HomeMy WebLinkAboutWASHINGTON SANTA ANA HOUSING PARTNERS, L (2).PRecorded at the Request of
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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
Recorded in Official Records, Orange County
Hugh Nguyen, Clerk -Recorder
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2022000259271 12:43 pm 07126122
106 407A Al2 167
0.00 0.00 0.00 0.00 498.00 0.00 0.000.000.00 0.00
SPACE ABOVE THIS LINE FOR RECORDING USE
INSURANCE NOT REQ UIRED
FREE RECORDING REQUESTED
[Government Code Section 6103]
WORK MAY PROCEED
CLERK OF COUNCIL
A-2022-132
DATE:
C [UVAta5naN) �
HOME LOAN AGREEMENT
by and between the
CITY OF SANTA ANA
II
Washington Santa Ana Housing Partners, L.P.
a California limited partnership
(1126, 1136 & 1146 East Washington Avenue, Santa Ana, California)
Dated: July21,2022
TABLE OF CONTENTS
Section 1.
DEFINITIONS AND INTERPRETATION .............................................
2
1.1. Defined
Terms....................................................................................................
2
1.2. Singular and Plural Terms....................................................................................
8
1.3. References and Other Terms................................................................................
8
1.4. Exhibits
Incorporated...........................................................................................
8
Section2.
[RESERVED]............................................................................................
8
Section 3.
SCOPE OF WORK/ PROJECT BUDGET ...............................................
8
Section4.
[RESERVED]............................................................................................
9
Section5.
LOANS......................................................................................................
9
Section 6.
CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
............. 9
Section 7.
AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE
OFTHE PROPERTY.......................................................................................................
14
Section8.
RESERVED............................................................................................
20
Section 9.
GENERAL PROVISIONS AND WARRANTIES .................................
20
Section 10.
CONDITIONS FOR CONSTRUCTION ................................................
24
Section 11.
FEDERAL (HOME PROGRAM) COVENANTS .................................
26
Section 12.
MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION
AND REPAIR OF PROPERTY.......................................................................................
31
Section 13.
NONDISCRIMINATION COVENANTS ..............................................
34
Section 14.
ENVIRONMENTAL MATTERS..........................................................
35
Section 15.
OTHER AFFIRMATIVE COVENANTS ..............................................
36
Section 16.
OTHER NEGATIVE COVENANTS.....................................................
38
Section 17.
CERTIFICATE OF COMPLETION......................................................
39
Section 18.
INDEMNIFICATION.............................................................................
39
Section 19.
INSURANCE, CASUALTY AND CONDEMNATION .......................
42
Section 20.
DEFAULTS AND REMEDIES..............................................................
46
Section 21.
MISCELLANEOUS................................................................................
49
i
The Crossroads at Washington
City HOME Loan Agmement
LOAN AGREEMENT
HOMEPROGRAM
THIS LOAN AGREEMENT (the "Agreement') dated, for identification purposes only,
as of July 21, 2022, is made and entered into by and between the City of Santa Ana, a
charter city and municipal corporation (referred to herein as "City") and Washington Santa
Ana Housing Partners, L.P., a California limited partnership (referred to herein as
"Developer"), with reference to the following:
RECITALS:
A. City has received an allocation of funds from the United States Department of
Housing and Urban Development ("HUD") under the HOME Investment Partnerships
Program (the "HOME Program") (42 U.S.C. §12701, et seq.,) to be used in accordance
with applicable statutory requirements and regulations (the "HOME Regulations") (24
CFR Part 92);
B. The Housing Authority of the City of Santa Ana ("Housing Authority") owns one
parcel located at 1136 East Washington Avenue (APN 398-092-14) totaling approximately
1.43 acres of land area ("Housing Authority Parcel'). The County of Orange ("County")
owns an adjacent parcel (APN 398-092-13) totaling approximately 0.85 acres of land area
("County Parcel'). The two parcels will be merged into one parcel ("Property") and co -
owned by the Housing Authority and the County as Tenants -In -Common.
C. The Housing Authority and the County will ground lease the Property to the
Developer (the "Ground Lease") for sixty-two (62) years from the Certificate of Completion,
but no more than sixty-five (65) years from the date of execution of the Ground Lease.
D. In furtherance of the HOME Program, Developer has applied to the City for a loan
with which to:
1. provide deeper affordability for a longer term, as well as acquire and
construct the Property, and
2. thereafter to maintain, operate and professionally manage the Property
as decent, safe, sanitary and affordable rental housing.
E. City, on certain terms and conditions, desires to make such loan to Developer in
order to make possible the construction of the Property, to expand the supply of decent,
safe, sanitary and affordable housing.
F. If there is any discrepancy between Federal and State guidelines with regard to any
of the terns and conditions contained herein, the more stringent shall apply.
G. This Agreement and all of its attachments shall be enforceable by City in
accordance with the terms thereof. Each of the Agreement, the Affordability Restrictions
on Transfer of Property, the City/HOME Loan Note and the City/HOME Loan Deed of
The Crossroads at Washington
City HOME Loan Agreement
Trust provide a means of enforcement by the City if Developer is in breach of its
obligations hereunder and thereunder, including liens on the Property, use and deed
restrictions and covenants running with the land [24 CFR 92.504 (c) (13)].
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, City and Developer agree as follows:
Section 1. DEFINITIONS AND INTERPRETATION
1.1. Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Loan Documents, unless otherwise
expressly defined, are defined where first used in this Agreement and/or as set forth in this
Section 1.
"Affordable Housing" means housing operated in accordance with the
requirements of 24 CFR 92.252 and the rents governed by HUD.
"Affordability Period" means the period beginning upon the issuance of the
Certificate of Completion and ending on the date which is sixty-two (62) years after the
issuance of the Certificate of Completion during which the Affordability Restrictions on
Transfer of Property remain in effect.
"Affordability Restrictions on Transfer of Property" means that certain
document affecting real property benefiting the City, attached hereto as Exhibit F.
"Affordable Rent" means the monthly rents that are set forth in more detail in
Section 7 of this Agreement.
"Building Permit" means the building permit(s) issued by City and required for
the construction, if any.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on
which Santa Ana City Hall is open to the public to conduct City affairs.
"Calendar Year" means each consecutive twelve (12) month period from January
to December 31.
"Certificate of Completion" has the meaning set forth in Article 17.
"City" means the City of Santa Ana, California, a charter city and municipal
corporation.
"City/HOME Loan" means the loan to be made to Developer by City from HOME
funds pursuant to Article 5 of this Agreement.
The Crossroads at Washington
City HOME Loan Agreement
"City/HOME Loan Deed of Trust" means the deed of trust encumbering the
Property, in the form attached hereto as Exhibit D, to be executed by Developer pursuant
to Section 5.B.2 in order to secure the City/HOME Loan Note.
"City/HOME Loan Note" means that certain promissory note in the original
principal amount of $3,007,489.00, in the form attached hereto as Exhibit E, to be executed
by Developer in favor of City to evidence the obligation of Developer to repay the
City/HOME Loan.
"Close of Escrow" shalt mean the date upon which the City/HOME Loan Deed of
Trust is recorded in the Official Records of the County.
"Closing Statement" means the final statement of Developer's Escrow account for
the purchase and sale of the Property pursuant to the Purchase Contract.
"Construction Period" means the period of time commencing with the Close of
Escrow and ending on the Conversion Date.
"Conversion Date" means the date on which the Senior Construction Loan is
purchased by the Senior Permanent Lender and it converts from a construction loan to a
permanent loan.
"County" means the County of Orange, California.
"Developer" means Washington Santa Ana Housing Partners, L.P., a California
limited partnership, its successors and assigns.
"Developer's Representative" shall mean the President of the Administrative
General Partner or his/her designee.
"Environmental Reports" [list to be provided under separate cover]
"Escrow Holder" means Old Republic Title Insurance Company.
"Event of Default" has the meaning set forth in Section 20.1.
"Executive Director" means the Executive Director of the Community
Development Agency, or his/her designee.
"Extremely Low Income" means an adjusted income that 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.
"General Partner(s)" means the General Partner(s) of Developer, Supportive
Housing LLC (the "Managing General Partner'), Related/Washington Santa Ana
Development Co., LLC (the "Administrative General Partner"), and their respective
successors and assigns.
The Crossroads at Washington
City HOME Loan Agreement
"Governmental Authority" means any governmental or quasi -governmental
agency, board, bureau, commission, department, court, administrative tribunal or other
instrumentality or authority, and any public utility.
"Hazardous Materials" means any flammable materials, explosives, radioactive
materials, hazardous wastes, toxic substances and similar substances and materials,
including all substances and materials defined as hazardous or toxic wastes, substances or
materials under any applicable law, including without limitation the Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901 et sec., and the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601, et
seq., as amended including:
(i) poses a hazard to the Project or to persons on the Project or
(ii) causes the Project to be in violation of any Hazardous Substance Law;
(iii) asbestos in any form;
(iv) urea formaldehyde foam insulation;
(v) transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls;
(vi) radon gas;
(vii) any chemical, material, or substance defined as or included in the definition
of "hazardous substance," "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," or "toxic
substances" or words of similar import under any applicable local, state, or federal law or
under the regulations adopted or publications promulgated pursuant to those laws,
including, but not limited to, any Hazardous Substance Law, Code of Civil Procedure §
564, as amended from time to time, Code of Civil Procedure § 726.5, as amended from
time to time, Code of Civil Procedure §736, as amended from time to time, and Civil Code
§ 2929.5, as amended from time to time;
(viii) any other chemical, material, or substance, exposure to which is prohibited,
limited, or regulated by any governmental authority or which may pose a hazard to the
health and safety of the occupants of the Project or the owners or occupants of property
adjacent to or surrounding the Project, or any other person coming on the Project or any
adjacent property; and
(ix) any other chemical, material, or substance that may pose a hazard to the
environment flammable materials, explosives, radioactive materials, hazardous wastes,
toxic substances and similar substances and materials, including all substances and
materials defined as hazardous or toxic wastes, substances or materials under any
applicable law, including, without limitation the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et. seq., as amended.
The term Hazardous Substance shall not include materials or
substances commonly used in the construction and operation of an
apartment complex in accordance with applicable Hazardous
Substance Law.
4
The Crossroads at Washington
City HOME Loan Agreement
"Hazardous Substance Law" means any federal, state, or local law, ordinance,
regulation, or policy relating to the environment, health, and safety, any Hazardous
Materials (including, without limitation, the use, handling, transportation, production,
disposal, discharge, or storage of the substance), industrial hygiene, soil, groundwater, and
indoor and ambient air conditions or the environmental conditions on the Project,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 [42 USCS §§ 9601 et seq.], as amended from
time to time; the Hazardous Substances Transportation Act [49 USCS §§ 1801 et seq.], as
amended from time to time; the Resource Conservation and Recovery Act [42 USCS §§
6901 et seq.], as amended from time to time; the Federal Water Pollution Control Act [33
USCS §§ 1251 et seq.], as amended from time to time; the Hazardous Substance Account
Act [Health and Safety Code §§ 25300 et seq.], as amended from time to time; the
Hazardous Waste Control Law [Health and Safety Code §§ 25100 et seq.], as amended
from time to time; the Medical Waste Management Act [Health and Safety Code §§ 25015
et seq.], as amended from time to time; and the Porter -Cologne Water Quality Control Act
[Water Code §§ 13000 et seq.], as amended from time to time.
"HOME Compliance Period" is for a period of twenty (20) years from the
issuance of the Certificate of Completion.
"HOME Program" has the meaning set forth in Recital "A" above.
"HOME Regulations" has the meaning set forth in Recital "A" above and
summarized in Exhibit G.
"HUD" means the United States 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 (including, without limitation, streets, curbs,
storm drains, and adjacent street lighting).
"Indemnitees" has the meaning set forth in Section 14.5.
"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).
"Limited Partner" means the Tax Credit Investor and any other Limited Partner(s)
or Special Limited Partner(s) of Developer, and their successors and assigns.
"Loan Documents" means, collectively, this Agreement, the City/HOME
The Crossroads at Washington
City HOME Loan Apvcnaent
Loan Note, the City/HOME Loan Deed of Trust, the Affordability Restrictions on Transfer
of Property, and any other agreement, document, or instrument that the City requires in
connection with the execution of this Agreement or from time to time to effectuate the
purposes of this Agreement.
A°Low Income" means an adjusted income that does not exceed eighty percent
(80%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HUD.
"Median Income for the Area" means the median income for the Orange County,
California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Loan Documents as "Area Median Income" or "AMP'. In the event
that such income determinations are no longer published, or are not updated for a period of
at least eighteen (18) months, the City shall provide the Developer with other income
determinations which are reasonably similar with respect to methods of calculation to those
previously published by HUD and the State.
"Operating Reserves" shall mean reserves maintained during the Term of
Agreement and funded out of Residual Receipts, loan advances, equity, or other sources
and set aside for taxes and assessments, insurance premiums, operating expenses, and debt
service. Operating Reserves shall not exceed the amount required to pay three (3) months
of operating expenses and three (3) months of mandatory debt service, or such higher
amount required by a project lender or by the Tax Credit Investor.
"Partnership Agreement" means the Agreement of Amended and Restated
Agreement of Limited Partnership of Borrower, dated as of [ ], as said
Partnership Agreement may be amended from time to time.
"Permitted Encumbrances for the Affordable Housing Restrictions" means,
collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations
with respect to the Property hereafter approved by the Executive Director in writing.
"Permitted Encumbrances for the City Loan Deed of Trust" means,
collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations
with respect to the Property hereafter approved by the Executive Director in writing.
"Project" means the acquisition of a leasehold interest and construction of the
Property by Developer pursuant to this Agreement.
"Project Budget" means the line -item budget for the Project attached hereto as
Exhibit C, as modified from time to time in accordance with this Agreement.
"Project Costs" means all costs of any nature incurred in connection with the
Project in accordance with generally accepted accounting principles.
"Property" means the Property that is located at I t26, 1136 and 1146 East
Washington Avenue, within the City of Santa Ana, and is more fully described in the "Legal
6
The Crossroads at Washington
City HOME Loan Agreement
Description" of the Property attached hereto as Exhibit A and incorporated herein by
reference.
"Replacement Reserves" shall mean reserves maintained during the Term of
Agreement and funded out of Residual Receipts, loan advances, equity, or other sources
and set aside for replacement of roofing, furniture, fixtures, equipment and other capital
expenditures. The annual amount set aside for Replacement Reserves shall be a minimum
of two hundred fifty dollars ($250) per unit but shall not exceed five hundred dollars ($500)
per unit and may increase by 3% per year, or such higher amount as may be required by
the Tax Credit Investor or the Senior Lender and approved by City (such approval not to
be unreasonably withheld or delayed).
"Residual Receipts" has the meaning set forth in the City/HOME Loan Note.
"Senior Construction Lender" means U.S. Bank National Association. or such
senior construction lender designated by the Developer and approved in advance by the
City for the Project.
"Senior Construction Loan" means the construction loan made by Senior
Construction Lender to Borrower.
"Senior Lender" means the Senior Construction Lender prior to the Conversion
Date and, thereafter, the Senior Permanent Lender during the remainder of the Term of
Agreement, or any other holder of the Senior Loan Note(s) or any refinancing of the Senior
Loan Note(s).
"Senior Loan" shall mean the Senior Construction Loan being made by Senior
Lender concurrent to the City Loan for payment of a portion of the acquisition of a
leasehold interest in the Project (and related costs) and new construction costs, the Senior
Permanent Loan and shall include any subsequent loan that refinances the initial Senior
Loan.
"Senior Loan Deed of Trust" means the deed of trust securing the Senior Loan
by encumbering the Property, as the same may be amended and restated from time to time.
"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, as the same may be amended and restated from time to time.
"Senior Loan Note" means the promissory note evidencing the Senior Loan from
Senior Lender, as the same may be amended and restated from time to time.
"Senior Permanent Lender" means California Community Reinvestment
Corporation, a California nonprofit public benefit corporation, or such senior permanent
lender as may be designated by Developer and approved in advance by the City as the
senior permanent lender for the Project.
The Crossroads at Washington
City HOME Loan Agreement
"Senior Permanent Loan" means the Senior Construction Loan following its
conversion from a construction to a permanent loan following the satisfaction of certain
conversion conditions and the purchase of such Senior Construction Loan by Senior
Permanent Lender.
"Tax Credit Investor" means U.S. Bancorp Community Development
Corporation, a Minnesota corporation.
"Tax Credit Rules" means the provisions of Section 42 of the Internal Revenue
Code and/or, if applicable, California Revenue and Taxation Code Sections 17057.5,
17058, 23610.4 and 23610.5, et seq., as the foregoing may be amended from time to time,
to the extent applicable to the Project and the rules and regulations implementing the
foregoing, including the regulations set forth in Title 4 Cal. Code Regs. Section 10300, et
seq.
"Term of Agreement" the terms and conditions contained herein shall commence
upon the date first written above and remain in effect for sixty-two (62) years from the
issuance of the Certificate of Completion.
"Very Low Income" means an adjusted income that 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.
1.2. Singular and Plural Terms. Any defined term used in the plural in this
Agreement or any other City Loan Document shall refer to all members of the relevant
class and any defined term used in the singular shall refer to any number of the members
of the relevant class.
1.3. References and Other Terms. Any reference to this Agreement or any
Loan Document shall include such document both as originally executed and as it may
from time to time be modified. References herein to Articles, Sections and Exhibits shall
be construed as references to this Agreement unless a different document is named.
References to subparagraphs shall be construed as references to the same Section in which
the reference appears. The term "document" is used in its broadest sense and encompasses
agreements, certificates, opinions, consents, instruments and other written material of
every kind. The terms "including" and "include" mean "including (include) without
limitation."
1.4. Exhibits Incorporated. All attachments and exhibits to this Agreement, as
now existing and as the same may from time to time be modified, are incorporated herein
by this reference.
Section 2. [RESERVED]
Section 3. SCOPE OF WORK/ PROJECT BUDGET
8
The Crossroads at Washington
City HOMG Loan Agreement
Developer shall comply with this Section until the Certificate of Completion is issued.
A "Scope of Worlc" for the Property is attached hereto as Exhibit B. Any change
to the Scope of Work requested by the Developer, which would result in a change to the
Project Budget in excess of ten percent (10%) of any individual line item or in excess of
five percent (5%) of the aggregate budget, shall be subject to the prior written approval of
the Executive Director.
A line -item budget for the Project, including a summary statement of sources and
uses of funds, is incorporated into Exhibit C (the "Project Budget"). Any material change
to the Project Budget in excess of ten percent (10%) of any individual line item or in excess
of five percent (5%) of the aggregate budget shall be subject to the prior written approval
of the Executive Director which approval will not be unreasonably withheld, conditioned
or delayed and if not granted or denied within five (5) Business Days, shall be deemed
approved; provided, however, that in all events, Developer shall at all times obtain and
maintain all required permits and approvals from the City's Planning and Building Agency.
Notwithstanding the foregoing, the City's approval of a change order shall not be required
unless the approval of the Senior Lender is required with respect to such change order.
Section 4. [RESERVED]
Section 5. LOANS
5.1. CITY LOAN:
(a) Amount and Purpose. Subject to the terms and conditions of this
Agreement, City agrees to make a loan of HOME funds to Developer in the principal
amount of up to $3,007,489 (the "City/HOME Loan") for the construction of the Property.
(b) City/HOME Loan Note and Deed of Trust. The City/HOME Loan
shall be evidenced by the City/HOME Loan Note in the form attached hereto as Exhibit E.
The City/HOME Loan shall be secured by the City/HOME Loan Deed of Trust in the form
attached hereto as Exhibit D. The City/HOME Loan Deed of Trust shall be a deed of trust
encumbering the Property, subordinate to the Senior Loan(s) made to Developer and the
Senior Loan Documents.
(c) City/HOME Loan Terms. The terms and conditions of the
City/HOME Loan are as set forth in the City/HOME Loan Note, which is a residual receipts
note. The HOME Compliance Period will end twenty (20) years from the issuance of the
Certificate of Completion.
Section 6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
Developer shall comply with this Section until the Certificate of Completion is issued.
6.1. Conditions Precedent. City's obligation to disburse the City/HOME Loan
is subject to the satisfaction, or waiver by the Executive Director, of the following
The Crossroads at Washington
City HOME Loan Agreement
conditions precedent:
(a) Loan Documents. Developer shall have delivered to the Escrow
Holder, signed by the authorized officer or officers of Developer, with such signature(s)
acknowledged where necessary, each of the following documents:
(i) this Agreement;
(ii) The City/HOME Loan Note;
(iii) The City/HOME Loan Deed of Trust;
(iv) The Affordability Restrictions on Transfer of Property;
(v) The Project Budget;
(vi) The Ground Lease; and
(vii) All other documents and instruments reasonably required by
the City to be executed and delivered, all in form and
substance reasonably satisfactory to the City. The City has
received and approved all required Environmental Reports.
(b) Title Insurance. City shall have received an LP-10 ALTA Lender's
loan policy of title insurance (2006 edition), or evidence of a commitment therefore
satisfactory to City, issued by Old Republic Title Insurance Company and in form and
substance satisfactory to City, together with all endorsements and binders required,
naming City as the insured, in a policy amount of not less than the City/HOME Loan
Amount, showing Developer as the ground lessee of the Property and insuring the
City/HOME Loan Deed of Trust to be a valid lien on the Property. This Agreement, the
City/HOME Loan Note, and City/HOME Loan Deed of Trust shall be subordinate to the
Senior Loan Note, Senior Loan Deed of Trust and the other Senior Loan Documents.
(c) Intentionally Omitted.
(d) Management Plan. The Developer shall have submitted and the City
shall have approved a Management Plan ("Management Plan"). The Management Plan
shall include a management contract with a manager approved in writing by the City for
management of the Project and a plan for long-term marketing, operation, maintenance,
repair and security of the Project, method of selection of tenants, and for rental policies in
compliance with any applicable requirements, policies and procedures and with the
Affordability Restrictions on Transfer of Property, along with any other policies or
procedures required by the City. The Management Plan shall also include an initial budget
for the Project. City hereby approves John Stewart Company as the initial property
manager.
(e) Documents Recorded. This Agreement, the City/HOME Loan Deed
10
The Crossroads at Washington
City HOME Loan Agreement
of Trust and the Affordability Restrictions on Transfer of Property shall have been recorded
in the Official Records of the County. This Agreement, and the City/HOME Loan Deed
of Trust shall be subordinate to the Senior Loan Note, the Senior Loan Deed of Trust, and
the other Senior Loan Documents.
(0 Request for Notice. For the benefit of City, Escrow Holder shall
have recorded a request for notice of default of the Senior Loan (the "Request for Notice
of Default").
(g) Insurance. City shall have received evidence satisfactory to the City
that all of the policies of insurance required by Section 19 of this Agreement are in full
force and effect.
(h) Representations and Warranties. The representations and warranties
of Developer contained in this Agreement and the other Loan Documents shall be correct
in all material respects as of the Close of Escrow as though made on and as of that date,
and if requested by the Executive Director, City shall have received a certificate to that
effect signed by Developer's Representative.
(i) No Default. No Event of Default by Developer shall have
occurred and be continuing, and no event shall have occurred which, with the giving of
notice or the passage of time or both, would constitute an Event of Default by Developer
under this Agreement, and if requested by the Executive Director, City shall have received
a certificate to that effect signed by Developer's Representative.
6.2. Disbursement Procedures for Loan.
The City/HOME Loan proceeds shall be disbursed through Escrow to finance the construction
of the Property (as evidenced in Exhibit Q. The City/HOME Loan proceeds shall not be used
for any purpose other than for eligible construction costs, including a developer fee and soft
costs related to development of the Project (costs all subject to City's prior review). The City
allows for eligible costs to be paid by HOME loan funds that were incurred not more than 24
months prior to the HOME funds commitment date of this loan agreement in accordance with
HOME regulations. Ninety percent (90%) of the City/HOME Loan proceeds will be
disbursed by City to Developer after execution and recording of this Agreement, with ten
percent (10%) held back by the City and not disbursed to Developer until after completion of
construction on the Project and issuance of a Certificate of Completion.
6.3. First Disbursement. The City's obligation to make the first disbursement
of the construction portion is subject to satisfaction of the following conditions precedent:
(a) General Contractor. If the Executive Director has not yet approved
the General Contractor, the Executive Director shall have approved the identity and
qualifications of the General Contractor which approval will not be unreasonably withheld,
conditioned or delayed.
(b) Construction Contract. If the Executive Director has not yet
approved the Construction Contract, the Executive Director shall have approved the
11
The Crossroads at Washington
City HOME Loan Agreement _
Construction Contract which approval will not be unreasonably withheld, conditioned or
delayed.
6.4. Termination for Failure of Condition. If (a) any of the conditions set
forth herein are not timely satisfied within no more than ninety (90) days of the date of this
Agreement or waived by the Executive Director, and (b) City is not in default under this
Agreement, City may terminate this Agreement without any further liability on its part by
giving written notice of termination to Developer. Upon the giving of such notice, all
principal, interest and other amounts owing under the City/HOME Loan Note shall be
immediately due and payable, regardless of any other specified due date.
6.5. [Reserved.]
6.6. [Reserved.]
6.7. Waiver of Conditions. The conditions set forth pertaining to City's
obligation to make disbursements of the rehabilitation or construction portion are for City's
benefit only and the Executive Director may waive all or any part of such rights by written
notice to Developer.
6.8. Waiver of Disbursement Conditions. A waiver of a disbursement
condition may only be provided with written approval by the City.
6.9. Modification of Disbursement Conditions and Procedures. The
Executive Director shall have the authority to modify the disbursement conditions and
procedures set forth herein in order to conform them to the payment provisions of the
Construction Contract.
6.10. Other Terms and Conditions of Loan.
(a) The City/HOME Loan Note shall become immediately due and
payable, in the event of any of the following:
(i) failure to complete the Project within four (4) years of the
Close of Escrow;
(ii) HOME assisted units must achieve initial occupancy within
18 months of the issuance of the Certificate of Completion;
(iii) violation of any of the use covenants and restrictions
contained in this Agreement after the expiration of any applicable notice and cure periods;
(iv) an Event of Default by Developer which is not timely cured
after expiration of any applicable notice and cure periods pursuant to the terms of this
Agreement.
6.11. Closing Costs and Fees. Developer shall pay (a) all escrow fees and
charges, (b) all recording fees and charges on any document recorded pursuant to this
Agreement, and (c) the premium for the title insurance required hereunder.
6.12. Approval of Additional Financing. Except as to the Senior Loan, the
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The Crossroads at Washington
City HOME Loan Agreement
loans secured by permitted encumbrances for the City Loan Deed of Trust and as otherwise
described herein or in the policy of title insurance issued to the City at loan closing, the
Developer shall not place or permit (either voluntarily or involuntarily) to be placed any
encumbrances, including, but not limited to any additional liens or financing of any kind
on the Project without the prior written discretionary consent of the City.
6.13. Cost Savings Obligation.
(a) Subject to compliance with the Tax Credit Rules and the approval
of the California Tax Credit Allocation Committee ("TCAC"), Developer hereby agrees to
provide and pay to the City the payment described in this Section 6.13 in connection with
Cost Savings, if any, from the Project in an amount to be determined based on the "Audit"
(as defined in Section 6.13(b) below and in accordance with 6.13) to be conducted upon
completion of construction for the Project. Payment of the City Share of Cost Savings
(defined below) shall be made at the time set forth therefore in Section 6.13(d) below.
Provided that the payment is timely and fully made in accordance with Section 6.13(d), the
amount paid for the City Share of Cost Savings shall be credited against the amount then
outstanding on the City/HOME Loan Note.
(b) Audit to Determine Cost Savings and City Share of Cost Savings
The actual amount of"Cost Savings" (as defined below) to be paid to the City and retained
by the Developer shall be determined after the Audit, as hereafter defined and described,
and the amount of such Cost Savings shall be equal to the amount by which the total sources
of permanent financing for the Project exceed the costs of development incurred for the
Project including without limitation payment of the Developer Fee (resulting amount
constituting "Cost Savings"). From the total amount of Cost Savings, the Developer shall
retain fifty percent (50%) and pay to City fifty percent (50%) ("City Share of Cost
Savings"). If any of the other soft lenders request a share of Cost Savings, the City shall
split the City Share of the Cost Savings (50%) on a pro rata basis with the other soft
lender(s) that are requesting a share of Cost Savings. The pro rata distribution shall be
based on the initial principal balances of each respective soft loan of the soft lender(s) that
are requesting a share of Cost Savings. If none of the other soft lenders request a share of
the Cost Savings, the City shall receive the full 50% of the Cost Savings.
Within one hundred and eighty (180) days following the issuance of Form 8609 by TCAC,
Developer shall cause its certified public accountant(s) to perform a final audit of the costs
of development of the Project in accordance with the requirements of the Tax Credits and
generally accepted auditing standards (GAAP) ("Audit"). If the Audit determines that the
total sources of permanent financing for the Project (including long-term permanent debt
and equity) exceed the total development cost for the Project required in connection with
the development of the Project, such excess shall be considered the "Cost Savings" for the
Project.
(c) Allocation of Cost Savings Amount. First to Pay the City Share of
Cost Savings as Payment of Principal on City/HOME Loan Note. Once determined by the
Audit pursuant to Section 6.13 above, the full amount of Cost Savings shall be allocated
and remitted in the following order: (a) first, Developer shall retain fifty (50%) of Cost
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City HOME Loan Agmement
Savings, and (b) second, Developer shall pay to the City the City Share of Cost Savings
which shall be utilized as principal payment due on the City/HOME Loan Note.
(d) Timing of Allocation and Payment of Cost Savings. In the event of
any Cost Savings, the payment of the City Share of Cost Savings shall become due and
payable no later than sixty (60) days after Developer receives its final Tax Credit equity
payment for the Project, and each of such payments shall be allocated and remitted in a
lump sum, and as applicable credited toward the respective amount outstanding under the
City/HOME Loan Note.
6.14. Standard Form Leases. On or before issuance of the Certificate of
Completion, Developer shall submit to City for its written approval a standard form of
residential lease to be used for leasing of the Project (the "Standard Lease"). The Standard
Lease shall be in compliance with all applicable laws and Developer shall be obligated to
revise said Standard Lease from time to time to comply with any changes in said applicable
laws.
6.15. Leasing Program. Developer shall market and lease the Project consistent
with the Marketing Plan described in Exhibit G.
6.16. No Changes. Developer shall not materially modify the approved Standard
Lease or materially deviate from the approved rental rate schedule for the Units without
the City's prior written consent in each instance.
6.17. Landlord's Obligations. Developer shall timely and in good faith, perform
all obligations required to be performed by it as landlord under any lease affecting any part
of the Project or any space within the Project. If any tenant at any time claims any breach
of landlord's obligations and the amount of such claim (in excess of available insurance
coverage) is $10,000 or more, Developer shall promptly notify City of such claim.
Section 7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE
OF THE PROPERTY
7.1. Use Covenants and Restrictions.
(a) Developer agrees and covenants, which covenants shall run with the
land and bind Developer, its successors, its assigns and every successor in interest to the
Property that Developer will make all rental units on the Property available to extremely-
low- or very -low or low income households at rents affordable to such households for
sixty-two (62) years from the issuance of the Certificate of Completion. The HOME
restrictions for the City's twelve (12) HOME assisted units shall be enforced until the date
that is twenty (20) years after the date on which the Certificate of Completion is issued.
The City permits the Developer to limit the eligibility and/or give preference to a particular
segment of the population in accordance with 24 CFR 92.253(d).
(b) The Project shall consist of eighty-six (86) units, including one (1)
on -site manager's unit(s). The City's HOME assistance shall require twelve (12) HOME
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The Crossroads at Washington
City HOME Loan Agreement
assisted units. The HOME assisted units shall be six (6) 2-bedroom units, four (4) 3-
bedroom units, and two (2) 4-bedroom unit, fixed, and shall be distributed throughout the
complex with comparable amenities to the other units. The County's HOME assistance
shall require forty-three (43) HOME assisted units. In total, there will be fifty-five (55)
HOME assisted units in the Project. There shall not be any overlap between the County's
HOME assisted units and the City's HOME assisted units.
(c) At initial lease up, households in the HOME assisted units cannot
earn more than the Very -Low Income limits (50% of AMI) as published by HUD in
compliance with the HOME Program. Rental increases shall be in conformance with
federal and state law. After the twenty (20) year HOME Compliance Period, the City shall
require that the HOME assisted units remain affordable, with rents calculated based on
assumed household size at the same income levels.
(d) All of the HOME units will be restricted to occupancy by families
earning at initial lease up no more than the Very Low income limits (50% of AMI) as
published by HUD, and the rents must not exceed the Low HOME rents adjusted for family
size appropriate to the unit as published by HUD.
(e) Maximum Occupancy will be two (2) people per room plus one (1).
Example for a two -bedroom unit, five (5) people would be maximum occupancy.
(f) Rents for the HOME assisted units shall be governed by the HOME
Program regulations at 24 CFR section 92.252.
(g) Developer must have a written lease between tenant and owner for
a period of at least one year, unless a shorter period is mutually agreed upon. Leases must
be consistent with the HOME Program regulations at 24 CFR section 92.209(g).
7.2. Affordability Levels/Unit Mix:
The affordability levels/unit mix for the Project is as follows:
Unit Size
30% TCAC AMI
No.
Units
Current
Rent
Studio
16
$711
1 Bedroom
26
$762
2 Bedroom
21
$915
3 Bedroom
17
$1,057
4 Bedroom
5
$1,179
Total
85
The remaining unit will be a 2-bedroom unit reserved for the on -site manager.
HOME Assisted Units
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City HOME Loan Agreement
# of HOME
% Share of
Total # of
Unit Type
Level of
Assisted
HOME
Units
Affordability
Assisted Unit
Units
Type
16
Studio
Very -Low
Income
(50% AMI)
(Low HOME)
0
0%
26
1 Bed
0
0%
21
2 Bed
6
50%
17
3 Bed
4
33%
5
4 Bed
2
17%
(1) In no event shall the rent charged to the HOME assisted units be more than that
amount of the Low HOME rent as published by HUD, as amended from time to time.
(2) At the time of project completion, the Developer shall provide to the City the address
and/or unit number of each of the HOME fixed units.
(3) Annually with the financial statements, the Developer shall provide an annual report
of rents and occupancy of all units, including the HOME assisted units, to verify
compliance with affordability requirements. For the HOME assisted units,
information on unit substitution and filling vacancies shall be provided to ensure that
the project maintains the required unit mix.
Except with respect to the HOME assisted units during the HOME Compliance Period, the
affordable rents charged at the Project must comply with the most stringent of the standards
set forth by TCAC as defined in Affordability Restrictions on Transfer of Property.
A utility allowance must be deducted from the maximum affordable rent charged at the
Project for each unit. Utility allowances must be based on project -specific allowances for the
HOME assisted units. TCAC provides a California Utility Allowance Calculator (CUAC) that
must be used to calculate the utility allowances for the HOME -assisted units.
Initial rents may be recalculated to allowable rental amounts at the time of initial lease -up
following completion of construction in accordance with any changes in allowable rent and
income tables as published by HUD.
7.3. Rent Increases. On an annual basis, the City shall provide Developer with
the maximum allowable schedule of rents for the Property in accordance with changes in
allowable rent and income tables published by HUD and TCAC, provided however that
the rent for the HOME assisted units shall in no event be higher than the rent for the
equivalent non -HOME assisted unit within the Project. In no event can Developer charge
any tenant more than such amount.
All rent increases are subject to City approval pursuant to the terms of this Section. No
later than sixty (60) days prior to the proposed implementation of any rent increase,
Developer shall submit to the City a schedule of any proposed increase in the rent. The
City will disapprove a rent increase if it does not comply with the restrictions set forth in
Section 7.1 and 7.2 above.
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City HOME Loan Agreement
Subject to the applicable requirements and provisions of, and changes to, Section 42 of the
Code, if, upon recertification of the income of any tenant, the Developer determines that
such tenant has an adjusted income exceeding 30% of the applicable Median Income for
the Area, in each case, adjusted for household size, such tenant may be permitted to
continue to occupy the unit at the rental rate as provided for in Sections 7.1 and 7.2 above,
as applicable, until the tenant chooses to vacate the unit. After the unit is vacated, the
Developer shall re -rent the unit to a tenant pursuant to the terms, covenants and conditions
of this Agreement.
7.4. Prohibited Fees. The Developer and subsequent owner is prohibited from
charging fees that are not customary, consistent with HOME Regulations 24 CFR section
92.504(c)(3)(xi). The Developer and subsequent owner can charge reasonable application
fees to prospective tenants; other fees only to the extent that they are reasonable and
customary for the project area; and fees for services provided to tenants, provided that these
services are not mandatory.
7.5. Operation and Maintenance of the Property. Solely at Developer's
expense, Developer agrees to maintain the Property in a clean and orderly condition and in
good condition and repair and keep the Property free from any accumulation of debris and
waste materials. If at any time Developer fails to maintain, or cause to be maintained, the
Property as required by this section, and said condition is not corrected after the expiration
of a reasonable period of time not to exceed thirty (30) days from the date of written notice
from the City, unless such condition cannot reasonably be cured within thirty (30) days, in
which case Developer shall have such additional time as reasonably necessary to complete
such cure, the City may perform the necessary maintenance and Developer shall pay all
reasonable costs incurred for such maintenance. The City shall inspect the Property
annually after the date of issuance of the Certificate of Completion as described in Article
17 of this Agreement. During the Affordability Period, the Property must meet all
applicable State and local codes. The Property must be free of all health and safety defects
during the Affordability Period.
(a) Operation. During the Term of Agreement, Developer shall at all
times operate on the Project an affordable housing rental facility in compliance with this
Agreement and the Affordability Restrictions on Transfer of Property.
(b) Maintenance. During the Term of Agreement, Developer agrees to
maintain all interior and exterior improvements, including landscaping (and all abutting
ground, sidewalks, roads, parking and landscape areas) on the Project in good condition,
repair and sanitary condition (and, as to landscaping, in a healthy condition) and in
accordance with any Management Plan approved by the City under this Loan Agreement
(such approval not to be unreasonably withheld or delayed) (including without limitation
any landscape and signage plans), as the same may be amended from time to time, and all
other applicable laws, rules, ordinances, orders, and regulations of all federal, state, county,
municipal, and other governmental agencies and bodies having jurisdiction and all their
respective departments, bureaus, and officials. Developer acknowledges the great
emphasis the City places on quality maintenance to protect its investment and to provide
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The Crossroads at Washington
City HOME Loan Agreement
quality affordable housing for its constituents and to ensure that all City -subsidized
affordable housing projects within the City are not allowed to deteriorate due to deficient
maintenance. In addition, Developer shall keep the Project free from all graffiti and any
accumulation of debris or waste material. Developer shall promptly make all repairs and
replacements necessary to keep the Project in good condition and repair and shall promptly
eliminate all graffiti and replace dead and diseased plants and landscaping with comparable
approved materials. Developer shall not commit or pen -nit any waste or deterioration of
the Project, shall not abandon any portion of the Project, and shall not otherwise act, or fail
to act, in such a way as to unreasonably increase the risk of damage to the Project.
