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Home My WebLink About25K - NEIGHBORHOOD STABILIZATION PROGRAM REQUEST FOR 1 COUNCIL ACTION ' CITY COUNCIL MEETING DATE: ~ CLERK OF COUNCIL USE ONLY: MARCH 1, 2010 TITLE: APPROVED ? As Recommended AGREEMENTS FOR FEDERAL ? As Amended ? Ordinance on 151 Reading NEIGHBORHOOD STABILIZATION ? Ordinance on 2"d Reading PROGRAM (NSP 1 AND NSP 2) ? Implementing Resolution ? Set Public Hearing For CONTINUED TO ~ , FILE NUMBER CITY MANAGER RECOMMENDED ACTION 1. Authorize the City Manager to execute a Neighborhood Stabilization Program 2 (NSP 2) contract with the U. S. Department of Housing and Urban Development for grant funds in the amount of $10,000,000. 2. Approve an Appropriation Adjustment recognizing $10,000,000 in Neighborhood Stabilization Program 2 grant funds and appropriating the same. 3. Authorize the City Manager and the Clerk of the Council to execute an agreement for the implementation of the Neighborhood Stabilization Program 2 in the amount of $9,000,000 plus program income with: . ANR Industries, Inc. Orange Housing Development Corporation and C & C Development 4. Approve an Appropriation Adjustment recognizing Neighborhood Stabilization Program 1 (NSP1) program income funds and appropriating the same. 5. Authorize the City Manager and the Clerk of the Council to execute an amendment with ANR Industries, Inc. for implementation of the single family and Historic Condo components of the Neighborhood Stabilization Program 1 to include program income, subject to non-substantive changes approved by the City Manager and City Attorney. 6. Authorize the City Manager and the Clerk of the Council to execute an amendment with Orange Housing Development Corporation and C & C Development for implementation of the Rental Housing component of the programs Neighborhood Stabilization Program 1 to include program income, subject to non-substantive changes approved by the City Manager and City Attorney. 25K-1 Agreements for Federal NSP 1 and NSP 2 March 1, 2010 Page 2 COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION ACTION At its regular meeting on February 16, 2010, by a vote of 4:0, (Bist absent), the Community Redevelopment and Housing Commission recommended that the City Council approve and authorize the City Manager and Clerk of the Council to execute agreements regarding NSP 1 and NSP 2 as noted above. DISCUSSION On May 4, 2009, the U. S. Department of Housing and Urban Development (HUD) issued a Notice of Funding Availability (NOFA) for Neighborhood Stabilization Program 2 Funds. In July 2009, the City submitted an application for $10 million. On January 14, 2009, HUD notified the City that they were awarded the full amount as requested in the application. There were over 480 applicants and only 56 awardees nationwide. Of these, only 15 are local governments. As with NSP 1, funds may be used to benefit households with incomes up to 120 percent of area median income, with a minimum of 25 percent of these funds spent on activities benefitting very low-income households (50 percent AMI). The NSP programs, budgets and target goals are listed below and will be implemented in the target area (Exhibit 1) as required by HUD. Prog. Program Budget Goal No. # of Homes 1 Down a ment Assistance Pro ram $400,000 10 2 Acquisition and Rehabilitation - Sin le Famil Homes $6,100,000 60 3 Acquisition and Rehabilitation - Rental Housin $2,500,000 30 4 Admin $1,000,000 n/a Total NSP Grant $10,000,000 Under NSP 2 requirements, 50 percent of the funds must be spent within 24 months and 100 percent in 36 months from the date of the execution of the contract. HUD is mandated to have contracts executed by February 17, 2010. Because of these short timeframes to expend the funds and the successful implementation of NSP 1 with our partners, staff is recommending that ANR Homes, Inc. (ANR) and Orange Housing Development Corporation (OHDC) and C & C Development continue implementing the Single Family and Rental Housing components, respectively, for NSP 2. 25K-2 Agreements for Federal NSP 1 and NSP 2 March 1, 2010 Page 3 The City, along with our partners, continues to implement the NSP 1 activities and expects to meet the legislative deadlines for obligating (18 months) and expending (36 months) the funds. Currently, we have obligated 87 percent of our funds and have expended 56 percent. Inherent in single family and condo/historic programs is Program Income. This is generated from the subsequent sale of properties to new homebuyers. Per HUD regulations, NSP Program Income can only be used for activities approved in the NSP application. These include down payment assistance, single-family acquisition and rehabilitation, condo/historic acquisition and rehabilitation, rental housing, redevelopment and administration. As with the original allocation, HUD also requires that 25 percent of all program income be used for activities that benefit households at 50 percent of Area Median Income (AMI); these funds will be programmed into the rental programs. Additionally, 10 percent of the Program Income is to be used for program administration costs. Staff is requesting that Program Income generated by NSP 1 be recognized and approved for use. Given the nature of these programs, staff expects to continually recycle program income into NSP activities. FISCAL IMPACT By submitting the executed grant agreement, the City of Santa Ana will be eligible to receive up to $10,000,000 in grant funds from the U. S. Department of Housing and Urban Development. APPROVED AS TO FUNDS AND ACCOUNTS: r. ~ Cynthia J. Nelson Francisco Gutierrez Deputy City Manager for Development Executive Director Services Finance & Management Services Agency Community Development Agency CJN/SLB/JPH/kg Exhibit: 1. NSP 1 & 2 Target Geography Map 25K-3 _ a u, ~ *a, J °a Cf t 'a 0 R ,s veao~ ~ ~ 'c ~ \ o U ex, Z '(j' ao )laVd Ollla ' ~(fQ 'L N x /O~ttl ~ ~ ~ ti0~ 1S 3~Ota6hWJ ~ t ~y 4 ~ ea b q ~ .~+i S~ .Y ~P p LL N v ~y ~ 1~~4 Atl a'1W~ n 1511355V1U ~(J Atl 1110 :I S ~ _ ^ J ~ 1 ~ ,y $ F d.•1 4 M ~ ,f• 1S l7iY'1 ~ ~ ~ ~ ~ 1 ~ ~ ~ n .ti, ~ ~ ~ ~ ~ ~ rte`, ` ~ ~ !s l01 gas ~ g k \ ~ .l ~ ~ ~ ~ \ ~ w > ~ » O b ~ \ ~ n z ~ !s at3dna~vd ~ ~~4 \ \ ~ ~ ~ d w BPS ~ a~U1asY/ ~ ~ ~ N ~ an~eaoe w-re aoaarH ~ a$ ~ o as ~ 1S 3dOH!d311 ~ a a O v pq W ~ v N ~ ~ ~ W L r- C7 C7 F- s ~ ~ ~ o 00 ~ ~ N x ~ N w a a r z z ~ ~ o a z o 25K-4 FUNDING APPROVAL AND GRANT AGREEMENT FOR NEIGHBORHOOD STABILIZATION PROGRAM 2 (NSP2) FUNDS AS AUTHORIZED AND APPROPRIATED UNDER THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 AND THE HOUSING AND ECONOMIC RECOVERY ACT OF 2008 {PUBLIC LAWS 111-5 and 110-289) NSP2 GRANTEE: City of Santa Ana NSP2 GRANT NUMBER: B-09-LN-CA-0047 N5P2 GRANT AMOUNT: X10,000,000 NSP2 APPROVAL DATE: January 14, 2010 NSP2 EXPENDITURE DEADLINE (2 YEARj: February 11, 2012 NSP2 EXPENDITURE DEADLINE {3 YEAR}: February 11, 2013 1. This Grant Agreement between the U.S. Department of Housing and Urban Development (HUD) and City of Santa Ana (Grantee} is made pursuant to the authority of title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5 (February 17, 2009)) (Recovery Act) and sections 2301 - 2304 of the Housing and Economic Recovery Act of 2008 (Public Law 110-289 (July 30, 2008}) (HERA). The program established pursuant to section 2301-2304 of HERA is known as the "Neighborhood Stabilization Program" or "NSP." The term "NSP2" refers to the second appropriation of NSP funds provided under the Recovery Act. The Notice of Fund Availability for the Neighborhood Stabilization Program 2 under the American Recovery and Reinvestment, 2009 (Docket No. FR-5321-N-O1,1\,!lay 4, 2009) (1VOFA); the three Notices of Fund Availability for Fiscal Year 2009 Neighborhood Stabilization Program 2 under the American Recovery and Reinvestment Act of 2009, Correction (Docket No. FR-5321-C-02, June 11, 2009; Docket No. FR-5321-C-03, November 9, 2009; and Docket No. FR-5321-C-04}; the Recovery Act; HERA; the Grantee's application for . NSP2 assistance (Grantee Application); the HUD regulations at 24 CFR Part 570 (as modified by the NOFA as now in effect and as maybe amended from time to time) (Regulations); and this Funding Approval, including any special conditions, constitute part of the Grant Agreement. In the event of a conflict between a provision of the Grantee's Application and any provision of this- Grant Agreement, the latter shall control. 25K-5 City of Santa Ana 8-09-LN-CA-0047 2 2. The Grantee shall comply with governmentwide guidance and standard award terms established by the Office of Management and Budget {OMB} concerning the implementation of the Recovery Act, including Requirements for Implementing Sections 1512, 1605, and 1606 of the American Recovery and Reinvestment Act of 2009 for Financial Assistance Awards, 74 Fed. Reg. 18449 (Apri123, 2009) {to be codified at 2 CFR part 17b} (as now in effect and as may be amended from time to time}. The Grantee shall comply with reporting requirements established by HUD and OMB (including all revisions to such reporting requirements), as well as section 1553 of the Recovery Act (including implementing guidance). 3. Subject to the provisions of this Grant Agreement, HUD will make NSP2 Grant Funds in the amount of $10,000,000 available to the Grantee upon execution of this Grant Agreement by the parties. Of that amount, $2,500,000 must be used for the purchase and redevelopment of abandoned or foreclosed homes or residential properties that will be used to house individuals or families whose incomes do not exceed 50 percent of area median income, pursuant to the Recovery Act and HERA. The Grantee shall have 24 ; months from the date of HUD's execution of this Grant Agreement to expend half of the NSP2 Grant amount pursuant to the requirements of this Agreement, the Recovery Act, HERA and the NOFA, as amended. The Grantee shall have 36 months from the date of HUD's execution of this Grant Agreement to expend the total NSP2 Grant amount pursuant to the requirements of this Agreement, the Recovery Act, HERA and the NOFA, as amended. The NSP2 Grant Funds may be used to pay eligible costs arising from eligible uses incurred after the NSP2 Approval Date provided the activities to which such costs are related are carried out in compliance with all applicable requirements. Pre- award planning and general administrative costs may not be paid with funding assistance except as permitted in the NOFA, as amended. Other pre-award costs may not be paid with funding assistance except as permitted by 24 CFR 570.204(h); for purposes of NSP2, such costs are limited to those incurred on or after the date that the NSP2 NOFA i was published by HUD. if the Grantee's NSP2 Grant Amount is less than the amount requested in the Grantee's NSP2 Application, the Grantee must submit a Revised Budget and Activity List, (see Appendix A}, with the executed copy of this Grant Agreement. The Grantee is reminded that the Revised Budget and Activity List must still comply with the requirements of the NSP2 NOFA. Specifically, the Grantee is required to 1) return a minimum of 100 abandoned or foreclosed homes back to productive use or otherwise eliminate or mitigate the negative effects on the stability of the target geography and 2} ensure that the target geogrpphy in which the Grantee intends to carry out NSP2 activities has an average combined needs index score of 18 or greater. 4. The Grantee agrees to assume all of the responsibilities for environmental review, decisionmaking, and actions, as specified and re uired in re lations issued b the q ~ Y Secretary pursuant to section 104(g} of Title 1 of the Housing and Community Development Act, as amended {42 U:S.C. 5304) and published in 24 CFR Part 58. 25K-6 City of Santa Ana B-09-LN-CA-0047 3 5. The Grantee agrees that it will demolish or convert units using NSP2 funds only to the extent and scope described in the NSP2 application. The Grantee agrees that under no circumstances will NSP2 funds be used to demolish any public housing {as defined in section 3 of the United States Housing Act of 1937 (42 U.S.C. 1437a)). 6. The Grantee agrees to comply with the Recovery Act provisions concerning tenant protections applicable to NSP2 acquisitions of foreclosed property. The Grantee must document its efforts to ensure that the initial successor in interest (ISII} in a foreclosed upon dwelling or residential real property {typically, the initial successor in interest in property acquired through foreclosure is the lender or trustee for holders of obligations secured by mortgage liens) has provided bona fide tenants with the notice and other protections outlined in the Recovery Act. The Grantee- will not use NSP2 funds to finance the acquisition of property from any initial successor in interest that failed to comply with applicable requirements unless the Grantee assumes the obligations of such initial successor in interest with respect to bona fide tenants. If the. Grantee elects to assume such obligations, it may only do so if the tenant is still occupying the property and will provide any tenant displaced as a result of the NSP2 funded acquisition with the assistance outlined in 24 CFR 570.606. If the Grantee knows that the ISII did nat comply with the NSP tenant protection requirements and vacated the property contrary to the NSP requirements, NSP2 funds cannot be used to acquire such properties. 7. The Grantee further acknowledges its responsibility for adherence to all applicable terms and conditions of this grant award by sub-recipient entities and contractors, including obtaining a DUNS number (ar updating the existing DUN5 record), and registering with . the Central Contractor Registration. The DUNS number shall be provided by the Grantee on the execution page of this agreement. 8. This Grant Agreement maybe amended only with the prior written approval of HUD. Changes that affect program design elements that HUD considered in rating NSP2 applications may result in HUD re-rating the application. In considering proposed amendments to this Grant Agreement, HUD shall also review, among other things, whether the amendment is otherwise consistent with the Recovery Act, HERA, the NOFA, as amended, and the Regulations. 9. The Grantee may not amend its Grantee Submission other than as described above; however, such amendments will be subject to the requirements of the NOFA and any revisions HUD may make to the NOFA (or any successor Notice or regulation). 10. The Grantee must respond in writing to any citizen complaint within 15 working days, if feasible, and send a copy of the response to HUD. The Grantee shall at all times maintain an up-to-date copy of its Grantee Application, including all amendments approved by HUD, on its Internet website. Further, the Grantee shall maintain information on all drawdowns, deposits, and expenditures of grant funds and program income under this Funding Approval and Grant Agreement and any other records required by 24 CFR 570.506 and the NOFA, as amended, in its files and shall make such information 25K-7 City of Santa Ana B-09-LN-CA-0047 4 available for audit or inspection by duly authorized representatives of HUD, HUD's Office of the Inspector General, the Recovery Act Transparency Board or the Comptroller General of the United States. 11. The Grantee is advised that providing false, fictitious or misleading information with respect to NSP2 Grant Funds may result in criminal, civil or administrative prosecution under 18 USC § 1001, 1$ USC § 1343, 31 USC § 3729, 31 USC § 3$01 or another applicable statute. 