HomeMy WebLinkAboutItem 16 - Affordable Housing Project at 801, 807, 809 and 809 ½ E. Santa Ana Blvd Community Development Agency
https://www.santa-ana.org/cd
Item # 16
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
December 7, 2021
TOPIC: Affordable Housing Project at 801, 807, 809 and 809 ½ E. Santa Ana Blvd
AGENDA TITLE:
Approve an Appropriation Adjustment, a Density Bonus Agreement, and a Development
Impact Fee Deferral Agreement with Shelter Providers of Orange County, Inc. DBA
HomeAid Orange County, Inc. for the development of the FX Residences affordable
housing project located at 801, 807, 809 and 809 ½ E. Santa Ana Blvd (Non-General
Fund) (Contingent upon approval of Housing Authority Item #3).
RECOMMENDED ACTION
1. Authorize the City Manager to execute a Density Bonus Agreement with Shelter
Providers of Orange County, Inc. DBA HomeAid Orange County, Inc., for a 55-year
term, for the development of the FX Residences affordable housing project located at
801, 807, 809 and 809 ½ E. Santa Ana Blvd, subject to non-substantive changes
approved by the City Manager and City Attorney.
2. Authorize the City Manager to execute a Development Impact Fee Deferral
Agreement with Shelter Providers of Orange County, Inc. DBA HomeAid Orange
County, Inc., to defer approximately $510,000 of their development impact fees for the
development of the FX Residences affordable housing project located at 801, 807,
809 and 809 ½ E. Santa Ana Blvd, subject to non-substantive changes approved by
the City Manager and City Attorney. The calculation of the final fee amount to be
deferred will be determined at the time of issuance of the certificate of occupancy.
3. Approve an appropriation adjustment to recognize $587,000 in prior-year fund balance
from the Low and Moderate Income Housing Asset Fund and appropriate the same
amount to the Low and Moderate Income Housing Asset Fund, Loans and Grants
account (no. 60718830-69152) for the development of the FX Residences affordable
housing project located at 801, 807, 809 and 809 ½ E. Santa Ana Blvd. (Requires five
affirmative votes)
EXECUTIVE SUMMARY
On January 15, 2019, the Housing Authority approved an award of $1,069,947 in funding
and agreed to enter into a 99-year Ground Lease for the development of the Frances
Xavier Residence affordable housing project by Shelter Providers of Orange County, Inc.
DBA HomeAid Orange County, Inc. After nearly three years of predevelopment in which
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Frances Xavier Residence (renamed to “FX Residences”) worked with staff to secure all
of their remaining sources of financing in their capital stack as a condition of the Housing
Authority’s award of funds and Ground Lease, staff is now returning to the Housing
Authority / City Council for approval of their Loan Agreement and Ground Lease. Due to
additional construction costs associated with the project since approval of the award on
January 15, 2019, staff is also recommending to amend their award of funds for an
additional $587,000. In addition, staff is also recommending approval of a Density Bonus
Agreement required for HomeAid’s entitlements to develop FX Residences and a
Development Impact Fee Deferral Agreement to offset their costs of construction. A
future Subordination Agreement may be necessary at a later date and is included as a
Recommended Action.
DISCUSSION
On January 15, 2019, City Council approved a pre-loan commitment with HomeAid
Orange County (“HomeAid”) with Mercy House Living Centers (“Mercy House”) as the
service provider for $1,069,947 in Low and Moderate Income Housing Asset Funds and
a 99-year Ground Lease of 801, 807, 809 and 809 ½ E. Santa Ana Blvd for the
development of the Frances Xavier Residence affordable housing project. The
$1,069,947 are former redevelopment agency funds held by the Housing Authority acting
as the Housing Successor Agency. The funds are generated from proceeds from the
sale of former Redevelopment Agency housing assets, residual receipts from former
Redevelopment Agency assets (i.e. loans), as well as a portion of the loan repayments
from the former Redevelopment Agency to the City. The Housing Authority owns the land
at 801, 807, 809 and 809 ½ E. Santa Ana Blvd after it was transferred by the former
Redevelopment Agency. The project was renamed from Frances Xavier Residences to
FX Residences after City Council approved the pre-loan commitment. The Staff Report
from January 15, 2019 is attached as Exhibit 1 and the pre-loan commitment letter is
attached as Exhibit 2.
After City Council approves a pre-loan commitment of funding for an affordable housing
project, it typically takes a substantial amount of time for a developer to secure their
remaining sources of financing in their capital stack. The majority of large multi-family
affordable housing projects require Low-Income Housing Tax Credits which are very
competitive for the higher value 9% Tax Credits with only two application deadlines a year
and more difficult to finance with the lower value 4% Tax Credits. In this case, HomeAid
did not apply for Low-Income Housing Tax Credits, but applied for various other sources
of financing through the County of Orange, Orange County Housing Finance Trust and
Wells Fargo, among other grantees and lenders. After almost three years since HomeAid
received a commitment of funding and land from the Housing Authority, HomeAid is
prepared to close on their financing and begin construction of the project.
In order for HomeAid to develop FX Residences and in accordinace with the pre-loan
commitment letter approved by the Housing Authority on January 15, 2019, staff is
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recommending approval of $587,000 in additional funds, a $1,656,947 Loan Agreement,
a 99-year Ground Lease, a Density Bonus Agreement, and a Development Impact Fee
Deferral Agreement with HomeAid for the development of the FX Residences affordable
housing project (“Project”) located at 801, 807, 809 and 809 ½ E. Santa Ana Blvd.
$587,000 Award of Additional Funds
Due to unanticipated and additional construction costs associated with the Project since
approval of the pre-loan commitment on January 15, 2019, staff is recommending to
amend the Housing Authority’s original award for $587,000 in additional funds from the
Low and Moderate Income Housing Asset Fund. With approval by City Council, the total
award of funds would increase from $1,069,947 to $1,656,947. After receiving the
Housing Authority’s award of financial assistance, HomeAid revised their proposed
project to add five additional units instead of the 12 units previously proposed. In addition,
HomeAid received updated construction cost estimates, which increased the
development budget for the Project. The increase in costs is primarily due to the COVID-
19 pandemic and the increase in labor and materials since January 15, 2019. As such,
HomeAid is requesting the Housing Authority to provide an additional $587,000 in
additional financial assistance to the Project.
To address this gap, most recently HomeAid attempted to apply for these funds from
Wells Fargo and from the Affordable Housing Program General Fund through the Federal
Home Loan Bank of San Francisco. Although Wells Fargo provided a $25,000 grant, the
application to the Federal Home Loan Bank was not successful. Keyser Marston
Associates, Inc. prepared a financial gap analysis attached as Exhibit 3 and confirmed
this remaining financial gap amount. Staff recommends approval of the award of
$587,000 in order to move the Project forward and not continue to wait for HomeAid to
secure their remaining sources of financing. If not approved by City Council, the Project
will likely be delayed by another year before being recommended to City Council for
approval again.
Loan Agreement
The Housing Successor Agency Loan Agreement is attached as Exhibit 4. The following
loan terms are incorporated into the Loan Agreement:
Borrower: Shelter Providers of Orange County, Inc. DBA HomeAid Orange
County, Inc.
Loan Amount: $1,656,947 principal amount from the Low and Moderate Income
Housing Asset Fund (Housing Successor Agency)
Interest Rate: 3% simple interest compounded annually
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Term: fifty-five (55) years from the date of issuance of the Certificate of Occupancy
for the Project.
Terms of Repayment: Repaid from fifty percent (50%) of residual receipts (pro-
rata with payments due in connection with other financing provided) calculated by
taking the Annual Project Revenues from the Property for each year, less
deductions for Annual Operating Expenses.
Disbursement Schedule: 90 percent of the funds will be disbursed upfront for the
construction, with a 10 percent contingency.
Selection of Tenants: HomeAid shall give preference in leasing units to
chronically homeless individuals that live and/or work in the City of Santa Ana.
Staff in the Community Development Agency will monitor implementation of the
preference.
The Loan Agreement has been signed by HomeAid to acknowledge their acceptance of
the terms.
99-Year Ground Lease
The 99-year Ground Lease is attached as Exhibit 5. The 99-year Ground Lease is
between the Housing Authority (“Agency” and “Lessor”) and HomeAid as the “Tenant”.
In its simplest form, the Ground Lease binds the Housing Authority into a 99-year Ground
Lease with HomeAid to develop, manage and maintain the FX Residences Project on the
Housing Authority’s land at 801, 807, 809 and 809 ½ E. Santa Ana Blvd. The purpose of
the Ground Lease is to lease the parcels owned by the Housing Authority to HomeAid for
no more than 99 years from the date they receive their Certificate of Occupancy.
The following terms are incorporated into the 99-year Ground Lease:
Term: ninety-nine (99) years, commencing on the Effective Date of the lease, and
shall expire at 12:00 midnight Pacific Standard Time on the 99th anniversary of the
Commencement Date. The Effective Date is the date when the Tenant takes
possession of the property and is entitled to start construction. The
Commencement Date is the date when the Tenant receives their Certificate of
Occupancy.
Tenant accepts the parcel “as-is”.
Tenant shall pay to Housing Authority a base rent in the amount of one dollar
($1.00) per year.
Tenant shall pay directly to the taxing authorities all taxes required and utility costs.
Tenant shall construct and during the entire Term operate, maintain, replace and
repair the improvements upon the property for only the following required uses:
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o multifamily affordable housing, and appurtenant improvements, including,
without limitation, parking;
o permanent supportive housing units and related services; and
o related commercial and community-serving uses, as approved by the
Lessor.
The Housing Authority may enter the premises upon two (2) business days’ prior
written notice to Tenant in order to determine whether Tenant is complying with
Tenant’s obligations or to enforce any rights given to the Housing Authority under
the Lease.
On a monthly basis, the Tenant shall maintain a reserve fund to pay for the costs
of major replacements, renovations or significant upgrades of or to the Project.
The Tenant shall contribute to a Capital Improvement Fund one percent (1%) of
the total rent collected by Tenant from sub-tenants from the previous month.
Throughout the Term of the Lease, Tenant shall, at Tenant’s sole cost and
expense, keep and maintain the premises and all Improvements now or hereafter
constructed and installed on the premises in good order, condition and repair.
In the event the whole or any part of the improvements shall be damaged or
destroyed by fire or other casualty, damage or action of the elements which is fully
covered by insurance required to be carried by Tenant pursuant to the Lease or in
fact caused by Tenant, at any time during the Term, Tenant shall with all due
diligence, at Tenant’s sole cost and expense, repair, restore and rebuild the
improvements on substantially the same plan and design as existed immediately
prior to such damage or destruction and to substantially the same condition that
existed immediately prior to such damage.
Tenant will purchase all required insurance at Tenant's expense and provide active
certificates of insurance, including all endorsements required by the Housing
Authority.
Other terms and conditions binding the Tenant in regards to Condemnation,
Subletting, Default and Remedies under the lease, Holding Over the lease term,
Leasehold Mortgages, and Best Management Practices.
The 99-year Ground Lease has been signed by HomeAid to acknowledge their
acceptance of the terms. The approval of the 99-year Ground Lease is contingent on
approval of the award of additional funds and the Loan Agreement.
Density Bonus Agreement
The Density Bonus Agreement was approved unanimously by the Planning Commission
on March 22, 2021. The Agreement is attached as Exhibit 6. As proposed, the Project
will utilize waivers from development standards and/or development concessions through
the Density Bonus Agreement as permitted pursuant to California Government Code
sections 65915 through 65918 as implemented by the Santa Ana Municipal Code (SAMC)
Sections 41-1600 through 41-1607. Staff is recommending approval of the Density Bonus
Agreement as the Project satisfies the purpose and intent of the Transit Zoning Code (TZC)
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to promote a pedestrian-oriented environment with a mix of land uses and will provide
additional affordable housing stock to an underserved segment of the City’s population.
The California Density Bonus law allows developers proposing five or more residential
units to seek increases in base density for providing on-site housing units in exchange for
providing affordable units on site. To help make constructing on-site affordable units
feasible, the law allows developers to seek up to three incentives/concessions and an
unlimited number of waivers, which are essentially variances from development
standards that would help the project be built without significant burden and without
detriment to public health. The first version of the Density Bonus Law was adopted in
1979 and has since been amended various times. Recent revisions allow affordable
housing developers to request incentives/concessions and/or waivers for 100-percent
affordable developments, even if they do not require a numerical density bonus in units.
Moreover, in early 2017, the law was amended to restrict the ability of local jurisdictions
to require studies to “justify” the density bonus and requested incentives/waivers and
places the onus on local jurisdictions to prove that the incentives/concessions or waivers
are not financially warranted.
Due to the project’s 100-percent affordability rate, HomeAid can seek up to three density
bonus concessions and unlimited waivers, pursuant to Section 65915 et al. of the
California Government Code (Density Bonuses and Other Incentives). In addition,
California Assembly Bill No. 2345, approved September 28, 2020, revised the State
Density Bonus Law originally adopted in 1979 to provide additional benefits for projects
that include qualifying affordable housing. The bill requires that housing development in
which 100 percent of all units (exclusive of manager units) are for lower-income
households receive a maximum density bonus of eighty percent (80%). Pursuant to
Section 65915 et al. of the California Government Code, HomeAid is requesting a 70-
percent (70%) state density bonus. As outlined by Table 1 below, the maximum unit yield
for the 0.344-acre site using the TZC standards and the State density bonus is 18 units
and the applicant is proposing to develop 17 units on the site.
Table 1: Density Bonus Calculation
Density or Bonus Allowed for Project Under
State Density Bonus Law Proposed by Project
Base Density of the UN-2 zoning
class for the property is 30 units
per acre
10 units (0.344 acres x 30
units/acre base density based on
Courtyard Housing type, which is
the most “intense” type allowed in
UN-2).
10 Units
Add on the 80-Percent State
Density Bonus 8 units (10 x 0.80)+7 Units
Total Units 18 units maximum 17 units proposed
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The purpose of the State Density Bonus Law is to encourage the development and
availability of affordable housing by requiring the inclusion of affordable housing units within
new developments. Pursuant to California Government Code sections 65915 (d)(1) and
65915 (e)(1), a local jurisdiction is limited in its ability to deny requested concessions and
waivers and is preempted from denying the Density Bonus Agreement. The conditions of
approval proposed for the project are intended to address any of the project’s potential
impacts. Table 2 outlines the incentives/concessions and waivers requested by HomeAid.
Table 2: Requested Incentives/Concessions
TZC Standard Requirement Provided
Sec. 41-2020 – Lot
Width and Depth
Lot Depth – 130’-0” – 250’-0”
Lot Width – 125’-0” – 200’-0”
Lot Depth – 150’-0”
Lot Width – 100’-0” – Requires
Concession for lot width at 25 feet
less than the minimum (1 of 3), Cal.
Gov’t Code Sec. 65915 (d)(1)
Sec. 41-2003 –
Tandem Parking
Sec. 41-2003 of the TZC allows for
tandem parking not to exceed 30% of
the required parking per residential
unit.
10 Tandem parking spaces proposed
out of 12 spaces provided (83% of
parking) - Requires Concession to
exceed the minimum by 53% (2 of
3), Cal. Gov’t Code Sec. 65915 (d)(1)
Sec. 41-2024 –
Open Space
Standards
Common open space is required to be
designed as a courtyard and be equal
to 15 percent of the lot area. The
required open space would be
approximately 2,247 square feet.
Common open space is provided as a
1,877-square-foot interior courtyard. –
Requires Concession provide 12.5
percent of the lot area (3 of 3), Cal.
Gov’t Code Sec. 65915 (d)(1)
Sec. 41-2020 –
Permitted
Building Type
The UN-2 land use designation does
not permit the Stacked Dwelling
Building Type
A Stacked Dwelling Building Type is
proposed at this location which is not
permitted, pursuant to the TZC –
Requires Waiver to allow Stacked
Building Type, Cal. Gov’t Code Sec.
65915 (e)(1)
Sec. 41-2024 –
Landscape
Standards
Trees are required to be planted at the
rate of one 24-inch box tree per 25
lineal feet of front yard.
No trees are proposed or can be
accommodated along Garfield Street.
In addition, less than one tree per 25
lineal feet can be accommodated
along Santa Ana Boulevard –
Requires Waiver to allow no tree
along the Garfield frontage and 1
tree per 37.5 lineal feet along Santa
Ana Boulevard, Cal. Gov’t Code
Sec. 65915 (e)(1)
In addition, the site is parked in compliance with California Government Code Section
65915(p)(3)(A) and provides 0.71 spaces per unit, inclusive of handicapped and guest
parking. The California Density Bonus Law allows 0.5 spaces per unit for rental projects that
are 100-percent affordable to lower income households, and within one-half mile of an
accessible major transit stop. The site provides 12 total parking spaces or 0.71 spaces per
unit, which includes ten tandem-parking stalls and two van accessible parking stalls.
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The Density Bonus Agreement has been signed by HomeAid to acknowledge their
acceptance of the terms.
Development Impact Fee Deferral Agreement
The Development Impact Fee Deferral Agreement will defer the collection of the Project’s
development impact fees until prior to issuance of the certificate of occupancy instead of
requiring payment of the fees at the time of building permit issuance. The Agreement is
attached as Exhibit 7. HomeAid’s reason for the request is that they are entitled by State
law to deferred payment of fees intended for public facilities or improvements and the
deferral of such development impact fees will help facilitate the financing, development
and construction of the project. Specifically, California Government Code Section 66007
states that “any local agency that imposes any fees or charges on residential
development for the construction of public improvements or facilities shall not require the
payment of those fees or charges, notwithstanding any other provision of law, until the
date of the final inspection, or the date the certificate of occupancy is issued, whichever
occurs first.” The specific development impact fees that are part of this deferral request
include the following:
Development Impact Fee Amount
Park Acquisitions and Development $377,400
Fire Facilities $81,600
Transportation System Improvement Authority
(Combined Non-Residential and
Residential-Multifamily)
$51,000
TOTAL $510,000
As an affordable housing project, the project qualifies for this request for deferral of their
development impact fees. The Development Impact Fee Deferral Agreement will defer
approximately $510,000 of the development impact fees for the development of the
Project.
The following terms are incorporated into the Agreement:
Fee Deferral and Amount: The deferred collection of the development impact
fees in the estimated amount of approximately five hundred, ten thousand dollars
($510,000).
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Deferral Period: The development impact fees will be deferred until the final
inspection or issuance of a certificate of occupancy for the Project, whichever
comes first.
Extension: An extension of the Agreement may only be granted by the City
Council.
Payment Security: Payment of fee is a personal obligation of the owner, or any
successor secured by the property, and if left unpaid, shall be collected as a special
lien against the property.
Recordation of Agreement and Lien against Property: The Agreement will be
recorded in the Official Records of the County of Orange and the Agreement shall
contractually bind the owner to pay the development impact fees and shall
constitute a lien against the property.
The intended goal of the collection of development impact fees at the time of building
permit issuance is to ensure that the payment of the fees is completed prior to the vesting
of development rights by a project developer. Development impact fees for development
projects include customary fees to defray costs for the City to provide development
services under the permit, outside agency fees as applicable, and established
development impact fees. While deferral of collection of development impact fees is not
a routine practice, HomeAid submitted their request under California Government Code
Section 66007 and the City is required to consider their request.
The collection of the development impact fees for a new residential development is to
generally fund planned acquisition and development of parks and open space within the
City to mitigate the impacts that new developments will have on the demand for parks
and open space within the City. While the request will defer the collection of the
development impact fees to a later time in the development process, it will not waive or
prevent the City from collecting the fee through protections and securities provided to the
City under the agreement. Furthermore, the fees will be paid prior to the actual impact,
as no residents will be allowed to occupy the Project until payment is received by the City.
The Development Impact Fee Deferral Agreement has been signed by HomeAid to
acknowledge their acceptance of the terms.
Subordination Agreement
As a public lender for an affordable housing project such as this, the private market senior
lender typically requests a subordination agreement for the Housing Authority’s loan
agreement in order to ensure the senior lender will be paid back before the Housing
Authority’s loan. In this case, staff is uncertain if a subordination agreement is going to
be requested by the private market senior lender or another lender. If necessary, the
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subordination agreement will be drafted and finalized at the conversion from the
construction loan to the permanent loan.
Project Description
The Project includes the construction of a new affordable rental residential development
consisting of 17 units, 1,120 square feet of group space (e.g., lobby, lounge/loft, and laundry
areas), and a 389-square foot community room. The development will consist of a two-story
building with flats/apartment units, trash enclosure, ten covered parking stalls, and one van
accessible surface-parking stall. It will feature onsite amenities such as communal laundry
facilities on the first and second floor, onsite bicycle storage, 400 square feet of on-site
storage, and 608 square feet of office space. One unit will be set aside for the onsite
manager while 16 units are proposed as affordable to chronically homeless households
earning less than thirty percent (30%) and twenty-five (25%) of the area median income
(AMI). Each of the seventeen units will be one-bedroom and will contain a full kitchen, a
single bedroom, a full bathroom, and open/common (living) areas.
Open space will be provided through a private interior courtyard approximately 1,877 square
feet in size. The design and layout of the proposed courtyard creates a unique outdoor area
within the development that functions as a passive outdoor space. The courtyard will feature
an exterior art wall/mural and a robust landscape palette with a variety of hardscaping
materials, trees, and shrubs. Trees and shrubs include, but are not limited to, queen palms,
camphor and crape myrtle trees, Indian Hawthorne, red kangaroo paw, and blue ice yellow-
wood. Landscaping and a block wall will provide buffering/screening for the adjacent single-
family residences to the north. The block wall will feature a varied wall height to allow for
proper egress and fire access to building on the adjacent property, which is too close the
existing property line.
The Project features a Mission Revival architectural style common of many multiple-family
or mixed-use residential communities under construction in Santa Ana and the region. The
residential structure is designed to fully screen all mechanical equipment within the structure
and parapet walls. The Mission Revival style respects and complements the surrounding
neighborhood, including the Triada at the Station District located on the corner of Santa Ana
Boulevard and Lacy Street across the street from the Project, which was completed in 2013.
The Project will be constructed by the same general contractor as the Triada. Overall, the
project will include a design and solid construction materials that will ensure that the Project
ages well for the duration of the building’s lifetime.
The Project is proposed to be entirely affordable with 16 units of permanent supportive
housing for individuals experiencing chronic homelessness. Nine (9) of the units will be
permanent supportive housing for households earning no more than 30% of the Area
Median Income; seven (7) of the units will be permanent supportive housing for households
earning no more than 25% of the AMI; and one (1) of the units is reserved for an on-site
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manager. There will be a local preference for chronically homeless residents of Santa Ana
who live or work in the City. The unit mix and rent restrictions are as follows:
Unit Size No. Units AMI
9 30%
7 25%1-Bedroom
1 Manager’s Unit
FISCAL IMPACT
Approval of the appropriation adjustment will allocate $528,300 (90% of the additional
award amount) to the Low and Moderate Income Housing Asset Fund, Loans and Grants
account (no. 60718830-69152) for expenditure in the current fiscal year. The remaining
$58,700 (10%) will be budgeted and included in the FY 2022-23 annual budget.
The total estimated development impact fees to be deferred for the project is estimated
to be $510,000 as follows:
Accounting Unit
– Account #Fund Description Accounting Unit,
Account Description Amount
31213002-53300 Residential
Development District 2
District Park A & D
Fees $377,400
12015002-53700 Fire Facilities Fund Improvement Fee $81,600
99117002-50301 Transportation System
Improvement Authority
TSIA from City of Santa
Ana $51,000
TOTAL $510,000
The final fee amount to be deferred will be calculated at the time of the final inspection or
issuance of a certificate of occupancy for the project, whichever comes first. There is no
negative fiscal impact as the deferred amount will be paid back to the City. However, it
should be noted that the FY 21-22 deferred amount may be received in FY 22-23.
Fiscal Impact Verified By: Kathryn Downs, CPA, Executive Director – Finance and
Management Services Agency
EXHIBITS
1. Staff Report from January 15, 2019
2. Pre-Loan Commitment Letter
3. Keyser Marston Associates, Inc. Financial Gap Analysis
4. Housing Successor Agency Loan Agreement
5. 99-Year Ground Lease
6. Density Bonus Agreement
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7. Development Impact Fee Deferral Agreement
Submitted By:
Steven A. Mendoza, Assistant City Manager
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SANTA ANA CITY COUNCIL
Miguel A. Pulido
Mayor
mpulido@santa-ana.org
Michele Martinez
Mayor Pro Tem, Ward 2
mimartinez@santa-ana.org
Vicente Sarmiento
Ward 1
vsarmiento@santa-ana.org
Jose Solorio
Ward 3
jsolorio@santa-ana.org
P. David Benavides
Ward 4
dbenavides@santa-ana.org
Juan Villegas
Ward 5
jvillegas@santa-ana.org
Sal Tinajero
Ward 6
stinajero@santa-ana.org
MAYOR
Miguel A. Pulido
MAYOR PRO TEM
Michele Martinez
COUNCILMEMBERS
P. David Benavides
Vicente Sarmiento
Jose Solorio
Sal Tinajero
Juan Villegas CITY OF SANTA ANA
20 Civic Center Plaza ● P.O. Box 1988
Santa Ana, California 92702
www.santa-ana.org
CITY MANAGER
Raul Godinez II
CITY ATTORNEY
Sonia R. Carvalho
CLERK OF THE COUNCIL
Maria D. Huizar
December 4, 2018
Scott Larson, Executive Director of HomeAid Sent via E-mail
Larry Haynes, Executive Director of Mercy House
HomeAid Orange County / Mercy House Living Centers
24 Executive Park, Suite 100
Irvine, CA 92614
Subject: Award Recommendations by Review Panel for RFP # 18-056
Dear Mr. Larson and Mr. Haynes,
Thank you very much for your proposal submitted in response to our RFP for Affordable
Housing Development (RFP # 18-056). The City of Santa Ana received a total of thirteen
(13) proposals requesting over $52 million and 304 Project-Based Vouchers. We thank
you for your proposal and your commitment to develop affordable housing for the
residents of the City of Santa Ana.
In compliance with the City’s Affordable Housing Funds Policies and Procedures adopted
by City Council on March 20, 2018, staff formed a Review Panel that consisted of the
Executive Director of the City’s Public Works Agency with his designee, the Executive
Director of the Planning and Building Agency with his designee, the Executive Director of
the Community Development Agency, and the Housing Division Manager. The VAMC of
Long Beach, the County of Orange, Keyser Marston Associates, and MDG Associates
served as advisors to the Review Panel. The Review Panel used the proposal Scoring
and Selection Criteria from the RFP to conduct their review. In addition to the Scoring and
Selection Criteria from the RFP, the Review Panel also reviewed the proposed project
design for appropriateness for the proposed target group, compatibility with surrounding
uses, cost effectiveness of construction, and appropriateness of the design and
construction for low maintenance and long term durability.
On October 30, 2018, the Review Panel met and interviewed all of the developers who
submitted a proposal. LINC Housing requested to be removed from consideration prior to
their scheduled interview and therefore their proposal was removed from consideration.
On November 14, 2018, the Review Panel met a second time to discuss and deliberate
3-9
EXHIBIT 1
upon the final scoring and selection of the proposals. Following this process, the Review
Panel agreed upon the final scores below based on an average of the scores from each
member of the Panel:
*Supporting documentation for the scores above may be provided upon request.
Housing Authority Land Asset Requested /
HUD-VASH Vouchers / Non-Housing
Authority Land Asset
Developer Name Project Name FINAL SCORE (Average of Individual
Reviewer Scores)
Orange Housing Development Corporation and
C&C Development, LLC 1126–1146 E. Washington Site 92
Related California The Crossroads at Washington 91
Jamboree Housing REVO Apartments 87
Cesar Chavez Foundation Santa Ana Place 84
Community HousingWorks Transformar 80
Community Development Partners Washington Plaza, GRFLD, Lacy Walk 77
Chelsea Investment Corporation Cielo 76
Habitat for Humanity of Orange County Lacy Street Project 82
Community Development Partners Washington Plaza, GRFLD, Lacy Walk 77
HomeAid Orange County Frances Xavier Residence 90
Community Development Partners Washington Plaza, GRFLD, Lacy Walk 77
Jamboree Housing Budget Inn Site 86
Community Development Partners Westview House 81
Non-Housing Authority Land Asset National Community Renaissance and Mercy
House Living Centers Santa Ana United Methodist Church Site 93
HUD-VASH Vouchers (As the Primary Source
of Financing)
1126 & 1146 E. Washington Avenue
826 N. Lacy/830 N. Lacy
801, 809 & 809 1/2 E. Santa Ana Blvd.
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EXHIBIT 1
Based on the scores above and the relative scoring of proposals competing for the same
land asset or source of affordable housing funds, the Review Panel is recommending the
following award for your organization to our Community Redevelopment and Housing
Commission and to the City Council / Housing Authority for final approval:
Developer: HomeAid Orange County and Mercy House
Project Name: Frances Xavier Residence
Developer Request:
$1,051,629.00
8 HUD-VASH PBVs
Award Recommendation:
Lease Agreement for 801 E. Santa Ana Blvd.
o Appraised Value as of Oct 25, 2018: $788,000
Low and Moderate Income Housing Asset Fund (Housing Successor
Agency Fund): $1,069,947.00
Project-Based Voucher Program (PBV): Three (3) HUD-VASH PBVs
This recommendation is contingent upon final approval by the Community
Redevelopment and Housing Commission (CRHC) and City Council / Housing
Authority. This letter should not be confused with a final pre-loan commitment
letter from the City or Housing Authority. This is only a recommendation by our
Review Panel.
For the next steps:
1)Please acknowledge your willingness to accept this award recommendation and
develop your project (by responding to this e-mail) including the additional
requirements listed below that will be incorporated into your final commitment
from the City / Housing Authority among various other terms:
a.Efforts must be made to incorporate ground -level retail in the project
design to incorporate the site into the forthcoming OC Streetcar.
b.100% of the units must be permanent supportive housing for individuals
and families referred from the Coordinated Entry System who are residing
in the City of Santa Ana based upon:
i.Proof of strong ties to the community, to include current residency
of an immediate family member – mother, father, sibling, or
grandparent in the City of Santa Ana;
ii.Proof that the individual attended a K-12 school in Santa Ana;
iii.Proof that the individual resided on property zoned for residential
use in Santa Ana and the individual was on the lease and/or paid
utilities necessary for legal use of the property for residential
purposes; or
iv.Knowledge – either first-hand or recorded – by the Santa Ana
Police Department that the individual has been a member of the
Santa Ana homeless community.
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2)Please acknowledge (by responding to this e -mail) your willingness to reimburse
the City for the cost of an underwriting and subsidy layering review to be
conducted by Keyser Marston Associates (KMA).
3)Staff will coordinate with you a first look of your project in coordination with the
City’s Planning and Building Agency to verify that the project design complies
with the City’s requirements.
4)Staff will complete a National Environmental Policy Act review in compliance with
your award of federal funds.
5)Please draft a presentation that you will provide with staff to the Community
Redevelopment and Housing Commission (CRHC) on December 19th at 4:30PM
in the City Council Chambers. This presentation must be provided to staff before
COB on Tuesday, December 11th. Staff will also coordinate with you on the Staff
Report that will be presented to the Commission and then to City Council /
Housing Authority.
6)Staff will be recommending your award to the CRHC on December 19, 2018 and
to City Council and the Housing Authority in January or February 2019. You
must be present and ready to present your project at both meetings as well as
respond to any questions or concerns.
From all of us here at the City, thank you again for your proposal and congratulations on
your award recommendation. We look forward to working with you to develop affordable
housing for the residents of the City of Santa Ana.
Sincerely,
Judson Brown
Housing Division Manager
Community Development Agency
Housing and Neighborhood Development Division
20 Civic Center Plaza (M-26)
Santa Ana, CA 92701
T: (714) 667-2241
F: (714) 647-6549
www.santa-ana.org/cda
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SANTA ANA CITY COUNCIL
Miguel A. Pulido
Mayor
mpulido@santa-ana.org
Juan Villegas
Mayor Pro Tem, Ward 5
jvillegas@santa-ana.org
Vicente Sarmiento
Ward 1
vsarmiento@santa-ana.org
David Penaloza
Ward 2
dpenaloza@santa-ana.org
Jose Solorio
Ward 3
jsolorio@santa-ana.org
Roman Reyna
Ward 4
rreyna@santa-ana.org
Cecilia Iglesias
Ward 6
ciglesias@santa-ana.org
MAYOR
Miguel A. Pulido
MAYOR PRO TEM
Juan Villegas
COUNCILMEMBERS
Cecilia Iglesias
David Penaloza
Roman Reyna
Vicente Sarmiento
Jose Solorio CITY OF SANTA ANA
SANTA ANA HOUSING AUTHORITY
20 Civic Center Plaza ● P.O. Box 22030
Santa Ana, California 92702
(714) 667-2200
www.santa-ana.org
CITY MANAGER
Raul Godinez II
CITY ATTORNEY
Sonia R. Carvalho
CLERK OF THE COUNCIL
Maria D. Huizar
January 15, 2019
Scott Larson
Executive Director
HomeAid Orange County
24 Executive Park, Suite 100
Irvine, CA 92614
Larry Haynes
Executive Director
Mercy House Living Centers
Re: Francis Xavier Residence
801, 809, and 809½ East Santa Ana Boulevard, Santa Ana, CA 92701
Pre-Commitment Letter for: LMIHAF Loan, Project Based Vouchers, and Lease
Agreement
Dear Messrs. Larson and Haynes:
HomeAid Orange County and Mercy Housing Living Centers (“Developer”) requested
financial assistance in connection with the proposed development of a twelve (12) unit
affordable housing complex to be located at 801, 809, and 809½ East Santa Ana Boulevard,
Santa Ana, CA 92701 (“Project”).
The City of Santa Ana (“City”) and the Housing Authority of the City of Santa Ana (“Housing
Authority”) have reviewed the Developer's request for assistance, and at the City
Council/Housing Authority meeting on January 15, 2019, the Housing Authority Board
authorized and approved issuance of this pre-commitment letter evidencing the preliminary
award of (collectively, the “Agency Assistance”):
-A loan in the maximum amount of $1,069,947.00 from the Low and Moderate
Income Housing Asset Fund (“LMIHAF”) held by the Housing Authority of the City
of Santa Ana acting as the Housing Successor Agency (“Agency”) for the Project
(“Agency Loan”);
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-A 99-year ground lease for the property located at 801, 809, and 809½ East Santa
Ana Boulevard (APNs: 398-303-04, 398-303-05, 398-303-06, and 398-303-07,
with a combined appraised value of $788,000.00 as of October 25, 2018); to be
used for development of affordable housing at 801, 809, and 809½ East Santa
Ana Boulevard, Santa Ana, CA 92701 (“Ground Lease”); and,
-Three (3) U.S. Department of Housing and Urban Development-Veterans Affairs
Supportive Housing (“HUD-VASH”) Project-Based Vouchers (“PBV”) for
Permanent Supportive Housing for the Project.
This letter shall evidence the Agency’s pre-commitment of the Agency Assistance to the
Developer for the Project subject to the conditions described below.
Agency Loan:
The amount of the proposed Agency Loan has been determined based upon the Agency’s
review of the Developer's request for the receipt of the Agency Assistance and the
development proforma and projected cash flows for the Project submitted by the Developer
to the Agency (“Proforma”). The Housing Authority Executive Director has authority to
approve revised development proformas and projected cash flows for the Project; provided,
however, that the Agency Assistance is not increased or extended.
The Agency Loan shall include the following terms:
$1,069,947.00 maximum principal amount, or as much thereof as is disbursed for
hard and soft costs in constructing the Project, provided from Santa Ana Housing
Successor Agency Low and Moderate Income Housing Asset Funds.
3% simple interest per annum.
Repayment from 50% of Residual Receipts (pro-rata with payments due in
connection with other financing provided by other public agencies) (after payment of
operating expenses, debt service, any deferred developer fee, and partnership fees
to be described in the Agreement) with the remaining 50% to be disbursed to the
Developer.
Remaining principal and accrued interest due upon the 55th anniversary of the
issuance of Certificate of Occupancy and/or final building permits or earlier upon sale,
refinancing or default. On that date, the City/Agency agrees to review the
performance of the property and consider in good faith any reasonable request by
Developer to modify the terms or extend the term of the Agency Promissory Notes.
Additionally, the Agency will receive a pro rata share of 50% of the net proceeds
received from any sale or refinancing of the Project, after payment of outstanding
debt and payment in full of any deferred developer fee and establishment of any
reserves and transaction costs.
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P a g e | 3
Cost savings from the Project, if any, will be applied first to pay down the Agency
Loan, subject to compliance with the Tax Credit Allocation Committee (“TCAC”)
Regulations and California Health and Safety Code.
Ground Lease:
The Project will be located at 801, 809, and 809½ East Santa Ana Boulevard (APNs: 398-
303-04, 398-303-05, 398-303-06, and 398-303-07) (“Property”). The Housing Authority
currently owns the Property. Accordingly, the Housing Authority Board authorized the
lease of the Property to the Developer for the Project. After Developer secures all of its
remaining financing for the development of the Project, staff will return to the Housing
Authority for consideration of a 99-year Ground Lease Agreement.
HUD-VASH PBV’s:
The Project consists of twelve (12) permanent supportive housing units for homeless
individuals and families, including three (3) units to be made available at affordable rents
to HUD-VASH eligible homeless veterans for a term of fifty-five (55) years. All individuals
and families shall be referred from the Orange County Coordinated Entry System, and
are residing or working in the City of Santa Ana as defined under the City’s criteria. Efforts
shall be made to incorporate ground-level retail as an interface for the forthcoming
Orange County Streetcar.
The HUD-VASH PBV’s shall include the following terms:
Voucher Source: The three (3) HUD-VASH PBVs will be funded exclusively out of
the tenant-based voucher program annual budget authority received by the
Housing Authority from the U.S. Department of Housing and Urban Development
(HUD).
Rents: The PBV Housing Assistance Payments (“HAP”) Contract rents below are
preliminary and contingent upon a reasonable rent determination to be conducted
at the time of execution of the HAP Contract:
o 1 Bedroom - $1,599
o 2 Bedroom - $1,996
In accordance with HUD regulations and the Housing Authority’s Housing Choice
Voucher Program Administrative Plan, these rents are subject to review prior to
the execution of a HAP Contract.
Rents and income requirements for the remaining affordable units shall be based
on the requirements of the federal Low Income Housing Tax Credit Program as
administered by TCAC.
Annual Amount: The Project will receive PBVs for three (3) units:
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EXHIBIT 1
P a g e | 4
Unit Size Income
Target No. Units Proposed Rent Total Annual
Revenue
1-Br 30% AMI 1 $1,599 $19,188
2-Br 30% AMI 2 $1,996 $47,904
The estimated maximum annual amount received under this award is $67,092.
These estimates assume 100% occupancy of the assisted units over the twelve -
month period.
Term: The HAP Contract will have a term of twenty (20) years. Any time before
the expiration of the HAP Contract, the Developer may request an additional
twenty (20) years, subject to a determination by the Housing Authority that it is
appropriate to continue providing affordab le housing for low-income families or to
expand housing opportunities and HUD funding. Subsequent extensions are
subject to the same requirements.
Units Receiving PBV Assistance: The maximum number of units receiving PBV
assistance will be three (3).
General Provisions:
The Agency's obligation to provide the Agency Assistance to the Project is subject to each
of the following conditions:
Developer must provide proof that it has secured all of its remaining financing for
the development of the Project before staff will return to the City Council and/or
Housing Authority for consideration of the Loan Agreement and Ground Lease
Agreement.
All provided funding and project requirements shall conform to the City’s adopted
Affordable Housing Funds Policies and Procedures, unless alternative
requirements are expressly provided in the executed Loan Agreement, Ground
Lease Agreement, or any other documents related to the development of the
Project.
Approval of all required entitlements and discretionary actions, to allow the
construction of a 12-unit affordable housing complex to be located at 801, 809, and
809½ East Santa Ana Boulevard, Santa Ana, CA 92701.
The Agency's obligation to provide the Loan is and shall remain subject to all
covenants, conditions, and restrictions set forth in the Loan Agreement, and in
particular Agency's analysis of the available funding sources and development and
operating costs of the Project and the overall economic feasibility of the Project.
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P a g e | 5
Review and approval of the documents evidencing the Agency Loan by the City
Council and/or Housing Authority, as applicable.
Review and approval of the documents evidencing the Ground Lease by the Housing
Authority.
Execution of HAP Contracts and all necessary documents for the PBV’s.
Project funding and PBV awards are predicated on the successful execution of a
99-year Ground Lease Agreement by the Developer with the Housing Authority.
Compliance with California Health and Safety Code and applicable regulations set
forth in Section 34176.
Developer, at its sole cost and expense, will be responsible for securing any and all
permits and discretionary approvals that may be required for the Project by the City,
Housing Authority, or any other federal, state, or local governmental entity having or
claiming jurisdiction over the Property or Project. Notably, this pre-commitment letter
shall not obligate the City or any department thereof to approve any application or request
for or take any other action in connection with any planning approval, permit or other
action necessary for the construction, rehabilitation, installation or operation of the
Project.
This pre-commitment letter for the Project will expire on January 15, 2021.
If you have any questions or require any additional information regarding this award letter,
please contact Judson Brown, Housing Division Manager, by telephone at (714) 667-
2241 or by e-mail at jbrown@santa-ana.org.
Sincerely,
_________________________________
Steven Mendoza
Housing Authority Executive Director
Attest:
_________________________________
Maria D. Huizar
Recording Secretary
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EXHIBIT 1
500 SOUTH GRAND AVENUE, SUITE 1480 LOS ANGELES, CALIFORNIA 90071 PHONE 213.622.8095
1901007:SA:TRB
WWW.KEYSERMARSTON.COM 19090.017.010
ADVISORS IN:
Real Estate
Affordable Housing
Economic Development
BERKELEY
A. Jerry Keyser
Timothy C. Kelly
Debbie M. Kern
David Doezema
Kevin Feeney
LOS ANGELES
Kathleen H. Head
James A. Rabe
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz
SAN DIEGO
Paul C. Marra
MEMORANDUM
To: Judson Brown, Housing Division Manager
City of Santa Ana
From: Tim Bretz
Date: January 9, 2019
Subject: Francis Xavier Residence: Preliminary Financial Gap Analysis
At your request, Keyser Marston Associates, Inc. (KMA) prepared a preliminary financial
gap analysis for the project proposed to be developed at 801 – 809 ½ East Santa Ana
Boulevard (Site) by HomeAid Orange County (HomeAid) and Mercy House (Mercy
House), collectively referred to as “Developer.” The Site is currently owned by the City
of Santa Ana Housing Authority (Authority). As proposed, the project will include 12
units that will be restricted to extremely-low income households (Project).
The Developer is requesting the following financial assistance:
1.$1.07 million in Low and Moderate Income Housing Asset Funds (LMIHAF) from
the Authority;
2.Veterans Affairs Supportive Housing (VASH) Vouchers allocated to the Authority
by the United States Department of Housing and Urban Development (HUD); and
3.To enter into a long-term ground lease with the Authority for the Site.
The purpose of the KMA analysis is to evaluate the Developer’s financial assistance
request.
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EXHIBIT 1
Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 2
1901007:SA:TRB
19090.017.010
EXECUTIVE SUMMARY
Estimated Financial Gap
The results of the KMA financial gap analysis are compared to the Developer’s financial
proposal in the following table:
KMA Developer Difference
Total Construction Costs $4,195,000 $4,234,000 ($39,000)
Outside Funding Sources 3,164,000 3,164,000 -0-
Financial Gap $1,031,000 $1,070,000 ($39,000)
As shown in the preceding table, KMA estimates the Project’s financial gap at $1.03
million. Comparatively, the Developer is requesting $1.07 million in financial assistance
from the Authority. This represents an approximately 1% differential which can be
considered inconsequential. However, it is important to note that the KMA and
Developer estimates differ on a line item by line item basis.
Proposed Funding Sources
The following summarizes the proposed funding sources for the Project:
1.The Project’s stabilized net operating income (NOI) supports a $449,000
conventional permanent loan. The NOI includes the rental subsidy generated by
the following:
a.Three (3) VASH Vouchers awarded to the Project by the Authority; and
b.A Capitalized Operating Subsidy Reserve (COSR) for nine units awarded
by the California Department of Housing and Community Development
(HCD) through the No Place Like Home Program (NPLH).
2.The Developer is proposing to apply for a $2.35 million loan of NPLH funds
awarded by HCD.
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EXHIBIT 1
Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 3
1901007:SA:TRB
19090.017.010
3.The Developer is proposing to defer $365,000 of the Developer Fee that is
included in the Project’s development costs. The deferred amount will be repaid
from the cash flow generated by the Project over time.
PROJECT DESCRIPTION
The proposed scope of development can be described as follows:
1.The Site area totals 0.34 acres, or approximately 15,000 square feet of land area.
2.The 12-unit Project represents a density of 35 units per acre.
3.The Project’s unit mix is as follows:
Number of Units Unit Size (SF)
One-Bedroom Units 10 600
Two-Bedroom Units 2 800
Total / Weighted Average 12 633
4.The Project’s gross building area (GBA) is estimated at approximately 14,800
square feet.
5.The Project will include 12 garage parking spaces, which equates to one space
per unit.
6.Each of the 12 units in the Project will be restricted to households earning the
lesser of:
a.Extremely Low Income per the definitions set forth in California Health
and Safety Code (H&SC); and
b.25% of the NPLH Area Median Income (AMI).
7.The Project will not include an on-site manager’s unit.
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EXHIBIT 1
Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 4
1901007:SA:TRB
19090.017.010
8.The Project’s units are targeted towards homeless veterans and homeless
individuals.
FINANCIAL GAP ANALYSIS
KMA prepared a pro forma analysis to estimate the Project’s financial gap. The analysis
is located at the end of this memorandum, and is organized as follows:
Table 1: Estimated Construction Costs
Table 2: Stabilized Net Operating Income
Table 3: Financial Gap Calculation
Estimated Construction Costs (Table 1)
KMA reviewed the Developer’s January 9, 2019 pro forma and then independently
prepared a pro forma analysis of the Project. The resulting construction costs are as
follows:
Direct Costs
The direct costs assume that the Project will not be subject to State of California and/or
Federal Davis Bacon prevailing wage requirements. The direct costs applied in this
analysis can be summarized as follows:
1.The on-site improvement costs are estimated at $15 per square foot of land
area, or $225,000.
2. The residential building costs are estimated at $130 per square foot of GBA,
which equates to $1.92 million.
3.A $50,000 allowance for furnishings, fixtures and equipment is provided.
4.The contractor costs are estimated as follows:
a.A 12% allowance for contractors’ fees and general requirements is
provided.
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Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 5
1901007:SA:TRB
19090.017.010
b.An allowance for construction bonds / general liability insurance at 2% of
construction costs is provided.
5.KMA included a $125,000 direct cost contingency allowance, which is equal to
5% of other direct costs.
KMA estimates the total direct costs at $2.62 million. This equates to $177 per square
foot of GBA.
Indirect Costs
KMA utilized the following assumptions in estimating the indirect costs:
1.The architecture, engineering and consulting costs are estimated at 7% of direct
costs.
2.The Developer estimated the public permits and fees costs at $375,000, or
approximately $31,300 per unit. City of Santa Ana (City) staff should verify the
accuracy of this estimate.
3.The taxes, legal and accounting costs are estimated at 6% of direct costs.
4.The insurance costs are estimated at $27,000, or $2,250 per unit.
5.An approximately $1,700 per unit allowance for marketing and leasing costs is
provided, which equates to $20,000.
6.The Developer set the Developer Fee at $498,000, which is equal to 13% of the
net construction costs.1
7.An indirect cost contingency allowance equal to 7% of other indirect costs is
provided.
KMA estimates the total indirect costs at $1.35 million.
1 Net construction costs equate to the total construction costs less the developer fee amount.
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Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 6
1901007:SA:TRB
19090.017.010
Financing Costs
The financing costs for the Project are estimated as follows:
1.The construction period and absorption period interest costs are estimated at
$13,000. These costs are based on the following assumptions:
a.The construction period interest costs are based on a 5.30% interest rate,
a 14-month construction period, and a 60% average outstanding balance.
b.The absorption period interest costs are based on a four-month
absorption period with a 100% average outstanding balance.
2.The Developer estimates the financing fees as follows:
a.The financing fees for the construction loan are estimated at $18,000,
which equates to 7.75 points; and
b.The financing fees for the permanent loan are estimated at $12,000,
which equates to 2.75 points.
3.The following capitalized reserves will be provided:
a.A $67,000 capitalized operating reserve is provided, which equates to six
months of operating expenses and debt service payments; and
b.The Developer included a $112,000 transition reserve to satisfy the NPLH
Program.
KMA estimates the total financing costs at $222,000.
Total Construction Costs
As shown in Table 1, KMA estimates the total construction costs at $4.20 million, which
equates to approximately $349,600 per unit. In comparison, the Developer estimates
the total construction costs at $4.23 million. This equates to an approximately 1%
differential, which can be considered an insignificant difference.
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Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 7
1901007:SA:TRB
19090.017.010
Stabilized Net Operating Income (Table 2)
The Project’s funding sources include NPLH funds and LMIHAF funds. The Project’s
income and affordability standards must comport with the most stringent of the
following:
1.Income Restrictions: The tenants’ household incomes cannot exceed the stricter
of:
a.H&SC Section 50106 for extremely low income households; and
b.The applicable income limits published by HCD for the NPLH Program.
2.Affordability Restrictions: Rents applied to all of the units must reflect the more
stringent of:
a.H&SC extremely low income rents based on the calculation defined in
Section 50053; and
b.The applicable rents published by HCD for the NPLH Program.
Tenant-Paid Rents
The rents used in this analysis are based on 2018 income and rent information published
by HCD. Additionally, for the purposes of underwriting the project, the maximum
tenant-paid rents are also limited by 30% of the monthly Supplemental Security Income
allowance. The maximum allowable rents, net of the appropriate utility allowances, are
estimated as follows:2
Rent Restriction 1-Bedroom 2-Bedrooms
H&SC ELI / NPLH @ 25% Median
30% Supplemental Security Income $250 $429
H&SC Extremely Low Income $527 $586
NPLH @ 25% NPLH Median $586 $698
Applicable Rents $250 $429
2 The utility allowances are estimated at: $29 for one-bedroom units and $40 for two-bedroom units.
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Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 8
1901007:SA:TRB
19090.017.010
The Authority will provide VASH Vouchers for three of the income-restricted units. The
VASH payments are based on the difference between the rent paid by the tenant and
the fair market rent (FMR) approved by HUD. The 2019 FMRs are as follows:
1. $1,599 per unit per month for the one-bedroom units; and
2. $1,996 per unit per month for the two-bedroom units.
In addition, the NPLH Program will provide a COSR for nine one-bedroom units in the
Project. The Developer estimates the FMR for the COSR units at $845 per unit per
month.
Estimated Effective Gross Income
KMA estimates the Project’s effective gross income (EGI) at $142,600 based on the
following:
1.The gross tenant-paid rents are estimated to total $40,300.
2.The gross VASH and COSR subsidies are estimated to total $118,100.
3.A 10% vacancy and collection allowance is applied to the gross income.
Estimated Operating Expenses
The operating expenses are estimated at $88,300 based on the following:
1.The general operating expenses are estimated at $5,700 per unit per year.
2.KMA assumes that the Developer will apply for the property tax abatement that
is accorded to non-profit housing organizations that own and operate apartment
units restricted to households earning less than 80% of the area median income.
The property tax assessment overrides are estimated at $4,200.
3.The Project’s operating budget does not include any social service expenses. Per
the Developer, under the NPLH Program the social services will be provided by
the County of Orange or their designated service provider to provide social
services to the Project’s residents.
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Francis Xavier Residence: Preliminary Financial Gap Analysis Page 9
1901007:SA:TRB
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4.The NPLH Loan has a mandatory debt service payment equal to 0.42% of the
NPLH Loan amount, which equals $9,900 per year.
5.The replacement reserve deposits are set at $500 per unit per year, which is
required by the NPLH Program.
Estimated Stabilized Net Operating Income
The Project’s EGI is estimated at $142,600, and the operating expenses are estimated at
$88,300. This results in estimated stabilized net operating income of $54,300.
Financial Gap Calculation
The financial gap is estimated by deducting the available outside funding sources from
the Project’s total construction costs. The outside funding sources anticipated to be
received by the Project are described in the following sections of this memorandum.
Available Outside Funding Sources
Permanent Loan
To estimate the maximum permanent loan that can be supported by the Project’s NOI,
KMA assumed that the loan would be underwritten based on the following
requirements:
1.A 118% debt service coverage ratio;
2.A 6.15% interest rate; and
3.A 15-year amortization period.
KMA estimates that the Project’s stabilized NOI can support a $449,000 conventional
loan.
NPLH Loan
The Developer anticipates receiving a $2.35 million NPLH Loan.
3-26
EXHIBIT 1
Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 10
1901007:SA:TRB
19090.017.010
Deferred Developer Fee
The Developer is proposing to defer $365,000, or 73% of the Developer Fee that is
included in the Project’s construction costs. The deferred amount will be repaid from
the cash flow generated by the Project over time.
Total Available Outside Funding Sources
As shown in Table 3, the outside funding sources available to the Project are estimated
at $3.16 million.
Financial Gap Calculation
Based on the preceding analysis, KMA estimates the Project’s financial gap as follows:
Total Construction Costs $4,195,000
(Less) Total Available Funding Sources (3,164,000)
Financial Gap $1,031,000
Per Unit $85,900
As shown in the preceding analysis, KMA estimates that the Project exhibits a $1.03
million financial gap. In contrast, the Developer is requesting $1.07 million in financial
assistance from the Authority. This represents a $39,000 differential, which is an
approximately 1% difference. It is the KMA opinion that a difference of this magnitude
can be considered insignificant.
CONCLUSIONS / ISSUES FOR CONSIDERATION
The following summarizes the conclusions of the KMA analysis:
1.Based on the currently available information, it is KMA’s conclusion that the
Project exhibits a $1.03 million financial gap, which is approximately equal to the
Developer’s $1.07 million financial assistance request. As such, KMA concludes
that the Developer’s request is warranted by the Project’s economics.
3-27
EXHIBIT 1
Judson Brown, City of Santa Ana January 9, 2019
Francis Xavier Residence: Preliminary Financial Gap Analysis Page 11
1901007:SA:TRB
19090.017.010
2.It should be noted that the Developer and City staff are discussing the possibility
of adding ground floor retail space to the Project. The addition of retail space to
the Project may require this financial analysis to be updated. Furthermore, it is
important to note that the LMIHAF funds cannot be used to pay for any retail
costs.
3.While the construction costs appear reasonable, KMA recommends that the City
require the Developer to obtain three general contractor bids prior to selecting a
general contractor. The three bids should be provided to the City for review and
approval.
4.KMA recommends the following ground lease terms:
a.A 55-year ground lease.
b.A capitalized ground rent payment equal to the appraised fair market
value of the Site and secured by a promissory note with the following
terms:
i.A 3% simple interest rate; and
ii.Repayment of the capitalized ground rent promissory note equal
to the pro rata share of 50% of residual receipts with other soft
lenders.
3-28
EXHIBIT 1
TABLE 1
ESTIMATED CONSTRUCTION COSTS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Direct Costs 1
Site Improvements 15,000 Sf Land $15 /Sf Land $225,000
Residential Building Costs 14,792 Sf GBA $130 /Sf GBA 1,923,000
Furnishings, Fixtures & Equipment 50,000
Contractor Fees / General Requirements 12%Construction Costs 258,000
General Liability Insurance / Const Bonds 2%Construction Costs 43,000
Contingency Allowance 5%Other Direct Costs 125,000
Total Direct Costs 14,792 Sf GBA $177 /Sf GBA $2,624,000
II.Indirect Costs
Architecture, Engineering & Consulting 7.0%Direct Costs $184,000
Permits & Fees 2 12 Units $31,250 /Unit 375,000
Taxes, Legal & Accounting 6.0%Direct Costs 157,000
Insurance 12 Units $2,250 /Unit 27,000
Marketing & Leasing 12 Units $1,667 /Unit 20,000
Developer Fee 3 13%Net Construction Costs 498,000
Contingency Allowance 7.0%Other Indirects 88,000
Total Indirect Costs $1,349,000
III.Financing Costs
Interest During Construction 4 $238,000 Loan Amount 5.30%Interest $13,000
Financing Fees 5
Construction Loan $238,000 Loan Amount 7.75 Points 18,000
Permanent Loan $449,000 Loan Amount 2.75 Points 12,000
Capitalized Reserves
Operating Reserve 5 6 Months Operate Expenses & Debt Svc Pmts 67,000
NPLH Transition Reserve 5 112,000
Total Financing Costs $222,000
IV.Total Construction Costs 12 Units $349,600 /Unit $4,195,000
1 Estimates assume prevailing wage requirements will not be imposed on the Project.
2 Based on Developer estimate. The estimate should be verified by City staff.
3 Net construction costs equate to the total construction costs less the developer fee.
4
5 Based on Developer estimates.
Based on a 14-month construction period with a 60% average outstanding balance; and a 4-month absorption period with a 100% average outstanding
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; Pro Forma; trb 3-29
EXHIBIT 1
TABLE 2
STABILIZED NET OPERATING INCOME
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Manager's Unit - Unit $0 /Unit/Month $0
ELI H&SC/NPLH @ 25% Median/VASH
1-Bedroom Units @ (600-Sf)1 Units $250 /Unit/Month 3,000
2-Bedroom Units @ (800-Sf)2 Units $429 /Unit/Month 10,300
ELI H&SC/NPLH @ 25% Median/COSR
1-Bedroom Units @ (600-Sf)9 Units $250 /Unit/Month 27,000
VASH/COSR Subsidy
ELI H&SC/NPLH @ 25% Median/VASH
1-Bedroom Units @ (600-Sf)1 Units $1,349 /Unit/Month 16,200
2-Bedroom Units @ (800-Sf)2 Units $1,567 /Unit/Month 37,600
ELI H&SC/NPLH @ 25% Median/COSR
1-Bedroom Units @ (600-Sf)9 Units $595 /Unit/Month 64,300
Gross Rental Income 12 Units $158,400
(Less) Vacancy & Collection Allowance 10.0%Gross Income (15,800)
Effective Gross Income $142,600
II.Operating Expenses
General Operating Expenses 12 Units $5,680 /Unit $68,200
Property Taxes 2 12 Units $350 /Unit 4,200
HCD Mandatory Interest Payment 3 $2,350,000 NPLH Loan 0.42%NPLH Loan 9,900
Replacement Reserve 3 12 Units $500 /Unit 6,000
Total Operating Expenses 12 Units $7,358 /Unit $88,300
III.Net Operating Income $54,300
1
2
3
Based on the assumption that the Developer will receive the property tax abatement accorded to non-profit housing organizations that own and
operate apartment units restricted to households earning less than 80% of the area median income.
Based on the requirements of the No Place Like Home (NPLH) Program.
Based on Orange County 2018 Incomes distributed by HUD/HCD. As pertinent, the rents are based on rents published in 2018 by HCD, CA H&SC
Section 50053, and 30% of SSI. Utility Allowances per the Developer: $29 for 1-Bdrm units; and $40 for 2-Bdrm units.
