HomeMy WebLinkAbout80A - JOINT - LOAN AGMT AND VOUCHER AGMTS DEPOT AT SANTIAGOREQUEST FOR COUNCIL/
HOUSING AUTHORITY
ACTION
MEETING DATE:
MAY 20, 2013
TITLE:
LOAN AGREEMENT AND PROJECT-BASED
VOUCHERS AGREEMENTS WITH DEPOT AT
SANTIAGO, LP
CIT MANAGER EXECUTIVE DIRECTOR
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
APPROVED
? As Recommended
? As Amended
? Ordinance on 1st Reading
? Ordinance on 2nd Reading
? Implementing Resolution
? Set Public Hearing For
CONTINUED TO
FILE NUMBER
CITY COUNCIL ACTION
Authorize the City Manager and the Clerk of the Council to execute a loan agreement with Depot
at Santiago, LP in the amount of $3,000,000, subject to non-substantive changes approved by the
Acting Executive Director and City Attorney.
HOUSING AUTHORITY ACTION
Authorize the Executive Director of the Housing Authority or designee, contingent upon approval
by the U.S. Department of Housing and Urban Development, to complete and execute the Project-
Based Vouchers (PBV) Agreement to Enter into Housing Assistance Payments Contract and, after
construction of the Depot at Santiago project, to complete and execute the PBV Housing
Assistance Payments Contract between the Housing Authority of the City of Santa Ana and Depot
at Santiago, LP for up to eight PBV's, and other necessary documents, for the implementation of
project-based vouchers for the Depot at Santiago project.
COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION
At its special meeting on May 14, 2013, by a vote of 5:0 (Bist, Garcia absent) the Community
Redevelopment and Housing Commission recommended that the City Council and Housing
Authority approve the recommended actions stated above.
DISCUSSION
After receiving City Council approval on February 19, 2013, staff distributed a notice on February
20, 2013 announcing the availability of a Request for Proposals (RFP) soliciting proposals for
development of an affordable rental housing project. The RFP indicated that the City would
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Depot at Santiago Loan Agreement & Vouchers
May 20, 2013
Page 2
consider proposals for new construction or acquisition and rehabilitation projects. It also identified
a number of criteria that would be used to evaluate proposals, including the experience and track
record of the development team in both developing and managing affordable projects, project
readiness, proposed levels of affordability, the location of the proposed project, and leveraging of
City funds with outside sources. The RFP was published on the City's website, and letters
announcing its availability were sent to 153 individuals and firms who had previously requested to
be informed of development opportunities. Two developers submitted questions regarding the
RFP. A third developer submitted the only proposal that was received.
The City's review team was made up of senior staff members from the City's Planning and Building
Agency, and from the Community Development Agency's Administrative/Successor Agency and
Housing Development Divisions. The team met on April 3, 2013 to review the proposal. It was
determined that the proposal met and/or exceeded the submission requirements of the RFP, and
unanimously recommended that it be submitted to City Council for approval. The proposal was
submitted by a partnership composed of Orange Housing Development Corporation, Magis Realty,
and C&C Development. They have tentatively chosen to name their partnership the Depot at
Santiago, LP. Over the past twenty years, Orange Housing Development and C&C Development
have partnered with each other and with the City and other municipalities on many successful
affordable housing projects. Their most recently completed project is Terraces at Santiago, a 36-
unit new construction project located at 605-611 E. Washington. Magis Realty is a real estate
development and consulting firm focused on mixed use, multifamily and hospitality developments.
The proposed mixed use project will be known as the Depot at Santiago, and is located within the
Station District at the Northeast corner of Santa Ana Blvd. and Santiago Street (Exhibit 1). The
developer has control of the site which is currently occupied by a collection of small, single tenant
industrial units and a contractor's yard. The developer will be required to work with a qualified
relocation consultant. When completed, the project will be comprised of 70 one, two and three
bedroom rental units, 8,500 square feet of retail space, and a 3,000 square foot community room.
The project will be designed to meet the Transit Zoning Code's "California Contemporary"
architecture standard, and to achieve a LEED Gold certification, and adhere to all development
and processing requirements. The developer has already held several meetings with surrounding
community members, and will be conducting additional outreach throughout the planning process.
The proposed unit mix and levels of affordability are as follows:
Bedroom
Size Square
Feet 30%
AMI 40%
AMI 50%
AMI 60%
AMI Total
1 Bedroom 875 2 3 6 3 14
2 Bedroom 1,085 2 6 11 10 29
3 Bedroom 1,350 3 5 11 7 26
Totals 7 14 28 20 69
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Depot at Santiago Loan Agreement & Vouchers
May 20, 2013
Page 3
The remaining unit will be a 3-bedroom unit reserved for the onsite manager. The total project
development cost is estimated to be $26.8 million. The tables below show the anticipated funding
sources and their uses:
Funding Source Amount
Conventional Permanent Loan $4,191,910
Section 8 Loan 8 Project Based Vouchers) $ 710,460
City of Santa Ana HOME Program $2,634,566
City of Santa Ana CDBG Funds $ 365,434
Deferred Developer Fee $ 787,193
General Partner Equity $ 100
Limited Partner Equity Tax Credits) $18,096,845
TOTAL $26,786,508
-Funding Use Amount
Acquisition/Demolition $ 3,280,000
Construction $16,298,340
Soft Costs $ 6,370,134
Costs Deferred Until Conversion $ 494,190
-Financing Costs $ 343,844
TOTAL $26,786,508
The HOME and CDBG funds will be provided by means of a 55-year City loan carrying a 3 percent
interest rate and payable by residual receipts. The budget proposal requests eight project based
vouchers (PBVs). Unlike conventional housing choice vouchers, PBVs are attached to a specific
residential facility. The rental assistance is tied to the unit versus the household. The U.S.
Department of Housing and Urban Development (HUD) regulations require that the Housing
Authority enter into a PBV Agreement to Enter into Housing Assistance Payments Contract (Exhibit
3) prior to the start of construction, and a PBV Housing Assistance Payments Contract (Exhibit 4)
after the completion of construction. Execution of these documents will be contingent upon
completion of the National Environmental Policy Act (NEPA) and California Environmental Quality
Act (CEQA) requirements, approval of the developer's application for a tax credit allocation, and
completion of a subsidy layering analysis by the California Tax Credit Allocation Committee.
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Depot at Santiago Loan Agreement & Vouchers
May 20, 2013
Page 4
FISCAL IMPACT
Funds will be available in the HOME Program account (account no. 13018780-69152), and CDBG
funds will be transferred from single family housing activities to loans for acquisition purposes
(account no. 13518783-69152).
APPROVED AS TO FUNDS AND ACCOUNTS:
Sandra D. Gottlieb
Acting Executive Director
Community Development Agency
SDG/SLB/kg
EXHIBITS: 1. Site Map
2. Loan Agreement
3. PBV Agreement
4. PBV Contract
Francisco Gutierrez
Executive Director
Finance and Management Services Agency
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PROPOSED PROJECT LOCATION
EXHIBIT 1
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EXHIBIT 2
FREE RECORDING REQUESTED PURSUANT
TO GOVERNMENT CODE SECTION 6103 & 27383
When Recorded Mail to:
City of Santa Ana
Community Development Agency
20 Civic Center Plaza (M-37)
P.O. Box 1988
Santa Ana, California 92702
Attention: Housing Manager
SPACE ABOVE THIS LINE FOR RECORDING USE
FREE RECORDING REQUESTED
[Government Code Section 6103]
LOAN AGREEMENT
by and between the
CITY OF SANTA ANA,
and
Depot at Santiago, L.P.
(923 N. Santiago Street, Santa Ana, California)
Dated: May , 2013
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LOAN AGREEMENT
HOME PROGRAM/CDBG FUNDS
THIS LOAN AGREEMENT (the "Agreement") dated, for identification purposes only, as of
May , 2013, is made and entered into by and between the City of Santa Ana, a charter city
and municipal corporation ("City") and Depot at Santiago, L.P. ("Developer") with reference to
the following:
RECITALS:
A. City has received an allocation of funds from the United States Department of
Housing and Urban Development ("HUD") under the HOME Investment Partnership Program
(the "HOME Program") (42 U.S.C. §12701, et seq.,) to be used in accordance with applicable
statutory requirements and regulations (the "HOME Regulations") (24 CFR Part 92).
B. A portion of City's allocation of HOME Program funds is reserved for Community
Housing Development Organizations (the "HOME Program/CHDO funds"), and the sole
member of Developer's Managing General Partner, Orange Housing Development Corporation,
has qualified and is in good standing as a Community Housing Development Organization.
C. Among the purposes of the HOME Program are (1) to expand the supply of decent,
safe, sanitary, and affordable housing, with primary attention to rental housing, for very low-
income and low-income households; and (2) to provide participating jurisdictions, on a
coordinated basis, with the various forms of federal housing assistance, including capital
investment, mortgage insurance, rental assistance, and other federal assistance, needed (a) to
promote the development of partnerships among the federal government, states and units of
general local government, private industry, and nonprofit organizations able to utilize all
available resources to provide more of such housing, and (b) to expand the capacity of nonprofit
community housing development organizations to develop and manage decent, safe, sanitary and
affordable housing.