12. Close-out of this grant shall be subject to the provisions of 24 CFR 570.509 or such close-out instructions as may hereafter be issued by HUD specifically for NSP2 grants. Special Conditions: Not applicable [Remainder of this page blank] 25K-8 City of Santa Ana B-09-LN-CA-0047 5 This NSP2 Grant Agreement is binding with respect to HUD in accordance with its terms upon the execution by HUD in the space provided below, subject to execution on behalf of the Grantee. The United States Department of The Grantee Housing and Urban Development City of Santa Ana Si afore of Authorized Offic' Signature of Authorized Offical Yolanda Chavez David N. REam Name of Authorized Official Name of Authorized Official Deputy Assistant Secretary for Grant Programs City Manager Title of Authorized Official Title of Authorized Official fEB 1 1 2010 Date of Signature Date of Signature 95-soao~s5 Grantee Tax Identification Number 083153247 DUNS Number For HUD CFO Use Only Current Balances Increases/Decreases Endin Balance Date 25K-9 25K-10 FIRST AMENDMENT TO NEIGHBORHOOD STABILIZATION PROGRAM GRANT SERVICES AGREEMENT WITH ANR SANTA ANA NSP, LLC This Amendment is executed by and between the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California (hereinafter "City") and ANR Santa Ana NSP, LLC, a limited liability company ("Developer") as of March , 2010. RECITALS: A. City and Developer entered into the Neighborhood Stabilization Program Grant Services Agreement (said "Agreement") on , 2009 for Developer to assist City with the acquisition and rehabilitation of single family, condominium and historic components of the Neighborhood Stabilization Program (NSP). B. The parties now desire to amend said Agreement to include terms related to additional funding generated by program income. WHEREFORE, in consideration of the covenants contained in said Agreement, and subject to all the terms and conditions of said Agreement, except those amended in this First Amendment to Agreement, the parties agree as follows: 1. Each party hereto agrees that Sections 500 and 700 of said Agreement, shall be amended to include the following additional terms: 507. Verification of Homebuyer Income. Prior to the sale of any NSP Assisted Unit to a Homebuyer, the Developer shall submit to the City a completed income computation and certification form from each Homebuyer of the NSP Assisted Unit in the form which is provided by the City. Each Homebuyer shall certify, to the best of the Homebuyer's knowledge, that it is a Low or Moderate Income Household and meets the eligibility requirements established for the NSP Assisted Unit. The Developer shall obtain an income verification and lender's packet from the prospective purchaser of an NSP Assisted Unit (which shall be provided to the City). For purposes of this Program, income will be calculated per HUD guidelines for federal programs (Exhibit E: HUD Part 5 Income & Assets Definitions). For purposes of such certification, the Developer shall verify the income certification of the prospective Homebuyer in one or more of the following methods reasonably acceptable to the City: (a) obtain three (3) paycheck stubs from the prospective Homebuyer's three (3) most recent pay periods. (b) obtain a true copy of an income tax return from the prospective Homebuyer for the most recent three tax years in which a return was filed. (c) obtain an income verification certification from the employer of the prospective Homebuyer. Final Amend NSP1 ANR 2~-~qit 3 (d) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the prospective Homebuyer receives assistance from such agencies. (e) obtain an alternate form of income verification reasonably acceptable to the City, if none of the above forms of verification is available to the Developer. 508. Affordability Documents at Time of Sale. At the closing of escrow for the Homebuyer's purchase of each NSP Assisted Unit, the City will require each income qualified Homebuyer of such Unit to execute the following documents: the Homebuyer Deed of Trust (attached hereto as Exhibit F), Homebuyer Promissory Note (attached hereto as Exhibit G), and such further documents reasonably required by the City in a form provided by the City. Any Units assisted with tax increment money will also have a Notice of Affordability recorded against such Property (attached hereto as Exhibit H). The Promissory Note, and Deed of Trust shall contain aforty-five (45) year term. The principal loan amount of the Promissory Note shall be the amount of NSP Funds to create this homeownership opportunity, which will be determined based on the affordable sales price, the fair market value or the maximum sales price permitted under the NSP Program at the time of sale. In those instances where properties have an appraised Fair Market Value that is greater than the sales price, a silent second will be placed on the Property for that difference. All principal and interest shall be deferred until subsequent sale or transfer of the Property. The Deed of Trust will carry a 3% forgivable interest rate, and will be due and payable in forty-five (45) years. Interest will be forgiven at a rate of 1/45`h per year, at each anniversary date of the original sale, with all interest forgiven at the end of the forty-five (45) year affordability period. The covenants and restrictions must be fully explained to each Homebuyer and the entire explanation and execution of said document must be recorded by the Developer. A copy of said audio and visual recording shall be placed on a CD which shall be kept by the Developer and the City. 708. Program Income. Developer acknowledges that the funds being provided by City for said program are received by City pursuant to the NSP Program criteria and guidelines as amended and that expenditures of these funds shall be in accordance with the NSP criteria and guidelines and all pertinent regulations issued by agencies of the federal government, including, but not limited to, all regulations found at Title 24 of the Code of Federal Regulations. When the City receives repayment such funds are Program Income. Program Income received by the City will be used for NSP Activities. Program Income and reallocated funds identified for the single family, condominium and historic components will be added to agreement with Developer. Developer agrees to comply fully with all federal, state and local laws and court orders applicable to its operation whether or not referred to in this Agreement. Final Amend NSP 1 ANR 25K-12 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Agreement on the date and year first written above. ATTEST: CITY OF SANTA ANA MARIA D. HUIZAR DAVID N. REAM Clerk of the Council City Manager APPROVED AS TO FORM: JOSEPH W.FLETCHER City Attorney By: LISA E. STORCK Assistant City Attorney DEVELOPER: ANR Santa Ana NSP, LLC By: GEORGE JORDAN Vice President Final Amend NSP1 ANR 25K-13 25K-14 FIRST AMENDMENT TO NEIGHBORHOOD STABILIZATION PROGRAM GRANT SERVICES AGREEMENT WITH ORANGE HOUSING DEVELOPMENT CORPORATION AND C&C DEVELOPMENT This Amendment is executed by and between the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California (hereinafter "City") and Orange Housing Development Corporation ("OHDC"), a non-profit 501 (c) (3) organization, and C&C Development, a Limited Liability Company ("Developer") as of March , 2010. ~ RECITALS: A. City and Developer entered into the Neighborhood Stabilization Program Grant Services Agreement (said "Agreement") on , 2009 for Developer to assist City with the acquisition and rehabilitation of rental components of the Neighborhood Stabilization Program (NSP). B. The parties now desire to amend said Agreement to include terms related to additional funding generated by program income. WHEREFORE, in consideration of the covenants contained in said Agreement, and subject to all the terms and conditions of said Agreement, except those amended in this First Amendment to Agreement, the parties agree as follows: 1. Each party hereto agrees that Section 700 of said Agreement, shall be amended to include the following additional term: 708. Program Income. Developer acknowledges that the funds being provided by City for said program are received by City pursuant to the NSP Program criteria and guidelines as amended and that expenditures of these funds shall be in accordance with the NSP criteria and guidelines and all pertinent regulations issued by agencies of the federal government, including, but not limited to, all regulations found at Title 24 of the Code of Federal Regulations. When the City receives repayment from sales of the Properties, such funds are "Program Income". Program Income received by the City will be used for NSP activities. Program Income and reallocated funds identified for the rental component will be added to the Agreement with Developer. Developer agrees to comply fully with all federal, state, and local laws applicable to its operation whether or not referred to in this Agreement. 25K-15 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Agreement on the date and year first written above. ATTEST: CITY OF SANTA ANA MARIA D. HUIZAR DAVID N. REAM Clerk of the Council City Manager APPROVED AS TO FORM: JOSEPH W.FLETCHER City Attorney By: LISA E. STORCK Assistant City Attorney DEVELOPER: By: ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit public benefit corporation, its sole member By: Eunice Bobert, its Chief Executive Officer C&C Development a California limited liability company By: Todd R. Cottle, its member By: Cottle Family Trust Dated 3/8/87, By: Barry A. Cottle, its Trustee 25K-16 NEIGHBORHOOD STABILIZATION PROGRAM (PROGRAM 2) GRANT SERVICES AGREEMENT This Agreement is executed by and between the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California (hereinafter "City") and ANR Santa Ana NSP, LLC, a California limited liability corporation ("Developer") as of , 2010. RECITALS: A. Title III of Division B of the Housing and Economic Recovery Act of 2008 (Pub. L 110- 289, 122 Stat. 2654 enacted July 30, 2009) makes available to certain qualified municipalities for certain qualified grant funds termed Neighborhood Stabilization Program ("NSP Funds") under a program termed the Neighborhood Stabilization Program (the "NSP"). B. On May 4, 2009, the U.S. Department of Housing and Urban Development ("HUD") issued a Notice of Funding Availability (NOFA) for Neighborhood Stabilization Program 2 Funds (NSP 2). In July 2009, the City submitted an application for $10 million. C. On January 14, 2010, the City was notified that its application under the NSP for NSP 2 Funds was approved by HUD. Funding for Developer is allocated for acquisition and rehabilitation of the single family component of the NSP2 program in an amount not to exceed $6,500,000.00, but not less than $3,000,000.00 plus program income. D. The City has developed certain criteria and guidelines for implementation of its Neighborhood Stabilization Program for the NSP funds. The City has identified the target area as illustrated in the map attached hereto as Exhibit A. E. Developer was awarded an Agreement for NSP 1 funds, and due to the successful implementation of NSP 1 with Developer, this Agreement is being awarded to Developer. F. The City intends for the NSP funds to be primarily used for acquisition of foreclosed properties and any expenses related to the acquisition and disposition of such properties, including developer fees. Only in special circumstances will the NSP funds be used for the rehabilitation costs associated with foreclosed properties. NOW THEREFORE, the parties agree as follows: 100. DEFINITIONS "Abandoned" a residential property is abandoned when mortgage or tax foreclosure proceedings have been initiated for that property, no mortgage or tax payments have been made by the property owner for at least 90 days AND the property has been vacant for at least 90 days. 1 "Affordable Sales Price" shall mean a purchase price which results in an affordable cost to a Low or Moderate Income Purchaser. The Affordable Sales Price for Low Income households will be the product of 30% times 65% of the Area Median Income adjusted for family size appropriate for the unit. For Moderate Income households, the Affordable Sales Price will be the product of 35% times 100% of the Area Median Income, adjusted for family size appropriate for the unit. "Agency" means the Community Redevelopment Agency of the City of Santa Ana, a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et sec The principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California, 92702. "Agreement" means this Neighborhood Stabilization Program Agreement between the City and the Developer, and any attachments thereto. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the NSP, and the NSP 2 Funds. "Area Median Income" means the median income figures for Orange County adopted by the State of California pursuant to Health and Safety Code Section 50093, as amended from time to time. Also maybe referred to as "AMI" herein. "Blighted" a structure is blighted when it exhibits objectively determinable signs of deterioration sufficient to constitute a threat to human health, safety and welfare. "Building Permit" means the building permit(s) issued by City and required for the rehabilitation, if any. "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. "City" means the City of Santa Ana, a charter city and municipal corporation. "Current Market Appraised Value" the current market appraised value means the value of a foreclosed residential property that is established through an appraisal made in conformity with the appraisal requirements of the Uniform Relocation Act (URA) 49 CFR 24.13 and completed within 60 days prior to the final offer made for the property. "Deed of Trust" means the Deed of Trust with the Developer encumbering the NSP Assisted Unit in the form attached hereto as Exhibit C. "Developer" means ANR Homes Inc., a California corporation, and its affiliate, ANR Santa Ana, NSP, LLC. 2 25K-18 "Eligible Property" shall mean a property that the City shall in its sole discretion determines meets NSP Program Criteria. "Executive Director" means both the Deputy City Manager for Development Services, and the Executive Director of the Community Redevelopment Agency, or his/her designee. "Foreclosed" A property "has been foreclosed upon" at that point that, under state or local law, the mortgage or tax foreclosure is complete and the title has been transferred away from the former property owner. A property is not foreclosed until the title for the property has been transferred from the former property owner under a foreclosure proceeding or a transfer in lieu of foreclosure, in accordance with state or local law. "Hazardous Materials" means flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including without limitation the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et sec., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601, et seq., as amended. "Homebuyer" shall be the qualified low or moderate income household that originally purchases the NSP Assisted Unit from the Developer. "Homebuyer Deed of Trust" means the deed of trust encumbering the NSP Assisted Unit, in the form attached hereto as Exhibit F to be executed by the Homebuyer at the time of sale. "Housing Rehabilitation Standards" NSP funded activities will adhere to the Housing Rehab Standards (attached hereto and incorporated herein as Exhibit B). This standard exceeds the HUD Housing Quality Standards. The Standards shall correct housing deficiencies and address items deemed essential for basic health, safety, and welfare. All work shall meet the Uniform Building Code (UBC), Uniform Plumbing Code (UPC), Uniform Mechanical Code (UMC), National Electric Code (NEC) as amended periodically. "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "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). "Low Income" means an adjusted income which does not exceed eighty percent (80%) of the Orange County, California PMSA, adjusted for household size, as published 3 25K-19 by HUD. .This income limit will be used to determine the Homebuyer's maximum income for eligibility to purchase a Low Income Unit. "Median Income for the Area" means the median income for the Orange County, California PMSA as most recently determined by HUD. Also maybe referred to interchangeably in the Loan Documents as "Area Median Income" or "AMI". "Moderate Income" means an adjusted income which does not exceed one hundred twenty percent (120%) of the Orange County, California PMSA, adjusted for household size, as published by HUD. This income limit will be used to determine the Homebuyer's maximum income for eligibility to purchase a Moderate Income Unit. "Neighborhood Stabilization Program" (NSP) has the meaning set forth in the Recitals above. "Neighborhood Stabilization Program (NSP) Regulations" has the meaning set forth in the Recitals above. ~~NSP Assisted Units" shall mean those residential units purchased and rehabilitated on Eligible Properties which are subject to the term of affordability. "NSP Funds" shall mean the money provided under the NSP 2 Program for the acquisition and rehabilitation of the homes hereunder. "Target Area" shall mean the map attached hereto and incorporated herein as Exhibit A. "Term of Affordability" the term of affordability shall be forty-five (45) years. 