project'). On June 20, 2017, SAHA approved an amendment to your
original Project award for an additional thirty-one (31) PBVs for permanent supportive
housing, for a total of fifty-six (56) PBVs for the Project. The Project consists of a fifty-
seven (57) unit affordable multi -family apartment complex and will be made available at
affordable rents with wrap-around supportive services to chronically homeless
individuals. This approval is contingent upon completion of a subsidy layering analysis of
the Project by the U.S. Department of Housing and Urban Development ("HUD"). Should
the Project be awarded low-income housing tax credits, the analysis will be conducted by
the California Tax Credit Allocation Committee.
The basic terms of the award are as follows;
• Funding Source: The fifty-six (56) PBVs will be funded exclusively out of the tenant -
based voucher program annual budget authority received by SAHA from HUD.
SANTA ANA CITY COUNCIL
Mlaoel A PWida Mlrkda Wrenn Joao Soloda RDavid Deneddm Joan V11"Wo Sol lh4"ro
Mayor Mayor Pm Tom, Ward2 Wad WOW e Word Wald6 Wards
moupdaQ3,nlaana om mAnartlneaAaanl"aw.om ysennlant"nflsanlaann.om -,. ramade,dsaw.an=nm aWae,lOsanlaana ora Mlleuaamlaenlaana.om allngiamftam"arm oro
FOOMMOOF
EXHIBIT 1
Rents: The Project -Based Voucher Housing Assistance Payments (HAP) Contract
rents below are preliminary and contingent upon a reasonable rent determination to
be conducted by the Housing Authority at the time of execution of the HAP Contract:
o Studio: $1,382
0 1 -bedroom: $1,579
In accordance with HUD regulations and SAHA's Administrative Plan, these rents
are subject to review prior to the execution of a HAP contract.
Annual Amount: Should the project receive low-income housing tax credits, itwill
receive PBVs for fifty-sfx (56) units:
Unit Size
30% AMI
60% AMI
Total
No.
Units
Proposed
Rent
No.
Units
Proposed
Rent
Studio
9
$1,382
3
$1,382
12
One Bedroom
30
$1,579
14
$1,579
44
Total
38
17
5li
The estimated maximum annual amount received under this award is $1,032,720.
These estimates assume 100% occupancy of the units over the twelve-month
period.
Term: The HAP Contract will have a term of twenty (20) years. Any time before the
expiration of the NAP Contract, the developer may request an additional twenty (20)
year term, subject to a determination by SAHA that it is appropriate to continue
providing affordable housing for chronically homeless individuals and/or to expand
housing opportunities and HUD funding. Subsequent extensions are subject to the
same requirement.
Units Receiving Assistance: The maximum number of units receiving assistance will
be fifty-six (56). Should the project receive low-income housing tax credits, the
maximum number of units will be fifty-six (56).
If you have any questions or require any additional information regarding this award letter,
please contact Judson Brown, Housing Division Manager, by telephone at (714) 667-
2241 or by e-mail at jbrownnsanta-ana.org.
Sincerely,
Cynthia Kurtz
Interim City Manager
City of Santa Ana /
Housing Authority of the City of Santa Ana
MAYOR
Miguel A. Pulldo
MAYORPROTEM
Michele Martinez
P. David Benevides
Vleenla Sarmiento
Jose $olorlo
Sal Tinalero
Juan Vlllegas
June 20, 2017
Exhibit 11
CITY OF SANTA ANA
20 Civic Center Plaza s P.O. Box 1989
Santa Ana, California 92702
714-847.0900
n2mia�ilad a
Kyle Paine
Community Development Partners
3416 Via Oporto, Suite 301
Newport Beach, CA 92663
SUBJECT: S1 Unit Multi -Family Housing Project
2223 West 5th Street, Santa Ana, California
Dear Mr. Paine,
EXHIBIT 1
INTERIM CITY MANAGER
Cynthia Kurtz
CITYATTORNEY
Sonla R. Carvalho
CLERK OF THE COUNCIL
Made D. Hulzar
Community Development Partners ("Developer") requested financial assistance in
connection with the proposed development of a 51 unit affordable housing complex to be located at
2223 West 5th Skeet, Santa Ana, California ("Project"). The City of Santa Ana ("City") and the
Housing Authority of the City of Santa Ana ("Housing Authority") have reviewed the Developer's
request for assistance and at the City Council/Hooasing Authority meeting on June 20, 2017, the City
Council/Housing Authority Board authorized and approved issuance of this conditional pre -
commitment letter evidencing the preliminary award of $6,000,000 of funds to the Project (the
"City/Agency Assistance"), which City/Agency Assistance shall be funded from inclusionary
housing in -lieu fee payments made pursuant to the City's Housing Opportunity Ordinance (Article
XVM.I of Chapter 41 of the Santa Ana Municipal Code) (the "Inclusionary Housing Fund") and the
Low and Moderate Income Housing Asset Fund (the "LMIHAF") held by the Housing Authority of
the City of Santa Ana acting as the Housing Successor Agency (the "Agency"). The City, Agency
and the Developer have mutually agreed upon the conditional pre -commitment of City/Agency
Assistance in the maximum amount of $6,000,000.
The purpose of this letter is to provide a conditional pre -commitment from the City and
Agency for loans of up to $6,000,000 ("City/Agency Loans"), of which $I,300,000 will come from
the htclusionary Housing Fund held by the City and $4,700,000 will conte from the LMIHAF held
by the Housing Successor Agency. This letter shall evidence the City and Agency's conditional pre -
commitment of the City/Agency Assistance to the Developer for the Project subject to the conditions
described below, The Loan Agreements for these funds require City Council/Housing Authority
Board approval prior to execution by the Developer, the City and the Agency.
SANTA ANA CITY COUNCIL
Miguel AP Ido Mlehele M.de . Moonie Zw Ipnio Jo. $owo P. DaVd Ba Oche Juan VIIM ae Sal TIM1.
Mavor MayorPla Tem, WaM2 wardl Wazda Warda Warn 6� warda
maar*Ounlaana,oro mt1Z0.1eM0T10:aane.om vsurmWnleFbsanfe-ane.ora 1-1,m.-,_-, dbanevldeallAaanhwne.om ivtllaoevrtbsentn-nno.arn ellnaleml&senPoana.om
MAON n*M
Community Development Partners
June 20, 2017
Page 2
The amount of the proposed City/Agency Loans has been determined based upon the City
and Agarncy's review ofthe Developer's request for the receipt of the City/Agency Assistance and the
development proforma and projected cash flows for the Project submitted by the Developer to the
City/Agency C'Proforma"). The City Manager and Housing Authority Executive Director have
authority to approve revised development proformas and projected cash flows for the Project;
provided, however, that the City/Agency Assistance is not materially increased or extended.
The City/Agency Loans, should they be issued, will have the following terms:
• $6,000,000 principal amount ($4,700,000 from LMIHAF; $1,300,000 from
Inclusionary Housing Fund), or as much thereof as is disbursed for acquisition costs
and hard and soft costs in constructing the Project;
• 3% simple interest per annum;
• Repayment from 50% ofResidual Receipts (pro -rata with payments due in connection
with other financing provided by the City/Agony) (after payment of operating
expenses, debt service, any deferred developer fee, and partnership fees to be
described in the Agreement) with the remaining 50% to be disbursed to the Developer;
• Remaining principal and accrued interest due upon the 55th anniversary of the
issuance of Certificate of Occupancy and/orfinal building permits or earlier upon sale,
refinancing or default. On that date, the City/Agency agrees to review the
performance of the property and consider in good faith any reasonable request by
Community Development Partners to modify. the terms or extend the term of the
City/Agency Promissory Notes. Additionally, the City/Agency will receive 50% of
the net proceeds received from any sale or refinancing of the Project, after payment
of outstanding debt and payment in full of any deferred developer fee and
establishment of any reserves and transaction costs; and
Cost savings from the Project, if any, will be applied first to pay down the Loans,
subject to compliance with the Tax Credit Allocation Committee (TCAC")
Regulations and California Health and Safety Code.
The City and Agency's obligation to provide the City/Agency Loans to the Project are subject to each
of the following conditions:
I. Adoption of a resolution by the Planning Commission and City Council approving the
Site Plan Review to allow the construction of a 51 -unit affordable housing complex
to be located at 2223 West 5th Street, Santa Ana, California.
2. At least 10% of the units will be affordable to families at 30% Area Median Income
(AMI).
3. Review and approval of the documents evidencing the Loans by the City of Santa Ana
and the Housing Authority of the City of Santa Ana acting as the Housing Successor
Agency.
FOODIX40F
EXHIBIT 1
Community Development Partners
June 20, 2017
Page 3
4. Compliance with California Health and Safety Code and applicable regulations set
forth in Section 34176.
5. Compliance with and completion of an environmental review of the Project pursuant
to the California Environmental Quality Act ("CEQA'7 and approval thereof.
6. The City/Agency Loan Agreements shall provide that each of the following conditions
shall be met prior to the disbursement of any portion of the Loans;
a. All grading permits shall have been issued and the City shall have issued a
letter stating that building permits are ready to issue, subject only to payment
of fees and the completion of grading of the Project site.
b. Developer shall have secured all necessary financing and finding for the
construction and operation of the Project. Such financing and funding shall
be sufficient to pay all Project development costs, through lease -up, as set
forth In a final budget consistent with the approved Proforma (or as otherwise
approved by the City/Agency).
C, The Developer shall have provided evidence to the City/Agency that the
Developer has obtained insurance policies and certificates or endorsements
acceptable to the City/Agency, as described in the Loan Agreements.
d. The Developer shall have provided construction security in favor of the
City/Agency, which may includes, completion guarantee from Community
Development Partners and/or a letter of credit and/or performance & payment
bonds from the general contractor for the Project (or some combination of
these), in an amount sufficient to ensure the Project will be completed and
placed in service within the time set forth in the Project schedule approved by
the City/Agency.
e. Developer shall submit and obtain the City Manager / Executive Director of
the Housing Authority's approval of the construction contract, Developer's
limited partnership agreement for the limited partnership entity to be formed
to own and operate the Project, and management, marketing and tenant
selection plans for the Project.
The City/Agency's obligation to provide the Loans is and shall remain subject to all
covenants, conditions, and restrictions set forth in the Loan Agreements, and in
particular City/Agency's analysis of the available funding sources and development
and operating costs of the Project and the overall economic feasibility of the Project.
This conditional pre -commitment letter for the Project will expire two (2) years from issuance of the
letter to the Developer. The Developer, City and the Agency agree in the Loan Agreements that the
provision of any fiords to the Project is and shall be conditioned on the City/Agency's determination
to proceed with, modify or cancel the City/Agency Assistance based on the results of a subsequent
CEQA environmental review and the outcome of a Subsidy Layering Review.
FOODIX46h
rMcn fts
Community Development Partners
June 20, 2017
Page 4
If you have any questions or require any additional Information regarding this conditional pre -
commitment letter, please contact Judson Brown, Housing Division Manager, by telephone at
(714) 667-2241 or by a -mail at ib n@santa� a�na.org.
Sincerely,
Cynthia Kurtz
Interim City Manager
City of Santa Ana /
Housing Authority of tho City of Santa Ana
M . .
MAYOR
Miguel A. Pulido
MAYOR PRO TEM
Michele Martinez
COUNCILMEMBERS
P. David Benavides
Vicente Sarmiento
Jose Solorio
Sal Tinaiero
Juan Villages
June 20, 2017
CITY OF SANTA ANA
20 Civic Center Plaza • P.O. Box 1988
Santa Ana, California 92702
714.647-6900
wvmv.santa-ana.orc
Kyle Paine
Community Development Partners
3416 Via Oporto, Suite 301
Newport Beach, CA 92663
SUBJECT: 51 Unit Multi -Family Housing Project
2223 West 5th Street, Santa Ana, California
Dear Mr. Paine,
EXHIBIT 2
INTERIM CITY MANAGER
Cynthia Kurtz
CITY ATTORNEY
Sonia R. Carvalho
CLERK OF THE COUNCIL
Maria D. Huizar
Community Development Partners ("Developer") requested financial assistance in
connection with the proposed development of a 5t unit affordable housing complex to be located at
2223 West 5th Street, Santa Ana, California ("Project"), The City of Santa Ana ("City") and the
Housing Authority of the City of Santa Ana ("Housing Authority") have reviewed the Developer's
request for assistance and at the City Council/Housing Authority meeting on June 20, 2017, the City
Council/Housing Authority Board authorized and approved issuance of this conditional pre -
commitment letter evidencing the preliminary award of $6,000,000 of funds to the Project (the
"City/Agency Assistance"), which City/Ageney Assistance shall be frmded from inclusionary
housing in -lieu fee payments made pursuant to the City's Housing Opportunity Ordinance (Article
XVIII.I of Chapter 41 of the Santa Ana Municipal Code) (the "Inclusionary Housing Fun(T") and the
Low and Moderate Income Housing Asset Fund (the "LMIHAF") held by the Housing Authority of
the City of Santa Ana acting as the Housing Successor Agency (the "Agency"). The City, Agency
and the Developer have mutually agreed upon the conditional pre-cormnitnent of City/Agency
Assistance in the maximum amount of $6,000,000.
The purpose of this letter is to provide a conditional pre -commitment from the City and
Agency for loans of up to $6,000,000 ("City/Agency Loans"), of which $1,300,000 will come from
the Inclusionary Housing Fund held by the City and $4,700,000 will come from the LMIHAF held
by the Housing Successor Agency. This letter shall evidence the City and Agency's conditional pre -
commitment of the City/Agency Assistance to the Developer for the Project subject to the conditions
described below. The Loan Agreements for these funds require City Council/Housing Authority
Board approval prior to execution by the Developer, the City and the Agency.
SANTA ANA CITY COUNCIL
Miguel A. RAch, Michele Martinez Vicente Sarmiento Jose soiree P. David 9anaWdas Juan Villages Sal "Trier
Mayor Mayor Pro Tem. Ward 2 Ward Ward Word Wards Ward
moulidoasantamhaora miadnirm,idisena-ana.oro vsarmientc&yanla-anaom "-8
n-� dtheardes@sante-ane.r mileaiiiinsare-ata am 51 na'eronnsante-ane oro
EXHIBIT 2
Community Development Partners
June 20, 2017
Page 2
The amount of the proposed City/Agency Loans has been determined based upon the City
and Agency's review of the Developer's request for the receipt of the City/Agency Assistance and the
development proforma and projected cash flows for the Project submitted by the Developer to the
City/Agency ("Proforma"). The City Manager and Housing Authority Executive Director have
authority to approve revised development proformas and projected cash flows for the Project;
provided, however, that the City/Agency Assistance is not materially increased or extended.
The City/Agency Loans, should they be issued, will have the following terms:
• $6,000,000 principal amount ($4,700,000 from LMIHAF; $1,300,000 from
Inclusionary Housing Fund), or as much thereof as is disbursed for acquisition costs
and hard and soft costs in constructing the Project;
• 3% simple interest per annum;
• Repayment from 50% of Residual Receipts (pro -rata withpayments due in connection
with other financing provided by the City/Agency) (after payment of operating
expenses, debt service, any deferred developer fee, and partnership fees to be
described in the Agreement) with the remaining 50% to be disbursed to the Developer;
• Remaining principal and accrued interest due upon the 55th anniversary of the
issuance of Certificate of Occupancy and/or final building permits or earlier upon sale,
refinancing or default. On that date, the City/Agency agrees to review the
performance of the property and consider in good faith any reasonable request by
Community Development Partners to modify the terms or extend the term of the
City/Agency Promissory Notes. Additionally, the City/Agency will receive 50% of
the net proceeds received from any sale or refinancing of the Project, after payment
of outstanding debt and payment in fill of any deferred developer fee and
establishment of any reserves and transaction costs; and
Cost savings from the Project, if any, will be applied first to pay down the Loans,
subject to compliance with the Tax Credit Allocation Committee ("TCAC")
Regulations and California Health and Safety Code,
The City and Agency's obligation to provide the City/Agency Loans to the Project are subject to each
of the following conditions:
Adoption of a resolution by the Planning Commission and City Council approving the
Site Plan Review to allow the construction of a 5I -unit affordable housing complex
to be located at 2223 West 5th Street, Santa Ana, California.
2. At least 10% of the units will be affordable to farnilies at 30% Area Median Income
(AMI).
3. Review and approval of the documents evidencing the Loans by the City of Santa Ana
and the Housing Authority of the City of Santa Ana acting as the Housing Successor
Agency,
.OD' OI
Community Development Partners
June 20, 2017
Page 3
4. Compliance with California Health and Safety Code and applicable regulations set
forth in Section 34176.
5. Compliance with and completion of an environmental review of the Project pursuant
to the California Environmental Quality Act ("CEQA") and approval thereof
6. The City/Agency Loan Agreements shall provide that each of the following conditions
shall be met prior to the disbursement of any portion of the Loans:
a. All grading permits shall have been issued and the City shall have issued a
letter stating that building permits are ready to issue, subject only to payment
of fees and the completion of grading of the Project site.
b. Developer shall have secured all necessary financing and funding for the
construction and operation of the Project. Such financing and funding shall
be sufficient to pay all Project development costs, through lease -up, as set
forth in a final budget consistent with the approved Proforma (or as otherwise
approved by the City/Agency),
C. The Developer shall have provided evidence to the City/Agency that the
Developer has obtained insurance policies and certificates or endorsements
acceptable to the City/Agency, as described in the Loan Agreements.
d. The Developer shall have provided construction security in favor of the
City/Agency, which may include a completion guarantee from Community
Development Partners and/or a letter of credit and/or performance & payment
bonds from the general contractor for the Project (or some combination of
these), in an amount sufficient to ensure the Project will be completed and
placed in service within the time set forth in the Project schedule approved by
the City/Agency.
C. Developer shall submit and obtain the City Manager / Executive Director of
the Housing Authority's approval of the construction contract, Developer's
limited partnership agreement for the limited partnership entity to be formed
to own and operate the Project, and management, marketing and tenant
selection plans for the Project.
The City/Agency's obligation to provide the Loans is and shall remain subject to all
covenants, conditions, and restrictions set forth in the Loan Agreements, and in
particular City/Agency's analysis of the available funding sources and development
and operating costs of the Project and the overall economic feasibility of the Project.
This conditional pre -commitment letter for the Project will expire two (2) years from issuance of the
letter to the Developer. The Developer, City and the Agency agree in the Loan Agreements that the
provision of any funds to the Project is and shall be conditioned on the City/Agency's determination
to proceed with, modify or cancel the City/Agency Assistance based on the results of a subsequent
CEQA environmental review and the outcome of a Subsidy Layering Review.
F46111MOT
EXHIBIT 2
Community Development Partners
June 20, 2017
Page 4
If you have any questions or require any additional information regarding this conditional pre -
commitment letter, please contact Judson Brown, Housing Division Manager, by telephone at
(714) 667-2241 or by e-mail at ibrown@santa-ana.org.
Sincerely,
Cynthia Kurtz ~~
Interim City Managere,
City of Santa Ana /
Housing Authority of the City of Santa Acta
FOODYMN
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
LOAN AGREEMENT
by and between the
EXHIBIT 3
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 61031
HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE
HOUSING SUCCESSOR AGENCY
and
Tiny Tim LP, a California limited partnership
(2223 West Fifth Street, Santa Ana, California)
Dated: April 16, 2019
. l m
LOAN AGREEMENT
HOUSING SUCCESSOR AGENCY FUNDS
THIS LOAN AGREEMENT ("Agreement") dated, for identification purposes
only, as of April 16, 2019, is made and entered into by and between the Housing Authority
of the City of Santa Ana (CA093), acting as the Housing Successor Agency, a public body,
corporate and politic ("Agency"), and Tiny Tim LP, a California limited partnership
("Developer") with reference to the following:
RECITALS:
A. The Agency is authorized by the Community Redevelopment Law of the
State of California (Health and Safety Code section 33000, et seq.) ("CRL") to expend
funds to increase the supply of very low and low income housing available at affordable
housing costs. In part to further this goal, the Agency has created the Merged Project
Areas, within the City (the "Project Area"), and adopted a Redevelopment Plan for the
redevelopment of the Project Area. In accordance with Section 33334.2, et seq., of the
CRL, the Agency sets aside a portion of the tax increment revenues it receives from the
Merged Project Area in a separate low and moderate housing asset fund, which the Agency
uses for the construction, preservation, and rehabilitation of affordable housing for low
income households.
B. Developer, acting by and through its representative and agent, Community
Development Partners, a California corporation ("CDP") requested financial assistance in
connection with the proposed development of a fifty-one (51) unit affordable housing
complex ("Project") to be located at 2223 West Fifth Street, Santa Ana, California, and
legally described within Exhibit A attached hereto and incorporated herein ("Property").
At least fifteen (15) of the units will be affordable to family households earning no more
than 30% of the Area Median Income ("AMI"); five (5) of the units affordable to family
households earning no more than 50% of the AMI; and thirty (30) of the units affordable
to family households earning no more than 60% of the AMI. Office space within the
development will be provided for use as a police substation which at a minimum will have
room for a desk, phone, and computer that could be set up by the Santa Ana Police
Department ("SAPD"), dependent upon their available staffing and resources. The unit
mix consists of:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
On-site amenities will include a community plaza, an art center, urban farm, and
mini park with outdoor gym and jogging track. Mercy House Living Centers ("Mercy
House") will manage onsite residential services coordination for all households.
"Affordability Restrictions on Transfer of Property" means that certain
document affecting real property benefiting the Agency, attached hereto and incorporated
herein as Exhibit B.
"Affordable Housing" means the total housing costs paid by a qualifying
household, which shall not exceed the fraction of gross income specified, as follows, in
accordance with Sections 50052.5 and 50053 of the Health & Safety Code and the U.S.
Department of Housing and Urban Development (HUD):
Very Low -Income Households. Thirty (30) percent of the income of a household
earning fifty (50) percent of the Median Income for the Area adjusted for family
size appropriate for the unit.
Low -Income Households. Thirty (30) percent of the income of a household earning
seventy (70) percent of the Median Income for the Area for for -sale units, and thirty
(30) percent of the income of a household earning sixty (60) percent of the Orange
County median income for rental units, adjusted in either case for family size
appropriate for the unit.
In the event of a conflict between the fractions specified in this definition and those
found in Sections 50052.5 and 50053 of the Health & Safety Code and HUD, the
fractions specified by HUD shall control.
"Affordable Rent" means the monthly rents which do not exceed the
maximum amount applicable to Extremely Low, Very Low and Low Income households,
as promulgated by the California Tax Credit Allocation Committee (ICAC), or by the State
of California, as applicable.
"Agency" means the Housing Authority of the City of Santa Ana, acting as
the Housing Successor Agency, a public body, corporate and politic, exercising
governmental functions and powers, and organized and existing under the CRL. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California
92702. "Agency" shall also refer to the City where the context dictates, to the effect that
City shall have all rights granted to the Agency hereunder.
"Agency Deed of Trust" means the deed of trust encumbering the
Property, in the form attached hereto as Exhibit C, to be executed by Developer pursuant
to Section 5.13.1 in order to secure the Agency Loan Note.
"Agency Loan" means a loan in the original principal amount of up to four -
million, seven -hundred thousand dollars ($4,700,000) to be made to Developer by the
Agency to be funded exclusively from the Low and Moderate Income Housing Asset Fund
held by the Agency.
"Agency Promissory Note" means that certain promissory note for
Agency Loan funds in the original principal amount of $4,700,000 in the form attached
hereto as Exhibit D, and to be executed by Developer in favor of Agency to evidence the
C. The City of Santa Ana ("City") and the Housing Authority of the City of
Santa Ana ("Housing Authority") reviewed Developer's request for assistance and at the
City Council/Housing Authority meeting on June 20, 2017, the Housing Authority Board
authorized and approved issuance of a conditional, pre -commitment letter evidencing the
preliminary award of $4,700,000 of funds to the Project ("Agency Loan"), to be funded
exclusively from the Low and Moderate Income Housing Asset Fund (the "LMIHAF")
held by the Agency.
D. The amount of the Agency Loan was determined based upon the City and
Agency's review of the Developer's request for the receipt of the Agency Loan and the
development proforma and projected cash flows for the Project submitted by the Developer
to the City/Agency as of March 29, 2017 ("Proforma"). The Housing Authority's
Executive Director has authority to approve revised development proformas and projected
cash flows for the Project; provided, however, that the Agency Loan is not materially
increased or extended.
E. In furtherance of the CRL and the Redevelopment Plan, Developer has
applied to the Agency for a loan with which to:
1. Acquire, develop and construct the project, and
2. Thereafter to maintain, operate and professionally manage the Project
as decent, safe, sanitary and affordable rental housing.
F. The Agency, on certain terms and conditions, desires to make such Agency
Loan to Developer in order to make possible the acquisition, development, constriction,
ownership, maintenance, and operation of the Project, thereby expanding the supply of decent,
safe, sanitary and affordable housing within the City.
G. If there is any inconsistency between Federal, State, and local guidelines
with regard to any of the terms and conditions contained herein, the more stringent shall
apply.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, Agency and Developer agree as follows:
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Project Documents, unless otherwise
expressly defined, are defined where first used in this Agreement and/or as set forth in this
Article 1.
"Administrative General Partner" means Tiny Tim CDP LLC, a
California limited liability company.
• A
1 .,
obligation of Developer to repay the Agency Loan through residual receipts as further
described in the Agency Promissory Note.
"Building Permit" means the building permit(s) issued by City and
required for the construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 31.
"Certificate of Completion" has the meaning set forth in Article 17.
"City" means the City of Santa Ana, California, a charter city and
municipal corporation. "City" shall also refer to the Agency where the context dictates, to
the effect that the Agency shall have all the rights granted to the City hereunder.
"City Project Manager" shall mean the City's Housing Manager and/or
his/her designee..
"Close of Escrow" shall mean the date upon which the Agency Loan
Agreement and Agency Deed of Trust is recorded in the Official Records of the County.
"Co -General Partner" means IH CDP Partnership LLC, a California
limited liability company.
"County" means the County of Orange, California.
"Developer" means Tiny Tim LP, a California limited partnership.
"Developer's Representative" shall mean a representative of the
Administrative General Partner designated from time to time by the Administrative
General Partner of Developer or his/her designee.
"Escrow" is the escrow opened for the closing of the Senior Loan, Agency
Loan and Inclusionary City Loan.
"Escrow Holder" is Commonwealth Land Title Company.
"Event of Default" has the meaning set forth in Section 20.1.
"Extremely Low Income" means an adjusted income which does not
exceed thirty percent (30%) of the Median Income for the Area, adjusted for household
size, as published by the U.S. Department of Housing and Urban Development.
"General Partner" means collectively, jointly and severally the
Administrative General Partner, the Co -General Partner and the Managing General Partner.
"Governmental Authority" means any governmental or quasi -
governmental agency, board, bureau, commission, department, court, administrative
tribunal or other instrumentality or authority, and any public utility.
"Hazardous Materials" means flammable materials, explosives,
radioactive materials, hazardous wastes, toxic substances and similar substances and
materials, including all substances and materials defined as hazardous or toxic wastes,
substances or materials under any applicable law, including without limitation the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et sec., and the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. §§ 9601, et seq., as amended. Hazardous Material shall not include (i) construction
products, household cleaners and office materials of the type and quantity ordinarily used
in the normal construction, operation, ownership, occupancy and maintenance of properties
similar to the Project or (ii) small amounts of household mold to the extent promptly
remediated upon discovery.
"Housing Authority" means the Housing Authority of the City of Santa
Ana (CA093), a public body, corporate and politic.
"HUD" means the United States (U.S.) Department of Housing and Urban
Development, and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter
comprising any portion of the Property, including, without limitation, landscaping, trees
and plant materials; and offsite improvements, as required through the City of Santa Ana
Planning and Building Agency entitlement process.
"Inclusionary City Loan" means that certain $1,300,000 loan made to
Borrower by the City.
"Indemnitees" has the meaning set forth in Section 14.5.
"Investor Limited Partner" means R4 TTCA Acquisition LLC, or its
permitted successors or assigns.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
judgments, injunctions, decrees or awards of the United States or any state, county,
municipality or other Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, including any conditional sale or other title retention agreement,
any lease in the nature thereof, and any agreement to give any lien or security interest.
"Loan Documents" or "Agency Loan Documents" means, collectively,
this Agreement, the Agency Promissory Note, the Agency Deed of Trust, and the
Affordability Restrictions on Transfer of Property, and any other agreement, document, or
A
LFOODYOTOO
instrument that the Agency reasonably requires in connection with the execution of this
Agreement or from time to time to effectuate the purposes of this Agreement.
"Low Income" means an adjusted income which does not exceed eighty
percent (80%) of the Median Income for the Area, adjusted for household size, as published
by the U.S. Department of Housing and Urban Development (HUD).
"Managing General Partner" means Tiny Tim Mercy House CHDO
LLC, a California limited liability company.
"Median Income for the Area" means the median income for the Orange
County, California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Agency Loan Documents as "Area Median Income" or "AMI".
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership of the Developer, dated as of May 1, 2019, as may be amended,
modified or supplemented.
"Project" means the construction of the Improvements upon the Property
by Developer pursuant to this Agreement.
"Project Budget" means the line -item budget for the Project attached
hereto as Exhibit E, as modified from time to time in accordance with this Agreement.
"Project Costs" means all costs of any nature incurred in connection with
the Project in accordance with generally accepted accounting principles.
"Property" means the property that is located at 2223 West Fifth Street in
the City of Santa Ana, and as more fully described in the "Legal Description" of the Property
attached hereto as Exhibit A and incorporated herein by reference.
"Scope of Work/Schedule of Performance" means the detailed statement
of the work to be performed by Developer on and to the Property pursuant to this
Agreement, along with the Schedule of Performance setting forth timeframes for certain
tasks, which document is attached hereto as Exhibit F.
"Senior Lender" means a commercial or institutional financial institution
providing the Senior Loan or any other holder of the Senior Loan Note.
"Senior Loan" means a loan from the Senior Lender concurrent to the
Agency Loan for payment of a portion of the acquisition and construction costs, and shall
include any subsequent loan that permanently refinances the initial Senior Loan.
"Senior Loan Deed of Trust" means the first deed(s) of trust securing the
Senior Loan by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement
governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any
• ' A • •
.�
other agreement, document or instrument that the Senior Lender requires in connection
with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior
Loan from the Senior Lender.
"Term of Affordability" means the terms and conditions contained herein
shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate
of Occupancy for the Project, or repayment of the Agency Loan, whichever is longer.
"Very Low Income" means an adjusted income which does not exceed
fifty percent (50%) of the Median Income for the Area, adjusted for household size, as
published by the U.S. Department of Housing and Urban Development.
1.2 Singular and Plural Terms. Any defined term used in the plural in this
Agreement shall refer to all members of the relevant class and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement shall
include such document both as originally executed and as it may from time to time be
modified. References herein to Articles, Sections and Exhibits shall be construed as
references to this Agreement unless a different document is named. References to
subparagraphs shall be construed as references to the same Section in which the reference
appears. The term "document" is used in its broadest sense and encompasses agreements,
certificates, opinions, consents, instruments and other written material of every kind. The
terms "including" and "include" mean "including (include) without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement,
as now existing and as the same may from time to time be modified, are incorporated herein
by this reference.
2. [RESERVED]
3. SCOPE OF WORK/PROJECT BUDGET
A "Scope of Work" and "Schedule of Performance" for the Property is attached
hereto as Exhibit F. Any material change to the Scope of Work/Schedule of Performance
requested by the Developer shall be subject to the prior written approval of the City Project
Manager. The Scope of Work/Schedule sets forth the construction work that shall be
performed on the Property and timeframes for approvals of such work.
A line -item budget for the Project, including a summary of statement of sources
and uses of funds, is incorporated into Exhibit E ("Project Budget"), Any material change
to the Project Budget requested by Developer shall be subject to the prior written approval
of the City Project Manager.
4. [RESERVED]
80A-100
AGENCY LOAN:
The Agency Loan shall be evidenced by the Agency Promissory Note in the form
attached hereto as Exhibit D. The Agency Loan shall be secured by the Agency Deed of
Trust in the form attached hereto as Exhibit C. The terms and conditions of the Agency
Loan are as set forth in the Agency Promissory Note. The Term of Affordability for the
Project is fifty-five (55) years from the date of issuance of Certificate of Occupancy for the
Project, or repayment of the Agency Loan, whichever is longer.
5.1. Aaeney Funds:
A. Amount and Purpose. Subject to the terms and conditions of this
Agreement, Agency agrees to make a loan to Developer from the Low and Moderate
Income Housing Asset Fund ("LMIHAF") in the principal amount of up to $4,700,000.00
for the acquisition, construction, ownership, operation, rehabilitation and other costs of the
Project.
CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
6.1 Conditions Precedent. Agency's obligation to disburse the loan is subject
to the satisfaction of the following conditions precedent:
(a) Housing Authority. Review and approval of the documents
evidencing the Agency Loan by the Board of the Housing Authority of the City of Santa
Ana acting as the Housing Successor Agency.
(b) Code Compliance. Compliance with California Health and Safety
Code and applicable regulations set forth in Section 34176.
(c) Environmental Review. Compliance with and completion of
environmental review of the Project pursuant to the California Environmental Quality Act
("CEQA") and approval thereof.
(d) Affordability Restrictions. The funding of $4,700,000 is from the
Low and Moderate Income Housing Asset Fund, which requires legal restrictions that the
Agency cannot amend or repeal. Fifty (50) of the "Housing Units" at the Project shall and
will be restricted to affordable rents pursuant to the Maximum Rents published yearly by
the California Tax Credit Allocation Committee (TCAC) and referenced in the regulatory
agreement containing conditions, covenants and restrictions executed by Developer and
TCAC for a period not less than fifty-five (55) years recorded against the Project in the
Official Records, County of Orange, California. At least fifteen (15) of the Housing Units
at the Project shall and will be restricted to households earning 30% or less of the AMI.
One (1) Housing Unit will be rented to an on-site property manager; the manager's unit
will not be rent restricted.
(e) Loan Documents. Developer shall have delivered to the Escrow
Holder, signed by the authorized officer or officers of Developer, with such signature(s)
acknowledged where necessary, each of the following documents:
80A-101
(i) this Agency Loan Agreement;
(ii) the Agency Promissory Note ($4,700,000);
(iii) the Agency Deed of Trust; and,
(iv) the Affordability Restrictions on Transfer of Property.
(f) Title Insurance. Agency shall have received an American Land
Title Association (ALTA) Extended (LP -10) Loan Policy (6-17-06), or evidence of a
commitment therefore satisfactory to Agency, issued by Commonwealth Land Title
Company and in form and substance satisfactory to Agency, together with all endorsements
and binders required, naming Agency as the insured, in a policy amount of not less than
the total Agency Loan Amount, showing Developer as the fee owner of the Property and
insuring the Agency Deed of Trust to be a valid priority lien on the Property. This
Agreement, the Agency Promissory Note, and the Agency Deed of Trust shall all be
subordinate to the Senior Loan Note and Senior Loan Deed of Trust.
(g) Affordability Restrictions on Transfer of Property. Developer shall
have delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the
Affordability Restrictions on Transfer of Property pursuant to which, among other things,
Developer agrees that the Property shall be used only for decent, safe, sanitary and
Affordable Housing pursuant to the affordability requirements of California Health and
Safety Code ("H&S") sections 50052.5 and 33334.3, as applicable. The Agency's
Affordability Restrictions on Transfer of Property shall remain in superior position to the
Senior Loan Documents and shall not be subordinated.
(h) Documents Recorded. This Loan Agreement, Agency Deed of
Trust, and the Affordability Restrictions on Transfer of Property shall have been recorded
in the Official Records of the County.
(i) Request for Notice. For the benefit of Agency, Escrow Holder shall
have recorded a request for notice of default of the Senior Loan (the "Request for Notice
of Default").
0) Insurance. Agency shall have received evidence satisfactory to the
City Attorney that all of the policies of insurance required by Section 19 of this Agreement
are in fall force and effect.
(lc) Representations and Warranties. The representations and warranties
of Developer contained in this Agreement and the other Loan Documents shall be correct
in all material respects as of the Close of Escrow as though made on and as of that date,
and if requested by the City Project Manager, Agency shall have received a certificate to
that effect signed by Developer's Representative.
(1) No Default. No Event of Default by Developer shall have occurred,
and no event shall have occurred which, with the giving of notice or the passage of time or
80A-102
both, would constitute an Event of Default by Developer under this Agreement, and if
requested by the City Project Manager, Agency shall have received a certificate to that
effect signed by Developer's Representative.
(m) The Agency's obligation to provide the Agency Loan is and shall
remain subject to all covenants, conditions, and restrictions set forth in this Loan
Agreement, and in particular Agency's analysis of the available funding sources and
development and operating costs of the Project and the overall economic feasibility of the
Project.
6.2 Disbursement Procedures for Loan. The Agency Loan proceeds shall be
disbursed through Escrow to finance the acquisition, development and construction of the
Project (as evidenced in the Project Budget, attached as Exhibit E). The Agency Loan
proceeds shall not be used for any purpose other than for acquisition, development and
construction related costs, including Developer fee and soft costs related to the development
of the Project (costs all subject to Agency's prior review).
6.3 First Disbursement. Agency's obligation to make the first disbursement
of the Loan is subject to satisfaction of the following conditions precedent:
(a) All grading permits shall have been issued or the City shall have
issued a letter stating that Building Permits are ready to issue, subject only to payment of
fees and the completion of grading of the Project site.
(b) Developer shall have secured all necessary financing and funding
for the construction and operation of the Project. Such financing and funding shall be
sufficient to pay all Project development costs, through lease -up, as set forth in the final
budget consistent with the approved Proforma (or as otherwise approved by the Agency).
(c) Developer shall have provided evidence to the Agency that the
Developer has obtained insurance policies and certificates or endorsements acceptable to
the Agency, as described in this Agreement.
(d) Developer shall have provided construction security in favor of the
Agency, which may include a completion guarantee from Developer and/or a letter of
credit and/or performance and payment bonds from the general contractor for the Project
(or some combination of these), in an amount sufficient to ensure the Project will be
completed and placed in service within the time set forth in the Project schedule approved
by the Agency.
(e) Developer shall submit and obtain the City Project Manager's
approval of the construction contract, the identity and qualifications of the General
Contractor, the Partnership Agreement for the limited partnership entity to be formed to
own and operate the Project, and management, marketing and tenant selection plans for the
Project.
6.4 Termination for Failure of Condition. If (a) any of the conditions set
forth herein are not timely satisfied (subject to applicable notice and cure rights), and (b)
80A-103
Agency is not in default under this Agreement, Agency may terminate this Agreement
without any further liability on its part by giving written notice of termination to Developer.
Upon the giving of such notice, all principal, interest and other amounts owing under the
Agreement shall be due and payable.
6.5 Any Disbursement. Agency's obligation to make any disbursement of the
Loan, including the first and final disbursements, is subject to the satisfaction of the
following conditions precedent:
(a) SatisfactorProgress. The City Project Manager shall be satisfied
that, based on his/her own inspections or other reliable information, the construction is
progressing satisfactorily in conformance with all applicable laws and other requirements.
(b) Condition of Title. Either (i) the City Project Manager reasonably
believes that no event has occurred since the Close of Escrow that would give rise to a
colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of
Agency against the Property with respect to the subject disbursement, or if such claim is
made, then City Project Manager shall receive satisfactory evidence that such claim has
been bonded over until its resolution; or (ii) Agency must have received, at Developer's
expense but payable out of the Loan proceeds from the title insurer who issued City's LP -
10 Title Policy, all endorsements thereto then reasonably required by Agency (including,
without limitation, CLTA Form 122 -- priority of advance endorsements).
(c) Representations and Warranties. The representations and warranties
of Developer contained in this Agreement and the other Agency Loan Documents shall be
correct in all material respects as of the date of the disbursement as though made on and as
of that date.
(d) No Default. No Event of Default by Developer shall remain uncured
(unless, to the extent permitted under this Agreement, Developer is diligently taking action
to cure such default) and no event shall have occurred which, with the giving of notice or
the passage of time or both, would constitute an Event of Default by Developer.
6.6 Final Disbursement. Agency's obligation to disburse that portion of the
Loan funds retained pursuant to Section 6.12 is subject to the satisfaction of the following
additional conditions precedent:
(a) Construction complete. The construction of the Project shall be
complete.
(b) Certificate of Occupancy Issued. Any portion of the construction work
requiring inspection or certification by any Governmental Authority shall have been
inspected and certified as complete. Developer shall request that the City of Santa Ana
Planning and Building Agency issue a Certificate of Occupancy, a copy of which shall be
delivered to the City Project Manager, in order for final disbursement to occur.
(c) Lien Free. At least one of the following shall have occurred:
80A-104
(i) Thirty-five (35) days shall have passed since the recording of a
valid notice of completion for the construction, and no mechanic's or materialman's lien
shall be outstanding; or
(ii) Ninety-five (95) days shall have passed since actual completion
of the construction, and no mechanic's or materialman's lien shall be outstanding, or
Developer shall have bonded over any such lien to Agency's reasonable satisfaction.
6.7 Waiver of Conditions. The conditions set forth pertaining to Agency's
obligation to make disbursements of the Loan proceeds are for Agency's benefit only and
the City Project Manager may waive all or any part of such rights by written notice to
Developer.
6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line -
item by line -item basis in accordance with the Project Budget and subject to the conditions
in this section. In no event shall Agency have any obligation to disburse any amount for
any item in excess of the amount allocated to such item in the Project Budget.
Disbursements shall be made only upon Developer's written request in the form of a
Disbursement Request showing all costs which Developer intends to fund with such
disbursement, itemized in such detail as Agency may reasonably require, accompanied in
each case by (a) invoices and lien releases satisfactory to Agency, including in any event
partial lien releases executed by each contractor and subcontractor who has received any
payment for work performed, and (b) all other documents and information reasonably
required by Agency. Disbursement Requests shall be submitted no less than ten (10)
Business Days prior to the date of the requested disbursement, and shall not be submitted
more often than monthly.
Prior to each disbursement by Agency of proceeds of the loan, Developer shall
deliver to Agency a draw request ("Draw Request"), and all required supporting
information as set forth in the Agency Loan Documents or as otherwise reasonably required
by Agency in order to provide information for evaluating the requested disbursement
pursuant to customary construction lending practices of institutional lenders in Southern
California.
Agency shall notify the Developer of approval or disapproval of each Draw Request
within five (5) Business Days after receipt of the Draw Request, using the Agency's
"Disbursement/Change Order Approval Notice". Agency shall have the right, but not the
obligation, to discontinue processing Draw Requests unless and until receipt of notification
from the other lenders of approval or disapproval of each outstanding Draw Request.
6.9 Manner of Disbursement. Agency may make any disbursement by check
payable to Developer; or on a voucher basis; or by check payable jointly to Developer and
any contractor, subcontractor or other claimant; or directly to any such claimant; or by any
other means reasonably selected by Agency.
6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the
actual cost reasonably estimated by Developer to be required to complete all matters
included in any line item in the Project Budget exceeds the amount allocated to that line
80A-105
item in the Project Budget, (b) Project Costs for any matters not covered by a specific line
item have been or will be incurred, or (c) the undisbursed portion of the Loan proceeds and
all other approved financing sources are or may be insufficient to pay all construction of
the Project that may be payable under the Agency Loan Documents or otherwise in
connection with the construction, Developer shall, within ten (10) days after it receives
written notice thereof from Agency of any of the foregoing matters, do one or more of the
following:
(a) provide satisfactory evidence to Agency that Developer has
previously paid such excess or otherwise provided for such insufficiency (collectively, the
"Excess Cost") with funds from a source other than the Agency Loan;
(b) reallocate sufficient funds to pay the Excess Cost from funds
allocated to "Contingency" in the Project Budget; provided, however, that the City Project
Manager's consent to any such reallocation shall be required; or
(c) deposit an amount equal to the Excess Cost in a non-interest bearing
account (the "Overrun Account") with Agency from which withdrawals may be made only
with the consent of the City Project Manager but which will be exhausted prior to any
further disbursement for any line item, so that any resulting surplus in any line item of the
Project Budget will then be reallocated to the line item(s) in which the Excess Costs are
expected to be incurred.
Agency shall have no obligation to make further disbursements until Developer has
paid or otherwise provided for the overrun as required above. Amounts deposited by
Developer in the Overrun Account for any Excess Costs shall be disbursed by Agency prior
to the disbursement of any remaining Loan proceeds in the manner described in subsection
9.3(c).
6.11 Cost Savings. Upon completion of and disbursement for all matters covered
by any line items in the Project Budget, any remaining undisbursed amounts allocated to
that line item shall be reallocated to "Contingency" and thereafter be available for
disbursement in accordance with the terms of this Agreement.
6.12 Retainage. Agency will withhold a Retainage of 10% from each
Disbursement for each of the Hard Cost line items of the Project Cost Breakdown (and
other line items thereof designated for withholding of retainage) until all conditions to the
final Disbursement of Hard Costs have been satisfied. In lieu of Agency's withholding
Retainage, Developer can by written notice to Agency elect not to draw any overhead or
profit as would otherwise be permitted under the Construction Contract until such time as
Retainage would otherwise have been released.
6.13 [Reserved].
6.14 Waiver of Disbursement Conditions. Unless Agency otherwise agrees in
writing, the making by Agency of any disbursement with knowledge that any condition to
such disbursement is not fulfilled shall constitute a waiver of such condition only with
80A-106
respect to the particular disbursement made, and such condition shall be conditioned to all
further disbursements until fulfilled.
6.15 Modification of Disbursement Conditions and Procedures. The City
Project Manager shall have the authority to modify the disbursement conditions and
procedures set forth herein in order to conform them to the payment provisions of the
contract for construction.
6.16 Other Terms and Conditions of Loan.
A. The Note shall become immediately due and payable, in the event of any
of the following:
(1) Failure to complete the Project within three (3) years of the date on which
the Agency Deed of Trust is recorded, unless extended due to Force Majeure delays;
(2) Violation of any of the use covenants and restrictions contained in this
Agreement after the expiration of any applicable notice and cure periods; or,
(3) An Event of Default by Developer which is not timely cured after
expiration of any applicable notice and cure periods pursuant to the terms of this Agreement.
6.17 Closing Costs and Fees. Developer shall pay (a) all escrow fees and
charges, (b) all recording fees and charges on any document recorded pursuant to this
Agreement, and (c) the premium for the title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROJECT
7.1 Use Covenants and Restrictions. Developer agrees and covenants, which
covenants shall run with the land and bind Developer, its successors, its assign and every
successor in interest to the Property that Developer will make all of the rental units on the
Property available to extremely low, very low and low income households at rents affordable
to such households for fifty-five (55) years (except for one (1) unit for the onsite manager).
The Project shall consist of fifty-one (5 1) residential units. Enforceability of restrictions
on the fifty (50) units shall be enforced until the date that is fifty-five (55) years after the date
on which the Certificate of Occupancy is issued.
7.2 Affordability Levels/Unit Mix:
The unit mix and levels of affordability are as follows:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
80A-107
a. The Affordable Rents charged at the Project must comply with the standards
set forth by the California Tax Credit Allocation Committee (TCAC).
b. Utility allowances must be deducted from the Maximum Gross Monthly Rent.
The Housing Authority of the City of Santa Ana publishes a Utility Allowance
Schedule on an annual basis.
c. Based on the unit mix and bedroom sizes provided above, at least fifteen (15)
of the traits will be affordable to family households earning no more than 30%
of the AMI; five (5) of the units affordable to family households earning no
more than 50% of the AMI; and thirty (30) of the units affordable to family
households earning no more than 60% of the AMI.
7.3 Rent Increases: On an annual basis, the Agency shall provide the Developer
with the maximum allowable schedule of rents for the Property which shall correspond to the
maximum rent increase allowed by TCAC. In no event can Developer charge any tenant more
than such amount.
7.4 Maintenance of the Property. Solely at Developer's expense, Developer
agrees to maintain the Property in a clean and orderly condition and in good condition and
repair and keep the Property free from any accumulation of debris and waste materials. If at
any time Developer fails to maintain, or cause to be maintained, the Property as required by
this section, and said condition is not corrected after the expiration of a reasonable period of
time not to exceed thirty (30) days from the date of written notice from the Agency, unless
such condition cannot reasonably be cured within thirty (30) days, in which case Developer
shall have such additional time as reasonably necessary to complete such cure, the Agency
may perform the necessary maintenance and Developer shall pay all reasonable costs incurred
for such maintenance. The Agency shall inspect the Property annually after the date of
issuance of the Certificate of Completion as described in Section 17 of this Agreement.
7.5 Oblieation to Refrain from Discrimination. Developer covenants and agrees
for itself, its successors, its assigns and every successor in interest to the Property or any part
thereof, that there shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, disability, religion, sex, marital status, ancestry or
national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of
the Property nor shall Developer itself or any person claiming under or through him 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 of the Property. The foregoing covenants shall ran with the land and shall remain in
effect for the term of the Agreement.
8. DEFAULTS AND REMEDIES
8.1 Event of Default. Failure or delay by either party to perform any term or
provision of this Agreement within the time periods provided herein for such performance
constitutes a default under the Agreement. If any party defaults in performance of its
obligations, covenants or agreements herermder, the defaulting party shall be entitled to cure
,:1 1:
the default in accordance with this section. The injured party shall give written notice of
default to the party in default, specifying the default complained of by the injured party. Delay
in giving such notice shall not constitute a waiver of any default nor shall it change the time
of default. The defaulting party must, within thirty (3 0) days following service of said written
notice, commence to cure, correct or remedy such failure or delay and shall complete such
cure, correction, or remedy with reasonable diligence. Upon a default by Developer which is
not cured within thirty (30) days following service of said notice, unless such default cannot
reasonably be cured within thirty (30) days, in which case Developer shall have such
additional time as reasonably necessary to complete such cure but no more than ninety (90)
days, the Agency shall have the right to terminate this Agreement by delivery of written notice
of termination to Developer.
8.2 Institution of Legal Actions. In addition to any other rights or remedies,
either party may institute legal action to cure, correct or remedy any default to recover
economic damages for any default, or to obtain any other remedy consistent with the purpose
of this Agreement.
8.3 Rights and Remedies are Cumulative. Except with respect to rights and
remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the
parties are cumulative and the exercise by either party of one or more of such rights or
remedies shall not preclude the exercise by it, at the same or different times, of any other rights
or remedies for the same default or any other default by the other party.
8.4 Damages. In the event that the Agency is liable for damages to Developer,
such liability shall not exceed costs incurred by the Developer in the performance of this
Agreement and shall not extend to compensation for loss of future income, profits or assets.
8.5 Nonrecourse Liability, Neither Developer, nor any partner of Developer, nor
any member of any partner of Developer, nor any member, partner, officer, director,
employee, agent or representative of any member of any partner of Developer, shall have any
personal liability under this Agreement, or the attached Note and Deed of Trust, and any
judgment, decree or order for the payment of money obtained in any action to enforce the
obligation of Developer to repay the loan evidenced by such documents shall be enforceable
against Developer only to the extent of Developer's interest in the Property.
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to Agency to enter into this Agreement, Developer
represents and warrants as follows, which representations and warranties are made solely
by Developer and not by or on behalf of any partner of Developer:
9.1 Formation, Qualification and Compliance. Tiny Tim LP is a California
limited partnership. Developer is in compliance with all laws applicable to its business and
has obtained all approvals, licenses, exemptions and other authorizations from, and has
accomplished all filings, registrations and qualifications with, any Governmental Authority
that are necessary for the transaction of its business.
9.2 Execution and Performance of Agency Loan Documents.
80A-109
9.2.1 Developer has all requisite authority to execute and perform its
obligations under the Agency Loan Documents.
9.2.2 The execution and delivery by Developer of, and the performance
by Developer of its obligations under, each Loan Document that has been authorized by all
necessary action and does not and will not:
(a) require any consent or approval not heretofore
obtained of any person having any interest in Developer;
(b) violate any provision of, or require any consent or
approval not heretofore obtained under, any articles of incorporation, by-laws or other
governing document applicable to Developer;
(c) result in or require the creation of any lien, claim,
charge or other right of others of any kind (other than under the Agency Loan Documents)
on or with respect to any property now or hereafter owned or leased by Developer;
(d) to the best of its knowledge, violate any provision of
any law presently in effect; or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other
agreement or document to which Developer is a party or by which Developer or any of its
property is bound.
9.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of Agency under the Agency Loan Documents or that would have any
material adverse effect on the financial condition of Developer or the conduct of its
business, under any law, contract, lease or other agreement or document described in sub-
paragraph (d) or (e) of the previous subsection.
9.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which has
not been previously obtained in connection with:
(a) the execution by Developer of, and the performance
by Developer of its obligations under, the Agency Loan Documents; and
(b) the creation of the liens described in the Agency
Loan Documents.
9.3 Financial and Other Information. To the best of Developer's knowledge,
all financial information furnished to Agency by the Developer or any affiliate thereof with
respect to Developer in connection with the Loan (a) is complete and correct in all material
respects as of the date of preparation thereof, (b) accurately presents the financial condition
of Developer, and (c) has been prepared in accordance with generally accepted accounting
80A-110
principles consistently applied or in accordance with such other principles or methods as
are reasonably acceptable to Agency. To the best of Developer's knowledge, all other
documents and information furnished to Agency by the Developer or any affiliate thereof
with respect to Developer, in connection with the Loan, are correct and complete insofar
as completeness is necessary to give the Agency accurate knowledge of the subject matter.
To the best of Developer's knowledge Developer has no material liability or contingent
liability not disclosed to Agency in writing and there is no material lien, claim, charge or
other right of others of any kinds (including liens or retained security titles of conditional
vendors) on any property of Developer not disclosed in such financial statements or
otherwise disclosed to Agency in writing.
9.4 No Material Adverse Change. There has been no material adverse change
in the condition, financial or otherwise, of Developer since the dates of the latest financial
statements furnished to Agency. Since those dates, Developer has not entered into any
material transaction not disclosed in such financial statements or otherwise disclosed to
Agency in writing.
9.5 Tax Liability. Developer has filed all required federal, state and local tax
returns and has paid all taxes (including interest and penalties, but subject to lawful
extensions disclosed to Agency in writing) other than taxes being promptly and actively
contested in good faith and by appropriate proceedings. Developer is maintaining adequate
reserves for tax liabilities (including contested liabilities) in accordance with generally
accepted accounting principles or in accordance with such other principles or methods as
are reasonably acceptable to Agency.
9.6 Governmental Requirements. To best of its knowledge, Developer is in
compliance with all laws relating to the Property and all Governmental Authority
approvals, including zoning, land use, planning requirements, and requirements arising
from or relating to the adoption or amendment of, any applicable general plan, subdivision
and parcel map requirement; environmental requirements, including the requirements of
the California Environmental Quality Act and the National Environmental Policy Act, and
the preparation and approval of all required environmental impact statements and reports;
use, occupancy and building permit requirements; and public utilities requirements.
9.7 Rights of Others. Developer is in compliance with all covenants,
conditions, restrictions, easements, rights of way and other rights of third parties relating
to the Property.
9.8 Litigation. There are no material actions or proceedings pending or, to the
best of the Developer's knowledge, threatened against or affecting Developer or any
property of Developer before any Governmental Authority, except as disclosed to Agency
in writing prior to the execution of this Agreement.
9.9 Bankruptcy. To the best of Developer's knowledge, no attachments,
execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or threatened against Developer, nor are
any of such proceedings contemplated by Developer.
80A-111
9.10 Information Accurate. To the best of Developer's knowledge, all
information, regardless of its form, conveyed by Developer to Agency, by whatever means,
is accurate, and correct in all material respects and is sufficiently complete to give Agency
true and accurate knowledge of its subject matter, and does not contain any material
misrepresentation or omission.