D. City is also the recipient of Community Development Block Grant ("CDBG") funds
from HUD pursuant to Tile I of the Housing and Community Development Act of 1974, as
amended ("Act") and 24 CFR 570 ("CDBG Regulations").
E. The City of Santa Ana is authorized by the HOME and CDBG Regulations to expend
funds to increase the supply of low- and moderate-income housing available at affordable housing
costs.
F. Developer is entering into this agreement to acquire and, subject to entitlement
approvals, develop a mixed use project consisting of seventy (70) unit multi-family residential
housing development with retail space and a community room (the "Project") located at 923 N.
Santiago Street, within the City of Santa Ana, California, and legally described in Exhibit A
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attached hereto (the "Property"). The CDBG funds referenced herein shall assist in the land
acquisition only and the HOME funds will assist in the acquisition and soft costs of said Project.
G. In furtherance of the HOME Program and CDBG guidelines, Developer has
applied to City for a loan with which to:
provide deeper affordability and construct the improvements to the Property,
and
2. thereafter to maintain, operate and professionally manage the Project
as decent, safe, sanitary and affordable rental housing.
H. City, on certain terms and conditions, desires to make such loan to Developer in
order to make possible the acquisition and construction of the Project, thereby expanding the supply
of decent, safe, sanitary and affordable housing.
1. If there is any inconsistency between Federal and State guidelines with regard to any
of the terms and conditions contained herein, the more stringent shall apply.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, City and Developer agree as follows:
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. All capitalized terms used herein, including, without
limitation, in the Recitals above and in all other Project Documents, unless otherwise expressly
defined, are defined where first used in this Agreement and/or as set forth in this Article 1.
"Affordable Housing" means housing operated in accordance with the
requirements of 24 CFR 92.252 and 24 CFR 570[no state funds].
"Affordability Restrictions on Transfer of Property" means that certain
document affecting real property benefiting the City, attached hereto as Exhibit B.
"Affordable Rent" means the monthly rents which do not exceed the maximum
amount applicable to Extremely Low, Very Low and Low Income households, as promulgated
by the U.S. Department of Housing and Urban Development (HUD).
"Building Permit" means the building permit(s) issued by City and required
for the construction, if any.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Santa Ana City Hall is open to the public for the conduct of City affairs.
"Calendar Year" means each consecutive twelve (12) month period from
January 1 to December 31.
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L
"Certificate of Completion" has the meaning set forth in Article 17.
corporation.
"City" means the City of Santa Ana, California, a charter city and municipal
"City Deed of Trust" means the deed of trust encumbering the Property, in the
form attached hereto as Exhibit C, to be executed by Developer pursuant to Section 5.13.2 in
order to secure the Loan Note.
designee.
"City Project Manager" shall mean the Deputy City Manager and his/her
"City Promissory Note" means that certain promissory note in the original
principal amount of $3,000,000 in the form attached hereto as Exhibit D, and to be executed by
Developer in favor of City to evidence the obligation of Developer to repay the City Loan
through residual receipts as further described in the Promissory Note.
"Close of Escrow" shall mean the date upon which the Loan Agreement and City
Deed of Trust is recorded in the Official Records of the County.
"Closing Statement" means the final statement of Developer's Escrow account
for the purchase and sale of the Property pursuant to the Purchase Contract.
"Community Development Block Grant" or "CDBG" has the meaning set
forth in Recital "D" above.
"County" means the County of Orange, California.
"Developer" means Depot at Santiago, LP, a California limited partnership
comprised of OHDC Depot, LLC, California limited liability company as managing general
partner and C&C Depot, LLC, a California limited liability company, as developer general
partner.
"Developer's Representative" shall mean the Chief Executive Officer of
of the Managing General Partner of Developer or his/her designee.
"Escrow" means Escrow No.
"Escrow Holder" means First American Title Company, 5 First American Way,
Santa Ana, CA 92707. The Escrow Officer is Ryan Hahn.
"Extremely Low Income" means an adjusted income which does not exceed
thirty percent (30%) of the area median income for the Orange County, California PMSA,
adjusted for household size, as published by HUD.
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"Event of Default" has the meaning set forth in Section 20.1.
"Governmental Authority" means any governmental or quasi governmental
agency, board, bureau, commission, department, court, administrative tribunal or other
instrumentality or authority, and any public utility.
"Hazardous Materials" means flammable materials, explosives, radioactive
materials, hazardous wastes, toxic substances and similar substances and materials, including all
substances and materials defined as hazardous or toxic wastes, substances or materials under any
applicable law, including without limitation the Resource Conservation and Recovery Act, 42
U.S.C. §§ 6901 et seq., and the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. §§ 9601, et seq., as amended.
"HOME Program" has the meaning set forth in Recital "A" above
"HOME Regulations" has the meaning set forth in Recital "A" above.
"HUD" means the United States Department of Housing and Urban Development
and any successors or assigns thereof.
"Improvements" means all improvements and fixtures now and hereafter
comprising any portion of the Property, including, without limitation, landscaping, trees and
plant materials; and offsite improvements (including, without limitation, streets, curbs, storm
drains, and adjacent street lighting).
"Indebtedness" of a person means (a) all indebtedness for borrowed money,
(b) notes payable and drafts accepted representing extensions of credit, whether or not
representing obligations for borrowed money, (c) any obligation for the purchase of property or
services in excess of $10,000 in the aggregate that is (i) deferred for more than six (6) months, or
(ii) evidenced by a note or similar instrument, and ( d) all recourse and all non-recourse
indebtedness secured by any Lien on any property or asset of such person (whether or not
assumed by such person).
"Indemnitees" has the meaning set forth in Section 14.5.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
judgments, injunctions, decrees or awards of the United States or any state, county,
municipality or other Governmental Authority.
"Lien " means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any lien or security interest).
"Loan Documents" means, collectively, this Agreement, the City Promissory
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Note, the City Deed of Trust, and the Affordability Restrictions on Transfer of Property, and any
other agreement, document, or instrument that the City requires in connection with the execution
of this Agreement or from time to time to effectuate the purposes of this Agreement.
"Low Income" means an adjusted income which does not exceed eighty percent
(80%) of the area median income for the Orange County, California PMSA, adjusted for
household size, as published by HUD.
"Median Income for the Area" means the median income for the Orange
County, California PMSA as most recently determined by HUD. Also may be referred to
interchangeably in the Loan Documents as "Area Median Income" or "AMP".
"Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Depot at Santiago, L.P., dated as of , 2013.
"Permitted Encumbrances for the Affordable Housing Restrictions" means
collectively, the Senior Loan Deed of Trust and all other title exceptions and limitations with
respect to the Property hereafter approved by the City Project Manager in writing.
"Permitted Encumbrances for the City Deed of Trust" means the
Senior Loan Deed of Trust and all other title exceptions and limitations with respect to the
Property hereafter approved by the City Project Manager in writing.
"Project" means the construction of the Improvements upon the Property by
Developer pursuant to this Agreement.
"Project Budget" means the line-item budget for the Project attached hereto
as Exhibit E, as modified from time to time in accordance with this Agreement.
"Project Costs" means all costs of any nature incurred in connection with
the Project in accordance with generally accepted accounting principles.
"Property" means the property that is located at 923 N. Santiago Street in the City
of Santa Ana, and is more fully described in the "Legal Description" of the Property attached hereto
as Exhibit A and incorporated herein by reference.
"Scope of Work" means the detailed statement of the work to be
performed by Developer on and to the Property pursuant to this Agreement, which Scope of
Work is attached hereto as Exhibit F.
"Senior Lender" means a commercial financial institution providing the Senior
Loan or any other holder of the Senior Loan Note.
"Senior Loan" means a loan from the Senior Lender which is either a
construction loan in the approximate principal amount of $17,192,490.00 with a term of
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approximately two (2) years or a permanent loan in the approximate principal amount of
$4,191,910.00 with a term of approximately 18 years and an amortization period of 30 years.
"Senior Loan Deed of Trust" means the first deed of trust securing the
Senior Loan by encumbering the Property.
"Senior Loan Documents" means, collectively, the loan agreement governing
the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement,
document or instrument that the Senior Lender requires in connection with the Senior Loan.
"Senior Loan Note" means the promissory note evidencing the Senior
Loan from the Senior Lender.
"Term of Affordability" the terms and conditions contained herein shall remain
in effect for fifty-five (55) years from the date of issuance of the Certificate of Completion.
"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.
1.2 Singular and Plural Terms. Any defined term used in the plural in this
Agreement shall refer to all members of the relevant class and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 References and Other Terms. Any reference to this Agreement shall include
such document both as originally executed and as it may from time to time be modified.
References herein to Articles, Sections and Exhibits shall be construed as references to this
Agreement unless a different document is named. References to subparagraphs shall be
construed as references to the same Section in which the reference appears. The term "document"
is used in its broadest sense and encompasses agreements, certificates, opinions, consents,
instruments and other written material of every kind. The terms "including" and "include" mean
"including (include) without limitation."