200. PROPERTY ACQUISITION 201. Selection of Properties by Developer. Developer shall with reasonable diligence seek to identify proposed Eligible Properties which it determines may meet NSP Program Criteria. Only vacant properties will be considered. The Developer shall provide the City with its Acquisition/Rehabilitation Bid Analysis on each potential property to the City. Upon receipt of complete bid analysis, the City shall review said within two (2) working days, subject to final approval after inspection by City rehabilitation staff which shall occur within two (2) additional working days. The City will approve or reject properties for purchase through the NSP Program. Developer shall negotiate the purchase of the property with the current owner which must be consistent with NSP guidelines. Developer has the capacity to finance up to 80 percent of costs with its own acquisition/construction lender. Developer shall take, insure and hold title to the property, and prepare a scope of work to be reviewed by the City. The City anticipates mainly using NSP funds for acquisition, costs associated with maintenance, sales and other related soft costs. The actual number of housing units to be acquired and rehabilitated by Developer will be determined by the City in its sole discretion based in part on the amount of NSP Funds awarded to Santa Ana. 4 25K-20 202. Properties Provided by the National Community Stabilization Trust. The parties shall also be working in conjunction with the National Community Stabilization Trust (NCST) to identify potential eligible properties. Each of the parties has signed a Memorandum of Understanding with NCST and agreed to the Acquisition Program Guidelines issued by NCST. Any properties purchased in collaboration with NCST must comply with all NCST requirements and follow the NCST framework for acquisition of eligible properties. As the City's partner with NCST, Developer shall work with the City's approved intermediary(ies) for the Rental Program, or to other non-profit organizations implementing similar programs that the City may identify, to provide potential eligible properties. 203. Offer to Purchase. Any offers to purchase must include a contingency for appraisal to be in compliance with NSP Regulations. Once appraisal is in compliance, then a final offer to purchase may be submitted. 204. Appraisals. The City issued a Request for Proposals (RFP) in order to establish a list of qualified appraisers. The appraisers selected are experienced, qualified and meet the NSP appraiser requirements. The City shall provide its approved list of appraisers to be used for all NSP activities to the Developer. Developer shall select and pay the appraiser directly as one of its development costs. 205. Funding of Acquisition. City shall deposit into escrow, funds for Developer as agreed upon during the Selection Phase. City shall record a lien, in the form of a Deed of Trust (attached hereto and incorporated herein as Exhibit C), against each of the selected properties equal to the amount of money deposited into escrow for such property. Said lien will be released upon sale of the Property to a qualified homebuyer, when the Deed of Trust and Promissory Note are executed. The City is willing to subordinate its Deed of Trust to the primary lender. 300. REHABILITATION REQUIREMENTS. The following Rehabilitation Requirements shall apply to all NSP Assisted Units: 301. Permits and Approvals. Developer shall diligently obtain all permits, including all building permits, licenses, approvals, exemptions and other authorizations of governmental agencies required in connection with the rehabilitation of the Property. 302. Commencement and Completion of Rehabilitation. The Rehabilitation 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 any governmental authority has been completed and all requisite certificates, approvals and other necessary authorizations (including required final certificates of occupancy) have been obtained. 303. Rehabilitation Standards. Residential Rehabilitation Standards (24 CFR 570): Developer certifies that it will perform rehabilitation in conformance to the standards outlined in the City's Residential Rehabilitation Standards ,which exceed the HUD Housing Quality Standards and with strict adherence to state and local building codes, safety standards, protection 5 25K-21 of historical integrity and for maximum achievement in the area of energy efficiency. Demolition shall be conducted in cases of extreme deterioration, to eliminate illegal additions, and in concert with local authorities. 304. Protection of Historical Structures (24 CFR Part 58/36CFR Part 800). Developer will comply with and obtain approval of the Federal and State Historic Preservation Commission(s) when rehabilitation activities are planned on a structure that is listed on the state historic registry, and will provide documentation of such approval to the City prior to commencement of any rehabilitation activities on a property which is funded through this program. 305. Lead-Based Paint. Developer shall comply with the requirements, as applicable of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing regulations at 24 CFR 35 for any housing project it undertakes pursuant to this Agreement. For the activities outlined in this Agreement, Developer will be required to pay particular attention to subpart J (Rehabilitation); subpart K (Acquisition, Leasing, Support Services or Operation) and Subpart R (Methods and Standards for lead based paint hazard reduction activities). 306. Asbestos Abatement: The United States Environmental Protection Agency (EPA) has defined asbestos containing materials (ACM) to be any substance containing more than one percent (1%) or more asbestos by weight. All ACM's must be abated prior to demolition or renovation/remodeling activities by a Cal-OSHA licensed asbestos abatement contractor using methods in accordance with 8 CCR 1529 and SCAQMD Rule 1403. Asbestos abatement procedures should be monitored by a third party or consultant knowledgeable in asbestos abatement procedures and is, at a minimum, either a Cal-OSHA certified Site Surveillance Technician or Certified Asbestos Consultant. The survey for ACMs shall be performed in conjunction with the survey for lead-based paint. All suspect materials are sampled and tested in accordance with the general guidelines for bulk asbestos sampling as presented in Section 40, Part 763 (AHERA) of the Code of Federal Regulations (CFR) and the United States EPA. 307. Energy Efficient Products. Developer shall include energy efficient products in the rehabilitation of the homes. Such products include, but are not limited to, the following features: low-flush toilets, insulation, high efficiency systems, and tankless water heaters. In addition, yards will be landscaped with low-maintenance and drought tolerant plants. 308. Rehabilitation Act -Section 504 (As Applicable). Section 504 of the Rehabilitation Act of 1973 prohibits discrimination in federally-assisted activities and programs on the basis of handicap, and imposes requirements to ensure that qualified individuals with handicaps have access to these programs and activities. 309. Property Standards. Developer shall cause the Property to meet the housing quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal 6 25K-22 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. 400. REHABILITATION COSTS PAID WITH NSP FUNDS. In those special instances where Rehabilitation Costs will be paid with NSP Funds, the following procedures shall be followed: 401. Rehabilitation Costs Paid with NSP Funds. It is the intent of the parties to use NSP funds for acquisition and related soft costs. If there is a need to use NSP funds for rehabilitation, this section will apply. In the event that NSP Funds will be used for construction related expenses, Developer must also comply with the labor and Davis-Bacon regulations as set forth in Section 703 hereof. The documents referenced in this Section 400 (Payment Request, Release of Retention Funds, Notice of Completion) are attached hereto and incorporated herein as Exhibit D. 402. Disbursement Requests. The Rehabilitation Portion proceeds shall be disbursed on a line-item by line-item basis in accordance with the Rehabilitation Budget and subject to the conditions in this section. In no event shall City have any obligation to disburse any amount for any item in excess of the amount allocated to such item in the Rehabilitation Budget. Disbursements shall be made only upon Developer's written request in the form of a Disbursement Request showing all costs which Developer intends to fund with such disbursement, itemized in such detail as City may reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to City, including in any event partial lien releases executed by each contractor and subcontractor who has received any payment for work performed, and (b) all other documents and information reasonably required by City. Disbursement Requests shall be submitted no less than ten (10) Business Days prior to the date of the requested disbursement, and shall not be submitted more often than monthly. Prior to each disbursement by City of proceeds of the NSP Funds, Developer shall deliver to City and to Bank a draw request ("Draw Request"), and all required supporting information as set forth in this Agreement or as otherwise reasonably required by City or Bank in order to provide information for evaluating the requested disbursement pursuant to customary construction lending practices of institutional lenders in Southern California. City and Bank shall notify the other and Developer of approval or disapproval of each Draw Request within five (5) business days after receipt of the Draw Request, using the Bank's "Disbursement/Change Order Approval Notice". City and Bank shall have the right, but not the obligation, to discontinue processing Draw Requests unless and until receipt of notification from the other of approval or disapproval of each outstanding Draw Request. 403. Manner of Disbursement. City may make any disbursement by check payable to Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor, subcontractor or other claimant; or directly to any such claimant; or by any other means reasonably selected by City. 7 25K-23 404. Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost reasonably estimated by City or Developer to be required to complete all matters included in any line item in the Rehabilitation Budget exceeds the amount allocated to that line item in the Rehabilitation Budget, (b) Rehabilitation Costs for any matters not covered by a specific line item have been or will be incurred, or (c) the undisbursed portion of the Rehabilitation Portion is or may be insufficient to pay all Rehabilitation Costs that may be payable under this Agreement or otherwise in connection with the Rehabilitation, Developer shall, within ten (10) days after it receives written notice thereof from City of any of the foregoing matters, do one or more of the following: (a) provide satisfactory evidence to City that Developer has previously paid such excess or otherwise provided for such insufficiency (collectively, the "Excess Cost") with funds from a source other than the NSP Funds; (b) reallocate sufficient funds to pay the Excess Cost from funds allocated to "Contingency" in the Rehabilitation Budget; provided, however, that the Executive Director's consent to any such reallocation shall be required; or (c) deposit an amount equal to the Excess Cost in anon-interest bearing account (the "Overrun Account") with City from which withdrawals may be made only with the consent of the Executive Director but which will be exhausted prior to any further disbursement for any line item, so that any resulting surplus in any line item of the Rehabilitation Budget will then be reallocated to the line item(s) in which the Excess Costs are expected to be incurred. City shall have no obligation to make further disbursements until Developer has paid or otherwise provided for the overrun as required above. Amounts deposited by Developer in the Overrun Account for any Excess Costs shall be disbursed by City prior to the disbursement of any remaining Rehabilitation Portion proceeds. 405. Cost Savings. Upon completion of and disbursement for all matters covered by any line items in the Rehabilitation 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. 406. Retainage. City will withhold a Retainage of 10% from each Disbursement for each of the Hard Cost line items of the Project Cost Breakdown (and other line items thereof designated for withholding of retainage) until all conditions to the final Disbursement of Hard Costs have been satisfied. In lieu of City's withholding Retainage, Developer can by written notice to City elect not to draw any overhead or profit as would otherwise be permitted under the Construction Contract until such time as Retainage would otherwise have been released. City shall not retain funds for building materials purchased by Developer for which Developer supplies documentation to City proving payment in full or for soft costs. 407. Holdback. The retainage otherwise available for disbursement shall be subject to a holdback of one hundred twenty-five percent (125%) of the estimated cost (as determined by the 8 25K-24 Executive Director) for "punch-list" items. Such holdback will be released when all punch-list items have been completed to the satisfaction of City. 408. Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the making by City of any disbursement with knowledge that any condition to such disbursement is not fulfilled shall constitute a waiver of such condition only with respect to the particular disbursement made, and such condition shall be condition to all further disbursements until fulfilled. 409. Modification of Disbursement Conditions and Procedures. The Executive Director shall have the authority to modify the disbursement conditions and procedures set forth herein in order to conform them to the payment provisions of the Rehabilitation Contract. 500. COVENANTS, RESTRICTIONS, SALE TO HOMEBUYERS 501. Reserved. 502. Selection of Broker by Developer. Developer shall select local real estate brokers that are most knowledgeable of the market and have a successful track record in the area. Selection of the broker will be based on criteria such as volume of sales in the area, days on the market, and comparison of listing price versus sales price, excluding foreclosed properties. The number of brokers shall be reviewed periodically based on program needs and volume. 503. NSP Assisted Units. Developer agrees to make available, restrict occupancy to, and sell each of the NSP Assisted Units to Low or Moderate Income Households (as that term is herein defined) at an Affordable Housing Cost. In addition, the Developer agrees to cooperate with the Agency in any subsidized loan program the Agency may in its sole discretion make available to Low or Moderate Income Household purchasers of some or all of the NSP Assisted Units. 504. Sales price. Single Family Homes: Upon completion, the homes will be marketed and sold to households with incomes at or below 120 percent of the area median income, for the sale amount indicated below. Each property must be sold to a qualified homebuyer household at an affordable price. In no case shall the sales price be greater than the lesser of (a) fair market value or (b) the total costs to acquire and rehabilitate the property per NSP guidelines. The City assumes that properties cannot be sold for more than their market value, regardless of the development costs (acquisition, rehab, other eligible costs, developer fee). The City expects to reimburse eligible costs that cannot be recovered from the sale price. Amounts may be amended periodically to reflect changes published by HUD. 9 25K-25 505. Selection of Buyers. The Developer shall provide the City with a copy of its Marketing Plan which shall set forth how the Developer plans to provide interested households with information about the NSP Assisted Units. The Developer shall be solely responsible for the selection of qualified purchasers of the NSP Assisted Units, subject to final approval by the City. Developer shall ensure that there will be adequate homebuyer education with HUD approved pre- and post- purchase counseling. Pre-purchase counseling must be completed PRIOR to close of escrow. 