9.11 Conflicts of Interest. No member, official or employee of the Agency shall
have any personal interest, direct or indirect, in this Agreement, nor shall any such member,
official or employee participate in any decision relating to this Agreement which affects
his/her personal interests or the interests of any corporation, partnership or association in
which he/she has a direct or indirect financial interest. The Developer warrants that it neither
has paid nor given, nor will pay or give, any third party any money or other consideration for
obtaining this Agreement.
9.12 Nonliability of Agency Officials and Employees. No member, official or
employee of the Agency shall be personally liable to the Developer in the event of any default
or breach by the Agency or for any amount which may become due to Developer or on any
obligations under the terms of this Agreement.
9.13 No Assignment. Developer expressly acknowledges and agrees that the
Agency has only agreed to assist the Developer as a means by which to induce the
construction/development of the Project. Accordingly, Developer further expressly
acknowledges and agrees that this Agreement is a personal right of Developer that is neither
negotiable, transferable, nor assignable except as set forth herein. Developer may assign some
or all of its rights under the Agreement only with the prior written consent of the City Project
Manager, except that no prior consent is necessary for an assignment by a limited partner of
Developer to an affiliate, for the inclusion of tax credit investors in the Agreement, or as
otherwise provided in the Agency Deed of Trust.
9.14 Applicable Law. This Agreement shall be interpreted, governed and
enforced under federal and California state law with venue in Orange County, California.
9.15 Third Parties. This Agreement is made for the sole benefit of Developer and
the Agency and their successors and assigns, and no other person or persons shall have any
rights or remedies under or by reason of this Agreement or any right to the exercise of any
right or power of the Agency hereunder or arising from any default by Developer, nor shall
the Agency owe any duty whatsoever to any claimant for labor performed or materials
furnished in connection with the construction of the Property.
9.16 Control of Property. The parties acknowledge that the Agency has not at
anytime participated in any manner in the management or operation of the Property, and will
not so participate at any time hereafter.
10. CONDITIONS FOR CONSTRUCTION
10.1 Permits and Approvals. Developer shall diligently obtain all permits,
including all Building Permits, licenses, approvals, exemptions and other authorizations of
80A-112
Governmental Agencies required in connection with the construction and conversion of the
Property.
10.2 Commencement and Completion of Construction. The constriction of
the Project shall be considered complete for purposes of this Agreement only when (a) all
work described has been completed and fully paid for, and (b) all work requiring inspection
or certification by Governmental Authority has been completed and all requisite
certificates, approvals and other necessary authorizations (including required final
certificates of occupancy) have been obtained.
10.3 Chance Orders. The contract for construction shall not be modified except
pursuant to change orders. All change orders in excess of $10,000:
(a) Shall be in writing, numbered in sequence, signed by
Developer and submitted to Agency prior to the proposed effectiveness thereof and
accompanied by any working drawings and a written narrative of the proposed change;
and,
(b) Shall be subject to the City Project Manager's prior written
approval.
10.4 Entry and Inspection. At all times prior to completion of the construction,
upon reasonable prior written notice and subject to reasonable job site safety rules, Agency
and its agents shall have (a) the right of free access to the Property and all sites away from
the Property where materials for the construction are stored, (b) the right to inspect all labor
performed and materials furnished for the construction, and (c) the right to inspect and
copy all documents pertaining to the construction.
10.5 [RESERVED]
10.6 Construction Information. From time to time during the course of the
construction, within ten (10) Business Days following Agency's written demand therefore,
Developer shall furnish requested reports of Project Costs, progress schedules and
contractors' costs breakdowns for the construction, itemized as to trade description and
item, showing the name of the contractor(s) and/or subcontractor(s), and including such
indirect costs as real estate taxes, legal and accounting fees, insurance, architects' and
engineers' fees, loan fees, interest during construction and contractors' overhead.
10.7 Protection Against Liens: Developer shall diligently file a valid Notice of
Completion upon completion of the construction, diligently file a notice of cessation in the
event of a cessation of labor on the construction for a period of thirty (30) days or more,
and take all actions reasonably required to prevent the assertion of claims of lien against
the Property. In the event that any claim of lien is asserted against the property or any stop
notice or claim is asserted against the Agency by any person furnishing labor or materials
to the Property, Developer shall immediately give written notice of the same to Agency
and shall, promptly and in any event within ten (10) Business Days after written demand
therefor, (a) pay and discharge the same, (b) effect the release thereof by delivering to
Agency a surety bond complying with the requirement of applicable laws for such release,
80A-113
or (c) take such other action as Agency may require to release Agency from any obligation
or liability with respect to such stop notice or claim.
11. PROJECT COVENANTS
11.1 Affordable Rent Schedule. The rents shall be determined by the
regulatory agreements entered into between the Developer and the California Tax Credit
Allocation Committee governing the Project.
11.2 Qualification as Affordable Housing. As more particularly provided in the
Affordability Restrictions on Transfer of Property, Developer shall use, manage and
operate the Property in accordance with the requirements of California Health and Safety
Code section 50052.5 so as to qualify the housing on the Property as Affordable Housing
with Affordable Rents.
11.3 Local Preference. Local preference for Santa Ana residents and workers in
tenant selection shall be a requirement of the Project. Subject to the prohibition of
discrimination and the granting of preferences in housing occupancy imposed by federal
laws and regulations, the State of California, and by the City of Santa Ana Affordable
Housing Funds Policies and Procedures, the Developer shall use its best efforts to lease
units in the following order of priority:
First priority shall be given to persons who have been permanently displaced or
face permanent displacement from housing in Santa Ana as a result of any of the
following:
a. A redevelopment project undertaken pursuant to California's Community
Redevelopment Law (Health & Safety Code Sections 33000, et seq.) --
applicable only to projects funded by the Low and Moderate Income
Housing Asset Fund.
b. Ellis Act, owner -occupancy, or removal permit eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP Contract by property
owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at least the last 6
months.
80A-114
11.4 Application and Financial Preparedness. Developer shall submit for
review and approval by the Agency a booklet to inform interested persons regarding
minimum application and eligibility requirements and to assist interested persons with
application and financial preparedness and eligibility for residency at the Project at the
initial leasing of the affordable units. Developer shall also work with the Agency to hold
a minimum of two (2) workshops to be coordinated by the Developer at least twelve (12)
months prior to the initial leasing of the affordable units.
11.5 Handicapped Accessibility. Developer shall comply with: (a) Section 504
of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the
Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36
in order to make the Project readily accessible to and usable by individuals with disabilities.
11.6 Onsite Supportive Services, Programs and Amenities. Developer shall
provide residents of the Project access to discounted or no -cost onsite supportive services,
programming, and amenities that promote child development, youth development, and
economic mobility, and include, but are not limited to health and wellness services,
transportation services, social activities, and physical or recreational amenities as expressly
set forth in and required by the Affordability Restrictions on Transfer of Property.
11.7 Local Sourcing Plan. Developer agrees to make a good faith effort to
encourage contractors and suppliers to hire and procure locally. Prior to issuance of any
Building Permit, Developer shall develop and submit to the Agency a local sourcing plan
for the Project targeting, to the extent feasible, the hiring of qualified workers, construction
contractors, or the purchasing of goods locally within the City of Santa Ana.
11.8 Lead -Based Paint. Developer shall comply with the requirements, as
applicable of the Lead -Based Paint Poisoning Prevention Act.
11.9 Affirmative Marketing. Prior to the issuance of a Certificate of
Occupancy, Developer shall prepare and obtain Agency's approval of an affirmative
marketing program for leasing the affordable units at the Project.
11.10 Equal Opportunity and Fair Housing. Developer shall carry out the
construction and perform its obligations under this Agreement in compliance with all of
the state and federal laws and regulations regarding equal opportunity and fair housing.
Developer must also follow the requirements of California Health and Safety Code section
33435.
11.11 Property Standards. Developer shall cause the Property to meet all
applicable local, state and federal codes and ordinances, including zoning ordinances.
Developer shall also cause the Property to meet the current edition of the Model Energy
Code published by the Council of American Building Officials.
11.12 Alternative Transportation and Energy Source, Resource
Conservation, and LEED Certification. In recognition of the Agency's desire to
optimize the energy efficiency of the Project, Developer agrees to consult with the Project
design team, a CABEC certified 2016 Certified Energy Analyst, a LEED AP Homes (low -
80A -115
rise and mid -rise), LEED AP BD+C (high rise), National Green Building Standard (NGBS)
Green Verifier, or GreenPoint Rater (one person may meet both of these latter
qualifications) early in the Project design process to evaluate a building energy model
analysis and identify and consider energy efficiency or generation measures beyond those
required by the TCAC minimum construction standards.
11.13 Maintenance. At all times during the term of this Agreement, Developer
shall cause the Property and the Project to be maintained in a decent, safe and sanitary
manner, regardless of cause of the disrepair. Developer shall be fully and solely responsible
for costs of maintenance, repair, addition and improvements. Agency, and any of its
employees, agents, contractors or designees, shall have the right to enter upon the Property
at reasonable times and in a reasonable manner to inspect the Project.
11.14 Property Maintenance Agreement. Developer shall execute a
maintenance agreement with the Agency prior to occupancy, which shall be recorded
against the Property, and which shall be in a form reasonably satisfactory to the City
Attorney.
11.15 Management Plan. Prior to issuance of a Certificate of Occupancy,
Developer shall submit for the reasonable approval of the Agency a "Management Plan"
that sets forth in detail Developer's property management duties, a tenant selection process
in accordance with this Agreement, a security system and crime prevention program, the
procedures for the collection of rent, the procedures for eviction of tenants, the rules and
regulations for the Property and manner of enforcement, a standard lease form, an operating
budget, the identity and emergency contact information of the professional property
management company to be contracted with to provide onsite property management
services. at the Property, and other matters relevant to the management of the Property.
11.16 Crime Free Housing. Developer shall work with Agency staff to develop
a crime free housing policy, procedure, and design plan.
11.17 Onsite Parking Management Plan. Developer shall provide onsite
parking for residents and visitors of the Project and actively monitor the parking demand
of the Project site. Developer shall continually monitor and take appropriate measures to
manage the parking demand of the Project site to mitigate the use of offsite parking spaces
on private or public properties and/or right-of-way. Prior to issuance of a Certificate of
Occupancy, Developer shall submit a Parking Management Plan which will include but
not be limited to: 1) a list of requirements for any tenants who park their vehicles on-site;
2) pre -conditions and ongoing conditions associated with all on-site parking; and 3) towing
policies and practices of management. Developer shall obtain approval from the Agency
for said plan.
11.18 Conflict of Interest. Developer shall comply with and be bound by the
conflict of interest provisions set forth in all applicable state regulations pertaining to
conflict of interest.
11.19 Monitoring. Developer shall allow the Agency to conduct periodic
inspections of each of the assisted units on the Property after the date of construction
80A-116
completion, with reasonable notice. Developer shall cure any defects or deficiencies found
by the Agency while conducting such inspections within ten (10) business days of written
notice thereof, or such longer period as is reasonable within the sole discretion of the
Agency.
11.20 Recertification of Tenant Income.
(a) Developer shall take all necessary steps to review the income of all
tenants prior to renting to them, as well as reviewing current tenants on an annual basis.
At a minimum, every fifth (5th) year, Developer shall require new original income
documents to be submitted by tenants.
(b) Developer shall allow the Agency to conduct periodic reviews of
tenant files and files relating to affirmative marketing and outreach to ensure the Project's
compliance with applicable regulations and guidelines.
(c) Agency assisted units continue to qualify as affordable housing despite
a temporary non-compliance caused by increases in the incomes of existing tenants if
actions satisfactory by the Agency are being taken to ensure that all vacancies are filled in
accordance with this section until the non-compliance is corrected.
11.21 Housing Opportunity Ordinance Requirements. Developer shall comply
with all other applicable requirements of the City's Housing Opportunity Ordinance,
including the following:
(a) Onsite Services: The Developer shall provide on-site services that
are available to the residents and shall report to the Agency
annually the services provided.
(b) Coordination with the WORK Center: The Developer and the
Property Manager shall coordinate with the City's WORK Center
to provide services and outreach to tenants, as well as provide
information on employment during the construction of the Project.
(c) Tenant Satisfaction Survey: The Developer shall complete and
submit to the Agency biennial tenant satisfaction surveys of
tenants.
(d) Rental Inclusionary Housing Manual: The Developer shall also
maintain compliance with the City's Inclusionary Housing
Manual for Rental Projects.
11.22 Controlling Covenants. If there is a discrepancy between local, state and
federal law with regard to any of the aforementioned covenants, the more stringent shall
apply.
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND
REPAIR OF PROPERTY
80A-117
12.1 Maintenance. Developer shall maintain the Property (and all abutting
grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise
required to maintain) in good condition and repair; shall operate the Property in a business-
like manner; shall prudently preserve and protect its own as well as the Agency's interests
in connection with the Property; shall not commit or permit any waste or deterioration of
the Property (except for normal wear and tear); shall not abandon any portion of the
Property or leave the Property unguarded or unprotected; and shall not otherwise act, or
fail to act, in such a way as to unreasonably increase the risk of any damage to the Property
or of any other impairment of Agency's interests under the Agency Loan Documents.
Without limiting the generality of the foregoing, and except as otherwise agreed by Agency
in writing from time to time, Developer shall promptly and faithfully perform and observe
each of the following provisions:
12.1.1 Alterations and Repair. Developer shall not remove, demolish or
materially alter any Improvement without Agency's prior consent, except to make non-
structural repairs which preserve or increase the Property's value, and shall promptly
restore, in a good and professional manner, any Improvement (or other aspect or portion of
the Property) that is damaged or destroyed from any cause.
12.2 Compliance. Developer shall comply with all laws and requirements of
Governmental Authority (including, without limitation, all requirements relating to the
obtaining of Governmental Authority approvals), all Governmental Authority approvals
and all rights of third parties, relating to Developer, the Property or Developer's business
thereon.
12.3 Taxes and Impositions. Subject to any property tax abatement available
to the Developer, Developer shall pay, prior to delinquency, all of the _following
(collectively, the "Impositions"): (a) all general and special real property taxes and
assessments imposed on the Property; (b) all other taxes and assessments and charges of
every kind that are assessed upon the Property (or upon the owner and/or operator of the
Property) and that create or may create a lien upon the Property (or upon any personal
property or fixtures used in connection with the Property), including, without limitation,
non-governmental levies and assessments pursuant to applicable covenants, conditions or
restrictions; and (c) all license fees, taxes and assessments imposed on Agency (other than
Agency's income or franchise taxes) which are measured by or based upon (in whole or in
part) the amount of the obligations secured by the Property. If permitted by law, Developer
may pay any Imposition in installments (together with any accrued interest).
12.3.1 Right to Contest. Developer shall not be required to pay any
Imposition so long as: (a) its validity is being actively contested in good faith and by
appropriate proceedings; (b) Developer has demonstrated to Agency's reasonable
satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings
could not result in conveyance of the Property in satisfaction of such Imposition or
otherwise impair the Agency's interests under the Agency Loan Documents; and, (c)
Developer has furnished Agency with a bond or other security satisfactory in an amount
not less than 100% of the applicable claim (including interest and penalties).
80A-118
12.3.2 Evidence of Payment. Upon demand by Agency from time to time,
Developer shall deliver to Agency, within thirty (30) days following the due date of any
Imposition, evidence of payment reasonably satisfactory to Agency.
12.3.3 Books and Records. Developer shall maintain complete books of
account and other records reflecting its operations (in connection with any other businesses
as well as with respect to the Property), in accordance with generally accepted accounting
principles applied on a consistent basis or in accordance with such other principles or
methods as are reasonably acceptable to Agency.
12.4 [RESERVED]
12.5 Project Operating Budget. Developer must promptly deposit all Gross
Revenues (as defined in the Project Note) directly into a segregated depository account
established exclusively for the Project ("Project Operating Account") pursuant to the
agreement with the property management company. Withdrawals from the Project
Operating Account may be made only in accordance with the provisions of this Agreement
and the approved Project Budget, as it may be revised from time to time with prior Agency
approval. Developer may make withdrawals from the Project Operating Account solely
for the payment of Operating Expenses (as defined in the Project Note). Withdrawals from
the Project Operating Account for other purposes may be made only with the prior written
approval of the Agency. Notwithstanding anything to the contrary contained herein,
neither capital contributions from the Investor Limited Partner or proceeds from any loans
made to the Developer (other than loans to address operating deficits pursuant to the terms
of the Partnership Agreement) shall be deposited in the Project Operating Account.
12.6 Replacement Reserve Account. Developer must establish or cause to be
established a segregated replacement reserve depository account ("Replacement Reserve
Account") no later than the commencement of the permanent financing period for the
Project. Developer must make monthly deposits from project income into the Replacement
Reserve Account in accordance with Developer's Project Budget, and the requirements of
the Senior Lender, as amended from time to time. Developer may withdraw funds from
the Replacement Reserve Account solely to fund capital improvements for the Project and
as otherwise is permitted under the Senior Loan Documents and including, but not limited
to, capital repair or replacement, such as replacing or repairing structural elements,
furniture, fixtures or equipment of the Project that are reasonably required to preserve the
Project. Developer may not withdraw funds from the Replacement Reserve Account for
any other purpose without the prior written approval of the Agency.
13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and
agrees that:
(a) In Use of Property. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed, disability,
religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer,
use, occupancy, temire or enjoyment of the Property, nor shall Developer or any person
80A-119
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 vendors of the Property.
(b) In Affordable Housing Restrictions. The foregoing covenant
shall: (a) be included in the Affordability Restrictions on Transfer of Property; (b) run with
the land; and, (c) remain effective for the term of the Agreement (for 55 years).
(c) In Employment. In construction on the Property, Developer shall
not discriminate against any employee or applicant because of race, color, creed, religion,
sex, marital status, disability, national origin, or ancestry. Developer shall take affirmative
action to ensure that applicants are employed, and that employees are treated during
employment, without regard to their race, color, disability, creed, religion, sex, marital
status, disability, national origin, or ancestry.
(d) In all Contracts. Developer shall cause the foregoing covenants to
be inserted in all contracts for any work covered by this Agreement so that such provisions
will be binding upon each contractor for the benefit of Agency, provided that the foregoing
covenant shall not apply to contracts or subcontracts for standard commercial supplies or
raw materials.
14. ENVIRONMENTAL MATTERS
14.1 Representation and Warranty. Except as disclosed in writing to the
Agency, Developer has no knowledge: (a) of the presence on, under or about the Property,
now or in the past, of any Hazardous Materials, or of the transportation to or from the
Property of any Hazardous Materials; (b) that asbestos or polychlorinated biphenyls
(PCBs) are contained in or stored on the Property; or, (c) that there are any underground
storage tanks located in, on or under the Property.
14.2 Compliance with Environmental Laws. Developer shall: (a) comply with
all environmental laws and environmental permits applicable to the construction of the
Property; (b) immediately pay or cause to be paid all costs and expenses incurred by reason
of such compliance; (c) keep the Property free and clear of any environmental claims or
liens imposed pursuant to any environmental law; and, (d) obtain and renew all
environmental permits required for ownership or use of the Property.
14.3 Presence of Hazardous Materials. Developer shall not, and shall not
permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous
Materials on the Property, or transport or permit the transportation of Hazardous Materials
to or from the Property, except for de minimis quantities used at the Property in compliance
with all applicable environmental laws and required in connection with the routine
operation and maintenance of the Property.
14.4 Notice of Environmental Matters. Developer shall immediately advise
Agency in writing of any of the following: (a) any pending or threatened environmental
claim against Developer or the Property; or (b) any condition or occurrence that: (i) results
in noncompliance with any applicable environmental law; (ii) could reasonably be
80A-120
anticipated to cause the Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of the Property under any environmental Law; or, (iii)
could reasonably be anticipated to form the basis of an environmental claim against the
Property or Developer.
14.5 Environmental Indemnification by the Developer. Developer agrees to
defend, indemnify and hold harmless the Agency and its respective officers, directors,
employees and agents (collectively the "Indemnitees") from and against any and all
obligations (including removal and remediation), losses, claims (including third party
claims), suits, judgments, liabilities, penalties, damages (including consequential and
punitive damages), costs and expenses (including consultants, and attorneys' fees) of
whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or
asserted against the Indemnitees directly or indirectly based on, or arising or resulting from
the actual or alleged presence of Hazardous Materials on the Property, other than resulting
from the gross negligence or willful misconduct of any Indemnitee.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the Agency Promissory Note or Agency
Deed of Trust remain outstanding, the following provisions shall apply, except to the extent
that City Project Manager otherwise consents in writing:
15.1 Existence. The sole member of Developer's managing general partner shall
maintain its existence in good standing under the laws of the State of California, and
Developer shall provide documentation of such status annually to the Agency.
15.2 Protection of Lien. Developer shall maintain the lien of the Agency Deed
of Trust as a deed of trust on the Property in the same priority as at the commencement of
construction and take all actions to execute and deliver to Agency all documents,
reasonably required by Agency from time to time in connection therewith.
15.3 Notice of Certain Matters. Developer shall give notice to Agency, within
ten (10) days of Developer's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the
Property and involving an amount in excess of $5,000; and any litigation or claim that
might subject Developer or any general partner to liability in excess of $5,000, whether
covered by insurance or not;
(b) any dispute between Developer and a Governmental
Authority relating to the Property, the adverse determination of which might materially
affect the Property;
(c) any change in Developer's principal place of business;
(d) any aspect of the Improvements that is not in substantial
conformity with the plans or code;
80A-121
(e) any event which after the giving of all required notices and
the expiration of all applicable cure periods, would constitute an Event of Default;
(f) any material default by Developer or any other party under
any Senior Loan document, or the receipt by Developer of any notice of default under any
Senior Loan document;
(g) the creation or imposition of any mechanics' or
materialmans' lien or other lien against the Property which might materially affect the
Property, which is not bonded over or released; and/or
(h) any material adverse change in the financial condition of
Developer.
15.4 Further Assurances. Developer shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to Agency all documents, and take all
actions, reasonably required by Agency from time to time to confirm the rights created or
now or hereafter intended to be created under the Agency Loan Documents; to protect and
further the validity, priority and enforceability of the Agency Deed of Trust; to subject to
the Deed of Trust any property intended by the terms of any Loan Document(s) to be
covered by the Agency Deed of Trust or otherwise to carry out the purposes of the Agency
Loan Documents and the transactions contemplated thereunder.
15.5 Annual Financial Statements. Developer shall deliver the following to
Agency within one hundred and fifty (150) days after the end of each Calendar Year: (a) a
certified public accountant reviewed balance sheet for Developer as of the end of such
Calendar Year and a certified public accountant reviewed statement of profit and loss for
Developer and for Developer's operations in connection with the Property for such
Calendar Year, together with all supporting schedules; (b) a certificate of such certified
public accountant that such documents were reviewed by such certified public accountant
in accordance with generally accepted accounting principles and otherwise comply with
generally accepted accounting principles review requirements; and, (c) a certificate of
Developer's chief financial officer that such documents: (i) were prepared in accordance
with generally accepted accounting principles applied on a consistent basis or in
accordance with such other principles or methods as are reasonably acceptable to Agency;
(ii) fairly present Developer's financial condition; (iii) show all material liabilities, direct
and contingent; and, (iv) fairly present the results of Developer's operations. Developer
shall also provide the Agency with any other annual audit reports issued by other
monitoring agencies. Developer shall include in said reports a document in the "Form of
Residual Receipts Report" attached hereto as Exhibit G and incorporated herein.
15.6 Audits and Access to Records. Developer agrees that Agency or any of its
authorized representatives shall have the right of access, upon reasonable notice and during
normal business hours, to any books, documents, papers, or other records of Developer that
are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts
or transcripts. Developer will maintain all books and records pertaining to this Agreement
for a period of not less than five (5) years after all matters pertaining to this Agreement
(i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or state
80A-122
laws, regulations or policies, and when a period of affordability or recapture applies to
Developer's activities, for a period of not less than five (5) years after the affordability or
recapture period ends.
15.7 Termite Inspection Report. Developer shall deliver a termite report
pertaining to the Property to the Agency every fifth (5th) year following the date of issuance
of the Certificate of Occupancy.
16, OTHER COVENANTS
While any obligation of Developer under the Agency Note or Agency Deed of Trust
remain outstanding, the following provisions shall apply, except to the extent that City
Project Manager otherwise consents in writing:
16.1 Default on Senior Loan. Developer shall not default on any of the Senior
Loan Documents, provided however, that Developer shall have such period as is provided
in the Senior Loan Documents during which to effectuate a cure.
16.2 Sale or Lease of Property. Unless and until Developer has received a
Certificate of Completion for the construction from Agency, Developer shall not sell, lease
(other than to tenants meeting the requirements set forth in this Agreement), sublease or
otherwise transfer all or any part of the Property or any interest therein without the prior
written consent of the City Project Manager, which consent may be withheld in the City
Project Manager's reasonable discretion. In connection with the foregoing consent
requirements, Developer acknowledges that Agency relied upon Developer's particular
expertise in entering into this Agreement and continues to rely on such expertise to ensure
the satisfactory completion of the construction.
Notwithstanding anything to the contrary contained herein, a "transfer" shall not
include: (i) a transfer of a General Partner's interest in Developer when made in connection
with the exercise by the Developer's limited partner (the "Limited Partner") of its rights
upon a default by a General Partner under the Developer's Partnership Agreement (the
"Partnership Agreement") or upon a General Partner's withdrawal in violation of the
Partnership Agreement, so long as the removal and substitution of the defaulting General
Partner is made within thirty (30) days of such default or, if such removal and substitution
cannot reasonably be completed within thirty (30) days, so long as the Limited Partner
commences to take action to remove and substitute the General Partner within a reasonable
period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of
the Property to one or more of the General Partners pursuant to the purchase option, as
provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's
interest in connection with a default by the Limited Partner under and in accordance with
the Partnership Agreement; and, (iv) any sale, transfer or other disposition of the Limited
Partner's interest in the Developer or of an interest in the Limited Partner.
16.3 Transfer of Developer Limited Partner's Interest. Notwithstanding
anything to the contrary in this Agreement or the Loan Documents, no consent shall be
required of the Agency (and it shall not be deemed a default or an Event of Default under
any of the Loan Documents), in connection with the transfer and/or the assignment by the
80A-123
Developer's limited partner of its interest in the Developer to an entity controlled or
managed by an entity which is related to or under common control with the Developer's
limited partner.
16.4 Removal of Developer's General Partner. Notwithstanding anything to
the contrary in this Agreement or the Loan Documents, the removal and/or replacement of
a General Partner for cause in accordance with the Partnership Agreement shall not require
the consent of the Agency and shall not shall not constitute a default or an Event of Default
under this Agreement or the Loan Documents or accelerate the maturity of the Agency
Loan. If the Developer's limited partner exercises its right to remove a General Partner,
Agency will not unreasonably withhold its consent to the substitute general partner;
provided however, the consent of either the Agency shall not be required if the substitute
general partner is an affiliate of the Developer's limited partner. The substitute general
partner shall assume all of the rights and obligations of the removed general partner
hereunder.
17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of
Developer, or at its own election, the Agency shall issue a Certificate of Completion. Such
Certificate of Completion shall be, and shall so state, conclusive determination of
satisfactory completion of the construction.
If Agency declines to furnish a Certificate of Completion after written request from
Developer, the City Project Manager shall, within thirty (30) days after receipt of the
request, provide Developer with a written statement of the reasons therefore. The statement
shall contain a description of the action Developer must take to obtain a Certificate of
Completion. If the reason therefore is that the Developer has not completed a minor portion
of the construction, Agency may, in its sole and absolute discretion, issue the Certificate
of Completion upon the posting with Agency of a bond or other form of security acceptable
to the City Project Manager in the amount of the fair value of the uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of
the Agency Loan Documents or any obligation of Developer to any other party whatsoever,
including any holder of a mortgage or deed of trust. A Certificate of Completion is not
"notice of completion" referred to in Section 3093 of the California Civil Code.
18. INDEMNIFICATION
18.1 NonliabilitV of Agency. Developer acknowledges and agrees that:
(a) The relationship between Developer and the Agency is and shall
remain solely that of Developer and lender. Agency neither undertakes nor assumes any
responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform
Developer of any matter in connection with the construction, including matters relating to:
(i) the performance of the construction work; (ii) architects, contractors, subcontractors and
materialmen, or the workmanship of or materials used by any of them; or, (iii) the progress
of the construction; and Developer shall rely entirely on its own judgment with respect to
80A-124
such matters and acknowledges that any review, inspection, supervision, approval or
information supplied to Developer by Agency in connection with such matters is solely for
the protection of Agency, and that neither Developer nor any third party is entitled to rely
on it;
(b) Notwithstanding any other provision of any Loan Document: (i)
the Agency is not a partner, joint venture, alter -ego, manager, controlling person or other
business associate or participant of any kind of Developer, and Agency does not intend to
ever assume any such status; (ii) Agency's activities in connection with the Loan shall not
be "outside the scope of the activities of a lender of money" within the meaning of
California Civil Code Section 3434, as modified or recodified from time to time, and
Agency does not intend to ever assume any responsibility to any person for the quality or
safety of the Property; and, (iii) Agency shall not be deemed responsible for or a participant
in any acts, omissions or decisions of Developer;
(c) Agency shall not be directly or indirectly liable or responsible for
any loss or injury of any kind to any person or property resulting from any construction on,
or occupancy or use of, the Property, whether arising from: (i) any defect in any building,
grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of
Developer or any of Developer's agents, employees, independent contractors, licensees or
invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon;
and,
(d) By accepting or approving anything required to be performed or
given to Agency under the Loan Documents, including any certificate, financial statement,
survey, appraisal or insurance policy, Agency shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or approval
shall constitute a warranty or representation by Agency to anyone.
18.2 Indemnity. Developer shall defend (by counsel reasonably satisfactory to
Agency), indemnify and save and hold harmless the Indemnitees from and against all
claims, damages, demands, actions, losses, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) arising from or relating to:
(i) this Agreement; (ii) the making of the Loan(s); (iii) a claim, demand or cause of action
that any person has or asserts against Developer; (iv) any act or omission of Developer,
any contractor, subcontractor or material supplier, engineer, architect or other person with
respect to the Property; or, (vi) the ownership, occupancy or use of the Property.
Notwithstanding the foregoing, Developer shall not be obligated to indemnify Agency with
respect to the consequences of any act of gross negligence or willful misconduct of Agency.
Developer's obligations under this Section shall survive the cancellation of the Agency
Promissory Note, release and reconveyance of the Agency Deed of Trust, issuance of the
Certificate of Completion, and termination of this Agreement.
18.2.1 Notwithstanding the foregoing, neither Developer, nor any of its
partners, shall be personally liable for any indemnification obligation hereunder that would
result as the repayment of principal and/or interest under the Loan.
80A-125
18.3 Reimbursement of Agency. Developer shall reimburse Agency
immediately upon written demand for all costs reasonably incurred by Agency (including
the reasonable fees and expenses of attorneys, accountants, appraisers and other
consultants, whether the same are independent contractors or employees of Agency) in
connection with the enforcement of the Loan Documents and all related matters, including
all claims, demands, causes of action, liabilities, losses, commissions and other costs
against which Agency is indemnified under the Loan Documents. Such reimbursement
obligations shall bear interest from the date occurring twenty (20) days after Agency gives
written demand to Developer and shall be secured by the Agency Deed of Trust. Such
reimbursement obligations shall survive the cancellation of the Loan Note, release and
reconveyance of the Agency Deed of Trust, issuance of a Certificate of Completion, and
termination of this Agreement
19. INSURANCE, CASUALTY AND CONDEMNATION
19.1 Policies Required. While any obligation of Developer under the Loan
Documents remains outstanding, Developer shall maintain at Developer's sole expense,
with insurers either: (i) admitted in California; or, (ii) are not admitted to California but
have an A.M. Best Rating of "A" or above and reasonably approved by the Agency, the
following policies of insurance in form and substance reasonably satisfactory to the City
Attorney:
(a) worker's compensation insurance and any other insurance required
by law in connection with the construction;
(b) prior to commencement and following completion of the
construction, fire and hazard "all risk" insurance covering 100% of the replacement cost of
the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief
and all other risks normally covered by "all risk" coverage policies in the area where the
Property is located (including loss by flood if the Property is in an area designated as
subject to the danger of flood);
(c) upon commencement of the construction and at all times prior to
completion of the construction, builder's risk -all risk insurance covering 100% of the
replacement cost of all Improvements (including offsite materials) during the course of
construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the area
where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(d) public liability insurance in amounts reasonably required by Agency
from time to time, and in no event less than $1,000,000 for "single occurrence;"
(e) property damage insurance in amounts reasonably required by the
Agency from time to time, and in no event less than $1,000,000; and
(f) any other insurance reasonably required by Agency that is available
at commercially reasonable rates.
80A-126
All such insurance shall provide that it may not be canceled or materially modified
without thirty (30) days prior written notice to Agency. The policies required under
subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in form and
substance satisfactory to Agency, showing the Agency as encumbrance. The Agency shall
be named as an additional insured in the policies required rmder subparagraphs (d) and (e).
Certificates of insurance for the above policies (and/or original policies, if required by
Agency) shall be primary and delivered within ten (10) days after demand therefore, and
prior to start of any construction work. All policies insuring against damage to the
Improvements shall contain an agreed value clause sufficient to eliminate any risk of co-
insurance. No less than thirty (30) days prior to the expiration of each policy, Developer
shall deliver to Agency evidence of renewal or replacement of such policy reasonably
satisfactory to the City Attorney.
19.2 City Attorney May Modify. The City Attorney may modify the type and
amounts of insurance required pursuant to this Section.
19.3 Claims and Proceedings. Developer shall give Agency immediate
notice of any material casualty to any portion of the Property, whether or not covered by
insurance, and of the initiation or threatened initiation of any proceeding for the
condemnation or other taking for public or quasi -public use of any portion of the Property
(collectively, "Condemnation"), and shall provide Agency with copies of all documents
which pertain to any such casualty or Condemnation. Developer shall take all action
reasonably required by Agency in connection therewith to protect the interests of
Developer and/or Agency, and Agency shall be entitled (without regard to the adequacy of
its security) to participate in any action, claim, adjustment or proceeding and to be
represented therein by counsel of its choice. Developer shall not settle, adjust, or
compromise any claim, action, adjustment or proceeding without prior written approval,
which approval shall not be unreasonably withheld or delayed.
19.4 Delivery of Proceeds to Agency. In the event that, notwithstanding the
"lender's loss payable endorsement" requirement set forth above, the proceeds of any
casualty insurance policy described herein are paid to Developer, Developer shall, subject
to any superior rights of the Senior Lender, deliver such proceeds to the Agency
immediately upon receipt.
19.5 Application of Casualty Insurance Proceeds. Any proceeds collected (the
"Proceeds") under any casualty insurance policy described in this Agreement shall be
disbursed to Developer as provided below, but only upon fulfillment of each of the
following conditions (the "Restoration Conditions") within ninety (90) days (unless
extended by mutual agreement of Developer and Agency) following the occurrence of the
receipt of the Proceeds:
(a) Developer shall demonstrate to Agency's reasonable
satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to
subparagraph (b) and any undisbursed loan and tax credit proceeds available to the
Developer) will be adequate to repair the Improvements and to restore the fair market value
of the Property, within a time period reasonably determined by Agency, to at least the value
80A-127
it had immediately prior to sustaining the damage. Such demonstration shall include
delivery to Agency of. (i) plans and specifications reasonably satisfactory to Agency; and,
(ii) a construction contract in form and content, and with a contractor, reasonably
satisfactory to Agency;
(b) To the extent that the Proceeds (together with all
undisbursed Loan proceeds and any other financing proceeds available to the Developer)
are insufficient to accomplish the restoration required above, Developer shall deliver to
Agency funds (the "Shortfall Funds") in the amount of such shortfall, which funds shall be
assigned to Agency as security for Developer's obligation hereunder and held and disbursed
in the same manner as the Proceeds;
(c) Developer shall execute such documents as Agency
reasonably requires to evidence and secure Developer's obligation to use all amounts
disbursed for the diligent restoration of the Property; and,
(d) No Event of Default shall remain uncured.
19.6 Method of Disbursement and Undisbursed Funds. Any Proceeds and
Shortfall Funds to be disbursed to Developer shall be held by the Senior Lender if a Senior
Loan is outstanding, and disbursed in accordance with the Senior Loan Documents or, if
no Senior Loan, then held by the Agency and disbursed in accordance with the Agency's
then customary disbursement procedures and related provisions. Any amounts remaining
undisbursed following completion of such restoration shall be returned to Developer up to
the amount of any Shortfall Funds deposited by Developer, and any other amounts
remaining shall either be paid to Developer or applied by the Senior Lender, or the Agency
in the absence of a Senior Loan, as the case may be against any obligations that are secured
by a lien on the Property, as they elect in their sole and absolute discretion.
19.7 Failure to Satisfy Conditions. In the event that Developer fails to fidfill
the Restoration Conditions within one hundred and eighty (180) days (unless extended
pursuant to Section 19.5) following the date Proceeds are received, the Proceeds shall be
applied by Agency against any obligations to Agency that are secured by a lien on the
Property, and the selection of which such obligations to apply the Proceeds against shall
be made by Agency in its sole and absolute discretion.
19.8 Restoration. Nothing in this Section 19 shall be construed to excuse
Developer from repairing and restoring all damage to the Property in accordance with other
Loan Document provisions, regardless of whether insurance proceeds are available or
sufficient.
19.9 Condemnation; Treatment of Compensation. Subject to any
superior rights of Senior Lender, Developer hereby assigns to the Agency, as security for
all obligations to Agency secured by a lien on the Property, all amounts payable to
Developer in connection with any Condemnation, and any proceeds of any related
settlement (collectively, "Compensation"). Subject to any superior rights of Senior Lender,
Developer shall deliver such remaining Compensation to Agency immediately upon
receipt. If the taking results in a loss of the Property to an extent that, in the reasonable
80A-128
opinion of Agency, renders or is likely to render the Property not economically viable or
if, in Agency's reasonable judgment Developer's security is otherwise impaired, Agency
may apply the Compensation received due to judgment or settlement in connection with
any condemnation or other taking to reduce the unpaid obligations secured in such order
as Agency may determine, and without any adjustment in the amount or due dates of
payments due under the Note. If so applied, any award in excess of the unpaid balance of
the Note and other sums due to Agency shall be paid to Developer or Developer's assignee.
Agency shall have no obligation to take any action in connection with any actual or
threatened condemnation or other proceeding.
19.9.1 Notwithstanding the foregoing, as long as the value of Agency's
liens are not impaired, any condemnation proceeds maybe used by the Developer for repair
and/or restoration of the Project.
19.9.2 Notwithstanding the foregoing, during the tax credit compliance
period for the Project, as determined under Section 42 of the Internal Revenue Code, any
condemnation proceeds may be used by the Developer for repair and/or restoration of the
Project.
19.10 Waiver of Subrogation. Developer hereby waives all rights to recover
against the Agency (or any officer, employee, agent or representative of Agency) for any
loss incurred by Developer from any cause insured against or required by any Loan
Document, to be insured against; provided, however, that this waiver of subrogation shall
not be effective with respect to any insurance policy if the coverage thereunder would be
materially reduced or impaired as a result. Developer shall use its best efforts to obtain
only policies that permit the foregoing waiver of subrogation.
20. DEFAULTS AND REMEDIES
20.1 Events of Default. The occurrence of any of the following, whatever the
reason therefore which is not cured, shall constitute an Event of Default by Developer:
(a) Developer fails to make any payment of principal or interest
under the Agency Promissory Note when due, and such failure is not cured within ten (10)
Business Days after Developer's receipt of written notice that such payment was not
received when due;
(b) Developer fails to perform any other obligation for the
payment of money under any Loan Document, and such failure is not cured within ten (10)
Business Days after Developer's receipt of written notice that such obligation was not
performed when due;
(c) Developer fails to perform any obligation (other than the
obligations described in subparagraphs (a) and (b) above) under any Loan Document, and
such failure is not cured within thirty (30) days after Developer's receipt of written notice
that such obligation was not performed; provided that, if cure cannot reasonably be effected
within such thirty (30) -day period, such failure shall not be an Event of Default so long as
Developer (in any event, within ten (10) Business Days after receipt of such notice)
80A-129
commences to cure, and thereafter diligently (in any event within ninety (90) days after
receipt of such notice) prosecutes such cure to completion;
(d) Any representation or warranty in any Loan Document
proves to have been incorrect in any material respect when made;
(e) The Property is materially damaged or destroyed by fire or
other casualty unless Developer fulfills the Restoration Conditions set forth in the
insurance provisions of this Agreement within one hundred eighty (180) days (unless
extended pursuant to Section 19.5) and thereafter diligently restores the Property in
accordance with this Agreement;
(f) Work on the construction ceases for thirty (30) consecutive
days for any reason (other than governmental orders, decrees or regulations, acts of God or
any other deity, strikes or other causes beyond Developer's reasonable control);
(g) Developer is enjoined or otherwise prohibited by any
Governmental Authority from constructing and/or occupying the Improvements and such
injunction or prohibition continues unstayed for sixty (60) days or more for any reason;
(h) Developer is dissolved, liquidated or terminated, or all or
substantially all of the assets of Developer are sold or otherwise transferred without the
City Project Manager's prior written consent;
(i) Developer is the subject of an order for relief by a
bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or
makes an assignment for the benefit of creditors; or Developer applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or any part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without the application
or consent of Developer and the appointment continues undischarged or unstayed for
ninety (90) days; or Developer institutes or consents to any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, custodianship,
conservatorship, liquidation, construction or similar proceeding relating to it or any part of
its property; or any similar proceeding is instituted without the consent of Developer and
continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against any property of
Developer and is not released, vacated or fully bonded within ninety (90) days after its
issue or levy; or
0) (i) any of the Senior Loan Documents is revoked or
terminated, in whole or in part and for any reason (except due to repayment of such loans),
without the City Project Manager's prior written consent, or (ii) Developer defaults or
otherwise fails to perform any of its duties or obligations under or in connection with any
of the Senior Loan Documents, subject to all applicable notice and cure periods, or (iii) any
of the Senior Loan Documents is amended, supplemented or otherwise modified without
Agency's prior written consent, which consent shall not be unreasonably withheld.
80A-130
Notwithstanding anything to the contrary contained herein, Agency hereby agrees
that any cure of any default made or tendered under this Agreement or under the other
Agency Loan Documents by Developer's Limited Partner shall be deemed to be a cure by
Developer and shall be accepted or rejected on the same basis as if made or tendered by
Developer.
20.2 Remedies Upon Default. Upon the occurrence of any Event of Default,
Agency may, at its option and in its absolute discretion, do any or all of the following:
(a) By written notice to Developer, declare the principal of all amounts
owing under the Loan Documents, together with all accrued interest and other amounts
owing in connection therewith, to be immediately due and payable, regardless of any other
specified due date; provided that any Event of Default described in Section 20.1 (e) shall
automatically, without notice or other action on Agency's part, cause all such amounts to
be immediately due and payable;
(b) In its own right or by a court-appointed receiver, take possession of
the Property, enter into contracts for and otherwise proceed with the completion of the
construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including, without limitation, the right to seek specific performance and
the right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as Agency elects in its sole and absolute discretion;
and,
(d) Suspend or terminate the award of Agency funds if Developer fails
to comply with any term of such award.
20.3 Cumulative Remedies: No Waiver. Agency's rights and remedies under
the Loan Documents are cumulative and in addition to all rights and remedies provided by
law. The exercise by Agency of any right or remedy shall not constitute a cure or waiver
of any default, nor invalidate any notice of default or any act done pursuant to any such
notice, nor prejudice the Agency in the exercise of any other right or remedy. No waiver
of any default shall be implied from any omission by Agency to take action on account of
such default if such default persists or is repeated. No waiver of any default shall affect any
default other than the default expressly waived, and any such waiver shall be operative
only for the time and to the extent stated. No waiver of any provision of any Loan
Document shall be construed as a waiver of any subsequent breach of the same provision.
Agency's consent to or approval of any act by Developer requiring further consent or
approval shall not be deemed to waive or render unnecessary Agency's consent to or
approval of any subsequent act. The Agency's acceptance of the late performance of any
obligation shall not constitute a waiver by Agency of the right to require prompt
performance of all further obligations; Agency's acceptance of any performance following
the sending or filing of any notice of default shall not constitute a waiver of either party's
right to proceed with the exercise of its remedies for any unfulfilled obligations; and
Agency's acceptance of any partial performance shall not constitute a waiver by Agency of
any rights.
80A-131
21. MISCELLANEOUS
21.1 Oblieations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of Agency to Developer, or any other
claim by developer against Agency, in connection with the Loan or otherwise, Developer
hereby waives any right it might otherwise have: (a) to offset any such obligation, liability
or claim against Developer's obligations under the Loan Documents; or, (b) to claim that
the existence of any such outstanding obligation, liability or claim excuses the
nonperformance by Developer of any of its obligations under the Loan Documents.
21.2 Notices. All notices, demands, approvals and other communications
provided for in the Loan Documents shall be in writing and be delivered to the appropriate
party by personal service or U.S. mail at its address as follows:
If to Developer: Tiny Tim, LP
c/o Community Development Partners
3416 Via Oporto, Suite 301
Newport Beach, CA 92663
Attention: Kyle Paine
With a copy to: Law Offices of Patrick R. Sabelhaus
1724 10s' Street, Suite 110
Sacramento, CA 95811
Attention: Stephen A. Strain, Esq.
With a copy to: Tiny Tim Mercy House CHDO LLC
P.O. Box 1905
Santa Ana, CA 92702
Attn: Larry Haynes
With a copy to: IH CDP Partnership LLC
4 Venture, Suite 295
Irvine, CA 92618
Attention: Philip Wood
With a copy to: R4 TTCA Acquisition LLC
c/o R4 Capital LLC
780 Third Avenue, 16th Floor
New York, New York 10017
Attention: Marc Schnitzer
With a copy to: Frost Brown Todd LLC
400 West Market Street, Suite 3200
Louisville, KY 40202
Attention: Amy Curry, Esq.
80A-132
If to Agency: Housing Authority of the City of Santa Ana
Executive Director
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to all other
parties. All notices personally served shall be effective when actually received. All notices
mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The
foregoing notwithstanding, the non -receipt of any notice as the result of a change of address
of which the sending party was not notified or as the result of a refusal to accept delivery
shall be deemed receipt of such notice.
21.3 Survival of Representations and Warranties. All representations and
warranties in the Loan Documents shall survive the making of the Loan(s) described herein
and have been or will be relied on by Agency notwithstanding any investigation made by
either party.
21.4 No Third Parties Benefited. This Agreement is made for the purpose of
setting forth rights and obligations of Developer and the Agency, and no other person shall
have any rights hereunder or by reason hereof.
21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind,
and shall inure to the benefit of, Developer and Agency and their respective successors and
assigns. Other than as expressly provided to the contrary in this Agreement, Developer
shall not assign any of its rights or obligations under any Loan Document without the prior
written consent of Agency, which consent may be withheld in Agency's sole and absolute
discretion. Any such assignment without such consent shall, at Agency's option, be void.
21.6 Prior Agreements; Amendments; Consents. This Agreement (together
with all other Loan Documents) contains the entire agreement between the Agency and
Developer with respect to the Loan and the Property, and all prior negotiations,
understandings and agreements are superseded by this Agreement and such other Loan
Documents. No modification of any Loan Document (including waivers of rights and
conditions) shall be effective unless in writing and signed by the party against whom
enforcement of such modification is sought, and then only in the specific instance and for
the specific purpose given.
21.7 Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California and Federal
law, whichever is more stringent. Developer irrevocably and unconditionally submits to
the jurisdiction of the Superior Court of the State of California for the County of Orange
or the United States District Court of the Central District of California, as Agency may
80A-133
deem appropriate, in connection with any legal action or proceeding arising out of or
relating to this Agreement or the Loan Documents. Assuming proper service of process,
Developer also waives any objection regarding personal or in rem jurisdiction or venue.
21.8 Severability of Provisions. No provision of any Loan Document that is
held to be unenforceable or invalid shall affect the remaining provisions, and to this end all
provisions of the Loan Documents are hereby declared to be severable.
21.9 Headings. Article and section headings are included in the Loan
Documents for convenience of reference only and shall not be used in construing the Loan
Documents.
21.10 Conflicts. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, this Agreement, tmless otherwise
expressly provided, shall prevail; provided however that, with respect to any matter
addressed in both such documents, the fact that one document provides for greater, lesser
or different rights or obligations than the other shall not be deemed a conflict unless the
applicable provisions are inconsistent and could not be simultaneously enforced or
performed.
21.11 Time of the Essence. Time is of the essence under this Agreement and in
the performance of every term, covenant, and obligation contained herein.
21.12 Conflict of Interest. No member, official or employee of the Agency shall
have any direct or indirect interest in this Agreement, nor participate in any decision
relating to the Agreement which is prohibited by law.
21.13 Warranty Against Payment of Consideration. Developer warrants that
it has not paid or given, and will not pay or give, any third person any money or other
consideration for obtaining this Agreement.
21.14 [RESERVED]
21.15 Plans and Data. Where Developer does not proceed with the work and
construction of the Project, and when this Agreement is terminated with respect thereto for
any reason, Developer shall deliver to Agency any and all plans and data concerning the
Property, and Agency or any person or entity designated by Agency shall have the right to
use such plans and data without compensation to Developer. Such right of Agency shall be
subject to any right of the preparer of the plans to their use.
21.16 Authority to Enter Agreement. Each undersigned represents and warrants
that its signature hereinbelow has the power, authority and right to bind their respective parties
to each of the terms of this Agreement, and shall indemnify the Agency fully, including
reasonable costs and attorney's fees, for any injuries or damages to Agency in the event that
such authority or power is not, in fact, held by the signatory or is withdrawn.
80A-134
IN WITNESS WHEREOF, the parties hereto have caused this Loam Agreement to be
executed on the date set forth at the beginning of (his Agreement.
AT"I"EST:
HOUSING AUTHORITY OF THE CITY
OF SANTA ANA ACTING AS THE
HOUSING SUCCESSOR AGENCY
Norma Mitre Steven A. Mendoza
Recording Secretary Executive Director
APPROVED AS TO FORM
Sonia R. Carvalho
Authority General Counsel
By:
ttorney
RECOMMENDED FOR APPROVAL,
Steven A. Mendoza
Executive Director
Community Development Agency
(Signalures cornlinue on followingpage}
80A-135
DEVELOPER:
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By: L
Kyle Yaine
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc.,
a California nonprofit public benefit corporation
Its: Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
By: IH CDP Partnership LLC,
a California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
By:
Philip Wood
Its: President
80A-136
EXHIBITS
A. Legal Description
B. Affordability Restrictions on Transfer of Property
C. Agency Deed of Trust
D. Agency Promissory Note
E. Project Budget
F. Scope of Work / Schedule of Performance
G. Form of Residual Receipts Report
80A-137
Exhibit A:
Legal Description
80A-138
LEGAL DESCRIPTION
APN: 007-313-15
007-313-16
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SANTA ANA, IN THE COUNTY OF
ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA,
AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47 AND 48 OF MISCELLANEOUS MAPS, RECORDS
OF ORANGE COUNTY, CALIFORNIA.
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT THEREON SOUTH
89°49'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF SAID LOT, AND RUNNING THENCE
NORTH 00016'15" EAST PARALLEL WITH THE CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS
SHOWN ON SAID MAP, 144.00 FEET; THENCE SOUTH 89°49'25" WEST PARALLEL WITH THE CENTER LINE
OF FIFTH STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST LINE OF SAID
LOT 39; THENCE SOUTH 0°16'15" WEST ALONG SAID WEST LINE, 133.92 FEETTO THE BEGINNING OF A
TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 10 FEET; THENCE
SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90°26150" AN ARC DISTANCE OF
15.79 FEET TO A POINT OF TANGENCY WITH THE SOUTH LINE OF SAID LOT; THENCE NORTH 89°49'25"
EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE POINT OF BEGINNING.
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA,
AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47 AND 48 OF MISCELLANEOUS MAPS, RECORDS
161 Xil len O ffori11P WKWI I I tilZ 011 I_0
EXCEPTING THEREFROM THAT PORTION OF LOT 39 OF TRACT NO. 1341, AS SHOWN ON A MAP THEREOF
RECORDED IN BOOK 57, PAGES 47 AND 48 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT THEREON SOUTH
89°49'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF SAID LOT, AND RUNNING THENCE
NORTH 00°16'15" EAST PARALLEL WITH THE CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS
SHOWN ON SAID MAP, 144.00 FEET; THENCE SOUTH 89°49'25" WEST PARALLEL WITH THE CENTER LINE
OF FIFTH STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST LINE OF SAID
LOT 39; THENCE SOUTH 0°16'15" WEST ALONG SAID WEST LINE, 133.92 FEETTO THE BEGINNING OF A
TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 10 FEET; THENCE
SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90°26'50" AN ARC DISTANCE OF
15.79 FEET TO A POINT OF TANGENCY WITH THE SOUTH LINE OF SAID LOT; THENCE NORTH 89°49'25"
EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE POINT OF BEGINNING.
80A-139
Exhibit B.9
Affordability
Restrictions on
t
80A-140
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
(Address: 2223 West Fifth Street, Santa Ana, California)
THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the
"Restrictions") are entered into by and between Tiny Tim LP, a California limited partnership
("Developer") and the Housing Authority of the City of Santa Ana, acting as the Housing
Successor Agency, a public body, corporate and politic ("Agency").
RECITALS:
A. The Agency is authorized by the Community Redevelopment Law of the State of
California (Health and Safety Code section 33000, et seq.) ("CRL") to expend funds to increase
the supply of very low and low income housing available at affordable housing costs. In part to
further this goal, the Agency has created the Merged Project Areas, within the City (the "Project
Area"), and adopted a Redevelopment Plan for the redevelopment of the Project Area. In
accordance with Section 33334.2, et seq., of the CRL, the Agency sets aside a portion of the tax
increment revenues it receives from the Merged Project Area in a separate low and moderate
housing asset fund, which the Agency uses for the constriction, preservation, and rehabilitation
of affordable housing for low-income households.
B. Developer, acting by and through its representative and agent, Community
Development Partners, a California corporation ("CDP") requested financial assistance in
connection with the proposed acquisition, development, construction, ownership, occupancy, and
operation of a fifty-one (51) unit affordable housing complex ("Project') to be located at 2223
West Fifth Street, Santa Ana, California, and 'legally described within Exhibit A of the Agency
Loan Agreement hereto and incorporated herein ("Property"). At least fifteen (15) of the units
will be affordable to family households earning no more than 30% of the Area Median Income
("AMP'); five (5) of the traits affordable to family households earning no more than 50% of the
AMI; and thirty (30) of the units affordable to family households earning no more than 60% of
the AMI. Office space within the development will be provided for use as a police substation
which at a minimum will have room for a desk, phone, and computer that could be set up by the
1076\53\1379664.2
80A-141
Santa Ana Police Department ("SAPD"), dependent upon their available staffing and resources.
The unit mix consists of:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
On-site amenities will include a community plaza, an art center, urban farm, and mini
park with outdoor gym and jogging track. Mercy House Living Centers ("Mercy House") will
manage onsite residential services coordination for all households.
C. The City of Santa Ana ("City") and the Housing Authority of the City of Santa
Ana ("Housing Authority") reviewed Developer's request for assistance and at the City
Council/Housing Authority meeting on June 20, 2017, the Housing Authority Board authorized
and approved issuance of a conditional, pre -commitment letter evidencing the preliminary award
of $4,700,000 of funds to the Project ("Agency Loan"), to be funded exclusively from the Low
and Moderate Income Housing Asset Fund (the "LMIHAF") held by the Agency.
D. The amount of the Agency Loan was determined based upon the City and
Agency's review of the Developer's request for the receipt of the Agency Loan and the
development proforma and projected cash flows for the Project submitted by the Developer to
the City/Agency as of March 29, 2017 ("Proforma"). The Housing Authority's Executive
Director has authority to approve revised development proformas and projected cash flows for
the Project; provided, however, that the Agency Loan is not materially increased or extended.