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; Pro Forma; trb 3-30
EXHIBIT 1
TABLE 3
FINANCIAL GAP CALCULATION
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Available Funding Sources
Permanent Loan 1
Net Operating Income $54,300 NOI (See Table 2)
Income Available for Mortgage 1.18 DCR $45,929 Debt Service
Interest Rate 6.15%Interest Rate 10.22%Mortgage Constant
Permanent Loan $449,000
No Place Like Home (NPLH) Loan 2 $2,350,000
Deferred Developer Fee 2 73%Total Developer Fee $365,000
Total Available Funding Sources $3,164,000
II.Financial Gap Calculation
Total Available Funding Sources $3,164,000
(Less) Total Construction Costs (4,195,000)
III.Financial Surplus / (Financial Gap)12 Units ($85,900)/Unit ($1,031,000)
1 Assumes a 15-year amortization term.
2 Based on Developer estimate.
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; Pro Forma; trb 3-31
EXHIBIT 1
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
I.Gross Residential Income 1
Gross Affordable Rental Income $40,300 $41,308 $42,340 $43,399 $44,484 $45,596 $46,736 $47,904 $49,102 $50,329
VASH/COSR Subsidy 118,100 121,053 124,079 127,181 130,360 133,619 136,960 140,384 143,893 147,491
(Less) Vacancy & Collection Allowance (15,841)(16,237)(16,643)(17,059)(17,485)(17,922)(18,370)(18,830)(19,300)(19,783)
Effective Gross Base Income $142,559 $146,123 $149,776 $153,521 $157,359 $161,293 $165,325 $169,458 $173,695 $178,037
II.Operating Expenses 2
General Operating Expenses $68,200 $70,587 $73,058 $75,615 $78,261 $81,000 $83,835 $86,769 $89,806 $92,950
Property Taxes 4,200 4,284 4,370 4,457 4,546 4,637 4,730 4,824 4,921 5,019
HCD Mandatory Interest Payment 9,900 10,247 10,605 10,976 11,360 11,758 12,170 12,596 13,036 13,493
Replacement Reserve 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
Total Operating Expenses $88,300 $91,118 $94,032 $97,048 $100,168 $103,395 $106,735 $110,189 $113,764 $117,462
III.Net Operating Income $54,259 $55,006 $55,744 $56,473 $57,191 $57,897 $58,590 $59,269 $59,931 $60,575
(Less) Debt Service 3 (45,905)(45,905)(45,905)(45,905)(45,905)(45,905)(45,905)(45,905)(45,905)(45,905)
Net Income After Debt Service $8,354 $9,101 $9,839 $10,568 $11,286 $11,992 $12,685 $13,364 $14,026 $14,670
IV.Cash Flow Available for Contingent Payments $8,354 $9,101 $9,839 $10,568 $11,286 $11,992 $12,685 $13,364 $14,026 $14,670
(Less) Deferred Developer Fee (8,354)(9,101)(9,839)(10,568)(11,286)(11,992)(12,685)(13,364)(14,026)(14,670)
V.Cash Flow after Contingent Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Nominal Dollars $2,105,259 $116,000 NPV @ 10% Discount Rate
VI.Residual Receipt Payments to NPLH Loan $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Nominal Dollars $723,281 $40,000 NPV @ 10% Discount Rate
VII.Residual Receipt Payments to Authority Loan $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Nominal Dollars $329,348 $18,000 NPV @ 10% Discount Rate
VIII.Residual Receipt Payments to Developer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Nominal Dollars $1,052,630 $58,000 NPV @ 10% Discount Rate
1
2
3
The affordable rents and VASH/COSR subsidy are assumed to
increase by 102.5%/year. Assumes Year 1 is at stabilization.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; CF; trb3-32EXHIBIT 1
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Gross Affordable Rental Income
VASH/COSR Subsidy
(Less) Vacancy & Collection Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
HCD Mandatory Interest Payment
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
(Less) Debt Service 3
Net Income After Debt Service
IV.Cash Flow Available for Contingent Payments
(Less) Deferred Developer Fee
V.Cash Flow after Contingent Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan
Nominal Dollars
VII.Residual Receipt Payments to Authority Loan
Nominal Dollars
VIII.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
The affordable rents and VASH/COSR subsidy are assumed to
increase by 102.5%/year. Assumes Year 1 is at stabilization.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22
$51,587 $52,877 $54,199 $55,554 $56,943 $58,366 $59,826 $61,321 $62,854 $64,426 $66,036 $67,687
151,178 154,957 158,831 162,802 166,872 171,044 175,320 179,703 184,196 188,801 193,521 198,359
(20,278)(20,785)(21,304)(21,837)(22,383)(22,942)(23,516)(24,104)(24,706)(25,324)(25,957)(26,606)
$182,488 $187,050 $191,726 $196,519 $201,432 $206,468 $211,630 $216,921 $222,344 $227,902 $233,600 $239,440
$96,203 $99,570 $103,055 $106,662 $110,395 $114,259 $118,258 $122,397 $126,681 $131,115 $135,704 $140,453
5,120 5,222 5,327 5,433 5,542 5,653 5,766 5,881 5,999 6,119 6,241 6,366
13,965 14,454 14,960 15,483 16,025 16,586 17,166 17,767 18,389 19,033 19,699 20,388
6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
$121,288 $125,246 $129,341 133,578 $137,962 $142,497 $147,190 $152,045 $157,069 $162,266 $167,643 $173,207
$61,200 $61,804 $62,385 $62,941 $63,471 $63,971 $64,440 $64,876 $65,275 $65,636 $65,956 $66,232
(45,905)(45,905)(45,905)(45,905)(45,905)0 0 0 0 0 0 0
$15,295 $15,899 $16,480 $17,037 $17,566 $63,971 $64,440 $64,876 $65,275 $65,636 $65,956 $66,232
$15,295 $15,899 $16,480 $17,037 $17,566 $63,971 $64,440 $64,876 $65,275 $65,636 $65,956 $66,232
(15,295)(15,899)(16,480)(17,037)(17,566)(63,971)(64,440)(38,425)0 0 0 0
$0 $0 $0 $0 $0 $0 $0 $26,450 $65,275 $65,636 $65,956 $66,232
$0 $0 $0 $0 $0 $0 $0 $9,087 $22,426 $22,550 $22,660 $22,755
$0 $0 $0 $0 $0 $0 $0 $4,138 $10,212 $10,268 $10,318 $10,361
$0 $0 $0 $0 $0 $0 $0 $13,225 $32,638 $32,818 $32,978 $33,116
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; CF; trb3-33EXHIBIT 1
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Gross Affordable Rental Income
VASH/COSR Subsidy
(Less) Vacancy & Collection Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
HCD Mandatory Interest Payment
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
(Less) Debt Service 3
Net Income After Debt Service
IV.Cash Flow Available for Contingent Payments
(Less) Deferred Developer Fee
V.Cash Flow after Contingent Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan
Nominal Dollars
VII.Residual Receipt Payments to Authority Loan
Nominal Dollars
VIII.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
The affordable rents and VASH/COSR subsidy are assumed to
increase by 102.5%/year. Assumes Year 1 is at stabilization.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 Year 34
$69,379 $71,114 $72,892 $74,714 $76,582 $78,496 $80,459 $82,470 $84,532 $86,645 $88,811 $91,032
203,318 208,401 213,611 218,951 224,425 230,035 235,786 241,681 247,723 253,916 260,264 266,770
(27,271)(27,953)(28,652)(29,368)(30,102)(30,855)(31,626)(32,417)(33,227)(34,058)(34,909)(35,782)
$245,426 $251,561 $257,851 $264,297 $270,904 $277,677 $284,619 $291,734 $299,028 $306,503 $314,166 $322,020
$145,369 $150,457 $155,723 $161,173 $166,814 $172,653 $178,696 $184,950 $191,423 $198,123 $205,057 $212,234
6,493 6,623 6,755 6,891 7,028 7,169 7,312 7,459 7,608 7,760 7,915 8,073
21,102 21,841 22,605 23,396 24,215 25,063 25,940 26,848 27,787 28,760 29,766 30,808
6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
$178,964 $184,921 $191,083 $197,460 $204,058 $210,884 $217,948 $225,256 $232,818 $240,643 $248,739 $257,116
$66,462 $66,641 $66,767 $66,837 $66,846 $66,792 $66,671 $66,478 $66,209 $65,860 $65,427 $64,904
0 0 0 0 0 0 0 0 0 0 0 0
$66,462 $66,641 $66,767 $66,837 $66,846 $66,792 $66,671 $66,478 $66,209 $65,860 $65,427 $64,904
$66,462 $66,641 $66,767 $66,837 $66,846 $66,792 $66,671 $66,478 $66,209 $65,860 $65,427 $64,904
0 0 0 0 0 0 0 0 0 0 0 0
$66,462 $66,641 $66,767 $66,837 $66,846 $66,792 $66,671 $66,478 $66,209 $65,860 $65,427 $64,904
$22,834 $22,895 $22,938 $22,962 $22,966 $22,947 $22,905 $22,839 $22,747 $22,627 $22,478 $22,298
$10,397 $10,425 $10,445 $10,456 $10,458 $10,449 $10,430 $10,400 $10,358 $10,303 $10,235 $10,154
$33,231 $33,320 $33,384 $33,418 $33,423 $33,396 $33,336 $33,239 $33,105 $32,930 $32,713 $32,452
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; CF; trb3-34EXHIBIT 1
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Gross Affordable Rental Income
VASH/COSR Subsidy
(Less) Vacancy & Collection Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
HCD Mandatory Interest Payment
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
(Less) Debt Service 3
Net Income After Debt Service
IV.Cash Flow Available for Contingent Payments
(Less) Deferred Developer Fee
V.Cash Flow after Contingent Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan
Nominal Dollars
VII.Residual Receipt Payments to Authority Loan
Nominal Dollars
VIII.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
The affordable rents and VASH/COSR subsidy are assumed to
increase by 102.5%/year. Assumes Year 1 is at stabilization.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Year 35 Year 36 Year 37 Year 38 Year 39 Year 40 Year 41 Year 42 Year 43 Year 44 Year 45 Year 46
$93,307 $95,640 $98,031 $100,482 $102,994 $105,569 $108,208 $110,913 $113,686 $116,528 $119,441 $122,428
273,440 280,276 287,282 294,464 301,826 309,372 317,106 325,034 333,160 341,489 350,026 358,776
(36,677)(37,593)(38,533)(39,497)(40,484)(41,496)(42,534)(43,597)(44,687)(45,804)(46,949)(48,123)
$330,070 $338,322 $346,780 $355,450 $364,336 $373,444 $382,781 $392,350 $402,159 $412,213 $422,518 $433,081
$219,663 $227,351 $235,308 $243,544 $252,068 $260,890 $270,022 $279,472 $289,254 $299,378 $309,856 $320,701
8,235 8,400 8,568 8,739 8,914 9,092 9,274 9,459 9,648 9,841 10,038 10,239
31,887 33,003 34,158 35,353 36,591 37,871 39,197 40,569 41,988 43,458 44,979 46,553
6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
$265,784 $274,753 $284,033 $293,636 $303,572 $313,853 $324,492 $335,500 $346,891 $358,677 $370,873 $383,493
$64,286 $63,569 $62,747 $61,814 $60,764 $59,591 $58,289 $56,850 $55,268 $53,536 $51,645 $49,588
0 0 0 0 0 0 0 0 0 0 0 0
$64,286 $63,569 $62,747 $61,814 $60,764 $59,591 $58,289 $56,850 $55,268 $53,536 $51,645 $49,588
$64,286 $63,569 $62,747 $61,814 $60,764 $59,591 $58,289 $56,850 $55,268 $53,536 $51,645 $49,588
0 0 0 0 0 0 0 0 0 0 0 0
$64,286 $63,569 $62,747 $61,814 $60,764 $59,591 $58,289 $56,850 $55,268 $53,536 $51,645 $49,588
$22,086 $21,840 $21,557 $21,237 $20,876 $20,473 $20,026 $19,531 $18,988 $18,393 $17,743 $17,036
$10,057 $9,945 $9,816 $9,670 $9,506 $9,322 $9,119 $8,894 $8,646 $8,375 $8,079 $7,758
$32,143 $31,785 $31,373 $30,907 $30,382 $29,795 $29,144 $28,425 $27,634 $26,768 $25,822 $24,794
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; CF; trb3-35EXHIBIT 1
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Gross Affordable Rental Income
VASH/COSR Subsidy
(Less) Vacancy & Collection Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
HCD Mandatory Interest Payment
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
(Less) Debt Service 3
Net Income After Debt Service
IV.Cash Flow Available for Contingent Payments
(Less) Deferred Developer Fee
V.Cash Flow after Contingent Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan
Nominal Dollars
VII.Residual Receipt Payments to Authority Loan
Nominal Dollars
VIII.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
The affordable rents and VASH/COSR subsidy are assumed to
increase by 102.5%/year. Assumes Year 1 is at stabilization.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Year 47 Year 48 Year 49 Year 50 Year 51 Year 52 Year 53 Year 54 Year 55
$125,488 $128,625 $131,841 $135,137 $138,515 $141,978 $145,528 $149,166 $152,895
367,746 376,939 386,363 396,022 405,923 416,071 426,472 437,134 448,063
(49,326)(50,559)(51,823)(53,119)(54,447)(55,808)(57,203)(58,633)(60,099)
$443,908 $455,006 $466,381 $478,040 $489,991 $502,241 $514,797 $527,667 $540,859
$331,925 $343,543 $355,567 $368,012 $380,892 $394,223 $408,021 $422,302 $437,082
10,444 10,653 10,866 11,083 11,305 11,531 11,761 11,997 12,237
48,183 49,869 51,615 53,421 55,291 57,226 59,229 61,302 63,447
6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
$396,552 $410,065 $424,047 $438,516 $453,487 $468,980 $485,011 $501,600 $518,766
$47,356 $44,941 $42,334 $39,525 $36,504 $33,261 $29,786 $26,067 $22,093
0 0 0 0 0 0 0 0 0
$47,356 $44,941 $42,334 $39,525 $36,504 $33,261 $29,786 $26,067 $22,093
$47,356 $44,941 $42,334 $39,525 $36,504 $33,261 $29,786 $26,067 $22,093
0 0 0 0 0 0 0 0 0
$47,356 $44,941 $42,334 $39,525 $36,504 $33,261 $29,786 $26,067 $22,093
$16,270 $15,440 $14,544 $13,579 $12,541 $11,427 $10,233 $8,956 $7,590
$7,408 $7,031 $6,623 $6,183 $5,711 $5,203 $4,660 $4,078 $3,456
$23,678 $22,471 $21,167 $19,762 $18,252 $16,631 $14,893 $13,033 $11,046
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_1 9 19; CF; trb3-36EXHIBIT 1
MAYOR
Miguel A. Pulido
MAYOR PRO TEM
Juan Villegas
COUNCILMEMBERS
Cecilia Iglesias
David Penaloza
Roman Reyna
Vicente Sarmiento
Jose Solorio CITY OF SANTA ANA
SANTAANA HOUSI NG AUTHORITY
January 15, 2019
Scott Larson
Executive Director
HomeAid Orange County
24 Executive Park, Suite 100
Irvine, CA 92614
Larry Haynes
Executive Director
Mercy House Living Centers
20 Civic Center Plaza• P.O. Box 22030
Santa Ana, California 92702
(714) 667-2200
www.santa-ana.org
Re: Francis Xavier Residence
CITY MANAGER
Raul Godinez II
CITY ATTORNEY
Sonia R. Carvalho
CLERK OF THE COUNCIL
Maria D. Huizar
801, 809, and 809½ East Santa Ana Boulevard, Santa Ana, CA 92701
Pre-Commitment Letter for: LMIHAF Loan, Project Based Vouchers, and Lease
Agreement
Dear Messrs. Larson and Haynes:
HomeAid Orange County and Mercy Housing Living Centers ("Developer") requested
financial assistance in connection with the proposed development of a twelve (12) unit
affordable housing complex to be located at 801, 809, and 809½ East Santa Ana Boulevard,
Santa Ana, CA 92701 ("Project").
The City of Santa Ana ("City") and the Housing Authority of the City of Santa Ana ("Housing
Authority") have reviewed the Developer's request for assistance, and at the City
Council/Housing Authority meeting on January 15, 2019, the Housing Authority Board
authorized and approved issuance of this pre-commitment letter evidencing the preliminary
award of (collectively, the "Agency Assistance"):
Miguel A. Pulido
Mayor
mp ulid9@santa-ana.org
A loan in the maximum amount of $1,069,947.00 from the Low and Moderate
Income Housing Asset Fund ("LMIHAF") held by the Housing Authority of the City
of Santa Ana acting as the Housing Successor Agency ("Agency") for the Project
("Agency Loan");
Juan Villegas
Mayor Pro Tern, Ward 5
jvillegas@santa-ana.org
SANTA ANA CITY COUNCIL
Vicente Sarmiento David Penaloza
Ward 1 Ward 2
vsarmiento@santa-ana.org doenaloza@santa-ana.org
Jose Solorio
Ward 3
jsolorio@santa-ana .org
Roman Reyna Cecilia Igles ias Ward 4 Ward 6
rreyna@santa-ana.org ciglesias@santa-ana.org
EXHIBIT 2
Page 12
-A 99-year ground lease for the property located at 801, 809, and 809½ East Santa
Ana Boulevard (APNs: 398-303-04, 398-303-05, 398-303-06, and 398-303-07,
with a combined appraised value of $788,000.00 as of October 25, 2018); to be
used for development of affordable housing at 801, 809, and 809½ East Santa
Ana Boulevard, Santa Ana, CA 92701 ("Ground Lease"); and,
-Three (3) U.S. Department of Housing and Urban Development-Veterans Affairs
Supportive Housing ("HUD-VASH") Project-Based Vouchers ("PBV") for
Permanent Supportive Housing for the Project.
This letter shall evidence the Agency's pre-commitment of the Agency Assistance to the
Developer for the Project subject to the conditions described below.
Agency Loan:
The amount of the proposed Agency Loan has been determined based upon the Agency's
review of the Developer's request for the receipt of the Agency Assistance and the
development proforma and projected cash flows for the Project submitted by the Developer
to the Agency ("Proforma"). The Housing Authority Executive Director has authority to
approve revised development proformas and projected cash flows for the Project; provided,
however, that the Agency Assistance is not increased or extended.
The Agency Loan shall include the following terms:
•$1,069,947.00 maximum principal amount, or as much thereof as is disbursed for
hard and soft costs in constructing the Project, provided from Santa Ana Housing
Successor Agency Low and Moderate Income Housing Asset Funds.
•3% simple interest per annum.
•Repayment from 50% of Residual Receipts (pro-rata with payments due in
connection with other financing provided by other public agencies) (after payment of
operating expenses, debt service, any deferred developer fee, and partnership fees
to be described in the Agreement) with the remaining 50% to be disbursed to the
Developer.
•Remaining principal and accrued interest due upon the 55th anniversary of the
issuance of Certificate of Occupancy and/or final building permits or earlier upon sale,
refinancing or default. On that date, the City/Agency agrees to review the
performance of the property and consider in good faith any reasonable request by
Developer to modify the terms or extend the term of the Agency Promissory Notes.
Additionally, the Agency will receive a pro rata share of 50% of the net proceeds
received from any sale or refinancing of the Project, after payment of outstanding
debt and payment in full of any deferred developer fee and establishment of any
reserves and transaction costs.
EXHIBIT 2
Page 13
•Cost savings from the Project, if any, will be applied first to pay down the Agency
Loan, subject to compliance with the Tax Credit Allocation Committee ("TCAC")
Regulations and California Health and Safety Code.
Ground Lease:
The Project will be located at 801, 809, and 809½ East Santa Ana Boulevard (APNs: 398-
303-04, 398-303-05, 398-303-06, and 398-303-07) ("Property"). The Housing Authority
currently owns the Property. Accordingly, the Housing Authority Board authorized the
lease of the Property to the Developer for the Project. After Developer secures all of its
remaining financing for the development of the Project, staff will return to the Housing
Authority for consideration of a 99-year Ground Lease Agreement.
HUD-VASH PBV's:
The Project consists of twelve (12) permanent supportive housing units for homeless
individuals and families, including three (3) units to be made available at affordable rents
to HUD-VASH eligible homeless veterans for a term of fifty-five (55) years. All individuals
and families shall be referred from the Orange County Coordinated Entry System, and
are residing or working in the City of Santa Ana as defined under the City's criteria. Efforts
shall be made to incorporate ground-level retail as an interface for the forthcoming
Orange County Streetcar.
The HUD-VASH PBV's shall include the following terms:
•Voucher Source: The three (3) HUD-VASH PBVs will be funded exclusively out of
the tenant-based voucher program annual budget authority received by the
Housing Authority from the U.S. Department of Housing and Urban Development
(HUD).
•Rents: The PBV Housing Assistance Payments ("HAP") Contract rents below are
preliminary and contingent upon a reasonable rent determination to be conducted
at the time of execution of the HAP Contract:
o 1 Bedroom -$1,599
o 2 Bedroom -$1,996
In accordance with HUD regulations and the Housing Authority's Housing Choice
Voucher Program Administrative Plan, these rents are subject to review prior to
the execution of a HAP Contract.
Rents and income requirements for the remaining affordable units shall be based
on the requirements of the federal Low Income Housing Tax Credit Program as
administered by TCAC.
EXHIBIT 2
Page 14
•Annual Amount: The Project will receive PBVs for three (3) units:
Unit Size Income No. Units Proposed Rent Total Annual
Target Revenue
1-Br 30% AMI 1 $1,599 $19,188
2-Br 30% AMI 2 $1,996 $47,904
The estimated maximum annual amount received under this award is $67,092.
These estimates assume 100% occupancy of the assisted units over the twelve
month period.
•Term: The HAP Contract will have a term of twenty (20) years. Any time before
the expiration of the HAP Contract, the Developer may request an additional
twenty (20) years, subject to a determination by the Housing Authority that it is
appropriate to continue providing affordable housing for low-income families or to
expand housing opportunities and HUD funding. Subsequent extensions are
subject to the same requirements.
•Units Receiving PBV Assistance: The maximum number of units receiving PBV
assistance will be three (3).
General Provisions:
The Agency's obligation to provide the Agency Assistance to the Project is subject to each
of the following conditions:
•Developer must provide proof that it has secured all of its remaining financing for
the development of the Project before staff will return to the City Council and/or
Housing Authority for consideration of the Loan Agreement and Ground Lease
Agreement.
•All provided funding and project requirements shall conform to the City's adopted
Affordable Housing Funds Policies and Procedures, unless alternative
requirements are expressly provided in the executed Loan Agreement, Ground
Lease Agreement, or any other documents related to the development of the
Project.
•Approval of all required entitlements and discretionary actions, to allow the
construction of a 12-unit affordable housing complex to be located at 801, 809, and
809½ East Santa Ana Boulevard, Santa Ana, CA 92701.
•The Agency's obligation to provide the Loan is and shall remain subject to all
covenants, conditions, and restrictions set forth in the Loan Agreement, and in
particular Agency's analysis of the available funding sources and development and
operating costs of the Project and the overall economic feasibility of the Project.
EXHIBIT 2
Pa ge 15
•Review and approval of the documents evidencing the Agency Loan by the City
Council and/or Housing Authority, as applicable.
•Review and approval of the documents evidencing the Ground Lease by the Housing
Authority.
•Execution of HAP Contracts and all necessary documents for the PBV's.
•Project funding and PBV awards are predicated on the successful execution of a
99-year Ground Lease Agreement by the Developer with the Housing Authority.
•Compliance with California Health and Safety Code and applicable regulations set
forth in Section 34176.
Developer, at its sole cost and expense, will be responsible for securing any and all
permits and discretionary approvals that may be required for the Project by the City,
Housing Authority, or any other federal, state, or local governmental entity having or
claiming jurisdiction over the Property or Project. Notably, this pre-commitment letter
shall not obligate the City or any department thereof to approve any application or request
for or take any other action in connection with any planning approval, permit or other
action necessary for the construction, rehabilitation, installation or operation of the
Project.
This pre-commitment letter for the Project will expire on January 15, 2021.
If you have any questions or require any additional information regarding this award letter,
please contact Judson Brown, Housing Division Manager, by telephone at (714) 667-
2241 or by e-mail at jbrown@santa-ana.org.
Sincerely,
Steven A. Mendoza
Housing Authority Executive Director
Attest:
Maria D. Huizar
Recording Secretary
EXHIBIT 2
500 SOUTH GRAND AVENUE, SUITE 1480 LOS ANGELES, CALIFORNIA 90071 PHONE 213.622.8095
2108022.SA:TRB
WWW.KEYSERMARSTON.COM 19090.017.010
ADVISORS IN:
Real Estate
Affordable Housing
Economic Development
BERKELEY
A. Jerry Keyser
Timothy C. Kelly
Debbie M. Kern
David Doezema
Kevin Feeney
LOS ANGELES
Kathleen H. Head
James A. Rabe
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz
SAN DIEGO
Paul C. Marra
MEMORANDUM
To: Judson Brown, Housing Division Manager
City of Santa Ana
From: Tim Bretz
Date: October 6, 2021
Subject: Francis Xavier Residence: Financial Gap Analysis
At your request, Keyser Marston Associates, Inc. (KMA) prepared a financial gap analysis
for the project proposed to be developed at 801 – 809 ½ East Santa Ana Boulevard (Site)
by HomeAid Orange County (HomeAid) and Mercy House (Mercy House), collectively
referred to as “Developer.” The Site is currently owned by the City of Santa Ana Housing
Authority (Authority). As proposed, the project will include 17 units that will be
restricted to extremely-low income households (Project).
EXECUTIVE SUMMARY
Background
In 2018, the Developer responded to a request for proposals (RFP) issued by the City of
Santa Ana (City) / Authority to provide financial assistance to affordable housing
projects. The Developer proposed to construct a 12-unit permanent supportive housing
(PSH) apartment project located on the Site. The City/Authority approved the
Developer’s proposal and agreed to provide the following financial assistance:
1.A $1.07 million loan of Low and Moderate Income Housing Asset Funds
(LMIHAF);
EXHIBIT 3
Judson Brown, City of Santa Ana October 6, 2021
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2. Three (3) Section 8 Project-Based Vouchers (PBVs) allocated to the Authority by
the United States Department of Housing and Urban Development (HUD); and
3. To enter into a long-term ground lease with the Developer for the Site.
Subsequent to the Authority’s award, the Developer secured the following additional
funding sources:
1. The Project was awarded a $1.56 million loan of No Place Like Home (NPLH)
funds from the California Department of Housing and Community Development
(HCD);
2. The Project was awarded a $2.05 million loan of Special Needs Housing Program
(SNHP) funds from the County of Orange (County);
3. The Project was awarded an $832,000 loan from the Orange County Housing
Trust Fund (OCHTF);
4. A $1.44 million Capitalized Operating Subsidy Reserve (COSR) for 8 units was
awarded by HCD through the NPLH Program; and
5. A $630,000 COSR for four units was awarded by the County through the SNHP
Program.
Additional Financial Assistance Request
After receiving the Authority’s award of financial assistance, the Developer revised the
proposed project to include 17 one-bedroom units instead of the 12 units previously
proposed. In addition, the Developer received updated construction cost estimates,
which increased the development budget for the Project. As such, per the information
submitted by the Developer, the Project currently exhibits an additional unfunded
financial gap. The Developer is requesting that the Authority provide $588,000 in
additional financial assistance to the Project.
Estimated Additional Financial Gap
The purpose of this KMA analysis is to evaluate the Developer’s request for an
additional $588,000 in financial assistance.
EXHIBIT 3
Judson Brown, City of Santa Ana October 6, 2021
Francis Xavier Residence: Financial Gap Analysis Page 3
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The results of the KMA financial gap analysis are compared to the Developer’s financial
proposal in the following table:
KMA Developer Difference
Total Construction Costs $6,898,000 $6,899,000 ($1,000)
Outside Funding Sources 6,311,000 6,311,000 -0-
Financial Gap $587,000 $588,000 ($1,000)
As shown in the preceding table, KMA estimates the Project’s additional financial gap at
$587,000, which is approximately equal to the Developer’s request for $588,000 in
additional financial assistance from the Authority. However, it is important to note that
the KMA and Developer estimates differ on a line item by line item basis.
PROJECT DESCRIPTION
The proposed scope of development can be described as follows:
1. The Site area totals 0.34 acres, or approximately 15,000 square feet of land area.
2. The Project includes 17 one-bedroom units, which equates to a density of 49
units per acre.
3. The Project’s gross building area (GBA) is estimated at approximately 14,300
square feet.
4. The Project will include 12 garage parking spaces, which equates to 0.71 spaces
per unit.
5. The Project’s affordability mix is summarized as follows:1
1 H&SC = California Health and Safety Code income and rent definitions
EXHIBIT 3
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Francis Xavier Residence: Financial Gap Analysis Page 4
2108022:SA:TRB
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Extremely Low Income (ELI) H&SC 3
ELI H&SC / NPLH/SNHP @ 25% Median 8
ELI H&SC / SNHP @ 25% Median 1
ELI H&SC / SNHP @ 30% Median 4
Total Affordable Units 16
6. The Project will include one on-site manager’s unit.
7. The Project’s units are targeted towards homeless individuals.
FINANCIAL GAP ANALYSIS
KMA prepared a pro forma analysis to estimate the Project’s additional financial gap.
The analysis is located at the end of this memorandum, and is organized as follows:
Table 1: Estimated Construction Costs
Table 2: Stabilized Net Operating Income
Table 3: Financial Gap Calculation
Estimated Construction Costs (Table 1)
KMA reviewed the Developer’s August 27, 2021, pro forma and then independently
prepared a pro forma analysis of the Project. The resulting construction costs are
estimated as follows:
Direct Costs
The direct costs assume that the Project will not be subject to State of California and/or
Federal Davis Bacon prevailing wage requirements. The direct costs applied in this
analysis can be summarized as follows:
1. The on-site improvement costs are estimated at $25 per square foot of land
area, or $375,000.
EXHIBIT 3
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2108022:SA:TRB
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2. The residential building costs are estimated at $220 per square foot of GBA,
which equates to $3.15 million.
3. A $50,000 allowance for furnishings, fixtures and equipment is provided.
4. The contractor costs are estimated as follows:
a. A 12% allowance for contractors’ fees and general requirements is
provided.
b. An allowance for construction bonds / general liability insurance at 2% of
construction costs is provided.
5. The Developer included an $814,000 direct cost contingency allowance, which
equates to approximately 20% of other direct costs. While this contingency
allowance is higher than typical, the current construction cost environment is
extremely volatile. Recent projects have experienced exponential cost increases
over the past year. In addition, the small size of the Project may limit the ability
of the Developer to achieve economies of scale in terms of construction pricing.
As such, KMA included a 20% direct cost contingency allowance in this analysis.
KMA estimates the total direct costs at $4.88 million. This equates to $341 per square
foot of GBA.
Indirect Costs
KMA utilized the following assumptions in estimating the indirect costs:
1. The architecture, engineering and consulting costs are estimated at 7% of direct
costs.
2. The Developer estimated the public permits and fees costs at $533,000, or
approximately $31,300 per unit. City staff should verify the accuracy of this
estimate.
3. The taxes, insurance, legal and accounting costs are estimated at 3% of direct
costs.
EXHIBIT 3
Judson Brown, City of Santa Ana October 6, 2021
Francis Xavier Residence: Financial Gap Analysis Page 6
2108022:SA:TRB
19090.017.010
4. An approximately $900 per unit allowance for marketing and leasing costs is
provided, which equates to $15,000.
5. The Developer set the Developer Fee at $442,000, which is equal to 7% of the
net construction costs.2
6. An indirect cost contingency allowance equal to 10% of other indirect costs is
provided.
KMA estimates the total indirect costs at $1.63 million.
Financing Costs
The financing costs for the Project are estimated as follows:
1. The construction period and absorption period interest costs are estimated at
$235,000. These costs are based on the following assumptions:
a. The construction period interest costs are based on a 5.05% interest rate,
a 20-month construction period, and a 60% average outstanding balance.
b. The absorption period interest costs are based on a four-month
absorption period with a 100% average outstanding balance.
2. The financing fees for the construction loan are estimated at $35,000, which
equates to 1.0 point.
3. The following capitalized reserves will be provided:
a. A $60,000 capitalized operating reserve is provided, which equates to
four months of operating expenses; and
b. The Developer included a $57,000 transition reserve to satisfy the NPLH
Program.
KMA estimates the total financing costs at $387,000.
2 Net construction costs equate to the total construction costs less the developer fee amount.
EXHIBIT 3
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Francis Xavier Residence: Financial Gap Analysis Page 7
2108022:SA:TRB
19090.017.010
Total Construction Costs
As shown in Table 1, KMA estimates the total construction costs at $6.90 million, which
equates to approximately $405,800 per unit. The KMA estimate is approximately equal
to the Developer’s estimate.
Stabilized Net Operating Income (Table 2)
The Project’s funding sources include NPLH funds, SNHP funds, OCHTF funds and
LMIHAF funds. The Project’s income and affordability standards must comport with the
most stringent of the following:
1. Income Restrictions: The tenants’ household incomes cannot exceed the stricter
of:
a. H&SC Section 50106 for extremely low income households; and
b. The applicable income limits published by HCD for the NPLH and SNHP
Program.
2. Affordability Restrictions: Rents applied to all of the units must reflect the more
stringent of:
a. H&SC extremely low income rents based on the calculation defined in
Section 50053; and
b. The applicable rents published by HCD for the NPLH and SNHP Program.
Tenant-Paid Rents
The rents used in this analysis are based on 2021 income and rent information published
by HCD. Additionally, for the purposes of underwriting the project, the maximum
tenant-paid rents are also limited to 30% of the monthly Supplemental Security Income
allowance. The maximum allowable rents, net of the appropriate utility allowances, are
estimated as follows:3
3 The utility allowances are estimated at $31 for one-bedroom units.
EXHIBIT 3
Judson Brown, City of Santa Ana October 6, 2021
Francis Xavier Residence: Financial Gap Analysis Page 8
2108022:SA:TRB
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Rent Restriction 1-Bedroom
H&SC ELI
30% Supplemental Security Income $249
H&SC Extremely Low Income $609
Applicable Rents $249
H&SC ELI / NPLH/SNHP @ 25% Median
30% Supplemental Security Income $249
H&SC Extremely Low Income $609
NPLH/SNHP @ 25% NPLH Median $599
Applicable Rents $249
H&SC ELI / SNHP @ 25% Median
30% Supplemental Security Income $249
H&SC Extremely Low Income $609
NPLH @ 25% NPLH Median $599
Applicable Rents $249
H&SC ELI / SNHP @ 30% Median
30% Supplemental Security Income $249
H&SC Extremely Low Income $609
SNHP @ 30% NPLH Median $725
Applicable Rents $249
The Authority will provide PBVs for three of the income-restricted units. The PBV
payments are based on the difference between the rent paid by the tenant and the fair
market rent (FMR) approved by HUD and published by the Authority. The 2021
payment standard is set at $1,718 per unit per month for a one-bedroom unit.
EXHIBIT 3
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In addition, the NPLH Program will provide a COSR for eight units in the Project, and the
SNHP Program will provide a COSR for four units in the Project.
Estimated Effective Gross Income
KMA estimates the Project’s effective gross income (EGI) at $196,200 based on the
following:
1. The gross tenant-paid rents are estimated to total $53,200, which includes
laundry and miscellaneous income estimated at $26 per unit per month.
2. The gross PBV and COSR subsidies are estimated to total $150,000.
3. A 7% vacancy and collection allowance is applied to the gross tenant-paid
income and the PBV subsidy income.
Estimated Operating Expenses
The operating expenses are estimated at $180,800 based on the following:
1. The general operating expenses are estimated at approximately $5,700 per unit
per year.
2. KMA assumes that the Developer will apply for the property tax abatement that
is accorded to non-profit housing organizations that own and operate apartment
units restricted to households earning less than 80% of the area median income.
The property tax assessment overrides are estimated at $5,400.
3. The Developer estimates the social services expenses at $56,600, or $3,500 per
affordable unit per year.
4. The NPLH Loan has a mandatory debt service payment equal to 0.42% of the
NPLH Loan amount, which equals $6,600 per year.
5. The SNHP Loan has an annual fee of $7,500.
6. The replacement reserve deposits are set at $500 per unit per year, which is
required by the NPLH Program.
EXHIBIT 3
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Francis Xavier Residence: Financial Gap Analysis Page 10
2108022:SA:TRB
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Estimated Stabilized Net Operating Income
The Project’s EGI is estimated at $196,200, and the operating expenses are estimated at
$180,800. This results in estimated stabilized net operating income of $15,400.
However, it is important to note, that once the COSR funds are fully disbursed, the
Project’s NOI will become negative. This will likely occur between Years 15 – 20. At that
time, the Project’s affordability requirements may need to be re-evaluated to ensure
operational feasibility.
Financial Gap Calculation
The financial gap is estimated by deducting the available outside funding sources from
the Project’s total construction costs. The outside funding sources anticipated to be
received by the Project are described in the following sections of this memorandum.
Available Outside Funding Sources
Permanent Loan
The Project’s NOI could potentially support a $138,000 permanent loan. However, the
NOI consists primarily of COSR subsidy, and it is unclear if permanent lenders would be
willing to underwrite a permanent loan using this revenue source. In addition, due to
the added restrictions imposed by permanent lenders, KMA generally does not
recommend taking out a permanent loan less than $500,000. As such, a permanent
loan is not included in the Project.
NPLH Loan
The Developer was awarded a $1.56 million NPLH Loan for capital costs.
SNHP Loan
The Developer was awarded a $2.05 million SNHP Loan for capital costs.
OCHTF Loan
The Developer was awarded an $832,000 OCHTF Loan.
EXHIBIT 3
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2108022:SA:TRB
19090.017.010
Wells Fargo Contribution
The Developer anticipates receiving a $25,000 contribution from Wells Fargo.
Deferred Developer Fee
The Developer is proposing to defer $70,000, or 16% of the total Developer Fee that is
included in the Project’s construction costs. The deferred amount will be repaid from
the Developer’s share of residual receipts generated by the Project over time.
Developer Fundraising / In-Kind Contributions
The Developer anticipates obtaining $704,000 in fundraising dollars and/or in-kind
contributions.
Previously Committed Authority Funds
The Authority previously awarded a $1.07 million loan to the Project.
Total Available Outside Funding Sources
As shown in Table 3, the outside funding sources available to the Project are estimated
at $6.31 million.
Financial Gap Calculation
Based on the preceding analysis, KMA estimates the Project’s additional financial gap as
follows:
Total Construction Costs $6,898,000
(Less) Total Available Funding Sources (6,311,000)
Financial Gap $587,000
Per Unit $34,500
As shown in the preceding analysis, KMA estimates that the Project exhibits a $587,000
additional financial gap, which is approximately equal to the Developer’s $588,000
request for additional financial assistance from the Authority.
EXHIBIT 3
Judson Brown, City of Santa Ana October 6, 2021
Francis Xavier Residence: Financial Gap Analysis Page 12
2108022:SA:TRB
19090.017.010
It is important to note that the additional financial gap can be primarily attributed to a
higher than typical direct cost contingency allowance. However, given the extreme
volatility in construction costs and the small size of the Project, KMA concurs that the
Developer’s contingency allowance is reasonable under the current conditions.
CONCLUSIONS / ISSUES FOR CONSIDERATION
The following summarizes the conclusions of the KMA analysis:
1. Based on the currently available information, it is KMA’s conclusion that the
Developer’s request for $588,000 in additional financial assistance is warranted
by the Project’s economics.
2. The construction industry is currently experiencing substantial volatility with
regards to material and labor prices. While the construction costs appear
reasonable, it is uncertain how construction costs will change over the next year.
As such, KMA recommends that the City require the Developer to obtain three
general contractor bids prior to selecting a general contractor. The three bids
should be provided to the City for review and approval.
3. It is important to note that once the COSR funds are fully disbursed, the Project’s
NOI will become negative. This will likely occur between Years 15 – 20. At that
time, the Project’s affordability requirements may need to be re-evaluated to
ensure operational feasibility.
EXHIBIT 3
TABLE 1
ESTIMATED CONSTRUCTION COSTS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Direct Costs 1
Site Improvements 15,000 Sf Land $25 /Sf Land $375,000
Residential Building Costs 14,321 Sf GBA $220 /Sf GBA 3,151,000
Furnishings, Fixtures & Equipment 50,000
Contractor Fees / General Requirements 12.0%Construction Costs 423,000
General Liability Insurance / Const Bonds 2.0%Construction Costs 71,000
Contingency Allowance 20.0%Other Direct Costs 814,000
Total Direct Costs 14,321 Sf GBA $341 /Sf GBA $4,884,000
II.Indirect Costs
Architecture, Engineering & Consulting 7.0%Direct Costs $342,000
Permits & Fees 2 17 Units $31,353 /Unit 533,000
Taxes, Ins., Legal & Accounting 3.0%Direct Costs 147,000
Marketing & Leasing 17 Units $882 /Unit 15,000
Developer Fee 3 7%Net Construction Costs 442,000
Contingency Allowance 10.0%Other Indirects 148,000
Total Indirect Costs $1,627,000
III.Financing Costs
Interest During Construction 4 $3,493,000 Loan Amount 5.05%Interest $235,000
Financing Fees
Construction Loan $3,493,000 Loan Amount 1.00 Point 35,000
Capitalized Reserves
Operating Reserve 4 Months Operating Expenses & Debt Svc Pmts 60,000
NPLH Transition Reserve 5 57,000
Total Financing Costs $387,000
IV.Total Development Costs 17 Units $405,800 /Unit $6,898,000
1 Estimates assume prevailing wage requirements will not be imposed on the Project.
2 Based on Developer estimate. The estimate should be verified by City staff.
3 Per Developer. Net construction costs equate to the total construction costs less the developer fee.
4
5 Based on Developer estimate.
Based on a 20-month construction period with a 60% average outstanding balance; and a 4-month absorption period with a 100% average outstanding
balance.
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; Pro Forma_w 3 PBV; trb 1 of 12
EXHIBIT 3
TABLE 2
STABILIZED NET OPERATING INCOME
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Manager's Unit 1 Unit $0 /Unit/Month $0
ELI H&SC/PBV
1-Bedroom Units @ (500-Sf)3 Units $249 /Unit/Month 9,000
ELI H&SC/NPLH @ 25% Median/SNHP/NPLH COSR
1-Bedroom Units @ (500-Sf)8 Units $249 /Unit/Month 23,900
ELI H&SC/SNHP @ 25% Median
1-Bedroom Units @ (500-Sf)1 Unit $249 /Unit/Month 3,000
ELI H&SC/SNHP @ 30% Median/SNHP COSR
1-Bedroom Units @ (500-Sf)4 Units $249 /Unit/Month 12,000
PBV/COSR Subsidies
ELI H&SC/PBV
1-Bedroom Units @ (500-Sf)3 Units $1,469 /Unit/Month 52,900
NPLH COSR 2 8 Units 65,000
SNHP COSR 2 4 Units 32,500
Gross Income 17 Units $198,300
Laundry/Miscellaneous Income 17 Units $26 /Unit/Month 5,300
(Less) Vacancy Allowance 7.0%Tenant-Paid Income + PBV Subsidy (7,400)
Effective Gross Income $196,200
II.Operating Expenses
General Operating Expenses 17 Units $5,656 /Unit $96,200
Property Taxes 3 17 Units $318 /Unit 5,400
Supportive Services 16 Units $3,540 /Affordable Unit 56,600
NLPH Annual Fee 4 $1,563,000 NPLH Loan 0.42%NPLH Loan 6,600
SNHP Annual Fee 5 7,500
Replacement Reserve 17 Units $500 /Unit 8,500
Total Operating Expenses 17 Units $10,635 /Unit $180,800
III.Net Operating Income $15,400
1
2
3
4
5 Based on the requirements of the Special Needs Housing Program (SNHP).
Based on the assumption that the Developer will receive the property tax abatement accorded to non-profit housing organizations that own and
operate apartment units restricted to households earning less than 80% of the area median income.
Based on the requirements of the No Place Like Home (NPLH) Program.
Based on Orange County 2021 Incomes distributed by HUD/HCD. As pertinent, the rents are based on rents published in 2021 by HCD, CA H&SC
Section 50053, and 30% of SSI. Utility Allowances per the Developer: $31 for 1-Bdrm units.
Per KMA COSR analysis. See TABLE 5. The final amounts will be determined by HCD and CalHFA.
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; Pro Forma_w 3 PBV; trb 2 of 12
EXHIBIT 3
TABLE 3
FINANCIAL GAP CALCULATION
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Available Funding Sources 1
NPLH 2 8 NPLH Units $195,375 /NPLH Unit $1,563,000
SNHP 2 13 SNHP Units $157,462 /SNHP Unit $2,047,000
OCHTF 2 $832,000
Wells Fargo Contribution 3 $25,000
Deferred Developer Fee 3 16%Total Developer Fee $70,000
Developer Fundraising / In-Kind Contributions 3 $704,000
Previously Committed Housing Authority Funds 4 $1,070,000
Total Available Funding Sources $6,311,000
II.Financial Gap Calculation
Total Available Funding Sources $6,311,000
(Less) Total Construction Costs (6,898,000)
III.Additional Financial Surplus / (Financial Gap)17 Units ($34,500)/Unit ($587,000)
1
2 Based on award documentation
3 Based on Developer estimate.
4 Per City award letter.
The maximum permanent loan supported by the Project's NOI is estimated at $138,000. This assumes a fully amortized 15-year term. However, given
the added restrictions imposed by permanent lenders, KMA recommends that projects avoid taking out permanent loans less than $500,000.
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; Pro Forma_w 3 PBV; trb 3 of 12
EXHIBIT 3
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
I.Gross Residential Income 1
Tenant-Paid Income $53,200 $54,530 $55,893 $57,291 $58,723 $60,191 $61,696 $63,238
PBV Subsidy Income 52,900 54,223 55,578 56,968 58,392 59,851 61,348 62,881
NPLH COSR 64,957 66,969 69,057 71,223 73,471 75,803 78,223 80,733
SNHP COSR 32,479 33,485 34,528 35,611 36,735 37,901 39,111 40,367
(Less) Vacancy Allowance (7,427)(7,613)(7,803)(7,998)(8,198)(8,403)(8,613)(8,828)
Effective Gross Base Income $196,109 $201,593 $207,253 $213,095 $219,123 $225,344 $231,765 $238,391
II.Operating Expenses 2
General Operating Expenses $96,200 $99,567 $103,052 $106,659 $110,392 $114,255 $118,254 $122,393
Property Taxes 5,400 5,508 5,618 5,731 5,845 5,962 6,081 6,203
Supportive Services 56,600 58,015 59,465 60,952 62,476 64,038 65,639 67,280
NLPH Annual Fee 6,600 6,831 7,070 7,318 7,574 7,839 8,113 8,397
SNHP Annual Fee 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
Replacement Reserve 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500
Total Operating Expenses $180,800 $185,921 $191,205 $196,659 $202,286 $208,094 $214,087 $220,273
III.Net Operating Income $15,309 $15,672 $16,048 $16,436 $16,836 $17,250 $17,677 $18,118
V.Cash Flow Available for Residual Receipts Payments $15,309 $15,672 $16,048 $16,436 $16,836 $17,250 $17,677 $18,118
Nominal Dollars $279,620 $174,000 NPV @ 6% Discount Rate
VI.Residual Receipt Payments to NPLH Loan 4 $1,961 $2,007 $2,055 $2,105 $2,156 $2,209 $2,264 $2,321
Nominal Dollars $35,814 $22,000 NPV @ 6% Discount Rate
VII.Residual Receipt Payments to SNHP Loan 4 $2,569 $2,630 $2,693 $2,758 $2,825 $2,895 $2,966 $3,040
Nominal Dollars $46,921 $29,000 NPV @ 6% Discount Rate
VII.Residual Receipt Payments to OCHTF Loan 4 $1,044 $1,069 $1,094 $1,121 $1,148 $1,176 $1,206 $1,236
Nominal Dollars $19,069 $12,000 NPV @ 6% Discount Rate
IX.Residual Receipt Payments to Authority Loan 4 $2,081 $2,130 $2,181 $2,234 $2,288 $2,345 $2,403 $2,463
Nominal Dollars $38,006 $24,000 NPV @ 6% Discount Rate
X.Residual Receipt Payments to Developer $7,654 $7,836 $8,024 $8,218 $8,418 $8,625 $8,839 $9,059
Nominal Dollars $139,810 $87,000 NPV @ 6% Discount Rate
1
2
3
4
The affordable rents and VASH subsidy are assumed to increase by
102.5%/year. The SNHP income is increased by 101.0%/year.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Based on pro rata share of 50% of Residual Receipts.
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; CF_w 3 PBV; trb 4 of 12
EXHIBIT 3
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Tenant-Paid Income
PBV Subsidy Income
NPLH COSR
SNHP COSR
(Less) Vacancy Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
Supportive Services
NLPH Annual Fee
SNHP Annual Fee
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
V.Cash Flow Available for Residual Receipts Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan 4
Nominal Dollars
VII.Residual Receipt Payments to SNHP Loan 4
Nominal Dollars
VII.Residual Receipt Payments to OCHTF Loan 4
Nominal Dollars
IX.Residual Receipt Payments to Authority Loan 4
Nominal Dollars
X.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
4
The affordable rents and VASH subsidy are assumed to increase by
102.5%/year. The SNHP income is increased by 101.0%/year.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Based on pro rata share of 50% of Residual Receipts.
Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17
$64,819 $66,440 $68,100 $69,803 $71,548 $73,337 $75,170 $77,049 $78,976
64,454 66,065 67,716 69,409 71,145 72,923 74,746 76,615 78,530
83,338 86,040 88,844 91,752 94,769 97,899 101,146 104,513 108,007
41,669 43,020 44,422 45,876 47,385 48,950 50,573 52,257 19,701
(9,049)(9,275)(9,507)(9,745)(9,988)(10,238)(10,494)(10,757)(11,025)
$245,231 $252,290 $259,576 $267,096 $274,858 $282,870 $291,141 $299,678 $274,188
$126,677 $131,111 $135,700 $140,449 $145,365 $150,453 $155,718 $161,169 $166,809
6,327 6,453 6,583 6,714 6,849 6,985 7,125 7,268 7,413
68,962 70,686 73,160 75,720 78,370 81,113 83,952 86,891 89,932
8,691 8,995 9,310 9,636 9,973 10,322 10,683 11,057 11,444
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500
$226,657 $233,245 $240,752 $248,519 $256,557 264,874 $273,479 $282,384 $291,599
$18,574 $19,045 $18,824 $18,577 $18,301 $17,997 $17,662 $17,294 ($17,411)
$18,574 $19,045 $18,824 $18,577 $18,301 $17,997 $17,662 $17,294 $0
$2,379 $2,439 $2,411 $2,379 $2,344 $2,305 $2,262 $2,215 $0
$3,117 $3,196 $3,159 $3,117 $3,071 $3,020 $2,964 $2,902 $0
$1,267 $1,299 $1,284 $1,267 $1,248 $1,227 $1,204 $1,179 $0
$2,525 $2,589 $2,559 $2,525 $2,488 $2,446 $2,401 $2,351 $0
$9,287 $9,522 $9,412 $9,288 $9,151 $8,998 $8,831 $8,647 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; CF_w 3 PBV; trb 5 of 12
EXHIBIT 3
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Tenant-Paid Income
PBV Subsidy Income
NPLH COSR
SNHP COSR
(Less) Vacancy Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
Supportive Services
NLPH Annual Fee
SNHP Annual Fee
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
V.Cash Flow Available for Residual Receipts Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan 4
Nominal Dollars
VII.Residual Receipt Payments to SNHP Loan 4
Nominal Dollars
VII.Residual Receipt Payments to OCHTF Loan 4
Nominal Dollars
IX.Residual Receipt Payments to Authority Loan 4
Nominal Dollars
X.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
4
The affordable rents and VASH subsidy are assumed to increase by
102.5%/year. The SNHP income is increased by 101.0%/year.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Based on pro rata share of 50% of Residual Receipts.
Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26
$80,950 $82,974 $85,048 $87,174 $89,354 $91,588 $93,877 $96,224 $98,630
80,494 82,506 84,569 86,683 88,850 91,071 93,348 95,682 98,074
111,630 37,466 -
- - -
(11,301)(11,584)(11,873)(12,170)(12,474)(12,786)(13,106)(13,433)(13,769)
$261,773 $191,362 $157,744 $161,687 $165,729 $169,873 $174,119 $178,472 $182,934
$172,648 $178,690 $184,945 $191,418 $198,117 $205,051 $212,228 $219,656 $227,344
7,561 7,713 7,867 8,024 8,185 8,348 8,515 8,686 8,859
93,079 96,337 99,709 103,199 106,811 110,549 114,418 118,423 122,568
11,845 12,259 12,689 13,133 13,592 14,068 14,560 15,070 15,597
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500
$301,133 $311,000 $321,209 $331,773 $342,705 $354,017 $365,722 $377,835 $390,369
($39,361)($119,637)($163,465)($170,086)($176,976)($184,144)($191,603)($199,362)($207,435)
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; CF_w 3 PBV; trb 6 of 12
EXHIBIT 3
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Tenant-Paid Income
PBV Subsidy Income
NPLH COSR
SNHP COSR
(Less) Vacancy Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
Supportive Services
NLPH Annual Fee
SNHP Annual Fee
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
V.Cash Flow Available for Residual Receipts Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan 4
Nominal Dollars
VII.Residual Receipt Payments to SNHP Loan 4
Nominal Dollars
VII.Residual Receipt Payments to OCHTF Loan 4
Nominal Dollars
IX.Residual Receipt Payments to Authority Loan 4
Nominal Dollars
X.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
4
The affordable rents and VASH subsidy are assumed to increase by
102.5%/year. The SNHP income is increased by 101.0%/year.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Based on pro rata share of 50% of Residual Receipts.
Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 Year 34 Year 35
$101,096 $103,623 $106,214 $108,869 $111,591 $114,380 $117,240 $120,171 $123,175
100,525 103,039 105,615 108,255 110,961 113,735 116,579 119,493 122,481
(14,113)(14,466)(14,828)(15,199)(15,579)(15,968)(16,367)(16,776)(17,196)
$187,508 $192,195 $197,000 $201,925 $206,973 $212,148 $217,451 $222,888 $228,460
$235,301 $243,537 $252,061 $260,883 $270,014 $279,464 $289,245 $299,369 $309,847
9,036 9,217 9,402 9,590 9,781 9,977 10,177 10,380 10,588
126,858 131,298 135,893 140,650 145,572 150,667 155,941 161,399 167,047
16,143 16,708 17,293 17,898 18,525 19,173 19,844 20,539 21,258
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500
$403,339 $416,760 $430,648 $445,020 $459,892 $475,281 $491,207 $507,686 $524,740
($215,831)($224,565)($233,648)($243,095)($252,919)($263,134)($273,755)($284,799)($296,280)
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; CF_w 3 PBV; trb 7 of 12
EXHIBIT 3
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Tenant-Paid Income
PBV Subsidy Income
NPLH COSR
SNHP COSR
(Less) Vacancy Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
Supportive Services
NLPH Annual Fee
SNHP Annual Fee
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
V.Cash Flow Available for Residual Receipts Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan 4
Nominal Dollars
VII.Residual Receipt Payments to SNHP Loan 4
Nominal Dollars
VII.Residual Receipt Payments to OCHTF Loan 4
Nominal Dollars
IX.Residual Receipt Payments to Authority Loan 4
Nominal Dollars
X.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
4
The affordable rents and VASH subsidy are assumed to increase by
102.5%/year. The SNHP income is increased by 101.0%/year.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Based on pro rata share of 50% of Residual Receipts.
Year 36 Year 37 Year 38 Year 39 Year 40 Year 41 Year 42 Year 43 Year 44
$126,255 $129,411 $132,646 $135,962 $139,361 $142,845 $146,417 $150,077 $153,829
125,543 128,681 131,898 135,196 138,575 142,040 145,591 149,231 152,961
(17,626)(18,066)(18,518)(18,981)(19,456)(19,942)(20,441)(20,952)(21,475)
$234,171 $240,026 $246,026 $252,177 $258,481 $264,943 $271,567 $278,356 $285,315
$320,691 $331,916 $343,533 $355,556 $368,001 $380,881 $394,212 $408,009 $422,289
10,799 11,015 11,236 11,460 11,690 11,923 12,162 12,405 12,653
172,894 178,945 185,209 191,691 198,400 205,344 212,531 219,970 227,669
22,002 22,772 23,569 24,394 25,247 26,131 27,046 27,992 28,972
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500
$542,387 $560,648 $579,546 $599,101 $619,338 $640,279 $661,950 $684,376 $707,583
($308,215)($320,623)($333,519)($346,924)($360,857)($375,336)($390,383)($406,020)($422,268)
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; CF_w 3 PBV; trb 8 of 12
EXHIBIT 3
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Tenant-Paid Income
PBV Subsidy Income
NPLH COSR
SNHP COSR
(Less) Vacancy Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
Supportive Services
NLPH Annual Fee
SNHP Annual Fee
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
V.Cash Flow Available for Residual Receipts Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan 4
Nominal Dollars
VII.Residual Receipt Payments to SNHP Loan 4
Nominal Dollars
VII.Residual Receipt Payments to OCHTF Loan 4
Nominal Dollars
IX.Residual Receipt Payments to Authority Loan 4
Nominal Dollars
X.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
4
The affordable rents and VASH subsidy are assumed to increase by
102.5%/year. The SNHP income is increased by 101.0%/year.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Based on pro rata share of 50% of Residual Receipts.
Year 45 Year 46 Year 47 Year 48 Year 49 Year 50 Year 51 Year 52 Year 53
$157,675 $161,616 $165,657 $169,798 $174,043 $178,394 $182,854 $187,426 $192,111
156,785 160,705 164,723 168,841 173,062 177,388 181,823 186,369 191,028
(22,012)(22,563)(23,127)(23,705)(24,297)(24,905)(25,527)(26,166)(26,820)
$292,448 $299,759 $307,253 $314,934 $322,808 $330,878 $339,150 $347,629 $356,319
$437,069 $452,367 $468,200 $484,587 $501,547 $519,101 $537,270 $556,074 $575,537
12,906 13,164 13,428 13,696 13,970 14,250 14,535 14,825 15,122
235,637 243,884 252,420 261,255 270,399 279,863 289,658 299,796 310,289
29,986 31,036 32,122 33,246 34,410 35,614 36,861 38,151 39,486
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500
$731,599 $756,451 $782,169 $808,784 $836,326 $864,828 $894,323 $924,846 $956,434
($439,151)($456,692)($474,916)($493,850)($513,518)($533,950)($555,173)($577,218)($600,114)
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; CF_w 3 PBV; trb 9 of 12
EXHIBIT 3
TABLE 4
CASH FLOW ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Gross Residential Income 1
Tenant-Paid Income
PBV Subsidy Income
NPLH COSR
SNHP COSR
(Less) Vacancy Allowance
Effective Gross Base Income
II.Operating Expenses 2
General Operating Expenses
Property Taxes
Supportive Services
NLPH Annual Fee
SNHP Annual Fee
Replacement Reserve
Total Operating Expenses
III.Net Operating Income
V.Cash Flow Available for Residual Receipts Payments
Nominal Dollars
VI.Residual Receipt Payments to NPLH Loan 4
Nominal Dollars
VII.Residual Receipt Payments to SNHP Loan 4
Nominal Dollars
VII.Residual Receipt Payments to OCHTF Loan 4
Nominal Dollars
IX.Residual Receipt Payments to Authority Loan 4
Nominal Dollars
X.Residual Receipt Payments to Developer
Nominal Dollars
1
2
3
4
The affordable rents and VASH subsidy are assumed to increase by
102.5%/year. The SNHP income is increased by 101.0%/year.
General operating expenses are assumed to increase by
103.5%/year, property taxes at 102.0%/year and replacement
reserves remain constant.
SEE TABLE 3
Based on pro rata share of 50% of Residual Receipts.
Year 54 Year 55
$196,914 $201,837
195,804 200,699
(27,490)(28,177)
$365,227 $374,358
$595,681 $616,530
15,424 15,733
321,149 332,389
40,868 42,298
7,500 7,500
8,500 8,500
$989,122 $1,022,950
($623,895)($648,592)
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; CF_w 3 PBV; trb 10 of 12
EXHIBIT 3
TABLE 5
NPLH/SNHP COSR ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Number of COSR Units
For Revenue
NPLH Units (For COSR)8
SNHP Units (For COSR)4
Total Units 12
For Expenses (Including Manager's Unit)17
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
II.Gross Income 1
1-Bedroom Units $249 $35,856 $36,752 $37,671 $38,613 $39,578 $40,568 $41,582 $42,622 $43,687 $44,779
Laundry / Miscellaneous Income $26 3,744 3,838 3,934 4,032 4,133 4,236 4,342 4,450 4,562 4,676
(Less) Vacancy Allowance 7.0%(2,772)(2,841)(2,912)(2,985)(3,060)(3,136)(3,215)(3,295)(3,377)(3,462)
Effective Gross Base Income $36,828 $37,749 $38,692 $39,660 $40,651 $41,668 $42,709 $43,777 $44,871 $45,993
III.Operating Expenses 2
General Operating Expenses $5,656 $67,873 $70,249 $72,708 $75,252 $77,886 $80,612 $83,434 $86,354 $89,376 $92,504
Property Taxes $318 3,812 3,888 3,966 4,045 4,126 4,208 4,293 4,379 4,466 4,555
Supportive Services $3,540 42,479 43,965 45,504 47,097 48,745 50,451 52,217 54,045 55,936 57,894
NLPH Annual Fee 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600
SNHP Annual Fee 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
Replacement Reserve $500 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
Total Operating Expenses $134,264 $138,202 $142,277 $146,494 $150,857 $155,372 $160,043 $164,877 $169,878 $175,054
IV.Net Operating Income ($97,436)($100,454)($103,585)($106,834)($110,206)($113,704)($117,334)($121,100)($125,007)($129,061)
V.NPLH COSR 8 NPLH Units
Beginning Balance $1,443,936 $1,392,769 $1,339,058 $1,282,701 $1,223,593 $1,161,623 $1,096,678 $1,028,640 $957,386 $882,788
Annual Withdrawal (64,957)(66,969)(69,057)(71,223)(73,471)(75,803)(78,223)(80,733)(83,338)(86,040)
Interest @ 1.0%13,790 13,258 12,700 12,115 11,501 10,858 10,185 9,479 8,740 7,967
Ending Balance $1,392,769 $1,339,058 $1,282,701 $1,223,593 $1,161,623 $1,096,678 $1,028,640 $957,386 $882,788 $804,715
VI.SNHP COSR 4 SNHP Units
Beginning Balance $629,924 $603,420 $575,635 $546,517 $516,015 $484,072 $450,633 $415,636 $379,023 $340,727
Annual Withdrawal (32,479)(33,485)(34,528)(35,611)(36,735)(37,901)(39,111)(40,367)(41,669)(43,020)
Interest @ 1.0%5,974 5,699 5,411 5,109 4,793 4,462 4,115 3,753 3,374 2,977
Ending Balance $603,420 $575,635 $546,517 $516,015 $484,072 $450,633 $415,636 $379,023 $340,727 $300,684
1 Escalated at 102.5%/year.
2
Per Unit /
Month
Per Unit / Year
General operating expenses and social services costs are
escalated at 103.5/year; property taxes at 102.0%/year; and
NPLH/ SNHP annual fees and replacement reserve deposits
remain constant.
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; Combined COSR; trb 11 of 12
EXHIBIT 3
TABLE 5
NPLH/SNHP COSR ANALYSIS
FRANCIS XAVIER RESIDENCE
SANTA ANA, CALIFORNIA
I.Number of COSR Units
For Revenue
NPLH Units (For COSR)8
SNHP Units (For COSR)4
Total Units 12
For Expenses (Including Manager's Unit)17
II.Gross Income 1
1-Bedroom Units $249
Laundry / Miscellaneous Income $26
(Less) Vacancy Allowance 7.0%
Effective Gross Base Income
III.Operating Expenses 2
General Operating Expenses $5,656
Property Taxes $318
Supportive Services $3,540
NLPH Annual Fee
SNHP Annual Fee
Replacement Reserve $500
Total Operating Expenses
IV.Net Operating Income
V.NPLH COSR 8 NPLH Units
Beginning Balance
Annual Withdrawal
Interest @ 1.0%
Ending Balance
VI.SNHP COSR 4 SNHP Units
Beginning Balance
Annual Withdrawal
Interest @ 1.0%
Ending Balance
1 Escalated at 102.5%/year.
2
Per Unit /
Month
Per Unit / Year
General operating expenses and social services costs are
escalated at 103.5/year; property taxes at 102.0%/year; and
NPLH/ SNHP annual fees and replacement reserve deposits
remain constant.
Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
$45,899 $47,046 $48,222 $49,428 $50,664 $51,930 $53,228 $54,559 $55,923 $57,321
4,793 4,912 5,035 5,161 5,290 5,422 5,558 5,697 5,839 5,985
(3,548)(3,637)(3,728)(3,821)(3,917)(4,015)(4,115)(4,218)(4,323)(4,431)
$47,143 $48,322 $49,530 $50,768 $52,037 $53,338 $54,671 $56,038 $57,439 $58,875
$95,742 $99,093 $102,561 $106,151 $109,866 $113,712 $117,692 $121,811 $126,074 $130,487
4,647 4,739 4,834 4,931 5,030 5,130 5,233 5,337 5,444 5,553
59,920 62,017 64,188 66,435 68,760 71,166 73,657 76,235 78,903 81,665
6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
$180,409 $185,950 $191,684 197,616 $203,756 $210,108 $216,681 $223,483 $230,522 $237,805
($133,266)($137,628)($142,154)($146,849)($151,719)($156,770)($162,010)($167,445)($173,083)($178,930)
$804,715 $723,030 $637,591 $548,250 $454,854 $357,245 $255,259 $148,725 $37,466 $0
(88,844)(91,752)(94,769)(97,899)(101,146)(104,513)(108,007)(111,630)(37,466)0
7,159 6,313 5,428 4,504 3,537 2,527 1,473 371 0 0
$723,030 $637,591 $548,250 $454,854 $357,245 $255,259 $148,725 $37,466 $0 $0
$300,684 $258,825 $215,078 $169,370 $121,625 $71,762 $19,701 $0 $0 $0
(44,422)(45,876)(47,385)(48,950)(50,573)(52,257)(19,701)0 0 0
2,563 2,129 1,677 1,204 711 195 0 0 0 0
$258,825 $215,078 $169,370 $121,625 $71,762 $19,701 $0 $0 $0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Francis Xavier Residence PF_8 27 21.xlsm; Combined COSR; trb 12 of 12
EXHIBIT 3
LOAN AGREEMENT
by and between the
HOUSING AUTHORITY OF THE CITY OF SANTA ANA ACTING AS THE
HOUSING SUCCESSOR AGENCY
and
Shelter Providers of Orange County, Inc. DBA HomeAid Orange County, Inc.
(801, 807, 809 and 809 ½ E. Santa Ana Blvd., Santa Ana, California)
Dated: ______________, 2021
EXHIBIT 4
EXHIBIT 4
LOAN AGREEMENT
HOUSING SUCCESSOR AGENCY FUNDS
THIS LOAN AGREEMENT (“Agreement”) dated, for identification purposes
only, as of _____, 2021, is made and entered into by and between the Housing Authority
of the City of Santa Ana (CA093), acting as the Housing Successor Agency, a public body,
corporate and politic (“Agency”), and Shelter Providers of Orange County, Inc., DBA
HomeAid Orange County (“Developer”) with reference to the following:
RECITALS:
A. The Agency is authorized by the Community Redevelopment Law of the
State of California (Health and Safety Code section 33000, et seq.) (“CRL”) to expend
funds to increase the supply of very low and low income housing available at affordable
housing costs. In part to further this goal, the Agency has created the Merged Project
Areas, within the City (the “Project Area”), and adopted a Redevelopment Plan for the
redevelopment of the Project Area. In accordance with Section 33334.2, et seq., of the
CRL, the Agency sets aside a portion of the tax increment revenues it receives from the
Merged Project Area in a separate low and moderate housing asset fund, which the Agency
uses for the construction, preservation, and rehabilitation of affordable housing for low
income households.