In the event that Developer breaches any of the covenants contained in this Section
7.5 and such default continues for a period of five (5) days after written notice from the
City (with respect to graffiti, debris, waste material, and general maintenance) or thirty (30)
days after written notice from the City (with respect to landscaping and building
improvements), then City, in addition to whatever other remedies it may have under this
Agreement, the other Loan Documents or at law or in equity, shall have the right to enter
upon the Project and perform or cause to be performed all such acts and work necessary to
cure the default. Pursuant to such right of entry, the City shall be permitted (but not
required) to enter upon the Project and perform all acts and work necessary to protect,
maintain and preserve the improvements and landscaped areas on the Project, in the amount
of the expenditure arising from such acts and work of protection, maintenance, and
preservation by City and/or reasonable costs of such cure, including a fifteen percent (15%)
administrative charge, which amount shall be promptly paid by Developer to City upon
demand.
(c) Removal of Personal Property. During the Term of Agreement,
Developer shall not cause or permit the removal from the Project of any items of
Developer's personal property (other than tools and equipment used in the operation of the
Project) unless (i) no Event of Default remains uncured and (ii) Developer promptly
substitutes and installs on the Project other items of equal or greater value in the operation
of the Project, all of which shall be free of liens and shall be subject to the liens of the Deed
of Trust and the Financing Statement and executes and delivers to City all documents
required by City in connection with the attachment of such liens to such items. Developer
shall keep detailed records of such removal and shall make such records available to City
upon written request from time to time.
7.6. _Obligation to Refrain from Discrimination. Developer covenants and
agrees for itself, its successors, its assigns and every successor in interest to the Property
or any part thereof, that there shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed, religion, sex, mental or physical
disability, marital status, ancestry or national origin in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the Property nor shall Developer itself or any
person claiming under or through him establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The
foregoing covenants shall run with the land and shall remain in effect for the term of the
Agreement.
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The Crossroads at Washington
City HOME Loan Agreement
7.7. Loss of Project -Based Voucher Subsidy. It is anticipated that during the
Term of Agreement the Project will maintain not less than fifteen (15) Project -Based
Voucher ("PBV") Restricted Units ("PBV Restricted Units") provided by the Housing
Authority and forty three (43) Project -Based Vouchers provided by Orange County (the
"County PBV Restricted Units"), supported by Project -Based Section 8 rental subsidy
payments (the "Rental Subsidy"). If, during the Term of Agreement, there is a reduction,
termination or nonrenewal of the Housing Authority's or County's Rental Subsidy through
no fault of Developer, such that the Rental Subsidy shown on the Project Budget is no
longer available (or available in a lesser amount), Developer may request approval of the
City (a) to allow households with adjusted incomes that do not exceed sixty percent (60%)
of AMI, adjusted for actual household size, to occupy the extremely -low income units (i.e.,
a unit previously restricted to households with adjusted incomes that do not exceed 30%
of AMI), and (b) to increase the rent on one or more of the Restricted Units, to rents that
are affordable to households with an adjusted income that does not exceed sixty percent
(60%) of AMI, adjusted for household size appropriate for the Restricted Unit.
The rent increase is subject to the following requirements: (a) concurrently with the
request, Developer shall provide the City with evidence of the anticipated reduction,
termination, or nonrenewal of the Rental Subsidy, (b) a Management.Plan (as defined in
Section 6.1(d) of this Agreement) for the Project for the City's approval pursuant to
Sections 6.1(d) and Exhibit F of this Agreement, showing the impact of the loss or
reduction of the Rental Subsidy, (c) a proposed operating budget reflecting the rent
increases (the "Operating Budget"), and (d) a description of efforts to obtain alternate
sources of rent. The number of the Restricted Units subject to the rent increase and the
amount of the proposed increase may not be greater than the number or amount required
to ensure that the Project generates sufficient income to cover its operating costs, required
deposits to replacement reserves, and debt service on approved financing as shown on the
Operating Budget, and as is necessary to maintain the financial stability of the Project. In
addition, upon a reduction, termination or nonrenewal of the Rental Subsidy as described
above, Developer hereby agrees to the following:
(a) Developer shall use good faith commercially reasonable efforts to
obtain alternative sources of rental subsidies and shall provide the City with annual
progress reports on efforts to obtain alternative sources of rental subsidies that would allow
the rents to be reduced. Upon receipt of any alternative rental subsidies, Developer shall
reduce the rents back to the original restrictions to the extent that the alternative rental
subsidies provide sufficient income to cover the operating costs, required replacement
reserves and debt service of the Project as shown on the Operating Budget.
(b) Developer shall provide tenants in the Restricted Units with notice
of any rent increase pursuant to this Section 7.7, and shall notify the tenant that if they have
received a tenant -based voucher from the Housing Authority they may use the tenant -based
voucher for their Restricted Unit.
(c) All rent increases for the Restricted Units are subject to City
approval pursuant to the terms of this Section 7.7. No later than sixty (60) days prior to
the proposed implementation of any rent increase, Developer shall submit to the City a
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The Crossroads at Washington
City HOME Loan Agivemcnt
schedule of any proposed increase in the rent. The City will disapprove a rent increase if
it does not comply with the restrictions set forth in this Section 7.7. Notwithstanding the
foregoing, rent increases for the Restricted Units shall be subject to review and approval
of the City.
Developer shall give tenants of all Restricted Units written notice at least sixty (60) days
prior to any rent increase.
7.8. Reserved.
Section 8. RESERVED.
Section 9. GENERAL PROVISIONS AND WARRANTIES
9.1. As a material inducement to City to enter into this Agreement, Developer
represents and warrants as follows, which representations and warranties are made solely
by Developer and not by or on behalf of any partner of Developer: Formation, Qualification
and Compliance. Supportive Housing LLC, the managing general partner of Developer:
(a) is a limited liability company, validly existing and in good standing under the laws of
the State of California; (b) has all requisite authority to conduct its business and own and
lease its properties; and, (c) is qualified and in good standing in every jurisdiction in which
the nature of its business makes qualification necessary or where failure to qualify could
have a material adverse effect on its financial condition or the performance of its
obligations under the Loan Documents. Developer is in compliance with all laws
applicable to its business and has obtained all approvals, licenses, exemptions and other
authorizations from, and has accomplished all filings, registrations and qualifications with,
any Governmental Authority that are necessary for the transaction of its business.
9.2. Execution and Performance of Loan Documents.
(a) Developer has all requisite authority to execute and perform its
obligations under the Loan Documents.
(b) The execution and delivery of Developer of, and the performance
by Developer of its obligations under, each Loan Document has been authorized by all
necessary action and does not and will not:
(i) require any consent or approval not heretofore obtained of
any person having any interest in Developer;
(ii) violate any provision of, or require any consent or approval
not heretofore obtained under, any articles of incorporation, by-laws or other governing
document applicable to Developer;
(iii) result in or require the creation of any lien, claim, charge or
other right of others of any kind (other than under the City Loan Documents) on or with
respect to any property now or hereafter owned or leased by Developer;
20
The Crossroads at Washington
City HOME Loan Agreement
(iv) violate any provision of any law presently in effect; or
(v) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other
agreement or document to which Developer is a party or by which Developer or any of its
property is bound.
(c) Developer is not in default, in any respect that is materially adverse
to the interests of City under the Loan Documents or that would have any material adverse
effect on the financial condition of Developer or the conduct of its business, under any law,
contract, lease or other agreement or document described in subsection (b).
(d) No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which has
not been previously obtained in connection with:
(i) the execution of Developer of, and the performance by
Developer of its obligations under, the Loan Documents; and
(ii) the creation of the liens described in the Loan Documents.
9.3. Financial and Other Information. To the best of Developer's knowledge,
all financial information furnished to City with respect to Developer in connection with the
City/HOME Loan (a) is complete and correct in all material respects as of the date of
preparation thereof, (b) accurately presents the financial condition of Developer, and (c)
has been prepared in accordance with generally accepted accounting principles consistently
applied or in accordance with such other principles or methods as are reasonably acceptable
to City. To the best of Developer's knowledge, all other documents and information
furnished to City with respect to Developer, in connection with the City/HOME Loan, are
correct and complete in all material respects insofar as completeness is necessary to give
the City accurate knowledge of the subject matter. To the best of Developer's knowledge
Developer has no material liability or contingent liability not disclosed to City in writing
and there is no material lien, claim, charge or other right of others of any kinds (including
liens or retained security titles of conditional vendors) on any property of Developer not
disclosed in such financial statements or otherwise disclosed to City in writing.
9.4. No Material Adverse Change. There has been no material adverse change
in the condition, financial or otherwise, of Developer since the dates of the latest financial
statements furnished to City. Since those dates, Developer has not entered into any
material transaction not disclosed in such financial statements or otherwise disclosed to
City in writing.
9.5. Tax Liability. Developer has filed all required federal, state and local tax
returns and has paid all taxes (including interest and penalties, but subject to lawful
extensions disclosed to City in writing) other than taxes being promptly and actively
contested in good faith and by appropriate proceedings. Developer is maintaining adequate
reserves for tax liabilities (including contested liabilities) in accordance with generally
21
nie Cmssmads at Washington
City HOME Loan Agmement
accepted accounting principles or in accordance with such other principles or methods as
are reasonably acceptable to City.
9.6. Governmental Requirements. To the best of Developer's knowledge,
Developer is in compliance with all laws relating to the Property and all Governmental
Authority approvals, including zoning, land use, planning requirements, and requirements
arising from or relating to the adoption or amendment of, any applicable general plan,
subdivision and parcel map requirement; environmental requirements, including the
requirements of the California Environmental Quality Act and the National Environmental
Policy Act and the preparation and approval of all required environmental impact
statements and reports; use, occupancy and building permit requirements; and public
utilities requirements.
9.7. Rights of Others. Developer is in compliance with all covenants,
conditions, restrictions, easements, rights of way and other rights of third parties relating
to the Property.
9.8. Litigation. There are no material actions or proceedings pending or, to the
best of the Developer's knowledge, threatened against or affecting Developer or any
property of Developer before any Governmental Authority, except as disclosed to City in
writing prior to the execution of this Agreement.
9.9. Bankruptcy. To the best of Developer's knowledge, no attachments,
execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or threatened against Developer, nor are
any of such proceedings contemplated by Developer.
9.10. Information Accurate. To the best of Developer's knowledge, all
information, regardless of its form, conveyed by Developer to City, by whatever means, is
accurate, correct and sufficiently complete to give City true and accurate knowledge of its
subject matter, and does not contain any material misrepresentation or omission.
9.11. Conflicts of Interest. No member, official or employee of the City shall
have any personal interest, direct or indirect, in this Agreement, nor shall any such member,
official or employee participate in any decision relating to this Agreement which affects
his/her personal interests or the interests of any corporation, partnership or association in
which he/she has a direct or indirect financial interest. The Developer warrants that it
neither has paid nor given, nor will pay or give, any third party any money or other
consideration for obtaining this Agreement.
9.12. Nonliability of City Officials and Employees. No member, official or
employee of the City shall be personally liable to the Developer in the event of any default
or breach by the City or for any amount that may become due to Developer or on any
obligations under the terms of this Agreement.
9.13. Transfers. Developer expressly acknowledges and agrees that the City has
only agreed to assist the Developer as a means by which to induce the
acquisition/construction/development of the Property. During the Term of Agreement,
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The Crossroads at Washington
City HOME Loan Agreement
except for a Permitted Transfer or except as otherwise permitted under the Loan
Documents, Developer shall not sell or otherwise transfer the Project or any portion
thereof, and none of the constituent general partners of Developer shall sell or otherwise
transfer their interests in Developer, and none of the constituent general partners in a
partnership that is a general partner in Developer shall sell or otherwise transfer their
interest in such partnership without first obtaining the approval of the City, which consent
the City may withhold or grant in the exercise of its reasonable and good faith discretion.
The City shall not approve any such transfer request if the Developer is in default under
any of the Loan Documents or the Management Plan. For purposes hereof, "Permitted
Transfer" shall mean:
(a) The granting of easements or licenses to any appropriate
governmental agency or utility or permits to facilitate the development and/or operation of
the Property;
(b) A sale or transfer in connection with a foreclosure or deed in lieu of
foreclosure of any senior deed of trust so long as the City is given notice as provided in
Section 21.2 in order to exercise its remedies under Section 20.2;
(c) The lease of any individual residential unit in the Project;
(d) (i) A transfer of the Developer's interest in the Property by
foreclosure or deed in lieu of foreclosure to any bona fide third -party lender holding a lien
encumbering the Property (or its nominee); and, (ii) following a foreclosure or a transfer
of the Property by deed in lieu thereof, the first subsequent transfer to a third -party;
(e) A transfer of limited partnership interests in Developer;
(f) Transfer of the Property pursuant to the terms of a purchase option
or right of first refusal executed in connection with Developer's amended and restated
agreement of limited partnership; and
(g) The removal of the general partner of Developer as permitted
under Developer's Partnership Agreement.
9.14. Applicable Law. This Agreement shall be interpreted, governed and
enforced under federal and State of California laws.
9.15. Third Parties. This Agreement is made for the sole benefit of Developer
and the City and their successors and assigns, and no other person or persons shall have
any rights or remedies under or by reason of this Agreement or any right to the exercise of
any right or power of the City hereunder or arising from any default by Developer, nor
shall the City owe any duty whatsoever to any claimant for labor performed or materials
furnished in connection with the construction of the Property.
9.16. Control of Property. The parties acknowledge that the City has not at any
time participated in any manner in the management or operation of the Property, and will
not so participate at any time hereafter.
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City HOME Loan Agreement
Section 10. CONDITIONS FOR CONSTRUCTION
Developer shall comply with this Section until the Certificate of Completion is issued.
10.1. Permits and Approvals. Developer shall diligently obtain all permits,
including all building permits, licenses, approvals, exemptions and other authorizations of
Governmental Agencies required in connection with the construction of the Property.
10.2. Commencement and Completion of Construction. The construction
shall be considered complete for purposes of this Agreement only when: (a) all work
described has been completed and fully paid for; and, (b) all work requiring inspection or
certification by Governmental Authority has been completed and all requisite certificates,
approvals and other necessary authorizations for use of the Property as an affordable rental
housing development (including required final certificates of occupancy) have been
obtained.
10.3. RESERVED.
10.4. Entry and Inspection. At all times prior to completion of the construction,
upon reasonable notice of no less than 48 hours, City and their agents shall have: (a) the
right of free access to the Property and all sites away from the Property where materials for
the construction are stored; (b) the right to inspect all labor performed and materials
furnished for the construction; and, (c) the right to inspect and copy all documents
pertaining to the construction.
10.5. Compliance with Section 3 Clause. Section 3 of the Housing and Urban
Development Act of 1968, 12 U.S.C. 1701u, as amended by Section 915 of the Housing
and Community Development Act of 1992, requires that economic opportunities generated
by HUD financial assistance for housing and community development programs be
targeted toward low- and very low- income persons. Whenever HUD assistance generates
opportunities for employment or contracting, state and local grantees, as well as other
recipients of HUD housing assistance funds must, to the greatest extent feasible, provide
these opportunities to low- and very low- income persons and to businesses owned by or
employing low- and very low- income persons. Section 3 applies to projects for which
HUD's share of project costs exceeds $200,000 and contracts and subcontracts awarded on
projects for which HUD's share or project costs exceeds $200,000 and the contract or
subcontract exceeds $100,000.
For purposes of this Section 3 Clause and compliance thereto, whenever the
word "contractor" is used it shall mean and include, as applicable, the Developer, and its
contractor and subcontractor(s), if any. The particular text to be utilized in any and all
contracts of any contractor doing work covered by Section 3 shall be in substantially the
form of the following, as reasonably determined by the City, or as directed by HUD or its
representative, and shall be executed by the applicable contractor under penalty of perjury:
(a) "The work to be performed under this contract is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 U.S.C. 1701u ("Section 3"). The purpose of Section 3 is to ensure that
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City HOME Loan Agreement
employment and other economic opportunities generated by HUD assistance or HUD -
assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to
low- and very low-income persons [inclusive of Very Low Income Persons, Very Low
Income Households, and Very Low Income Tenants served by the Project], particularly
persons who are recipients of HUD assistance for housing.
(b) The parties to this contract agree to comply with HUD's regulations
in 24 CFR part 135, which implement Section 3. As evidenced by their execution of this
contract, the parties to this contract certify that they are under no contractual or other
impediment that would prevent them from complying with the part 135 regulations.
(c) The contractor agrees to send to each labor organization or
representative of workers with which the contractor has a collective bargaining agreement
or other understanding, if any, a notice advising the labor organization or workers'
representative of the contractor's commitments under this Section 3 clause, and will post
copies of notices in conspicuous places at the work site where both employees and
applicants for training and employment positions can see the notice. The notice shall
describe the Section 3 preference, shall set forth minimum number of job titles subject to
hire, availability of apprenticeship and training positions, the qualifications for each; and
the name and location of person(s) taking applications for each of the position; and the
anticipated date the work shall begin.
(d) The contractor agrees to include this Section 3 clause in every
subcontract subject to compliance with regulations in 24 CFR part 135, and agrees to take
appropriate action, as provided in an applicable provision of the subcontract or in this
Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in
24 CFR part 135. The contractor will not subcontract with any subcontractor where the
contractor has notice or knowledge that the subcontractor has been found in violation of
the regulations in 24 CFR part 135.
(e) The contractor will certify that any vacant employment positions,
including training positions, that are filled (a) after the contractor is selected but before the
contract is executed, and (b) with persons other than those to whom the regulations of 24
CFR part 135 require employment opportunities to be directed, were not filled to
circumvent the contractor's obligations under 24 CFR part 135.
(1) Noncompliance with HUD's regulations in 24 CFR part 135 may
result in sanctions, termination of this contract for default, and debarment or suspension
from future HUD assisted contracts."
After the foregoing Section 3 Clause, there shall be a signature block for the
contractor, as applicable, the following text shall be included immediately above the
signature block: "The contractor/provider by his/her signature affixed hereto declares
under penalty of perjury that contractor has read the requirements of the Section 3 Clause
and accepts all its requirements contained therein for all of his/her operations related to this
contract."
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City HOME Loan Ageement
To the extent applicable, the Developer shall comply and/or cause
compliance with Section 3 Clause requirements for the Project. For example, when and if
Developer or its contractors)/subcontractor(s) hire(s) full time employees, rather than
volunteer labor or materials, Section 3 is applicable and all disclosure and reporting
requirements apply.
10.6. Construction Information. From time to time during the course of the
construction, within ten (10) Business Days following City's written demand therefore,
Developer shall furnish requested reports of project costs, progress schedules and
contractors' costs breakdowns for the construction, itemized as to trade description and
item, showing the name of the contractor(s) and/or subcontractor(s), and including such
indirect costs as real estate taxes, legal and accounting fees, insurance, architects' and
engineers' fees, loan fees, interest during construction and contractors' overhead.
10.7. Protection Against Liens. Developer shall diligently file a valid Notice
of Completion upon completion of the construction, diligently file a notice of cessation in
the event of a cessation of labor on the construction for a period of thirty (30) days or more,
and take all actions reasonably required to prevent the assertion of claims of lien against
the Property. In the event that any claim of lien is asserted against the property or any stop
notice or claim is asserted against the City by any person furnishing labor or materials to
the Property, Developer shall immediately give written notice of the same to City and shall,
promptly and in any event within ten (10) Business Days after written demand therefor, (a)
pay and discharge the same, (b) effect the release thereof by delivering to City a surety
bond complying with the requirement of applicable laws for such release, or (c) take such
other action as City may reasonably require to release City from any obligation or liability
with respect to such stop notice or claim. Nothing in this Section 10.7 shall limit or prohibit
Developer's right to contest any claim of lien, stop notice or claim described herein in good
faith.
10.8. General Contractors who are Related Parties to the Developer. If the
Project is developed with general contractors who are Related Parties to the Developer, the
Developer must be audited to the subcontractor level by an outside auditing firm approved
by the City. The Developer shall pay for the audit to the subcontractor level by an outside
auditing firm.
Section 11. FEDERAL (HOME PROGRAM) COVENANTS
11.1. The Developer shall carry out the design, construction and operation of the
Project, and operate the Program, in conformity with all applicable laws, regulations, and
rules of governmental agencies having jurisdiction, including without limitation and to the
extent applicable, the HOME Requirements and the legal requirements set forth in "Exhibit
G" attached to this Agreement and the statutes referenced therein. For purposes of this
paragraph, "HOME Requirements" mean the requirements of the HOME Investment
Partnership Act, as amended (42 U.S.C. § 12741, et seq.), and the implementing regulations
(24 C.F.R. § 92, et seq.), and the legal requirements summarized or referenced in Exhibit
G attached hereto and incorporated herein by this reference.
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City HOME Loan Agreement
11.1.5 Reserved.
11.2. Qualification as Affordable Housing. As more particularly provided in
the Affordability Restrictions on Transfer of Property, Developer shall use, manage and
operate the Property in accordance with the requirements of 24 CFR 92.252 so as to qualify
the housing on the Property as Affordable Housing with affordable rents.
11.3. Tenant and Participant Protection. Developer shall comply with the
requirements of 24 CFR 92.253.
11.4. Local Preference. Except with regard to persons experiencing
homelessness referred off of the County of Orange coordinated entry system due to the
layer of forty-three (43) PBVs provided by the Orange County Housing Authority, and
subject to compliance with the HOME Regulations and applicable California and federal
fair housing laws, and the requirements of Section 142(d) and Section 42 of the Internal
Revenue Code local preference for Santa Ana residents and workers in tenant selection
shall be a requirement of the Project. Subject to applicable laws and regulations governing
nondiscrimination and preferences in housing occupancy required by Section 142(d) and
Section 42 of the Internal Revenue Code, HUD or the State of California, as well as the
City of Santa Ana Affordable Housing Funds Policies and Procedures, the Developer shall
give preference in leasing units in the following order of priority:
(a) First priority shall be given to persons who have been permanently
displaced or face permanent displacement from housing in Santa Ana as a result of any of
the following:
(i) 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;
property owner; or
(ii) Ellis Act, owner -occupancy, or removal permit eviction;
(iii) Earthquake, fire, flood, or other natural disaster;
(iv) Cancellation of a Housing Choice Voucher HAP Contract by
(v) Governmental Action, such as Code Enforcement.
(b) Second priority shall be given to persons who are either:
(i) Residents of Santa Ana•, and/or
(ii) Working in Santa Ana at least 32 hours per week for at least
the last 6 months.
11.5. Handicapped Accessibility. Developer shall comply with: (a) Section 504
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City HOME Loan Agreement
of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C governing
accessibility of projects assisted under the HOME Program; and, (b) the Americans with
Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36, in order to
provide handicapped accessibility to the extent readily achievable.
11.6. Use of Debarred. Suspended, or Ineligible Participants. Developer shall
comply with the provisions of 24 CFR 24 relating to the employment, engagement of
services, awarding of contracts, or funding of any contractor or subcontractor during any
period of debarment, suspension, or placement in ineligibility status.
11.7. Maintenance of Drug -Free Workplace. Developer shall certify that
Developer will provide a drug -free workplace in accordance with 24 CFR 84.13.
11.8. Lead -Based Paint. Developer shall comply with the requirements of the
Lead -Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing
regulations at 24 CFR 35, as applicable.
11.9. Affirmative Marketing. Developer shall implement and perform such
affirmative marketing procedures and requirements for the Property (24 CFR 92.351) in
compliance with the City's adopted Program.
11.10. Equal Opportunity and Fair Housing. Developer shall carry out the
construction and perform its obligations under this Agreement in compliance with all of
the state and federal laws and regulations regarding equal opportunity and fair housing
described in 24 CFR 92.350.
11.11. Property Standards. Developer shall cause the Property to meet the
housing quality standards set forth in 24 CFR 882.109, as well as all applicable local, state
and federal codes and ordinances, including zoning ordinances.
11.12. Displacement and Relocation. Developer acknowledges and agrees that,
pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part,
City must ensure that it has taken all reasonable steps to minimize the displacement of
persons as a result of the Project. Furthermore, to the extent feasible, any existing
residential tenants must be provided a reasonable opportunity to lease and occupy a
suitable, decent, safe, sanitary and affordable dwelling unit on the Property upon
completion of the constriction. Developer agrees to cooperate fully and completely with
City in meeting the requirements of 24 CFR 92.253 and shall take all actions and measures
reasonably required by the Executive Director in connection therewith. All applicable state
guidelines must also be followed.
(a) Developer acknowledges and agrees that if the Project requires
temporary or permanent relocation of existing residential or commercial tenants it will hire
a Relocation Consultant to provide relocation services, pursuant to the Uniform Relocation
Act and Real Property Acquisition Policies Act of 1970 ("URA") and 24 CFR 92.253.
(b) If a Relocation Consultant is required to be retained pursuant to
Section 11.12(a), the City, Developer, and Relocation Consultant will meet periodically
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City HOME Loan Agreement
during the relocation to provide updates and review tenant files, including at Project
approval and prior to final benefit calculations. The Developer and Relocation Consultant
shall carry out activity in compliance with URA and the City's Acquisition and Relocation
Policy and Procedures Manual ("Manual").
(c) If a Relocation Consultant is required to be retained pursuant to
Section 11.12(a), the Developer and Relocation Consultant shall maintain accurate records
and files pertaining to the temporary and permanent relocation of tenants, in accordance
with URA and the City's Manual.
(d) If a Relocation Consultant is required to be retained pursuant to
Section 11.12(a), the Developer and Relocation Consultant shall provide all relocation and
tenant files to the City once relocation is complete at the Project.
(c) Developer Responsible for Administration of Relocation.
Developer acknowledges that former tenants and occupants of the Property maybe eligible
for advisory assistance, monetary payments, and other benefits under the Relocation Laws.
Developer shall be fully responsible for administering determinations of eligibility, the
extent of advisory assistance, and the scope and amount of benefits and monetary payments
pursuant to the applicable Relocation Laws, subject to the right, but not obligation, to
oversee Relocation by the City. Developer shall cause to be provided and shall pay
Relocation assistance and benefits, if any, in accordance with and to the extent required by
applicable Relocation Laws to each eligible tenant/occupant that is required to vacate the
Property as a result of implementation of the Project. The City's rights are limited to
determining compliance with Relocation Laws. Developer is and shall remain solely
responsible to pay all out-of-pocket costs for direct payments, if any, to eligible person(s),
household(s) and business(es) for Relocation assistance and benefits due and paid and for
any other costs incurred related to Relocation, including a Relocation consultant, and any
and all costs or fees incurred therefor.
(f) Indemnification by Developer Relating to Relocation Developer
hereby covenants and agrees to indemnify, save, protect, hold harmless, pay for, and defend
the Indemnitees from and against any and all liabilities, suits, actions, claims, demands,
penalties, damages (including without limitation penalties, fines, and monetary sanctions),
losses, costs, or expenses, including without limitation consultants' and attorneys' fees, or
relocation benefits claimed or payable under the Relocation Laws (for purposes of this
Section 11.12, the foregoing shall be referred to as "Liabilities") which may now or in the
future be incurred or suffered by Indemnitees by reason of, or resulting, in full or in part,
or in any respect whatsoever from the Relocation of residents of the current site pursuant
to or resulting from the implementation of this Agreement, except to the extent arising out
of the gross negligence or willful misconduct of any of the Indemnitees or a breach by the
City of any representation, warranty or covenant contained in this Agreement. At the
request of Developer, the City shall cooperate with and assist Developer in its defense of
any such claim, action, suit, proceeding, loss, cost, damage, City liability, deficiency, fine,
penalty, punitive damage, or expense; provided that City shall not be obligated to incur any
expense in connection with such cooperation or assistance.
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City HOME Loan Agreement
(g) Release. Developer, on behalf of itself and its affiliates, and any and
all successors and assigns hereby fully and finally releases the Indemnitees from any and
all manner of actions, causes of action, suits, obligations, liabilities, judgments, executions,
debts, claims and demands of every kind and nature whatsoever, known and unknown,
which Developer and any of its affiliates, successors or assigns may now have or hereafter
obtain against the Indemnitees by reason of, arising out of, relating to, or resulting from in
full or in part, the election of Developer to proceed with the Project pursuant to this
Agreement except to the extent arising out of the gross negligence or willful misconduct
of any of the Indemnitees or a breach by the City of any representation, warranty or
covenant contained in this Agreement (collectively, "Claims"), which release shall include
but not be limited to any Claims for Relocation assistance or benefits under federal, state,
local, or any other applicable laws or Governmental Requirements, except to the extent
arising out of the gross negligence or willful misconduct of any of the Indemnitees or a
breach by the City of any representation, warranty or covenant contained in this
Agreement. The parties agree that, with respect to the release of Claims as set forth above,
all rights under Section 1542 of the California Civil Code and any similar law of any state
or territory of the United States are expressly waived. Section 1542 reads as follows:
"A general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing the
release and that, if known by him or her, would have materially affected his or her
settlement with the debtor or released party,"
11.13. Other Program Requirements. Developer shall carry out each activity in
compliance with all federal laws and regulations described in subpart H of 24 CFR 92,
except that Developer does not assume City's responsibilities for environmental review in
24 CFR 92.352 or the intergovernmental review process in 24 CFR 92.359.
11.14. Request for Disbursements of Funds. Notwithstanding anything
contained in this Agreement to the contrary, Developer may not request disbursements of
funds under this Agreement until the funds are needed for payment of eligible costs (such
funds shall be used solely towards the acquisition and construction of the Property). The
amount of each request shall be limited to the amount needed.
11.15. Eligible Costs. Developer shall use HOME Funds to pay costs defined as
"eligible costs" pursuant to 24 CFR 92.206.
11.16. Records and Reports. Developer shall maintain and from time to time
submit to City such records, reports and information as the Executive Director may
reasonably require in order to permit City to meet the record keeping and reporting
requirements required of it pursuant to 24 CFR 92.508.
11.17. Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards. Developer shall comply with the requirements and
standards of 2 CFR 200.
11.18. Conflict of Interest. Developer shall comply with and be bound by the
conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations
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City HOME Loan Agreement
pertaining to conflict of interest.
11.19. Monitoring. Developer shall allow the City to conduct periodic inspections
of the City's HOME assisted units on the Property as required by the Program after the
date of construction completion, with reasonable advance written notice of not less than 48
hours. 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.
Not less than once per year, the City shall review Developer's activities and operations
under the Agreement and Developer's compliance with the HOME Requirements. Such
review may include an on -site inspection of the Project units (including unit interiors). If
such an on -site inspection of the Project units is to be undertaken, the City shall coordinate
such inspection with Developer. The monitoring required pursuant to this paragraph shall
be in compliance with the requirements of 24 C.F.R. § 92.504.
11.20. Recertification of Tenant Income.
(a) Developer shall take all necessary steps to review the income of all
tenants prior to renting to them, as well as reviewing current tenants on an annual basis, in
accordance with HOME regulations and guidelines. Every fifth (5tt') year, Developer shall
require new original income documents to be submitted by tenants. Tenants in the City's
HOME assisted units whose incomes no longer comply with federal income guidelines
shall have their rents adjusted in accordance with federal HOME guidelines (24 CFR
92.252-92.253).
(b) HOME 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 HUD are being taken to ensure that all vacancies are filled in
accordance with this section (24 CFR 92.252-92.253) until the non-compliance is
corrected.
11.21. Other HOME Program Requirements. Developer shall comply with all
other applicable requirements of the HOME Program.
11.22. Controlling Covenants. If there is a discrepancy between State of
California and Federal law with regard to any of the aforementioned covenants, the more
stringent shall apply.
11.23. Faith Based Activities. To the extent applicable to the Project, in
accordance with 24 CFR 92.257, Developer will comply with the restrictions on the use of
HOME funds for faith based activities as set forth in Section 92.257.
Section 12. MAINTENANCE, MANAGEMENT, OPERATION,
PRESERVATION AND REPAIR OF PROPERTY
12.1. Maintenance. Developer shall maintain the Property (and all abutting
grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise
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City HOME Loan Agreement
required to maintain) in good condition and repair; shall operate the Property in a
businesslike manner; shall prudently preserve and protect its own as well as the City's
interests in connection with the Property; shall not commit or permit any waste or
deterioration of the Property (except for normal wear and tear); shall not abandon any
portion of the Property or leave the Property unguarded or unprotected; and shall not
otherwise act, or fail to act, in such a way as to unreasonably increase the risk of any
damage to the Property or of any other impairment of City's interests under the Loan
Documents. Without limiting the generality of the foregoing, and except as otherwise
agreed by City in writing from time to time, Developer shall promptly and faithfully
perform and observe each of the following provisions:
12.2. Alterations and Repair. Developer shall not remove, demolish or
materially alter any Improvement without City's prior consent, except to make non-
structural repairs that preserve or increase the Property's value, and shall promptly restore,
in a good and professional manner, any Improvement (or other aspect or portion of the
Property) that is damaged or destroyed from any cause.
12.3. Compliance. Developer shall comply with all laws and requirements of
Governmental Authority (including, without limitation, all requirements relating to the
obtaining of Governmental Authority approvals), all Governmental Authority approvals
and all rights of third parties, relating to Developer, the Property or Developer's business
thereon.
12.4. Taxes and Impositions. Developer shall pay, prior to delinquency, all of
the following (collectively, the "Impositions"): (a) all general and special real property
taxes and assessments imposed on the Property; (b) all other taxes and assessments and
charges of every kind that are assessed upon the Property (or upon the owner and/or
operator of the Property) and that create or may create a lien upon the Property (or upon
any personal property or fixtures used in connection with the Property), including, without
limitation, non -governmental levies and assessments pursuant to applicable covenants,
conditions or restrictions; and (c) all license fees, taxes and assessments imposed on City
(other than City's income or franchise taxes) which are measured by or based upon (in
whole or in part) the amount of the obligations secured by the Property. If permitted by
law, Developer may pay any Imposition in installments (together with any accrued
interest).
12.5. Right to Contest. Developer shall not be required to pay any Imposition
so long as: (a) its validity is being actively contested in good faith and by appropriate
proceedings; (b) Developer has demonstrated to City's reasonable satisfaction that leaving
such Imposition unpaid pending the outcome of such proceedings could not result in
conveyance of the Property in satisfaction of such Imposition or otherwise impair City's
interests under the Loan Documents; and, (c) Developer has furnished City with a bond or
other security satisfactory in an amount not less than 100% of the applicable claim
(including interest and penalties).
12.6. Evidence of Payment. Upon demand by City from time to time, Developer
shall deliver to City, within thirty (30) days following the due date of any Imposition,
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City HOME Loan Agreement
evidence of payment reasonably satisfactory to City.
12.7. Books, Records and Annual Statement. Developer shall maintain
complete books of account and other records reflecting the construction and operation of
the Project in accordance with generally accepted accounting principles applied on a
consistent basis. During the Term of Agreement, the amount of the Residual Receipts shall
be determined on the basis of an annual audited financial statement ("Annual Statement"),
for the preceding year, beginning with the first year of operation of all or any part of the
Project, prepared at the Developer's expense by an independent certified public account
firm acceptable to the City. Such Annual Statement shall be prepared based on the
guidelines, and taking into account the information, set forth on Exhibit C, attached hereto
and incorporated herein. During the Term of Agreement, the Developer shall submit the
Annual Statement and any payment to the City not later than one hundred twenty (120)
days after closing of the Developer's previous year's books. The first Annual Statement
submitted by the Developer for the City/HOME Loan shall include the period from the
Completion of Construction to the close of that year's books. The City shall review and
approve such statement (such approval not to be unreasonably withheld or delayed), or
request revisions, within ninety (90) days after receipt. In the event that Developer's
calculation of Residual Receipts is found to be incorrect as a result of a City review, and
has underreported, Developer shall pay to the City the full amount of additional amounts
owed within thirty (30) days of notice of such error. The terms of this subsection shall not
be the exclusive method by which the City may review Residual Receipts payments by the
Developer. In the event the discovery occurs at any time subsequent to the ninety (90) day
period for that year's books, Developer shall pay to the City the full amount of such
additional amounts owed within thirty (30) days after the error is discovered.
Notwithstanding the foregoing, no previous action or inaction by the City shall prohibit the
City from requesting repayment of any unpaid, owed amounts of Residual Receipts at any
time during the term of this Agreement or thereafter within ten (1O) years of when such
unpaid Residual Receipts were due. The Developer shall pay to the City the full amount of
such additional amounts owed within thirty (30) days of notice of such errors for periods
prior to the previous year.
12.8. Project Operating Account. Developer shall establish an interest bearing
account to be known as the Operating Reserve Account. Upon the Conversion Date,
Developer shall deposit an amount into the Operating Reserve Account sufficient to pay at
least three (3) months of operating expenses and three (3) months of mandatory debt
service payments ("Target Balance"), or such greater amount as may be required by a
senior lender or tax credit investor.
Funds shall be invested subject to the prior written approval of the City, and any
earnings shall become and remain a part of the Operating Reserve. Funds may be drawn
only when revenue is insufficient to pay operating expenses and may be used as permitted
under Borrower's Partnership Agreement. At the time of any withdrawals from the
Operating Reserve Account, written notice shall be provided to the City which provides a
detailed narrative of the nature of the operating deficits that are being cured, including all
necessary amounts to cure them.
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City HOME Loan Agmement
If the balance in the Operating Reserve Account falls below the amount required to
pay three (3) months of operating expenses and three (3) months of mandatory debt service
payments, then Developer shall apply Residual Receipts, when and if available, or other
funds, to the replenishment of Operating Reserves until the Target Balance is achieved.
12.9. Replacement Reserve Account. At or before the Conversion Date,
Developer shall establish an interest bearing account to be known as the Replacement
Reserve Account. Annually prior to March 31 of each year, Developer shall deposit into
the Replacement Reserve Account an amount equal to a minimum of two hundred fifty
dollars ($250) per unit but shall not exceed five hundred dollars ($500) per unit, which
amounts may increase by 3 % annually, or such higher amount as may be required by the
Tax Credit Investor or Senior Lender and approved by City; provided, however, that City
acknowledges that the Tax Credit Investor and/or Senior Lender will require an annual
deposit of funds into the Replacement Reserve Account for all units, and City hereby
approves such requirement and agrees that any replacement reserve established by
Developer and held by the Tax Credit Investor and/or Senior Lender shall satisfy the
requirements of this Section 12.9. The funds in the Replacement Reserve Account shall
be held in an interest bearing account, subject to the prior written approval of the City, and
any earnings shall become and remain a part of the Replacement Reserve. The Developer
shall not draw funds from the Replacement Reserve Account without the prior written
approval of the City.
Funds may only be drawn from the Replacement Reserve Account to replace or
maintain Project assets that have a useful life of more than one (1) year in accordance with
Generally Accepted Accounting Principles ("GAAP"), and have been or will be
depreciated on the Partnership Tax Return, Form 1040P, filed with the Internal Revenue
Service by the Developer's accountant.