1.4 Exhibits Incorporated. All attachments and exhibits to this Agreement, as now
existing and as the same may from time to time be modified, are incorporated herein by this
reference.
2. [RESERVED]
SCOPE OF WORK/PROJECT BUDGET
A "Scope of Work" for the Property is attached hereto as Exhibit F. Any material change
to the Scope of Work requested by the Developer shall be subject to the prior written approval of
the City Project Manager. The Scope of Works sets forth the construction work that shall be
performed on the Property.
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A line-item budget for the Project, including a summary statement of sources and uses of
funds, is incorporated into Exhibit E (the "Project Budget"). Any material change to the Project
Budget requested by Developer shall be subject to the prior written approval of the City Project
Manager.
4. [RESERVED]
CITY LOAN:
The City Loan shall be evidenced by the City Promissory Note in the form attached
hereto as Exhibit D. The City Loan shall be secured by the City Deed of Trust in the form
attached hereto as Exhibit C. The terms and conditions of the City Loan are as set forth in the
City Promissory Note which is a residual receipts note. The HOME compliance period is twenty
(20) years, commencing on the date that all work is complete and the Property is fully occupied,
however the term of affordability for the Project is fifty-five years or repayment of the City
Loan, whichever is longer.
A. HOME FUNDS:
1. Amount and Purpose. Subject to the terms and conditions of this Agreement,
City agrees to make a loan to Developer from HOME funds in the principal amount of up to
$2,634,566.00 for the property acquisition and other costs of the Project.
B. CDBG FUNDS:
1. Amount and Purpose. Subject to the terms and conditions of this Agreement,
City agrees to make a loan of CDBG funds to Developer in the principal amount of up to
$365,434 solely for the Property acquisition related costs of the Project.
6. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS
6.1 Conditions Precedent. City's obligation to disburse the loan is subject to the satisfaction,
or waiver by the City Project Manager, of the following conditions precedent:
(a) Loan Documents. Developer shall have delivered to the Escrow
Holder, signed by the authorized officer or officers of Developer, with such signature(s)
acknowledged where necessary, each of the following documents:
(i) this Loan Agreement;
(ii) the City Promissory Note;
(iii) the City Deed of Trust; and
(iv) the Affordability Restrictions on Transfer of Property.
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(b) Title Insurance. City shall have received an LP-10 ALTA Lender loan
policy of title insurance (1970 edition), or evidence of a commitment therefore satisfactory to
City, issued by First American Title Insurance Company and in form and substance satisfactory
to City, together with all endorsements and binders required, naming City as the insured, in a
policy amount of not less than the total City Loan Amount, showing Developer as the fee owner
of the Property and insuring the City Deed of Trust to be a valid priority lien on the Property.
The City Promissory Note and Deed of Trust shall be subordinate to the Senior Loan Note and
Senior Loan Deed of Trust.
(c) Affordability Restrictions on Transfer of Property. Developer shall have
delivered to the Escrow Holder, in the form attached hereto as Exhibit B, the Affordability
Restrictions on Transfer of Property pursuant to which, among other things, Developer agrees
that the Property shall be used only for decent, safe, sanitary and affordable rental housing
pursuant to the affordability requirements of Code of Federal Regulations ("CFR") section
92.252 or 92.254 and California Health and Safety Code ("H&S") sections 50052.5 and 33334.3,
as applicable.
(d) Documents Recorded. This Loan Agreement, the City Deed of Trust and
the Affordability Restrictions on Transfer of Property shall have been recorded in the Official
Records of the County.
(e) Request for Notice. For the benefit of City, Escrow Holder shall have
recorded a request for notice of default of the Senior Loan (the "Request for Notice of Default").
(f) Insurance. City shall have received evidence satisfactory to the City
Attorney that all of the policies of insurance required by Section 19 of this Agreement are in full
force and effect.
(g) Representations and Warranties. The representations and warranties of
Developer contained in this Agreement and the other Loan Documents shall be correct as of the
Close of Escrow as though made on and as of that date, and if requested by the City Project
Manager, City shall have received a certificate to that effect signed by Developer's
Representative.
(h) No Default. No Event of Default by Developer shall have occurred, and no
event shall have occurred which, with the giving of notice or the passage of time or both, would
constitute an Event of Default by Developer under this Agreement, and if requested by the City
Project Manager, City shall have received a certificate to that effect signed by Developer's
Representative.
6.2 Disbursement Procedures for Loan(s).
The Loan proceeds shall be disbursed through Escrow to finance the construction of the Project
(as evidenced in Exhibit E). The Loan proceeds shall not be used for any purpose other than for
acquisition and construction related costs, including Developer fee and soft costs related to the
development of the Project (costs all subject to City's prior review).
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6.3 First Disbursement. City's obligation to make the first disbursement of the Loan is
subject to satisfaction of the following conditions precedent:
(a) General Contractor. If the City Project Manager has not yet approved the
General Contractor, the City Project Manager shall have approved the identity and
qualifications of the General Contractor.
(b) Contract for construction. If the City Project Manager has not yet
approved the contract for construction, the City Project Manager shall have approved said
contract.
6.4 Termination for Failure of Condition. If (a) any of the conditions set forth herein are
not timely satisfied (subject to applicable notice and cure rights) or waived by the City Project
Manager, and (b) City is not in default under this Agreement, City may terminate this Agreement
without any further liability on its part by giving written notice of termination to Developer.
Upon the giving of such notice, all principal, interest and other amounts owing under the
specified due date.
6.5 Any Disbursement. City's obligation to make any disbursement of the Loan (including
the first and final disbursements is subject to the satisfaction of the following conditions
precedent:
(a) Satisfactory Progress. The City Project Manager shall be satisfied, based
on
his/her own inspections or other reliable information, that the construction is progressing
satisfactorily in conformance with all applicable laws and other requirements (including HOME
and CDBG Regulations).
(b) Condition of Title. Either (i) the City Project Manager reasonably believes
that no event has occurred since the Close of Escrow that would give rise to a colorable claim
against the Property (e"., a mechanic's lien) superior to the claim of City against the Property
with respect to the subject disbursement, or if such claim is made, then City Project Manager
shall receive satisfactory evidence that such claim has been bonded over until its resolution; or
(ii) City must have received, at Developer's expense but payable out of the Loan proceeds from
the title insurer who issued City's LP-10 Title Policy, all endorsements thereto then reasonably
required by City (including, without limitation, CLTA Form 122 -- priority of advance
endorsements).
(c) Representations and Warranties. The representations and warranties of
Developer contained in this Agreement and the other City Loan Documents shall be correct as of
the date of the disbursement as though made on and as of that date.
(d) No Default. No Event of Default by Developer shall remain uncured
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(unless, to the extent permitted under this Agreement, Developer is diligently taking action to
cure such default) and no event shall have occurred which, with the giving of notice or the
passage of time or both, would constitute an Event of Default by Developer.
6.6 Final Disbursement. City's obligation to disburse that portion of the Loan funds retained
pursuant to Section 6.12 is subject to the satisfaction of the following additional conditions
precedent:
(a) Construction complete. The construction of the Project shall be complete.
(b) Certificate of Occupancy Issued. Any portion of the construction work
requiring inspection or certification by any Governmental Authority shall have been inspected
and certified as complete. Developer shall request that the Building Department issue a
Certificate of Occupancy, a copy of which shall be delivered to the City Project Manager, in
order for final disbursement to occur.
(c) Lien Free. At least one of the following shall have occurred:
(i) Thirty-five (35) days shall have passed since the recording of a
valid notice of completion for the construction, and no mechanic's or materialman's lien
shall be outstanding; or
(ii) Ninety-five (95) days shall have passed since actual completion of
the construction, and no mechanic's or materialman's lien shall be outstanding, or Developer
shall have bonded over any such lien to City's reasonable satisfaction.
6.7 Waiver of Conditions. The conditions set forth pertaining to City's obligation to make
disbursements of the Loan proceeds are for City's benefit only and the City Project Manager may
waive all or any part of such rights by written notice to Developer.
6.8 Disbursement Requests. The Loan proceeds shall be disbursed on a line-item by line-
item basis in accordance with the Project Budget and subject to the conditions in this section. In
no event shall City have any obligation to disburse any amount for any item in excess of the
amount allocated to such item in the Project Budget. Disbursements shall be made only upon
Developer's written request in the form of a Disbursement Request showing all costs which
Developer intends to fund with such disbursement, itemized in such detail as City may
reasonably require, accompanied in each case by (a) invoices and lien releases satisfactory to
City, including in any event partial lien releases executed by each contractor and subcontractor
who has received any payment for work performed, and (b ) all other documents and information
reasonably required by City. Disbursement Requests shall be submitted no less than ten (10)
Business Days prior to the date of the requested disbursement, and shall not be submitted more
often than monthly.