E. In furtherance of the CRL and the Redevelopment Plan, Developer has applied to
the Agency for a loan with which to:
1. Acquire, develop and construct the project, and
2. Thereafter to maintain, operate and professionally manage the Project as
decent, safe, sanitary and affordable rental housing.
F. The Agency, on certain terms and conditions, desires to make such Agency Loan
to Developer in order to make possible the acquisition, development, construction, ownership,
maintenance and operation of the Project, thereby expanding the supply of decent, safe, sanitary and
affordable housing within the City.
G. If there is any inconsistency between State, and local guidelines with regard to
any of the terms and conditions contained herein, the more stringent shall apply.
H. The Agency Loan Agreement, Agency Deed of Trust, Agency Promissory Note and
these Restrictions, dated concurrently herewith (collectively the "Agency Loan Documents") are
80A-142
entered into for the purpose of providing for affordable residential rental units in the City of
Santa Ana pursuant to the Agency Funds regulations and guidance.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein
contained, Agency and Developer agree as follows:
1. Definitions:
"Affordable Housing" means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified, as follows, in accordance with
Sections 50052.5 and 50053 of the Health & Safety Code and the U.S. Department of Housing
and Urban Development (HUD):
Very Low -Income Households. Thirty (30) percent of the income of a household earning
fifty (50) percent of the Orange County median income adjusted for family size
appropriate for the unit.
Low -Income Households. Thirty (30) percent of the income of a household earning
seventy (70) percent of the Median Income for the Area for for -sale units, and thirty (30)
percent of the income of a household earning sixty (60) percent of the Median Income for
the Area for rental units, adjusted in either case for family size appropriate for the unit.
In the event of a conflict between the fractions specified in this definition and those found
in Sections 50052.5 and 50053 of the Health & Safety Code and HUD, the fractions
specified by HUD shall control.
"Affordable Rent" means the monthly rents which do not exceed the maximum amount
applicable to Extremely Low, Very Low and Low Income households, as promulgated by the
California Tax Credit Allocation Committee (TCAC), or by the State of California, as applicable.
"Agency" means the Housing Authority of the City of Santa Ana, acting as the Housing
Successor Agency, a public body, corporate and politic, exercising governmental functions and
powers, and organized and existing under the CRL. The principal office of the Agency is located
at 20 Civic Center Plaza, Santa Ana, California 92702. "Agency" shall also refer to the City
where the context dictates, to the effect that City shall have all rights granted to the Agency
hereunder.
"Agency Deed of Trust" means the deed of trust encumbering the Property, in the form
attached as Exhibit C to the Agreement, to be executed by Developer pursuant to Section 5.13.1
of the Agreement in order to secure the Agency Loan Note.
"Agency Loan" means a loan in the original principal amount of up to four -million,
seven -hundred thousand dollars ($4,700,000) to be made to Developer by the Agency to be
funded exclusively from the Low and Moderate Income Housing Asset Fund held by the
Agency.
80A-143
"Agency Promissory Note" means that certain promissory note for Agency Loan funds
in the original principal amount of $4,700,000 in the form attached as Exhibit D to the
Agreement, and to be executed by Developer in favor of Agency to evidence the obligation of
Developer to repay the Agency Loan through residual receipts as further described in the Agency
Promissory Note.
"Agreement" means the Loan Agreement by and between the Agency and Developer for
Housing Successor Agency Funds.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the Agency Funds.
"Building Permit" means the building permit(s) issued by the City of Santa Ana and
required for the construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on
which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"Certificate of Completion" has the meaning set forth in Article 17 of the Agreement.
"City" means the City of Santa Ana, California, a charter city and municipal corporation.
"City" shall also refer to the Agency where the context dictates, to the effect that the Agency
shall have all the rights granted to the City hereunder.
"City Project Manager" shall mean the City's Housing Manager and/or his/her
designee.
"County" means the County of Orange, California.
"Developer" means Tiny Tim LP, a California limited partnership.
"Event of Default" has the meaning set forth in Section 20.1 of the Agreement.
"Extremely Low Income" means an adjusted income which does not exceed thirty
percent (30%) of the Median Income for the Area, adjusted for household size, as published by
the U.S. Department of Housing and Urban Development.
"Governmental Authority" means any governmental or quasi -governmental agency,
board, bureau, commission, department, court, administrative tribunal or other instrumentality or
authority, and any public utility.
0
80A-144
"Housing Authority" means the Housing Authority of the City of Santa Ana (CA093), a
public body, corporate and politic.
"HUD" means the United States (U.S.) Department of Housing and Urban Development,
and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter comprising
any portion of the Property, including, without limitation, landscaping, trees and plant materials;
and offsite improvements, as required through the City of Santa Ana Planning and Building
Agency entitlement process.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments,
injunctions, decrees or awards of the United States or any state, county, municipality or other
Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of
any kind, including any conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any lien or security interest.
"Loan Documents" or "Agency Loan Documents" means, collectively, the Agreement,
the Agency Promissory Note, the Agency Deed of Trust, and these Restrictions, and any other
agreement, document, or instrument that the Agency reasonably requires in connection with the
execution of these Restrictions or from time to time to effectuate the purposes of these
Restrictions.
"Low Income" means an adjusted income which does not exceed eighty percent (80%)
of the Median Income for the Area, adjusted for household size, as published by the U.S.
Department of Housing and Urban Development (HUD).
"Median Income for the Area" means the median income for Orange County,
California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Agency Loan Documents as "Area Median Income" or "AMP'.
"Project" means the construction of the Improvements upon the Property by Developer
pursuant to the Agreement.
"Property" means the property that is located at 2223 West Fifth Street in the City of
Santa Ana, and as more fully described in the "Legal Description" of the Property attached as
Exhibit A to the Agreement.
"Restricted Units" means fifty (50) of the "Housing Units" at the Project shall and will
be restricted to affordable rents pursuant to the Maximum Rents published yearly by the
California Tax Credit Allocation Committee (TCAC) and referenced in the regulatory agreement
containing conditions, covenants and restrictions executed by Developer and TCAC for a period
not less than fifty-five (55) years recorded against the Project in the Official Records, County of
Orange, California. At least fifteen (15) of the Housing Units at the Project shall and will be
80A-145
restricted to households earning 30% or less of the AMI. One (1) Housing Unit will be rented to
an on-site property manager; the manager's unit will not be rent restricted.
"Senior Lender" means a commercial or institutional financial institution providing the
Senior Loan or any other holder of the Senior Loan Note.
"Senior Loan" means a loan from the Senior Lender concurrent to the Agency Loan for
payment of a portion of the acquisition and rehabilitation costs, and shall include any subsequent
loan that refinances the initial Senior Loan.
"Senior Loan Deed of Trust" means the first deed(s) of trust securing the Senior Loan
by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement governing the
Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement,
document or instrument that the Senior Lender requires in connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior Loan from the
Senior Lender.
"Term of Affordability" or "Affordability Period" means the terms and conditions
contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the
Certificate of Occupancy for the Project, or repayment of the Agency Loan, whichever is longer.
"Very Low Income" means an adjusted income which does not exceed fifty percent
(50%) of the Median Income for the Area, adjusted for household size, as published by the U.S.
Department of.Housing and Urban Development.
2. Use of the Property. Developer covenants and agrees, for itself, its successors,
its assigns, and every successor in interest to the Property of any part thereof, that Developer,
such successors, and assigns shall use the Property to provide Affordable Housing, for low-,
very -low, and extremely -low-income households, as provided in the Agency Loan Agreement
and these Restrictions. Developer agrees that the Property shall be used only for decent, safe,
sanitary and Affordable Housing pursuant to the affordability requirements of California Health
and Safety Code ("H&S") sections 50052.5 and 33334.3, as applicable.
3. Affordability Requirements Use and Maintenance of the Property.
3.1 Use Covenants and Restrictions:
A. Developer agrees and covenants, which covenants shall run with the land and bind
Developer, its successors, its assign and every successor in interest to the Property that Developer
will make all rental units on the Property available to extremely -low, very low and low income
households at rents affordable to such households pursuant to these Restrictions for fifty-five (55)
years from the date of issuance of the Certificate of Occupancy for the Project, or repayment of
the Agency Loan, whichever is longer.
80A-146
B. These Restrictions shall be recorded in the Official Records of the County, and
shall remain in first position on title and shall not be subordinated.
3.2 Affordability Levels/Unit Mix:
A. The Project shall consist of fifty-one (5 1) residential units (except for one (1) unit
for the onsite manager). The unit mix and levels of affordability are as follows:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
B. The affordable rents charged at the Project must comply with the standards set
forth by the California Tax Credit Allocation Committee (TCAC).
C. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. The Housing Authority of the City of Santa Ana publishes a Utility
Allowance Schedule on an annual basis.
3.3 Calculation of Rent:
A. The affordable rents charged at the Project must comply with the standards set
forth by the California Tax Credit Allocation Committee (TCAC).
B. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. The Housing Authority publishes a Utility Allowance Schedule on an annual basis.
C. On an annual basis, the Agency shall provide the Developer with the maximum
allowable schedule of incomes and rents (less utility allowance appropriate for the Restricted Units
for the Property), which shall correspond to the maximum rent increase allowed by TCAC. In no
event can Developer charge any tenant more than such amount.
D. Developer, its successors and assigns, shall not charge rents for the Restricted
Units in excess of the amounts set forth in the tables as adjusted from time -to -time by TCAC.
The City's Project Manager, or designee, shall notify Owner in writing of the adjusted allowable
maximum incomes and rents as allowed by TCAC.
E. In no event shall the rent charged to the tenant of a Restricted Unit be more than that
amount of the rent as published by TCAC on an annual basis.
7
80A-147
F. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. Utility allowances are deducted from rents using the amounts set annually by the Housing
Authority.
G. Recertification of Tenant Income:
(1) Developer shall take all necessary steps to review the income of all tenants
prior to renting to them, as well as reviewing current tenants on an annual
basis. At a minimum, every fifth (5th) year, Developer shall require new
original income documents to be submitted by tenants.
(2) Developer shall allow the Agency to conduct periodic reviews of tenant
files and files relating to affirmative marketing and outreach to ensure the
Project's compliance with applicable regulations and guidelines.
(3) Agency assisted traits continue to qualify as Affordable Housing despite a
temporary non-compliance caused by increases in the incomes of existing
tenants if actions satisfactory to the Agency are being taken to ensure that
all vacancies are filled in accordance with this section until the non-
compliance is corrected.
3.4 Construction and Maintenance of the Property:
A. Construction and Maintenance. Solely at Developer's expense, Developer agrees to
maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas
which Developer is otherwise required to maintain) in a clean and good condition and repair in
compliance with all applicable housing quality standards and state and local code requirements,
and keep the Property free from any accumulation of debris and waste materials. Agency, and any
of its employees, agents, contractors or designees, shall have the right to enter upon the Property at
reasonable times and in a reasonable manner to inspect the Project. If at any time Developer fails to
maintain, or cause to be maintained, the Property as required by this section, and said condition is
not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from
the date of written notice from the Agency, unless such condition cannot reasonably be cured within
thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to
complete such cure, the Agency may perform the necessary maintenance and Developer shall pay
all reasonable costs incurred for such maintenance. The Agency shall inspect the Property annually
after the date of issuance of the Certificate of Completion as described in Section 17 of the
Agreement.
B. Renovations. Developer shall not remove, demolish or materially alter any
Improvement without Agency's prior consent, except to make non-structural repairs, which
preserve or increase the Property's value, and shall promptly restore, in a good and professional
manner, any Improvement (or other aspect or portion of the Property) that is damaged or
destroyed from any cause.
.O I � ' OO
C. Handicapped Accessibility, Developer shall comply with: (a) Section 504 of the
Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the Americans
with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to make
the Project readily accessible to and usable by individuals with disabilities.
D. Local Sourcing Plan. Developer agrees to make a good faith effort to encourage
contractors and suppliers to hire and procure locally. Prior to issuance of any Building Permit,
Developer shall develop and submit to the Agency a local sourcing plan for the Project targeting,
to the extent feasible, the hiring of qualified workers, construction contractors, or the purchasing
of goods locally within the City of Santa Ana.
E. Lead -Based Paint. Developer shall comply with the requirements, as applicable
of the Lead -Based Paint Poisoning Prevention Act.
F. Equal Opportunity and Fair Housing. Developer shall carry out the construction
and perform its obligations trader this Agreement in compliance with all of the state and federal
laws and regulations regarding equal opportunity and fair housing. Developer must also follow
the requirements of California Health and Safety Code section 33435.
G. Property Standards. Developer shall cause the Property to meet all applicable
local, state and federal codes and ordinances, including zoning ordinances. Developer shall also
cause the Property to meet the current edition of the Model Energy Code published by the
Council of American Building Officials.
H. Alternative Transportation and Energy Source, Resource Conservation, and
LEED Certification. In recognition of the Agency's desire to optimize the energy efficiency of
the Project, Developer, agrees to consult with the Project design team, a CABEC certified 2016
Certified Energy Analyst, a LEED AP Homes (low-rise and mid -rise), LEED AP BD+C (high
rise), National Green Building Standard (NGBS) Green Verifier, or GreenPoint Rater (one
person may meet both of these latter qualifications) early in the Project design process to
evaluate a building energy model analysis and identify and consider energy efficiency or
generation measures beyond those required by the TCAC minimum construction standards.
I. Property Maintenance Agreement. Developer shall execute a maintenance
agreement with the Agency prior to occupancy, which shall be recorded against the Property, and
which shall be in a form reasonably satisfactory to the City Attorney.
I Monitoring. Developer shall allow the Agency to conduct periodic inspections of
each of the assisted units on the Property as required by the Housing Opportunity Ordinance
after the date of construction completion, with reasonable notice. Developer shall cure any
defects or deficiencies found by the Agency while conducting such inspections within two weeks
of written notice thereof, or such longer period as is reasonable within the sole discretion of the
Agency.
0
80A-149
3.5 Management Plan:
A. Management Plan. Prior to issuance of a Certificate of Occupancy, Developer
shall submit for the reasonable approval of the Agency a "Management Plan" that sets forth in
detail Developer's property management duties, a tenant selection process in accordance with
this Agreement, a security system and crime prevention program, the procedures for the
collection of rent, the procedures for eviction of tenants, the rules and regulations for the
Property and manner of enforcement, a standard lease form, an operating budget, the identity and
emergency contact information of the professional property management company to be
contracted with to provide onsite property management services at the Property, and other
matters relevant to the management of the Property, including, but not limited to, the following:
(1) Management Agent. Developer shall submit the name and qualifications
of the proposed Management Agent. The City Project Manager shall
approve or disapprove the proposed Management Agent in writing based
on the experience and qualifications of the Management Agent.
(2) Management Agreement. Developer shall submit a copy of the
proposed management agreement specifying the amount of the
management fee, and the relationship and division of responsibilities
between Developer and Management Agent.
(3) Annual Budget and Projected Cash Flows. Prior to the issuance of a
certificate of occupancy for the Project, and annually thereafter not later
than one hundred fifty (150) days after the close of each Calendar Year
thereafter, Developer shall submit an updated operating budget and cash
flow to the,City.Project Manager. The budget and cash flow shall be in a
form that is reasonably acceptable to the City Project Manager.
(4) Tenant Selection Policies. Developer shall adopt and include as part of its
Management Plan, written tenant selection policies and criteria for the
Restricted Units that meet the following requirements:
(a) Are consistent with the purpose of providing housing for
Extremely -Low, Very -Low and Low Income households;
(b) Are reasonably related to program eligibility and the applicants'
ability to perform the obligations of the lease;
(c) Provide for:
(i) the selection of tenants from a written waiting list in the
chronological order of their application, insofar as is
practicable; and,
10
80A-150
(ii) the prompt written notification to any rejected applicant of
the grounds for any rejection;
(d) Carry out the Affirmative Marketing procedures of the City of
Santa Ana, which are designed to provide information and
otherwise attract eligible persons from all racial, ethnic and gender
groups in the housing market area to the Restricted Units.
Developer shall cooperate to effectuate this provision prior to the
initial renting, or upon occurrence of a vacancy, and the re -renting
of any Restricted Units;
(5) Local Preference. Local preference for Santa Ana residents and workers
in tenant selection shall be a requirement of the Project. Subject to the
prohibition of discrimination and the granting of preferences in housing
occupancy imposed by federal laws and regulations, the State of
California, and by the City of Santa Ana Affordable Housing Funds
Policies and Procedures, the Developer shall use its best efforts to lease
units in the following order of priority:
1. First priority shall be given to persons who have been
permanently displaced or face permanent displacement from
housing in Santa Ana as a result of any of the following:
a. A redevelopment project undertaken pursuant to
California's Community Redevelopment Law (Health
& Safety Code Sections 33000, et seq.) -- applicable
only to projects funded by the Low and Moderate
Income Housing Asset Fund.
b. Ellis Act, owner -occupancy, or removal permit
eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP
Contract by property owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at
least the last 6 months.
11
80A-151
(6) Affirmative Marketing. Prior to the issuance of a Certificate of
Occupancy, Developer shall prepare and obtain Agency's approval of an
affirmative marketing program for leasing the affordable units at the
Project.
(7) Crime Free Housing. Developer shall work with Agency staff to develop
a crime free housing policy, procedure, and design plan.
(8) Onsite Parking Management Plan. Developer shall provide onsite parking
for residents and visitors of the Project and actively monitor the parking
demand of the Project site. Developer shall continually monitor and take
appropriate measures to manage the parking demand of the Project site to
mitigate the use of offsite parking spaces on private or public properties
and/or right-of-way. Prior to issuance of a Certificate of Occupancy,
Developer shall submit a Parking Management Plan and obtain approval
from the Agency for said plan.
(9) Tenant Satisfaction Survey. The Developer shall complete and submit to
the Agency biennial tenant satisfaction surveys of tenants.
B. Rental Inclusionary Housing Manual. The Developer shall also maintain
compliance with the City's Inclusionary Housing Manual for Rental Projects.
C. Cure Period. If at any time the Agency determines that the Restricted Units are
not being managed or maintained in accordance with the approved Management Plan, Agency
shall provide Developer and Investor Limited Partner (as defined in the Agreement) with notice
thereof which notice shall include a reasonable cure period not less than thirty (30) days. If the
deficiencies are not cured within the cure period provided in the Agency notice, Developer shall
change the management agent or the practices complained of, upon receipt of written notice from
the City Project Manager. The City Project Manager may require Developer to change
management practices or to terminate the management contract and designate and retain a
different management agent. The management agreement shall provide that it is subject to
termination by Developer without penalty, upon thirty (30) days prior written notice, at the
direction of the City Project Manager. Within ten (10) days following a direction of the City
Project Manager to replace the management agent, the Developer shall select another
management agent or make other arrangements satisfactory to the City Project Manager or
designee for continuing management of the Restricted Units.
3.6 Supportive Services:
A. Onsite Services. The Developer shall provide on-site services that are available to
the residents and shall report to the Agency annually the services provided.
B. Application and Financial Preparedness. Developer shall submit for review and
approval by the Agency a booklet to inform interested persons regarding minimum application
and eligibility requirements and to assist interested persons with application and financial
12
80A-152
preparedness and eligibility for residency at the Project at the initial leasing of the affordable
units. Developer shall also work with the Agency to hold a minimum of two (2) workshops to
be coordinated by the Developer at least twelve (12) months prior to the initial leasing of the
affordable units.
C. Programs and Amenities. Developer shall provide residents of the Project access
to discounted or no -cost onsite supportive services, programming, and amenities that promote
child development, youth development, and economic mobility, and include, but are not limited
to health and wellness services, transportation services, social activities, and physical or
recreational amenities.
D. WORK Center. The Developer and the Property Manager shall coordinate with
the City's WORK Center to provide services and outreach to tenants, as well as provide
information on employment during the construction of the Project.
3.7 Obligation to Refrain from Discrimination:
A. In Use of Property. Developer covenants and agrees for itself, its successors, its
assigns and every successor in interest to the Property or any part thereof, that there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, disability, sex, marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer 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 of the Property, as required by the Title VI of
the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing
regulations, and the Age Discrimination Act of 1975, and all implementing regulations.
B. In Affordable Housing Restrictions. Developer, its successors and assigns, shall
not refuse to lease a unit to a holder of a rental voucher under 24 CFR part 887 (Housing Choice
Voucher Program) or to a holder of a comparable document evidencing participation in a
federally funded tenant -based assistance program because of the status of the prospective tenant
as a holder of such certificate of family participation, rental voucher, or comparable tenant -based
assistance docmnent.
C. In Employment. Developer shall take affirmative action to ensure that applicants
are employed, and that employees are treated during employment, without regard to their race,
color, disability, creed, religion, sex, marital status, disability, national origin, or ancestry.
D. In all Contracts. Developer shall cause the foregoing covenants to be inserted in
all contracts for any work covered by this Agreement so that such provisions will be binding
upon each contractor for the benefit of Agency, provided that the foregoing covenant shall not
apply to contracts or subcontracts for standard commercial supplies or raw materials.
13
80A-153
4. Miscellaneous Provisions:
A. Any lease of any of the Restricted Units must be for not less than one year, unless
by mutual agreement between the tenant and the Developer. Should the tenant and Developer
agree to a term of less than one year, said agreement shall be expressed in written form, signed
by the tenant, and maintained in the tenant's rental file held by the Developer. The lease may not
contain any of the following provisions (in which references to "Developer" shall mean the
Developer, its successors or assigns):
(1) Agreement by the tenant to be sued, to admit guilt, or to a judgment in
favor of the Developer in a lawsuit brought in connection with the lease;
(2) Agreement by the tenant that the Developer may take, hold, or sell
personal property of household members without notice to the tenant and a
court decision on the rights of the parties. This prohibition, however, does
not apply to an agreement by the tenant concerning disposition of personal
property remaining in the Restricted Unit after the tenant has moved out of
the Restricted Unit. The Developer may dispose of this personal property
in accordance with state law;
(3) Agreement by the tenant not to hold the Developer or the Developer's
agent legally responsible for any action or failure to act, whether
intentional or negligent;
(4) Agreement of the tenant that the Developer may institute a lawsuit without
notice to the tenant;
(5) Agreement by the tenant that the Developer may evict the tenant or
household members without instituting a civil court proceeding in which
the tenant has the opportunity to present a defense, or before a court
decision on the rights of the parties;
(6) Agreement by the tenant to waive any right to a trial by jury;
(7) Agreement by the tenant to waive the tenant's right to appeal, or to
otherwise challenge in court, a court decision in connection with the lease;
and,
(8) Agreement by the tenant to pay attorney's fees or other legal costs even if
the tenant wins in a court proceeding by the Developer against the tenant.
The tenant, however, may be obligated to pay costs if the tenant loses.
B. Developer, its successors or assigns, must adhere to state law requirements with
regard to termination of tenancy.
14
80A-154
C. Developer shall comply with and be bound by the conflict of interest provisions
set forth in all applicable state regulations pertaining to conflict of interest.
D. The covenants established in these Restrictions, and any amendments hereto
approved by the Agency, shall be binding for the benefit of and in favor of the Agency and its
respective successors and assigns, without regard to technical classification and designation.
These Restrictions shall remain in effect for fifty-five (55) years from the date of issuance of the
Certificate of Occupancy for the Project, or repayment of the Agency Loan, whichever is longer.
In its discretion, the Agency may defer repayment of the Loan or the Agency may agree to such
reasonable modifications to the requirements of these Restrictions, as the Agency may determine
are necessary for the continued maintenance and operation of the Restricted Units. The
covenants against discrimination shall remain in effect for the period of these Restrictions.
E. Records and Audits.
(1) Owner shall maintain the following general program records, and make
them available for inspection by the Agency, the State or HUD:
(a) Records which demonstrate compliance with the Equal
Opportunity and Fair Housing requirements outlined in these
Restrictions, including:
(i) data on the extent to which each racial and ethnic group
and single head of household (by gender of head of
household) have applied for, participated in, or benefited
from, any program or activity funded in whole or in part;
(ii) documentation of actions undertaken to meet the equal
opportunity requirements of 24 CFR 92.350, which
implements Section 3 of the Housing Development Act of
1968, as amended (12 U.S.C. 1701u); and,
(iii) documentation and data on the steps taken to implement
Owner's outreach programs to minority-owned and women -
owned businesses to meet the minority outreach
requirements of 24 CFR 92.350;
(b) If applicable, records which demonstrate compliance with the
requirements relating to relocation of displaced persons, as
described in 24 CFR 92.353. At a minimum, these shall include
project occupancy lists identifying the name and address of all
persons occupying the Project Property up until the date on which
Developer obtained ownership of the Property; and,
(c) Any other reports issued by other monitoring agencies.
15
80A-155
(2) All records pertaining to each Calendar Year of Agency funds must be
retained for the most recent five year period, except that for rental housing
projects, records may be retained for five years after the Project
completion date; except that records of individual tenant income
verifications, Project rents and Project inspections must be retained for the
most recent five year period, until five years after the Affordability Period
terminates. Developer shall cooperate with the Agency to retain all books
and records relevant to the Loan Agreement for a minimum of five years
after the expiration of the Loan Agreement and any and all amendments
hereto, or for five years after the conclusion or resolution of any and all
audits or litigation relevant to the Loan Agreement, whichever is later.
The Agency, the State, and/or their representatives shall have unrestricted
reasonable access to all locations, books, and records for the purpose of
monitoring, auditing, or otherwise examining said locations, books, and
records with or without prior notice.
(3) If so directed by the Agency upon termination of the Loan Agreement,
Developer shall cause all records, accounts, documentation and all other
materials relevant to the work to be delivered to the Agency, as
depository.
(4) All records, accounts, documentation and other materials relevant to the
Project shall be accessible at any time to the authorized representatives of
the Agency on reasonable prior notice, for the purpose of examination or
audit.
(5) , The Agency shall perform an annual audit at the close of each Calendar
Year in which these Restrictions are in effect. Developer shall reasonably
cooperate with Agency in performing such audit.
(6) Developer shall permit the Agency to perform an Annual Physical
Inspection of the Property with at least ten (10) Business Days notice.
Developer shall cooperate with this Inspection and shall take all steps
necessary to quickly correct any code deficiencies identified during the
Inspection.
F. If there is a discrepancy between local, state and federal law with regard to any of
the aforementioned covenants, the more stringent shall apply.
G. The Agency is the beneficiary of the terms and provisions of these Restrictions
and the covenants herein, both for and in its own right and for the purposes of protecting the
interests of the community and other parties, public or private, for whose benefit these
Restrictions and the covenants running with the land have been provided. The Agency shall
have the right if the covenants are breached, to exercise all rights and remedies, and to maintain
any actions or suits at law or in equity or other proper proceedings to enforce the curing of such
breaches to which they or any other beneficiaries of these Restrictions and covenants are entitled.
16
80A-156
H. The covenants and agreements contained herein shall run with the land and shall
remain in effect for the term of the Agreement. Upon the sale, conveyance or other transfer of the
Property (a "Transfer") and the assumption of the obligations hereunder by a transferee,
Developer's liability for performance shall be terminated as to any obligation to be performed
hereunder after the date of such Transfer.
I. Upon a Transfer of the Property, the transferee will be obligated to meet with the
City prior to closing of the Transfer to review the terms of these Restrictions and requirements of
the transferee therein. Any failure of transferee to meet with the City as required would
constitute a default under these Restrictions.
I. The Agreement and all of its attachments shall be enforceable by the Agency in
accordance with the terms thereof. Each of the Loan Documents, provide a means of
enforcement by the Agency if Developer is in breach of its obligations hereunder and thereunder,
including liens on the Property, deed restrictions and covenants running with the land.
K. The Agency agrees to provide Developer's Investor Limited Partner (as defined in
the Agreement) with notice of and an opportunity to cure any default. Any cure made or tendered
by the Limited Partner shall be deemed a cure by Developer.
17
80A-157
IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions on
Transfer of Property to be executed on the date set forth at the beginning of these Restrictions.
ATTEST: HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
Norma Mitre Steven A. Mendoza
Recording Secretary Executive Director
APPROVED AS TO FORM
Sonia R. Carvalho
Authority General Counsel
By: Ryan O. Hodge
Assistant City Attorney
RECOMMENDED FOR APPROVAL
Steven A. Mendoza
Executive Director
Community Development Agency
{Signatures continue on following page)
IR
80A-158
DEVELOPER:
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By:
Kyle Paine
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc.,
a California nonprofit public benefit corporation
Its: Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
By: IH CDP Partnership LLC,
a California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
By:
Philip Wood
Its: President
19
80A-159
Exhibit Co.
80A-160
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
AGENCY DEED OF TRUST
AND ASSIGNMENT OF RENTS
(2223 West Fifth Street, Santa Ana, California)
THIS AGENCY DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed of
Trust") made this 16 day of April, 2019, by and between Tiny Tim LP, a California limited
partnership (the "Trustor"), Commonwealth Land Title Company, a California corporation (the
"Trustee"), and the Housing Authority of the City of Santa Ana (CA093), acting as the Housing
Successor Agency, a public body, corporate and politic (the "Beneficiary"). Capitalized terms not
defined in this Deed of Trust shall have the meanings given such terms in the Agreement (defined in
Section 1 below and in the Agency Promissory Note).
Trustor; in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the
property located in the City of Santa Ana, County of Orange, State of California, described in the
attached Exhibit A and more commonly known as 2223 West Fifth Street, Santa Ana, California
(the "Property");
TOGETHER with all the improvements now or hereafter erected on the Property, and all
easements, rights, appurtenances and all fixtures now or hereafter attached to the Property, all of
which, including replacements and additions thereto, shall be deemed to be and remain a part of the
Property covered by this Agency Deed of Trust; provided that so long as Trustor is not in default
hereunder, it shall be permitted to control the Property in accordance with the requirements of
that certain Agency Loan Agreement entered into between the Trustor and the Beneficiary, dated
concurrently herewith, which Agreement is on file with the Beneficiary as a public record;
TOGETHER with the right, power and authority during the continuance of this Trust, to
collect the rents, issues, and profits of the Property, reserving unto the Trustor the right, prior to any
default by Trustor in payment of the indebtedness secured by this Deed of Trust or in the
performance of any agreement under this Deed of Trust, to collect and retain these rents, issues and
profits as they become due and payable; and,
1076\53\1379660.2
80A-161
TOGETHER with all articles of personal property or fixtures now or hereafter attached to or
used in and about the building or buildings now erected, or hereafter to be erected, on the Property
which are necessary to the complete and comfortable use and occupancy of such building or
buildings for the purposes for which they were or are to be erected, including all other goods and
chattels and personal property as are ever used or furnished in operating a building, or the activities
conducted therein, similar to the one herein described and referred to, and all renewals or
replacements thereof or articles in substitution therefor, whether or not the same are, or shall be
attached to said building or buildings in any manner; and 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; and,
TO SECURE to the Beneficiary: (a) the repayment of the sums evidenced by a Promissory
Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of four -
million, seven -hundred thousand dollars ($4,700,000) (the "Agency Promissory Note"); (b) the
performance of the covenants and agreements of Borrower contained in a certain Agreement as
hereinafter defined; and, (c) the payment of all other sums, with interest thereon, advanced in
accordance herewith to protect the security of this Deed of Trust; and the performance of the
covenants and agreements of Trustor contained herein.
TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS:
1. The Agreement. This Deed of Trust is executed and delivered, along with the
Agency Promissory Note, the Agency Loan Agreement, and Affordability Restrictions on Transfer
of Property to benefit the Property. A copy of said Agency Loan Agreement is on file as a public
record with the. Beneficiary and is incorporated herein by reference (the "Agreement"). Trustor
acknowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter into
the Agreement or Agency Promissory Note secured by this Deed of Trust.
2. Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the
right to grant and convey the Security; that other than this Deed of Trust, the Security is not
encumbered except for obligations secured by deeds of trust, or any other security agreement, to
secure financing or refinancing for the purchase and rehabilitation of the Property.
3. Renayment of the Loan. Trustor will promptly repay, when due, the principal loan
amount, as required by the Agency Promissory Note secured by this Deed of Trust.
4. Subordination. This obligation secured by this Deed of Trust shall be subordinated
to the Senior Loan and the Senior Loan Deed of Trust, but the Agency's Affordability Restrictions
on Transfer of Property shall remain in a senior position to the Senior Loan and the Senior Loan
Deed of Trust.
5. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform all of
Trustor's obligations under any mortgage, deed of trust or other security agreement with a lien that
has priority over this Instrument, including Trister's covenants to make payments when due
(subject to all applicable notice and cure provisions). Trustor will pay all taxes, assessments and
other charges, fines and impositions attributable to the Security that may attain a priority over this
2
80A-162
Deed of Trust, by Trustor making any payment, when due, directly to the payee thereof. Trustor
will promptly furnish to the Beneficiary all notices of amounts due under this paragraph, and in the
event Trustor makes payment directly, Trustor will promptly discharge any lien that has priority
over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed
of Trust securing any senior lender or any other lien described in this paragraph so long as Trustor
will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to
the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in,
legal proceedings, which operate to prevent the enforcement of the lien or forfeiture of the Security,
or any part thereof.
6. Hazard Insurance. Trustor will keep the Security insured by such insurance policies
in such amounts and for such periods as called for in the Agreement. All insurance policies and
renewals thereof will include a standard mortgagee clause with standard lender's endorsement in
favor of the holder of any Senior Lender and the Beneficiary as their interests may appear and in a
form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its
designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the
Beneficiary, or its designated agent, the original insurance policies or certificates of insurance, all
renewal notices and all receipts of paid premiums subject to the rights of any senior lender. In the
event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its
designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made
promptly by Trustor. The Beneficiary shall receive thirty (30) days advance notice of cancellation
of any insurance policies required under this Section.
Unless the Beneficiary and Trustor otherwise agree in writing, insurance proceeds, subject
to the rights of any senior lender, will be applied to restoration or repair of the Security damaged,
provided such restoration or repair is economically feasible and the security of this Deed of Trust is
not thereby impaired. If such restoration or repair is not economically feasible or if the security of
this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance
proceeds will be used to repay the loan secured by this Deed of Trust, with the excess, if any, paid
to Trustor. If the Security is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary,
or its designated agent within thirty (30) days from the date notice is mailed by either of them to
Trustor that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its
designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's
option, either to restoration or repair of the Security or to repay the loan.
If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in and to
any insurance policy, and in and to the proceeds thereof resulting from damage to the Security prior
to the sale or acquisition, will pass to the Beneficiary to the extent of the sums secured by this Deed
of Trust immediately prior to such sale or acquisition, subject to the rights of any senior lender.
7. Preservation and Maintenance of Security. Trustor will keep the Security in good
repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the Beneficiary's Security. If Trustor fails to perform the covenants
and agreements contained in this Deed of Trust, or if any action or proceeding is commenced that
materially affects the Beneficiary's interest in the Security, including, but not limited to, default
under the Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement,
or arrangements or proceedings involving a bankruptcy or decedent, then the Beneficiary, at the
80A-163
Beneficiary's option, upon notice to Trustor, may make such appearances, disburse such sums and
take such action as it determines necessary to protect the Beneficiary's interest, including, but not
limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs.
Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon,
will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and the
Beneficiary agree to other terms of payment, such amount will be payable upon notice from the
Beneficiary to Trustor requesting payment thereof, and will bear interest from the date of
disbursement at the rate payable from time to time on outstanding principal under the Agency
Promissory Note, unless payment of interest at such rate would be contrary to applicable law, in
which event such amounts will bear interest at the highest rate permissible under applicable law.
Nothing contained in this paragraph will require the Beneficiary to insure any expense or take any
action hereunder.
9. Inspection. The Beneficiary may make, or cause to be made, reasonable entries
upon and inspections of the Security upon reasonable prior notice during normal business hours;
provided that, the Beneficiary will give Trustor reasonable notice of inspection.
10. Forbearance by the Beneficiary Not a Waiver. Any forbearance by the Beneficiary
in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy.
The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary
will not be a waiver of the Beneficiary's right to accelerate the maturity of the indebtedness secured
by this Deed of Trust.
11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and
cumulative to any other right or remedy under this Deed of Trust, or any other document, or
afforded by law or equity, and may be exercised concurrently, independently or successively.
12. Successors and Assigns Bound. The covenants and agreements herein contained
shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the
Beneficiary and Trustor subject to the provisions of this Deed of Trust.
13. Joint and Several Liability. All covenants and agreements of Trustor shall be joint
and several.
14. Notice. Except for any notice required rider applicable law to be given in another
manner: (a) any notice to Trustor provided for in this Agency Deed of Trust will be given by
certified mail, return receipt requested, addressed to Trustor at 3416 Via Oporto, Suite 301,
Newport Beach, CA 92663 with a copy to R4 Capital LLC at 780 Third Avenue, 161 Floor, New
York, New York 10017, Attention: Marc Schnitzer, and to Frost Brown Todd LLC at 400 West
Market Street, Suite 3200, Louisville, Kentucky 40202, Attention: Amy Curry, Esq.; (b) any notice
to the Beneficiary will be given by certified mail, return receipt requested, to the Beneficiary at 20
Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention: Housing Division
Manager, or at such other address as the Beneficiary may designate by notice to Trustor as provided
above; and, (c) to Trustee at 888 S. Figueroa Street, Suite 2100, Los Angeles, CA 90017. Notice
shall be effective as of the date received as shown on the return receipt.
4
80A-164
15. Governing Law. This Deed of Trust shall be governed by the laws of the State of
California with venue in Orange County.
16. Severabilitv. In the event that any provision or clause of this Deed of Trust or the
Agency Promissory Note conflicts with applicable law, such conflict will not affect other provisions
of this Deed of Trust or the Agency Promissory Note that can be given effect without the conflicting
provision, and to this end the provisions of the Deed of Trust and the Agency Promissory Note are
declared to be severable.
17. Captions. The captions and headings in this Deed of Trust are for convenience only
and are not to be used to interpret or define the provisions hereof.
18. Default in Foreclosure; Remedies. Upon Truster's breach of any covenant or
agreement of Trustor in this Deed of Trust or the Agency Promissory Note secured by this Deed of
Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed
of Trust, the Beneficiary may declare all stuns secured by this Deed of Trust immediately due and
payable by delivering to Trustor notice thereof, specifying: (1) the breach; (2) the action required to
cure such breach; (3) a date not less than thirty (30) days from the date the notice is received by
Trustor, as shown on the return receipt, by which such breach is to be cured, provided, however,
that if such default is not reasonably susceptible to being cured within thirty (30) days, Trustor shall
have a reasonable period to cure the defect, so long as Trustor is diligently prosecuting the cure to
completion; and, (4) that failure to cure such breach on or before the date specified in the notice
may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. The
notice will also inform Trustor of Trustor's right to reinstate after acceleration and the right to bring
a court action to assert the non-existence of default, or any other defense of Trustor to acceleration
and sale.
Notwithstanding anything to the contrary contained herein, a "default" shall not include
any transaction not considered a "transfer' under Section 16.2 of the Agreement or permitted
under Section 16.3 or 16.4 of the Agreement.
If the breach is not cured on or before the date specified in the notice, or such longer period
as provided above or in the Agency Promissory Note or the Agreement, the Beneficiary, at the
Beneficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be
immediately due and payable without further demand and may invoke the power of sale and any
other remedies permitted by California law; (b) either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the
adequacy of its security, enter upon the Security and take possession thereof (or any part thereof)
and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it
deems necessary or desirable to preserve the value or marketability of the Property, or part thereof
or interest therein, increase the income therefrom or protect the security thereof. The entering upon
and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any
act done in response to such breach and, notwithstanding the continuance in possession of the
Security, the Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust,
or by law upon occurrence of any uncured breach, including the right to exercise the power of sale;
(c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or
specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of
default and demand for sale, pursuant to the provisions for notice of sale found at California Civil
80A-165
Code sections 2924, et seq., as amended from time to time; or, (e) exercise all other rights and
remedies provided herein, in the instruments by which Trustor acquires title to any Security, or in
any other document or agreement now or hereafter evidencing, creating or securing all or any
portion of the obligations secured hereby, or provided by law.
Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any cure of
any default made or tendered by Trustor's limited partner shall be deemed to be a cure by Trustor
and shall be accepted or rejected on the same basis as if made or tendered by Trustor.
The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in
pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys'
fees.
19. Trnstor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the
sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by
the Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before
sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior
to entry of a judgment enforcing this Deed of Trust if. (a) Trustor pays the Beneficiary all sums that
would be then due under this Deed of Trust, and no acceleration under the Agency Promissory Note
has occurred; (b) Trustor cures all breaches of any other covenants or agreements of Trustor
contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by the Beneficiary
and the Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of
Trust and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to,
reasonable attorneys' fees; and, (d) Trustor takes such action as the Beneficiary may reasonably
require to assure that the lien of this Deed of Trust, the Beneficiary's interest in the Security and
Truster's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon
such payment and cure by Trustor, this Deed of Trust and the obligations. secured hereby will
remain in full force and effect as if no acceleration had occurred.
20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to
notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party, unless brought by Trustee.
21. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the
Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust
and the Agency Promissory Note to the Trustee. The Trustee will reconvey the Security without
warranty and without charge to the person or persons legally entitled thereto. Such person or
persons will pay all costs of recordation, if any.
22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from time to
time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The
successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein
and by applicable law.
23. Request for Notice. Trustor requests that copies of the notice of default and notice
of sale be sent to Trustee at the address set forth in Section 14 above.
80A-166
24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor nor any other
person or entity shall have any personal liability under the Agreement, Agency Promissory
Note, or this Deed of Trust, and any judgment, decree or order for payment of money
obtained in any action to enforce the obligation of Trustor to repay the loan evidenced by
such documents shall be enforceable against Trustor only to the extent of Trustor's interest
in the Property.
25. Beneficiary agrees to provide Trustor's Investor Limited Partner (as defined in the
Agreement) with notice of and an opportunity to cure any default hereunder. Any cure made or
tendered by the Limited Partner shall be deemed a cure by Trustor.
(Signatures on Following Page)
80A-167
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written
above.
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By:
Kyle Paine
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc.,
a California nonprofit public benefit corporation
Its. Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
By: IH CDP Partnership LLC,
a California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
By:
Philip Wood
Its: President
E
•
Exhibit D:
Agency Promissory
80A-169
LOW AND MODERATE INCOME HOUSING ASSET FUNDS PROMISSORY NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA
(2223 West Fifth Street, Santa Ana, California)
$4,700,000.00
1. Principal Amount of Loan
April 16, 2019
Santa Ana, California
FOR VALUE RECEIVED, Tiny Tim LP, a California limited partnership ("Borrower"),
hereby promises to pay to the Housing Authority of the City of Santa Ana (CA093), acting as the
Housing Successor Agency, a public body, corporate and politic ("Agency"), or order, a principal
amount not to exceed FOUR -MILLION, SEVEN -HUNDRED THOUSAND DOLLARS
($4,700,000), or so much thereof as may be advanced by the Agency to the Borrower, due and
payable with 3% interest by residual receipts over the fifty-five (55) year term, pursuant to the
Agency Loan Agreement (said "Agreement') between Borrower and the Agency dated
concurrently herewith, which is incorporated herein by this reference. This loan is funded
exclusively from the Low and Moderate Income Housing Asset Fund (the "LMIHAF") held by
the Agency (the "Agency Funds"). Any capitalized term not otherwise defined in this LMIHAF
Promissory Note ("Note") shall have the meaning ascribed to such term in the Agreement. The
obligation of Borrower to Agency hereunder is subject to the terms of said Agreement, the
Affordability Restrictions on Transfer of Property, Agency Deed of Trust and this Note. Said
documents are public records on file in the offices of the Agency, and the provisions of said
documents are incorporated herein by this reference.
This Note, said Agreement, the Affordability Restrictions on Transfer of Property, and the
Agency Deed of Trust are sometimes collectively referred to herein as the "Loan Documents". The
rights and responsibilities provided for in the Loan Documents shall inure to the benefit of the
Agency. Any capitalized term that is not otherwise defined herein shall have the meaning ascribed
to such term in the Agreement.
This Note evidences the obligation of Borrower to the Agency for repayment of the Agency
Loan of Agency Funds attributable to the acquisition, development, and construction of the
Property, and related soft costs.
This Note is payable at the principal office of the City of Santa Ana — Community
Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Attn: Housing
Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful
money of the United States.
1076\53\1379659.2
80A-170
2. Definitions.
For the purpose of calculating the payments to be made by Borrower to Agency pursuant
to this Note, the following terms shall have the following respective meanings:
"Agency Assisted Units" shall mean those affordable rental units constructed on the
Property, which are subject to the 55 -year Term of Affordability.
"Agency Deed of Trust" shall mean the deed of trust encumbering the Property, in the form
attached to the Agreement as Exhibit C, which is incorporated herein by this reference, to be
executed by Developer pursuant to section 6.1(e) of the Agreement in order to secure the Agency
Promissory Note.
"Agency Funds" shall mean the money provided by the Housing Successor Agency from
the Low and Moderate Income Housing Asset Fund for the construction of the Agency Assisted
Units hereunder.
"Agency Loan" means a loan in the original principal amount of up to four -million, seven -
hundred thousand dollars ($4,700,000) to be made to Developer by the Agency to be funded
exclusively from the Low and Moderate Income Housing Asset Fund held by the Agency.
"Agency's Percentage" with reference to the Residual Receipts, shall mean fifty percent
(50%) of the total Residual Receipts from the Property as further described in section 5 hereof.
"Agreement" means the Agency Loan Agreement between the Agency and the Developer,
and any attachments or amendments thereto.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the Agency Housing Program, and the Agency Funds.
"Area Median Income" means the median income for the Orange County, California
PMSA as most recently determined by the U.S. Department of Housing and Urban Development
("HUD"). Also may be referred to interchangeably in the Agency Loan Documents as "Median
Income for the Area" or "AMI".
"Borrower" means Tiny Tim LP, a California limited partnership.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"Closing Costs" shall mean:
(i) In the case of a Sale, reasonable brokerage commissions payable to a broker
as a result of the Sale, which shall not in any event exceed the customary
amount charged for similar transactions in the immediate market place,
2
80A-171
costs of title insurance premiums, documentary stamp taxes, escrow fees,
recording charges, loan repayment charges and other costs reasonably
incurred with respect to the Property, in each case actually paid by Borrower
as a condition of the Sale.
(ii) In the case of a Refinancing, the reasonable and necessary costs of
consummating such Refinancing, including, without limitation, loan fees,
loan repayment charges, costs of title insurance premiums, escrow fees,
recording fees and attorneys' fees.
"Extremely Low Income" means an adjusted income which does not exceed thirty percent
(30%) of the area median income for the Orange County, California PMSA, adjusted for household
size, as published by HUD.
"Gross Revenues" shall mean all revenues and receipts of every kind actually received by
Borrower from operating the Property, and all parts thereof, including, but not limited to, income
from both cash and credit transactions, rental from leased and/or subleased spaces and parking fees
and charges, but not including security deposits and other tenant deposits, except to the extent such
deposits are forfeited to the Borrower under the tenant's lease. Gross Revenues also includes any
casualty insurance proceeds in excess of those used to restore the Property, and any rental
interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at
the time cash proceeds (principal and/or other) are received. Borrower shall establish and maintain
accounts for the Gross Revenues (the "Project Accounts") that are segregated from revenues and
income received by Borrower from all other projects. Gross Revenues shall also include all interest
earned on the Project Accounts, and shall specifically exclude any capital contributions made by
the Investor Limited Partner.
"Interest" shall mean that the NOTE shall bear simple interest at the rate of Three percent
(3%) per annum, from the date of issuance of the Certificate of Occupancy/Completion.
"Low Income" means an adjusted income which does not exceed eighty percent (80%) of
the area median income for the Orange County, California PMSA, adjusted for household size, as
published by HUD.
"Operating Expenses" shall mean the stun of the following:
(i) payments of principal and interest and all other charges relating to the
Senior Loan(s);
(ii) property management fee not to exceed 5% of gross rents;
(iii) owner administration fee not to exceed 5% of gross rents which will include
Investor Limited Partner local administration fee of $5,500 per year, which
shall increase by 3% per year, and other fees payable to the General Partner
pursuant to the Partnership Agreement;
80A-172
(iv) deposits into required reserves;
(v) any deferred developer fee;
(vi) all other actual, reasonable cash operating costs and expenses, calculated on
an annual basis, that are directly attributable to managing and operating the
Property, including, without limiting the generality of the foregoing, the
following: costs and expenses for real and personal property taxes, special
assessments or similar charges; water, fuel, electricity and other utilities;
heating, ventilation and air conditioning expenses; labor; supplies; tools;
equipment; insurance; advertising and marketing; accounting and legal fees;
brokerage commissions and other leasing expenses; reasonable reserves for
all anticipated expenses as approved by the Agency; and other such items
constituting operation, maintenance and repair costs actually paid by the
Borrower, subject to the following conditions:
(a) Depreciation and amortization expenses shall not be considered
Operating Expenses, except as otherwise provided herein; and,
(b) Any expenses, compensation or fees paid to any affiliate of
Borrower, excluding those payable under (iii), shall only be
included as Operating Expenses to the extent they are not in excess
of the reasonable expenses, compensation or fees that would be
payable to unrelated third parties in arms -length transactions for
similar services in the Orange County, California area;
(vii) Any other expenses necessary to meet Senior Lender requirements, and
requirements of the Investor Limited Partner, or its assignee, as set forth in
Borrower's Amended and Restated Agreement of Limited Partnership dated
as of May 1, 2019, as may be amended (the "Partnership Agreement").
"PropertX" shall mean that property located at 2223 West Fifth Street, Santa Ana,
California.
"Refinancing" shall mean changing the then existing financing on the Property by, without
limitation, modifying the interest rate and/or the term of the existing Senior Loan, increasing or
reducing the amount of the existing Senior Loan, paying off the existing Senior Loan and obtaining
new Senior Loan, except for the payoff of the construction loan and its replacement with permanent
financing as contemplated by that [Citi Commitment with Freddie Mac dated as of _ _, 2019]
and except for the payoff of the conventional lender's acquisition loan for the Property.
"Refinancing Proceeds" shall be disbursed as set forth in section 6 hereof.
0
80A-173
"Residual Receipts" shall mean the Gross Revenues from the Property for each year, less
deductions for Operating Expenses from the same Property, applicable to each such year to the
extent not previously deducted as an Operating Expense.
"Sale" shall mean any transfer, assignment, conveyance or lease of the Property, or any
portion thereof, or any interest therein by the Borrower. Sale includes a sale in condemnation or
under threat thereof. Sale does not include dedications and grants of easements to public and
private utility companies of the kind customary in real estate development. Notwithstanding
anything to the contrary contained herein, a "Sale" shall not include any transaction not considered
a "transfer' under section 13, or under Section 16.2 of the Agreement or as otherwise permitted
under Section 16.3 or 16.4 of the Agreement.
"Senior Loan" shall mean a loan from the Senior Lender concurrent to the Agency Loan
for payment of a portion of the acquisition and construction costs, and shall include any subsequent
loan that refinances the initial Senior Loan.
"Term of Affordability" or "Term" means the terms and conditions contained herein shall
remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Occupancy
for the Project, or repayment of the Agency Loan, whichever is longer.
"Very Low Income" means an adjusted income which does not exceed fifty percent (50%)
of the area median income for the Orange County, California PMSA, adjusted for household size,
as published by HUD.
3. Loan Repayment.
Borrower shall make payments to the Agency as provided in sections 5 (Residual
Receipts), 6 (Refinancing Proceeds), 7 (Sale Proceeds) and 9 (Accelerated Loan Repayment) of
this Note.
4. Oneratine Capital Improvement Loan.
If the replacement reserve account ("Reserves") is depleted due to unforeseen repairs and
the General Partner makes a loan to the Partnership, the Reserves must be fully funded prior to
payment of said loan. The outstanding loan balance will be reflected in the annual report.
5. Annual Loan Repayment/ Residual Receipts.
a. Commencing on the date one hundred and fifty (150) days after the close of the initial
Calendar Year following the issuance of the Certificate of Occupancy, and on or before the 150t'
day of each Calendar Year thereafter, the Borrower shall thereafter make a loan payment, including
any payment processing fee charged by the City's loan processor, as applicable, to the Agency
annually, in the amount of the lesser of the outstanding balance due under this Note or the Agency's
Percentage of the Residual Receipts, as provided herein.
80A-174
b. Within one hundred and fifty (150) days after the close of the initial Calendar Year,
following the Issuance of the Certificate of Occupancy, and on or before the 150th day of each
Calendar Year thereafter, the Borrower shall submit to the Agency an audited financial statement
of Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar
Year, along with a computation of the amount of the Residual Receipts applicable to such Calendar
Year with which to make an Agency Loan payment then due.
C. Except as otherwise provided, the Borrower shall pay to the Agency the Agency's
Percentage of the Residual Receipts as payment of the Agency LMIHAF Loan and City
Inclusionary Loan pursuant to Section 5(d) below. At least fifty percent (50%) of the Residual
Receipts shall remain with the Borrower, with all Residual Receipts remaining with Borrower,
once both the Agency LMIHAF Loan and City Inclusionary Loan have been fully repaid.
d. Borrower shall retain fifty percent (50%) of the Residual Receipts. The other fifty
percent (50%), shall be divided with seventy-eight percent (78%) to be applied to this Agency
LMIHAF Loan, and twenty-two percent (22%) to be applied to the Inclusionary City Loan. As
Borrower repays this Loan and the Inclusionary City Loan, the payment percentage applied to the
remaining loans shall increase.
e. The Residual Receipts payment shall be made no later than one hundred and fifty
(150) days after the close of the Calendar Year. Such payment shall be applied first to any late
fees, then to reduce the principal balance of the loan.
6. Loan Reuayment from Refinancing Proceeds.
The Borrower shall make a loan payment to the Agency from every Refinancing that occurs
during the term of this Note (other than refinancing of the Senior Loan), not to exceed the
outstanding balance of principal on this Note, to the extent of the Agency's Percentage of the
Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be
applied first to pay Closing Costs; next, the amount necessary to pay in full the balance remaining
on the Senior Loan; next, the amount necessary to pay any deferred developer fee in full; and next,
the Borrower shall pay to the Agency the Agency's Percentage of the Refinancing Proceeds of
which Agency Percentage shall be used seventy-eight percent (78%) to repay this LMIHAF
Agency Loan, and twenty-two percent (22%) to repay the Inclusionary City Loan, to the extent of
the outstanding balance on this Note. All remaining Refinancing proceeds shall remain with the
Borrrower to the extent the outstanding balance (including interest) of the Note has been fully paid.
Such payment shall be due on the date of such Refinancing, and shall be applied to reduce the
principal balance of the Loan in accordance with this Section 6. The Agency shall not be required
to reconvey the lien of the Deed of Trust if Refinancing Proceeds are insufficient to repay the Loan
in full.
Loan Repayment from Sale Proceeds.
The Borrower shall make a loan payment, not to exceed the outstanding balance of
principal on this Note, subject to section 14 herein, to the Agency from any Sale that occurs during
80A-175
the term of the Agency Loan, to the extent of the Agency's Percentage of the Sale Proceeds, as
follows: gross sale proceeds are applied first to pay Closing Costs; next, to pay in full the balance
remaining on the Senior Loan; next, the amount necessary to pay any deferred developer fee in
full; and next, the Borrower shall pay to the Agency the Agency's Percentage of the Refinancing
Proceeds of which Agency Percentage shall be used seventy-eight percent (78%) to repay the
LMIHAF Agency Loan, and twenty-two percent (22%) to repay the Inclusionary City Loan, not
to exceed the outstanding amount of principal due on this Note. All remaining Sale Proceeds shall
remain with the Borrower to the extent the outstanding balance (including interest) of the Note has
been fully paid. Such payment shall be due on the date of such Sale, and shall be applied to reduce
the principal balance of the Loan in accordance with this Section 7. The Agency shall not be
required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the
Loan in full.