B. Developer requested financial assistance in connection with the proposed
ground lease, development, construction, ownership, occupancy, and operation of a
seventeen (17) unit affordable housing complex (“Project”) to be located at 801, 807, 809
and 809 ½ E. Santa Ana Blvd., Santa Ana, California, and legally described as set forth in
Exhibit A attached hereto and incorporated herein (“Property”). Nine (9) of the units will
be permanent supportive housing for households earning no more than 30% of the Area
Median Income; Seven (7) of the units will be permanent supportive housing for
households earning no more than 25% of the Area Median Income; and one (1) of the units
is reserved for an on-site manager. Office space within the development will be provided
for use as space for the case managers that will provide mental health services. On-site
amenities will include a courtyard, community room and a lounge area. Mercy House
Living Centers (“Mercy House”) will manage the onsite manager.
C. The City of Santa Ana (“City”) and the Housing Authority of the City of
Santa Ana (“Housing Authority”) reviewed Developer’s request for assistance and at the
City Council/Housing Authority meeting on January 15, 2019, the Housing Authority
Board authorized and approved issuance of a conditional, pre-commitment letter
evidencing the preliminary award of $1,069,947 of funds to the Project (“Agency Loan”),
to be funded exclusively from the Low and Moderate Income Housing Asset Fund (the
“LMIHAF”) held by the Agency.
D. The amount of the Agency Loan was determined based upon the City and
Agency’s review of the Developer’s request for the receipt of the Agency Loan and the
development proforma and projected cash flows for the Project submitted by the Developer
to the City/Agency as of January, 2019 (“Proforma”). The Housing Authority’s Executive
EXHIBIT 4
Director has authority to approve revised development proformas and projected cash flows
for the Project; provided, however, that the Agency Loan is not materially increased or
extended.
E. Developer requested an additional $587,000 from the Agency in order to
offset a portion of the additional construction costs associated with the Project due to the
increased costs of labor and materials since January 15, 2019.
F. The Agency desires to increase the pre-commitment letter to Developer in
order to make possible the development and construction of the Project, thereby expanding
the supply of decent, safe, sanitary and affordable housing within the City.
G. In furtherance of the CRL and the Redevelopment Plan, Developer has
applied to the Agency for a loan with which to: (1) Lease, develop and construct the Project,
and (2) thereafter to maintain, operate and professionally manage the Project as decent,
safe, sanitary and affordable rental housing.
H. The Agency, on certain terms and conditions, desires to make such Agency
Loan to Developer in order to make possible the lease, development, construction, ownership,
maintenance and operation of the Project, thereby expanding the supply of decent, safe,
sanitary and affordable housing within the City.
I. If there is any inconsistency between State, and local guidelines with regard
to any of the terms and conditions contained herein, the more stringent shall apply.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, Agency and Developer agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Project Documents, unless otherwise
expressly defined, are defined where first used in this Agreement and/or as set forth in this
Article 1.
“Adjusted for family size appropriate to the unit" shall have the
meaning set forth by Health and Safety Code Section 50052.5(h).
"Affordability Restrictions on Transfer of Property" means that certain
document affecting real property benefiting the Agency, attached hereto and incorporated
herein as Exhibit B.
"Affordable Housing" means the total housing costs paid by a qualifying
household, which shall not exceed the fraction of gross income specified, as follows, in
accordance with Sections 50052.5 and 50053 of the Health & Safety Code and the U.S.
Department of Housing and Urban Development (HUD):
EXHIBIT 4
Very Low-Income Households. Thirty (30) percent of the income of a household
earning fifty (50) percent of the Median Income for the Area adjusted for family
size appropriate for the unit.
Extremely-Low Income Households. Thirty (30) percent of the income of a
household earning no more than thirty (30) percent of the Median Income for the
Area for rental units, adjusted for family size appropriate for the unit.
In the event of a conflict between the fractions specified in this definition and those
found in Sections 50052.5 and 50053 of the Health & Safety Code and HUD, the
fractions specified by HUD shall control.
“Affordable Rent” means the Health and Safety Code extremely low
income rents based on the calculation defined in Section 50053 and income limits
published by the Department of Housing and Community Development.
“Agency” means the Housing Authority of the City of Santa Ana, acting as
the Housing Successor Agency, a public body, corporate and politic, exercising
governmental functions and powers, and organized and existing under the CRL. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California
92702. “Agency” shall also refer to the City where the context dictates, to the effect that
City shall have all rights granted to the Agency hereunder.
"Agency Deed of Trust" means the deed of trust encumbering the
Property, in the form attached hereto as Exhibit C, to be executed by Developer pursuant
to Section 4.1(e)(iii) in order to secure the Agency Loan Note.
“Agency Loan” means a loan in the original principal amount of up to One
Million Six Hundred Fifty-Six Thousand Nine Hundred Forty-Seven and No/100 Dollars
($1,656,947.00) to be made to Developer by the Agency to be funded exclusively from the
Low and Moderate Income Housing Asset Fund held by the Agency.
"Agency Promissory Note" means that certain promissory note for
Agency Loan funds in the original principal amount of $1,656,947.00 in the form attached
hereto as Exhibit D, and to be executed by Developer in favor of Agency to evidence the
obligation of Developer to repay the Agency Loan through residual receipts as further
described in the Agency Promissory Note.
"Building Permit" means the building permit(s) issued by City and
required for the construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 31.
"Certificate of Completion" has the meaning set forth in Article 13.
EXHIBIT 4
"City" means the City of Santa Ana, California, a charter city and
municipal corporation. “City” shall also refer to the Agency where the context dictates, to
the effect that the Agency shall have all the rights granted to the City hereunder.
“City Project Manager” shall mean the City’s Housing Manager and/or
his/her designee.
"Close of Escrow" shall mean the date upon which the Agency Loan
Agreement and Agency Deed of Trust is recorded in the Official Records of the County.
"County" means the County of Orange, California.
“Developer” means Shelter Providers of Orange County, Inc. DBA
HomeAid Orange County.
"Developer's Representative" shall mean a representative of the
designated from time to time by the Executive Director of Developer or his/her designee.
“Escrow” is the escrow opened for the closing of the Senior Loan and
Agency Loan.
“Escrow Holder” is Commonwealth Land Title Company.
"Event of Default" has the meaning set forth in Section 6.1.
“Excluded Transfer” shall have the meaning set forth in the Ground Lease.
“Extremely Low Income” means an adjusted income which does not
exceed thirty percent (30%) of the Median Income for the Area, adjusted for household
size, as published by the U.S. Department of Housing and Urban Development and in
accordance with Sections 50052.5 and 50053 of the Health & Safet y Code.
“Force Majeure Event” shall have the meaning given such term in Section
2.3 below.
"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.
"Ground Lease" means that certain Ground Lease dated __________,
2021 by and between Agency and Developer.
"Hazardous Materials" means flammable materials, explosives,
radioactive materials, hazardous wastes, toxic substances and similar substances and
materials, including all substances and materials defined as hazardous or toxic wastes,
substances or materials under any applicable law, including without limitation the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and the
EXHIBIT 4
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. §§ 9601, et seq., as amended. Hazardous Material shall not include (i) construction
products, household cleaners and office materials of the type and quantity ordinarily used
in the normal construction, operation, ownership, occupancy and maintenance of properties
similar to the Project or (ii) small amounts of household mold to the extent promptly
remediated upon discovery.
"Housing Authority" means the Housing Authority of the City of Santa
Ana (CA093), a public body, corporate and politic.
"HUD" means the United States (U.S.) Department of Housing and Urban
Development, and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter
comprising any portion of the Property, including, without limitation, landscaping, trees
and plant materials; and offsite improvements, as required through the City of Santa Ana
Planning and Building Agency entitlement process.
"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.
“Legal Challenge” means any challenge (legal, administrative, court or
governmental order, or otherwise) by any Person(s) to the legality or validity of all or any
portion of the Agency’s approval of the Lease, the Improvements or the Project, or to the
use of the Property for the Project, or to attack, set aside, void or annul any approval of the
City concerning the Agency Loan, the Improvements or the Project.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, including any conditional sale or other title retention agreement,
any lease in the nature thereof, and any agreement to give any lien or security interest.
“Loan Documents” or “Agency Loan Documents” means, collectively,
this Agreement, the Agency Promissory Note, the Agency Deed of Trust, and the
Affordability Restrictions on Transfer of Property, and any other agreement, document, or
instrument that the Agency reasonably requires in connection with the execution of this
Agreement or from time to time to effectuate the purposes of this Agreement.
“Low Income” means an adjusted income which does not exceed eighty
percent (80%) of the Median Income for the Area, adjusted for household size, as published
by the U.S. Department of Housing and Urban Development (HUD) and in accordance
with Sections 50052.5 and 50053 of the Health & Safety Code.
“Median Income for the Area” means the median income for the Orange
County, California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Agency Loan Documents as “Area Median Income” or “AMI”.
EXHIBIT 4
"NPLH” means the No Place Like Home Program administered by the
State of California Department of Housing and Community Development.
"NPLH Lender” means __________________.
"NPLH Loan" means a loan from NPLH Lender to be made subsequent to
the issuance of a Certificate of Completion for payment to, among other things, refinance
the PWB Construction Loan, and shall include any subsequent loan that permanently
refinances the NPLH Loan.
"NPLH Loan Deed of Trust" means the deed(s) of trust securing the
NPLH Loan by encumbering the Property.
"NPLH Loan Documents" means, collectively, the loan agreement
governing the NPLH Loan, the NPLH Loan Note, the NPLH Loan Deed of Trust, and any
other agreement, document or instrument that NPLH requires in connection with the NPLH
Loan.
"NPLH Loan Note" means the promissory note evidencing the NPLH
Loan from NPLH.
"OCHFT” means the Orange County Housing Finance Trust.
"OCHFT Loan" means a loan from the OCHFT concurrent to the Agency
Loan for payment of a portion of the acquisition and construction costs, and shall include
any subsequent loan that permanently refinances the OCHFT Loan.
"OCHFT Loan Deed of Trust" means the deed(s) of trust securing the
OCHFT Loan by encumbering the Property.
"OCHFT Loan Documents" means, collectively, the loan agreement
governing the OCHFT Loan, the OCHFT Loan Note, the OCHFT Loan Deed of Trust, and
any other agreement, document or instrument that OCHFT requires in connection with the
OCHFT Loan.
"OCHFT Loan Note" means the promissory note evidencing the OCHFT
Loan from OCHFT.
"Project" means the construction of the Improvements upon the Property
by Developer pursuant to this Agreement.
"Project Budget" means the line-item budget for the Project attached
hereto as Exhibit E, as modified from time to time in accordance with this Agreement.
"Project Costs" means all costs of any nature incurred in connection with
the Project in accordance with generally accepted accounting principles.
EXHIBIT 4
"Property" means the Developer’s leasehold interest in the property that is
located at 801, 807, 809 and 809 ½ E. Santa Ana Blvd. in the City of Santa Ana, and as more
fully described in the “Legal Description” of the Property attached hereto as Exhibit A and
incorporated herein by reference.
"PWB” means Pacific Western Bank.
"PWB Loan" means a loan from PWB concurrent to the Agency Loan for
payment of a portion of the acquisition and construction costs, and shall include any
subsequent loan that permanently refinances the PWB Loan.
"PWB Loan Deed of Trust" means the first deed(s) of trust securing the
PWB Loan by encumbering the Property.
"PWB Loan Documents" means, collectively, the loan agreement
governing the PWB Loan, the PWB Loan Note, the PWB Loan Deed of Trust, and any
other agreement, document or instrument that PWB requires in connection with the PWB
Loan.
"PWB Loan Note" means the promissory note evidencing the PWB Loan
from PWB.
"Scope of Work/Schedule of Performance" means the detailed statement
of the work to be performed by Developer on and to the Property pursuant to this
Agreement, along with the Schedule of Performance setting forth timeframes for certain
tasks, which document is attached hereto as Exhibit F.
"Senior Construction Loan Lender" means PWB.
"Senior Construction Loan" means the PWB Loan.
"Senior Construction Loan Deed of Trust" means the PWB Deed of
Trust.
"Senior Construction Loan Documents" means the PWB Loan
Documents.
"Senior Construction Loan Notes" means the PWB Note.
"Senior Lenders" means the Senior Construction Loan Lender.
"Senior Loan Deed of Trust" means the Senior Construction Loan Deed
of Trust and the Senior Permanent Loan Deed of Trust.
"Senior Loan" means the Senior Construction Loan.
"Senior Loan Documents" means collectively the Senior Construction
Loan Documents and the Senior Permanent Loan Documents.
EXHIBIT 4
"Senior Notes" means collectively the Senior Construction Loan Notes
and the Senior Permanent Loan Notes.
"SNHP” means the Special Needs Housing Program.
"SNHP Lender” means __________.
"SNHP Loan" means a loan from SNHP to be made subsequent to the
issuance of a Certificate of Completion for payment to, among other things, refinance the
PWB Construction Loan, and shall include any subsequent loan that permanently
refinances the SNHP Loan.
"SNHP Loan Deed of Trust" means the deed(s) of trust securing the
SNHP Loan by encumbering the Property.
"SNHP Loan Documents" means, collectively, the loan agreement
governing the SNHP Loan, the SNHP Loan Note, the SNHP Loan Deed of Trust, and any
other agreement, document or instrument that SNHP requires in connection with the SNHP
Loan.
"SNHP Loan Note" means the promissory note evidencing the SNHP
Loan from SNHP.
“Term of Affordability” means the terms and conditions contained herein
shall remain in effect for fifty-five (55) years from the date of issuance of the Certificate
of Occupancy for the Project, or repayment of the Agency Loan, whichever is longer.
“Very Low Income” means an adjusted income which does not exceed
fifty percent (50%) of the Median Income for the Area, adjusted for household size, as
published by the U.S. Department of Housing and Urban Development and in accordance
with Sections 50052.5 and 50053 of the Health & Safety Code.
1.2 Singular and Plural Terms. Any defined term used in the plural in this
Agreement shall refer to all members of the relevant class and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement shall
include such document both as originally executed and as it may from time to time be
modified. References herein to Articles, Sections and Exhibits shall be construed as
references to this Agreement unless a different document is named. References to
subparagraphs shall be construed as references to the same Section in which the reference
appears. The term "document" is used in its broadest sense and encompasses agreements,
certificates, opinions, consents, instruments and other written material of every kind. The
terms "including" and "include” mean "including (include) without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement, as
now existing and as the same may from time to time be modified, are incorporated herein
EXHIBIT 4
by this reference.
2. SCOPE OF WORK/PROJECT BUDGET
2.1 Scope of Work/Schedule of Performance. A “Scope of Work” and
“Schedule of Performance” for the Property is attached hereto as Exhibit F. Except as
otherwise permitted by this Agreement, any material change to the Scope of
Work/Schedule of Performance requested by the Developer shall be subject to the prior
written approval of the City Project Manager except as a result of a Force Majeure Event.
The Scope of Work/Schedule sets forth the construction work that shall be performed on
the Property and timeframes for approvals of such work, as such may be extended due to
Force Majeure Events.
2.2 Project Budget. A line-item budget for the Project, including a summary of
statement of sources and uses of funds, is incorporated into Exhibit E ("Project Budget").
Except as otherwise permitted by this Agreement, any material change to the Project
Budget requested by Developer shall be subject to the prior written approval of the City
Project Manager.
2.3 Force Majeure Events. Notwithstanding specific provisions of this
Agreement, performance hereunder shall not be deemed to be in default where delays or
defaults are due to: war; terrorism; insurrection; strikes; lock-outs; riots; floods;
earthquakes; fires; a Legal Challenge; casualties; acts of God or other deities; acts of the
public enemy; epidemics; quarantine restrictions; freight embargoes; lack of
transportation; governmental restrictions or priority; litigation; unusually severe weather;
inability to secure necessary labor, materials or tools; delays of any contractor or supplier;
acts of the other party; acts or failure to act of the Agency or any other Governmental
Authority or entity (except that any act or failure to act of Agency shall not excuse
performance by Agency); or any other causes beyond the reasonable control, or without
the fault of the party claiming an extension of time to perform (each a “Force Majeure
Event”). An extension of time for any Force Majeure Event 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 Agreement may also be extended in writing by the Agency and the Developer.
3. AGENCY LOAN:
3.1 Agency Loan Documents. The Agency Loan shall be evidenced by the
Agency Promissory Note in the form attached hereto as Exhibit D. The Agency Loan shall
be secured by the Agency Deed of Trust in the form attached hereto as Exhibit C. The
terms and conditions of the Agency Loan are as set forth in the Agency Promissory Note.
The Term of Affordability for the Project is fifty-five (55) years from the date of issuance
of Certificate of Occupancy for the Project, or repayment of the Agency Loan, whichever
is longer.
3.2 Agency Funds. Subject to the terms and conditions of this Agreement,
Agency agrees to make a loan to Developer from the Low and Moderate Income Housing
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Asset Fund (“LMIHAF”) in the principal amount of up to One Million Six Hundred Fifty-
Six Thousand Nine Hundred Forty-Seven and No/100 Dollars ($1,656,947.00) for the
lease, construction, ownership, operation, rehabilitation and other costs of the Project.
4. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
4.1 Conditions Precedent. Agency's obligation to disburse the loan is subject
to the satisfaction of the following conditions precedent:
(a) Housing Authority. Review and approval of the documents
evidencing the Agency Loan by the Board of the Housing Authority of the City of Santa
Ana acting as the Housing Successor Agency.
(b) Code Compliance. Compliance with California Health and Safety
Code and applicable regulations set forth in Section 34176.
(c) Environmental Review. Compliance with and completion of
environmental review of the Project pursuant to the California Environmental Quality Act
(“CEQA”) and approval thereof.
(d) Affordability Restrictions. The funding of $1,656,947.00 is from
the Low and Moderate Income Housing Asset Fund, which requires legal restrictions that
the Agency cannot amend or repeal. Sixteen (16) of the “Housing Units” at the Project
shall and will be restricted to affordable rents referenced in the Affordability Restrictions
on Transfer of Property containing conditions, covenants and restrictions executed by
Developer and Agency for a period not less than fifty-five (55) years recorded against the
Project in the Official Records, County of Orange, California. Nine (9) of the units will be
permanent supportive housing for households earning no more than 30% of the Area
Median Income; Seven (7) of the units will be permanent supportive housing for
households earning no more than 25% of the Area Median Income; and one (1) of the units
is reserved for an on-site manager.
(e) Loan Documents. Developer shall have delivered to the Escrow
Holder, signed by the authorized officer or officers of Developer, with such signature(s)
acknowledged where necessary, each of the following documents:
(i) this Agency Loan Agreement;
(ii) the Agency Promissory Note ($1,656,947.00);
(iii) the Agency Deed of Trust; and,
(iv) the Affordability Restrictions on Transfer of Property.
(f) Title Insurance. Agency shall have received an American Land
Title Association (ALTA) Extended Loan Policy (6-17-06), or evidence of a commitment
therefore satisfactory to Agency, issued by Commonwealth Land Title Company and in
form and substance satisfactory to Agency, together with all endorsements and binders
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required, naming Agency as the insured, in a policy amount of not less than the total
Agency Loan Amount, showing Developer as the fee owner of the Property and insuring
the Agency Deed of Trust to be a valid priority lien on the Property. Notwithstanding the
foregoing, this Agreement, the Agency Promissory Note, and the Agency Deed of Trust
shall all be subordinate to the Senior Loan Documents.
(g) Affordability Restrictions on Transfer of Property. Developer shall
have delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the
Affordability Restrictions on Transfer of Property pursuant to which, among other things,
Developer agrees that the Property shall be used only for decent, safe, sanitary and
Affordable Housing pursuant to the affordability requirements of California Health and
Safety Code (“H&S”) sections 50052.5 and 33334.3, as applicable. The Agency’s
Affordability Restrictions on Transfer of Property shall remain in superior position to the
Senior Loan Documents and shall not be subordinated.
(h) Documents Recorded. The Agency Deed of Trust and the
Affordability Restrictions on Transfer of Property shall have been recorded in the Official
Records of the County.
(i) Request for Notice. For the benefit of Agency, Escrow Holder shall
have recorded a request for notice of default of the Senior Construction Loan Lender (the
"Request for Notice of Default").
(j) Insurance. Agency shall have received evidence satisfactory to the
City Attorney that all of the policies of insurance required by the Ground Lease are in full
force and effect.
(k) Representations and Warranties. The representations and warranties
of Developer contained in this Agreement and the other Loan Documents shall be correct
in all material respects as of the Close of Escrow as though made on and as of that date,
and if requested by the City Project Manager, Agency shall have received a certificate to
that effect signed by Developer's Representative.
(l) No Default. No Event of Default by Developer shall have occurred,
and no event shall have occurred which, with the giving of notice or the passage of time or
both, would constitute an Event of Default by Developer under this Agreement, and if
requested by the City Project Manager, Agency shall have received a certificate to that
effect signed by Developer's Representative.
(m) The Agency’s obligation to provide the Agency Loan is and shall
remain subject to all covenants, conditions, and restrictions set forth in this Loan
Agreement, and in particular Agency’s analysis of the available funding sources and
development and operating costs of the Project and the overall economic feasibility of the
Project.
4.2 Disbursement Procedures for Loan. The Agency Loan proceeds shall be
disbursed through Escrow to finance the lease, development, construction, operation and
management of the Project (as evidenced in the Project Budget, attached as Exhibit E). The
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Agency Loan proceeds shall not be used for any purpose other than for the purposes stated
above, including Developer fee and soft costs related to the lease, development construction,
ownership, occupancy and operation of the Project (as set forth in the Project Budget or
otherwise subject to Agency’s prior review).
4.3 First Disbursement. Agency's obligation to make the first disbursement
of the Loan is subject to satisfaction of the following conditions precedent:
(a) All grading permits shall have been issued or the City shall have
issued a letter stating that Building Permits are ready to issue, subject only to payment of
fees and the completion of grading of the Project site.
(b) Developer shall have secured all necessary financing and funding
for the construction and operation of the Project. Such financing and funding shall be
sufficient to pay all Project development costs, through lease -up, as set forth in the final
budget consistent with the approved Proforma (or as otherwise approved by the Agency).
(c) Developer shall have provided evidence to the Agency that the
Developer has obtained insurance policies and certificates or endorsements acceptable to
the Agency, as described in this Agreement.
(d) Developer shall have provided construction security in favor of the
Agency, which may include a completion guarantee from Developer and/or a letter of
credit and/or performance and payment bonds from the general contractor for the Project
(or some combination of these), in an amount sufficient to ensure the Project will be
completed and placed in service within the time set forth in the Project schedule approved
by the Agency.
(e) Developer shall submit and obtain the City Project Manager’s
approval of the construction contract, the identity and qualifications of the General
Contractor and management, marketing and tenant selection plans for the Project.
4.4 Termination for Failure of Condition. If (a) any of the conditions set
forth herein are not timely satisfied pursuant to the Schedule of Performance (subject to
extension for Force Majeure Events and the expiration of applicable notice and cure rights),
and (b) Agency is not in default under this Agreement, Agency may terminate this
Agreement without any further liability on its part by giving written notice of termination
to Developer. Upon the giving of such notice, all principal, interest and other amounts
owing under the Agreement shall be due and payable.
4.5 Any Disbursement. Agency's obligation to make any disbursement of the
Loan, including the first and final disbursements, is subject to the satisfaction of the
following conditions precedent:
(a) Satisfactory Progress. The City Project Manager shall be satisfied
that, based on his/her own inspections or other reliable information, the construction is
progressing satisfactorily in conformance with all applicable laws.
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(b) Condition of Title. Either (i) the City Project Manager reasonably
believes that no event has occurred since the Close of Escrow that would give rise to a
colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of
Agency against the Property with respect to the subject disbursement, or if such claim is
made, then City Project Manager shall receive satisfactory evidence that such claim has
been bonded over until its resolution; or (ii) Agency must have received, at Developer’s
expense but payable out of the Loan proceeds from the title insurer who issued City's
ALTA Loan Policy (2006 Form), all endorsements thereto then reasonably required by
Agency (including, without limitation, priority of advance endorsements).
(c) Representations and Warranties. The representations and warranties
of Developer contained in this Agreement and the other Agency Loan Documents shall be
correct in all material respects as of the date of the disbursement as though made on and as
of that date.
(d) No Default. No Event of Default by Developer shall remain uncured
(unless, to the extent permitted under this Agreement, Developer is diligently taking action
to cure such default).
4.6 Final Disbursement. Agency's obligation to disburse that portion of the
Loan funds retained pursuant to Section 4.12 is subject to the satisfaction of the following
additional conditions precedent:
(a) Construction complete. The construction of the Project shall be
substantially complete.
(b) Certificate of Occupancy Issued. Any portion of the construction
work requiring inspection or certification by any Governmental Authority shall have been
inspected and certified as complete. Developer shall request that the City of Santa Ana
Planning and Building Agency issue a Certificate of Occupancy, a copy of which shall be
delivered to the City Project Manager, in order for final disbursement to occur.
(c) Lien Free. At least one of the following shall have occurred:
(i) Thirty-five (35) days shall have passed since the recording of a
valid notice of completion for the construction, and no mechanic's or materialman’s lien
shall be outstanding; or
(ii) Ninety-five (95) days shall have passed since actual completion
of the construction, and no mechanic's or materialman’s lien shall be outstanding, or
Developer shall have bonded over any such lien to Agency’s reasonable satisfaction.
4.7 Waiver of Conditions. The conditions set forth pertaining to Agency’s
obligation to make disbursements of the Loan proceeds are for Agency's benefit only and
the City Project Manager may waive all or any part of such rights by written notice to
Developer.
4.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line-
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item by line-item basis in accordance with the Project Budget and subject to the conditions
in this section. In no event shall Agency have any obligation to disburse any amount for
any item in excess of the amount allocated to such item in the Project Budget.
Disbursements shall be made only upon Developer's written request in the form of a
Disbursement Request showing all costs which Developer intends to fund with such
disbursement, itemized in such detail as Agency may reasonably require, accompanied in
each case by (a) invoices and lien releases satisfactory to Agency, including in any event
partial lien releases executed by each contractor and subcontractor who has received any
payment for work performed, and (b) all other documents and information reasonably
required by Agency. Disbursement Requests shall be submitted no less than ten (10)
Business Days prior to the date of the requested disbursement, and shall not be submitted
more often than monthly.
Prior to each disbursement by Agency of proceeds of the loan, Developer shall
deliver to Agency a draw request ("Draw Request"), and all required supporting
information as required by the Agreement.
Agency shall notify the Developer of approval or disapproval of each Draw Request
within five (5) Business Days after receipt of the Draw Request, using the Agency's
"Disbursement/Change Order Approval Notice". Agency shall have the right, but not the
obligation, to discontinue processing Draw Requests unless and until receipt of notification
from the other lenders of approval or disapproval of each outstanding Draw Request.
4.9 Manner of Disbursement. Agency may make any disbursement by check
payable to Developer; or on a voucher basis; or by check payable jointly to Developer and
any contractor, subcontractor or other claimant; or directly to any such claimant; or by any
other means reasonably selected by Agency.
4.10 Cost Overruns. In the event that, at any time and for any reason, (a) the
actual cost reasonably estimated by Developer to be required to complete all matters
included in any line item in the Project Budget exceeds the amount allocated to that line
item in the Project Budget, (b) Project Costs for any matters not covered by a specific line
item have been or will be incurred, or (c) the undisbursed portion of the Loan proceeds and
all other approved financing sources are or may be insufficient to pay all construction of
the Project that may be payable under the Agency Loan Documents or otherwise in
connection with the construction, Developer shall, within twenty (20) days after it receives
written notice thereof from Agency of any of the foregoing matters, do one or more of the
following:
(a) provide satisfactory evidence to Agency that Developer has
previously paid such excess or otherwise will provide for such insufficiency (collectively,
the "Excess Cost") with funds or in-kind services, materials or other donations from a
source other than the Agency Loan; or
(b) reallocate sufficient funds to pay the Excess Cost from funds
allocated to "Contingency" in the Project Budget.
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Agency shall have no obligation to make further disbursements until Developer has
paid or otherwise provided for the overrun as required above.
4.11 Cost Savings. Upon completion of and disbursement for all matters covered
by any line items in the Project Budget, any remaining undisbursed amounts allocated to
that line item shall be reallocated to "Contingency" and thereafter be available for
disbursement in accordance with the terms of this Agreement.
4.12 Retainage. Agency will withhold a Retainage of 10% from each
Disbursement for each of the Hard Cost line items of the Project Cost Breakdown (and
other line items thereof designated for withholding of retainage) until all conditions to the
final Disbursement of Hard Costs have been satisfied; provided that Agency shall disburse
Retainage for a particular line-item of the Project Budget earlier if such work is complete,
and such subcontractor performing such work has delivered unconditional, final and
complete lien waivers. In lieu of Agency’s withholding Retainage, Developer can by
written notice to Agency elect not to draw any overhead or profit as would otherwise be
permitted under the Construction Contract until such time as Retainage would otherwise
have been released.
4.13 Waiver of Disbursement Conditions. Unless Agency otherwise agrees
in writing, the making by Agency of any disbursement with knowledge that any condition
to such disbursement is not fulfilled shall constitute a waiver of such condition only with
respect to the particular disbursement made, and such condition shall be conditioned to all
further disbursements until fulfilled.
4.14 Modification of Disbursement Conditions and Procedures. The City
Project Manager shall have the authority to modify the disbursement conditions and
procedures set forth herein in order to conform them to the payment provisions of the
contract for construction.
4.15 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.
4.16 Other Terms and Conditions of Loan.
(a) The Note shall become immediately due and payable, in the event of
any of the following:
1) Failure to complete the Project within three (3) years of the date
on which the Agency Deed of Trust is recorded, unless extended
due to Force Majeure delays;
2) Violation of any of the use covenants and restrictions contained
in this Agreement after the expiration of any applicable notice
and cure periods; or,
3) An Event of Default by Developer which is not timely cured
after expiration of any applicable notice and cure periods
pursuant to the terms of this Agreement.
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5. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF
THE PROJECT
5.1 Affordability Requirements. Developer shall comply with the terms and
provisions of the Affordability Restrictions on Transfer of Property in all material respects.
5.2 Maintenance of the Property. Developer shall maintain the Property in
accordance with the Ground Lease.
5.3 Obligation to Refrain from Discrimination. Developer covenants and
agrees for itself, its successors, its assigns and every successor in interest to the Property or
any part thereof, that there shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, disability, religion, sex, marital status,
ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Property nor shall Developer itself or any person claiming under or through
him establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees or vendees of the Property. The foregoing covenants shall run with the land and
shall remain in effect for the term of the Agreement.
6. DEFAULTS AND REMEDIES
6.1 Event of Default. Failure or delay by either party to perform any term or
provision of this Agreement within the time periods provided herein for such performance
constitutes a default under the Agreement. If any party defaults in performance of its
obligations, covenants or agreements hereunder, the defaulting party shall be entitled to cure
the default in accordance with this section. The injured party shall give written notice of
default to the party in default, specifying the default complained of by the injured party. Delay
in giving such notice shall not constitute a waiver of any default nor shall it change the time
of default. The defaulting party must, within thirty (30) days following service of said written
notice, commence to cure, correct or remedy such failure or delay and shall complete such
cure, correction, or remedy with reasonable diligence. The occurrence of any of the
following shall be deemed to be an event of default by Developer which is not cured within
the applicable time period described therein ("Event of Default'') hereunder: (a) failure by
Developer to make any payments provided for herein, and if such default is not made good
within ten (10) Business Days after Developer's receipt of written notice that such payment
was not received when due; (b) failure by Developer to perform any nonmonetary covenant
or agreement under this Agreement within thirty (30) days after written demand therefor
by Agency (or, in the event that more than thirty (30) days is reasonably required to cure
such default, should Developer fail to promptly any “Event of Default” by Developer under
the Ground Lease, the Agency Deed of Trust, the Agency Note, or the Affordability
Covenants and Restrictions commence such cure, and diligently and continuously
prosecute same to completion); or (d) a default under any Senior Loan Deed of Trust that
remains uncured after any applicable notice has been provided and the expiration of any
applicable cure period therefore, if any, provided therein.
6.2 Institution of Legal Actions. In addition to any other rights or remedies,
either party may institute legal action to cure, correct or remedy any default to recover
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economic damages for any default, or to obtain any other remedy consistent with the purpose
of this Agreement.
6.3 Rights and Remedies are Cumulative. Except with respect to rights and
remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the
parties are cumulative and the exercise by either party of one or more of such rights or
remedies shall not preclude the exercise by it, at the same or different times, of any other rights
or remedies for the same default or any other default by the other party.
6.4 Damages. In the event that the Agency is liable for damages to Developer,
such liability shall not exceed costs incurred by the Developer in the performance of this
Agreement and shall not extend to compensation for loss of future income, profits or assets.
6.5 Nonrecourse Liability. Neither Developer, nor any member, partner, officer,
director, employee, agent or representative of Developer, shall have any personal liability
under this Agreement, or the attached Note and Deed of Trust, and any judgment, decree or
order for the payment of money obtained in any action to enforce the obligation of Developer
to repay the loan evidenced by such documents shall be enforceable against Developer only
to the extent of Developer’s interest in the Property.
7. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to Agency to enter into this Agreement, Developer
represents and warrants as follows, which representations and warranties are made solely
by Developer and not by or on behalf of any partner of Developer:
7.1 Formation, Qualification and Compliance. Shelter Providers of Orange
County, Inc. DBA HomeAid Orange County, Inc. 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.
7.2 Execution and Performance of Agency Loan Documents.
7.2.1 Developer has all requisite authority to execute and perform its
obligations under the Agency Loan Documents.
7.2.2 The execution and delivery by Developer of, and the performance
by Developer of its obligations under, each Loan Document that has been authorized by all
necessary action and does not and will not:
(a) require any consent or approval not heretofore obtained of
any person having any interest in Developer;
(b) violate any provision of, or require any consent or approval
not heretofore obtained under, any articles of incorporation, by-laws or other governing
document applicable to Developer;
EXHIBIT 4
(c) result in or require the creation of any lien, claim, charge or
other right of others of any kind (other than under the Agency Loan Documents) on or with
respect to any property now or hereafter owned or leased by Developer;
(d) to the best of its knowledge, violate any provision of any law
presently in effect; or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other
agreement or document to which Developer is a party or by which Developer or any of its
property is bound.
7.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of Agency under the Agency Loan Documents or that would have any
material adverse effect on the financial condition of Developer or the conduct of its
business, under any law, contract, lease or other agreement or document described in sub-
paragraph (d) or (e) of the previous subsection.
7.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which has
not been previously obtained in connection with:
(a) the execution by Developer of, and the performance by
Developer of its obligations under, the Agency Loan Documents; and
(b) the creation of the liens described in the Agency Loan
Documents.
7.3 Financial and Other Information. To the best of Developer’s knowledge,
all financial information furnished to Agency by the Developer or any affiliate thereof with
respect to Developer in connection with the Loan (a) is complete and correct in all material
respects as of the date of preparation thereof, (b) accurately presents the financial condition
of Developer, and (c) has been prepared in accordance with generally accepted accounting
principles consistently applied or in accordance with such other principles or methods as
are reasonably acceptable to Agency. To the best of Developer’s knowledge, all other
documents and information furnished to Agency by the Developer or any affiliate thereof
with respect to Developer, in connection with the Loan, are correct and complete insofar
as completeness is necessary to give the Agency accurate knowledge of the subject matter.
To the best of Developer’s knowledge Developer has no material liability or contingent
liability not disclosed to Agency in writing and there is no material lien, claim, charge or
other right of others of any kinds (including liens or retained security titles of conditional
vendors) on any property of Developer not disclosed in such financial statements or
otherwise disclosed to Agency in writing.
7.4 No Material Adverse Change. There has been no material adverse change
in the condition, financial or otherwise, of Developer since the dates of the latest financial
statements furnished to Agency.
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7.5 Tax Liability. Developer has filed all required federal, state and local tax
returns and has paid all taxes (including interest and penalties, but subject to lawful
extensions disclosed to Agency in writing) other than taxes being promptly and actively
contested in good faith and by appropriate proceedings. Developer is maintaining adequate
reserves for tax liabilities (including contested liabilities) in accordance with generally
accepted accounting principles or in accordance with such other principles or methods as
are reasonably acceptable to Agency.
7.6 Governmental Requirements. To best of its knowledge, Developer is in
compliance with all laws relating to the Property and all Governmental Authority
approvals, including zoning, land use, planning requirements, and requirements arising
from or relating to the adoption or amendment of, any applicable general plan, subdivision
and parcel map requirement; environmental requirements, including the requirements of
the California Environmental Quality Act and the National Environmental Policy Act, and
the preparation and approval of all required environmental impact statements and reports;
use, occupancy and building permit requirements; and public utilities requirements.
7.7 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.
7.8 Litigation. There are no material actions or proceedings pending or, to the
best of the Developer’s knowledge, threatened against or affecting Developer or any
property of Developer before any Governmental Authority, except as disclosed to Agency
in writing prior to the execution of this Agreement.
7.9 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.
7.10 Information Accurate. To the best of Developer’s knowledge, all
information, regardless of its form, conveyed by Developer to Agency, by whatever means,
is accurate, and correct in all material respects and is sufficiently complete to give Agency
true and accurate knowledge of its subject matter, and does not contain any material
misrepresentation or omission.
7.11 Conflicts of Interest. No member, official or employee of the Agency shall
have any personal interest, direct or indirect, in this Agreement, nor shall any such member,
official or employee participate in any decision relating to this Agreement which affects
his/her personal interests or the interests of any corporation, partnership or association in
which he/she has a direct or indirect financial interest. The Developer warrants that it neither
has paid nor given, nor will pay or give, any third party any money or other consideration for
obtaining this Agreement.
7.12 Nonliability of Agency Officials and Employees. No member, official or
employee of the Agency shall be personally liable to the Developer in the event of any default
or breach by the Agency or for any amount which may become due to Developer or on any
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obligations under the terms of this Agreement.
7.13 No Assignment. Developer expressly acknowledges and agrees that the
Agency has only agreed to assist the Developer as a means by which to induce the
construction/development of the Project. Accordingly, Developer further expressly
acknowledges and agrees that this Agreement is a personal right of Developer that is neither
negotiable, transferable, nor assignable except as set forth herein. Developer may assign some
or all of its rights under the Agreement only with the prior written consent of the City Project
Manager, except for any Excluded Transfers.
7.14 Applicable Law. This Agreement shall be interpreted, governed and
enforced under federal and California state law with venue in Orange County, California.
7.15 Third Parties. This Agreement is made for the sole benefit of Developer and
the Agency and their successors and assigns, and no other person or persons shall have any
rights or remedies under or by reason of this Agreement or any right to the exercise of any
right or power of the Agency hereunder or arising from any default by Developer, nor shall
the Agency owe any duty whatsoever to any claimant for labor performed or materials
furnished in connection with the construction of the Property.
7.16 Control of Property. The parties acknowledge that the Agency 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.
8. CONDITIONS FOR CONSTRUCTION
8.1 Permits and Approvals. Developer shall diligently obtain all permits,
including all Building Permits, licenses, approvals, exemptions and other authorizations of
Governmental Authority required in connection with the construction and conversion of
the Property.
8.2 Commencement and Completion of Construction. The construction of
the Project shall be considered complete for purposes of this Agreement only when (a) all
work described has been completed and fully paid for, and (b) all work requiring inspection
or certification by Governmental Authority has been completed and all requisite
certificates, approvals and other necessary authorizations (including required final
certificates of occupancy) have been obtained.
8.3 Change Orders. The contract for construction shall not be modified except
pursuant to change orders. All change orders in excess of $10,000:
(a) Shall be in writing, numbered in sequence, signed by Developer and
submitted to Agency prior to the proposed effectiveness thereof and accompanied by any
working drawings and a written narrative of the proposed change; and,
(b) Shall be subject to the City Project Manager’s prior written
approval, which approval shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing to the extent that any Change Order will be funded with
EXHIBIT 4
funds or in-kind services, materials or other donations from a source other than the Agency
Loan, Agency’s consent shall not be required.
8.4 Entry and Inspection. At all times prior to completion of the construction,
upon reasonable prior written notice and subject to reasonable job site safety rules, Agency
and its agents shall have (a) the right of free access to the Property and all sites away from
the Property where materials for the construction are stored, (b) the right to inspect all labor
performed and materials furnished for the construction, and (c) the right to inspect and
copy all documents pertaining to the construction.
8.5 Construction Information. From time to time during the course of the
construction, within ten (10) Business Days following Agency’s written demand therefore,
Developer shall furnish requested reports of Project Costs, progress schedules and
contractors’ costs breakdowns for the construction, itemized as to trade description and
item, showing the name of the contractor(s) and/or subcontractor(s), and including such
indirect costs as real estate taxes, legal and accounting fees, insurance, architects’ and
engineers’ fees, loan fees, interest during construction and contractors’ overhead.
8.6 Protection Against Liens: Developer shall diligently file a valid Notice of
Completion upon completion of the construction, diligently file a notice of cessation in the
event of a cessation of labor on the construction for a period of thirty (30) days or more,
and take all actions reasonably required to prevent the assertion of claims of lien against
the Property. In the event that any claim of lien is asserted against the property or any stop
notice or claim is asserted against the Agency by any person furnishing labor or materials
to the Property, Developer shall immediately give written notice of the same to Agency
and shall, promptly and in any event within ten (10) Business Days after written demand
therefor, (a) pay and discharge the same, (b) effect the release thereof by delivering to
Agency a surety bond complying with the requirement of applicable laws for such release,
or (c) take such other action as Agency may require to release Agency from any obligation
or liability with respect to such stop notice or claim.
9. PROJECT COVENANTS
9.1 Affordable Rent Schedule. The rents shall be determined in accordance
with the Affordability Restrictions on Transfer of Property.
9.2 Qualification as Affordable Housing. As more particularly provided in
the Affordability Restrictions on Transfer of Property, Developer shall use, manage and
operate the Property in accordance with the requirements of California Health and Safety
Code section 50052.5 so as to qualify the housing on the Property as Affordable Hou sing
with Affordable Rents.
9.3 Local Preference. The Project consists of sixteen (16) permanent
supportive housing units for chronically homeless individuals and families. All individuals
and families must be chronically homeless and preference should be given to residents of
the City of Santa Ana. Local preference for Santa Ana residents and workers in tenant
selection shall be a requirement of the Project. Subject to the prohibition of discrimination
and the granting of preferences in housing occupanc y imposed by federal laws and
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regulations, the State of California, and by the City of Santa Ana Affordable Housing
Funds Policies and Procedures, the Developer shall use its best efforts to lease units in the
following order of priority:
9.3.1 First priority shall be given to persons who have been permanently
displaced or face permanent displacement from housing in Santa Ana as a result of any of
the following:
9.3.1.1 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.
9.3.1.2 Ellis Act, owner-occupancy, or removal permit eviction;
9.3.1.3 Earthquake, fire, flood, or other natural disaster;
9.3.1.4 Cancellation of a Housing Choice Voucher HAP Contract
by property owner; or
9.3.1.5 Governmental Action, such as Code Enforcement.
9.3.2 Second priority shall be given to persons who are either:
9.3.2.1 Residents of Santa Ana and/or
9.3.2.2 Working in Santa Ana at least 32 hours per week for at
least the last 6 months.
9.4 Application and Financial Preparedness. Developer shall submit for
review and approval by the Agency a booklet to inform interested persons regarding
minimum application and eligibility requirements and to assist interested persons with
application and financial preparedness and eligibility for residency at the Project at the
initial leasing of the affordable units. Developer shall also work with the Agency to hold
a minimum of two (2) workshops to be coordinated by the Developer at least twelve (12)
months prior to the initial leasing of the affordable units.
9.5 Handicapped Accessibility. Developer shall comply with: (a) Section 504
of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the
Americans with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36
in order to make the Project readily accessible to and usable by individuals with disabilities.
9.6 Onsite Supportive Services, Programs and Amenities. Developer shall
provide residents of the Project access to information regarding discounted or no-cost
onsite supportive services, programming, and amenities that promote child development,
youth development, and economic mobility, and include, but are not limited to health and
wellness services, transportation services, social activities, and physical or recreational
amenities as expressly set forth in and required by the Affordability Restrictions on
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Transfer of Property.
9.7 Lead-Based Paint. Developer shall comply with the requirements, as
applicable of the Lead-Based Paint Poisoning Prevention Act.
9.8 Equal Opportunity and Fair Housing. Developer shall carry out the
construction and perform its obligations under this Agreement in compliance with all of
the state and federal laws and regulations regarding equal opportunity and fair housing.
Developer must also follow the requirements of California Health and Safety Code section
33435.
9.9 Property Standards. Developer shall cause the Property to meet all
applicable local, state and federal codes and ordinances, including zoning ordinances.
Developer shall also cause the Property to meet the current edition of the Model Energy
Code published by the Council of American Building Officials.
9.10 Alternative Transportation and Energy Source, Resource
Conservation, and LEED Certification. In recognition of the Agency’s desire to
optimize the energy efficiency of the Project, Developer agrees to consult with the Project
design team, a CABEC certified 2016 Certified Energy Analyst, a LEED AP Homes (low-
rise and mid-rise), LEED AP BD+C (high rise), National Green Building Standard (NGBS)
Green Verifier, or GreenPoint Rater (one person may meet both of these latter
qualifications) early in the Project design process to evaluate a building energy model
analysis and identify and consider energy efficiency or generation measures beyond those
required by the HUD minimum construction standards.
9.11 Maintenance. At all times during the term of this Agreement, Developer
shall cause the Property and the Project to be maintained in a decent, safe and sanitary
manner, regardless of cause of the disrepair and in accordance with the terms of the Ground
Lease. Developer shall be fully and solely responsible for costs of maintenance, repair,
addition and improvements. Agency, and any of its employees, agents, contractors or
designees, shall have the right to enter upon the Property at reasonable times and in a
reasonable manner to inspect the Project.
9.12 Management Plan. Prior to issuance of a Certificate of Occupancy,
Developer shall submit for the reasonable approval of the Agency a “Management Plan”
that sets forth in detail Developer’s property management duties, a tenant selection process
in accordance with this Agreement, a security system and crime prevention program, the
procedures for the collection of rent, the procedures for eviction of tenants, the rules and
regulations for the Property and manner of enforcement, a standard lease form, an operating
budget, the identity and emergency contact information of the professional property
management company to be contracted with to provide onsite property management
services at the Property, and other matters relevant to the management of the Property.
9.13 Crime Free Housing. Developer shall work with Agency staff to develop
a crime free housing policy, procedure, and design plan.
9.14 Onsite Parking Management Plan. Developer shall provide onsite
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parking for residents and visitors of the Project and actively monitor the parking demand
of the Project site. Developer shall continually monitor and take appropriate measures to
manage the parking demand of the Project site to mitigate the use of offsite parking spaces
on private or public properties and/or right-of-way. Prior to issuance of a Certificate of
Occupancy, Developer shall submit a Parking Management Plan which will include but
not be limited to: 1) a list of requirements for any tenants who park their vehicles on-site;
2) pre-conditions and ongoing conditions associated with all on-site parking; and 3) towing
policies and practices of management. Developer shall obtain approval from the Agency
for said plan.
9.15 Conflict of Interest. Developer shall comply with and be bound by the
conflict of interest provisions set forth in all applicable state regulations pertaining to
conflict of interest.
9.16 Monitoring. Developer shall allow the Agency to conduct periodic
inspections of each of the assisted units on the Property after the date of construction
completion, with reasonable notice. Developer shall cure any defects or deficiencies found
by the Agency while conducting such inspections within ten (10) business days of written
notice thereof, or such longer period as is reasonable within the sole discretion of the
Agency.
9.17 Recertification of Tenant Income.
(a) Developer shall take all necessary steps to review the income of all
tenants prior to renting to them, as well as reviewing current tenants on an annual
basis. At a minimum, every fifth (5th) year, Developer shall require new original
income documents to be submitted by tenants.
(b) Developer shall allow the Agency to conduct periodic reviews of
tenant files and files relating to affirmative marketing and outreach to ensure the
Project’s compliance with this Agreement.
(c) Agency assisted units continue to qualify as affordable housing despite
a temporary non-compliance caused by increases in the incomes of existing tenants
if actions satisfactory by the Developer are being taken to ensure that all vacancies
are filled in accordance with this section until the non-compliance is corrected.
9.18 Controlling Covenants. If there is a discrepancy between local, state and
federal law with regard to any of the aforementioned covenants, the more stringent shall
apply.
10. NONDISCRIMINATION COVENANTS
10.1 Obligation to Refrain from Discrimination. Developer covenants and
agrees that:
(a) In Use of Property. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed, disability,
religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the Property, nor shall Developer or any person
claiming under or through it, establish or permit any such practice or practices of
EXHIBIT 4
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees, or vendors of the Property.
(b) In Affordable Housing Restrictions. The foregoing covenant
shall: (a) be included in the Affordability Restrictions on Transfer of Property; (b) run with
the land; and, (c) remain effective for the term of the Agreement (for 55 years).
(c) In Employment. In construction on the Property, Developer shall
not discriminate against any employee or applicant because of race, color, creed, religion,
sex, marital status, disability, national origin, or ancestry. Developer shall take affirmative
action to ensure that applicants are employed, and that employees are treated during
employment, without regard to their race, color, disability, creed, religion, sex, marital
status, disability, national origin, or ancestry.
(d) In all Contracts. Developer shall cause the foregoing covenants to
be inserted in all contracts for any work covered by this Agreement so that such provisions
will be binding upon each contractor for the benefit of Agency, provided that the foregoing
covenant shall not apply to contracts or subcontracts for standard commercial supplies or
raw materials.
11. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the Agency Promissory Note or Agency
Deed of Trust remain outstanding, the following provisions shall apply, except to the extent
that City Project Manager otherwise consents in writing:
11.1 Protection of Lien. Developer shall maintain the lien of the Agency Deed
of Trust as a deed of trust on the Property in the same priority as at the commencement of
construction and take all actions to execute and deliver to Agency all documents,
reasonably required by Agency from time to time in connection therewith.
11.2 Notice of Certain Matters. Developer shall give notice to Agency, within
ten (10) days of Developer's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the Property and
involving an amount in excess of $50,000; and any litigation or claim that might subject
Developer to liability in excess of $50,000, that is not covered by insurance;
(b) any dispute between Developer and a Governmental Authority
relating to the Property, the adverse determination of which might materially affect the
Property;
(c) any change in Developer's principal place of business;
(d) any aspect of the Improvements that is not in substantial conformity
with the plans or code;
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(e) any event which after the giving of all required notices and the
expiration of all applicable cure periods, would constitute an Event of Default;
(f) any material default by Developer or any other party under any
Senior Loan Document, or the receipt by Developer of any notice of default under any
Senior Loan Document;
(g) the creation or imposition of any mechanics’ or materialmans’ lien
or other lien against the Property which might materially affect the Property, which is not
bonded over or released; and/or
(h) any material adverse change in the financial condition of Developer.
11.3 Further Assurances. Developer shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to Agency all documents, and take all
actions, reasonably required by Agency from time to time to confirm the rights created or
now or hereafter intended to be created under the Agency Loan Documents; to protect and
further the validity, priority and enforceability of the Agency Deed of Trust; to subject to
the Deed of Trust any property intended by the terms of any Loan Document(s) to be
covered by the Agency Deed of Trust or otherwise to carry out the purposes of the Agency
Loan Documents and the transactions contemplated thereunder.
12. OTHER COVENANTS
While any obligation of Developer under the Agency Note or Agency Deed of Trust
remain outstanding, the following provisions shall apply, except to the extent that City
Project Manager otherwise consents in writing:
12.1 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.
12.2 Transfer or Lease of Property. Unless and until Developer has received
a Certificate of Completion for the construction from Agency, except for any Excluded
Transfers or any other transfer permitted pursuant to the Ground Lease, Developer shall
not lease (other than to tenants meeting the requirements set forth in this Agreement),
sublease or otherwise transfer all or any part of the Property or any interest therein without
the prior written consent of the City Project Manager, which consent may be withheld in
the City Project Manager's reasonable discretion. In connection with the foregoing consent
requirements, Developer acknowledges that Agency relied upon Developer's particular
expertise in entering into this Agreement and continues to rely on such expertise to ensure
the satisfactory completion of the construction.
13. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of
Developer, or at its own election, the Agency shall issue a Certificate of Completion. Such
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Certificate of Completion shall be, and shall so state, conclusive determination of
satisfactory completion of the construction.
If Agency declines to furnish a Certificate of Completion after written request from
Developer, the City Project Manager shall, within thirty (30) days after receipt of the
request, provide Developer with a written statement of the reasons therefore. The statement
shall contain a description of the action Developer must take to obtain a Certificate of
Completion. If the reason therefore is that the Developer has not completed a minor portion
of the construction, Agency may, in its sole and absolute discretion, issue the Certificate
of Completion upon the posting with Agency of a bond or other form of security acceptable
to the City Project Manager in the amount of the fair value of the uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of
the Agency Loan Documents or any obligation of Developer to any other party whatsoever,
including any holder of a mortgage or deed of trust. A Certificate of Completion is not
"notice of completion” referred to in Section 3093 of the California Civil Code.
14. INDEMNIFICATION
14.1 Nonliability of Agency. Developer acknowledges and agrees that:
(a) The relationship between Developer and the Agency is and shall
remain solely that of Developer and lender. Agency neither undertakes nor assumes any
responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform
Developer of any matter in connection with the construction, including matters relating to:
(i) the performance of the construction work; (ii) architects, contractors, subcontractors and
materialmen, or the workmanship of or materials used by any of them; or, (iii) the progress
of the construction; and Developer shall rely entirely on its own judgment with respect to
such matters and acknowledges that any review, inspection, supervision, approval or
information supplied to Developer by Agency in connection with such matters is solely for
the protection of Agency, and that neither Developer nor any third party is entitled to rely
on it;
(b) Notwithstanding any other provision of any Loan Document: (i) the
Agency is not a partner, joint venture, alter-ego, manager, controlling person or other
business associate or participant of any kind of Developer, and Agency does not intend to
ever assume any such status; (ii) Agency’s activities in connection with the Loan shall not
be “outside the scope of the activities of a lender of money” within the meaning of
California Civil Code Section 3434, as modified or recodified from time to time, and
Agency does not intend to ever assume any responsibility to any person for the quality or
safety of the Property; and, (iii) Agency shall not be deemed responsible for or a participant
in any acts, omissions or decisions of Developer;
(c) Agency shall not be directly or indirectly liable or responsible for any
loss or injury of any kind to any person or property resulting from any construction on, or
occupancy or use of, the Property, whether arising from: (i) any defect in any building,
grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of
Developer or any of Developer’s agents, employees, independent contractors, licensees or
EXHIBIT 4
invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon;
and,
(d) By accepting or approving anything required to be performed or given
to Agency under the Loan Documents, including any certificate, financial statement,
survey, appraisal or insurance policy, Agency shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or approval
shall constitute a warranty or representation by Agency to anyone.
14.2 Indemnity. Developer shall defend (by counsel reasonably satisfactory to
Agency), indemnify and save and hold harmless the Indemnitees from and against all
claims, damages, demands, actions, losses, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) arising from or relating to:
(i) this Agreement; (ii) the making of the Loan(s); (iii) a claim, demand or cause of action
that any person has or asserts against Developer; (iv) any act or omission of Developer,
any contractor, subcontractor or material supplier, engineer, architect or other person with
respect to the Property; or, (vi) the ownership, occupancy or use of the Property.
Notwithstanding the foregoing, Developer shall not be obligated to indemnify Agency with
respect to the consequences of any act of gross negligence or willful misconduct of Agency.
Developer's obligations under this Section shall survive the cancellation of the Agency
Promissory Note, release and reconveyance of the Agency Deed of Trust, issuance of the
Certificate of Completion, and termination of this Agreement. Notwithstanding the
foregoing, neither Developer, nor any of its partners, shall be personally liable for any
indemnification obligation hereunder that would result as the repayment of principal and/or
interest under the Loan.
14.3 Reimbursement of Agency. Developer shall reimburse Agency
immediately upon written demand for all costs reasonably incurred by Agency (including
the reasonable fees and expenses of attorneys, accountants, appraisers and other
consultants, whether the same are independent contractors or employees of Agency) in
connection with the enforcement of the Loan Documents and all related matters, including
all claims, demands, causes of action, liabilities, losses, commissions and other costs
against which Agency is indemnified under the Loan Documents. Such reimbursement
obligations shall bear interest from the date occurring twenty (20) days after Agency gives
written demand to Developer and shall be secured by the Agency Deed of Trust. Such
reimbursement obligations shall survive the cancellation of the Loan Note, release and
reconveyance of the Agency Deed of Trust, issuance of a Certificate of Completion, and
termination of this Agreement
15. DEFAULTS AND REMEDIES
15.1 Events of Default. The occurrence of any of the following, whatever the
reason therefore which is not cured, shall constitute an Event of Default by Developer:
(a) Developer fails to make any payment of principal or interest under the
Agency Promissory Note when due, and such failure is not cured within ten (10) Business
Days after Developer's receipt of written notice that such payment was not received when
due;
(b) Developer fails to perform any other obligation for the payment of
money under any Loan Document, and such failure is not cured within ten (10) Business
EXHIBIT 4
Days after Developer's receipt of written notice that such obligation was not performed
when due;
(c) Developer fails to perform any obligation (other than the obligations
described in subparagraphs (a) and (b) above) under any Loan Document, and such failure
is not cured within thirty (30) days after Developer's receipt of written notice that such
obligation was not performed; provided that, if cure cannot reasonably be effected within
such thirty (30)-day period, such failure shall not be an Event of Default so long as
Developer (in any event, within ten (10) Business Days after receipt of such notice)
commences to cure, and thereafter diligently (in any event within ninety (90) days after
receipt of such notice) prosecutes such cure to completion;
(d) Any representation or warranty in any Loan Document
proves to have been incorrect in any material respect when made;
(e) The Property is materially damaged or destroyed by fire or
other casualty unless Developer fulfills the Restoration Conditions set forth in the
insurance provisions of this Agreement within one hundred eighty (180) days (unless
extended pursuant to Section 19.5) and thereafter diligently restores the Property in
accordance with this Agreement;
(f) Work on the construction ceases for thirty (30) consecutive
days for any reason (other than governmental orders, decrees or regulations, acts of God or
any other deity, strikes or other causes beyond Developer's reasonable control);
(g) Developer is enjoined or otherwise prohibited by any
Governmental Authority from constructing and/or occupying the Improvements and such
injunction or prohibition continues unstayed for sixty (60) days or more for any reason;
(h) Developer is dissolved, liquidated or terminated, or all or substantially
all of the assets of Developer are sold or otherwise transferred without the City Project
Manager's prior written consent;
(i) Developer is the subject of an order for relief by a bankruptcy court, or
is unable or admits its inability to pay its debts as they mature, or makes an assignment for
the benefit of creditors; or Developer applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or
any part of its property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent of Developer
and the appointment continues undischarged or unstayed for ninety (90) days; or Developer
institutes or consents to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, custodianship, conservatorship, liquidation, construction
or similar proceeding relating to it or any part of its property; or any similar proceeding is
instituted without the consent of Developer and continues undismissed or unstayed for
ninety (90) days; or any judgment, writ, warrant of attachment or execution, or similar
process is issued or levied against any property of Developer and is not released, vacated
or fully bonded within ninety (90) days after its issue or levy; or
(j) (i) any of the Senior Loan Documents is revoked or terminated, in whole
or in part and for any reason (except due to repayment of such loans), without the City
Project Manager's prior written consent, or (ii) Developer defaults or otherwise fails to
perform any of its duties or obligations under or in connection with any of the Senior Loan
Documents, subject to all applicable notice and cure periods, or (iii) any of the Senior Loan
Documents is amended, supplemented or otherwise modified without Agency's prior
written consent, which consent shall not be unreasonably withheld.
EXHIBIT 4
Notwithstanding anything to the contrary contained herein, Agency hereby agrees
that any cure of any default made or tendered under this Agreement or under the other
Agency Loan Documents by Developer’s Limited Partner shall be deemed to be a cure by
Developer and shall be accepted or rejected on the same basis as if made or tendered by
Developer.
15.2 Remedies Upon Default. Upon the occurrence of any Event of Default,
Agency may, at its option and in its absolute discretion, do any or all of the following:
(a) By written notice to Developer, declare the principal of all amounts
owing under the Loan Documents, together with all accrued interest and other amounts
owing in connection therewith, to be immediately due and payable, regardless of any other
specified due date; provided that any Event of Default described in Section 20.1 (e) shall
automatically, without notice or other action on Agency's part, cause all such amounts to
be immediately due and payable;
(b) In its own right or by a court-appointed receiver, take possession of the
Property, enter into contracts for and otherwise proceed with the completion of the
construction by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including, without limitation, the right to seek specific performance and
the right to foreclose on any security and exercise any other rights with respect to any
security, all in such order and manner as Agency elects in its sole and absolute discretion;
and,
(d) Suspend or terminate the award of Agency funds if Developer fails to
comply with any term of such award.
15.3 Cumulative Remedies: No Waiver. Agency's rights and remedies under
the Loan Documents are cumulative and in addition to all rights and remedies provided by
law. The exercise by Agency of any right or remedy shall not constitute a cure or waiver
of any default, nor invalidate any notice of default or any act done pursuant to any such
notice, nor prejudice the Agency in the exercise of any other right or remedy. No waiver
of any default shall be implied from any omission by Agency to take action on account of
such default if such default persists or is repeated. No waiver of any default shall affect any
default other than the default expressly waived, and any such waiver shall be operative
only for the time and to the extent stated. No waiver of any provision of any Loan
Document shall be construed as a waiver of any subsequent breach of the same provision.
Agency's consent to or approval of any act by Developer requiring further consent or
approval shall not be deemed to waive or render unnecessary Agency's consent to or
approval of any subsequent act. The Agency's acceptance of the late performance of any
obligation shall not constitute a waiver by Agency of the right to require prompt
performance of all further obligations; Agency's acceptance of any performance following
the sending or filing of any notice of default shall not constitute a waiver of either party's
right to proceed with the exercise of its remedies for any unfulfilled obligatio ns; and
Agency's acceptance of any partial performance shall not constitute a waiver by Agency of
any rights.
16. MISCELLANEOUS
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16.1 Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of Agency to Developer, or any other
claim by developer against Agency, in connection with the Loan or otherwise, Developer
hereby waives any right it might otherwise have: (a) to offset any such obligation, liability
or claim against Developer's obligations under the Loan Documents; or, (b) to claim that
the existence of any such outstanding obligation, liability or claim excuses the
nonperformance by Developer of any of its obligations under the Loan Documents.
15.2 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: Shelter Providers of Orange County, Inc. DBA HomeAid Orange
County
17821 17th Street, Suite 120
Tustin, CA 92780
Attention: Gina R. Scott
With a copy to: Jackson Tidus
2030 Main Street, 12th Floor
Irvine, CA 92614
Attn: Sonia A. Lister, Esq.
If to Agency: Housing Authority of the City of Santa Ana
Executive Director
20 Civic Center Plaza (M-26)
P.0. Box 1988
Santa Ana, California 92702
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to all other
parties. All notices personally served shall be effective when actually received. All notices
mailed shall be effective three (3) days after deposit in the U.S. Mail, postage prepaid. The
foregoing notwithstanding, the non-receipt of any notice as the result of a change of address
of which the sending party was not notified or as the result of a refusal to accept delivery
shall be deemed receipt of such notice.