Prior to each disbursement by City of proceeds of the loan, Developer shall deliver to City a
draw request ("Draw Request"), and all required supporting information as set forth in the Loan
Documents or as otherwise reasonably required by City in order to provide information for
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evaluating the requested disbursement pursuant to customary construction lending practices of
institutional lenders in Southern California.
City shall notify the Developer of approval or disapproval of each Draw Request within five (5)
business days after receipt of the Draw Request, using the City's "Disbursement/Change Order
Approval Notice". City shall have the right, but not the obligation, to discontinue processing
Draw Requests unless and until receipt of notification from the other of approval or disapproval
of each outstanding Draw Request.
6.9 Manner of Disbursement. City may make any disbursement by check payable to
Developer; or on a voucher basis; or by check payable jointly to Developer and any contractor,
subcontractor or other claimant; or directly to any such claimant; or by any other means
reasonably selected by City.
6.10 Cost Overruns. In the event that, at any time and for any reason, (a) the actual cost
reasonably estimated by City or Developer to be required to complete all matters included in any
line item in the Project Budget exceeds the amount allocated to that line item in the Project
Budget, (b) Project costs for any matters not covered by a specific line item have been or will be
incurred, or (c) the undisbursed portion of the Loan proceeds is or may be insufficient to pay all
construction of the Project that may be payable under the City Loan Documents or otherwise in
connection with the construction, Developer shall, within ten (10) days after it receives written
notice thereof from City of any of the foregoing matters, do one or more of the following:
(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 City Loan;
(b) reallocate sufficient funds to pay the Excess Cost from funds allocated to
"Contingency" in the Project Budget; provided, however, that the City Project Manager's consent
to any such reallocation shall be required; or
(c) deposit an amount equal to the Excess Cost in a non-interest bearing
account (the "Overrun Account") with City from which withdrawals may be made only with the
consent of the City Project Manager but which will be exhausted prior to any further
disbursement for any line item, so that any resulting surplus in any line item of the Project
Budget will then be reallocated to the line item(s) in which the Excess Costs are expected to be
incurred.
City shall have no obligation to make further disbursements until Developer has paid or
otherwise provided for the overrun as required above. Amounts deposited by Developer in the
Overrun Account for any Excess Costs shall be disbursed by City prior to the disbursement of
any remaining Loan proceeds in the manner described in subsection 9.3(c).
6.11 Cost Savings. Upon completion of and disbursement for all matters covered by any line
items in the Project Budget, any remaining undisbursed amounts allocated to that line item shall
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be reallocated to "Contingency" and thereafter be available for disbursement in accordance with
the terms of this Agreement.
6.12 Retainage. City will withhold a Retainage of 10% from each Disbursement for each
of the Hard Cost line items of the Project Cost Breakdown (and other line items thereof
designated for withholding of retainage) until all conditions to the final Disbursement of Hard
Costs have been satisfied. In lieu of City's withholding Retainage, Developer can by written
notice to City elect not to draw any overhead or profit as would otherwise be permitted under the
Construction Contract until such time as Retainage would otherwise have been released.
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.
6.13 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 Project Manager) for "punch-list" items. Such holdback will be released when all punch-list
items have been completed to the satisfaction of City.
6.14 Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the
making by City of any disbursement with knowledge that any condition to such disbursement is
not fulfilled shall constitute a waiver of such condition only with respect to the particular
disbursement made, and such condition shall be condition to all further disbursements until
fulfilled.
6.15 Modification of Disbursement Conditions and Procedures. The City Project Manager
shall have the authority to modify the disbursement conditions and procedures set forth herein in
order to conform them to the payment provisions of the contract for construction.
6.16 Other Terms and Conditions of Loan.
A. The Note(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.
6.17 Closing Costs and Fees. Developer shall pay (a) all escrow fees and charges, (b) all
recording fees and charges on any document recorded pursuant to this Agreement, and (c) the
premium for the title insurance required hereunder.
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7. AFFORDABILITY REQUIREMENTS, USE AND MAINTENANCE OF THE
PROJECT
7.1 Use Covenants and Restrictions.
Developer agrees and covenants, which covenants shall run with the land and bind Developer, its
successors, its assign and every successor in interest to the Property that Developer will make all of
the rental units on the Property available to extremely low, very low and low income households at
rents affordable to such households for fifty-five (55) years (except for the unit for the onsite
Manager). The Project shall consist of approximately seventy (70) residential units.
Enforceability of restrictions on the sixty-nine (69) units shall be enforced until the date that is
twenty (20) years after the date on which the Certificate of Completion is issued (HOME
affordability period), unless tax credits are awarded to the Property, then fifty-five (55) years after
the date on which the Certificate of Completion is issued.
7.2 Affordability Levels/Unit Mix:
The proposed unit mix and levels of affordability are as follows:
Bedroom
Size Square
Feet 30%
AMI 40%
AMI 50%
AMI 60%
AMI Total
1 Bedroom 875 2 3 6 3 14
2 Bedroom 1,085 2 6 11 10 29
3 Bedroom 1,350 3 5 11 7 26
Totals 7 14 28 20 69
The remaining unit will be a 3 bedroom unit reserved for the onsite manager.
The affordable rents charged at the Project must comply with the lowest of the following
standards:
1. The standards set forth by California Tax Credit Allocation Committee (TCAC), or
2. During the 20-year HOME affordability period, for the eleven (11) HOME assisted units,
the rent schedule periodically published by HUD.
* Utility allowances must be deducted from the Maximum Gross Monthly Rent. The Santa Ana
Housing Authority publishes the utility allowance.
7.3 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.
7.4 Maintenance of the Property. Solely at Developer's expense, Developer agrees to maintain
the Property in a clean and orderly condition and in good condition and repair and keep the Property
free from any accumulation of debris and waste materials. If at any time Developer fails to
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maintain, or cause to be maintained, the Property as required by this section, and said condition is
not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from
the date of written notice from the City, unless such condition cannot reasonably be cured within
thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to
complete such cure, the City may perform the necessary maintenance and Developer shall pay all
reasonable costs incurred for such maintenance. The City shall inspect the Property annually after
the date of issuance of the Certificate of Completion as described in Article 17 of this Agreement.
7.5 Obligation to Refrain from Discrimination. Developer covenants and agrees for itself, its
successors, its assigns and every successor in interest to the Property or any part thereof, that there
shall be no discrimination against or segregation of any person or group of persons on account of
race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer itself or any
person claiming under or through him establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall
run with the land and shall remain in effect for the term of the Agreement.
8. DEFAULTS AND REMEDIES
8.1 Event of Default. Failure or delay by either party to perform any term 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 party in default, specifying
the default complained of by the injure 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.
8.2 Institution of Legal Actions. In addition to any other rights or remedies, either party may
institute legal action to cure, correct or remedy any default to recover damages for any default, or to
obtain any other remedy consistent with the purpose of this Agreement.
8.3 Rights and Remedies are Cumulative. Except with respect to rights and remedies
expressly declared to be exclusive in this Agreement, the right and remedies of the parties are
cumulative and the exercise by either party of one or more of such rights or remedies shall not
preclude the exercise by it, at the same or different times, of any other rights or remedies for the
same default or any other default by the other party.
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8.4 Damages. In the event that the City is liable for damages to Developer, such liability shall
not exceed costs incurred by the Developer in the performance of this Agreement and shall not
extend to compensation for loss of future income, profits or assets; provided, however, Developer's
only remedy for any breach of this Agreement by the City shall be an action for specific
performance of such party's obligations.
8.5 Nonrecourse Liability. Neither Developer, nor any partner of Developer, shall have any
personal liability under this Agreement, or the attached Note and Deed of Trust, and any judgment,
decree or order for the payment of money obtained in any action to enforce the obligation of
Developer to repay the loan evidenced by such documents shall be enforceable against Developer
only to the extent of Developer's interest in the Property.
9. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to Agency/City to enter into this Agreement, Developer represents
and warrants as follows:
9.1 Formation, Oualification and Compliance. Depot at Santiago, LP, a California limited
partnership comprised of Orange Housing Development Corporation, and C&C Development, a
California corporation, as the general partners. Orange Housing Development Corporation is (a)
a non-profit public-benefit corporation, validly existing and in good standing under the laws of
the State of California, (b) has all requisite authority to conduct its business and own and lease its
properties, and (c) is qualified and in good standing in every jurisdiction in which the nature of
its business makes qualification necessary or where failure to qualify could have a material
adverse effect on its financial condition or the performance of its obligations under the Loan
Documents. Developer is in compliance with all laws applicable to its business and has obtained
all approvals, licenses, exemptions and other authorizations from, and has accomplished all
filings, registrations and qualifications with, any Governmental Authority that are necessary for
the transaction of its business.
9.2 Execution and Performance of Loan Documents.
9.2.1 Developer has all requisite authority to execute and perform its
obligations under the Loan Documents.