In the event of a failure by the Developer to adequately maintain the Project, or pay
operating expenses, mandatory debt service payments, or other payments required under
the Loan Documents or Senior Loan Documents, or during the continuance of an event of
default by Developer under the Loan Documents or Senior Loan Documents that would
provide for the acceleration of the City/HOME Loan or Senior Loan, then the City may,
after delivery of notice to Developer and the expiration of any applicable cure periods and
subject to the rights of any Senior Lender, apply the funds in the Replacement Reserve
Account to the City/HOME Loan, the Senior Loan, or use such funds for the maintenance,
improvement, or continued operation of the Project.
Section 13. NONDISCRIMINATION COVENANTS
13.1. Obligation to Refrain from Discrimination. Developer covenants and
agrees that:
(a) In Use of Property. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed, religion,
sex, mental or physical disability, marital status, national origin, or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall
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Developer or any person claiming under or through it, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendors of the
Property.
(b) In Affordable Housing Restrictions. The foregoing covenant shall:
(a) be included in the Affordability Restrictions on Transfer of Property; (b) run with the
land; and, (c) remain effective for the term of the Agreement.
(c) In Employment. In construction of the Property, Developer shall
not discriminate against any employee or applicant because of race, color, creed, religion,
sex, marital status, mental or physical disability, national origin, or ancestry. Developer
shall take affirmative action to ensure that applicants are employed, and that employees are
treated during employment, without regard to their race, color, creed, religion, sex, marital
status, 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 and subcontractor for the benefit of City, provided
that the foregoing covenant shall not apply to contracts or subcontracts for standard
commercial supplies or raw materials.
Section 14. ENVIRONMENTAL MATTERS
14.1. Representation and Warranty. Except as disclosed in writing to the City
including the Environmental Reports prepared on behalf of Developer and delivered to the
City, and except for the Existing Hazardous Materials (as such tern is defined in the
Ground Lease) Developer has no knowledge: (a) of the presence on, under or about the
Property, now or in the past, of any Hazardous Materials in violation of applicable law, or
of the transportation to or from the Property of any Hazardous Materials; (b) that asbestos
or polychlorinated biphenyls (PCBs) are contained in or stored on the Property; or, (c) that
there are any underground storage tanks located in, on or under the Property.
14.2. Compliance with Environmental Laws. Developer shall: (a) comply with
all environmental laws and environmental permits applicable to the Construction of the
Property; (b) immediately pay or cause to be paid all costs and expenses incurred by reason
of such compliance; (c) keep the Property free and clear of any environmental claims or
liens imposed pursuant to any environmental law; and, (d) obtain and renew all
environmental permits required for ownership or use of the Property.
14.3. Presence of Hazardous Materials. Developer shall not, and shall not
permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous
Materials on the Property, or transport or permit the transportation of Hazardous Materials
to or from the Property except for de minimis quantities used at the Property in compliance
with all applicable environmental laws and required in connection with the routine
construction, operation and maintenance of the Property.
14.4. Notice of Environmental Matters. Developer shall immediately advise
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City in writing of any of the following: (a) any pending or threatened environmental claim
against Developer or the Property; (b) any condition or occurrence that: (i) results in
noncompliance with any applicable environmental law; (ii) could reasonably be anticipated
to cause the Property to be subject to any restrictions on the ownership, occupancy, use or
transferability of the Property under any environmental law; or, (iii) could reasonably be
anticipated to form the basis of an environmental claim against the Property or Developer.
14.5. Environmental Indemnification by the Developer. Developer agrees to
defend, indemnify and hold harmless the City and their respective officers, directors,
employees and agents (collectively the "Indemnitees") from and against any and all
obligations (including removal and remediation), losses, claims (including third party
claims), suits, judgments, liabilities, penalties, damages (including consequential and
punitive damages), costs and expenses (including consultants, and attorneys' fees) of
whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or
asserted against the Indemnitees directly or indirectly based on, or arising or resulting from
the actual or alleged presence of Hazardous Materials on the Property other than arising
from the gross negligence, willful misconduct and/or illegal actions of any Indemnitee and
the Existing Hazardous Materials (as such term is defined in the Ground Lease).
Section 15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the City/HOME Loan Note or Deed of
Trust remain outstanding, the following provisions shall apply, except to the extent that the
Executive Director otherwise consents in writing:
15.1. Existence. Developer's Managing General Partner shall maintain its
existence in good standing under the laws of the State of California, and Developer shall
provide documentation of such status annually to the City.
15.2. Protection of Lien. Developer shall maintain the lien of the City Deed of
Trust as a valid second priority deed of trust on the Property and take all actions, and
execute and deliver to City all documents, reasonably required by City from time to time
in connection therewith.
15.3. Notice of Certain Matters. Developer shall give notice to City, within ten
(10) days of Developer's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the Property and
involving an amount in excess of $25,000; and any litigation or claim that might subject
Developer or any general partner of Developer to liability in excess of $50,000, whether
covered by insurance or not;
(b) any material dispute between Developer and a Governmental
Authority relating to the Property, the adverse determination of which would reasonably
be expected to have a material adverse effect on the Property;
(c) any change in Developer's principal place of business;
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(d) any aspect of the Improvements that is not in substantial conformity
with the plans or code;
(e) any Event of Default or event which, with the giving of notice or the
passage of time or both, would constitute an Event of Default;
(f) any material default by Developer or any other party under any
Senior Loan document, or the receipt by Developer of any notice of default under any
Senior Loan document;
(g) the creation or imposition of any mechanics' or materialmans' lien
or other lien against the Property which might materially affect the Property; and/or
(h) any material adverse change in the financial condition of
Developer.
15.4. Further Assurances. Developer shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to City all documents, and take all actions,
reasonably required by City from time to time to confirm the rights created or now or
hereafter intended to be created under the Loan Documents; to protect and further the
validity, priority and enforceability of the City Deed of Trust; to subject to the Deed of
Trust any property intended by the terms of any Loan Document(s) to be covered by the
City Deed of Trust or otherwise to carry out the purposes of the Loan Documents and the
transactions contemplated thereunder. Notwithstanding anything to the contrary set forth
herein, the Developer shall have no obligation to execute any document, or take any action,
which would: (i) change a material term of any Loan Document; (ii) change or impair any
material right of Developer; and/or, (iii) increase the liability of Developer or any partner
thereof.
15.5. Annual Financial Statements. Developer shall deliver to City, within one
hundred twenty (120) days after the end of each Calendar Year following issuance of a
Certificate of Completion: (a) a certified public accountant reviewed balance sheet for
Developer as of the end of such Calendar Year and a certified public accountant reviewed
statement of profit and loss for Developer and for Developer's operations in connection
with the Property for such Calendar Year, together with all supporting schedules; (b) a
certificate of such certified public accountant that such documents were reviewed by such
certified public accountant in accordance with generally accepted accounting principles
and otherwise comply with generally accepted accounting principles review requirements;
and, (c) a certificate of Developer's Managing General Partner that such documents: (i)
were prepared in accordance with generally accepted accounting principles applied on a
consistent basis or in accordance with such other principles or methods as are reasonably
acceptable to City; (ii) fairly present Developer's financial condition; (iii) show all material
liabilities, direct and contingent; and, (iv) fairly present the results of Developer's
operations. Developer shall also provide the City with any other annual audit reports
issued by other monitoring agencies upon written request.
15.6. Audits and Access to Records. Developer agrees that City, the U.S.
Department of Housing and Urban Development, the Comptroller General of the United
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States or any of their authorized representatives shall have the right of access, upon
reasonable notice, to any books, documents, papers, or other records of Developer that are
pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts or
transcripts. Developer will maintain all books and records pertaining to this Agreement for
a period of not less than five (5) years after all matters pertaining to this Agreement (i.e.,
audit, disputes or litigation) are resolved in accordance with applicable federal or state
laws, regulations or policies, and when a period of affordability or recapture applies to
Developer's activities, for a period of not less than five (5) years after the Affordability
Period ends.
Section 16. OTHER NEGATIVE COVENANTS
While any obligation of Developer under the City/HOME Loan Note or
City/HOME Loan Deed of Trust remain outstanding, the following provisions shall apply,
except to the extent that the Executive Director otherwise consents in writing:
16.1. Default on Senior Loan. Developer shall not default on any of the Senior
Loan Documents, provided however, that Developer shall have such period as is provided
in the Senior Loan Documents during which to effectuate a cure.
16.2. Sale or Lease of Property. Unless and until Developer has received a
Certificate of Completion for the construction from City, except for a Permitted Transfer,
Developer shall not sell, lease, sublease or otherwise transfer all or any part of the Property
or any interest therein without the prior written consent of the Executive Director, which
consent may be withheld in the Executive Director's sole and absolute discretion. In
connection with the foregoing consent requirements, Developer acknowledges that City
relied upon Developer's particular expertise in entering into this Agreement and continues
to rely on such expertise to ensure the satisfactory completion of the construction.
Notwithstanding anything to the contrary contained herein, a "transfer" shall not
include: (i) a transfer of any general partner's interest in Developer when made in
connection with the exercise by the Developer's Limited Partner of its rights upon a default
by a general partner under the Developer's Partnership Agreement or upon a general
partner's withdrawal in violation of the Partnership Agreement, so long as the removal and
substitution of the defaulting general partner is made within thirty (30) days of such default
or, if such removal and substitution cannot reasonably be completed within thirty (30) days,
so long as the Limited Partner commences to take action to remove and substitute the
general partner with a reasonable period and thereafter diligently proceeds to complete
such substitution; (ii) any transfer of the Property to the managing general partner of
Developer pursuant to the right of first refusal or to the general partners of Developer
pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any
transfer of the Limited Partner's interest in accordance with the Partnership Agreement;
and, (iv) any sale, transfer or other disposition of an interest in a limited partner of the
Developer.
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Section 17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of
Developer, or at its own election, the City shall issue a certificate of completion
("Certificate of Completion"). Such Certificate of Completion shall be, and shall so state,
conclusive determination of satisfactory completion of the construction.
If City declines to furnish a Certificate of Completion after written request from
Developer, the Executive Director shall, within thirty (30) days after receipt of the request,
provide Developer with a written statement of the reasons therefore. The statement shall
contain a description of the action(s) Developer must take to obtain a Certificate of
Completion. If the reason therefore is that the Developer has not completed a minor portion
of the Construction, City may, in its sole and absolute discretion, issue the Certificate of
Completion upon the posting with City of a bond or other form of security acceptable to
the Executive Director in the amount of the fair value of the uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of
the Loan Documents or any obligation of Developer to any other party whatsoever,
including any holder of a mortgage or deed of trust. A Certificate of Completion is not
"notice of completion" referred to in Section 3093 of the California Civil Code.
A Certificate of Occupancy issued by the City will also meet the same purpose and
requirement as the Certificate of Completion.
Section 18. INDEMNIFICATION
18.1. Nonliability of City. Developer acknowledges and agrees that:
(a) The relationship between Developer and City is and shall remain
solely that of borrower and lender, City neither undertakes nor assumes any responsibility
to review, inspect, supervise, approve (other than for aesthetics) or inform Developer of
any matter in connection with the construction, including matters relating to: (i) the
perfonnance of the construction work, (ii) architects, contractors, subcontractors and
materialmen, or the workmanship of or materials used by any of them, or (iii) the progress
of the construction; and Developer shall rely entirely on its own judgment with respect to
such matters and acknowledges that any review, inspection, supervision, approval or
information supplied to Developer by City in connection with such matters is solely for the
protection of City and that neither Developer nor any third party is entitled to rely on it;
(b) Notwithstanding any other provision of any Loan Document: (i) the
City is not a partner, joint venture, alter -ego, manager, controlling person or other business
associate or participant of any kind of Developer and City does not intend to ever assume
any such status; (ii) City's activities in connection with the City/HOME Loan shall not be
"outside the scope of the activities of a lender of money" within the meaning of California
Civil Code Section 3434, as modified or recodified from time to time, and City does not
intend to ever assume any responsibility to any person for the quality or safety of the
Property; and, (iii) City shall not be deemed responsible for or a participant in any acts,
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omissions or decisions of Developer;
(c) City shall not be directly or indirectly liable or responsible for any
loss or injury of any kind to any person or property resulting from any construction on, or
occupancy or use of, the Property, whether arising from: (i) any defect in any building,
grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of
Developer or any of Developer's agents, employees, independent contractors, licensees or
invitees; or, (iii) any accident on the Property or any fire or other casualty or hazard
thereon; and
(d) By accepting or approving anything required to be performed or
given to City under the Loan Documents, including any certificate, financial statement,
survey, appraisal or insurance policy, City shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or approval
shall constitute a warranty or representation by City to anyone.
18.2. Indemnity. Developer shall defend (by counsel reasonably satisfactory
to City), indemnify and save and hold harmless the Indemnitees from and against all
claims, damages, demands, actions, losses, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) arising from or relating to:
(i) a breach of this Agreement by Developer; (ii) the making of the City/HOME Loan; (iii)
a claim, demand or cause of action that any person has or asserts against Developer; (iv)
any act or omission of Developer, any contractor, subcontractor or material supplier,
engineer, architect or other person with respect to the Property; or, (vi) the ownership,
occupancy or use of the Property. Notwithstanding the foregoing, Developer shall not be
obligated to indemnify City with respect to the consequences of any act of illegal conduct,
gross negligence or willful misconduct of City. Developer's obligations under this Section
shall survive the cancellation of the City/HOME Loan Note, release and reconveyance of
the City Deed of Trust, issuance of the Certificate of Completion, and termination of this
Agreement.
(a) Notwithstanding the foregoing, neither Developer, nor any of its
partners, shall be personally liable for any indemnification obligation hereunder which
would result as the repayment of principal and/or interest under the City/HOME Loan.
(b) To the fullest extent permitted by law, the Developer agrees to
indemnify, hold harmless and defend the City and its elected officials, officers, governing
members, employees, attorneys and agents (collectively, the "Indemnified Parties"), from
and against any and all losses, damages, claims, actions, liabilities, reasonable costs and
expenses of any and every conceivable nature, kind or character (including, without
limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement
and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them,
may become subject to under any statutory law (including federal or state securities laws)
or at common law or otherwise, arising out of or based upon or in any way relating to:
(i) the Loan Documents or the execution or amendment thereof
or in connection with the transactions contemplated thereby;
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(ii) Developer's ownership or operation of the Project or any act
or omission of the Developer or any of its agents, contractors, servants, employees or
licensees in connection with the City/HOME Loan or the Project, the operation of the
Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct
or management of work done in or about, or from the planning, design, acquisition,
installation, operation or rehabilitation of, the Project or any part thereof;
(iii) any lien or charge upon payments by the Developer to the
City, or any taxes (including, without limitation, all ad valorem taxes and sales taxes),
assessments, impositions and other charges imposed on the City in respect of any portion
of the Project;
(iv) any violation of any environmental law, rule or regulation
with respect to, or the release of any toxic substance from the Project or any part thereof;
(v) any untrue or misleading statement of a material fact by the
Developer contained in any Loan Document or any of the documents or instruments
relating to said Loan Documents that the City relied upon in making the City/HOME Loan,
except to the extent such damages are caused by the gross negligence or willful misconduct
of such Indemnified Party. In the event that any action or proceeding is brought against
any Indemnified Party with respect to which indemnity may be sought hereunder, the
Developer, upon written notice from the Indemnified Party, shall assume the investigation
and defense thereof, including the employment and payment for counsel selected by the
Indemnified Party, and shall assume the payment of all reasonable expenses related thereto,
with full power to litigate, compromise or settle the same; provided that the Indemnified
Party shall have the right to review and approve or disapprove in its reasonable discretion
any such compromise or settlement; and,
(vi) Notwithstanding anything in this Section 18.2 to the
contrary, if judgment is entered against Developer and City by a court of competent
jurisdiction because of the concurrent active negligence of City or Indemnified Parties,
Developer and City agree that liability will be apportioned as determined by the court.
Neither Party shall request a jury apportionment.
18.3. Reimbursement of City. Developer shall reimburse City immediately
upon written demand for all costs reasonably incurred by City (including the reasonable
fees and expenses of attorneys, accountants, appraisers and other consultants, whether the
same are independent contractors or employees of City) in connection with the
enforcement of the Loan Documents and all related matters including all claims, demands,
causes of action, liabilities, losses, commissions and other costs against which City is
indemnified under the Loan Documents. Such reimbursement obligations shall bear
interest from the date occurring twenty (20) days after City gives written demand to
Developer at the rate of Interest defined in the Note and shall be secured by the City Deed
of Trust. Such reimbursement obligations shall survive the cancellation of the City/HOME
Loan Note, release and reconveyance of the City/HOME Loan Deed of Trust, issuance of
a Certificate of Completion, and termination of this Agreement
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Subsequent to the making and disbursement of this Loan, the Developer shall pay for any
subsequent revisions, transfers, extensions, renewals, modifications, refinancing or
"workouts," and providing estoppels or subordination of the City/HOME Loan
(collectively, "Changes"), and in the exercise of any of City's rights or remedies under this
Agreement. The City will receive from Developer in connection with any request by
Developer for a Change, a nonrefundable fee in the amount of Five Hundred Dollars ($500)
and Developer shall reimburse City for all of the City's reasonable out-of-pocket expenses
(including reasonable attorney's fees) incurred in the administration and review of such
Changes, to the extent such expenses exceed Five Hundred Dollars ($500).
Section 19. INSURANCE, CASUALTY AND CONDEMNATION
19.1. Prior to undertaking performance of work under this Agreement,
Developer shall maintain and shall require its subcontractors, if any, to obtain and
maintain insurance as described below:
a. Minimum Scope and Limit of Insurance — Coverage shall be at least as
broad as:
1. Commercial General Liability (CGL): Insurance Services Office
Form CG 00 01 covering CGL on an "occurrence" basis, including
products and completed operations, property damage, bodily injury and
personal & advertising injury with limits no less than $2,000,000 per
occurrence. If a general aggregate limit applies, either the general
aggregate limit shall apply separately to this project/location (ISO CG
25 03 or 25 04) or the general aggregate limit shall be twice the required
occurrence limit.
2. Automobile Liability: Insurance Services Office Form Number CA 00
01 covering any auto (Code 1), or if Developer has no owned autos,
hired (Code 8), and non -owned autos (Code 9), with a limit no less than
$1,000,000 per accident for bodily injury and property damage.
3. Workers' Compensation: Insurance as required by the State of
California, with Statutory Limits, and Employer's Liability Insurance
with limit of no less than $1,000,000 per accident for bodily injury or
disease.
4. Professional Liability (Errors & Omissions): Insurance appropriate
to the Developer's profession, with limit no less than $2,000,000 per
occurrence or claim, $2,000,000 aggregate.
5. Broader Coverage: If Developer maintains broader coverage and/or
higher limits than the minimums shown above, the City requires and
shall be entitled to the broader coverage and/or the higher limits
maintained by Developer. Any available insurance proceeds in excess
of the specified minimum limits of insurance and coverage shall be
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City HOME Loan Agreement
available to the City.
b. Other Insurance Provisions — The insurance policies are to contain, or be
endorsed to contain, the following provisions:
Additional Insured Status: The City, its officers, officials, employees,
and volunteers are to be covered as additional insureds on the CGL
policy with respect to liability arising out of work or operations
performed by or on behalf of Developer including materials, parts, or
equipment furnished in connection with such work or operations.
General liability coverage can be provided in the form of an
endorsement to Developer's insurance (at least as broad as ISO Form
CG 20 10 1185 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38;
and CG 2037 forms if later revisions used).
2. Primary Coverage: For any claims related to this Agreement,
Developer's insurance coverage shall be primary coverage at least as
broad as ISO CG 20 0104 13 as respects the City, its officers, officials,
employees, and volunteers. Any insurance or self-insurance maintained
by the City, its officers, officials, employees, or volunteers shall be
excess of Developer's insurance and shall not contribute with it.
3. Notice of Cancellation: Each insurance policy required above shall
state that coverage shall not be canceled, except with notice to the City.
4. Waiver of Subrogation: Developer hereby grants to City a waiver of
any right to subrogation which any insurer of said Developer may
acquire against the City by virtue of the payment of any loss under such
insurance. Developer agrees to obtain any endorsement that may be
necessary to affect this waiverof subrogation, but this provision applies
regardless of whether or not the City has received a waiver of
subrogation endorsement from the insurer.
5. Self -Insured Retentions: Self -insured retentions must be declared to
and approved by the City. The City may require Developer to purchase
coverage with a lower retention or provide proof of ability to pay losses
and related investigations, claim administration, and defense expenses
within the retention. The policy language shall provide, or be endorsed
to provide, that the self -insured retention may be satisfied by either the
named insured or City.
6. Acceptability of Insurers: Insurance is to be placed with insurers
authorized to conduct business in the state with a current A.M. Best's
rating of no less than A:VII, unless otherwise acceptable to the City.
7. Claims Made Policies: If any of the required policies provide coverage
on a claims -made basis:
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City HOME Loan Agreement
i. The Retroactive Date must be shown and must be before the date
of the Agreement or the beginning of work.
ii. Insurance must be maintained and evidence of insurance must
be provided for at least five (5) years after completion of the
work.
iii. If coverage is canceled or non -renewed, and not replaced with
another claims -made policy form with a Retroactive Date prior
to the contract effective date, the Developer must purchase
"extended reporting" coverage for a minimum of five (5) years
after completion of work.
8. Verification of Coverage: Developer shall furnish the City with
original Certificates of Insurance including all required amendatory
endorsements (or copies of the applicable policy language effecting
coverage requiredby this clause) and a copy of the Declarations and
Endorsement Page of the CGL policy listing allpolicy endorsements to
City before work begins. However, failure to obtain the required
documents prior to the work beginning shall not waive Developer's
obligation to provide them. The City reserves the right to require
complete, certified copies of all required insurance policies, including
endorsements required by these specifications, at any time.
9. Subcontractors: Developer shall require and verify that all
subcontractors maintain insurance meeting all the requirements stated
herein, and Developer shall ensure that City is an additional insured on
insurance required from subcontractors.
10. Special Risks or Circumstances: City reserves the right to modify
these requirements, including limits, based on the nature of therisk, prior
experience, insurer, coverage, or other special circumstances.
19.2. Claims and Proceedings. Developer shall give City immediate notice of
any material casualty to any portion of the Property, whether or not covered by insurance,
and of the initiation or threatened initiation of any proceeding for the condemnation or
other taking for public or quasi -public use of any portion of the Property (collectively,
"Condemnation"), and shall provide City with copies of all documents which pertain to any
such casualty or Condemnation. Developer shall take all action reasonably required by City
in connection therewith to protect the interests of Developer and/or City, and City shall be
entitled (without regard to the adequacy of its security) to participate in any action, claim,
adjustment or proceeding and to be represented therein by counsel of its choice. Developer
shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without
prior written approval, which approval shall not be unreasonably withheld or delayed.
19.3. Delivery of Proceeds to City. If the proceeds from any casualty insurance
is in excess of $500,000, Developer shall, subject to any superior rights of the Senior
Lender, deliver such proceeds to the City immediately upon receipt.
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19.4. Application of Casualty Insurance Proceeds. Subject to the rights of the
Senior Lender, any proceeds collected (the "Proceeds") under any casualty insurance
policy described in this Agreement shall be disbursed to Developer as provided below, but
only upon fulfillment of each of the following conditions (the "Restoration Conditions")
within ninety (90) days (unless extended by mutual agreement of Developer and City)
following the occurrence of the damage for which the Proceeds are collected:
(a) Developer shall demonstrate to City's reasonable satisfaction that
the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b))
will be adequate to repair the Improvements and to restore the fair market value of the
Property, within two years (or such longer time period reasonably determined by City), to
at least the value it had immediately prior to sustaining the damage. Such demonstration
shall include delivery to City of: (i) plans and specifications reasonably satisfactory to City;
and, (ii) a construction contract in form and content, and with a contractor, reasonably
satisfactory to City.
(b) To the extent that the Proceeds are insufficient to accomplish the
restoration required above, Developer shall deliver to City (the "Shortfall Funds") in the
amount of such shortfall, which funds shall be assigned to City as security for Developer's
obligation hereunder and held and disbursed in the same manner as the Proceeds.
(c) Developer shall execute such documents as City reasonably requires
to evidence and secure Developer's obligation to use all amounts disbursed for the diligent
restoration of the Property.
(d) No Event of Default shall remain uncured.
19.5. Method of Disbursement and Undisbursed Funds. Any Proceeds and
Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in
accordance with then customary disbursement procedures and related provisions. Any
amounts remaining undisbursed following completion of such restoration shall be returned
to Developer up to the amount of any Shortfall Funds deposited by Developer, and any
other amounts remaining shall either be paid to Developer or applied by City against any
obligations to City that are secured by a lien on the Property, as they elect in their sole and
absolute discretion.
19.6. Failure to Satisfy Conditions. In the event that Developer fails to fulfill
the Restoration Conditions within ninety (90) days, unless extended, following the date on
which the damage occurs, the Proceeds shall be applied by City against any obligations to
City that are secured by a lien on the Property, and the selection of which such obligations
to apply the Proceeds against shall be made by City in their sole and absolute discretion,
subject to the rights of the Senior Lender.
19.7. Condemnation; Treatment of Compensation. Subject to any superior
rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations
to City secured by a lien on the Property, all amounts payable to Developer in connection
with any Condemnation, and any proceeds of any related settlement (collectively,
"Compensation"). Subject to any superior rights of Senior Lender, Developer shall deliver
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such remaining Compensation to City immediately upon receipt. If the taking results in a
loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely
to render the Property not economically viable or if, in City's reasonable judgment
Developer's security is otherwise impaired, City may apply the Compensation received
due to judgment or settlement in connection with any condemnation or other taking to
reduce the unpaid obligations secured in such order as City may determine, and without
any adjustment in the amount or due dates of payments due under the City/HOME Loan
Note. If so applied, any award in excess of the unpaid balance of the City/HOME Loan
Note and other sums due to City shall be paid to Developer or Developer's assignee. City
shall have no obligation to take any action in connection with any actual or threatened
condemnation or other proceeding.
(a) Notwithstanding the foregoing, as long as the Developer is not in
default under the Loan Documents, any condemnation proceeds may be used by the
Developer for repair and/or restoration of the Project.
Section 20. DEFAULTS AND REMEDIES
20.1. Events of Default. The occurrence of any of the following, whatever the
reason therefore, shall constitute an Event of Default by Developer:
(a) Developer fails to make any payment of principal or interest under
the City/HOME Loan Note when due, and such failure is not cured within thirty (30)
Business Days after Developer's receipt of written notice that such payment was not
received when due;
(b) Developer fails to perform any other obligation for the payment of
money under any Loan Document, and such failure is not cured within thirty (30) Business
Days after Developer's receipt of written notice that such obligation was not performed
when due;
(c) Developer fails to perform any obligation (other than the obligations
described in subparagraphs (a) and (b) above) under any Loan Document, and such failure
is not cured within thirty (30) days after Developer's receipt of written notice that such
obligation was not performed; provided that, if cure cannot reasonably be effected within
such thirty (30)-day period, such failure shall not be an Event of Default so long as
Developer (in any event, within ten (10) days after receipt of such notice) commences to
cure, and thereafter diligently (in any event within one hundred and twenty (120) days after
receipt of such notice) prosecutes such cure to completion;
(d) Any representation or warranty in any Loan Document proves to
have been incorrect in any material respect when made;
(e) Reserved;
(f) Work on the construction ceases for ninety (90) consecutive days
for any reason (other than governmental orders, decrees or regulations, acts of God or any
other deity, quarantine restrictions, epidemics, supply shortages, strikes or other causes
46
The Crossroads at Washington
City HOME loan Agreement
beyond Developer's reasonable control), provided that the same do not, in the aggregate
and in the City's reasonable judgment, threaten to delay the completion of the construction
beyond the required completion date set forth in this Agreement;
(g) Developer is enjoined or otherwise prohibited by any Governmental
Authority from constructing and/or occupying the improvements and such injunction or
prohibition continues unstayed for ninety (90) days or more for any reason;
(h) Developer is dissolved, liquidated or terminated, or all or
substantially all of the assets of Developer are sold or otherwise transferred without the
Executive Director's prior written consent;
(i) Developer is the subject of an order for relief by a bankruptcy court,
or is unable or admits its inability to pay its debts as they mature, or makes an assignment
for the benefit of creditors; or Developer applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or
any part of its property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent of Developer
and the appointment continues undischarged or unstayed for ninety (90) days; or Developer
institutes or consents to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, custodianship, conservatorship, liquidation,
rehabilitation or similar proceeding relating to it or any part of its property; or any similar
proceeding is instituted without the consent of Developer and continues undismissed or
unstayed for ninety (90) days; or any judgment, writ, warrant of attachment or execution,
or similar process is issued or levied against any property of Developer and is not released,
vacated or fully bonded within ninety (90) days after its issue or levy;
0) Any of the Senior Loan documents is amended, supplemented or
otherwise modified without City's prior written consent, to the extent the City's consent is
required pursuant to any subordination agreement between the City and the Senior Lender;
(k) Senior Loan Document Breach. Any default or breach of Developer
that continues uncured after the expiration of any applicable cure period under any other
loan document including, but not limited to, the Senior Loan Documents (including but not
limited to the Senior Loan Deed of Trust);
(1) VoluntarSuspension. The voluntary suspension of Developer's
business or the dissolution or termination of the Partnership (if any) constituting
Developer;
(m) Unauthorized Transfer. Developer's sale or other transfer of the
Property or the Project in violation of such terms herein;
(n) Fraud or Material Misstatement or Omissions. Any fraudulent act
or intentional material omission of Developer's, or intentional material misrepresentation
of Developer's, pertaining to or made in connection with the City/HOME Loan, Loan
Documents or the Project; or,
47
The Crossroads at Washington
City HOME Loan Agreement
(o) Project Monies. Developer's intentional misapplication or
embezzlement of Project monies.
20.2. Remedies Upon Default. Upon the occurrence and during the continuance
of any Event of Default, City may, at its option and in its absolute discretion, do any or all
of the following:
(a) By written notice to Developer, declare the principal of all amounts
owing under the Loan Documents, together with all accrued interest and other amounts
owing in connection therewith, to be immediately due and payable, regardless of any other
specified due date; provided that any Event of Default described in Section 20.1 shall
automatically, without notice or other action on City's part, cause all such amounts to be
immediately due and payable;
(b) In its own right or by a court -appointed receiver, take possession of
the Property, enter into contracts for and otherwise proceed with the completion of the
construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including, without limitation, the right to seek specific performance and
the right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as City elects in its sole and absolute discretion;
(d) Suspend or terminate the award of HOME funds if Developer fails
to comply with any term of that award; and,
(e) Ripht to Cure at Developer's Ex eense. The City shall have the right
to cure any monetary Event of Default by Developer under a loan other than the
City/HOME Loan. The Developer agrees to reimburse the City for any funds advanced by
the City to cure a monetary default by Developer upon demand therefore, together with
interest thereon at the rate of twelve percent (12%) per annum (which rate shall in no event
exceed the maximum rate permitted by law and if it does, said rate shall be reduced to the
maximum rate then permitted by law), from the date of expenditure until the date of
reimbursement.
20.3. Cumulative Remedies: No Waiver. City's rights and remedies under the
Loan Documents are cumulative and in addition to all rights and remedies provided by law.
The exercise by City of any right or remedy shall not constitute a cure or waiver of any
default, not invalidate any notice of default or any act done pursuant to any such notice,
nor prejudice the City in the exercise of any other right or remedy. No waiver of any default
shall be implied from any omission by City to take action on account of such default if
such default persists or is repeated. No waiver of any default shall affect any default other
than the default expressly waived, and any such waiver shall be operative only for the time
and to the extent stated. No waiver of any provision of any Loan Document shall be
construed as a waiver of any subsequent breach of the same provision. City's consent to or
approval of any act by Developer requiring further consent or approval shall not be deemed
to waive or render unnecessary City's consent to or approval of any subsequent act. The
City's acceptance of the late performance of any obligation shall not constitute a waiver by
48
The Crossroads at Washington
City HOME Loan Agreement
City of the right to require prompt performance of all further obligations; City's acceptance
of any performance following the sending or filing of any notice of default shall not
constitute a waiver of either party's right to proceed with the exercise of its remedies for
any unfulfilled obligations; and City's acceptance of any partial performance shall not
constitute a waiver by City of any rights.
20.4. Nonrecourse Liability. Neither Developer, nor any other party, including
any partner of Developer, shall have any personal liability under this Agreement, or the
attached City/HOME Loan Note and City/HOME Loan Deed of Trust, and any judgment,
decree or order for the payment of money obtained in any action to enforce the obligation
of Developer to repay the City/HOME Loan or any other amount evidenced or secured by
such documents shall be enforceable against Developer only to the extent of Developer's
interest in the Property.
20.5. Limited Partner Cure. The City shall provide the Developer's Limited
Partner with an opportunity to cure any default. Any cure made or tendered by Limited
Partner shall be accepted as if made by Developer.
Section 21. MISCELLANEOUS
21.1. Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of City to Developer, or any other claim
by developer against City, in connection with the City/HOME Loan or otherwise,
Developer hereby waives any right it might otherwise have: (a) to offset any such
obligation, liability or claim against Developer's obligations under the Loan Documents;
or, (b) to claim that the existence of any such outstanding obligation, liability or claim
excuses the nonperformance by Developer of any of its obligations under the Loan
Documents.
21.2. Notices. All notices, demands, approvals and other communications
provided for in the Loan Documents shall be in writing and be delivered to the appropriate
party by personal service or U.S, mail at its address as follows:
If to Developer: Washington Santa Ana Housing Partners, L.P.
c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leong Gallo
President and Chief Executive Officer
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 64th Floor
49
The Crossroads at Washington
City HOME Loan Agieement
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
With a copy to: U.S. Bancorp Community Development Corporation
1307 Washington Ave., Suite 300
St. Louis, MO 63103
USB Project No: 28339
Attn: Director of LIHTC Asset Management
If to City: City of Santa Ana
Executive Director (CDA)
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
With a copy to: City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to all other parties. All
notices personally served shall be effective when actually received. All notices mailed shall
be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing
notwithstanding, the non -receipt of any notice as the result of a change of address of which
the sending party was not notified or as the result of a refusal to accept delivery shall be
deemed receipt of such notice.
21.3. Survival of Representations and Warranties. All representations and
warranties in the Loan Documents shall survive the making of the City/HOME Loan
described herein and have been or will be relied on by City notwithstanding any
investigation made by either party.
21.4. No Third Parties Benefited. This Agreement is made for the purpose of
setting forth rights and obligations of Developer and the City, and no other person shall
have any rights hereunder or by reason hereof.
21.5. Reserved.
21.6. Prior Agreements; Amendments; Consents. This Agreement (together
with the other Loan Documents) contains the entire agreement between the City and
Developer with respect to the City/HOME Loan and the Property, and all prior
negotiations, understandings and agreements are superseded by this Agreement and such
other Loan Documents. No modification of any Loan Document (including waivers of
rights and conditions) shall be effective unless in writing and signed by the party against
whom enforcement of such modification is sought, and then only in the specific instance
and for the specific purpose given.
50
The Crossroads at Washington
City HOME Loan Agreement
21.7. Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California and Federal
law, whichever is more stringent. Developer irrevocably and unconditionally submits to
the jurisdiction of the Superior Court of the State of California for the County of Orange
or the United States District Court of the Central District of California, as City may deem
appropriate, in connection with any legal action or proceeding arising out of or relating to
this Agreement or the Loan Documents. Assuming proper service of process, Developer
also waives any objection regarding personal or in rem jurisdiction or venue.
21.8. Severability of Provisions. No provision of any Loan Document that is
held to be unenforceable or invalid shall affect the remaining provisions, and to this end all
provisions of the Loan Documents are hereby declared to be severable.
21.9. Headings. Article and section headings are included in the Loan
Documents for convenience of reference only and shall not be used in construing the Loan
Documents.
21.10. Conflicts. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, this Agreement, unless otherwise
expressly provided, shall prevail; provided however that, with respect to any matter
addressed in both such documents, the fact that one document provides for greater, lesser
or different rights or obligations than the other shall not be deemed a conflict unless the
applicable provisions are inconsistent and could not be simultaneously enforced or
performed.
21.11. Time of the Essence. Time is of the essence under this Agreement and in
the performance of every term, covenant, and obligation contained herein.
21.12. Conflict of Interest. No member, official or employee of the City shall
have any direct or indirect interest in this Agreement, nor participate in any decision
relating to the Agreement that is prohibited by law.
21.13. Warranty Against Payment of Consideration. Developer warrants that
it has not paid or given, and will not pay or give, any third person any money or other
consideration for obtaining this Agreement.
21.14. Reserved.
21.15. Plans and Data. As additional collateral for the City/HOME Loan,
Developer hereby grants to the City a security interest in all plans and data concerning the
Property, subject to the rights of any Senior Lender. Such right of City shall be subject to
any right of the preparer of the plans to their use.
21.16. Authority to Enter Agreement. Each undersigned represents and warrants
that its signature hereinbelow has the power, authority and right to bind their respective
parties to each of the terms of this Agreement, and shall indemnify the City fully, including
reasonable costs and attorney's fees, for any injuries or damages to City in the event that
such authority or power is not, in fact, held by the signatory or is withdrawn.
51
The Crossroads at Washington
City HOME Loan Agreement
{signatures on following page}
52
The Crossroads at Washington
City HOME Loan Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date set forth at the beginning of this Agreement.
DEVELOPER
Washington Santa Ana Housing Partners, L.P.,
a California limited partnership
By: Related/Washington Santa Ana Development Co., LLC,
a California limited liability company,
its Administrative General Partner
By: I—Awc'%�
Frank Cardone, President
By: Supportive Housing LLC,
a California limited liability company,
its Managing General Partner
By: A Community of Friends,
a California nonprofit public benefit corporation,
its sole member/manager
By:
Dora Le. ng Gallo,
President and Chief Executive Officer
53
The Crossroads at Washington
City HOME Loan Agreement
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 July 18, 2022
before me, t�v_l (Arplft-V " r Notary Public
(insert name and title of the officer)
personally appeared Frank Cardone
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS m hand and official seal. NotaASHAry
licA-VMr
y SM.�.W -- Notary pblk-California
- Orange County
E Commission M 2403693
�/� 14— (Seal) My Comm. Expires May 9, 2026 r
Signature `/MW'Vt —A
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 July 18, 2022
before me, r o;, /) • �P r Notary Public
(insert name and title of the officer)
personally appeared Dora Leong Gallo
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
GA!�-" - '' 6�' IL P. FEE
Notary Public. California
Z Orange County
Commission; 2270789
(Seal) My Comm. Expires Jan 10, 2023
A-2022-132
ATTEST:
Daisy Gomez
Clerk of the Council
Dated:
APPROVED AS TO FORM:
SONIA R. CARVALHO, City Attorney
LE
Attorney
Dated: -7)11�
RECOMMENDED FOR APPROVAL:
Steven A. Mendoza
Executive Director
Community Development Agency
CITY OF SANTA ANA
Kristine�G .