506. Marketing and Outreach Plan. The goal of the Marketing and Outreach Plan is to insure that the marketing of affordable for-sale housing be as broad and inclusive as possible in order to inform and attract as many prospective buyers as possible. The Outreach and Marketing Plan and the associated applicant selection procedures will be targeted to purchasers regardless of race, color, religion, sex, disability status, familial status or national origin. Information shall also be provided on the Developer's website, City of Santa Ana website, City cable channel, Workforce Investment Board, Santa Ana Chamber of Commerce, Santa Ana Unified School District, Rancho Santiago Community College District, Community Development Resource Network Newsletter and through neighborhood associations. 507. Verification of Homebuyer Income. Prior to the sale of any NSP Assisted Unit to a Homebuyer, the Developer shall submit to the City a completed income computation and certification form from each Homebuyer of the NSP Assisted Unit in the form which is provided by the City. Each Homebuyer shall certify, to the best of the Homebuyer's knowledge, that it is a Low or Moderate Income Household and meets the eligibility requirements established for the NSP Assisted Unit. The Developer shall obtain an income verification and lender's packet from the prospective purchaser of an NSP Assisted Unit (which shall be provided to the City). For purposes of this Program, income will be calculated per HUD guidelines for federal programs (Exhibit E: HUD Part 5 Income & Assets Definitions). For purposes of such certification, the Developer shall verify the income certification of the prospective Homebuyer in one or more of the following methods reasonably acceptable to the City: (a) obtain three (3) paycheck stubs from the prospective Homebuyer's three (3) most recent pay periods. (b) obtain a true copy of an income tax return from the prospective Homebuyer for the most recent three tax years in which a return was filed. (c) obtain an income verification certification from the employer of the prospective Homebuyer. (d) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the prospective Homebuyer receives assistance from such agencies. (e) obtain an alternate form of income verification reasonably acceptable to the City, if none of the above forms of verification is available to the Developer. 10 25K-26 508. Affordability Documents at Time of Sale. At the closing of escrow for the Homebuyer's purchase of each NSP Assisted Unit, the City will require each income qualified Homebuyer of such Unit to execute the following documents: the Homebuyer Deed of Trust (attached hereto as Exhibit F), Homebuyer Promissory Note (attached hereto as Exhibit G), and such further documents reasonably required by the City in a form provided by the City. Any Units assisted with tax increment money will also have a Notice of Affordability recorded against such Property (attached hereto as Exhibit H). The Promissory Note, and Deed of Trust shall contain aforty-five (45) year term. The principal loan amount of the Promissory Note shall be the amount of NSP Funds to create this homeownership opportunity, which will be determined based on the affordable sales price, the fair market value or the maximum sales price permitted under the NSP Program at the time of sale. In those instances where properties have an appraised Fair Market Value that is greater than the sales price, a silent second will be placed on the Property for that difference. All principal and interest shall be deferred until subsequent sale or transfer of the Property. The Deed of Trust will carry a 3% forgivable interest rate, and will be due and payable in forty-five (45) years. Interest will be forgiven at a rate of 1/45th per year, at each anniversary date of the original sale, with all interest forgiven at the end of the forty-five (45) year affordability period. The covenants and restrictions must be fully explained to each Homebuyer and the entire explanation and execution of said document must be recorded by the Developer. A copy of said audio and visual recording shall be placed on a CD which shall be kept by the Developer and the City. 509. Net Sales Proceeds and Distributions. Net sales proceeds shall be applied as follows: 1. First, to payments required on any acquisition and rehabilitation loan that has been secured with a first trust deed on the property sold; 2. Second, to the repayment of any equity contribution paid by Developer for the subject property; 3. Third, to pay for any Cost Overruns that have been approved in writing by the City in accordance with Section 404, which were unable to be paid with funds from the acquisition and rehabilitation loan; 4. Fourth, to the Developer Fee, as described in Section 601 to the repayment of the City loan, less the amount approved as a project subsidy at the time of the City's approval of the property for acquisition; 5. Fifth, to the repayment of the City Loan, less the amount approved as a project subsidy at the time of the City's approval of the property for acquisition; 6. Thereafter, if any, to the City. 510. Homebuyer Assistance. The Developer agrees to cooperate with the City in any subsidized loan program the City andlor Agency may in its sole discretion make available to Low or Moderate Income Household purchasers of some or all of the NSP Assisted Units. 11 25K-27 511. Affordable Housing Property Tax. Developer shall be responsible for applying to the County of Orange to request that the property tax be based on the restricted value with the affordability covenants that are recorded against each Affordable Unit. 512. Maintenance. The Deed of Trust shall require each of the households to maintain their property in conformance with local and state requirements. 513. Reasonable Efforts to Sell Affordable Units. The Developer agrees to exercise reasonable efforts consistent with prudent business practices to sell all of the NSP Assisted Units to owner-occupants as soon as practical following the completion of the rehabilitation. The Developer agrees that the NSP Assisted Units shall not be sold to the Developer or any party/employee related to the Developer. 514. Guarantee/Homeowner Protection Plan. Developer agrees to guarantee its work from defects for a period of at least one (1) year after rehabilitation is complete, with a five (5) year guarantee for the roof of each Unit. Developer shall provide each Homebuyer with all of the manufacturer's warranties and product information. Developer shall also provide the Homebuyers of each of the Affordable Units with a Homeowner Protection Plan. 515. Subsequent Sales/Recapture of Loan Amount. The Grant Deed from Developer to any proposed qualified household shall restrict the use of the Property to being owner- occupied. The Homebuyer Deed of Trust shall be recorded against the property with a term of 45 years. If said NSP Assisted Unit is sold prior to the expiration of the 45 year covenant of affordability, the loan can be transferred to another income qualified household (with City approval), or the City must be repaid the full amount of its Promissory Note. Upon transfer and repayment to the City, the covenant of affordability shall no longer be applicable. 516. Maintenance Covenants. During the time of Developer's ownership of the Sites, the Developer shall maintain the Sites and all improvements thereon, including all landscaping, in compliance with the terms of all applicable provisions of the City of Santa Ana Municipal Code. Each Homebuyer shall be responsible for maintenance of his/her own property after transfer of title. 517. Nondiscrimination Covenants. Developer herein covenants by and for itself, its successors and assigns, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. 600. DEVELOPER FEE AND PERFORMANCE. 601. Developer Fee. The Developer shall be paid ten percent (10%) of the cost of the acquisition sales price of each property, plus all rehabilitation costs, actual acquisition and sale 12 25K-28 closing costs, insurance related to acquisition and rehabilitation, property taxes and maintenance costs (utility and landscaping)subject to proper documentation evidencing such costs ("Developer Fee"). The Developer Fee shall be paid by the City to the Developer at the close of escrow to the qualified homebuyer. 602. Performance Measures. Due to the legislative deadlines, performance measurements will be monitored closely. The Developer's contract maybe cancelled and the funds reallocated to other developers for failure to meet HUD deadlines. 603. Business License/Professional Licenses. Developer must obtain and maintain a valid business license in order to perform services in the City of Santa Ana. Also, Developer shall, throughout the term of this Agreement, maintain all necessary licenses, permits, approvals, waivers, and exemptions necessary for the provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the City of Santa Ana and all other governmental agencies. Developer shall notify the City immediately and in writing of its inability to obtain or maintain such permits, licenses, approvals, waivers, and exemptions. Said inability shall be cause for termination of this Agreement. 700. GOVERNMENTAL REQUIREMENTS 701. Economic Opportunities for Low Income People. (24 CFR 570.487, Section 3 of the Housing and Urban Development Act of 1968, 12 USC 1701u, as amended by Section 915 of the Housing and Community Development Act of 1992). Developer certifies that it implements a policy in accordance with Section 3 of the Housing and Urban Development Act of 1968 that requires employment and other economic opportunities arising in connection with housing rehabilitation, housing construction and other public construction projects shall, to the extent feasible and consistent with existing federal, state and local laws and regulations, be given to low and very low-income persons. Noncompliance with HUD's regulations in 24 CFR part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts. To the extent applicable, the Developer shall comply and/or cause compliance with Section 3 Clause requirements for the NSP. For example, when and if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, Section 3 is applicable and all disclosure and reporting requirements apply. 702. Use of Debarred. Suspended, or Ineligible Participants. Developer shall comply with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. 703. Conformance with Applicable Labor Law. If Section 401 applies, all laborers and mechanics employed by the Developer and any subcontractor in the performance of the construction work under this Agreement (if any) shall be paid wages at rates not less than the prevailing wage as determined by the U.S. Department of Labor, under the Davis-Bacon Act. The Developer further agrees to comply with the provisions of the Copeland Act and the Contractor Work Hours and Safety Act. This paragraph does not apply to contracts which do not exceed $2,000. 13 25K-29 704. Maintenance of Drug-Free Workplace. Developer shall certify that Developer will provide adrug-free workplace in accordance with 24 CFR 84.13. 705. Books and Records. Developer shall maintain complete books of account and other records, reports and information, as the Executive Director may reasonably require, reflecting its operations (in connection with any other businesses as well as with respect to the NSP Assisted Units), in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City, to meet the record keeping and reporting requirements required of it in accordance with 24 CFR 92.508. 706. Equal Opportunity and Fair Housing. Developer shall carry out the Rehabilitation and perform its obligations under this Agreement in compliance with all of the state and federal laws and regulations regarding equal opportunity and fair housing described in 24 CFR 92.350. Developer must also follow the requirements of Health and Safety Code section 33435. 707. Conflict of lnterest. Developer shall comply with and be bound by the conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations pertaining to conflict of interest. 708. Program Income. When the City receives repayment from sales of the Properties, such funds are "Program Income". Program Income received by the City will be used for NSP activities. Program Income and reallocated funds identified for the single family component will be added to the Agreement with Developer. Developer agrees to comply fully with all federal, state, and local laws applicable to its operation whether or not referred to in this Agreement. 800. DEFAULTS, REMEDIES, TERMINATION 801. Default Remedies. Failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence. 802. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restriction otherwise set forth in this Agreement, either party may institute and action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Courts of the County of Orange, State of California, or in the District of the United States District Court in which such county is located. 14 25K-30 803. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such right 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. 804. Inaction Not a Waiver of Default. Any failures or delays by either party 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, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 805. Termination. This Agreement shall terminate on the earlier of: (a) expenditure of all NSP funds; (b) failure to cure a material breach after notice and time to cure; (c) February 1, 2014; (d) the date ninety (90) days following receipt by Developer of written notice of termination from the City; (e) upon mutual agreement of the parties, or (f) failure to meet Performance Measures as set forth in Section 602. 900. GENERAL PROVISIONS 901. Relationship between the Parties. Both parties expressly acknowledge it is the intention of the parties that this Agreement shall be a contract for services and shall not in any way create any employer/employee relationship between the parties or any co-venture or joint venture. Developer is an independent contractor who shall in no way be considered an employee of the City. It is expressly acknowledged and agreed that Developer shall be responsible for maintaining its own insurance as described in paragraph 906. 902. Notices. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given by any commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice. To City: City of Santa Ana -Housing Division 20 Civic Center Plaza, M-37 Santa Ana, California 92701 Attention: Executive Director To Developer: ANR Homes, Inc. 10702 Hathaway Drive, Unit 1 Santa Fe Springs, CA 90670 Attention: George Jordan, Vice President Any written notice, demand or communication shall be deemed received immediate if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 15 25K-31 903. Modification of Terms. The Executive Director shall have the authority to make minor modifications to the terms contained herein with the prior approval of the City Attorney's Office. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 904. Limitation on Delegation. Inasmuch as this Agreement is intended to secure the specialized services of Developer, Developer may not assign, transfer, delegate, or subcontract any interest herein without the prior written consent of the City and any such assignment, transfer, delegation or subcontract without the City's prior written consent shall be considered Nothin in this A Bement shall be construed to limit the City's ability to have any null and void. g gr of the services which are the subject to this Agreement performed by City personnel or by other developers or consultants retained by the City. 905. Exclusivity and Amendment. This Agreement represents the complete and exclusive statement between the City and Developer, and supersedes any and all other agreements, oral or written, between the parties. h1 the event of a conflict between the terms of this Agreement and any attachments hereto, the terms of this Agreement shall prevail. This Agreement may not be modified except by written instrument signed by the City and by an authorized representative of Developer. The parties agree that any terms or conditions of any purchase order or other instrument that are inconsistent with, or in addition to, the terms and conditions hereof, shall not bind or obligate Developer nor the City. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any parry, or anyone acting on behalf of any party, which are not embodied herein. 906. Insurance. The Developer shall take out and maintain or shall cause its contractor to take out and maintain until the completion of rehabilitation pursuant to the terms of this Agreement, a commercial general liability policy in the amount of Two Million Dollars ($2,000,000) combined single limit policy, and a comprehensive automobile liability policy in the amount of One Million Dollars ($1,000,000), combined single limit, or such other policy limits as the City may approve at its discretion, including contractual liability, as shall protect the Developer, City from claims for such damages. Such policy or policies must be written on an occurrence form. The Developer shall also furnish or cause to be furnished to the City evidence satisfactory to the City that Developer and any contractor with whom it has contracted for the performance of work on the Sites or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. Developer also agrees to provide insurance covering one hundred percent (100%) of the replacement cost of all insurable items within the Property in the event of fire, lightning, debris removal, windstorm, vandalism, malicious mischief, theft, mysterious disappearance and hazards, casualties and contingencies as are normally and usually covered by all-risk policies in effect in the locality where the Property is situated. The Developer shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier on a form approved by the City setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the City and its respective officers, agents, and employees as an additionally insured party under the policy, and the certificates shall be accompanied by a duly executed 16 25K-32 enforcement evidencing such additional insured status (the City's preferred Additional Insured Endorsement is attached hereto as Exhibit I). The certificate and endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify City of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Developer shall be primary insurance and not be contributing with any insurance maintained by the City, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the City. The required certificate shall be furnished by the Developer at the time this Agreement is executed. Certificates verifying such coverage has been extended to the City of Santa Ana must be furnished to the City of Santa Ana City Attorney's Office (M-29), 20 Civic Center Plaza, Santa Ana, CA 92701 prior to the commencement of work hereunder. 907. Builders Risk Insurance. The Developer shall be responsible to cover the properties during the course of rehabilitation. It is recommended that such insurance provide coverage on an all risk basis, including theft and vandalism, for accidental losses, damage or destruction of the Property until each home is sold. 908. Right of Access. For purposes of assuring compliance with this Agreement, representatives of the City shall have the right of access to the properties, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in rehabilitating the improvements so long as City representatives comply with all safety rules. The City (or its representatives) shall, except in emergency situations, notify the Developer prior to exercising its right pursuant to this section. 909. Developer Indemnity. Developer shall indemnify, defend and hold harmless City, its officers, agents, employees and volunteers from and against any and all loss or damage, expenses, injuries, death to any person, damage to real or personal property, claim, demand, suit, action, judgment, settlement, reasonable attorney's fees, costs, or proceeding of any kind arising out of this Agreement, implementation of this Agreement, the sale of the property by Developer, securing of financing, design development drawings, engineering, construction, reconstruction, structural integrity of the NSP Assisted Units, maintenance of the properties, operation, and subsequent sale of the NSP Assisted Units, including but not limited to: (a) the presence, release, use, generation, discharge, storage or disposal of any hazardous materials, on, under, in or about, or the transportation of any such hazardous materials to or from, the NSP Assisted Units; (b) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the NSP Assisted Units; (c) latent material defects in rehabilitation work; 17 25K-33 (d) any construction defect; (e) personal injury, including death, of the employees, agents, officers, and/or volunteers of Developer, and/or any subcontractors, independent contractors, partners, and/or subsidiaries; (f) property damage claims of the employees, agents, officers, and/or volunteers of Developer, and/or any subcontractors, independent contractors, partners, and/or subsidiaries; (g) delay in rehabilitation; (h) personal injury, including death, of any third party; (i) property damage claims of any third party; and (j) the failure to make required real estate disclosures to subsequent buyers of the NSP Assisted Units. Developer's obligation to indemnify as set forth in this Agreement shall extend to loss or damage, expenses, injuries, death to any person, damage to real or personal property, claim, demand, suit, action, judgment, settlement, reasonable attorney's fees, costs, or proceedings of any kind that, are discovered or accrue, either before or after the termination of this Agreement. Notwithstanding the foregoing, Developer shall not be required to indemnify and hold harmless the City for liability attributable to the active negligence or intentional misconduct of the City or any of its boards, officers, employees, representatives or agents. 910. Attorney's Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys' fees. 911. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise. 912. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 913. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 18 25K-34 914. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 915. Jurisdiction/Venue. This Agreement has been executed in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this Agreement shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action or proceeding that maybe brought or arise out of, in connection with or by reason of this Agreement. 916. Miscellaneous. a. 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 City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. b. All Exhibits referenced herein and attached hereto shall be incorporated as if fully set forth in the body of this Agreement. 19 25K-35 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first stated above. ATTEST: CITY OF SANTA ANA MARIA D. HUIZAR DAVID N. REAM Clerk of the Council City Manager APPROVED AS TO FORM: JOSEPH W.FLETCHER City Attorney By: LISA E. STORCK Assistant City Attorney DEVELOPER: ANR HOMES, INC. By: GEORGE JORDAN Vice President 20 25K-36 NEIGHBORHOOD STABILIZATION PROGRAM (PROGRAM 2) RENTAL HOUSING DEVELOPMENT AGREEMENT This Agreement is executed by and between the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California (hereinafter "City") and Orange Housing Development Corporation ("OHDC"), a non-profit 501 (c) (3) organization, and C&C Development, a Limited Liability Company ("Developer") as of March 2010. RECITALS: A. Title III of Division B of the Housing and Economic Recovery Act of 2008 (Pub. L 110- 289, 122 Stat. 2654 enacted July 30, 2009) makes available to certain qualified municipalities for certain qualified grant funds termed Neighborhood Stabilization Program ("NSP Funds") under a program termed the Neighborhood Stabilization Program (the "NSP"). B. On May 4, 2009, the U.S. Department of Housing and Urban Development ("HUD") issued a Notice of Funding Availability (NOFA) for Neighborhood Stabilization Program 2 Funds (NSP 2). In July 2009, the City submitted an application for $10 million. C. On January 14, 2010, the City was notified that its application under the NSP for NSP 2 Funds was approved by HUD. Funding for Developer is allocated for acquisition and rehabilitation of the single family, condominium and historic components of the NSP in an amount not to exceed $6,500,000.00, but not less than $2,500,000.00 plus program income. D. The Acquisition and Rehabilitation -Rental Program will be implemented in the target area as illustrated in the map attached hereto as Exhibit A. E. Developer was awarded an agreement for the NSP 1 funds for the Rental Program, and due to its successful implementation of NSP 1 with Developer, this agreement is being awarded to Developer. F. The City intends for the NSP funds to be primarily used for acquisition of foreclosed properties and any expenses related to the acquisition and disposition of such properties, including developer fees. Only in special circumstances will the NSP funds be used for the rehabilitation costs associated with foreclosed properties. NOW THEREFORE, the parties agree as follows: 100. DEFINITIONS "Abandoned" a residential property is abandoned when mortgage or tax foreclosure proceedings have been initiated for that property, no mortgage or tax 1 payments have been made by the property owner for at least 90 days AND the property has been vacant for at least 90 days. "Affordability Covenants and Restrictions on Transfer of Property" means thatcertain recorded document affecting real property benefiting the City, attached hereto as Exhibit A. "Affordable Rent" means the monthly rents that are set forth in more detail in Section 502 of this Agreement. "Agreement" means this Neighborhood Stabilization Program Agreement (Program 2) between the City and the Developer, and any attachments thereto. "Applicable Law" shall mean those federal, state and local laws, ordinances, regulations, policies and procedures applicable to the NSP, and the NSP Funds. "Area Median Income" means the median income figures for Orange County adopted by the State of California pursuant to Health and Safety Code Section 50093, as amended from time to time. Also maybe referred to as "AMI" herein. "Blighted" a structure is blighted when it exhibits objectively determinable signs of deterioration sufficient to constitute a threat to human health, safety and welfare. "Building Permit" means the building permit(s) issued by City and required for the rehabilitation, if any. "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. "City" means the City of Santa Ana, a charter city and municipal corporation. "City Manager" means the City Manager, or his/her designee. "Current Market Appraised Value" the current market appraised value means the value of a foreclosed property that is established through an appraisal made in conformity with the appraisal requirements of the Uniform Relocation Act (URA) 49 CFR 24.13 and completed within 60 days prior to the final offer made for the property. "Deed of Trust" means the Deed of Trust with the Developer encumbering the NSP Assisted Unit in the form attached hereto as Exhibit B. "Developer" means Townsend & Raitt, LP. "Eligible Property" shall mean a property that the City shall in its sole discretion determines meets NSP Program Criteria. 2 25K-38 "Foreclosed" A property "has been foreclosed upon" at that point that, under state or local law, the mortgage or tax foreclosure is complete and the title has been transferred away from the former property owner. A property is not foreclosed until the title for the property has been transferred from the former property owner under a foreclosure proceeding or a transfer in lieu of foreclosure, in accordance with state or local law. A Deed in Lieu of Foreclosure or property sold at auction can also be considered "foreclosed". "Hazardous Materials" means flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances or materials under any applicable law, including without limitation the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et sec., and the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 6901, et seq., as amended. "Housing Rehabilitation Standards NSP funded activities will adhere to the Housing Rehab Standards (attached hereto and incorporated herein as Exhibit C). This standard exceeds the HUD Housing Quality Standards. The Standards shall correct housing deficiencies and address items deemed essential for basic health, safety, and welfare. All work shall meet the Uniform Building Code (UBC), Uniform Plumbing Code (UPC), Uniform Mechanical Code (UMC), National Electric Code (NEC) as amended periodically. "HUD" means the United States Department of Housing and Urban Development and any successors or assigns thereof. "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). "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 this Agreement as "Area Median Income" or "AMI". "Neighborhood Stabilization Program" (NSP) has the meaning set forth in the Recitals above. "Neighborhood Stabilization Program (NSP) Regulations" has the meaning set forth in the Recitals above. "NSP Assisted Units" shall mean those rental units purchased and rehabilitated on Eligible Properties which are subject to the term of affordability. 3 25K-39 "NSP Funds" shall mean the money provided under the NSP Program (NSP 2) for the acquisition and rehabilitation of the Property hereunder. "Promissory Note" means the Promissory Note executed by the Developer encumbering the NSP Assisted Unit in the form attached hereto as Exhibit C. "Target area" shall mean the map attached hereto and incorportated herein as Exhibit A. "Term of Affordability" the term of affordability shall be fifty-five (55) years. "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. 200. PROPERTY ACQUISITION 201. Selection of Properties by Developer. Developer shall with reasonable diligence seek to identify proposed Eligible Properties which it determines may meet NSP Program Criteria. The Developer shall provide the City with its Acquisition/Rehabilitation Bid Analysis on each potential property to the City. Upon receipt of complete bid analysis, the City shall review said within two (2) working days, subject to final approval after inspection by City rehabilitation staff which shall occur within two (2) additional working days. The City will approve or reject properties for purchase through the NSP Program. Developer shall negotiate the purchase of the property with the current owner which must be consistent with NSP guidelines. Developer shall take, insure and hold title to the property, and prepare a scope of work to be reviewed by the City. The City anticipates mainly using NSP funds for acquisition, costs associated with maintenance, sales and other related soft costs. The actual number of units to be acquired and rehabilitated by Developer will be determined by the City in its sole discretion based in part on the amount of NSP Funds awarded to Santa Ana. 202. Properties Provided by the National Community Stabilization Trust. The parties shall also be working in conjunction with the National Community Stabilization Trust (NCST) to identify potential eligible properties. Any properties purchased in collaboration with NCST must comply with all NCST requirements and follow the NCST framework for acquisition of eligible properties. Developer shall work with the City's identified acquisition agent, currently ANR Homes, Inc., subject to future change. 203. Offer to Purchase. Any offers to purchase must include a contingency for appraisal to be in compliance with NSP Regulations. Once appraisal is in compliance, then a final offer to purchase maybe submitted. 204. Appraisals. The City issued a Request for Proposals (RFP) in order to establish a list of qualified appraisers. The appraisers selected are experienced, qualified and meet the NSP appraiser requirements. The City shall provide its approved list of appraisers to be used for all 4 25K-40 NSP activities to the Developer. Developer shall select and pay the appraiser directly as one of its development costs. 205. Funding of Acquisition/Rehabilitation. City shall deposit into escrow, funds for Developer as agreed upon during the Selection Phase. City shall record a lien, in the form of a Deed of Trust, Affordability Covenants and Restrictions, and Promissory Note (attached hereto and incorporated herein as Exhibits A , B, and C), against each of the selected properties equal to the amount of money deposited into escrow for such Property. 