9.2.2 The execution and delivery of Developer of, and the performance by
Developer of its obligations under, each Loan Document has been authorized by all necessary
action and does not and will not:
(a) require any consent or approval not heretofore
obtained of any person having any interest in Developer;
(b) violate any provision of, or require any consent or
approval not heretofore obtained under, any articles of incorporation, by-laws or other governing
document applicable to Developer;
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(c) result in or require the creation of any lien, claim,
charge or other right of others of any kind (other than under the City Loan Documents) on or
with respect to any property now or hereafter owned or leased by Developer;
or
(d) to best of its knowledge, violate any provision of any law
presently in effect;
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or other agreement or
document to which Developer is a party or by which Developer or any of its property is bound.
9.2.3 Developer is not in default, in any respect that is materially adverse
to the interests of City under the Loan Documents or that would have any material adverse effect
on the financial condition of Developer or the conduct of its business, under any law, contract,
lease or other agreement or document described in sub-paragraph (d) or (e) of the previous
subsection.
9.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Authority is required which has not
been previously obtained in connection with:
(a) the execution of Developer of, and the
performance by Developer of its obligations under, the Loan Documents; and
Documents.
(b) the creation of the liens described in the Loan
9.3 Financial and Other Information. To the best of Developer's knowledge, all financial
information furnished to City with respect to Developer in connection with the Loans (a) is
complete and correct in all material respects as of the date of preparation thereof, (b) accurately
presents the financial condition of Developer, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied or in accordance with such other
principles or methods as are reasonably acceptable to City. To the best of Developer's
knowledge, all other documents and information furnished to City with respect to Developer, in
connection with the Loans, are correct and complete insofar as completeness is necessary to give
the City accurate knowledge of the subject matter. To the best of Developer's knowledge
Developer has no material liability or contingent liability not disclosed to City in writing and
there is no material lien, claim, charge or other right of others of any kinds (including liens or
retained security titles of conditional vendors) on any property of Developer not disclosed in
such financial statements or otherwise disclosed to City in writing.
9.4 No Material Adverse Change. There has been no material adverse change in the
condition, financial or otherwise, of Developer since the dates of the latest financial statements
furnished to City. Since those dates, Developer has not entered into any material transaction not
disclosed in such financial statements or otherwise disclosed to City in writing.
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9.5 Tax Liability. Developer has filed all required federal, state and local tax returns and
has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to
City in writing) other than taxes being promptly and actively contested in good faith and by
appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities
(including contested liabilities) in accordance with generally accepted accounting principles or in
accordance with such other principles or methods as are reasonably acceptable to City.
9.6 Governmental Requirements. To best of its knowledge, Developer is in compliance with
all laws relating to the Property and all Governmental Authority approvals, including zoning,
land use, planning requirements, and requirements arising from or relating to the adoption or
amendment of, any applicable general plan, subdivision and parcel map requirement;
environmental requirements, including the requirements of the California Environmental Quality
Act and the National Environmental Policy Act and the preparation and approval of all required
environmental impact statements and reports; use, occupancy and building permit requirements;
and public utilities requirements.
9.7 Rights of Others. Developer is in compliance with all covenants, conditions, restrictions,
easements, rights of way and other rights of third parties relating to the Property.
9.8 Litigation. There are no material actions or proceedings pending or, to the best of the
Developer's knowledge, threatened against or affecting Developer or any property of Developer
before any Governmental Authority, except as disclosed to City in writing prior to the execution
of this Agreement.
9.9 Bankruptcy. To the best of Developer's knowledge, no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or
other proceedings are pending or threatened against Developer, nor are any of such proceedings
contemplated by Developer.
9.10 Information Accurate. To the best of Developer's knowledge, all information, regardless
of its form, conveyed by Developer to City, by whatever means, is accurate, correct and
sufficiently complete to give City true and accurate knowledge of its subject matter, and does not
contain any misrepresentation or omission.
9.11 Conflicts of Interest. No member, official or employee of the City shall have any personal
interest, direct or indirect, in this Agreement, nor shall any such member, official or employee
participate in any decision relating to this Agreement which affects his/her personal interests or the
interests of any corporation, partnership or association in which he/she has a direct or indirect
financial interest. The Developer warrants that it neither has paid nor given, nor will pay or give,
any third parry any money or other consideration for obtaining this Agreement.
9.12 Nonliability of City Officials and Employees. No member, official or employee of the City
shall be personally liable to the Developer in the event of any default or breach by the City or for
any amount which may become due to Developer or on any obligations under the terms of this
Agreement.
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9.13 No Assignment. Developer expressly acknowledges and agrees that the City has only
agreed to assist the Developer as a means by which to induce the construction/development of the
Property. Accordingly, Developer further expressly acknowledges and agrees that this Agreement is
a personal right of Developer that is neither negotiable, transferable, nor assignable except as set
forth herein. Developer may assign some or all of its rights under the Agreement only with the prior
written consent of the City Project Manager (such consent not to be unreasonably withheld), except
that no prior consent is necessary for an assignment by a limited partner of Developer to an affiliate,
or as otherwise provided in the Deed of Trust.
9.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under federal
and California state law.
9.15 Third Parties. This Agreement is made for the sole benefit of Developer and the City and
their successors and assigns, and no other person or persons shall have any rights or remedies under
or by reason of this Agreement or any right to the exercise of any right or power of the City
hereunder or arising from any default by Developer, nor shall the City owe any duty whatsoever to
any claimant for labor performed or materials furnished in connection with the construction of the
Property.
9.16 Control of Property. The parties acknowledge that the City has not at anytime participated
in any manner in the management or operation of the Property, and will not so participate at any
time hereafter.
10. CONDITIONS FOR CONSTRUCTION
10.1 Permits and Approvals. Developer shall diligently obtain all permits, including all
building permits, licenses, approvals, exemptions and other authorizations of Governmental
Agencies required in connection with the construction and conversion of the Property.
10.2 Commencement and Completion of Construction.
The construction of the Project shall be considered complete for purposes of this
Agreement only when (a) all work described has been completed and fully paid for, and (b) all
work requiring inspection or certification by Governmental Authority has been completed and all
requisite certificates, approvals and other necessary authorizations (including required final
certificates of occupancy) have been obtained.
10.3 Change Orders. The contract for construction shall not be modified except pursuant
to change orders. All change orders:
(a) shall be in writing, numbered in sequence, signed by Developer
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and submitted to City prior to the proposed effectiveness thereof and accompanied by any
working drawings and a written narrative of the proposed change.
(b) Shall be subject to the City Project Manager's and Bank's prior
written approval of the City Project Manager and Bank.
10.4 Entry and Inspection. At all times prior to completion of the construction, upon
reasonable notice, City and its agents shall have (a) the right of free access to the Property and all
sites away from the Property where materials for the construction are stored, (b) the right to
inspect all labor performed and materials furnished for the construction, and (c) the right to
inspect and copy all documents pertaining to the construction.
10.5 Compliance with Section 3 Clause. Section 3 of the Housing and Urban Development
act of 1968, 12 U.S.C. 1701u, as amended by Section 915 of the Housing and Community
Development Act of 1992 requires that economic opportunities generated by HUD financial
assistance for housing and community development programs be targeted toward low- and very
low- income persons. Whenever HUD assistance generates opportunities for employment or
contracting, state and local grantees, as well as other recipients of HUD housing assistance funds
must, to the greatest extent feasible, provide these opportunities to low- and very low- income
persons and to businesses owned by or employing low- and very low- income persons. Section 3
applies to projects for which HUD's share of project costs exceeds $200,000 and contracts and
subcontracts awarded on projects for which HUD's share or project costs exceeds $200,000 and
the contract or subcontract exceeds $100,000.
For purposes of this Section 3 Clause and compliance thereto, whenever the word
"contractor" is used it shall mean and include, as applicable, the Developer, and its contractor
and subcontractor(s), if any. The particular text to be utilized in any and all contracts of any
contractor doing work covered by Section 3 shall be in substantially the form of the following, as
reasonably determined by the City, or as directed by HUD or its representative, and shall be
executed by the applicable contractor under penalty of perjury:
"(a) The work to be performed under this contract is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 U.S.C. 170lu ("Section 3"). The purpose of Section 3 is to ensure that
employment and other economic opportunities generated by HUD assistance or HUD-
assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to
low-and very low-income persons [inclusive of Very Low Income Persons, Very Low
Income Households, and Very Low Income Tenants served by the Project], particularly
persons who are recipients of HUD assistance for housing.
(b) The parties to this contract agree to comply with HUD's regulations in 24
CFR part 135, which implement Section 3. As evidenced by their execution of this
contract, the parties to this contract certify that they are under no contractual or other
impediment that would prevent them from complying with the part 135 regulations.
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(c) The contractor agrees to send to each labor organization or representative
of workers with which the contractor has a collective bargaining agreement or other
understanding, if any, a notice advising the labor organization or workers' representative
of the contractor's commitments under this Section 3 clause, and will post copies of
notices in conspicuous places at the work site where both employees and applicants for
training and employment positions can see the notice. The notice shall describe the
Section 3 preference, shall set forth minimum number of job titles subject to hire,
availability of apprenticeship and training positions, the qualifications for each; and the
name and location of person(s) taking applications for each of the position; and the
anticipated date the work shall begin.