15.3 Survival of Representations and Warranties. All representations and
warranties in the Loan Documents shall survive the making of the Loan(s) described herein
and have been or will be relied on by Agency notwithstanding any investigation made by
either party.
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15.4 No Third Parties Benefited. This Agreement is made for the purpose of
setting forth rights and obligations of Developer and the Agency, and no other person shall
have any rights hereunder or by reason hereof.
15.5 Binding Effect; Assignment of Obligations. This Agreement shall bind,
and shall inure to the benefit of, Developer and Agency and their respective successors and
assigns. Other than as expressly provided to the contrary in this Agreement, Developer
shall not assign any of its rights or obligations under any Loan Document without the prior
written consent of Agency, which consent may be withheld in Agency's sole and absolute
discretion. Any such assignment without such consent shall, at Agency's option, be void.
15.6 Prior Agreements; Amendments; Consents. This Agreement (together
with all other Loan Documents) contains the entire agreement between the Agency and
Developer with respect to the Loan and the Property, and all prior negotiations,
understandings and agreements are superseded by this Agreement and such other Loan
Documents. No modification of any Loan Document (including waivers of rights and
conditions) shall be effective unless in writing and signed by the party against whom
enforcement of such modification is sought, and then only in the specific instance and for
the specific purpose given.
15.7 Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California and Federal
law, whichever is more stringent. Developer irrevocably and unconditionally submits to
the jurisdiction of the Superior Court of the State of California for the County of Orange
or the United States District Court of the Central District of California, as Agency may
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.
15.8 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.
15.9 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.
15.10 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.
15.11 Time of the Essence. Time is of the essence under this Agreement and in
the performance of every term, covenant, and obligation contained herein.
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15.12 Conflict of Interest. No member, official or employee of the Agency shall
have any direct or indirect interest in this Agreement, nor participate in any decision
relating to the Agreement which is prohibited by law.
15.13 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.
15.14 Plans and Data. Where Developer does not proceed with the work and
construction of the Project, and when this Agreement is terminated with respect thereto for
any reason, Developer shall deliver to Agency any and all plans and data concerning the
Property, and Agency or any person or entity designated by Agency shall have the right to
use such plans and data without compensation to Developer. Such right of Agency shall be
subject to any right of the preparer of the plans to their use.
15.15 Authority to Enter Agreement. Each undersigned represents and warrants
that its signature hereinbelow has the power, authority and right to bind their respective parties
to each of the terms of this Agreement, and shall indemnify the Agency fully, including
reasonable costs and attorney’s fees, for any injuries or damages to Agency in the event that
such authority or power is not, in fact, held by the signatory or is withdrawn.
[signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
executed on the date set forth at the beginning of this Agreement.
ATTEST: HOUSING AUTHORITY OF THE CITY
OF SANTA ANA ACTING AS THE
HOUSING SUCCESSOR AGENCY
___________________________ _______________________
Daisy Gomez Steven A. Mendoza
Recording Secretary Executive Director
APPROVED AS TO FORM
Sonia R. Carvalho
Authority General Counsel
___________________________
By: Ryan O. Hodge
Assistant City Attorney
RECOMMENDED FOR APPROVAL
___________________________
Steven A. Mendoza
Executive Director
Community Development Agency
{Signatures continue on following page}
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DEVELOPER:
Shelter Providers of Orange County, Inc. DBA HomeAid Orange County, Inc.
By:____________________________________
Gina R. Scott
Its: Executive Director
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EXHIBITS
A. Legal Description
B. Affordability Restrictions on Transfer of Property
C. Agency Deed of Trust
D. Agency Promissory Note
E. Project Budget
F. Scope of Work / Schedule of Performance
G. Form of Residual Receipts Report
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Exhibit A:
Legal Description
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EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Santa Ana, County of Orange, State of California, described
as follows:
PARCEL 1: (APN: 398-303-04)
THE SOUTHWESTERLY 50.00 FEET OF LOTS 13, 14, 15 AND 16 I N BLOCK 66 OF
SANTA ANA EAST, AS
SHOWN ON A MAP RECORDED IN BOOK 10, PAGES 43 AND 44 OF
MISCELLANEOUS RECORDS OF LOS
ANGELES COUNTY, CALIFORNIA.
PARCEL 2: (APN: 398-303-05)
THE NORTHEASTERLY 50.00 FEET OF THE SOUTHWESTERLY 100.00 FEET OF
LOTS 13, 14, 15 AND 16
I N BLOCK 66 OF SANTA ANA EAST, AS SHOWN ON A MAP RECORDED IN BOOK
10, PAGES 43 AND 44
OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA.
PARCEL 3: (APN: 398-303-06)
THE EASTERLY 47 FEET OF THE SOUTHERLY 15 FEET OF LOT 14 AND THE
EASTERLY 47 FEET OF LOTS
15 AND 16, ALL I N BLOCK 66 OF "SANTA ANA EAST", CI TY OF SANTA ANA,
COUNTY OF ORANGE,
STATE OF CALI FORNI A, AS PER MAP THEREOF RECORDED I N BOOK 10
PAGES 43 AND 44 OF
MISCELLANEOUS MAPS RECORDS OF LOS ANGELES, CALIFORNIA.
PARCEL 4: (APN: 398-303-07)
THE EASTERLY 50 FEET OF LOT 13, THE NORTHERLY 10 FEET OF THE
EASTERLY 50 FEET OF LOT 14,
THE WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF THE SOUTHERLY 15
FEET OF LOT 14, AND THE
WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF LOTS 15 AND 16 I N BLOCK
66 OF SANTA ANA EAST,
IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN
BOOK 10, PAGES 43 AND 44 OF MISCELLANEOUS MAPS, OF LOS ANGELES
COUNTY.
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Exhibit B:
Affordability
Restrictions on
Transfer of Property
EXHIBIT 4
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
{Address: 801, 807, 809 and 809 ½ East Santa Ana Boulevard, Santa Ana, California}
THESE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (the
"Restrictions") are entered into by and between Shelter Providers of Orange County, Inc., a
California nonprofit corporation doing business as HomeAid Orange County (“Developer”) and
the Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, a
public body, corporate and politic (“Agency”).
RECITALS:
A. The Agency is authorized by the Community Redevelopment Law of the State of
California (Health and Safety Code section 33000, et seq.) (“CRL”) to expend funds to increase
the supply of very low and low income housing available at affordable housing costs. In part to
further this goal, the Agency has created the Merged Project Areas, within the City (the “Project
Area”), and adopted a Redevelopment Plan for the redevelopment of the Project Area. In
accordance with Section 33334.2, et seq., of the CRL, the Agency sets aside a portion of the tax
increment revenues it receives from the Merged Project Area in a separate low and moderate
housing asset fund, which the Agency uses for the construction, preservation, and rehabilitation
of affordable housing for low-income households.
B. Developer requested financial assistance in connection with the ground lease,
development, construction, ownership, occupancy, and operation of a seventeen (17) unit
affordable housing complex (“Project”) to be located at 801, 807, 809 and 809 ½ E. Santa Ana
Blvd., Santa Ana, California, legally described within Exhibit A of the Agency Loan Agreement
hereto and incorporated herein (“Property”). Nine (9) of the units will be permanent supportive
housing for households earning no more than 30% of the Area Median Income; Seven (7) of the
units will be permanent supportive housing for households earning no more than 25% of the
Area Median Income; and one (1) of the units is reserved for an on-site manager.
Office space within the development will be provided for use as space for the case
managers that will provide mental health services. On-site amenities will include a courtyard,
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community room and a lounge area. Mercy House Living Centers (“Mercy House”) will manage
the onsite manager.
C. The City of Santa Ana (“City”) and the Housing Authority of the City of Santa
Ana (“Housing Authority”) reviewed Developer’s request for assistance and at the City
Council/Housing Authority meeting on January 15, 2019, the Housing Authority Board
authorized and approved issuance of a conditional, pre-commitment letter evidencing the
preliminary award of $1,069,947 of funds to the Project (“Agency Loan”), , to be funded
exclusively from the Low and Moderate Income Housing Asset Fund (the “LMIHAF”) held by
the Agency.
D. The amount of the Agency Loan was determined based upon the City and
Agency’s review of the Developer’s request for the receipt of the Agency Loan and the
development proforma and projected cash flows for the Project submitted by the Developer to
the City/Agency as of January, 2019 (“Proforma”). The Housing Authority’s Executive Director
has authority to approve revised development proformas and projected cash flows for the
Project; provided, however, that the Agency Loan is not materially increased or extended.
E. Developer requested an additional $587,000 from the Agency in order to offset a
portion of the additional construction costs associated with the Project due to the increased costs
of labor and materials since January 15, 2019. The Agency desires to increase the pre-
commitment letter to Developer in order to make possible the development and construction of
the Project, thereby expanding the supply of decent, safe, sanitary and affordable housing within
the City.
F. In furtherance of the CRL and the Redevelopment Plan, Developer has applied to
the Agency for a loan with which to: (1) Lease, develop and construct the Project, and (2)
thereafter to maintain, operate and professionally manage the Project as decent, safe, sanitary and
affordable rental housing.
G. The Agency, on certain terms and conditions, desires to make such Agency Loan
to Developer in order to make possible the lease, development, construction, ownership,
maintenance and operation of the Project, thereby expanding the supply of decent, safe, sanitary and
affordable housing within the City.
H. If there is any inconsistency between State, and local guidelines with regard to
any of the terms and conditions contained herein, the more stringent shall apply.
I. The Agency Loan Agreement, Agency Deed of Trust, Agency Promissory Note and
these Restrictions, dated concurrently herewith (collectively the "Agency Loan Documents") are
entered into for the purpose of providing for affordable residential rental units in the City of
Santa Ana pursuant to the Agency funds regulations and guidance.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein
contained, Agency and Developer agree as follows:
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1. Definitions:
“Adjusted for family size appropriate to the unit" shall have the meaning set forth by
Health and Safety Code Section 50052.5(h).
"Affordable Housing" means the total housing costs paid by a qualifying household,
which shall not exceed the fraction of gross income specified, as follows, in accordance with
Sections 50052.5 and 50053 of the Health & Safety Code and the U.S. Department of Housing
and Urban Development (HUD):
Very Low-Income Households. Thirty (30) percent of the income of a household earning
fifty (50) percent of the Orange County median income adjusted for family size
appropriate for the unit.
Extremely-Low Income Households. Thirty (30) percent of the income of a household
earning no more than thirty (30) percent of the Median Income for the Area for rental
units, adjusted for family size appropriate for the unit.
In the event of a conflict between the fractions specified in this definition and those found
in Sections 50052.5 and 50053 of the Health & Safety Code and HUD, the fractions
specified by HUD shall control.
"Affordable Rent" means the Health and Safety Code extremely low income rents
based on the calculation defined in Section 50053 and income limits published by the
Department of Housing and Community Development.
“Agency” means the Housing Authority of the City of Santa Ana, acting as the Housing
Successor Agency, a public body, corporate and politic, exercising governmental functions and
powers, and organized and existing under the CRL. The principal office of the Agency is located
at 20 Civic Center Plaza, Santa Ana, California 92702. “Agency” shall also refer to the City
where the context dictates, to the effect that City shall have all rights granted to the Agency
hereunder.
"Agency Deed of Trust" means the deed of trust encumbering the Property, in the form
attached as Exhibit C to the Agreement, to be executed by Developer pursuant to the Agreement
in order to secure the Agency Loan Note.
“Agency Loan” means a loan in the original principal amount of up to One Million Six
Hundred Fifty-Six Thousand Nine Hundred Forty-Seven and No/100 Dollars ($1,656,947.00) to
be made to Developer by the Agency to be funded exclusively from the Low and Moderate
Income Housing Asset Fund held by the Agency.
"Agency Promissory Note" means that certain promissory note for Agency Loan funds
in the original principal amount of $1,656,947.00 in the form attached as Exhibit D to the
Agreement, and to be executed by Developer in favor of Agency to evidence the obligation of
Developer to repay the Agency Loan as further described in the Agency Promissory Note.
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"Agreement” means the Loan Agreement by and between the Agency and Developer.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the Project.
"Building Permit" means the building permit(s) issued by the City of Santa Ana and
required for the construction.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on
which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from January 1 to
December 31.
"Certificate of Completion" has the meaning set forth in the Agreement.
"City" means the City of Santa Ana, California, a charter city and municipal corporation.
“City” shall also refer to the Agency where the context dictates, to the effect that the Agency
shall have all the rights granted to the City hereunder.
"City Project Manager" shall mean the City’s Housing Manager and/or his/her
designee.
"County" means the County of Orange, California.
“Developer” means Shelter Providers of Orange County, Inc., a California nonprofit
corporation doing business as HomeAid Orange County.
"Event of Default" has the meaning set forth in the Agreement.
“Extremely Low Income” means an adjusted income which does not exceed thirty
percent (30%) of the Median Income for the Area, adjusted for household size, as published by
the U.S. Department of Housing and Urban Development.
"Governmental Authority" means any governmental or quasi-governmental agency,
board, bureau, commission, department, court, administrative tribunal or other instrumentality or
authority, and any public utility.
"Housing Authority" means the Housing Authority of the City of Santa Ana (CA093), a
public body, corporate and politic.
"HUD" means the United States (U.S.) Department of Housing and Urban Development,
and any successors or assigns thereof.
EXHIBIT 4
"Improvements" means all improvements and fixtures now and hereafter comprising
any portion of the Property, including, without limitation, landscaping, trees and plant materials;
and offsite improvements, as required through the City of Santa Ana Planning and Building
Agency entitlement process.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments,
injunctions, decrees or awards of the United States or any state, county, municipality or other
Governmental Authority.
"Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of
any kind, including any conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any lien or security interest.
“Loan Documents” or “Agency Loan Documents” means, collectively, the Agreement,
the Agency Promissory Note, the Agency Deed of Trust, and these Restrictions, and any other
agreement, document, or instrument that the Agency reasonably requires in connection with the
execution of these Restrictions or from time to time to effectuate the purposes of these
Restrictions.
“Low Income” means an adjusted income which does not exceed eight y percent (80%)
of the Median Income for the Area, adjusted for household size, as published by the U.S.
Department of Housing and Urban Development (HUD).
“Median Income for the Area” means the median income for Orange County,
California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Agency Loan Documents as “Area Median Income” or “AMI”.
"Project" means the construction of the Improvements upon the Property by Developer
pursuant to the Agreement.
"Property" means the Developer’s leasehold interest in the property that is located at 801,
807, 809 and 809 ½ E. Santa Ana Blvd. in the City of Santa Ana, and as more fully described in the
“Legal Description” of the Property attached as Exhibit A to the Agreement.
“Restricted Units” means sixteen (16) permanent supportive housing units at the Project
shall and will be restricted to Affordable Rents for chronically homeless Extremely-Low Income
households for a period of no less than fifty-five (55) years. One (1) additional unit will be
rented to an on-site property manager; the manager’s unit will not be rent restricted.
“Term of Affordability” or “Affordability Period” means the terms and conditions
contained herein shall remain in effect for fifty-five (55) years from the date of issuance of the
Certificate of Occupancy for the Project, or repayment of the Agency Loan, whichever is longer.
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“Very Low Income” means an adjusted income which does not exceed fifty percent
(50%) of the Median Income for the Area, adjusted for household size, as published by the U.S.
Department of Housing and Urban Development .
2. Use of the Property. Developer covenants and agrees, for itself, its successors,
its assigns, and every successor in interest to the Property of any part thereof, that Developer,
such successors, and assigns shall use the Property to provide Affordable Housing, for low-,
very-low, and extremely-low-income households, as provided in the Agency Loan Agreement
and these Restrictions. Developer agrees that the Property shall be used only for decent, safe,
sanitary and Affordable Housing pursuant to the affordability requirements of California Health
and Safety Code (“H&S”) sections 50053 and 33334.3, as applicable.
3. Affordability Requirements, Use and Maintenance of the Property.
3.1 Use Covenants and Restrictions:
A. Developer agrees and covenants, which covenants shall run with the land and bind
Developer, its successors, its assign and every successor in interest to the Property that Developer
will make all rental units on the Property except for the manager’s unit available to extremely-low,
very low and low income households at rents affordable to such households pursuant to these
Restrictions for fifty-five (55) years from the date of issuance of the Certificate of Occupancy for
the Project, or repayment of the Agency Loan, whichever is longer.
B. These Restrictions shall be recorded in the Official Records of the County, and
shall remain in first position on title and shall not be subordinated.
3.2 Affordability Levels/Unit Mix:
A. The Project shall consist of a seventeen (17) unit affordable housing complex.
Nine (9) of the units will be permanent supportive housing for households earning
no more than 30% of the Area Median Income; Seven (7) of the units will be
permanent supportive housing for households earning no more than 25% of the
Area Median Income; and one (1) of the units is reserved for an on-site manager.
B. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. The Housing Authority of the City of Santa Ana publishes a Utility
Allowance Schedule on an annual basis.
3.3 Calculation of Rent:
A. The affordable rents charged at the Project are the extremely low income rents
based on the calculation defined in Section 50053 and income limits published by the
Department of Housing and Community Development and must comply with the standards set
forth by these Restrictions, the Density Bonus Agreement and any other standards, regulatory
agreements or requirements for the Project’s public funding sources including but not limited to
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No Place Like Home (“NPLH”), Housing and Urban Development and Special Needs Housing
Program (“SNHP”), as applicable.
B. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. The Housing Authority publishes a Utility Allowance Schedule on an annual basis.
C. On an annual basis, the Agency shall provide the Developer with the maximum
allowable schedule of incomes and rents (less utility allowance appropriate for the Restricted Units
for the Property), which shall correspond to the maximum rent increase allowed by these
Restrictions, the Density Bonus Agreement and any other standards, regulatory agreements or
requirements for the Project’s public funding sources including but not limited to NPLH, HUD
and SNHP, as applicable. In no event can Developer charge any tenant more than such amount.
F. Utility allowances must be deducted from the maximum gross monthly Affordable
Rent. Utility allowances are deducted from rents using the amounts set annually by the Housing
Authority.
G. Recertification of Tenant Income:
(1) Developer shall take all necessary steps to review the income of all
tenants prior to renting to them, as well as reviewing current tenants on an
annual basis. Developer shall be entitled to rely on a tenant income
verification form certifying that the tenant is an eligible household and
otherwise meet(s) the eligibility requirements established for the
affordable unit and supporting documentation provided by tenant(s) unless
Developer has knowledge of, or a reasonable basis for belief as to, the
inaccuracy or falsehood of any of the supporting documentation.
Developer shall make reasonable efforts to verify or cause to be verified
that the income and asset statement provided by an applicant in an income
certification is accurate by taking, at a minimum, at least one of the
following steps as a part of the verification process: (1) obtain three
months consecutive pay stubs for the most recent pay period, (2) obtain an
income tax return for the most recent tax year, (3) obtain an income
verification form from the applicant’s current employer, (4) obtain an
income verification form from the Social Security Administration and/or
the California Department of Social Services if the applicant receives
assistance from either of such agencies, or (5) if the applicant is
unemployed and has no such tax return, obtain another form of
independent verification.. At a minimum, every fifth (5th) year,
Developer shall require new original income documents to be submitted
by tenants.
(2) Developer shall allow the Agency to conduct periodic reviews of tenant
files and files relating to affirmative marketing and outreach to ensure the
Project’s compliance with applicable regulations and guidelines.
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(3) Agency assisted units continue to qualify as Affordable Housing despite a
temporary non-compliance caused by increases in the incomes of existing
tenants if actions satisfactory to the Agency are being taken to ensure that
all vacancies are filled in accordance with this section until the non-
compliance is corrected.
3.4 Construction and Maintenance of the Property:
A. Maintenance. Developer shall maintain the Property in accordance with the
Ground Lease.
B. Handicapped Accessibility. Developer shall comply with: (a) Section 504 of the
Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C; and (b) the Americans
with Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to make
the Project readily accessible to and usable by individuals with disabilities.
D. Local Sourcing Plan. Developer agrees to make a good faith effort to encourage
contractors and suppliers to hire and procure locally to the extent that it is cost effective and does
not delay the overall Project development schedule. Prior to issuance of any Building Permit,
Developer shall develop and submit to the Agency a local sourcing plan for the Project targeting,
to the extent feasible, the hiring of qualified workers, construction contractors, or the purchasing
of goods locally within the City of Santa Ana.
E. Lead-Based Paint. Developer shall comply with the requirements, as applicable
of the Lead-Based Paint Poisoning Prevention Act.
F. Equal Opportunity and Fair Housing. Developer shall carry out the construction
and perform its obligations under this Agreement in compliance with all of the state and federal
laws and regulations regarding equal opportunity and fair housing. Developer must also follow
the requirements of California Health and Safety Code section 33435.
G. Property Standards. Developer shall cause the Property to meet all applicable
local, state and federal codes and ordinances, including zoning ordinances. Developer shall also
cause the Property to meet the current edition of the Model Energy Code published by the
Council of American Building Officials.
H. Alternative Transportation and Energy Source, Resource Conservation, and
LEED Certification. In recognition of the Agency’s desire to optimize the energy efficiency of
the Project, Developer agrees to consult with the Project design team, a CABEC certified 2016
Certified Energy Analyst, a LEED AP Homes (low-rise and mid-rise), LEED AP BD+C (high
rise), National Green Building Standard (NGBS) Green Verifier, or GreenPoint Rater (one
person may meet both of these latter qualifications) early in the Project design process to
evaluate a building energy model analysis and identify and consider energy efficiency or
generation measures beyond those required by HUD minimum construction standards.
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I. Property Maintenance Agreement. Developer shall maintain the Property in
accordance with the Ground Lease.
J. Monitoring. Developer shall allow the Agency to conduct periodic inspections of
each of the assisted units on the Property after the date of construction completion, with
reasonable notice. Developer shall cure any defects or deficiencies found by the Agency while
conducting such inspections within ten (10) business days of written notice thereof, or such
longer period as is reasonable within the sole discretion of the Agency.
3.5 Management Plan:
A. Management Plan. Prior to issuance of a Certificate of Occupancy, Developer
shall submit for the reasonable approval of the Agency a “Management Plan” that sets forth in
detail Developer’s property management duties, a tenant selection process in accordance with
this Agreement, a security system and crime prevention program, the procedures for the
collection of rent, the procedures for eviction of tenants, the rules and regulations for the
Property and manner of enforcement, a standard lease form, an operating budget, the identity and
emergency contact information of the professional property management company to be
contracted with to provide onsite property management services at the Property, and other
matters relevant to the management of the Property, including, but not limited to, the following:
(1) Management Agent. Developer shall submit the name and qualifications
of the proposed Management Agent. The City Project Manager shall
approve or disapprove the proposed Management Agent in writing based
on the experience and qualifications of the Management Agent.
(2) Management Agreement. Developer shall submit a copy of the
proposed management agreement specifying the amount of the
management fee, and the relationship and division of responsibilities
between Developer and Management Agent.
(4) Tenant Selection Policies. Developer shall adopt and include as part of its
Management Plan, written tenant selection policies and criteria for the
Restricted Units that meet the following requirements:
(a) Are consistent with the purpose of providing housing for
Extremely-Low, Very-Low and Low Income households;
(b) Are reasonably related to program eligibility and the applicants'
ability to perform the obligations of the lease;
(c) Provide for:
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(i) the selection of tenants from a written waiting list in the
chronological order of their application, insofar as is
practicable; and,
(ii) the prompt written notification to any rejected applicant of
the grounds for any rejection;
(d) Carry out the Affirmative Marketing procedures of the City of
Santa Ana, which are designed to provide information and
otherwise attract eligible persons from all racial, ethnic and gender
groups in the housing market area to the Restricted Units.
Developer shall cooperate to effectuate this provision prior to the
initial renting, or upon occurrence of a vacancy, and the re-renting
of any Restricted Units;
(5) Local Preference. The Project consists of sixteen (16) permanent
supportive housing units for chronically homeless individuals and
families. All individuals and families must be chronically homeless and
preference should be given to residents of the City of Santa Ana. Local
preference for Santa Ana residents and workers in tenant selection shall be
a requirement of the Project. Subject to the prohibition of discrimination
and the granting of preferences in housing occupancy imposed by federal
laws and regulations, the State of California, and by the City of Santa Ana
Affordable Housing Funds Policies and Procedures, the Developer shall
use its best efforts to lease units in the following order of priority:
1. First priority shall be given to persons who have been
permanently displaced or face permanent displacement from
housing in Santa Ana as a result of any of the following:
a. A redevelopment project undertaken pursuant to
California’s Community Redevelopment Law (Health
& Safety Code Sections 33000, et seq.) -- applicable
only to projects funded by the Low and Moderate
Income Housing Asset Fund.
b. Ellis Act, owner-occupancy, or removal permit
eviction;
c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP
Contract by property owner; or
e. Governmental Action, such as Code Enforcement.
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2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at
least the last 6 months.
(6) Affirmative Marketing. Prior to the issuance of a Certificate of
Occupancy, Developer shall prepare and obtain Agency’s approval of an
affirmative marketing program for leasing the affordable units at the
Project.
(7) Crime Free Housing. Developer shall work with Agency staff to develop
a crime free housing policy, procedure, and design plan.
(8) Onsite Parking Management Plan. Developer shall provide onsite parking
for residents and visitors of the Project and actively monitor the parking
demand of the Project site. Developer shall continually monitor and take
appropriate measures to manage the parking demand of the Project site to
mitigate the use of offsite parking spaces on private or public properties
and/or right-of-way. Developer has submitted a Parking Management
Plan (the “PMP”) dated March 10, 2020, outlining appropriate measures to
manage and mitigate the use of offsite parking spaces and/or right of way.
Prior to issuance of a Certificate of Occupancy, Developer shall obtain
approval from the Agency for said plan. Notwithstanding the foregoing,
in no event may the plan or the requirements of this subsection supersede
the parking allowed under the Density Bonus Agreement or be interpreted
in a manner requiring parking in excess of twelve (12) onsite parking
spaces, ten (10) of which shall be tandem parking spaces.
C. Cure Period. If at any time the Agency determines that the Restricted Units are
not being managed or maintained in accordance with the approved Management Plan, Agency
shall provide Developer with written notice thereof which notice shall include a reasonable cure
period not less than thirty (30) days. If the deficiencies are not cured within the cure period
provided in the Agency notice, Developer shall change the management agent or the practices
complained of, upon receipt of written notice from the City Project Manager. The City Project
Manager may require Developer to change management practices or to terminate the
management contract and designate and retain a different management agent. The management
agreement shall provide that it is subject to termination by Developer without penalty, upon
thirty (30) days prior written notice, at the direction of the City Project Manager. Within ten (10)
days following a direction of the City Project Manager to replace the management agentthe
Developer shall select another management agent or make other arrangements satisfactory to the
City Project Manager or designee for continuing management of the Restricted Units.
EXHIBIT 4
3.6 Supportive Services:
A. Onsite Services. The Developer shall provide on-site services that are available to
the residents and shall report to the Agency annually the services provided.
B. Application and Financial Preparedness. Developer shall submit for review and
approval by the Agency a booklet to inform interested persons regarding minimum application
and eligibility requirements and to assist interested persons with application and financial
preparedness and eligibility for residency at the Project at the initial leasing of the affordable
units. Developer shall also work with the Agency to hold a minimum of two (2) workshops to
be coordinated by the Developer at least twelve (12) months prior to the initial leasing of the
affordable units.
C. Programs and Amenities. Developer shall provide residents of the Project access
to information regarding discounted or no-cost onsite supportive services, programming, and
amenities that promote child development, youth development, and economic mobility, and
include, but are not limited to health and wellness services, transportation services, social
activities, and physical or recreational amenities.
D. WORK Center. The Developer and the Property Manager shall coordinate with
the City’s WORK Center to provide services and outreach to tenants, as well as provide
information on employment during the construction of the Project.
3.7 Obligation to Refrain from Discrimination:
A. In Use of Property. Developer covenants and agrees for itself, its successors, its
assigns and every successor in interest to the Property or any part thereof, that there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, disability, sex, marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer itself or any
person claiming under or through it establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees or vendees of the Property, as required by the Title VI of
the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing
regulations, and the Age Discrimination Act of 1975, and all implementing regulations.
B. In Affordable Housing Restrictions. Developer, its successors and assigns, shall
not refuse to lease a unit to a holder of a rental voucher under 24 CFR part 887 (Housing Choice
Voucher Program) or to a holder of a comparable document evidencing participation in a
federally funded tenant-based assistance program because of the status of the prospective tenant
as a holder of such certificate of family participation, rental voucher, or comparable tenant-based
assistance document.
C. In Employment. Developer shall take affirmative action to ensure that applicants
are employed, and that employees are treated during employment, without regard to their race,
color, disability, creed, religion, sex, marital status, disability, national origin, or ancestry.
EXHIBIT 4
D. In all Contracts. Developer shall cause the foregoing covenants to be inserted in
all contracts for any work covered by this Agreement so that such provisions will be binding
upon each contractor for the benefit of Agency, provided that the foregoing covenant shall not
apply to contracts or subcontracts for standard commercial supplies or raw materials.
4. Miscellaneous Provisions:
A. The lease of any Restricted Units may not contain any of the following provisions
(in which references to "Developer" shall mean the Developer, its successors or assigns):
(1) Agreement by the tenant to be sued, to admit guilt, or to a judgment in
favor of the Developer in a lawsuit brought in connection with the lease;
(2) Agreement by the tenant that the Developer may take, hold, or sell
personal property of household members without notice to the tenant and a
court decision on the rights of the parties. This prohibition, however, does
not apply to an agreement by the tenant concerning disposition of personal
property remaining in the Restricted Unit after the tenant has moved out of
the Restricted Unit. The Developer may dispose of this personal property
in accordance with state law;
(3) Agreement by the tenant not to hold the Developer or the Developer’s
agent legally responsible for any action or failure to act, whether
intentional or negligent;
(4) Agreement of the tenant that the Developer may institute a lawsuit without
notice to the tenant;
(5) Agreement by the tenant that the Developer may evict the tenant or
household members without instituting a civil court proceeding in which
the tenant has the opportunity to present a defense, or before a court
decision on the rights of the parties;
(6) Agreement by the tenant to waive any right to a trial by jury;
(7) Agreement by the tenant to waive the tenant's right to appeal, or to
otherwise challenge in court, a court decision in connection with the lease;
and,
(8) Agreement by the tenant to pay attorney's fees or other legal costs even if
the tenant wins in a court proceeding by the Developer against the tenant.
The tenant, however, may be obligated to pay costs if the tenant loses.
EXHIBIT 4
B. Developer, its successors or assigns, must adhere to state law requirements with
regard to termination of tenancy.
C. Developer shall comply with and be bound by the conflict of interest provisions
set forth in all applicable state regulations pertaining to conflict of interest.
D. The covenants established in these Restrictions, and any amendments hereto
approved by the Agency, shall be binding for the benefit of and in favor of the Agency and its
respective successors and assigns, without regard to technical classification and designation.
These Restrictions shall remain in effect for fifty-five (55) years from the date of issuance of the
Certificate of Occupancy for the Project, or repayment of the Agency Loan, whichever is longer.
In its discretion, the Agency may defer repayment of the Loan or the parties may agree to such
reasonable modifications to the requirements of these Restrictions, as the parties may determine
are necessary for the continued maintenance and operation of the Restricted Units. The
covenants against discrimination shall remain in effect for the period of these Restrictions.
E. Records and Audits.
(1) Owner shall maintain the following general program records, and make
them available for inspection by the Agency, the State or HUD:
(a) Records which demonstrate compliance with the Equal
Opportunity and Fair Housing requirements outlined in these
Restrictions, including:
(i) data on the extent to which each racial and ethnic group
and single head of household (by gender of head of
household) have applied for, participated in, or benefited
from, any program or activity funded in whole or in;
(ii) documentation of actions undertaken to meet the equal
opportunity requirements of 24 CFR 92.350, which
implements Section 3 of the Housing Development Act of
1968, as amended (12 U.S.C. 1701u); and,
(iii) documentation and data on the steps taken to implement
Owner's outreach programs to minority-owned and women-
owned businesses to meet the minority outreach
requirements of 24 CFR 92.350;
(b) If applicable, records which demonstrate compliance with the
requirements relating to relocation of displaced persons, as
described in 24 CFR 92.353. At a minimum, these shall include
project occupancy lists identifying the name and address of all
persons occupying the Project Property up until the date on which
Developer obtained ownership of the Property; and,
EXHIBIT 4
(c) Any other reports issued by other monitoring agencies.
(2) All records pertaining to each Calendar Year must be retained for the most
recent five year period; 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.
The Agency, the State, and/or their representatives shall have unrestricted
reasonable access to all locations, books, and records for the purpose of
monitoring, auditing, or otherwise examining said locations, books, and
records with or without prior notice.
(3) If so directed by the Agency upon termination of the Loan Agreement,
Developer shall cause all records, accounts, documentation and all other
materials relevant to the work to be delivered to the Agency, as
depository.
(4) All records, accounts, documentation and other materials relevant to the
Project shall be accessible at any time to the authorized representatives of
the agency on reasonable prior notice, for the purpose of examination or
audit.
(5) The Agency shall perform an annual audit at the close of each Calendar
Year in which these Restrictions are in effect. Developer shall reasonably
cooperate with Agency in performing such audit.
(6) Developer shall permit the Agency to perform an Annual Physical
Inspection of the Property with at least ten (10) Business Days notice.
Developer shall cooperate with this Inspection and shall take all steps
necessary to quickly correct any code deficiencies identified during the
Inspection..
F. If there is a discrepancy between local, state and federal law with regard to any of
the aforementioned covenants, the more stringent shall apply.
G. The Agency is the beneficiary of the terms and provisions of these Restrictions
and the covenants herein, both for and in its own right and for the purposes of protecting the
interests of the community and other parties, public or private, for whose benefit these
Restrictions and the covenants running with the land have been provided. Notwithstanding the
foregoing, no person or entity, other than Agency, City and Developer shall have any right of
action based upon any provision of these Restrictions. The Agency shall have the right if the
covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits
at law or in equity or other proper proceedings to enforce the curing of such breaches to which
they are entitled.
EXHIBIT 4
H. The covenants and agreements contained herein shall run with the land and shall
remain in effect for the term of the Agreement. Upon the sale, conveyance or other transfer of the
Property (a "Transfer") and the assumption of the obligations hereunder by a transferee,
Developer’s liability for performance shall be terminated as to any obligation to be performed
hereunder after the date of such Transfer.
I. Upon a Transfer of the Property, the transferee will be obligated to meet with the
City prior to closing of the Transfer to review the terms of these Restrictions and requirements of
the transferee therein. Any failure of transferee to meet with the City or Agency as required
would constitute a default under these Restrictions.
J. The Agreement and all of its attachments shall be enforceable by the Agency in
accordance with the terms thereof. Each of the Loan Documents provide a means of
enforcement by the Agency if Developer is in breach of its obligations hereunder and thereunder,
including liens on the Property, deed restrictions and covenants running with the land.
K.
Force Majeure Events. Notwithstanding specific provisions of these Restrictions,
performance hereunder shall not be deemed to be in default where delays or defaults are due to:
war; terrorism; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; a legal challenge;
casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; lack of transportation; governmental restrictions or priority;
litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays
of any contractor or supplier; acts of the other party; acts or failure to act of the Agency or any
other governmental Authority or entity (except that any act or failure to act of Agency shall not
excuse performance by Agency); or any other causes beyond the reasonable control , or without
the fault of the party claiming an extension of time to perform (each a “Force Majeure Event”).
An extension of time for any Force Majeure Event 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 these Restrictions may also
be extended in writing by the Agency and the Developer.
EXHIBIT 4
IN WITNESS WHEREOF, the parties hereto have caused these Affordability Restrictions on
Transfer of Property to be executed on the date set forth at the beginning of these Restrictions.
ATTEST: HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
___________________________ _______________________
Norma Mitre Steven A. Mendoza
Recording Secretary Executive Director
APPROVED AS TO FORM
Sonia R. Carvalho
Authority General Counsel
___________________________
By: Ryan O. Hodge
Assistant City Attorney
RECOMMENDED FOR APPROVAL
___________________________
Steven A. Mendoza
Executive Director
Community Development Agency
{Signatures continue on following page}
EXHIBIT 4
DEVELOPER:
Shelter Providers of Orange County, Inc. DBA HomeAid Orange County, Inc.
By:____________________________________
Gina R. Scott
Its: Executive Director
EXHIBIT 4
Exhibit C:
Agency Deed of Trust
EXHIBIT 4
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, California 92702
Attention: Clerk of the Council
AGENCY DEED OF TRUST
AND ASSIGNMENT OF RENTS
(801 E. Santa Ana Blvd., Santa Ana, California)
THIS AGENCY DEED OF TRUST AND ASSIGNMENT OF RENTS (the “Deed of
Trust") made this ____ day of _______________, 2021, by and between Shelter Providers of
Orange County, Inc. DBA HomeAid Orange County (the "Trustor"), Commonwealth Land Title
Company, a California corporation (the “Trustee"), and the Housing Authority of the City of
Santa Ana (CA093), acting as the Housing Successor Agency, a public body, corporate and
politic (the "Beneficiary"). Capitalized terms not defined in this Deed of Trust shall have the
meanings given such terms in the Agreement (defined in Section 1 below and in the Agency
Promissory Note).
Trustor, in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, all of
Trustor’s leasehold interest in the real property located in the City of Santa Ana, County of Orange,
State of California, described in the attached Exhibit A and more commonly known as 801 E. Santa
Ana Blvd., Santa Ana, California (the "Property");
TOGETHER with all the improvements now or hereafter erected on the Property, and all
easements, rights, appurtenances and all fixtures now or hereafter attached to the Property, all of
which, including replacements and additions thereto, shall be deemed to be and remain a part of the
Property covered by this Agency Deed of Trust; provided that so long as Trustor is not in default
hereunder and no Event of Default has occurred or is continuing, it shall be permitted to control
the Property in accordance with the requirements of that certain Agency Loan Agreement
entered into between the Trustor and the Beneficiary, dated concurrently herewith, which
Agreement is on file with the Beneficiary as a public record;
TOGETHER with the right, power and authority during the continuance of this Trust, to
collect the rents, issues, and profits of the Property, reserving unto the Trustor the right, prior to any
default by Trustor in payment of the indebtedness secured by this Deed of Trust or in the
performance of any agreement under this Deed of Trust, and so long as no Event of Default has
EXHIBIT 4
occurred or is continuing, to collect and retain these rents, issues and profits as they become due and
payable; and,
TOGETHER with all articles of personal property or fixtures now or hereafter attached to or
used in and about the building or buildings now erected, or hereafter to be erected, on the Property
which are necessary to the complete and comfortable use and occupancy of such building or
buildings for the purposes for which they were or are to be erected, including all other goods and
chattels and personal property as are ever used or furnished in operating a building, or the activities
conducted therein, similar to the one herein described and referred to, and all renewals or
replacements thereof or articles in substitution therefor, whether or not the same are, or shall be
attached to said building or buildings in any manner; and all of the foregoing, together with the
Property, is herein referred to as the "Security";
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever; and,
TO SECURE to the Beneficiary: (a) the repayment of the sums evidenced by a Promissory
Note to the Beneficiary executed by Trustor of even date herewith in the principal amount of One
Million Six Hundred Fifty-Six Thousand Nine Hundred Forty-Seven and No/100 Dollars
($1,656,947.00) (the “Agency Promissory Note”); (b) the performance of the covenants and
agreements of Borrower contained in a certain Agreement as hereinafter defined; and, (c) the
payment of all other sums, with interest thereon, advanced in accordance herewith to protect the
security of this Deed of Trust; and the performance of the covenants and agreements of Trustor
contained herein.
TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS:
1. The Agreement. This Deed of Trust is executed and delivered, along with the
Agency Promissory Note, the Agency Loan Agreement, and Affordability Restrictions on Transfer
of Property to benefit the Property. A copy of said Agency Loan Agreement is on file as a public
record with the Beneficiary and is incorporated herein by reference (the “Agreement”). Trustor
acknowledges that but for the execution of this Deed of Trust, the Beneficiary would not enter into
the Agreement or Agency Promissory Note secured by this Deed of Trust.
2. Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the
right to grant and convey the Security; that other than this Deed of Trust, the Security is not
encumbered except for obligations secured by deeds of trust, or any other security agreement, to
secure financing or refinancing for the purchase and rehabilitation of the Property.
3. Repayment of the Loan. Trustor will promptly repay, when due, the principal loan
amount, as required by the Agency Promissory Note secured by this Deed of Trust.
4. Subordination. This obligation secured by this Deed of Trust shall be subordinated
to the Senior Loan and the Senior Loan Documents, but the Agency’s Affordability Restrictions on
Transfer of Property shall remain in a senior position to the Senior Loan and the Senior Loan
Documents.
EXHIBIT 4
5. Prior Mortgages and Deeds of Trust; Charges; Liens. Trustor shall perform all of
Trustor’s obligations under any mortgage, deed of trust or other security agreement with a lien that
has priority over this Instrument, including Trustor’s covenants to make payments when due
(subject to all applicable notice and cure provisions). Trustor will pay all taxes, assessments and
other charges, fines and impositions attributable to the Security that may attain a priority over this
Deed of Trust, by Trustor making any payment, when due, directly to the payee thereof. Trustor
will promptly furnish to the Beneficiary all notices of amounts due under this paragraph, and in the
event Trustor makes payment directly, Trustor will promptly discharge any lien that has priority
over this Deed of Trust; provided that Trustor will not be required to discharge the lien of the Deed
of Trust securing any Senior Lender or any other lien described in this paragraph so long as Trustor
will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to
the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in,
legal proceedings, which operate to prevent the enforcement of the lien or forfeiture of the Security,
or any part thereof.
6. Hazard Insurance. Trustor will keep the Security insured by such insurance policies
in such amounts and for such periods as called for in the Agreement.
7. Preservation and Maintenance of Security. Trustor will keep the Security in good
repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the Beneficiary's Security. If Trustor fails to perform the covenants
and agreements contained in this Deed of Trust, or if any action or proceeding is commenced that
materially affects the Beneficiary's interest in the Security, including, but not limited to, an Event of
Default under the Deed of Trust securing any Senior Lender, eminent domain, insolvency, code
enforcement, or arrangements or proceedings involving a bankruptcy or decedent, then the
Beneficiary, at the Beneficiary's option, upon notice to Trustor, may make such appearances,
disburse such sums and take such action as it determines necessary to protect the Beneficiary's
interest, including, but not limited to, disbursement of reasonable attorneys' fees and entry upon the
Security to make repairs.
Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon,
will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and the
Beneficiary agree to other terms of payment, such amount will be payable upon notice from the
Beneficiary to Trustor requesting payment thereof, and will bear interest from the date of
disbursement at the rate payable from time to time on outstanding principal under the Agency
Promissory Note, unless payment of interest at such rate would be contrary to applicable law, in
which event such amounts will bear interest at the highest rate permissible under applicable law.
Nothing contained in this paragraph will require the Beneficiary to insure any expense or take any
action hereunder.
9. Inspection. The Beneficiary may make, or cause to be made, reasonable entries
upon and inspections of the Security upon reasonable prior notice during normal business hours;
provided that, the Beneficiary will give Trustor reasonable notice of inspection.
10. Forbearance by the Beneficiary Not a Waiver. Any forbearance by the Beneficiary
in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy.
The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary
EXHIBIT 4
will not be a waiver of the Beneficiary's right to accelerate the maturity of the indebtedness secured
by this Deed of Trust.
11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and
cumulative to any other right or remedy under this Deed of Trust, or any other document, or
afforded by law or equity, and may be exercised concurrently, independently or successively.
12. Successors and Assigns Bound. The covenants and agreements herein contained
shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the
Beneficiary and Trustor subject to the provisions of this Deed of Trust.
13. Joint and Several Liability. All covenants and agreements of Trustor shall be joint
and several.
14. Notice. Except for any notice required under applicable law to be given in another
manner: (a) any notice to Trustor provided for in this Agency Deed of Trust will be given by
certified mail, return receipt requested, addressed to Trustor at Shelter Providers of Orange County,
Inc. DBA HomeAid Orange County, 17821 17th Street, Suite 120, Tustin, California 92780,
Attention: Gina R. Scott/Executive Director; (b) any notice to the Beneficiary will be given by
certified mail, return receipt requested, to the Beneficiary at 20 Civic Center Plaza, P.O. Box 1988,
Santa Ana, California 92702, Attention: Housing Division Manager, or at such other address as the
Beneficiary may designate by notice to Trustor as provided above; and, (c) to Trustee at 888 S.
Figueroa Street, Suite 2100, Los Angeles, CA 90017. Notice shall be effective as of the date
received as shown on the return receipt.
15. Governing Law. This Deed of Trust shall be governed by the laws of the State of
California with venue in Orange County.
16. Severability. In the event that any provision or clause of this Deed of Trust or the
Agency Promissory Note conflicts with applicable law, such conflict will not affect other provisions
of this Deed of Trust or the Agency Promissory Note that can be given effect without the conflicting
provision, and to this end the provisions of the Deed of Trust and the Agency Promissory Note are
declared to be severable.
17. Captions. The captions and headings in this Deed of Trust are for convenience only
and are not to be used to interpret or define the provisions hereof.
18. Default in Foreclosure; Remedies. Upon Trustor's breach of any covenant or
agreement of Trustor in this Deed of Trust or secured by this Deed of Trust, including, but not
limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, or the
occurrence of any “Event of Default” (as defined in the Agency Promissory Note), the Beneficiary
may declare all sums secured by this Deed of Trust immediately due and payable by delivering to
Trustor notice thereof, specifying: (1) the breach; (2) the action required to cure such breach; (3) a
date not less than thirty (30) days from the date the notice is received by Trustor, as shown on the
return receipt, by which such breach is to be cured, provided, however, that if such Event of Default
is not reasonably susceptible to being cured within thirty (30) days, Trustor shall have a reasonable
period to cure the defect, so long as Trustor is diligently prosecuting the cure to completion; and, (4)
that failure to cure such breach on or before the date specified in the notice may result in
EXHIBIT 4
acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice will also
inform Trustor of Trustor's right to reinstate after acceleration and the right to bring a court action to
assert the non-existence of default, or any other defense of Trustor to acceleration and sale.
If the breach is not cured on or before the date specified in the notice, or such longer period
as provided above or in the Agency Promissory Note or the Agreement, the Beneficiary, at the
Beneficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be
immediately due and payable without further demand and may invoke the power of sale and any
other remedies permitted by California law; (b) either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the
adequacy of its security, enter upon the Security and take possession thereof (or any part thereof)
and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it
deems necessary or desirable to preserve the value or marketability of the Property, or part thereof
or interest therein, increase the income therefrom or protect the security thereof. The entering upon
and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any
act done in response to such breach and, notwithstanding the continuance in possession of the
Security, the Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust,
or by law upon occurrence of any uncured breach, including the right to exercise the power of sale;
(c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or
specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of
default and demand for sale, pursuant to the provisions for notice of sale found at California Civil
Code sections 2924, et seq., as amended from time to time; or, (e) exercise all other rights and
remedies provided herein, in the instruments by which Trustor acquires title to any Security, or in
any other document or agreement now or hereafter evidencing, creating or securing all or any
portion of the obligations secured hereby, or provided by law.
The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in
pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys'
fees.
19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary’s acceleration of the
sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by
the Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before
sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior
to entry of a judgment enforcing this Deed of Trust if: (a) Trustor pays the Beneficiary all sums that
would be then due under this Deed of Trust (prior to any acceleration under the Agency Promissory
Note has occurred); (b) Trustor cures all breaches of any other covenants or agreements of Trustor
contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by the Beneficiary
and the Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of
Trust and in enforcing the Beneficiary’s and the Trustee’s remedies, including, but not limited to,
reasonable attorneys' fees; and, (d) Trustor takes such action as the Beneficiary may reasonably
require to assure that the lien of this Deed of Trust, the Beneficiary’s interest in the Security and
Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired subject
to the lien of any Senior Deed of Trust. Upon such payment and cure by Trustor, this Deed of Trust
and the obligations secured hereby will remain in full force and effect as if no acceleration had
occurred.
EXHIBIT 4
20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to
notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party, unless brought by Trustee.
21. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the
Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust
and the Agency Promissory Note to the Trustee. The Trustee will reconvey the Security without
warranty and without charge to the person or persons legally entitled thereto. Such person or
persons will pay all costs of recordation, if any.
22. Substitute Trustee. The Beneficiary, at the Beneficiary’s option, may from time to
time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The
successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein
and by applicable law.
23. Request for Notice. Trustor requests that copies of the notice of default and notice
of sale be sent to Trustee at the address set forth in Section 14 above.
24. Nonrecourse Liability. Neither Trustor nor any partner, employee, director, officer
affiliate, agent or representative of Trustor nor any other person or entity shall have any personal
liability under the Agreement, Agency Promissory Note, or this Deed of Trust, and any judgment,
decree or order for payment of money obtained in any action to enforce the obligation of Trustor to
repay the loan evidenced by such documents shall be enforceable against Trustor only to the extent
of Trustor’s interest in the Property.
(Signatures on Following Page)
EXHIBIT 4
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written
above.
Shelter Providers of Orange County, Inc. DBA HomeAid Orange County
By: ____________________________________
Gina R. Scott
Its: Executive Director
EXHIBIT 4
Exhibit D:
Agency Promissory
Note
EXHIBIT 4
LOW AND MODERATE INCOME HOUSING ASSET FUNDS PROMISSORY NOTE
SECURED BY SUBORDINATED DEED OF TRUST
TO THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA
(801 E. Santa Ana Blvd., Santa Ana, California)
$1,656,947.00 ______________, 2021
Santa Ana, California
1. Principal Amount of Loan
FOR VALUE RECEIVED, Shelter Providers of Orange County, Inc. DBA HomeAid
Orange County (“Borrower”), hereby promises to pay to the Housing Authority of the City of
Santa Ana (CA093), acting as the Housing Successor Agency, a public body, corporate and politic
(“Agency”), or order, a principal amount not to exceed ONE MILLION SIX HUNDRED FIFTY-
SIX THOUSAND NINE HUNDRED FORTY-SEVEN AND NO/100 DOLLARS
($1,656,947.00), or so much thereof as may be advanced by the Agency to the Borrower, due and
payable with 3% simple Interest from the date of issuance of the Certificate of
Occupancy/Completion by residual receipts over the fifty-five (55) year term, pursuant to the
Agency Loan Agreement (said “Agreement”) between Borrower and the Agency dated
concurrently herewith, which is incorporated herein by this reference. This loan is funded
exclusively from the Low and Moderate Income Housing Asset Fund held by the Agency (the
“Agency Funds”). Any capitalized term not otherwise defined in this Promissory Note (“Note”)
shall have the meaning ascribed to such term in the Agreement. The obligation of Borrower to
Agency hereunder is subject to the terms of said Agreement, the Affordability Restrictions on
Transfer of Property, Agency Deed of Trust and this Note. Said documents are public records on
file in the offices of the Agency, and the provisions of said documents are incorporated herein by
this reference.
This Note, said Agreement, the Affordability Restrictions on Transfer of Property, and the
Deed of Trust are sometimes collectively referred to herein as the "Loan Documents". The rights
and responsibilities provided for in the Loan Documents shall inure to the benefit of the Agency.
Any capitalized term that is not otherwise defined herein shall have the meaning ascribed to such
term in the Agreement.
This Note evidences the obligation of Borrower to the Agency for repayment of the Agency
Loan of Agency Funds attributable to the acquisition, development, and construction of the
Property, and related soft costs.
This Note is payable at the principal office of the City of Santa Ana – Community
Development Agency, 20 Civic Center Drive, Santa Ana, California 92702, Attn: Housing
Division, or at such other place as the holder hereof may inform Borrower in writing, in lawful
money of the United States.
EXHIBIT 4
2. Definitions.
For the purpose of calculating the payments to be made by Borrower to Agency pursuant
to this Note, the following terms shall have the following respective meanings:
“Agency Assisted Units” shall mean those affordable rental units constructed on the
Property, which are subject to the 55-year Term of Affordability.
“Agency Funds” shall mean the money provided by the Housing Successor Agency from
the Low and Moderate Income Housing Asset Fund for the construction of the Agency Assisted
Units hereunder.
“Agency Loan” means a loan in the original principal amount of up to One Million Six
Hundred Fifty-Six Thousand Nine Hundred Forty-Seven and No/100 Dollars ($1,656,947.00) to
be made to Borrower by the Agency to be funded exclusively from the Low and Moderate Income
Housing Asset Fund held by the Agency.
"Agency’s Percentage" with reference to the Residual Receipts, shall mean the Agency’s
pro rata share of fifty percent (50%) of the total Residual Receipts from the Property as further
described in section 4 hereof, allocated to the Loan, NPLH Loan and SNHP Loan based on the
original principal amount of such loans.
“Agreement” means the Agency Loan Agreement between the Agency and the Borrower,
and any attachments or amendments thereto.
"Applicable Law" shall mean those federal, state and local laws, ordinances, regulations,
policies and procedures applicable to the Agency Housing Program, and the Agency Funds.
“Area Median Income” means the median income for the Orange County, California
PMSA as most recently determined by the U.S. Department of Housing and Urban Development
(“HUD”). Also may be referred to interchangeably in the Agency Loan Documents as “Median
Income for the Area” or “AMI”.
“Annual Operating Expenses” means the sum of the following:
(i) payments of principal and interest and all other charges relating to the
Senior Loan(s);
(ii) property management fee not to exceed 5% of gross rents;
(iii) owner administration fee not to exceed 5% of gross rents;
(iv) deposits into required reserves;
(v) all other actual, reasonable cash operating costs and expenses, calculated on
an annual basis, that are directly attributable to managing and operating the
Property, including, without limiting the generality of the foregoing, the
following: costs and expenses for real and personal property taxes, special
assessments or similar charges; water, fuel, electricity and other utilities;
heating, ventilation and air conditioning expenses; labor; supplies; tools;
EXHIBIT 4
equipment; insurance; advertising and marketing; accounting and legal fees;
brokerage commissions and other leasing expenses; reasonable reserves for
all anticipated expenses as approved by the Agency; and other such items
constituting operation, maintenance and repair costs actually paid by the
Borrower, subject to the following conditions:
(a) Depreciation and amortization expenses shall not be considered
Operating Expenses, except as otherwise provided herein; and,
(b) Any expenses, compensation or fees paid to any affiliate of
Borrower, excluding those payable under (iii), shall only be
included as Operating Expenses to the extent they are not in excess
of the reasonable expenses, compensation or fees that would be
payable to unrelated third parties in arms-length transactions for
similar services in the Orange County, California area;
“Annual Project Revenue” means all annual revenue generated by the Project
from any source, including, but not limited to, rent payments, governmental assistance housing
payments, laundry and other vending machine and pay telephone income. Notwithstanding the
foregoing, Annual Project Revenue shall not include the following items: (a) security deposits
from subtenants (except when applied by Borrower to rent or other amounts owing by
subtenants); (b) capital contributions to Borrower by its members, partners or shareholders
(including capital contributions required to pay deferred developer fee); (c) condemnation or
insurance proceeds; (d) there shall be no line item, expense, or revenue shown allocable to
vacant unit(s) at the Project; or (e) receipt by an Affiliate of management fees or other bona fide
arms-length payments for reasonable and necessary Operating Expenses associated with the
Project. For purposes of this Lease, “Annual Project Revenue” shall expressly exclude any and
all cash or in-kind donations and contributions made to the Borrower.
“Borrower” means Shelter Providers of Orange County, Inc. DBA HomeAid Orange
County.
“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 Transfer, reasonable brokerage commissions payable to a
broker as a result of the Transfer, which shall not in any event exceed the
customary amount charged for similar transactions in the immediate market
place, costs of title insurance premiums, 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
Transfer.
EXHIBIT 4
(ii) In the case of a Refinancing, the reasonable and necessary costs of
consummating such Refinancing, including, without limitation, loan fees,
loan repayment charges, costs of title insurance premiums, escrow fees,
recording fees and attorneys' fees.
“Deed of Trust” shall mean the deed of trust encumbering the Property, in the form attached
to the Agreement as Exhibit C, which is incorporated herein by this reference, to be executed by
Borrower pursuant to section 6.1(e) of the Agreement in order to secure the Agency Promissory
Note.
“Extremely Low Income” means an adjusted income which does not exceed thirty percent
(30%) of the area median income for the Orange County, California PMSA, adjusted for household
size, as published by HUD.
"Ground Lease" shall mean that certain Ground Lease dated __________, 2021, between
Agency and Borrower.
“Interest” shall mean that the Note shall bear simple interest from the date of issuance of
the Certificate of Occupancy/Completion at a rate equal to Three percent (3%) per annum.
“Low Income” means an adjusted income which does not exceed eighty percent (80%) of
the area median income for the Orange County, California PMSA, adjusted for household size, as
published by HUD.
“Property” shall have the meaning set forth in the Agreement.
"Residual Receipts" shall mean the Annual Project Revenue from the Property for each
year, less deductions for Annual Operating Expenses from the same Property, applicable to each
such year to the extent not previously deducted as an Annual Operating Expense.
“Senior Loan” shall have the meaning set forth in the Agreement.
"Term of Affordability" or “Term” means the terms and conditions contained herein shall
remain in effect for fifty-five (55) years from the date of issuance of the Certificate of Occupancy
for the Project, or repayment of the Agency Loan, whichever is longer.
"Transfer" shall mean any transfer, assignment, conveyance or lease of the Property, or any
portion thereof, or any interest therein by the Borrower. Transfer includes a sale in condemnation
or under threat thereof. Notwithstanding anything to the contrary contained herein, a "Transfer”
shall not include any Excluded Transfer or any other Transfer permitted under the Ground Lease
or the Agreement.
“Very Low Income” means an adjusted income which does not exceed fifty percent (50%)
of the area median income for the Orange County, California PMSA, adjusted for household size,
as published by HUD.
EXHIBIT 4
3. Loan Repayment.
Borrower shall make payments to the Agency as provided in sections 4 (Residual
Receipts), 5 (Refinancing Proceeds), 6 (Transfer Proceeds) and 7 (Accelerated Loan Repayment)
of this Note.
4. Annual Loan Repayment/ Residual Receipts.
a. Commencing on the date one hundred and fifty (150) days after the close of the initial
Calendar Year following the issuance of the Certificate of Occupancy, and on or before the 150th
day of each Calendar Year thereafter, the Borrower shall thereafter make a loan payment, including
any payment processing fee charged by the City’s loan processor, as applicable, to the Agency
annually, in the amount of the lesser of the outstanding balance due under this Note or the Agency’s
Percentage of the Residual Receipts, as provided herein.
b. Within one hundred and fifty (150) days after the close of the initial Calendar Year,
following the Issuance of the Certificate of Occupancy, and on or before the 150th day of each
Calendar Year thereafter, the Borrower shall submit to the Agency an audited financial statement
of Annual Project Revenues and Annual Operating Expenses attributable to the Property for the
applicable Calendar Year, along with a computation of the amount of the Residual Receipts
applicable to such Calendar Year with which to make an Agency Loan payment then due.
c. Except as otherwise provided, the Borrower shall pay to the Agency the Agency's
Percentage of the Residual Receipts as payment of the Agency Loan pursuant to Section 4(d)
below. At least fifty percent (50%) of the Residual Receipts shall remain with the Borrower, with
all Residual Receipts remaining with Borrower, once the Agency Loan has been fully repaid.
d. Borrower shall retain fifty percent (50%) of the Residual Receipts. The other fifty
percent (50%), shall be applied to this Agency Loan.
e. The Residual Receipts payment shall be made no later than one hundred and fifty
(150) days after the close of the Calendar Year. Such payment shall be applied first to any late
fees, then to reduce the principal balance of the loan.
f. Agency’s right to receive payments pursuant to this Section 4 shall be subject and
subordinate to any Senior Lender’s rights under the Senior Loan Documents.
5. Loan Repayment from Refinancing Proceeds.
The Borrower shall make a loan payment to the Agency from every Refinancing that occurs
during the term of this Note (other than refinancing of the Senior Loans), not to exceed the
outstanding balance of principal on this Note, to the extent of the Agency’s Percentage of the
Refinancing Proceeds (if any), as follows: the cash proceeds from such Refinancing shall be
applied first to pay Closing Costs; next, the amount necessary to pay in full the balance remaining
on any Senior Loan; next, the amount necessary to pay any deferred developer fee in full; and next,
EXHIBIT 4
the Borrower shall pay to the Agency the Agency's Percentage of the Refinancing Proceeds of
which Agency Percentage shall be used to repay this Agency Loan, to the extent of the outstanding
balance on this Note. All remaining Refinancing proceeds shall remain with the Borrower to the
extent the outstanding balance (including interest) of the Note has been fully paid. Such payment
shall be due on the date of such Refinancing, and shall be applied to reduce the principal balance
of the Loan in accordance with this Section 5. The Agency shall not be required to reconvey the
lien of the Deed of Trust if Refinancing Proceeds are insufficient to repay the Loan in full.
6. Loan Repayment from Transfer Proceeds.
The Borrower shall make a loan payment, not to exceed the outst anding balance of
principal on this Note, to the extent of the Agency’s Percentage of the Transfer Proceeds, as
follows: gross transfer proceeds are applied first to pay Closing Costs; next, to pay in full the
balance remaining on the Senior Loan; next, the amount necessary to pay any deferred developer
fee in full; and next, the Borrower shall pay to the Agency the Agency's Percentage of the
Refinancing Proceeds of which Agency Percentage shall be used to repay the Agency Loan, not
to exceed the outstanding amount of principal due on this Note. All remaining Transfer Proceeds
shall remain with the Borrower. Such payment shall be due on the date of such Transfer, and shall
be applied to reduce the principal balance of the Loan in accordance with this Section 6. The
Agency shall not be required to reconvey the lien of the Deed of Trust if Transfer Proceeds are
insufficient to repay the Loan in full.
7. Accelerated Loan Payment.
The full principal amount outstanding shall be due and payable on the earlier to occur of
the following:
a. Transfer or Refinancing of the Property, unless: (i) in the case of a Transfer in which
the Transfer Proceeds are insufficient to repay in full the Agency Loan, the Agency approves such
sale and the purchaser assumes the balance of the Agency Loan in accordance with the terms of
this Note; or (ii) in the case of a Refinancing in which the Refinancing Proceeds are insufficient to
repay in full the Agency Loan, the Agency approves such Refinancing and the Borrower remains
obligated pursuant to the terms of this Note;
b. In the event of default (subject to any applicable notice and cure provisions)
pursuant to any of the Loan Documents or the Senior Loan Documents; or
c. The date that is fifty-five (55) years after the date of execution of this Note. To the
extent the Loan is not repaid by that date, the Agency agrees to review the performance of the
Property and consider in good faith any reasonable request by Borrower to modify the terms or
extend the Term of this Note, if applicable.
8. Prepayment
EXHIBIT 4
Borrower may prepay the outstanding principal balance under this Note, in whole or in
part, at any time without penalty. However, the Affordability Covenants and Restrictions will
remain for the entire Affordability Period of fifty-five (55) years.
9. Lawful Money.
Principal is payable in lawful money of the United States of America.