206. Relocation. Developer acknowledges and agrees that, pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part, City must ensure that it has taken all reasonable steps to minimize the displacement of persons as a result of the Rehabilitation. Furthermore, to the extent feasible, residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary and affordable dwelling unit on the Property upon completion of the rehabilitation. Developer agrees to cooperate fully and completely with City in meeting the requirements of 24 CFR 92.253 and shall take all actions and measures reasonably required by the City Manager in connection therewith. All applicable federal and state guidelines must also be followed. 300. REHABILITATION REQUIREMENTS. The following Rehabilitation Requirements shall apply to all NSP Assisted Units: 301. Permits and Approvals. Developer shall diligently obtain all permits, including all building permits, licenses, approvals, exemptions and other authorizations of governmental agencies required in connection with the rehabilitation of the Property. 302. Commencement and Completion of Rehabilitation. The Rehabilitation 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 any governmental authority has been completed and all requisite certificates, approvals and other necessary authorizations (including required final certificates of occupancy) have been obtained. 303. Rehabilitation Standards. Residential Rehabilitation Standards (24 CFR 570): Developer certifies that it will perform rehabilitation in conformance to the standards outlined in the City's Residential Rehabilitation Standards ,which exceed the HUD Housing Quality Standards and with strict adherence to state and local building codes, safety standards, protection of historical integrity and for maximum achievement in the area of energy efficiency. Demolition shall be conducted in cases of extreme deterioration, to eliminate illegal additions, and in concert with local authorities. 304. Protection of Historical Structures (24 CFR Part 58/36CFR Part 800). Developer will comply with and obtain approval of the Federal and State Historic 5 25K-41 Preservation Commission(s) when rehabilitation activities are planned on a structure that is listed on the state historic registry, and will provide documentation of such approval to the City prior to commencement of any rehabilitation activities on a property which is funded through this program. 305. Lead-Based Paint. Developer shall comply with the requirements, as applicable of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing regulations at 24 CFR 35 for any housing project it undertakes pursuant to this Agreement. For the activities outlined in this Agreement, Developer will be required to pay particular attention to subpart J (Rehabilitation); subpart K (Acquisition, Leasing, Support Services or Operation) and Subpart R (Methods and Standards for lead based paint hazard reduction activities). 306. Asbestos Abatement: The United States Environmental Protection Agency (EPA) has defined asbestos containing materials (ACM) to be any substance containing more than one percent (1%) or more asbestos by weight. All ACM's must be abated prior to demolition or renovation/remodeling activities by a Cal-OSHA licensed asbestos abatement contractor using methods in accordance with 8 CCR 1529 and SCAQMD Rule 1403. Asbestos abatement procedures should be monitored by a third party or consultant knowledgeable in asbestos abatement procedures and is, at a minimum, either a Cal-OSHA certified Site Surveillance Technician or Certified Asbestos Consultant. The survey for ACMs shall be performed in conjunction with the survey for lead-based paint. All suspect materials are sampled and tested in accordance with the general guidelines for bulk asbestos sampling as presented in Section 40, Part 763 (AHERA) of the Code of Federal Regulations (CFR) and the United States EPA. 307. Energy Efficient Products. Developer shall include energy efficient products in the rehabilitation of the units. Such products include, but are not limited to, the following features: low-flush toilets, insulation, high efficiency systems, and tankless water heaters. In addition, yards will be landscaped with low-maintenance and drought tolerant plants. 308. Rehabilitation Act -Section 504 (As Applicable). Section 504 of the Rehabilitation Act of 1973 prohibits discrimination in federally-assisted activities and programs on the basis of handicap, and imposes requirements to ensure that qualified individuals with handicaps have access to these programs and activities. 309. Property Standards. Developer shall cause the Property to meet the housing quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal codes and ordinances, including zoning ordinances. Developer shall also cause the Property to meet the current edition of the Model Energy Code published by the Council of American Building Officials. 400. REHABILITATION COSTS PAID WITH NSP FUNDS. 6 25K-42 In those instances where Rehabilitation Costs will be paid with NSP Funds, the following procedures shall be followed: 401. Rehabilitation Costs Paid with NSP Funds. It is the intent of the parties to use NSP funds for acquisition and related soft costs. If there is a need to use NSP funds for rehabilitation, this section will apply. In the event that NSP Funds will be used for construction related expenses, Developer must also comply with the labor and Davis-Bacon regulations as set forth in Section 703 hereof. The documents referenced in this Section 400 (Payment Request, Release of Retention Funds, Notice of Completion) are attached hereto and incorporated herein as Exhibit D. 402. Disbursement Requests. The Rehabilitation Portion proceeds shall be disbursed on a line-item by line-item basis in accordance with the Rehabilitation Budget and subject to the i urse an amount for In no event shall Cit have an obli ation to d sb y conditions m this section. y y g any item in excess of the amount allocated to such item in the Rehabilitation Budget. Disbursements shall be made only upon Developer's written request in the form of a Disbursement Request showing all costs which Developer intends to fund with such disbursement, itemized in such detail as City may reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to City, including in any event partial lien releases executed by each contractor and subcontractor who has received any payment for work performed, and (b) all other documents and information reasonably required by City. Disbursement Requests shall be submitted no less than ten (10) Business Days prior to the date of the requested disbursement, and shall not be submitted more often than monthly. Prior to each disbursement by City of proceeds of the NSP Funds, Developer shall deliver to City and to Bank a draw request ("Draw Request"), and all required supporting information as set forth in this Agreement or as otherwise reasonably required by City or Bank in order to provide information for evaluating the requested disbursement pursuant to customary construction lending practices of institutional lenders in Southern California. City and Bank shall notify the other and Developer of approval or disapproval of each Draw Request within five (5) business days after receipt of the Draw Request, using the Bank's "Disbursement/Change Order Approval Notice". City and Bank shall have the right, but not the obligation, to discontinue processing Draw Requests unless and until receipt of notification from the other of approval or disapproval of each outstanding Draw Request. 403. Manner of Disbursement. City may make any disbursement by check payable to Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor, subcontractor or other claimant; or directly to any such claimant; or by any other means reasonably selected by City. 404. Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost reasonably estimated by City or Developer to be required to complete all matters included in any line item in the Rehabilitation Budget exceeds the amount allocated to that line item in the Rehabilitation Budget, (b) Rehabilitation Costs for any matters not covered by a specific line item have been or will be incurred, or (c) the undisbursed portion of the Rehabilitation Portion is 7 25K-43 or may be insufficient to pay all Rehabilitation Costs that may be payable under this Agreement or otherwise in connection with the Rehabilitation, Developer shall, within ten (10) days after it receives written notice thereof from City of any of the foregoing matters, do one or more of the following: (a) provide satisfactory evidence to City that Developer has previously paid such excess or otherwise provided for such insufficiency (collectively, the "Excess Cost") with funds from a source other than the NSP Funds; (b) reallocate sufficient funds to pay the Excess Cost from funds allocated to "Contingency" in the Rehabilitation Budget; provided, however, that the City Manager's consent to any such reallocation shall be required; or c de osit an amount e ual to the Excess Cost in anon-interest bearing q p account (the "Overrun Account") with City from which withdrawals may be made only with the consent of the City Manager but which will be exhausted prior to any further disbursement for any line item, so that any resulting surplus in any line item of the Rehabilitation Budget will then be reallocated to the line item(s) in which the Excess Costs are expected to be incurred. City shall have no obligation to make further disbursements until Developer has paid or otherwise provided for the overrun as required above. Amounts deposited by Developer in the Overrun Account for any Excess Costs shall be disbursed by City prior to the disbursement of any remaining Rehabilitation Portion proceeds. 405. Cost Savings. Upon completion of and disbursement for all matters covered by any line items in the Rehabilitation 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. 406. Retainage. City will withhold a Retainage of 10% from each Disbursement for each of the Hard Cost line items of the Project Cost Breakdown (and other line items thereof designated for withholding of retainage) until all conditions to the final Disbursement of Hard Costs have been satisfied. In lieu of City's withholding Retainage, Developer can by written notice to City elect not to draw any overhead or profit as would otherwise be permitted under the Construction Contract until such time as Retainage would otherwise have been released. City shall not retain funds for building materials purchased by Developer for which Developer supplies documentation to City proving payment in full or for soft costs. 407. Holdback. The retainage otherwise available for disbursement shall be subject to a holdback of one hundred twenty-five percent (125%) of the estimated cost (as determined by the City Manager) for "punch-list" items. Such holdback will be released when all punch-list items have been completed to the satisfaction of City. 408. Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the making by City of any disbursement with knowledge that any condition to such disbursement is not fulfilled shall constitute a waiver of such condition only with respect to the particular 8 25K-44 disbursement made, and such condition shall be condition to all further disbursements until fulfilled. 409. Modification of Disbursement Conditions and Procedures. The City 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 Rehabilitation Contract. 410. Other Terms and Conditions of Grant hereunder. A. The Note(s) 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 recording date; (2) violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cure periods; (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. 411. 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. 500. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE PROPERTY 501. Use Covenants and Restrictions. Developer agrees to make available, restrict occupancy to, and rent each of the NSP Assisted Units to Extremely Low or Low Income Households (as that term is herein defined) at an Affordable Rent. A. Developer agrees and covenants, which covenants shall run with the land and bind Developer, its successors, its assign and every successor in interest to the Property that Developer will make all rental units on the Property available to extremely low and low income households at rents affordable to such households for fifty-five (55) years from the effective date of this Agreement. B. Reserved. C. Tenancy and relocation shall be managed in accordance with NSP Regulations and guidance. D. Affordable rents shall be governed by California Health and Safety Code Sections 50052.5 and 50053(b)(1), and as provided in the NSP Regulations. Rental increases shall be in conformance with federal and state law. 9 25K-45 E. Rents During Construction/Rehabilitation: Upon close of escrow, tenants will be notified that leases will be modified to reflect a new rent structure per this Agreement, but in no event will it be more than they are currently paying. 502. Affordable Gross Starting Rents (Less Reasonable Utility Allowance): Initial rents maybe recalculated to allowable rental amounts at the time of initial lease-up following completion of construction in accordance with any changes in allowable rent and income tables as published by HUD and the State of California. 503. Rent Increases: On an annual basis, the City shall provide the Developer with the maximum allowable schedule of rents for the Property. In no event can Developer charge any tenant more than such amount. 504. Recertification of Tenant Income. a. Developer shall take all necessary steps to review the income of all tenants prior to renting to them, as well as reviewing current tenants on an annual basis, in accordance with NSP regulations and guidelines. Every fifth (5th) year, Developer shall require new original income documents to be submitted by tenants. Tenants in NSP assisted units whose incomes no longer comply with federal income guidelines shall have their rents adjusted in accordance with federal NSP guidelines. b. NSP assisted units continue to qualify as affordable housing despite a temporary non- compliance caused by increases in the incomes of existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies are filled in accordance with this section until the non-compliance is corrected. 505. Obligation to Refrain from Discrimination. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, 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. 506. Maintenance. Developer shall maintain the Property (and all abutting grounds, sidewalks, roads, parking and landscape areas which Developer is otherwise required to maintain) in good condition and repair; shall operate the Property in a businesslike manner; shall prudently preserve and protect its own as well as the City's interests in connection with the Property; shall not commit or permit any waste or deterioration of the Property (except for normal wear and tear); shall not abandon any portion of the Property or leave the Property unguarded or unprotected; and shall not otherwise act, or fail to act, in such a way as to 10 25K-46 unreasonably increase the risk of any damage to the Property or of any other impairment of City's interests under the this Agreement. Without limiting the generality of the foregoing, and except as otherwise agreed by City in writing from time to time, Developer shall promptly and faithfully perform and observe each of the following provisions: 506.1 Alterations and Repair. Developer shall not remove, demolish or materially alter any part of the Property without City's prior consent, except to make non- structural repairs which preserve or increase the Property's value, and shall promptly restore, in a good and professional manner, any Improvement (or other aspect or portion of the Property) that is damaged or destroyed from any cause. 507. Compliance. Developer shall comply with all laws and requirements of Governmental Authority (including, without limitation, all requirements relating to the obtaining of Governmental Authority approvals), all Governmental Authority approvals and all rights of third parties, relating to Developer, the Property or Developer's business thereon. 