8. Accelerated Loan Payment.
The full principal amount outstanding shall be due and payable on the earlier to occur of
the following:
a. Sale or Refinancing of the Property as provided further in section 13 hereof, unless:
(i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the Agency
Loan, the Agency approves such sale and the purchaser assumes the balance of the Agency Loan
in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the
Refinancing Proceeds are insufficient to repay in full the Agency Loan, the Agency approves such
Refinancing and the Borrower remains obligated pursuant to the terms of this Note;
b. In the event of default (subject to any applicable notice and cure provisions)
pursuant to any of the Loan Documents or the Senior Loan Documents,-
c.
ocuments;c. Any default (subject to any applicable notice and cure provisions) by Borrower as
to any other loan or loans by Agency to Borrower with respect to the Property; or
d. The date that is fifty-five (55) years after the date of execution of this Note. To
the extent the Loan is not repaid by that date, the Agency agrees to review the performance of the
Property and consider in good faith any reasonable request by Borrower to modify the terms or
extend the Term of this Agency Note, if applicable.
9. Prepayment
Borrower may prepay the outstanding principal balance under this Note, in whole or in
part, at any time without penalty. However, the Affordability Covenants and Restrictions will
remain for the entire Affordability Period of fifty-five (55) years.
10. Lawful Money.
Principal is payable in lawful money of the United States of America.
7
80A-176
11. Application of Payments; Yate Charges.
a. Any payments received by the Agency pursuant to the terms hereof shall be applied
first to sums, other than principal, due the Agency pursuant to this Note, and the balance, if any,
to the payment of principal.
b. If any payment is not received by the Agency within ten (10) Business Days after
Developer's receipt of written notice that such payment was not received when due; then in
addition to the remedies conferred upon the Agency pursuant to this Note and the other Loan
Documents: (i) a late charge of four percent (4%) of the amount due and unpaid will be added to
the delinquent amount to compensate the Agency for the expense of handling the delinquency;
and, (ii) the amount due and unpaid, excluding the late charge, shall bear interest at the highest
annual rate which may lawfully be charged and collected under applicable law on the obligation,
evidenced by this Note, computed from the date on which the amount was due and payable until
paid. Without prejudice to the rights of the Agency hereunder, or under any of the other Loan
Documents, Borrower shall indemnify the Agency against, and shall pay the Agency on demand,
any expense or loss which it may sustain or incur as a result of the failure by Borrower to pay when
due any installment of principal, fees, or other amounts payable to the Agency under this Note or
any other Loan Document that exceeds the amount of the late charge described above, to the extent
that any such expense or loss is not recovered pursuant to such foregoing provisions. A certificate
of the Agency setting forth the basis for the determination of the amounts necessary to indemnify
the Agency in respect of such expenses or direct loss, submitted to Borrower by the Agency, shall
be conclusive and binding for all purposes except as immediately corrected by Borrower notice to
Agency.
12. Securi
This Note is secured by the recorded Deed of Trust.
13. Acceleration by Reason of Transfer or Financing.
a. In order to induce Agency to make the loan evidenced hereby, Borrower agrees
that in the event of any transfer of the Property without the prior written consent of Agency (other
than a transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the
holder of the Senior Loan Deed of Trust), Agency shall have the absolute right at its option, without
prior demand or notice, to declare all sums secured hereby immediately due and payable. Consent
to one such transaction shall not be deemed to be a waiver of the right to require consent to future
or successive transactions. Agency may grant or deny such consent in its sole discretion and, if
consent should be given, any such transfer shall be subject to this section 13, and any such
transferee shall assume all obligations hereunder and agree to be bound by all provisions contained
herein. Such assumption shall not, however, release Borrower from any liability thereunder
without the prior written consent of Agency.
80A-177
b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or
conveyance of the Property, or any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, the execution of any installment land sale contract
or similar instrument affecting all or a portion of the Property, or the lease of all or substantially
all of the Property. 'Transfer' shall not include the leasing of individual residential units on the
Property, so long as Borrower complies with the provisions of the Agreement and the Affordability
Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of
the Property to a limited partnership in which Borrower is a general partner, or to a corporation or
limited liability company that is wholly owned by the Borrower or its affiliates and that is formed
for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the
event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior
Loan, without the prior written consent of Agency (which consent Agency may grant or deny in
its sole discretion), then the entire outstanding balance of the Agency Loan shall be repaid to the
Agency at the time of each Refinancing or partial Refinancing. Additionally, a "Transfer" shall
not include any transaction not considered a "transfer' under section 16.2 of the Agreement or
which is otherwise permitted under Section 16.3 or 16.4 of the Agreement.
14. Event of Default.
Subject to the provisions of Sections 21 and 23 hereof, the occurrence of any of the
following shall be deemed to be an event of default which is not cured within the applicable time
period described therein ("Event of Default") hereunder: (a) failure by Borrower to make any
payments provided for herein, and if such default is not made good within ten (10) Business Days
after Developer's receipt of written notice that such payment was not received when due; (b) failure
by Borrower to perform any covenant or agreement in the Deed of Trust, the Agreement, or the
Affordability Covenants and Restrictions within thirty (30) days after written demand therefor by
Agency (or, in the event that more than thirty (30) days is reasonably required to cure such default,
should Borrower fail to promptly commence such cure, and diligently and continuously prosecute
same to completion); or (c) a default under the Senior Loan Deed of Trust that remains uncured
after any applicable notice has been provided and the expiration of any applicable cure period
therefore, if any, provided therein.
15. Remedies.
Upon the occurrence of an Event of Default, after any applicable notice has been provided
and the expiration of any applicable cure period therefore, Agency may declare all sums evidenced
hereby immediately due and payable by delivery to the Trustee named in the Deed of Trust
securing this Note, and to Borrower, written declaration of default and demand for sale, and written
notice of default and of election to cause the Property to be sold, which notice Trustee shall cause
to be duly filed for record and Agency may foreclose on the Deed of Trust. Agency shall also
deposit with Trustee the Deed of Trust, this Note and all documents evidencing expenditures
secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long
as such Event of Default shall continue), the entire balance of principal shall bear interest at the
rate of the Note phis four percent (4%). No delay or omission on the part of the Agency in
80A-178
exercising any right under this Note or under any of the other Loan Documents shall operate as a
waiver of such right.
16. Attorney Fees.
If this Agency Promissory Note is not paid when due or if any Event of Default occurs,
Borrower promises to pay all costs of enforcement and collection, including, but not limited to,
reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the
provisions hereof.
17. Severability.
Every provision of this Note is intended to be severable. In the event any term or provision
hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions
hereof, which terms and provisions shall remain binding and enforceable.
18. Number and Gender.
In this Note the singular shall include the plural and the masculine shall include the
feminine and neuter gender, and vice versa, if the context so requires.
19. Non-recourse.
The Agency Loan is a nonrecourse obligation of the Borrower. Neither Borrower, nor its
partners, nor any other person or entity shall have any personal liability for repayment of the
Agency Loan or for any other amounts under any of the documentation evidencing, securing or
describing the Agency Loan. The sole recourse of Agency under this Note and the Deed of Trust
for repayment of the Agency Loan and for such other amounts arising therefrom shall be the
exercise of its rights against the Property and related security thereunder.
20. Subordination.
It is hereby expressly agreed and acknowledged by Borrower and Agency that the Deed of
Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior
Deed of Trust.
21. Notice of Default.
10
80A-179
a. Subject to the applicable cure periods set forth in section 14, and subject to the further
provisions of this section 21, failure or delay by the Borrower to perform any term or provision of
this Note constitutes a default under this Note. The Borrower must commence to cure, correct, or
remedy such failure or delay and shall complete such cure, correction or remedy with reasonable
diligence.
b. The Agency shall give written notice of default to the Borrower and the Investor
Limited Partner (as defined in the Agreement) specifying the default complained of by the Agency.
Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time
of default.
c. Except in the case of a monetary event of default, the Borrower shall not be in default
so long as it endeavors to complete such cure, correction or remedy with reasonable diligence,
provided such cure, correction or remedy is completed within the applicable time period set forth
herein after receipt of written notice (or such additional time as may be deemed by the Agency to
be reasonably necessary to correct the default).
d. Any failures or delays by the Agency in asserting any of its rights and remedies as to
any default shall not operate as a waiver of any default or of any such rights or remedies. Delays
by the Agency in asserting any of its rights and remedies shall not deprive the Agency of its right
to institute and maintain any actions or proceedings that it may deem necessary to protect, assert,
or enforce any such rights or remedies.
e. If a monetary event of default occurs under the terms of this Note or the Deed of Trust,
prior to exercising any remedies thereunder, Agency shall give Borrower written notice of such
default. Borrower shall have a period of ten (10) Business Days after such notice is received within
which to cure the default prior to exercise of remedies by Agency under this Note and the Deed of
Trust.
f. If a non -monetary event of default occurs under the terms of this Note or the Deed of
Trust, prior to exercising any remedies thereunder, Agency shall give Borrower notice of such
default. If the default is reasonably capable of being cured within thirty (30) days, Borrower shall
have such period to effect a cure prior to exercise of remedies by the Agency under this Note and
the Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty
(30) days, and Borrower: (i) initiates corrective action within said period; and, (ii) diligently,
continually, and in good faith works to effect a cure as soon as possible, then borrower shall have
such additional time as is reasonably necessary to cure the default prior to exercise of any remedies
by Agency. In no event shall Agency be precluded from exercising remedies if its security becomes
or is about to become materially jeopardized by any failure to cure a default or the default is not
cured within one hundred and eighty (180) days after the first notice of default is given.
22. Insurance and Condemnation.
11
,: 1 ffloe
In the event of any fire or other casualty to the Property or eminent domain proceedings
resulting in condemnation of the Property, or any part thereof, Borrower shall have the right to
rebuild the Property, and to use all available insurance or condemnation proceeds therefor,
provided that: (a) such proceeds are sufficient to keep the Agency Loan in balance and rebuild the
Property in a manner that provides adequate security to Agency for repayment of the Agency Loan,
or if such proceeds are insufficient, then Borrower shall have funded any deficiency; (b) Agency
shall have the right to approve plans and specifications for any major rebuilding, and the right to
approve disbursements of insurance or condemnation proceeds for rebuilding under a construction
escrow or similar arrangement; and, (c) no material uncured default then exists under this Note or
the Deed of Trust. If the casualty or condemnation affects only part of the Property and total
rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of
the Agency Loan in a manner that provides adequate security for repayment of the remaining
balance of the Agency Loan.
23. Force Maieure.
Notwithstanding specific provisions of this Note, performance hereunder shall not be
deemed to be in default where delays or defaults are due to: war; terrorism; insurrection; strikes;
lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public
enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation; unusually severe weather; inability to secure
necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party;
acts or failure to act of the Agency or any other public or governmental Agency or entity (except
that any act or failure to act of Agency shall not excuse performance by Agency); or any other
causes beyond the reasonable control, or without the fault of the party claiming an extension of
time to perform. An extension of time for any such cause shall be for the period of the enforced
delay and shall commence to run from the time the party claiming such extension gives notice to
the other party, provided notice by the party claiming such extension is given within thirty (30)
days after the commencement of the cause. Times of performance under this Note may also be
extended in writing by the Agency and the Borrower.
24. Assignments.
The Agency, and the assignee of the Agency, shall have the right to assign this Note and
the Deed of Trust securing this Note, without any further act of Borrower. The assignee shall give
notice to Borrower as soon as practicable after such assignment.
12
80A-181
This Agency Promissory Note is hereby agreed to and executed on the date first set forth above.
:s'•• im
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By:
Kyle Paine
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc.,
a California nonprofit public benefit corporation
Its: Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
[Signatures Continue on Following Page]
13
80A-182
By: IH CDP Partnership LLC,
a California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
LN
Philip Wood
Its: President
0130080.0718261 4822-0627-1373v2
14
80A-183
Exhibit Ee.
FOOTITMOOVA
EXHIBIT E
80A-185
ROSMentiol
Rental
Component
Loete
COSTS
Commercial
Component
Costs
Total
Oovelopment
Coat.
B%lexcretllta
LIHTC Eqully-
R4
FretltlU Mao
Permanent
Loan.Freddle
Mac
FUNDING SOURCES
I Local Local
Cityof Santa Cltyoibanm
Ana Punde. AneFunds-
LMIHAF Incluslonery
POvata Prlveb
NOI Code, Warned
Cona[rudlon Oevelopal Fee
SOURCES
TOTAL
Lesser of Land Cost or Value
53, W.Mn
$308,000
Ottio000
$121]8.
$2,425,211
$1130, nod
$3,850,000
Compton
$0
so
Legalit Closing Costs
$0
$0
Verifiable Car Ing Castle
$418,000
$418,000
WPO.o
$418,600
Subtotal
50,900 000
000,01)
44,208,000
$p.
Or".0
$210461211
$1,300,000
$0
P.
$$855,000
Existing Improvements Cost
be
$o
Other: s BCH
$0
$0
Total Acqulalllon
58,980,000
-. 4300,004
$4,260,010.40
5121.,709
0,046,211
K300,800
'S0
$0
$4 seems
OH -$Ifs lm rOvemeola
$1.831,500
1,631,600
$1,631,600
$1,631, SW
EC,!.dmentel Remediation
$c
$D
Site Work hard Costs
0
g0
BtmoNms dcoals
$18,990,300
$1,119.60
$16,116,612
$9.322,322
$5,]93,490
$16116,012
PV InsMllapon
$0
40
General Ra omerme
$701,390
$]2,]65
$654,158
$054.150
.$054,156
Ccntfaclol OVelheetl
$46.1835
$43,618
3512,363
$512353
$51?353
Contractor Pratt
$466.635
$,73618
512,3$3
$51?353
§512,353
General Lastly Insurance
$156, 2]B
$14,90
$171181.
$171,181
$1
Bond Premium
$176,001
§1,810
$174649
$1,818
$95031
417 6a]1,181 9
Toler Conelrualloe
$17,08178
f1,P96,D29
10 8] QOi
519005,484
Si`193,d90
(96,031
SO
- 0
$O
516,974005
Use n
$]19,50.
119,589
$779.689
emrion
50EOTotal
Architectural Costs
$919,660.
$0
$]]9,509
$719;590
$0
$0
$0
$0
$0]9,5.8En
;17]9,589Su
Ioeadn
$352.584
$35?684
352504
5? "AALTA
Land SUNe
$6.¢M
6,80
$5,800
$S,BOD
Total Survey S En IneerinB
!CONTINGENCY COSTS
Ssie,3e9
E9
.4360984
$218,904
$0
SO
40
40
SO
$$6890a
Hard COB]Conlin enc
$819,117
$64,7.1
88,1,908
$083.908
SB83,900
Soft Cost Contin anc
$43,60
UN
$43,6W
$43,607
Total C. do emay Coate
$062,724
$04,091
$9'",116
$929,515
$0
So
SP
$0
$0
$927,615
ConsVucion Loan lntaresl
$1.345,470
$1,345,470
$649608
$,795,]84
§1,345q]0
OrlInation Fee
$160,000
$160.000
$160000
-$180,000
Credll Enhancement&A .Fee
$o.
'$0
Owner Paid SondAircurance
$0
_40
Lender Ins ectOn Fees
635.500
$35,500
$35,500
$3500
Taxes Ourlo C0nsVu011on
- $67,T4i
$8],]41
$67.741
$0$41
Frevailln Wee Monitor
W
$0
Insurance Duro Construvllon
$172.205
$172,205
$172.205
:$172205
TIB¢and Rewrdln Fees
535,000
$35,00D
$35000
$36,000
Construction M ml 6 Teslln
$100.000
$10& 00C
$106,000
$1OAC00
Pretl¢ve10 men( lntaresl Ex .
$p
$p
ONec
11C,
1
a0
other
$c'
$0
$o
iolal CanelrMN; Ex enema
$1"23,916.
$0
$1,95,016
$35000
$1,233 32
$164000
$0
$495,Y84
P. '
$1.929,916
,ML
Loan Orl Ination F..U)
is
Credit Enhancement & App.Fee
$10,000
$10,000
$10,000
$10.000
Title and Recording
$5, W0
SIX.
$5000
$5000
im,hy Taxes
$0
$0
Insurance
$o
$0
Other: Conversion
s18sno
$10.600
$10,50a
-$18 Sort
Other: s edl
So
30
Total Permanent Famoong
$J ,600
$0
""A(s)
$0
- 535500
$0
$0
$D
$0
$30.500
Con6Vuctlon Lender Legal Expenses
s90.0o0
$90.000
$rsi
$9D,0oc
Permanent Lender Legal Fees
$0
in
6 o.r Tonal Foga
$i 00.000
$100,000
$100,100
810 900
O ml.tIual Le al Fees
ni
I
i$D
6 ntllcation Le al Fees
660.000
b6u,so`
550,000
$60 nc
cilia!', s ecif
$D
$D
Total Le al Fees
$24 ,0tl0
40
4M0,000
- $D
!0.
.240 00
{0
SP
0
#4p,0Ch
CAPITALIZED RE$ERVES
O ¢lotto Reserve
$202,32)
$202,322
$202.322
5202,323.
Ra IrMWintReserve
0
$0
Rent -Up Reserve
D
$c
Trenaftn Reserve
$0
$0.
Other.. ecu
$0
$0
eaetl
O. 1&8521.1
$D
$D
Reserves
Y0R,322
EO
$2D2022
$0
S]0 r922
$P
.$0
$0
0
$209,022
arms
Ono
$3,Sc0
$2500
$3600
Ma@at SWtl
$6,800
5800
$5800
$6,800
Ph 9iaal Needs Assessment
$0
g0
Envlronmenlal Studds
$4,439
4,43d
$4,439
tid.09
Other: GBCtech
$22,000
22,000
$22.000
$22,000
Other: ALTA
$9,500
$4$0
'0
$9,500
$9,600
Other: As-11WIs
$91600
$17,600i
$V end
- $17600
Oilier, s ecif
$
$0
T0ta1 R0 rile 83toIIa.
582>J9
$p
$63,>3B
sal
Na"nal
D. cD
Ep
SD
50,..
§62.]39
80A-185
JOTHER
TO C A .IAIIoalMontor Fees
$141656!
$141,655
Si 41,'¢5¢
COLAC Fees
Local Parmll Fees
OOh,6
t QY,O16I
I
Market ILease
$0
MarketingILeeeeu
620,000
', 82b Opp
$2,,000
B8W060
Parks & Reaaellon
$264,404
:.$2¢4,404
$264.404
". $2..4
9lreeWSI nals
$63.966
$63,9@6
®53,B6b
156,96@
Traffic Fees
.$0
Waste Water
$19].]6,
$A9%`]6V
$19).)60
$19t]00
Water Feailll
®76.594
( Wi, it 4
$76,594
aG5i69q
Other irhest Fees
$236,430
-$26@, SD.
$236,490
'. sneos17
Other COsts of Bond Issuance
$0
r 30.
9 ndlcatorI nveator Fees & E% an
so
$0
Furnlsbin 3
$163,W0
$10 Doe
$163000
$163,000
Flnel Cast Audit Expensi,
$2L6aa
$2.ti60D
Marketin
$0
'$0
Flnandel Consultin
'$0
"$D
Other Entlllements
$196940$195,)40
$196]40
$196.74,,
Mlsc. Special Inspectors
6W, 000
$60,00D
are.0W
50,000
other: s ed
A
other: s ad1
nTPlal
OtM1Or Laeb
i1.@ 4813
;0
- 3 531
SD
SOB&Rfib
.x319 @:
9
$s
;1,634 RB4)35563
. ;1 000
i29 09413@
' (6,6069)3
SE19;43T
$4700000
Alh BOD
!4@4
62eHg4R9
DeVelo ar FealOVarheadlProlll
61,66I,09B
,611$87.094
fi002996
$1,660.114
$4.86S,OB9
Total DOnlo er Coals
564@t, B9
;P
S. 9th oB9
00
303193
S9
0
ED
.611 @4074
6:; $4619
TOTAL DEVELOPMENT COST
434,613 63
61669026
::$p1 ¢61202
516�1D 972
6609635?
W)90,000
�. $,6,100017,
'$496.)44
$,654,179
;31,461,283
Lo 1 •
Exhibit Fee
Scope of
80A-187
EXHIBIT F
SCOPE OF WORK & SCHEDULE OF PERFORMANCE
SCOPE OF WORK
The project includes construction of a 51 -unit affordable residential community for large
families, rehabilitation of the existing commercial buildings at the north and east portions
of the site, new site amenities, landscaping and improvements to Fifth and Hawley
streets.
The residential portion of the project includes demolition of the existing, vacant
mechanic shop at 2237 West Fifth Street (corner of Fifth and Hawley streets) to
construct the residential rental community. The residential community includes three
levels of stick framed units on top of an on -grade podium parking garage. The ground
floor level will contain community space for services and activities, services and
property management offices along Fifth Street. A secured parking garage for residents
is tucked behind the street facing community space. The second level includes a
courtyard with playground equipment, outdoor BBQ area, an artificial turf recreation
area and clubhouse. The structure has been designed in a contemporary Mexican
architectural style that incorporates large facades, repetitive window placement, with
natural vegetation and public art.
The commercial component of the project is the renovation of the existing commercial
center at 2223 West Fifth Street. Improvements to the storefront facades include new
windows, signage, paint, siding, HVAC, parking area and driveway. These
improvements will establish a uniform contemporary architectural style among all
buildings on the project site and improve the existing businesses' ability to attract new
customers.
The site improvements component of the project also includes new landscape and
hardscape, as well as the construction of a new mini -park between the two commercial
buildings. Additional site upgrades include construction of community garden spaces
behind the commercial buildings, outdoor play equipment in the residential courtyard, an
entry plaza at the new residential structure, running track around the exterior of the site
and an outdoor fitness area. The proposed landscape palette includes drought -tolerant
plants, and hardscape complement the contemporary architectural style of the buildings.
New sidewalks, curbs, and street trees will be constructed or installed along the
project's frontages on both streets.
1 ..
II. SCHEDULE OF PERFORMANCE
Conditions Prior to Disbursement. The City/Agency Loan Agreements shall
provide that each of the following conditions shall be met prior to the disbursement
of any portion of the Loans:
a. PERMITS. All grading permits shall have been issued and the City shall have
issued a letter stating that building permits are ready to issue, subject only to
payment of fees and the completion of grading of the Project site.
b. FINANCING. Developer shall have secured all necessary financing and funding
for the construction and operation of the Project. Such financing and funding
shall be sufficient to pay all Project development costs, through lease -up, as set
forth in a final budget consistent with the approved Proforma (or as otherwise
approved by the City/Agency).
c. INSURANCE. The Developer shall have provided evidence to the City/Agency
that the Developer has obtained insurance policies and certificates or
endorsements acceptable to the City/Agency, as described in the Loan
Agreements.
d. SECURITY. The Developer shall have provided construction security in favor of
the City/Agency, which may include a completion guarantee from Community
Development Partners and/or a letter of credit and/or performance & payment
bonds from the general contractor for the Project (or some combination of these),
in an amount sufficient to ensure the Project will be completed and placed in
service within the time set forth in the Project schedule approved by the
City/Agency.
e. APPROVALS. Developer shall submit and obtain the City Manager / Executive
Director of the Housing Authority's approval of the following:
1. Construction Contract
2. Limited partnership agreement for the limited partnership entity to be
formed to own and operate the Project
3. Management plan for the Project
4. Marketing plan for the Project
5. Tenant selection plan for the Project.
2. Commencement of Construction of the Improvements. Developer shall cause
the Construction of the Improvements to be commenced by Contractor no later than
June 1, 2019
. M ..
3. Completion of Construction of Residential Improvements. Developer shall
complete all work of the Construction of the Residential Improvements on or before
February 1, 2021 (subject to extension by City based upon substantial progress
toward completion of construction by Developer).
4. Completion of Construction of the Improvements. Developer shall complete all
work of the Construction of the Improvements on or before February 1, 2021
(subject to extension by City based upon substantial progress toward completion of
construction by Developer).
The Schedule of Performance is subject to revision from time to time as mutually
agreed upon in writing between Developer and the City Manager or his/her designee
("City Manager"), and City Manager is authorized on behalf of City to agree to make
such revisions as he deems reasonably necessary. The City Manager, in his/her sole
discretion, may elect to bring to the City Council for consideration and action any
modifications to this Schedule of Performance. It is understood that the Schedule of
Performance is subject to all of the terms and conditions set forth in the text of the
Agreement. The summary of the items of performance in the Schedule of Performance
is not intended to supersede or modify the more complete description in the text of the
Agreement; in the event of any inconsistency between the Schedule of Performance
and the text of the Agreement, the text shall govern. In the event the City Manager
deems it necessary to bring to City Council for consideration one or more modifications
to this Schedule of Performance, the discretion to do so is expressly reserved to the
City Manager. The time periods set forth herein for City approval of plans and drawings
and other submittals that are submitted to City by Developer shall only apply and
commence upon Developer's complete submittal of all the required information. In no
event shall an incomplete submittal by Developer trigger any City obligations of review
and/or approval hereunder; provided, however, that City shall notify Developer of an
incomplete submittal as soon as is practicable and in no event later than the applicable
time set forth for City action on the particular item in question. If any of the foregoing
performance measurements are not met then it will be deemed a default as defined in
Section 20 and any remedies shall be cured according to said Section of the
Agreement.
80A-190
Exhibit G.9
Form of Residual
Receipts Report
80A-191
EXHIBIT G
FORM OF RESIDUAL RECEIPTS REPORT
Community Development Agency of the City of Santa Ana
Residual Receipts Report
for the Year Ending,
Date Prepared
Please complete the following information and execute the certification at the bottom of this form.
Annual Protect Revenue
Please report Annual Project Revenue for the year ending on the following lines:
Rent Payments (including Section 8 tenant assistance payments, if any) (1) $•—
Interest Income (do not include interest income from replacement and operating
reserves nor interest income on tenant security deposits)
Additional Income (for example, vending machine income, tenant forfeited
deposits, laundry income not paid to the residents' association)
Total Annual Project Revenue (Add lines 1, 2, and 3)
Operating Expenses'
Please report Operating Expenses incurred for the year ending
on the following lines:
Operating and Maintenance Expenses
Utilities
Property Management Expenses and On -Site Staff Payroll
Administrative Expenses
Property Taxes
Insurance
80A-192
(2)
(3)
(4) $
(5)
$.
(6)
$
—
(7)
$�
(8)
$
(9)
$
(10)
$
Other Expenses
Please list these expenses:
Total Annual Operating Expenses for the Housing Project
(Add lines 5, 6, 7, 8, 9, 10, and 11)
Net Operating Income (Subtract Line 12 from Line 4)
Do not include expense unrelated to the operation ofthe Rental Portion of the
Project, such as depreciation, amortization, accrued principal and interest
expense on deferred payment debt, or capital expenditures.
Additional Cash Flow Payments
(12) $
(13)
Obligated First Mortgage Debt Service Payments (as approved by the Agency and (14)
other parties that may have such approval rights) and Obligated Secondary
Subordinate Debt Service Payments (as approved by the Agency and other parties
that may have such approval rights)
Scheduled Deposits to Reserves (as approved by the Agency)
Additional Payment Obligations (such as partnership management fees, deferred
developer fees, or repayments on loans to partners, as approved by the Agency to
have priority over Residual Receipt Payment to the Agency)
Total Additional Cash Flow Payments (Add lines 14,15, and 16)
Residual Receipts for Year Ending
(Subtract Line 17 from Line 13)
Percentage of Residual Receipts to be Paid to the Agency (as shown in the
Promissory Note by and between the Agency and Borrower dated
Amount Payable to the Agency (Multiply Line 18 by Line 19)
The amount payable to the Agency listed on Line 20 is subject to payment according to the terms of the
Promissory Note by and between the Agency and Borrower dated . If Line 20 is
$0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check
payable to and attach to this report.
80A-193
80A-194
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
LOAN AGREEMENT
by and between the
CITY OF SANTA ANA
and
WHMM
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
Tiny Tim LP, a California limited partnership
(2223 West Fifth Street, Santa Ana, California)
Dated: April 16, 2019
80A-195
LOAN AGREEMENT
INCLUSIONARY HOUSING PROGRAM
THIS LOAN AGREEMENT ("Agreement") dated, for identification purposes
only, as of April 16, 2019, is made and entered into by and between the City of Santa Ana,
a charter city and municipal corporation ("City"), and Tiny Tim LP, a California limited
partnership ("Developer") with reference to the following:
RECITALS:
A. The City's Housing Opportunity Ordinance ("Ordinance") was originally
adopted by the City Council on November 28, 2011 (Ordinance No. NS -2825), and is
codified in Article XVIILI of the Santa Ana Municipal Code ("SAMC"). The Ordinance
was amended by the City Council on September 1, 2015 (Ordinance No. NS -2881), and on
October 6, 2015 (Ordinance No. NS -2885). The Ordinance established standards and
procedures to encourage the development of housing that is affordable to a range of
households with varying income levels. Pursuant to SAMC section 41-1904(c), developers
may pay an in -lieu fee in certain instances to satisfy the inclusionary requirements. These
funds are deposited into the Inclusionary Housing Fund, as defined by SAMC section 41-
1901, and are to be used to increase and improve the supply of affordable housing per
SAMC section 41-1909.
B. Developer, acting by and through its representative and agent, Community
Development Partners, a California corporation ("CDP") requested financial assistance in
connection with the proposed development of a fifty-one (51) unit affordable housing
complex ("Project") to be located at 2223 West Fifth Street, Santa Ana, California, and
legally described within Exhibit A attached hereto and incorporated herein ("Property").
At least fifteen (15) of the units will be affordable to family households earning no more
than 30% of the Area Median Income ("AMI"); five (5) of the units affordable to family
households earning no more than 50% of the AMI; and thirty (30) of the units affordable
to family households earning no more than 60% of the AMI. Office space within the
development will be provided for use as a police substation which at a minimum will have
room for a desk, phone, and computer that could be set up by the Santa Ana Police
Department ("SAPD"), dependent upon their available staffing and resources. The unit
mix consists of:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
On-site amenities will include a community plaza, an art center, urban farm, and
mini park with outdoor gym and jogging track. Mercy House Living Centers ("Mercy
House") will manage onsite residential services coordination for all households.
80A-196
C. The City and the Housing Authority of the City of Santa Ana ("Housing
Authority") reviewed Developer's request for assistance and at the City Council/Housing
Authority meeting on June 20, 2017, the City Council authorized and approved issuance
of a conditional, pre -commitment letter evidencing the preliminary award of $1,300,00 of
funds to the Project ("Inclusionary Loan"), to be funded exclusively from the Inclusionary
Housing Fund.
D. The amount of the Inclusionary Loan was determined based upon the City's
review of the Developer's request for the receipt of the Inclusionary Loan and the
development proforma and projected cash flows for the Project submitted by the Developer
to the City as of March 29, 2017 ("Proforma"). The City Project Manager has authority to
approve revised development proformas and projected cash flows for the Project; provided,
however, that the Inclusionary Loan is not materially increased or extended.
E. In furtherance of the Inclusionary Housing Program, Developer has applied
to the City for a loan with which to:
1. Acquire, develop and construct the project, and
Thereafter to maintain, operate and professionally manage the Project
as decent, safe, sanitary and affordable rental housing.
F. The City, on certain terms and conditions, desires to make such Inclusionary
Loan to Developer in order to make possible the acquisition, development, construction,
ownership, maintenance, and operation of the Project, thereby expanding the supply of decent,
safe, sanitary and affordable housing within the City.
G. If there is any inconsistency between Federal, State, and local guidelines
with regard to any of the terms and conditions contained herein, the more stringent shall
apply.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, City and Developer agree as follows:
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Project Documents, unless otherwise
expressly defined, are defined where first used in this Agreement and/or as set forth in this
Article 1.
"Administrative General Partner" means Tiny Tim CDP LLC, a
California limited liability company.
"Affordability Restrictions on Transfer of Property" means that certain
document affecting real property benefiting the City, attached hereto and incorporated
herein as Exhibit B.
80A-197
"Affordable Housing" means the total housing costs paid by a qualifying
household, which shall not exceed the fraction of gross income specified, as follows, in
accordance with Sections 50052.5 and 50053 of the Health & Safety Code and the U.S.
Department of Housing and Urban Development (HUD):
Very Low -Income Households. Thirty (30) percent of the income of a household
earning fifty (50) percent of the Median Income for the Area adjusted for family
size appropriate for the unit.
Low -Income Households. Thirty (30) percent of the income of a household earning
seventy (70) percent of the Median Income for the Area for for -sale units, and thirty
(30) percent of the income of a household earning sixty (60) percent of the Orange
County median income for rental units, adjusted in either case for family size
appropriate for the unit.
In the event of a conflict between the fractions specified in this definition and those
found in Sections 50052.5 and 50053 of the Health & Safety Code and HUD, the
fractions specified by HUD shall control.
"Affordable Rent" means the monthly rents which do not exceed the
maximum amount applicable to Extremely Low, Very Low and Low Income households,
as promulgated by the California Tax Credit Allocation Committee (TCAC), or by the State
of California, as applicable.
"Agency" means the Housing Authority of the City of Santa Ana, acting as
the Housing Successor Agency, a public body, corporate and politic, exercising
governmental functions and powers, and organized and existing under the CRL. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California
92702. "Agency" shall also refer to the City where the context dictates, to the effect that
City shall have all rights granted to the Agency hereunder.
"Building Permit" means the building permit(s) issued by City and
required for the construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 31.
"Certificate of Completion" has the meaning set forth in Article 17.
"City" means the City of Santa Ana, California, a charter city and
municipal corporation. "City" shall also refer to the Agency where the context dictates, to
the effect that the Agency shall have all the rights granted to the City hereunder.
"City Project Manager" shall mean the City's Housing Manager and/or
his/her designee.
"Close of Escrow" shall mean the date upon which the Inclusionary Loan
Agreement and Inclusionary Deed of Trust is recorded in the Official Records of the
County.
"Co -General Partner" means IH CDP Partnership LLC, a California
limited liability company.
"County" means the County of Orange, California.
"Developer" means Tiny Tim LP, a California limited partnership.
"Developer's Representative" shall mean a representative of the
Administrative General Partner designated from time to time by the Administrative
General Partner of Developer or his/her designee.
"Escrow" is the escrow opened for the closing of the Senior Loan, Agency
Loan and Inclusionary City Loan.
"Escrow Holder" is Commonwealth Land Title Company.
"Event of Default" has the meaning set forth in Section 20.1.
"Extremely Low Income" means an adjusted income which does not
exceed thirty percent (30%) of the Median Income for the Area, adjusted for household
size, as published by the U.S. Department of Housing and Urban Development.
"General Partner" means collectively, jointly and severally the
Administrative General Partner, the Co -General Partner and the Managing General Partner.
"Governmental Authority" means any governmental or quasi -
governmental agency, board, bureau, commission, department, court, administrative
tribunal or other instrumentality or authority, and any public utility.
"Hazardous Materials" means flammable materials, explosives,
radioactive materials, hazardous wastes, toxic substances and similar substances and
materials, including all substances and materials defined as hazardous or toxic wastes,
substances or materials under any applicable law, including without limitation the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et s�Mc., and the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. §§ 9601, et seq., as amended. Hazardous Material shall not include (i) construction
products, household cleaners and office materials of the type and quantity ordinarily used
in the normal construction, operation, ownership, occupancy and maintenance of properties
similar to the Project or (ii) small amounts of household mold to the extent promptly
remediated upon discovery.
"Housing Authority" means the Housing Authority of the City of Santa
Ana (CA093), a public body, corporate and politic.
80A-199
"HUD" means the United States (U.S.) Department of Housing and Urban
Development, and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter
comprising any portion of the Property, including, without limitation, landscaping, trees
and plant materials; and offsite improvements, as required through the City of Santa Ana
Planning and Building Agency entitlement process.
"Inclusionary Deed of Trust" means the deed of trust encumbering the
Property, in the form attached hereto as Exhibit C, to be executed by Developer pursuant
to Section 5.B.1 in order to secure the Inclusionary Loan Note.
"Inclusionary Loan" or "Inclusionary City Loan" means a loan in the
original principal amount of up to one -million, three -hundred thousand dollars
($1,300,000) to be made to Developer by the City to be funded exclusively from the
Inclusionary Housing Fund.
"Inclusionary Promissory Note" means that certain promissory note for
Inclusionary Loan funds in the original principal amount of $1,300,000 in the form attached
hereto as Exhibit D, and to be executed by Developer in favor of City to evidence the
obligation of Developer to repay the Inclusionary Loan through residual receipts as further
described in the Inclusionary Promissory Note.
"Indemnitees" has the meaning set forth in Section 14.5.
"Investor Limited Partner" means R4 TTCA Acquisition LLC, or its
permitted successors or assigns.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
judgments, injunctions, decrees or awards of the United States or any state, county,
municipality or other Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, including any conditional sale or other title retention agreement,
any lease in the nature thereof, and any agreement to give any lien or security interest.
"Loan Documents" or "Inclusionary Loan Documents" means,
collectively, this Agreement, the Inclusionary Promissory Note, the Inclusionary Deed of
Trust, and the Affordability Restrictions on Transfer of Property, and any other agreement,
document, or instrument that the City reasonably requires in connection with the execution
of this Agreement or from time to time to effectuate the purposes of this Agreement.
"Low Income" means an adjusted income which does not exceed eighty
percent (80%) of the Median Income for the Area, adjusted for household size, as published
by the U.S. Department of Housing and Urban Development (HUD).
80A-200
"Managing General Partner" means Tiny Tim Mercy House CHDO
LLC, a California limited liability company.
"Median Income for the Area" means the median income for the Orange
County, California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Inclusionary Loan Documents as "Area Median Income" or "AMP'.
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership of the Developer, dated as of May 1, 2019, as may be amended,
modified or supplemented.
"Project" means the construction of the Improvements upon the Property
by Developer pursuant to this Agreement.
"Project Budget" means the line -item budget for the Project attached
hereto as Exhibit E, as modified from time to time in accordance with this Agreement.
"Project Costs" means all costs of any nature incurred in connection with
the Project in accordance with generally accepted accounting principles.
"Property" means the property that is located at 2223 West Fifth Street in
the City of Santa Ana, and as more fully described in the "Legal Description" of the Property
attached hereto as Exhibit A and incorporated herein by reference.
"Scope of WoridSchedule of Performance" means the detailed statement
of the work to be performed by Developer on and to the Property pursuant to this
Agreement, along with the Schedule of Performance setting forth timeframes for certain
tasks, which document is attached hereto as Exhibit F.
"Senior Lender" means a commercial or institutional financial institution
providing the Senior Loan or any other holder of the Senior Loan Note.
"Senior Loan" means a loan from the Senior Lender concurrent to the
Inclusionary Loan for payment of a portion of the acquisition and construction costs, and
shall include any subsequent loan that permanently refinances the initial Senior Loan.
"Senior Loan Deed of Trust" means the first deed(s) of trust securing the
Senior Loan by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement
governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any
other agreement, document or instrument that the Senior Lender requires in connection
with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior
Loan from the Senior Lender.
80A-201
"Term of Affordability" means the terms and conditions contained herein
shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate
of Occupancy for the Project, or repayment of the Inclusionary Loan, whichever is longer.
"Very Low Income" means an adjusted income which does not exceed
fifty percent (50%) of the Median Income for the Area, adjusted for household size, as
published by the U.S. Department of Housing and Urban Development.
1.2 Singular and Plural Terms. Any defined term used in the plural in this
Agreement shall refer to all members of the relevant class and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement shall
include such document both as originally executed and as it may from time to time be
modified. References herein to Articles, Sections and Exhibits shall be construed as
references to this Agreement unless a different document is named. References to
subparagraphs shall be construed as references to the same Section in which the reference
appears. The term "document' is used in its broadest sense and encompasses agreements,
certificates, opinions, consents, instruments and other written material of every kind. The
terms "including" and "include" mean "including (include) without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement,
as now existing and as the same may from time to time be modified, are incorporated herein
by this reference.
2. [RESERVED]
3. SCOPE OF WORK/PROJECT BUDGET
A "Scope of Work" and "Schedule of Performance" for the Property is attached
hereto as Exhibit F. Any material change to the Scope of Work/Schedule of Performance
requested by the Developer shall be subject to the prior written approval of the City Project
Manager. The Scope of Work/Schedule sets forth the construction work that shall be
performed on the Property and timeframes for approvals of such work.
A line -item budget for the Project, including a summary of statement of sources
and uses of funds, is incorporated into Exhibit E ('Project Budget'). Any material change
to the Project Budget requested by Developer shall be subject to the prior written approval
of the City Project Manager.
4. [RESERVED]
5. INCLUSIONARY LOAN:
The Inclusionary Loan shall be evidenced by the Inclusionary Promissory Note in
the form attached hereto as Exhibit D. The Inclusionary Loan shall be secured by the
Inclusionary Deed of Trust in the form attached hereto as Exhibit C. The terms and
conditions of the Inclusionary Loan are as set forth in the Inclusionary Promissory Note.
80A-202
The Term of Affordability for the Project is fifty-five (55) years from the date of issuance
of Certificate of Occupancy for the Project, or repayment of the Inclusionary Loan,
whichever is longer.
5.1. Inclusionary Funds:
A. Amount and Purpose. Subject to the terms and conditions of this
Agreement, City agrees to make a loan to Developer from the Inclusionary Housing Fund
in the principal amount of up to $1,300,000.00 for the acquisition, construction, ownership,
operation, rehabilitation and other costs of the Project.
6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
6.1 Conditions Precedent. City's obligation to disburse the loan is subject to
the satisfaction of the following conditions precedent:
(a) City Council. Review and approval of the documents evidencing
the Inclusionary Loan by the City Council of the City of Santa Ana.
(b) Code Compliance. Compliance with California Health and Safety
Code and applicable regulations set forth in Section 34176.
(c) Environmental Review. Compliance with and completion of
environmental review of the Project pursuant to the California Environmental Quality Act
("CEQA") and approval thereof.
(d) Affordability Restrictions. The funding of $1,300,000 is from the
Inclusionary Housing Fund. Fifty (50) of the "Housing Units" at the Project shall and will
be restricted to affordable rents pursuant to the Maximum Rents published yearly by the
California Tax Credit Allocation Committee (TCAC) and referenced in the regulatory
agreement containing conditions, covenants and restrictions executed by Developer and
TCAC for a period not less than fifty-five (55) years recorded against the Project in the
Official Records, County of Orange, California. At least fifteen (15) of the Housing Units
at the Project shall and will be restricted to households earning 30% or less of the AMI.
One (1) Housing Unit will be rented to an on-site property manager; the manager's unit
will not be rent restricted.
(e) Loan Documents. Developer shall have delivered to the Escrow
Holder, signed by the authorized officer or officers of Developer, with such signature(s)
acknowledged where necessary, each of the following documents:
(i) this hiclusionary Loan Agreement;
(ii) the Inclusionary Promissory Note ($1,300,000);
(iii) the Inclusionary Deed of Trust; and,
(iv) the Affordability Restrictions on Transfer of Property.
80A-203
(f) Title Insurance. City shall have received an American Land Title
Association (ALTA) Extended (LP -10) Loan Policy (6-17-06), or evidence of a
commitment therefore satisfactory to City, issued by Commonwealth Land Title Company
and in form and substance satisfactory to City, together with all endorsements and binders
required, naming City as the insured, in a policy amount of not less than the total
Inclusionary Loan Amount, showing Developer as the fee owner of the Property and
insuring the Inclusionary Deed of Trust to be a valid priority lien on the Property. This
Agreement, the Inclusionary Promissory Note, and the Inclusionary Deed of Trust shall all
be subordinate to the Senior Loan Note and Senior Loan Deed of Trust.
(g) Affordability Restrictions on Transfer of Property. Developer shall
have delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the
Affordability Restrictions on Transfer of Property pursuant to which, among other things,
Developer agrees that the Property shall be used only for decent, safe, sanitary and
Affordable Housing pursuant to the affordability requirements of California Health and
Safety Code ("H&S") sections 50052.5 and 33334.3, as applicable. The City's
Affordability Restrictions on Transfer of Property shall remain in superior position to the
Senior Loan Documents and shall not be subordinated.
(h) Documents Recorded. This Loan Agreement, Inclusionary Deed of
Trust, and the Affordability Restrictions on Transfer of Property shall have been recorded
in the Official Records of the County.
(i) Request for Notice. For the benefit of City, Escrow Holder shall
have recorded a request for notice of default of the Senior Loan (the "Request for Notice
of Default").
6) Insurance. City shall have received evidence satisfactory to the City
Attorney that all of the policies of insurance required by Section 19 of this Agreement are
in full force and effect.
(k) Representations and Warranties. The representations and warranties
of Developer contained in this Agreement and the other Loan Documents shall be correct
in all material respects as of the Close of Escrow as though made on and as of that date,
and if requested by the City Project Manager, City shall have received a certificate to that
effect signed by Developer's Representative.
(1) No Default. No Event of Default by Developer shall have occurred,
and no event shall have occurred which, with the giving of notice or the passage of time or
both, would constitute an Event of Default by Developer under this Agreement, and if
requested by the City Project Manager, City shall have received a certificate to that effect
signed by Developer's Representative.
(m) The City's obligation to provide the Inclusionary Loan is and shall
remain subject to all covenants, conditions, and restrictions set forth in this Loan
Agreement, and in particular City's analysis of the available funding sources and
80A-204
development and operating costs of the Project and the overall economic feasibility of the
Project.
6.2 Disbursement Procedures for Loan. The Inclusionary Loan proceeds shall be
disbursed through Escrow to finance the acquisition, development and construction of the
Project (as evidenced in the Project Budget, attached as Exhibit E). The Inclusionary Loan
proceeds shall not be used for any purpose other than for acquisition, development and
construction related costs, including Developer fee and soft costs related to the development
of the Project (costs all subject to City's prior review).
6.3 First Disbursement. City's obligation to make the first disbursement of the
Loan is subject to satisfaction of the following conditions precedent:
(a) All grading permits shall have been issued or the City shall have
issued a letter stating that Building Permits are ready to issue, subject only to payment of
fees and the completion of grading of the Project site.
(b) Developer shall have secured all necessary financing and funding
for the construction and operation of the Project. Such financing and funding shall be
sufficient to pay all Project development costs, through lease -up, as set forth in the final
budget consistent with the approved Proforma (or as otherwise approved by the City).
(c) Developer shall have provided evidence to the City that the
Developer has obtained insurance policies and certificates or endorsements acceptable to
the City, as described in this Agreement.
(d) Developer shall have provided construction security in favor of the
City, which may include a completion guarantee from Developer and/or a letter of credit
and/or performance and payment bonds from the general contractor for the Project (or some
combination of these), in an amount sufficient to ensure the Project will be completed and
placed in service within the time set forth in the Project schedule approved by the City.
(e) Developer shall submit and obtain the City Project Manager's
approval of the constriction contract, the identity and qualifications of the General
Contractor, the Partnership Agreement for the limited partnership entity to be formed to
own and operate the Project, and management, marketing and tenant selection plans for the
Project.
6.4 Termination for Failure of Condition. If (a) any of the conditions set
forth herein are not timely satisfied (subject to applicable notice and cure rights), and (b)
City is not in default under this Agreement, City may terminate this Agreement without
any further liability on its part by giving written notice of termination to Developer. Upon
the giving of such notice, all principal, interest and other amounts owing under the
Agreement shall be due and payable.
6.5 Any Disbursement. City's obligation to make any disbursement of the
Loan, including the first and final disbursements, is subject to the satisfaction of the
following conditions precedent:
80A-205
(a) Satisfactory Progress. The City Project Manager shall be satisfied
that, based on his/her own inspections or other reliable information, the construction is
progressing satisfactorily in conformance with all applicable laws and other requirements.
(b) Condition of Title. Either (i) the City Project Manager reasonably
believes that no event has occurred since the Close of Escrow that would give rise to a
colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of City
against the Property with respect to the subject disbursement, or if such claim is made, then
City Project Manager shall receive satisfactory evidence that such claim has been bonded
over until its resolution; or (ii) City must have received, at Developer's expense but payable
out of the Loan proceeds from the title insurer who issued City's LP -10 Title Policy, all
endorsements thereto then reasonably required by City (including, without limitation,
CLTA Form 122 -- priority of advance endorsements).
(c) Representations and Warranties. The representations and warranties
of Developer contained in this Agreement and the other Inclusionary Loan Documents
shall be correct in all material respects as of the date of the disbursement as though made
on and as of that date.
(d) No Default. No Event of Default by Developer shall remain uncured
(unless, to the extent permitted under this Agreement, Developer is diligently taking action
to cure such default) and no event shall have occurred which, with the giving of notice or
the passage of time or both, would constitute an Event of Default by Developer.
6.6 Final Disbursement. City's obligation to disburse that portion of the Loan
funds retained pursuant to Section 6.12 is subject to the satisfaction of the following
additional conditions precedent:
(a) Constriction complete. The construction of the Project shall be
complete.
(b) Certificate of Occupancy Issued. Any portion of the construction work
requiring inspection or certification by any Governmental Authority shall have been
inspected and certified as complete. Developer shall request that the City of Santa Ana
Planning and Building Agency issue a Certificate of Occupancy, a copy of which shall be
delivered to the City Project Manager, in order for final disbursement to occur.
(c) Lien Free. At least one of the following shall have occurred:
(i) Thirty-five (35) days shall have passed since the recording of a
valid notice of completion for the construction, and no mechanic's or materialman's lien
shall be outstanding; or
(ii) Ninety-five (95) days shall have passed since actual completion
of the construction, and no mechanic's or materialman's lien shall be outstanding, or
Developer shall have bonded over any such lien to City's reasonable satisfaction.
80A-206
6.7 Waiver of Conditions. The conditions set forth pertaining to City's
obligation to make disbursements of the Loan proceeds are for City's benefit only and the
City Project Manager may waive all or any part of such rights by written notice to
Developer.
6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line -
item by line -item basis in accordance with the Project Budget and subject to the conditions
in this section. In no event shall City have any obligation to disburse any amount for any
item in excess of the amount allocated to such item in the Project Budget. Disbursements
shall be made only upon Developer's written request in the form of a Disbursement Request
showing all costs which Developer intends to fund with such disbursement, itemized in
such detail as City may reasonably require, accompanied in each case by (a) invoices and
lien releases satisfactory to City, including in any event partial lien releases executed by
each contractor and subcontractor who has received any payment for work performed, and
(b) all other documents and information reasonably required by City. Disbursement
Requests shall be submitted no less than ten (10) Business Days prior to the date of the
requested disbursement, and shall not be submitted more often than monthly.
Prior to each disbursement by City of proceeds of the loan, Developer shall deliver
to City a draw request ("Draw Request"), and all required supporting information as set
forth in the Inclusionary Loan Documents or as otherwise reasonably required by City in
order to provide information for evaluating the requested disbursement pursuant to
customary construction lending practices of institutional lenders in Southern California.
City shall notify the Developer of approval or disapproval of each Draw Request
within five (5) Business Days after receipt of the Draw Request, using the City's
"Disbursement/Change Order Approval Notice". City shall have the right, but not the
obligation, to discontinue processing Draw Requests unless and until receipt of notification
from the other lenders of approval or disapproval of each outstanding Draw Request.
6.9 Manner of Disbursement. City may make any disbursement by check
payable to Developer; or on a voucher basis; or by check payable jointly to Developer and
any contractor, subcontractor or other claimant; or directly to any such claimant; or by any
other means reasonably selected by City.
6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the
actual cost reasonably estimated by Developer to be required to complete all matters
included in any line item in the Project Budget exceeds the amount allocated to that line
item in the Project Budget, (b) Project Costs for any matters not covered by a specific line
item have been or will be incurred, or (c) the undisbursed portion of the Loan proceeds and
all other approved financing sources are or may be insufficient to pay all construction of
the Project that may be payable under the Inclusionary Loan Documents or otherwise in
connection with the construction, Developer shall, within ten (10) days after it receives
written notice thereof from City of any of the foregoing matters, do one or more of the
following:
80A-207
(a) provide satisfactory evidence to City that Developer has previously
paid such excess or otherwise provided for such insufficiency (collectively, the "Excess
Cost") with funds from a source other than the Inclusionary Loan;
(b) reallocate sufficient funds to pay the Excess Cost from funds
allocated to "Contingency" in the Project Budget; provided, however, that the City Project
Manager's consent to any such reallocation shall be required; or
(c) deposit an amount equal to the Excess Cost in a non-interest bearing
account (the "Overrun Account") with City from which withdrawals may be made only
with the consent of the City Project Manager but which will be exhausted prior to any
further disbursement for any line item, so that any resulting surplus in any line item of the
Project Budget will then be reallocated to the line item(s) in which the Excess Costs are
expected to be incurred.
City shall have no obligation to make further disbursements until Developer has
paid or otherwise provided for the overrun as required above. Amounts deposited by
Developer in the Overrun Account for any Excess Costs shall be disbursed by City prior to
the disbursement of any remaining Loan proceeds in the manner described in subsection
9.3(c).
6.11 Cost Savings. Upon completion of and disbursement for all matters covered
by any line items in the Project Budget, any remaining undisbursed amounts allocated to
that line item shall be reallocated to "Contingency" and thereafter be available for
disbursement in accordance with the terms of this Agreement.
6.12 Retainage. City will withhold a Retainage of 10% from each
Disbursement for each of the Hard Cost line items of the Project Cost Breakdown (and
other line items thereof designated for withholding of retainage) until all conditions to the
final Disbursement of Hard Costs have been satisfied. In lieu of City's withholding
Retainage, Developer can by written notice to City elect not to draw any overhead or profit
as would otherwise be permitted under the Construction Contract until such time as
Retainage would otherwise have been released.
6.13 [Reserved].
6.14 Waiver of Disbursement Conditions. Unless City otherwise agrees in
writing, the making by City of any disbursement with knowledge that any condition to such
disbursement is not fulfilled shall constitute a waiver of such condition only with respect
to the particular disbursement made, and such condition shall be conditioned to all further
disbursements until fulfilled.
6.15 Modification of Disbursement Conditions and Procedures. The City
Project Manager shall have the authority to modify the disbursement conditions and
procedures set forth herein in order to conform them to the payment provisions of the
contract for constriction.
6.16 Other Terms and Conditions of Loan.
,:1 1:
A. The Note shall become immediately due and payable, in the event of any
of the following:
(1) Failure to complete the Project within three (3) years of the date on which
the Inclusionary Deed of Trust is recorded, unless extended due to Force Majeure delays;
(2) Violation of any of the use covenants and restrictions contained in this
Agreement after the expiration of any applicable notice and cure periods; or,
(3) An Event of Default by Developer which is not timely cured after
expiration of any applicable notice and cure periods pursuant to the terms of this Agreement.
6 .17 Closing Costs and Fees. Developer shall pay (a) all escrow fees and
charges, (b) all recording fees and charges on any document recorded pursuant to this
Agreement, and (c) the premium for the title insurance required hereunder.
7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROJECT
7.1 Use Covenants and Restrictions. Developer agrees and covenants, which
covenants shall run with the land and bind Developer, its successors, its assign and every
successor in interest to the Property that Developer will make all of the rental units on the
Property available to extremely low, very low and low income households at rents affordable
to such households for fifty-five (55) years (except for one (1) unit for the onsite manager).
The Project shall consist of fifty-one (5 1) residential units. Enforceability of restrictions
on the fifty (50) units shall be enforced until the date that is fifty-five (55) years after the date
on which the Certificate of Occupancy is issued.
7.2 Affordability Levels/Unit Mix.
The unit mix and levels of affordability are as follows:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
a. The Affordable Rents charged at the Project must comply with the standards
set forth by the California Tax Credit Allocation Committee (TCAC).
b. Utility allowances must be deducted from the Maximum Gross Monthly Rent.
The Housing Authority of the City of Santa Ana publishes a Utility Allowance
Schedule on an annual basis.
80A-209
c. Based on the unit mix and bedroom sizes provided above, at least fifteen (15)
of the units will be affordable to family households earning no more than 30%
of the AMI; five (5) of the units affordable to family households earning no
more than 50% of the AMI; and thirty (30) of the units affordable to family
households earning no more than 60% of the AMI.