City Manager
Dated:
54
The Crossroads at Washington
City HOME Loan Agreement
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 July 15, 2022 before me, Claudia M. Fernandez -Shaw, Notary Public
(insert name and title of the officer)
personally appeared Kristine Ridge
who proved to me on the basis of satisfactory evidence to be the person(4) whose namearts-
subscribed to the within instrument and acknowledged to me that- �i they -executed the same in
4W±094heir authorized capacity(io), and that by NsA44Rtlaoirsignaturg(s) 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.
°v.,, CLADDIA M. EERNANDEZ•SHAW
• Notary Public - California
official — -'` Orangees Jury
Commission ; 2389597
'��• �•� ,My Comm. Expires Jan 25, 2026
EXHIBITS
A. Legal Description
B. Scope of Work
C. Project Budget
D. City/HOME Loan Deed of Trust
E. City/HOME Loan Note
F. Affordability Restrictions on Transfer of Property
G. Additional Terms and Conditions Federal HOME Investment Partnership
(HOME) Funds
55
The Crossroads at Washington
City HOME Loan Agreement
Exhibit.A.
Legal Description
ORDER NO.: 1117020721.2
EXHIBIT A
The land referred to is situated in the County of Orange, City of Santa Ana, State of California,
and is described as follows:
That portion of the Rancho Santiago De Santa Ana in the City of Santa Ana, County of Orange,
State of California per Map recorded in Book 3 Page 420 of Patents, Records of Los Angeles
County in the Office of the County Recorder, described as follows:
Beginning at the southwest terminus of that certain course on the southwest line of said land
shown as having a bearing and distance of "North 60005'57" East 133.86 feet" per Record of
Survey No, 2002-1059 recorded in Book 194 Pages 28 through 36 of Records of Surveys in the
Orange County records; thence along said southwest line North 60005'57" East, 133.81 feet;
thence North 64053'54" East, 193.71 feet; thence North 21°00'44" West, 62.74 feet; thence
North 21100'43" West, 224.19 feet; thence North 32°46'09" West, 150.43 feet to the beginning
of a non -tangent curve, concave northerly and having a radius of 45.00 feet, a radial line to
said beginning of curve bears North 82128'26" East; thence southerly along said curve, 166.04
feet, through a central angle of 211124'37" to the beginning of a reverse curve, concave
westerly and having a radius of 71.00 feet, a radial line to said beginning of curve bears South
66106'57" East; thence northeasterly along said curve, 52.77 feet, through a central angle of
42035'14"; thence North 55021'04" West, 25.14 feet; thence South 00016'37" West, 621.36 feet
W the point of beginning.
Per lot merger recorded July 20, 2022, Instrument No. 2022000253305
APN'S 398-092-13 & 398-092-14
Page 1 of 1
Exhibit Be.
Scope of Work
The Crossroads at Washington Prepared March 11, 2022
Washington Santa Ana Housing Partners, L.P.
Project Description Narrative
Overview/Current Use of Proper
The proposed project, The Crossroads at Washington, (the "Project") will be located at 1136 &
1146 E. Washington Avenue, Santa Ana, CA 92701 (the "Property"). The 2.29 acre site includes
two (2) parcels that will be merged into one (1) parcel prior to the completion of construction.
The current APNs associated with the Project are APN 398-092-014 ("North Parcel") and APN
398-092-013 ("South Parcel").
The Property is currently vacant and underutilized. The immediate perimeter of the site is
bounded by the Santa Ana Freeway to the north and east, light industrial use buildings to the
west, and Santa Ana Boulevard to the south. Along with environmental remediation activities to
prepare the site for its intended use, there is an asphalt pad on the site that will be removed in
order to begin construction.
Ownership and Convevance of Land
The North Parcel is currently owned by the Housing Authority of the City of Santa Ana
("Agency"), while the South Parcel is owned by the County of Orange ("County"). The parcels
will be merged into one parcel and co -owned by both the Housing Authority of the City of Santa
Ana and the County of Orange as Tenants -in -Common.
Washington Santa Ana Housing Partners, L.P. (the "Partnership") entered into an Option
Agreement with the Housing Authority of the City of Santa Ana and County of Orange on
February 25, 2020. Upon satisfactorily meeting conditions to the Option Agreement, the site will
be leased to the Partnership for a period of sixty-two (62) years from the date of the Certificate of
Occupancy, not to exceed sixty-five (65) years from the date of execution of the Ground Lease.
Design Description and Proiect Characteristics
The Project is an eighty-six (86) unit, affordable housing project with forty-three (43) units
dedicated for permanent supportive housing and one (1) unit dedicated as Manager's unit. Of the
forty-three (43) permanent supportive housing units, twenty (20) will be set aside for Mental
Health Services Act ("MHSA") tenants. The breakdown of the bedroom types are sixteen (16)
studio units, twenty-six (26) one -bedroom units, twenty-two (22) two -bedroom units, seventeen
(17) three -bedroom units, and five (5) four -bedroom units. Its purpose is to provide housing to
families with incomes at thirty percent (30%) of the Area Median Income ("AMI" ), and to
special needs populations with incomes at or below thirty percent (30%) of AMI.
Tucked away in Santa Ana's historic "Logan neighborhood," the Project is designed in
accordance with the architectural legacy of Santa Ana and the City's Transit Zoning Code (SD
84 Specific Plan) and will incorporate a Mission Revival architectural design style.
The Project is designed as Type VA construction with two (2) buildings. Building 1 (1136 E
The Crossroads at Washington Prepared March 11, 2022
Washington Santa Ana Housing Partners, L.P.
Washington Avenue) is four (4) stories with an elevator. Building 2 (1146 E. Washington
Avenue) ranges from two (2) to three (3) stories and has two (2) elevators. Building 1 has a total
of thirty-five (35) units and Building 2 has a total of fifty-one (51) units. Each building is
comprised of stacked flats. The Project will include approximately 5,811 square feet of
Community Area with leasing and management offices, as well as 1,060 square feet of retail for
a community serving use.
The proposed design of the Project will feature an inward -facing orientation that creates buffered
courtyards in order to accommodate for the adjacent Santa Ana Freeway to the east of the project
and the industrial building backdrop to the west.
The Project is designed to keep in mind its urban context as well as the needs of its future
families and special needs residents. The Project includes multiple on -site amenities for its
residents, including a pool, tot lot, courtyards, laundries, leasing/management offices, BBQ
pavilion, and a dog run.
The Project was fully entitled on February 24, 2020
Parkin¢
The Project will provide one hundred and twenty (120) parking spaces in an on -grade parking
lot, which includes accessible parking and Electric Vehicle ("EV") parking. Thirty-eight (38) of
the one hundred and twenty (120) spaces utilize tandem parking.
Landscapin¢
The landscaping concept consists of a drought -tolerant and native plant palette where feasible
that complements the Project architecture and is consistent with the overall landscape in the
adjacent neighborhood.
Floor Plans and Unit Amenities
The design of the space considers layouts to ensure livability for residents. Units meet or exceed
established minimum requirements for area and amenities. The breakdown of unit type by square
footage is summarized below:
• Sixteen (16) studio/one bath units at 400 ft2.
• Twenty-six (26) one-bedroom/one bath units at 600 ft2.
• Twenty-two (22) two-bedroom/one bath units at 815 ft2.
• Seventeen (17) three-bedroom/two bath units at 1,100 fl
• Five (5) four-bedroom/two bath units at 1,300 W.
Unit amenities include:
• Bathroom fixtures and finishes.
• Kitchen fixtures, finishes, and cabinets.
• Energy Star rated appliances including stove/oven and refrigerators.
• Energy efficient lighting.
The Crossroads at Washington Prepared March 11, 2022
Washington Santa Ana Housing Partners, L.P.
• Energy efficient windows.
• Floor and window coverings.
• Central heating/air conditioning.
• Storage closets.
• Coat closets.
• Ceiling Fans
• Dishwashers
Accessible features include:
The Project will comply with accessibility requirements. The Project will provide ten percent
(10%) of all units as accessible to people with mobility impairments, and an additional four
percent (4%) of all units as, accessible to people with vision and hearing impairments.
Recreational Amenities and On -Site Services
The design for the recreational amenities and on -site services will reflect the interests and needs
of the resident population. Various amenities are provided in the design, including a computer
room, community room/lounge and kitchen, fitness room, pool, and outdoor courtyards with
seating areas and barbeque areas.
The design encourages interaction amongst all residents through easy access and visual links to
common spaces. Because there are two (2) target populations (families and special needs
populations), a mix of the units has been spread across the residential buildings as to ensure
integration and prevent isolation of a group within the Project. The tot lot, however, is
strategically situated next to the residential building that has a higher share of larger family
bedroom units. While the Project has a high density of dwelling units, a large portion of the
ground floor is dedicated to services, common areas and on -site amenities.
Demolition & Remediation Costs
The site is currently vacant. The site will be remediated in accordance with the Removal Action
Workplan ("RAW") as approved by the Department of Toxic Substances Control ("DTSC"). The
RAW is a proposed cleanup plan to address areas of soil contaminated with arsenic, lead,
chromium, and petroleum hydrocarbons, and an area of soil vapor contaminated with
tetrachloroethylene ("PCE"), prior to residential development.
Services
The Project will engage the social service provider A Community of Friends ("ACOF") to
provide a range of services available to residents.
• Adult Educational, Health, Wellness, and Skill Building Classes — examples of classes
may include, but are not limited to, the following areas: financial literacy, computer
training, resume building, nutrition, health information/awareness, and cooking.
• Service Coordinator — responsibilities include, but are not limited to, providing
individual case management referrals and supportive services for tenants.
The Crossroads at Washington Prepared March 11, 2022
Washington Santa Ana Housing Partners, L.P.
• Case Manager — responsibilities include, but are not limited to, providing individual case
management referrals and supportive services for tenants; process housing applications
using the Coordinated Entry System ("CES"), Family Solutions Center ("FSC"), and
interview potential tenants for permanent supportive housing; and developing Individual
Service Plans in collaboration with tenants.
Please note that because the project contains less than seventy-five percent (75%) Special Needs
units, and is fifty percent (50%) Special Needs and fifty -percent (50%) Large Family, services
are provided proportionally for each population type.
In addition to the services provided by ACOF, the Orange County Health Care Agency
("OCHCA") will provide individualized services for the twenty (20) Mental Health Services Act
tenants.
Project Population Type
As described above, the Project consists of eighty-six (86) units. Of the eighty (86) units, forty-
three (43) units are dedicated for permanent supportive housing and one (1) unit dedicated as
Manager's unit. Of the forty-three (43) permanent supportive housing units, twenty (20) will be
set aside for Mental Health Services Act ("MHSA") tenants.
Income
Catergory
Total Units
Studio
30% TC
16
1 Bedroom
30% TC
26
2 Bedrooms
30% TC
21
2 Bedrooms
Manager,
1
3 Bedrooms
30% TC1
17
4 Bedrooms
30% TC1
5
Total
1 86
General
Affordable
0
0
20
1
17
5
43
Development & Management Teams
MHSAUnits
General
PSHUnits
Total PSH
Units
16
16
20
6
26
1
1
0
0
20
23
43
Type
(PSH vs Family)
PSH
PSH
PSH
Family
Family
The Project is controlled by the Partnership. The "for profit" administrative general partner is
Related/Washington Santa Ana Development Co., LLC, an affiliate of Related. The "not for
profit" managing general partner will be Supportive Housing LLC, whose member is A
Community of Friends. The John Stewart Company ("JSCo") will manage the Project.
Related/Washington Santa Ana Development Co., LLC, will own a .0075% interest and
Supportive Housing LLC will own a .0025% interest and act as the Managing General Partner.
The Crossroads at Washington
Washington Santa Ana Housing Partners, L.P.
Prepared March 11, 2022
ORGANIZATIONAL CHART FOR WASHINGTON SANTA ANA HOUSING PARTNERS, L.P.
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Schedule of Values
Exhibit B - Scope of Work
Refernce (Description
Number
01-7123
Site Controls / Field Engineering
02-0002
General Overtime Hour Allowance
03-3000
Cast -In -Place Concrete
03-3116
Lightweight Concrete
04-2000
Masonry
05-1200
Structural Steel Framing
05-7000
Misc. & Ornamental Metals
06-1000
Rough Carpentry
06-2000
Finish Carpentry
06-2200
Countertops
06-4100
Cabinets
07-1000
Waterproofing
07-2100
Building Insulation
07-4600
Cladding/Siding
07-4000
Roofing
07-6000
Flashing / Sheetmetal
07-9000
Caulking, Sealant & Fire Stopping
07-9500
Expansion Controls
08-1000
Doors and Trim
08-3100
Access Doors
08-5200
Wood & Plastic Windows
08-8000
Glass & Glazing
09-2200
Drywall & Metal Stud
09-2400
Cement Plastering
09-3000
Ceramic Tile
09-6200
Special Flooring
09-6500
Resilient Flooring & Carpet
09-7710
Fiber Reinforced Panel
09-9000
Painting & Wall Covering
10-1400
Signs
10-2100
Toilet Compartments & Accessories
10-2600
Wall & Corner Guards
10-4400
Fire Extinguisher
10-5500
Mail Chutes/Boxes
10-7313
Canopies/Awnings
11-4000
Appliances
Value
55,775
200,000
1,352,273
172,500
207,202
559,545
204,801
5,416,400
112,826
223,792
412,672
184,821
221,087
190,085
383,260
193,012
43,866
24,829
843,400
16,059
720,447
81,078
2,275,000
1,546,500
33,533
15,549
627,142
5,000
720,698
43,866
51,900
7,500
6,141
25,800
22,814
231,000
12-2000
Window Treatment
$
45,150
13-1100
Swimming Pool & Spa
$
165,000
14-2000
Elevators
$
250,000
14-9000
Chutes
$
70,300
21-1000
Fire Sprinkler Systems
$
514,000
22-0000
Plumbing
$
2,261,098
23-0000
HVAC
$
1,112,000
26-0000
Electrical
$
1,752,800
26-0001
Light Fixture Allowance
$
400,000
26-0002
Dry Utility Allowance
$
100,000
27-1000
Low Voltage Systems Allowance
$
298,560
27-1001
Electronic Hardware Allowance
$
42,000
28-4600
Fire Alarm Systems
$
210,559
31-0001
Earthwork
$
302,247
31-2500
Erosion Control
$
36,999
32-1216
Asphaltic Concrete Paving
$
95,564
32-1313
Site Concrete
$
322,023
32-1700
Pavement Marking
$
13,650
32-1800
Play -field Equipment
$
149,840
32-3300
Site/Street Furnishings
$
62,205
32-8000
Irrigation/Landscaping
$
415,097
33-0001
Site Utilities (Storm Drain/Sewer/Water) Allowance
$
1,023,250
Trade Subtotal
$
27,074.515
General. Conditions & General Requirements $ 2,376,385
Contractor Fee $ 1,178,036
Insurance $ 434,931
Mark Up Subtotal $ 3.989.352
ntract Value Total
Exhibit C:
Project Budget
PROJECT SUMMARY
The Chamod de of Weahingfon- nodded Clo,ing Proforme(,07)
Related Companles of Cellf,mis
Prolecl0ate
Pmlxt3ype
Special Naeds
Canty
Omega
SIISConlml Typa
Ground Laaee
Total Who
86
Parking Sexes
IN
Land Arad
229Asras
Nat Renkfagal Arda
65,296 SF
Radical Building
8,629 SF
Retell Buildingl3pace
1,4A3 SF
Ganail M.M.
16"Me
Boarding Eternal. Plummeted,
Randall Vacancy Rate(GannaPAgmddbk Unlls)
5.00%
ReeMentlal Vacancy Raleg'SHIARa)
1000%
UnIl Weighted Vacancy
7.53%
Retail Vacancy Rafe
0.0%
Inwmelnflator
3.0%
Ex,mad Inflator
3.0%
Pro," Tax Inflator
2.0%
Replacement Reserve lnflalar(evarySYears)
10.0%
CPI
3.0%
Stabilized Cash BAY
Mar 1
Gmns3dmdulad Rent
U3,928
Project Based Voucher Ovmhang(fit
939,708
Laundry Imams.
6,192
VxanryBColecgon
H34,704)
Elfective Guam Income
FUSIN
Operalin9Expenaee
OVL794)
Net Operal Income
900,330
Debt Servlce)ambined)
(7B2,644)
Cash Flow
Ill,486
MR
1.15
Adlueled Thai Basis IN
Tdal Bill Bwla eaA%of Threi Rails Umlt
Permanent Sources
Internet Rate
To. (Yeere)
Amount
Octagonal
Tax Credit Egmty
24,696,393
We
Permanenl Loan More A
6.10%
15Yr14OYr Anl
485,000
32,429
Permanenl Loan Nola B (SAHA PBV Trandhe B Won)
6,10%
15Yr140YrAmmt
4,04t
323,966
Permanent Loan NolaOr (GCHA PBV Tranche B Lan)
6,10%
15Yr140Yr A,i
Q3]8,000
426,459
City Residual Rai grom(Land Value)
3,00%
62
4,h)i
Na
Ciry Re,ldualRedonda Luen
3.00%
62
4,644,909
We
Orange County Reaidual Rai Loan (Land Value)
3.00%
62
2,341,064
one
Orange County PSH than
3.00%
55
2,650701
1
OCHFT MHSA Loan(2021 PSH NOFA)
3.00%
55
2,500000
me
Hating Andadrlry of Me City of Care Ana and County of Orange(Envlramenlal Remedial Funding)
300,000
are
GP Equlry
100
Ma
local
52L36 3
]82,644
So... And U,es
Totnl Permanenl Sources
62,950,103
Total Davalopmenl Cost
62,950103
Coat Effl,laav l Credit Rod argon l Puallc Fund,
Coat Eficlency 13%
Gredit Redi 0%
Public Fund, Dauamnout Full 26%
38%
UNIT DISTRIBUTION
The Crossroads at Washington - Updated Closing Probers, (07)
Related Companies of California
Number
Income
Rent
Gross
Of Units
Category
Restriction
SF
Rent
Studio
16
30%AMI
TCAC
406
$711
16
1 Bedroom
26
30%AMI
TCAC
575
$762
26
2 Bedrooms
21
30%AMI
TCAC
818
$915
1
Manager
818
$D
22
3 Bedrooms
17
301
TCAC
1,143
$1,057
17
4 Bedrooms
5
301
TCAC
1,286
- $1,179
5
Unit Distribution Summary
Summary
Total SF
65,295
Avg. Unit SIF
759
Monthly Rent
$69,494
Annual Renl
$833,928
Avg. Rent(excl. manager's)
$818
Avg. Rent PSF(excl, managers)
$1.08
Bedrooms
157
Total
Utility.
_ Net
Net Rent
Monthly
Annual
Square
Vance
Ram
Per Sniff
Rent
Rent
Unll%
Footage
$36
$675
$1.66
$10,800
$129,600
19%
6.496
$45
$717
$1.25
$18.642
$223,7D4
30%
14,937
$60
$855
$1.05
$17,955
$215,46D
24%
17,178
$0
0
nm
$0 -
- $0
1%
818
$76
$981
$0.66
$16,677
$200,124
20%
19,436
$95
$1.084
$0.84
$5,42D
$65,040
6%
6,430
Income
Units
Total%
30%AMI
85
100%
35%AMI
0
0%
40%AMI
0
0%
45%AMI
0
0%
50%AMI
0
0%
60%AMI
0
0%
Marcel
0
0%
Subtotal
85
100%
Manager
1
Total
66
Unit Size
Unite
Total%
Studio
16
19%
1 Bedroom
26
30%
2 Bedrooms
22
26%
3 Bedrooms
17
20%
4 Bedrooms
5
6%
Taal
66
100%
The Crossroads at Washington -Updated Closing Protorma (07)
Project Based Voucher Calculation (Actual) Used SAHA 2021 Payment Standards (Effective 1011121)
SEPARATED
1 Bedroom
2 Bedrooms
2021
Income
Payment
TCAC Gross
Per Unit
Monthly
Annual
atergory
PBS8 Units Standard
Rents
Overhang
Overhang
Overhang
39% TC
16 1,682.
711
971
15,536
186,432
30% TC
26 1,867
762
1,105
28,730
344,760
30% TC
1 2.278
915
1.363
1.363
16.356
Less Vacancy
Less Monitoring Fee
Less Management Fee
Net Overhang
OCR
Interest Rate
Term (months)
Maximum Loan Amount
Actual Loan Amount (Rounded Down)
10.00% (4,563)
(197)
1.15
6,10%
SAHA
Income
Catergory
2021
Payment TCAC Gross
PBS8 Units Standard Rents
Per Unit
Overhang
Monthly
Overhang
Annual
Overhang
3 Bedrooms
30% TC
10 3,114 1,057
2,057
20,570
246,840
4 Bedrooms
30% TC
5 3,601 1,179
2,422
12,110
145,320
Total
15
32,680
392,160
Less Vacancy
6,00%
(1,634)
(19,608)
Net Overhang
31,046
372,552
DCR
1.15
Interest Rate
6A0%
Term (months)
480
Maximum Loan Amount
4,845,028
Actual Loan Amount (Rounded Down)
4,845,000
Annual Payment
323,956
ANNUAL OPERATING EXPENSE BUDGET
The Crossroads at Washington • Updated Closing Proforma (07)
Related Companies of California
Project Budget
86 units
RENTING
Advertising
672
Misc. Renting
699
TOTAL RENTING
1,371
ADMINISTRATION
Offcee -
5,913
Legal
3,010
Audit
12,000
Telephone/Computer .
16,931
Tenant Relations
2,956
Misc. Adminishative
11,234
TOTAL ADMINISTRATION
52,044
MANAGEMENTFEE
Contract Management
54,696
TOTAL MANAGEMENT
54,696
OPERATING
Electricity
11,825
Water
24,725
Gas.
11,825
Sewer
18,505
Exterminating
4,300
Rubbish Removal
23,220
Misc. Operating
1,075
TOTAL OPERATING
95,475
MAINTENANCE
Security
29,348
Grounds
26,875
Pool
6,000
Repairs
26,875
Elevator-
19,350
Unit Turns
5,375
Misc. Maintenance
9,138
TOTAL MAINTENANCE
122,960
SALARIES AND BENEFITS
Office Salaries
67,080
Maintenance Salaries -
62,608
Payroll Taxes and Benefits
51,875
TOTAL SALARIES AND BENEFITS
181,563
TAXES AND INSURANCE
Real Estate Taxes
4,500
Business Taxes and Licenses
1,169
Insurance -
51,637
TOTAL TAXES AND INSURANCE
57,306
RESERVES AND OTHER EXPENSES
Replacement Reserves
25,800
Replacement Reserves (Add'I MHSA Units)
4,000
PSH Monitoring Fee (OCHAIOCCS: $551unitlyrx 43 units)
2,365
PSH Monitoring Fee (OCHFT: $65/uniVyr x 20 units)
1,300
Annual Environmental Monitoring Fees
5,915
Social Programs
140,000
TOTAL RESERVES AND OTHER COSTS
179,380
TOTAL OPERATING EXPENSES
744,794
TAX CREDIT CALCULATION
The Crossroads at Washington - Updated Closing Proforma (v07)
Related Companies of California
Total Project Cost
$52,950,103
Total Permanent Sources
(28,253710)
Funding Shortfall
$24,696,393
Total Qualified Basis
$29,829,544
Annual Federal Credits - Calculated
$2,684,659
Annual Federal Credits - Awarded
$2.684,659
Total Federal Credits (10 Years)
$26,846,590
Federal Tax Credit Price
$0.920
Federal Tax Credit Investor Equity
$24,696,393
Total Tax Credit Investor Equity (Federal t State+ Acquisition)
$24,696,393
Threshold Basis Limits (Year 2022) 9%Limits
Units
Limit
Total
Efficiency
16
308,882
4,942,112
1 Bedroom
26
356,138
9,259,588
2 Bedrooms
22
429,600
9,451,200
3 Bedrooms
17
549,888
9,348,096
4 Bedrooms
5
612,610
3,063,050
86
36,064,046
Special Features Threshold Basis Limit Increases
10% Increase: 95%of the project's upper floor units are serviced by an elevator - 3,606,405
20% Increase: State or Federal Prevailing Wage Requirement 7,212,809
Total Percentage Increase to Unadjusted Eligible Basis (Combined not to exceed 39%) 10,819,214
Seismic Upgrading or Environmental Mitigation (15% unadj. eligible basis max.) 819,960
Development Impact Fees 1,449,p87
Adjusted Threshold Basis Limit $49,152,306
Total Eligible Basis $42,467,590
Over l(Under) Basis Limit ($6,684,716)
PROJECT BUDGET
The Crossroads at Washington - Updated Closing Proforma (v07)
Development Profoma 2011 V1.2 • ILP
Related Companies of California
86 units
Commercial!
TCAC
Budget
Residential
Retail
Eligible Basis
ACQUISITION COSTS
6,450,036
6,450,036
0
0
PROFESSIONAL FEES
2,752,000
2,762,000
0
2,750,602
FEES AND PERMITS
2,465,000
2,465,000
0
2,465,000
CONSTRUCTION COSTS
Olfsite Improvements/Site ImprovementslLandscaping
2,844,439
2,844,439
0
2,844,439
Residential Structures/Non-Residential Structures/Community Building
24,205,076
24,040,655
164,421
24,040,655
General Conditions l Contractor Pro0t
3,574,251
3.552.525
21,726
3,552,525
Contractor Insurance
441,764
439,079
2,685
439,079
Contractor/ Construction Contingency - -
1,837,296
1,826,128
11,168
1,826,128
Remedlation
819,960
819,960
0
0
TOTAL CONSTRUCTION COSTS
33,722,787
33,522,787
200,000
32,702,827
GAPICONSTRUCTIONIPERMANENT LOAN FEES
735,000
735,000
0
137,156
CONSTRUCTION LOAN INTERESTIPOST-CONSTRUCTION INTEREST
2,384,000
2,384,000
0
940,000
OTHER SOFT COSTS
1,560,371
1,560,371
0
973,006
RESERVES
381,910
301,910
0
0
DEVELOPER FEE
2,499,000
2,499,000
0
2,4992000
TOTAL DEVELOPMENT COSTS
52,950,103
52,750,103
200,000
42,467,590
1 TOTAL ELIGIBLE BASIS
SOURCES AND USES OF FUNDS
The Crossroads at Washington - Updated Closing Preforms (07)
Related Companies of California
Construction Sources and Uses
Construction Sources
Construction Loan
34,919,045
City Residual Receipts Loan (Land Value)
4,108,136
Tax Credit Equity
2,469,639
City Residual Receipts Loan
4,644,909
Orange County Residual Receipts Loan (Land Value)
2,341,864
OCHFT MHSA Loan (2021 PSH NOFA)
2,500,000
Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)
300,000
GP Equity
. 100
Deferred Developer Fee (50%of $2,499,000)
1,249,500
Operating Deficit Reserve
381,910
Deferred TCAC Monitoring Fee
35,000
Total Construction Sources 52,950,103
Construction Uses
Total Development Cost 52,950,103
Amount Overl(Under)
Sources
Tax Credit Equity
24,696,393
Permanent Loan Note A
485,000
Permanent Loan Note B (SAHA PBV Tranche B Loan)
4,845,000
Permanent Loan Note B (OCHA PBV Tranche B Loan)
6,378,000
City Residual Receipts Loan (Land Value)
4,108,136
City Residual Receipts Loan
4,644,909
Orange County Residual Receipts Loan (Land Value)
2,341,864
Orange County PSH Loan
2,650,701
OCHFT MHSA Loan (2021 PSH NOFA)
2,500,000
Housing Authority of the City of Santa Ana and County of Orange (Environmental Remediation Funding)
300,000
GP Equity
100
Total Permanent Sources
52,950,103
Uses
Total Development Cost 52,950,103
Amount Over/(Under)
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Exhibit D.
City/HOME Loan
Deed of Trust
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 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
CITY HOME DEED OF TRUST
AND ASSIGNMENT OF RENTS
(1126, 1136 & 1146 East Washington Avenue, Santa Ana, California)
THIS DEED OF TRUST AND ASSIGNMENT OF RENTS ("Deed of Trust") is made as of this
21st day of July, 2022, by Washington Santa Ana Housing Partners, L.P., a California limited
partnership, ("Trustor"), to [ ], as trustee ("Trustee"), for the benefit of the City of Santa
Ana, a charter city and municipal corporation , as beneficiary ("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WIIH'POWER OF
SALE AND RIGHT OF ENTRY AND POSSESSION, for the benefit and security of
Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor's
leasehold interest in the property located in the City of Santa Ana, State of California, that is
described in Exhibit A, attached hereto and incorporated herein by this reference (the
"Property"), on which Trustor intended to construct and operate an apartment complex
commonly known as Crossroads at Washington.
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH all easements, rights -of -way and rights used in connection therewith
or as a means of access thereto, including without limiting the generality of the foregoing, all
tenements, hereditament and appurtenances thereof and thereto;
TOGETHER WITH any and all buildings, improvements and landscaping of every kind
and description now or hereafter erected thereon, and all property of the Trustor now or hereafter
affixed to or placed upon the Property (sometimes collectively referred to as the
"Improvements");
1
The Crossroads at Washington
City HOME Deed of Trust
TOGETHER WITH all building materials and equipment now or hereafter delivered to
said Property and intended to be installed therein;
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter
acquired, in and to any land lying within the right-of-way of any street, open or proposed,
adjoining the Property, and any and all sidewalks, alleys, strips and gores of land adjacent to or
used in connection with the Property and/or Improvements;
TOGETHER WITH all estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property, both in law and in equity, including, but
not limited to, all oil, gas and mineral rights (including royalty and leasehold rights relating
thereto), all water and water rights and shares of stock relating thereto, all leases of all or any
portion of the Property or Improvements entered into by Trustor as lessor or lessee, all options to
purchase or lease all or any portion of the Property and/or Improvements, all deposits made with
or other security given by Truster to third parties including, utility companies, the proceeds from
any or all of such property, including the Property, claims or demands with respect to the
proceeds of insurance in effect with respect thereto, which Truster now has or may hereafter
acquire, any and all awards made for the taking by eminent domain or by and proceeding or
purchase in lieu thereof of the whole or any part of such property; and
TOGETHER WITH all articles of personal property or fixtures now or hereafter attached
to, located on, installed in or used in and about the Property and/or Improvements, including
without limitation, all partitions, generators, screens, boilers, furnaces, pipes, plumbing,
elevators, cleaning and sprinkler systems, fire extinguishing machinery and equipment, water
tanks, heating, ventilating, air conditioning and air cooling machinery and, equipment, gas and
electric machinery and equipment and other appliances, machinery and equipment and other
fixtures of every nature, all of which shall remain real property, and all renewals or replacements
thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the
Property in any manner.
TOGETHER WITH all present and future accounts, general intangibles, chattel paper,
deposit accounts, investment property, instruments and documents as those terms are defined in
the California Commercial Code, now or hereafter relating or arising with respect to the Property
and/or Improvements and/or the use thereof or any improvements thereto, including without
limitation: (i) all rights to the payment of money, including escrow proceeds arising out of the
sale or other disposition of all or any portion of the Property and/or Improvements; (ii) all
deposit accounts and other accounts and funds created under or pursuant to the Loan Agreement
(as defined below), and the other Loan Documents, all amounts now or hereafter on deposit
herein, and all interest and other earnings thereon with the exception of the operating reserve
created pursuant to Borrower's Partnership Agreement (as defined in the Loan Agreement); (iii)
all use permits, occupancy permits, construction and building permits, and all other permits and
approvals required by any governmental or quasi -governmental authority in connection with the
development, construction, use, occupancy or operation of the Property and/or Improvements;
(iv) any and all agreements relating to the occupancy and/or operation of the Property and/or
Improvements, including without limitation service, property management, landscaping,
gardening, consulting and other contracts of every nature (to the extent the same are assignable);
(v) all lease or rental agreements; (vi) all names under which the Property and/or Improvements
2
The Crossroads at Washington
City HOME Deed of Tnast
are now or hereafter known and all rights to carry on business under any such names or any
variant thereof; (vii) all trademarks relating to the Property and/or Improvements and/or the use,
occupancy or operation thereof; (viii) all goodwill relating to the Property and/or Improvements
and/or the use, occupancy or operation thereof; (ix) all insurance proceeds and condemnation
awards arising out of or incidental to the ownership, use, occupancy or operation of the Property
and/or Improvements; (x) all reserves, deferred payments, deposits; refunds, cost savings, bonds,
insurance policies and payments of any kind relating to the Property and/or Improvements; (xi)
all water stock, if any, relating to any Property and/or Improvements; (xii) all supplements,
modifications and amendments to the foregoing and all present and future accessions, additions,
attachments, replacements and substitutions of or to any or all of the foregoing; and (xiii) all cash
and noncash proceeds and products of any or all of the foregoing, including without limitation all
monies, deposit accounts, insurance proceeds and other tangible or intangible property received
upon a sale or other disposition of any of the foregoing; whether voluntary or involuntary; and
TOGETHER WITH all present and future goods, equipment and inventory, as those
terms are defined in the California Commercial Code, and all other present and future personal
property of any kind or nature whatsoever, now or hereafter located at, upon or about the
Property and/or Improvements, or used or to be used in connection with or relating or arising
with respect to the Property and/or Improvements, the use thereof or any improvements thereto.
All of the foregoing, together with the Property, is herein referred to as the "Security".
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING:
(a) Payment of and performance of all indebtedness of Trustor to Beneficiary as set
forth in the Loan Agreement (defined in Section 1.5 below) and the Note (defined in Section 1.6
below) in the original principal amount of $3,007,489 until paid or canceled. Said principal and
other payments shall be due and payable as provided in the Loan Agreement and the Note. The
Loan Agreement and the Note and all their terms are incorporated herein by reference, and this
conveyance shall secure any and all extensions thereof, however evidenced;
(b) Payment and performance of any sums advanced by Beneficiary to protect the
Security pursuant to the terms and provisions of this Deed of Trust with interest thereon as
provided herein;
, (c) Payment and performance of every other obligation, covenant or agreement of
Trustor contained in this Deed of Trust and in the other "Loan Documents" (as such term is
defined in the Loan Agreement);
(d) Payment and performance of all renewals, extensions, supplements, amendments
and other modifications of any of the foregoing, including without limitation modifications that
are evidenced by new or additional documents or that change the rate of interest on any
obligation.
All of the foregoing obligations are referred to collectively herein as the "Obligations".
The Crossroads at Washington
City HOME Deed of Trust
AND TO PROTECT THE SECURITY OF 'PHIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
Section 1. DEFINITIONS
1.1 Defined Terms. In addition to the terms defined elsewhere in this Deed of Trust,
the following terms shall have the following meanings in this Deed of Trust:
"Debt Instrument"means any debt, loan, mortgage, deed of trust, regulatory agreement
or security instrument relating to. the Property or the Security, including, but not limited to, the
Loan Documents.
"Environmental Reports" [list to be provided under separate cover]
"Hazardous Substance" means:
(a) any oil, flammable substance, explosive, radioactive material, hazardous
waste or substance, toxic waste or substance or any other waste, material, or pollutant that
(i) poses a hazard to the Property or'to persons on the Property or
(ii) causes the Property to be in violation of any Hazardous Substance
Law;
(b) asbestos in any form;
(c) area formaldehyde foam insulation;
(d) transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls;
(e) radon gas;
(f) any chemical, material, or substance defined as or included in the
definition of hazardous substance, hazardous substances,"« hazardous. wastes,". hazardous
materials, "extremely hazardous waste," "restricted hazardous waste," or "toxic substances" or
words of similar import under any applicable local, state, or federal law or under the regulations
adopted or publications promulgated pursuant to those laws, including, but not limited to, any
Hazardous Substance Law, Code of Civil Procedure § 564, as amended from time to time, Code
,of Civil Procedure § 726.5, as amended from time to time, Code of Civil Procedure §736, as
amended from time to time, and Civil Code § 2929.5, as amended from time to time;
(g) any other chemical, material, or substance, exposure to .which is
prohibited, limited, or regulated. by any governmental authority with authority over the Property
or which may pose a hazard to the health and safety of the occupants of the Property or the
owners or occupants of property adjacent to or surrounding the Property, or any other person
corning on the Property or any adjacent property; and
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City HOME need of Trust
environment.
(h) any other chemical, material, or. substance that may pose a hazard to the
The term Hazardous Substance shall not include materials or substances
commonly used in the construction and operation of an apartment complex in
accordance with applicable Hazardous Substance Law.
"Hazardous Substance Claim" means any enforcement, cleanup, removal, remedial, or
other governmental, regulatory, or private actions, agreements, or orders threatened, instituted, or
completed pursuant to any Hazardous Substance Law together with all claims made or
threatened by any third party against Trustor or the Property relating to damage, contribution,
cost -recovery compensation, loss, or injury resulting from the presence, release or discharge of
any'Hazardous Substance.
"Hazardous Substance Law" means any federal, state, or local law, ordinance,
regulation, or policy relating to the environment, health, and safety, any Hazardous Substance
(including, without limitation, the use, handling, transportation, production, disposal, discharge,
or storage of the substance), industrial hygiene, soil, groundwater, and indoor and ambient air
conditions or the environmental conditions on the Property, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 [42 USCS
§§ 9601 et seq], as amended from time to time; the Hazardous Substances Transportation Act
[49 USCS §§ 1801 et seq.], as amended from time to time; the Resource Conservation and
Recovery Act [42 USCS §§ 6901 et seq.], as amended from time to time; the Federal Water
Pollution Control Act [33 USCS §§ 1251 et seq.], as amended from time to time; the Hazardous
Substance Account Act [Health and Safety Code §§ 25300 et seq.], as amended from time to
time; the Hazardous Waste Control Law [Health and Safety Code §§ 25100 et seq.], as amended
from time to time; the Medical Waste Management Act [Health and Safety Code §§ 25015 et
seq.], as amended from time to time; and the Porter -Cologne Water Quality Control Act [Water
Code §§ 13000 et seq.], as amended from time to time.
"Loan Agreement" means that certain Loan Agreement, which terms and provision are
incorporated into this Deed of Trust by reference, of even date herewith between Trustor and -
Beneficiary.
"Note" means that certain promissory note of even date herewith executed by the Trustor,
the payment of which is secured by this deed of Trust.
"Principal" means the aggregate of all principal and interest due under the Note.
"Release" means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing into the environment, including
continuing migration, of Hazardous Substances that goes into the soil, surface water, or
groundwater of the Property, whether or not caused by, contributed to, permitted by, acquiesced.
to; or known to Trustor.