10. Application of Payments; Late Charges.
a. Any payments received by the Agency pursuant to the terms hereof shall be applied
first to sums, other than principal, due the Agency pursuant to this Note, and the balance, if any,
to the payment of principal.
b. If any payment is not received by the Agency within ten (10) Business Days after
Borrower's receipt of written notice that such payment was not received when due; then in addition
to the remedies conferred upon the Agency pursuant to this Note and the other Loan Documents:
(i) a late charge of four percent (4%) of the amount due and unpaid will be added to the delinquent
amount to compensate the Agency for the expense of handling the delinquency; and, (ii) the
amount due and unpaid, excluding the late charge, shall bear interest at the highest annual rate
which may lawfully be charged and collected under applicable law on the obligation, evidenced
by this Note, computed from the date on which the amount was due and payable until paid. Without
prejudice to the rights of the Agency hereunder, or under any of the other Loan Documents,
Borrower shall indemnify the Agency against, and shall pay the Agency on demand, any expense
or loss which it may sustain or incur as a result of the failure by Borrower to pay when due any
installment of principal, fees, or other amounts payable to the Agency under this Note or any other
Loan Document that exceeds the amount of the late charge described above, to the extent that any
such expense or loss is not recovered pursuant to such foregoing provisions. A certificate of the
Agency setting forth the basis for the determination of the amounts necessary to indemnify the
Agency in respect of such expenses or direct loss, submitted to Borrower by the Agency, shall be
conclusive and binding for all purposes except as immediately corrected by Borrower notice to
Agency.
11. Security
This Note is secured by the recorded Deed of Trust.
12. Event of Default.
Subject to the provisions of Section 19, the occurrence of any of the following shall be
deemed to be an event of default which is not cured within the applicable time period described
therein ("Event of Default'') hereunder: (a) failure by Borrower to make any payments provided
for herein, and if such default is not made good within ten (10) Business Days after Borrower's
receipt of written notice that such payment was not received when due; (b) failure by Borrower to
EXHIBIT 4
perform any nonmonetary covenant or agreement under this Note within thirty (30) days after
written demand therefor by Agency (or, in the event that more than thirty (30) days is reasonably
required to cure such default, should Borrower fail to promptly commence such cure, and
diligently and continuously prosecute same to completion; (c) any “Event of Default” under the
Ground Lease, the Deed of Trust, the Agreement, or the Affordability Covenants and Restrictions,
or (d) a default under any Senior Loan Deed of Trust that remains uncured after any applicable
notice has been provided and the expiration of any applicable cure period therefore, if any,
provided therein.
13. Remedies.
Upon the occurrence of an Event of Default, after any applicable notice has been provided
and the expiration of any applicable cure period therefore, Agency may declare all sums evidenced
hereby immediately due and payable by delivery to the Trustee named in the Deed of Trust
securing this Note, and to Borrower, written declaration of default and demand for sale, and written
notice of default and of election to cause the Property to be sold, which notice Trustee shall cause
to be duly filed for record and Agency may foreclose on the Deed of Trust. Agency shall also
deposit with Trustee the Deed of Trust, this Note and all documents evidencing expenditures
secured thereby and evidenced hereby. Upon the occurrence of an Event of Default (and so long
as such Event of Default shall continue), the entire balance of principal shall bear interest at the
rate of the Note plus four percent (4%). No delay or omission on the part of the Agency in
exercising any right under this Note or under any of the other Loan Documents shall operate as a
waiver of such right.
14. Attorney Fees.
If this Agency Promissory Note is not paid when due or if any Event of Default occurs,
Borrower promises to pay all costs of enforcement and collection, including, but not limited to,
reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the
provisions hereof.
15. 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.
16. 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.
17. Non-recourse.
EXHIBIT 4
The Agency Loan is a nonrecourse obligation of the Borrower. Neither Borrower, nor any
member, partner, officer, director, employee, agent or representative of Borrower, nor any other
person or entity shall have any personal liability for repayment of the Agency Loan or for any
other amounts under any of the documentation evidencing, securing or describing the Agency
Loan. The sole recourse of Agency under this Note and the Deed of Trust for repayment of the
Agency Loan and for such other amounts arising therefrom shall be the exercise of its rights against
the Property and related security thereunder.
18. Subordination.
It is hereby expressly agreed and acknowledged by Borrower and Agency that the Deed of
Trust is a subordinate deed of trust, and that this Note is subject and subordinate to any Senior
Loan Documents.
19. Notice of Default.
a. Subject to the applicable cure periods set forth in section 12, and subject to the further
provisions of this section 19, failure or delay by the Borrower to perform any term or provision of
this Note constitutes a default under this Note. The Borrower must commence to cure, correct, or
remedy such failure or delay and shall complete such cure, correction or remedy with reasonable
diligence.
b. The Agency shall give written notice of default to the Borrower and the Investor
Limited Partner (as defined in the Agreement) specifying the default complained of by the Agency.
Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time
of default.
c. Except in the case of a monetary event of default, the Borrower shall not be in default
so long as it endeavors to complete such cure, correction or remedy with reasonable diligence,
provided such cure, correction or remedy is completed within the applicable time period set forth
herein after receipt of written notice (or such additional time as may be deemed by the Agency to
be reasonably necessary to correct the default).
d. Any failures or delays by the Agency in asserting any of its rights and remedies as to
any default shall not operate as a waiver of any default or of any such rights or remedies. Delays
by the Agency in asserting any of its rights and remedies shall not deprive the Agency of its right
to institute and maintain any actions or proceedings that it may deem necessary to protect, assert,
or enforce any such rights or remedies.
e. If a monetary event of default occurs under the terms of this Note or the Deed of Trust,
prior to exercising any remedies thereunder, Agency shall give Borrower written notice of such
default. Borrower shall have a period of ten (10) Business Days after such notice is received within
which to cure the default prior to exercise of remedies by Agency under this Note and the Deed of
Trust.
EXHIBIT 4
f. If a non-monetary event of default occurs under the terms of this Note or the Deed of
Trust, prior to exercising any remedies thereunder, Agency shall give Borrower notice of such
default. If the default is reasonably capable of being cured within thirty (30) days, Borrower shall
have such period to effect a cure prior to exercise of remedies by the Agency under this Note and
the Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty
(30) days, and Borrower: (i) initiates corrective action within said period; and, (ii) diligently,
continually, and in good faith works to effect a cure as soon as possible, then borrower shall have
such additional time as is reasonably necessary to cure the default prior to exercise of any remedies
by Agency. In no event shall Agency be precluded from exercising remedies if its security becomes
or is about to become materially jeopardized by any failure to cure a default or the default is not
cured within one hundred and eighty (180) days after the first notice of default is given.
20. Force Majeure.
Notwithstanding specific provisions of this Note, performance hereunder shall not be
deemed to be in default where delays or defaults are due to: war; terrorism; insurrection; strikes;
lock-outs; riots; floods; earthquakes; fires; casualties; acts of God or other deities; acts of the public
enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation;
governmental restrictions or priority; litigation; unusually severe weather; inability to secure
necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party;
acts or failure to act of the Agency or any other public or governmental Agency or entity (except
that any act or failure to act of Agency shall not excuse performance by Agency); or any other
causes beyond the reasonable control, or without the fault of the party claiming an extension of
time to perform (each a “Force Majeure Event”). An extension of time for any Force Majeure
Event shall be for the period of the enforced delay and shall commence to run from the time the
party claiming such extension gives notice to the other party, provided notice by the party claiming
such extension is given within thirty (30) days after the commencement of the cause. Times of
performance under this Note may also be extended in writing by the Agency and the Borrower.
21. Assignments.
The Agency, and the assignee of the Agency, shall have the right to assign this Note and
the Deed of Trust securing this Note, without any further act of Borrower. The assignee shall give
notice to Borrower as soon as practicable after such assignment.
EXHIBIT 4
This Agency Promissory Note is hereby agreed to and executed on the date first set forth above.
"BORROWER"
Shelter Providers of Orange County, Inc. DBA HomeAid Orange County.
By: ____________________________________
Gina R. Scott
Its: Executive Director
EXHIBIT 4
Exhibit E:
Project Budget
EXHIBIT 4
Summary
Project Name FX Residences
Summary NPLH/SNHP/PBV
Scope Unit Mix Units Percentage
Units 17 Studio 0 0%
Residential SF 8,975 1BD 17 100%
Circulation 2BD 0%
Common Space 5,346 3BD 0 0%
Total SF 14,321 Total 17 100%
Site Affordability Units Percentage
Gross Area- Acres 0.34 25% AMI 9 44%
Gross Area- SF 15,000 30% AMI 7 44%
Lot Coverage 56%50% AMI 0 0%
Footprint 8,382 60% AMI 0 0%
Parking Spaces 12 Total 16 100%
Parking- SF 2,623 Average Affordability 27.2%AMI
Parking Spaces/Unit 0.71 Average Rent 249$
Zoning Net Rent Range Low High
Zoning- current UN-2 Studio
Zoning- proposed UN-2 1BD 249$ 249$
Allowable Density 2BD
Density Bonus 3BD
Max. Density with Bonus
Max. Units 0 Summary of Costs Total Per Unit Per SF % of TDC
Proposed Density 49.4 Land Costs 788,000$ 46,353$ 55$ 10%
Hard Costs 4,932,174$ 290,128$ 344$ 64%
Soft Costs 1,524,621$ 89,684$ 106$ 20%
Notes Developer Fee 442,000$ 26,000$ 31$ 6%
Total Development Costs 7,686,795$ 452,164$ 537$
Development Costs Total Per Unit Per SF % of TDC
Land & Acquisition 788,000$ 46,353$ 55$ 10%
Construction 4,932,174$ 290,128$ 344$ 64%
Local Fees 533,000$ 31,353$ 37$ 7%
Financing Costs 328,997$ 19,353$ 23$ 4%
Soft Costs 544,790$ 32,046$ 38$ 7%
Developer Fee 442,000$ 26,000$ 31$ 6%
Reserves 117,834$ 6,931$ 8$ 2%
Total 7,686,795$ 452,164$ 537$ 100%
Summary of Sources Total Per Unit Per SF % of TDC
NPLH 1,562,631$ 91,919$ 109$ 20%
SNHP 2,047,253$ 120,427$ 143$ 27%
City of Santa Ana 1,656,947$ 97,467$ 116$ 22%
City of Santa Ana Lease 788,000$
Wells Fargo Grant 25,000$ 1,471$ 2$ 0%
OCHFT 832,000$ 48,941$ 58$ 11%
In-Kind 704,963$ 41,468$ 49$
Developer Contribution 70,000$ 4,118$ 5$ 1%
Total 7,686,794$ 360,225$ 428$ 80%
Surplus/Deficit (0)
Financing assumes 8 units assisted with NPLH capital and
COSR, 13 units assisted with SNHP capital and 4 units
assisted with SNHP COSR, and 3 PBV units.
FX Proforma 11/23/2021
EXHIBIT 4
Sources Uses
FX Residences
Sources and Uses
Development Sources Terms Amount Per Unit Per SF Predevelopment Construction Permanent Percent of Total
Permanent Loan 5.8%, 35 yrs - 0.00 - 0.00%
NPLH Residual Receipts, 8 assisted units 1,562,631 91,919 109.11 1,562,631 20.33%
SNHP Residual Receipts, 13 assisted units 2,047,253 120,427 142.95 2,047,253 26.63%
City of Santa Ana Residual Receipts 1,656,947 97,467 115.70 1,656,947 21.56%
City of Santa Ana Lease 788,000 46,353 55.02 788,000 10.25%
Wells Fargo Grant 25,000 1,471 1.75 25,000 0.33%
OCHFT 832,000 48,941 58.10 712,500 119,500 10.82%
In-Kind 704,963 41,468 49.23 704,963 9.17%
Developer Contribution 70,000 4,118 4.89 70,000 0.91%
Lending Partner 5.05%, 3-month term - - 0.00 -
Construction Loan 5.05%, 24-month term 3,601,268 211,839 251.47 3,601,268 (3,601,268)
Total 7,686,794 452,164 536.75 1,500,500 6,177,678 8,616 100.00%
Surplus/Deficit (0) (0) (0.00)-
Project Predevelopment Construction Permanent Const/Rehab
Development Costs Assumptions Total Per Unit Per SF Eligible Basis
Acquisition
Property Purchase 788,000 46,353 55.02 788,000
Legal/Broker Fees - 0.00 -
Real Estate Taxes, Insurance - 0.00 -
Title and Recording - 0.00 -
Total Acquisition 788,000 46,353 55.02 788,000 - - -
Construction
Structures & Site Work 3,518,281 206,958 245.67 3,518,281 3,518,281
General Requirements 4%128,701 7,571 8.99 128,701 128,701
Contractor Overhead 4%128,701 7,571 8.99 128,701 128,701
Prevailing Wage - - 0.00 -
Contractor Profit 4%167,891 9,876 11.72 167,891 167,891
Surety & Bonds 0%- 0.00 - -
General Liability/Builders Risk Ins.2%60,000 3,529 4.19 60,000 60,000
Security 95,000 5,588 6.63 95,000 95,000
Construction Material Increase 12%433,600 25,506 30.28 433,600 433,600
Hard Cost Contingency 8.83%400,000 23,529 27.93 400,000 400,000
Total Construction 4,932,174 290,128 344.40 - 4,932,174 - 4,932,174
Permit & Impact Fees
Planning Fees 108,000 6,353 7.54 108,000 108,000
Plan Check, Permit & Inspection Fees - 0.00 - -
Impact Fees 425,000 25,000 29.68 425,000 - 425,000
Total Permit & Impact Fees 533,000 31,353 37.22 533,000 - - 533,000
Financing
Perm Title/Recording/Escrow 11,500 676 0.80 11,500
Perm Orig. Fees & Expenses 1.0%- 0.00 -
Construction Loan Interest 5.05% at 60% out 12 mos.+3 mo. 100%154,584 9,093 10.79 154,584 108,038
Origination Fee 1.0%36,013 2,118 2.51 36,013 36,013
Taxes During Construction - 0.00 - -
Legal 50,000 2,941 3.49 50,000 50,000
Title and Recording 20,000 1,176 1.40 20,000 20,000
Lender Fees (appraisal, etc.)56,900 3,347 3.97 56,900 56,900
Predevelopment Loan Fee 1.0%- - 0.00 -
Predevelopment Loan Interest 5.05% at 60% out 3 mos.- - 0.00 -
Total Financing 328,997 19,353 22.97 - 317,497 11,500 270,951
Soft Costs
Architecture 50,000 2,941 3.49 35,000 15,000 50,000
Engineering 75,000 4,412 5.24 52,500 22,500 75,000
Appraisal 15,000 882 1.05 15,000
Environmental Studies 15,000 882 1.05 15,000 15,000
Legal- Organization & Loans - 0.00 -
Marketing/Lease-up 15,000 882 1.05 15,000
Furnishings 50,000 2,941 3.49 50,000 50,000
Market Study 9,000 529 0.63 9,000 9,000
Audit/Cost Certification 22,000 1,294 1.54 22,000 22,000
Construction Inspection 15,000 882 1.05 15,000 15,000
Survey 8,000 471 0.56 8,000 8,000
Insurance 58,800 3,459 4.11 58,800 58,800
Financial Consultant 50,000 2,941 3.49 15,000 15,000 20,000
Security 30,000 1,765 2.09 30,000
Soft Cost Contingency 131,990 7,764 9.22 30,000 30,000 71,990 131,990
Total Soft Costs 544,790 32,046 38.04 179,500 251,300 113,990 434,790
Developer Fee 442,000 26,000 30.86 88,400 353,600 442,000
Reserves
NPLH Required Transition Reserve 12 months 57,216 3,366 4.00 57,216
Services Reserve - - 0.00 -
Operating Reserves 4 months of op exp., reserves, debt 60,618 3,566 4.23 60,618
Total Reserves 117,834 6,931 8.23 - - 117,834 -
Total Development Costs 7,686,795 452,164 536.75 1,500,500 5,589,371 596,924 6,612,915
FX Proforma 11/23/2021
EXHIBIT 4
Exhibit F:
Scope of
Work/Schedule of
Performance
EXHIBIT 4
EXHIBIT F
SCOPE OF WORK & SCHEDULE OF PERFORMANCE
I. SCOPE OF WORK
The project includes new construction of a 17-units of permanent supportive house for
Chronically Homeless adult individuals ,
The residential community includes 2 story building with a courtyard feature. Includes
attached tandem parking carport. The ground floor level will contain community space
for services and activities, offices for services and the onsite management unit. Laundry
facilities are located on both 1 st and 2nd floor for tenant use only. Access to the
courtyard and carport is through the ground floor. The structure has been designed in a
Spanish style architecture to match the character of the existing neighborhood.
The site improvements component of the project also includes new landscape and
hardscape. The proposed landscape palette includes drought-tolerant plants, and
hardscape complement the Spanish architectural style of the buildin g.
EXHIBIT 4
IDTask ModeTask NameDurationStartFinishPredecessorsResource Names1Entitlement Approval92 daysFri 7/30/21Tue 12/7/212City Council0 daysTue 12/7/21Tue 12/7/213Work on Documents65 daysFri 7/30/21Thu 10/28/2145CDs130 daysTue 11/23/21Tue 5/24/226Submit CDs0 daysTue 11/23/21Tue 11/23/217Plan Check and Resubmittal130 daysTue 11/23/21Mon 5/23/2268Building Permit0 daysTue 5/24/22Tue 5/24/227910Funding162 daysMon 8/9/21Tue 3/22/2211SNHP Loan Committee0 daysFri 1/14/22Fri 1/14/2212Funding Docs Put Together 76 daysMon 8/9/21Mon 11/22/2113Finalization of Funds48 daysFri 1/14/22Tue 3/22/22111415ConstructionTue 5/24/22516Groundbreaking0 daysWed 5/25/22Wed 5/25/2217Construction262 daysWed 5/25/22Thu 5/25/231618Certificate of Occupancy1 dayWed 5/24/23Wed 5/24/231719Dedication0 daysThu 5/25/23Thu 5/25/2318FX Schedule of PerformancePage 1EXHIBIT 4
Exhibit G:
Form of Residual
Receipts Report
EXHIBIT 4
EXHIBIT G
FORM OF RESIDUAL RECEIPTS REPORT
Community Development Agency of the City of Santa Ana
Residual Receipts Report
for the Year Ending, _
Date Prepared _
Please complete the following information and execute the certification at the bottom of this form.
Annual Project Revenue
Please report Annual Project Revenue for the year ending on the following lines:
Rent Payments (including Section 8 tenant assistance payments, if any) (1) $. _
Interest Income (do not include interest income from replacement and operating
reserves nor interest income on tenant security deposits) (2) $ _
Additional Income (for example, vending machine income, tenant forfeited
deposits, laundry income not paid to the residents' association)
Total Annual Project Revenue (Add lines 1, 2, and 3)
(3) $. _
(4) $ _
Operating Expenses 1
Please report Operating Expenses incurred for the year ending _
on the following lines:
Operating and Maintenance Expenses (5) $. _
Utilities
Property Management Expenses and On-Site Staff Payroll
Administrative Expenses
Property Taxes
Insurance
(6) $ _
(7) $ _
(8) $ _
(9) $ _
(10) $ _
EXHIBIT 4
Other Expenses
Please list these expenses:
(11) $ _
Total Annual Operating Expenses for the Housing Project
(12)
$
(Add lines 5, 6, 7, 8, 9, 10, and 11)
Net Operating Income (Subtract Line 12 from Line 4)
(13)
$
Do not include expense unrelated to the operation ofthe Rental Portion of the
Project, such as depreciation, amortization, accrued principal and interest
expense on deferred payment debt, or capital expenditures.
Additional Cash Flow Payments
Obligated First Mortgage Debt Service Payments (as approved by the Agency and
(14)
$
other parties that may have such approval rights) and Obligated Secondary
Subordinate Debt Service Payments (as approved by the Agency and other parties
that may have such approval rights)
Scheduled Deposits to Reserves (as approved by the Agency)
(15)
$
Additional Payment Obligations (such as partnership management fees, deferred
(16)
$
developer fees, or repayments on loans to partners, as approved by the Agency to
have priority over Residual Receipt Payment to the Agency)
Total Additional Cash Flow Payments (Add lines 14, 15, and 16)
(17)
$
Residual Receipts for Year Ending
(18)
$
(Subtract Line 17 from Line 13)
Percentage of Residual Receipts to be Paid to the Agency (as shown in the
(19)
%
Promissory Note by and between the Agency and Borrower dated
Amount Payable to the Agency (Multiply Line 18 by Line 19) (20) $ _
The amount payable to the Agency listed on Line 20 is subject to payment according to the terms of the
Promissory Note by and between the Agency and Borrower dated . If Line 20 is
$0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check
payable to and attach to this report.
EXHIBIT 4
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9138-126780\1512539.3
GROUND LEASE
THIS GROUND LEASE (“Lease”) is made and effective as of the ___ day of __________ ,
2021 (“Effective Date”) by and between the HOUSING AUTHORITY OF THE CITY OF SANTA
ANA, a public body, corporate and politic (the “Agency” and “Lessor”), and SHELTER
PROVIDERS OF ORANGE COUNTY, INC. DBA HOMEAID ORANGE COUNTY (hereinafter
called “Tenant”) (also referred to hereinafter each as “Party” or collectively as the “Parties”).
RECITALS
A.Lessor is the owner of that certain property located within the City of Santa Ana,
County of Orange, State of California, commonly known as 801, 807, 809 and 809 ½ East Santa
Ana Boulevard, Santa Ana, California, 92701, and legally described as set forth in Exhibit A attached
hereto and incorporated herein by this reference as if set forth in full (“Property”).
B.Lessor desires to enter into an agreement for a 99-year ground lease of the Property
with Tenant and the Tenant desires to lease and develop the Property with the Project as defined
herein, subject to the terms and provisions of this Lease.
C.Tenant is proposing to develop an affordable rental residential community consisting
of seventeen (17) units with sixteen (16) units of permanent supportive housing for chronically
homeless individuals and 1,120 square feet of group space and a 389 square foot community room on
the Property.
D.Lessor and Tenant have jointly agreed to enter into this Lease as of the date set forth
above.
E.On January 15, 2019, the Agency authorized the Executive Director of the Housing
Authority and the Recording Secretary to execute a pre-commitment letter with the Tenant for a 99-
year ground lease of the land located at 801, 809, 809 ½ E. Santa Ana Blvd., for the development of
the FX Residences Permanent Supportive housing project (APNs 398-303-04, 398-303-05, 398-303-
06, and 398-303-07).
NOW, THEREFORE, in consideration of the above recitals, which are hereby incorporated
into this Lease by reference, and mutual covenants and agreements hereinafter contained, Agency
and Tenant mutually agree to the following:
ARTICLE I
DEFINITIONS
1.1 Definitions: The following defined terms used in this Lease shall have the meanings
set forth below. Other terms are defined in other provisions of this Lease, and shall have the
definitions given to such terms in such other provisions.
1.1.1. “Affiliate” shall mean, with respect to any person (which as used herein
includes an individual, trust or entity), any other person which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control with, suc h person.
EXHIBIT 5
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9138-126780\1512539.3
1.1.2. “Agency” shall mean the Housing Authority of the City of Santa Ana, acting
as the Housing Successor Agency, a public body, corporate and politic, exercising governmental
functions and powers, and organized and existing under the California Redevelopment Law. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702.
“Agency” shall also refer to the City of Santa Ana where the context dictates, to the effect that the
City of Santa Ana shall have all rights granted to the Agency hereunder.
1.1.3. “Agency Loan” shall mean that certain loan made by Agency to Tenant
pursuant to the Agency Loan Agreement in the principal amount of One Million Six Hundred Fifty-
Six Thousand Nine Hundred Forty-Seven and No/100 Dollars ($1,656,947.00).
1.1.4. “Agency Loan Agreement” shall mean that certain Loan Agreement made
by Agency to Tenant dated as of ______________, which evidences the Agency Loan.
1.1.5. “Aggregate Transfer” shall refer to the total “Ownership Interest(s)” in
Tenant transferred or assigned in one transaction or a series of related transactions (other than an
Excluded Transfer) occurring since the latest of (a) the Effective Date, (b) the execution by Tenant of
this Lease, or (c) the most recent Tenant Ownership Change; provided, however, that there shall be
no double counting of successive transfers of the same interest in the case of a transaction or series of
related transactions involving successive transfers of the same interest. Isolated and unrelated
transfers shall not be treated as a series of related transactions for purposes of the definition of
“Aggregate Transfer.”
1.1.6. “Auditor-Controller" shall mean the Auditor-Controller, or designee, or
upon written notice to Tenant, such other person as may be designated by the Agency.
1.1.7. “Base Rent” shall mean $1.00 per year, payable on the Commencement Date
and on each anniversary thereof during the Term of this Lease.
1.1.8. “Certificate of Occupancy” shall mean a temporary or final certificate of
occupancy (or other equivalent entitlement, however designated) which entitles Tenant to commence
normal operation and occupancy of the Improvements.
1.1.9. “City” shall mean the City of Santa Ana, California, a charter city and
municipal corporation. “City” shall also refer to the Agency where the context dictates, to the effect
that the Agency shall have all the rights granted to the City hereunder. “City Council” shall mean
the City Council of the City of Santa Ana.
1.1.10. “Claims” shall mean liens, claims, demands, suits, judgments, liabilities,
damages, fines, losses, penalties, costs and expenses (including without limitation reasonable
attorneys' fees and expert witness costs, and costs of suit), and sums reasonably paid in settlement of
any of the foregoing.
1.1.11. “Commencement Date” shall mean the date on which a Certificate of
Occupancy is issued for the Project, and on which the Term shall commence and Base Rent shall
become due and payable.
1.1.12. “Contractor” shall mean Tenant’s general contractor for the construction of
the Improvements.
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9138-126780\1512539.3
1.1.13. “Effective Date” is defined in the introductory paragraph to this Lease, and
shall be the date on which Tenant take possession of the Premises and is entitled to commence
construction pursuant to Article V, below.
1.1.14. “Event of Default” is defined in Section 11.1.
1.1.15. “Excluded Transfer” shall mean any of the following:
(a) A transfer by any direct or indirect partner, shareholder, or member of
Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or
indirect owner in Tenant’s ownership structure) as of the Effective Date or the date on which a
Tenant Ownership Change occurred as to the interest transferred, to any other direct or indirect
partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited
liability company that is a direct or indirect owner in Tenant’s ownership structure) as of the
Effective Date, including in each case to or from a trust for the benefit of the immediate family of
any direct or indirect partner or member of Tenant who is an individual;
(b) A transfer of an Ownership Interest in Tenant or in constituent entities
of Tenant (i) to a member of the immediate family of the transferor (which for purposes of th is Lease
shall be limited to the transferor’s spouse, children, parents, siblings, and grandchildren); (ii) to a
trust for the benefit of a member of the immediate family of the transferor; (iii) from such a trust or
any trust that is an owner in a constituent entity of Tenant as of the Effective Date, to the settlor or
beneficiaries of such trust or to one or more other trusts created by or for the benefit of any of the
foregoing persons, whether any such transfer described in this subsection is the result of gift, devise,
intestate succession, or operation of law; or (iv) in connection with a pledge by any partners or
members of a constituent entity of Tenant to an affiliate of such partner or member;
(c) A transfer of a direct or indirect interest resulting from public trading
in the stock or securities of an entity, when such entity is a corporation or other entity whose stock
and/or securities is/are traded publicly on a national stock exchange or traded in the over -the-counter
market and the price for which is regularly quoted in recognized national quotation services;
(d) A mere change in the form, method, or status of ownership
(including, without limitation, the creation of single -purpose entities) as long as the ultimate
beneficial ownership remains the same as of the Effective Date, or is otherwise excluded in
accordance with subsections (a) – (c) above;
(e) A transfer to an Affiliated nonprofit public benefit corporation or for-
profit corporation, or to a limited partnership whose general partner is a nonprofit corporation, for-
profit corporation or limited liability company Affiliated with the Tenant or the Tenant’s general
partner, subject to the Agency’s right to reasonably approve the agreement to effect such assignment
or transfer;
(f) The lease, assignment of lease or sublease of any individual residential
unit in the Improvements;
(g) A transfer of the Tenant’s interest in the Premises by foreclosure or
deed in lieu of foreclosure (i) to any bona fide third-party lender holding a lien encumbering the
Premises (or its nominee), and (ii) by a Lender Foreclosure Transferee to a third-party made in
EXHIBIT 5
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9138-126780\1512539.3
accordance with Section 17.6.5;
(h) Any assignment of the Lease by Tenant to an Affiliate of Tenant or
to a Mortgagee as security in which there is no change to the direct a nd indirect beneficial ownership
of the leasehold interest.
1.1.16. “Force Majeure Event” is defined in Article XIV.
1.1.17. “Hazardous Material(s)” is defined in Section 4.5.
1.1.18. “HCD” shall mean the California Department of Housing and Community
Development.
1.1.19. “Improvement Costs” shall mean the final actual construction costs incurred
by Tenant in connection with the construction of the Improvements and in accordance with the terms
of this Lease, excluding ordinary repair and maintenance costs and any Permitted Capital
Expenditures paid for out of the Replacement Reserve Fund.
1.1.20. “Improvements” shall mean and includes all buildings (including above-
ground and below ground portions thereof, and all foundations and supports), building systems and
equipment (such as HVAC, electrical and plumbing equipment), physical structures, fixtures,
hardscape, paving, curbs, gutters, sidewalks, fences, landscaping and all other improvements of any
type or nature whatsoever now or hereafter made or constructed on the Premises. The term
Improvements shall mean the Initial Improvements and any replacement improvements constructed
in accordance with the terms of this Lease. During the entire Term, the Improvements will be
restricted to the following uses:
(a) multifamily affordable housing,
(b) permanent supportive housing units and related services, and
(c) related commercial and community-serving uses as needed for the siting of the
affordable housing and supportive housing units, as approved by the Lessor.
1.1.21. “Includes” shall mean “includes but is not limited to” and “including” shall
mean “including but is not limited to.”
1.1.22. “Initial Improvements” shall mean the improvements first constructed by
Tenant on the Premises at its sole cost and expense as more particularly described in Exhibit B
attached hereto and incorporated by reference herein.
1.1.23. “Interest Rate” shall mean the lower of: (a) the reference or prime rate of
U.S. Bank National Association, in effect from time to time plus three percent (3%); or (b) the
highest rate of interest permissible under the Laws not to exceed the rate of twelve percent (12%) per
annum.
1.1.24. “Laws” shall mean all laws, codes, ordinances, statutes, orders and
regulations now or hereafter made or issued by any federal, state, County, local or other
governmental agency or entity that are binding on and applicable to the Premises and Improvements.
1.1.25. “Lease” shall mean this Ground Lease (including any and all addenda,
EXHIBIT 5
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9138-126780\1512539.3
amendments and exhibits hereto), as now or hereafter amended.
1.1.26. “Leasehold Estate” is defined in Section 17.1.1.
1.1.27. “Leasehold Foreclosure Transferee” is defined in Section 17.1.2.
1.1.28. “Leasehold Mortgage” is defined in Section 17.1.3.
1.1.29. “Leasehold Mortgagee” is defined in Section 17.1.4.
1.1.30. “Lender” shall mean: (a) a bank, savings bank, investment bank, savings and
loan association, mortgage company, insurance company, trust company, commercial credit
corporation, real estate investment trust, pension trust or real estate mortgage investment conduit; or
(b) some other type of lender engaged in the business of making commercial loans, provided that
such other type of lender has total assets of at least $2,000,000 and capital/statutory surplus or
shareholder’s equity of at least $500,000,000 (or a substantially similar financial capacity if the
foregoing tests are not applicable to such type of lender); or (c) a local, state or federal governmental
entity, including but not limited to HCD, which provides predevelopment, acquisition, construction
and/or permanent financing for Tenant’s acquisition and developme nt of the Property.
1.1.31. “Lessor’s Interest” shall mean all of Agency’s interests in the real property,
the Premises, this Lease and its existing, as well as the Improvements upon the expiration of the
Term or earlier termination thereof.
1.1.32. “Lessor Parties” shall mean, collectively and individually, the Agency and
their respective Affiliates, governing boards, agents, employees, members, officers, directors and
attorneys.
1.1.33. “Net Refinancing Proceeds” is defined in Section 3.2.
1.1.34. “New Lease” is defined in Section 17.7.1.
1.1.35. “Operating Costs” is defined in Section 3.4.1.
1.1.36. “Ownership Interests” shall mean the share(s) of stock, partnership interests,
membership interests, other equity interests or any other direct or indirect ownership interests in
Tenant, regardless of the form of ownership and regardless of whether such interests are owned
directly or through one or more layers of constituent partnerships, corporations, limited liability
companies, or trusts.
1.1.37. “Person” shall include firms, associations, partnerships, joint ventures, trusts,
corporations and other legal entities, including public or governmental bodies, agencies or
instrumentalities, as well as natural persons.
1.1.38. “Premises” shall mean that certain real property containing approximately
________ acres of undeveloped land in the City, together with all easements, rights and privileges
appurtenant thereto, to be leased to Tenant pursuant to this Lease and on which Tenant intends to
construct the Improvements. The legal description of the Premises is attached hereto as Exhibit A.
1.1.39. “Project” shall mean the Improvements, and all related appurtenances,
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9138-126780\1512539.3
constructed by Tenant on the Premises.
1.1.40. “Rent” shall mean and includes the Base Rent and Additional Rent payable
by Tenant under this Lease.
1.1.41. “Risk Manager” shall mean the Risk Manager for the City of Santa Ana, or
designee, or upon written notice to Tenant, such other person as may be designated b y the City
Council.
1.1.42. “Senior Loan” shall have the meaning set forth in the Loan Agreement.
1.1.43. “Taxes” is defined in Section 3.11.2.
1.1.44. “Tenant Group” shall mean Tenant and Tenant’s Affiliates, agents,
employees, members, officers, directors and attorneys.
1.1.45. “Tenant Ownership Change” shall mean (a) any transfer or assignment by
Tenant of the Leasehold Estate or (b) any “Aggregate Transfer” of at least twenty five percent (25%)
of the “Ownership Interest(s)” in Tenant, in each case that is not an “Excluded Transfe r.”
1.1.46. “Term” is defined in Section 2.2.
1.1.47. “Transfer” is defined in Section 10.1.1.
1.1.48. “Transfer Notice” is defined in Section 10.4.
1.1.49. “Utility Costs” is defined in Section 3.4.1.
1.1.50. “Work” shall mean both Tenant’s construction activity with respect to the
Improvements, including permitted future changes, alterations and renovations thereto and also
including, without limiting the generality of the foregoing, site preparation, landscaping, installation
of utilities, street construction or improvement and grading o r filling in or on the Premises.
ARTICLE II
LEASE OF PROPERTY
2.1 Lease of Premises.
2.1.1. Lessor hereby leases the Premises to Tenant for the Term, and Tenant hereby
leases the Premises from Lessor for the Term, subject to the terms, conditions, covenants, restrictions
and reservations of this Lease.
2.1.2. Warranty of Peaceful Possession. Lessor covenants and warrants that, subject
to the Tenant’s payment of Rent and performance and observation of all of the covenants, obligations
and agreements herein contained and provided to Tenant, Tenant shall and may peaceably and
quietly have, hold, occupy, use and enjoy the Premises during the Term and may exercise all of its
rights hereunder. Except as otherwise set forth herein, the Lessor covenants and agrees that they
shall not grant any mortgage or lien on or in respect of its fee interest in the Premises unless the same
is expressly subject and subordinate to this Lease or any New Lease.
EXHIBIT 5
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9138-126780\1512539.3
2.2 The “Term” of this Lease shall commence on the Effective Date of this Lease, and
shall expire at 12:00 midnight Pacific Standard Time on the 99th anniversary of the Commencement
Date, unless sooner terminated as a result of Tenant’s non-compliance with any terms, conditions,
covenants, restrictions or reservations of this Lease. Notwithstanding the foregoing, the Term shall
not exceed ninety-nine (99) years from the Effective Date.
2.3 Termination at End of Term. This Lease shall terminate without need of further
actions of any Party at 12:00 midnight Pacific Standard Time on the last day of the Term.
2.4 Condition of the Premises. TENANT HEREBY ACCEPTS THE PREMISES
“AS IS”, AND ACKNOWLEDGES THAT THE PREMISES IS IN SATISFACTORY
CONDITION. AGENCY MAKES NO WARRANTY, IMPLIED OR OTHERWISE, AS TO
THE SUITABILITY OF THE PREMISES FOR TENANT’S PROPOSED USES. THE
AGENCY MAKE NO COVENANTS OR WARRANTIES, IMPLIED OR OTHERWISE,
RESPECTING THE CONDITION OF THE SOIL, SUBSOIL, OR ANY OTHER
CONDITIONS OF THE PREMISES OR THE PRESENCE OF HAZARDOUS MATERIALS,
NOR DOES AGENCY COVENANT OR WARRANT, IMPLIED OR OTHERWISE, AS TO
THE SUITABILITY OF THE PREMISES FOR THE PROPOSED DEVELOPMENT,
CONSTRUCTION OR USE BY TENANT. THE AGENCY SHALL NOT BE RESPONSIBLE
FOR ANY LAND SUBSIDENCE, SLIPPAGE, SOIL INSTABILITY OR DAMAGE
RESULTING THEREFROM. THE AGENCY SHALL NOT BE REQUIRED OR
OBLIGATED TO MAKE ANY CHANGES, ALTERATIONS, ADDITIONS,
IMPROVEMENTS OR REPAIRS TO THE PREMISES. TENANT SHALL RELY ON ITS
OWN INSPECTION AS TO THE SUITABILITY OF THE PREMISES FOR THE
INTENDED USE.
TENANT INITIALS: ______ ______
2.5 Limitations of the Leasehold. This Lease and the rights and privileges granted
Tenant in and to the Premises are subject to all covenants, conditions, restrictions, and exceptions of
record as of the date hereof or otherwise disclosed to Tenant prior to the date hereof. Nothing
contained in this Lease or in any document related hereto shall be construed to imply the conveyance
to Tenant of rights in the Premises which exceed those owned by Lessor, or any representation or
warranty, either express or implied, relating to the nature or condition of the Premises or ’s or
Agency’s interest therein.
2.6 Tenant’s Investigation. Tenant acknowledges that it is solely responsible for
investigating the Premises to determine the suitability thereof for the uses contemplated by Tenant.
Tenant further acknowledges by executing this Lease that it has completed its investigation and has
made such determinations as Tenant believes may be required under the circumstances.
ARTICLE III
TOTAL RENT
3.1 Base Rent. Throughout the Term of this Lease, Tenant shall make annual payments
to the Agency in the amount of one dollar ($1.00) per year (“Base Rent”), commencing on the
Commencement Date and continuing on each anniversary thereof.
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3.2 Net Refinancing Proceeds. Any Net Refinancing Proceeds received by Tenant shall
be used to pay the Agency Loan. Additionally, the Tenant’s right and obligation to use such Net
Refinancing Proceeds to pay the Agency Loan is subject and subordinate to the rights of holders of
any Leasehold Mortgages to control the use of such proceeds pursuant to the terms of their respective
loan documents and any subordination agreement. Without limiting application of those loan
documents, in no case shall Tenant be permitted to retain Net Refinancing Proceeds without the prior
written consent of the Lessor, until full satisfaction of the unpaid Agency Loan. Notwithstanding the
foregoing, this Section 3.2 shall not apply to (i) any Excluded Transfer or (ii) any Senior Loan or
any financing described in Section 17.2.
“Net Refinancing Proceeds” shall be defined as the proceeds from the refinancing of any loan
approved by Lessor hereunder, 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), 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 Lessor.
3.3 Triple Net Rent. It is the intent of the Parties that all Rent shall be absolutely net to
Lessor and that, except as otherwise provided herein, Tenant will pay all costs, charges, insurance
premiums, taxes, utilities, expenses and assessments of every kind and nature in curred for, against or
in connection with the Premises which arise or become due during the Term as a result of Tenant’s
use and occupancy of the Premises. Under no circumstances or conditions, whether now existing or
hereafter arising, or whether beyond the present contemplation of the Parties, shall Agency be
obligated or required to make any payment of any kind whatsoever or be under any other obligation
or liability under this Lease except as expressly provided herein.
3.4 Insufficient Funds. If any payment of Rent or other fees made by check is returned
due to insufficient funds or otherwise, the Agency shall have the right to require Tenant to make all
subsequent Rent payments by cashier’s check, certified check or automated clearing house debit
system. All Rent or other fees shall be paid in lawful money of the United States of America,
without offset or deduction or prior notice or demand. No payment by Tenant or receipt by the
Agency of a lesser amount than the Rent or other fees due shall be dee med to be other than on
account of the Rent or other fees due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and satisfaction, and the
Agency shall accept such check or payment without prejudice to ’s and Agency’s right to recover the
balance of the Rent or other fees or pursue any other remedy available to the Agency in this Lease.
3.5 Reserved.
3.6 Additional Rent.
3.6.1. Additional Rent. During the Term, the Base Rent shall be absolutely net to
the Agency so that all costs (including but not limited to Operating Costs and Utility Costs, as
defined below), fees, taxes (including but not limited to Real Estate Taxes and Equipment Taxes, as
defined below), charges, expenses, impositions, reimbursements, and obligations of every kind
relating to the Premises shall be paid or discharged by Tenant as additional rent (“Additional
Rent”). As more particularly set forth in Sections 3.6.3 and 3.6.6, below, Tenant has the right to pay
under protest the foregoing Additional Rent, as applicable, and defend against the same. Any
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9138-126780\1512539.3
imposition rebates shall belong to Tenant.
3.6.2. Taxes. During the Term, Tenant shall pay directly to the taxing authorities
all Taxes (as herein defined) at least ten (10) days prior to delinquency thereof. For purposes hereof,
“Taxes” shall include any form of assessment, license fee, license tax, business license fee,
commercial rental tax, levy, penalty, sewer use fee, real property tax, charge, possessory interest tax,
tax or similar imposition (other than inheritance or estate taxes), imposed by any authority having the
direct or indirect power to tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage, flood control, water pollution control, public transit or other special
district thereof, as against any legal or equitable interest of Agency in the Premises or any payments
in lieu of taxes required to be made by Agency, including, but not limited to, the followi ng:
(a) Any assessment, tax, fee, levy, improvement district tax, charge or
similar imposition in substitution, partially or totally, of any assessment, tax, fee, levy, charge or
similar imposition previously included within the definition of Taxes. It is the intention of Tenant
and Lessor that all such new and increased assessments, taxes, fees, levies, charges and similar
impositions be included within the definition of “Taxes” for the purpose of this Lease.
(b) Any assessment, tax, fee, levy, charge or similar imposition allocable
to or measured by the area of the Premises or the rent payable hereunder, including, without
limitation, any gross income tax or excise tax levied by the city, county, state or federal government,
or any political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to
the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof;
(c) Any assessment, tax, fee, levy, charge or similar imposition upon this
transaction or any document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises, including any possessory interest tax levied on the Tenant’s interest under this
Lease;
(d) Any assessment, tax, fee, levy, charge or similar imposition by any
governmental agency related to any transportation plan, fund or system instituted within the
geographic area of which the Premises are a part.
The definition of “Taxes,” including any additional tax the nature of which was previously included
within the definition of “Taxes,” shall include any increases in such taxes, levies, charges or
assessments occasioned by increases in tax rates or increases in assessed valuations, whether
occurring as a result of a sale or otherwise.
3.6.3. Contest of Taxes. Tenant shall have the right to contest, oppose or object to
the amount or validity of any Taxes or other charge levied on or assessed against the Premises and/or
Improvements or any part thereof; provided, however, that the contest, opposition or objection must
be filed before such time the Taxes or other charge at which it is directed becomes delinquent.
Furthermore, no such contest, opposition or objection shall be continued or maintained after the date
the tax, assessment or other charge at which it is directed becomes delinquent unless Tenant has
either: (i) paid such tax, assessment or other charge under protest prior to its becoming delinquent; or
(ii) obtained and maintained a stay of all proceedings for enforcement and collection of the tax,
assessment or other charge by posting such bond or other matter required by law for such a stay; or
(iii) delivered to Lessor a good and sufficient undertaking in an amount specified by Lessor and
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issued by a bonding corporation authorized to issue undertakings in California conditioned on the
payment by Tenant of the tax, assessments or charge, together with any fines, interest, penalties,
costs and expenses that may have accrued or been imposed thereon within thirty (30) days after final
determination of Tenant’s contest, opposition or objection to such tax, assessment or other charge.
3.6.4. Payment by Lessor. Should Tenant fail to pay any Taxes required by this
Article III to be paid by Tenant within the time specified herein, subject to Tenant’s right to contest
such Taxes in accordance with Section 3.6.3, and if such amount is not paid by Tenant within fifteen
(15) days after receipt of Lessor’s written notice advising Tenant of such nonpayment, the Agency
may, without further notice to or demand on Tenant, pay, discharge or adjust such tax, assessment or
other charge for the benefit of Tenant. In such event, Tenant shall promptly on written demand of
Agency reimburse the Agency for the full amount paid by the Agency in paying, discharging or
adjusting such tax, assessment or other charge, together with interest at the Interest Rate from the
date advanced until the date repaid.
3.6.5. Operating Costs. Tenant shall pay all Operating Costs during the Term prior
to delinquency. As used in this Lease, the term “Operating Costs” shall mean all charges, costs and
expenses related to the Premises, including, but not limited to, management, operation, maintenance,
overhaul, improvement, replacement or repair of the Improvements and /or the Premises.
3.6.6. Utility Costs. Tenant shall pay all Utility Costs during the Term prior to
delinquency. As used in this Lease, the term “Utility Costs” shall include all charges, surcharges,
taxes, connection fees, service fees and other costs of inst alling and using all utilities required for or
utilized in connection with the Premises and/or the Improvements, including without limitation, costs
of heating, ventilation and air conditioning for the Premises, costs of furnishing gas, electricity and
other fuels or power sources to the Premises, and the costs of furnishing water and sewer services to
the Premises. Tenant agrees to indemnify and hold harmless the Agency against any liability, claim,
or demand for the late payment or non-payment of Utility Costs.
ARTICLE IV
USE OF PREMISES
4.1 Permitted Use of Premises. Tenant may use the Premises for the construction,
development, entitlement, operation, maintenance, replacement and repair of the Improvements as
follows:
4.1.1. Required Services and Uses. Lessor’s primary purpose for entering into this
Lease is to promote the development of the Improvements consistent with this Lease. In furtherance
of that purpose, Tenant shall construct and during the entire Term operate, maintain, replace and
repair the Improvements in a manner consistent with the Laws and for the following uses:
(a) multifamily affordable housing, and appurtenant improvements,
including, without limitation, parking,
(b) permanent supportive housing units and related services, and
(c) related commercial and community-serving uses, as contemplated by
the project approvals or this Lease, or as otherwise approved by the Lessor.
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4.1.2. Ancillary Services and Uses. Subject to the prior written approval of
Lessor, which approval may be granted or withheld in the sole discretion of the Lessor, conditioned
or delayed, Tenant may provide those additional services and uses which are ancillary to and
compatible with the required services and uses set forth in Section 4.1.1., above.
4.1.3. Additional Concessions or Services. Tenant may establish, maintain, and
operate such other additional facilities, concessions, and services as Tenant and Lessor may jointly
from time to time reasonably determine to be reasonably necessary for the use of the Premises and
which are otherwise permitted by Law for the sole purpose to provide the services set forth in Section
4.1.1 above.
4.1.4. Restricted Use. The services and uses listed in this Section 4.1, both
required and optional, shall be the only services and uses permitted. Tenant agrees not to use the
Premises for any other purpose or engage in or permit any other activity within or from the Premises
unless approved in writing by the Lessor, which approval may be granted or withheld in the sole
discretion of the Lessor.
4.1.5. Continuous Use. During the Term, Tenant shall continuously conduct
Tenant’s business in the Premises in the manner provided under this Lease and shall not discontinue
use of the Premises for any period of time except in the case of a Force Majeure Event or as
permitted in advance and in writing by the Lessor.
4.1.6. Alcohol Restrictions. Tenant shall not permit the sale of alcoholic beverages
on the Premises.
4.1.7. Permits and Licenses. Tenant shall be solely responsible to obtain, at its
sole cost and expense, any and all permits, licenses or other approvals required for the uses permitted
herein and shall maintain such permits, licenses or other approvals for the entire Term.
4.2 Nuisance; Waste. Tenant shall not maintain, commit, or permit the maintenance or
commission of any nuisance as now or hereafter defined by any statutory or decisional law applicable
to the Premises and Improvements or any part thereof. Tenant shall not commit or allow to be
committed any waste in or upon the Premises or Improvements and shall keep the Premises and the
Improvements thereon in good condition, repair and appearance.
4.3 Compliance with Laws. Tenant shall not use or permit the Premises or the
Improvements or any portion thereof to be used in any manner or for any purpose that violates any
applicable Laws. Tenant shall have the right to contest, in good faith, any such Laws, and to delay
compliance with such Laws during the pendency of such contest (so long as there is no material
threat to life, health or safety that is not mitigated by Tenant to the satisfaction of the applicable
authorities). Lessor may cooperate with Tenant in all reasonable respects in such contest, including
joining with Tenant in any such contest if the Agency’s joinder is required in order to maintain such
contest; provided, however, that any such contest shall be without cost to Lessor, and Tenant shall
indemnify, defend (with attorneys acceptable to Lessor), and hold harmless the Lessor from any and
all claims, liabilities, losses, damages, or actions of any kind and nature, including reasonable
attorneys’ fees, arising or related to Tenant’s failure to observe or comply with the contested Law
during the pendency of the contest.
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4.4 Hazardous Materials.
4.4.1. Definition of Hazardous Materials. For purposes of this Lease, the term
“Hazardous Material” or “Hazardous Materials” shall mean any hazardous or toxic substance,
material, product, byproduct, or waste, which is or shall become regulated by any governmental
entity, including, without limitation, the /or Agency acting in their governmental capacity, the State
of California or the United States government.
4.4.2. Use of Hazardous Materials. Except for those Hazardous Materials which
are customarily used in connection with the construction, operation, maintenance and repair of the
Improvements or used in connection with any permitted use of the Premises and Improvements under
this Lease (which Hazardous Materials shall be used in compliance with all applicable Laws), Tenant
or Tenant’s employees, agents, independent contractors, invitees or subtenants (collectively “Tenant
Parties”) shall not cause or permit any Hazardous Materials to be brought upon, stored, kept, used,
generated, released into the environment or disposed of on, under, from or about the Premises (which
for purposes of this Section shall include the subsurface soil and ground water).
4.4.3. Tenant Obligations. If the presence of any Hazardous Materials on, under
or about the Premises caused or permitted by Tenant or Tenant Parties, and excluding Hazardous
Materials existing on the Premises prior to the Effective Date (the “Existing Hazardous
Materials”), results in (i) injury to any person, (ii) injury to or contamination of the Premises (or a
portion thereof), or (iii) injury to or contamination or any real or personal property wherever situated,
Tenant, at its sole cost and expense, shall promptly take all actions necessary or appropriate to return
the Premises to the condition existing prior to the introduction of such Hazardous Materials to the
Premises and to remedy or repair any such injury or contamination. Without limiting any other rights
or remedies of Agency under this Lease, Tenant shall pay the cost of any cleanup or remedial work
performed on, under, or about the Premises as required by this Lease or by applicable Laws in
connection with the removal, disposal, neutralization or other treatment of such Hazardous Materials
caused or permitted by Tenant or Tenant Parties, excluding the Existing Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not take any remedial action in response to the presence,
discharge or release, of any Hazardous Materials on, under or about the Premises caused or permitted
by Tenant or Tenant Parties, or enter into any settlement agreement, consent decree or other
compromise with any governmental or quasi-governmental entity without first obtaining the prior
written consent of the Lessor. All work performed or caused to be performed by Tenant as provided
for above shall be done in good and workmanlike manner and in compliance with plans,
specifications, permits and other requirements for such work approved by Lessor.
4.4.4. Indemnification for Hazardous Materials.
(a) To the fullest extent permitted by law, Tenant hereby agrees to
indemnify, hold harmless, protect and defend (with attorneys acceptable to Lessor) Lessor, its
elected officials, officers, employees, agents, independent contractors, and the Premises, from and
against any and all liabilities, losses, damages (including, but not limited, damages for the loss or
restriction on use of rentable or usable space or any amenity of the Premises or damages arising
from any adverse impact on marketing and diminution in the value of the Premises), judgments,
fines, demands, claims, recoveries, deficiencies, costs and expenses (including, but not limited to,
reasonable attorneys' fees, disbursements and court costs and all other professional or consultant's
expenses), whether foreseeable or unforeseeable (collectively, “Liabilities”), arising out of the
presence, use, generation, storage, treatment, on or off-site disposal or transportation of Hazardous
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Materials on, into, from, under or about the Premises by Tenant or Tenant Parties, and excluding all
Existing Hazardous Materials.
(b) The foregoing indemnity shall also specifically include the cost of
any required or necessary repair, restoration, clean-up or detoxification of the Premises and the
preparation of any closure or other required plans.
(c) The foregoing indemnity and defense obligations of this Lease shall
survive its expiration or termination; provided, however, that the obligations contained in Section
4.3.3 and the indemnity and defense contained in this Section 4.4.4 shall not apply to any Liabilities
arising or occurring (a) prior to the Effective Date of this Ground Lease, (b) after the expiration or
earlier termination of the Term of this Ground Lease, or (c) as a result of the negligent or wrongful
acts or omissions of Lessor or any Lessor Parties.
4.5 Access by Lessor. Lessor reserves the right for Agency and its authorized
representatives to enter the Premises upon two (2) business days’ prior written notice to Tenant,
during normal business hours and subject to the rights of subtenants, in order to determine whether
Tenant is complying with Tenant’s obligations hereunder, or to enforce any rights given to Agency
under this Lease. Lessor and its representatives shall report to the Tenant’s on -site office and must
be accompanied by a representative of Tenant at all times while on the Property and obey Tenant’s
rules and regulations. Tenant acknowledges Lessor have the authority to enter the Premises and
perform work on the Premises at any time as needed to provide immediate or necessary protection
for the general public. Lessor will take all necessary measures not to unreasonably in terfere with
Tenant’s business at the Premises in exercising its rights under this Section. Lessor shall indemnify
and hold Tenant harmless from and against any loss, cost, damage or liability, including, without
limitation, attorneys’ fees, which results from the willful misconduct or gross negligence of any
Lessor Parties, or any other party acting under Lessor’s authority, of the rights granted by this
Section 4.5.
ARTICLE V
CONSTRUCTION OF IMPROVEMENTS
5.1 Construction of Improvements.
5.1.1. Initial Improvements. Upon the fulfillment of the Preconditions set forth in
Section 5.1.2, below, and payment for and issuance of all permits required under the Laws (whether
from City in their governmental capacity, or otherwise), Tenant shall construct the Initial
Improvements.
5.1.2. Preconditions. No work for development of the Initial Improvements shall
be commenced, and no building or other materials shall be delivered to the Premises, until:
(a) Tenant has obtained a permit through the City, submitted Project
design, conceptual development, plans and special provisions for the construction of Improvements
in accordance with the Lessor’s criteria, standard and practices;
(b) Tenant has given Lessor written notice of the proposed
commencement of construction of the Premises or the delivery of construction materials in order to
allow Lessor to take all necessary actions under California Civil Code section 3094, including
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posting of a notice of non-responsibility at the Premises; and
(c) Tenant has provided to Lessor evidence that (i) Tenant has entered
into a Construction Contract with a Contractor in accordance with Section 5.2 below, (ii) Tenant has
secured the construction funding required under Section 5.1.4 below, and (iii) Tenant has provided
Lessor with assurances sufficient to construct the Initial Improvements in accordance with Section
5.3 below.
5.1.3. Utilities. To the extent not already constructed, Tenant, at no cost to Lessor,
shall construct or cause to be constructed all water, gas, heat, light, power, air conditioning,
telephone, broadband internet, and other utilities and related services supplied to and/or used on the
Premises at Tenant’s sole cost and expense for the purposes of conducting Tenant’s operations
thereon. All such utilities shall be separately metered from any uti lities which may be used by the
Agency in conducting its operations, if any, on or about the Premises. Nothing contained in this
Section is to be construed or implied to give Tenant the right or permission to install or to permit any
utility poles or communication towers to be constructed or installed on the Premises.
5.1.4. Construction Funding. Prior to commencement of construction of the Initial
Improvements, Tenant shall provide to Lessor evidence reasonably satisfactory to Lessor of funding
available to Tenant that is sufficient to pay for Tenant’s estimated total cost of constructing the Initial
Improvements, which evidence may consist of (i) a written commitment to Tenant from one or more
Lenders selected by Tenant to provide a construction loan to Tenant for the purpose of constructing
the Initial Improvements (which may be secured by a Leasehold Mortgage encumbering Tenant’s
leasehold interest under this Lease), (ii) actual equity funds or in-kind donations then held by Tenant
or irrevocably committed to be paid or donated to Tenant for the purpose of constructing the Initial
Improvements, or (iii) any combination of the foregoing. Tenant may from time to time change any
of the foregoing funding sources and the allocation thereof, so long as the aggregat e available
funding continues to be sufficient to pay for Tenant’s estimated remaining cost of constructing the
Initial Improvements, provided that Tenant shall promptly notify Lessor of any such change.
5.1.5. Compliance with Laws and Permits. Tenant shall cause all Improvements
made by Tenant to be constructed in substantial compliance with all applicable Laws, including all
applicable grading permits, building permits, and other permits and approvals issued by
governmental agencies and bodies having jurisdiction over the construction thereof. No permit,
approval, or consent given hereunder by the Agency, in their governmental capacity, shall affect or
limit Tenant’s obligations hereunder, nor shall any approvals or consents given by the Agency, as a
Party to this Lease, be deemed approval as to compliance or conformance with applicable
governmental codes, laws, rules, or regulations.
5.1.6. Reports. Not less than monthly from the commencement of construction of
the Initial Improvements, Tenant shall provide Lessor with written construction status reports in the
form of AIA No. G702 (“Application and Certification for Payment”) or comparable form,
augmented by oral reports if so requested by Agency.
5.1.7. Certificate of Occupancy. Tenant shall provide Lessor with a copy of the
Certificate of Occupancy promptly following issuance thereof. The date of issuance of the
Certificate of Occupancy shall be the Commencement Date hereunder.
5.1.8. Insurance. Tenant (or the Contractor, as applicable) shall deliver to Lessor
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both (i) certificates of insurance evidencing coverage for “builder’s risk,” as specified in Section 8.1,
and (ii) evidence of worker’s compensation insurance, which provide the requisite insurance levels in
accordance with Article VIII, for all persons employed in connection with the construction of any
Improvements upon the Premises and with respect to whom death or bodily injury claims could be
asserted against the Agency or the Premises. Tenant shall (or shall cause Contractor to) maintain,
keep in force and pay all premiums required to maintain and keep in said insurance herein at all times
during which construction Work is in progress.
5.1.9. Mechanic’s Liens.
(a) Payment of Liens. Tenant shall pay or cause to be paid the total cost
and expense of all “Work of Improvement,” as that phrase is defined in the California Mechanics’
Lien law in effect and as amended from time to time. Tenant shall not suffer or permit to be enforced
against the Premises or Improvements or any portion thereof, any mechanics’, materialmen’s,
contractors’ or subcontractors’ liens arising from any work of improvement, however it may arise.
Tenant may, however, in good faith and at Tenant’s sole cost and expense contest the validity of any
such asserted lien, claim, or demand, provided Tenant (or any contractor or subcontractor, as
applicable) has furnished the release bond (if required by Agency or any construction lender)
required in California Civil Code section 8000 et seq. (or any comparable statute hereafter enacted
for providing a bond freeing the Premises from the effect of such lien claim). In the event a lien or
stop-notice is imposed upon the Premises as a result of such construction, repair, alteration, or
installation, and provided the lien is not the result of actions of, or work performed by, the Lessor,
Tenant shall either:
(1) Record a valid Release of Lien, or
(2) Procure and record a bond in accordance with Section 8424 of the
Civil Code, which releases the Premises from the claim of the lien or stop-notice and from any action
brought to foreclose the lien, or
(3) Post such security as shall be required by Tenant’s title insurer to
insure over such lien or stop-notice, or
(4) Should Tenant fail to accomplish either of the three optional
actions above within 30 days after Tenant receives notice of the filing of such a lien or stop-notice, it
shall constitute an Event of Default hereunder.
(b) Indemnification. Tenant shall at all times indemnify, defend with
counsel approved in writing by the Agency and hold the Agency harmless from all claims, losses,
demands, damages, cost, expenses, or liability costs for labor or materials in connection with
construction, repair, alteration, or installation of structures, improvements, equipment, or facilities
within the Premises, and from the cost of defending against such claims, including reasonable
attorneys’ fees and costs, but excluding any liability resulting from the gross negligence or willful
misconduct of Lessor or any Lessor Parties, and excluding any liens resulting from the actions of, or
work performed by, the Lessor.
(c) Protection Against Liens. Lessor shall have the right to post and
maintain on the Premises any notices of non-responsibility provided for under applicable California
law. During the course of construction, Tenant shall obtain customary mechanics’ lien waivers and
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releases. Upon completion of the construction of any Improvements, Tenant shall record a notice of
completion in accordance with applicable law. Promptly after the Improvements have been
completed, Tenant shall (or shall cause Contractor to) record a notice of completion as defined and
provided for in California Civil Code section 8000 et seq.
(d) Lessor’s Rights. If Tenant (or any contractor or subcontractor, as
applicable) does not cause to be recorded the bond described in California Civil Code section 8000 et
seq. or otherwise protect the Premises and Improvements under any alternative or successor statute,
and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the
foreclosure of a mechanic’s, materialman’s, contractor’s or subcontractor’s lien claim, and if Tenant
fails to stay the execution of judgment by lawful means or to pay the judgment, Lessor shall have the
right, but not the duty to pay or otherwise discharge, stay or prevent the execution of any such
judgment or lien or both. Upon any such payment by the Agency, Tenant shall immediately upon
receipt of written request therefor by the Agency, reimburse the Agency for all sums paid by Agency
under this paragraph together with all Agency’s reasonable attorney’s fees and costs , plus interest at
the Interest Rate from the date of payment until the date of reimbursement.
5.1.10. No Responsibility. Any approvals by the Agency with respect to any
Improvements shall not make the Agency responsible for the Improvement with respect to which
approval is given or the construction thereof. Tenant shall indemnify, defend and hold Lessor
harmless from and against all liability and all claims of liability (including, without limitation,
reasonable attorneys’ fees and costs) arising during the Term of this Lease for damage or injury to
persons or property or for death of persons arising from or in connection with the Improvement or
construction thereof, but excluding any liability resulting from the gross negligence or willful
misconduct of Lessor or any Lessor Parties, and excluding any liens resulting from the actions of, or
work performed by, the Lessor.
5.2 Construction Contracts.
5.2.1. Construction Contract. Tenant shall enter into a written contract with a
general contractor (“Contractor”) for construction of the Initial Improvements. All construction of
the Initial Improvements shall be performed by contractors and subcontractors duly licensed as such
under the laws of the State of California. Tenant shall give Lessor a true copy of the contract or
contracts with the Contractor.
5.2.2. Assignment to Agency. Tenant shall obtain the written agreement of the
Contractor that, at Agency’s election and in the event that Tenant fails to perform its contract with
the Contractor, such Contractor will recognize Agency as the assignee of the contract with the
Contractor, and that Agency may, upon such election, assume such contract with credit for payments
made prior thereto. Notwithstanding the foregoing, Agency’s rights under this Section 5.2.2 are
hereby made subject and subordinate to the lien of each Leasehold Mortgage.
5.3 Reserved.
5.4 Ownership of Improvements.
5.4.1. For purposes of this Section 5.4, “Term” shall have the meaning stated in
Section 2.2.3.
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5.4.2. During Term. Title to all Improvements constructed or placed on the
Premises by Tenant and paid for by Tenant are and shall be vested in Tenant during the Term of this
Lease, until the expiration or earlier termination thereof. Any and all depreciation, amortization and
tax credits for federal or state purposes relating to the Improvements located on the Premises and any
and all additions thereto shall be deducted or credited exclusively by Tenant during the Term. The
Parties agree for themselves and all persons claiming under them that the Improvements are real
property.