7.3 Rent Increases: On an annual basis, the City shall provide the Developer with
the maximum allowable schedule of rents for the Property which shall correspond to the
maximum rent increase allowed by TCAC. In no event can Developer charge any tenant more
than such amount.
7.4 Maintenance of the Property. Solely at Developer's expense, Developer
agrees to maintain the Property in a clean and orderly condition and in good condition and
repair and keep the Property free from any accumulation of debris and waste materials. If at
any time Developer fails to maintain, or cause to be maintained, the Property as required by
this section, and said condition is not corrected after the expiration of a reasonable period of
time not to exceed thirty (30) days from the date of written notice from the City, unless such
condition cannot reasonably be cured within thirty (30) days, in which case Developer shall
have such additional time as reasonably necessary to complete such cure, the City may
perform the necessary maintenance and Developer shall pay all reasonable costs incurred for
such maintenance. The City shall inspect the Property annually after the date of issuance of
the Certificate of Completion as described in Section 17 of this Agreement.
7.5 Obligation to Refrain from Discrimination. Developer covenants and agrees
for itself, its successors, its assigns and every successor in interest to the Property or any part
thereof, that there shall be no discrimination against or segregation of any person or group of
persons on account of race, color, creed, disability, religion, sex, marital status, ancestry or
national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of
the Property nor shall Developer itself or any person claiming under or through him 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 of the Property. The foregoing covenants shall run with the land and shall remain in
effect for the term of the Agreement.
8. DEFAULTS AND REMEDIES
8.1 Event of Default. Failure or delay by either party to perform any term or
provision of this Agreement within the time periods provided herein for such performance
constitutes a default under the Agreement. If any party defaults in performance of its
obligations, covenants or agreements hereunder, the defaulting party shall be entitled to cure
the default in accordance with this section. The injured party shall give written notice of
default to the party in default, specifying the default complained of by the injured party. Delay
in giving such notice shall not constitute a waiver of any default nor shall it change the time
of default. The defaulting party must, within thirty (30) days following service of said written
notice, commence to cure, correct or remedy such failure or delay and shall complete such
cure, correction, or remedy with reasonable diligence. Upon a default by Developer which is
not cured within thirty (30) days following service of said notice, unless such default cannot
reasonably be cured within thirty (30) days, in which case Developer shall have such
80A-210
additional time as reasonably necessary to complete such cure but no more than ninety (90)
days, the City shall have the right to terminate this Agreement by delivery of written notice
of termination to Developer.
8.2 Institution of Legal Actions. In addition to any other rights or remedies,
either party may institute legal action to cure, correct or remedy any default to recover
economic damages for any default, or to obtain any other remedy consistent with the purpose
of this Agreement.
8.3 Rights and Remedies are Cumulative. Except with respect to rights and
remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the
parties are cumulative and the exercise by either party of one or more of such rights or
remedies shall not preclude the exercise by it, at the same or different times, of any other rights
or remedies for the same default or any other default by the other party.
8.4 Damages. In the event that the City is liable for damages to Developer, such
liability shall not exceed costs incurred by the Developer in the performance of this
Agreement and shall not extend to compensation for loss of future income, profits or assets.
8.5 Nonrecourse Liability. Neither Developer, nor any partner of Developer, nor
any member of any partner of Developer, nor any member, partner, officer, director,
employee, agent or representative of any member of any partner of Developer, shall have any
personal liability under this Agreement, or the attached Note and Deed of Trust, and any
judgment, decree or order for the payment of money obtained in any action to enforce the
obligation of Developer to repay the loan evidenced by such documents shall be enforceable
against Developer only to the extent of Developer's interest in the Property.
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to City to enter into this Agreement, Developer represents
and warrants as follows, which representations and warranties are made solely by
Developer and not by or on behalf of any partner of Developer:
9.1 Formation, Qualification and Comuliance. Tiny Tim LP is a California
limited partnership. Developer is in compliance with all laws applicable to its business and
has obtained all approvals, licenses, exemptions and other authorizations from, and has
accomplished all filings, registrations and qualifications with, any Governmental Authority
that are necessary for the transaction of its business.
9.2 Execution and Performance of Inclusionary Loan Documents.
9.2.1 Developer has all requisite authority to execute and perform its
obligations under the Inclusionary Loan Documents.
9.2.2 The execution and delivery by Developer of, and the performance
by Developer of its obligations under, each Loan Document that has been authorized by all
necessary action and does not and will not:
80A-211
(a) require any consent or approval not heretofore
obtained of any person having any interest in Developer;
(b) violate any provision of, or require any consent or
approval not heretofore obtained under, any articles of incorporation, by-laws or other
governing document applicable to Developer;
(c) result in or require the creation of any lien, claim,
charge or other right of others of any kind (other than under the Inclusionary Loan
Documents) on or with respect to any property now or hereafter owned or leased by
Developer;
(d) to the best of its knowledge, violate any provision of
any law presently in effect; or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other
agreement or document to which Developer is a party or by which Developer or any of its
property is bound.
9.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of City under the Inclusionary Loan Documents or that would have any
material adverse effect on the financial condition of Developer or the conduct of its
business, under any law, contract, lease or other agreement or document described in sub-
paragraph (d) or (e) of the previous subsection.
9.2.4 No approval, license,, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which has
not been previously obtained in connection with:
(a) the execution by Developer of, and the performance
by Developer of its obligations under, the Inclusionary Loan Documents; and
(b) the creation of the liens described in the Inclusionary
Loan Documents.
9.3 Financial and Other Infformation. To the best of Developer's knowledge,
all financial information furnished to City by the Developer or any affiliate thereof with
respect to Developer in connection with the Loan (a) is complete and correct in all material
respects as of the date of preparation thereof, (b) accurately presents the financial condition
of Developer, and (c) has been prepared in accordance with generally accepted accounting
principles consistently applied or in accordance with such other principles or methods as
are reasonably acceptable to City. To the best of Developer's knowledge, all other
documents and information furnished to City by the Developer or any affiliate thereof with
respect to Developer, in connection with the Loan, are correct and complete insofar as
completeness is necessary to give the City accurate knowledge of the subject matter. To
the best of Developer's knowledge Developer has no material liability or contingent
liability not disclosed to City in writing and there is no material lien, claim, charge or other
80A-212
right of others of any kinds (including liens or retained security titles of conditional
vendors) on any property of Developer not disclosed in such financial statements or
otherwise disclosed to City in writing.
9.4 No Material Adverse Change. There has been no material adverse change
in the condition, financial or otherwise, of Developer since the dates of the latest financial
statements furnished to City. Since those dates, Developer has not entered into any
material transaction not disclosed in such financial statements or otherwise disclosed to
City in writing.
9.5 Tax Liability. Developer has filed all required federal, state and local tax
returns and has paid all taxes (including interest and penalties, but subject to lawful
extensions disclosed to City in writing) other than taxes being promptly and actively
contested in good faith and by appropriate proceedings. Developer is maintaining adequate
reserves for tax liabilities (including contested liabilities) in accordance with generally
accepted accounting principles or in accordance with such other principles or methods as
are reasonably acceptable to City.
9.6 Governmental Requirements. To best of its knowledge, Developer is in
compliance with all laws relating to the Property and all Governmental Authority
approvals, including zoning, land use, planning requirements, and requirements arising
from or relating to the adoption or amendment of, any applicable general plan, subdivision
and parcel map requirement; environmental requirements, including the requirements of
the California Environmental Quality Act and the National Environmental Policy Act, and
the preparation and approval of all required environmental impact statements and reports;
use, occupancy and building permit requirements; and public utilities requirements.
9.7 Rights of Others. Developer is in compliance with all covenants,
conditions, restrictions, easements, rights of way and other rights of third parties relating
to the Property.
9.8 Litigation. There are no material actions or proceedings pending or, to the
best of the Developer's knowledge, threatened against or affecting Developer or any
property of Developer before any Governmental Authority, except as disclosed to City in
writing prior to the execution of this Agreement.
9.9 Bankruptcy. To the best of Developer's knowledge, no attachments,
execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or threatened against Developer, nor are
any of such proceedings contemplated by Developer.
9.10 Information Accurate. To the best of Developer's knowledge, all
information, regardless of its form, conveyed by Developer to City, by whatever means, is
accurate, and correct in all material respects and is sufficiently complete to give City true
and accurate knowledge of its subject matter, and does not contain any material
misrepresentation or omission.
80A-213
9.11 Conflicts of Interest. No member, official or employee of the City shall have
any personal interest, direct or indirect, in this Agreement, nor shall any such member, official
or employee participate in any decision relating to this Agreement which affects his/her
personal interests or the interests of any corporation, partnership or association in which
he/she has a direct or indirect financial interest. The Developer warrants that it neither has
paid nor given, nor will pay or give, any third party any money or other consideration for
obtaining this Agreement.
9.12 Nonliability of City Officials and Employees. No member, official or
employee of the City shall be personally liable to the Developer in the event of any default or
breach by the City or for any amount which may become due to Developer or on any
obligations under the terms of this Agreement.
9.13 No Assignment. Developer expressly acknowledges and agrees that the City
has only agreed to assist the Developer as a means by which to induce the
construction/development of the Project. Accordingly, Developer further expressly
acknowledges and agrees that this Agreement is a personal right of Developer that is neither
negotiable, transferable, nor assignable except as set forth herein. Developer may assign some
or all of its rights under the Agreement only with the prior written consent of the City Project
Manager, except that no prior consent is necessary for an assignment by a limited partner of
Developer to an affiliate, for the inclusion of tax credit investors in the Agreement, or as
otherwise provided in the Inclusionary Deed of Trust.
9.14 Applicable Law. This Agreement shall be interpreted, governed and
enforced under federal and California state law with venue in Orange County, California.
9.15 Third Parties. This Agreement is made for the sole benefit of Developer and
the City and their successors and assigns, and no other person or persons shall have any rights
or remedies under or by reason of this Agreement or any right to the exercise of any right or
power of the City hereunder or arising from any default by Developer, nor shall the City owe
any duty whatsoever to any claimant for labor performed or materials furnished in connection
with the construction of the Property.
9.16 Control of Property. The parties acknowledge that the City has not at
anytime participated in any manner in the management or operation of the Property, and will
not so participate at any time hereafter.
10. CONDITIONS FOR CONSTRUCTION
10.1 Permits and Approvals. Developer shall diligently obtain all permits,
including all Building Permits, licenses, approvals, exemptions and other authorizations of
Governmental Agencies required in connection with the construction and conversion of the
Property.
10.2 Commencement and Completion of Construction. The construction of
the Project shall be considered complete for purposes of this Agreement only when (a) all
work described has been completed and fully paid for, and (b) all work requiring inspection
or certification by Governmental Authority has been completed and all requisite
80A-214
certificates, approvals and other necessary authorizations (including required final
certificates of occupancy) have been obtained.
10.3 Chante Orders. The contract for construction shall not be modified except
pursuant to change orders. All change orders in excess of $10,000:
(a) Shall be in writing, numbered in sequence, signed by
Developer and submitted to City prior to the proposed effectiveness thereof and
accompanied by any working drawings and a written narrative of the proposed change;
and,
(b) Shall be subject to the City Project Manager's prior written
approval.
10.4 Entry and Inspection. At all times prior to completion of the construction,
upon reasonable prior written notice and subject to reasonable job site safety rules, City
and its agents shall have (a) the right of free access to the Property and all sites away from
the Property where materials for the construction are stored, (b) the right to inspect all labor
performed and materials furnished for the construction, and (c) the right to inspect and
copy all documents pertaining to the construction.
10.5 [RESERVED]
10.6 Construction Information. From time to time during the course of the
construction, within ten (10) Business Days following City's written demand therefore,
Developer shall furnish requested reports of Project Costs, progress schedules and
contractors' costs breakdowns for the construction, itemized as to trade description and
item, showing the name of the contractor(s) and/or subcontractor(s), and including such
indirect costs as real estate taxes, legal and accounting fees, insurance, architects' and
engineers' fees, loan fees, interest during construction and contractors' overhead.
10.7 Protection Against Liens: Developer shall diligently file a valid Notice of
Completion upon completion of the construction, diligently file a notice of cessation in the
event of a cessation of labor on the construction for a period of thirty (30) days or more,
and take all actions reasonably required to prevent the assertion of claims of lien against
the Property. In the event that any claim of lien is asserted against the property or any stop
notice or claim is asserted against the City by any person furnishing labor or materials to
the Property, Developer shall immediately give written notice of the same to City and shall,
promptly and in any event within ten (10) Business Days after written demand therefor, (a)
pay and discharge the same, (b) effect the release thereof by delivering to City a surety
bond complying with the requirement of applicable laws for such release, or (c) take such
other action as City may require to release City from any obligation or liability with respect
to such stop notice or claim.
11. PROJECT COVENANTS
80A-215
11.1 Affordable Rent Schedule. The rents shall be determined by the
regulatory agreements entered into between the Developer and the California Tax Credit
Allocation Committee governing the Project.
11.2 Qualification as Affordable Housing. As more particularly provided in the
Affordability Restrictions on Transfer of Property, Developer shall use, manage and
operate the Property in accordance with the requirements of California Health and Safety
Code section 50052.5 so as to qualify the housing on the Property as Affordable Housing
with Affordable Rents.
11.3 Local Preference. Local preference for Santa Ana residents and workers in
tenant selection shall be a requirement of the Project. Subject to the prohibition of
discrimination and the granting of preferences in housing occupancy imposed by federal
laws and regulations, the State of California, and by the City of Santa Ana Affordable
Housing Funds Policies and Procedures, the Developer shall use its best efforts to lease
units in the following order of priority:
First priority shall be given to persons who have been permanently displaced or
face permanent displacement from housing in Santa Ana as a result of any of the
following:
a. A redevelopment project undertaken pursuant to California's Community
Redevelopment Law (Health & Safety Code Sections 33000, et seq.) --
applicable only to projects funded by the Low and Moderate Income
Housing Asset Fund.
b. Ellis Act, owner -occupancy, or removal permit eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP Contract by property
owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at least the last 6
months.
11.4 Application and Financial Preparedness. Developer shall submit for
review and approval by the City a booklet to inform interested persons regarding minimum
application and eligibility requirements and to assist interested persons with application
and financial preparedness and eligibility for residency at the Project at the initial leasing
of the affordable units. Developer shall also work with the City to hold a minimum of two
80A-216
(2) workshops to be coordinated by the Developer at least twelve (12) months prior to the
initial leasing of the affordable units.
11.5 Handicapped Accessibility. Developer shall comply with: (a) Section 504
of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the
Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36
in order to make the Project readily accessible to and usable by individuals with disabilities.
11.6 Onsite Supportive Services, Programs and Amenities. Developer shall
provide residents of the Project access to discounted or no -cost onsite supportive services,
programming, and amenities that promote child development, youth development, and
economic mobility, and include, but are not limited to health and wellness services,
transportation services, social activities, and physical or recreational amenities as expressly
set forth in and required by the Affordability Restrictions on Transfer of Property.
11.7 Local Sourcing Plan. Developer agrees to make a good faith effort to
encourage contractors and suppliers to hire and procure locally. Prior to issuance of any
Building Permit, Developer shall develop and submit to the City a local sourcing plan for
the Project targeting, to the extent feasible, the hiring of qualified workers, construction
contractors, or the purchasing of goods locally within the City of Santa Ana.
11.8 Lead -Based Paint. Developer shall comply with the requirements, as
applicable of the Lead -Based Paint Poisoning Prevention Act.
11.9 Affirmative Marketing. Prior to the issuance of a Certificate of
Occupancy, Developer shall prepare and obtain City's approval of an affirmative
marketing program for leasing the affordable units at the Project.
11.10 Equal Opportunitv and Fair Housing. Developer shall carry out the
construction and perform its obligations under this Agreement in compliance with all of
the state and federal laws and regulations regarding equal opportunity and fair housing.
Developer must also follow the requirements of California Health and Safety Code section
33435.
11.11 Property Standards. Developer shall cause the Property to meet all
applicable local, state and federal codes and ordinances, including zoning ordinances.
Developer shall also cause the Property to meet the current edition of the Model Energy
Code published by the Council of American Building Officials.
11.12 Alternative Transportation and Energy Source, Resource
Conservation, and LEED Certification. In recognition of the City's desire to optimize
the energy efficiency of the Project, Developer agrees to consult with the Project design
team, a CABEC certified 2016 Certified Energy Analyst, a LEED AP Homes (low-rise and
mid -rise), LEED AP BD+C (high rise), National Green Building Standard (NGBS) Green
Verifier, or GreenPoint Rater (one person may meet both of these latter qualifications)
early in the Project design process to evaluate a building energy model analysis and identify
and consider energy efficiency or generation measures beyond those required by the TCAC
minimum construction standards.
80A-217
11.13 Maintenance. At all times during the term of this Agreement, Developer
shall cause the Property and the Project to be maintained in a decent, safe and sanitary
manner, regardless of cause of the disrepair. Developer shall be fully and solely responsible
for costs of maintenance, repair, addition and improvements. City, and any of its
employees, agents, contractors or designees, shall have the right to enter upon the Property
at reasonable times and in a reasonable manner to inspect the Project.
11.14 Property Maintenance Agreement. Developer shall execute a
maintenance agreement with the City prior to occupancy, which shall be recorded against
the Property, and which shall be in a form reasonably satisfactory to the City Attorney.
11.15 Management Plan. Prior to issuance of a Certificate of Occupancy,
Developer shall submit for the reasonable approval of the City a "Management Plan" that
sets forth in detail Developer's property management duties, a tenant selection process in
accordance with this Agreement, a security system and crime prevention program, the
procedures for the collection of rent, the procedures for eviction of tenants, the rules and
regulations for the Property and manner of enforcement, a standard lease form, an operating
budget, the identity and emergency contact information of the professional property
management company to be contracted with to provide onsite property management
services at the Property, and other matters relevant to the management of the Property.
11.16 Crime Free Housing. Developer shall work with City staff to develop a
crime free housing policy, procedure, and design plan.
11.17 Onsite Parking Management Plan. Developer shall provide onsite
parking for residents and visitors. of the Project and actively monitor the parking demand
of the Project site. Developer shall continually monitor and take appropriate measures to
manage the parking demand of the Project site to mitigate the use of offsite parking spaces
on private or public properties and/or right-of-way. Prior to issuance of a Certificate of
Occupancy, Developer shall submit a Parking Management Plan which will include but
not be limited to: 1) a list of requirements for any tenants who park their vehicles on-site;
2) pre -conditions and ongoing conditions associated with all on-site parking; and 3) towing
policies and practices of management. Developer shall obtain approval from the City for
said plan.
11.18 Conflict of Interest. Developer shall comply with and be bound by the
conflict of interest provisions set forth in all applicable state regulations pertaining to
conflict of interest.
11.19 Monitoring. Developer shall allow the City to conduct periodic inspections
of each of the assisted units on the Property after the date of constriction completion, with
reasonable notice. Developer shall cure any defects or deficiencies found by the City while
conducting such inspections within ten (10) business days of written notice thereof, or such
longer period as is reasonable within the sole discretion of the City.
11.20 Recertification of Tenant Income.
80A-218
(a) Developer shall take all necessary steps to review the income of all
tenants prior to renting to them, as well as reviewing current tenants on an annual basis.
At a minimum, every fifth (5th) year, Developer shall require new original income
documents to be submitted by tenants.
(b) Developer shall allow the City to conduct periodic reviews of tenant
files and files relating to affirmative marketing and outreach to ensure the Project's
compliance with applicable regulations and guidelines.
(c) City assisted units continue to qualify as affordable housing despite a
temporary non-compliance caused by increases in the incomes of existing tenants if actions
satisfactory by the City are being taken to ensure that all vacancies are filled in accordance
with this section until the non-compliance is corrected.
11.21 Housing Opportunity Ordinance Requirements. Developer shall comply
with all other applicable requirements of the City's Housing Opportunity Ordinance,
including the following:
(a) Onsite Services: The Developer shall provide on-site services that
are available to the residents and shall report to the City annually
the services provided.
(b) Coordination with the WORK Center: The Developer and the
Property Manager shall coordinate with the City's WORK Center
to provide services and outreach to tenants, as well as provide
information on employment during the construction of the Project.
(c) Tenant Satisfaction Survey: The Developer shall complete and
submit to the City biennial tenant satisfaction surveys of tenants.
(d) Rental Inclusionary Housing Manual: The Developer shall also
maintain compliance with the City's Inclusionary Housing
Manual for Rental Projects.
11.22 Controlling Covenants. If there is a discrepancy between local, state and
federal law with regard to any of the aforementioned covenants, the more stringent shall
apply.
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND
REPAIR OF PROPERTY
12.1 Maintenance. Developer shall maintain the Property (and all abutting
grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise
required to maintain) in good condition and repair; shall operate the Property in a business-
like manner; shall prudently preserve and protect its own as well as the City's interests in
connection with the Property; shall not commit or permit any waste or deterioration of the
Property (except for normal wear and tear); shall not abandon any portion of the Property
or leave the Property unguarded or unprotected; and shall not otherwise act, or fail to act,
80A-219
in such a way as to unreasonably increase the risk of any damage to the Property or of any
other impairment of City's interests under the Inclusionary Loan Documents. Without
limiting the generality of the foregoing, and except as otherwise agreed by City in writing
from time to time, Developer shall promptly and faithfully perform and observe each of
the following provisions:
12.1.1 Alterations and Repair. Developer shall not remove, demolish or
materially alter any Improvement without City's prior consent, except to make non-
structural repairs which preserve or increase the Property's value, and shall promptly
restore, in a good and professional manner, any Improvement (or other aspect or portion of
the Property) that is damaged or destroyed from any cause.
12.2 Compliance. Developer shall comply with all laws and requirements of
Governmental Authority (including, without limitation, all requirements relating to the
obtaining of Governmental Authority approvals), all Governmental Authority approvals
and all rights of third parties, relating to Developer, the Property or Developer's business
thereon.
12.3 Taxes and Impositions. Subject to any property tax abatement available
to the Developer, Developer shall pay, prior to delinquency, all of the following
(collectively, the "Impositions"): (a) all general and special real property taxes and
assessments imposed on the Property; (b) all other taxes and assessments and charges of
every kind that are assessed upon the Property (or upon the owner and/or operator of the
Property) and that create or may create a lien upon the Property (or upon any personal
property or fixtures used in connection with the Property), including, without limitation,
non-governmental levies and assessments pursuant to applicable covenants, conditions or
restrictions; and (c) all license fees, taxes and assessments. imposed on City (other than
City's income or franchise taxes) which are measured by or based upon (in whole or in
part) the amount of the obligations secured by the Property. If permitted by law, Developer
may pay any Imposition in installments (together with any accrued interest).
12.3.1 Richt to Contest. Developer shall not be required to pay any
Imposition so long as: (a) its validity is being actively contested in good faith and by
appropriate proceedings; (b) Developer has demonstrated to City's reasonable satisfaction
that leaving such Imposition unpaid pending the outcome of such proceedings could not
result in conveyance of the Property in satisfaction of such Imposition or otherwise impair
the City's interests under the Inclusionary Loan Documents; and, (c) Developer has
furnished City with a bond or other security satisfactory in an amount not less than 100%
of the applicable claim (including interest and penalties).
12.3.2 Evidence of Payment. Upon demand by City from time to time,
Developer shall deliver to City, within thirty (30) days following the due date of any
Imposition, evidence of payment reasonably satisfactory to City.
12.3.3 Books and Records. Developer shall maintain complete books of
account and other records reflecting its operations (in connection with any other businesses
as well as with respect to the Property), in accordance with generally accepted accounting
80A-220
principles applied on a consistent basis or in accordance with such other principles or
methods as are reasonably acceptable to City.
12.4 [RESERVED]
12.5 Project Operating Budget. Developer must promptly deposit all Gross
Revenues (as defined in the Project Note) directly into a segregated depository account
established exclusively for the Project ("Project Operating Account") pursuant to the
agreement with the property management company. Withdrawals from the Project
Operating Account may be made only in accordance with the provisions of this Agreement
and the approved Project Budget, as it may be revised from time to time with prior City
approval. Developer may make withdrawals from the Project Operating Account solely
for the payment of Operating Expenses (as defined in the Project Note). Withdrawals from
the Project Operating Account for other purposes may be made only with the prior written
approval of the City. Notwithstanding anything to the contrary contained herein, neither
capital contributions from the Investor Limited Partner or proceeds from any loans made
to the Developer (other than loans to address operating deficits pursuant to the terms of the
Partnership Agreement) shall be deposited in the Project Operating Account.
12.6 Replacement Reserve Account. Developer must establish or cause to be
established a segregated replacement reserve depository account ("Replacement Reserve
Account") no later than the commencement of the permanent financing period for the
Project. Developer must make monthly deposits from project income into the Replacement
Reserve Account in accordance with Developer's Project Budget, and the requirements of
the Senior Lender, as amended from time to time. Developer may withdraw funds from
the Replacement Reserve Account solely to fund capital improvements for the Project and
as otherwise is permitted under the Senior Loan Documents and including, but not limited
to, capital repair or replacement, such as replacing or repairing structural elements,
furniture, fixtures or equipment of the Project that are reasonably required to preserve the
Project. Developer may not withdraw funds from the Replacement Reserve Account for
any other purpose without the prior written approval of the City.
13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and
agrees that:
(a) In Use of Property. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed, disability,
religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the Property, nor shall Developer 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 vendors of the Property.
(b) In Affordable Housing Restrictions. The foregoing covenant
shall: (a) be included in the Affordability Restrictions on Transfer of Property; (b) run with
the land; and, (c) remain effective for the term of the Agreement (for 55 years).
80A-221
(c) In Employment. In construction on the Property, Developer shall
not discriminate against any employee or applicant because of race, color, creed, religion,
sex, marital status, disability, national origin, or ancestry. Developer shall take affirmative
action to ensure that applicants are employed, and that employees are treated during
employment, without regard to their race, color, disability, creed, religion, sex, marital
status, disability, national origin, or ancestry.
(d) In all Contracts. Developer shall cause the foregoing covenants to
be inserted in all contracts for any work covered by this Agreement so that such provisions
will be binding upon each contractor for the benefit of City, provided that the foregoing
covenant shall not apply to contracts or subcontracts for standard commercial supplies or
raw materials.
14. ENVIRONMENTAL MATTERS
14.1 Representation and Warranty. Except as disclosed in writing to the City,
Developer has no knowledge: (a) of the presence on, under or about the Property, now or
in the past, of any Hazardous Materials, or of the transportation to or from the Property of
any Hazardous Materials; (b) that asbestos or polychlorinated biphenyls (PCBs) are
contained in or stored on the Property; or, (c) that there are any underground storage tanks
located in, on or under the Property.
14.2 Compliance with Environmental Laws. Developer shall: (a) comply with
all environmental laws and environmental permits applicable to the construction of the
Property; (b) immediately pay or cause to be paid all costs and expenses incurred by reason
of such compliance; (c) keep the Property free and clear of any environmental claims or
liens imposed pursuant to any environmental law; and, (d) obtain and renew all
environmental permits required for ownership or use of the Property.
14.3 Presence of Hazardous Materials. Developer shall not, and shall not
permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous
Materials on the Property, or transport or permit the transportation of Hazardous Materials
to or from the Property, except for de minimis quantities used at the Property in compliance
with all applicable environmental laws and required in connection with the routine
operation and maintenance of the Property.
14.4 Notice of Environmental Matters. Developer shall immediately advise City
in writing of any of the following: (a) any pending or threatened environmental claim
against Developer or the Property; or (b) any condition or occurrence that: (i) results in
noncompliance with any applicable environmental law; (ii) could reasonably be anticipated
to cause the Property to be subject to any restrictions on the ownership, occupancy, use or
transferability of the Property under any environmental Law; or, (iii) could reasonably be
anticipated to form the basis of an environmental claim against the Property or Developer.
14.5 Environmental Indemnification by the Developer. Developer agrees to
defend, indemnify and hold harmless the City and its respective officers, directors,
employees and agents (collectively the "Indemnitees") from and against any and all
80A-222
obligations (including removal and remediation), losses, claims (including third party
claims), suits, judgments, liabilities, penalties, damages (including consequential and
punitive damages), costs and expenses (including consultants, and attorneys' fees) of
whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or
asserted against the Indemnitees directly or indirectly based on, or arising or resulting from
the actual or alleged presence of Hazardous Materials on the Property, other than resulting
from the gross negligence or willful misconduct of any hidemnitee.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the Inclusionary Promissory Note or
Inclusionary Deed of Trust remain outstanding, the following provisions shall apply,
except to the extent that City Project Manager otherwise consents in writing:
15.1 Existence. The sole member of Developer's managing general partner shall
maintain its existence in good standing under the laws of the State of California, and
Developer shall provide documentation of such status annually to the City.
15.2 Protection of Lien. Developer shall maintain the lien of the Inclusionary
Deed of Trust as a deed of trust on the Property in the same priority as at the
commencement of construction and take all actions to execute and deliver to City all
documents, reasonably required by City from time to time in connection therewith.
15.3 Notice of Certain Matters. Developer shall give notice to City, within ten
(10) days of Developer's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the
Property and involving an amount in excess of $5,000; and any litigation or claim that
might subject Developer or any general partner to liability in excess of $5,000, whether
covered by insurance or not;
(b) any dispute between Developer and a Governmental
Authority relating to the Property, the adverse determination of which might materially
affect the Property;
(c) any change in Developer's principal place of business;
(d) any aspect of the Improvements that is not in substantial
conformity with the plans or code;
(e) any event which after the giving of all required notices and
the expiration of all applicable cure periods, would constitute an Event of Default;
(f) any material default by Developer or any other party under
any Senior Loan document, or the receipt by Developer of any notice of default under any
Senior Loan document;
80A-223
(g) the creation or imposition of any mechanics' or
materialmans' lien or other lien against the Property which might materially affect the
Property, which is not bonded over or released; and/or
(h) any material adverse change in the financial condition of
Developer.
15.4 Further Assurances. Developer shall execute and acknowledge (or cause
to be executed and ack riowledged) and deliver to City all documents, and take all actions,
reasonably required by City from time to time to confirm the rights created or now or
hereafter intended to be created under the Inclusionary Loan Documents; to protect and
further the validity, priority and enforceability of the Inclusionary Deed of Trust; to subject
to the Deed of Trust any property intended by the terms of any Loan Document(s) to be
covered by the Inclusionary Deed of Trost or otherwise to carry out the purposes of the
Inclusionary Loan Documents and the transactions contemplated thereunder.
15.5 Annual Financial Statements. Developer shall deliver the following to
City within one hundred and fifty (150) days after the end of each Calendar Year: (a) a
certified public accountant reviewed balance sheet for Developer as of the end of such
Calendar Year and a certified public accountant reviewed statement of profit and loss for
Developer and for Developer's operations in connection with the Property for such
Calendar Year, together with all supporting schedules; (b) a certificate of such certified
public accountant that such documents were reviewed by such certified public accountant
in accordance with generally accepted accounting principles and otherwise comply with
generally accepted accounting principles review requirements; and, (c) a certificate of
Developer's chief financial officer that such documents: (i) were prepared in accordance
with generally accepted_ accounting principles applied on a consistent basis or in
accordance with such other principles or methods as are reasonably acceptable to City; (ii)
fairly present Developer's financial condition; (iii) show all material liabilities, direct and
contingent; and, (iv) fairly present the results of Developer's operations. Developer shall
also provide the City with any other annual audit reports issued by other monitoring
agencies. Developer shall include in said reports a document in the "Form of Residual
Receipts Report" attached hereto as Exhibit G and incorporated herein.
15.6 Audits and Access to Records. Developer agrees that City or any of its
authorized representatives shall have the right of access, upon reasonable notice and during
normal business hours, to any books, documents, papers, or other records of Developer that
are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts
or transcripts. Developer will maintain all books and records pertaining to this Agreement
for a period of not less than five (5) years after all matters pertaining to this Agreement
(i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or state
laws, regulations or policies, and when a period of affordability or recapture applies to
Developer's activities, for a period of not less than five (5) years after the affordability or
recapture period ends.
15.7 Termite Inspection Report. Developer shall deliver a termite report
pertaining to the Property to the City every fifth (5') year following the date of issuance
of the Certificate of Occupancy.
80A-224
16. OTHER COVENANTS
While any obligation of Developer under the Inclusionary Note or Inclusionary
Deed of Trust remain outstanding, the following provisions shall apply, except to the extent
that City Project Manager otherwise consents in writing:
16.1 Default on Senior Loan. Developer shall not default on any of the Senior
Loan Documents, provided however, that Developer shall have such period as is provided
in the Senior Loan Documents during which to effectuate a cure.
16.2 Sale or Lease of Property. Unless and until Developer has received a
Certificate of Completion for the construction from City, Developer shall not sell, lease
(other than to tenants meeting the requirements set forth in this Agreement), sublease or
otherwise transfer all or any part of the Property or any interest therein without the prior
written consent of the City Project Manager, which consent may be withheld in the City
Project Manager's reasonable discretion. In connection with the foregoing consent
requirements, Developer acknowledges that City relied upon Developer's particular
expertise in entering into this Agreement and continues to rely on such expertise to ensure
the satisfactory completion of the construction.
Notwithstanding anything to the contrary contained herein, a "transfer" shall not
include: (i) a transfer of a General Partner's interest in Developer when made in connection
with the exercise by the Developer's limited partner (the "Limited Partner") of its rights
upon a default by a General Partner under the Developer's Partnership Agreement (the
"Partnership Agreement") or upon a General Partner's withdrawal in violation of the
Partnership Agreement, so long as the removal and substitution of the defaulting General
Partner is made within thirty (30) days of such default or, if such removal and substitution
cannot reasonably be completed within thirty (30) days, so long as the Limited Partner
commences to take action to remove and substitute the General Partner within a reasonable
period and thereafter diligently proceeds to complete such substitution; (ii) any transfer of
the Property to one or more of the General Partners pursuant to the purchase option, as
provided for in the Partnership Agreement; (iii) any transfer of the Limited Partner's
interest in connection with a default by the Limited Partner under and in accordance with
the Partnership Agreement; and, (iv) any sale, transfer or other disposition of the Limited
Partner's interest in the Developer or of an interest in the Limited Partner.
16.3 Transfer of Developer Limited Partner's Interest. Notwithstanding
anything to the contrary in this Agreement or the Loan Documents, no consent shall be
required of the City (and it shall not be deemed a default or an Event of Default under any
of the Loan Documents), in connection with the transfer and/or the assignment by the
Developer's limited partner of its interest in the Developer to an entity controlled or
managed by an entity which is related to or under common control with the Developer's
limited partner.
16.4 Removal of Developer's General Partner. Notwithstanding anything to
the contrary in this Agreement or the Loan Documents, the removal and/or replacement of
a General Partner for cause in accordance with the Partnership Agreement shall not require
80A-225
the consent of the City and shall not shall not constitute a default or an Event of Default
under this Agreement or the Loan Documents or accelerate the maturity of the Inclusionary
Loan. If the Developer's limited partner exercises its right to remove a General Partner,
City will not unreasonably withhold its consent to the substitute general partner; provided
however, the consent of either the City shall not be required if the substitute general partner
is an affiliate of the Developer's limited partner. The substitute general partner shall
assume all of the rights and obligations of the removed general partner hereunder.
17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of
Developer, or at its own election, the City shall issue a Certificate of Completion. Such
Certificate of Completion shall be, and shall so state, conclusive determination of
satisfactory completion of the construction.
If City declines to furnish a Certificate of Completion after written request from
Developer, the City Project Manager shall, within thirty (30) days after receipt of the
request, provide Developer with a written statement of the reasons therefore. The statement
shall contain a description of the action Developer must take to obtain a Certificate of
Completion. If the reason therefore is that the Developer has not completed a minor portion
of the construction, City may, in its sole and absolute discretion, issue the Certificate of
Completion upon the posting with City of a bond or other form of security acceptable to
the City Project Manager in the amount of the fair value of the uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of
the Inclusionary Loan Documents or any obligation of Developer to any other party
whatsoever, including any holder of a mortgage or, deed of trust. A Certificate of
Completion is not "notice of completion" referred to in Section 3093 of the California Civil
Code.
18. INDEMNIFICATION
18.1 Nonliability of City. Developer acknowledges and agrees that:
(a) The relationship between Developer and the City is and shall
remain solely that of Developer and lender. City neither undertakes nor assumes any
responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform
Developer of any matter in connection with the construction, including matters relating to:
(i) the performance of the construction work; (ii) architects, contractors, subcontractors and
materialmen, or the workmanship of or materials used by any of them; or, (iii) the progress
of the construction; and Developer shall rely entirely on its own judgment with respect to
such matters and acknowledges that any review, inspection, supervision, approval or
information supplied to Developer by City in connection with such matters is solely for the
protection of City, and that neither Developer nor any third party is entitled to rely on it;
(b) Notwithstanding any other provision of any Loan Document: (i)
the City is not a partner, joint venture, alter -ego, manager, controlling person or other
business associate or participant of any kind of Developer, and City does not intend to ever
80A-226
assume any such status; (ii) City's activities in connection with the Loan shall not be
"outside the scope of the activities of a lender of money" within the meaning of California
Civil Code Section 3434, as modified or recodified from time to time, and City does not
intend to ever assume any responsibility to any person for the quality or safety of the
Property; and, (iii) City shall not be deemed responsible for or a participant in any acts,
omissions or decisions of Developer;
(c) City shall not be directly or indirectly liable or responsible for any
loss or injury of any kind to any person or property resulting from any construction on, or
occupancy or use of, the Property, whether arising from: (i) any defect in any building,
grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of
Developer or any of Developer's agents, employees, independent contractors, licensees or
invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon;
and,
(d) By accepting or approving anything required to be performed or
given to City under the Loan Documents, including any certificate, financial statement,
survey, appraisal or insurance policy, City shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or approval
shall constitute a warranty or representation by City to anyone.
18.2 Indemnity. Developer shall defend (by counsel reasonably satisfactory to
City), indemnify and save and hold harmless the Indemnitees from and against all claims,
damages, demands, actions, losses, liabilities, costs and expenses (including, without
limitation, reasonable attorneys' fees and court costs) arising from or relating to: (i) this
Agreement; (ii) the making of the Loan(s); (iii) a claim, demand or cause of action that any
person has or asserts against Developer; (iv) any act or omission of Developer, any
contractor, subcontractor or material supplier, engineer, architect or other person with
respect to the Property; or, (vi) the ownership, occupancy or use of the Property.
Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with
respect to the consequences of any act of gross negligence or willful misconduct of City.
Developer's obligations under this Section shall survive the cancellation of the Inclusionary
Promissory Note, release and reconveyance of the Inclusionary Deed of Trust, issuance of
the Certificate of Completion, and termination of this Agreement.
18.2.1 Notwithstanding the foregoing, neither Developer, nor any of its
partners, shall be personally liable for any indemnification obligation hereunder that would
result as the repayment of principal and/or interest under the Loan.
18.3 Reimbursement of City. Developer shall reimburse City immediately
upon written demand for all costs reasonably incurred by City (including the reasonable
fees and expenses of attorneys, accountants, appraisers and other consultants, whether the
same are independent contractors or employees of City) in connection with the
enforcement of the Loan Documents and all related matters, including all claims, demands,
causes of action, liabilities, losses, commissions and other costs against which City is
indemnified under the Loan Documents. Such reimbursement obligations shall bear
interest from the date occurring twenty (20) days after City gives written demand to
Developer and shall be secured by the Inclusionary Deed of Trust. Such reimbursement
80A-227
obligations shall survive the cancellation of the Loan Note, release and reconveyance of
the Inclusionary Deed of Trust, issuance of a Certificate of Completion, and termination of
this Agreement
19. INSURANCE, CASUALTY AND CONDEMNATION
19.1 Policies Required. While any obligation of Developer under the Loan
Documents remains outstanding, Developer shall maintain at Developer's sole expense,
with insurers either: (i) admitted in California; or, (ii) are not admitted to California but
have an A.M. Best Rating of "A" or above and reasonably approved by the City, the
following policies of insurance in form and substance reasonably satisfactory to the City
Attorney:
(a) worker's compensation insurance and any other insurance required
by law in connection with the construction;
(b) prior to commencement and following completion of the
construction, fire and hazard "all risk" insurance covering 100% of the replacement cost of
the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief
and all other risks normally covered by "all risk" coverage policies in the area where the
Property is located (including loss by flood if the Property is in an area designated as
subject to the danger of flood);
(c) upon commencement of the construction and at all times prior to
completion of the construction, builder's risk -all risk insurance covering 100% of the
replacement cost of all Improvements (including offsite materials) during the course of
construction in_the event of fire, lightning,, windstorm, vandalism, earthquake, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the area
where the Property is located (including loss by flood if the Property is in an area
designated as subject to the danger of flood);
(d) public liability insurance in amounts reasonably required by City
from time to time, and in no event less than $1,000,000 for "single occurrence;"
(e) property damage insurance in amounts reasonably required by the
City from time to time, and in no event less than $1,000,000; and
(f) any other insurance reasonably required by City that is available at
commercially reasonable rates.
All such insurance shall provide that it may not be canceled or materially modified
without thirty (30) days prior written notice to City. The policies required under
subparagraphs (b) and (c) shall include a "lender's loss payable endorsement" in form and
substance satisfactory to City, showing the City as encumbrance. The City shall be named
as an additional insured in the policies required under subparagraphs (d) and (e).
Certificates of insurance for the above policies (and/or original policies, if required by City)
shall be primary and delivered within ten (10) days after demand therefore, and prior to
start of any constriction work. All policies insuring against damage to the Improvements
80A-228
shall contain an agreed value clause sufficient to eliminate any risk of co-insurance. No
less than thirty (30) days prior to the expiration of each policy, Developer shall deliver to
City evidence of renewal or replacement of such policy reasonably satisfactory to the City
Attorney.
19.2 City Attorney May Modify. The City Attorney may modify the type and
amounts of insurance required pursuant to this Section.
19.3 Claims and Proceedings. Developer shall give City immediate notice
of any material casualty to any portion of the Property, whether or not covered by
insurance, and of the initiation or threatened initiation of any proceeding for the
condemnation or other taking for public or quasi -public use of any portion of the Property
(collectively, "Condemnation"), and shall provide City with copies of all documents which
pertain to any such casualty or Condemnation. Developer shall take all action reasonably
required by City in connection therewith to protect the interests of Developer and/or City,
and City shall be entitled (without regard to the adequacy of its security) to participate in
any action, claim, adjustment or proceeding and to be represented therein by counsel of its
choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or
proceeding without prior written approval, which approval shall not be unreasonably
withheld or delayed.
19.4 Delivery of Proceeds to City. In the event that, notwithstanding the
"lender's loss payable endorsement" requirement set forth above, the proceeds of any
casualty insurance policy described herein are paid to Developer, Developer shall, subject
to any superior rights of the Senior Lender, deliver such proceeds to the City immediately
upon receipt.
19.5 Application of Casualty Insurance Proceeds. Any proceeds collected (the
"Proceeds") under any casualty insurance policy described in this Agreement shall be
disbursed to Developer as provided below, but only upon fulfillment of each of the
following conditions (the "Restoration Conditions") within ninety (90) days (unless
extended by mutual agreement of Developer and City) following the occurrence of the
receipt of the Proceeds:
(a) Developer shall demonstrate to City's reasonable satisfaction
that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph
(b) and any undisbursed loan and tax credit proceeds available to the Developer) will be
adequate to repair the Improvements and to restore the fair market value of the Property,
within a time period reasonably determined by City, to at least the value it had immediately
prior to sustaining the damage. Such demonstration shall include delivery to City of: (i)
plans and specifications reasonably satisfactory to City; and, (ii) a construction contract in
form and content, and with a contractor, reasonably satisfactory to City;
(b) To the extent that the Proceeds (together with all
undisbursed Loan proceeds and any other financing proceeds available to the Developer)
are insufficient to accomplish the restoration required above, Developer shall deliver to
City funds (the "Shortfall Funds") in the amount of such shortfall, which funds shall be
80A-229
assigned to City as security for Developer's obligation hereunder and held and disbursed
in the same manner as the Proceeds;
(c) Developer shall execute such documents as City reasonably
requires to evidence and secure Developer's obligation to use all amounts disbursed for the
diligent restoration of the Property; and,
(d) No Event of Default shall remain uncured.
19.6 Method of Disbursement and Undisbursed Funds. Any Proceeds and
Shortfall Funds to be disbursed to Developer shall be held by the Senior Lender if a Senior
Loan is outstanding, and disbursed in accordance with the Senior Loan Documents or, if
no Senior Loan, then held by the City and disbursed in accordance with the City's then
customary disbursement procedures and related provisions. Any amounts remaining
undisbursed following completion of such restoration shall be returned to Developer up to
the amount of any Shortfall Funds deposited by Developer, and any other amounts
remaining shall either be paid to Developer or applied by the Senior Lender, or the City in
the absence of a Senior Loan, as the case may be against any obligations that are secured
by a lien on the Property, as they elect in their sole and absolute discretion.
19.7 Failure to Satisfy Conditions. In the event that Developer fails to fulfill
the Restoration Conditions within one hundred and eighty (180) days (unless extended
pursuant to Section 19.5) following the date Proceeds are received, the Proceeds shall be
applied by City against any obligations to City that are secured by a lien on the Property,
and the selection of which such obligations to apply the Proceeds against shall be made by
City in its sole and absolute discretion.
19.8 Restoration. Nothing in this Section 19 shall be construed to excuse
Developer from repairing and restoring all damage to the Property in accordance with other
Loan Document provisions, regardless of whether insurance proceeds are available or
sufficient.
19.9 Condemnation; Treatment of Compensation. Subject to any
superior rights of Senior Lender, Developer hereby assigns to the City, as security for all
obligations to City secured by a lien on the Property, all amounts payable to Developer in
connection with any Condemnation, and any proceeds of any related settlement
(collectively, "Compensation"). Subject to any superior rights of Senior Lender, Developer
shall deliver such remaining Compensation to City immediately upon receipt. If the taking
results in a loss of the Property to an extent that, in the reasonable opinion of City, renders
or is likely to render the Property not economically viable or if, in City's reasonable
judgment Developer's security is otherwise impaired, City may apply the Compensation
received due to judgment or settlement in connection with any condemnation or other
taking to reduce the unpaid obligations secured in such order as City may determine, and
without any adjustment in the amount or due dates of payments due under the Note. If so
applied, any award in excess of the unpaid balance of the Note and other sums due to City
shall be paid to Developer or Developer's assignee. City shall have no obligation to take
any action in connection with any actual or threatened condemnation or other proceeding.
80A-230
19.9.1 Notwithstanding the foregoing, as long as the value of City's liens
are not impaired, any condemnation proceeds may be used by the Developer for repair
and/or restoration of the Project.
19.9.2 Notwithstanding the foregoing, during the tax credit compliance
period for the Project, as determined under Section 42 of the Internal Revenue Code, any
condemnation proceeds may be used by the Developer for repair and/or restoration of the
Project.
19.10 Waiver of Subrogation. Developer hereby waives all rights to recover
against the City (or any officer, employee, agent or representative of City) for any loss
incurred by Developer from any cause insured against or required by any Loan Document,
to be insured against; provided, however, that this waiver of subrogation shall not be
effective with respect to any insurance policy if the coverage thereunder would be
materially reduced or impaired as a result. Developer shall use its best efforts to obtain
only policies that permit the foregoing waiver of subrogation.
20. DEFAULTS AND REMEDIES
20.1 Events of Default. The occurrence of any of the following, whatever the
reason therefore which is not cured, shall constitute an Event of Default by Developer:
(a) Developer fails to make any payment of principal or interest
under the Inclusionary Promissory Note when due, and such failure is not cured within ten
(10) Business Days after Developer's receipt of written notice that such payment was not
received when due;
(b) Developer fails to perform any other obligation for the
payment of money under any Loan Document, and such failure is not cured within ten (10)
Business Days after Developer's receipt of written notice that such obligation was not
performed when due;
(c) Developer fails to perform any obligation (other than the
obligations described in subparagraphs (a) and (b) above) under any Loan Document, and
such failure is not cured within thirty (30) days after Developer's receipt of written notice
that such obligation was not performed; provided that, if cure cannot reasonably be effected
within such thirty (30) -day period, such failure shall not be an Event of Default so long as
Developer (in any event, within ten (10) Business Days after receipt of such notice)
commences to cure, and thereafter diligently (in any event within ninety (90) days after
receipt of such notice) prosecutes such cure to completion;
(d) Any representation or warranty in any Loan Document
proves to have been incorrect in any material respect when made;
(e) The Property is materially damaged or destroyed by fire or
other casualty unless Developer fulfills the Restoration Conditions set forth in the
insurance provisions of this Agreement within one hundred eighty (180) days (unless
80A-231
extended pursuant to Section 19.5) and thereafter diligently restores the Property in
accordance with this Agreement;
(f) Work on the constriction ceases for thirty (30) consecutive
days for any reason (other than governmental orders, decrees or regulations, acts of God or
any other deity, strikes or other causes beyond Developer's reasonable control);
(g) Developer is enjoined or otherwise prohibited by any
Governmental Authority from constructing and/or occupying the Improvements and such
injunction or prohibition continues unstayed for sixty (60) days or more for any reason;
(h) Developer is dissolved, liquidated or terminated, or all or
substantially all of the assets of Developer are sold or otherwise transferred without the
City Project Manager's prior written consent;
(i) Developer is the subject of an order for relief by a
bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or
makes an assignment for the benefit of creditors; or Developer applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or any part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without the application
or consent of Developer and the appointment continues undischarged or unstayed for
ninety (90) days; or Developer institutes or consents to any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, custodianship,
conservatorship, liquidation, construction or similar proceeding relating to it or any part of
its property; or any similar proceeding is instituted without the consent of Developer and
continues undismissed or unstayed for ninety (90).days; or any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against any property of
Developer and is not released, vacated or fully bonded within ninety (90) days after its
issue or levy; or
0) (i) any of the Senior Loan Documents is revolted or
terminated, in whole or in part and for any reason (except due to repayment of such loans),
without the City Project Manager's prior written consent, or (ii) Developer defaults or
otherwise fails to perform any of its duties or obligations under or in connection with any
of the Senior Loan Documents, subject to all applicable notice and cure periods, or (iii) any
of the Senior Loan Documents is amended, supplemented or otherwise modified without
City's prior written consent, which consent shall not be unreasonably withheld.
Notwithstanding anything to the contrary contained herein, City hereby agrees that
any cure of any default made or tendered under this Agreement or under the other
Inclusionary Loan Documents by Developer's Limited Partner shall be deemed to be a cure
by Developer and shall be accepted or rejected on the same basis as if made or tendered by
Developer.
20.2 Remedies Upon Default. Upon the occurrence of any Event of Default,
City may, at its option and in its absolute discretion, do any or all of the following:
80A-232
(a) By written notice to Developer, declare the principal of all amounts
owing under the Loan Documents, together with all accrued interest and other amounts
owing in connection therewith, to be immediately due and payable, regardless of any other
specified due date; provided that any Event of Default described in Section 20.1 (e) shall
automatically, without notice or other action on City's part, cause all such amounts to be
immediately due and payable;
(b) In its own right or by a court-appointed receiver, take possession of
the Property, enter into contracts for and otherwise proceed with the completion of the
construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including, without limitation, the right to seek specific performance and
the right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as City elects in its sole and absolute discretion; and,
(d) Suspend or terminate the award of City funds if Developer fails to
comply with any term of such award.
20.3 Cumulative Remedies: No Waiver. City's rights and remedies under the
Loan Documents are cumulative and in addition to all rights and remedies provided by law.
The exercise by City of any right or remedy shall not constitute a cure or waiver of any
default, nor invalidate any notice of default or any act done pursuant to any such notice,
nor prejudice the City in the exercise of any other right or remedy. No waiver of any default
shall be implied from any omission by City to take action on account of such default if
such default persists or is repeated. No waiver of any default shall affect any default other
than the default, expressly waived, and any such waiver shall be operative only for the time
and to the extent stated. No waiver of any provision of any Loan Document shall be
construed as a waiver of any subsequent breach of the same provision. City's consent to or
approval of any act by Developer requiring further consent or approval shall not be deemed
to waive or render unnecessary City's consent to or approval of any subsequent act. The
City's acceptance of the late performance of any obligation shall not constitute a waiver by
City of the right to require prompt performance of all further obligations; City's acceptance
of any performance following the sending or filing of any notice of default shall not
constitute a waiver of either party's right to proceed with the exercise of its remedies for
any unfulfilled obligations; and City's acceptance of any partial performance shall not
constitute a waiver by City of any rights.
21. MISCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of City to Developer, or any other claim
by developer against City, in connection with the Loan or otherwise, Developer hereby
waives any right it might otherwise have: (a) to offset any such obligation, liability or claim
against Developer's obligations under the Loan Documents; or, (b) to claim that the
existence of any such outstanding obligation, liability or claim excuses the nonperformance
by Developer of any of its obligations under the Loan Documents.
80A-233
21.2 Notices. All notices, demands, approvals and other communications
provided for in the Loan Documents shall be in writing and be delivered to the appropriate
party by personal service or U.S. mail at its address as follows:
If to Developer: Tiny Tim, LP
c/o Community Development Partners
3416 Via Oporto, Suite 301
Newport Beach, CA 92663
Attention: Kyle Paine
With a copy to: Law Offices of Patrick R. Sabelbaus
1724 101h Street, Suite 110
Sacramento, CA 95811
Attention: Stephen A. Strain, Esq.
With a copy to: Tiny Tim Mercy House CHDO LLC
P.O. Box 1905
Santa Ana, CA 92702
Attn: Larry Haynes
With a copy to: IH CDP Partnership LLC
4 Venture, Suite 295
Irvine, CA 92618
Attention: Philip Wood
With a copy to: R4 TTCA Acquisition LLC
c/o R4 Capital LLC
780 Third Avenue, 16th Floor
New York, New York 10017
Attention: Marc Schnitzer
With a copy to: Frost Brown Todd LLC
400 West Market Street, Suite 3200
Louisville, KY 40202
Attention: Amy Curry, Esq.
If to City: Community Development Agency of the City of Santa Ana
Housing Manager
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
80A-234
Addresses for notice may be changed as required by written notice to all other
parties. All notices personally served shall be effective when actually received. All notices
mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The
foregoing notwithstanding, the non -receipt of any notice as the result of a change of address
of which the sending party was not notified or as the result of a refusal to accept delivery
shall be deemed receipt of such notice.
21.3 Survival of Representations and Warranties. All representations and
warranties in the Loan Documents shall survive the making of the Loan(s) described herein
and have been or will be relied on by City notwithstanding any investigation made by either
party.
21.4 No Third Parties Benefited. This Agreement is made for the purpose of
setting forth rights and obligations of Developer and the City, and no other person shall
have any rights hereunder or by reason hereof.
21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind,
and shall inure to the benefit of, Developer and City and their respective successors and
assigns. Other than as expressly provided to the contrary in this Agreement, Developer
shall not assign any of its rights or obligations under any Loan Document without the prior
written consent of City, which consent may be withheld in City's sole and absolute
discretion. Any such assignment without such consent shall, at City's option, be void.
21.6 Prior Agreements; Amendments; Consents. This Agreement (together
with all other Loan Documents) contains the entire agreement between the City and
Developer with respect to the Loan and the Property, and all prior negotiations,
understandings and agreements are superseded by this Agreement and such other Loan
Documents. No modification of any Loan Document (including waivers of rights and
conditions) shall be effective unless in writing and signed by the party against whom
enforcement of such modification is sought, and then only in the specific instance and for
the specific purpose given.
21.7 Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California and Federal
law, whichever is more stringent. Developer irrevocably and unconditionally submits to
the jurisdiction of the Superior Court of the State of California for the County of Orange
or the United States District Court of the Central District of California, as City may deem
appropriate, in connection with any legal action or proceeding arising out of or relating to
this Agreement or the Loan Documents. Assuming proper service of process, Developer
also waives any objection regarding personal or in rem jurisdiction or venue.
