HomeMy WebLinkAboutTINY TIM LP (C/O COMMUNITY DEVELOPMENT PARTNERS)IN-WRANCE N01" RE)UIRE IJ
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t>hW FREE RECORDING REQUESTED PURSUANT
C�wwiM AwoTO 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)
A-2019-058-01
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
XVIII.I 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, constriction, 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
hncome ("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 AM]. 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\I
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 profornas
and projected cash flows for the Project; provided, however, that the Inclusionary Loan is not
materially increased or extended.
B. 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
2. Thereafter to maintain, operate and professionally manage the Project as decent,
safe, sanitary and affordable rental housing.
F. The City, on certain terns and conditions, desires to make such Inclusionary 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 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
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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 fancily 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 constriction.
"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.
"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.
"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 farther 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 "Inclusioanry 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 detennined by HUD. Also may be referred to interchangeably in the
Inclusionary Loan Documents as "Area Median Income" or "AMI".
"Project" means the constriction 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 frilly 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.
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"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 terns 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 Inclusioamy 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 nun 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.
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 (51) residential units (except for one (1) unit
for the onsite manager). The unit mix and levels of affordability areas 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 maxinnim 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 rmist comply with the standards set forth
by the California Tax Credit Allocation Coimnittee (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. hr 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.
F. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. Utility allowances are deducted from rents using the amoimts 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. Constriction 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 (3 0) days from the date of written notice
from the City, unless such condition cannot reasonably be cured within thirty (3 0) 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 manier,
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
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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 shallallow 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 construction 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.
3.5 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
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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,
(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 ac designed to provide information and otherwise
attract eligible persons from all racial, ethnic and gender groups in
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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
pennanently 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. Gove-rnnental 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.
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(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
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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
document.
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 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):
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(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
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, rurtil 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
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 terns 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 perfonned
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
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
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:
CITY OF SANTA ANA
Y
Norma Mitre Steven A. Mendoza
Acting Clerk of the Council Acting City Manager
APPROVED AS TO FORM
Sonia R. Carvalho
RECOMMENDED FOR APPROVAL
Steven A. Mendoza
Executive Director
Community Development Agency
(Signatures continue on following page)
18
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 Orange )
On April 23, 2019 before me, Claudia M. Fernandez -Shaw, Notary Public
(insert name and title of the officer)
personally appeared Steven A. Mendoza
who proved to me on the basis of satisfactory evidence to be the personV) whose name
subscribed to the within instrument and acknowled ed to me that he/s /they executed the same in
r authorized capacity(is), and that by/herFthEirsignature) on the instrument the
person), or the entity upon behalf of which the person) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
91"9ti
WUDlAM, FERNANDEZ-SHAW
Notary Public - California
Orange County
Commission # 2228084
q My Comm, Expires Jan 25, 2022
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
Exhibit A:
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
Exhibit Co.
Trust
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 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 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 ruito 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
1076A53\1379660.2
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 Inclusionary 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. 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. Repernent 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
Trustor's obligations Linder 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 Deed of Trust, by
Trustor making any payment, when due, directly to the payee thereof. Trustor will promptly firnish
to the Beneficiary all notices of amounts due under this paragraph, and in the event Trustor makes
2
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 Truster,
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 suras secured by this Deed
of Trust itmnediately prior to such sale or acquisition, subject to the rights of any senior lender.
7. Preservation and Maintenance of Security. Trustor will keep the Sectiuity in good
repair and will not commit waste or permit impairment or deterioration of the Security.
S. 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 conwleaced that
materially affects the Beneficiary's interest in the Security, including, but not limited to, default under
the Deed of Trust securhlg any serrior lender, eminent domain, insolvency, code enforcement, or
arrangements or proceedings involving a banlmiptcy 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 mance repairs.
c
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
PromissoryNote, 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 docunnent, 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, 16"' 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
16. Severabilitv. 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 Tnist 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 surns 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 Truster'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 irnrnediately
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 narne 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 theref om 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.
5
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
6
by such doctunents 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)
7
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
Exhibit Do.
Inclusionary
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
1. 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 (55) 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 tern in the Agreement. The obligation of Borrower to City hereunder
is subject to the tenns 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 teen 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 terns shall have the following respective meanings:
1076\53\1379659.2
"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 Inclusionary 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 constructed on the Property,
which are subject to the 55 -year Tenn 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 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.
"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 (SO%) 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;
(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").
"Pro je 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.
"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
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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 "Tenn" 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. Operatiniz 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.
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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 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 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.
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 Renavment 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
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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 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 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 Money.
Principal is payable in lawful money of the United States of America.
11. Application of Payments; Late Charles.
a. Any payments received by the City pursuant to the teens 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
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. Stich
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
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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 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 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. Attornev 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.
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17. Severability.
Every provision of this Note is intended to be severable. In the event any tern 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 terns and provisions
hereof, which terns 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 roust 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
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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 often(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 under the terns 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.
h1 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 hiclusionary 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
constriction 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 mamler that provides adequate security for repayment of
the remaining balance of the Inclusionary Loan.
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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 assigmnent.
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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]
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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
Philip Wood
Its: President
0130080.0718261 4822-0627-1373v2
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