(d) The contractor agrees to include this Section 3 clause in every subcontract
subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate
action, as provided in an applicable provision of the subcontract or in this Section 3
clause, upon a finding that the subcontractor is in violation of the regulations 24 CFR part
135. The contractor will not subcontract with any subcontractor where the contractor has
notice or knowledge that the subcontractor has been found in violation of the regulations
in 24 CFR part 135.
(e) The contractor will certify that any vacant employment positions,
including training positions, that are filled (a) after the contractor is selected but before
the contract is executed, and (b) with persons other than those to whom the regulations of
24 CFR part 135 require employment opportunities to be directed, were not filled to
circumvent the contractor's obligations under 24 CFR part 135.
(f) Noncompliance with HUD's regulations in 24 CFR part 135 may result in
sanctions, termination of this contract for default, and debarment or suspension from
future HUD assisted contracts."
After the foregoing Section 3 Clause, there shall be a signature block for the
contractor, as applicable, the following text shall be included immediately above the signature
block: "The contractor/provider by his/her signature affixed hereto declares under penalty of
perjury that contractor has read the requirements of the Section 3 Clause and accepts all its
requirements contained therein for all of his/her operations related to this contract."
To the extent applicable, the Developer shall comply and/or cause compliance
with Section 3 Clause requirements for the Project. For example, when and if Developer or its
contractor(s)/subcontractor(s) hire(s) full time employees, rather than volunteer labor or
materials, Section 3 is applicable and all disclosure and reporting requirements apply.
10.6 Construction Information. From time to time during the course of the construction,
within ten (10) Business Days following City's written demand therefore, Developer shall
furnish requested reports of project costs, progress schedules and contractors' costs breakdowns
for the construction, itemized as to trade description and item, showing the name of the
contractor(s) and/or subcontractor(s), and including such indirect costs as real estate taxes, legal
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and accounting fees, insurance, architects' and engineers' fees, loan fees, interest during
construction and contractors' overhead.
10.7 Protection Against Liens: Developer shall diligently file a valid Notice of Completion
upon completion of the construction, diligently file a notice of cessation in the event of a
cessation of labor on the construction for a period of thirty (30) days or more, and take all actions
reasonably required to prevent the assertion of claims of lien against the Property. In the event
that any claim of lien is asserted against the property or any stop notice or claim is asserted
against the City by any person furnishing labor or materials to the Property, Developer shall
immediately give written notice of the same to City and shall, promptly and in any event within
ten (10) Business Days after written demand therefor, (a) pay and discharge the same, (b) effect
the release thereof by delivering to City a surety bond complying with the requirement of
applicable laws for such release, or (c) take such other action as City may require to release City
from any obligation or liability with respect to such stop notice or claim.
11. FEDERAL - HOME PROGRAM AND CDBG COVENANTS
11.1 CHDO. Orange Housing Development Corporation, the sole member of the
managing general partner of Developer, represents and warrants that it qualifies and is in good
standing as a Community Housing Development Organization under the HOME Program.
Developer hereby covenants and agrees to maintain such status throughout the term of this
Agreement, and to provide the City with written documentation necessary to demonstrate
maintenance of said status on an annual basis.
11.2 Oualification as Affordable Housing. As more particularly provided in the
Affordability Restrictions on Transfer of Property, Developer shall use, manage and operate the
Property in accordance with the requirements of 24 CFR 92.252, 24 CFR 570, and California
Health and Safety Code section 50052.5 so as to qualify the housing on the Property as
Affordable Housing with affordable rents.
11.3 Tenant and Participant Protection. Developer shall comply with the
requirements of 24 CFR 92.253.
11.4 [Intentionally Omitted]
11.5 Handicapped Accessibility. Developer shall comply with (a) Section
504 of the Rehabilitation Act of 1973, and implementing regulations at 24 CFR 8C governing
accessibility of projects assisted under the HOME Program; and (b) the Americans with
Disabilities Act of 1990, and implementing regulations at 28 CFR 35-36 in order to make the
Project readily accessible to and usable by individuals with handicaps.
11.6 Use of Debarred, Suspended, or Ineligible Participants. Developer shall comply
with the provisions of 24 CFR 24 relating to the employment, engagement of services, awarding
of contracts, or funding of any contractor or subcontractor during any period of debarment,
suspension, or placement in ineligibility status.
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11.7 Maintenance of Drug-Free Workplace. Developer shall certify that Developer
will provide a drug-free workplace in accordance with 24 CFR 84.13.
11.8 Lead-Based Paint. Developer shall comply with the requirements, as applicable
of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and implementing
regulations at 24 CFR 35.
11.9 Affirmative Marketing. Developer shall implement and perform such
affirmative marketing procedures and requirements for the Property as required by 24 CFR
92.351 and the City of Santa Ana's adopted affirmative marketing procedures and minority
outreach program.
11.10 Equal Opportunity and Fair Housing. Developer shall carry out the
construction and perform its obligations under this Agreement in compliance with all of the state
and federal laws and regulations regarding equal opportunity and fair housing described in 24
CFR 92.350. Developer must also follow the requirements of Health and Safety Code section
33435.
11.11 Property Standards. Developer shall cause the Property to meet the housing
quality standards set forth in 24 CFR 882.109, as well as all applicable local, state and federal
codes and ordinances, including zoning ordinances. Developer shall also cause the Property to
meet the current edition of the Model Energy Code published by the Council of American
Building Officials.
11.12 Displacement and Relocation. Developer acknowledges and agrees that,
pursuant to 24 CFR 92.253 and consistent with the other goals and objectives of this part, City
must ensure that it has taken all reasonable steps to minimize the displacement of persons as a
result of the construction. 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 construction. 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 Project Manager in
connection therewith. All applicable state guidelines must also be followed.
11.13 Other Program Requirements. Developer shall carry out each activity in
compliance with all federal laws and regulations described in subpart H of 24 CFR 92, except
that Developer does not assume City's responsibilities for environmental review in 24 CFR
92.352 or the intergovernmental review process in 24 CFR 92.359.
11.14 Request for Disbursements of Funds. Notwithstanding anything contained in
this Agreement to the contrary, Developer may not request disbursements of funds under this
Agreement until the funds are needed for payment of eligible costs (such funds shall be used
solely towards the acquisition and soft costs of the Project). The amount of each request shall be
limited to the amount needed.
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11.15 Eligible Costs. Developer shall use HOME Funds to pay costs defined as
"eligible costs" pursuant to 24 CFR 92.206.
11.16 Records and Reports. Developer shall maintain and from time to time submit to
City such records, reports and information as the City Project Manager may reasonably require
in order to permit City to meet the record keeping and reporting requirements required of it
pursuant to 24 CFR 92.508.
11.17 Uniform Administrative Requirements. Developer shall comply with the
requirements and standards of OMB Circular No. A-122, "Cost Principles for Non-Profit
Organizations," and with the following Attachments to OMB Circular No. A-110:
(a) Attachment A, "Cash Depositories", except for paragraph 4 concerning
deposit insurance;
(b) Attachment B, "Bonding and Insurance";
(c) Attachment C, "Retention and Custodial Requirements for Records",
except that in lieu of the provisions in paragraph 4, the retention period for
records pertaining to individual CDBG activities starts from the date of
submission of the annual performance and evaluation report, as prescribed
in 24 CFR 570.507, in which the specific activity is reported on for the
final time;
(d) Attachment F, "Standards for Financial Management Systems";
(e) Attachment H, "Monitoring and Reporting Program Performance",
Paragraph 2;
(f) Attachment O, "Procurement Standards."
11.18 Conflict of Interest. Developer shall comply with and be bound by the conflict
of interest provisions set forth at 24 CFR 570.611, as well as state regulations pertaining to
conflict of interest.
11.19 Monitoring. Developer shall allow the City to conduct periodic inspections of
each of the assisted units on the Property as required by the Program after the date of
construction completion, with reasonable notice. Developer shall cure any defects or
deficiencies found by the City while conducting such inspections within two weeks of written
notice thereof, or such longer period as is reasonable within the sole discretion of the City.
11.20 Recertification of Tenant Income.
(a) Developer shall take all necessary steps to review the income of all tenants
prior to renting to them, as well as reviewing current tenants on an annual basis, in
accordance with HOME regulations and guidelines. Every fifth (5t') year, Developer
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shall require new original income documents to be submitted by tenants. Tenants in
HOME assisted units whose incomes no longer comply with federal income guidelines
shall have their rents adjusted in accordance with federal HOME guidelines (24 CFR
92.252-92.253).
(b) Developer shall allow the City to conduct periodic reviews of tenant files
and files relating to affirmative marketing and outreach to insure the Project's compliance
with applicable regulations and guidelines.
(c) HOME assisted units continue to qualify as affordable housing despite a
temporary non-compliance caused by increases in the incomes of existing tenants if
actions satisfactory to HUD are being taken to ensure that all vacancies are filled in
accordance with this section until the non-compliance is corrected.
11.21 Other HOME Program Requirements. Developer shall comply with all other
applicable requirements of the HOME Program.