21.8 Severability of Provisions. No provision of any Loan Document that is
held to be unenforceable or invalid shall affect the remaining provisions, and to this end all
provisions of the Loan Documents are hereby declared to be severable.
21.9 Headings. Article and section headings are included in the Loan
Documents for convenience of reference only and shall not be used in construing the Loan
Documents.
80A-235
21.10 Conflicts. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, this Agreement, unless otherwise
expressly provided, shall prevail; provided however that, with respect to any matter
addressed in both such documents, the fact that one document provides for greater, lesser
or different rights or obligations than the other shall not be deemed a conflict unless the
applicable provisions are inconsistent and could not be simultaneously enforced or
performed.
21.11 Time of the Essence. Time is of the essence under this Agreement and in
the performance of every term, covenant, and obligation contained herein.
21.12 Conflict of Interest. No member, official or employee of the City shall
have any direct or indirect interest in this Agreement, nor participate in any decision
relating to the Agreement which is prohibited by law.
21.13 Warranty Against Payment of Consideration. Developer warrants that
it has not paid or given, and will not pay or give, any third person any money or other
consideration for obtaining this Agreement.
21.14 [RESERVED]
21.15 Plans and Data. Where Developer does not proceed with the work and
construction of the Project, and when this Agreement is terminated with respect thereto for
any reason, Developer shall deliver to City any and all plans and data concerning the
Property, and City or any person or entity designated by City shall have the right to use
such plans and data without compensation to Developer. Such right of City shall be subject
to any right of the preparer of the plans to their use.
21.16 Authority to Enter Agreement. Each undersigned represents and warrants
that its signature hereinbelow has the power, authority and right to bind their respective parties
to each of the terms of this Agreement, and shall indemnify the City fully, including
reasonable costs and attorney's fees, for any injuries or damages to City in the event that such
authority or power is not, in fact, held by the signatory or is withdrawn.
80A-236
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
executed on the date set forth at the beginning of this Agreement.
A'T'TEST:
Nonni Mrtre
Acting Clerk of the Council
APPROVED AS TO FORM
Sonia R. Carvalho
RECOMMENDED FOR APPROVAL
Steven A. Mendoza
Executive Director
Connnunity Development Agency
CITY OF SANTA ANA
Steven A. Mendoza
Acting City Manager
{Signatures continue on following pagef
80A-237
DEVELOPER:
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By:
Kyle ainc
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Morey House CHDO, Inc.,
a California nonprofit public benefit corporation
Its: Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
By: IH CDP Partnership LLC,
a. California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance 11, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
By:
Philip Wood
Its: President
80A-238
EXHIBITS
A. Legal Description
B. Affordability Restrictions on Transfer of Property
C. Inclusionary Deed of Trust
D. Inclusionary Promissory Note
E. Project Budget
F. Scope of Work / Schedule of Performance
G. Form of Residual Receipts Report
80A-239
Exhibit A.*
Legal Description
80A-240
LEGAL DESCRIPTION
APN: 007-313-15
007-313-16
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SANTA ANA, IN THE COUNTY OF
ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA,
AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47 AND 48 OF MISCELLANEOUS MAPS, RECORDS
OF ORANGE COUNTY, CALIFORNIA.
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT THEREON SOUTH
89°49'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF SAID LOT, AND RUNNING THENCE
NORTH 00°16'15" EAST PARALLEL WITH THE CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS
SHOWN ON SAID MAP, 144.00 FEET; THENCE SOUTH 89°49'25" WEST PARALLEL WITH THE CENTER LINE
OF FIFTH STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST LINE OF SAID
LOT 39; THENCE SOUTH 0°16'15" WEST ALONG SAID WEST LINE, 133.92 FEET TO THE BEGINNING OF A
TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 10 FEET; THENCE
SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90°26'50" AN ARC DISTANCE OF
15.79 FEETTO A POINT OF TANGENCY WITH THE SOUTH LINE OF SAID LOT; THENCE NORTH 89°49'25"
EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE POINT OF BEGINNING.
TOGETHER WITH:
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA,
AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47 AND 48 OF MISCELLANEOUS MAPS, RECORDS
OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM THAT PORTION OF LOT 39 OF TRACT NO. 1341, AS SHOWN ON A MAP THEREOF
RECORDED IN BOOK 57, PAGES 47 AND 48 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT THEREON SOUTH
89°49'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF SAID LOT, AND RUNNING THENCE
NORTH 00016'15" EAST PARALLEL WITH THE CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS
SHOWN ON SAID MAP, 144.00 FEET; THENCE SOUTH 89°49'25" WEST PARALLEL WITH THE CENTER LINE
OF FIFTH STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST LINE OF SAID
LOT 39; THENCE SOUTH 0°16'15" WEST ALONG SAID WEST LINE, 133.92 FEET TO THE BEGINNING OF A
TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 10 FEET; THENCE
SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90°26'50" AN ARC DISTANCE OF
15.79 FEET TO A POINT OF TANGENCY WITH THE SOUTH LINE OF SAID LOT; THENCE NORTH 89°49'25"
EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE POINT OF BEGINNING.
80A-241
Exhibit B,*
Affordability
Restrictions on
Transfer of Property
80A-242
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
{Address: 2223 West Fifth Street, Santa Ana, California)
THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the
"Restrictions") are entered into by and between Tiny Tim LP, a California limited partnership
("Developer") and the City of Santa Ana, a charter city and municipal corporation ("City").
RECITALS:
A. The City's Housing Opportunity Ordinance ("Ordinance") was originally adopted
by the City Council on November 28, 2011 (Ordinance No. NS -2825), and is codified in Article
XVIILI of the Santa Ana Municipal Code ("SAMC"). The Ordinance was amended by the City
Council on September 1, 2015 (Ordinance No. NS -2881), and on October 6, 2015 (Ordinance No.
NS -2885). The Ordinance established standards and procedures to encourage the development of
housing that is affordable to a range of households with varying income levels. Pursuant to SAMC
section 41-1904(c), developers may pay an in -lieu fee in certain instances to satisfy the
inclusionary requirements. These funds are deposited into the Inclusionary Housing Fund, as
defined by SAMC section 41-1901, and are to be used to increase and improve the supply of
affordable housing per SAMC section 41-1909.
B. Developer, acting by and through its representative and agent, Community
Development Partners, a California corporation ("CDP") requested financial assistance in
connection with the proposed acquisition, development, construction, ownership, occupancy, and
operation of a fifty-one (51) unit affordable housing complex ("Project") to be located at 2223
West Fifth Street, Santa Ana, California, and legally described within Exhibit A of the
Inclusionary Loan Agreement hereto and incorporated herein ("Property"). At least fifteen (15)
of the units will be affordable to family households earning no more than 30% of the Area Median
Income ("AMI"); five (5) of the units affordable to family households earning no more than 50%
of the AMI; and thirty (3 0) of the units affordable to family households earning no more than 60%
of the AMI. Office space within the development will be provided for use as a police substation
which at a minimum will have room for a desk, phone, and computer that could be set up by the
1076A53\13796642
80A-243
Santa Ana Police Department ("SAPD"), dependent upon their available staffing and resources.
The unit mix consists of:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
On-site amenities will include a community plaza, an art center, urban farm, and mini park
with outdoor gym and jogging track. Mercy House Living Centers ("Mercy House") will manage
onsite residential services coordination for all households.
C. The City and the Housing Authority of the City of Santa Ana ("Housing Authority")
reviewed Developer's request for assistance and at the City Council/Housing Authority meeting
on June 20, 2017, the City Council authorized and approved issuance of a conditional, pre -
commitment letter evidencing the preliminary award of $1,300,000 of funds to the Project
("Inclusionary Loan"), to be funded exclusively from the Inclusionary Housing Fund.
D. The amount of the Inclusionary Loan was determined based upon the City's review
of the Developer's request for the receipt of the Inclusionary Loan and the development proforma
and projected cash flows for the Project submitted by the Developer to the City as of March 29,
2017 ("Proforma"). The City Manager has authority to approve revised development proformas
and projected cash flows for the Project; provided, however, that the Inclusionary Loan is not
materially increased or extended.
E. hi furtherance of the Inclusionary Housing Program, Developer has applied to the
City for a loan with which to:
1. Acquire, develop and construct the project, and
2. Thereafter to maintain, operate and professionally manage the Project as decent,
safe, sanitary and affordable rental housing.
F. The City, on certain terms and conditions, desires to make such Inclusionary Loan
to Developer in order to make possible the acquisition, development, construction, ownership,
maintenance and operation of the Project, thereby expanding the supply of decent, safe, sanitary and
affordable housing within the City.
G. If there is any inconsistency between State, and local guidelines with regard to any
of the terms and conditions contained herein, the more stringent shall apply.
H. The Inclusionary Loan Agreement, Inclusionary Deed of Trust, Inclusionary
Promissory Note and these Restrictions, dated concurrently herewith (collectively the
°Inclusionary Loan Documents") are entered into for the purpose of providing for affordable
80A-244
residential rental units in the City of Santa Ana pursuant to the Inclusionary Housing Fund
regulations and guidance.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein
contained, City and Developer agree as follows:
1. Definitions:
"Affordable Housing" means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified, as follows, in accordance with
Sections 50052.5 and 50053 of the Health & Safety Code and the U.S. Department of Housing and
Urban Development (HUD):
Very Low -Income Households. Thirty (30) percent of the income of a household earning
fifty (50) percent of the Orange County median income adjusted for family size appropriate
for the unit.
Low -Income Households. Thirty (30) percent of the income of a household earning seventy
(70) percent of the Median Income for the Area for for -sale units, and thirty (30) percent
of the income of a household earning sixty (60) percent of the Median Income for the Area
for rental units, adjusted in either case for family size appropriate for the unit.
In the event of a conflict between the fractions specified in this definition and those found
in Sections 50052.5 and 50053 of the Health & Safety Code and HUD, the fractions
specified by HUD shall control.
"Affordable Rent" means the monthly rents which do not exceed the maximum amount
applicable to Extremely Low, Very Low and Low Income households, as promulgated by the
California Tax Credit Allocation Committee (TCAC), or by the State of California, as applicable.
"Agency" means the Housing Authority of the City of Santa Ana, acting as the Housing
Successor Agency, a public body, corporate and politic, exercising governmental functions and
powers, and organized and existing under the CRL. The principal office of the Agency is located
at 20 Civic Center Plaza, Santa Ana, California 92702. "Agency" shall also refer to the City where
the context dictates, to the effect that City shall have all rights granted to the Agency hereunder.
"Agreement" means the Loan Agreement by and between the City and Developer for
Inclusionary Housing Funds.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the Inclusionary Housing Funds.
"Building Permit" means the building permit(s) issued by the City of Santa Ana and
required for the construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which
Santa Ana City Hall is open to the public for the conduct of City affairs.
80A-245
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"Certificate of Completion" has the meaning set forth in Article 17 of the Agreement.
"City" means the City of Santa Ana, California, a charter city and municipal corporation.
"City" shall also refer to the Agency where the context dictates, to the effect that the Agency shall
have all the rights granted to the City hereunder.
"City Project Manager" shall mean the City's Housing Manager and/or his/her
designee.
"County" means the County of Orange, California.
"Developer" means Tiny Tim LP, a California limited partnership.
"Event of Default" has the meaning set forth in Section 20.1 of the Agreement.
"Extremely Low Income" means an adjusted income which does not exceed thirty percent
(30%) of the Median Income for the Area, adjusted for household size, as published by the U.S.
Department of Housing and Urban Development.
"Governmental Authority" means any governmental or quasi -governmental agency,
board, bureau, commission, department, court, administrative tribunal or other instrumentality or
authority, and any public utility.
"Housing Authority" means the Housing Authority of the City of Santa Ana (CA093), a
public body, corporate and politic.
"HUD" means the United States (U.S.) Department of Housing and Urban Development,
and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter comprising any
portion of the Property, including, without limitation, landscaping, trees and plant materials; and
offsite improvements, as required through the City of Santa Ana Planning and Building Agency
entitlement process.
"Inclusionary Deed of Trust" means the deed of trust encumbering the Property, in the
form attached hereto as Exhibit C, to be executed by Developer pursuant to Section 5.13.1 in order
to secure the Inclusionary Loan Note.
"Inclusionary Loan" or "Inclusionary City Loan" means a loan in the original principal
amount of up to one -million, three -hundred thousand dollars ($1,300,000) to be made to Developer
by the City to be funded exclusively from the Inclusionary Housing Fund.
80A-246
"Inclusionary Promissory Note" means that certain promissory note for Inclusionary
Loan funds in the original principal amount of $1,300,000 in the form attached hereto as Exhibit
D, and to be executed by Developer in favor of City to evidence the obligation of Developer to
repay the Inclusionary Loan through residual receipts as further described in the Inclusionary
Promissory Note.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments,
injunctions, decrees or awards of the United States or any state, county, municipality or other
Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any
kind, including any conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any lien or security interest.
"Loan Documents" or "Inclusionnry Loan Documents" means, collectively, the
Agreement, the Inclusionary Promissory Note, the Inclusionary Deed of Trust, and these
Restrictions, and any other agreement, document, or instrument that the City reasonably requires
in connection with the execution of these Restrictions or from time to time to effectuate the
purposes of these Restrictions.
"Low Income" means an adjusted income which does not exceed eighty percent (80%) of
the Median Income for the Area, adjusted for household size, as published by the U.S. Department
of Housing and Urban Development (HUD).
"Median Income for the Area" means the median income for Orange County, California
PMSA as most recently determined by HUD. Also may be referred to interchangeably in the
Inclusionary Loan Documents as "Area Median Income" or "AMI".
"Project" means the construction of the Improvements upon the Property by Developer
pursuant to the Agreement.
"Property" means the property that is located at 2223 West Fifth Street in the City of Santa
Ana, and as more fully described in the "Legal Description" of the Property attached as Exhibit A to
the Agreement.
"Restricted Units" means fifty (50) of the "Housing Units" at the Project shall and will
be restricted to affordable rents pursuant to the Maximum Rents published yearly by the California
Tax Credit Allocation Committee (TCAC) and referenced in the regulatory agreement containing
conditions, covenants and restrictions executed by Developer and TCAC for a period not less than
fifty-five (55) years recorded against the Project in the Official Records, County of Orange,
California. At least fifteen (15) of the Housing Units at the Project shall and will be restricted to
households earning 30% or less of the AMI. One (1) Housing Unit will be rented to an on-site
property manager; the manager's unit will not be rent restricted.
80A-247
"Senior Lender" means a commercial or institutional financial institution providing the
Senior Loan or any other holder of the Senior Loan Note.
"Senior Loan" means a loan from the Senior Lender concurrent to the Inclusionary Loan
for payment of a portion of the acquisition and rehabilitation costs, and shall include any
subsequent loan that refinances the initial Senior Loan.
"Senior Loan Deed of Trust" means the first deed(s) of trust securing the Senior Loan
by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement governing the Senior
Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document
or instrument that the Senior Lender requires in connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior Loan from the
Senior Lender.
"Term of Affordability" or "Affordability Period" means the terms and conditions
contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the
Certificate of Occupancy for the Project, or repayment of the Inclusioanry Loan, whichever is
longer.
"Very Low Income" means an adjusted income which does not exceed fifty percent (50%)
of the Median Income for the Area, adjusted for household size, as published by the U.S.
Department of Housing and Urban Development.
2. Use of the Property. Developer covenants and agrees, for itself, its successors, its
assigns, and every successor in interest to the Property of any part thereof, that Developer, such
successors, and assigns shall use the Property to provide Affordable Housing, for low-, very -low,
and extremely -low-income households, as provided in the Inclusionary Loan Agreement and these
Restrictions. Developer agrees that the Property shall be used only for decent, safe, sanitary and
Affordable Housing pursuant to the affordability requirements of California Health and Safety
Code ("H&S") sections 50052.5 and 33334.3, as applicable.
3. Affordability Requirements, Use and Maintenance of the Property.
3.1 Use Covenants and Restrictions:
A. Developer agrees and covenants, which covenants shall run with the land and bind
Developer, its successors, its assign and every successor in interest to the Property that Developer will
make all rental units on the Property available to extremely -low, very low and low income households
at rents affordable to such households pursuant to these Restrictions for fifty-five (55) years from
the date of issuance of the Certificate of Occupancy for the Project, or repayment of the
Inclusionary Loan, whichever is longer.
.O 1 2 ' 0
B. These Restrictions shall be recorded in the Official Records of the County, and shall
remain in first position on title and shall not be subordinated.
3.2 Affordability Levels/Unit Mix:
A. The Project shall consist of fifty-one (5 1) residential units (except for one (1) unit
for the onsite manager). The unit mix and levels of affordability are as follows:
Bedroom
Size
30%
AMI
50%
AMI
60%
AMI
Manager's
Unit
Total
_
Two Bedroom
6
3
10
1
20
Three Bedroom
8
2
19
29
Four Bedroom
1
1
2
Totals
15
5
30
1
51
B. The affordable rents charged at the Project must comply with the standards set forth
by the California Tax Credit Allocation Committee (TCAC).
C. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. The Housing Authority of the City of Santa Ana publishes a Utility Allowance
Schedule on an annual basis.
3.3 Calculation of Rent:
A. The affordable rents charged at the Project must comply with the standards set forth
by the California Tax Credit Allocation Committee (TCAC).
B. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. The Housing Authority publishes a Utility Allowance Schedule on an annual basis.
C. On an annual basis, the City shall provide the Developer with the maximum allowable
schedule of incomes and rents (less utility allowance appropriate for the Restricted Units for the
Property), which shall correspond to the maximum rent increase allowed by TCAC. In no event can
Developer charge any tenant more than such amount.
D. Developer, its successors and assigns, shall not charge rents for the Restricted Units
in excess of the amounts set forth in the tables as adjusted from time -to -time by TCAC. The City's
Project Manager, or designee, shall notify Owner in writing of the adjusted allowable maximum
incomes and rents as allowed by TCAC.
E. In no event shall the rent charged to the tenant of a Restricted Unit be more than that
amount of the rent as published by TCAC on an annual basis.
80A-249
F. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. Utility allowances are deducted from rents using the amounts set annually by the Housing
Authority.
G. Recertification of Tenant Income:
(1) Developer shall take all necessary steps to review the income of all tenants
prior to renting to them, as well as reviewing current tenants on an annual
basis. At a minimum, every fifth (5th) year, Developer shall require new
original income documents to be submitted by tenants.
(2) Developer shall allow the City to conduct periodic reviews of tenant files
and files relating to affirmative marketing and outreach to ensure the
Project's compliance with applicable regulations and guidelines.
(3) City assisted units continue to qualify as Affordable Housing despite a
temporary non-compliance caused by increases in the incomes of existing
tenants if actions satisfactory to the City are being taken to ensure that all
vacancies are filled in accordance with this section until the non-compliance
is corrected.
3.4 Construction and Maintenance of the Property:
A. Construction and Maintenance. Solely at Developer's expense, Developer agrees to
maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas which
Developer is otherwise required to maintain) in a clean and good condition and repair in compliance
with all applicable housing quality standards and state and local code requirements, and keep the
Property free from any accumulation of debris and waste materials. City, and any of its employees,
agents, contractors or designees, shall have the right to enter upon the Property at reasonable times
and in a reasonable manner to inspect the Project. If at any time Developer fails to maintain, or cause
to be maintained, the Property as required by this section, and said condition is not corrected after the
expiration of a reasonable period of time not to exceed thirty (30) days from the date of written notice
from the City, unless such condition cannot reasonably be cured within thirty (30) days, in which case
Developer shall have such additional time as reasonably necessary to complete such cure, the City
may perform the necessary maintenance and Developer shall pay all reasonable costs incurred for
such maintenance. The City shall inspect the Property annually after the date of issuance of the
Certificate of Completion as described in Section 17 of the Agreement.
B. Renovations. Developer shall not remove, demolish or materially alter any
Improvement without City's prior consent, except to make non-structural repairs, which preserve
or increase the Property's value, and shall promptly restore, in a good and professional manner,
any Improvement (or other aspect or portion of the Property) that is damaged or destroyed from
any cause.
C. Handicapped Accessibility. Developer shall comply with: (a) Section 504 of the
Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the Americans
80A-250
with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to make the
Project readily accessible to and usable by individuals with disabilities.
D. Local Sourcing Plan. Developer agrees to make a good faith effort to encourage
contractors and suppliers to hire and procure locally. Prior to issuance of any Building Permit,
Developer shall develop and submit to the City a local sourcing plan for the Project targeting, to
the extent feasible, the hiring of qualified workers, construction contractors, or the purchasing of
goods locally within the City of Santa Ana.
E. Lead -Based Paint. Developer shall comply with the requirements, as applicable of
the Lead -Based Paint Poisoning Prevention Act.
F. Equal Opportunity and Fair Housing. Developer shall carry out the construction
and perform its obligations under this Agreement in compliance with all of the state and federal
laws and regulations regarding equal opportunity and fair housing. Developer must also follow
the requirements of California Health and Safety Code section 33435.
G. Property Standards. Developer shall cause the Property to meet all applicable local,
state and federal codes and ordinances, including zoning ordinances. Developer shall also cause
the Property to meet the current edition of the Model Energy Code published by the Council of
American Building Officials.
H. Alternative Transportation and Energy Source, Resource Conservation, and LEED
Certification. In recognition of the City's desire to optimize the energy efficiency of the Project,
Developer agrees to consult with the Project design team, a CABEC certified 2016 Certified
Energy Analyst, a LEED AP Homes (low-rise and mid -rise), LEED AP BD+C (high rise), National
Green Building Standard (NGBS) Green Verifier, or GreenPoint Rater (one person may meet both
of these latter qualifications) early in the Project design process to evaluate a building energy
model analysis and identify and consider energy efficiency or generation measures beyond those
required by the TCAC minimum construction standards.
I. Property Maintenance Agreement. Developer shall execute a maintenance
agreement with the City prior to occupancy, which shall be recorded against the Property, and
which shall be in a form reasonably satisfactory to the City Attorney.
J. Monitoring. Developer shall allow the City to conduct periodic inspections of each
of the assisted units on the Property as required by the Housing Opportunity Ordinance after the
date of constriction completion, with reasonable notice. Developer shall cure any defects or
deficiencies found by the City while conducting such inspections within two weeks of written
notice thereof, or such longer period as is reasonable within the sole discretion of the City.
15 Management Plan:
A. Management Plan. Prior to issuance of a Certificate of Occupancy, Developer shall
submit for the reasonable approval of the City a "Management Plan" that sets forth in detail
Developer's property management duties, a tenant selection process in accordance with this
80A-251
Agreement, a security system and crime prevention program, the procedures for the collection of
rent, the procedures for eviction of tenants, the rules and regulations for the Property and manner
of enforcement, a standard lease form, an operating budget, the identity and emergency contact
information of the professional property management company to be contracted with to provide
onsite property management services at the Property, and other matters relevant to the management
of the Property, including, but not limited to, the following:
(1) Management Agent. Developer shall submit the name and qualifications
of the proposed Management Agent. The City Project Manager shall
approve or disapprove the proposed Management Agent in writing based on
the experience and qualifications of the Management Agent.
(2) Management Agreement. Developer shall submit a copy of the
proposed management agreement specifying the amount of the management
fee, and the relationship and division of responsibilities between Developer
and Management Agent.
(3) Annual Budget and Projected Cash Flows. Prior to the issuance of a
certificate of occupancy for the Project, and annually thereafter not later
than one hundred fifty (150) days after the close of each Calendar Year
thereafter, Developer shall submit an updated operating budget and cash
flow to the City Project Manager. The budget and cash flow shall be in a
form that is reasonably acceptable to the City Project Manager.
(A) Tenant Selection Policies. Developer shall adopt and include as part of its
Management Plan, written tenant selection policies and criteria for the
Restricted Units that meetthefollowing requirements:
(a) Are consistent with the purpose of providing housing for Extremely -
Low, Very -Low and Low Income households;
(b) Are reasonably related to program eligibility and the applicants'
ability to perform the obligations of the lease;
(c) Provide for:
(i) the selection of tenants from a written waiting list in the
chronological order of their application, insofar as is
practicable; and,
(ii) the prompt written notification to any rejected applicant of
the grounds for any rejection;
(d) Carry out the Affirmative Marketing procedures of the City of Santa
Ana, which are designed to provide information and otherwise
attract eligible persons from all racial, ethnic and gender groups in
10
80A-252
the housing market area to the Restricted Units. Developer shall
cooperate to effectuate this provision prior to the initial renting, or
upon occurrence of a vacancy, and the re -renting of any Restricted
Units;
(5) Local Preference. Local preference for Santa Ana residents and workers in
tenant selection shall be a requirement of the Project. Subject to the
prohibition of discrimination and the granting of preferences in housing
occupancy imposed by federal laws and regulations, the State of California,
and by the City of Santa Ana Affordable Housing Funds Policies and
Procedures, the Developer shall use its best efforts to lease units in the
following order of priority:
1. First priority shall be given to persons who have been
permanently displaced or face permanent displacement from
housing in Santa Ana as a result of any of the following:
a. A redevelopment project undertaken pursuant to
California's Community Redevelopment Law (Health
& Safety Code Sections 33000, et seq.) -- applicable
only to projects funded by the Low and Moderate
Income Housing Asset Fund.
b. Ellis Act, owner -occupancy, or removal permit
eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP
Contract by property owner; or
e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at
least the last 6 months.
(6) Affirmative Marketing. Prior to the issuance of a Certificate of Occupancy,
Developer shall prepare and obtain City's approval of an affirmative
marketing program for leasing the affordable units at the Project.
(7) Crime Free Housing. Developer shall work with City staff to develop a
crime free housing policy, procedure, and design plan.
11
80A-253
(8) Onsite Parking Management Plan. Developer shall provide onsite parking
for residents and visitors of the Project and actively monitor the parking
demand of the Project site. Developer shall continually monitor and take
appropriate measures to manage the parking demand of the Project site to
mitigate the use of offsite parking spaces on private or public properties
and/or right-of-way. Prior to issuance of a Certificate of Occupancy,
Developer shall submit a Parking Management Plan and obtain approval
from the City for said plan.
(9) Tenant Satisfaction Survey. The Developer shall complete and submit to
the City biennial tenant satisfaction surveys of tenants.
B. Rental Inclusionary Housing Manual. The Developer shall also maintain
compliance with the City's Inclusionary Housing Manual for Rental Projects.
C. Cure Period. If at any time the City determines that the Restricted Units are not
being managed or maintained in accordance with the approved Management Plan, City shall
provide Developer and Investor Limited Partner (as defined in the Agreement) with notice thereof
which notice shall include a reasonable cure period not less than thirty (30) days. If the deficiencies
are not cured within the cure period provided in the City notice, Developer shall change the
management agent or the practices complained of, upon receipt of written notice from the City
Project Manager. The City Project Manager may require Developer to change management
practices or to terminate the management contract and designate and retain a different management
agent. The management agreement shall provide that it is subject to termination by Developer
without penalty, upon thirty (30) days prior written notice, at the direction of the City Project
Manager. Within ten (10) days following a direction of the City Project Manager to replace the
management agent, the Developer shall select another management agent or make other
arrangements satisfactory to the City Project Manager or designee for continuing management of
the Restricted Units.
3.6 Supportive Services:
A. Onsite Services. The Developer shall provide on-site services that are available to
the residents and shall report to the City annually the services provided.
B. Application and Financial Preparedness. Developer shall submit for review and
approval by the City a booklet to inform interested persons regarding minimum application and
eligibility requirements and to assist interested persons with application and financial preparedness
and eligibility for residency at the Project at the initial leasing of the affordable units. Developer
shall also work with the City to hold a minimum of two (2) workshops to be coordinated by the
Developer at least twelve (12) months prior to the initial leasing of the affordable units.
C. Programs and Amenities. Developer shall provide residents of the Project access
to discounted or no -cost onsite supportive services, programming, and amenities that promote
child development, youth development, and economic mobility, and include, but are not limited to
12
80A-254
health and wellness services, transportation services, social activities, and physical or recreational
amenities.
D. WORK Center. The Developer and the Property Manager shall coordinate with the
City's WORK Center to provide services and outreach to tenants, as well as provide information
on employment during the construction of the Project.
3.7 Obligation to Refrain from Discrimination:
A. hi Use of Property. Developer covenants and agrees for itself, its successors, its
assigns and every successor in interest to the Property or any part thereof, that there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, disability, sex, marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer 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 of the Property, as required by the Title VI of the Civil Rights Act
of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations, and the Age
Discrimination Act of 1975, and all implementing regulations.
B. In Affordable Housing Restrictions. Developer, its successors and assigns, shall
not refuse to lease a unit to a holder of a rental voucher under 24 CFR part 887 (Housing Choice
Voucher Program) or to a holder of a comparable document evidencing participation in a federally
funded tenant -based assistance program because of the status of the prospective tenant as a holder
of such certificate of family participation, rental voucher, or comparable tenant -based assistance
document.
C. In Employ Developer shall take affirmative action to ensure that applicants
are employed, and that employees are treated during employment, without regard to their race,
color, disability, creed, religion, sex, marital status, disability, national origin, or ancestry.
D. In all Contracts. Developer shall cause the foregoing covenants to be inserted in
all contracts for any work covered by this Agreement so that such provisions will be binding upon
each contractor for the benefit of City, provided that the foregoing covenant shall not apply to
contracts or subcontracts for standard commercial supplies or raw materials.
4. Miscellaneous Provisions:
A. Any lease of any of the Restricted Units must be for not less than one year, unless
by mutual agreement between the tenant and the Developer. Should the tenant and Developer
agree to a term of less than one year, said agreement shall be expressed in written form, signed by
the tenant, and maintained in the tenant's rental file held by the Developer. The lease may not
contain any of the following provisions (in which references to "Developer" shall mean the
Developer, its successors or assigns):
13
80A-255
(1) Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor
of the Developer in a lawsuit brought in connection with the lease;
(2) Agreement by the tenant that the Developer may take, hold, or sell personal
property of household members without notice to the tenant and a court
decision on the rights of the parties. This prohibition, however, does not
apply to an agreement by the tenant concerning disposition of personal
property remaining in the Restricted Unit after the tenant has moved out of
the Restricted Unit. The Developer may dispose of this personal property
in accordance with state law;
(3) Agreement by the tenant not to hold the Developer or the Developer's agent
legally responsible for any action or failure to act, whether intentional or
negligent;
(4) Agreement of the tenant that the Developer may institute a lawsuit without
notice to the tenant;
(5) Agreement by the tenant that the Developer may evict the tenant or
household members without instituting a civil court proceeding in which
the tenant has the opportunity to present a defense, or before a court decision
on the rights of the parties;
(6) Agreement by the tenant to waive any right to a trial by jury;
(7) Agreement by the tenant to waive the tenant's right to appeal, or to otherwise
challenge.in court, a court decision in connection with the lease; and,
(8) Agreement by the tenant to pay attorney's fees or other legal costs even if
the tenant wins in a court proceeding by the Developer against the tenant.
The tenant, however, may be obligated to pay costs if the tenant loses.
B. Developer, its successors or assigns, must adhere to state law requirements with
regard to termination of tenancy.
C. Developer shall comply with and be bound by the conflict of interest provisions set
forth in all applicable state regulations pertaining to conflict of interest.
D. The covenants established in these Restrictions, and any amendments hereto
approved by the City, shall be binding for the benefit of and in favor of the City and its respective
successors and assigns, without regard to technical classification and designation. These
Restrictions shall remain in effect for fifty-five (55) years from the date of issuance of the
Certificate of Occupancy for the Project, or repayment of the Inclusionary Loan, whichever is
longer. In its discretion, the City may defer repayment of the Loan or the City may agree to such
reasonable modifications to the requirements of these Restrictions, as the City may determine are
14
80A-256
necessary for the continued maintenance and operation of the Restricted Units. The covenants
against discrimination shall remain in effect for the period of these Restrictions.
E. Records and Audits.
(1) Owner shall maintain the following general program records, and make
them available for inspection by the City, the State or HUD:
(a) Records which demonstrate compliance with the Equal Opportunity
and Fair Housing requirements outlined in these Restrictions,
including:
(i) data on the extent to which each racial and ethnic group and
single head of household (by gender of head of household)
have applied for, participated in, or benefited from, any
program or activity funded in whole or in part;
(ii) documentation of actions undertaken to meet the equal
opportunity requirements of 24 CFR 92.350, which
implements Section 3 of the Housing Development Act of
1968, as amended (12 U.S.C. 1701u); and,
(iii) documentation and data on the steps taken to implement
Owner's outreach programs to minority-owned and women -
owned businesses to meet the minority outreach
requirements of 24 CFR 92.350;
(b) If applicable, records which demonstrate compliance with the
requirements relating to relocation of displaced persons, as
described in 24 CFR 92.353. At a minimum, these shall include
project occupancy lists identifying the name and address of all
persons occupying the Project Property up until the date on which
Developer obtained ownership of the Property; and,
(c) Any other reports issued by other monitoring agencies.
(2) All records pertaining to each Calendar Year of Inclusionary Housing funds
must be retained for the most recent five year period, except that for rental
housing projects, records may be retained for five years after the Project
completion date; except that records of individual tenant income
verifications, Project rents and Project inspections must be retained for the
most recent five year period, until five years after the Affordability Period
terminates. Developer shall cooperate with the City to retain all books and
records relevant to the Loan Agreement for a minimum of five years after
the expiration of the Loan Agreement and any and all amendments hereto,
or for five years after the conclusion or resolution of any and all audits or
15
80A-257
litigation relevant to the Loan Agreement, whichever is later. The City, the
State, and/or their representatives shall have unrestricted reasonable access
to all locations, books, and records for the purpose of monitoring, auditing,
or otherwise examining said locations, books, and records with or without
prior notice.
(3) If so directed by the City upon termination of the Loan Agreement,
Developer shall cause all records, accounts, documentation and all other
materials relevant to the work to be delivered to the City, as depository.
(4) All records, accounts, documentation and other materials relevant to the
Project shall be accessible at any time to the authorized representatives of
the City on reasonable prior notice, for the purpose of examination or audit.
(5) The City shall perform an annual audit at the close of each Calendar Year
in which these Restrictions are in effect. Developer shall reasonably
cooperate with City in performing such audit.
(6) Developer shall permit the City to perform an Annual Physical Inspection
of the Property with at least ten (10) Business Days notice. Developer shall
cooperate with this Inspection and shall take all steps necessary to quickly
correct any code deficiencies identified during the Inspection.
F. If there is a discrepancy between local, state and federal law with regard to any of
the aforementioned covenants, the more stringent shall apply.
G. The City is the beneficiary of the terms and provisions of these Restrictions and the
covenants herein, both for and in its own right and for the purposes of protecting the interests of
the community and other parties, public or private, for whose benefit these Restrictions and the
covenants running with the land have been provided. The City shall have the right if the covenants
are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in
equity or other proper proceedings to enforce the curing of such breaches to which they or any
other beneficiaries of these Restrictions and covenants are entitled.
H. The covenants and agreements contained herein shall run with the land and shall
remain in effect for the term of the Agreement. Upon the sale, conveyance or other transfer of the
Property (a "Transfer") and the assumption of the obligations hereunder by a transferee,
Developer's liability for performance shall be terminated as to any obligation to be performed
hereunder after the date of such Transfer.
I. Upon a Transfer of the Property, the transferee will be obligated to meet with the
City prior to closing of the Transfer to review the terms of these Restrictions and requirements of
the transferee therein. Any failure of transferee to meet with the City as required would constitute
a default under these Restrictions.
16
80A-258
J. The Agreement and all of its attachments shall be enforceable by the City in
accordance with the terms thereof. Each of the Loan Documents, provide a means of enforcement
by the City if Developer is in breach of its obligations hereunder and thereunder, including liens
on the Property, deed restrictions and covenants running with the land.
K. The City agrees to provide Developer's Investor Limited Partner (as defined in the
Agreement) with notice of and an opportunity to cure any default. Any cure made or tendered by
the Limited Partner shall be deemed a cure by Developer.
17
80A-259
IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions on
Transfer of Property to be executed on the date set forth at the beginning of these Restrictions.
ATTEST:
Norma Mitre
Acting Clerk of the Council
APPROVED AS TO FORM
Sonia R. Carvalho
City Attorney
By: Ryan O. Hodge
Assistant City Attorney
RECOMMENDED FOR APPROVAL
Steven A. Mendoza
Executive Director
Community Development Agency
(Signatures continue on following page)
CITY OF SANTA ANA
Steven A. Mendoza
Acting City Manager
10
80A-260
DEVELOPER:
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By:
Kyle Paine
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc.,
a California nonprofit public benefit corporation
Its: Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
By: IH CDP Partnership LLC,
a California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
By:
Philip Wood
Its: President
19
80A-261
Exhibit C:
Inclusionary Deed of
Trust
80A-262
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
INCLUSIONARY DEED OF TRUST
AND ASSIGNMENT OF RENTS
(2223 West Fifth Street, Santa Ana, California)
THIS INCLUSIONARY DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed
of Trust") made this 16 day of April, 2019, by and between Tiny Tim LP, a California limited
partnership (the "Trustor"), Commonwealth Land Title Company, a California corporation (the
"Trustee"), and the City of Santa Ana, a charter city and municipal corporation (the "Beneficiary").
Capitalized terms not defined in this Deed of Trust shall have the meanings given such terms in the
Agreement (defined in Section 1 below and in the Inclusionary Promissory Note).
Trustor, in consideration of the promises herein recited and the trust herein created,
irrevocably grants; transfers, conveys and assigns to Trustee, in trust, with power of sale, the property
located in the City of Santa Ana, County of Orange, State of California, described in the attached
Exhibit A and more commonly lmown as 2223 West Fifth Street, Santa Ana, California (the
'Property");
TOGETHER with all the improvements now or hereafter erected on the Property, and all
easements, rights, appurtenances and all fixtures now or hereafter attached to the Property, all of
which, including replacements and additions thereto, shall be deemed to be and remain a part of the
Property covered by this Inclusionary Deed of Trust; provided that so long as Trustor is not in
default hereunder, it shall be permitted to control the Property in accordance with the requirements
of that certain Inclusionary Loan Agreement entered into between the Trustor and the Beneficiary,
dated concurrently herewith, which Agreement is on file with the Beneficiary as a public record;
TOGETHER with the right, power and authority during the continuance of this Trust, to
collect the rents, issues, and profits of the Property, reserving unto the Trustor the right, prior to any
default by Trustor in payment of the indebtedness secured by this Deed of Trust or in the performance
of any agreement under this Deed of Trust, to collect and retain these rents, issues and profits as they
become due and payable; and,
TOGETHER with 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
1076A53V1379660.2
80A-263
which are necessary to the complete and comfortable use and occupancy of such building or buildings
for the purposes for which they were or are to be erected, including all other goods and chattels and
personal property as are ever used or furnished in operating a building, or the activities conducted
therein, similar to the one herein described and referred to, and all renewals or replacements thereof
or articles in substitution therefor, whether or not the same are, or shall be attached to said building
or buildings in any manner; and 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; and,
TO SECURE to the Beneficiary: (a) the repayment of the sums evidenced by a Promissory
Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of one -
million, three -hundred thousand dollars ($1,300,000) (the "Inclusionary Promissory Note"); (b) the
performance of the covenants and agreements of Borrower contained in a certain Agreement as
hereinafter defined; and, (c) the payment of all other sums, with interest thereon, advanced in
accordance herewith to protect the security of this Deed of Trust; and the performance of the
covenants and agreements of Trustor contained herein.
TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS:
1. The Agreement. This Deed of Trust is executed and delivered, along with the
Inclusionary Promissory Note, the Inclusionary Loan Agreement, and Affordability Restrictions on
Transfer of Property to benefit the Property. A copy of said hiclusionary Loan Agreement is on file
as a public record with the Beneficiary and is incorporated herein by reference (the "Agreement").
Trustor acknowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter
into the Agreement or Inclusionary Promissory Note secured by this Deed of Trust.
2. Trustees Estate. Trustor is lawfully seized of the estate hereby conveyed and has the
right to grant and convey the Security; that other than this Deed of Trust, the Seciuity is not
encumbered except for obligations secured by deeds of trust, or any other security agreement, to
secure financing or refinancing for the purchase and rehabilitation of the Property.
3. Renavment of the Loan. Trustor will promptly repay, when due, the principal loan
amount, as required by the Inclusionary Promissory Note secured by this Deed of Trust.
4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to
the Senior Loan and the Senior Loan Deed of Trust, but the Inclusionary Affordability Restrictions
on Transfer of Property shall remain in a senior position to the Senior Loan and the Senior Loan Deed
of Trust.
5. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform all of
Truster's obligations under any mortgage, deed of trust or other security agreement with a lien that
has priority over this Instrument, including Trustor's covenants to make payments when due (subject
to all applicable notice and cure provisions). Trustor will pay all taxes, assessments and other charges,
fines and impositions attributable to the Security that may attain a priority over this Deed of Trust, by
Trustor making any payment, when due, directly to the payee thereof. Trustor will promptly furnish
to the Beneficiary all notices of amounts due under this paragraph, and in the event Trustor makes
2
80A-264
payment directly, Trustor will promptly discharge any lien that has priority over this Deed of Trust;
provided that Trustor will not be required to discharge the lien of the Deed of Trust securing any
senior lender or any other lien described in this paragraph so long as Trustor will agree in writing to
the payment of the obligation secured by such lien in a manner acceptable to the Beneficiary, or will,
in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings, which
operate to prevent the enforcement of the lien or forfeiture of the Security, or any part thereof.
6. Hazard Insurance. Trustor will keep the Security insured by such insurance policies
in such amounts and for such periods as called for in the Agreement. All insurance policies and
renewals thereof will include a standard mortgagee clause with standard lender's endorsement in favor
of the holder of any Senior Lender and the Beneficiary as their interests may appear and in a form
acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its designated
agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the Beneficiary,
or its designated agent, the original insurance policies or certificates of insurance, all renewal notices
and all receipts of paid premiums subject to the rights of any senior lender. In the event of loss,
Trustor will give prompt notice to the insurance carrier and the Beneficiary or its designated agent.
The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor.
The Beneficiary shall receive thirty (30) days advance notice of cancellation of any insurance policies
required under this Section.
Unless the Beneficiary and Trustor otherwise agree in writing, insurance proceeds, subject to
the rights of any senior lender, will be applied to restoration or repair of the Security damaged,
provided such restoration or repair is economically feasible and the security of this Deed of Trust is
not thereby impaired. If such restoration or repair is not economically feasible or if the security of
this Deed of Trust would be impaired, again, subject to the rights of any senior lender, the insurance
proceeds will be used to repay the loan secured by this Deed of Trust, with the excess, if any, paid to
Trustor. If the Security is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or
its designated agent within thirty (30) days from the date notice is mailed by either of them to Trustor
that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its
designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option,
either to restoration or repair of the Security or to repay the loan.
If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in and to
any insurance policy, and in and to the proceeds thereof resulting from damage to the Security prior
to the sale or acquisition, will pass to the Beneficiary to the extent of the sums secured by this Deed
of Trust immediately prior to such sale or acquisition, subject to the rights of any senior lender.
7. Preservation and Maintenance of Security. Trustor will keep the Security in good
repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the Beneficiary's Security. If Trustor fails to perform the covenants and
agreements contained in this Deed of Trust, or if any action or proceeding is commenced that
materially affects the Beneficiary's interest in the Security, including, but not limited to, default under
the Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement, or
arrangements or proceedings involving a bankruptcy or decedent, then the Beneficiary, at the
Beneficiary's option, upon notice to Trustor, may make such appearances, disburse such sums and
take such action as it determines necessary to protect the Beneficiary's interest, including, but not
limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs.
80A-265
Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon,
will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and the
Beneficiary agree to other terms of payment, such amount will be payable upon notice from the
Beneficiary to Trustor requesting payment thereof, and will bear interest from the date of
disbursement at the rate payable from time to time on outstanding principal under the Inclusionary
Promissory Note, unless payment of interest at such rate would be contrary to applicable law, in which
event such amounts will bear interest at the highest rate permissible imder applicable law. Nothing
contained in this paragraph will require the Beneficiary to insure any expense or take any action
hereunder.
9. Inspection. The Beneficiary may make, or cause to be made, reasonable entries upon
and inspections of the Security upon reasonable prior notice during normal business hours; provided
that, the Beneficiary will give Trustor reasonable notice of inspection.
10. Forbearance by the Beneficiary Not a Waiver. Any forbearance by the Beneficiary in
exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The
procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary will not
be a waiver of the Beneficiary's right to accelerate the maturity of the indebtedness secured by this
Deed of Trust.
11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and
cumulative to any other right or remedy under this Deed of Trust, or any other document, or afforded
by law or equity, and may be exercised concurrently, independently or successively.
12. Successors and Assigns Bound. The covenants and agreements herein contained shall
bind, and the rights hereunder shall inure to, the respective successors and assigns of the Beneficiary
and Trustor subject to the provisions of this Deed of Trust.
13. Joint and Several Liability. All covenants and agreements of Trustor shall be joint
and several.
14. Notice. Except for any notice required under applicable law to be given in another
manner: (a) any notice to Trustor provided for in this Inclusionary Deed of Trust will be given by
certified mail, return receipt requested, addressed to Trustor at 3416 Via Oporto, Suite 301, Newport
Beach, CA 92663 with a copy to R4 Capital LLC at 780 Third Avenue, 16a` Floor, New York, New
York 10017, Attention: Marc Schnitzer, and to Frost Brown Todd LLC at 400 West Market Street,
Suite 3200, Louisville, Kentucky 40202, Attention: Amy Curry, Esq.; (b) any notice to the
Beneficiary will be given by certified mail, return receipt requested, to the Beneficiary at 20 Civic
Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention: Housing Division Manager, or
at such other address as the Beneficiary may designate by notice to Trustor as provided above; and,
(c) to Trustee at 888 S. Figueroa Street, Suite 2100, Los Angeles, CA 90017. Notice shall be effective
as of the date received as shown on the return receipt.
15, Governing Law. This Deed of Trust shall be governed by the laws of the State of
California with venue in Orange County.
4
80A-266
16. Severability. In the event that any provision or clause of this Deed of Trust or the
Inclusionary Promissory Note conflicts with applicable law, such conflict will not affect other
provisions of this Deed of Trust or the Inclusionary Promissory Note that can be given effect without
the conflicting provision, and to this end the provisions of the Deed of Trust and the Inclusionary
Promissory Note are declared to be severable.
17. Captions. The captions and headings in this Deed of Trust are for convenience only
and are not to be used to interpret or define the provisions hereof.
18. Default in Foreclosure; Remedies. Upon Truster's breach of any covenant or
agreement of Trustor in this Deed of Trust or the Inclusionary Promissory Note secured by this Deed
of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed
of Trust, the Beneficiary may declare all sums secured by this Deed of Trust immediately due and
payable by delivering to Trustor notice thereof, specifying: (1) the breach; (2) the action required to
cure such breach; (3) a date not less than thirty (30) days from the date the notice is received by
Trustor, as shown on the return receipt, by which such breach is to be cured, provided, however, that
if such default is not reasonably susceptible to being cured within thirty (30) days, Trustor shall have
a reasonable period to cure the defect, so long as Trustor is diligently prosecuting the cure to
completion; and, (4) that failure to cure such breach on or before the date specified in the notice may
result in acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice
will also inform Trustor of Trustor's right to reinstate after acceleration and the right to bring a court
action to assert the non-existence of default, or any other defense of Trustor to acceleration and sale.
Notwithstanding anything to the contrary contained herein, a "default" shall not include
any transaction not considered a "transfer' under Section 16.2 of the Agreement or permitted under
Section 16.3 or 16.4 of the Agreement.
If the breach is not cured on or before the date specified in the notice, or such longer period
as provided above or in the Inclusionary Promissory Note or the Agreement, the Beneficiary, at the
Beneficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately
due and payable without further demand and may invoke the power of sale and any other remedies
permitted by California law; (b) either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security,
enter upon the Security and take possession thereof (or any part thereof) and of any of the Security,
in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable
to preserve the value or marketability of the Property, or part thereof or interest therein, increase the
income therefrom or protect the security thereof. The entering upon and taking possession of the
Security shall not cure or waive any breach hereunder or invalidate any act done in response to such
breach and, notwithstanding the continuance in possession of the Security, the Beneficiary shall be
entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any
uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose
this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants
hereof, (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the
provisions for notice of sale found at California Civil Code sections 2924, et seq., as amended from
time to time; or, (e) exercise all other rights and remedies provided herein, in the instruments by which
Trustor acquires title to any Security, or in any other document or agreement now or hereafter
evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by
law.
80A-267
Notwithstanding anything to the contrary herein, Beneficiary hereby agrees that any cure of any
default made or tendered by Trustor's limited partner shall be deemed to be a cure by Trustor and
shall be accepted or rejected on the same basis as if made or tendered by Trustor.
The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in
pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys'
fees.
19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the
sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by the
Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale
of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to
entry of a judgment enforcing this Deed of Trust if. (a) Trustor pays the Beneficiary all sums that
would be then due under this Deed of Trust, and no acceleration under the Inclusionary Promissory
Note has occurred; (b) Trustor cures all breaches of any other covenants or agreements of Trustor
contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by the Beneficiary
and the Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust
and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable
attorneys' fees; and, (d) Trustor takes such action as the Beneficiary may reasonably require to assure
that the lien of this Deed of Trust, the Beneficiary's interest in the Security and Trustor's obligation
to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and
cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and
effect as if no acceleration had occurred.
20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to
notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party, unless brought by Trustee.
21. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the
Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust
and the Inclusionary Promissory Note to the Trustee. The Trustee will reconvey the Security without
warranty and without charge to the person or persons legally entitled thereto. Such person or persons
will pay all costs of recordation, if any.
22. Substitute Trustee, The Beneficiary, at the Beneficiary's option, may from time to
time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The
successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and
by applicable law.
23. Request for Notice. Trustor requests that copies of the notice of default and notice of
sale be sent to Trustee at the address set forth in Section 14 above.
24. Nonrecourse Liability. Neither Trustor nor any partner of Trustor nor any other
person or entity shall have any personal liability under the Agreement, Inclusionary
Promissory Note, or this Deed of Trust, and any judgment, decree or order for payment of
money obtained in any action to enforce the obligation of Trustor to repay the loan evidenced
by such documents shall be enforceable against Trustor only to the extent of Truster's interest
in the Property.
25. Beneficiary agrees to provide Truster's lnvestor Limited Partner (as defined in the
Agreement) with notice of and an opportunity to cure any default hereunder. Any cure made or
tendered by the Limited Partner shall be deemed a cure by Trustor.
(Signatures on Following Page)
7
80A-269
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By:
Kyle Paine
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc.,
a California nonprofit public benefit corporation
Its: Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
By: IH CDP Partnership LLC,
a California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
By:
Philip Wood
Its: President
80A-270
Exhibit Do.
Inclusionary
1 1ITAMAW
80A-271
INCLUSIONARY HOUSING FUNDS PROMISSORY NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO THE CITY OF SANTA ANA
(2223 West Fifth Street, Santa Ana, California)
$1,300,000.00 April 16, 2019
Santa Ana, California
Principal Amount of Loan
FOR VALUE RECEIVED, Tiny Tim LP, a California limited partnership (`Borrower"),
hereby promises to pay to the City of Santa Ana, a charter city and municipal corporation ("City"),
or order, a principal amount not to exceed ONE -MILLION, THREE -HUNDRED THOUSAND
DOLLARS ($1,300,000), or so much thereof as may be advanced by the City to the Borrower, due
and payable with 3% interest by residual receipts over the fifty-five (5 5) year term, pursuant to the
Inclusionary Loan Agreement (said "Agreement') between Borrower and the City dated
concurrently herewith, which is incorporated herein by this reference. This loan is funded
exclusively from the Inclusionary Housing Fund held by the City (the "City Funds"). Any
capitalized term not otherwise defined in this Inclusionary Promissory Note ("Note") shall have
the meaning ascribed to such term in the Agreement. The obligation of Borrower to City hereunder
is subject to the terms of said Agreement, the Affordability Restrictions on Transfer of Property,
Inclusionary Deed of Trust and this Note. Said documents are public records on file in the offices
of the City, and the provisions of said documents are incorporated herein by this reference.
This Note, said Agreement, the Affordability Restrictions on Transfer of Property, and the
Inclusionary Deed of Trust are sometimes collectively referred to herein as the "Loan Documents".
The rights and responsibilities provided for in the Loan Documents shall inure to the benefit of the
City. Any capitalized term that is not otherwise defined herein shall have the meaning ascribed to
such term in the Agreement.
This Note evidences the obligation of Borrower to the City for repayment of the
Inclusionary Loan of Inclusionary Housing Funds attributable to the acquisition, development, and
construction of the Property, and related soft costs.
This Note is payable at the principal office of the City of Santa Ana — Community
Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Attn: Housing
Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful
money of the United States.
2. Definitions.
For the purpose of calculating the payments to be made by Borrower to City pursuant to
this Note, the following terms shall have the following respective meanings:
1076\53\1379659.2
80A-272
"Agreement" means the Inclusionary Loan Agreement between the City and the
Developer, and any attachments or amendments thereto.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the City Housing Program, and the hiclusionary Housing
Funds.
"Area Median Income" means the median income for the Orange County, California
PMSA as most recently determined by the U.S. Department of Housing and Urban Development
("HUD"). Also may be referred to interchangeably in the Inclusionary Loan Documents as
"Median Income for the Area" or "AMI".
"Borrower" means Tiny Tim LP, a California limited partnership.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"City Assisted Units" shall mean those affordable rental units constricted on the Property,
which are subject to the 55 -year Term of Affordability.
"City's Percentage" with reference to the Residual Receipts, shall mean fifty percent (50%)
of the total Residual Receipts from the Property as further described in section 5 hereof.
"Closing Costs" shall mean:
(i) In the case of a Sale, reasonable brokerage commissions payable to a broker
as a result of the Sale, which shall not in any event exceed the customary
amount charged for similar transactions in the immediate market place,
costs of title insurance premiums, documentary stamp taxes, escrow fees,
recording charges, loan repayment charges and other costs reasonably
incurred with respect to the Property, in each case actually paid by Borrower
as a condition of the Sale.
(ii) In the case of a Refinancing, the reasonable and necessary costs of
consummating such Refinancing, including, without limitation, loan fees,
loan repayment charges, costs of title insurance premiums, escrow fees,
recording fees and attorneys' fees.
"Extremely Low Income" means an adjusted income which does not exceed thirty percent
(30%) of the area median income for the Orange County, California PMSA, adjusted for household
size, as published by I -IUD.
"Gross Revenues" shall mean all revenues and receipts of every kind actually received by
Borrower from operating the Property, and all parts thereof, including, but not limited to, income
from both cash and credit transactions, rental from leased and/or subleased spaces and parking fees
80A-273
and charges, but not including security deposits and other tenant deposits, except to the extent such
deposits are forfeited to the Borrower under the tenant's lease. Gross Revenues also includes any
casualty insurance proceeds in excess of those used to restore the Property, and any rental
interruption insurance proceeds. Any credit consideration shall be included in Gross Revenues at
the time cash proceeds (principal and/or other) are received. Borrower shall establish and maintain
accounts for the Gross Revenues (the "Project Accounts") that are segregated from revenues and
income received by Borrower from all other projects. Gross Revenues shall also include all interest
earned on the Project Accounts, and shall specifically exclude any capital contributions made by
the Investor Limited Partner.
"Inclusionary Deed of Trust" shall mean the deed of trust encumbering the Property, in the
form attached to the Agreement as Exhibit C, which is incorporated herein by this reference, to be
executed by Developer pursuant to section 6.1(e) of the Agreement in order to secure the
Inclusionary Promissory Note.
"Inclusionary Housing Funds" shall mean the money provided by the City from the
Inclusionary Housing Fund for the construction of the City Assisted Units hereunder.