5.4.3. Upon Expiration or Earlier Termination of Term. All Improvements on
the Premises at the expiration or earlier termination of the Term of this Lease shall, without
additional payment to Tenant, then become Lessor’s property free and clear of all claims to or against
them by Tenant and free and clear of all Leasehold Mortgages and any other liens and claims arising
from Tenant’s use and occupancy of the Premises, and with Taxes paid current as of the expirat ion or
earlier termination date. Tenant shall upon the expiration or earlier termination of the Term deliver
possession of the Premises and the Improvements to Lessor in good order, condition and repair
consistent with the requirements of this Lease and in compliance with all applicable laws and
regulations for the occupancy of the Project, taking into account reasonable wear and tear and the age
of the Improvements.
5.5 “AS-BUILT” Plans. Within sixty (60) days following completion of any substantial
improvement within the Premises, Tenant shall furnish the Lessor a complete set of reproducibles
and two sets of prints of “As-Built” plans and a magnetic tape, disk or other storage device
containing the “As-Built” plans in a form usable by Lessor, to Lessor’s satisfaction, on Lessor’s
computer aided mapping and design (“CAD”) equipment. CAD files are also to be converted to
Acrobat Reader (pdf format), which shall be included on the disk or CD ROM. In addition, Tenant
shall furnish Lessor copy of the final construction costs for the construction of such improvements.
5.6 Replacement Reserve Fund.
5.6.1. Tenant shall establish and maintain a reserve fund (the "Replacement
Reserve Fund") during the Term of this Lease (as “Term” is defined in Section 2.2) in accordance
with the provisions of this Section 5.6 designated to pay for Permitted Capital Expenditures (as
defined below) for the Improvements during the Term of this Lease.
5.6.2. Tenant and Lessor agree and acknowledge that the purpose of the
Replacement Reserve Fund shall be to provide sufficient funds to pay for the costs of major
replacements, renovations or significant upgrades of or to the Improvements, including without
limitation building facade or structure and major building systems (such as HVAC, mechanical,
electrical, plumbing, vertical transportation, security, communications, structural or roof) that
significantly affect the capacity, efficiency, useful life or economy of operation of the Improvements
or their major systems, after the completion of the Initial Improvements (“Permitted Capital
Expenditure(s)”).
5.6.3. The Replacement Reserve Fund shall not be used to fund any portion of the
construction cost of the Initial Improvements. In addition, Permitted Capital Expenditures shall not
include the cost of periodic, recurring or ordinary maintenance expenditures or maintenance, repairs
or replacements that keep the Improvements in an ordinarily efficient operating condition, but that do
not significantly add to their value or appreciably prolong their useful life. Permitted Capital
Expenditures must constitute capital replacements, improvement s or equipment under generally
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accepted accounting principles consistently applied or constitute qualifying aesthetic improvements.
Permitted Capital Expenditures shall not include costs for any necessary repairs to remedy any
broken or damaged Improvements, all of which costs shall be separately funded by Tenant.
5.6.4. All specific purposes and costs for which Tenant desires to utilize amounts
from the Replacement Reserve Fund shall be at Tenant’s reasonable discretion and subject to
Lessor's written approval as provided for in Section 5.6.9, below. Tenant shall furnish to the Lessor
applicable invoices, evidence of payment and other back-up materials concerning the use of amounts
from the Replacement Reserve Fund.
5.6.5. The Replacement Reserve Fund shall be held in an account established with a
Lender acceptable to the Lessor, into which deposits shall be made by Tenant pursuant to Section
5.6.8, below.
5.6.6. Tenant shall have the right to partly or fully satisfy the Replacement Reserve
Fund obligations of this Section 5.6 with capital improvement reserves (or replacement reserves)
required by Tenant's Leasehold Mortgagees, as long as such capital improvement reserves or
replacement reserves are in all material respects administered and utilized in accordance, and
otherwise comply, with the terms, provisions and requirements of this Section 5.6.
5.6.7. In the event of default by Tenant and the early termination of this Lease, the
Lessor shall have full access to the Replacement Reserve Fund, provided the Tenant’s Leasehold
Mortgagee does not use it within a reasonable time for the purposes stated in this Section 5.6;
provided, however, that Lessor’s rights under this Section 5.6.7 are hereby made subject and
subordinate to the lien of each Leasehold Mortgage.
5.6.8. From and after the issuance of the Certificate of Occupancy, Tenant shall
make an annual deposit to the Replacement Reserve Fund in an amount no less than $500 per unit
per year by no later than December 31 of each year. All interest and earnings on the Replacement
Reserve Fund shall be added to the Replacement Reserve Fund, but shall not be treated as a credit
against the Replacement Reserve Fund deposits required to be made by Tenant pursuant to this
Section 5.6.
5.6.9. Disbursements shall be made from the Replacement Reserve Fund only for
costs which satisfy the requirements of this Section 5.6. For the purpose of obtaining the Lessor's
prior approval of any Replacement Reserve Fund disbursements, Tenant shall submit to the Lessor
on an annual calendar year basis a capital expenditure plan for the upcoming year which details the
amount and purpose of anticipated Replacement Reserve Fund expenditures (“Capital
Improvement Plan”). Lessor shall approve or disapprove such Capital Improvement Plan within
thirty (30) days of receipt, which approval shall not be unreasonably withheld, conditioned or
delayed. Any expenditure set forth in the approved Capital Improvement Plan shall be considered
pre-approved by Lessor (but only up to the amount of such expenditure set forth in the Capital
Improvement Plan) for the duration of the upcoming year. Tenant shall have the right during the
course of each year to submit to the Lessor for the Lessor's approval revisions to the then current
Capital Improvement Plan, or individual expenditures not noted on the previously submitted Capital
Improvement Plan. In the event of an unexpected emergency that necessitates a Permitted Capital
Expenditure not contemplated by the Capital Improvement Plan, the Tenant may complete such work
using the funds from the Replacement Reserve Fund with contemporaneous or prior (if possible)
written notice to the Lessor and provide applicable documentation to the Lessor thereafter for
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approval. If the Lessor disapproves the emergency expenditure which was not previously approved
by Lessor, Tenant shall refund the amount taken from the Replacement Reserve Fund within thirty
(30) days of written notice from the Lessor of its decision.
5.6.10. Notwithstanding anything above to the contrary, if Tenant incurs
expenditures that constitute Permitted Capital Expenditures but which are not funded out of the
Replacement Reserve Fund because sufficient funds are not then available in such fund, then Tenant
may credit the Permitted Capital Expenditures so funded by Tenant out of its own funds against
future Replacement Reserve Fund contribution obligations of Tenant; provided, that such credit must
be applied, if at all, within four (4) years after such Permitted Capital Expenditure is incurred by the
Tenant.
ARTICLE VI
REPAIRS, MAINTENANCE, ADDITIONS AND RECONSTRUCTION
6.1 Maintenance by Tenant. Throughout the Term of this Lease, Tenant shall, at
Tenant’s sole cost and expense, keep and maintain the Premises and any and all Improvements now
or hereafter constructed and installed on the Premises in good order, condition and repair (i.e., so that
the Premises does not deteriorate more quickly than its age and reasonable wear and tear would
otherwise dictate) and in a safe and sanitary condition and in compliance with all applicable Laws in
all material respects. Tenant shall immediately notify the Lessor of any material damage relating to
the Premises.
6.2 Interior Improvements, Additions and Reconstruction of Improvements.
Following the completion of construction of the Initial Improvements, Tenant shall have the right
from time to time to make any interior improvements and repairs to the Improvements that are
consistent with the Lessor’s approved use of the Premises as reflected in this Lease, without Lessor’s
prior written consent, but with prior written notice to the Lessor (except in the event of an
emergency, in which case no prior written notice shall be required but Tenant shall notify Lessor of
any emergency work done as soon as practicable). With prior written approval of Lessor, Tenant
may restore and reconstruct the Improvements, and in that process make any modifications otherwise
required by changes in Laws, following any damage or destruction thereto (whether or not required
to do so under Article VII); and/or to make changes, revisions or improvements to the Improvements
for uses consistent with the Lessor approved use of the Premises as reflected in this Lease. Tenant
shall perform all work authorized by this Section at its sole cost and expense, including, without
limitation, with insurance proceeds approved for such use in accordance with Article VII, if any, and
in compliance with all applicable Laws in all material respects.
6.3 All Other Construction, Demolition, Alterations, Improvements and
Reconstruction. Following the completion of construction of the Initial Improvements, and except
as specified in Sections 6.1 and 6.2, any construction, alterations, additions, major repairs,
demolition, improvements or reconstruction of any kind shall require the prior written consent of the
Lessor, which consent shall not be unreasonably conditioned, delayed or withheld and may require
their respective governing body’s approval (e.g. City Council approval). Tenant shall perform all
work authorized by this Section at its sole cost and expense, includi ng, without limitation, with
insurance proceeds approved for such use in accordance with Article VII, if any, and in compliance
with all applicable Laws in all material respects.
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6.4 Requirements of Governmental Agencies. At all times during the Term of this
Lease, Tenant, at Tenant’s sole cost and expense, shall: (i) make all alterations, improvements,
demolitions, additions or repairs to the Premises and/or the Improvements required to be made by
any law, ordinance, statute, order or regulation now or hereafter made or issued by any federal, state,
county, local or other governmental agency or entity; (ii) observe and comply in all material respects
with all Laws now or hereafter made or issued respecting the Premises and/or the Improvements
(subject to Tenant’s right to contest such Laws in accordance with Section 4.4); (iv) indemnify,
defend and hold Agency, the Premises and the Improvements free and harmless from any and all
liability, loss, damages, fines, penalties, claims and actions resulting from Tena nt’s failure to comply
with and perform the requirements of this Article VI, except for liability arising out of the gross
negligence or willful misconduct of Lessor or any Lessor Parties.
6.5 Lessor Obligations. Tenant specifically acknowledges and agrees that Agency and
Lessor Parties do not and shall not have any obligations with respect to the maintenance, alteration,
improvement, demolition, replacement, addition or repair of any Improvements.
6.6 Lessor Reservations. Without limiting Lessor’s rights with respect to the Premises,
Lessor reserves for themselves, their successors and assigns those rights necessary to assure proper
maintenance and operation of the Premises and to permit any steps to be taken which the Lessor
deems necessary or desirable to maintain, repair, improve, modify or reconstruct the Premises. The
rights reserved to Lessor in this section or any other section of this Lease shall be exercised by the
Lessor at their sole discretion, unless otherwise provided herein.
ARTICLE VII
DAMAGE AND RESTORATION
7.1 Damage and Restoration. In the event the whole or any part of the Improvements
shall be damaged or destroyed by fire or other casualty, damage or action of the elements which is
fully covered by insurance required to be carried by Tenant pursuant to this Lease or in fact cause d
by Tenant, at any time during the Term, Tenant shall with all due diligence, at Tenant’s sole cost and
expense, repair, restore and rebuild the Improvements on substantially the same plan and design as
existed immediately prior to such damage or destruction and to substantially the same condition that
existed immediately prior to such damage, with any changes made by Tenant to comply with then
applicable Laws and with any upgrades or improvements that Tenant may determine in its reasonable
discretion. If Tenant desires to change the use of the Premises following such casualty, then Tenant
may make appropriate changes to the Premises to accommodate such changed use after approval of
such change of use by the Lessor pursuant to Article IV above. This Article shall not apply to
cosmetic damage or alterations. In the event that Tenant shall determine, subject to the rights of the
Leasehold Mortgagees by notice to the Lessor given by the later of ninety (90) days after the date of
the damage or destruction or thirty (30) days after receipt by Tenant of any such insurance proceeds,
that there are not adequate proceeds to restore the Improvements and/or the Premises to substantially
the same condition in which they existed prior to the occurrence of such damage or destruction, then
Tenant may terminate this Lease as of a date that is not less than thirty (30) days after the date of
such notice. Notwithstanding Section 17.9, if Tenant terminates this Lease pursuant to this Section
7.1, Tenant shall surrender possession of the Premises to the Lessor immediately and assign to the
Lessor (or, if same has already been received by Tenant, pay to the Lessor) all of its right, title and
interest in and to the proceeds from Tenant’s insurance upon the Premises.
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7.2 Restoration. In the event of any restoration or reconstruction pursuant to this
Section, all such work performed by Tenant shall be constructed in a good and workmanlike manner
according to and in conformance with the Laws, rules and regulations of all go vernmental bodies and
agencies and the requirements of this Lease applicable to the construction of the Initial
Improvements.
7.3 No Rental Abatement. Tenant shall not be entitled to any abatement, allowance,
reduction, or suspension of Rent because part or all of the Improvements become untenantable as a
result of the partial or total destruction of the Improvements, and Tenant’s obligation to keep and
perform all covenants and agreements on its part to be kept and performed hereunder, shall not be
decreased or affected in any way by any destruction of or damage to the Improvements; except as
otherwise provided herein.
7.4 Application of Insurance Proceeds. If following the occurrence of damage or
destruction to the Premises or Improvements, Tenant is obligated to or determines that there are
adequate proceeds to restore the Premises and Improvements pursuant to this Article VII, then all
proceeds from the insurance required to be maintained by Tenant on the Premises and the
Improvements shall be applied to fully restore the same, and, subject to the rights of the Leasehold
Mortgagees, if applicable, any excess proceeds shall be paid to Tenant and any deficit in necessary
funds plus the amount of any deductible shall be paid by Tenant. If Tenant after commencing or
causing the commencement of the restoration of Premises and Improvements shall determine that the
insurance proceeds are insufficient to pay all costs to fully restore the Improvements, Tenant shall
pay the deficiency and shall nevertheless proceed to complete the restoration of Premises and the
Improvements and pay the cost thereof. Upon lien free completion of the restoration, subject to the
rights of the Leasehold Mortgagees, if applicable, any balance of the insurance proceeds remaining
over and above the cost of such restoration shall be paid to Tenant.
7.5 Exclusive Remedies. Notwithstanding any destruction or damage to the Premises
and/or the Improvements, Tenant shall not be released from any of its obligations under this Lease,
except to the extent and upon the conditions expressly stated in this Article VII. Agency and Tenant
hereby expressly waive the provisions of California Civil Code Sections 1932(2) and 1933(4) with
respect to any damage or destruction of the Premises and/or the Improvements and agree that their
rights shall be exclusively governed by the provisions of this Article VII.
7.6 Damage Near End of Term. If, during the last three (3) years of the Term, as
applicable, the Improvements shall be damaged or destroyed for which the repair and/or replacement
cost is fifty percent (50%) or more of then replacement cost of the Improvements, then Tenant shall
have the option, to be exercised within ninety (90) days after such damage or destruction:
7.6.1. to notify the Lessor of its election to repair or restore the Improvements as
provided in this Article VII; or
7.6.2. subject to the rights of Leasehold Mortgagees and such provisions of this
Lease that survive termination, to terminate this Lease by notice to the Lessor, which termination
shall be deemed to be effective as of the date of the damage or destruction. If Tenant terminates this
Lease pursuant to this Section 7.6.2, Tenant shall surrender possession of the Leased Premises to the
Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to
the Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance upon the
Premises less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of
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the loss or collection of the proceeds, (ii) any reasonable costs incurred by Tenant in connection with
the Premises after the damage or destruction, which costs are eligible for reimbursement from such
insurance proceeds, and (iii) the proceeds of any rental loss or business interruption insurance
applicable prior to the date of surrender of the Premises to the Lessor.
ARTICLE VIII
INSURANCE AND INDEMNITY
8.1 Tenant's Required Insurance.
8.1.1. Tenant agrees to purchase all required insurance at Tenant's expense and to
deposit with Lessor certificates of insurance, including all endorsements required herein, necessary to
satisfy Lessor that the insurance provisions of this Lease have been complied with and to keep such
insurance coverage and the certificates and endorsements therefore on deposit with Lessor during the
entire term of this Lease.
8.1.2. Tenant agrees that it shall not operate on the Premises at any time the
required insurance is not in full force and effect as evidenced by a certificate of insurance and
necessary endorsements or, in the interim, an official binder being in the possession of Lessor; rent
however shall not be suspended. In no cases shall assurances by Tenant, its employees, agents,
including any insurance agent, be construed as adequate evidence of insurance. Lessor will only
accept valid certificates of insurance and endorsements, or in the interim, an insurance binder as
adequate evidence of insurance. Tenant also agrees that upon cancellation, termination, or expiration
of Tenant's insurance, Lessor may take whatever steps are necessary to interrupt any operation from
or on the Premises until such time as the Lessor reinstates the Lease.
8.1.3. If Tenant fails to provide Lessor with a valid certificate of insurance and
endorsements, or binder at any time during the term of the Lease. Whether or not a notice of default
has or has not been sent to Tenant, said material breach shall permit Lessor to take whatever steps are
necessary to interrupt any operation from or on the Premises, and to prevent any persons, including,
but not limited to, members of the general public, and Tenant's employees and agents, from entering
the Premises until such time as the Lessor is provided with adequate evidence of insurance required
herein. Tenant further agrees to hold harmless for any damages resulting from such interruption of
business and possession, including, but not limited to, damages resulting from any loss of income or
business resulting from Lessor’s action(s).
8.1.4. All contractors and subcontractors performing work on behalf of Tenant
pursuant to this Lease shall obtain insurance subject to the same terms and conditions as set forth
herein for Tenant and limits of insurance as described in Section 8.1.6 (e), Section 8.1.6 (f) and
Section 8.1.6 (g). Tenant shall not allow contractors or subcontractors to work if contractors have
less than the level of coverage required by under this Lease. It is the obligation of the Tenant to
provide written notice of the insurance requirements to every contractor and to receive proof of
insurance prior to allowing any contractor to begin work within the Premises. Such proof of
insurance must be maintained by Tenant through the entirety of this Lease and be available for
inspection by Lessor at any reasonable time.
8.1.5. All self-insured retentions (SIRs) shall be clearly stated on the Certificate of
Insurance. Any self-insured retention (SIR) in an amount in excess of Fifty Thousand Dollars
($50,000) shall specifically be approved by the Risk Manager, or designee, upon review of Tenant’s
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current audited financial report.
If the Tenant fails to maintain insurance acceptable to the Agency for the full term of this Lease, the
Agency may terminate this Lease.
8.1.6. All policies of insurance required under this Article VIII must be issued by an
insurer with a minimum rating of A- (Secure A.M. Best's Rating) and VIII (Financial Size Category
as determined by the most current edition of the Best's Key Rating Guide/Property-
Casualty/United States or ambest.com). It is preferred, but not mandatory, that the insurer must be
licensed to do business in the state of California.
(a) If the insurance carrier does not have an A.M. Best Rating of A-/VIII,
the Lessor retains the right to approve or reject a carrier after a review of the carrier's performance
and financial ratings.
(b) If the insurance carrier is not an admitted carrier in the state of
California and does not have an A.M. Best rating of A-/VIII, the Lessor retains the right to approve
or reject a carrier after a review of the company's performance and financial ratings.
(c.1) The policy or policies of insurance maintained by the TENANT
DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages Minimum Limits
Builder's Risk (during the Construction Period)
naming retained General Contractor
Project value and no coinsurance
provision.
Commercial General Liability $5,000,000 per occurrence
$5,000,000 aggregate
Automobile Liability including coverage for owned,
non-owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation Statutory Minimum
Employers' Liability Insurance $1,000,000 per occurrence
(c.2) The policy or policies of insurance maintained by the TENANT’S
GENERAL CONTRACTOR DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages Minimum Limits
Commercial General Liability $5,000,000 per occurrence
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$10,000,000 aggregate
Automobile Liability including coverage for owned,
non-owned and hired vehicles
$2,000,000 limit per occurrence
Workers' Compensation Statutory Minimum
Employers' Liability Insurance $1,000,000 per occurrence
Contractor’s Pollution Liability including NODS $5,000,000 per claims made or per
occurrence
(d) The policy or policies of insurance maintained by the TENANT’S
SUBCONTRACTORS DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non-owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation Statutory Minimum
Employer’s Liability Insurance (not required for
self-employed subcontractors)
$1,000,000 per occurrence
Contractor’s Pollution Liability including NODS
(Required only of those subcontractors involved in
pollution remediation)
$1,000,000 per claims made or per
occurrence
(e) The policy or policies of insurance maintained by the ARCHITECT-
ENGINEER shall provide the minimum limits and coverage as set forth below:
Coverages Minimum Limits
Professional Liability (architect, structural,
electrical engineer, mechanical/plumbing
engineering, environmental engineer, civil engineer,
landscape architect, and geotechnical engineer)
$2,000,000 per occurrence
$2,000,000 aggregate
Commercial General Liability $1,000,000 per occurrence
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$2,000,000 aggregate
Automobile Liability including coverage for owned,
non-owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation Statutory Minimum
Employers' Liability Insurance $1,000,000 per occurrence
(f) The policy or policies of insurance maintained by the TENANT
AFTER CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages Minimum Limits
Commercial General Liability
Including Sexual Misconduct (defined as abuse,
molestation and assault and battery)
$5,000,000 per occurrence
$5,000,000 aggregate
Automobile Liability including coverage for owned,
non-owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation Statutory Minimum
Employers' Liability Insurance $1,000,000 per occurrence
Commercial Property Insurance on an "All Risk" or
"Special Causes of Loss" basis covering all
buildings, contents and any tenant improvements
including Business Interruption/Loss of Rents with
a 12 month limit
100% of the Replacement Cost Value
and no coinsurance provision
Tenant shall provide a builder’s risk policy, naming the Contractor, providing coverage for the full
project value and no coinsurance provision. The policy shall provide coverage for all perils excluding
earthquake, and flood. Tenant is responsible for any deductible amount. Housing Authority of the
City of Santa Ana shall be named as Loss Payees as its financial interests may appear. This shall be
evidenced by a Loss Payee endorsement which shall accompany the Certificate of Insurance.
The Builder's Risk policy shall not be required to cover any tools, equipment, or supplies, unless
such tools, equipment, or supplies are part of the Work being constructed. The Contractor shall be
responsible for securing and maintaining appropriate insurance on any tools, equipment, or supplies
that are not part of the work being constructed.
The Contractor waives all rights against each other and the subcontractors, sub-subcontractors,
officers, and employees of each other, and the Contractor waives all rights against ’s separate
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contractors, if any, and their subcontractors, sub-subcontractors, officers and employees for damages
caused by fire or other perils to the extent paid by the Builder’s Risk insurance, except such rights as
they may have to the proceeds of such insurance. The Contractor shall require of its subcontractors
and sub-subcontractors by appropriate agreements, similar waivers, each in favor of all other parties
enumerated in the preceding sentence.
(g) The policy or policies of insurance maintained by the TENANT’S
CONTRACTOR AFTER CONSTRUCTION shall provide the minimum limits and coverage as
set forth below when performing maintenance and minor work after the building is in operation:
Coverages Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non-owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation Statutory Minimum
Employers' Liability Insurance $1,000,000 per occurrence
8.1.7. Required Coverage Forms.
(a) The Commercial General Liability coverage shall be written on
Insurance Services Office (ISO) form CG 00 01, or a substitute form providing liability coverage at
least as broad.
(b) The Business Auto Liability coverage shall be written on ISO form
CA 00 01, CA 00 05, CA 00 12, CA 00 20, or a substitute form providing liability coverage as broad.
8.1.8. Required Endorsements. The Commercial General Liability policy shall
contain the following endorsements, which shall accompany the Certificate of insurance:
1) An Additional Insured endorsement using ISO form CG 20 26 04 13 or a form at least as
broad naming the City of Santa Ana, and their respective elected and appointed officials,
officers, employees, agents as Additional Insureds. Blanket coverage may also be
provided which will state, as required by Lease.
2) A Products and Completed Operations endorsement using ISO Form CG2037 (ed.04/13)
or a form at least as broad, or an acceptable alternative is the ISO from CG2010 (ed.
11/85). (Pertains to contractors and subcontractors performing major construction).
Contractors shall maintain Products and Completed Operations coverage for ten (10)
years following completion of construction.
The Contactors Pollution Liability and Pollution Liability policies shall contain the followin g
endorsements, which shall accompany the Certificate of Insurance:
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1) An Additional Insured endorsement naming the City of Santa Ana, and their respective
elected and appointed officials, officers, employees, and agents as Additional Insureds.
(a) The Workers' Compensation policy shall contain a waiver of
subrogation endorsement waiving all rights of subrogation against the City of Santa Ana, and their
respective elected and appointed officials, officers, agents and employees.
(b) All insurance policies required by this Lease shall waive all rights of
subrogation against the City of Santa Ana, and their respective elected and appointed officials,
officers, agents and employees when acting within the scope of their appointment or employment.
(c) The Commercial Property Building policy shall include City of Santa
Ana as both Named Insureds. A Certificate of Insurance shall be submitted as evidence of this
requirement. The Builders’ Risk policy shall be endorsed to include City of Santa Ana as Loss
Payees. A Loss Payee endorsement shall be submitted with the Certificate of Insurance as evidence
of this requirement.
(d) Tenant shall notify City in writing within thirty (30) days of any
policy cancellation and ten (10) days for non-payment of premium and provide a copy of the
cancellation notice to the City. Failure to provide written notice of cancellation may constitute a
material breach of the Lease, after which the City may suspend or terminate this Lease.
(e) The Commercial General Liability policy shall contain a severability
of interests clause, also known as a "separation of insureds" clause (standard in the ISO CG 001
policy).
(f) If Contractor’s Pollution Liability and Pollution Liability are claims -
made policies, Contractor shall agree to maintain coverage for five (5) years following completion
of the construction. If Contractor’s Professional Liability is a claims-made policy, Contractor shall
agree to maintain coverage for ten (10) years following the completion of construction. Products and
Completed Operations coverage shall be maintained for ten (10) years following the completion of
construction.
(g) Insurance certificates should be forwarded to City addresses provided
in Section 18.19 below. Tenant has ten (10) business days to provide adequate evidence of insurance
or it shall constitute an Event of Default.
(h) City expressly retains the right to require Tenant to increase or
decrease insurance of any of the above insurance types throughout the term of this Lease which shall
be mutually agreed upon by City and Tenant.
(i) Lessor shall notify Tenant in writing of changes in the insurance
requirements consistent with subsection (h) above. If Tenant does not deposit copies of certificates
of insurance and endorsements with Lessor incorporating such changes within thirty (30) days of
receipt of such notice, it shall constitute an Event of Default.
(j) The procuring of such required policy or policies of insurance shall
not be construed to limit Tenant's liability hereunder nor to fulfill the indemnification provisions and
requirements of this Lease, nor in any way to reduce the policy coverage and limits available from
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the insurer.
8.2 Indemnification. Tenant agrees to assume all risks, financial or otherwise,
associated with the Premises. Tenant hereby releases and waives all claims and recourse against
Lessor, including the right of contribution for loss or damage of persons or property, arising from,
growing out of or in any way connected with or related to this Lease, including any damage to or
interruption of use of the Premises including, but not limited to, loss of business, damage to,
destruction of, or relocation costs of Tenant’s Improvements or impaired utility of the Premises
caused by erosion, flood, or flood overflow, or caused by any action undertaken in the operation,
maintenance, repair, reconstruction, replacement, enlargement or improvement of the Premises
except claims arising from the gross negligence or willful misconduct of Lessor or any Lessor
Parties. Tenant hereby agrees to indemnify, defend (with counsel approved in writing by Lessor), and
hold harmless, Lessor and any Lessor Parties against any and all claims, losses, demands, damages,
cost, expenses or liability for injury to any persons or property, arising out of the operation or
maintenance of the Premises, and/or Tenant’s exercise of the rights under this Lease, except for
liability arising out of the gross negligence or willful misconduct of Lessor or any Lessor Parties,
including the cost of defense of any lawsuit arising therefrom, and except for claims arising after the
later to occur of the expiration or earlier termination of the Term, or the date Tenant vacates the
Premises. If Lessor is named as co-defendant in a lawsuit in connection with this Lease, Tenant shall
notify Lessor of such fact and shall represent the Lessor in such legal action unless Lessor
undertakes to represent themselves as co-defendant in such legal action, in which event, Tenant shall
pay to Lessor their litigation costs, expenses, and reasonable attorneys' fees. If judgment is entered
against Lessor and Tenant by a court of competent jurisdiction because of the concurrent active
negligence of Lessor and Tenant, Lessor and Tenant agree that liability will be apportioned as
determined by the court. Neither Party shall request a jury apportionment. A judgment or other
judicial determination regarding Lessor’s negligence shall not be a condition precedent to Tenant’s
obligations stated in this Section.
Tenant acknowledges that it is familiar with the language and provisions of California Civil Code
Section 1542 which provides as follows:
A general release does not extend to claims which 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.
Tenant, being aware of and understanding the terms of Section 1542, hereby waives all benefit of its
provisions to the extent described in this paragraph.
The foregoing indemnity and defense obligations of this Lease shall survive its expiration or
termination. This Section 8.2 notwithstanding, indemnification with respect to Hazardous Materials
shall be governed by Section 4.4.4.
8.3 Damage to Tenant’s Premises. Lessor shall not be liable for injury or damage
which may be sustained by the person, goods, wares, merchandise, or other property of Tenant, of
Tenant’s employees, invitees, customers, or of any other person in or about the Premises or the
Improvements caused by or resulting from any peril which may affect the Premises or Improvements,
including fire, steam, electricity, gas, water, or rain which may leak or flow from or into any part of
the Premises or the Improvements, whether such damage or injury results from conditions arising
upon the Premises or from other sources; provided, however, Lessor shall be liable for injury or
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damage under this Section 8.3 resulting from the gross negligence or willful misconduct of Lessor or
any Lessor Party.
ARTICLE IX
CONDEMNATION
9.1 Definitions.
9.1.1. “Condemnation” means (i) the taking or damaging, including severance
damage, by eminent domain or by inverse condemnation or for any public or quasi-public use under
any statute, whether by legal proceedings or otherwise, by a Condemnor (hereinafter defined), and
(ii) a voluntary sale or transfer to a Condemnor, either under threat of condemnation or while
condemnation legal proceedings are pending.
9.1.2. “Date of Taking” means the later of (i) the date actual physical possession is
taken by the Condemnor; or (ii) the date on which the right to compensation and damages accrues
under the law applicable to the Premises.
9.1.3. “Award” means all compensation, sums or anything of value awarded, paid
or received for a Total Taking, a Substantial Taking or a Partial Taking (hereinafter defined), whether
pursuant to judgment or by agreement or otherwise.
9.1.4. “Condemnor” means any public or quasi-public authority or private
corporation or individual having the power of condemnation.
9.1.5. “Total Taking” means the taking by Condemnation of all of the Premises and
all of the Improvements.
9.1.6. “Substantial Taking” means the taking by Condemnation of so much of the
Premises or Improvements or both that one or more of the following c onditions results, as
reasonably determined by Tenant: (i) The remainder of the Premises would not be economically
and feasibly usable by Tenant; and/or (ii) A reasonable amount of reconstruction would not make
the Premises and Improvements a practical improvement and reasonably suited for the uses and
purposes for which the Premises were being used prior to the Condemnation; and/or (iii) The
conduct of Tenant’s business on the Premises would be materially and substantially prevented or
impaired.
9.1.7. “Partial Taking” means any taking of the Premises or Improvements that is
neither a Total Taking nor a Substantial Taking.
9.1.8. “Notice of Intended Condemnation” means any notice or notification on
which a reasonably prudent person would rely and which he would interpret as expressing an
existing intention of Condemnation as distinguished from a mere preliminary inquiry or proposal. It
includes but is not limited to service of a Condemnation summons and complaint on a Party hereto.
The notice is considered to have been received when a Party receives from the Condemnor a notice
of intent to condemn, in writing, containing a description or map reasonably defining the extent of
the Condemnation.
9.2 Notice and Representation.
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9.2.1. Notification. The Party receiving a notice of one or more of the kinds
specified below shall promptly notify the other Party of the receipt, contents and dates of such
notice: (i) a Notice of Intended Condemnation; (ii) service of any legal process relating to the
Condemnation of the Premises or Improvements; (iii) any notice in connection with any proceedings
or negotiations with respect to such a Condemnation; (iv) any notice of an intent or willingness to
make or negotiate a private purchase, sale or transfer in lieu of Condemnation.
9.2.2. Separate Representation. Agency and Tenant each have the right to
represent its respective interest in each Condemnation proceeding or negotiation and to make full
proof of his claims. No agreement, settlement, sale or transfer to or with the Condemnor shall be
made without the consent of Agency and Tenant. Agency and Tenant shall each execute and deliver
to the other any instruments that may be required to effectuate or facilitate the provisions of this
Lease relating to Condemnation.
9.3 Total or Substantial Taking.
9.3.1. Total Taking. On a Total Taking, this Lease shall terminate on the Date of
Taking.
9.3.2. Substantial Taking. If a taking is a Substantial Taking, Tenant may, with
the consent of each Leasehold Mortgagee to the extent required, by notice to Lessor given within
ninety (90) days after Tenant receives a Notice of Intended Condemnation, elect to treat the taking as
a Total Taking. If Tenant does not so notify Lessor, the taking shall be deemed a Partial Taking.
9.3.3. Early Delivery of Possession. Tenant may continue to occupy the Premises
and Improvements until the Condemnor takes physical possession. At any time following Notice of
Intended Condemnation, Tenant may in its sole discretion, with the consent of each Leasehold
Mortgagee to the extent required, elect to relinquish possession of the Premises to Lessor before the
actual Taking. The election shall be made by notice declaring the election and agreeing to pay all Rent
required under this Lease to the Date of Taking. Tenant’s right to apportionment of or compen sation
from the Award shall then accrue as of the date that the Tenant relinquishes possession.
9.3.4. Apportionment of Award. On a Total Taking all sums, including damages
and interest, awarded for the fee or leasehold or both shall be distributed and disbursed as finally
determined by the court with jurisdiction over the Condemnation proceedings in accordance with
applicable law. Notwithstanding anything herein to the contrary, Tenant shall be entitled to receive
compensation for the value of its leasehold estate under this Lease including its fee interest in all
Improvements, personal property and trade fixtures located on the Premises, its relocation and
removal expenses, its loss of business goodwill and any other items to which Tenant may be entitled
under applicable law.
9.4 Partial Taking.
9.4.1. Effect on Rent. On a Partial Taking this Lease shall remain in full force and
effect covering the remainder of the Premises and Improvements, and Tenant shall not be entitled to
any refund of the Base Rent.
9.4.2. Restoration of Improvements. Promptly after a Partial Taking, Tenant shall
repair, alter, modify or reconstruct the Improvements (“Restoring”) so as to make them reasonably
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suitable for Tenant’s continued occupancy for the uses and purposes for which the Premises are
leased.
9.4.3. Apportionment of Award. On a Partial Taking, Lessor shall be entitled to
receive the entire award for such Partial Taking, except that (i) the proceeds of such Partial Taking
shall first be applied towards the cost of Restoring the Premises pursuant to Section 9.4.2 and (ii)
Tenant shall be entitled to receive any portion of such award allocated to Tenant’s interest in any of
Tenant’s Improvements, Personal property and trade fixtures taken, and any part of the award
attributable to the low income housing tax credits.
9.5 Waiver of Termination Rights. Both Parties waive their rights under Section
1265.130 of the California Code of Civil Procedure (and any successor provision) and agree that the
right to terminate this Lease in the event of Condemnation shall be governed by the provisions of this
Article IX.
ARTICLE X
ASSIGNMENT, SUBLETTING AND ENCUMBERING
10.1 General. Except as provided in Sections 10.3 and 17.6.4, below, Tenant shall not
mortgage, pledge, hypothecate, encumber, transfer, sublease Tenant’s interest in this Lease or assign
(including an assignment by operation of law) Tenant’s interest in the Premises or Improvements or
any part or portion thereof (hereinafter referred to collectively as “Transfer”) without the written
consent of the Lessor, which consent may not be unreasonably withheld, conditioned or delayed.
Lessor’s consent may be subject to approval by the City Council. Tenant’s failure to obtain the
Lessor’s written consent to a Transfer shall render such Transfer void. Occupancy of the Premises
by a prospective transferee, sublessee, or assignee prior to Lessor’s written consent of a Transfer
shall constitute an Event of Default, except as set forth in Section 10.3, below.
10.1.1. Except as provided in Section 10.3, below, if Tenant hereunder is a
corporation, limited liability company, an unincorporated association or partnership, the sale or
transfer of any stock or interest in said corporation, company, association and partnership in the
aggregate exceeding 25% shall require the written consent of the Lessor, as set forth in Section 10.3,
above, which consent may not be unreasonably withheld, conditioned or delayed.
10.1.2. Should Lessor consent to any Transfer, such consent and approval shall not
constitute a waiver of any of the terms, conditions, covenants, restrictions or reservations of this Lease
nor be construed as Lessor’s consent to any further Transfer. Such terms conditions, covenants,
restrictions and reservations shall apply to each and every Transfer hereunder and shall be severally
binding upon each and every party thereto. Any document to regarding the Transfer of the Premises
or any part thereof shall not be inconsistent with the provisions of this Lease and in the event of any
such inconsistency, the provisions of this Lease shall control.
10.1.3. This Section shall not be interpreted to prohibit, disallow or require Lessor’s
consent to space leases (subleases of less than Tenant’s entire Lease interest), including leases of
individual residential units in the Improvements, which are consistent with the approved uses under
this Lease.
10.2 Leasehold Mortgage. Under no circumstances may Tenant mortgage, encumber or
hypothecate Lessor’s Fee Interest.
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10.3 Excluded Transfers. Lessor’s consent, as set forth in Section 10.1, above, shall not
be required for any Excluded Transfer (each party to whom an Excluded Transfer may be made is a
“Permitted Transferee”), provided, however, that (1) Tenant shall notify Lessor of such Excluded
Transfer at least twenty (20) days prior to the Excluded Transfer, and shall provide Lessor with
information regarding the transferee evidencing that the Transfer falls within the scope of this
Section 10.3 and the definition of Excluded Transfer, set forth in Section 1.1.21, above, and (2) if
such Transfer involves an assignment of Tenant’s rights under this Lease, Tenant or such transferee
shall provide Lessor with a written assumption of Tenant’s obligations and liabilities under this
Lease executed by such transferee in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.3 shall not apply to any
Transfer to a Foreclosure Transferee.
10.4 Transfer Procedure. The provisions of this Section 10.4 shall not be applicable to
an Excluded Transfer, which shall be governed by Sections 1.1.21 and 10.3, above. If Tenant desires
at any time to enter into a Transfer for which Lessor’s consent is required hereunder, Tenant shall
provide Lessor with written notice (“Transfer Notice”) at least ninety (90) days prior to the
proposed effective date of the Transfer. The Transfer Notice shall include (i) the name and address
of the proposed transferee, (ii) the nature of the Transfer (e.g., whether an assignment, sublease, etc.),
(iii) the proposed effective date of the Transfer, (iv) income statements and “fair market” balance
sheets of the proposed transferee for the two (2) most recently completed fiscal or calendar years
(provided however, if the proposed transferee is a newly formed entity and has not been in existence
for such two (2) year period, the financial statements submitted shall be those of its principals), (v) a
detailed description of the proposed transferees qualifications and experience that demonstrates the
transferee meets the criteria for a Tenant as established by this Lease, and (vi) a bank or other credit
reference. Thereafter, Tenant shall furnish such supplemental information as Lessor may reasonably
request concerning the proposed transferee. Lessor shall, no later than ninety (90) days after Lessor’s
receipt of the information specified above, deliver written notice to Tenant which shall (i) indicate
whether Lessor give or withhold consent to the proposed Transfer, and (ii) if Lessor withhold consent
to the proposed Transfer, setting forth a detailed explanation of Lessor’s grounds for doing so. If
Lessor consents to a proposed Transfer, then Tenant may thereafter effectuate such Transfer to the
proposed transferee based upon the specific terms of the Lessor’s approval and after execution of a
consent to assignment by Lessor in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.4 shall not apply to any
Transfer to a Foreclosure Transferee.
10.5 Liability of Transferors/Transferees For Lease Obligations. In the case of an
assignment, including an assignment pursuant to Section 17.6.5, each Permitted Transferee and any
other assignees or transferees of this Lease shall assume in writing all of Tenant’s obligations
thereafter arising under this Lease. All assignees or transferees of any interest in this Lease or the
Premises or Improvements (whether or not directly liable on this Lease) shall be subject to the terms,
conditions, covenants, restrictions and reservations of this Lease. Except as otherwise provided in
Section 17.6.5, the transferor may be released from all liability under this Lease only if the Permitted
Transferee or other transferee agrees in writing to assume all of transferor’s obligations and liabilities
and provides to Lessor evidence of sufficient and adequate assets, including any required insurance
policies, subject to approval by Lessor, which approval shall not be unreasonably withheld, that
evidence said Permitted Transferee’s or other transferees’ financial and o therwise competence to
assume transferor’s obligations and liability (an “Approved Release”). Except as otherwise
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provided in Section 17.6.5 and except for an Approved Release, for all other Transfers, any transferor
of any interest in this Lease or the Premises or Improvements shall remain primarily liable for all
obligations hereunder and shall be subject to the terms, conditions, covenants, restrictions and
reservations of this Lease. Except as otherwise provided in Section 17.6.5 and except for an
Approved Release, the Lessor may proceed directly against the transferor in its sole and absolute
discretion, with no obligation to exhaust its remedies against the transferee.
10.6 Conditions of Certain Lessor Consent.
10.6.1. Lessor may withhold consent to a Transfer (excluding Excluded Transfers
which shall not require Lessor consent) at its and absolute sole discretion if any of the following
conditions exist:
(a) An Event of Default exists under this Lease.
(b) The prospective transferee has not agreed in writing to keep, perform,
and be bound by all the terms conditions, covenants, restrictions and reservations of this Lease.
(c) In the case of an assignment, the prospective transferee has not agreed
in writing to assume all of transferor’s obligations and liabilities.
(d) The construction of the Initial Improvements has not been completed.
(e) Any construction required of Tenant as a condition of this Lease has
not been completed.
(f) All the material terms, covenants, and conditions of the Transfer that
are relevant to the Lessor’s approval of the Transfer have not been disclosed in writing to the
Lessor.
10.7 Transfer of Mortgages of Lessor’s Interest. Notwithstanding anything to the
contrary set forth in this Ground Lease, unless required by statute, court order or operation of law,
Lessor shall not transfer, assign, pledge or hypothecate its fee interest in the Premises (other than to
entities under common control with Lessor or other governmental entities under applicable law)
without the prior written consent of Tenant, Leasehold Mortgagee. Any and all mortgages or liens
placed or suffered by the Lessor encumbering the Lessor’s fee interest in the Premises shall be
expressly subject and subordinate to this Lease, to all obligations of Lessor hereunder, to all of the
rights, titles, interests, and estates of the Tenant created or arising hereunder, to each New Lease and
to each Leasehold Mortgage. Furthermore, any Person succeeding to the Lessor’s fee interest as a
consequence of any conveyance, foreclosure or other transfer shall suc ceed to all of the obligations
of the Lessor hereunder.
ARTICLE XI
DEFAULT AND REMEDIES
11.1 Event of Default. Each of the following events shall constitute an “Event of
Default” by Tenant:
11.1.1. Failure to Pay. Tenant’s failure or omission to pay Basic Rent or other sum
payable hereunder on or before the date due where such failure shall continue for a period of twenty
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(20) days after written notice thereof from Lessor to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure
§1161 et seq.
11.1.2. Failure to Perform. The failure or inability by Tenant to observe or perform
any of its obligations under this Lease (other than those specified in Sections 11.1.1, 11.1.3, 11.1.6, or
11.1.8 herein, which have their own notice and cure periods), where such failure shall continue for a
period of thirty (30) days after written notice thereof from Lessor to Tenant or past any such longer
period as reasonably agreed upon by the Tenant, Lessor in writing as may be necessary for completion
of its cure; provided, however, that any such notice by Lessor shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161 et. seq.; provided,
further, that if the nature of such failure is such that it can be cured by Tenant but that more than thirty
(30) days are reasonably required for its cure (for any reason other than financial inability), then
Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30)
days, and thereafter diligently pursues such cure to completion.
11.1.3. Abandonment. The abandonment (as defined in California Civil Code
Section 1951.3) or vacation of the Premises by Tenant for a period of thirty (30) consecutive days or
more.
11.1.4. Assignments.
(a) The making by Tenant of any assignment of its leasehold estate under
this Lease without Lessor’s consent, to the extent required pursuant to Article X;
(b) A case is commenced by or against Tenant under Chapters 7, 11 or 13
of the Bankruptcy Code, Title 11 of the United States Code as now in force or hereafter amended and
if so commenced against Tenant, the same is not dismissed within ninet y (90) days of such
commencement;
(c) the appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where
such seizure is not discharged within sixty (60) days; or
(d) Tenant’s convening of a meeting of its creditors or any class thereof
for the purpose of effecting a moratorium upon or composition of its debts. In the event of any such
default, neither this Lease nor any interests of Tenant in and to the Premise s shall become an asset in
any of such proceedings.
11.1.5. Failure to Reimburse Lessor. Tenant’s failure to reimburse the Lessor
pursuant to Section 3.6.4.
11.1.6. Termination of and Failure to Reinstate Insurance Coverage.
Termination of Tenant’s insurance coverage and lack of reinstatement within ten (10) business days
after notice from Lessor of such termination.
11.1.7. Failure to Provide Evidence of Insurance. Tenant’s failure to provide
Lessor with a valid and adequate certificate of insurance and endorsements, or binde r, at any time
during the Term of the Lease, within the time period required under Section 8.1.3.
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11.1.8. Lessor’s Consent and Approval of Transfer. Occupancy of the Premises
by a prospective transferee, sublessee, or assignee which requires Lessor’s consent or approval,
before Lessor’s written consent and approval of a Transfer is obtained to the extent required in
Section 10.1.
11.1.9. Additional Rent. Tenant’s failure to make Additional Rent payment(s) as set
forth in Sections 11.3 and 11.10.
11.2 Lessor’s Remedies. If an Event of Default occurs, Lessor shall have the following
remedies in addition to all rights and remedies provided by law or equity to which Lessor may resort
cumulatively or in the alternative:
11.2.1. Termination of Lease. Subject to Article 17, as applicable, Lessor shall
have the right to terminate this Lease and all rights of Tenant hereunder including Tenant’s right to
possession of the Premises. In the event that Lessor shall elect to so terminate this Lease then Lessor
may recover from Tenant:
(a) The worth at the time of award of the unpaid Rent and other charges,
which had been earned as of the date of the termination hereof; plus
(b) The worth at the time of award of the amount by which the unpaid
Rent and other charges which would have been earned after the date of the termination hereof until
the time of award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(c) The worth at the time of award of the amount by which the unpaid
Rent and other charges for the balance of the Term hereof after the time of award exceeds the amount
of such rental loss that Tenant proves could be reasonably avoided; plus
(d) Any other amount necessary to compensate Lessor for all the
detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom, including, but not limited
to, the cost of recovering possession of the Premises, expenses of reletting, including necessary
repair, renovation and alteration of the Premises, reasonable attorneys' fees, expert witness costs; plus
(e) Subject to the rights of any Leasehold Mortgagees, the funds in the
Replacement Reserve Fund; plus
(f) Any other amount which Lessor may by law hereafter be permitted to
recover from Tenant to compensate Lessor for the detriment caused by Tenant’s default as permitted
under applicable California law.
11.2.2. Continue Lease in Effect. Lessor may continue this Lease in effect without
terminating Tenant’s right to possession and to enforce all of Lessor's rights and remedies under this
Lease, at law or in equity, including the right to recover the Rent as it becomes due under this Lease;
provided, however, that Lessor may at any time thereafter elect to terminate this Lease for the
underlying Event(s) of Default by notifying Tenant in writing that Tenant’s right to possession of the
Premises has been terminated.
11.2.3. Removal of Personal Property Following Termination of Lease. Lessor
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shall have the right, following a termination of this Lease and Tenant’s rights of possession of the
Premises under Section 11.2.1 above, to re-enter the Premises and, subject to applicable law, to
remove Tenant’s personal property from the Premises. Such property may be removed and stored in a
public warehouse or elsewhere at the cost of and for the account of Tenant, or disposed of without
such storage, in accordance with applicable California law.
11.3 Lessor’s Right to Cure Tenant Defaults. If Tenant shall have failed to cure, after
expiration of the applicable time for curing, a particular default under this Lease, Lessor may at their
election, but are not obligated to, make any payment required of Tenant under this Lease or perform
or comply with any term, agreement or condition imposed on Tenant hereunder, and the amount so
paid plus the reasonable cost of any such performance or compliance plus interest on such sum at the
Interest Rate from the date of payment, performance or compliance until reimbursed shall be deemed
to be Additional Rent payable by Tenant on Lessor’s demand. Tenant’s failure to reimburse the
Agency within 30 days of Lessor’s demand shall constitute an Event of Default under this Lease. No
such payment, performance or compliance shall constitute a waiver of default or of any remedy for
default, or render Agency liable for any loss or damage resulting from the same except to the extent
caused by the gross negligence or willful misconduct of Lessor or Lessor Party.
11.4 Lessor’s Default. Lessor shall not be considered to be in default under this Lease
unless Tenant has given Lessor written notice specifying the default, and either (i) as to monetary
defaults, Lessor have failed to cure the same within ten (10) business days after written notice from
Tenant, or (ii) as to nonmonetary defaults, Lessor have failed to cure the same within thirty (30) days
after written notice from Tenant, or if the nature of Lessor’s nonmonetary default is such that more
than thirty (30) days are reasonably required for its cure, then such thirty (30) day period shall be
extended automatically so long as Agency commences a cure within such thirty (30) day period and
thereafter diligently pursues such cure to completion. Tenant shall have no right to offset or abate
alleged amounts owing by Agency under this Lease against any amounts owing by Tenant under this
Lease. Additionally, Tenant’s sole remedy for any monetary default shall be towards the Lessor’s
interest in the property and not to any other assets. Any and all claims or actions accruing hereunder
shall be absolutely barred unless such action is commenced within twelve (12) months of the event or
action giving rise to the default.
11.5 Remedies Cumulative. All rights and remedies of Lessor contained in this Lease
shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and
Lessor shall have the right to pursue any one or all of such remedies or any other remedy or relief
which may be provided by law, whether or not stated in this Lease.
11.6 Waiver by Lessor. No delay or omission of Lessor to exercise any right or remedy
shall be construed as a waiver of such right or remedy or any defaul t by Tenant hereunder. The
acceptance by Lessor of Rent or any other sums hereunder shall not be (a) a waiver of any preceding
breach or default by Tenant of any provision thereof, other than the failure of Tenant to pay the
particular rent or sum accepted, regardless of Lessor’s knowledge of such preceding breach or default
at the time of acceptance of such rent or sum, or (b) waiver of Lessor’s right to exercise any remedy
available to Lessor by virtue of such breach or default. No act or thing done by Agency’s agents
during the term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and signed by Lessor.
11.7 Reserved.
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11.8 Conditions Deemed Reasonable. Tenant acknowledges that each of the conditions
to a Transfer, and the rights of Lessor set forth in this Article X in the event of a Transfer is a
reasonable restriction for the purposes of California Civil Code Section 1951.4.
11.9 Waiver by Tenant. Tenant’s waiver of any breach by Lessor of any term, covenant
or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the
same or any other term, covenant or condition herein contained.
11.10 Tenant Covenants and Agreements. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s
sole cost and expenses and without any abatement of Rent. If Tenant shall fail to pay any sum of
money, other than Rent required to be paid by it hereunder, or shall fail to perform any other act on
its part to be performed hereunder, or to provide any insurance or evidence of insurance to be
provided by Tenant within the time period required under this Lease, then in addition to any other
remedies provided herein, Lessor may, but shall not be obligated to do so, and without waiving or
releasing Tenant from any obligations of Tenant, make any such payment or perform any such act on
Tenant’s part to be made or performed as provided in this Lease or to provide such insurance. Any
payment or performance of any act or the provision of any such insurance by Lessor on Tenant’s
behalf shall not give rise to any responsibility of Lessor to continue making the same or similar
payments or performing the same or similar acts. All costs, expenses, and other sums incurred or
paid by Lessor in connection therewith, together with interest at the Interest Rate from the date
incurred or paid by Lessor, shall be deemed to be Additional Rent hereunder and shall be paid by
Tenant within thirty (30) days of receipt of a demand and invoice from Lessor, and Tenant’s failure
to pay the Lessor, as stated herein, shall constitute an Event of Default under this Lease.
ARTICLE XII
HOLDING OVER
If Tenant fails to surrender the Premises and the Improvements as stated herein, and Lessor
shall take legal action to cause Tenant’s eviction from the Premises and is successful in such action,
Tenant shall be responsible for all costs and expenses, inclu ding reasonable attorney’s fees and costs,
incurred by Agency in connection with such eviction action; Tenant shall also indemnify and hold
Lessor harmless from all loss or liability or reasonable attorney’s fees and costs, including any claim
made by any succeeding tenant, incurred by Agency founded on or resulting from such failure to
surrender.
ARTICLE XIII
ESTOPPEL CERTIFICATES
At any time and from time to time, within ten (10) business days after written request by
either Agency or Tenant (the “requesting party”), the other Party (the “responding party”) shall
execute, acknowledge and deliver an estoppel certificate addressed to the requesting party, and/or to
such other beneficiary (as described below) as the requesting party shall request, certifying (i) th at
this Lease is in full force and effect, (ii) that this Lease is unmodified, or, if there have been
modifications, identifying the same, (iii) the dates to which Rent has been paid in advance, (iv) that,
to the actual knowledge of the responding party, there are no then existing and uncured defaults
under the Lease by either Agency or Tenant, or, if any such defaults are known, identifying the same,
and (v) any other factual matters (which shall be limited to the actual knowledge of the responding
party) as may be reasonably requested by the requesting party. Such certificate may designate as the
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beneficiary thereof the requesting party, and/or any third party having a reasonable need for such a
certificate (such as, but not limited to, a prospective purchaser, transferee or lender) and any such
certificate may be relied upon by the Parties.
ARTICLE XIV
FORCE MAJEURE
Unless otherwise specifically provided herein, the period for performance of any
nonmonetary obligation by either Party shall be extended by the p eriod of any delay in performance
caused by Acts of God, strikes, boycotts, lock-outs, inability to procure materials not related to the
price thereof, failure of electric power, riots, civil unrest, acts of terrorism, insurrection, war,
pandemic, declaration of a local, state or national emergency, weather that could not have reasonably
been anticipated, market conditions, changes in the Laws which would prevent the Premise from
being operated in accordance with this Lease, or other reasons beyond the reasonable control of
Agency, Tenant, or their respective agents or representatives (collectively, “Force Majeure
Events”). In no event, however, shall Force Majeure Events include the financial inability of a Party
to this Lease to pay or perform its obligations hereunder. Further, nothing herein shall extend the
time for performance of any monetary obligation owing under this Lease (including Tenant’s
obligation to pay Rent owing hereunder).
ARTICLE XV
RECORDS AND ACCOUNTS
15.1 Financial Statements. Within one hundred eighty (180) after the end of each
accounting year, Tenant shall at his own expense submit to Auditor-Controller and the Agency a
balance sheet and income statement prepared by a Certified Public Accountant (“CPA”) who is a
member of the American Institute of Certified Public Accountants (“AICPA”) and the California
Society of CPAs, reflecting business transacted on or from the Premises during the preceding
accounting year. The Certified Public Accountant must attest that the balance sheet and income
statement submitted are an accurate representation of Tenant's records as reported to the United
States of America for income tax purposes. At the same time, Tenant shall submit to Auditor -
Controller and Agency a statement certified as to accuracy by a Public Accountant who is a member
of AICPA and the California Society of CPAs, wherein the total Gross Receipts for the accounting
year are classified according to the categories of business established for percentage rent and listed in
Section 3.4.1(d) and for any other business conducted on or from the Premises. Tenant shall provide
Lessor with copies of any CPA's management letters prepared in conjunction with their audits of
Tenant's operations from the Premises. Copies of management letters shall be provid ed directly to
Lessor by the CPA at the same time Tenant’s copy is provided to Tenant. In the event that when
such financial statements are submitted, the Tenant has a budget for the following accounting year,
Tenant, at the same time, shall also provide Lessor with such budget.
15.1.1. Tenant acknowledges its understanding that any and all of the Financial
Statement submitted to the Lessor pursuant to this Lease become Public Records and may be subject
to public inspection and copying pursuant to §§ 6250 et. seq. of the California Government Code.
15.1.2. All Tenant's books of account and records and supporting source documents
related to this Lease or to business operations conducted within or from the Premises shall be kept
and made available at one location within the limits of the County unless an alternative location is
approved in writing by the Lessor. Lessor shall, through their duly authorized agents or
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representatives, have the right to examine and audit said books of account and records and supporting
source documents at any and all reasonable times for the purpose of determining the accuracy thereof
in connection with such Sections of this Lease as the Parties mutually and reasonably agree the audit
is relevant thereto.
15.2 Reports. In the event that the Tenant commissions, requests or is required to
produce any reports related to the physical condition of the Improvements or Premises, Tenant shall
submit copies of such reports to Lessor along with the financial statements required above in Section
15.1.
ARTICLE XVI
OPERATIONAL OBLIGATIONS OF TENANT
16.1 Standards of Operation.
16.1.1. Tenant shall operate the Premises in a manner reasonably comparable to other
comparable facilities or businesses within the City of Santa Ana. Tenant shall at all times during the
Term cause to be provided adequate security measures to reasonably protect persons and property on
the Premises.
16.1.2. The ultimate purpose of this Lease is to permit the construction and operation
of a multifamily affordable residential rental development, including permanent supportive housing,
in accordance with Section 4.1.1. Accordingly, Tenant covenants and agrees to operate said
Premises fully and continuously to accomplish said purposes and not to abandon or vacate the
Premises at any time.
16.1.3. The facilities on the Premises shall be operated during normal business hours,
subject to any temporary interruptions in operations or closures due to ordinary maintenance and
repair and any Force Majeure Event, defined in Article XIV above.
16.2 Protection of Environment. Tenant shall take all reasonable measures available to:
16.2.1. Avoid any pollution of the atmosphere or waste caused by or originating in,
on, or about Tenant’s facilities.
16.2.2. Maintain a reasonable noise level on the Premises so that persons in the
general neighborhood will be able to comfortably enjoy the other facilities and amenities in the area.
16.2.3. Prevent the light fixtures of the Premises from emitting light that could
negatively affect the operation of cars, boats, or airplanes in the area.
16.2.4. Prevent all pollutants from Tenant’s operations on the Premises from being
discharged, including petroleum products of any nature, except as may be permitted in accordance
with any applicable permits or as permitted by applicable Law. Tenant and all of Tenant’s agents,
employees and contractors shall conduct operations under this Lease so as to ensure that pollutants
do not enter the municipal storm drain system (including but not limited to curbs and gutters that are
part of the street systems), or directly impact receiving waters (including but not limited to rivers,
creeks, streams, estuaries, lakes, harbors, bays and the ocean), except as may be permitted by any
applicable permits or as permitted by applicable law.
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16.2.5. The Lessor may enter the Premises in accordance with Section 4.5 and/or
review Tenant records at all reasonable times to assure that activities conducted on the Premises
comply with the requirements of this Section.
16.3 On-Site Manager. Tenant shall employ a competent manager who shall be
responsible for the day-to-day operation and level of maintenance, cleanliness, and general order for
the Premises. Such person shall be vested with the authority of Tenant with respect to the
supervision over the operation and maintenance of the Premises, including the authority to enforce
compliance by Tenant’s agents, employees, concessionaires, or licensees with the terms and
conditions of this Lease and any and all rules and regulations adopted hereunder. Tenant shall notify
Lessor in writing of the name of the Manager currently so employed as provided in Section 19.20 of
this Lease.
16.4 Policies and Procedures to be Established by Tenant. Prior to the completion of
construction, Tenant shall submit to Lessor proposed policies and procedures pertinent to the
operation of the multifamily affordable residential rental development and manner of providing the
uses required by this Lease (“Policies and Procedures”).
ARTICLE XVII
LEASEHOLD MORTGAGES
17.1 Definitions. The following definitions are used in this Article (and in other Sections
of this Lease):
17.1.1. “Leasehold Estate” shall mean Tenant’s leasehold estate in and to the
Premises, including Tenant’s rights, title and interest in and to the Premises and the Improv ements,
or any applicable portion thereof or interest therein.
17.1.2. “Leasehold Foreclosure Transferee” shall mean any person (which may,
but need not be, a Leasehold Mortgagee) which acquires the Leasehold Estate pursuant to a
foreclosure, assignment in lieu of foreclosure or other enforcement of remedies under or in
connection with a Leasehold Mortgage.
17.1.3. “Leasehold Mortgage” shall mean and includes a mortgage, deed of trust,
security deed, conditional deed, deed to secure debt or any other security instrument (including any
assignment of leases and rents, security agreement and financing statements) held by a Lender by
which Tenant’s Leasehold Estate is mortgaged to secure a debt or other obligation, including a
purchase money obligation.
17.1.4. “Leasehold Mortgagee” shall mean a Lender which is the holder of a
Leasehold Mortgage.
17.1.5. “Tenant” shall mean all of the following: (i) the Tenant under this Lease; (ii)
an approved assignee, transferee or subtenant of the Tenant under this Lease who is or becomes
directly and primarily liable to Lessor; and (iii) any further assignee, transferee or subtenant of any of
the parties listed in (ii) who is or becomes directly and primarily liable to Lessor.
17.2 Tenant’s Right to Encumber Leasehold Estate; No Right to Encumber Lessor’s
Fee Interest. Provided that an Event of Default has not occurred and is continuing, Tenant may, at
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any time during the Term of this Lease (with consent of Lessor after prior written notice providing
evidence that all requirements of this Lease have been complied with, which consent shall not be
unreasonably withheld, conditioned or delayed), encumber all or any portion of Tenant’s Leasehold
Estate with one (1) or more Leasehold Mortgages; provided, however:
17.2.1. Such Leasehold Mortgage(s) (as of the date recorded) shall not exceed (a) if
recorded before completion of the Initial Improvements, One Hundred Percent (100%) of the costs of
the Initial Improvements, or (b) if recorded after completion of the Initial Improvements, eighty
percent (80%) of the Leasehold Estate value (including the value of all improvements) after
completion;
17.2.2. That Tenant shall not have the power to encumber, and no Leasehold
Mortgage shall encumber, Lessor’s Fee Interest;
17.2.3. Except as expressly provided in this Lease, the Leasehold Mortgage and all
rights acquired under it shall be subject to each and all of the covenants, conditions, and restrictions
set forth in this Lease and to all rights and interests of Lessor hereunder; and
17.2.4. Nothing in this Lease shall be construed so as to require or result in a
subordination in whole or in part in any way of the Lessor’s Fee Interest to any Leasehold Mortgage;
17.2.5. Except as otherwise expressly provided herein, in the event of any conflict
between the provisions of this Lease and the provisions of any such Leasehold Mortgage, the
provisions of this Lease shall control; and
17.2.6. Lessor’s prior consent shall not be required with respect to any Leasehold
Mortgage that constitutes a “Senior Loan” (as defined in the Agency Loan Agreement ).
Tenant’s encumbrance of its Leasehold Estate with a Leasehold Mortgage, as provided in this
Section 17.2, shall not constitute an assignment or other Transfer under Article X or otherwise, nor
shall any Leasehold Mortgagee, as such, be deemed to be an assi gnee or transferee of this Lease or of
the Leasehold Estate so as to require such Leasehold Mortgagee, as such, to assume the Tenant’s
obligations and liabilities under this Lease.
Notwithstanding the foregoing, if any Leasehold Mortgagee (or its nominee) acquires title to
the Premises by foreclosure or deed in lieu thereof, such transfer shall be deemed an Excluded
Transfer for purposes of this Lease.