Section 2. GENERAL COVENANTS OF TRUSTOR REGARDING THE
PROPERTY, IMPROVEMENTS AND SECURITY
The Crossroads at Washington
City HOME Deed or Trost
2.1. Payment of Secured Obligations.
Trustor shall duly and punctually pay and perform all Obligations, including but not
limited to all terms, covenants, conditions and agreements set forth in the Debt Instruments, the _
Loan Agreement, the Note and any otheragreement of any nature whatsoever now or hereafter.
involving or affecting the Security or any part thereof.
2.2. Maintenance, Repair and Modification..
(a) The Truster agrees that at all times prior to full payment of the sum owed under
the Note, the Truster will, at the Trustoe's own expense, maintain, preserve and keep the Security
or cause the Security to be maintained and preserved in good, condition and repair and in a
prudent and businesslike manner. The Truster will from time to time make or cause to be made
all repairs, replacements and renewals to the Security, which are necessary or appropriate. The
Beneficiary shall have no responsibility in any of these matters or for the making of
improvements or additions to the Security. .
(b) Truster shall not remove, demolish or substantially alter any of the Improvements,
other than to make repairs in the ordinary course of business of a non-structural nature which
serve to preserve or increase the value of the Security without Beneficiary's prior written
consent, which consent shall . not be unreasonably withheld so long as Trustor provides
reasonable evidence to Beneficiary that,. following such demolition and restoration and/or
alteration, the Improvements shall have a fair market value at least equal to their fair market
value prior to such demolition and restoration and/or alteration; Trustor shall complete promptly
and in a good and workmanlike manner any Improvement which may now or hereafter be
constructed and promptly restore in like manner any Improvement which may be damaged or
destroyed thereon from any cause whatsoever, and pay when due all claims for labor performed
and materials furnished therefor; Trustor shall comply with all laws, ordinances, rules,
regulations, covenants, conditions, restrictions and orders of any governmental authority now or
hereafter affecting the conduct or operation of Trustor's business or the security or any part
thereof or requiring any alteration or improvement to be made thereon; Truster shall not commit,
suffer or permit any act to be done in, upon or to the Security or any part thereof in violation of
any such laws, ordinances, rules, regulations or orders, or any covenant, condition or restriction
now or hereafter affecting the Security; Truster shall not commit or permit any waste or
deterioration of the Security, and shall keep and maintain abutting grounds, sidewalks, roads,
parking and landscape areas in good and neat order and repair; Trustor will not take (or fail to
take) any action; which if taken (or not so taken) would increase in any way the risk of fire or
other hazard occurring to or affecting the Security or otherwise would impair the security of
Beneficiary in the Security; Trustor shall comply with the provisions of all leases, if any,
constituting a portion of the Security; Trustor shall not abandon the Security or any portion
thereof or leave the Security unprotected, unguarded, vacant or deserted; Trustor shall not
.initiate, join in or consent to any change in any zoning ordinance, general plan, specific plan,
private restrictive covenant or other public or private restriction limiting the uses which may be
made of the Security by Trustor or by the owner thereof; Trustor shall secure and maintain in full
force all permits necessary for the use, occupancy and operation of the Security; except as
otherwise prohibited or restricted by the Loan Agreement and the other instruments and
documents executed in connection with the transaction to which the Loan Agreement pertains or
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City HOME Deed of Trust
any of them, Truster shall do any and all other acts which may be reasonably necessary to protect
or preserve the value of the Security and the rights of Trustee and Beneficiary with respect
thereto.
2.3. Granting of Easements.
Trustor may not grant easements, licenses, rights -of -way or other rights or privileges in
the.nature of easements with respect to any property or rights included in the .Security except
thoserequired or desirable for installation and maintenance of public utilities including, without
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law.
2.4. Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Truster agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so paid by
the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such
expenses are paid at the Agreed Rate (as defined in Section 3.1(d) below).
2.5. Payment of the Principal.
The Truster shall pay to the Beneficiary the Principal and any other payments as set. forth
in the Note in the amounts and by the times set out therein.
2.6. Fixture Filing and Security Agreement.
(a) To the maximum extent permitted by law, the personal property subject to this
Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust
shall constitute a fixture filing under the California Commercial Code. As to any personal
property not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security
agreement under the California Commercial Code and Trustor hereby grants to Beneficiary a
security interest in all of Truster's right, title and interest, whether now existing or hereafter
arising, in and to any portion of the Property which constitutes personal property (the "Personal
Property")
(b) Truster hereby represents and warrants to Beneficiary that: (1) Truster is the
owner of the Personal Property and no other person has any right, title, claim or interest (by way
of security interest or other lien or charge or otherwise) in, against or to the Personal Property
other than any senior lender or lien holder approved in writing by Beneficiary; (2) the Personal
Property is free from all liens, security interests, encumbrances and adverse interests, except
Permitted Encumbrances (hereinafter defined); (3) no financing statement or similar filing
covering any of the Personal Property, and naming any secured party other than Beneficiary and
the holders of Permitted Encumbrances, is on file in any public office; (4) each account, general
intangible, chattel paper, deposit account, instrument, document, agreement, contract or right to
the payment of money constituting Personal Property (collectively, the "Rights to Payment"), if
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City HOME Deed of Trust
any, is genuine and enforceable in accordance with its terms against the party obligated to pay
the same and (5) the Personal Property is not used nor was the Personal Property purchased for
personal or family use by Trustor.
(c) Trustor hereby agrees: (1) to pay, prior to delinquency, all taxes, assessments,
charges, encumbrances and liens now or hereafter imposed upon or affecting all or any part of
the Personal Property; (2) not to amend, modify, supplement, terminate or cancel any of the
Personal Property; (3) without the prior written consent of Beneficiary; not to remove all or any
part of the tangible Personal Property from the Property; (4) to give Beneficiary thirty (30) days'
prior written notice of any change in Trustor's residence, principal place of business, chief
executive office or trade names or styles; (5) to appear in and defend any action or proceeding
which may affect the Personal Property (including, without limitation, actions, proceedings and
claims which may affect Trustor's title to the Personal Property or the validity or priority of
Beneficiary's security interest in the Personal Property); (6) to indemnify Beneficiary against all
claims, demands and liabilities of every kind caused by the Personal Property; and (7) upon not
less than 72 hours' prior written notice and during regular business hours, to permit Beneficiary
to enter Trustor's premises to inspect the Personal Property; provided, that Trustor shall have the
right to require that a representative of Trustor be present during any such entry made while any
construction and/or rehabilitation work is occurring. Trustor further agrees (8) to fully and timely
perform all of its obligations under and with respect to all Rights of Payment and to diligently
enforce all of the obligations of each obligor thereunder; (9) not to amend, modify, supplement,
cancel or terminate any of the Rights to Payment in any material respect without the prior written
consent of Beneficiary; (10) to keep the Rights to Payment and all proceeds free and clear of all
defaults, defenses, rights of offset and counterclaim; (11) to take.or bring, in Beneficiary's name
or in the name of Trustor, as Beneficiary may require, all actions, suits or proceedings reasonably
deemed necessary by Beneficiary to effect collection or to realize upon Rights to Payment; and
(12) not to commingle Rights to Payment or collections thereunder with other property.
(d) As soon as practicable, and in any event within ten (10) days, Trustor shall notify
Beneficiary of: (1) any attachment or other legal process levied against any of the Personal
Property; (2) any information received by Trustor which may in any manner materially and
adversely affect the value of the Personal Property or the rights and remedies of Beneficiary with
respect thereto; and (3) the removal of any of the Personal Property to a new location other than
in the ordinary course of business and the removal of any records of Trustor relating to the
Personal Property to any location other than the Land and Improvements
(e) Trustor hereby irrevocably constitutes and appoints Beneficiary as its attorney -in -
fact to, after the occurrence and during the occurrence of an Event of Default: (1) perform any
obligation of Trustor hereunder in Trustor's name or otherwise; (2) give notice of Beneficiary's
rights in the Rights to Payment, to enforce the same, and make extension agreements with
respect thereto; (3) release persons liable on the Rights to Payment and to give receipts and
acquittances and compromise disputes in connection therewith; (4) release security for the Rights
to Payment; (5) resort to security for the Rights to Payment in any order; (5) prepare, execute,
file, record or deliver notes, assignments, schedules, designation statements, financing
statements, continuation statements, termination statements, and other documents to perfect
preserve or release Beneficiary's interest in the Rights to Payment; and (6) do all acts and things
The Crossroads at Washington
City HOME Deed of Trust
and execute all documents in the name of Trustor or otherwise, deemed by Beneficiary as
necessary, proper and convenient in connection with the preservation, perfection or enforcement
of its rights hereunder. The power of attorney granted hereunder is coupled with an interest and
is irrevocable.
2.7. Financing Statement.
The Truster shall execute and deliver to the Beneficiary such financing statements
pursuant to the appropriate statutes, and any other documents or instruments as are required to
convey to the Beneficiary a valid perfected security interest in the Security.. The Trustor agrees
to perform all acts that the Beneficiary may reasonably request.so as to enable the Beneficiary to
maintain such valid, perfected security interest in the Security in order to secure the payment of
the Note in accordance with its terms. The Beneficiary is authorized to file a copy of any such
financing statement in any jurisdiction(s) as it, shall deem appropriate from time to time in order
to protect the security interest established pursuant to this instrument.
2.8. Operation of the Security.
The Trustor agrees and covenants to operate the Security in full compliance with the
Loan Agreement and the Debt Instruments.
2.9. Inspection of the Security.
The Truster covenants and agrees that at any and all reasonable times during regular
business hours and upon not less than 72 hours' prior written notice, the Beneficiary and its duly
authorized agents, attorney's experts, engineers, accountants and representatives, shall have the
right, without payment of charges or fees, to inspect all or any portion of the Security, including,
but not limited to, the right to inspect and copy all reports and records pertaining thereto
provided, that Truster shall have the right to require that a representative of Trustor be present
during any entry onto the Property made while any construction and/or rehabilitation work is
occurring.
2.10. Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and ..
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, sex, sexual orientation, age, marital status, national origin, ancestry or disability in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the
Truster itself or any person claiming under or through it establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The
foregoing covenants shall run with the land.
2.11. Subrogation and Waiver of Offset.
(a) Truster waives any and all right to claim or recover against Beneficiary, its
officers, employees, agents and representatives, for loss of or damage to Trustor, the Security,
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City HOME Deed of Trust
Truster's property or the property of others under Trustor's control from any cause insured
against or required to be insured against by the provisions of this Deed of Trust; provided,
however, that this waiver of subrogation shall not be effective with respect to any policy of
insurance permitted or required by this Deed of Trust if (i) such policy prohibits, or if coverage
thereunder would be reduced as a result of, such waiver of subrogation and (ii) Trustor is unable
to obtain from a carrier issuing such insurance a policy that, by special endorsement or
otherwise, permits such a waiver of subrogation.
(b) Except as otherwise specifically provided herein, all amounts payable by Truster
pursuant to this Deed of Trust shall be paid without notice, demand, counterclaim, setoff;
deduction or defense and without abatement, suspension, deferment, diminution or reduction;
and the obligations and liabilities of Trustor hereunder shall in no way be released, discharged or
otherwise affected (except as expressly provided herein) by reason of (i) any damage to or
destruction of or any condemnation or similar taking of the Security or any part thereof; (ii) any
restriction or prevention of or interference by any third party with any use of the. Security or any
part thereof, (iii) any title defect or encumbrance or any eviction from the Security or any part
thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding relating to Beneficiary,
or any action taken with respect to this Deed of Trust by any trustee or receiver of Beneficiary,
or by any court, in any such proceeding; (v) any claim which Trustor has or might have against
Beneficiary; (vi) any default or failure on the part of Beneficiary to perform or comply with any
of the terms hereof or of any other agreement with Truster; or (vii) any other occurrence
whatsoever, whether similar or dissimilar to the foregoing. Except as expressly provided herein,
Truster waives all rights now or hereafter conferred by statute or otherwise to any abatement,
suspension, deferment, diminution or reduction of any sum secured hereby and payable by
Trustor.
2.12. Utilities.
Trustor shall pay or cause to be paid when due all utility charges which are incurred for
the benefit of the Security or which may become a charge or lien against the Security for gas,
electricity, water, sewer services or other fees and charges for utilities furnished to the Security
and all other assessments or charges of a similar nature, whether public or private, affecting or
related to the Security or any portion thereof, whether or not such taxes, assessments or charges
are or may become liens thereon.
2.13. Actions by Beneficiary to Preserve Property.
If Trustor fails to make any payment or to do any act as and in the manner provided in
this Deed of Trust, Beneficiary and Trustee, and each of them, each in its own discretion, without
obligation to do so, without releasing Trustor from any Obligation, and subject only to the notice
and cure provisions of the Loan Agreement, may make or do the same in such manner and to
such extent as either may deem necessary to protect the security hereof. In connection therewith
(without limiting their general and other powers, whether conferred herein, in another Loan
Document or by law), Beneficiary and Trustee shall each and are hereby given the right, but not
the obligation: (i) to enter upon and take possession of the Security; (ii) to make additions,
alterations, repairs and improvements to the Security which either of them consider necessary or
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City HOME Deed of Toast
proper to keep the Security in good condition and repair; (iii) to appear and participate in any
action or proceeding which may affect the security hereof or the rights or powers of Beneficiary
or Trustee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or
debt which in the judgment of either may affect the security of this Deed of Trust or be prior or
superior hereto; and (v) in exercising such powers to pay necessary expenses, including
employment of counsel or other necessary or desirable consultants. Trustor shall reimburse
Beneficiary on demand for all costs incurred by Beneficiary in connection with actions which
Beneficiary reasonably deems advisable to protect its interest under the Loan Agreement and all
such amounts shall bear interest at the Agreed Rate following demand and be secured hereby.
2.14. Transfer. of Property by Trustor.
Prior to repayment of the Note, Trustor agrees that.Trustor shall not sell or transfer the
Security or any interest therein or sell or transfer all or substantially all of the assets of Trustor or
any of them except as may be provided in the Loam Agreement.
2.15. Additional Security.
No other security now existing, or hereafter taken, to secure the Obligations secured
hereby or the liability of any maker, surety guarantor or endorser with respect to such
Obligations, or any of them, shall be impaired or affected by the execution of this Deed of Trust;
and all additional security shall be taken, considered and held as cumulative, The taking of
additional security, execution of partial releases of the Security, or any extension of the time of
payment of the indebtedness shall not diminish the force, effect or lien of this Deed of Trust and
shall not affect or impair the liability of any maker, surety, guarantor or endorser for the payment
of said indebtedness. In the event Beneficiary at any time holds additional security for any of the
Obligations secured hereby, it may enforce the sale thereof or otherwise realize upon the same, at
its option, either before, concurrently, or after a sale is made hereunder.
2.16. Liens.
Trustor shall not cause, incur suffer or permit to.exist or become effective any lien,
encumbrance or charge upon all or any part of the Property, the Improvements or any interest
therein other than (a) easements, rights of way, covenants, conditions, restrictions, liens, and
.other title limitations approved in writing by Beneficiary prior to the execution of this Deed of
Trust, (b) immaterial easements and rights of way which are required by governmental
authorities as a condition to the use and operation of the Improvements which are approved in
writing by Beneficiary after the execution of this Deed of Trust, (c) easements, rights of way,
covenants, conditions, restrictions, liens and other title limitations allowed pursuant to Section
2.3 hereof and (d) deeds of trust, regulatory agreements and covenants contained in that certain
lender's title policy issued to the Beneficiary in.connection with the Loan on or about the date
hereof (the "Permitted Encumbrances"). Trustor shall pay and promptly discharge, at Trusters
cost and expense, all liens, encumbrances and charges upon the Security, or any part thereof or
interest therein other than the Permitted Encumbrances; provided, that the existence of any
mechanic's, laborer's, materialman's, supplier's or vendor's lien or right thereto shall not
constitute a violation of this Section if payment is not yet due under the contract which is the
foundation thereof. Trustor shall have the right to contest in good faith the validity of any such
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City HOME Deed of Trust
lien, encumbrance or charge, provided Trustor shall first deposit with the Beneficiary a bond or
other security reasonably satisfactory to Beneficiary in such amounts as Beneficiary shall
reasonably require, but not more than one hundred fifty percent (150%) of the amount of the
claim or shall post a bond authorized by statute in lieu thereof, and provided further that Trustor
shall thereafter diligently proceed to cause such lien, encumbrance or charge to be removed and
discharged. If Truster shall fail to remove and discharge any such lien, encumbrance, or charge,
then, in addition to any other right or remedy of Beneficiary, Beneficiary may, but shall not be
obligated to, discharge the same, without inquiring into the validity of such lien, encumbrance or
charge nor into the existence of any defense or offset thereto, either by paying the amount
claimed to be due, or by procuring the discharge of such lien, encumbrance or charge by
depositing in court a bond or the amount claimed, or otherwise giving security for such claim, in
such manner as is or may be prescribed by law. Trustor shall, promptly upon demand therefor
by Beneficiary, pay to Beneficiary an amount equal to all costs and expenses incurred by
Beneficiary in connection with the exercise by Beneficiary of the foregoing right to discharge
any such lien, encumbrance or charge, together with interest thereon from the date of such
expenditure at the Agreed Rate and, until paid, such sums shall be secured hereby.
2.17. Beneficiary's Powers.
Without affecting the liability of any other person liable for the payment of any
Obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon
any portion of the Security not then or theretofore released as security for the full amount of all
unpaid Obligations, Beneficiary may, from time to time and without notice: (a) release any
person so liable, (b) extend the maturity or alter any of the terms of any such Obligation (to the
extent that Beneficiary is so allowed under the Loan Agreement), (c) grant other indulgences, (d)
release or reconvey, or cause to be released or reconveyed at any time at Benefieiary's option any
parcel, portion or all of the Security, (e) take or release any other or additional security for any
Obligation herein mentioned, or (t) make compositions or other arrangements with debtors in
relation thereto. By accepting payment or performance of any Obligation secured by this Deed
of Trust after the payment or performance thereof is due or after the filing of notice of default
and election to sell (other than satisfaction in full of the Obligations), Beneficiary shall not have
thereby waived its right to require prompt payment or performance, when due, of all other
Obligations secured hereby, or to declare a default for failure so to pay or perform, or to proceed
with the sale under any notice of default and election to sell theretofore given by Beneficiary, or .
with respect to any unpaid balance of the indebtedness secured hereby. The acceptance by
Beneficiary of any sum in an amount less than the sum then due shall not constitute a waiver of
the obligation of Trustor to pay the entire sum then due. Trustor's failure to pay the entire sum
then due shall continue to be a default, notwithstanding the acceptance of partial payment, and,
until the entire sum then due shall have been paid, Beneficiary or Trustee shall at all times be
entitled to declare a default and to exercise all the remedies herein conferred, and the right to
proceed with a sale under any notice of default and election to sell shall in no way be impaired,
whether or not such amounts are received prior or subsequent to such notice. No delay or
omission of Trustee or Beneficiary in the exercise of any other right or power hereunder shall
impair such right or power or any other right or power nor shall the same be construed to be a
waiver of any default or any acquiescence therein.
2.18. Suits to Protect Property.
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City HOME Deed of Trust
Trustor agrees to appear in and defend any action or proceeding purporting to affect the
security of this Deed of Trust or any additional or other security for the obligations secured, the
interest of Beneficiary of the rights, powers and duties of Trustee, and to pay all costs and
expenses, including without limitation, cost of evidence of title and reasonable attorneys' fees, in
any.action or proceeding in which Beneficiary or Trustee may appear to be made a party,
including, but not limited to, foreclosure or other proceeding commenced by those claiming a
right to any part of the Property under subordinate liens, in any action to partition or condemn all
or part of the Property, whether pursued -to final judgment, and in any exercise of the power of
sale in this Deed of Trust, whether the sale is actually consummated.
Section 3. TAXES AND INSURANCE;. ADVANCES
3.1. Taxes, Other Governmental Charges and Utility Charges.
(a) Trustor shall pay, prior to delinquency, all real property taxes and assessments,
general and special, and all other charges of any kind, including without limitation non-
governmental levies or assessments such as maintenance charges, levies or other charges
resulting from covenants, conditions and restrictions affecting the Security, which are assessed or
imposed upon the Security or upon Trustor as owner or operator of the Security, or become due
and payable, and which create or may create a lien upon the Security, or any part thereof, or
upon any personal property, equipment or other facility used in the operation or maintenance
thereof (all the above collectively hereinafter referred to as "Impositions"); provided, however,
that if, by law, any Imposition is payable, or may at the option of the taxpayer be paid, in
installments, Trustor may pay the same in installments (together with any interest charged) as the
same become due and before any fine, penalty or cost may be added thereto for the nonpayment
of any such installment. Notwithstanding the foregoing, Trustor shall have the right to diligently
contest, in good faith and by appropriate proceedings, the validity of any Imposition, so, long as
Trustor demonstrates to Beneficiary that Trustor is maintaining sufficient reserves for the
payment of all contested liabilities and so long as the security and value of Beneficiary's interest
under this Deed of Trust are not impaired as a result of such contest.
(b) If at any time after the date hereof there shall be assessed or imposed (1).a tax or
assessment on the Security in lieu of or in addition to the Impositions. payable by Trustor
pursuant to this Section 3.1 hereof, or (2) a license fee, tax or assessment imposed on Beneficiary
and measured by or based in whole or in part upon the amount of the outstanding Obligations
secured hereby, then all such taxes, assessments or fees shall be deemed to be included within
the term "Impositions" as defined, in this Section and Trustor shall pay and discharge the same as
herein provided with respect to the payment of Impositions. If Trustor fails to pay such
Impositions prior to delinquency or if Trustor is prohibited by law from paying such Impositions,
Beneficiary may at its option declare all Obligations secured hereby, together with all accrued
interest thereon, immediately due and payable. Anything to the contrary herein notwithstanding,
Trustor shall have no obligation to pay any franchise, estate, inheritance, income, excess profits
or similar tax levied on Beneficiary or on the Obligations secured hereby.
(c) Trustor shall deliver to Beneficiary within thirty (30) days after the date upon
which any such Imposition is due and payable by Trustor official receipts of the appropriate
taxing authority, or other proof reasonably satisfactory to Beneficiary, evidencing the payment
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City HOME Deed ofTnast
thereof. Trustor shall not suffer, permit or initiate the joint assessment of any real and personal
property which may constitute all or a portion of the Security and the personal property or suffer,
permit or initiate any other procedure whereby the lien of real property taxes and the lien of
personal property taxes shall be assessed, levied or charged to the Security as a single Lien.
Trustor shall cause to be furnished to Beneficiary a tax reporting service, covering the Property,.
of a type and duration, and with a company,reasonably satisfactory to Beneficiary.
(d) In the event that Trustor shall fail to pay any of the foregoing items required by
this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the
same, after the Beneficiary has notified the Truster of such failure to pay and the Trustor fails to
fully pay such items within fifteen (15) business days after receipt of such notice. Any amount
so advanced therefor by Beneficiary, together with interest thereon from the date of such
advance at the lesser of twelve percent (12%) per annum or the maximum rate permitted by law
(hereinafter. the "Agreed Rate"), shall become an additional Obligation of Trustor to the
Beneficiary and shall be secured hereby, and Truster agrees to pay all such amounts.
3.2. Insurance.
(a) Trustor agrees to provide insurance conforming in all respects to that required
under the Loan Agreement at all times until all amounts secured by this Deed of Trust have been
paid and all other Obligations secured hereunder fulfilled, and this Deed of Trust. reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost -and expense.
(b) All said.insurance shall have attached thereto a lender's loss payable endorsement
for the benefit .of Beneficiary in form reasonably satisfactory to the Beneficiary and/or shall
name Beneficiary as an additional insured, as Beneficiary may require, and shall contain an
endorsement or agreement by the insurer that any loss shall be payable in accordance with the
terms of such policies notwithstanding any act or negligence of Trustor or. any party holding
under Trustor which might otherwise result in forfeiture of said insurance and the further
agreement of the insurer waiving all rights of setoff, counterclaim and deduction against Trustor.
At Beneficiary's option, Truster shall furnish Beneficiary with an original of all required policies
of insurance and/or a certificate of insurance with all required endorsements for each required.
policy setting forth .the coverage, the limits of liability, the deductible, if any, the name of the
carrier, the policy number, and the period of coverage, which certificates and endorsements shall
be executed by authorized officials of the companies issuing such insurance, or any agents or
attorneys -in -fact authorized to issue said certificates and endorsements (in which event each such
certificate and endorsements shall be accompanied by a notarized affidavit, agency.agreement or
power of attorney evidencing the authority of the signatory to issue such certificate on behalf of
.the insurer named therein), accompanied by a certificate from Trustor that the insurance satisfies
the requirements of the Loan Agreement, and that Beneficiary may conclusively rely on such
certificates. If Beneficiary consents (which consent shall not be unreasonably withheld or
delayed), Trustor may provide any of the required insurance through blanket policies carried by
- --- Truster and covering more than one location; provided, however, all such policies shall be in
form and substance and issued by companies reasonably satisfactory to Beneficiary.
(c) At least thirty (30) days prior to the expiration of each required policy, Trustor
shall deliver to Beneficiary evidence reasonably satisfactory to Beneficiary of the payment of
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The Crossroads at Washington
City HOME Deed of Trust
premium and the renewal or replacement of such policy continuing insurance in form as required
by this Deed of Trust or the Loan Agreement. All such policies shall contain a provision that,
notwithstanding any contrary agreement between Trustor and the insurance company, such
policies will not be canceled, allowed to lapse without renewal, surrendered or materially
amended (which term shall include any reduction in the scope, or limits of coverage), other than
for nonpayment, without at least thirty (30) days prior written notice to Beneficiary.
(d) In the event of foreclosure of this Deed of Trust or other transfer of title or
assignment of the Property in extinguishment, in whole or in part, of the debt secured hereby, all
right, title and interest of Truster in and to all policies of insurance required by Section 3.2
hereof and any unearned premiums paid• thereon shall, without further act, be assigned to and
shall inure to the benefit of and pass to the successor in interest to Trustor or the purchaser or
grantee of the Property, and Trustor hereby appoints Beneficiary its lawful attorney -in -fact to
execute an assignment thereof and any other document necessary to effect such transfer.
3.3. Advances.
In the event the Truster shall fail to maintain the full insurance coverage requiredby this
Deed of Trust or shall fail to keep the Security in accordance with the Loan Agreement, the
Beneficiary, after at least twenty (20) days prior written notice to Trustor, may (but shall be
under no Obligation to) take out the required policies of insurance and pay the premiums on the
same or may make such repairs or replacements as are necessary and provide for payment
thereof; and all amounts so advanced therefor by the Beneficiary shall become an additional
Obligation of the Trustor to the Beneficiary (together with any applicable interest) and shall be
secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and
if not so paid, shall bear interest from the date of the advance at the Agreed Rate.
Section 4. DAMAGE, DESTRUCTION OR CONDEMNATION
4.1. Casualties.
Trustor shall give prompt written notice to Beneficiary upon the occurrence of casualty to
or in connection with the Security or any part thereof, whether or not covered by insurance. In
the event of such casualty Trustor hereby absolutely and unconditionally assigns to Beneficiary
all insurance proceeds which it may be entitled to receive and such proceeds shall be delivered to
and held by Beneficiary to be applied to Beneficiary's expenses in settling, prosecuting or
defending any insurance claim, and then to the restoration of any portion of the Security that has
been damaged or destroyed to the same condition, character and value as existed prior to such
damage or destruction so long as the following conditions .are satisfied: (i) Trustor is not in
default hereunder (other than any default resulting from such casualty), (ii) Beneficiary's
security is not materially impaired, (iii) all income (from the Security or otherwise) required to
pay all debt service and operating expenses of the Security during such restoration and thereafter
will be equal to or greater than the income which was required to pay such debt service and
operating expenses prior to the casualty,.(iv) Trustor evidences to the reasonable satisfaction of
Beneficiary that the insurance required to be maintained hereunder will be available to the
Trustor during restoration and thereafter, (v) Beneficiary shall have approved the plans and
specifications for such restoration, which approval shall not be unreasonably withheld or
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'Hie Crossroads at Washington
City HOME Deed of Trust
delayed, and (vi) in the event that in Beneficiary's reasonable judgment the insurance proceeds
and any amounts deposited with a senior lender are not sufficient to accomplish restoration,
Trustor deposits with the Beneficiary or senior lender, if and to the extent required by that senior
lender pursuant to the terms of the. senior debt instrument, within five days of demand by
Beneficiary, the additional amounts necessary to accomplish restoration. Proceeds disbursed for
restoration will be released to Truster in accordance with Beneficiary's then current customary
disbursement procedures. In the event any of the conditions set forth above are not satisfied or if
the insurance proceeds shall not be applied to the restoration of the. Security within thirty days
after receipt of such proceeds by Beneficiary, Beneficiary may release such proceeds to Trustor
without such release being deemed a payment of any indebtedness secured hereby, rather than
apply such proceeds to the restoration of the Security. Such application or release shall not cure
or waive any default or notice of default hereunder or invalidate any act done pursuant to such
notice. If the Security is restored at a cost less than the available insurance proceeds, then such
excess proceeds shall, if Trustor is not then in default hereunder, be paid over to Trustor:
Beneficiary may commence, appear in, defend or prosecute any assigned claim or action, and
may adjust, compromise, settle and collect all claims, proceeds and awards assigned to
Beneficiary, but shall not be responsible for any failure to collect any claim, proceeds or award,
regardless of the cause of the failure.
4.2. Condemnation.
Promptly upon its obtaining knowledge of the institution or the threatened institution of
any proceeding for the condemnation or other taking for public or quasi -public use of the
Security or any part thereof, or if the same be taken or damaged by reason of any public
improvement or condemnation proceeding, or in any other manner, or should Trustor receive any
notice or other information regarding such proceedings, action, taking or damage, Trustor shall
promptly notify Trustee and Beneficiary -of such fact. Trustor shall then, if requested by
Beneficiary, file or defend its right thereunder and prosecute the same with due diligence to its
final disposition and shall cause any award or settlement to be paid to Beneficiary in accordance
with the provisions of the Loan Agreement. At Beneficiary's option, Beneficiary or Truster may
be the nominal party in such proceeding but in any event Beneficiary shall be entitled, without
regard to the adequacy of its security, to participate in, appear in, prosecute and settle, jointly
with Trustor to control the same and to be represented therein by counsel of its choice, and
Trustor will deliver, or cause to be delivered, to Beneficiary such instruments as may be
requested by it from time to time to permit such participation. Trustor and Beneficiary agree to
act in good faith with respect to any consent, settlement, or award arising out of said prosecution.'
If the Security or any part thereof is taken or diminished in value, or if a consent' settlement is
entered, by or under threat of such proceedings, all compensation, awards, damages, rights' of
action proceeds and settlements payable to Trustor by virtue of its interest in the security shall be
and hereby are assigned, transferred and set over into Beneficiary to be held by it, in trust,
subject to the lien and security interest of this Deed of Trust. All such proceeds shall be first
applied to reimburse Trustee and Beneficiary, for all costs and expenses, including reasonable
attorneys' fees, incurred in connection with the collection of such award or settlement, and then
to the restoration of any portion of the Security that has been taken to the similar condition,
character and value as existed prior to such taking so long as the following conditions are
satisfied: (i) Trustor is not in default hereunder, (ii) Beneficiary's security is not materially
impaired, (iii) all income (from the Security or otherwise) required to pay all debt service and
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City HOME Deed of Trust
operating expenses of the Security during such restoration and thereafter will be equal to or
greater than the income which was required to pay such debt service and operating expenses
prior to the casualty, (iv) Truster evidences to the reasonable satisfaction of Beneficiary that the
insurance required to be maintained hereunder will be available to the Trustor during restoration
and. thereafter, (v) Beneficiary shall have approved the plans and specifications. for such
restoration, and (vi) in the event that in Beneficiary's reasonable judgment the insurance
proceeds and any amounts deposited with a senior lender are not sufficient to accomplish
restoration, Trustor deposits with the Beneficiary or senior lender, if and to the extent required
by that senior lender pursuant to the terms of the senior Debt Instrument, within five days of
demand by Beneficiary, the additional amounts necessary to accomplish restoration. Application
or release of proceeds as provided herein shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice.
Section 5. ENVIRONMENTAL COVENANTS OF TRUSTOR. .
5.1. Disclosures By Trustor
Except as disclosed in writing to, and acknowledged and . accepted in writing by
Beneficiary, Trustor represents and warrants that:.
(a) during the period of Trustor's ownership of the Property
(1) there has been no use, generation, manufacture, storage, treatment,
disposal, discharge, Release, or threatened Release of any Hazardous Substance by any person
on or around the Property except in such small quantities as are customary and usual in the .
ordinary course of constructing, using and operating a residential housing business on the
Property and in strict compliance with all Hazardous Substances Laws, and
(2) there have been no Hazardous Substances transported over or
through the Property;
(b) Trustor has no knowledge of, or reason to believe that, there has been:
(1) any use, generation, manufacture, storage, treatment, disposal,
Release, or threatened Release of any hazardous waste or substance by any prior owners or prior
occupants of the Property or by any third parties onto the Property, or
(2) any actual or threatened litigation or claims of any kind by any
person relating to these matters;
(c) to Trustor's knowledge, no Hazardous Substances in excess of permitted
levels or reportable quantities under applicable Hazardous Substance Laws are present in or
about the Property or any nearby real property that could migrate to the Property;
(d) to Trustor's knowledge, no Release or threatened Release exists or has
occurred;
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The Crossroads at Washington
City HOME Deed ofTmst
(e) to Trustor's knowledge, no underground storage tanks of any kind are or
ever have been located in or about the Property;
(f) the Property and all of Trustor's contemplated operations and activities at,
and Trustor's contemplated use and occupancy of, the Property comply with all applicable
Hazardous Substance Laws;
(g) Truster is now in strict compliance with, every permit, license, and
approval required by all applicable Hazardous Substance Laws for all activities and operations
at, and the use and occupancy of, the Property;
(h) to Trustor's knowledge, there are no Hazardous Substance Claims pending
or threatened with regard to Property or against Trustor;
(i) to Trustor's knowledge the Property has not been nor is it within 2,000
feet of any other property designated as "hazardous waste property" or "border zone property"
pursuant to Health and Safety Code §§ 25220 et seq., and no proceedings for a determination of
this designation are pending or threatened;
0) to Trustor's knowledge, there exists no occurrence or condition on any
real property adjoining or within 2,000 feet of the Property that would cause the Property or any
part of it to be designated as "hazardous waste property" or "border zone property" under the
provisions of Health and Safety Code § § 25220 et seq., and any regulation adopted in accordance
with that section
(k) that the Trustor's use of the Property shall be residential housing;
(1) to Trustor's knowledge, any written disclosure submitted by or on behalf
of Trustor to Beneficiary concerning any Release or threatened Release, past or present
compliance by Truster or other person of any Hazardous Substance Laws applicable to the
Property, the past and present use and occupancy of the Property, and any environmental
concerns relating, to the Property, was true and complete when submitted and continues to be true
and complete as of the date of this Deed of Trust.
As used in this Section 5.1, phrases such
actual knowledge of the Trustor, and its agents,
inquiry or investigation other than the ordering
required pursuant to the Loan Agreement.
5.2. Covenants of Trustor.
as "to Trustor's knowledge," shall refer to the
directors and other associates, without duty of
of a Phase I Environmental Assessment as
Trustor agrees, except in the ordinary course of business and in strict compliance with all
applicable Hazardous Substance Laws, as follows:
(a) not to cause or permit the property to be used as a site for the use,
generation, manufacture, storage, treatment, Release, discharge, disposal, transportation, or
presence of any Hazardous Substance, other than Existing Hazardous Materials(as such term is
defined in the Ground Lease);
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The Crossroads at Washington
City HOME Deed of Trast
(b) not to cause, contribute to, permit, or acquiesce in any Release or
threatened Release;
(c) not to change or modify the use of the Property without the prior written
consent of Beneficiary;
(d) to comply with and to use reasonable commercial efforts to cause the
Property and every invitee or occupant. of the Property to comply with all Hazardous Substance
Laws;
(e) to promptly upon Truster's discovery thereof (other than Hazardous
Substances that were known prior to Loan closing as disclosed in the Environmental Reports),
notify Beneficiary in writing of and to provide Beneficiary with a reasonably detailed description
of:
Laws;
(1) any noncompliance of the Property with any Hazardous Substance
(2) any Hazardous Substance Claim;
(3) any Release or Threatened Release;
(4) the discovery of any occurrence or condition on. any real property
adjoining or in the vicinity of the Property that would cause the Property -or any part of it to be
designated as "hazardous waste property" or "border zone property" under the provisions of
Health and Safety Code §§ 25220.et seq., and any regulation adopted in accordance with that
section;
(f) if Trustor discovers a Release or the presence of any Hazardous Substance
on or about the Property in violation of any Hazardous Substance Law, to:
(1) notify Beneficiary of that discovery together with a reasonably.
detailed description;
(2) engage promptly after a request by Beneficiary, a qualified
environmental engineer reasonably satisfactory to Beneficiary to investigate these matters and
prepare and submit to Beneficiary a written report containing the findings and conclusions
resulting from that investigation, all at the sole expense of Trustor, and
(3) Except as otherwise provided in the Ground Lease, if the Release
of Hazardous Substances results in (i) injury to any person, (ii) injury to or contamination of the
Property (or a portion thereof), or (iii) injury to or contamination of any real or personal property
wherever situated take, at Trustor's sole expense, all necessary actions to remedy, .repair, clean
up, or detoxify any Release of Hazardous Substance, including, but not limited to, any remedial
action required by any Hazardous Substance Laws or any judgment, consent, decree, settlement,
or compromise in respect of any Hazardous Substance Claims, these actions to be performed: -
A. in accordance with Hazardous Substance Laws,
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The Crossroads at Washington
City HOME Deed of Tmst
B. in a good and proper manner,
C. under the supervision of a qualified environmental engineer
approved in writing by Beneficiary (such approval not to be unreasonably withheld or delayed),
D. in accordance with plans and specifications for these actions
approved in writing by Beneficiary (such approval not to be unreasonably withheld or delayed),.
and
E. using licensed and insured qualified contractors approved in
writing by Beneficiary;
(g) promptly furnish to Beneficiary copies of all written communications
received by Truster from any governmental authority or other person or given by Trustor to any
person and any other information Beneficiary may reasonably request concerning any Release,
threatened Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance
on or about the Property in violation of any Hazardous Substance Law; and
(h) keep Beneficiary generally informed regarding any Release, threatened
Release, Hazardous Substance Claim, or the discovery of any Hazardous Substance on or about
the Property in violation of any Hazardous Substance Law.