"Inclusionary Loan" means a loan in the original principal amount of up to one -million,
three -hundred thousand dollars ($1,300,000) to be made to Developer by the City to be funded
exclusively from the Inclusionary Housing Fund held by the City.
"Interest" shall mean that the NOTE shall bear simple interest at the rate of Three percent
(3%) per annum, from the date of issuance of the Certificate of Occupancy/Completion.
"Low Income" means an adjusted income which does not exceed eighty percent (80%) of
the area median income for the Orange County,California PMSA, adjusted for household size, as
published by HUD.
"Operating Expenses" shall mean the sum of the following:
(i) payments of principal and interest and all other charges relating to the
Senior Loan(s);
(ii) property management fee not to exceed 5% of gross rents;
(iii) owner administration fee not to exceed 5% of gross rents which will include
Investor Limited Partner local administration fee of $5,500 per year, which
shall increase by 3% per year, and other fees payable to the General Partner
pursuant to the Partnership Agreement;
(iv) deposits into required reserves;
(v) any deferred developer fee;
80A-274
(vi) all other actual, reasonable cash operating costs and expenses, calculated on
an annual basis, that are directly attributable to managing and operating the
Property, including, without limiting the generality of the foregoing, the
following: costs and expenses for real and personal property taxes, special
assessments or similar charges; water, fuel, electricity and other utilities;
heating, ventilation and air conditioning expenses; labor; supplies; tools;
equipment; insurance; advertising and marketing; accounting and legal fees;
brokerage commissions and other leasing expenses; reasonable reserves for
all anticipated expenses as approved by the City; and other such items
constituting operation, maintenance and repair costs actually paid by the
Borrower, subject to the following conditions:
(a) Depreciation and amortization expenses shall not be considered
Operating Expenses, except as otherwise provided herein; and,
(b) Any expenses, compensation or fees paid to any affiliate of
Borrower, excluding those payable under (iii), shall only be
included as Operating Expenses to the extent they are not in excess
of the reasonable expenses, compensation or fees that would be
payable to unrelated third parties in arms -length transactions for
similar services in the Orange County, California area;
(vii) Any other expenses necessary to meet Senior Lender requirements, and
requirements of the Investor Limited Partner, or its assignee, as set forth in
Borrower's Amended and Restated Agreement of Limited Partnership dated
as of May 1, 2019, as may be amended (the "Partnership Agreement").
"Property" shall mean that property located at 2223 West Fifth Street, Santa Ana,
California.
"Refinancing" shall mean changing the then existing financing on the Property by, without
limitation, modifying the interest rate and/or the term of the existing Senior Loan, increasing or
reducing the amount of the existing Senior Loan, paying off the existing Senior Loan and obtaining
new Senior Loan, except for the payoff of the constriction loan and its replacement with permanent
financing as contemplated by that [Citi Commitment with Freddie Mac dated as of _, 2019]
and except for the payoff of the conventional lender's acquisition loan for the Property.
"Refinancing Proceeds" shall be disbursed as set forth in section 6 hereof.
"Residual Receipts" shall mean the Gross Revenues from the Property for each year, less
deductions for Operating Expenses from the same Property, applicable to each such year to the
extent not previously deducted as an Operating Expense.
"Sale" shall mean any transfer, assignment, conveyance or lease of the Property, or any
portion thereof, or any interest therein by the Borrower. Sale includes a sale in condemnation or
4
80A-275
under threat thereof. Sale does not include dedications and grants of easements to public and
private utility companies of the kind customary in real estate development. Notwithstanding
anything to the contrary contained herein, a "Sale" shall not include any transaction not considered
a "transfer' under section 13, or under Section 16.2 of the Agreement or as otherwise permitted
under Section 16.3 or 16.4 of the Agreement.
"Senior Loan" shall mean a loan from the Senior Lender concurrent to the Inclusionary
Loan for payment of a portion of the acquisition and construction costs, and shall include any
subsequent loan that refinances the initial Senior Loan.
"Term of Affordability" or "Term" means the terms and conditions contained herein shall
remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Occupancy
for the Project, or repayment of the Inclusionary Loan, whichever is longer.
"Very Low Income" means an adjusted income which does not exceed fifty percent (50%)
of the area median income for the Orange County, California PMSA, adjusted for household size,
as published by HUD.
3. Loan Repayment.
Borrower shall make payments to the City as provided in sections 5 (Residual Receipts), 6
(Refinancing Proceeds), 7 (Sale Proceeds) and 9 (Accelerated Loan Repayment) of this Note.
4. Operating Capital Improvement Loan.
If the replacement reserve account ("Reserves") is depleted due to unforeseen repairs and
the General Partner makes a loan to the Partnership, the Reserves must be fully funded prior to
payment of said loan. The outstanding loan balance will be reflected in the annual report.
5. Annual Loan Repayment/ Residual Receipts.
a. Commencing on the date one hundred and fifty (150) days after the close of the initial
Calendar Year following the issuance of the Certificate of Occupancy, and on or before the 150'x'
day of each Calendar Year thereafter, the Borrower shall thereafter make a loan payment, including
any payment processing fee charged by the City's loan processor, as applicable, to the City
annually, in the amount of the lesser of the outstanding balance due under this Note or the City's
Percentage of the Residual Receipts, as provided herein.
b. Within one hundred and fifty (150) days after the close of the initial Calendar Year,
following the Issuance of the Certificate of Occupancy, and on or before the 150th day of each
Calendar Year thereafter, the Borrower shall submit to the City an audited financial statement of
Gross Revenues and Operating Expenses attributable to the Property for the applicable Calendar
Year, along with a computation of the amount of the Residual Receipts applicable to such Calendar
Year with which to make an Inclusionary Loan payment then due.
80A-276
c. Except as otherwise provided, the Borrower shall pay to the City the City's Percentage
of the Residual Receipts as payment of the Agency LMIHAF Loan and City Inclusionary Loan
pursuant to Section 5(d) below. At least fifty percent (50%) of the Residual Receipts shall remain
with the Borrower, with all Residual Receipts remaining with Borrower, once both the Agency
LMIHAF Loan and City Inclusionary Loan have been frilly repaid.
d. Borrower shall retain fifty percent (50%) of the Residual Receipts. The other fifty
percent (50%), shall be divided with seventy-eight percent (78%) to be applied to the Agency
LMIHAF Loan, and twenty-two percent (22%) to be applied to this Inclusionary City Loan. As
Borrower repays this Loan and the Agency LMIHAF Loan, the payment percentage applied to the
remaining loans shall increase.
C. The Residual Receipts payment shall be made no later than one hundred and fifty
(150) days after the close of the Calendar Year. Such payment shall be applied first to any late
fees, then to reduce the principal balance of the loan.
6. Loan Repayment from Refinancing Proceeds.
The Borrower shall make a loan payment to the City from every Refinancing that occurs
during the term of this Note (other than refinancing of the Senior Loan), not to exceed the
outstanding balance of principal on this Note, to the extent of the City's Percentage of the
Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be
applied first to pay Closing Costs; next, the amount necessary to pay in full the balance remaining
on the Senior Loan; next, the amount necessary to pay any deferred developer fee in full; and next,
the Borrower shall pay to the City the City's Percentage of the Refinancing Proceeds of which City
Percentage shall be used seventy-eight percent (78%) to repay the LMIHAF Agency Loan, and
twenty-two percent (22%) to repay this Inclusionary City Loan, to the extent of the outstanding
balance on this Note. All remaining Refinancing proceeds shall remain with the Borrrower to the
extent the outstanding balance (including interest) of the Note has been fully paid. Such payment
shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance
of the Loan in accordance with this Section 6. The City shall not be required to reconvey the lien
of the Deed of Trust if Refinancing Proceeds are insufficient to repay the Loan in full.
7. Loan Repayment from Sale Proceeds.
The Borrower shall make a loan payment, not to exceed the outstanding balance of
principal on this Note, subject to section 14 herein, to the City from any Sale that occurs during
the term of the Inclusionary Loan, to the extent of the City's Percentage of the Sale Proceeds, as
follows: gross sale proceeds are applied first to pay Closing Costs; next, to pay in full the balance
remaining on the Senior Loan; next, the amount necessary to pay any deferred developer fee in
full; and next, the Borrower shall pay to the City the City's Percentage of the Refinancing Proceeds
of which City Percentage shall be used seventy-eight percent (78%) to repay the LMIHAF Agency
Loan, and twenty-two percent (22%) to repay the Inclusionary City Loan, not to exceed the
outstanding amount of principal due on this Note. All remaining Sale Proceeds shall remain with
the Borrower to the extent the outstanding balance (including interest) of the Note has been fully
80A-277
paid. Such payment shall be due on the date of such Sale, and shall be applied to reduce the
principal balance of the Loan in accordance with this Section 7. The City shall not be required to
reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the Loan in full.
8. Accelerated Loan Payment.
The frill principal amount outstanding shall be due and payable on the earlier to occur of
the following:
a. Sale or Refinancing of the Property as provided further in section 13 hereof, unless:
(i) in the case of a Sale in which the Sale Proceeds are insufficient to repay in full the Inclusionary
Loan, the City approves such sale and the purchaser assumes the balance of the Inclusionary Loan
in accordance with the terms of this Note; or (ii) in the case of a Refinancing in which the
Refinancing Proceeds are insufficient to repay in full the Inclusionary Loan, the City approves
such Refinancing and the Borrower remains obligated pursuant to the terms of this Note;
b. In the event of default (subject to any applicable notice and cure provisions)
pursuant to any of the Loan Documents or the Senior Loan Documents;
c. Any default (subject to any applicable notice and cure provisions) by Borrower as
to any other loan or loans by City to Borrower with respect to the Property; or
d. The date that is fifty-five (55) years after the date of execution of this Note. To
the extent the Loan is not repaid by that date, the City agrees to review the performance of the
Property and consider in good faith any reasonable request by Borrower to modify the terms or
extend the Term of this Inclusionary Note, if applicable.
9. Prepayment
Borrower may prepay the outstanding principal balance under this Note, in whole or in
part, at any time without penalty. However, the Affordability Covenants and Restrictions will
remain for the entire Affordability Period of fifty-five (55) years.
10. Lawful Monev.
Principal is payable in lawful money of the United States of America.
11. Application of Payments; Late Charges.
a. Any payments received by the City pursuant to the terms hereof shall be applied
first to sums, other than principal, due the City pursuant to this Note, and the balance, if any, to
the payment of principal.
b. If any payment is not received by the City within ten (10) Business Days after
Developer's receipt of written notice that such payment was not received when due; then in
80A-278
addition to the remedies conferred upon the City pursuant to this Note and the other Loan
Documents: (i) a late charge of four percent (4%) of the amount due and unpaid will be added to
the delinquent amount to compensate the City for the expense of handling the delinquency; and,
(ii) the amount due and unpaid, excluding the late charge, shall bear interest at the highest annual
rate which may lawfully be charged and collected under applicable law on the obligation,
evidenced by this Note, computed from the date on which the amount was due and payable until
paid. Without prejudice to the rights of the City hereunder, or under any of the other Loan
Documents, Borrower shall indemnify the City against, and shall pay the City on demand, any
expense or loss which it may sustain or incur as a result of the failure by Borrower to pay when
due any installment of principal, fees, or other amounts payable to the City under this Note or any
other Loan Document that exceeds the amount of the late charge described above, to the extent
that any such expense or loss is not recovered pursuant to such foregoing provisions. A certificate
of the City setting forth the basis for the determination of the amounts necessary to indemnify the
City in respect of such expenses or direct loss, submitted to Borrower by the City, shall be
conclusive and binding for all purposes except as immediately corrected by Borrower notice to
City.
12. Security
This Note is secured by the recorded Deed of Trust.
13. Acceleration by Reason of Transfer or Financing.
a. In order to induce City to make the loan evidenced hereby, Borrower agrees that
in the event of any transfer of the Property without the prior written consent of City (other than a
transfer resulting from a foreclosure, or conveyance by deed in lieu of foreclosure, by the holder
of the Senior Loan Deed of Trust), City shall have the absolute right at its option, without prior
demand or notice, to declare all sums secured hereby immediately due and payable. Consent to
one such transaction shall not be deemed to be a waiver of the right to require consent to future or
successive transactions. City may grant or deny such consent in its sole discretion and, if consent
should be given, any such transfer shall be subject to this section 13, and any such transferee shall
assume all obligations hereunder and agree to be bound by all provisions contained herein. Such
assumption shall not, however, release Borrower from any liability thereunder without the prior
written consent of City.
b. As used herein, "transfer" includes the Sale, agreement to sell, transfer or
conveyance of the Property, or any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, the execution of any installment land sale contract
or similar instrument affecting all or a portion of the Property, or the lease of all or substantially
all of the Property. 'Transfer' shall not include the leasing of individual residential units on the
Property, so long as Borrower complies with the provisions of the Agreement and the Affordability
Covenants and Restrictions relating to such leasing activity, nor shall it include a conveyance of
the Property to a limited partnership in which Borrower is a general partner, or to a corporation or
limited liability company that is wholly owned by the Borrower or its affiliates and that is formed
for the sole purpose of owning and operating the Property, or the sale back to the Borrower. In the
80A-279
event of any Refinancing or partial Refinancing in an amount in excess of the balance of the Senior
Loan, without the prior written consent of City (which consent City may grant or deny in its sole
discretion), then the entire outstanding balance of the Inclusionary Loan shall be repaid to the City
at the time of each Refinancing or partial Refinancing. Additionally, a "Transfer" shall not include
any transaction not considered a "transfer' under section 16.2 of the Agreement or which is
otherwise permitted under Section 16.3 or 16.4 of the Agreement.
14. Event of Default.
Subject to the provisions of Sections 21 and 23 hereof, the occurrence of any of the
following shall be deemed to be an event of default which is not cured within the applicable time
period described therein ("Event of Default") hereunder: (a) failure by Borrower to make any
payments provided for herein, and if such default is not made good within ten (10) Business Days
after Developer's receipt of written notice that such payment was not received when due; (b) failure
by Borrower to perform any covenant or agreement in the Deed of Trust, the Agreement, or the
Affordability Covenants and Restrictions within thirty (30) days after written demand therefor by
City (or, in the event that more than thirty (30) days is reasonably required to cure such default,
should Borrower fail to promptly commence such cure, and diligently and continuously prosecute
same to completion); or (c) a default under the Senior Loan Deed of Trust that remains uncured
after any applicable notice has been provided and the expiration of any applicable cure period
therefore, if any, provided therein.
15. Remedies.
Upon the occurrence of an Event of Default, after any applicable notice has been provided
and the expiration of any applicable cure period therefore, City may declare ull sums evidenced
hereby immediately dile and payable by delivery to the Trustee named in the Deed of Trust
securing this Note, and to Borrower, written declaration of default and demand for sale, and written
notice of default and of election to cause the Property to be sold, which notice Trustee shall cause
to be duly filed for record and City may foreclose on the Deed of Trust. City shall also deposit
with Trustee the Deed of Trust, this Note and all documents evidencing expenditures secured
thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long as such
Event of Default shall continue), the entire balance of principal shall bear interest at the rate of the
Note phis four percent (4%). No delay or omission on the part of the City in exercising any right
under this Note or under any of the other Loan Documents shall operate as a waiver of such right.
16. Attorney Fees.
If this Inclusionary Promissory Note is not paid when due or if any Event of Default occurs,
Borrower promises to pay all costs of enforcement and collection, including, but not limited to,
reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the
provisions hereof.
0
FOOT17MR74orl
17. Severability.
Every provision of this Note is intended to be severable. In the event any term or provision
hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions
hereof, which terms and provisions shall remain binding and enforceable.
18. Number and Gender.
In this Note the singular shall include the plural and the masculine shall include the
feminine and neuter gender, and vice versa, if the context so requires.
19. Non-recourse.
The Inclusionary Loan is a nonrecourse obligation of the Borrower. Neither Borrower, nor
its partners, nor any other person or entity shall have any personal liability for repayment of the
Inclusionary Loan or for any other amounts under any of the documentation evidencing, securing
or describing the Inclusionary Loan. The sole recourse of City under this Note and the Deed of
Trust for repayment of the Inclusionary Loan and for such other amounts arising therefrom shall
be the exercise of its rights against the Property and related security thereunder.
20. Subordination.
It is hereby expressly agreed and acknowledged by Borrower and City that the Deed of
Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior
Deed of Trust.
21. Notice of Default.
a. Subject to the applicable cure periods set forth in section 14, and subject to the further
provisions of this section 21, failure or delay by the Borrower to perform any term or provision of
this Note constitutes a default under this Note. The Borrower must commence to cure, correct, or
remedy such failure or delay and shall complete such cure, correction or remedy with reasonable
diligence.
b. The City shall give written notice of default to the Borrower and the Investor Limited
Partner (as defined in the Agreement) specifying the default complained of by the City. Delay in
giving such notice shall not constitute a waiver of any default nor shall it change the time of default.
c. Except in the case of a monetary event of default, the Borrower shall not be in default
so long as it endeavors to complete such cure, correction or remedy with reasonable diligence,
provided such cure, correction or remedy is completed within the applicable time period set forth
10
80A-281
herein after receipt of written notice (or such additional time as may be deemed by the City to be
reasonably necessary to correct the default).
d. Any failures or delays by the City in asserting any of its rights and remedies as to any
default shall not operate as a waiver of any default or of any such rights or remedies. Delays by
the City in asserting any of its rights and remedies shall not deprive the City of its right to institute
and maintain any actions or proceedings that it may deem necessary to protect, assert, or enforce
any such rights or remedies.
e. If a monetary event of default occurs under the terms of this Note or the Deed of Trust,
prior to exercising any remedies thereunder, City shall give Borrower written notice of such
default. Borrower shall have a period of ten (10) Business Days after such notice is received within
which to cure the default prior to exercise of remedies by City under this Note and the Deed of
Trust.
f If a non -monetary event of default occurs wider the terms of this Note or the Deed of
Trust, prior to exercising any remedies thereunder, City shall give Borrower notice of such default.
If the default is reasonably capable of being cured within thirty (30) days, Borrower shall have
such period to effect a cure prior to exercise of remedies by the City under this Note and the Deed
of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30)
days, and Borrower: (i) initiates corrective action within said period; and, (ii) diligently,
continually, and in good faith works to effect a cure as soon as possible, then borrower shall have
such additional time as is reasonably necessary to cure the default prior to exercise of any remedies
by City. In no event shall City be precluded from exercising remedies if its security becomes or is
about to become materially jeopardized by any failure to cure a default or the default is not cured
within one hundred and eighty (180) days after the first notice of default is given.
22. Insurance and Condemnation.
In the event of any fire or other casualty to the Property or eminent domain proceedings
resulting in condemnation of the Property, or any part thereof, Borrower shall have the right to
rebuild the Property, and to use all available insurance or condemnation proceeds therefor,
provided that: (a) such proceeds are sufficient to keep the Inclusionary Loan in balance and rebuild
the Property in a manner that provides adequate security to City for repayment of the Inclusionary
Loan, or if such proceeds are insufficient, then Borrower shall have funded any deficiency; (b)
City shall have the right to approve plans and specifications for any major rebuilding, and the right
to approve disbursements of insurance or condemnation proceeds for rebuilding under a
construction escrow or similar arrangement; and, (c) no material uncured default then exists under
this Note or the Deed of Trust. If the casualty or condemnation affects only part of the Property
and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial
repayment of the Inclusionary Loan in a manner that provides adequate security for repayment of
the remaining balance of the Inclusionary Loan.
11
80A-282
23. Force Majeure.
Notwithstanding specific provisions of this Note, performance hereunder shall not be
deemed to be in default where delays or defaults are due to: war; terrorism; insurrection; strikes;
lock -outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public
enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation; unusually severe weather; inability to secure
necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party;
acts or failure to act of the City or any other public or governmental Agency or entity (except that
any act or failure to act of City shall not excuse performance by City); or any other causes beyond
the reasonable control, or without the fault of the party claiming an extension of time to perform.
An extension of time for any such cause shall be for the period of the enforced delay and shall
commence to run from the time the party claiming such extension gives notice to the other party,
provided notice by the party claiming such extension is given within thirty (30) days after the
commencement of the cause. Times of performance under this Note may also be extended in
writing by the City and the Borrower.
24. Assignments.
The City, and the assignee of the City, shall have the right to assign this Note and the Deed
of Trust securing this Note, without any further act of Borrower. The assignee shall give notice to
Borrower as soon as practicable after such assignment.
12
80A-283
This Inclusionary Promissory Note is hereby agreed to and executed on the date first set forth
above.
"BORROWER"
Tiny Tim, LP, a California limited partnership
By: Tiny Tim CDP LLC,
a California limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Managing Member
By:
Kyle Paine
Its: President
By: Tiny Tim Mercy House CHDO LLC,
a California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc.,
a California nonprofit public benefit corporation
Its: Sole Managing Member
By:
Stephanie Miles
Its: Board Secretary
[Signatures Continue on Following Page]
13
Fj A
By: IH CDP Partnership LLC,
a California limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
which will do business in the State of California as
Integrity Housing
Its: Sole Managing Member
By:
Philip Wood
Its: President
0130080.0718261 4822-0627-1373v2
14
80A-285
Exhibit E:
EXHIBIT E
80A-287
Residential
Rental
Component
Cost.
COSTS
Commercial
Component
Coats
Total
D...
Coat.
8%tax cretllta
R4 UHTC Equity.
R4
Freddie Mac
Permanent
Loam Fretltlle
Mac
FUNDING SOURCES
Local Loeal
Clryof Santa Cityof Santa
Ana Fonda. Ane Funtle.
LMIHAF Implosion.,
Private Prlveta
NOI During Warned
Construction Developer Fee
SOURCES
TOTAL
Lesser of Land Cost or Value
$$642000
$308,000
$3,950,000
$121,988
$2,428,211
$1,300,000
$3,HSQOW
Demolition
$0
$0
Legal& ClusW Costs
$0
90
VendableCarrying Costs
$415000
$410000
$418,000
"Rod
SYble181
$3,660:.0
" $900080
$4,268,800
$0
$121,]08
$2,640,211
$1.900,000
'$0
$0
64,265,000
mens Cost
Exiong Improvements
$it
$0
Other s .di
$0
$o
I Total Acquisition
CONSTRUCTION
$3jB..P9P
$300 OW
Sd,26a.00P
$0
$6214091
$2.846,211
$1,300000
'SO
'$0
. 50.268,000
0&SIIe Im mvemenls
00
11,83 p04$71..500,$0
600
§1.681500
Envlmnmenlel Remedlallon
EO
$0
SIIe Ww6 M1artl coals
p
$0
Structures hard costs
00
$1110.504
$1g 119; 12322
$5,]93.490
515.115.812
PV lnslellelion
SO
SO
General Re Nremente
00
$]2,]08
.:$854,1$0160
$854.158
Centrads, Ovarhe.d
36
$43,518
$512,853.353
$512,353
Contractor Protll
4$13
35$4&518
$512,3$3353
.$512.353
Cameral Lieblll Insurance
]0
519.900
. 61]] 151,101
$1]1,181
Bond Premium
31
$1,818
- $1]$449513
$175,031
398.849open
d .
$1.x88,820
$i6,B14,0asad'
E64B9,490
1 6.094
$0
$0
$0
515874,4Us
Des n
8
$])058909
"$779,5.9
Su ervislan
$0
5D
TotalAre't"nalCosb05
MriN
$0
$]]8.56000
$0
$0
$0
$0
$0
177O.09
Elgre.1119
SO.O.4
4
$352589
$352,584
ALTA Lord Surve
$6.800
9
$s,eo0
:55,800
Total SUrve & Engineering
3968684
S $04
088694
$0
0
SO
-SO
$0
..:$358 364
more o051 O0n1n enc
$819,117
$54.7918
$983.908
.$003,900
Soft Cost Contin enc
$43,¢01
07
$43,60
'$43,80
Total Contingency Costs
"Al.
6479111
q$SX7,61a
$027,515
S0
/ EB
0
so
$0
- .$82;515
ConatucHon Loan lnleresl
$1.3459]0
50.
$849,886
$495peA
$1.Mn
Or mallet Fee
$160000
00
$185000
$1.a
Spot Eeharc.ment&A ,Fee
$0
$0
Owner Ped Raltdclnsumnce
O
$O
Lentler lrs octon Fees
$36.600
m
$35,500
`$35500
Taxes munr ConetrUollon
$67]41
4
6],441
`-$67,741Prevallln
Wa a Mentor
0
$o
In6Uranoe During ConaWCllOn$02205
$1'1!,205
$0x.206
$1R,z05
TRY, and Recor0in Fees
53$,000
$J9,000.
$36,000
-$35.0
ConaVOnlon M m.& arun
$i 95000
$198,000
15108,000
$1011,.0
elo ment lnleresl Ex .
89
So
other,
OIM1ec
$0
$0
$p
Total Ez amass
FINANCNG EXPENSES
N,928918
0
$1 92JA1b
.$95,000
51,233130
1W 900
o
96484
0 .
$Y 9xa B1e
JPFRIMANFN
Loan Orlphraflan Fuels)
- 0
$0
Credit Enhancement A Asp.Fee
$10000
$10,000
$10,0.
tilm"D
Title and Recent
$5000
$5,11..
$6, 0.
$6,000
Pro ad Texas
$0
$p
Issuance
$o
Other: Conversion
$18,500
$10,s0o
515500
: $15600
Other: (cpacIfy (specify
$p
So
Total Permanent Flnancln
LEGALFEES
503,500
$0.
133;.
$0.
393,800
SO
30
$0.
;0
593, p0
Construction Lender Le el Expenses
SXAUO
5.,000
$Bo.000
$99,000
Permanente Lender Le al rose
$o.
:ffP
Sponsor Le el Fees
flop,".
$1 "MOU
stmPpRa
$t I'Ma
O animfi.nal Le al Fees&o
$a
rtndeatlen Legal Fees
WOOD
$500.
$50,.0
60;009
Other: 6 eci
EO
$0
Tofel Le al F.0
SR4P.0
$0
5240000
30
0
5240,00
iim9
$0
$0
$240,000
Creeping Raserve
$202322
$202,➢2P
$202,322
$202322
Re lacemen Reserve
$0
$0
Rart-Up Reserva
$0
$E
Farallon Reserve
Sc
$0
Other, (specify
$9
$O
Other', (specify)
'. to
$P
Total Capitalized Reserves
$202322
$0
$292,922
SP
$202,322
$0
EO
$0
$9
x$2021322
A rel6els
$5600
$One
SO, S.
55.
Mallet SWtl
S"Wo
$1800
$5,800
$6,800.
Physical Needs Assessment
$0
0
EnvlmsmeoUl SiLdles
$4.439
$4439
$4,430
$4,438
Otner: Oa.,...
$zz,00p
SOz,o0P
$x2000
g22 poo
Oths, ALTA
$5500
Odo
$9,500
SO Soo
Other As Cl im
$17,500
$1];600
$1],6.
11,500'
Other: s ecif
0
$0.
Total Re oft. &Stutlle.
527JB
8
$fi2g99
$0
$21,939
540000
: RO
$0
10
$62,739.
80A-287
TCAC A JAllco.IMontcr Fees
$141.6651
1
4141,2L5
COLAC Fees
P-S4.
$6
Local Permit Fees
$219,0]5
s".
1
$214.096
Markeflng ILeeseu
1-SO
MarWlng ILeasau
$20,000
$20000
$20,000
➢,000
Pa" & Recreation
".e
$2W,9D4
$26d d09
$$(4,404
6treets/Slgnals
969856
>..$5J,965
650956
$63]856
Traffic Fees
'. $0
'. $D
Wesle Water
$197,760
-. $197.760
$19),]60
$. 97J6D
Water Facility
S75,594
675.594
$75,564
:
Other 1111 ecI FO¢9
$236.430
'. 4238:930
$238,430
:$'534:0$➢
ower costs of EDnd Issuance
.aD
(.'. $D'
Syndicator/ InVeeter Fees& Expenses
-$D
$0.
FUml.hin
$153.03
$153.000
$153,000
$153:0110.
Final Cost Alldf E,ss,
$21.600
:-$21,fi00
$211631$41,60
Marketing
$0
.:$0
Finonci01 Consdtln
Other: Entitlements
$195,740
;'$196.740
$195,]40
-$1. 5, 4
MI¢C Sp. .1lnsnsMd 6
$SD.30
$3,060
$30.000
$60,D00
Other. s eWY
Other:(spacif -
30
_
_..,
" &.
Totel Other Costa
$iewv
SD
-f1 6 slk
$0
59D6:24$
$1207,95
f0
3Q
,. 3➢
'A�624h 9
SUBTOTAL
S2)iz5569
: 51.669620
-539399,189
F'J$1058)2
.82,1$a,42t
N)Op,DO➢
- $i 500006
Sd 5,)BA
W
P40. 47.05
DaY¢lo Br FeelOgrheadlPmfll
$1,BB]p98
Eil68X>099.
$302,825
81.664,1]9
1r68109H
Total
291656z]
f0
.
:.
,;2_.200929
TOTALDEV EL¢Or PCMosEtNa TCObT
$26956z9
$311,286 i,20599
f7. D6,9$t26
$$'onsul
i]0008➢D
$63ow
M6ST8b4
Exhibit F:
Scope of
EXHIBIT F
SCOPE OF WORK & SCHEDULE OF PERFORMANCE
I. SCOPE OF WORK
The project includes construction of a 51 -unit affordable residential community for large
families, rehabilitation of the existing commercial buildings at the north and east portions
of the site, new site amenities, landscaping and improvements to Fifth and Hawley
streets.
The residential portion of the project includes demolition of the existing, vacant
mechanic shop at 2237 West Fifth Street (corner of Fifth and Hawley streets) to
construct the residential rental community. The residential community includes three
levels of stick framed units on top of an on -grade podium parking garage. The ground
floor level will contain community space for services and activities, services and
property management offices along Fifth Street. A secured parking garage for residents
is tucked behind the street facing community space. The second level includes a
courtyard with playground equipment, outdoor BBQ area, an artificial turf recreation
area and clubhouse. The structure has been designed in a contemporary Mexican
architectural style that incorporates large facades, repetitive window placement, with
natural vegetation and public art.
The commercial component of the project is the renovation of the existing commercial
center at 2223 West Fifth Street. Improvements to the storefront facades include new
windows, signage, paint, siding, HVAC, parking area and driveway. These
improvements will establish a uniform contemporary architectural style among all
buildings on the project site and improve the existing businesses' ability to attract new
customers.
The site improvements component of the project also includes new landscape and
hardscape, as well as the construction of a new mini -park between the two commercial
buildings. Additional site upgrades include construction of community garden spaces
behind the commercial buildings, outdoor play equipment in the residential courtyard, an
entry plaza at the new residential structure, running track around the exterior of the site
and an outdoor fitness area. The proposed landscape palette includes drought -tolerant
plants, and hardscape complement the contemporary architectural style of the buildings.
New sidewalks, curbs, and street trees will be constructed or installed along the
project's frontages on both streets.
80A-290
II. SCHEDULE OF PERFORMANCE
Conditions Prior to Disbursement. The City/Agency Loan Agreements shall
provide that each of the following conditions shall be met prior to the disbursement
of any portion of the Loans:
a. PERMITS. All grading permits shall have been issued and the City shall have
issued a letter stating that building permits are ready to issue, subject only to
payment of fees and the completion of grading of the Project site.
b. FINANCING. Developer shall have secured all necessary financing and funding
for the construction and operation of the Project. Such financing and funding
shall be sufficient to pay all Project development costs, through lease -up, as set
forth in a final budget consistent with the approved Proforma (or as otherwise
approved by the City/Agency).
c. INSURANCE. The Developer shall have provided evidence to the City/Agency
that the Developer has obtained insurance policies and certificates or
endorsements acceptable to the City/Agency, as described in the Loan
Agreements.
d. SECURITY. The Developer shall have provided construction security in favor of
the City/Agency, which may include a completion guarantee from Community
Development Partners and/or a letter of credit and/or performance & payment
bonds from the general contractor for the Project (or some combination of these),
in an amount sufficient to ensure the Project will be completed and placed in
service within the time set forth in the Project schedule approved by the
City/Agency.
e. APPROVALS. Developer shall submit and obtain the City Manager / Executive
Director of the Housing Authority's approval of the following:
1. Construction Contract
2. Limited partnership agreement for the limited partnership entity to be
formed to own and operate the Project
3. Management plan for the Project
4. Marketing plan for the Project
5. Tenant selection plan for the Project.
2. Commencement of Construction of the Improvements. Developer shall cause
the Construction of the Improvements to be commenced by Contractor no later than
June 1, 2019
80A-291
3. Completion of Construction of Residential Improvements. Developer shall
complete all work of the Construction of the Residential Improvements on or before
February 1, 2021 (subject to extension by City based upon substantial progress
toward completion of construction by Developer).
4. Completion of Construction of the Improvements. Developer shall complete all
work of the Construction of the Improvements on or before February 1, 2021
(subject to extension by City based upon substantial progress toward completion of
construction by Developer).
The Schedule of Performance is subject to revision from time to time as mutually
agreed upon in writing between Developer and the City Manager or his/her designee
("City Manager"), and City Manager is authorized on behalf of City to agree to make
such revisions as he deems reasonably necessary. The City Manager, in his/her sole
discretion, may elect to bring to the City Council for consideration and action any
modifications to this Schedule of Performance. It is understood that the Schedule of
Performance is subject to all of the terms and conditions set forth in the text of the
Agreement. The summary of the items of performance in the Schedule of Performance
is not intended to supersede or modify the more complete description in the text of the
Agreement; in the event of any inconsistency between the Schedule of Performance
and the text of the Agreement, the text shall govern. In the event the City Manager
deems it necessary to bring to City Council for consideration one or more modifications
to this Schedule of Performance, the discretion to do so is expressly reserved to the
City Manager. The time periods set forth herein for City approval of plans and drawings
and other submittals that are submitted to City by Developer shall only apply and
commence upon Developer's complete submittal of all the required information. In no
event shall an incomplete submittal by Developer trigger any City obligations of review
and/or approval hereunder; provided, however, that City shall notify Developer of an
incomplete submittal as soon as is practicable and in no event later than the applicable
time set forth for City action on the particular item in question. If any of the foregoing
performance measurements are not met then it will be deemed a default as defined in
Section 20 and any remedies shall be cured according to said Section of the
Agreement.
80A-292
Exhibit Go.
Form of Residual
Receipts Report
80A-293
EXHIBIT G
FORM OF RESIDUAL RECEIPTS REPORT
Community Development Agency of the City of Santa Ana
Residual Receipts Report
for the Year Ending,
Date Prepared
Please complete the following information and execute the certification at the bottom of this form.
Please report Annual Project Revenue for the year ending on the following lines:
Rent Payments (including Section 8 tenant assistance payments, if any)
Interest Income (do ngtinclude interest income from replacement and operating
reserves nor interest income on tenant security deposits)
Additional Income (for example, vending machine income, tenant forfeited
deposits, laundry income not paid to the residents' association)
Total Annual Project Revenue (Add lines 1, 2, and 3)
Operatina Expenses'
Please report Operating Expenses incurred for the year ending
on the following lines:
Operating and Maintenance Expenses
Utilities
Property Management Expenses and On -Site Staff Payroll
Administrative Expenses
Property Taxes
Insurance
80A-294
(5)
$.
(6)
$
—
(7)
$
(8)
$
[a
(10) $
Other Expenses
Please list these expenses:
Total Annual Operating Expenses for the Housing Project (12) $
(Add lines 5, 6, 7, 8, 9, 10, and 11)
Net Operating Income (Subtract Line 12 from Line 4) (13)
Do not include expense unrelated to the operation ofthe Rental Portion of the
Project, such as depreciation, amortization, accrued principal and interest
expense on deferred payment debt, or capital expenditures.
Additional Cash Flow Payments
Obligated First Mortgage Debt Service Payments (as approved by the Agency and (14) $
other parties that may have such approval rights) and Obligated Secondary
Subordinate Debt Service Payments (as approved by the Agency and other parties
that may have such approval rights)
Scheduled Deposits to Reserves (as approved by the Agency)
Additional Payment Obligations (such as partnership management fees, deferred
developer fees, or repayments on loans to partners, as approved by the Agency to
have priority over Residual Receipt Payment to the Agency)
Total Additional Cash Flow Payments (Add lines 14,15, and 16)
Residual Receipts for Year Ending
(Subtract Line 17 from Line 13)
Percentage of Residual Receipts to be Paid to the Agency (as shown in the
Promissory Note by and between the Agency and Borrower dated
Amount Payable to the Agency (Multiply Line 18 by Line 19)
(15)
(20)
The amount payable to the Agency listed on Line 20 is subject to payment according to the terms of the
Promissory Note by and between the Agency and Borrower dated . If Line 20 is
$0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check
payable to and attach to this report.
80A-295
80A-296
WHEN RECORDED MAIL TO:
Citibank, N.A.
Transaction Management Group/Post Closing
388 Greenwich Street, 8th Floor
New York, New York 10013
Attention: Tanya Jimenez
Re: Tiny Tim Apartments Deal ID No. 25353
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(CITY OF SANTA ANA)
(Revised 10-1-2018)
Subordination Agreement — Governmental Entity
City of Santa Ana
19089788-v2
80A-297
EXHIBIT 5
Tiny Tim Apartments
EXHIBIT 5
Property Name: Tiny Tim Apartments
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(CITY OF SANTA ANA)
(Revised 10-1-2015)
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into as of the 1st day of
May, 2019, by and between (i) CITIBANK, N.A., a national banking association ("Senior
Lender") and (ii) the HOUSING AUTHORITY OF THE CITY OF SANTA ANA acting as the
Housing Successor Agency, a public body, corporate and politic ("Subordinate Lender"). The
date of this Assignment as set forth above is for reference purposes only, and this Assignment
will not be effective and binding until the Closing Date (as defined in the Senior Loan
Agreement).
RECITALS
A. Tiny Tim LP, a limited partnership organized under the laws of the State of California
("Borrower") is the owner of certain land located in Orange County, California,
described in Exhibit A ("Land"). The Land is improved with a multifamily rental
housing project ("Improvements").
B. Senior Lender has made or is making a loan to Borrower in the original principal amount
of [$15,000,000] ("Senior Loan") upon the terms and conditions of a Construction Loan
Agreement dated as of May 1, 2019 between Senior Lender and Borrower ("Senior Loan
Agreement") in connection with the Mortgaged Property. The Senior Loan is secured by
a Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing dated as of the date of the Senior Loan Agreement ("Senior Mortgage")
encumbering the Land, the Improvements and related personal and other property
described and defined in the Senior Mortgage as the "Mortgaged Property."
C. Pursuant to a Loan Agreement dated as of May [_], 2019 between Subordinate Lender
and Borrower ("Subordinate Loan Agreement'), Subordinate Lender has made or is
making a loan to Borrower in the original principal amount of $4,700,000 ("Subordinate
Loan"). The Subordinate Loan is or will be secured by an Agency Deed of Trust and
Assignment of Rents dated as of May [__J, 2019 ("Subordinate Mortgage")
encumbering all or a portion of the Mortgaged Property. The Subordinate Loan also
includes an Affordability Restrictions on Transfer of Property agreement by and between
the Subordinate Lender and the Borrower, dated as of May [_], 2019 ("Regulatory
Agreement') that shall remain in first position on title to the Land and shall not be
subordinated.
Subordination Agreement — Governmental Entity 1 Tiny Tim Apartments
City of Santa Ana
80A-298
EXHIBIT 5
D. The Senior Mortgage will be recorded in the Official Records of Orange County,
California ("Recording Office"). The Subordinate Mortgage will be recorded in the
Recording Office following the recording of the Senior Mortgage.
E. The execution and delivery of this Agreement is a condition of Senior Lender's
consenting to Subordinate Lender's making of the Subordinate Loan and Borrower's
granting of the Subordinate Mortgage.
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties agree as follows:
1. Definitions. The following terms, when used in this Agreement (including, as
appropriate, when used in the above recitals), will have the following meanings:
The terms "Condemnation," "Imposition Deposits," "Impositions," "Leases," "Rents"
and "Restoration," as well as any term used in this Agreement and not otherwise defined
in this Agreement, will have the meanings given to those terms in the Senior Loan
Agreement.
"Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency,
composition, restructuring, dissolution, liquidation, receivership, assignment for the
benefit of creditors, or custodianship action or proceeding under any federal or state law
with respect to Borrower, any guarantor of any of the Senior Indebtedness, any of their
respective properties, or any of their respective partners, members, officers, directors, or
shareholders.
"Borrower" means all persons or entities identified as `Borrower" in the first Recital of
this Agreement, together with their successors and assigns, and any other person or entity
who acquires title to the Mortgaged Property after the date of this Agreement; provided
that the term `Borrower" will not include Senior Lender if Senior Lender acquires title to
the Mortgaged Property.
"Casualty" means the occurrence of damage to or loss of all or any portion of the
Mortgaged Property by fire or other casualty.
"Enforcement Action" means any of the following actions taken by or at the direction of
Subordinate Lender: the acceleration of all or any part of the Subordinate Indebtedness,
the advertising of or commencement of any foreclosure or trustee's sale proceedings, the
exercise of any power of sale, the acceptance of a deed or assignment in lieu of
foreclosure or sale, the collecting of Rents, the obtaining of or seeking of the appointment
of a receiver, the seeking of default interest, the taking of possession or control of any of
the Mortgaged Property, the commencement of any suit or other legal, administrative, or
arbitration proceeding based upon the Subordinate Note or any other of the Subordinate
Subordination Agreement — Governmental Entity 2 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-299
EXHIBIT 5
Loan Documents or the Regulatory Agreement, the exercising of any banker's lien or
rights of set-off or recoupment, or the exercise of any other remedial action against
Borrower, any other party liable for any of the Subordinate Indebtedness or obligated
under any of the Subordinate Loan Documents or the Regulatory Agreement, or the
Mortgaged Property.
"Enforcement Action Notice" means a Notice given from Subordinate Lender to Senior
Lender following one or more Subordinate Mortgage Default(s) and the expiration of any
applicable notice or cure periods, setting forth in reasonable detail the Subordinate
Mortgage Default(s) and the Enforcement Actions proposed to be taken by Subordinate
Lender.
"Lien" means any lien, encumbrance, estate or other interest, recorded against or secured
by the Mortgaged Property.
"Loss Proceeds" means all monies received or to be received under any insurance policy,
from any condemning authority, or from any other source, as a result of any
Condemnation or Casualty.
"Notice" means all notices, requests, demands, consents, approvals or other
communication pursuant to this Agreement provided in accordance with the provisions of
Section 10.
"Regulatory Agreement" shall have the meaning ascribed in the Recitals hereof,
recorded or to be recorded in the Recording Office, which shall remain in first position on
title to the Land and shall not be part of the Subordinated Loan Documents.
"Senior Indebtedness" means the "Indebtedness" as defined in the Senior Loan
Agreement.
"Senior Lender" means the "Lender" as defined in the Senior Mortgage. When any other
person or entity becomes the legal holder of the Senior Note, such other person or entity
will automatically become Senior Lender.
"Senior Loan Documents" means the "Loan Documents" as defined in the Senior Loan
Agreement, as such documents may be amended.
"Senior Mortgage Default" means any act, failure to act, event, condition, or occurrence
which constitutes, or which with the giving of Notice or the passage of time, or both,
would constitute, an "Event of Default" as defined in the Senior Loan Agreement.
"Senior Note" means the promissory note or other evidence of the Senior Indebtedness
and any replacement of the Senior Note.
Subordination Agreement — Governmental Entity
Housing Authority of the City of Santa Ana
80A-300
Tiny Tim Apartments
"Subordinate Indebtedness" means all sums evidenced or secured or guaranteed by, or
otherwise due and payable to Subordinate Lender pursuant to, the Subordinate Loan
Documents.
"Subordinate Lender" means the person or entity named as such in the first paragraph
of this Agreement and any other person or entity who becomes the legal holder of the
Subordinate Note after the date of this Agreement.
"Subordinate Loan Documents" means the Subordinate Mortgage, the Subordinate
Note, the Subordinate Loan Agreement and all other documents at any time evidencing,
securing, guaranteeing, or otherwise delivered in connection with the Subordinate
Indebtedness, as such documents may be amended and specifically excluding the
Regulatory Agreement, provided, that any exercise of remedies under the Subordinate
Loan Documents, by reason of a default under the Regulatory Agreement, shall be and
remain subordinated, pursuant to the terms of this Subordination.
"Subordinate Mortgage Default" means any act, failure to act, event, condition, or
occurrence which allows (but for any contrary provision of this Agreement), Subordinate
Lender to take an Enforcement Action.
"Subordinate Note" means the promissory note or other evidence of the Subordinate
Indebtedness and any replacement of the Subordinate Note.
"Surplus Cash" means, with respect to any period, any revenues of Borrower remaining
after paying, or setting aside funds for paying, all the following:
(a) All sums due or currently required to be paid under the Senior Loan Documents,
including any reserves and Imposition Deposits.
(b) All reasonable operating expenses of the Mortgaged Property, including real
estate taxes, insurance premiums, utilities, building maintenance, painting and
repairs, management fees, payroll, administrative expenses, legal expenses and
audit expenses (excluding any developer fees payable with respect to the
Mortgaged Property).
2. Subordinate Lender's Representations and Warranties.
(a) Subordinate Lender represents and warrants that each of the following is true as
of the date of this Agreement:
(i) Subordinate Lender is now the owner and holder of the Subordinate Loan
Documents and the Regulatory Agreement.
(ii) No Subordinate Mortgage Default has occurred and is continuing.
Subordination Agreement — Governmental Entity 4 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-301
EXHIBIT 5
(iii) The current unpaid principal balance of the Subordinate Indebtedness is
(iv) No scheduled payments under the Subordinate Note have been prepaid.
(b) Without the prior written consent of Senior Lender, Subordinate Lender will not
do any of the following:
(i) Pledge, assign, transfer, convey, or sell any interest in the Subordinate
Indebtedness or any of the Subordinate Loan Documents or the Regulatory
Agreement.
(ii) Take any action which has the effect of increasing the Subordinate
Indebtedness, except to cure a Senior Mortgage Default as contemplated
under Section 5(a) of this Agreement.
(iii) Accept any prepayment of the Subordinate Indebtedness.
3. Terms of Subordination.
(a) Agreement to Subordinate. The Subordinate Indebtedness is and will at all times
continue to be subject and subordinate in right of payment to the prior payment in
full of the Senior Indebtedness. Each of the Subordinate Loan Documents is, and
will at all times remain, subject and subordinate in all respects to the liens, terms,
covenants, conditions, operations, and effects of each of the Senior Loan
Documents, specifically excluding the Regulatory Agreement executed by and
between the Subordinate Lender and Borrower in connection with the
Subordinating Party's Loan, which shall always remain in first position on title to
the Land.
(b) Subordination of Subrogation Rights. If Subordinate Lender, by indemnification,
subrogation or otherwise, acquires any Lien on any of the Mortgaged Property,
then that Lien will be fully subject and subordinate to the receipt by Senior
Lender of payment in full of the Senior Indebtedness, and to the Senior Loan
Documents, to the same extent as the Subordinate Indebtedness and the
Subordinate Loan Documents are subordinate pursuant to this Agreement.
(c) Payments Before Senior Loan Default; Soft Subordinate Debt. Until the
occurrence of a Senior Mortgage Default, Subordinate Lender will be entitled to
retain for its own account all payments of the principal of and interest on the
Subordinate Indebtedness pursuant to the Subordinate Loan Documents; provided
that Subordinate Lender expressly agrees that it will not accept any such payment
that is made more than 10 days in advance of its due date and provided further
that Subordinate Lender will not accept any payment in an amount that exceeds
75% of then available Surplus Cash].
Subordination Agreement — Governmental Entity
Housing Authority of the City of Santa Ana
80A-302
Tiny Tim Apartments
EXHIBIT 5
(d) Payments After Senior Loan Default or Bankruptcy.
(i) Immediately upon Subordinate Lender's receipt of Notice or actual
knowledge of a Senior Mortgage Default, Subordinate Lender will not
accept any payments of the Subordinate Indebtedness, and the provisions
of Section 3(d) of this Agreement will apply.
(ii) If Subordinate Lender receives any of the following, whether voluntarily
or by action of law, after a Senior Mortgage Default of which Subordinate
Lender has actual knowledge (or is deemed to have actual knowledge as
provided in Section 4(c)) or has been given Notice, such will be received
and held in trust for Senior Lender:
(A) Any payment, property, or asset of any kind or in any form in
connection with the Subordinate Indebtedness.
(B) Any proceeds from any Enforcement Action.
(C) Any payment, property, or asset in or in connection with any
Bankruptcy Proceeding.
(iii) Subordinate Lender will promptly remit, in kind and properly endorsed as
necessary, all such payments, properties, and assets described in Section
3(d)(ii) to Senior Lender. Senior Lender will apply any payment, asset, or
property so received from Subordinate Lender to the Senior Indebtedness
in such order, amount (with respect to any asset or property other than
immediately available funds), and manner as Senior Lender determines in
its sole and absolute discretion.
(e) Bankruptcy. Without the prior written consent of Senior Lender, Subordinate
Lender will not commence, or join with any other creditor in commencing, any
Bankruptcy Proceeding. In the event of a Bankruptcy Proceeding, Subordinate
Lender will not vote affirmatively in favor of any plan of reorganization or
liquidation unless Senior Lender has also voted affirmatively in favor of such
plan.
Subordination Agreement — Governmental Entity
Housing Authority of the City of Santa Ana
80A-303
Tiny Tim Apartments
EXHIBIT 5
4. Default Under Subordinate Loan Documents.
(a) Notice of Subordinate Loan Default and Cure Rights.
(i) Subordinate Lender will deliver to Senior Lender a copy of each Notice
delivered by Subordinate Lender pursuant to the Subordinate Loan
Documents and/or the Regulatory Agreement within 5 Business Days of
sending such Notice to Borrower. Neither giving nor failing to give a
Notice to Senior Lender pursuant to this Section 4(a) will affect the
validity of any Notice given by Subordinate Lender to Borrower.
(ii) For a period of 90 days following delivery to Senior Lender of an
Enforcement Action Notice, Senior Lender will have the right, but not the
obligation, to cure any Subordinate Mortgage Default. However, if such
Subordinate Mortgage Default is a non -monetary default and is not
capable of being cured within such 90 -day period and Senior Lender has
commenced and is diligently pursuing such cure to completion, Senior
Lender will have such additional period of time as may be required to cure
such Subordinate Mortgage Default or until such time, if ever, as Senior
Lender takes either of the following actions:
(A) Discontinues its pursuit of any cure.
(B) Delivers to Subordinate Lender Senior Lender's written consent to
the Enforcement Action described in the Enforcement Action
Notice.
(iii) Senior Lender will not be subrogated to the rights of Subordinate Lender
render the Subordinate Loan Documents as a result of Senior Lender
having cured any Subordinate Mortgage Default.
(iv) Subordinate Lender acknowledges that all amounts advanced or expended
by Senior Lender in accordance with the Senior Loan Documents or to cure
a Subordinate Mortgage Default will be added to and become a part of the
Senior Indebtedness and will be secured by the lien of the Senior Mortgage.
(b) Subordinate Lender's Exercise of Remedies After Notice to Senior Lender.
(i) In the event of a Subordinate Mortgage Default, Subordinate Lender will
not commence any Enforcement Action until 90 days after Subordinate
Lender has delivered to Senior Lender an Enforcement Action Notice.
During such 90 -day period or such longer period as provided in Section
4(a), Subordinate Lender will be entitled to seek specific performance to
enforce covenants and agreements of Borrower relating to income, rent, or
affordability restrictions contained in the Regulatory Agreement, subject
Subordination Agreement — Governmental Entity 7 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-304
EXHIBIT 5
to Senior Lender's right to cure a Subordinate Mortgage Default set forth
in Section 4(a).
(ii) Subordinate Lender may not commence any other Enforcement Action,
including any foreclosure action under the Subordinate Loan Documents,
until the earlier of:
(A) The expiration of such 90 -day period or such longer period as
provided in Section 4(a).
(13) The delivery by Senior Lender to Subordinate Lender of Senior
Lender's written consent to such Enforcement Action by
Subordinate Lender.
(iii) Subordinate Lender acknowledges that Senior Lender may grant or refuse
consent to Subordinate Lender's Enforcement Action in Senior Lender's
sole and absolute discretion. At the expiration of such 90 -day period or
such longer period as provided in Section 4(a) and, subject to Senior
Lender's right to cure set forth in Section 4(a), Subordinate Lender may
commence any Enforcement Action.
(iv) Senior Lender may pursue all rights and remedies available to it under the
Senior Loan Documents, at law, or in equity, regardless of any
Enforcement Action Notice or Enforcement Action by Subordinate
Lender. No action or failure to act on the part of Senior Lender in the
event of a Subordinate Mortgage Default or commencement of an
Enforcement Action will constitute a waiver on the part of Senior Lender
of any provision of the Senior Loan Documents or this Agreement.
(c) Cross Default. Subordinate Lender acknowledges that a Subordinate Mortgage
Default constitutes a Senior Mortgage Default. Accordingly, upon the occurrence
of a Subordinate Mortgage Default, Subordinate Lender will be deemed to have
actual knowledge of a Senior Mortgage Default. If Subordinate Lender notifies
Senior Lender in writing that any Subordinate Loan Default of which Senior
Lender has received Notice has been cured or waived, as determined by
Subordinate Lender in its sole discretion, then provided that Senior Lender has
not conducted a sale of the Mortgaged Property pursuant to its rights under the
Senior Loan Documents, any Senior Loan Default under the Senior Loan
Documents arising solely from such Subordinate Loan Default will be deemed
cured, and the Senior Loan will be reinstated.
5. Default Under Senior Loan Documents.
(a) Notice of Senior Loan Default and Cure Rights.
Subordination Agreement — Governmental Entity 8 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-305
EXHIBIT 5
(i) Senior Lender will deliver to Subordinate Lender a copy of any Notice sent
by Senior Lender to Borrower of a Senior Mortgage Default within 5
Business Days of sending such Notice to Borrower. Failure of Senior Lender
to send Notice to Subordinate Lender will not prevent the exercise of Senior
Lender's rights and remedies under the Senior Loan Documents.
(ii) Subordinate Lender will have the right, but not the obligation, to cure any
monetary Senior Mortgage Default within 30 days following the date of such
Notice. During such 30 -day period Senior Lender will be entitled to continue
to pursue its remedies trader the Senior Loan Documents.
(iii) Subordinate Lender may, within 90 days after the date of the Notice, cure a
non -monetary Senior Mortgage Default if during such 90 -day period,
Subordinate Lender keeps current all payments required tmder the Senior
Loan Documents. If such a non -monetary Senior Mortgage Default creates
an unacceptable level of risk relative to the Mortgaged Property, or Senior
Lender's secured position relative to the Mortgaged Property, as determined
by Senior Lender in its sole discretion, then during such 90 -day period
Senior Lender may exercise all available rights and remedies to protect and
preserve the Mortgaged Property and the Rents, revenues and other proceeds
from the Mortgaged Property.
(iv) All amounts paid by Subordinate Lender to Senior Lender to cure a Senior
Mortgage Default will be deemed to have been advanced by Subordinate
Lender pursuant to, and will be secured by the lien of, the Subordinate
Mortgage. Notwithstanding anything in this Section 5(a) to the contrary,
Subordinate. Lender's right to cure any Senior Mortgage Default will
terminate immediately upon the occurrence of any Bankruptcy Proceeding.
(b) Release of Mortgaged Prouerty.
(i) Subordinate Lender consents to and authorizes any future release by
Senior Lender of all or any portion of the Mortgaged Property from the
lien, operation, and effect of the Senior Loan Documents. Subordinate
Lender waives to the fullest extent permitted by law, all equitable or other
rights it may have in connection with the release of all or any portion of
the Mortgaged Property, including any right to require Senior Lender to do
any of the following:
(A) To conduct a separate sale of any portion of the Mortgaged
Property.