17.3 Notification to Lessor of Leasehold Mortgage. Tenant or any Leasehold
Mortgagee shall, prior to making any Leasehold Mortgage, provide Lessor with written notice of
such Leasehold Mortgage and the name and address of the Leasehold Mortgagee. At the time of
notice, Tenant or such Leasehold Mortgagee shall furnish to Lessor a complete copy of any trust
deed and note to be secured thereby, together with the name and address of the holder thereof.
Thereafter, Tenant or any Leasehold Mortgagee shall notify Lessor of any change in the identity or
address of such Leasehold Mortgagee. Lessor shall be entitled to rely upon the addresses provided
pursuant to this Section for purposes of giving any notices required by this Article XVII.
17.4 Notice and Cure Rights of Leasehold Mortgagees With Respect to Tenant
Defaults. Lessor, upon delivery to Tenant of any notice of a default or demand for payment by
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Tenant under this Lease or a matter as to which Lessor may predicate or claim a default, will
promptly deliver a copy of such notice to each Leasehold Mortgagee. Each notice or demand
required to be given by Lessor to a Leasehold Mortgagee under this Lease shall be in writing and
shall be given by certified or registered mail, postage prepaid, return receipt requested, to such
Leasehold Mortgagee at the address(es) provided by such Leasehold Mortgagee, as applicable, to
Lessor from time to time in writing and shall be effective upon receipt (or refusal to accept receipt).
No notice or demand given by Lessor to Tenant shall be effective until the duplicate copy of such
notice or demand to the Tenant shall have been effectively given to each Leasehold Mortgagee in
accordance with this Lease. From and after the date such notice has been given to any Leasehold
Mortgagee, such Leasehold Mortgagee shall have the same cure period for such default (or act or
omission which is the subject matter of such notice) that is provided to Tenant under this Lease or as
otherwise agreed upon by Agency and the Tenant, to commence and/or complete a cure of such
default (or act or omission which is the subject matter of such notice). Lessor s hall accept any and
all performance by or on behalf of any Leasehold Mortgagee(s), including by any receiver obtained
by any Leasehold Mortgagee(s), as if the same had been done by Tenant. Tenant authorizes each
Leasehold Mortgagee to take any such action at such Leasehold Mortgagee’s option, and hereby
authorizes any Leasehold Mortgagee (or any receiver or agent) to enter upon the Premises for such
purpose.
17.5 Limitation on Lessor’s Termination Right. If following the delivery of notice
pursuant to Section 17.4, above, the default by Tenant continues and is not cured by Tenant (or any
Leasehold Mortgagee as allowed under Section 17.4, above), and such failure entitles Agency to
terminate this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall notify in
writing each and every Leasehold Mortgagee who has complied with Section 17.3 of Lessor’s intent
to so terminate at least sixty (60) days in advance of the proposed effective date of such termination.
If any Leasehold Mortgagee, within such sixty (60) day period, (i) notifies Lessor of such Leasehold
Mortgagee’s desire to cure such default and initiates such cure and (ii) pays or cause to be paid the
amount that is necessary to cure any monetary default as stated in such notice, if any, then Section
17.6 shall apply. The Lessor, at its sole discretion, may permit such additional time as necessary for
any Leasehold Mortgagee to commence the cure or make payment(s), as stated herein. If any
Leasehold Mortgagee fails to respond to said notice of termination within the allotted sixty (60) days
as consistent with the conditions of this Section 17.5, Lessor are entitled to immediately terminate
this Lease.
17.6 Leasehold Mortgagee Foreclosure Period. If any Leasehold Mortgagee complies
with Section 17.5 above, then the following provisions shall apply:
17.6.1. If Lessor’s notice under Section 17.5 specifies only monetary Events of
Default as the basis for Lessor’s election to terminate this Lease, and Leasehold Mortgagee has fully
paid the monetary amount designated by Lessor in its notice, then such payment shall be deemed to
have cured the Event of Default. If Lessor’s notice under Section 17.5 specifies both monetary and
non-monetary Events of Default or non-monetary Events of Default as the basis for Lessor’s election
to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by
Lessor in its notice, as applicable, then the date of termination specified in Lessor’s notice shall be
extended for a period of twelve (12) months, provided that such Leasehold Mortgagee shall, during
such twelve (12) month period:
(a) pay or cause to be paid all Rent under this Lease as the same
becomes due (subject to the notice and cure rights expressly set forth herein); and
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(b) continue (subject to any stay as described in Section 17.6.2 below)
its good faith efforts to perform (and complete performance of) all of Tenant’s nonmonetary
obligations under this Lease, excepting nonmonetary obligations (whether or not a default exists
with respect thereto) that are not then reasonably susceptible of being cured by Leasehold
Mortgagee; and
(c) commence and pursue with reasonable diligence until completion
(subject to any stay as described in Section 17.6.2 below) a judicial or nonjudicial foreclosure or
other enforcement of remedies under its Leasehold Mortgage.
17.6.2. In the event of a judicial or non-judicial foreclosure, the twelve (12) month
period described in Section 17.6.1, above, shall automatically be extended by the length of any delay
caused by any stay (including any automatic stay arising from any bankruptcy or insolvency
proceeding involving Tenant), injunction or other order arising under applicable Laws or issued by
any court (which term as used herein includes any other governmental or quasi -governmental
authority having such power) (the foregoing being collectively referred to as a “Stay”). Further,
Leasehold Mortgagee’s obligations stated in Section 17.6.1(b) and (c) shall be automatically
suspended during any period that any Stay prevents Leasehold Mortgagee from taking any such
actions. Nothing herein, however, shall be construed to extend this Lease beyond the Term hereof
nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after the Event of
Default has been cured. If the Event of Default has been cured and the Leasehold Mortgagee shall
discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if
Tenant had not defaulted under this Lease.
17.6.3. In the event the Leasehold Mortgage requires a new lease between the Lessor
and the Leasehold Mortgagee, Lessor shall enter into such new lease with the Leasehold Mortgagee
pursuant to Section 17.7, below, provided Lessor are provided with the necessary and adequate
documents related to the new lease requirements in the Leasehold Mortgage as described in Section
17.7.
17.6.4. So long as any Leasehold Mortgagee is complying with Sections 17.6.1 and
17.6.2 above, then upon the acquisition of Tenant’s Leasehold Estate by a Leasehold Foreclosure
Transferee, this Lease shall continue in full force and effect as if Tenant had not defaulted under this
Lease; provided that no Leasehold Foreclosure Transferee shall have any liability for the
performance of any of the Tenant’s obligations under this Lease until the Leasehold Foreclosure
Transferee has acquired the Tenant’s interest under the Lease, and then the Leasehold Foreclosure
Transferee shall be liable for the performance of only those obligations of the Tenant arising from
and after the effective date of the Leasehold Foreclosure Transferee’s acquisition of the Tenant’s
Leasehold Estate. Any such Leasehold Foreclosure Transferee shall be deemed to be an assignee or
transferee and shall be deemed to have agreed to perform all of the terms, covenants and conditions
on the part of the Tenant to be performed hereunder from and after the effective date on which such
Leasehold Foreclosure Transferee acquires title to the Leasehold Estate, but only for so long as such
purchaser or assignee is the owner of the leasehold estate.
17.6.5. Any Leasehold Mortgagee (or its designee) that becomes a Leasehold
Foreclosure Transferee, upon acquiring title to Tenant’s Leasehold Estate without obtaining Lessor’s
consent and provided it is not in default of any of the provisions of this Lease, shall have a one-time
right to assign the Leasehold Estate to an assignee (a) which is an Affiliate of the Leasehold
Foreclosure Transferee, or (b) which has substantial experience, or will employ a property
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management company with substantial experience, managing, maintaining and operating affordable
housing developments like that on the Premises. Upon such assignment, the Leasehold Foreclosure
Transferee shall automatically be released of all obligations thereafter accruing under this Lease,
provided that, substantially concurrently with such assignment, the assignee delivers to Lessor a
written agreement assuming Tenant’s obligations under the Lease thereafter accruing. Any
subsequent Transfers occurring after the one-time assignment permitted under this Section shall be
subject to Article X.
17.7 Leasehold Mortgagee’s Right to New Lease.
17.7.1. In the event of any termination of this Lease (including any termination
because of an Event of Default, or because of any rejection or disaffirmance of this Lease pursuant to
bankruptcy law or any other law affecting creditor’s rights, but other than by reason of a Total
Taking), Lessor shall give prompt written notice of such termination to each Leasehold Mortgagee
and shall (subject to Section 17.8 below if more than one Leasehold Mortgagee then exists) enter into
a new lease (“New Lease”) of the Premises with the Leasehold Mortgagee holding the Leasehold
Mortgage that has the most senior lien priority, in accordance with Section 17.8 below, or its
designee, upon notice to Lessor by such Leasehold Mortgagee. The New Lease shall commence as
of its effective date and shall continue for the remainder of the scheduled Term of this Lease, at the
same Rent that is payable under this Lease, and on the same terms, c onditions, covenants, restrictions
and reservations that are contained in this Lease (including any extension options, purchase options
and rights of first refusal, if any, provided for in this Lease), and subject to the rights of any tenants
under residential subleases or other subtenants then in valid occupancy of the Premises and
Improvements and further subject to any then existing senior Leasehold Mortgagees; provided that,
substantially concurrently with the delivery of a notice by Leasehold Mortgagee requiring Lessor to
enter into a New Lease, Leasehold Mortgagee shall pay to Lessor all Rent or any other amounts
payable by Tenant hereunder which are then due and shall commence and proceed with diligence to
cure all nonmonetary defaults under this Lease, other than those nonmonetary defaults which are
personal to the foreclosed tenant and impossible for the Leasehold Mortgagee to remedy.
17.7.2. If such Leasehold Mortgagee elects to enter into a New Lease pursuant to
Section 17.7.1 above, then Agency and the Leasehold Mortgagee (or its designee) shall promptly
prepare and enter into a written New Lease; but until such written New Lease is mutually executed
and delivered, this Lease shall govern, from and after the giving of notice pursuant to Section 17.7.1
but prior to the execution of the New Lease, the Lessor’s and Leasehold Mortgagee's relationship
with respect to the Premises and the Improvements and the Leasehold Mortgagee shall (i) be entitled
to possession of the Premises and to exercise all rights of Tenant hereunder, (ii) pay to Lessor any
Rent accruing under the New Lease as it becomes owing, and (iii) perform or cause to be performed
all of the other covenants and agreements under this Lease. Further, at such time as the written New
Lease is mutually executed and delivered, Leasehold Mortgagee (or its designee) shall pay to Lessor
its reasonable expenses, including reasonable attorneys’ fees and costs, incurred in connection with
the preparation, execution and delivery of such written New Lease. In ad dition, upon execution of
any such New Lease, Lessor shall execute, acknowledge and deliver to such Leasehold Mortgagee
(or its designee) a grant deed, in recordable form, conveying to such Leasehold Mortgagee (or its
designee) fee title to all Improvements in the event that title to such Improvements have vested with
the Lessor.
17.7.3. In the event that Lessor receives any net income (i.e., gross income less gross
expenses on a cash basis), if any, from the Premises and Improvements during any period that Lessor
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may control the same, then the Leasehold Mortgagee under the New Lease shall be entitled to such
net income received by Lessor except to the extent that it was applied to cure any default of Tenant.
17.7.4. All rights and claims of Tenant under this Lease shall be subject and
subordinate to all right and claims of the tenant under the New Lease.
17.8 Multiple Leasehold Mortgages. If more than one Leasehold Mortgagee shall make
a written request upon Lessor for a New Lease in accordance with the provisions of Section 17.7,
then such New Lease shall be entered into pursuant to the request of the Leasehold Mortgagee
holding the Leasehold Mortgage that has the most senior lien priority.
Notwithstanding anything herein to the contrary, Lessor shall have no duty or obligation to resolve
any disputes or conflicting demands between Leasehold Mortgagees. In the event of any conflicting
demands made upon Agency by multiple Leasehold Mortgagees, Lessor may (subject to any
applicable court orders to the contrary) rely on the direction of the Leasehold Mortgagee whose
Leasehold Mortgage is recorded first in time in the Official Records of the County, as determined by
any national title company.
17.9 Condemnation and Insurance Proceeds. Notwithstanding anything to the contrary
contained herein, all condemnation proceeds (other than proceeds payable on account of the value of
the Lessor’s Fee Interest as encumbered by this Lease) or insurance proceeds shall be subject to and
paid in accordance with the requirements of the most senior (in order of lien priority) Leasehold
Mortgage, subject, however, to any requirement in this Lease that, to the extent not in conflict with
the terms of the applicable Leasehold Mortgage, such proceeds must be used to repair and restore the
Improvements to the Premises which were damaged or destroyed by such condemnation or casualty
(including, without limitation, as required in Article VII following a casualty and in Section 9.4.3
following a condemnation). The handling and disbursement of any such proceeds used to repair or
restore the Improvements to the Premises shall be subject to the requirements of such senior
Leasehold Mortgage.
17.10 Mortgagee Clauses. A standard mortgagee clause naming each Leasehold
Mortgagee may be added to any and all insurance policies required to be carried by Tenant
hereunder, provided that any such Leasehold Mortgagee shall hold and apply such insurance
proceeds subject to the provisions of this Lease.
17.11 No Waiver. No payment made to Lessor by a Leasehold Mortgagee shall constitute
agreement that such payment was, in fact, due under the terms of this Lease; and a Leasehold
Mortgagee having made any payment to Lessor pursuant to Agency’s wrongful, improper or
mistaken notice or demand shall be entitled to the return of any such payment or portion thereof.
17.12 Fees and Costs. Tenant agrees to reimburse Lessor for its reasonable attorneys' fees
and costs incurred in connection with Lessor’s review and/or approval of any documentation which
may be required in connection with any Leasehold Mortgage by Tenant as provided herein.
17.13 No Termination, Cancellation, Surrender or Modification. Without the prior
written consent of each Leasehold Mortgagee, (a) this Lease may not be terminated or can celled by
mutual agreement of Agency and Tenant, (b) Lessor may not accept the surrender this Lease or the
Leasehold Estate created hereunder without the consent of each Leasehold Mortgagee, and (c) this
Lease may not be amended, modified or supplemented (and any action taken in furtherance of any of
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the foregoing without the required consent of each Leasehold Mortgagee shall be void and of no
effect). In addition, if any term or provision of this Lease gives Tenant the right to terminate or
cancel this Lease, in whole or in part, no such termination or cancellation shall be or become
effective unless Tenant has first received approval in writing by each Leasehold Mortgagee.
17.14 Effect of Foreclosure upon Base Rent. Notwithstanding anything to the contrary
contained elsewhere in this Lease, (i) in no event shall any Leasehold Mortgagee (or its designee) be
required to pay or cure, in order to prevent the termination of this Lease, to exercise its cure rights
hereunder or to obtain a New Lease or otherwise, any Base Rent, and (ii) in no event shall any
Leasehold Mortgagee (or its designee) or its (or their) successors and assigns be required to pay or
cure any Base Rent which otherwise became due and payable prior to completion of any foreclosure
under any Leasehold Mortgage (or acceptance of any assignment or deed in lieu thereof).
ARTICLE XVIII
BEST MANAGEMENT PRACTICES
18.1 Tenant and all of Tenant’s, subtenant, agents, employees and contractors shall
conduct operations under this Lease so as to assure that pollutants do not enter municipal storm drain
systems, in violation of applicable Laws, which systems are comprised of, but are not limited to
curbs and gutters that are part of the street systems (“Stormwater Drainage System”), and to ensure
that pollutants do not directly impact “Receiving Waters” (as used herein, Receiving Waters
include, but are not limited to, rivers, creeks, streams, estuaries, lakes, harbors, bays and oceans).
18.2 The Santa Ana and San Diego Regional Water Quality Control Boards have issued
National Pollutant Discharge Elimination System (“NPDES”) permits (“Stormwater Permits”) to
the County of Orange, and to the Orange County Flood Control District (“District”) and cities within
Orange County, as co-permittees (hereinafter collectively referred to as “NPDES Parties”) which
regulate the discharge of urban runoff from areas within the County of Orange, including the
Premises leased under this Lease. The NPDES Parties have enacted water quality ordinances that
prohibit conditions and activities that may resul t in polluted runoff being discharged into the
Stormwater Drainage System.
18.3 To assure compliance with the Stormwater Permits and water quality ordinances, the
NPDES Parties have developed a Drainage Area Management Plan (“DAMP”) which includes a
Local Implementation Plan (“LIP”) for each jurisdiction that contains Best Management Practices
(“BMPs”) that parties using properties within Orange County must adhere to. As used herein, a
BMP is defined as a technique, measure, or structural control that is u sed for a given set of conditions
to manage the quantity and improve the quality of stormwater runoff in a cost effective manner.
These BMPs are found within the District and/or County’s LIP in the form of Model Maintenance
Procedures and BMP Fact Sheets (the Model Maintenance Procedures and BMP Fact Sheets
contained in the DAMP/LIP shall be referred to hereinafter collectively as “BMP Fact Sheets”) and
contain pollution prevention and source control techniques to eliminate non-stormwater discharges
and minimize the impact of pollutants on stormwater runoff.
18.4 BMP Fact Sheets that apply to uses authorized under this Lease include the BMP
Fact Sheets that are attached hereto as Exhibit C. These BMP Fact Sheets may be modified during
the term of the Lease as required to comply with Laws; and the Lessor shall provide Tenant with any
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such modified BMP Fact Sheets. Tenant, its agents, contractors, representatives and employees and
all persons authorized by Tenant to conduct activities on the Premises shall, throughout the term of
this Lease, comply with the BMP Fact Sheets as they exist now or are modified to comply with
Laws, and shall comply with all other requirements of the Stormwater Permits, as they exist at the
time this Lease commences or as the Stormwater Permits may be modified. Tenant agrees to
maintain current copies of the BMP Fact Sheets on the Premises throughout the term of this Lease.
The BMPs applicable to uses authorized under this Lease must be performed as described within all
applicable BMP Fact Sheets.
18.5 Tenant may propose alternative BMPs that meet or exceed the pollution prevention
performance of the BMP Fact Sheets. Any such alternative BMPs shall be submitted to the Lessor
for review and approval prior to implementation.
18.6 Lessor may enter the Premises and/or review Tenant’s records at any reasonable
time during normal business hours to ensure that activities conducted on the Premises comply with
the requirements of this Section. Tenant may be required to implement a self-evaluation program to
demonstrate compliance with the requirements of this Section.
ARTICLE XIX
GENERAL CONDITIONS & MISCELLANEOUS PROVISIONS
19.1 Signs. Tenant agrees not to construct, maintain, or allow any signs, banners, flags,
etc., upon the Premises except (a) as approved in writing in advance by Lessor, which approval may
be withheld in the sole and absolute discretion of the Lessor, or (b) required by any of Tenant’s
lenders, provided that any such signage is in compliance with all applicable Laws. Tenant further
agrees not to construct, maintain, or allow billboards or outdoor advertising signs upon the Premises.
Unapproved signs, banners, flags, etc., may be removed by Lessor without prior notice to Tenant.
19.2 Nondiscrimination. Tenant agrees not to discriminate against any person or class of
persons by reason of sex, age (except as permitted by law), race, color, creed, physical handicap, or
national origin in employment practices and in the activities conducted pursuant to this Lease.
19.3 Taxes and Assessments. Pursuant to California Revenue and Taxation Code Section
107.6, Tenant is specifically informed that this Lease may create a possessory interest which is
subject to the payment of taxes levied on such interest. It is understood and agreed that all taxes and
assessments (including but not limited to said possessory interest tax) which become due and payable
upon the Premises or upon fixtures, equipment, or other property installed or constructed thereon,
shall be the full responsibility of Tenant, and Tenant shall cause said taxes and assessments to be
paid promptly.
19.4 Quitclaim of Interest upon Termination. Upon termination of this Lease for any
reason whatsoever in accordance with the terms of the Lease, Tenant shall execute, acknowledge,
and deliver to Lessor, within five (5) business days of a request from Lessor, a good and sufficient
deed, in a form as approved by the Lessor, whereby all right, title, and interest of Tenant in the
Premises is quitclaimed back to Lessor (“Quitclaim Deed”). The Quitclaim Deed shall then be
recorded by Lessor to remove any cloud on title created by this Lease.
19.5 Public Records. Tenant acknowledges that any written information submitted to
and/or obtained by Lessor from Tenant or any other person or entity having to do with or rel ated to
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this Lease and/or the Premises, either pursuant to this Lease or otherwise, is a “public record” open to
inspection and copying by the public pursuant to the California Public Records Act (Government
Code §6250, et seq.) (“CPRA”) as now in force or hereafter amended, or any Law in substitution
thereof, or otherwise made available to the public, unless such information is exempt from disclosure
pursuant to the applicable sections of CPRA or other law. In the event that a CPRA request is made
for any financial statements and records (not including Gross Receipts Statements) and the Lessor
determines that the records must be turned over, the Lessor will give Tenant fifteen (15) days’
written notice prior to turning over such records so that Tenant can take any necessary action,
including, but not limited to, injunctive relief, to prevent Lessor from turning over such financial
statements and records.
19.6 Attorney’s Fees. In any action or proceeding brought to enforce or interpret any
provision of this Lease, or where any provision hereof is validly asserted as a defense, each Party
shall bear its own attorneys’ fees and costs.
19.7 Payment Card Compliance. Should Tenant conduct credit/debit card transactions
in conjunction with Tenant’s business with the Agency, on behalf of the Agency, or as part of the
business that Tenant conducts on the Premises, Tenant covenants and warrants that it will during the
course of such activities be Payment Card Industry Data Security Standard (“PCI/DSS”) and
Payment Application Data Security Standard (“PA/DSS”) compliant and will remain compliant
during the entire duration of its conduct of such activities. Tenant agrees to immediately notify
Lessor in the event Tenant should ever become non-compliant at a time when compliance is required
hereunder, and will take all necessary steps to return to compliance and shall be compliant within ten
(10) days of the commencement of any such interruption. Upon demand by Lessor, Tenant shall
provide to Lessor written certification of Tenant’s PCI/DSS and/or PA/DSS compliance.
19.8 Right to Work and Minimum Wage Laws.
19.8.1. In accordance with the United States Immigration Reform and Control Act of
1986, Tenant shall require its employees that directly or indirectly service the Premises, pursuant t o
the terms and conditions of this Lease, in any manner whatsoever, to verify their identity and
eligibility for employment in the United States. Tenant shall also require and verify that its
contractors or any other persons servicing the Premises, pursuant to the terms and conditions of this
Lease, in any manner whatsoever, verify the identity of their employees and their eligibility for
employment in the United States.
19.8.2. Pursuant to the United States of America Fair Labor Standard Act of 1938, as
amended, and State of California Labor Code, Section 1178.5, Tenant shall pay no less than the
greater of the Federal or California Minimum Wage to all its employees that directly or indirectly
service the Premises, in any manner whatsoever. Tenant shall require and verify that all its
contractors or other persons servicing the Premises on behalf of the Tenant also pay their employees
no less than the greater of the Federal or California Minimum Wage.
19.8.3. Tenant shall comply and verify that its general contractor complies with all
other Federal and State of California laws for minimum wage, overtime pay, record keeping, and
child labor standards pursuant to the servicing of the Premises or terms and conditions of this Lease.
19.9 Declaration of Knowledge by Tenant. Tenant warrants that Tenant has carefully
examined this Lease and by investigation of the site and of all matters relating to the Lease
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arrangements has fully informed itself as to all existing conditions and limitations affecting the
construction of the Lease improvements and business practices required in the operation and
management of the uses contemplated hereunder.
19.10 Governing Law. This Lease shall be governed by and construed in accordance with
the laws of the State of California and the City.
19.11 Venue. The Parties hereto agree that this Lease has been negotiated and executed in
the State of California and shall be governed by and construed under the laws of California. In the
event of any legal action to enforce or interpret this Lease, 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. Furthermore, the Parties hereto specifically agree to waive any and all rights to request
that an action be transferred for trial to another .
19.12 Headings and Titles. The captions of the Articles or Sections of this Lease are only
to assist the Parties in reading this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
19.13 Interpretation. Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular. The masculine, femin ine and neuter
genders shall each include the other. In any provision relating to the conduct, acts or omissions of
Tenant, the term “Tenant” shall include Tenant’s agents, employees, contractors, invitees,
successors or others using the Premises with Tenant’s expressed or implied permission. In any
provision relating to the conduct, acts or omissions of Agency, the term “Agency” shall include
Agency’s agents, employees, contractors, invitees, successors or others using the Premises with
Agency’s expressed or implied permission.
19.14 Ambiguities. Each Party hereto has reviewed this Lease with legal counsel, and has
revised (or requested revisions of) this Lease based on the advice of counsel, and therefore any rules
of construction requiring that ambiguities are to be resolved against a particular Party shall not be
applicable in the construction and interpretation of this Lease or any exhibits hereto.
19.15 Successors and Assigns. Except as otherwise specifically provided in this Lease, all
of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective heirs, personal representatives, successors and
assigns.
19.16 Time is of the Essence. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.
19.17 Severability. If any term or provision of this Lease is held invalid or unenforceable
to any extent under any applicable law by a court of competent jurisdiction, t he remainder of this
Lease shall not be affected thereby, and each remaining term and provision of this Lease shall be
valid and enforceable to the fullest extent permitted by law.
19.18 Integration. This Lease, along with any exhibits, attachments or other documents
affixed hereto or referred to herein and related Agency permits, constitute the entire agreement
between Agency and Tenant relative to the leasing of the Premises. This Lease and such exhibits,
EXHIBIT 5
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attachments and other documents may be amended or revoked only by an instrument in writing
signed by Agency and Tenant. Agency and Tenant hereby agree that no prior agreement,
understanding or representation pertaining to any matter covered or mentioned in this Lease shall be
effective for any purpose.
19.19 Notices. All notices or other communications required or permitted hereunder shall
be in writing, and shall be personally delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or electronic mail, shall be deemed received upon the earlier of (a)
if personally delivered, the date of delivery to the address of the person to receive such notice, (b) if
mailed, three (3) business days after the date of posting by the United States post office, (c) if given
by electronic mail, when sent if before 5:00 p.m., otherwise on the next business day, or (d) if
delivered by overnight delivery, one (1) business day after mailing. Any notice, request, demand,
direction or other communication sent by electronic mail must be confirmed with in by letter mailed
or delivered within two business days in accordance with the foregoing.
Either Party may change the address for notices by giving the other Party at least ten (10) calendar
days’ prior written notice of the new address.
If to Lessor:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.0. Box 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
If to Tenant: c/o Shelter Providers of Orange County, Inc.
1130 N. Citrus St.
Orange, CA 92867
Attention: Executive Director
19.20 Amendments. This Lease is the sole and only agreement between the Parties
regarding the subject matter hereof; other agreements, either oral or written, are void. Any changes
to this Lease shall be in writing and shall be properly executed by all Parties.
19.21 Dispositions of Abandoned Property. If Tenant abandons or quits the Premises or
is dispossessed thereof by process of law or otherwise, title to any personal property belonging to and
left on the Premises thirty (30) days after such event shall, at Agency’s option, be deemed to have
been transferred to Agency. Agency shall have the right to remove and to dispose of such property
at Tenant’s cost, including the cost of labor, materials, equipment and an administrative fee equal to
fifteen percent (15%) of the sum of such costs without liability therefor to Tenant or to any person
claiming under Tenant, and shall have no need to account therefor. At Lessor's option, Lessor may
provide Tenant with an invoice for such costs, which invoice Tenant agrees to pay within fifteen (15)
days of receipt.
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19.22 Brokers. If Tenant has engaged a broker in this transaction pursuant to a separate
agreement, Tenant shall be solely responsible for the payment of any broker commission or similar
fee payable pursuant to such separate agreement. Tenant each hereby agree to indemnify and hold the
Lessor harmless from and against all costs, expenses or liabilities (including attorney fees and court
costs, whether or not taxable and whether or not any action is prosecuted to judgment) incurred by
the Agency in connection with any claim or demand by a person or entity for any broker’s, finder’s
or other commission or fee from the Agency in connection with the Tenant’s entry into this Lease
and the transactions contemplated hereby based upon any alleged statement or representation or
agreement of the Tenant. No broker, finder or other agent of any Party hereto shall be a third -party
beneficiary of this Lease
19.23 No Partnership. This Lease shall not be construed to constitute any form of
partnership or joint venture between Agency and Tenant. Agency and Tenant mutually acknowledge
that no business or financial relationship exists between them other than as Agency and Tenant, and
that Agency is not responsible in any way for the debts of Tenant or any other Party.
19.24 Authorization. Agency and Tenant (each, a “signing party”) each represents and
warrants to the other that the person or persons signing this Lease on behalf of the signing party has
full authority to do so and that this Lease binds the signing party. Concurrently with the exe cution of
this Lease, the Tenant shall deliver to the Lessor a certified copy of a resolution of the signing party’s
board of directors or other governing board authorizing the execution of this Lease by the signing
party.
19.25 Recording. This Lease itself shall not be recorded, but in the event that the Tenant
encumbers the leasehold as set forth in Article XVII, a memorandum hereof may be recorded in the
form of Exhibit D attached hereto (the “Memorandum”). The Memorandum may be executed
concurrently with this Lease and thereafter recorded in the Official Records of the Recorder on the
Effective Date of this Lease has occurred. Tenant shall be responsible for the payment of all charges
imposed in connection with the recordation of the Memorandum, including, without limitation, any
documentary transfer tax imposed in connection with this transaction and all recording fees and
charges.
19.26 Exhibits. This Lease contains the following exhibits, schedules and addenda, each of
which is attached to this Lease and incorporated herein in its entirety by this reference:
Exhibit A: Legal Description of the Premises
Exhibit B: Initial Improvements
Exhibit C: Best Management Practices Fact Sheets
Exhibit D: Form of Memorandum of Lease
19.27 Consent/Duty to Act Reasonably. Except as otherwise expressly provided herein,
whenever this Lease grants Agency and/or Tenant the right to take any action, grant any approval or
consent, or exercise any discretion, Agency and/or Tenant shall act reasonably and in good faith and
take no action which might result in the frustration of the other Party’s reasonable expectations
concerning the benefits to be enjoyed under this Lease.
19.28 Counterparts. For the convenience of the Parties to this Lease, this Lease may be
executed in several original counterparts, each of which shall together constitute but one and the
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same agreement. Original executed pages may be assembled together into one fully executed
document.
19.29 No Merger. The interests created by this Lease shall not be extinguished by merger
of any or all of the ownership interests the Premises or the Improvements in one person or entity.
19.30 Cooperation of Agency. Agency hereby agrees that (a) Agency staff shall be
responsible for administering the operation of the Project to insure it is being used in conformance
with this Lease, and (b) Agency staff shall serve as administrator of the Lease with the Tenant and
coordinate with the Tenant and third parties as reasonably necessary. Agency hereby agrees to work
cooperatively and expeditiously to provide written consent (or written refusal to provide consent) to
Tenant and the Leasehold Mortgagees.
[Signatures On Following Pages]
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9138-126780\1512539.3
IN WITNESS WHEREOF, the Parties have executed this Lease on the date first written above.
TENANT
SHELTER PROVIDERS OF ORANGE COUNTY,
INC. DBA HOMEAID ORANGE COUNTY, INC.
By: ____________________________
Gina R. Scott, Executive Director
APPROVED AS TO FORM:
SONIA CARAVALHO
AUTHORITY GENERAL COUNSEL
By: ________________________
Ryan O. Hodge, Assistant City Attorney
Date _______________________
APPROVED AS TO FORM:
COUNSEL
By: ________________________
Deputy
Date _______________________
LESSOR
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
a public body, corporate and politic
By: ________________________
Steven A. Mendoza, Executive Director
Date _______________________
EXHIBIT 5
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Santa Ana, County of Orange, State of California, described
as follows:
PARCEL 1: (APN: 398-303-04)
THE SOUTHWESTERLY 50.00 FEET OF LOTS 13, 14, 15 AND 16 I N BLOCK 66 OF
SANTA ANA EAST, AS
SHOWN ON A MAP RECORDED IN BOOK 10, PAGES 43 AND 44 OF
MISCELLANEOUS RECORDS OF LOS
ANGELES COUNTY, CALIFORNIA.
PARCEL 2: (APN: 398-303-05)
THE NORTHEASTERLY 50.00 FEET OF THE SOUTHWESTERLY 100.00 FEET OF
LOTS 13, 14, 15 AND 16
I N BLOCK 66 OF SANTA ANA EAST, AS SHOWN ON A MAP RECORDED IN BOOK
10, PAGES 43 AND 44
OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA.
PARCEL 3: (APN: 398-303-06)
THE EASTERLY 47 FEET OF THE SOUTHERLY 15 FEET OF LOT 14 AND THE
EASTERLY 47 FEET OF LOTS
15 AND 16, ALL I N BLOCK 66 OF "SANTA ANA EAST", CI TY OF SANTA ANA,
COUNTY OF ORANGE,
STATE OF CALI FORNI A, AS PER MAP THEREOF RECORDED I N BOOK 10
PAGES 43 AND 44 OF
MISCELLANEOUS MAPS RECORDS OF LOS ANGELES, CALIFORNIA.
PARCEL 4: (APN: 398-303-07)
THE EASTERLY 50 FEET OF LOT 13, THE NORTHERLY 10 FEET OF THE
EASTERLY 50 FEET OF LOT 14,
THE WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF THE SOUTHERLY 15
FEET OF LOT 14, AND THE
WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF LOTS 15 AND 16 I N BLOCK
66 OF SANTA ANA EAST,
IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN
BOOK 10, PAGES 43 AND 44 OF MISCELLANEOUS MAPS, OF LOS ANGELES
COUNTY.
EXHIBIT 5
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Santa Ana, County of Orange, State of California, described
as follows:
PARCEL 1: (APN: 398-303-04)
THE SOUTHWESTERLY 50.00 FEET OF LOTS 13, 14, 15 AND 16 I N BLOCK 66 OF
SANTA ANA EAST, AS
SHOWN ON A MAP RECORDED IN BOOK 10, PAGES 43 AND 44 OF
MISCELLANEOUS RECORDS OF LOS
ANGELES COUNTY, CALIFORNIA.
PARCEL 2: (APN: 398-303-05)
THE NORTHEASTERLY 50.00 FEET OF THE SOUTHWESTERLY 100.00 FEET OF
LOTS 13, 14, 15 AND 16
I N BLOCK 66 OF SANTA ANA EAST, AS SHOWN ON A MAP RECORDED IN BOOK
10, PAGES 43 AND 44
OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA.
PARCEL 3: (APN: 398-303-06)
THE EASTERLY 47 FEET OF THE SOUTHERLY 15 FEET OF LOT 14 AND THE
EASTERLY 47 FEET OF LOTS
15 AND 16, ALL I N BLOCK 66 OF "SANTA ANA EAST", CI TY OF SANTA ANA,
COUNTY OF ORANGE,
STATE OF CALI FORNI A, AS PER MAP THEREOF RECORDED I N BOOK 10
PAGES 43 AND 44 OF
MISCELLANEOUS MAPS RECORDS OF LOS ANGELES, CALIFORNIA.
PARCEL 4: (APN: 398-303-07)
THE EASTERLY 50 FEET OF LOT 13, THE NORTHERLY 10 FEET OF THE
EASTERLY 50 FEET OF LOT 14,
THE WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF THE SOUTHERLY 15
FEET OF LOT 14, AND THE
WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF LOTS 15 AND 16 I N BLOCK
66 OF SANTA ANA EAST,
IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN
BOOK 10, PAGES 43 AND 44 OF MISCELLANEOUS MAPS, OF LOS ANGELES
COUNTY.
EXHIBIT 5
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9138-126780\1512539.3
EXHIBIT B
INITIAL IMPROVEMENTS
The proposed Project includes the development of one residential building with 17 units surrounding
an interior courtyard. The Project includes 17 one-bedroom units with one unit being reserved as the
Manager’s Unit. Approximately 2,000 square feet of interior space will be used for offices for
supportive services, a lobby, and community areas.
The Project will be 100% Permanent Supportive Housing. Nine (9) of the units will be permanent
supportive housing for households earning no more than 30% of the Area Median Income; Seven (7)
of the units will be permanent supportive housing for households earning no more than 25% of the
Area Median Income; and one (1) of the units is reserved for an on-site manager. The unit mix and
rent restrictions are as follows, provided, however, the rent and income restrictions applicable to the
Project shall be set forth in and subject to the terms of the Loan Agreement:
Bedroom
Size
30%
AMI (PSH)
25%
AMI (PSH)
Manager’s
Unit Total Units
One-Bedroom 9 7 1 17
TOTAL 9 7 1 17
EXHIBIT 5
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EXHIBIT C
Best Management Practices
(“BMPs” Fact Sheets)
Best Management Practices can be found at: http://www.ocwatersheds.com/documents/bmp which
website may change from time to time.
BMPs apply to the TENANT's defined Premises and BMPs also apply to the TENANT’s Contractor
therefore TENANT shall cause Contractor to be responsible for implementing and complying with
all BMP Fact Sheet requirements that apply to construction activity wit h respect to the
Improvements, and also including, without limiting the generality of the foregoing, site preparation,
landscaping, installation of utilities, street construction or improvement and grading or filling in or
on the Premises. TENANT is to be aware that the BMP clause within this Lease, along with all
related BMP Exhibits, may be revised, and may incorporate more than what is initially being
presented in this Lease. Suggested BMPs Fact Sheets may include, but may not be limited to, the
following list shown below and can be found at:
http://www.ocwatersheds.com/documents/bmp/industrialcommercialbusinessesactivities (which
website may change from time to time):
IC3 Building Maintenance
IC4 Carpet Cleaning
IC6 Contaminated or Erodible Surface Areas
IC7 Landscape Maintenance
IC9 Outdoor Drainage from Indoor Areas
IC10 Outdoor Loading/Unloading of Materials
IC12 Outdoor Storage of Raw Materials, Products, and Containers
IC14 Painting, Finishing, and Coatings of Vehicles, Boats, Buildings, and Equipment
IC15 Parking & Storage Area Maintenance
IC17 Spill Prevention and Cleanup
IC21 Waste Handling and Disposal
IC22 Eating and Drinking Establishments
IC23 Fire Sprinkler Testing/Maintenance
IC24 Wastewater Disposal Guidelines
EXHIBIT 5
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EXHIBIT D
FORM OF MEMORANDUM OF LEASE
MEMORANDUM OF LEASE
This is a Memorandum of Lease (“Memorandum”) made and entered into as of this __________
day of __________, 20___, by and between the Housing Authority of the City of Santa Ana, a public
body, corporate and politic (the “Lessor”) and __________, (“Tenant”), residing at _________,
upon the following terms:
1. Lease. The provisions set forth in a written lease between the parties hereto dated __________
(“Lease”), are hereby incorporated by reference into this Memorandum.
2. Subject Premises. The Premises which are the subject of the Lease are more particularly
described as on Exhibit A, attached hereto
3. Effective Date of Lease. The Lease shall be deemed to have commenced on __________ (the
“Effective Date”) as set forth within the terms of the Lease.
4. Term. The Term of the Lease shall be Ninety-nine (99) years from the Effective Date as stated in
the written Lease.
5. Duplicate Copies of the originals of the Lease are in the possession of the Lessor and Tenant and
reference should be made thereto for a more detailed description thereof and for resolution of any
questions pertaining thereto. The addresses for Lessor and Tenant are as follows:
If to Lessor:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.0. Box 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
If to Tenant: c/o Shelter Providers of Orange County, Inc.
1130 N. Citrus St.
Orange, CA 92867
Attention: Executive Director
6. Purpose. It is expressly understood and agreed by all Parties that the sole purpose of this
Memorandum is to give record notice of the Lease; it being distinctly understood and agreed that said
Lease constitutes the entire lease and agreement between Lessor and Te nant with respect to the
EXHIBIT 5
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9138-126780\1512539.3
Premises and is hereby incorporated by reference. The Lease contains and sets forth additional rights,
terms, conditions, duties, and obligations not enumerated within this instrument which govern the
Lease. This Memorandum is for informational purposes only and nothing contained herein may be
deemed in any way to modify or vary any of the terms or conditions of the Lease. In the event of any
inconsistency between the terms of the Lease and this instrument, the terms of the Lease sh all
control. The rights and obligations set forth herein shall be binding upon and inure to the benefit of
the Parties hereto and their respective heirs, representatives, successors, and assigns.
EXHIBIT 5
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9138-126780\1512539.3
IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum pursuant to due
authorization on the dates herein acknowledged.
:
By: ______________________
Name: ______________________
Title: ______________________
AGENCY:
By: ______________________
Name: ______________________
Title: ______________________
TENANT:
By: ______________________
Name: ______________________
Title: ______________________
By: ______________________
Name: ______________________
Title: ______________________
EXHIBIT 5
1
9138-126780\1517029.2
RECORDING REQUESTED BY:
AND 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
________________________________________________________________________
Free Recording pursuant to
Government Code 27383
DENSITY BONUS HOUSING AGREEMENT
This DENSITY BONUS HOUSING AGREEMENT (“Agreement”), made and entered
into this day of , 2021, by and between the City of Santa Ana, a charter city
and municipal corporation of the State of California (“City”), and Shelter Providers of Orange
County, Inc., a California nonprofit corporation doing business as HomeAid of Orange County
(“Developer”). City and Developer are sometimes referred to collectively as the “Parties” and
individually as a “Party.”
RECITALS
A. The Housing Authority of the City of Santa Ana, a public body, corporate and
politic (“Housing Authority”) is the owner of that certain property located within the City of
Santa Ana, County of Orange, State of California, commonly known as 801, 807, 809 and 809 ½
East Santa Ana Boulevard, Santa Ana, California, 92701, and legally described as set forth in
Exhibit A attached hereto and incorporated herein by this reference as if set forth in full
(“Property”).
B. The Housing Authority desires to enter into an agreement for a long-term ground
lease of the Property with Developer and the Developer desires to lease and develop the Property
with the Project as defined herein, subject to approval of a long-term ground lease and associated
documentation.
C. Developer is proposing to develop an affordable rental residential community
consisting of seventeen (17) units with sixteen (16) units of permanent supportive housing for
homeless individuals, 1,120 square feet of group space, and a 389 square foot community room
on the Property, as more particularly set forth in Density Bonus Application No. 2020-02
(“Project”).
D. Santa Ana Municipal Code sections 41-1600, et seq. (“City Density Bonus for
Affordable Housing”), and California Government Code sections 65915, et seq. (“State Density
Bonus Law”), set forth a process to provide increased residential densities and incentives,
concessions, and waivers to property owners or developers who guarantee that a portion of their
residential development will be available to low income, very-low income, or senior (also known
EXHIBIT 6
2
9138-126780\1517029.2
as "qualified") households. These regulations are intended to materially assist the housing
industry in providing adequate and affordable housing for all economic segments of the
community and to provide a balance of housing opportunities for very-low income, low income
and senior households throughout the city.
E. The Project is proposing a total number of seventeen (17) residential units,
including sixteen (16) units for extremely-low income households and one manager’s unit.
Accordingly, the Developer is able to obtain an onsite parking standards incentive, concessions
and waivers pursuant to the California Government Code because the Project will include onsite
affordable units. Specifically, pursuant to California Government Code section 65915(p)(1), the
Developer is seeking an incentive to provide onsite parking at the ratio of 0.71 spaces per unit
and waivers and concessions for permitted building type, lot width and depth, tandem parking,
open space, landscape standards and density bonus pursuant to California Government Code
section 65915(d)(1) and (e)(1).
F. The Project complies with the affordable housing requirements set forth in the
State Density Bonus Law and City Density Bonus for Affordable Housing. For purposes of this
Agreement, the Project shall be the “housing development” as defined in the State Density
Bonus Law.
G. In light of the purpose of the State Density Bonus Law and City Density Bonus
for Affordable Housing, and the express provisions of Government Code section 65915(p), the
City has determined to grant Developer’s application for density bonus and related onsite
parking standards incentive, three concessions and waivers.
H. This Agreement, and the exhibits attached hereto and incorporated herein by
reference, are intended to set forth the terms and conditions for the implementation of the
Project’s requirement to provide affordable housing units in exchange for receiving the density
bonus incentive set forth herein.
NOW, THEREFORE, in consideration of the above recitals, which are incorporated
herein by this reference, and of the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. DEFINITIONS AND EXHIBITS
1.1 Definitions. In addition to the terms that may be defined elsewhere in this
Agreement, the following terms when used in this Agreement shall be defined as follows:
1.1.1 "Adjusted for family size appropriate to the unit" shall have the
meaning set forth by Health and Safety Code Section 50052.5(h).
1.1.2 "Affordable Rent" means the maximum Monthly Rent that may be
charged to and paid by an Eligible Household for the Affordable Units, as required by the terms
of this Agreement. The Affordable Rent shall be adjusted to reflect a reasonable utilities
EXHIBIT 6
3
9138-126780\1517029.2
allowance for utilities paid by the household using the Santa Ana Housing Authority Multi-
Family Housing Utility Allowance Schedule, and shall be updated no less than annually.
1.1.3 “Affordable Rent Schedule” means a rent schedule established as of the
date of issuance of an occupancy permit (exclusive of tenant utility payments or security
deposits) for the required number/percentage of the total number of units in the Project which are
to be rented or available for rent to Extremely-Low Income Tenants. Said Affordable Rent
Schedule shall be established at the time of the issuance of the occupancy permit (“Initial Rent
Schedule”) and shall be created in accordance with the Orange County, California Primary
Metropolitan Statistical Area (“PMSA”) as published by the California Department of Housing
and Community Development (“HCD”), adjusted for family size, and shall be updated no less
than annually.
1.1.4 "Affordable Units" means sixteen (16) units, which shall be comprised
of sixteen (16) one-bedroom units for Extremely-Low Income Tenants. Any change to the
number or distribution of Affordable Units is subject to City Manager approval.
1.1.5 "Agreement" means this Density Bonus Housing Agreement.
1.1.6 "Base Units" means the ten (10) Units that Developer would be
authorized to develop on the Property without application of the State Density Bonus Law.
1.1.7 "City" means the City of Santa Ana, California
1.1.8 "City Council" means the City Council of the City of Santa Ana.
1.1.9 "City Attorney" means the City Attorney for the City of Santa Ana.
1.1.10 "City Manager" means the City Manager for the City of Santa Ana.
1.1.11 "City's Planning Commission" means the Planning Commission for the
City of Santa Ana.
1.1.12 ''Density Bonus Housing Agreement Term" means the period during
which this Agreement shall be in full force and effect, as provided for in Section 6.1 below.
1.1.13 "Density Bonus Units" means the seven (7) Units in addition to the Base
Units that Developer shall develop or cause to be developed pursuant to the terms and conditions
of this Agreement, of which Developer would not be entitled to develop without providing the
Affordable Units.
1.1.14 "Developer" means Shelter Providers of Orange County, Inc., a
California nonprofit corporation doing business as HomeAid of Orange County and its permitted
successors and assigns to all or any part of the Property, Project or this Agreement.
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1.1.15 "Effective Date" means the date the Developer and the City shall record
or cause to be recorded in the Official Records for Orange County, California, an executed
original of this Agreement, pursuant to section 4.1 herein.
1.1.16 "Eligible Household" means a Household whose income does not exceed
the qualifying limit for an “Extremely-Low Income Tenant” as defined herein.
1.1.17 “Extremely-Low Income Tenant” means persons and families whose
income does not exceed thirty (30%) of the area median income for the Orange County,
California PMSA, adjusted for household size, as published by HCD.
1.1.18 "Household" means all persons residing in a Unit.
1.1.19 "Median Income" means the Orange County, California area median
income, adjusted for family size appropriate to the unit, as periodically published by HCD.
1.1.20 "Monthly Rent" means the total of monthly payments for: (a) use and
occupancy of each Affordable Unit and land and facilities associated therewith; (b) any
separately charged fees or service charges assessed by Developer which are required of all
tenants, other than security deposits, application fees or credit check fees; (c) a reasonable
allowance for an adequate level of service of utilities not included in (a) or (b) above, including
garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration
fuels, but not including telephone or cable service, to the extent applicable and charged to tenant;
and, (d) possessory interest, taxes or other fees or charges assessed for use of the land and
facilities associated therewith by a public or private entity other than Developer. In the event that
certain utility charges are paid by the landlord rather than the tenant, no utility allowance shall be
deducted from the rent for that type of utility charge.
1.1.21 "Project" means that certain affordable residential development as more
particularly described in Recital B and Section 2 of this Agreement.
1.1.22 "Property" means that certain real property more particularly described
in the legal description in Exhibit A and improvements thereon.
1.1.23 "State Density Bonus Law" means Government Code sections 65915, et
seq., as they exist on the Effective Date.
1.1.24 "Unit" means a residential dwelling unit within the Project to be
constructed or caused to be constructed by Developer pursuant to this Agreement.
1.1.25 "Unrestricted Units" means the Units within the Project to be
constructed or caused to be constructed by Developer to a Household without restriction.
1.1.26 “Very-Low Income Tenant” means persons and families whose income
does not exceed fifty (50%) of the area median income for the Orange County, California
PMSA, adjusted for household size, as published by HCD.
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1.2 Exhibits. The following documents are attached to, and by this reference made a
part of, this Agreement:
1.2.1 Exhibit A – Legal Description of the Property
1.2.2 Exhibit B – Tenant Verification
1.2.3 Exhibit C – Annual Tenant Recertification
1.2.4 Exhibit D – Annual Rental Housing Compliance Report
1.2.5 Exhibit E – Notice of Affordability Restrictions on Transfer of Property
2. DEVELOPMENT OF THE PROPERTY
2.1 Project. Developer shall develop, operate, and maintain, or cause the
development, operation and maintenance of, the Property as a seventeen (17) Unit rental
residential community, with sixteen (16) Affordable Units for Extremely Low Income Tenants.
2.2 Density Bonus. The Project shall have seventeen (17) Units, including sixteen
(16) Affordable Units, to be rented, occupied, operated, and maintained pursuant to the terms and
conditions of this Agreement. Developer understands and agrees that Developer is utilizing a
seventy percent (70%) density bonus increase provided by the State Density Bonus Law (10
Base Units x 70% = 7 State Density Bonus Units) for a total of 17 units. Although Developer has
a right to construct up to eight (8) State Density Bonus Units on the Property, Developer has
elected to construct or develop, or otherwise claim a right to construct or develop, no more than
seven (7) State Density Bonus Units on the Property.
2.3 Development Concessions, Incentives, and Waivers. As set forth in the City
entitlements, Developer petitioned for and is hereby granted the following concessions,
incentives, and waivers as part of the approval of Density Bonus 2020-02 for the Project:
2.3.1 The onsite parking standards for the Project shall be reduced from 2.25
parking spaces per unit to 0.71 spaces per unit pursuant to California Government Code sections
65915(p)(3)(a), which allows onsite parking at the ratio of 0.71 stall for one-bedroom units for a
total of twelve (12) onsite parking spaces for the Project, due to the affordability levels provided
at the Project and the unobstructed access of the Project to a major transit stop within one-half
mile.
2.3.2 Certain development standards for this Project shall be waived in
accordance with Government Code Section 65915(e)(1), such that the stacked dwelling building
type shall be a permitted building type for the project.
2.3.3 Certain development standards for this Project shall be waived in
accordance with Government Code Section 65915(e)(1), such that no trees shall be required
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along Garfield Street and less than one tree per 25 lineal feet shall be required along Santa Ana
Boulevard.
2.3.4 The lot width and lot depth requirements for this Project shall be reduced
in accordance with Government Code Section 65915 (d)(1), such that the minimum required lot
depth shall be 150 feet and the minimum required lot width shall be 100 feet.
2.3.5 The tandem parking requirements for this Project shall be allowed to
exceed the maximum allowable in accordance with Government Code Section 65915 (d)(1),
such that 83-percent of the parking spaces provided (10 of 12), shall be tandem parking spaces.
2.3.6 The common open space requirements for this Project shall reduce in
accordance with Government Code Section 65915 (d)(1), such that common open space shall be
provided as an 1,877-square-foot interior courtyard, or 12-percent of the lot size.
2.4 No Further Concessions, Incentives, or Waivers. Developer acknowledges and
agrees that the concessions, incentives, and waivers set forth in section 2.3 above fully satisfies
any duty City may have under the City Density Bonus for Affordable Housing, the Density
Bonus Law, or any other law or regulation to provide any density bonus incentive or to waive
any building, zoning, or other requirement in connection with a density bonus. By this
Agreement, Developer releases any and all claims Developer may have against City in any way
relating to or arising from City’s obligation to waive requirements of or provide development
incentives pursuant to the City Density Bonus for Affordable Housing and the Density Bonus
Law applicable to the Project.
2.5 Unrestricted Units. The Project, for purposes of this Agreement, may have no
more than one (1) Unrestricted Unit (i.e. – manager’s unit) comprised of one (1) one-bedroom
unit. Developer may alter the unit distribution of the Unrestricted Unit in Developer’s discretion,
provided that the Project has the minimum number of Affordable Units and the minimum
distribution thereof as specific in this Agreement.
2.6 Affordable Units. The Project, for purposes of this Agreement, shall have no less
than sixteen (16) Units, which shall be comprised of sixteen (16) one-bedroom units designated
as Affordable Units pursuant to the terms and conditions of this Agreement. The Affordable
Units shall be consistent with all City approvals, comparable in bedroom distribution and
amenities to the Unrestricted Units, and shall be located throughout the Project as required under
Santa Ana Municipal Code section 41-1602(c)(6).
2.7 Minimum Development Standards for Affordable Units. The Affordable Units
shall be constructed with the same exterior appearance and interior features, fixtures, and
amenities, and shall use the same type and quality of materials as provided for any Unrestricted
Units, regardless of whether such Unrestricted Units are in the Project.
2.8 Permits and Processing; Compliance with Laws. Developer, at its sole cost and
expense, or as otherwise set forth in a separate written agreement, shall secure or cause to be
secured any and all permits that may be required for development of the Project by City or any
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other federal, state, or local governmental entity having or claiming jurisdiction over the
Property or Project. Upon securing any and all permits, and all necessary financing and property
interests, Developer shall carry out and perform the development, operation, and maintenance of
the Project or cause the performance of the development, operation, and maintenance of the
Project, in conformity with all applicable federal, state, and local laws and regulations, and all
conditions of approval issued by the City Council and City's Planning Commission for the
Project. Any changes to the Project shall be reviewed by the City to determine compliance with
this Agreement. If any changes to the Project shall materially alter the ability of Developer to
comply with any terms of this Agreement in City’s sole determination, then City and Developer
shall meet and confer to address amendments and revisions to this Agreement as necessary.
2.9 Relocation Prior to Development of Project. If relocation is required prior to the
completion of development of the Project, Developer shall have the sole and exclusive
responsibility for providing relocation assistance and paying all relocation costs as may be
required to comply with applicable federal and state laws and regulations. In addition to any
other indemnity provided by Developer under this Agreement, Developer shall indemnify,
defend (with counsel of City's choosing and the consent of Developer, which shall not be
unreasonably withheld, and which may be joint defense counsel upon City's and Developer's
consent), and hold harmless City and all of its officials, officers, employees, representatives,
volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and
damages from any third party for relocation assistance, benefits and costs prior to the completion
of the development of the Project.
2.10 Local Sourcing Plan. Developer agrees to make a good faith effort to encourage
contractors and suppliers to hire and procure locally, to the extent that it is cost effective and
does not delay the overall project development schedule. Prior to issuance of a Building Permit,
Developer shall develop and submit or cause the development and submittal to the Community
Development Agency (the “CDA”) a local sourcing plan for the Project targeting, to the extent
feasible, the hiring of qualified workers, construction contractors, or the purchasing of goods
locally within the City of Santa Ana. The plan must be reviewed and approved by the CDA
which if not granted or denied within five (5) Business Days, shall be deemed approved (with
such approval not to be unreasonably withheld, conditioned or delayed) and be implemented for
the construction of the project prior to issuance of Building Permit.
2.11 Mechanic's Liens; Indemnification. Developer shall take all actions reasonably
necessary to remove any future mechanic's liens or other similar liens (including design
professional liens) against the Property or Project, or any part thereof, by reason of work, labor,
services, or materials supplied or claimed to have been supplied to Developer or caused by, at the
direction of, or on behalf of Developer. Prior to the recording of this Agreement (or
memorandum thereof) pursuant to Section 4.1 below, Developer shall provide evidence from the
Title Company of any new recordings against the Property or Project. City hereby reserves all
rights to post notices of non-responsibility and any other notices as may be appropriate upon a
filing of a mechanic's lien. In addition to any other indemnity provided by Developer under this
Agreement, Developer shall indemnify, defend (with counsel of City's choosing and the consent
of Developer, which shall not be unreasonably withheld, conditioned or delayed and which may
be joint defense counsel upon City's and Developer's consent), and hold harmless City and all of
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its officials, officers, employees, representatives, volunteers and agents from any and all alleged
or actual claims, causes of action, liabilities, and damages from any third party by reason of a
mechanic's lien or work, labor, services, or materials supplied or claimed to have been supplied
to Developer or caused by, at the direction of, or on behalf of Developer.
3. AFFORDABILITY
3.1 Total Affordability Term. Each Affordable Unit shall be restricted to use and
occupancy by an Eligible Household for a total period of no less than fifty-five (55) years ("Total
Affordability Term"). The Total Affordability Term for an Affordable Unit shall commence on
the date that the building in which the Affordable Unit is located receives all required occupancy
permits from the City.
3.2 Memorializing Commencement of Total Affordability Term. Developer shall
keep or cause to be kept detailed records of the commencement date of the Total Affordability
Term for each Affordable Unit. City shall have the right to review and verify said records
without a fee from City to Developer to ensure that the commencement date specified by
Developer for an Affordable Unit coincides with the date that the initial Affordable Unit received
all permits from City required for occupancy of the Unit. In the event that a conflict exists
between the date specified by Developer for the commencement of the Total Affordability Term
for an Affordable Unit and the date specified by City's issuance of all required permits for
occupancy of the Unit, the date specified by City's issuance of all required permits for occupancy
of the Unit shall control.
3.3 Levels of Affordability.
3.3.1 Extremely-Low Income Tenants. Developer covenants that no less than
sixteen (16) Affordable Units in the Project shall at all times during the Density Bonus Housing
Agreement Term be rented to, or held vacant and available for immediate occupancy by
Extremely-Low Income Tenants, at a rent that does not exceed thirty percent (30%) of thirty
percent (30%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HCD, including, as applicable, an allowance for utilities.
4. OPERATION OF THE PROJECT BY DEVELOPER
4.1 Payment of Density Bonus Setup Fee. A Density Bonus Setup Fee will not be
charged to the Developer for developing on Housing Authority land.
4.2 Recording of Documents. No later than issuance of building permits for the
Project, Developer and the City shall record or cause to be recorded in the Official Records for
Orange County, California, an executed original of this Agreement. City shall cooperate with
Developer in promptly executing in recordable form this Agreement. The date of recording of
the Agreement shall be the Effective Date of the Agreement. Upon the date of recording, the
terms and conditions of this Agreement shall be binding upon and run with the Property and the
Project. It is the express intent and agreement between the Parties that this Agreement shall
remain binding and enforceable against the Property, the Project, and the Units to ensure
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compliance with the State Density Bonus Law and City Density Bonus Law, and to ensure the
continued supply of Affordable Units in the Project, except as expressly set forth in this
Agreement.
4.2 Rental of Units. Upon the completion of construction of the Project and receipt
by Developer of all required permits for the occupancy of the Units, Developer shall rent or
cause to be rented each Affordable Unit for the Total Affordability Term for such Affordable
Unit in accordance with the terms and conditions set forth in this Agreement, which provide
among other terms and conditions for the rental of each Affordable Unit at an Affordable Rent to
an Eligible Household for the Total Affordability Term.
4.3 Location of Affordable Units. During the Density Bonus Housing Agreement
Term, the Affordable Units shall be dispersed throughout the Project in accordance with the
terms and conditions set forth in this Agreement.
4.4 Occupancy Levels. The number of persons permitted to occupy each Affordable
Unit shall not exceed the occupancy permitted pursuant to Health and Safety Code section
50052.5(h).
4.5 Use of the Property. All uses conducted on the Property by Developer, including,
without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall
conform to all applicable provisions of the Santa Ana Municipal Code and other applicable
federal, state, and local laws, rules, and regulations. The Project shall at all times during the term
of this Agreement be used as a rental supportive housing complex and none of the Affordable
Units in the Project, nor shall the Property or any portion thereof, ever be used as a hotel, motel,
dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest
home, or be converted to condominium ownership. All of the community facilities and any
social programs provided to the Project’s residents shall be available on an equal,
nondiscriminatory basis to residents of all Units at the Project.
4.6 Maintenance. Developer shall, at all times during the term of this Agreement,
cause the Property and the Project to be maintained in a decent, safe and sanitary manner,
regardless of cause of the disrepair, to the extent commercially reasonable. City, and any of its
employees, agents, contractors or designees shall have the right to enter upon the Property at
reasonable times and in a reasonable manner to inspect the Project. If at any time Developer fails
to maintain the Project or the Property in accordance with this Agreement and such condition is
not corrected within seven (7) days after written notice from City with respect to debris and
waste material, or within thirty (30) days after written notice from City with respect to general
maintenance, landscaping and building improvements, unless Developer has initiated corrections
and City has agreed to a reasonable amount of time to complete corrections, then City, in
addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the
applicable portion of the Project or the Property and perform all acts and work necessary to
protect, maintain, and preserve the Project and the Property, and to attach a lien upon the
Property, or to assess the Property, in the amount of the expenditures arising from such acts and
work of protection, maintenance, and preservation by City and/or costs of such cure, including a
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reasonable administrative charge, which amount shall be promptly paid by Developer to City
upon demand.
4.6.1 Property Maintenance Agreement. Subject to review and applicability by
the Planning and Building Agency (the “PBA”), the CDA, the Public Works Agency (the
“PWA”), and the City Attorney to ensure that the property and all improvements located
thereupon are properly maintained, Developer shall execute a maintenance agreement with the
City of Santa Ana or Housing Authority, as applicable, prior to occupancy which shall be
recorded against the property and which shall be in a form reasonably satisfactory to the City
Attorney. If the anticipated Ground Lease between Developer and the Housing Authority
includes terms that meet the maintenance requirements contained herein, then the Ground Lease
shall be sufficient to meet the requirements of this section in place of a separate maintenance
agreement. The maintenance agreement or Ground Lease, as applicable, shall contain covenants,
conditions and restrictions relating to the following:
(a) Compliance with operational conditions applicable during any period(s) of
construction or major repair (e.g., proper screening and securing of the construction site;
implementation of proper erosion control, dust control and noise mitigation measure;
adherence to approved project phasing etc.);
(b) Compliance with ongoing operational conditions, requirement and restrictions
as applicable, the proper storage and disposal of trash and debris, and/or restrictions on
certain uses;
(c) Ongoing compliance with approved design and construction parameters,
signage parameters and restrictions as well as landscape designs, as applicable;
(d) Ongoing maintenance, repair and upkeep of the property and all improvements
located thereupon (including but not limited to controls on the proliferation of trash and
debris about the property; the proper and timely removal of graffiti; the timely
maintenance, repair and upkeep of damaged, vandalized and/or weathered buildings,
structures and/or improvements; the timely maintenance, repair and upkeep of exterior
paint, parking striping, lighting and irrigation fixtures, walls and fencing, publicly
accessible bathrooms and bathroom fixtures, landscaping and related landscape
improvements and the like, as applicable);
(e) If Developer and the owner of the property are different (e.g., if the applicant
is a tenant or licensee of the property or any portion thereof), both the applicant and the
owner of the property shall be signatories to the maintenance agreement and both shall be
jointly and severally liable for compliance with its terms;
(f) The maintenance agreement shall further provide that any party responsible for
complying with its terms shall not assign its ownership interest in the property or any
interest in any lease, sublease, license or sublicense, except as set forth herein or unless
the prospective assignee agrees in writing to assume all of the duties and obligations and
responsibilities set forth under the maintenance agreement;
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(g) The maintenance agreement shall contain provisions relating to the
enforcement of its conditions by the City and shall also contain provisions authorizing the
City to recover costs and expenses which the City may incur arising out of any
enforcement and/or remediation efforts which the City may undertake in order to cure
any deficiency in maintenance, repair or upkeep or to enforce any restrictions or
conditions upon the use of the property. The maintenance agreement shall further provide
that any unreimbursed costs and/or expenses incurred by the City to cure a deficiency in
maintenance or to enforce use restrictions shall become a lien upon the property in an
amount equivalent to the actual costs and/or expense incurred by the City; and,
(h) The execution and recordation of the maintenance agreement shall be a
condition precedent to the issuance of the Certification of Occupancy.