5.3. Rights of Beneficiary.
Upon Beneficiary's reasonable belief of the existence of a past or present Release or
threatened Release not previously disclosed by Trustor in connection with the making of the
Loan, the Enviromnemal Reports or the execution of this Deed of Trust or -upon Beneficiary's
reasonable belief that Truster has failed to comply with any environmental provision of this
Deed of Trust or any other Loan Document and upon not less than 72 hours' prior written notice'
(except in the case of an emergency) to Trustot, Beneficiary or its representatives, employees,
and agents, may from time to time and at all reasonable times during regular business hours (or
at any time in the case of an emergency) enter and inspect the Property and every part of it
(including all samples of building materials, soil, and groundwater and all books, records, and
files of Trustor relating to the Property) and perform those acts and things that Beneficiary
reasonably deems necessary to inspect, investigate, assess, and protect the Security of this Deed
of Trust, for the purpose of determining:
(a) the existence, location, nature, and magnitude of any past or present
Release or threatened Release,
(b) the presence of any Hazardous Substances on or about the Property in
violation of any Hazardous Substance Law, and
(c) the compliance by Trustor of every environmental provision of this Deed
of Trust and every other Loan Document.
In furtherance of the purposes above, without limitation of any of its other rights,
Beneficiary may:
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The Crossroads at Washington
City HOME Deed of Trust
(1) obtain a court order to enforce Beneficiary's right to enter and
inspect the Property under Civil Code § 2929.5; and
(2) have a receiver appointed under Code of Civil Procedure § 564 to
enforce Beneficiary's right to enter and inspect the Property for the purpose set forth above.
All reasonable costs and expenses incurred by Beneficiary with respect to the audits,
tests, inspections, and examinations that Beneficiary or its agents, representatives, or employees
may conduct, including the reasonable fees of the engineers, laboratories, contractors,
consultants, and attorneys, will be paid by Trustor. All reasonable costs or expenses incurred by
Trustee and Beneficiary pursuant to this Section (including without limitation court costs,
consultant's fees, and attorney fees, whether incurred in litigation and whether before or after
judgment) will bear interest at the Agreed Rate from the date they are incurred until those sums
have been paid in full. Except as provided by law, any inspections or tests made by Beneficiary
or its representatives, employees, and agents will be for Beneficiary's purposes only and will not
be construed to create any responsibility or liability on the part of Beneficiary to Trustor or to
any other person. Beneficiary will have the right, but not the obligation, to communicate with
any governmental authority regarding any fact or reasonable belief of Beneficiary that constitutes
or could constitute a breach of any of Trustor's obligations under any environmental provision
contained in this Deed of Trust or any Loan Document.
5.4. Waiver and Indemnity.
Except as otherwise provided in the Ground Lease, Trustor:
(a) releases and waives any future claims against Beneficiary for indemnity or
contribution in the event Trustor becomes liable for cleanup or other costs under any Hazardous
Substance Laws or under any Hazardous Substance Claim except to the extent such liability
arises out of the gross negligence or willful misconduct or Beneficiary;
(b) agrees to reimburse Beneficiary, on demand, for all costs and expenses
incurred by Beneficiary in connection with any review, approval, consent, or inspection relating
to the environmental provisions in this Deed of Trust together with interest, after demand, at the .
Agreed Rate; and
(c) agrees to indemnify, defend, and hold Beneficiary and Trustee harmless
from all losses, costs, claims, damages, penalties, liabilities, causes of action, judgments, court
costs, reasonable attorney fees and other legal expenses, costs of evidence of title, cost of
evidence of value, and other expenses (collectively, "Expenses"), including, but not limited to,
any Expenses incurred or accruing after the foreclosure of the lien of this Deed of Trust, which
either may suffer or incur and which directly or indirectly arises out of or is in any way
connected with the breach of any environmental provision either in this Deed of Trust or in any
Loan Document or as a consequence of any Release or threatened Release or the presence, use,
generation, manufacture, storage, disposal, transportation, Release, or threatened Release of any
Hazardous Substance on or about the Property (but excluding any Existing Hazardous
Materials), including the soils and groundwater, caused or permitted by Trustor, including,
without liritation, to the extent required by an environmental agency with jurisdiction over the
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The Crossroads at Washington
City HOME Deed of Trust
Property, the cost of any required or necessary repair, cleanup, remedy, or detoxification of any
hazardous Substance and the preparation of any closure, remedial action, or other required plans.
Trustor's obligations will survive the satisfaction, release, or cancellation of the indebtedness,
the release and reconveyance or partial release and reconveyance of this Deed of Trust, and the
foreclosure of the lien of this Deed of Trust or deed in lieu of the Deed of Trust, for any liability
accruing or arising prior to such satisfaction, release, or cancellation of the indebtedness, the
release and reconveyance or partial release and reconveyance of this Deed of Trust, and the
foreclosure of the lien of this Deed of Trust or deed in lieu of the Deed of Trust.
5.5. Additional Covenants of Trustor.
(a) Trustor and Beneficiary agree that:
(1) . this Section is intended as Beneficiary's written request for
information and Trustor's written response concerning the environmental condition of the
Property as provided by Code of Civil Procedure § 726.5; and
(2) each representation, warranty, covenant, or indemnity made by
Trustor in this Section or in any other provision of this Deed of Trust or any Loan Document that
relates to the environmental condition of the Property is intended by Trustor and Beneficiary to
be an "environmental provision" for purposes of Code of Civil Procedure § 736 and will survive
the payment of the indebtedness and the termination or expiration of this Deed of Trust and will
not be affected by Lender's acquisition of any interest in the Property, whether by full credit bid
at foreclosure, deed in lieu of that, or otherwise. If there is any transfer of any portion of
Trustor's interest in the Property, any successor -in -interest to Trustor agrees by its succession to
that interest that the written request made pursuant to this Section will be deemed remade to the
successor -in -interest without any further or additional action on the part of Beneficiary and that
by assuming the debt secured by this Deed of Trust or by accepting the interest of Trustor subject
to the lien of this Deed of Trust, the successor remakes each of the representations and
warranties in this Deed of Trust and agrees to be bound by each covenant in this Deed of Trust,
including, but not limited to, any indemnity provision.
(b) Even though Trustor may have provided Beneficiary with an
environmental site assessment or other environmental report together with other relevant
information regarding the environmental condition of the Property, Trustor acknowledges and
agrees that Beneficiary is not accepting the Property as security for the Loan based on that
assessment, report, or information. Rather, Beneficiary has relied on the representations and
warranties of Trustor in this Deed of Trust, and Beneficiary is not waiving any of its rights and
remedies in the environmental provisions of this Deed of Trust or any other Loan Document.
(c) Beneficiary or its agents, representatives; and employees may seek a
judgment that Trustor has breached its covenants, representations, or warranties in Section 2 of
this Deed of Trust or any other covenants, representations, or warranties that are deemed to be
"environmental provisions" pursuant to Code of Civil Procedure § 736 (each an
"Environmental Provision"), by commencing and maintaining an action or actions in any court
of competent jurisdiction pursuant to Code of Civil Procedure § 736, whether commenced prior
to or after foreclosure of the lien of this Deed of Trust. Beneficiary or its agents, representatives,
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The Crossroads at Washington
City HOME Deed or Trust
and employees may also seek an injunction to cause Trustor to abate any action in violation of
any Environmental Provision and may seek the recovery of all costs,damages, expenses, fees,
penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket
costs or expenses actually incurred by Beneficiary (collectively, "Environmental. Costs")
incurred or advanced by Beneficiary relating to the cleanup, remedy, or other response action
required by any Hazardous Substances Law or any Hazardous Substance Claim. It will be
conclusively presumed between Beneficiary and Trustor that all Environmental Costs incurred or
advanced by Beneficiary relating to the cleanup, remedy, or other response action of or to the
Property were made by Beneficiary in good faith. All reasonable Environmental Costs incurred
by Beneficiary under this Section (including without limitation court costs, consultant fees, and
attorney fees, whether incurred in litigation and whether before or after judgment) will bear
interest at the Agreed Rate from the date of expenditure until those sums have been paid in full.
Beneficiary will be entitled to bid, at any trustee's or foreclosure sale of the Property, the amount
of the costs, expenses, and interest in addition to the amount of other indebtedness.
(d) Beneficiary or its agents, representatives, and employees may waive its
lien against the Property or any portion of it, including but not limited to the Improvements, to
the extent that the Property or any portion of the Security is found to be environmentally
impaired in accordance with Code of Civil Procedure § 726.5, and to exercise all rights and
remedies of an unsecured creditor against Trustor and all of Trustor's assets and property for the
recovery of any deficiency and Environmental Costs, including, but not limited to, seeking an
attachment order under Code of Civil Procedure § 483.010. As between Beneficiary and
Trustor, for purposes of Code of Civil Procedure § 126.5, Truster will have the burden of
proving that Trustor or any related party (or any affiliate or agent of Truster or any related party)
was not in any way negligent in permitting the Release or threatened Release of the Hazardous
Substances.
Section 6. ASSIGNMENTS OF RENTS, ISSUES AND PROFITS
6.1. Assignment.
Trustor hereby absolutely, irrevocably and unconditionally assigns to Beneficiary, as
security for the Obligations, all rents, profits, deposits, royalties, income and other issues and
similar benefits derived from the Security (collectively, the "Rents"), and hereby confers upon
Beneficiary the right, power and authority to collect such Rents. Truster irrevocably appoints
Beneficiary its true and lawful attorney -in -fact, at the option of Beneficiary, at any time and from
time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions,
and to sue, in its name or in the name of Trustor, for all Rents, and apply the same to the
Obligations secured hereby; provided; however, that Trustor shall have the right, as between
Trustor and Beneficiary, to collect the Rents but not more than one (1) month in advance of the
date due unless the written approval of Beneficiary has first been obtained, with the exception of
security deposits and "first and last months' rent" collected from tenants in connection with
Trustor's ordinary leasing of residential apartments within the Property), and to retain and enjoy
the same, so long as an Event of Default shall not have occurred hereunder and be continuing.
6.2. Collection Upon Default.
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City HOME Deed or Trust
While any Event of Default remains uncured, Beneficiary may, at any time without
notice, either in person, by agent or by a receiver appointed by a court, and without regard to the
adequacy of any security for the Obligations hereby secured, enter upon and take possession of
the Security, or any part thereof, and, with or without taking possession of the. Security or any
part thereof, in its own name sue for or otherwise collect such Rents (including those past due
and unpaid, and all prepaid Rents and all other monies which may have been or may hereafter be
deposited with Trustor by any tenant to secure the payment of any Rent or. for any services
thereafter to be rendered by Trustor for any other obligation of any tenant to Trustor arising
under any lease, and Trustor agrees that, upon the occurrence of any Event or Default hereunder,
Trustor shall promptly deliver all Rents and other moneys to Beneficiary), and Beneficiary may
apply the same, less costs and expenses of operation and collection, including, without
limitation, reasonable attorneys fees; whether or not suit is brought or prosecuted to judgment,
against any indebtedness or Obligation of Trustor secured hereby, and in such order as
Beneficiary may determine notwithstanding that said indebtedness or the performance of said
Obligation may not then be due. The collection of Rents, or the entering upon and taking
possession of the Security, or the application thereof as aforesaid, shall not cure or waive any
default or notice of default hereunder or invalidate any act done in response to such default or
pursuant to such notice of default or be deemed or construed to make Beneficiary a mortgagee -
in -possession of the Security or any portion thereof.
6.3. Further Assignments.
Upon demand of Beneficiary, Trustor shall, from time to time hereafter, execute, and
deliver to Beneficiary recordable assignments of Trustor's interest in any or all leases, subleases,
contracts, rights, licenses and permits now or hereafter affecting the Security or any portion
thereof. Such assignments shall be made by instruments in form and substance reasonably
satisfactory to Beneficiary; provided, however, that no such assignment shall be construed as
imposing upon Beneficiary any obligation with respect thereto. Beneficiary may, at its option,
exercise its rights hereunder or under any such specific assignment and such exercise shall not
constitute a waiver of any right hereunder or under any such specific assignment.
Section 7. EVENTS OF DEFAULT
7.1. Events of Default.
Each of the following shall constitute Events of Default: (1).the occurrence of an "Event
of Default" as defined if! the Loan Agreement or as defined in any Debt Instrument; or (2) the
failure to make any payment or perform any of Trustor's other Obligations now or hereafter
secured by this Deed of Trust (subject to written notice and expiration of any applicable cure
period) and if no cure period is provided, a cure period equal to those granted to the limited
partner under Section 7.12.
7.2. Acceleration of Maturity.
If an Event of Default shall have occurred and be continuing, then at the option of the
Beneficiary, the amount of any payment related to the Event of Default, the unpaid Principal of
the Note and any other indebtedness and other Obligations secured hereby shall immediately
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The Crossroads at Washington
City HOME Deed of Trust
become due and payable without presentment, protest notice or demand, all of which are hereby.
expressly waived, upon written notice by the Beneficiary to the Trustor and no omission on the
part of the Beneficiary to exercise such option when entitled to do so shall be construed as a
waiver of such right.
7.3. The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may
(a) Either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its
security, enter upon the Security and take possession thereof (or any part thereof) and of any of
the Security, in its own name or in the name of Trustee, and do any acts which it reasonably
deems necessary to preserve the value or marketability of the Security, or part thereof or interest
therein, increase the income therefrom or protect the security thereof and, with or without taking
possession of the Security, sue for or otherwise collect the Rents, including those past due and
unpaid, and apply the same, less costs and expenses of operation and collection including
without limitation reasonable attorneys fees, against any indebtedness secured hereby, all in such
order as Beneficiary may determine. The entering upon and taking possession of the Security the
collection of such Rents and the application thereof as aforesaid shall not cure or waive any
Event of Default or notice of default hereunder or invalidate any act done in response to such
Event of Default or pursuant to such notice of default, and, notwithstanding the continuance in
possession of the Security, Beneficiary shall be entitled to exercise every right provided for in
this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to
exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage,
appoint a receiver, or specifically enforce any of the covenants hereof;
(c) Deliver to Trustee a written declaration of default and demand for sale,
and a written notice of default and election to cause Trustor's interest in the Security to be sold,
which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records
of Orange County; or
(d) Exercise all other rights and remedies provided herein, in the instruments
by which the Trustor acquires title to any Security, or in any other document or agreement now
or hereafter evidencing, creating or securing all or any portion of the Obligations secured hereby,
or provided by law.
7.4. Foreclosure by Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained, the Beneficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust,
the Loan Agreement and the Note which is secured hereby (and the deposit of which shall be
deemed to constitute evidence that the unpaid Principal amount of the Note is immediately due
and payable), and such receipts and evidence of any expenditures made that are additionally
secured hereby as Trustee may require.
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City HOME Deed of Trust
(a) Upon receipt of such notice from the Beneficiary ("Notice of Default"),
Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and
election to sell as then required by law and by this Deed of Trust. Trustee shall, without demand
on Trustor, after lapse of such time as may then be required by law and after recordation of such
Notice of Default and after notice of sale having been given as required by law (`.`Notice of
Sale"), sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether
as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such
order as it may determine unless specified otherwise to the Truster according to California Civil
Code Section 2924g(b), at public auction to the highest bidder, for. cash in lawful money of the
United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers
thereof its good and.sufficient deed or deeds conveying the property so sold, but without any
covenant or warranty, express or implied.. The recitals in such deed or any matters of facts shall
be conclusive proof of the truthfulness thereof. Any person, including, without limitation,
Trustor, Trustee or Beneficiary, may purchase at such sale.
(b) After deducting all reasonable costs, fees and expenses of _Trustee,
including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds
of sale to payment of. (1) the unpaid Principal amount of the Note;' (2) all other sums then
secured hereby; and (3) the remainder, if any, to Truster.
(c) Trustee may postpone sale of all or any portion of the Security by public
announcement at such time and place of sale, and from time to time thereafter, and without
further notice make such sale at the time fixed by the last postponement, or may, in its discretion,
give a new notice of sale.
7.5. Receiver
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of
right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest of Trustor therein, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part
thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice
of any application therefor. Any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of
entry as provided herein, and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Security, unless such receivership is sooner terminated.
7.6. Application of Funds After Default.
Except as otherwise herein provided, upon the occurrence of an Event of Default
hereunder, and while such Event of Default remains uncured, Beneficiary may, at any time
without notice, apply any or all sums or amounts received and held by Beneficiary to pay
insurance premiums, Impositions, or either of them, or as Rents or income of the Security, or as
insurance or condemnation proceeds, and all other sums or amounts received by Beneficiary
from or on account of Trustor or the Security, or otherwise, against any indebtedness or
Obligation of the Trustor secured hereby, in such manner and order as Beneficiary may elect.
The receipt, use or application of any such sum or amount shall not be construed to affect the
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The Crossroads at Washington
City HOME Deed of Trust
maturity of any indebtedness secured by this Deed of Trust, or any of the rights or powers of
Beneficiary under the terms of the Loan Agreement, this Deed of Trust or the Note, or any of the
Obligations of Trustor or any guarantor.underany other instruments or documents now or
hereafter delivered in connection with the Loan Agreement or to cure or waive any default or
notice of default under the Loan Agreement or any such instruments or documents; or to
invalidate any act of Trustee or Beneficiary.
7.7. Costs of Enforcement.
If any Event of Default occurs,. Beneficiary and Trustee, and each of them, may employ
an attorney or attorneys to protect their rights hereunder. Truster promises to pay to Beneficiary,
on demand, the reasonable fees and expenses of such attorneys and all, other reasonable costs of
enforcing the Obligations secured hereby, including, without limitation, recording fees, the
expense of a trustee, sale guarantee, Trustee's fees and expenses, receivers fees and expenses,
and all other reasonable expenses, of whatever kind or nature, incurred by Beneficiary and
Trustee, and each of them, in connection with the enforcement of the Obligations secured
hereby, whether or not such enforcement includes the filing of a lawsuit. Until paid, such sums
shall be secured hereby and shall bear interest at the Agreed Rate.
7.8. Remedies Cumulative.
No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or in equity.
7.9. No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or
remedy accruing upon any Event of Default shall exhaust or impair any such right, power or
remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence
therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may
be exercised from lime to :time and as often as may be deemed expeditious by the Beneficiary,
No consent or waiver, expressed or implied, by the Beneficiary to or any breach by the Trustor in
the performance of the Obligations hereunder shall be deemed or construed to be a consent to or
.waiver of .Obligations of the Trustor hereunder. Failure on the part of the Beneficiary to
complain of any act or failure to act or to declare an Event of Default, irrespective of how long
such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or
impair any rights, power or remedies consequent on any Event of Default by the Trustor. .
(b) If the Beneficiary (1) grants forbearance or an extension of time for. the
payment of any sums secured hereby, (2) takes other or additional security or the payment of any
sums secured hereby, (3) waives or does not exercise any right granted in the Loan Agreement,
(4) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any
of the terms, .covenants, conditions or agreements in the Loan Agreement, (5) consents to the
.granting of any easement or other right affecting the Security, or (6) snakes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
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The Crossroads at Washington
City HOME Deed of Tmst
modify, change or affect the original liability under this Deed of Trust, or any other obligation of .
the .Truster or any subsequent purchaser of the Security or any part thereof, or any maker, co-
signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or
omission preclude the Beneficiary from exercising any right, power or privilege herein granted
or intended to be granted in any Event of Default then made or of any subsequent Event of
Default, nor, except as otherwise expressly provided in an instrument or instruments executed by
the Beneficiary shall the lien of this Deed of Trust be altered thereby.
7.10. Suits to Protect the Security.
The Beneficiary shall have power to: (1) institute and maintain such suits and
proceedings as it may in. its reasonable discretion deem expedient to prevent any impairment of
the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of
Trust, (2) preserve or protect its interest (as described in this Deed of Trust) in the Security, and
(3) restrain the enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for
compliance with such enactment, rule or order would impair the Security thereunder or be
prejudicial to the interest of the Beneficiary.
7.11. Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary in order to have the claims of the Beneficiary allowed in
such proceedings and for any additional amount which may become due and payable by the
Trustor hereunder after such date.
7.12. Limited Partner Cure Rights.
Notwithstanding anything to the contrary in this Deed of Trust, Beneficiary shall give the
investor limited partner of Truster the following notice at the address providedinSection 8.3(b)
and cure rights:
(a) Beneficiary will give the limited partner a copy of any notice (at the limited
partner's address provided in a notice by Truster to Beneficiary) that Beneficiary gives to Trustor
under this Deed of Trust, provided that Trustor has provided the address and contact information
for the investor limited partner in writing to Beneficiary;
(b) Beneficiary will give the limited partner thirty (30) days after the limited partner's
receipt of such notice to cure a non-payment of any sum due under this Deed of Trust;
(c) Beneficiary will give the limited partner sixty (60) days after the limited partner's
receipt of such notice to cure any other default under this Deed of Trust;
(d) If a non -monetary default is incapable of being cured within sixty (60) days,
Beneficiary will give the limited partner such additional time as is reasonably necessary to cure
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City HOME need of Trust
such default provided the limited partner has commenced to cure such defaultand is diligently
proceeding to cure such default through the end of such period; and
(e) If the limited partner makes any such payment or otherwise cures such default, the
Beneficiary will accept such action as curing such default as if such payment or cure were made
by Trustor.
Section 8. MISCELLANEOUS
8.1. Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only by
an. instrument in writing signed by Beneficiary and Trustor.
8.2. Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid,
and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon
payment by Truster of Trustee's reasonable fees, Trustee shall reconvey, without warranty, the
Security to Truster, or to the person or persons legally entitled thereto.
8.3. Notices.
(a) If at any time after the execution of this Deed of Trust it shall become
necessary or convenient for one of the parties hereto to serve .any notice,, demand or
communication upon the other party, such notice, demand or communication shall be in writing
and shall be served personally or by depositing the same in the registered United States mail,
return receipt requested, postage prepaid and:
(1) if intended for Beneficiary shall be addressed to:
City of Santa Ana
Executive Director (CDA)
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California.92702
(2) if intended for Trustors shall be addressed to:
Trustor: Washington Santa Ana Housing Partners, L.P.
With a copy to:
Any notice, demand or communication shall be deemed given, received, made or
communicated on the date personal delivery is effected or, if mailed in the manner herein
specified, on the delivery date or date delivery is refused by the addressee, as shown on the
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City HOME Deed of Tmst
return receipt. Either party may change its address at any time by giving written notice of such
change to Beneficiary or Trustor as the case may be, in the manner provided herein; at least ten
(10) days prior to the date such change is desired to be effective.
8.4. Successors and Joint Trustors.
All Obligations of Trustor secured by this Deed of Trust, shall also apply to and bind any
permitted transferee or successors in interest. Where the terms of the Deed of Trust have the
effect of creating an Obligation of the Trustor and a transferee, such Obligation shall be deemed
to be a joint and several Obligation of the Trustor and such transferee. Where Trustor is more
than one entity or person, all Obligations of Trustor shall be deemed to be a joint and several
Obligation of each and every entity and person comprising Trustor.
8.5. Captions.
The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
8.6. Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or
partially secured by the lien of this Deed of Trust.
8.7. Governing Law and Venue.
This Deed of Trust shall be governed by and construed in accordance with the laws of the
State of California. In the event of any legal action to enforce or interpret this Deed of Trust, the
sole and exclusive venue shall be a court of competent jurisdiction located in Orange County,
California, and the parties hereto agree to and do hereby submit to the jurisdiction of such court,
notwithstanding Code of Civil Procedure Section 394.
8.8. Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
8.9. Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
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City HOME Deed orTmst
8.10. Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect the
Security.
8.11. Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to
this Deed of Trust and its place of record, which, when duly recorded in the proper office of the
City or counties in which the Security is situated, shall be conclusive proof of proper
appointment of the successor trustee.
8.12. Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is
made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of
proceedings in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
8.13. Conflicts.
If any term or provision of this Deed of Trust conflicts with any term of provision of the
Loan Agreement, the term or provision of the Loan Agreement shall control to the extent of such
conflict.
8.14. Statements by Trustor.
Trustor shall, at its cost, within ten (10) days after notice thereof from Beneficiary,
deliver to Beneficiary a written statement setting forth to the best of its knowledge and
information, the amounts then unpaid and secured by this Deed of Trust and stating whether
Trustor is aware of any offset or defense against such amounts.
8.15. Beneficiary Statements.
For any statement or accounting requested by Trustor or any other entitled person
pursuant to Section 2943 or Section 2954 of the California Civil Code. or pursuant to any other
provision of applicable law, or for any other document or instrument furnished to Trustor by
Beneficiary, Beneficiary may charge the maximum amount permitted by law at the time of the
request therefor, or if there be no such maximum, then in accordance with Beneficiary's
customary charges therefor or the actual cost to Beneficiary therefor, whichever is greater.
8.16. Statute of Limitations.
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The Crossroads at Washington
City HOME Deed of Tint
Except insofar as now or hereafter prohibited by law, the right to plead, use or assert any
statute of limitations as a plea or defense or bar of any kind, or for any purpose, to any debt,
demand or obligation secured or to be secured hereby, or to any complaint or other pleading or
proceeding filed, instituted or maintained for the purpose of enforcing this Deed of Trust or any
rights hereunder, is hereby waived by Truster.
8.17. Trust Irrevocable; No Offset.
The Trust created hereby is irrevocable by Truster. No offset or claim that Truster now
has or may in the future have against Beneficiary shall relieve Truster. from paying the
indebtedness or performing any other Obligation contained herein or secured hereby.
8.18. Corrections.
Trustor shall, upon request of Beneficiary, promptly correct any defect, error or omission
which may be discovered in the contents hereof or in the execution or acknowledgment hereof,
and will execute, acknowledge and deliver such further instruments and do such further acts as
may be necessary or as may be reasonably requested by Beneficiary to carry out more effectively
the purposes thereof, to subject to, the lien and security interest hereby created any of Trustor's
properties, rights or interests covered or intended to be covered hereby, or to perfect and
maintain such lien and security interest.
8.19. Further Assurance.
Trustor,. Beneficiary and Trustee agree to do or cause to be done. such further acts and
things and to execute and deliver or to cause to be executed and delivered such additional
assignments, agreements, powers and instruments, as any of them may reasonably require to
keep valid and effective the charges and liens hereof, to carry into effect the purposes of this
Deed of Trust or to better assure and confirm unto any of them their rights, powers and remedies
hereunder; and, upon request by Beneficiary, shall supply evidence of fulfillment of each of the
covenants herein contained concerning which a request for such evidence has been made.
8.20. Waiver of Jury Trial.
Unless prohibited by Federal, State or local laws, each party acknowledges that it is
.aware of and has had the.advice of counsel of its choice with respect to its rights to trial by jury,
and each party, for itself and its successors and assigns, does hereby expressly and knowingly
waive and release all such rights to trial by jury in any action, proceeding or counterclaim
brought by any party hereto against the other (and/or against its officers, directors, employees,
agents, or subsidiary or affiliated entities) on or with regard to any matters whatsoever arising
out of or in any way connected with this Deed of Trust and/or any claim of injury or damage to
the fullest extent permitted by applicable law.
8.21. Tax Credits.
Beneficiary agrees that the lien of this Deed of Trust shall be subordinate to any extended
low-income housing commitment (as such term is defined in Section 42(h)(6)(B) of the Internal
Revenue Code) (the "Extended Use Agreement") recorded against the Security; provided that
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The Crossroads at Washington
City HOME Deed of Trust
such Extended Use Agreement, by its .terms, must terminate upon foreclosure under this
Instrument or upon a transfer of the Security by instrument in lieu of foreclosure, in accordance
with Section 42(h)(6)(E) of the Internal Revenue Code.
Section 9. WAIVERS
9.1. Waivers and Related Matters.
(a) To the fullest extent allowed by law, Trustor hereby waives:. (i)
presentment, demand, protest; notice of dishonor,. notice of protest and all other notices and
demands of every kind, and all suretyship defenses of every kind that would otherwise be
available in connection with this Deed of Trust, and (ii) all rights of redemption, valuation,
appraisement, stay of executive, notice of election to mature or declare due the whole of the
Obligation and marshaling in the event of foreclosure of the liens hereby created.
(b) Trustor hereby authorizes Beneficiary, at any time and from time to time
without notice and without affecting this Deed of Trust in any way; to: (i) accept new or
additional instruments, documents, agreements, security or guaranties in connection with all or
any part of the Obligations; (ii) accept partial payments on the Obligations; and (iii) waive,
release, reconvey, terminate, abandon, subordinate, exchange, substitute, transfer, compound,
compromise, liquidate and enforce all or any part of the Obligations and any security or
guaranties therefor, and apply any such security and direct the order or manner of sale thereof
and bid and purchase at any such sale.
(c) Trustor hereby waives any right to require Beneficiary to (i) proceed
against any person; (ii) proceed or exhaust any collateral held from any person; or (iii) pursue
any other remedy in Beneficiary's power. Upon the occurrence of any Event of Default,
Beneficiary is hereby expressly given the right, at its option, to proceed in the enforcement of
this Deed of Trust, independently of any other remedy or security Beneficiary may at any time
hold in connection with the Obligations, and Beneficiary shall not in any way be obligated or
otherwise required to proceed upon or against and/or exhaust any other security or remedy before
proceeding to enforce this Deed of Trust.
(d) Trustor hereby.waives any defense arising by reason of: (i) any disability
or other defense of Trustor or any other person; (ii) the cessation from any cause whatsoever,
other than full payment and performance of the Obligations, of the Obligations of Trustor or any
other person; or (iii) any act or omission by Beneficiary which directly or indirectly results in or
aids in the discharge or release of Trustor, or any other person, any Obligation, or any collateral
by operation of law or otherwise.
The waivers set forth in this Section 9 shall also apply, to the fullest extent permitted by
law to all other real and/or personal property of Trustor now or hereafter assigned to Beneficiary
as security for the Obligations. Trustor warrants and agrees that each, of the waivers set forth
above are made with Trustor's full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense waived may diminish, destroy or otherwise
adversely affect rights which Trustor otherwise may have against Beneficiary or others, or
against collateral, and that under the circumstances, the waivers are reasonable and not contrary
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City HOME Deed ofTmst
to public policy or law. If any of the waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective to the maximum extent permitted by law.
{signatures on following page}
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The Crossroads at Washington
City HOME Deed of Trust
IN WITNESS WHEREOF, Trustor has executed this City Deed of Trust as of the date first
written above.
TRUSTOR:
Washington Santa Ana Housing Partners, LT
a California limited partnership
By: Related/Washington Santa Ana Development Co., LLC,
a California limited liability company,
its Administrative General Partner
La
Frank Cardone, President
By: Supportive Housing LLC,
a California limited liability company,
its Managing General Partner
By: A Community of Friends,
a California nonprofit public benefit corporation,
its sole member/manager
M.
Dora Leong Gallo,
President and Chief Executive Officer
The Crossroads at Washington Exhibit A
City HOME Deed of Trust
EXHIBIT A
LEGAL DESCRIPTION
The Crossroads at Washington Exhibit A
City HOME Deed of Trust
Exhibit E:
Ci*ty'*/HOME Loan
Note
CITY HOME LOAN NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO TFIE CITY OF SANTA ANA, CALIF, ORNIA
(1126, 1136 & 1146 East Washington Avenue, Santa Ana, California)
3 0$ . 07,489 July 21, 2022
Santa Ana, California
1. PRINCIPAL AMOUNT OF LOAN.
For value received, WASHINGTON SANTA ANA HOUSING PARTNERS, L.P.,
a California limited partnership ("Borrower") promises to pay to the order of THE CITY
OF SANTA ANA ("City"), at 20 Civic Center Plaza, 6' Floor, Santa Ana, California
92701, or at such other place as the City may from time to time designate in writing, or to
the assignee of the City, the principal sum of THREE MILLION, SEVEN THOUSAND,
FOUR HUNDRED AND EIGHTY-NINE DOLLARS AND NO CENTS ($3,007,489.00)
or so much thereof as shall be disbursed hereunder, with three percent (3%) simple interest
per annum and commencing from the date of issuance of the Certificate of Completion.
City and Borrower have heretofore entered into that certain Loan Agreement dated
concurrently herewith (the "Loan Agreement"), pertaining to the construction of certain
real property described in the Loan Agreement as the "Property," commonly known as
1126, 1136 and 1146 East Washington Avenue, Santa Ana, California, and the operation
of the Property as affordable housing for Extremely -Low Income households. This City
HOME Loan Note (the "Note") is made pursuant to, entitled to the benefits of and referred
to as the City/HOME Loan Note in the Loan Agreement; that certain "Affordability
Restrictions on Transfer of Property" between Borrower and City, dated on or about the
date hereof; and that certain Subordinated City/HOME Deed of Trust and Assignment of
Rents by Borrower for the benefit of City, dated on or about the date hereof (the "City Deed
of Trust"). This Note, the Loan Agreement, the City Deed of Trust and the Affordability
Restrictions on Transfer of Property are sometimes collectively referred to herein as the
"Loan Documents." The Loan Documents and the rights and responsibilities thereto inure
to the benefit of the City. Any capitalized term that is not otherwise defined herein shall
have the meaning ascribed to such term in the Loan Agreement,
2. DEFINITIONS.
For the purpose of calculating the payments to be made by Borrower to City
pursuant to this Note, the following terms shall have the following respective meanings:
"City Loan" shall mean the loan evidenced by this Note.
"City's Percentage" with reference to the Residual Receipts, shall mean 23.71%
of the total Residual Receipts from the Property, as further described in Section 5 hereof.
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City HOME Loan Note
"Calendar Year" means each consecutive twelve (12) month period from January
1 to December 31.
"Closing Costs" shall mean:
(i) In the case of a Sale, reasonable brokerage commissions payable to a
broker as a result of the Sale, which shall not in any event exceed the customary amount
charged -for similar transactions in the immediate marketplace, 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, attorneys' fees and
costs of Lender required repairs or reserves.
"CPI'" means United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index of Urban Wage Earners and Clerical Workers, Subgroup "All
Items," for the Los Angeles -Riverside -Orange County area, 1982-84 = 100, or successor
or equivalent index in case such index is no longer published.
"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 payments from leased
and/or subleased spaces, governmental assistance housing payments or other operating,
subsidies, 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 does not include any insurance proceeds other than any
rental interruption insurance proceeds. Any credit consideration shall be included in Gross
Revenues at the time cash proceeds (principal, interest 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 to the extent
interest is released from the Project Accounts. Gross Revenues do not include the proceeds
of any loans or capital contributions made to Borrower, Refinancing Proceeds or Sale
Proceeds.
"Ground Lease" shall mean the lease between the Housing Authority of the City
of Santa Ana ("Agency') and the County of Orange ("County") as tenants -in -common, and
Washington Santa Ana Housing Partners, LP.
"Ground Lessor" shall mean collectively the Housing Authority of the City of
Santa Ana and the County of Orange.
"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 Completion.
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City HOME Loan Note
"Operating Expenses" shall mean the sum of the following:
(a) payments of principal and interest and all other charges payable on
or with respect to the Senior Loan(s);
(b) a property management fee no greater than fifty-five dollars
($55)/per unit/per year, increased annually by the lesser of: (i) three percent (3%); or (ii)
prior Year CPI, beginning the year following the issuance of the first certificate of
occupancy for the Project;
(c) Partnership related fees that are actually incurred and are reasonable
and customary to the partners of Borrower for similar projects in Southern California, and
which may include: (i) the partnership management fee payable to the Administrative
General Partner and/or Managing General Partner not to exceed twenty thousand dollars
($20,000) per operating year and escalating at three percent (39/4) per operating year; and
(ii) a limited partner asset management fee of five thousand dollars ($5,000) per year,.
escalating at (A) three percent (3%) per operating year;
(d) Deposits into required reserves required by any lender or
Borrower's Partnership Agreement;
(e) all other actual, reasonable cash operating costs and expenses,
calculated on an annual basis, that are directly attributable to managing and operating the
Property and the Borrower, 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:
(i) Depreciation, amortization, and accrued principal and
interest expenses on deferred payment debt and capital improvement expenditures shall not
be considered Operating Expenses, except as otherwise provided herein.
(f) Any expenses, compensation or fees paid to any affiliate of
Borrower shall only be included as Operating Expenses to the extent they are not in excess
of the reasonable expenses, compensation or fees which would be payable to unrelated
third parties in arms -length transactions for similar services in the Santa Ana, California
area;
(g) Any other expenses necessary to meet senior lender requirements
and requirements of Borrower's limited partner, or its assignee, as set forth in Borrower's
Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"),
including, without limitation, repayment of any loans to the Borrower by a partner or tax
credit recapture or deficiency payments;
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City HOM E+ Loan Note
(h) Deferred developer fees; and
(i) A social services administrative fee;
Director reserves the right to at any time review and approve each or any annual
budget during the Term hereof, and any changes to any said annual budget reasonably
requested by Director shall be promptly implemented by Borrower. Notwithstanding the
foregoing, in no event shall Operating Expenses include any costs, fees, fines, charges,
penalties, awards, judgments or expenses (including, but not limited to legal and
accounting fees and expenses) that are due to or arising out of the Borrower's: (a) breach
or default of this Loan, any Loan Document or any Senior Loan Document; (b) fraudulent
acts or willful misconduct., or (c) breach or default under any other contract, lease or
agreement pertaining to the Project.
"Project" shall mean the acquisition and construction of the.Property by Borrower
pursuant to the Loan Agreement.
"Property" shall mean the real property located at 1126, 1136 and 1146 East
Washington Avenue, Santa Ana, California described in the City Deed of Trust.
"Refinancing" shall mean changing the then existing financing on the Property
by, without limitation, modifying final maturity date of the existing Senior Loan, increasing
the stated maximum principal amount of the existing Senior Loan, paying off the existing
Senior Loan in full and obtaining new Senior Loan.
"Refinancing Proceeds" shall be as set forth in Section 7 hereof.
"Residual Receipts" shall mean the Gross Revenues from the Property, for each
year, less deductions for Operating Expenses from the Property, applicable to each such
year to the extent not already deducted as an Operating Expense.
"Sale" shall mean any transfer, assignment, conveyance or lease (other than to a
tenant for occupancy or a transaction set forth in Section 11.3 hereof and Permitted
Transfers as such term is defined in the Loan Agreement) of the Borrower's leasehold
interest in the Property or any portion thereof, or any interest therein by the Borrower, and
includes any transfer, assignment or sale of any partnership interest in the Borrower by an
individual or entity which is a general partner in the Borrower, or any interest by any
individual or entity which holds an interest in any such general partner in the Borrower,
which brings the cumulative total of all such direct and indirect transfers, assignments and
sales by a general partner during the term of this Note to more than forty-nine percent
(49%) of the ownership interests in the Borrower, and any such transfer, assignment or sale
of a direct or indirect general partnership interest thereafter. Sale includes a sale in
condemnation or under threat thereof. Sale does not include dedications and grants of
easements to public and private utility companies of the kind customary in real estate
development, nor transfers of Limited Partnership interests or transfers of General Partner
interests caused by the removal of the General Partner pursuant to the terms of the
Partnership Agreement,
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City HOME Loan Note
"Sale Proceeds" shall be as set forth in Section 8 hereof.
"Senior Loan" shall mean the senior loan being made by U.S. Bank National
Association, concurrent to the City Loan for payment of a portion of costs of the acquisition
of the leasehold interest in the Property and the Construction Costs, and shall include the
Senior Loan following the purchase thereof by California Community Reinvestment
Corporation (or its assignee) any subsequent loan that refinances the Senior Loan, and shall
include any other loan recorded senior in priority to this City Loan
"Term" the term for repayment of this Note shall mean sixty-two (62) years from
the Certificate of Completion.