(B) To exhaust its remedies against all or any portion of the Mortgaged
Property or any combination of portions of the Mortgaged Property
or any other collateral for the Senior Indebtedness.
Subordination Agreement — Governmental Entity
Housing Authority of the City of Santa Ana
80A-306
Tiny Tim Apartments
EXHIBIT 5
(C) To proceed against Borrower, any other party that may be liable
for any of the Senior Indebtedness (including any general partner
of Borrower if Borrower is a partnership), all or any portion of the
Mortgaged Property or combination of portions of the Mortgaged
Property or any other collateral, before proceeding against all or
such portions or combination of portions of the Mortgaged
Property as Senior Lender determines. Subordinate Lender waives
to the fullest extent permitted by law any and all benefits under
California Civil Code Sections 2845, 2849 and 2850.
(ii) Subordinate Lender consents to and authorizes, at the option of Senior
Lender, the sale, either separately or together, of all or any portion of the
Mortgaged Property. Subordinate Lender acknowledges that without
Notice to Subordinate Lender and without affecting any of the provisions
of this Agreement, Senior Lender may do any of the following:
(A) Extend the time for or waive any payment or performance under
the Senior Loan Documents.
(B) Modify or amend in any respect any provision of the Senior Loan
Documents or the Regulatory Agreement.
(C) Modify, exchange, surrender, release, and otherwise deal with any
additional collateral for the Senior Indebtedness.
Notwithstanding the foregoing, Senior Lender agrees that it will provide Subordinate
Lender with all Notices of foreclosure or foreclosure sale that are required under
applicable State or local law.
6. Conflicts. If there is any conflict or inconsistency between the terms of the Subordinate
Loan Documents and the terms of this Agreement, then the terms of this Agreement will
control. Borrower acknowledges that the terms and provisions of this Agreement will not,
and will not be deemed to do any of the following:
(a) Extend Borrower's time to cure any Senior Loan Default or Subordinate Loan
Default.
(b) Give Borrower the right to receive notice of any Senior Loan Default or
Subordinate Loan Default, other than that, if any, provided, respectively under the
Senior Loan Documents of the Subordinate Loan Documents.
(c) Create any other right or benefit for Borrower as against Senior Lender or
Subordinate Lender.
7. Rights and Obligations of Subordinate Lender Under the Subordinate Loan
Documents and of Senior Lender under the Senior Loan Documents.
Subordination Agreement — Governmental Entity 10 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-307
EXHIBIT 5
(a) Insurance.
(i) Intentionally Omitted.
(ii) All original policies of insurance required pursuant to the Senior Loan
Documents will be held by Senior Lender.
(iii) Nothing in this Section 7(a) will preclude Subordinate Lender from
requiring that it be named as a mortgagee and loss payee, as its interest
may appear, under all policies of property damage insurance maintained
by Borrower with respect to the Mortgaged Property, provided such action
does not affect the priority of payment of Loss Proceeds, or that
Subordinate Lender be named as an additional insured trader all policies of
liability insurance maintained by Borrower with respect to the Mortgaged
Property.
(b) Condemnation or Casualty.
In the event of a Condemnation or a Casualty, the following provisions will apply:
(i) The rights of Subordinate Lender (under the Subordinate Loan Documents
or otherwise) to participate in any proceeding or action relating to a
Condemnation or a Casualty, or to participate or join in any settlement of,
or to adjust, any claims resulting from a Condemnation or a Casualty, will
be and remain subordinate in all respects to Senior Lender's rights under
the Senior Loan Documents, and Subordinate Lender will be bound by any
settlement or adjustment of a claim resulting from a Condemnation or a
Casualty made by Senior Lender.
(ii) All Loss Proceeds will be applied either to payment of the costs and
expenses of Restoration or to payment on account of the Senior
Indebtedness, as and in the manner determined by Senior Lender in its
sole discretion; provided however, Senior Lender agrees to consult with
Subordinate Lender in determining the application of Casualty proceeds.
In the event of any disagreement between Senior Lender and Subordinate
Lender over the application of Casualty proceeds, the decision of Senior
Lender, in its sole discretion, will prevail.
(iii) If Senior Lender holds Loss Proceeds, or monitors the disbursement of
Loss Proceeds, Subordinate Lender will not do so. Nothing contained in
this Agreement will be deemed to require Senior Lender to act for or on
behalf of Subordinate Lender in connection with any Restoration or to
hold or monitor any Loss Proceeds in trust for or otherwise on behalf of
Subordinate Lender, and all or any Loss Proceeds may be commingled
with any funds of Senior Lender.
Subordination Agreement — Governmental Entity 11 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
Fi l ffiI] i
EXHIBIT 5
(iv) If Senior Lender elects to apply Loss Proceeds to payment on account of
the Senior Indebtedness, and if the application of such Loss Proceeds
results in the payment in full of the entire Senior Indebtedness, any
remaining Loss Proceeds held by Senior Lender will be paid to
Subordinate Lender unless another party has asserted a claim to the
remaining Loss Proceeds.
(c) Modification of Subordinate Loan Documents. Subordinate Lender agrees that,
until the principal of, interest on and all other amounts payable under the Senior
Loan Documents have been paid in full, it will not, without the prior written
consent of Senior Lender, increase the amount of the Subordinate Loan, increase
the required payments due under the Subordinate Loan, decrease the term of the
Subordinate Loan, increase the interest rate on the Subordinate Loan, or otherwise
amend the Subordinate Loan terms in a manner that creates an adverse effect
upon Senior Lender under the Senior Loan Documents. If Subordinate Lender
either (i) amends the Subordinate Loan Documents in the manner set forth above
or (ii) assigns the Subordinate Loan without Senior Lender's consent then such
amendment or assignment will be void ab initio and of no effect whatsoever.
(d) Modification of Senior Loan Documents. Senior Lender may amend, waive,
postpone, extend, renew, replace, reduce or otherwise modify any provisions of
the Senior Loan Documents without the necessity of obtaining the consent of or
providing Notice to Subordinate Lender, and without affecting any of the
provisions of this Agreement. Notwithstanding the foregoing, Senior Lender may
not modify any provision of the Senior Loan Documents that increases the Senior
Indebtedness, except for increases in the Senior Indebtedness that result from
advances made by Senior Lender to protect the security or lien priority of Senior
Lender under the Senior Loan Documents or to cure defaults under the
Subordinate Loan Documents.
(e) Commercial or Retail Leases. If requested, Subordinate Lender will enter into
attornment and non -disturbance agreements with all tenants under commercial or
retail Leases, if any, to whom Senior Lender has granted attornment and non-
disturbance, on the same terms and conditions given by Senior Lender.
(f) Consent Rights. Whenever the Subordinate Loan Documents give Subordinate
Lender approval or consent rights with respect to any matter, and a right of
approval or consent for the same or substantially the same matter is also granted
to Senior Lender pursuant to the Senior Loan Documents or otherwise, Senior
Lender's approval or consent or failure to approve or consent will be binding on
Subordinate Lender. None of the other provisions of Section 7 are intended to be
in any way in limitation of the provisions of this Section 7(f).
(g) Escrows. Except as provided in this Section 7(g), and regardless of any contrary
provision in the Subordinate Loan Documents, Subordinate Lender will not
Subordination Agreement — Governmental Entity 12 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-309
EXHIBIT 5
collect any escrows for any cost or expense related to the Mortgaged Property or
for any portion of the Subordinate Indebtedness. However, if Senior Lender is not
collecting escrow payments for one or more Impositions, Subordinate Lender may
collect escrow payments for such Impositions; provided that all payments so
collected by Subordinate Lender will be held in trust by Subordinate Lender to be
applied only to the payment of such Impositions.
(h) Certification. Within 10 days after request by Senior Lender, Subordinate Lender
will furnish Senior Lender with a statement, duly acknowledged and certified
setting forth the then -current amount and terms of the Subordinate Indebtedness,
confirming that there exists no default under the Subordinate Loan Documents or
the Regulatory Agreement (or describing any default that does exist), and
certifying to such other information with respect to the Subordinate Indebtedness
as Senior Lender may request.
8. Refinancing. Subordinate Lender agrees that its agreement to subordinate under this
Agreement will extend to any new mortgage debt which is for the purpose of refinancing
all or any part of the Senior Indebtedness (including reasonable and necessary costs
associated with the closing and/or the refinancing). Subordinate Lender further agrees to
expeditiously review and approve any reasonable increase to the Senior Indebtedness in
connection with any such refinanced mortgage debt provided that such increase is to be
used for rehabilitation of the Improvements in the context of a preservation transaction.
All terms and covenants of this Agreement will inure to the benefit of any holder of any
such refinanced debt, and all references to the Senior Loan Documents and Senior Lender
will mean, respectively, the refinance loan documents and the holder of such refinanced
debt.
9. Governmental Powers. Nothing in this Agreement is intended, nor will it be construed,
to in any way limit the exercise by Subordinate Lender of its governmental powers
(including police, regulatory and taxing powers) with respect to Borrower or the
Mortgaged Property to the same extent as if it were not a party to this Agreement or the
transactions contemplated by this Agreement.
10. Notices.
(a) Any Notice required or permitted to be given pursuant to this Agreement will be
in writing and will be deemed to have been duly and sufficiently given if (i)
personally delivered with proof of delivery (any Notice so delivered will be
deemed to have been received at the time so delivered), or (ii) sent by a national
overnight courier service (such as FedEx) designating earliest available delivery
(any Notice so delivered will be deemed to have been received on the next
Business Day following receipt by the courier), or (iii) sent by United States
registered or certified mail, return receipt requested, postage prepaid, at a post
office regularly maintained by the United States Postal Service (any Notice so
Subordination Agreement — Governmental Entity 13 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-310
EXHIBIT 5
sent will be deemed to have been received on the date of delivery as confirmed by
the return receipt), addressed to the respective parties as follows:
If to Senior Lender: Citibank, N.A.
388 Greenwich Street, 8th Floor
New York, New York 10013
Attention: Transaction Management Group
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (212) 723-8209
With a copy to: Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (805) 557-0924
With a copy to: Citibank N.A.
c/o Berkadia Commercial Servicing Department
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Client Relations Manager
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (215) 328-0305
And a copy of any notices of Citibank, N.A.
default sent to: 388 Greenwich Street
New York, New York 10013
Attention: General Counsel's Office
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (646) 291-5754
If to Subordinate Lender: Housing Authority of the City of Santa Ana
Executive Director
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
With a copy sent to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Subordination Agreement — Governmental Entity 14 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-311
EXHIBIT 5
(b) Any party, by Notice given pursuant to this Section 10, may change the person or
persons and/or address or addresses, or designate an additional person or persons
or an additional address or addresses, for its Notices, but Notice of a change of
address will only be effective upon receipt. Neither party will refuse or reject
delivery of any Notice given in accordance with this Section 10.
11. Miscellaneous Provisions.
(a) Assignments/Successors. This Agreement will be binding upon and will inure to
the benefit of the respective legal successors and permitted assigns of the parties
to this Agreement. No other party will be entitled to any benefits under this
Agreement, whether as a third -party beneficiary or otherwise. This Agreement
may be assigned at any time by Senior Lender to any subsequent holder of the
Senior Note.
(b) No Partnership or Joint Venture. Nothing in this Agreement or in any of the
Senior Loan Documents or Subordinate Loan Documents will be deemed to
constitute Senior Lender as a joint venturer or partner of Subordinate Lender.
(c) Further Assurances. Upon Notice from Senior Lender, Subordinate Lender will
execute and deliver such additional instruments and documents, and will take
such actions, as are required by Senior Lender to further evidence or implement
the provisions and intent of this Agreement.
(d) Amendment. This Agreement may be amended, changed, modified, altered or
terminated only by a written instrument signed by the parties to this Agreement or
their successors or assigns.
(e) Governing Law. This Agreement will be governed by the laws of the State in
which the Land is located.
(f) Severable Provisions. If any one or more of the provisions contained in this
Agreement, or any application of any such provisions, is invalid, illegal, or
unenforceable in any respect, the validity, legality, enforceability, and application
of the remaining provisions contained in this Agreement will not in any way be
affected or impaired.
(g) Term. The term of this Agreement will commence on the date of this Agreement
and will continue until the earliest to occur of the following events:
(i) The payment of all the Senior Indebtedness; provided that this Agreement
will be reinstated in the event any payment on account of the Senior
Indebtedness is avoided, set aside, rescinded or repaid by Senior Lender as
described in Section 2(e) of this Agreement.
Subordination Agreement — Governmental Entity 15 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-312
EXHIBIT 5
(ii) The payment of all the Subordinate Indebtedness other than by reason of
payments which Subordinate Lender is obligated to remit to Senior Lender
pursuant to this Agreement.
(iii) The acquisition by Senior Lender or by a third -party purchaser of title to
the Mortgaged Property pursuant to a foreclosure of, deed in lieu of
foreclosure, or trustee's sale or other exercise of a power of sale or similar
disposition under the Senior Mortgage.
(iv) With the prior written consent of Senior Lender, without limiting the
provisions of Section 4(b)(iv), the acquisition by Subordinate Lender of
title to the Mortgaged Property subject to the Senior Mortgage pursuant to
a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a
power of sale under) the Subordinate Mortgage.
(h) Counterparts. This Agreement may be executed in two or more counterparts, each
of which will be deemed an original but all of which together will constitute one
and the same instrument.
(i) Entire Agreement. This Agreement represents the entire understanding and
agreement between the parties regarding the matters addressed in this Agreement,
and will supersede and cancel any prior agreements regarding such matters.
(j) Authority. Each person executing this Agreement on behalf of a party to this
Agreement represents and warrants that such person is duly and validly
authorized to do so on behalf of such party with full right and authority to execute
this Agreement and to bind such party with respect to all of its obligations under
this Agreement.
(k) No Waiver. No failure or delay on the part of any party to this Agreement in
exercising any right, power, or remedy under this Agreement will operate as a
waiver of such right, power, or remedy, nor will any single or partial exercise of
any such right, power or remedy preclude any other or further exercise of such
right, power, or remedy or the exercise of any other right, power or remedy under
this Agreement.
(1) Remedies. Each party to this Agreement acknowledges that if any party fails to
comply with its obligations under this Agreement, the other parties will have all
rights available at law and in equity, including the right to obtain specific
performance of the obligations of such defaulting party and injunctive relief.
[SIGNATURE AND ACKNOWLEDGMENT PAGES FOLLOW]
Subordination Agreement — Governmental Entity 16 Tiny Tim Apartments
Housing Authority of the City of Santa Ana
80A-313
EXHIBIT 5
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year
first above written.
SENIOR LENDER:
CITIBANK, N.A.
By:
Name: Michael Hemmens
Title: Authorized Signatory
Deal ID No. 25353
SUBORDINATE LENDER:
CITY OF SAN'T'A ANA
By: _
Name:
Title:
AS TO FORM
Attorney
Subordination Agreement—Governmental Entity S-1 Tiny Tim Apartments
City of Santa Ana
80A-314
EXHIBIT 5
CONSENT OF BORROWER
Borrower acknowledges receipt of a copy of this Subordination Agreement, dated May —,
2019, by and between Citibank, N.A, and the City of Santa Ana and consents to the agreement of
the parties set forth in this Agreement.
TINY TIM LP, a California
limited partnership
By: Tiny Tim CDP LLC, a California
limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Member and Manager
By: G
Name: Ky e Paine
Title: President
By: Tiny Tim Mercy House CHDO, LLC, a
California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc., a California
nonprofit public benefit corporation
Its: Sole Managing Member
By:
Name: Stephanie Miles
Title: Board Secretary
By: IH CDP Partnership LLC, a California
limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance Il, Inc.,
a Colorado nonprofit corporation
dba Integrity Housing
Its: Sole Managing Member
By:
Name:
Title:
Subordination Agreement— Governmental Entity S-2
City of Santa Ana
80A-315
Philip Wood
President
Tiny Tim Apartments
Subordination Agreement — Governmental Entity
Housing Authority of the City of Santa Ana
80A-316
EXHIBIT 5
Tiny Tim Apartments
EXHIBIT 5
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On before me, (here insert name and title of the
officer), personally appeared who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
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)
Subordination Agreement — Governmental Entity S-3 Tiny Tim Apartments
City of Santa Ana
80A-317
EXHIBIT 5
EXHIBIT A
LEGAL DESCRIPTION
Real property situated in the County of Orange, State of California, described as follows:
PARCEL 1:
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE,
STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47
AND 48 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA.
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT
THEREON SOUTH 89049'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF
SAID LOT, AND RUNNING THENCE NORTH 0°16'15" EAST PARALLEL WITH THE
CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP,
144 FEET;
THENCE SOUTH 89049'25" WEST PARALLEL WITH THE CENTER LINE OF FIFTH
STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST
LINE OF SAID LOT 39;
THENCE SOUTH 0016'15" WEST ALONG SAID WEST LINE, 133.92 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A
RADIUS OF 10 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
90026'50" AN ARC DISTANCE OF 15.79 FEET TO A POINT OF TANGENCY WITH THE
SOUTH LINE OF SAID LOT;
THENCE NORTH 89049'25" EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE
POINT OF BEGINNING.
APN: 007-313-15
PARCEL 2:
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE,
STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47
AND 48 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM THAT PORTION OF LOT 39 OF TRACT NO, 1341, AS
SHOWN ON A MAP THEREOF RECORDED IN BOOK 57, PAGES 47 AND 48 OF
MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, DESCRIBED AS
FOLLOWS:
Subordination Agreement —Governmental Entity A-1 Tiny Tim Apartments
City of Santa Ana
80A-318
EXHIBIT 5
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT
THEREON SOUTH 89049'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF
SAID LOT, AND RUNNING THENCE NORTH 0°16'15" EAST PARALLEL WITH THE
CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP,
144 FEET;
THENCE SOUTH 89049'25" WEST PARALLEL WITH THE CENTER LINE OF FIFTH
STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST
LINE OF SAID LOT 39;
THENCE SOUTH 0016'15" WEST ALONG SAID WEST LINE, 133.92 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A
RADIUS OF 10 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
90026'50" AN ARC DISTANCE OF 15.79 FEET TO A POINT OF TANGENCY WITH THE
SOUTH LINE OF SAID LOT;
THENCE NORTH 89049'25" EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE
POINT OF BEGINNING.
Subordination Agreement — Governmental Entity A-2 Tiny Tim Apartments
City of Santa Ana
80A-319
80A-320
WHEN RECORDED MAIL TO:
Citibank, N.A.
Transaction Management Group/Post Closing
388 Greenwich Street, 811i Floor
New York, New York 10013
Attention: Tanya Jimenez
Re: Tiny Tim Apartments Deal ID No. 25353
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(CITY OF SANTA ANA)
(Revised 10-1-2018)
Subordination Agreement — Governmental Entity
City of Santa Ana -Inclusionary Housing
19189325v2
80A-321
EXHIBIT 6
Tiny Tim Apartments
Property Name: Tiny Tim Apartments
EXHIBIT 6
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(CITY OF SANTA ANA)
(Revised 10-1-2018)
THIS SUBORDINATION AGREEMENT ("Agreement') is entered into as of the 1st day of
May, 2019, by and between (i) CITIBANK, N.A., a national banking association ("Senior
Lender") and (ii) the CITY OF SANTA ANA, a municipal corporation and charter city of the
State of California ("Subordinate Lender"). The date of this Assignment as set forth above is
for reference purposes only, and this Assignment will not be effective and binding until the
Closing Date (as defined in the Senior Loan Agreement).
RECITALS
A. Tiny Tim LP, a limited partnership organized under the laws of the State of California
("Borrower") is the owner of certain land located in Orange County, California,
described in Exhibit A ("Land"). The Land is improved with a multifamily rental
housing project ("Improvements").
B. Senior Lender has made or is making a loan to Borrower in the original principal amount
of [$15,000,0001 ("Senior Loan") upon the terms and conditions of a Construction Loan
Agreement dated as of May 1, 2019 between Senior Lender and Borrower ("Senior Loan
Agreement') in connection with the Mortgaged Property. The Senior Loan is secured by
a Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing dated as of the date of the Senior Loan Agreement ("Senior Mortgage")
encumbering the Land, the Improvements and related personal and other property
described and defined in the Senior Mortgage as the "Mortgaged Property."
C. Pursuant to a Loan Agreement dated as of May [_], 2019 between Subordinate Lender
and Borrower ("Subordinate Loan Agreement'), Subordinate Lender has made or is
making an Inclusionary Housing Loan to Borrower in the original principal amount of
$1,300,000 ("Subordinate Load'). The Subordinate Loan is or will be secured by an
Agency Deed of Trust and Assignment of Rents dated as of May [�, 2019
("Subordinate Mortgage") encumbering all or a portion of the Mortgaged Property.
The Subordinate Loan also includes an Affordability Restrictions on Transfer of Property
agreement by and between the Subordinate Lender and the Borrower, dated as of May
[_J, 2019 ("Regulatory Agreement") that shall remain in first position on title to the
Land and shall not be subordinated.
Subordination Agreement — Governmental Entity 1 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-322
EXHIBIT 6
D. The Senior Mortgage will be recorded in the Official Records of Orange County,
California ("Recording Office"). The Subordinate Mortgage will be recorded in the
Recording Office following the recording of the Senior Mortgage.
E. The execution and delivery of this Agreement is a condition of Senior Lender's
consenting to Subordinate Lender's making of the Subordinate Loan and Borrower's
granting of the Subordinate Mortgage.
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties agree as follows:
1. Definitions. The following terms, when used in this Agreement (including, as
appropriate, when used in the above recitals), will have the following meanings:
The terms "Condemnation," "Imposition Deposits," "Impositions," "Leases," "Rents"
and "Restoration," as well as any term used in this Agreement and not otherwise defined
in this Agreement, will have the meanings given to those terms in the Senior Loan
Agreement.
"Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency,
composition, restructuring, dissolution, liquidation, receivership, assignment for the
benefit of creditors, or custodianship action or proceeding under any federal or state law
with respect to Borrower, any guarantor of any of the Senior Indebtedness, any of their
respective properties, or any of their respective partners, members, officers, directors, or
shareholders.
"Borrower" means all persons or entities identified as `Borrower" in the first Recital of
this Agreement, together with their successors and assigns, and any other person or entity
who acquires title to the Mortgaged Property after the date of this Agreement; provided
that the term "Borrower" will not include Senior Lender if Senior Lender acquires title to
the Mortgaged Property.
"Casualty" means the occurrence of damage to or loss of all or any portion of the
Mortgaged Property by fire or other casualty.
"Enforcement Action" means any of the following actions taken by or at the direction of
Subordinate Lender: the acceleration of all or any part of the Subordinate Indebtedness,
the advertising of or commencement of any foreclosure or trustee's sale proceedings, the
exercise of any power of sale, the acceptance of a deed or assignment in lieu of
foreclosure or sale, the collecting of Rents, the obtaining of or seeking of the appointment
of a receiver, the seeking of default interest, the taking of possession or control of any of
the Mortgaged Property, the commencement of any suit or other legal, administrative, or
arbitration proceeding based upon the Subordinate Note or any other of the Subordinate
Loan Documents or the Regulatory Agreement, the exercising of any banker's lien or
Subordination Agreement — Governmental Entity 2 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-323
rights of set-off or recoupment, or the exercise
Borrower, any other party liable for any of the
under any of the Subordinate Loan Documents
Mortgaged Property.
EXHIBIT 6
of any other remedial action against
Subordinate Indebtedness or obligated
or the Regulatory Agreement, or the
"Enforcement Action Notice" means a Notice given from Subordinate Lender to Senior
Lender following one or more Subordinate Mortgage Default(s) and the expiration of any
applicable notice or cure periods, setting forth in reasonable detail the Subordinate
Mortgage Default(s) and the Enforcement Actions proposed to be taken by Subordinate
Lender.
"Lien" means any lien, encumbrance, estate or other interest, recorded against or secured
by the Mortgaged Property.
"Loss Proceeds" means all monies received or to be received under any insurance policy,
from any condemning authority, or from any other source, as a result of any
Condemnation or Casualty.
"Notice" means all notices, requests, demands, consents, approvals or other
communication pursuant to this Agreement provided in accordance with the provisions of
Section 10.
"Regulatory Agreement" shall have the meaning ascribed in the Recitals hereof,
recorded or to be recorded in the Recording Office, which shall remain in first position on
title to the Land and shall not be part of the Subordinated Loan Documents.
"Senior Indebtedness" means .the "Indebtedness" as defined in the Senior Loan
Agreement.
"Senior Lender" means the "Lender" as defined in the Senior Mortgage. When any other
person or entity becomes the legal holder of the Senior Note, such other person or entity
will automatically become Senior Lender.
"Senior Loan Documents" means the "Loan Documents" as defined in the Senior Loan
Agreement, as such documents may be amended.
"Senior Mortgage Default" means any act, failure to act, event, condition, or occurrence
which constitutes, or which with the giving of Notice or the passage of time, or both,
would constitute, an "Event of Default' as defined in the Senior Loan Agreement.
"Senior Note" means the promissory note or other evidence of the Senior Indebtedness
and any replacement of the Senior Note.
"Subordinate Indebtedness" means all sums evidenced or secured or guaranteed by, or
otherwise due and payable to Subordinate Lender pursuant to, the Subordinate Loan
Documents.
Subordination Agreement — Governmental Entity 3 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-324
EXHIBIT 6
"Subordinate Lender" means the person or entity named as such in the first paragraph
of this Agreement and any other person or entity who becomes the legal holder of the
Subordinate Note after the date of this Agreement.
"Subordinate Loan Documents" means the Subordinate Mortgage, the Subordinate
Note, the Subordinate Loan Agreement and all other documents at any time evidencing,
securing, guaranteeing, or otherwise delivered in connection with the Subordinate
Indebtedness, as such documents may be amended and specifically excluding the
Regulatory Agreement, provided, that any exercise of remedies under the Subordinate
Loan Documents, by reason of a default under the Regulatory Agreement, shall be and
remain subordinated, pursuant to the terms of this Subordination.
"Subordinate Mortgage Default" means any act, failure to act, event, condition, or
occurrence which allows (but for any contrary provision of this Agreement), Subordinate
Lender to take an Enforcement Action.
"Subordinate Note" means the promissory note or other evidence of the Subordinate
Indebtedness and any replacement of the Subordinate Note.
"Surplus Cash" means, with respect to any period, any revenues of Borrower remaining
after paying, or setting aside funds for paying, all the following:
(a) All sums due or currently required to be paid under the Senior Loan Documents,
including any reserves and Imposition Deposits.
(b) All reasonable operating expenses of the Mortgaged Property, including real
estate taxes, insurance premiums, utilities, building maintenance, painting and
repairs, management fees, payroll, administrative expenses, legal expenses and
audit expenses (excluding any developer fees payable with respect to the
Mortgaged Property).
2. Subordinate Lender's Representations and Warranties.
(a) Subordinate Lender represents and warrants that each of the following is true as
of the date of this Agreement:
(i) Subordinate Lender is now the owner and holder of the Subordinate Loan
Documents and the Regulatory Agreement.
(ii) No Subordinate Mortgage Default has occurred and is continuing.
(iii) The current unpaid principal balance of the Subordinate Indebtedness is
(iv) No scheduled payments under the Subordinate Note have been prepaid.
Subordination Agreement — Governmental Entity 4 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-325
EXHIBIT 6
(b) Without the prior written consent of Senior Lender, Subordinate Lender will not
do any of the following:
(i) Pledge, assign, transfer, convey, or sell any interest in the Subordinate
Indebtedness or any of the Subordinate Loan Documents or the Regulatory
Agreement.
(ii) Take any action which has the effect of increasing the Subordinate
Indebtedness, except to cure a Senior Mortgage Default as contemplated
under Section 5(a) of this Agreement.
(iii) Accept any prepayment of the Subordinate Indebtedness.
3. Terms of Subordination.
(a) Agreement to Subordinate. The Subordinate Indebtedness is and will at all times
continue to be subject and subordinate in right of payment to the prior payment in
full of the Senior Indebtedness. Each of the Subordinate Loan Documents is, and
will at all times remain, subject and subordinate in all respects to the liens, terms,
covenants, conditions, operations, and effects of each of the Senior Loan
Documents, specifically excluding the Regulatory Agreement executed by and
between the Subordinate Lender and Borrower in connection with the
Subordinating Party's Loan, which shall always remain in first position on title to
the Land.
(b) Subordination of Subrogation Rights. If Subordinate Lender, by indemnification,
subrogation or otherwise, acquires any Lien on any of the Mortgaged Property,
then that Lien will be fully subject and subordinate to the receipt by Senior
Lender of payment in full of the Senior Indebtedness, and to the Senior Loan
Documents, to the same extent as the Subordinate Indebtedness and the
Subordinate Loan Documents are subordinate pursuant to this Agreement.
(c) Payments Before Senior Loan Default; Soft Subordinate Debt. Until the
occurrence of a Senior Mortgage Default, Subordinate Lender will be entitled to
retain for its own account all payments of the principal of and interest on the
Subordinate Indebtedness pursuant to the Subordinate Loan Documents; provided
that Subordinate Lender expressly agrees that it will not accept any such payment
that is made more than 10 days in advance of its due date and provided further
that Subordinate Lender will not accept any payment in an amount that exceeds
75% of then available Surplus Cash].
(d) Payments After Senior Loan Default or Bankruptcy.
(i) Immediately upon Subordinate Lender's receipt of Notice or actual
knowledge of a Senior Mortgage Default, Subordinate Lender will not
Subordination Agreement — Governmental Entity 5 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-326
EXHIBIT 6
accept any payments of the Subordinate Indebtedness, and the provisions
of Section 3(d) of this Agreement will apply.
(ii) If Subordinate Lender receives any of the following, whether voluntarily
or by action of law, after a Senior Mortgage Default of which Subordinate
Lender has actual knowledge (or is deemed to have actual knowledge as
provided in Section 4(c)) or has been given Notice, such will be received
and held in trust for Senior Lender:
(A) Any payment, property, or asset of any kind or in any form in
connection with the Subordinate Indebtedness.
(B) Any proceeds from any Enforcement Action.
(C) Any payment, property, or asset in or in connection with any
Bankruptcy Proceeding.
(iii) Subordinate Lender will promptly remit, in kind and properly endorsed as
necessary, all such payments, properties, and assets described in Section
3(d)(ii) to Senior Lender. Senior Lender will apply any payment, asset, or
property so received from Subordinate Lender to the Senior Indebtedness
in such order, amount (with respect to any asset or property other than
immediately available funds), and manner as Senior Lender determines in
its sole and absolute discretion.
(e) Bankruptcv. Without the prior written consent of Senior Lender, Subordinate
Lender will not commence, or join with any other creditor in commencing, any
Bankruptcy Proceeding. In the event of a Bankruptcy Proceeding, Subordinate
Lender will not vote affirmatively in favor of any plan of reorganization or
liquidation unless Senior Lender has also voted affirmatively in favor of such
plan.
4. Default Under Subordinate Loan Documents.
(a) Notice of Subordinate Loan Default and Cure Rights
(i) Subordinate Lender will deliver to Senior Lender a copy of each Notice
delivered by Subordinate Lender pursuant to the Subordinate Loan
Documents and/or the Regulatory Agreement within 5 Business Days of
sending such Notice to Borrower. Neither giving nor failing to give a
Notice to Senior Lender pursuant to this Section 4(a) will affect the
validity of any Notice given by Subordinate Lender to Borrower.
(ii) For a period of 90 days following delivery to Senior Lender of an
Enforcement Action Notice, Senior Lender will have the right, but not the
obligation, to cure any Subordinate Mortgage Default. However, if such
Subordination Agreement — Governmental Entity 6 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-327
EXHIBIT 6
Subordinate Mortgage Default is a non -monetary default and is not
capable of being cured within such 90 -day period and Senior Lender has
commenced and is diligently pursuing such cure to completion, Senior
Lender will have such additional period of time as may be required to cure
such Subordinate Mortgage Default or until such time, if ever, as Senior
Lender takes either of the following actions:
(A) Discontinues its pursuit of any cure.
(B) Delivers to Subordinate Lender Senior Lender's written consent to
the Enforcement Action described in the Enforcement Action
Notice.
(iii) Senior Lender will not be subrogated to the rights of Subordinate Lender
under the Subordinate Loan Documents as a result of Senior Lender
having cured any Subordinate Mortgage Default.
(iv) Subordinate Lender acknowledges that all amotmts advanced or expended
by Senior Lender in accordance with the Senior Loan Documents or to cure
a Subordinate Mortgage Default will be added to and become a part of the
Senior Indebtedness and will be secured by the lien of the Senior Mortgage.
(b) Subordinate Lender's Exercise of Remedies After Notice to Senior Lender.
(i) In the event of a Subordinate Mortgage Default, Subordinate Lender will
not commence any Enforcement Action until 90 days after Subordinate
Lender has delivered to Senior Lender an Enforcement Action Notice.
During such 90 -day period or such longer period as provided in Section
4(a), Subordinate Lender will be entitled to seek specific performance to
enforce covenants and agreements of Borrower relating to income, rent, or
affordability restrictions contained in the Regulatory Agreement, subject
to Senior Lender's right to cure a Subordinate Mortgage Default set forth
in Section 4(a).
(ii) Subordinate Lender may not commence any other Enforcement Action,
including any foreclosure action under the Subordinate Loan Documents,
until the earlier of:
(A) The expiration of such 90 -day period or such longer period as
provided in Section 4(a).
(B) The delivery by Senior Lender to Subordinate Lender of Senior
Lender's written consent to such Enforcement Action by
Subordinate Lender.
Subordination Agreement — Governmental Entity
City of Santa Ana -Inclusionary Housing
80A-328
Tiny Tim Apartments
EXHIBIT 6
(iii) Subordinate Lender acknowledges that Senior Lender may grant or refuse
consent to Subordinate Lender's Enforcement Action in Senior Lender's
sole and absolute discretion. At the expiration of such 90 -day period or
such longer period as provided in Section 4(a) and, subject to Senior
Lender's right to cure set forth in Section 4(a), Subordinate Lender may
commence any Enforcement Action.
(iv) Senior Lender may pursue all rights and remedies available to it under the
Senior Loan Documents, at law, or in equity, regardless of any
Enforcement Action Notice or Enforcement Action by Subordinate
Lender. No action or failure to act on the part of Senior Lender in the
event of a Subordinate Mortgage Default or commencement of an
Enforcement Action will constitute a waiver on the part of Senior Lender
of any provision of the Senior Loan Documents or this Agreement.
(c) Cross Default. Subordinate Lender acknowledges that a Subordinate Mortgage
Default constitutes a Senior Mortgage Default. Accordingly, upon the occurrence
of a Subordinate Mortgage Default, Subordinate Lender will be deemed to have
actual knowledge of a Senior Mortgage Default. If Subordinate Lender notifies
Senior Lender in writing that any Subordinate Loan Default of which Senior
Lender has received Notice has been cured or waived, as determined by
Subordinate Lender in its sole discretion, then provided that Senior Lender has
not conducted a sale of the Mortgaged Property pursuant to its rights under the
Senior Loan Documents, any Senior Loan Default under the Senior Loan
Documents arising solely from such Subordinate Loan Default will be deemed
cured, and the Senior Loan will be reinstated.
5. Default Under Senior Loan Documents.
(a) Notice of Senior Loan Default and Cure Rights.
(i) Senior Lender will deliver to Subordinate Lender a copy of any Notice sent
by Senior Lender to Borrower of a Senior Mortgage Default within 5
Business Days of sending such Notice to Borrower. Failure of Senior Lender
to send Notice to Subordinate Lender will not prevent the exercise of Senior
Lender's rights and remedies under the Senior Loan Documents.
(ii) Subordinate Lender will have the right, but not the obligation, to cure any
monetary Senior Mortgage Default within 30 days following the date of such
Notice. During such 30 -day period Senior Lender will be entitled to continue
to pursue its remedies under the Senior Loan Documents.
(iii) Subordinate Lender may, within 90 days after the date of the Notice, cure a
non -monetary Senior Mortgage Default if during such 90 -day period,
Subordinate Lender keeps current all payments required under the Senior
Loan Documents. If such a non -monetary Senior Mortgage Default creates
Subordination Agreement — Governmental Entity 8 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-329
IWAt,
an unacceptable level of risk relative to the Mortgaged Property, or Senior
Lender's secured position relative to the Mortgaged Property, as determined
by Senior Lender in its sole discretion, then during such 90 -day period
Senior Lender may exercise all available rights and remedies to protect and
preserve the Mortgaged Property and the Rents, revenues and other proceeds
from the Mortgaged Property.
(iv) All amounts paid by Subordinate Lender to Senior Lender to cure a Senior
Mortgage Default will be deemed to have been advanced by Subordinate
Lender pursuant to, and will be secured by the lien of, the Subordinate
Mortgage. Notwithstanding anything in this Section 5(a) to the contrary,
Subordinate Lender's right to cure any Senior Mortgage Default will
terminate immediately upon the occurrence of any Bankruptcy Proceeding.
(b) Release of Mortgaged Property.
(i) Subordinate Lender consents to and authorizes any future release by
Senior Lender of all or any portion of the Mortgaged Property from the
lien, operation, and effect of the Senior Loan Documents. Subordinate
Lender waives to the fullest extent permitted by law, all equitable or other
rights it may have in connection with the release of all or any portion of
the Mortgaged Property, including any right to require Senior Lender to do
any of the following:
(A) To conduct a separate sale of any portion of the Mortgaged
Property.
(B) To exhaust its remedies against all or any portion of the Mortgaged
Property or any combination of portions of the Mortgaged Property
or any other collateral for the Senior Indebtedness.
(C) To proceed against Borrower, any other party that may be liable
for any of the Senior Indebtedness (including any general partner
of Borrower if Borrower is a partnership), all or any portion of the
Mortgaged Property or combination of portions of the Mortgaged
Property or any other collateral, before proceeding against all or
such portions or combination of portions of the Mortgaged
Property as Senior Lender determines. Subordinate Lender waives
to the fullest extent permitted by law any and all benefits under
California Civil Code Sections 2845, 2849 and 2850.
(ii) Subordinate Lender consents to and authorizes, at the option of Senior
Lender, the sale, either separately or together, of all or any portion of the
Mortgaged Property. Subordinate Lender acknowledges that without
Notice to Subordinate Lender and without affecting any of the provisions
of this Agreement, Senior Lender may do any of the following:
Subordination Agreement — Governmental Entity 9 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-330
EXHIBIT 6
(A) Extend the time for or waive any payment or performance trader
the Senior Loan Documents.
(B) Modify or amend in any respect any provision of the Senior Loan
Documents or the Regulatory Agreement.
(C) Modify, exchange, surrender, release, and otherwise deal with any
additional collateral for the Senior Indebtedness.
Notwithstanding the foregoing, Senior Lender agrees that it will provide Subordinate
Lender with all Notices of foreclosure or foreclosure sale that are required under
applicable State or local law.
6. Conflicts. If there is any conflict or inconsistency between the terms of the Subordinate
Loan Documents and the terms of this Agreement, then the terms of this Agreement will
control. Borrower acknowledges that the terms and provisions of this Agreement will not,
and will not be deemed to do any of the following:
(a) Extend Borrower's time to cure any Senior Loan Default or Subordinate Loan
Default.
(b) Give Borrower the right to receive notice of any Senior Loan Default or
Subordinate Loan Default, other than that, if any, provided, respectively under the
Senior Loan Documents of the Subordinate Loan Documents.
(c) Create any other right or benefit for Borrower as against Senior Lender or
Subordinate Lender.
7. Rights and Obligations of Subordinate Lender Under the Subordinate Loan
Documents and of Senior Lender under the Senior Loan Documents.
(a) Insurance.
(i) Intentionally Omitted.
(ii) All original policies of insurance required pursuant to the Senior Loan
Documents will be held by Senior Lender.
(iii) Nothing in this Section 7(a) will preclude Subordinate Lender from
requiring that it be named as a mortgagee and loss payee, as its interest
may appear, under all policies of property damage insurance maintained
by Borrower with respect to the Mortgaged Property, provided such action
does not affect the priority of payment of Loss Proceeds, or that
Subordinate Lender be named as an additional insured under all policies of
Subordination Agreement — Governmental Entity 10
City of Santa Ana -Inclusionary Housing
80A-331
Tiny Tim Apartments
EXHIBIT 6
liability insurance maintained by Borrower with respect to the Mortgaged
Property.
(b) Condemnation or Casualty.
In the event of a Condemnation or a Casualty, the following provisions will apply:
(i) The rights of Subordinate Lender (under the Subordinate Loan Documents
or otherwise) to participate in any proceeding or action relating to a
Condemnation or a Casualty, or to participate or join in any settlement of,
or to adjust, any claims resulting from a Condemnation or a Casualty, will
be and remain subordinate in all respects to Senior Lender's rights under
the Senior Loan Documents, and Subordinate Lender will be bound by any
settlement or adjustment of a claim resulting from a Condemnation or a
Casualty made by Senior Lender.
(ii) All Loss Proceeds will be applied either to payment of the costs and
expenses of Restoration or to payment on account of the Senior
Indebtedness, as and in the manner determined by Senior Lender in its
sole discretion; provided however, Senior Lender agrees to consult with
Subordinate Lender in determining the application of Casualty proceeds.
In the event of any disagreement between Senior Lender and Subordinate
Lender over the application of Casualty proceeds, the decision of Senior
Lender, in its sole discretion, will prevail.
(iii) If Senior Lender holds Loss Proceeds, or monitors the disbursement of
Loss Proceeds, Subordinate Lender will not do so. Nothing contained in
this Agreement will be deemed to require Senior Lender to act for or on
behalf of Subordinate Lender in connection with any Restoration or to
hold or monitor any Loss Proceeds in trust for or otherwise on behalf of
Subordinate Lender, and all or any Loss Proceeds may be commingled
with any funds of Senior Lender.
(iv) If Senior Lender elects to apply Loss Proceeds to payment on account of
the Senior Indebtedness, and if the application of such Loss Proceeds
results in the payment in full of the entire Senior Indebtedness, any
remaining Loss Proceeds held by Senior Lender will be paid to
Subordinate Lender unless another party has asserted a claim to the
remaining Loss Proceeds.
(c) Modification of Subordinate Loan Documents. Subordinate Lender agrees that,
until the principal of, interest on and all other amounts payable under the Senior
Loan Documents have been paid in full, it will not, without the prior written
consent of Senior Lender, increase the amount of the Subordinate Loan, increase
the required payments due under the Subordinate Loan, decrease the term of the
Subordinate Loan, increase the interest rate on the Subordinate Loan, or otherwise
Subordination Agreement — Governmental Entity II Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-332
EXHIBIT 6
amend the Subordinate Loan terms in a manner that creates an adverse effect
upon Senior Lender under the Senior Loan Documents. If Subordinate Lender
either (i) amends the Subordinate Loan Documents in the manner set forth above
or (ii) assigns the Subordinate Loan without Senior Lender's consent then such
amendment or assignment will be void ab initio and of no effect whatsoever.
(d) Modification of Senior Loan Documents. Senior Lender may amend, waive,
postpone, extend, renew, replace, reduce or otherwise modify any provisions of
the Senior Loan Documents without the necessity of obtaining the consent of or
providing Notice to Subordinate Lender, and without affecting any of the
provisions of this Agreement. Notwithstanding the foregoing, Senior Lender may
not modify any provision of the Senior Loan Documents that increases the Senior
Indebtedness, except for increases in the Senior Indebtedness that result from
advances made by Senior Lender to protect the security or lien priority of Senior
Lender under the Senior Loan Documents or to cure defaults under the
Subordinate Loan Documents.
(e) Commercial or Retail Leases. If requested, Subordinate Lender will enter into
attornment and non -disturbance agreements with all tenants under commercial or
retail Leases, if any, to whom Senior Lender has granted attornment and non-
disturbance, on the same terms and conditions given by Senior Lender.
(f) Consent Rights. Whenever the Subordinate Loan Documents give Subordinate
Lender approval or consent rights with respect to any matter, and a right of
approval or consent for the same or substantially the same matter is also granted
to Senior Lender pursuant to the Senior Loan Documents or otherwise, Senior
Lender's approval or consent or failure to approve or consent will be binding on
Subordinate Lender. None of the other provisions of Section 7 are intended to be
in any way in limitation of the provisions of this Section 7(f).
(g) Escrows. Except as provided in this Section 7(g), and regardless of any contrary
provision in the Subordinate Loan Documents, Subordinate Lender will not
collect any escrows for any cost or expense related to the Mortgaged Property or
for any portion of the Subordinate Indebtedness. However, if Senior Lender is not
collecting escrow payments for one or more Impositions, Subordinate Lender may
collect escrow payments for such Impositions; provided that all payments so
collected by Subordinate Lender will be held in trust by Subordinate Lender to be
applied only to the payment of such Impositions.
(h) Certification. Within 10 days after request by Senior Lender, Subordinate Lender
will furnish Senior Lender with a statement, duly acknowledged and certified
setting forth the then -current amount and terms of the Subordinate Indebtedness,
confirming that there exists no default under the Subordinate Loan Documents or
the Regulatory Agreement (or describing any default that does exist), and
certifying to such other information with respect to the Subordinate Indebtedness
as Senior Lender may request.
Subordination Agreement — Governmental Entity 12 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-333
EXHIBIT 6
8. Refinancing. Subordinate Lender agrees that its agreement to subordinate under this
Agreement will extend to any new mortgage debt which is for the purpose of refinancing
all or any part of the Senior Indebtedness (including reasonable and necessary costs
associated with the closing and/or the refinancing). Subordinate Lender further agrees to
expeditiously review and approve any reasonable increase to the Senior Indebtedness in
connection with any such refinanced mortgage debt provided that such increase is to be
used for rehabilitation of the Improvements in the context of a preservation transaction.
All terms and covenants of this Agreement will inure to the benefit of any holder of any
such refinanced debt, and all references to the Senior Loan Documents and Senior Lender
will mean, respectively, the refinance loan documents and the holder of such refinanced
debt.
9. Governmental Powers. Nothing in this Agreement is intended, nor will it be construed,
to in any way limit the exercise by Subordinate Lender of its governmental powers
(including police, regulatory and taxing powers) with respect to Borrower or the
Mortgaged Property to the same extent as if it were not a party to this Agreement or the
transactions contemplated by this Agreement.
10. Notices.
(a) Any Notice required or permitted to be given pursuant to this Agreement will be
in writing and will be deemed to have been duly and sufficiently given if (i)
personally delivered with proof of delivery (any Notice so delivered will be
deemed to have been received at the time so delivered), or (ii) sent by a national
overnight courier service (such as FedEx) designating earliest available delivery
(any Notice so delivered will be deemed to have been received on the next
Business Day following receipt by the courier), or (iii) sent by United States
registered or certified mail, return receipt requested, postage prepaid, at a post
office regularly maintained by the United States Postal Service (any Notice so
sent will be deemed to have been received on the date of delivery as confirmed by
the return receipt), addressed to the respective parties as follows:
If to Senior Lender: Citibank, N.A.
388 Greenwich Street, 8th Floor
New York, New York 10013
Attention: Transaction Management Group
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (212) 723-8209
With a copy to: Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Subordination Agreement — Governmental Entity 13 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-334
EXHIBIT 6
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (805) 557-0924
With a copy to: Citibank N.A.
c/o Berkadia Commercial Servicing Department
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Client Relations Manager
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (215) 328-0305
And a copy of any notices of Citibank, N.A.
default sent to: 388 Greenwich Street
New York, New York 10013
Attention: General Counsel's Office
Re: Tiny Tim Apartments Deal ID No. 25353
Facsimile: (646) 291-5754
If to Subordinate Lender: Community Development Agency of the
City of Santa Ana
Housing Manager
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
With a copy sent to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
(b) Any party, by Notice given pursuant to this Section 10, may change the person or
persons and/or address or addresses, or designate an additional person or persons
or an additional address or addresses, for its Notices, but Notice of a change of
address will only be effective upon receipt. Neither party will refuse or reject
delivery of any Notice given in accordance with this Section 10.
Subordination Agreement — Governmental Entity 14
City of Santa Ana -Inclusionary Housing
80A-335
Tiny Tam Apartments
EXHIBIT 6
11. Miscellaneous Provisions.
(a) Assignments/Successors. This Agreement will be binding upon and will inure to
the benefit of the respective legal successors and permitted assigns of the parties
to this Agreement. No other party will be entitled to any benefits under this
Agreement, whether as a third -party beneficiary or otherwise. This Agreement
may be assigned at any time by Senior Lender to any subsequent holder of the
Senior Note.
(b) No Partnership or Joint Venture. Nothing in this Agreement or in any of the
Senior Loan Documents or Subordinate Loan Documents will be deemed to
constitute Senior Lender as a joint venturer or partner of Subordinate Lender.
(c) Further Assurances. Upon Notice from Senior Lender, Subordinate Lender will
execute and deliver such additional instruments and documents, and will take
such actions, as are required by Senior Lender to further evidence or implement
the provisions and intent of this Agreement.
(d) Amendment. This Agreement may be amended, changed, modified, altered or
terminated only by a written instrument signed by the parties to this Agreement or
their successors or assigns.
(e) Governing Law. This Agreement will be governed by the laws of the State in
which the Land is located.
(f) Severable Provisions. If any one or more of the provisions contained in this
Agreement, or any application of any such provisions, is invalid, illegal, or
unenforceable in any respect, the validity, legality, enforceability, and application
of the remaining provisions contained in this Agreement will not in any way be
affected or impaired.
(g) Term. The term of this Agreement will commence on the date of this Agreement
and will continue until the earliest to occur of the following events:
(i) The payment of all the Senior Indebtedness; provided that this Agreement
will be reinstated in the event any payment on account of the Senior
Indebtedness is avoided, set aside, rescinded or repaid by Senior Lender as
described in Section 2(e) of this Agreement.
(ii) The payment of all the Subordinate Indebtedness other than by reason of
payments which Subordinate Lender is obligated to remit to Senior Lender
pursuant to this Agreement.
(iii) The acquisition by Senior Lender or by a third -party purchaser of title to
the Mortgaged Property pursuant to a foreclosure of, deed in lieu of
Subordination Agreement — Governmental Entity 15 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-336
EXHIBIT 6
foreclosure, or trustee's sale or other exercise of a power of sale or similar
disposition under the Senior Mortgage.
(iv) With the prior written consent of Senior Lender, without limiting the
provisions of Section 4(b)(iv), the acquisition by Subordinate Lender of
title to the Mortgaged Property subject to the Senior Mortgage pursuant to
a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a
power of sale under) the Subordinate Mortgage.
(h) Counterparts. This Agreement may be executed in two or more counterparts, each
of which will be deemed an original but all of which together will constitute one
and the same instrument.
(i) Entire Agreement. This Agreement represents the entire understanding and
agreement between the parties regarding the matters addressed in this Agreement,
and will supersede and cancel any prior agreements regarding such matters.
(j) Authority. Each person executing this Agreement on behalf of a party to this
Agreement represents and warrants that such person is duly and validly
authorized to do so on behalf of such party with full right and authority to execute
this Agreement and to bind such party with respect to all of its obligations under
this Agreement.
(k) No Waiver. No failure or delay on the part of any party to this Agreement in
exercising any right, power, or remedy under this Agreement will operate as a
waiver of such right, power, or remedy, nor will any single or partial exercise of
any such right, power or remedy preclude any other or further exercise of such
right, power, or remedy or the exercise of any other right, power or remedy under
this Agreement.
(1) Remedies. Each party to this Agreement acknowledges that if any party fails to
comply with its obligations under this Agreement, the other parties will have all
rights available at law and in equity, including the right to obtain specific
performance of the obligations of such defaulting party and injunctive relief.
[SIGNATURE AND ACKNOWLEDGMENT PAGES FOLLOW]
Subordination Agreement — Governmental Entity 16 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-337
EXHIBIT 6
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the clay and year
first above written.
SENIOR LENDER:
CITIBANK, N.A.
By:
Name: Michael Henirnens
Title: Authorized Signatory
Deal ID No. 25353
SUBORDINATE ,LENDER:
CITY OF SANTA ANA
By: _
Name:
Title:
Attorney
SubordinationAgrcenncnt— GovernmentalEntity S-1 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-338
EXHIBIT 6
CONSENT OF BORROWER
Borrower acknowledges receipt of a copy of this Subordination Agreement, dated May _,
2019, by and between Citibank, N.A. and the City of Santa Ana and consents to the agreement of
the parties set forth in this Agreement.
TINY TINT LP, a California
limited partnership
By: Tiny Tim CDP LLC, a California
limited liability company
Its: Administrative General Partner
By: Community Development Partners,
a California corporation
Its: Sole Member and Manager
By:
Name: Ky16 Paine'
Title: President
By: Tiny Tim Mercy House CHDO, LLC, a
California limited liability company
Its: Managing General Partner
By: Mercy House CHDO, Inc., a California
nonprofit public benefit corporation
Its: Sole Managing Member
By:
Name: Stephanie Miles
Title: Board Secretary
By: IH CDP Partnership LLC, a California
limited liability company
Its: Co -General Partner
By: Affordable Housing Alliance II, Inc.,
a Colorado nonprofit corporation
dba Integrity Housing
Its: Sole Managing Member
By:
Name:
Title:
Subordination Agreement— Governmental Entity 8-2
City of Santa Ana -Inclusionary Housing
80A-339
Philip Wood
President
Tiny Tim Apartments
EXHIBIT 6
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On before me, (here insert name and title of the
officer), personally appeared who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrtunent the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
Subordination Agreement — Governmental Entity S-3 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-340
EXHIBIT 6
EXHIBIT A
LEGAL DESCRIPTION
Real property situated in the County of Orange, State of California, described as follows:
PARCEL 1:
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE,
STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47
AND 48 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA.
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT
THEREON SOUTH 89049'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF
SAID LOT, AND RUNNING THENCE NORTH 0°16'15" EAST PARALLEL WITH THE
CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP,
144 FEET;
THENCE SOUTH 89049'25" WEST PARALLEL WITH THE CENTER LINE OF FIFTH
STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST
LINE OF SAID LOT 39;
THENCE SOUTH 0016'15" WEST ALONG SAID WEST LINE, 133.92 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A
RADIUS OF 10 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
90026'50" AN ARC DISTANCE OF 15.79 FEET TO A POINT OF TANGENCY WITH THE
SOUTH LINE OF SAID LOT;
THENCE NORTH 89049'25" EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE
POINT OF BEGINNING.
APN: 007-313-15
PARCEL 2:
LOT 39 OF TRACT NO. 1341, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE,
STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 57, PAGES 47
AND 48 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM THAT PORTION OF LOT 39 OF TRACT NO, 1341, AS
SHOWN ON A MAP THEREOF RECORDED IN BOOK 57, PAGES 47 AND 48 OF
MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, DESCRIBED AS
FOLLOWS:
Subordination Agreement —Governmental Entity A-1 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-341
EXHIBIT 6
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID LOT 39 WHICH IS DISTANT
THEREON SOUTH 89049'25" WEST 162.06 FEET FROM THE SOUTHEAST CORNER OF
SAID LOT, AND RUNNING THENCE NORTH 0°16'15" EAST PARALLEL WITH THE
CENTER LINE OF HAWLEY STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP,
144 FEET;
THENCE SOUTH 89049'25" WEST PARALLEL WITH THE CENTER LINE OF FIFTH
STREET, 60 FEET IN WIDTH, AS SHOWN ON SAID MAP, 138.39 FEET TO THE WEST
LINE OF SAID LOT 39;
THENCE SOUTH 0016'15" WEST ALONG SAID WEST LINE, 133.92 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A
RADIUS OF 10 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
90026'50" AN ARC DISTANCE OF 15.79 FEET TO A POINT OF TANGENCY WITH THE
SOUTH LINE OF SAID LOT;
THENCE NORTH 89049'25" EAST ALONG SAID SOUTH LINE, 128.31 FEET TO THE
POINT OF BEGINNING.
Subordination Agreement — Governmental Entity A-2 Tiny Tim Apartments
City of Santa Ana -Inclusionary Housing
80A-342