508. Taxes and Impositions. Developer shall pay, prior to delinquency, all of the following (collectively, the "Impositions"): (a) all general and special real property taxes and assessments imposed on the Property; (b) all other taxes and assessments and charges of every kind that are assessed upon the Property (or upon the owner and/or operator of the Property) and that create or may create a lien upon the Property (or upon any personal property or fixtures used in connection with the Property), including, without limitation, non-governmental levies and assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees, taxes and assessments imposed on City (other than City's income or franchise taxes) which are measured by or based upon (in whole or in part) the amount of the obligations secured by the Property. If permitted by law, Developer may pay any Imposition in installments (together with any accrued interest). 508.1 Right to Contest. Developer shall not be required to pay any Imposition so long as (a) its validity is being actively contested in good faith and by appropriate proceedings, (b) Developer has demonstrated to City's reasonable satisfaction that leaving such Imposition unpaid pending the outcome of such proceedings could not result in conveyance of the Property in satisfaction of such Imposition or otherwise impair City interests under this Agreement, and (c) Developer has furnished City with a bond or other security satisfactory in an amount not less than 100% of the applicable claim (including interest and penalties). 508.2 Evidence of Payment. Upon demand by City from time to time, Developer shall deliver to City, within thirty (30) days following the due date of any Imposition, evidence of payment reasonably satisfactory to City. 508.3 Books and Records. Developer shall maintain complete books of account and other records reflecting its operations (in connection with any other businesses as well as with respect to the Property), in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City. 11 25K-47 509. Project Operating Budget. Developer must promptly deposit all project income directly into a segregated depository account established exclusively for the Project ("Project Operating Account"). Withdrawals from this account may be made only in accordance with the provisions of this Agreement and the approved Budget, as it may be revised from time to time with City approval. Developer may make withdrawals from this account solely for the payment of project expenses and project fees. Withdrawals from this account for other purposes may be made only with the prior written approval of the City. 510. Replacement Reserve Account. Developer must establish or cause to be established a segregated interest-bearing replacement reserve depository account ("Replacement Reserve Account") no later than sixty (60) days after the Notice of Completion is filed. Developer must make monthly deposits from project income into the Replacement Reserve in accordance with Developer's Budget, as amended from time to time. Developer may withdraw funds from the Replacement Reserve Account solely to fund capital improvements for the Project, such as replacing or repairing structural elements, furniture, fixtures or equipment of the Project that are reasonably required to preserve the Project. Developer may not withdraw funds from the Replacement Reserve Account for any other purpose without the prior written approval of the City. 511. Environmental Matters a. Representation and Warranty. Except as disclosed in writing to the City, Developer has no knowledge (a) of the presence on, under or about the Property, now or in the past, of any Hazardous Materials, or of the transportation to or from the Property of any Hazardous Materials, (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the Property, or (c) that there are any underground storage tanks located in, on or under the Property. b. Compliance with Environmental Laws. Developer shall (a) comply with all environmental laws and environmental permits applicable to the rehabilitation of the Property, (b) immediately pay or cause to be paid all costs and expenses incurred by reason of such compliance, (c) keep the Property free and clear of any environmental claims or liens imposed pursuant to any environmental law, and (d) obtain and renew all environmental permits required for ownership or use of the Property. c. Presence of Hazardous Materials. Developer shall not, and shall not permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property, or transport or permit the transportation of Hazardous Materials to or from the Property except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine operation and maintenance of the Property. d. Notice of Environmental Matters. Developer shall immediately advise City in writing of any of the following: (a) any pending or threatened environmental claim against Developer or the Property, (b) any condition or occurrence that (i) results in noncompliance with any applicable environmental law, (ii) could reasonably be anticipated to cause the Property to 12 25K-48 be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental law, or (iii) could reasonably be anticipated to form the basis of an environmental claim against the Property or Developer. e. Environmental Indemnification by the Developer. Developer agrees to defend, indemnify and hold harmless the City and its officers, directors, employees and agents (collectively the "lndemnitees from and against any and all obligations (including removal and remediation), losses, claims (including third party claims), suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including consultants, and attorneys' fees) of whatever kind or nature whatsoever that may at any time be incurred by, imposed on, or asserted against the lndemnitees directly or indirectly based on, or arising or resulting from the actual or alleged presence of Hazardous Materials on the Property. 600. DEVELOPER FEE AND PERFORMANCE. 601. Developer Fee. 8% of Project Cost per Developer's Proposal. The Developer Fee is earned at the acquisition of the Property, but shall not be paid to Developer until the rehabilitation of the Property is complete and the Property has 90% occupancy. 602. Performance Measures. Due to the legislative deadlines, performance measurements will be monitored closely. The Developer's contract maybe cancelled and the funds reallocated to other developers for failure to meet HUD deadlines. 603. Business License/Professional Licenses. Developer must obtain and maintain a valid business license in order to perform services in the City of Santa Ana. Also, Developer shall, throughout the term of this Agreement, maintain all necessary licenses, permits, approvals, waivers, and exemptions necessary for the provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the City of Santa Ana and all other governmental agencies. Developer shall notify the City immediately and in writing of its inability to obtain or maintain such permits, licenses, approvals, waivers, and exemptions. Said inability shall be cause for termination of this Agreement. 604. Annual Financial Statements. Developer shall deliver to City, within one hundred fifty (150) days after the end of each Calendar Year, (a) a certified public accountant reviewed balance sheet for Developer as of the end of such Calendar Year and a certified public accountant reviewed statement of profit and loss for Developer and for Developer's operations specific to this Property for such Calendar Year, together with all supporting schedules, (b) a certificate of such certified public accountant that such documents were reviewed by such certified public accountant in accordance with generally accepted accounting principles and otherwise comply with generally accepted accounting principles review requirements, and (c) a certificate of Developer's chief financial officer that such documents: (i) were prepared in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City, (ii) fairly present Developer's financial condition, (iii) show all material liabilities, direct and contingent, 13 25K-49 and (iv) fairly present the results of Developer's operations. Developer shall also provide the City with any other annual audit reports issued by other monitoring agencies. 605. Audits and Access to Records. Developer agrees that City, the U.S. Department of Housing and Urban Development, the Comptroller General of the United States or any of their authorized representatives shall have the right of access, upon reasonable notice, to any books, documents, papers, or other records of Developer which are pertinent to this Agreement in order to make audits, examinations, abstracts, excerpts or transcripts. Developer will maintain all books and records pertaining to this Agreement for a period of not less than five (5) years after all matters pertaining to this Agreement (i.e., audit, disputes or litigation) are resolved in accordance with applicable federal or state laws, regulations or policies, and when a period of affordability or recapture applies to Developer's activities, for a period of not less than five (5) years after the affordability or recapture period ends. 606. Termite Inspection Report. Developer shall deliver a termite report pertaining to the Property to the City every fifth (5`h) year beginning January 2016. i 700. GOVERNMENTAL REQUIREMENTS 701. Economic Opportunities for Low Income People. (24 CFR 570.487, Section 3 of the Housing and Urban Development Act of 1968, 12 USC 1701u, as amended by Section 915 of the Housing and Community Development Act of 1992). Developer certifies that it implements a policy in accordance with Section 3 of the Housing and Urban Development Act of 1968 that requires employment and other economic opportunities arising in connection with housing rehabilitation, housing construction and other public construction projects shall, to the extent feasible and consistent with existing federal, state and local laws and regulations, be given to low and very low-income persons. Noncompliance with HUD's regulations in 24 CFR part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts. To the extent applicable, the Developer shall comply and/or cause compliance with Section 3 Clause requirements for the NSP. For example, when and if Developer or its contractor(s)/subcontractor(s) hire(s) full time employees, Section 3 is applicable and all disclosure and reporting requirements apply. 702. Use of Debarred. Suspended, or Ineligible Participants. Developer shall comply with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding of contracts, or funding of any contractor or subcontractor during any period of debarment, suspension, or placement in ineligibility status. 703. Conformance with Applicable Labor Law. If Section 401 applies, all laborers and mechanics employed by the Developer and any subcontractor in the performance of the construction work under this Agreement (if any) shall be paid wages at rates not less than the prevailing wage as determined by the U.S. Department of Labor, under the Davis-Bacon Act. The Developer further agrees to comply with the provisions of the Copeland Act and the Contractor Work Hours and Safety Act. This paragraph does not apply to contracts which do not exceed $2,000. 14 25K-50 704. Maintenance of Drug-Free Workplace. Developer shall certify that Developer will provide adrug-free workplace in accordance with 24 CFR 84.13. 705. Books and Records. Developer shall maintain complete books of account and other records, reports and information, as the City Manager may reasonably require, reflecting its operations (in connection with any other businesses as well as with respect to the NSP Assisted Units), in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to City, to meet the record keeping and reporting requirements required of it in accordance with 24 CFR 92.508. 706. Equal Opportunity and Fair Housing. Developer shall carry out the Rehabilitation and perform its obligations under this Agreement in compliance with all of the state and federal laws and regulations regarding equal opportunity and fair housing described in 24 CFR 92.350. Developer must also follow the requirements of Health and Safety Code section i 33435. 707. Conflict of lnterest. Developer shall comply with and be bound by the conflict of interest provisions set forth at 24 CFR 570.611, as well as state regulations pertaining to conflict of interest. 708. Program Income. When the City receives repayment from sales of the Properties, such funds are "Program Income". Program Income received by the City will be used for NSP activities. Program Income and reallocated funds identified for the rental component will be added to the Agreement with Developer. Developer agrees to comply fully with all federal, state, and local laws applicable to its operation whether or not referred to in this Agreement. 800. DEFAULTS, REMEDIES, TERMINATION 801. Event of Default. Failure or delay by either party to perform any term of 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 parry in default, specifying the default complained of by the injured party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. The defaulting party must, within thirty (30) days following service of said written notice, commence to cure, correct or remedy such failure or delay and shall complete such cure, correction, or remedy with reasonable diligence. Upon a default by Developer which is not cured within thirty (30) days following service of said notice, unless such default cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure but no more than ninety (90) days, the City shall have the right to terminate this Agreement by delivery of written notice of termination to Developer. 15 25K-51 802. Default Remedies. Failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained o£ Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence. 803. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restriction otherwise set forth in this Agreement, either party may institute and action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Courts of the County of Orange, State of California, or in the District of the United States District Court in which such county is located. 804. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such right 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. 805. Inaction Not a Waiver of Default. Any failures or delays by either party 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, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 806. Termination. This Agreement shall terminate on the earlier of: (a) expenditure of all NSP funds; (b) failure to cure a material breach after notice and time to cure; (c) February 1, 2014; (d) the date ninety (90) days following receipt by Developer of written notice of termination from the City; (e) upon mutual agreement of the parties, or (f) failure to meet Performance Measures as set forth in Section 602. 900. GENERAL PROVISIONS 901. Relationship between the Parties. Both parties expressly acknowledge it is the intention of the parties that this Agreement shall be a contract for services and shall not in any way create any employer/employee relationship between the parties or any co-venture or joint venture. Developer is an independent contractor who shall in no way be considered an employee of the City. It is expressly acknowledged and agreed that Developer shall be responsible for maintaining its own insurance as described in paragraph 906. 902. Notices. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in 16 25K-52 writing and may be given by any commercially acceptable means to the parry to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice. To City: City of Santa Ana -Housing Division 20 Civic Center Plaza, M-37 Santa Ana, California 92701 Attention: City Manager To Developer: Orange Housing Development Corporation 414 East Chapman Avenue Orange, California 92866 Attn: Executive Director With a copy to: C&C Development Company, LLC 1110 E. Chapman Avenue, Suite 200 Orange, CA 92866 Any written notice, demand or communication shall be deemed received immediate if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 903. Modification of Terms. The City Manager shall have the authority to make minor modifications to the terms contained herein with the prior approval of the City Attorney's Office. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 904. Limitation on Delegation. Inasmuch as this Agreement is intended to secure the specialized services of Developer, Developer may not assign, transfer, delegate, or subcontract any interest herein without the prior written consent of the City and any such assignment, transfer, delegation or subcontract without the City's prior written consent shall be considered null and void. Nothing in this Agreement shall be construed to limit the City's ability to have any of the services which are the subject to this Agreement performed by City personnel or by other developers or consultants retained by the City. 905. Exclusivity and Amendment. This Agreement represents the complete and exclusive statement between the City and Developer, and supersedes any and all other agreements, oral or written, between the parties. In the event of a conflict between the terms of this Agreement and any attachments hereto, the terms of this Agreement shall prevail. This Agreement may not be modified except by written instrument signed by the City and by an authorized representative of Developer. The parties agree that any terms or conditions of any purchase order or other instrument that are inconsistent with, or in addition to, the terms and conditions hereof, shall not bind or obligate Developer nor the City. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally 17 25K-53 or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein. 906. Insurance Policies Required. While any obligation of Developer under this Agreement remains outstanding, Developer shall maintain at Developer's sole expense, with insurers either (i) admitted in California or (ii) are not admitted to California but have an A.M. Best Rating of "A" or above and reasonably approved by the City, the following policies of insurance in form and substance reasonably satisfactory to the City Attorney: (a) worker's compensation insurance and any other insurance required by law in connection with the rehabilitation; (b) prior to commencement and following completion of the rehabilitation, fire and hazard "all risk" insurance covering 100% of the replacement cost of the Improvements in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by "all risk" coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (c) upon commencement of the rehabilitation and at all times prior to completion of the rehabilitation, permanent property replacement and liability insurance policy covering 100% of the replacement cost of all Improvements (including offsite materials) during the course of construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious mischief and all other risks normally covered in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood); (d) public liability insurance in amounts reasonably required by City from time to time, and in no event less than $1,000,000 for "single occurrence;" (e) property damage insurance in amounts reasonable required by City from time to time, and in no event less than $1,000,000; and (f) any other insurance reasonably required by City. This countersigned certificate shall name the City and its respective officers, agents, and employees as an additionally insured party under the policy, and the certificates shall be accompanied by a duly executed enforcement evidencing such additional insured status (the City's preferred Additional Insured Endorsement is attached hereto as Exhibit E). The certificate and endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify City of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Developer shall be primary insurance and not be contributing with any insurance maintained by the City, and the policy shall contain such an endorsement. Certificates of insurance for the above policies (and/or original policies, if required by City) shall be delivered within ten (10) days after demand therefore, and prior to start 18 25K-54 of any rehabilitation work. No less than thirty (30) days prior to the expiration of each policy, Developer shall deliver to City evidence of renewal or replacement of such policy reasonably satisfactory to City Attorney. 906.1 City Attorney May Modify. The City Attorney may modify the type and amounts of insurance required pursuant to this Section. 906.2 Claims and Proceedings. Developer shall give City immediate notice of any material casualty to any portion of the Property, whether or not covered by insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or other taking for public or quasi-public use of any portion of the Property (collectively, "Condemnation"), and shall provide City with copies of all documents which pertain to any such casualty or Condemnation. Developer shall take all action reasonably required by City in connection therewith to protect the interests of Developer and/or City, and City shall be entitled (without regard to the adequacy of its security) to participate in any action, claim, adjustment or proceeding and to be represented therein by counsel of its choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without prior written approval, which approval shall not be unreasonably withheld or delayed. 906.3 Delivery of Proceeds to City. In the event that, notwithstanding the "lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance policy described herein are paid to Developer, Developer shall, subject to any superior rights of the Senior Lender, deliver such proceeds to the City immediately upon receipt. 906.4 Application of Casualty Insurance Proceeds. Any proceeds collected (the "Proceeds") under any casualty insurance policy described in this Agreement shall be disbursed to Developer as provided below, but only upon fulfillment of each of the following conditions (the "Restoration Conditions") within ninety (90) days (unless extended by mutual agreement of Developer and City) following the occurrence of the damage for which the Proceeds are collected: (a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of the Property, within a time period reasonably determined by City, to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to City of (i) plans and specifications reasonably satisfactory to City, and (ii) a rehabilitation contract in form and content, and with a contractor, reasonably satisfactory to City. (b) To the extent that the Proceeds are insufficient to accomplish the restoration required above, Developer shall deliver to City funds (the "Shortfall Funds") in the amount of such shortfall, which funds shall be assigned to City as security for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds. (c) Developer shall execute such documents as City requires to 19 25K-55 evidence and secure Developer's obligation to use all amounts disbursed for the diligent restoration of the Property. (d) No Event of Default shall remain uncured. 906.5 Method of Disbursement and Undisbursed Funds. Any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in accordance with then customary disbursement procedures and related provisions. Any amounts remaining undisbursed following completion of such restoration shall be returned to Developer up to the amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall either be paid to Developer or applied by City against any obligations to City that are secured by a lien on the Property, as they elect in their sole and absolute discretion. 906.6 Failure to Satisfy Conditions. In the event that Developer fails tofulfill the Restoration Conditions within one hundred twenty (120) days (unless extended pursuant to Section 19.5) following the date on which the damage occurs, the Proceeds shall be applied by City against any obligations to City that are secured by a lien on the Property, and the selection of which such obligations to apply the Proceeds against shall be made by City in their sole and absolute discretion. 906.7 Restoration. Nothing in this Article 19 shall be construed to excuse Developer from repairing and restoring all damage to the Property, regardless of whether insurance proceeds are available or sufficient. 906.8 Condemnation; Treatment of Compensation Subject to any superior rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to City secured by a lien on the Property, all amounts payable to Developer in connection with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation"). Subject to any superior rights of Senior Lender, Developer shall deliver such remaining Compensation to City immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely to render the Property not economically viable or if, in City's reasonable judgment Developer's security is otherwise impaired, City may apply the Compensation received due to judgment or settlement in connection with any condemnation or other taking to reduce the unpaid obligations secured in such order as City may determine, and without any adjustment in the amount or due dates of payments due under the Note. If so applied, any award in excess of the unpaid balance of the Note and other sums due to City shall be paid to Developer or Developer's assignee. City shall have no obligation to take any action in connection with any actual or threatened condemnation or other proceeding. (a) Notwithstanding the foregoing, as long as the value of City's liens are not impaired, any condemnation proceeds may be used by the Developer for repair andlor restoration of the Project. 20 25K-56 (b) Nothwithstanding the foregoing, during the tax credit compliance period for the Project, as determined under Section 42 of the Internal Revenue Code, any condemnation proceeds maybe used by the Developer for repair and/or restoration of the Project. 906.9 Waiver of Subrogation. Developer hereby waives all rights to recover against the City (or any officer, employee, agent or representative of City) for any loss incurred by Developer from any cause insured against or required to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation. The required certificates shall be furnished by the Developer at the time this Agreement is executed. Certificates verifying such coverage has been extended to the City of Santa Ana must be furnished to the City of Santa Ana City Attorney's Office (M-29), 20 Civic Center Plaza, Santa Ana, CA 92701 prior to the commencement of work hereunder. 907. Builders Risk Insurance. The Developer shall be responsible to cover the properties during the course of rehabilitation. It is recommended that such insurance provide coverage on an all risk basis, including theft and vandalism, for accidental losses, damage or destruction of the Property. 908. Right of Access. For purposes of assuring compliance with this Agreement, representatives of the City shall have the right of access to the properties, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in rehabilitating the improvements so long as City representatives comply with all safety rules. The City (or its representatives) shall, except in emergency situations, notify the Developer prior to exercising its right pursuant to this section. 909. Developer Indemnity. Developer shall indemnify, defend and hold harmless City, its officers, agents, employees and volunteers from and against any and all loss or damage, expenses, injuries, death to any person, damage to real or personal property, claim, demand, suit, action, judgment, settlement, reasonable attorney's fees, costs, or proceeding of any kind arising out of this Agreement, implementation of this Agreement, the sale of the property by Developer, securing of financing, design development drawings, engineering, construction, reconstruction, structural integrity of the NSP Assisted Units, maintenance of the properties, operation, and subsequent sale of the NSP Assisted Units, including but not limited to: (a) the presence, release, use, generation, discharge, storage or disposal of any hazardous materials, on, under, in or about, or the transportation of any such hazardous materials to or from, the NSP Assisted Units; 21 25K-57 (b) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the NSP Assisted Units; (c) latent material defects in rehabilitation work; (d) any construction defect; (e) personal injury, including death, of the employees, agents, officers, and/or volunteers of Developer, and/or any subcontractors, independent contractors, partners, and/or subsidiaries; (f) property damage claims of the employees, agents, officers, and/or volunteers of Developer, and/or any subcontractors, independent contractors, partners, and/or subsidiaries; (g) delay in rehabilitation; (h) personal injury, including death, of any third party; and (i) property damage claims of any third party. Developer's obligation to indemnify as set forth in this Agreement shall extend to loss or damage, expenses, injuries, death to any person, damage to real or personal property, claim, demand, suit, action, judgment, settlement, reasonable attorney's fees, costs, or proceedings of any kind that, are discovered or accrue, either before or after the termination of this Agreement. Notwithstanding the foregoing, Developer shall not be required to indemnify and hold harmless the City for liability attributable to the active negligence or intentional misconduct of the City or any of its boards, officers, employees, representatives or agents. 910. Attorney's Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys' fees. 911. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise. 912. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 913. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or 22 25K-58 unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 914. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 915. Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Developer and City and their respective successors and assigns. Other than as expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or obligations under this Agreement without the prior written consent of City, which consent may be withheld in City's sole and absolute discretion. Any such assignment without such consent shall, at City's option, be void. 916. Prior Agreements; Amendments; Consents. This Agreement (together with the related documents) contains the entire agreement between the City and Developer with respect to the NSP funds and the Property, and all prior negotiations, understandings and agreements are superseded by this Agreement. No modification of any this Agreement (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. 917. Governing Law. All of the NSP documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California and Federal law, whichever is more stringent. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Agreement. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue. 918. Severability of Provisions. No provision of this Agreement that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of this Agreement are hereby declared to be severable. 919. Conflicts. In the event of any conflict between the provisions of this Agreement and those of any other NSP documents, 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. 23 25K-59 920. Time of the Essence. Time is of the essence under this Agreement and in the performance of every term, covenant, and obligation contained herein. 921. Conflict of Interest. No member, official or employee of the City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement which is prohibited by law. 922. 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. 923. Nonliability of City Officials and Employees. No member, official or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Developer or successor, or on any obligation under the terms of this Agreement. 924. Authority to Enter Agreement. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify the City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. 24 25K-60 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first stated above. ATTEST: CITY OF SANTA ANA MARIA D. HUIZAR DAVID N. REAM Clerk of the Council City Manager APPROVED AS TO FORM: JOSEPH W. FLETCHER City Attorney By: LISA E. STORCK ' Assistant City Attorney DEVELOPER: By: ORANGE HOUSING DEVELOPMENT CORPORATION a California nonprofit public benefit corporation, its sole member By: Eunice Bobert, its Chief Executive Officer C&C Development a California limited liability company By: Todd R. Cottle, its member By: Cottle Family Trust Dated 3/8/87, By: Barry A. Cottle, its Trustee 25 25K-61 25K-62