4.7 Management Plan. Prior to Certificate of Occupancy, Developer shall submit for
the reasonable approval of City a “Management Plan” which sets forth in detail the property
management duties, a tenant selection process in accordance with this Agreement, a security
system and crime prevention program, the procedures for the collection of rent, the procedures
for eviction of tenants, the rules and regulations for the Property and manner of enforcement, a
standard lease form, an operating budget, the identity and emergency contact information of the
professional property management company to be contracted with to provide onsite property
management services at the Property (“Property Manager”), and other matters relevant to the
management of the Property. The Management Plan shall require Developer to adhere to a fair
lease and grievance procedure. The management of the Property shall be in compliance with the
Management Plan as approved by City.
If City determines that the performance of the Property Manager is deficient based upon
the standards set forth in the approved Management Plan and in this Agreement, City shall
provide written notice to Developer of such deficiencies and Developer shall use its best efforts
to correct such deficiencies. In the event that such deficiencies have not been cured within thirty
(30) days, or, if cure is not reasonably possible within 30 days, then unless actions to commence
a cure are taken within 30 days and continued thereafter with diligence, City shall have the right
to require Developer to immediately remove and replace the Property Manager with another
property manager or property management company which is reasonably acceptable to the City
Manager, which is not related to or affiliated with Developer, and which has not less than five
(5) years experience in property management, including significant experience managing
housing facilities of the size, quality and scope of the Project.
4.8 Rental Lease Agreement. Developer shall prepare and obtain City’s approval,
which approval shall not be unreasonably withheld, conditioned or delayed, of a rental lease
agreement (“Lease Agreement”). All Lease Agreements must 1) identify the names and ages of
all members of the household who will occupy the Affordable Unit; and 2) state that the
Household’s right to occupy the Affordable Unit is subject to compliance with the Median
Income requirements, adjusted for family size appropriate to the unit, as periodically published
by HCD. All Lease Agreements must be consistent with the terms contained in this Density
Bonus Agreement.
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4.8.1 Prohibited Lease Terms. The Lease Agreement may not contain any of the
following provisions:
(a) Agreement to be Sued. Agreement by the tenant to be sued, to admit to guilt,
or to a judgment in favor of the Developer in a lawsuit brought in connection
with the lease;
(b) Treatment of Property. Agreement by tenant that the Developer may take,
hold, or sell personal property of household members without notice to 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 Developer may dispose of this personal property in
accordance with State law;
(c) Excusing Developer of Responsibility. Agreement by the tenant not to hold
the Developer of the Developer’s agent legally responsible for any action or
failure to act, whether intentional or negligent;
(d) Waiver of Notice. Agreement of the tenant that the Developer may institute a
lawsuit without notice to the tenant;
(e) Waiver of Legal Proceedings. Agreement by the tenant that the Developer
may evict the tenant or household members without instituting a civil court
proceeding in which the tenant has the opportunity to present a defense, or
before a court decision on the rights of the parties;
(f) Waiver of a Jury Trial. Agreement by the tenant to waive any rights to a trial
by jury;
(g) Waiver of Right to Appeal Court Decision. 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
(h) Tenant Chargeable with Cost of Legal Action Regardless of Outcome.
Agreement by the tenant to pay attorney’s fees or other legal costs even if the
tenant wins in a court proceeding by the Developer against the tenant. The
tenant, however, may be obligated to pay attorney’s fees and costs if the
tenant loses, if provided for under applicable law or court ruling.
4.9 Selection of Tenants.
4.9.1 Developer shall review the selection of tenants for the Affordable Units in
compliance with lawful and reasonable criteria and the requirements of this Agreement. Each
Affordable Unit shall be leased to Eligible Households that are chronically homeless and
document-ready individuals on the Coordinated Entry List. All residents will be referred from
the County of Orange Coordinated Entry System.
4.9.2 Local preference for Santa Ana residents and workers in tenant selection
for the Affordable Units shall be a requirement of the Project. Subject to applicable laws and
regulations governing nondiscrimination and preferences in housing occupancy required by the
State of California, the Developer shall give preference or cause for the preference in leasing the
Affordable Units to households that live and/or work in the City of Santa Ana or who have an
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active Housing Choice Voucher issued by the Housing Authority of the City of Santa Ana or any
other Public Housing Authority.
4.9.3 Prior to the rental or lease of an Affordable Unit to a tenant(s), Developer
shall require the tenant(s) or cause for the tenant(s) to be required to execute a written lease and
to complete a Tenant Income Verification Form (in substantially the form attached hereto as
Exhibit B) certifying that the tenant(s) occupying the Affordable Unit is/are an Eligible
Household and otherwise meet(s) the eligibility requirements established for the Affordable Unit.
Developer shall verify the income of the tenant(s) as set forth herein. Developer and City shall
be entitled to rely on the Tenant Income Verification Form and supporting documentation
provided by tenant(s) unless Developer or City has knowledge of, or a reasonable basis for belief
as to, the inaccuracy or falsehood of any of the supporting documentation.
4.10 Income Verification and Certification.
Developer covenants to City that it will at all times abide by all specific compliance
standards set forth in the regulatory agreements entered into between the Developer and all
public funding sources including but not limited to No Place Like Home (“NPLH”), Housing and
Urban Development-Veterans Affairs Supportive Housing (“HUD-VASH”) and Special Needs
Housing Program (SNHP”), as applicable. Developer will abide by all standards including but
not limited to number of extremely-low and very-low and low-income affordable units by
number of bedrooms, standards for qualifying household incomes and other qualifying criteria.
Developer shall provide City with a certified copy of each of the recorded Regulatory
Agreements applicable to the Project. The compliance standards set forth in said Regulatory
Agreements are hereby incorporated by reference as fully set forth herein. In the event of a
conflict between this Agreement and the Regulatory Agreements: (1) the more stringent
requirement shall prevail if such interpretation eliminates the relevant conflict; or (2) Regulatory
Agreements, or any of them, shall prevail.
Developer shall be entitled to rely on the Tenant Income Verification Form and
supporting documentation provided by tenant(s) unless Developer has knowledge of, or a
reasonable basis for belief as to, the inaccuracy or falsehood of any of the supporting
documentation. Developer shall make reasonable efforts to verify or cause to be verified that the
income and asset statement provided by an applicant in an income certification is accurate by
taking, at a minimum, at least one of the following steps as a part of the verification process: (1)
obtain three months consecutive pay stubs for the most recent pay period, (2) obtain an income
tax return for the most recent tax year, (3) obtain an income verification form from the
applicant’s current employer, (4) obtain an income verification form from the Social Security
Administration and/or the California Department of Social Services if the applicant receives
assistance from either of such agencies, or (5) if the applicant is unemployed and has no such tax
return, obtain another form of independent verification.
4.10.1 Gross Household Income. Gross household income means all income
from whatever source from all adult Household members, which is anticipated to be received
during the 12-month period following the date of the determination of Gross Household Income.
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The applicable sources of income are defined in California Code of Regulations Title 25 Housing
and Community Development Section 6914.
4.10.2 Annual Recertification. Developer agrees to recertify or cause to be
recertified household eligibility annually. Notification of Annual Tenant Recertification shall be
sent to the household in substantially the form attached hereto as Exhibit C. An Annual Rental
Housing Compliance Report (“Annual Compliance Report”) shall be sent by Developer to the
City in substantially the form attached hereto as Exhibit D for City’s review and approval. The
Annual Compliance Report shall be due to the City within 30 days of the anniversary of the
commencement of the Total Affordability Term, which is the date that each building receives all
required occupancy permits from the City.
4.11 Monitoring and Recordkeeping. Throughout the Term of this Agreement,
Developer shall annually complete or cause to be completed and submit to City a Certification of
Continuing Program Compliance in the form provided by City. Developer agrees to pay a
reasonable fee, as set by City resolution, for the purpose of paying the actual costs associated
with the City’s obligation to monitor Developer’s compliance with the affordability restrictions
contained in this Agreement related to the Affordable Units, not to exceed monitoring costs for
up to sixteen (16) Affordable Units. Representatives of City shall be entitled to enter the Property
if necessary after review of above documentation, upon at least forty-eight (48) hour notice, to
monitor compliance with this Agreement, and shall be entitled to inspect the records of the
Project relating to the Affordable Units and to conduct an independent audit or inspection of
such records at a location within the City that is reasonably acceptable to the City without a fee
from the City. Developer agrees to cooperate with City in making the Property and the records
of the Project relating to the Affordable Units available for such inspection or audit. Developer
agrees to maintain or cause for the maintenance of each record of the Project for no less than five
(5) years after creation of each such record.
Developer shall allow the City to conduct annual inspections of each of the Affordable
Units on the Property after the date of construction completion, with reasonable notice.
Developer shall commence to cure or cause the commencement to cure any defects or
deficiencies found by the City while conducting such inspections within ten (10) Business Days
of written notice thereof, or such longer period as is reasonable within the sole discretion of the
City.
4.12 Notice of Affordability Restrictions on Transfer of Property. In the event the
Property Owner wishes to sell or transfer the Project, or the Developer wishes to assign the
ground lease to the Property, during the Total Affordability Term, the City and the Developer
shall execute and deposit into escrow, or record against the Property, a Notice of Affordability
Restrictions on Transfer of the Property as contained herein (Exhibit E). The sale or transfer of
the Property, or assignment of ground lease, shall not be effective unless and until the City and
the transferee execute the documents necessary to transfer the Density Bonus Agreement
obligations from the Developer to the transferee.
4.13 Onsite Supportive Services, Programs and Amenities. Throughout the Term of
this Agreement, and to the extent such can be coordinated with and largely supplied by
EXHIBIT 6
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philanthropic and other social welfare providers, Developer shall provide residents of the Project,
or cause to be provided to residents of the Project, access to discounted or no-cost onsite
supportive services, programming and amenities that promote independent living and economic
mobility and include but are not limited to: health and wellness services, transportation services,
social activities, and physical or recreational amenities.
4.14 Alternative Transportation and Energy Source, Resource Conservation, and
LEED Certification. While not a condition of the project’s Density Bonus, in recognition of the
City’s desire to optimize the energy efficiency of the project, Developer agrees to consult with
the project design team, a CABEC certified 2016 Certified Energy Analyst, a LEED AP Homes
(low-rise and mid-rise), LEED AP BD+C (high rise), National Green Building Standard (NGBS)
Green Verifier, or GreenPoint Rater (one person may meet both of these latter qualifications)
early in the project design process to evaluate a building energy model analysis and identify and
consider energy efficiency or generation measures. Prior to the meeting, the energy analyst shall
complete an initial energy model based on either current T24 standards or, if the project is
eligible, the California Utility Allowance Calculator using best available information on the
project. To the extent financially feasible for the project, Developer agrees to incorporate and
optimize energy efficient building materials, methods, and amenities.
4.15 Onsite Property Manager. The Project shall have 24-hour on-site Property
Management services and personnel. Up-to-date 24-hour contact information for the on-site
personnel shall be provided to the following City agencies on an ongoing basis:
(a) Police Department
(b) Fire Department
(c) Planning and Building Agency
(d) Community Development Agency
4.16 Emergency Evacuation Plan. Developer shall submit and obtain approval of an
Emergency Evacuation Plan (the EEP) from City Police and Fire Protection agencies prior to
issuance of a Certificate of Occupancy. Up-to-date 24-hour emergency contact information for
the on-site personnel shall be provided to the City on an ongoing basis and the approved EEP
shall be kept onsite and also be submitted to the following City Agencies:
(a) Police Department
(b) Fire Department
(c) Planning and Building Agency
(d) Community Development Agency
4.17 Crime Free Housing. Developer shall work with City staff to develop a crime free
housing policy, procedure, and design plan (the “CFH Plan”). Developer shall submit and
obtain approval from the PBA that the CFH Plan meets the requirements of this Subsection 4.17
prior to issuance of the Certificate of Occupancy. The approved CFH Plan shall be implemented
and administered by Property Management.
4.18 Parking Management Plan. Developer shall provide onsite parking for residents and
visitors of the Project in accordance with Subsections 2.3.1 and 2.3.5 and actively monitor the
parking demand of the Project site. Developer shall continually monitor and take appropriate
EXHIBIT 6
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measures to manage the parking demand of the Project site to mitigate the use of offsite parking
spaces on private or public properties and/or right-of-way. Developer has submitted a Parking
Management Plan (the “PMP”) dated March 10, 2020, outlining appropriate measures to manage
and mitigate the use of offsite parking spaces and/or right of way. Prior to issuance of the
Certificate of Occupancy, Developer shall obtain approval from the PBA of the PMP, as such
PMP may be revised consistent with requirements of this Subsection 4.18 and Agreement. The
approved PMP shall be adhered to and be enforced by the Project at all times. Notwithstanding
the foregoing, in no event may the PMP or the requirements of this Subsection supersede
Subsections 2.3.1 or 2.3.5 or be interpreted in a manner requiring parking in excess of twelve
(12) onsite parking spaces, ten (10) of which shall be tandem parking spaces.
5. [INTENTIONALLY RESERVED]
6. TERM OF THIS AGREEMENT
6.1 Term. The term of this Agreement ("Density Bonus Housing Agreement Term")
shall commence on the Effective Date and shall continue until the date that is fifty-five (55)
years after the City issues the last certificate of occupancy for the building in which the
Affordable Units are located.
7. DEFAULT AND TERMINATION; INDEMNIFICATION
7.1 Default. Failure or delay by any Party to perform any term or provision of this
Agreement, which is not cured within thirty (30) days after receipt of notice from the other Party
specifying the default (or such other period specifically provided herein), constitutes a default
under this Agreement; provided, however, if such default is of the nature requiring more than
thirty (30) days to cure, the defaulting Party shall avoid default hereunder by commencing to
cure within such thirty (30) day period, and thereafter diligently pursuing such cure to
completion within an additional sixty (60) days following the conclusion of such thirty (30) day
period (for a total of ninety (90) days). Except as required to protect against further damages, the
injured Party may not institute proceedings against the Party in default until the time for cure has
expired. Failure or delay in giving such notice shall not constitute a waiver of any default, nor
shall it change the time of default.
7.2 Rights and Remedies Cumulative. The rights and remedies of the Parties are
cumulative, and the exercise by either Party of one or more of its rights or remedies shall not
preclude the exercise by it, at the same or different times, of any other rights or remedies for the
same default or any other default by the other Party. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall either Party be liable for speculative,
consequential, punitive or other indirect damages, and each Party waives any right to collect
speculative, consequential, punitive or other indirect damages against the other Party.
7.3 Indemnification. In addition to any other indemnity specifically provided in this
Agreement, Developer agrees to defend (with counsel of City's choosing and the consent of
Developer, which shall not be unreasonably withheld, conditioned or delayed and which may be
joint defense counsel upon City's and Developer's consent) indemnify and hold harmless City
EXHIBIT 6
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and its respective officers, officials, agents, employees, representatives, and volunteers
(collectively, "Indemnitees") from and against any loss, liability, claim, or judgment arising from
any act or omission of Developer in connection with its obligations under this Agreement, except
to the extent caused by the negligence or willful misconduct of Indemnitees.
7.4 Termination. Prior to the issuance of building permits for the Project, Developer
has the right to terminate this Agreement by written notice to City if one or more of the
following does not occur: (1) approval and execution of a ground lease between the Housing
Authority and Developer (or an entity formed by Developer to lease the Property) in their
reasonable discretion for the lease of the Property; or, (2) receipt by Developer of all financing
required for the Project.
8. ASSIGNMENT; COVENANTS RUN WITH THE LAND
8.1 Assignment by Developer.
8.1.1 Prohibited Transfers or Assignments. Except as authorized in this Section
or Section 8.1.2 below, Developer shall not sell, transfer, or assign the Property or Project in
whole or in part, or transfer or assign Developer's rights and obligations in this Agreement, in
whole or in part, without City's prior written approval, which shall not be unreasonably withheld,
conditioned or delayed (“Permitted Transfer”); provided, however, Developer shall have the
right without City’s prior written approval to transfer or assign the Property, Project and/or
Developer’s rights and obligations in this Agreement to any entity that is controlled by, or is
under common control with, Developer, and Developer shall thereafter be released from any
future obligations under this Agreement; and provided further, Developer also shall have the
right without City’s prior written approval to transfer or assign Developer’s rights and
obligations in this Agreement, in whole or in part, to Mercy Housing or to any entity that is
controlled by, or is under common control with, Mercy Housing and Developer shall thereafter
be released from any transfer or assigned obligations under this Agreement. In connection with
Permitted Transfer, Developer shall: (i) notify City in writing of the sale, transfer, or assignment
of all or any portion of the Property, and (ii) deliver to City an assignment and assumption
agreement (or other agreement) in a form approved by City in its reasonable discretion and
executed by Developer and its transferee/assignee pursuant to which Developer's
transferee/assignee assumes all of Developer's covenants and obligations set forth herein with
respect to the Property or the portion thereof so transferred. Any request for transfer or
assignment of the Agreement by Developer shall require the payment of fees or a deposit to
compensate the City for approximate expenses incurred by Developer to City, as applicable, for
the City’s review of the request. Upon the delivery of the assignment and assumption agreement
as provided for above for a Permitted Transfer, or in the event of a sale of the Property as
provided for in Section 8.1.1, Developer shall be released from any future obligations under this
Agreement.
8.1.2 Lease of Property. Developer agrees and declares that the Property and the
Project shall be leased, rented, used, occupied, operated, and approved subject to all obligations
set forth or incorporated in this Agreement, all of which are for the purpose of enhancing and
protecting the value and attractiveness of the Property and the Project. All of the obligations set
EXHIBIT 6
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forth or incorporated in this Agreement shall constitute covenants which run with the land and
shall be binding on Developer and its successors and assigns, and all parties having or acquiring
any right, title or interest in, or to any part of the Property or Project. Developer further
understands and agrees that the Density Bonus permit approvals received for this Project have
been made on the condition that Developer and all subsequent lessees, or other successors and
assigns of the Property and/or Project lease and rent the Affordable Units in accordance with the
terms and conditions stipulated in Sections 4, 5 and 6 of this Agreement for a term of fifty-five
(55) consecutive years commencing upon the date of issuance of the last certificate of occupancy
for the Project.
8.1.3 Subsequent Assignment. As used in this Agreement, the term
"Developer" shall be deemed to include any such transferee or assignee after the date such sale,
transfer, or assignment occurs in compliance with this Agreement.
8.1.4 Unpermitted Assignments Void. Any sale, transfer, or assignment made
in violation of this Agreement shall be null and void, and City shall have the right to pursue any
right or remedy at law or in equity to enforce the provisions of the restriction against unpermitted
sales, transfers, or assignments.
8.2 Covenants Run with the Land. The Property shall be used, occupied and
improved subject to the covenants, conditions, and restrictions set forth herein. The covenants,
conditions, restrictions, reservations, equitable servitudes, liens and charges set forth in this
Agreement shall run with the Property and shall be binding upon Developer and all persons
having any right, title or interest in the Property, or any part thereof, their heirs, and successive
owners and assigns, shall inure to the benefit of City and its successors and assigns, and may be
enforced by City and its successors and assigns. The covenants established in this Agreement
shall, without regard to technical classification and designation, be binding for the benefit and in
favor of City and its successors and assigns, and the parties hereto expressly agree that this
Agreement and the covenants herein shall run in favor of City, without regard to whether City or
the Housing Authority is or remains an owner of any land or interest therein to which such
covenants relate. However, all such covenants and restrictions shall be deemed to run in favor of
all real property owned by City or the Housing Authority which real property shall be deemed
the benefited property of such covenants and this Agreement shall create equitable servitudes
and covenants appurtenant to all real property owned by City or the Housing Authority and
running with the Property in accordance with the provisions of Civil Code Section 1468.
Furthermore, all of the covenants, conditions, and restrictions contained herein shall also
constitute easements in gross running in favor of City. City is deemed the beneficiary of the
terms and provisions of this Agreement and of the covenants running with the land, for and in its
own right and for the purposes of protecting the interests of the community and other parties,
public or private, in whose favor and for whose benefit this Agreement and the covenants
running with the land have been provided. Developer hereby declares its understanding and
intent that the burden of the covenants set forth herein touch and concern the land and that the
Developer's lease interest in the Property is rendered less valuable thereby. Developer hereby
further declares its understanding and intent that the benefit of such covenants touch and concern
the land by enhancing and increasing the enjoyment and use of the Property by the citizens of
City and by furthering the health, safety, and welfare of the residents of City.
EXHIBIT 6
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9. MISCELLANEOUS
9.1 Entire Agreement. This Agreement and all of its exhibits and attachments set
forth and contain the entire understanding and agreement of the parties with respect to the
density bonus of the Project, and there are no oral or written representations, understandings or
ancillary covenants, undertakings or agreements which are not contained or expressly referred to
herein. No testimony or evidence of any such representations, understandings or covenants shall
be admissible in any proceeding of any kind or nature to interpret or determine the terms or
conditions of this Agreement.
9.2 Amendment. Any alteration, change or modification of or to this Agreement, in
order to become effective, shall be made in writing and in each instance approved by the City
Council, or through the City Manager as detailed herein, and signed on behalf of each party. The
City Manager shall have the authority to make approvals, issue interpretations, execute
documents, waive provisions, and/or enter into amendments of this Agreement on behalf of City,
including but not limited to amendments to this Agreement for consistency with other Project
agreements, funding sources or to assist Developer in obtaining other funding sources. Any
requested alteration, change or modification of the Agreement by Developer shall require the
payment of fees or deposit by Developer to City, as applicable, for the City’s review of the
request. Each alteration, change, or modification to this Agreement shall be recorded against the
Property in the Official Records of Orange County, California.
9.3 Notices.
9.3.1 Delivery. As used in this Agreement, "notice" includes, but is not limited
to, the communication of notice, request, demand, approval, statement, report, acceptance,
consent, waiver, appointment or other communication required or permitted hereunder. All
notices shall be in writing and shall be considered given either: (i) when delivered in person to
the recipient named below; or (ii) on the date of delivery shown on the return receipt, after
deposit in the United States mail in a sealed envelope as either registered or certified mail with
return receipt requested, and postage and postal charges prepaid, and addressed to the recipient
named below; or (iii) two (2) days after deposit in the United States mail in a sealed envelope,
first class mail and postage prepaid, and addressed to the recipient named below; or (iv) one (1)
day after deposit with a known and reliable next-day document delivery service (such as Federal
Express), charges prepaid and delivery scheduled next-day to the recipient named below,
provided that the sending party receives a confirmation of delivery from the delivery service
provider; or (v) the first business day following the date of transmittal of any facsimile, provided
confirmation of successful transmittal is retained by the sending Party; or (vi) upon transmission
thereof (as evidenced by the recipient’s reply to such notice or other competent evidence of
actual receipt) if transmitted by electronic transmission (email), provided that a copy of such
notice is concurrently sent by first-class mail postage prepaid. All notices shall be addressed as
follows:
If to City: City of Santa Ana
Community Development Agency
EXHIBIT 6
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20 Civic Center Plaza (M-26)
P.0. Box 1988
Santa Ana, California 92702
Attention: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
If to Developer: Shelter Providers of Orange County, Inc.
1130 North Citrus Street
Orange, CA 92867
Attention: Executive Director
9.3.2 Change of Address. Either Party may, by notice given at any time, require
subsequent notices to be given to another person or entity, whether a party or an officer or
representative of a party, or to a different address, or both. Notices given before actual receipt of
notice of change shall not be invalidated by the change.
9.4 Severability. If any term, provision, covenant or condition of this Agreement
shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be
affected thereby to the extent such remaining provisions are not rendered impractical to perform,
taking into consideration the purposes of this Agreement.
9.5 Interpretation and Governing Law. This Agreement and any dispute hereunder
shall be governed and interpreted in accordance with the laws of the State of California without
regard to conflict of law principles. This Agreement shall be construed as a whole according to
its fair language and common meaning to achieve the objectives and purposes of the Parties
hereto, and the rule of construction to the effect that ambiguities are to be resolved against the
drafting Party shall not be employed in interpreting this Agreement, all Parties having been
represented by counsel in the negotiation and preparation hereof.
9.6 Section Headings. All section headings and subheadings are inserted for
convenience only and shall not affect any construction or interpretation of this Agreement.
9.7 Singular and Plural. As used herein, the singular of any word includes the plural,
and vice versa, as context so dictates. Masculine, feminine, and neuter forms of any word
include the other as context so dictates.
9.8 Intentionally Omitted.
9.9 Time of Essence. Time is of the essence in the performance of the provisions of
this Agreement as to which time is an element.
EXHIBIT 6
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9.10 Computation of Days. Unless otherwise specified in this Agreement or any
Exhibit attached hereto, use of the term "days" shall mean calendar days. For purposes of this
Agreement and all Exhibits attached hereto, "business days" shall mean every day of the week
except Saturdays, Sundays, official State holidays as recognized in Government Code Section
19853(a) or successor statute, and any days in which Santa Ana City Hall is closed for business.
9.11 Waiver. Failure by a Party to insist upon the strict performance of any of the
provisions of this Agreement by the other Party, or the failure by a Party to exercise its rights
upon the default of the other Party, shall not constitute a waiver of such Party's right to insist and
demand strict compliance by the other Party with the terms of this Agreement thereafter.
9.12 Non-Discrimination. In performing its obligations under this Agreement,
Developer shall not discriminate because of race, color, creed, religion, sex, marital status,
sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by
applicable law, in the recruitment, selection, training, utilization, promotion, termination or other
related activities. Developer affirms that it is an equal opportunity employer and shall comply
with all applicable federal, state and local laws and regulations.
9.13 Third Party Beneficiaries. No person or entity, other than City and Developer
shall have any right of action based upon any provision of this Agreement.
9.14 Force Majeure. Neither Party shall be deemed to be in default where failure or
delay in performance of any of its obligations under this Agreement is caused by floods,
earthquakes, other Acts of God, fires, pandemics as declared by federal, state, or local
emergency resolution, wars, riots or similar hostilities, strikes and other labor difficulties beyond
the Party's control (including the Party's employment force), court actions (such as restraining
orders or injunctions), or other causes beyond the Party's control, including delays by any
governmental entity (although the City may not benefit from this provision for a delay that
results from City's failure to perform its obligations under this Agreement), or an insurance
company of either party. If any such events shall occur, the term of this Agreement and the time
for performance by either Party of any of its obligations hereunder may be extended by the
written agreement of the Parties for the period of time that such events prevented such
performance.
9.15 Mutual Covenants. The covenants contained herein are mutual covenants and
also constitute conditions to the concurrent or subsequent performance by the Party benefited
thereby of the covenants to be performed hereunder by such benefited Party.
9.16 Successors in Interest. The burdens of this Agreement shall be binding upon, and
the benefits of this Agreement shall inure to, all permitted successors in interest to the Parties to
this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes
and constitute covenants running with the land. Each covenant to do or refrain from doing some
act hereunder with regard to development of the Property: (a) is for the benefit of and is a burden
upon every portion of the Property; (b) runs with the Property and each portion thereof; and (c) is
binding upon each Party and each successor in interest approved pursuant to this Agreement
during ownership of the Property or any portion thereof.
EXHIBIT 6
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9138-126780\1517029.2
9.17 Counterparts. This Agreement may be executed by the Parties in counterparts,
which counterparts shall be construed together and have the same effect as if all of the Parties
had executed the same instrument.
9.18 Jurisdiction and Venue. Any action at law or in equity under this Agreement or
brought by a Party hereto for the purpose of enforcing, construing or determining the validity of
any provision of this Agreement shall be filed and tried in the Superior Court of the County of
Orange, State of California, and the Parties hereto waive all provisions of law providing for the
filing, removal or change of venue to any other court.
9.19 Project as a Private Undertaking. It is specifically understood and agreed by and
between the Parties hereto that the development of the Project is a private development, that
neither Party is acting as the agent of the other in any respect hereunder, and that each Party is an
independent contracting entity with respect to the terms, covenants and conditions contained in
this Agreement. No partnership, joint venture or other association of any kind is formed by this
Agreement. The only relationship between City and Developer is that of a government entity
regulating the development of private property and the Developer of such property.
9.20 Further Actions and Instruments. Each of the Parties shall cooperate with and
provide reasonable assistance to the other to the extent contemplated hereunder in the
performance of all obligations under this Agreement and in the satisfaction of the Project and
conditions of this Agreement. Upon the request of either Party at any time, the other Party shall
promptly execute, with acknowledgment or affidavit if reasonably required, and file or record
such required instruments and writings and take any actions as may be reasonably necessary
under the terms of this Agreement to carry out the intent and to fulfill the provisions of this
Agreement or the Project or to evidence or consummate the transactions contemplated by this
Agreement. City hereby authorizes City Manager to take such other actions and negotiate and
execute any additional agreements or amendments to this agreement as may be reasonably
necessary or proper to fulfill the City's obligations under this Agreement. The City Manager
may delegate her or his powers and duties under this Agreement to an authorized management
level employee of the City.
9.21 Estoppel Certificate. Within ten (10) business days following a written request by
any of the Parties, the other Party shall execute and deliver to the requesting Party a statement
certifying that (i) either this Agreement is unmodified and in full force and effect or there have
been specified (date and nature) modifications to the Agreement, but it remains in full force and
effect as modified; and (ii) either there are no known current uncured defaults under this
Agreement or that the responding Party alleges that specified (date and nature) defaults exist.
The statement shall also provide any other reasonable information requested. The failure to
timely deliver this statement shall constitute a conclusive presumption that this Agreement is in
full force and effect without modification, except as may be represented by the requesting Party,
and that there are no uncured defaults in the performance of the requesting Party, except as may
be represented by the requesting Party.
EXHIBIT 6
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9138-126780\1517029.2
9.22 No Subordination; Mortgagee Protection; Covenants Do Not Impair Liens. City's
approval of the necessary land use entitlements that authorize Developer to develop, operate, and
maintain the Project or to cause the development, operation and maintenance of the Project was
based upon Developer's obligation to provide the Affordable Units pursuant to the State Density
Bonus Law, City Density Bonus for Affordable Housing, and the terms and conditions of this
Agreement. For the Term of the Density Bonus Housing Agreement, this Agreement shall have
priority over any and all mortgages, deeds of trust, and other similar forms of secured financing
recorded against the Property or any portion thereof. Developer expressly understands and
acknowledges that state law requires preservation of affordability covenants in connection with
the approval of this density bonus project. This Agreement shall not prevent or limit Developer,
in Developer’s reasonable discretion, from encumbering the Property or any portion thereof of or
any improvement thereon by any mortgage, deed of trust or other security device securing
financing with respect to the Property or Project and such action shall not constitute an
assignment of this Agreement. No violation or breach of covenants, conditions, restrictions,
provisions, or limitations contained in this Agreement shall defeat or render invalid or diminish
or in any way impair the lien or charge of any mortgage or deed of trust or security instrument.
9.23 Attorneys' Fees and Costs. If either Party to this Agreement commences an action
against the other Party to this Agreement arising out of or in connection with this Agreement, the
prevailing Party shall be entitled to recover reasonable attorneys' fees, expert witness fees, costs
of investigation, and costs of suit from the losing Party.
9.24 Authority to Execute. The person or persons executing this Agreement on behalf
of each Party warrants and represents that he or she/they have the authority to execute this
Agreement on behalf of his or her/their corporation, partnership or business entity and warrants
and represents that he or she/they has/have the authority to bind the Party to the performance of
its obligations hereunder.
{Signatures on following page}
EXHIBIT 6
IN WITNESS WHEREOF, the parties hereto have caused this Density Bonus Housing
Agreement to be executed on the date set forth at the beginning of this Agreement.
CITY OF SANTA ANA ATTEST:
Daisy Gomez
Clerk of the Council
Kristine Ridge
City Manager
APPROVED AS TO FORM
Sonia R. Carvalho
City Attorney
By: Ryan 0. Hodge
Assistant City Attorney
RECOMMENDED FOR APPROVAL:SHELTER PROVIDERS OF ORANGE
COUNTY, INC.
aRiet
Steven A. Mendoza
Executive Director
Community Development Agency
9138-126780\I504s82.3 24
EXHIBIT 6
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9138-126780\1517029.2
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT 6
LEGAL DESCRIPTIONS
Property Address:
801 EAST SANTA ANA BOULEVARD, Santa Ana, CA 92701 in the County of Orange.
Apparent Legal Description:
For APN/Parcel ID(s): 398-303-04
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SANTA
ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS
FOLLOWS: THE SOUTHWESTERLY 50.00 FEET OF LOTS 13,14,15 AND 16 IN BLOCK
66 OF SANTA ANA EAST, AS SHOWN ON A MAP RECORDED IN BOOK 10, PAGES 43
AND 44 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA.
Property Address:
807 EAST SANTA ANA BOULEVARD, Santa Ana, CA 92701 in the County of Orange.
Apparent Legal Description:
For APN/Parcel ID(s): 398-303-05
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SANTA
ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS
FOLLOWS: THE NORTHEASTERLY 50 FEET OF THE SOUTHWESTERLY 100 FEET OF
LOTS 13,14, 15 AND 16, BLOCK 66 OF SANTA ANA, EAST AS PER MAP RECORDED IN
BOOK 10, PAGES 43 AND 44 OF MISCELLANEOUS RECORDS OF LOS ANGELES
COUNTY
Property Address:
809 EAST SANTA ANA BOULEVARD, Santa Ana, CA 92701 in the County of Orange
Apparent Legal Description:
For APN/Parcel ID(s): 398-303-06
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SANTA
ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS
FOLLOWS: THE EASTERLY 47 FEET OF THE SOUTHERLY 15 FEET OF LOT 14 AND
THE EASTERLY 47 FEET OF LOTS 15 AND 16, ALL IN BLOCK 66 OF "SANTA ANA
EAST", CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP THEREOF RECORDED IN BOOK 10 PAGES 43 AND 44 OF MISCELLANEOUS
MAPS RECORDS OF LOS ANGELES, CALIFORNIA.
Property Address:
809 1/2 EAST SANTA ANA BOULEVARD, Santa Ana, CA 92701 in the County of Orange.
Apparent Legal Description:
For APN/Parcel ID(s): 398-303-07
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SANTA
ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS
FOLLOWS: THE EASTERLY 50 FEET OF LOT 13, THE NORTHERLY 10 FEET OF THE
EXHIBIT 6
EASTERLY 50 FEET OF LOT 14, THE WESTERLY 3 FEET OF THE EASTERLY 50 FEET
OF THE SOUTHERLY 15 FEET OF LOT 14, AND THE WESTERLY 3 FEET OF THE
EASTERLY 50 FEET OF LOTS 15 AND 16 IN BLOCK 66 OF SANTA ANA EAST, IN THE
CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 10 PAGES 43 AND 44 OF MISCELLANEOUS MAPS, OF LOS
ANGELES COUNTY.
EXHIBIT 6
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9138-126780\1517029.2
EXHIBIT B
TENANT VERIFICATION
EXHIBIT 6
TENANT INCOME VERIFICATION FORM
Head of Household (Print Name):
Address:
Telephone Number: Home: Work: Cell:
Date of Birth: Social Security #:
Household Composition
List All Household Members Living in the Inclusionary Unit
Name Sex Age
Dependent
(Y/N) Social Security #
List additional household members on a separate sheet of paper.
EXHIBIT 6
TENANT INCOME VERIFICATION FORM
Monthly Gross Income *
List All Sources of Income of All Household Members Living in the Inclusionary Unit
Part 1: Earned Income
Head of
Household
Other Adult
Household
Members Total
1. Gross amount, before payroll deductions of wages,
salaries, overtime pay, commissions, fees, tips and
bonuses.
$ $ $
2. Net income from business. $ $ $
3. Social security, annuities, insurance policies,
pension/retirement funds, disability or death
benefits received periodically.
$ $ $
4. Payment in lieu of earnings, such as
unemployment, disability compensation, worker’s
compensation and severance pay.
$ $ $
5. Public assistance, welfare payments $ $ $
6. Alimony, child support, other periodic allowances $ $ $
7. Regular pay, special pay and allowances of
members of the Armed Forces
$ $ $
8. Other $ $ $
Subtotal: Monthly Earned Income $
Total Monthly Earned Income x 12 = $_______________ Total Annual Household Gross Earned Income
EXHIBIT 6
TENANT INCOME VERIFICATION FORM
Monthly Gross Income *
List All Sources of Income of All Household Members Living in the Inclusionary Unit
Part 2: Investment Income
Head of
Household
Other Adult
Household
Members
Total
Household
Investment
Income
1. Interest paid on Bank and Savings accounts $ $ $
2. Dividends and other payments from stocks and
bonds
$ $ $
3. Income from real property (i.e. rental property) $ $ $
4. Other (describe) $ $ $
Subtotal: Monthly Investment Income: $
Total Monthly Investment Income x 12 = $_______________ Total Annual Household Investment Income
*Note: The following items are not considered income: casual or sporadic gifts; amounts specifically for or in
reimbursement of medical expenses; lump sum payments such as inheritances, insurance payments, capital
gains and settlement for personal or property losses; educational scholarships paid directly to the student or
educational institution; special pay to a serviceman head of family away from home and under hostile fire;
relocation payments under federal, state or local law; foster child care payments; value of coupon allotments
for purpose of food under Food Stamp Act of 1964 which is in excess of amount actually charged the eligible
household; payments received pursuant to participation in the following programs: VISTA, Service Learning
Programs, and Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster
Grandparent Program, Older American Community Services Program, and National Volunteer Program to
Assist Small Business Experience.
EXHIBIT 6
TENANT INCOME VERIFICATION FORM
Assets **
List the Current Value of All Assets of All Household Members Living in the Inclusionary Unit
If the Asset generates income, that income must be specified In Part 2 above
Head of
Household
Other Adult
Household
Members Total Value of
Assets Value Value
1. Bank and Savings accounts $ $ $
2. Stocks and bonds $ $ $
3. Real property (i.e. rental property) $ $ $
4. Other (describe) $ $ $
Total Asset Value $______________________
**Note: Necessary items, such as furniture and automobiles, used for personal use are excluded from
household assets. Collections of items for hobby, investment or business purposes must be included in
household assets. If the total value of household assets exceeds $5,000, the calculation of the household’s
annual income shall include the greater of the actual amount of income, if any, derived from all of the
household assets; or 10% of the total value of the assets.
EXHIBIT 6
TENANT INCOME VERIFICATION FORM
If the total asset value exceeds $5,000, perform the calculations in the following table. If the total asset value
is less than $5,000, the amount of investment income to be included in annual household income is $0.
Calculation of Investment Income to be Included in Annual Household Income
1. Total Annual Household Investment Income $
2. Total Asset Value $ x 10% $
The Greater of #1 or #2 = Investment Income to be Included in Annual Household Income $___________
Calculation of the Household’s Total Annual Income
Total Annual Household Gross Earned Income $
Total Investment Income to be Included in Annual Household Income $
Total Household Income $
Documentation
Attach True Copies of the Relevant Documents Listed Below
Paycheck stubs from two most recent pay
periods
Bank/Savings account verification
Employment verification
Self-employment verification
Income tax return
Unemployment verification
Social security verification
Welfare verification
Alimony/child support verification
Disability income verification
Other (Describe)
EXHIBIT 6
AFFIDAVIT
This Affidavit is made with the knowledge that it will be relied upon by the _____________ City of Santa Ana,
our landlord and the owner of our apartment building, to determine maximum income for eligibility. (I/we)
warrant that all information set forth in this document is true, correct and complete and based upon information
(I/we) deem reliable and based upon such investigation as (I/we) deemed necessary.
(I/We) acknowledge that (I/we) have been advised that the making of any misrepresentation or misstatement in
this affidavit will constitute a material breach of (my/our) rental agreement with the property owner to rent the
unit and will additionally enable the property owner to initiate and pursue all applicable legal and equitable
remedies with respect to the unit and to me/us.
(I/We) do hereby swear under penalty of perjury that the foregoing statements are true and correct and that
this affidavit has been executed as of the date specified below by each adult member of the household which
intends to occupy an Inclusionary Unit located at ______________________ ,Santa Ana, California.
Signature Date
Printed Name
Executed at __________________________________, Santa Ana, California
Signature Date
Printed Name
Executed at __________________________________, Santa Ana, California
EXHIBIT 6
27
9138-126780\1517029.2
EXHIBIT C
ANNUAL TENANT RECERTIFICATION
EXHIBIT 6
ANNUAL TENANT RECERTIFICATION
CITY OF SANTA ANA
AFFORDABLE RENTAL HOUSING PROGRAM
Date:
Tenant Name:
Unit Address:
Dear __________________:
In accordance with the requirements imposed by the City of Santa Ana (City), and your lease,
the City requires that we review your income and family composition every year. To complete
our review, the Property Owner or Property Manager will set up a meeting with you to receive
the necessary information.
When you attend the meeting with the Property Owner or Property Manager you must bring
documents that verify the income of all the adult members of your household. This information
can include income tax returns, employment verification, wage statements, interest statements,
and/or unemployment compensation statements.
Cooperation with the recertification requirement is a condition of continuing tenancy in an
Inclusionary Unit. You must report the required information to enable the Property Owner to
process the recertification by Month/Day.
Sincerely,
Property Manager / Property Owner
EXHIBIT 6
28
9138-126780\1517029.2
EXHIBIT D
ANNUAL RENTAL HOUSING COMPLIANCE REPORT
EXHIBIT 6
Project:Date:
Address:Reporting Period:
Total # of Units in the Project:# of Affordable Units:
Very-Low Income Units
Compliance Report Completed By: Low Income Units
Phone Number:
Unit #
Household
Name
Household
Size
Household
Income
# of
Bedrooms
Gross
Rent
Utility
Allowance
Net
Rent
Date 1st
Occupied
Date of Last
Income
Recertification
Income Restriction
(Very-Low or Low)
HOUSING OPPORTUNITY ORDINANCE COMPLIANCE REPORT
ANNUAL RENTAL HOUSING COMPLIANCE REPORT
EXHIBIT 6
29
9138-126780\1517029.2
EXHIBIT E
NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY
EXHIBIT 6
EXHIBIT E
NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY
NOTICE IS HEREBY GIVEN that the CITY OF SANTA ANA, a charter city and municipal
corporation organized and existing under the Constitution and laws of the State of California, has
entered into a Density Bonus Agreement with Shelter Providers of Orange County, Inc., a
California nonprofit corporation doing business as HomeAid of Orange County (“Developer”).
The Density Bonus Agreement imposes income and affordability covenants on designated
Affordable Units with the Project located at 801, 807, 809, 809 ½ East Santa Ana Boulevard,
Santa Ana, Orange County, and further described in the legal description provided in Exhibit A
to the Density Bonus Agreement.
The Density Bonus Agreement was recorded as Document/Instrument Number
______________________, and shall remain in effect until _______________ ______, 20____
(Insert date of the termination of the Affordability Period). The Density Bonus Agreement
imposes the following income and affordability restrictions on the Affordable Units.
Number of Bedrooms Extremely-Low
Income
Households
Low
Income
Households
Studio Units
One-Bedroom Units 16
Two-Bedroom Units
Three-Bedroom Units
Four-Bedroom Units
In the event the Property Owner wishes to sell or transfer the Project during the Affordability
Period, or the Developer wishes to assign the ground lease to the Property and such assignment
requires City approval, the City and the Developer shall execute and deposit into escrow, or
record against the Property, this Notice of Affordability Covenants on Transfer of the Property.
The sale or transfer of the Property, or assignment of ground lease, shall not be effective unless
and until the City and transferee execute the documents necessary to transfer the Density Bonus
Agreement obligations from the Developer to the transferee, to the extent documentation or
approval is required under section 8.1.1.
This Notice of Affordability Covenants on Transfer of the Property in no way modifies the
provisions of the Density Bonus Agreement. In the event of any conflict between this Notice of
Affordability Covenants on Transfer of the Property and the Density Bonus Agreement, the
terms of the Density Bonus Agreement shall prevail.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Notice of Affordability
Restrictions on Transfer of Property as of the dates set forth below.
[Signatures on Following Pages]
EXHIBIT 6
SIGNATURE PAGE
TO
NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY
CITY:
CITY OF SANTA ANA
A California Charter City and Municipal
Corporation
By: _______________________
Name: Kristine Ridge
Its: City Manager_____________
Date: ________________________
APPROVED AS TO LEGAL FORM:
By: ________________________
Ryan O. Hodge
Assistant City Attorney
EXHIBIT 6
SIGNATURE PAGE
TO
NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY
DEVELOPER:
A
By:_______________________
Name:
Its:
Date: ________________________
EXHIBIT 6
1525165.2
RECORDING REQUESTED BY
AND WHEN RECORDED,
MAIL TO:
City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92702
Attn: City Clerk
______________________________________________________________________________
APN: 398-303-04, 398-303-05, SPACE ABOVE THIS LINE FOR RECORDER’S USE
398-303-06, 398-303-07 EXEMPT FROM RECORDING FEES PURSUANT TO GOV. CODE § 6103
DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT
between
THE CITY OF SANTA ANA
a charter city and municipal corporation of the State of California
and
Shelter Providers of Orange County, Inc., a California nonprofit corporation doing
business as HomeAid of Orange County
[Dated as of ___________________]
EXHIBIT 7
EXHIBIT 7
1525165.2
DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT
1. PARTIES AND EFFECTIVE DATE.
This Development Impact Fee Deferral Agreement (“Agreement”) is entered into on this
_______ day of _______________________, 2021, by and between the City of Santa Ana, a
charter city and municipal corporation of the State of California (“City”), and Shelter Providers
of Orange County, Inc., a California nonprofit corporation doing business as HomeAid of
Orange County (“Owner”). City and Owner are sometimes individually referred to herein as
“Party” and collectively as “Parties.”
2. RECITALS.
2.1 Owner is the owner of a leasehold interest in that certain real property in the City
of Santa Ana, California, which is owned by the Housing Authority of the City of Santa Ana, a
public body, corporate and politic, and more particularly described in Exhibit “A” attached
hereto and incorporated herein by this reference and as evidenced by that certain Memoranda of
Lease between _____, which was recorded in the Official Records of Orange County, California
on _____, as Document No. ____ (“Property”). Owner is the developer of the affordable rental
residential community consisting of seventeen (17) units with sixteen (16) units of permanent
supportive housing for chronically homeless individuals, 1,120 square feet of group space, and a
389 square foot community room at 801, 807, 809 and 809 ½ East Santa Ana Boulevard, Santa
Ana. Owner has received City approval and is in the process of obtaining the building permits;
2.2 Prior to issuance of any building permits, the City currently requires the payment
of various development impact fees for all residential projects to help address the impacts of new
development;
2.3 On ____, Owner submitted a written request formally requesting the deferral of
specific development impact fees for the Property pursuant to California Government Code
section 66007; and,
2.4 City and Owner desire to execute this Agreement to defer certain development
impact fees applicable to the Property and place a lien on the Property to secure payment of these
fees, pursuant to the terms and conditions set forth herein.
3. TERMS.
3.1 Deferral of Development Impact Fees.
3.1.1 Deferral of Development Impact Fees. City and Owner agree that the
development impact fees (“Subject Fee(s)”) and amount as shown on Exhibit “B,” for the
Property ordinarily due before issuance of a building permit for any new affordable residential
units on the Property (including manager’s units) will be deferred until immediately prior to the
final inspection or issuance of a certificate of occupancy for any new residential units on the
Property, whichever occurs first (“Deferral Period”). City and Owner acknowledge and agree
EXHIBIT 7
1525165.2
that the City Council may, in its sole and absolute discretion and during a regular, regular
adjourned, or special meeting of the City Council, extend the deadline for payment of the Subject
Fees without obtaining the approval of Owner or an amendment or modification of this
Agreement. Any extension granted by the City Council pursuant to this Section 3.1.1 shall
automatically be deemed to be part of the Deferral Period for purposes of this Agreement.
3.1.2 Payment of Subject Fees. Owner, or its successor in interest to the
Property or any portion thereof, shall be liable for the payment of the Subject Fees pursuant to
this Agreement. The Subject Fees for a residential building constructed on the Property shall be
due and payable at the termination of the Deferral Period. No certificate of occupancy shall be
issued for the building, any portion, or any residential units thereof on the Property unless and
until all Subject Fees ordinarily required to have been paid absent this Agreement have been paid
in full.
3.1.3 Subject Fee Amount. Except as may otherwise be provided for by a
statutory development agreement for the Property, as approved by the City, the amount of the
Subject Fee for each residential unit to be developed on the Property shall be determined
according to the rate of the Subject Fee adopted by the City and in effect on the date when the
building permit for the residential building is issued by the City. Upon issuance of each building
permit, the City shall complete and attach the form set forth in Exhibit “B” to this Agreement to
reflect the amount of the Subject Fee applicable at the time of issuance of that building permit
and attach a copy of the building permit, which shall collectively thereafter be incorporated as
part of this Agreement.
3.1.4 Obligation for Payment of Subject Fee. Owner hereby acknowledges and
agrees that Owner’s obligation to pay the Subject Fees shall continue and remain an obligation of
Owner, or any successors in interest of Owner, including, without limitation, any successor in
interest to the Property or any portion of the Property. Without limiting the nature of the
foregoing, any Subject Fees that remain unpaid following the time that they are required to be
paid may be collected by the City as a personal obligation of the Owner, or any successor of
Owner, as a special assessment against the property (collected at the same time and in the same
manner as ad valorem property taxes), or by any combination of the foregoing.
3.2 Covenant of Owner. Owner covenants that he, she or it is eligible to enter into
this Agreement and has fulfilled the requirements for approval of deferral of the Subject Fees.
Should Owner and/or the Property be deemed at any time prior or subsequent to execution of this
Agreement to be ineligible for a deferral of Subject Fees regardless of whether Owner
intentionally or unintentionally misrepresented to the City that Owner was eligible for a deferral
of Subject Fees, City may terminate this Agreement and require all Subject Fees ordinarily
required to have been paid absent this Agreement to be immediately paid in full.
3.3 Recordation of Agreement. Upon the execution of this Agreement, the City shall
cause this Agreement to be recorded in the Official Records of the County of Orange, California.
All costs assessed by the County of Orange for recordation of this Agreement shall be paid by
the Owner.
EXHIBIT 7
1525165.2
3.4 Lien against Property. From and after its execution, this Agreement shall
contractually bind Owner to pay all Subject Fees as provided in this Agreement, and shall
constitute a lien against the Property in an amount equal to the total Subject Fees, pursuant to
Government Code section 66007(c)(2). Upon payment to City of the total amount of the Subject
Fees for the Property, City shall, at the request of the Owner, execute and record in the Official
Records of the County of Orange, California, a release of the lien from the Property in
substantially the form of Exhibit “C” which is attached hereto and incorporated herein by this
reference. At the request of the Owner, the City shall deliver a copy of the executed and recorded
release of the lien to Owner.
3.5 Covenants Run With Land. Notwithstanding Section 3.6, each and all of the
promises, covenants and conditions of this Agreement and all liens against the Property subject
to this Agreement shall, as provided in Government Code section 66007, run with the Property
and shall be binding upon a party upon having or acquiring any right, title or interest in or to the
Property or any portion thereof.
3.6 Sale of Property. Pursuant to Government Code section 66007(c)(3), Owner
shall notify City in writing within three (3) business days of the sale or transfer of all or any
portion of the Property by Owner.
3.7 Invalidity of Lien. The invalidity or unenforceability of any lien provided for
under this Agreement shall not affect the contractual obligation of Owner to pay any and all
Subject Fees for the Property, nor shall the sale, lease or any encumbrance of the Property
release the Owner of this contractual obligation.
3.8 Rights Not Granted Under Agreement. This Agreement is not, and shall not be
construed to be, an approval or a granting of any right or entitlement (vested or otherwise) by
City concerning any development on the Property, or any other project, development or other
construction by Owner within the City. This Agreement does not, and shall not be construed to,
exempt Owner from paying any fees for any entitlements, permits, licenses or other approvals
that may be required by the City or other public entity with jurisdiction over the Property at the
time required by the City or other public entity with jurisdiction over the Property, or any other
project development or other construction by Owner. This Agreement does not, and shall not be
construed to, exempt Owner from any requirement to obtain permits or other discretionary or
non-discretionary approvals as may be necessary for the development, maintenance or operation
of the development on the Property or any other project, development or other construction by
Owner within the City. This Agreement does not, and shall not be construed to, exempt Owner
or the Property from the application or exercise of the City’s or any of its related agencies’
power of eminent domain or its police powers, including, but not limited to, the regulation of
land uses, and the taking of any actions necessary to protect the health, safety and welfare.
3.9 Cumulative Remedies. The rights or remedies of the City, as provided in this
Agreement, or pursuant to any applicable laws, rules or regulations, may be pursued singly,
successively, together or otherwise against the Property, Owner or its transferees, at the sole
discretion of the City. The City’s failure to exercise any such right or remedy shall in no event be
construed as a waiver or release of such rights or remedies, or of the right to exercise them at any
later time.
EXHIBIT 7
1525165.2
3.10 Indemnification. Owner agrees to indemnify, defend and hold harmless the City,
its elected officials, officers, agents and employees from and against all claims, demands, costs,
damages, liabilities and obligations of any kind or nature arising out of the deferral provided by
the City to Owner, this Agreement, or both, including without limitation, all costs of collection,
including actual attorneys’ and expert witness fees.
3.11 Successors and Assigns. Owner may not assign this Agreement, in whole or in
part, without the prior written consent of the City, which may be given, withheld or conditioned
in the City’s sole and absolute discretion. Any attempt to assign this Agreement without the
City’s prior written consent shall be null and avoid. This Agreement shall be binding on any and
all permitted successors and assigns of Owner.
3.12 Governing Laws. This Agreement shall be governed by the laws of the State of
California, without regard to the conflict of laws principles. The Superior Courts of the State of
California in the County of Orange, California, shall have exclusive jurisdiction of any litigation
between the City and Owner arising out of this Agreement. Owner hereby expressly waives the
provisions of any federal or state law providing for a change of venue to any other state court or
to federal district court, due to any reason whatsoever, including, without implied limitation, the
fact that the City is a party to this Agreement, due to any diversity of citizenship between the
City and Owner, or due to the fact that a federal question may be involved. Without limiting the
generality of the foregoing, Owner expressly waives, to the maximum legal extent, the benefit of
California Code of Civil Procedure Section 394 and all other state and federal statutes and
judicial decisions of similar effect.
3.13 Notices. All notices required to be delivered under this Agreement or applicable
law shall be delivered by personal delivery, express mail or by United States mail, certified,
postage prepaid. Notices personally delivered or delivered by express mail shall be deemed
received upon receipt. Notices delivered by certified mail shall be deemed received the earlier of
three (3) days following deposit of such notice with the United States Postal Service or actual
receipt. Notices shall be sent as follows:
To City: City of Santa Ana
Community Development Agency
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, CA 92702-1988
Attention: Housing. Manager
With copy to: Office of City Attorney
City of Santa Ana
20 Civic Center Plaza (M-29)
P.O. Box 1988
Santa Ana, California 92702
To Owner: Shelter Providers of Orange County, Inc.
1130 North Citrus Street
Orange, CA 92867
EXHIBIT 7
1525165.2
Attention: Executive Director
3.14 Attorneys’ Fees and Costs. Should the City or Owner bring any action or
proceeding against the other, and if such action or proceeding is related to the interpretation or
enforcement of this Agreement or in any way relates to or arises due to the existence of this
Agreement, then the prevailing party in that action or proceeding shall be entitled to recover
from the non-prevailing party, in addition to all other relief to which the prevailing party may be
entitled, its actual litigation costs and attorneys’ and expert witness fees. The “prevailing party”
shall be as determined by the court in accordance with the provisions of California Code of Civil
Procedure Section 1032. Recoverable litigation costs and attorneys’ fees include those incurred
by the prevailing party in the enforcement of any judgment or other judicial order, and during,
the defense of any appeal taken from such underlying judgment or other judicial order.
3.15 Entire Agreement. This Agreement constitutes the entire agreement of City and
Owner as to the deferral of impact fees and supersedes all previous agreements, oral or written,
on the subject matter of this Agreement.
3.16 Modification. This Agreement may be amended or modified only by an
agreement in writing signed by each of the parties hereto.
3.17 Headings. Section headings contained in this Agreement are for convenience
only, and shall not impact the construction or interpretation of any provision.
3.18 Severability. If any provision or clause of this Agreement or any application of it
to any person, firm, organization, partnership or corporation is held invalid, such invalidity shall
not affect any other provision of this Agreement, and the Agreement shall be construed as if such
provisions or clauses did not exist.
3.19 Time is of the Essence. Time is of the essence in this Agreement.
3.20 No Third Party Beneficiaries. This Agreement and the performance of the
City’s and Owner’s obligations hereunder are for the sole and exclusive benefit of the City and
Owner. No person or entity who or which is not a signatory to this Agreement shall be deemed to
be benefited or intended to be benefited by any provision hereof, and no such person or entity
shall acquire any rights or causes of action against either the City or Owner hereunder as a result
of the City’s or Owner’s performance or nonperformance of their respective obligations under
this Agreement.
3.21 Counterparts. This Agreement may be signed by the Parties in different
counterparts and the signature pages combined shall create a single document binding on all
parties.
[Signatures on Following Page]
EXHIBIT 7
1525165.2
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year
first above written.
ATTEST:
__________________________
DAISY GOMEZ
Clerk of the Council
CITY OF SANTA ANA
__________________________
KRISTINE RIDGE
City Manager
APPROVED AS TO FORM:
SONIA R. CARVALHO
City Attorney
By: _______________________
Ryan O. Hodge
Assistant City Attorney
SHELTER PROVIDERS OF ORANGE
COUNTY, INC., a California nonprofit
corporation
By: _________________________________
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
EXHIBIT 7
1525165.2
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF
On , , before me,
(here insert name and title of the officer)
personally appeared
,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
EXHIBIT 7
1525165.2
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF
On , , before me,
(here insert name and title of the officer)
personally appeared
,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
EXHIBIT 7
1525165.2
RECOMMENDED FOR APPROVAL:
_______________________________
STEVEN A. MENDOZA
Executive Director - CDA
PROPERTY OWNER:
HOUSING AUTHORITY OF THE CITY
OF SANTA ANA
By: _________________________________
EXHIBIT 7
1525165.2
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF
On , , before me,
(here insert name and title of the officer)
personally appeared
,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
EXHIBIT 7
1525165.2
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF
On , , before me,
(here insert name and title of the officer)
personally appeared
,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
EXHIBIT 7
1525165.2
EXHIBIT “A” TO
DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT
Legal Description of Property
Real property in the City of Santa Ana, County of Orange, State of California, described
as follows:
PARCEL 1: (APN: 398-303-04)
THE SOUTHWESTERLY 50.00 FEET OF LOTS 13, 14, 15 AND 16 I N BLOCK 66 OF
SANTA ANA EAST, AS
SHOWN ON A MAP RECORDED IN BOOK 10, PAGES 43 AND 44 OF
MISCELLANEOUS RECORDS OF LOS
ANGELES COUNTY, CALIFORNIA.
PARCEL 2: (APN: 398-303-05)
THE NORTHEASTERLY 50.00 FEET OF THE SOUTHWESTERLY 100.00 FEET OF
LOTS 13, 14, 15 AND 16
I N BLOCK 66 OF SANTA ANA EAST, AS SHOWN ON A MAP RECORDED IN BOOK
10, PAGES 43 AND 44
OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA.
PARCEL 3: (APN: 398-303-06)
THE EASTERLY 47 FEET OF THE SOUTHERLY 15 FEET OF LOT 14 AND THE
EASTERLY 47 FEET OF LOTS
15 AND 16, ALL I N BLOCK 66 OF "SANTA ANA EAST", CI TY OF SANTA ANA,
COUNTY OF ORANGE,
STATE OF CALI FORNI A, AS PER MAP THEREOF RECORDED I N BOOK 10
PAGES 43 AND 44 OF
MISCELLANEOUS MAPS RECORDS OF LOS ANGELES, CALIFORNIA.
PARCEL 4: (APN: 398-303-07)
THE EASTERLY 50 FEET OF LOT 13, THE NORTHERLY 10 FEET OF THE
EASTERLY 50 FEET OF LOT 14,
THE WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF THE SOUTHERLY 15
FEET OF LOT 14, AND THE
WESTERLY 3 FEET OF THE EASTERLY 50 FEET OF LOTS 15 AND 16 I N BLOCK
66 OF SANTA ANA EAST,
IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN
BOOK 10, PAGES 43 AND 44 OF MISCELLANEOUS MAPS, OF LOS ANGELES
COUNTY.
EXHIBIT 7
1525165.2
EXHIBIT “B” TO
DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT
Subject Fees for Building Permit No. ____
The following development impact fees imposed upon the Property or portion thereof by the city
of Santa Ana upon issuance of City of Santa Ana Building Permit No. ___ shall be deferred
pursuant to the terms and conditions of this Agreement:
(1) TSIA (Combined Non-Residential and Residential-Multifamily) in the amount of
$51,000.
(2) Fire Facilities in the amount of $81,600.
(3) Park Acquisitions and Development in the amount of $377,400.
Calculations of the final fee amounts to be determined at the time of issuance of certificate of
occupancy.
EXHIBIT 7
1525165.2
Exhibit “C” TO
DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT
Form Release of Lien
[Attached behind this cover page]
EXHIBIT 7
1525165.2
RECORDING REQUESTED BY
AND WHEN RECORDED,
MAIL TO:
City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92702
Attn: City Clerk
______________________________________________________________________________
APN: 398-303-04, 398-303-05, SPACE ABOVE THIS LINE FOR RECORDER’S USE
398-303-06, 398-303-07 EXEMPT FROM RECORDING FEES PURSUANT TO GOV. CODE § 6103
RELEASE OF LIEN FOR PAYMENT OF DEVELOPMENT IMPACT FEES
The City of Santa Ana, a charter city and municipal corporation of the State of California,
does hereby release that leasehold interest in certain real property, as further described in Exhibit
1 attached to this Release, from the lien for payment of certain development impact fees as
created by the Development Impact Fee Deferral Agreement entered into on __________, by and
between the City of Santa Ana and Shelter Providers of Orange County, Inc., a California
nonprofit corporation doing business as HomeAid of Orange County, which was recorded on
____________________, as Document Serial No. ________ in the Official Records of the
County of Orange, California (“Agreement”).
This release pertains only to the property described above and does not extend to any
other property(ies). This release of lien is executed and recorded pursuant to the provisions of
California Government Code section 66007.
Dated: ____________________
CITY OF SANTA ANA
By: _____________________
City Manager
Attest:
__________________________
City Clerk
EXHIBIT 7
1525165.2
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF
On , , before me,
(here insert name and title of the officer)
personally appeared
,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
EXHIBIT 7