3. LOAN REPAYMENT.
Borrower shall make payments to the City as provided in Sections 5 (Residual
Receipts), 7 (Refinancing Proceeds), 8 (Sale Proceeds) and 10 (Accelerated Loan
Repayment).
4. OPERATING CAPITAL IMPROVEMENT LOAN.
If the replacement reserve account ("reserves") is depleted due to unforeseen
repairs and the General Partner(s) makes a loan to the Borrower, the reserves must be fully
funded to the balance of the reserve prior to disbursement for such unforeseen repairs prior
to repayment of said loan. Such loan shall be repaid with net cash flow prior to the Residual
Receipt split. The outstanding loan balance will be reflected in the annual report.
5. ANNUAL LOAN REPAYMENT.
5.1. After any deferred developer fee has been paid, as set forth hereinabove, the
Borrower shall thereafter make a loan payment to the City annually, in the amount of the
lesser of the outstanding balance due under this Note, plus any accrued interest thereon, or
the City's Percentage of the Residual Receipts, as provided in this Section 5.
5.2. Within one hundred twenty (120) days after the year in which the
construction of the Project is completed, and on or before the 120th day of each Calendar
Year thereafter, the Borrower shall submit to the City a detailed 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 a City Loan payment then due.
5.3. Except as otherwise provided in Section 4, the Borrower shall pay to the
City the City's Percentage of the Residual Receipts as payment of principal and interest
under this Note. The Borrower shall pay 13.53% of the Residual Receipts to the County
and 12.76% of the Residual Receipts to the Orange County Housing Finance Trust The
remaining amount of the Residual Receipts shall remain with the Borrower to be used by
Borrower in accordance with the terms of the Partnership Agreement, including, without
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City HOME Loan Note
limitation, for distribution to the partners of the Borrower
5.4. The Residual Receipts payment shall be made not later than one hundred
fifty (150) days after the close of the Calendar Year. Such payment shall be applied first to
the payment of all expenses, charges, costs and fees incurred by or payable to City by
Borrower pursuant to the terms of the Loan Documents; second to any accrued but unpaid
interest, if any; and third, to reduce the principal balance of the City Loan. Notwithstanding
anything to the contrary contained herein, after the occurrence and during the continuation
of an Event of Default (as such term is defined in the Loan Agreement), all amounts
received by City from any party shall be applied in such order as City, in its sole discretion,
may elect,
6. RESERVED.
7. LOAN REPAYMENT FROM NET REFINANCING PROCEEDS/NET
SYNDICATION PROCEEDS.
The Borrower shall make a payment to the City or Agency from every approved
Refinancing or Syndication that occurs during the term of this Note and the term of the
Ground Lease, not to exceed (i) the outstanding balance of principal and interest on this
Note; plus (ii) the amount of unpaid Agency Base Rent as outlined in the Ground Lease, to
the extent of the City's Percentage (23.71%) of the Net Refinancing Proceeds ( Net
Syndication Proceeds (if any).
The "Net Refinancing Proceeds" shall be defined as the proceeds, from the
refinancing of any loan approved by the Ground Lessor as stipulated in the Ground Lease,
net of all of the following: the amount of the financing which is satisfied out of such
proceeds, closing costs, costs to rehabilitate the Project, including the costs necessary to
obtain refinancing proceeds (such as consultant, legal and other consultant costs), payment
of outstanding deferred developer fee, the soft costs related to the rehabilitation of the
Project (such as architecture, engineering and other consultant costs, and all required
relocation costs), and all hard costs of the rehabilitation, all of which have been reviewed
and reasonably approved by the Ground Lessor.
The"Net Syndication Proceeds" shall be defined as the syndication proceeds net of
final Project hard and soft construction costs, including developer fee, based on a cost
certification completed at the end of construction; and syndication costs all of which has
been reviewed and reasonably approved by the Ground Lessor.
Such payment shall be due within 30 days of the date of such Refinancing or
Syndication, and shall be applied at the City's sole discretion to either: (i) first to any
accrued but unpaid interest, then to reduce the principal balance of the City Loan; or (ii) to
the unpaid amount of Agency Base Rent as outlined in the Ground Lease. The City shall
not be required to reconvey the lien of the City Deed of Trust if Net Refinaricing/Net
Syndication Proceeds are insufficient to repay the City Loan in full.
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City HOME Loan Note
8. LOAN REPAYMENT FROM SALE PROCEEDS.
The Borrower shall make a payment, not to exceed (i) the outstanding balance of
principal and interest on this Note;. plus (ii) the amount of unpaid Agency Base Rent as
outlined in the Ground Lease, to the City/Agency from any approved Sale of the leasehold
interest that occurs during the term of the City Loan or the Ground Lease, to the extent of
the City's Percentage (23.71 %) of the Sale Proceeds, as follows. The Sale Proceeds shall
be calculated as follows: gross sale proceeds are applied first to pay Closing Costs, next to
pay in full all amounts owing.on the Senior Loan; next the Borrower shall pay to the City
the City's Percentage of the then remaining unapplied Sale Proceeds, not to exceed (i) the
outstanding balance of principal and interest on this Note; plus (ii) theamount of unpaid
Agency Base Rent as outlined in the Ground Lease. Such payment shall be due on the date
of such Sale, and shall be applied at the City's sole discretion to either: (i) first to any
accrued but unpaid interest, then to reduce the principal balance of the City Loan; or (ii) to
the unpaid amount of Agency Base Rent as outlined in the Ground Lease. The City shall
not be required to reconvey the lien of the City Deed of Trust if Sale Proceeds are
insufficient to repay the City Loan in full.
9. BUY OUT OPTION.
Prior to the initial disbursement under this Note, the Borrower shall grant to the
City a right of first refusal (subject to any purchase option and/or right for first refusal
granted to one or more of the General Partner(s) of the Borrower and any rights of the
investor limited partner of Borrower under the Partnership Agreement) (the "City Right of
First Refusal") to acquire the leasehold interest in the Property if Borrower desires to
transfer the Property to an entity that is not affiliated with one or more of Borrower's
general partners. The City Right of First Refusal shall be in form and substance acceptable
to the City, shall comply with all applicable Tax Credit requirements and shall, at
minimum, include that the purchase price will not be less than the amount of any bona fide
third party offer received by Borrower. The City Right of First Refusal is hereby
subordinated to the Senior Loan Deed of Trust and the other Senior Loan Documents, and
in any event, the City Right of First Refusal shall automatically terminate, without any
further action by Borrower, the City or any other party upon the initial disbursement under
this Note. Senior Lender is hereby made a third party beneficiary of the immediately
preceding sentence, and such sentence shall not be amended or deleted without Senior
Lender's prior written consent:
10. ACCELERATED LOAN PAYMENT.
The full principal amount outstanding plus accrued but unpaid interest thereon,
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
15 hereof; unless: (i) in the case of a Sale in which the City's Percentage of the Sale
Proceeds are insufficient to repay in full the City Loan, the City approves such sale and the
purchaser assumes the balance of the City Loan in accordance with the terms of this Note;
or (ii) in the case of a Refinancing in which the City's Percentage of the Refinancing
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City HOME Loan Note
Proceeds are insufficient to repay in full the City Loan, the City approves such Refinancing
and the Borrower remains obligated pursuant to the terms of this Note;
(b) if an Event of Default occurs pursuant to Section 16 hereof; or
(c) The date that is sixty-two (62) years after the date of execution of
the Certificate of Completion.
11. PREPAYMENT.
Borrower may prepay the outstanding principal balance under this Note, in whole
or in part, together with any accrued but unpaid interest, if any, and other sums owed to the
City under this Note, if any, at any time without penalty. In the event of prepayment by
Borrower, the Loan Agreement. (only with respect to any continuing obligations of
Borrower that survive repayment in full of the loan) and the Affordability Restrictions on
Transfer of Property shall remain intact, and shall be unaffected by the prepayment of this
Note by the Borrower.
12. LAWFUL MONEY.
Principal and interest are payable in lawful money of the United States of America.
13. APPLICATION OF PAYMENTS; LATE CHARGES.
(a) Any payments received by the City pursuant to the terms hereof
shall be applied first to sums, other than principal and interest, due the City pursuant to this
Note, next to the payment of all interest accrued to the date of such payment, and the
balance, if any, to the payment of principal.
(b) If any payment is not received by the City within thirty (30) days
following the due date thereof, 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 twelve percent (12%) per annum, or the
maximum amount allowed by law, whichever is less, 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 interest
and/or principal, fees, or other amounts payable to the City under this Note or any other
Loan Document, 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 corrected by Borrower notice to City within ten (10) days of receipt of
such certificate from City.
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City HOME Loan Note
14. SECURITY.
This Note is secured by the City Deed of Trust.
15. ACCELERATION BY REASON OF TRANSFER OR FINANCING.
15.1. In order to induce City to make the City Loan evidenced hereby, Borrower
agrees that in the event of any transfer of the leasehold interest in 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, upon at least 30 days' prior written notice
to Borrower, 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 and
absolute discretion and, if consent should be given, any such transfer shall be subject to
this Section 15, and any such transferee shall assume all obligations hereunder and agree
to be bound by all provisions contained herein. Such assumption shall release Borrower
from all liability thereunder from and after the date of such assumption.
15.2. As used herein, "transfer" includes the Sale, agreement to sell, transfer or
conveyance of the leasehold interest in 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 Loan Agreement and the Affordable Housing Restrictions
relating to such leasing activity, nor shall it include a conveyance of the Property to a
limited partnership in which a general partner of Borrower or an affiliate of a general
partner of Borrower is a general partner, or to a corporation that is wholly owned by the
Borrower or a general partner of Borrower and that is formed for the sole purpose of
owning and operating the Property, or the sale back to the Borrower. In the event of any
Refinancing or partial Refinancing in an amount in excess of the balance of the Senior
Loan, without the prior written consent of City (which consent City may grant or deny in
its sole discretion), then the entire outstanding balance of the City Loan together with all
accrued and unpaid interest; shall be repaid to the City at the time of each Refinancing or
partial Refinancing.
15.3. For the avoidance of doubt, a "transfer" shall not include (i) a transfer of
any general partner's interest in Borrower when made in connection with the exercise by
the Borrower's limited partner (the "Limited Partner") of its rights upon a default by a
general partner under the Borrower's Partnership Agreement or upon a general partner's
withdrawal in violation of the Partnership Agreement, so long as the removal and
substitution of the defaulting general partner is made within thirty (30) days of such default
or, if such removal and substitution cannot reasonably be completed within thirty (30) days,
so long as the Limited Partner commences to take action to remove and substitute the
general partner with a reasonable period and thereafter diligently proceeds to complete
such substitution; (ii) any transfer of the Property to the managing general partner of
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City HOME Loan Note
Borrower pursuant to the right of first refusal or to the general partners of Borrower
pursuant to the purchase option, as provided for in the Partnership Agreement; (iii) any
transfer of the Limited Partner's interest in accordance with the Partnership Agreement;
and (iv) any sale, transfer or other disposition of an interest in a limited partner of the
Borrower.
16. EVENT OF DEFAULT.
Subject to the provisions hereof; the occurrence of any of the following shall be
deemed to be an event of default.("Event of Default") hereunder: (a) failure by Borrower
to make any payments provided for herein, and if such default is not made good within the
earlier of fifteen (15) days of written notice to Borrower of such default or thirty (30) days
after such payment was due; or (b) failure by Borrower to perform any covenant or
agreement in the City Deed of Trust, the Loan Agreement, or the Affordability Restrictions
on Transfer of Property 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).
17. CURE BY LIMITED PARTNER.
The City acknowledges that the Limited Partner of Borrower shall have the right, but not
the obligation to cure any default hereunder. Any cure made or tendered by such Limited
Partner shall be accepted as if made by Borrower.
18. REMEDIES.
Upon the occurrence and during the continuance 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 City 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
filedfor record and City may foreclose on the City Deed of Trust. City shall also deposit
with Trustee the City Deed of Trust, this Note and all documents evidencing expenditures
secured thereby and evidenced hereby. 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.
19. ATTORNEYS' FEES.
If this City Loan 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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City HOME Loan Note
20. SEVERABILITY.
Every provision of this Note is intended to be severable. In the event any term or
provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for
any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms
and provisions hereof, which terms and provisions shall remain binding and enforceable.
21. CALCULATION OF INTEREST.
Interest hereunder shall be calculated on the basis of a three hundred sixty (360)
day year consisting of twelve (12) months of thirty (30) days each, except that interest due
and payable for a period less than a full month shall be calculated by dividing (a) the
product of (i) the actual number of days elapsed in such period, (ii) the outstanding
principal balance hereunder during that period and (iii) the Note interest rate in effect
hereunder during that period by (b) 360.
22. 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.
23. NON -RECOURSE.
The City Loan is a nonrecourse obligation of the Borrower. Neither Borrower nor
any other party, including Borrower's partners, shall have any personal liability for
repayment of the City Loan or for any other amounts under any of the documentation
evidencing, securing or describing the City Loan. The sole recourse of City under this Note
and the City Deed of Trust for repayment of the City Loan and for such other amounts
arising therefrom shall be the exercise of its rights against the Property and related security
thereunder.
24. SUBORDINATION.
Any agreement by the City to subordinate the City Deed of Trust and/or Regulatory .
Agreements to an encumbrance securing and/or evidencing Approved Financing (each
such Approved Financing, a "Senior Loan"), will be subject to the satisfaction of each of
the following conditions:
All of the proceeds of the proposed Senior Loan, less any transaction costs, are used
to provide acquisition, construction and/or permanent financing for the Project, or
any combination thereof,
2. The proposed lender of a Senior Loan (each a "Senior Lender") must be a state or
federally chartered financial institution, a nonprofit corporation or a public entity
that is not affiliated with Borrower;
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City HOME Loan Note
3. Borrower demonstrates to the City's satisfaction that subordination of the City Deed
of Trust and/or Affordability Restrictions on Transfer of Property is necessary to
secure adequate acquisition, construction and/or permanent financing to ensure the
viability of the Project, including the operation of the Project as affordable housing;
as required by the Loan Documents. To satisfy this requirement, Borrower must
provide to the City, in addition to any other information reasonably required by the
City, evidence demonstrating that the proposed amount of the Senior Loan is
necessary to provide adequate construction and/or permanent financing to ensure
the viability of the Project, and adequate financing for the Project 'would not be
available without the proposed subordination;
4. The subordination agreement(s) is structured to minimize the -risk that the City
Deed of Trust and/or Affordability Restrictions on Transfer of Property will be.
extinguished as aresult of a foreclosure by the Senior Lender or other holder of the
Senior Loan. To satisfy this requirement, the subordination agreement must
provide the City with adequate rights to cure any defaults by. Borrower, including:
(i) providing the City or its successor with copies of any notices of default at the
same time and in the same manner as provided to Borrower; and (ii) providing the
City with a cure period of at least sixty (60) days to cure any default;
5. The subordination(s) of the City Loan is effective only during the original term of
the Senior Loan and any extension of its term that is approved in writing by the
City;
6. No subordination may limit the effect of the City Deed of Trust and/or the
Affordability Restrictions on Transfer of Property before a foreclosure, nor require
the consent of the Senior Lender prior to the City exercising any remedies available
to the City under the Loan Documents; and
7. Upon a determination by the City Executive Director that the conditions in this
Section have been satisfied, the Executive Director or his/her designee, will be
authorized to execute the approved subordination agreement without the necessity
of any further action or approval by the City Council. Execution of any
subordination agreement will evidence and constitute the determination of the City
that all requirements of this Section have been satisfied or waived. .
Notwithstanding anything to the contrary contained in the Loan Documents, with
prior 30-days written notice to City, Borrower may refinance the Senior Loan with anon -
profit, commercial, governmental or institutional lender without the prior consent of the
City ("Refinanced Senior Indebtedness"), and the City hereby agrees to subordinate the
lien of its Deed of Trust (but not the Affordability Restrictions on Transfer of Property)
the Refinanced Senior Indebtedness and the lien of any deed of trust or mortgage securing
the Refinanced Senior Indebtedness, provided that the principal balance of the Refinanced
Senior Indebtedness does not exceed the then outstanding principal balance of the Senior
Loan plus the costs incurred in securing the Refinanced Senior Indebtedness.
12
The Crossroads at Washington
City HOME Loan Note
25. RESERVED.
26. RESERVED.
27. 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; 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
City 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.
28. ASSIGNMENTS:
The City, and the assignee of the City, shall have the right to assign this Note and
the City Deed of Trust securing this Note, without any fizrther act of Borrower. The
assignee shall give notice to Borrower as soon as practicable after such assignment.
(signatures on followingpage)
13
The Crossroads at Washington
City HOME Loan Note
This Note is hereby agreed to and executed on the date first set forth above.
"BORROWER"
Washington Santa Ana Housing Partners, L.P.,
a California limited partnership
By. Related/Washington Santa Ana Development Co., LLC,
a California -limited liability company,
its Administrative General Partner
Cardone, President
By:. Supportive Housing LLC,
a California limited liability company,
its Managing General Partner
By: A Community of Friends,
a California nonprofit public benefit corporation,
its sole member/manager
By:
Dora Leong Gallo,
President and Chief Executive Officer
14
The Crossroads at Washington
City HOME Loan Note
Exhibit F.
Affordability
Restrictions on
Transfer of Property
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN 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
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
(1126, 1136 & 1146 East Washington Avenue, Santa Ana, California)
THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY
(the "Restrictions") are entered into as of July 21, 2022, by and between and Washington
Santa Ana Housing Partners, L.P., a California limited partnership ("Developer"), and the
City of Santa Ana, a charter city and municipal corporation ("City").
RECITALS:
A. The Housing Authority of the City of Santa Ana ("Housing Authority") owns one
parcel located at 1136 East Washington Avenue (APN 398-092-14) totaling approximately
1.43 acres of land area ("Housing Authority Parcel'). The County of Orange ("County")
owns an adjacent parcel (APN 398-092-13) totaling approximately 0.85 acres of land area
("County Parcel'). The two parcels will be merged into one parcel ("Property") and co -
owned by the Housing Authority and the County as Tenants -In -Common.. The Property
is located in the City of Santa Ana, more particularly described in Exhibit A, which is
attached hereto and incorporated herein by this reference.
B. The Housing Authority and the County will ground lease the Property to the
Developer for sixty-two (62) years from the Certificate of Completion, but no more than sixty-
five (65) years from the date of execution of the Ground Lease.
C. The Developer and the City have entered into that certain Loan Agreement, dated
on or about the date hereof ("Loan Agreement'), for the purpose of providing eighty-six
(86) units of housing that will be affordable to Extremely Low Income, Very Low Income,
and Low Income households ("Restricted Units"), with one un-restricted unit reserved for
an on -site manager, to which these Restrictions are attached as Exhibit F (any capitalized
term that is not otherwise defined in these Restrictions shall have the meaning ascribed to
such term in the Loan Agreement).
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
D. The Loan Agreement provides, among other things, for the use of the Property for
affordable housing with all Restricted Units being restricted to Extremely Low Income,
Very Low Income and Low Income households, at Affordable Rent(s).
E. The Loan Agreement contains certain provisions relating to the use of the Property.
NOW, THEREFORE, CITY AND DEVELOPER COVENANT AND AGREE AS
FOLLOWS:
1. Developer covenants and agrees (for itself, its successors, its assigns, and every
successor in interest to the Property or any part thereof) that Developer, such successors,
and such assigns shall use the Property exclusively to provide affordable housing of
Extremely Low Income, Very Low Income and Low Income households, as provided in
these Restrictions and in the Loan Agreement.
2. Developer, for itself and its successors and assigns, hereby covenants and agrees
that all of the apartments in the Property (less one manager's unit) (the "Units") shall be
rented exclusively, at Affordable Rent, to Extremely Low Income, Very Low Income and
Low Income households to the extent provided for herein. Area median income levels and
Affordable Rents are subject to adjustment from time to time as provided in Section 3
below.
3. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF
THE PROPERTY
3.1. Use Covenants and Restrictions.
(a) Developer agrees and covenants, which covenants shall run with the
land and bind Developer, its successors, its assigns and every successor in interest to the
Property that Developer will make all Restricted Units on the Property available to
Extremely Low Income, Very Low Income and Low Income households at rents affordable
to such households , for sixty-two (62) years from the issuance of the Certificate of
Completion. The HOME restrictions for the City's twelve (12) HOME assisted units shall
be enforced until the date that is twenty (20) years after the date on which the Certificate
of Completion is issued. The City permits the Developer to limit the eligibility and/or give
preference to a particular segment of the population in accordance with 24 CFR 92.253(d).
(b) The Project shall consist of eighty-six (86) units, including one (1)
on -site manager's unit. The City's HOME assistance shall require twelve (12) HOME
assisted units. The HOME assisted units shall be six (6) 2-bedroom units, four (4) 3-
bedroom units, and two (2) 4-bedroom units, fixed, and shall be distributed throughout the
complex with comparable amenities to the Restricted Units.
(c) At initial lease up, households in the HOME assisted units cannot
earn more than the Very -Low Income limits (50% of AMI) as published by HUD in
compliance with the HOME Program for the Orange County, California PMSA, adjusted
2
The Crossroads at Washington
City HOME Afrordability Restrictions on Transfer of Property
for household size. Rental increases shall be in conformance with federal and state law.
After the twenty (20) year HOME Compliance Period, the City shall require that the
HOME assisted units remain affordable, with rents calculated based on assumed household
size at the same income levels (i.e. 50% of AMI).
(d) All of the HOME units will be restricted to occupancy by families
earning no more than the Very -Low Income limits (50% of AMD as published by HUD,
and the rents must not exceed the Low HOME rents adjusted for family size appropriate to
the unit as published by HUD.
(e) Maximum Occupancy will be two (2) people per room plus one (1). .
Example for a two -bedroom unit, five (5) people would be maximum occupancy.
(f) Developer must have a written lease between tenant and owner for
a period of at least one year, unless a shorter period is mutually agreed upon. Leases must
be consistent with the HOME Program regulations at 24 CFR section 92.209(g).
3.2. Affordability Levels/Unit Mix:
The affordability levels/unit mix for the Restricted Units in the Project are as follows:
Unit Size
30% TCAC AMI
No.
Units
Current
Rent
Studio
16
$711
1 Bedroom
2.6
$762
2 Bedroom
21
$915
3 Bedroom
17
$1,057
4Bedroom
5
$1,179
Total
85
The remaining unit will be an un-restricted 2-bedroom unit reserved for the onsite manager.
HOME Assisted Units
# of HOME
% Share of
Total # of
Unit Type
Level of
Assisted
HOME
Units
Affordability
Assisted Unit
Units
Type
16
_—Studio
Very -Low
Income
(50% AMI)
(Low HOME)
0
0%
26
1 Bed
0
0%
21
2 Bed
6
50%
17
3 Bed
4
33%
5
4 Bed
2
17%
3
The Crossroads at Washington
City HOM G Affordability Restrictions on Transfer of Property
(1) In no event shall the rent charged to the HOME assisted units be more than the
amount of the Low HOME rent as published by HUD, as amended from time to time.
(2) At the time of project completion, the Developer shall provide to the City the address
and/or unit number of each of the HOME fixed units.
(3) Annually with the financial statements, the Developer shall provide an annual report
of rents and occupancy of all Restricted Units, including the HOME assisted units, to
verify compliance with affordability requirements. For the HOME assisted units,
information on unit substitution and filling vacancies shall be provided to ensure that
the project maintains the required unit mix.
Except with respect to the HOME assisted units during the HOME Compliance Period, the
affordable rents charged at the Project for the Restricted Units must comply with the standards
set forth by the California Tax Credit Allocation Committee (TCAC).
A utility allowance must be deducted from the maximum affordable rent charged at the
Project for each Restricted Unit.
Utility allowances must be based on project -specific allowances for the HOME assisted units.
TCAC provides a California Utility Allowance Calculator (CUAC) that must be used to
calculate the utility allowances for the HOME assisted units.
Initial rents may be recalculated to allowable rental amounts at the time of initial lease -up
following completion of construction in accordance with any changes in allowable rent and
income tables as published by HUD.
The City's HOME assistance shall require twelve (12) HOME assisted units. The County's
HOME assistance shall require forty-three (43) HOME assisted units. In total, there will be
fifty-five (55) HOME assisted units in the Project. There shall not be any overlap between
the County's HOME assisted units and the City's HOME assisted units.
3.3. Rent Increases.
On an annual basis, the City shall provide Developer with the maximum allowable
schedule of rents for the Property in accordance with changes in allowable rent and income
tables published by HUD and TCAC, provided however that the rent for the HOME
assisted units shall in no event be higher than the rent for the equivalent non -HOME
assisted unit within the Project. hi no event can Developer charge any tenant more than
such amount.
All rent increases on the Restricted Units are subject to City approval pursuant to
the terms of this Section. No later than sixty (60) days prior to the proposed
implementation of any rent increase, Developer shall submit to the City a schedule of any
proposed increase in the rent. The City will disapprove a rent increase if it does not comply
with the restrictions set forth in Section 3.2 above.
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
(a) Termination of Tenancv. Developer may not terminate the tenancy
or refuse to renew the lease of tenant except for serious or repeated violation of the terms
and conditions of the Lease; for violation of applicable federal, state, or local law; for
completion of the transitional housing tenancy period (if the housing is transitional) or for
other good cause. Any termination or refusal to renew must be preceded by not less than
thirty (30) days by the Developer's service upon the tenant of a written notice specifying
the grounds for the action.
(b) Non -Qualifying Adjusted Income. Subject to the applicable
requirements and provisions of, and changes to,. Section 42 and 142(d) of the Internal
Revenue Code of 1986, as amended (the "Code"), if, upon recertification of the income of
a tenant of a Restricted Unit, the Developer determines that a tenant has an adjusted income
exceeding 30% of the applicable Median Income for the Area in each case, adjusted for
household size as provided in Section 3.2 above, such tenant may be permitted to continue
to occupy the Restricted Unit at the rental rate as provided for in Section 3.2 above, until
the tenant chooses to vacate the Restricted Unit. After the Restricted Unit is vacated, the
Restricted Unit shall be re -rented to a tenant. pursuant to the terms, covenants and
conditions of these Restrictions.
3.4. Loss of Project -Based Voucher Subsidy.
It is anticipated that during the Term of Agreement the Project will maintain not
less than fifteen (15) Project -Based Voucher ("PBV") Restricted Units ("PBV Restricted
Units") provided by the Housing Authority and forty three Project -Based Vouchers
provided by Orange County, supported by Project -Based Section 8 rental subsidy payments
("Rental Subsidy"). If, during the Term of Agreement, there is a reduction, termination
or nomenewal of the Housing Authority's or County's Rental Subsidy through no fault of
Developer, such that the Rental Subsidy shown on the Project Budget is no longer available
(or available in a lesser amount), Developer may request approval of the City (a) to allow
households with adjusted incomes that do not exceed sixtypercent (60%) ofAMI, adjusted
for actual household size, to occupy the extremely -low income units (i.e., a unit previously
restricted to households with adjusted incomes that do not exceed 30% of AMI), and (b)
to increase the rent on one or more of the Restricted Units, to rents that are affordable to
households with an adjusted income that does not exceed sixty percent (60%) of AML
adjusted for household size appropriate for the Restricted Unit.
The rent increase is subject to the following requirements: (a) concurrently with the
request, Developer shall provide the City with evidence of the anticipated reduction,
termination, or nomenewal of the Rental Subsidy; (b) a Management Plan (as defined in
Section 6.1(d) of the Loan Agreement) for the Project for the City's approval pursuant to
Sections 6.1(d) and Exhibit G of the Loan Agreement, showing the impact of the loss or
reduction of the Rental Subsidy; (e) a proposed operating budget reflecting the rent
increases (the "Operating Budget"); and (d) a description of efforts to obtain alternate
sources of rent. The number of the PBV Restricted Units subject to the rent increase and
the amount of the proposed increase may not be greater than the number or amount required
to ensure that the Project generates sufficient income to cover its operating costs, required
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
deposits to replacement reserves, and debt service on approved financing as shown on the
Operating Budget, and as is necessary to maintain the financial stability of the Project. In
addition, upon a reduction, termination or nonrenewal of the Rental Subsidy as described
above, Developer hereby agrees to the following:
(a) Developer shall use good faith commercially reasonable efforts to
obtain alternative sources of rental subsidies and shall provide the City with annual
progress reports on efforts to obtain alternative sources of rental subsidies that would allow
the rents to be reduced. Upon receipt of any alternative rental subsidies, Developer shall
reduce the -rents back to the original restrictions to the extent that the alternative rental
subsidies provide sufficient income to cover the operating costs, required replacement
reserves and debt service of the Project as shown on the Operating Budget.
(b) . Developer shall provide tenants in the Restricted Units with notice
of any rent increase pursuant to this Section 3.4, and shall notify the tenant that if they have
received a tenant -based voucher from the Housing Authority of the City of Santa Ana they
may use the tenant-basedvoucher for their Restricted Unit.
(c) All rent increases for the Restricted Units are subject to City
approval pursuant to the terms of this Section 3.4. No later than sixty (60) days prior to
the proposed implementation of any rent increase, Developer shall submit to the City a .
schedule of any proposed increase in the rent. The City will disapprove a rent increase if
it does not comply with the restrictions set forth in this Section 3.4. Notwithstanding the
foregoing, rent increases for the PBV Restricted Units shall be subject to review and
approval of the City.
Developer shall give tenants of all Restricted Units written, notice at least sixty (60)
days prior to any rent increase.
3.5. Reserved.
4. Developer, its successors and assigns shall not charge rents for the Units in excess
of the amounts set forth herein, as adjusted on the basis of the revised schedules of area
median incomes issued from time -to -time by HUD. The City shall notify Developer in
writing of the adjusted allowable maximum incomes and rents.
5. Developer shall adopt and include as part of its Management Plan (described in
Section 11 below), written tenant selection policies and criteria for the Units that meet the
following requirements:
53. Are consistent with the purpose of providing housing for Extremely Low,
Very Low, and Low Income households;
5.2. Are reasonably related to program eligibility and the applicants' ability to
perform the obligations of the lease;
6
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
5.3. Give reasonable consideration to the housing needs of households that
would have a preference under 42 CFR §906.211 (Federal selection preferences for
admission to Public Housing);
5.4. Provide for:
(a) The selection of tenants .from a written waiting list in the
chronological order of their application, insofar as is practicable; and
(b) The prompt written notification to any rejected. applicant of the
grounds for any rejection;
5.5. Except with regard to persons experiencing homelessness referred off of the
County of Orange coordinated entry system due to the layer of forty-three (43) PBVs
provided by the Orange County Housing Authority, and subject to compliance with the
HOME Regulations, the requirements of Section 142(d) of the Code, Section 42 of the
Code, the County of Orange coordinated entry system and applicable California and federal
fair housing laws, local preference for Santa Ana residents and workers in tenant selection
shall be a requirement of the Project. Subject to applicable laws and regulations governing
nondiscrimination and preferences in housing occupancy required by Section 142(d) of the
Code, Section 42 of the Code, HUD or the State of California, as well as the City of Santa
Ana Affordable Housing Funds Policies and Procedures, the Developer shall give
preference in leasing units in the following order of priority:
(a) First priority shall be given to persons who have been permanently
displaced or face permanent displacement from housing in Santa Ana as a result of any of
the following:
(i) 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;
(ii) . Ellis Act, owner -occupancy, or removal permit eviction;
(iii) Earthquake, fire, flood, or other natural disaster;
(iv) Cancellation of a Housing Choice Voucher HAP Contract by
property owner; or
(v) Governmental Action, such as Code Enforcement.
(b) . Second priority shall be given to persons who are either:
(i) Residents of Santa Ana; and/or
(ii) Working in Santa Ana at least 32 hours per week for at least
the last 6 months.
The Restricted Units will still be available to the general public, as required under
Section 142(d) of the Code and Section 42 of the Code, and these preferences do not restrict
the availability of the units to the general public.
7
The Crossroads at Washington
City HOME AtYordability Restrictions on TSansfer of Property
5.6. Carry out the Affirmative Marketing procedures of the City of Santa Ana,
which are designed to provide information and otherwise attract eligible persons from all
racial, ethnic and gender groups in the housing market area to the units. Developer shall
cooperate with the City to effectuate this provision prior to the initial renting, or upon
occurrence of a vacancy, and the re -renting of any HOME assisted units (24 CFR 92.351).
6. 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 HOME 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 HOME tenant -based assistance
document. Total rents charged to the tenant for the tenant's share of rent shall not exceed
the allowable rents as described above.
7. Any lease of any of the 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 some type of 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 "owner"
shall mean the Developer, its successors or assigns):
7.1. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor
of the owner in a lawsuit brought in connection with the lease;
7.2. Agreement by the tenant that the owner 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 housing Unit after the
tenant has moved out of the Unit. The owner may dispose of this personal property in
accordance with state law;
7.3. Agreement by the tenant not to hold the owner or the owner's agent legally
responsible for any action or failure to act, whether intentional or negligent;
7.4. Agreement of the tenant that the owner may institute a lawsuit without
notice to the tenant;
7.5. Agreement by the tenant that the owner 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;
7.6. Agreement by the tenant to waive any right to a trial by jury;
7.7. 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
7.8. Agreement by the tenant to pay attorney's fees or other legal costs even if
the tenant wins in a court proceeding by the owner against the tenant. The tenant, however,
The Crossroads at Washington
City nOMG Affordability Restrictions on Transfer of Property
may be obligated to pay costs if the tenant loses.
8. Developer, its successors or assigns, must adhere to state law requirements with
regard to termination of tenancy.
9. Developer shall maintain the improvements on the Property in compliance with all .
applicable housing quality standards [24CFR 92.504 (c)(6)] and state and local code
requirements (California Health and Safety Code section 33418), and shall keep the
Property free from any unreasonable accumulation of debris or waste materials. Developer
shall also maintain in a healthy condition any landscaping planted on the Property.
10. Developer covenants and agrees for itself, its successors, its assigns and every
successor in interest to the Property or any part thereof, there shall be no discrimination
against or segregation of any person, or group of persons, on account of race, color, creed,
religion, sex, mental or physical disability, marital status, national origin or ancestry in the
sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the
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.
11. Not later than fifteen (15) business days prior to the Close of Escrow, Developer
shall submit to the Executive Director a Management Plan in a form that is acceptable to
the Executive Director, including but not limited to, the components listed below.
Approval of the Management Plan must be obtained from the Executive Director not later
than the time for the Close of Escrow. Developer shall manage the Restricted Units in
accordance with the approved Management Plan, including such amendments as may be
approved in writing from time to time by the Executive Director, for the term of the income
and rent restrictions contained in these Restrictions. The components of the Management
Plan shall include:
11.1. Management Agent. Developer shall submit the name and qualifications
of the proposed Management Agent. The Executive Director shall approve or disapprove
the proposed Management Agent in writing based on the experience and qualifications of
the Management Agent.
11.2. 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.
11.3. Annual Budget and Projected Cash Flows Prior to the Closing, and
annually thereafter not less than sixty (60) days prior to the close of each calendar year
thereafter until the Loan is repaid in full, Developer shall submit a projected operating
budget and cash flow to the Executive Director for the following calendar year. The budget
9
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer ofPnoperty
and cash flow shall be in a form that is acceptable to the Executive Director.
11.4. Tenant Selection Policies. Developer shall include in the Management
Plan the tenant selection policies in accordance with. Section 5, above.
12. If at any time the City determines that the units are not being managed or
maintained in accordance with the approved Management Plan, the City shall send the
Developer a detailed description of the management deficiencies; (a "Deficiency Notice").
If the deficiencies set forth in the Deficiency Notice are not cured within sixty (60) days
(or such longer period as may be reasonably required to cure the deficiency), with the
exception of HOME regulations that require a shorter period, the Executive Director 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 Executive Director upon failure
to cure a Deficiency Notice within the time period specified above. Within thirty (30) days
following a direction of the Executive Director to replace the management agent in
accordance with the terms hereof, the Developer shall select another management agent or
make other arrangements satisfactory to the Executive Director or designee for continuing
management of the units.
12.1. Marketing Plan. The marketing plan will apply to all of the units in the
Project, except the one manager's unit. The Developer shall submit a marketing plan for
review and approval by the Executive Director which approval will not be unreasonably
withheld, conditioned or delayed. The marketing plan must contain procedures that ensure
marketing of the Restricted Units to Extremely Low Income, Very Low Income, and Low
Income households throughout the City. Such procedures shall be applicable for initial
rent -up and ongoing marketing of the units throughout the term of these Restrictions.
Developer shall advertise vacancies of the Restricted Units in general distribution
newspapers that circulate throughout the City. Where the Developer utilizes other forms
of advertising, such advertising shall also be distributed throughout the City.
13. The covenants established in these Restrictions and any amendments hereto
approved by the City and Developer shall, without regard to technical classification and
designation, be binding for the benefit and in favor of the City and their respective
successors and assigns. These Restrictions shall remain in effect for sixty-two (62) years
from the issuance of the Certificate of Completion and the HOME restrictions shall remain
in effect for the HOME Compliance Period. In its discretion, the City may defer repayment
of the HOME Loan or the City may agree to such reasonable modifications to the
requirements of these Restrictions, as they may determine are necessary for the continued
maintenance and operation of the Restricted Units. The covenants against discrimination
shall remain in effect for the period of these Restrictions.
10
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
14. Developer shall not request disbursement of HOME funds until the funds are
needed to pay eligible costs. The City shall have the right to disapprove any request if the
City determines the request is for an ineligible item or is otherwise not in compliance with
or inconsistent with the Loan Agreement and these Restrictions [24 CFR 92.504 (c)(10)].
15. Maintenance; Compliance' with Law.
During the term of these Restrictions, Developer agrees to maintain all interior and
exterior improvements, including landscaping, on the Project in good condition, repair and
sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with
any Management Plan approved by the City under these Restrictions (including without
limitation any landscaping and signage), as the same may be amended from time to time,
and all other applicable laws, rules, ordinances, orders, and regulations of all federal, state,
county, municipal, and other governmental agencies and bodies having or claiming
jurisdiction and all their respective departments, bureaus, and officials. Developer
acknowledges the great emphasis the City places on quality maintenance to protect its
investment and to provide quality low income housing for its constituents and to ensure
that all City subsidized affordable housing projects within the City are not allowed to
deteriorate due to deficient maintenance. In addition, Developer shall keep the Project free
from all graffiti and any accumulation of debris or waste material. Developer shall
promptly make all repairs and replacements necessary to keep the Project in good condition
and repair and shall promptly eliminate all graffiti and replace dead and diseased plants
and landscaping with comparable approved materials.