11.22 Controlling Covenants. If there is a discrepancy between State and Federal law
with regard to any of the aforementioned covenants, the more stringent shall apply.
12. MAINTENANCE, MANAGEMENT, OPERATION, PRESERVATION AND
REPAIR OF PROPERTY
12.1 Maintenance. Developer shall maintain the Property (and all abutting grounds, sidewalks,
roads, parking and landscape areas which Developer is otherwise required to maintain) in good
condition and repair; shall operate the Property in a businesslike manner; shall prudently
preserve and protect its own as well as the City's interests in connection with the Property; shall
not commit or permit any waste or deterioration of the Property (except for normal wear and
tear); shall not abandon any portion of the Property or leave the Property unguarded or
unprotected; and shall not otherwise act, or fail to act, in such a way as to unreasonably increase
the risk of any damage to the Property or of any other impairment of City's interests under the
Loan Documents. Without limiting the generality of the foregoing, and except as otherwise
agreed by City in writing from time to time, Developer shall promptly and faithfully perform and
observe each of the following provisions:
12.1.1 Alterations and Repair. Developer shall not remove, demolish or materially
alter any Improvement without City's prior consent, except to make non-structural repairs which
preserve or increase the Property's value, and shall promptly restore, in a good and professional
manner, any Improvement (or other aspect or portion of the Property) that is damaged or
destroyed from any cause.
12.2 Compliance. Developer shall comply with all laws and requirements of Governmental
Authority (including, without limitation, all requirements relating to the obtaining of
Governmental Authority approvals), all Governmental Authority approvals and all rights of third
parties, relating to Developer, the Property or Developer's business thereon.
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12.3 Taxes and Impositions. Developer shall pay, prior to delinquency, all of the
following (collectively, the "Impositions"): (a) all general and special real property taxes and
assessments imposed on the Property; (b) all other taxes and assessments and charges of every
kind that are assessed upon the Property (or upon the owner and/or operator of the Property) and
that create or may create a lien upon the Property (or upon any personal property or fixtures used
in connection with the Property), including, without limitation, non-governmental levies and
assessments pursuant to applicable covenants, conditions or restrictions; and (c) all license fees,
taxes and assessments imposed on City (other than City's income or franchise taxes) which are
measured by or based upon (in whole or in part) the amount of the obligations secured by the
Property. If permitted by law, Developer may pay any Imposition in installments (together with
any accrued interest).
12.3.1 Right to Contest. Developer shall not be required to pay any Imposition
so long as (a) its validity is being actively contested in good faith and by appropriate
proceedings, (b) Developer has demonstrated to City's reasonable satisfaction that leaving such
Imposition unpaid pending the outcome of such proceedings could not result in conveyance of
the Property in satisfaction of such Imposition or otherwise impair the City's interests under the
Loan Documents, and (c) Developer has furnished City with a bond or other security satisfactory
in an amount not less than 100% of the applicable claim (including interest and penalties).
12.3.2 Evidence of Payment. Upon demand by City from time to time,
Developer shall deliver to City, within thirty (30) days following the due date of any Imposition,
evidence of payment reasonably satisfactory to City.
12.3.3 Books and Records. Developer shall maintain complete books of account
and other records reflecting its operations (in connection with any other businesses as well as
with respect to the Property), in accordance with generally accepted accounting principles
applied on a consistent basis or in accordance with such other principles or methods as are
reasonably acceptable to City, in accordance with 24 CFR 92.508.
12.4 Payment of Fees. Developer shall pay annually to City on December 1 of each year,
monitoring and administrative fees described in the Bond Regulatory Agreement between the
Housing Authority of the City of Santa Ana and the Developer, executed upon issuance of bonds
pertaining to this Project.
12.5 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.
12.6 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
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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.
13. NONDISCRIMINATION COVENANTS
13.1 Obligation to Refrain from Discrimination. Developer covenants and agrees that:
(a) In Use of Property. There shall be no discrimination against or segregation of
any person, or group of persons, on account of race, color, creed, religion, sex, marital status,
national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Property, nor shall Developer or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or
vendors of the Property.
(b) In Affordable Housing Restrictions. The foregoing covenant shall (a) be
included in the Affordability Restrictions on Transfer of Property, (b) run with the land, and (c)
remain effective for the term of the contract (for 55 years).
(c) In Employment. In construction on the Property, Developer shall not
discriminate against any employee or applicant because of race, color, creed, religion, sex,
marital status, disability, national origin, or ancestry. Developer shall take affirmative action to
ensure that applicants are employed, and that employees are treated during employment, without
regard to their race, color, disability, creed, religion, sex, marital status, disability, national
origin, or ancestry.
(d) In all Contracts. Developer shall cause the foregoing covenants to be inserted
in all contracts for any work covered by this Agreement so that such provisions will be binding
upon each contractor for the benefit of City, provided that the foregoing covenant shall not apply
to contracts or subcontracts for standard commercial supplies or raw materials.
14. ENVIRONMENTAL MATTERS
14.1 Representation and Warranty. Except as disclosed in writing to the City, Developer
has no knowledge (a) of the presence on, under or about the Property, now or in the past, of any
Hazardous Materials, or of the transportation to or from the Property of any Hazardous
Materials, (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the
Property, or (c) that there are any underground storage tanks located in, on or under the Property.
14.2 Compliance with Environmental Laws. Developer shall (a) comply with all
environmental laws and environmental permits applicable to the construction of the Property, (b)
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immediately pay or cause to be paid all costs and expenses incurred by reason of such
compliance, (c) keep the Property free and clear of any environmental claims or liens imposed
pursuant to any environmental law, and (d) obtain and renew all environmental permits required
for ownership or use of the Property.
14.3 Presence of Hazardous Materials. Developer shall not, and shall not permit anyone else
to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property,
or transport or permit the transportation of Hazardous Materials to or from the Property except
for de minimis quantities used at the Property in compliance with all applicable environmental
laws and required in connection with the routine operation and maintenance of the Property.
14.4 Notice of Environmental Matters. Developer shall immediately advise City in writing of
any of the following: (a) any pending or threatened environmental claim against Developer or the
Property, (b) any condition or occurrence that (i) results in noncompliance with any applicable
environmental law, (ii) could reasonably be anticipated to cause the Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of the Property under any
environmental Law, or (iii) could reasonably be anticipated to form the basis of an
environmental claim against the Property or Developer.
14.5 Environmental Indemnification by the Developer. Developer agrees to defend,
indemnify and hold harmless the City and its respective officers, directors, employees and agents
(collectively the "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.
15. OTHER AFFIRMATIVE COVENANTS
While any obligation of Developer under the City Promissory Note or Deed of Trust
remain outstanding, the following provisions shall apply, except to the extent that City Project
Manager otherwise consents in writing:
15.1 Existence. The sole member of Developer's managing general partner (OHDC) shall
maintain its existence in good standing under the laws of the State of California, and its status as
a CHDO under federal law and Developer shall provide documentation of such status annually to
the City.
15.2 Protection of Lien. Developer shall maintain the lien of the City Deed of Trust as a
valid second priority deed of trust on the Property and take all actions, and execute and deliver to
City all documents, reasonably required by City from time to time in connection therewith.
15.3 Notice of Certain Matters. Developer shall give notice to City, within ten (10) days of
Developer's learning thereof, of each of the following:
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(a) any filed litigation or claim affecting or relating to the Property
and involving an amount in excess of $5,000; and any litigation or claim that might subject
Developer or any general partner to liability in excess of $5,000, whether covered by insurance
or not;
(b) any dispute between Developer and a Governmental Authority
relating to the Property, the adverse determination of which might materially affect the Property;
(c) any change in Developer's principal place of business;
(d) any aspect of the Improvements that is not in substantial
conformity with the plans or code;
(e) any Event of Default or event which, with the giving of
notice or the passage of time or both, would constitute an Event of Default;
(f) any material default by Developer or any other party under any
Senior Loan document, or the receipt by Developer of any notice of default under any Senior
Loan document;
(g) the creation or imposition of any mechanics' or materialmans' lien
or other lien against the Property which might materially affect the Property; and/or
(h) any material adverse change in the financial condition of Developer.
15.4 Further Assurances. Developer shall execute and acknowledge (or cause to be executed
and acknowledged) and deliver to City all documents, and take all actions, reasonably required
by City from time to time to confirm the rights created or now or hereafter intended to be created
under the Loan Documents; to protect and further the validity, priority and enforceability of the
City Deed of Trust; to subject to the Deed of Trust any property intended by the terms of any
Loan Document(s) to be covered by the City Deed of Trust or otherwise to carry out the
purposes of the Loan Documents and the transactions contemplated thereunder.
15.5 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 in
connection with the Property for such Calendar Year, together with all supporting schedules, (b)
a certificate of such certified public accountant that such documents were reviewed by such
certified public accountant in accordance with generally accepted accounting principles and
otherwise comply with generally accepted accounting principles review requirements, and (c) a
certificate of Developer's chief financial officer that such documents: (i) were prepared in
accordance with generally accepted accounting principles applied on a consistent basis or in
accordance with such other principles or methods as are reasonably acceptable to City, (ii) fairly
present Developer's financial condition, (iii) show all material liabilities, direct and contingent,
and (iv) fairly present the results of Developer's operations. Developer shall also provide the
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City with any other annual audit reports issued by other monitoring agencies. Developer shall
include in said reports, a document in the "Form of Residual Receipts Report" attached hereto as
Exhibit G and incorporated herein.