In the event that Developer breaches any of the covenants contained in this Section
15 and such default continues for a period of five (5) days after written notice from the City
(with respect to graffiti, debris, waste material, and general maintenance) or thirty (30)
days after written notice from the City (with respect to landscaping and building
improvements), then the City, in addition to whatever other right or remedy it may have
under the Loan Agreement, the other Loan Documents, these Restrictions or at law or in
equity, shall have the right to enter upon the Project and perform or cause to be performed
all such acts and work necessary to cure the default. Pursuant to such right of entry, the
City shall be permitted (but is not required) to enter upon the Project and perform all acts
and work necessary to protect, maintain and preserve the improvements and landscaped
areas on the Project. Developer shall promptly pay to the City, as applicable, the amount
of the expenditure arising from such acts and work of protection, maintenance, and
preservation by the City and/or costs of such cure, including a fifteen percent (15%)
administrative charge.
16. Developer shall prepare, maintain and submit to the City, as appropriate, the
following records and reports in compliance with 24 CFR 92.504 (c)(12):]
16.1. Annual Reports. Developer shall file with the City an Annual Report
(herein referred to as the "Annual Report") by June 15th of each calendar year,
commencing with the end of the calendar year (or portion thereof) in which the Real Estate
Closing occurs. The Annual Report shall contain a certification by Developer as to such
information as the City Executive Director may then require, including, but not limited to,
11
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
the following:
(a) The fiscal condition of the Project, including the Annual Budget and
Project Cash Flow report required by Section 11.3 which shall include a financial statement
for the previous calendar year that includes a balance sheet and a profit and loss statement
indicating any surplus or deficit in operating accounts; a detailed itemized listing of income
and expenses; and the amounts of any fiscal reserves. Such Annual Budget and financial
statement shall be prepared in accordance with generally accepted accounting practices.
The City Executive Director may require that the financial statement be audited at
Developer's expense by an independent certified public accountant acceptable to the
Executive Director.
(b) Any substantial physical defects in the Project, including a
description of any major repair or maintenance work undertaken or needed in the previous
and current years. Such statement shall describe what steps Developer has taken in order
to maintain the Project in a safe and sanitary condition in accordance with applicable
housing and building codes and the property standards set forth in 24 CFR 92.251.
(c) The occupancy of the units indicating the income of each current
resident and the current rents charged each resident and whether those rents include
utilities, including records that demonstrate that the Project meets the requirements of 24
CFR 92.253 for tenant and participant protection under the HOME Program.
(d) General management performance, including tenant relations and
other relevant information.
(e) Records that demonstrate that the units meet the affordability
requirements of 24 CFR 92.252, for the required period of affordability.
(f) Evidence of a currently paid hazard insurance policy in accordance
with the requirements of Section 3 of the City/HOME Deed of Trust, with a loss payable
endorsement naming the City as a loss payee(s) together with other approved lenders (as
their interests may appear), with a "Replacement Cost Endorsement" in amount sufficient
to prevent Developer or City from becoming a co-insurer under the terms of the policy, but
in any event in an amount not less than 100% of the then full replacement cost, to be
determined at least once annually and subject to reasonable approval by the Executive
Director.
(g) Evidence of a currently paid liability insurance policy, naming the
City as additional insured and in a form approved by the City Attorney with coverage as
described in the Loan Agreement.
(h) Termite reports pertaining to the Property every fifth (5tlr) year.
(i) Such other information as may be reasonably required by the
Executive Director or his/her designee.
16.2. Records and Audits. During the HOME Compliance Period, Developer
12
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
shall maintain the following general program records, and make them available for
inspection by the City, the State or HUD:
(a) records which demonstrate that the project meets the property
standard specified in 24 CFR 92.251;
(b) records, for each HOME assisted unit, which demonstrates that the
project meets the requirements of 24 CFR 92.252;
(c) records which demonstrate compliance with the tenant and
participant protections, as,specified in 24 Section 29.253;
(d) 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 with HOME funds;
(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);
(iii) documentation and data on the steps taken to implement
Developer's outreach programs to minority -owned and women -owned businesses to meet
the minority outreach requirements of 24 CFR 92.350;
(e) documentation of the steps taken to carry out an affirmative
marketing program in accordance with 24 CFR 92.351, if applicable; [
(f) 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 of the Real Estate Closing
(i.e., the date on which Developer obtained site control);,
(g) records concerning lead -based paint in accordance with 24 CFR
92.355;
(h) if applicable, records which support any requests for waivers. of the
conflict of interest prohibition as stated in 24 CFR 92.356;
(i) records of certifications of contractor qualifications as they relate to
the debarment and suspension requirement as stated in 24 CFR 92.357 and 24 CFR Part
24; and
0) any other reports issued by other monitoring agencies.
13
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Properly
16.3. All records pertaining to each calendar year of HOME funds must be
retained for the most recent five year period, except that records of individual tenant
income verifications, project rents and project inspections must be retained for the most
recent five year period, until five years after the affordability period terminates (24 CFR
92.508). 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 litigation relevant to the Loan Agreement, whichever is
later. The City, the State, the Office of the Auditor General of HUD, 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.
16.4. If so directed by the City, the State or HUD 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, the State or HUD, as depository.
16.5. All records, accounts, documentation and other materials relevant to the
Project shall be accessible at any time to the authorized representatives of the City, the
State or HUD, on reasonable prior notice, for the purpose of examination or audit.
16.6. Pursuant to 24 CFR Part 44, 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.
17. If an event of default occurs under the terms of these Restrictions, prior to
exercising any remedies hereunder, City shall give Developer written notice of such
default. If the default is reasonably capable of being cured within thirty (30) days,
Developer shall have such period to effect a cure prior to exercise of remedies by the City
under these Restrictions. If the default is such that it is not reasonably capable of being
cured within thirty (30) days, and Developer: (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 Developer shall have such additional time as is reasonably necessary to
cure the default prior to exercise of any remedies by City. Any cure made or tendered by
such limited partner shall be accepted as if made by Developer.
The City is a beneficiary of the terms and provisions of these Restrictions and the
covenants herein, both for and in their 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. Upon the
occurrence of an event of default and the expiration of the notice and cure period specified
above, the City shall have the right 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.
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The Crossroads at Washington
City HOME Affordability Restrictions on Ttnnsfer of Property
18. Default.
Each of the following shall constitute an "Event of Default" by Developer under
these Restrictions:
18.1. Failure to Make Payments. Developer fails to make any payment due. the
City under these Restrictions within thirty (30) days after receiving written notice for said
payment from the City;
M2. Non -Monetary Failure to Perform. Developer fails to timely perform,
comply with or observe any of the terms, covenants, or conditions of these Restrictions
(other than those provisions elsewhere referred to in this Section 18) and such failure
continues uncured or without Developer commencing to diligently cure for thirty (30) days
after notice thereof in writing is given by the City to Developer, provided that if Developer
has commenced cure but cannot complete such cure reasonably within thirty (30) days,
Developer shall have ninety (90) days from the date of notice to cure such failure without
such failure constituting an event of default;
18.3. Senior Loan Document Breach. Any default or breach of Developer which
continues uncured after the expiration of any applicable cure period under the Loan
Agreement (including, but not limited to, the obligations of the Developer under Section 6
of the Loan Agreement), any Loan Document or any other loan document including, but
not limited to, the Senior Loan Documents, as defined and set forth in the Loan Agreement;
18.4. Voluntary Suspension. The voluntary suspension of Developer's business
or the dissolution or termination of the partnership (if any) constituting Developer;
M5. Unauthorized Transfer. Developer's sale or other transfer of the Project in
violation of this Agreement;
18.6. Fraud or Material Misstatement or Omissions. Any fraudulent act or
intentional material omission of Developer pertaining to or made in connection with the
Loan, Loan Documents or the Project that is not cured within thirty (30) days after written
notice to Developer, unless such act or omission is not capable of cure;
18.7. Insolvency. A court having jurisdiction shall have made or entered any
decree or order: (i) adjudging Developer to be. banluupt or insolvent; (ii) approving as
properly filed a petition seeking reorganization of Developer or seeking any arrangement
for Developer under the bankruptcy law or any other applicable debtor's relief law or statute
of the United States or any state or other jurisdiction; (iii) appointing a receiver, trustee,
liquidator, or assignee of Developer in bankruptcy or insolvency or for any of their
properties; or (iv) directing the winding up or liquidation of Developer, if any such decree
or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or
undischarged for a period of ninety (90) days, unless a lesser time period is permitted for
cure under any other mortgage on the Property, in which event such lesser time period will
apply under this section as well; or Developer shall have admitted in writing its inability to
pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking
any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence
15
T7re Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
of any of the events of default in this paragraph shall act to accelerate automatically,
without the need for any action by the City, the indebtedness evidenced by the Note; or
18.8. Project Monies. Developer's intentional misapplication or embezzlement
of Project monies.
19. Reserved.
20. Remedies.
The occurrence of any Event of Default shall, either at the option of the City or
automatically where so .specified, relieve the City of any obligation to make or continue
the Loan and shall give the City the right to proceed with any and all remedies set forth in
these Restrictions or otherwise available at law or in equity or by statute (and all of the
City's rights and remedies shall be cumulative), including but not limited to the following:
20.1. Acceleration of Note. The City shall have the right to cause all indebtedness
of the Developer to the City under the Note, together with any accrued interest thereon, to
become immediately due and payable. The Developer waives all right to presentment,
demand, protest or notice ofprotest, or dishonor. The City may proceed to enforce payment
of the indebtedness and to exercise any or all rights afforded to the City as a creditor and
secured party under the law, including the Uniform Commercial Code, including
foreclosure under the Deed of Trust. The Developer shall be liable to pay the City on
demand all expenses, costs and fees (including, without limitation, reasonable attorneys'
fees and expenses) paid or incurred by the City in connection with the enforcement of this
provision, provided that such expenses, costs and fees shall be subordinate to the Senior
Loan made to Developer and the Senior Loan Documents.
20.2. Specific Performance. The City shall have the right to mandamus or other
suit, action or proceeding at law or in equity to require Developer to perform its obligations
and covenants under these Restrictions or to enjoin acts on things, which maybe unlawful,
or in violation of the provisions of these Restrictions. The Developer shall be liable to pay
the City on demand all expenses, costs and fees (including, without limitation, reasonable
attorneys' fees and expenses) paid or incurred by the City in connection with the
enforcement of these Restrictions.
20.3. Right to Cure at Developer's Expense. The City shall have the right to cure
any monetary Event of Default by Developer under these Restrictions. The Developer
agrees to reimburse the City for any funds advanced by the City to cure a monetary default
by Developer upon demand therefore, together with interest thereon at the rate of twelve
percent (12%) per annurn or the maximum rate permitted by law, whichever rate is lesser,
from the date of expenditure until the date of reimbursement.
20.4. Remedies Cumulative. No right, power, or remedy given to the City by the .
terms of these Restrictions is intended to be exclusive of any other right, power, or remedy;
and each and every such right, power, or remedy shall be cumulative and in addition to
every other right, power, or remedy given to the City by the terms of any such instrument,
16
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
or by any statute or otherwise against Developer and any other person. Neither the failure
nor any delay on the part of the City to exercise any such rights and remedies shall operate
as a waiver thereof, nor shall any single or partial exercise by the City of any such right or
remedy preclude any other or further exercise of such right or remedy, or any other right
or remedy.
20.5. Waiver of Terms and Conditions. No waiver of any default or breach by
Developer hereunder shall be implied from any omission by the City to take action on
account of such default if such default persists or is repeated, and no express waiver shall
affect any default other than the default specified in the waiver, and such waiver shall be
operative only for time and to the extent therein stated. Waivers of any covenant, term,
or condition contained herein shall not be construed as a waiver of any subsequent breach
of the same covenant, term, or condition. The consent or approval by the City to or of any
act by Developer requiring further consent or approval shall not be deemed to waive or
render unnecessary the consent or approval to or of any subsequent similar act. The
exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of
any default under these Restrictions or the Loan Documents, nor shall it invalidate any act
done pursuant to notice of default, or prejudice the City in the exercise of any right, power,
or remedy hereunder or under the Loan Documents, unless in the exercise of any such right,
power, or remedy all obligations of Developer to City are paid and discharged in full.
21. The covenants and agreements contained herein shall run with the land and not be
personal obligations of Developer. Upon the sale, conveyance or other transfer of the
leasehold interest in the Property (a "Transfer") and the assumption of the obligations
hereunder by a transferee, Developer's liability for performance shall be terminated as to
any obligation to be performed hereunder after the date of such Transfer.
22. The Loan Agreement and all of its attachments shall be enforceable by City in
accordance with the terms thereof. Each of the Loan Agreement, the Affordability
Restrictions on Transfer of Property, the City/HOME Loan Note and the City/HOME Deed
of Trust provide a means of enforcement by the City if Developer is in breach of its
obligations hereunder and thereunder, including liens on the Property, use and deed
restrictions and covenants running with the land [24 CFR 92.504 (c) (13)].
23. Additional Terms.
23.1. Indemnity. To the fullest extent permitted by law, the Developer agrees to
indemnify, hold harmless and defend the City and its elected officials, officers, governing
members, employees, attorneys and agents (collectively, the "Indemnified Parties"), from
and against any and all losses, damages, claims, actions, liabilities, costs and expenses of
any and every conceivable nature, kind or character (including, without limitation,
reasonable attorneys' fees, litigation and court costs, amounts paid in settlement and
amounts paid to discharge judgments) to which the Indemnified Parties, or any of them,
may become subject to under any statutory law (including federal or state securities laws)
or at common law or otherwise, arising out of or based upon or in any way relating to:
(a) these Restrictions or the execution or amendment thereof in
17
The Crossroads at Washington
City I IOME Affordability Restrictions on Transfer of Property
connection with the transactions contemplated thereby;
(b) Developer's ownership or operation of the Property and the Project
or any act or omission of the Developer or any of its agents, contractors, servants,
employees or licensees in connection with the Property and the Project, the operation of
the Project, or the condition, environmental or otherwise, occupancy, use, possession,
conduct or management of work done in or about, or from the planning, design, acquisition,
installation, operation or rehabilitation of, the Project or any part thereof;
(c) any lien or charge upon payments by the Developer to the City, or
any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments,
impositions and other charges imposed on the City in.respect of any portion of the Project;
(d) any violation of any environmental law, rule or. regulation with
respect to, or the release of any toxic substance from, the Property or the Project or any
part thereof; or
(e) any untrue statement or misleading statement or alleged untrue
statement or alleged misleading statement of a material fact by the Developer contained in
any Loan Document or any of the documents or instruments relating to said Loan
Documents that the City relied upon in making the Loan; except to the extent such damages
are caused by the gross negligence or willful misconduct of such Indemnified Party. In the
event that any action or proceeding is brought against any Indemnified Party with respect
to which indemnity may be sought hereunder, the Developer, upon written notice from the
Indemnified Party, shall assume the investigation and defense thereof, including the
employment and payment for of counsel selected by the Indemnified Party, and shall
assume the payment of all expenses related thereto, with full power to litigate, compromise
or settle the same; provided that the Indemnified Party shall have the right to review and
approve or disapprove any such compromise or settlement.
23.2. Time. Time is of the essence in these Restrictions.
23.3. Construction. Except where the context, otherwise requires, words
imparting the singular number shall include the plural number and vice versa, words
imparting persons shall include firms, associations, partnerships and corporations, and
words of either gender shall include the other gender.
23.4. Waiver of Jury Trial. Unless prohibited by Federal, State or local laws,
each party to these Restrictions hereby expressly waives any right to trial by jury of any
claim, demand, action or cause of action arising under any Loan Document or in any way
connected with or related or incidental to the dealings of the parties hereto or any of them
with respect to any Loan Document, or the transactions related thereto, in each case
whether now existing or hereafter arising, and whether sounding in contract or tort or
otherwise; and each party hereby agrees and consents that any such claim, demand, action
or cause of action shall be decided by court trial without a jury, and that any party to these
Restrictions may file an original counterpart or a copy of this section with any court as
written evidence of the consent of the parties hereto to the waiver of their right to trial by
jury.
18
The Crossroads at Washington
City HOME Affordability Restrictions on Tinnsf'er of Property
23.5. Nonliability. By accepting or approving anything required to be performed
or given to City under these Restrictions, City shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or approval
shall constitute a warranty or representation by City to anyone.
23.6. Obligations Unconditional and Independent. Notwithstanding the existence
at any time of any obligation or liability of City to Developer, or any claim by Developer
against City, in connection with these Restrictions or otherwise, Developer hereby waives
any right it might otherwise have: (a) to offset any such obligation, liability or claim against
Developer's obligations under these Restrictions; or (b) to claim that the existence of any
such obligation, liability or claim excuses the nonperformance by Developer of any of its
obligations under these Restrictions.
24. Reserved..
25. Notices. All notices, demands, approvals and other communications provided for
in the Loan Documents shall be in writing and be delivered to the appropriate party by
personal service or U.S. mail at its address as follows:
If to Developer: Washington Santa Ana Housing Partners, L.P.,
a California limited partnership
With a Copy to:
If to City: City of Santa Ana
Executive Director (CDA)
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
With a copy to: City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to at other
parties. All notices personally served shall be effective when actually received. All notices
mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The
foregoing notwithstanding, the non -receipt of any notice as the result of a change of address
of which the sending party was not notified or as the result of a refusal to accept delivery
shall be deemed receipt of such notice.
(signatures on followingpage)
19
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
IN WITNESS WHEREOF, the parties hereto have caused these Affordability
Restrictions on Transfer of Property to be executed on the date set forth hereinabove.
ATTEST:
Daisy Gomez
Clerk of the Council
Dated:
APPROVED AS TO FORM:
SONIA R. CARVALHO, City Attorney
By:
Ryan 0. Hodge
Assistant City Attorney
Dated:
RECOMMENDED FOR APPROVAL:
Steven A. Mendoza
Executive Director
Community Development Agency
CITY OF SANTA ANA
Kristine Ridge
City Manager
Dated:
20
The Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
DEVELOPER
Washington Santa Ana Housing Partners, L.P.,
a California limited partnership
By: Related/Washington Santa Ana Development Co., LLC,
a California limited liability company,
its Administrative General Partner
By:
Frank Cardone, President
By: Supportive Housing LLC,
a California limited liability company,
its Managing General Partner
By: A Community of Friends,
a California nonprofit public benefit corporation,
its sole member/manager
Dora Leong Gallo,
President and Chief Executive Officer
21
'the Crossroads at Washington
City HOME Affordability Restrictions on Transfer of Property
Exhibit G.
Additional Terms and
Conditions Federal
HOME Investment.
Partnership (HOME)
Funds
EXHIBIT G
ADDITIONAL TERMS AND CONDITIONS
FEDERAL HOME INVESTMENT PARTNERSHIP (HOME) FUNDS.
In addition to the. requirements set forth in other provisions of the Agreement, Developer
shall comply, and shall cause all Developer personnel and/or subcontractors to comply, with the
following regulations and requirements -to the extent applicable to the Project.'
1. Use of the HOME Funds. The Loan shall be used only for eligible costs (see, e.g.,
24 C.F.R. § 92.206, 92.214, 92.300(c), and92.361), and any development work shall be completed
within the times referred to in the Affordable Housing and Loan Agreement between City and
Developer.
2. Affordability. The Project units shall meet the affordability requirements of the
HOME Requirements (24 C.F.R. § 92.254) or this Agreement and the Regulatory Agreement,
whichever is more restrictive. If the Project units do not meet the affordability requirements of
the HOME Requirements for the specified time period, Developer shall repay the Loan to City
promptly upon demand by City, subject to all applicable notice and cure periods. In such event,
Developer shall not be released from the affordability and other covenants and restrictions set forth
in this Agreement and the Regulatory Agreement, which shall continue to apply independent of
the HOME Requirements.
3. Equal Opportunity and Nondiscrimination.
a. Title VI of the Civil Rights Act of 1964, as amended, including Public
Law 88-352 implemented in 24 CFR Part 1. This law provides in part that no person shall, on
the grounds of race, color, or national origin be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program or activity receiving federal
financial assistance. In regard to the sale or lease of the Property, Developer shall cause or
require a covenant running with the land to be inserted in the deed and leases prohibiting
discrimination under this Title, and providing that City and the United States are beneficiaries of
and entitled to enforce such covenants. Developer shall enforce such covenant and shall not
itself so discriminate.
b. Fair Housing Act, Title VIII of the Civil Rights Act of 1968, as
amended, including Public Law 90-234. The Fair Housing Act provides in part that there shall
be no discrimination in housing practices on the basis of race, color, religion, sex, and national
origin. The Fair Housing Act was amended in 1988 to provide protections from discrimination in
any aspect of the sale or rental of housing for families with children and persons with disabilities.
1 This exhibit is a list and summary of some of the applicable legal requirements and is not a
complete list of all Developer requirements. The description set forth next to a statute or
regulation is a summary of certain provisions in the statute or regulation and is in no way
intended to be a complete description or summary of the statute or regulation. In the event of
any conflict between this summary and the requirements imposed by applicable laws,
regulations, and requirements, the applicable laws, regulations, and requirements shall apply.
THE CROSSROADS AT WASHINGTON EXIIIBIT G
HOME FUNDING ADDITIONAL TERMS AND CONDITIONS
The Fair Housing Act also establishes requirements for the design and construction of new rental
or for -sale multi -family housing to ensure a minimum level of accessibility for persons with
disabilities.
C. Section 109 of Title I of the Housing and Community Development
Act of 1974, as amended, including 42 U.S.C. 5301 et. seq., 42 U.S.C. 6101 et. seq., and 29
U.S.C. 794. This law provides in part that no person' on the grounds of race, color, national
origin, sex, or religion shall be excluded from participation in, be denied the benefits of, or
otherwise be subject to discrimination under any activity funded in whole or part with funds
under this Title.
d. Section 104(b) of Title I of the Housing and Community Development
Act of 1974, as amended, including 42 U.S.C. 5301 et. seq. This law provides in part that any
grant under Section 106 shall be made only if the grantee certifies to the satisfaction of the
Secretary of HUD that the grantee will, among other things, affirmatively further fair housing.
C. Executive Order 11246, as amended. This order includes a requirement
that grantees and subrecipients and their contractors and subcontractors not discriminate against
any employee or applicant for employment because of race, color, religion, sex, or national
origin.
f. Executive Order 11063, as amended, including 24 CFR Part 107. This
order and its implementing regulations include requirements that all actions necessary be taken
to prevent discrimination because of race, color, religion, sex, or national origin in the use,
occupancy, sale, leasing, rental, or other disposition of property assisted with Federal loans,
advances, grants, or contributions.
g. Section 504 of the Rehabilitation Act of 1973, as amended. This Act
specifies in part that no otherwise qualified individual shall solely by reason of his or her
disability or handicap be excluded from participation (including employment), denied program
benefits, or subjected to discrimination under any program or activity receiving Federal
assistance. Developer must ensure that its programs are accessible to and usable by persons with
disabilities.
h. The Americans with Disabilities Act (ADA) of 1990, as amended. This
Act prohibits discrimination on the basis of disability in employment by state and local
governments and in places of public accommodation and commercial facilities. The ADA also
requires that facilities that are newly constructed or altered, by, on behalf of, or for use of a -
public entity, be designed and constructed in a manner that makes the facility readily accessible
to and usable by persons with disabilities. The Act defines the range of conditions that qualify as
disabilities and the reasonable accommodations that must be made to assure equality of
opportunity, full participation, independent living, and economic self-sufficiency for persons
with disabilities.
i. The Age Discrimination Act of 1975, as amended. This law provides in
part that no person shall be excluded from participation in, be denied program benefits, or
THE CROSSROADS AT WASHINGTON EXIIIHIT G
HOME FUNDING ADDITIONAL TERMS AND CONDITIONS
subjected to discrimination on the basis of age under any program or activity receiving federal
assistance.
j. EEO/AA Statement. Developer shall, in all solicitations or
advertisements for employees placed by or on behalf of Developer, state that it is an Equal.
Opportunity or Affirmative Action employer.
k. Minority/Women Business Enterprise. Developer will use its best
efforts to afford small businesses and minority and women -owned business enterprises the
maximum practicable opportunity to participate in the performance of the Agreement. As used in
the Agreement, the term "small business" means a business that meets the criteria set forth in
Section 3(a) of the Small Business Act, as amended (15 U.S.C. 632), and "minority and women -
owned business enterprise" means a business at least fifty-one percent (51%) owned and .
controlled by minority group members or women. For the purpose of this definition, "minority
group members" are Afro-Americans, Spanish-speaking, Spanish surnamed or Spanish -heritage
Americans, Asian -Americans, and American Indians. Developer may rely on written
representations by businesses regarding their status as minority and female business enterprises
in lieu of an independent investigation.
1. Nondiscrimination. Developer shall comply with the federal requirements
and nondiscrimination provisions in 24 C.F.R. § 92.350, which include requirements on
nondiscrimination and equal opportunity, disclosure requirements, debarred, suspended or
ineligible contractors, and maintaining a drug -free workplace.
4. Environmental.
a. Air and Water. Developer shall comply with the following regulations
insofar as they apply to the performance of the Agreement: Clean Air Act, 42 U.S.C. 7401, et
seq.; Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq., as amended,
1318 relating to inspection, monitoring, entry, reports, and information, as well as other
requirements specified in said Section 114 and Section 308, and all regulations and guidelines
issued thereunder; and the U.S. Environmental Protection City regulations pursuant to 40 CFR
Part 50, as amended.
b. Flood Disaster Protection Act of 1973. Developer shall assure that for .
activities located in an area identified by FEMA as having special flood hazards, flood insurance
under the National Flood Insurance Program is obtained and maintained.
C. ILead-Based Paint. Developer shall comply with the Lead -Based Paint
Regulations referenced in 24 C.F.R. 92.355, including 24 C.F.R. Part 35, et. al.
d. Historic Preservation. Developer shall comply with the. historic
preservation requirements set forth in the National Historic Preservation Act of 1966, as
amended (16 U.S.C. 470) and the procedures set forth in 36 C.F.R. Part 800, Advisory Council
on Historic Preservation Procedures for Protection of Historic Properties and related laws and
Executive Orders, insofar as they apply to the performance of this Agreement. In general, this
requires concurrence from the State Historic Preservation Officer for all rehabilitation and
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demolition of historic properties that are fifty years old or older or that are included on a federal,
state, or local historic property list.
e. Limitation on Activities Pending Clearance. In accordance with 24
C.F.R. § 58.22 entitled "Limitations on activities pending clearance," neither a recipient nor any
participant in the development process, including public or private nonprofit or for -profit entities,
or any of their contractors, may commit HUD assistance under a program listed in 24 C.F.R. §
58.1(b) on an activity or project until HUD or the state has approved the recipient's Request'for
Release of Funds (RROF) and the related certifications have been approved. Neither a recipient
nor any participant in the development process may commit non -HUD funds or undertake an
activity or project that would have an adverse environmental impact or limit the choice of
reasonable alternatives. Upon completion of environmental review or receipt of environmental
clearance, City shall notify Developer. HUD funds shall not be utilized before this requirement
is satisfied. The environmental review or violation of the provisions may result in approval,
modification of cancellation of the Loan. If a project or activity is exempt under 24 C.F.R. §
58.34, or is categorically excluded (except in extraordinary circumstances) under 24 C.F.R. §
58.35(b), no RROF is required and the recipient may undertake the activity immediately after the
City has documented its determination that each activity or project is exempt and meets the
conditions specified for such exemption under this section by issuing a Notice to Proceed.
5. Uniform Administrative Requirements. Developer shall comply with applicable
uniform administrative requirements as described in 24 C.F.R. §§ 92.205.
6. Other Program Requirements. Developer shall carry out each activity under the
Agreement in accordance with all applicable federal laws and regulations described in Subpart H
of 24 C.F.R. § 92 except for City's responsibility for initiating the environmental review process
under the provisions of 24 C.F.R. Part 58.
7. Project Requirements. Developer shall comply with all project requirements set
forth in 24 C.F.R. §§ 92.250-92.258, as applicable in accordance with the type of project assisted.
8. Property Standards. Developer shall perform any construction work and
maintain the Project units in compliance with the property standards in 24 C.F.R. § 92.251 and the
lead -based paint requirements in 24 C.F.R. § 92 Part 35, Subparts A, B, J, K, M and R, as
applicable.
9. Records and Reports. Developer shall provide to City all records and reports
relating to the Program Activities that maybe reasonably requested by City in order to enable it to
perform its recordkeeping and reporting obligations pursuant to the HOME Requirements,
including 24 C.F.R. §§ 92.508 and 92.509.
10. Conflict of Interest. Developer will comply with 2 C.F.R. Part 200 and 24
C.F.R. 84.42, 85.36 and 92.356, as applicable, regarding the avoidance of conflict of interest,
which provisions include (but are not limited to) the following:
i. Developer shall maintain a written code or standards of conduct that shall
govern the performance of its officers, employees or agents engaged in the award and
administration of contracts supported by Federal funds.
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ii. No employee, officer or agent of the Developer shall participate in the
selection, or in the award, or administration of, a contract supported by Federal funds if a
conflict of interest, real or apparent, would be involved.
iii. No covered persons who exercise or have exercised any functions or
responsibilities with respect to HOME -assisted activities, or who. are in a position to
participate in a decision -making process or gain inside information with regard to such
activities, may obtain a financial interest in any contract, or have a financial interest in
any contract, subcontract; or agreement with respect to the HOME -assisted activity, or
with respect to the proceeds from the HOME -assisted activity, either for themselves or
those with whom: they have business or immediate family ties, during their tenure or for a
period of one (1) year thereafter. For purposes of this paragraph, a "covered person"
includes any person who is an employee, agent, consultant, officer, or elected or
appointed official of the Grantee, the Developer, or any designated public agency.
11. Affirmative Marketing, If the Loan will be used for housing containing 5 or more
assisted units, Developer shall establish for City's review and approval a plan and procedures to,
affirmatively market the units. The objective of the plan shall be.to provide information and attract
eligible persons from all racial, ethnic and general groups in the housing market area to the
available housing. In connection therewith, Developer shall perform those affirmative marketing
responsibilities set forth in 24 C.F.R. § 92.351(a) and the marketing plan shall include the
following:
a. methods for informing the public, owners, and potential tenants about
federal fair housing loans and the City's affirmative marketing policy;
b. requirements and practices Developer must adhere to in order to carry out
the affirmative marketing procedures and requirements;
C. procedures to be used by Developer to inform and solicit applications from
persons in the housing market area that are not likely to apply for the housing without
special outreach;
d. records that will be kept describing actions taken by Developer to
affirmatively market units and records to assess the results of those actions; and
C. a description of how Developer will assess the success of affirmative
marketing actions and what corrective actions will be taken where affirmative marketing
requirements are not met:'
12. Displacement. Consistent with the other goals and objectives of Subpart H of 24
C.F.R. § 92, Developer shall take all reasonable steps to minimize the displacement of persons
(families, individuals, businesses, nonprofit organizations, and farms). as a result of the Program
Activities.
13. Debarment and Suspension. As required in 24 C.F.R. § 92.357, Developer shall
comply with all debarment and suspension certifications.
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14. Enforcement of Agreement. In addition to the other provisions set forth in the
Agreement, City shall have the authority to enforce Developer's obligation to comply with the
HOME Requirements.
15. Return of HOME Funds. Upon the completion of the Project or earlier
termination of the Agreement, Developer shall transfer to City any HOME funds on hand for which
expenses have not been incurred and any accounts receivable attributable to the use of HOME
funds. In addition to the foregoing, in the event the expenses for which any, disbursement of Loan
funds are disbursed to Developer are not incurred by Developer within thirty (30) days after City's
(or escrow holder's) disbursement to Developer, or such longer time as City approves in its sole
discretion, City shall have the right to require that Developer immediately return the Loan proceeds
to City. Disbursement of proceeds by the City to an escrow holder shall not constitute
disbursement to Developer for purposes of this provision.
16. Monitoring. Not less than once per year, City shall review Developer's activities
and operations under the Agreement and Developer's compliance with the HOME Requirements.
Such review may include an on -site inspection of the Project units (including unit interiors). If,
.such an on -site inspection of the Project units is to be undertaken, City shall coordinate such
inspection with Developer. The monitoring required pursuant to this paragraph shall be in
compliance with the requirements of 24 C.F.R. § 92.504.
17. Tenant Participation Plan. Developer shall provide to City for approval the form
of the lease agreement to be used for the rental units, which lease must be fair and provide for a
grievance procedure. In addition, Developer shall provide to City for approval a plan that provides
for tenant participation in management decisions. (24 CY R § 92.303.)
18 Anti -Lobbying Certification. By its execution of the Agreement, Developer
hereby certifies that:
i. No Federal appropriated funds have been paid or will be paid, by or on
behalf of it; to any person for influencing or attempting to influence an officer or
employee of any agency, a Member of Congress, an officer or employee of Congress, or
an employee of a Member of Congress in connection with the awarding of any Federal
contract, the making of any Federal grant, the making of any Federal loan, the entering
into of any cooperative agreement, and the extension, continuation, renewal, amendment,
or modification of any Federal contract, grant, loan, or cooperative agreement.
ii. If any funds other than Federal appropriated funds have been paid or will
be paid to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an employee
of a Member of Congress in connection with this Federal contract, grant, loan, or
cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure
Form to Report Lobbying," in accordance with its instructions.
iii. It will require that the language of this certification be included in the
award documents for all subawards at all tiers (including subcontracts, subgrants, and
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contracts under grants, loans, and cooperative agreements) and that all subrecipients shall
certify and disclose accordingly.
This certification is a material representation of fact upon which reliance was placed
when this transaction was made or entered into. This certification is a prerequisite for making or
entering into this transaction imposed by section 1352, title 31, U.S.C, Any person who fails to
file the required certification shall be subject to a civil penalty of not less than $10,000 and not
more than $100,000 for each such failure. At the request of City, Developer shallexecute a
separate document that contains the certifications set forth above.
19. Drug -Free Workplace Requirements.. Developer shall comply with and be
subject to the requirements of the federal drug -free workplace requirements, which include
the following actions be taken:
i. Publishing a statement notifying employees that the unlawful
manufacture, distribution, dispensing, possession, or use of a controlled substance is
prohibited in the grantee's workplace and specifying the actions that will be taken against
employees for violation of such prohibition.
ii. Establishing an ongoing drug -free awareness program to inform
employees about: (a) the dangers of drug abuse in the work place; (b) the grantee's
policy of maintaining a drug -free workplace; (c) any available drug counseling,
rehabilitation, and employee assistance programs; and (d) the penalties that may be
imposed upon employees for drug abuse violations occurring in the workplace.
iii. Making it a requirement that each employee to be engaged in the
performance of the grant be given a copy of the statement required by paragraph (i).
iv. Notifying the employee in the statement required by paragraph (i) that, as
a condition of employment under the grant, the employee will: (a) abide by the terms of
the statement; and (b) notify the employer in writing of his or her conviction for a
violation of a criminal drug statute occurring in the workplace no later than five calendar
days after such conviction.
V. Notifying the agency in writing, within ten calendardays after receiving
notice under sub -paragraph (iv) (b) from an employee or otherwise receiving actual
notice of such conviction. Employers of convicted employees must provide notice,
including position title, to every grant officer or other designee on whose grant activity .
the convicted employee was working, unless the Federal agency has designated a central
point for the receipt of such notices. Notice shall include the identification number(s) of
each affected grant.
vi. Taking one of the following actions, within 30 calendar days of receiving
notice under subparagraph (iv)(b), with respect to any employee who is so convicted:
(a) taking appropriate personnel action against such an employee, up to and including
termination, consistent with the requirements of the Rehabilitation Act of 1973, as
amended; or (b) requiring such employee to participate satisfactorily in a drug abuse
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assistance or rehabilitation program approved for such purposes by a Federal, State or
local health, law enforcement, or other appropriate agency.
vii. Making a good faith effort to continue to maintain a drug -free workplace
through implementation of paragraphs (i), (ii), (iii), (iv), (v), and (vi).
20. Procurement. If applicable, Developer will comply with the procurement
standards under 24 CFR 85.36 for governmental subrecipients and 24 CFR 84.40-48 for
subrecipients that are non-profit organizations. Developer shall comply with all existing and
future City policies concerning the purchase of equipment.
. 21. Hatch Act. The Developer agrees that no funds provided, nor personnel
employed under this Agreement, shall be in any way or to any extent engaged in the conduct of
political activities in violation of Title V United States Code Section 1501 et seq.
22. Labor Provisions.
a. Section 3 of the Housing and Community Development Act of 1968.
Developer shall comply with and cause its contractors and subcontractors to comply with the
requirements of Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C.
§ 1701u), the HUD regulations issued pursuant thereto at 24 C.F.R, Part 135, and any applicable
rules and orders of HUD issued thereunder. The Section 3 clause, set forth in 24 C.F.R § 135.38
provides;
i. The work to be performed under this contract is subject to the
requirements of Section 3 of the Housing and Urban Development Act of
1968, as amended, 12 U.S.C. § 170lu (Section 3). The purpose of Section
3 is to ensure that employment and other economic opportunities
generated by HUD assistance or HUD -assisted projects covered by
Section 3, shall, to the greatest extent feasible, be directed to low- and
very low-income persons, particularly persons who are recipients of HUD
assistance for housing.
ii. The parties to this contract agree to comply with HUD's regulations in 24
C.F.R. Part 135, which implement Section 3. As evidenced by their
execution of this contract, the parties to this contract certify that they are
under no contractual or other impediment that would prevent them from
complying with the Part 135 regulations.
iii. The contractor agrees to send to each labor organization or representative
of workers with which the contractor has a collective bargaining
agreement or other understanding if any, a notice advising the labor
organization or workers' representative of the contractor's commitments
under this Section 3 clause, and will post copies of the notice in
conspicuous places at the work site where both employees and applicants
for training and employment positions can see the notice. The notice shall
describe the Section 3 preference, shall set forth minimum number and job
titles subject to hire, availability of apprenticeship and training positions,
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the qualifications for each; and the name and location of the person(s)
taking applications for each of the positions; and the anticipated date the
work shall begin.
iv. The contractor agrees to include this Section 3 clause in every subcontract
subject to compliance with regulations in 24 C.F.R. Part 135, and agrees to
take appropriate action, as provided in an applicable provision of the
subcontractor in this Section 3 clause, upon a finding.that the
subcontractor is in violation of the regulations in 24 C.F.R. Part 135. The
contractor will not subcontract with any subcontractor where the
contractor has notice or knowledge that the subcontractor has been found
in violation of the regulations in 24 C.F.R. Part 135.
V. The contractor will certify that any vacant employment positions,
including training positions, that are filled (1) after the contractor is
selected but before the contract is executed, and (2) with persons other
than those to whom the regulations of 24 C.F.R. Part 135 require
employment opportunities to be directed, were not filled to circumvent the
contractor's obligations under 24 C.F.R. Part 135.
vi. Noncompliance with HUD's regulations in 24 C.F.R Part 135 may result
in sanctions, termination of this contract for default, and debarment or
suspension from future HUD assisted contracts.
Developer shall abide by the Section 3 clause set forth above and will also cause this
Section 3 clause to be inserted in all contracts relating to the construction of the Project.
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