15.6 Audits and Access to Records. Developer agrees that City, 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.
15.7 Termite Inspection Report. Developer shall deliver a termite report pertaining to the
Property to the City every fifth (5h) year beginning January 2018.
16. OTHER NEGATIVE COVENANTS
While any obligation of Developer under the City Note or City Deed of Trust remain
outstanding, the following provisions shall apply, except to the extent that City Project Manager
otherwise consents in writing:
16.1 Default on Senior Loan. Developer shall not default on any of the Senior Loan
documents, provided however, that Developer shall have such period as is provided in the Senior
Loan Documents during which to effectuate a cure.
16.2 Sale or Lease of Property. Unless and until Developer has received a Certificate of
Completion for the construction from City, Developer shall not sell, lease, sublease or otherwise
transfer all or any part of the Property or any interest therein without the prior written consent of
the City Project Manager, which consent may be withheld in the City Project Manager's
reasonable discretion. In connection with the foregoing consent requirements, Developer
acknowledges that City relied upon Developer's particular expertise in entering into this
Agreement and continues to rely on such expertise to ensure the satisfactory completion of the
construction.
Notwithstanding anything to the contrary contained herein, a "transfer" shall not include
(i) a transfer of a General Partner's interest in Developer when made in connection with the
exercise by the Developer's limited partner (the "Limited Partner") of its rights upon a default by
a General Partner under the Developer's Partnership Agreement (the "Partnership Agreement")
or upon a General Partner's withdrawal in violation of the Partnership Agreement, so long as the
removal and substitution of the defaulting General Partner is made within thirty (30) days of
such default or, if such removal and substitution cannot reasonably be completed within thirty
(30) days, so long as the Limited Partner commences to take action to remove and substitute the
General Partner with a reasonable period and thereafter diligently proceeds to complete such
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substitution; (ii) any transfer of the Property to the Managing General Partner pursuant to the
right of first refusal or to the General Partners pursuant to the purchase option, as provided for in
the Partnership Agreement; (iii) any transfer of the Limited Partner's interest in connection with
a default by the Limited Partner under and in accordance with the Partnership Agreement; and
(iv) any sale, transfer or other disposition of an interest in a limited partner of the Developer.
17. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of Developer, or at
its own election, the City of Santa Ana shall issue a Certificate of Completion. Such Certificate
of Completion shall be, and shall so state, conclusive determination of satisfactory completion of
the construction.
If City declines to furnish a Certificate of Completion after written request from
Developer, the City Project Manager shall, within thirty (30) days after receipt of the request,
provide Developer with a written statement of the reasons therefore. The statement shall contain
a description of the action Developer must take to obtain a Certificate of Completion. If the
reason therefore is that the Developer has not completed a minor portion of the construction, City
may, in its sole and absolute discretion, issue the Certificate of Completion upon the posting with
City of a bond or other form of security acceptable to the City Project Manager in the amount of
the fair value of the uncompleted work.
A Certificate of Completion is not evidence of compliance with or satisfaction of the
Loan Documents or any obligation of Developer to any other party whatsoever, including any
holder of a mortgage or deed of trust. A Certificate of Completion is not "notice of completion"
referred to in Section 3093 of the California Civil Code.
18. INDEMNIFICATION
18.1 Nonliability of City. Developer acknowledges and agrees that:
(a) The relationship between Developer and the City is and shall remain
solely that of Developer and lender, City neither undertakes nor assumes any responsibility to
review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter
in connection with the construction, including matters relating to: (i) the performance of the
construction work, (ii) architects, contractors, subcontractors and materialmen, or the
workmanship of or materials used by any of them, or (iii) the progress of the construction; and
Developer shall rely entirely on its own judgment with respect to such matters and acknowledges
that any review, inspection, supervision, approval or information supplied to Developer by City
in connection with such matters is solely for the protection of City and that neither Developer nor
any third party is entitled to rely on it;
(b) Notwithstanding any other provision of any Loan Document: (i) the City
is not a partner, joint venture, alter-ego, manager, controlling person or other business associate
or participant of any kind of Developer and City does not intend to ever assume any such status;
(ii) City's activities in connection with the Loan shall not be "outside the scope of the activities
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of a lender of money" within the meaning of California Civil Code Section 3434, as modified or
recodified from time to time, and City does not intend to ever assume any responsibility to any
person for the quality or safety of the Property; and (iii) City shall not be deemed responsible for
or a participant in any acts, omissions or decisions of Developer;
(c) City shall not be directly or indirectly liable or responsible for any loss or
injury of any kind to any person or property resulting from any construction on, or occupancy or
use of, the Property, whether arising from: (i) any defect in any building, grading, landscaping or
other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer's
agents, employees, independent contractors, licensees or invitees; or (iii) any accident on the
Property or any fire or other casualty or hazard thereon; and
(d) By accepting or approving anything required to be performed or given
to City under the Loan Documents, including any certificate, financial statement, survey,
appraisal or insurance policy, City shall not be deemed to have warranted or represented the
sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a
warranty or representation by City to anyone.
18.2 Indemnity. Developer shall defend (by counsel satisfactory to City), indemnify and save
and hold harmless the Indemnitees from and against all claims, damages, demands, actions,
losses, liabilities, costs and expenses (including, without limitation, attorneys' fees and court
costs) arising from or relating to (i) this Agreement; (ii) the making of the Loan(s); (iii) a claim,
demand or cause of action that any person has or asserts against Developer; (iv) any act or
omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or
other person with respect to the Property; or (vi) the ownership, occupancy or use of the
Property. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City
with respect to the consequences of any act of gross negligence or willful misconduct of City.
Developer's obligations under this Section shall survive the cancellation of the City Promissory
Note, release and reconveyance of the City Deed of Trust, issuance of the Certificate of
Completion, and termination of this Agreement.
18.2.1 Nothwithstanding the foregoing, neither Developer, nor any of its partners, shall
be personally liable for any indemnification obligation hereunder which would
result as the repayment of principal and/or interest under the Loan.
18.3 Reimbursement of City. Developer shall reimburse City immediately upon written
demand for all costs reasonably incurred by City (including the reasonable fees and expenses of
attorneys, accountants, appraisers and other consultants, whether the same are independent
contractors or employees of City) in connection with the enforcement of the Loan Documents
and all related matters including all claims, demands, causes of action, liabilities, losses,
commissions and other costs against which City is indemnified under the Loan Documents. Such
reimbursement obligations shall bear interest from the date occurring twenty (20) days after City
gives written demand to Developer and shall be secured by the City Deed of Trust. Such
reimbursement obligations shall survive the cancellation of the Loan Note, release and
reconveyance of the City Deed of Trust, issuance of a Certificate of Completion, and termination
of this Agreement
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19. INSURANCE, CASUALTY AND CONDEMNATION
19.1 Policies Required. While any obligation of Developer under the Loan
Documents remains outstanding, Developer shall maintain at Developer's sole expense, with
insurers either (i) admitted in California or (ii) are not admitted to California but have an A.M.
Best Rating of "A" or above and reasonably approved by the City, the following policies of
insurance in form and substance reasonably satisfactory to the City Attorney:
(a) worker's compensation insurance and any other insurance required by
law in connection with the construction;
(b) prior to commencement and following completion of the construction, fire
and hazard "all risk" insurance covering 100% of the replacement cost of the Improvements in
the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks
normally covered by "all risk" coverage policies in the area where the Property is located
(including loss by flood if the Property is in an area designated as subject to the danger of flood);
(c) upon commencement of the construction and at all times prior to
completion of the construction, builder's risk-all risk insurance covering 100% of the
replacement cost of all Improvements (including offsite materials) during the course of
construction in the event of fire, lightning, windstorm, vandalism, earthquake, malicious
mischief and all other risks normally covered by "all risk" coverage policies in the area where the
Property is located (including loss by flood if the Property is in an area designated as subject to
the danger of flood);
(d) public liability insurance in amounts reasonably required by City
from time to time, and in no event less than $1,000,000 for "single occurrence;"
(e) property damage insurance in amounts reasonably required by the
City from time to time, and in no event less than $1,000,000; and
(f) any other insurance reasonably required by City.
All such insurance shall provide that it may not be canceled or materially modified without thirty
(30) days prior written notice to City. The policies required under subparagraphs (b) and (c) shall
include a "lender's loss payable endorsement" in form and substance satisfactory to City,
showing the City as encumbrance. The City shall be named as an additional insured in the
policies required under subparagraphs (d) and (e). Certificates of insurance for the above policies
(and/or original policies, if required by City) shall be delivered within ten (10) days after demand
therefore, and prior to start of any construction work. All policies insuring against damage to the
Improvements shall contain an agreed value clause sufficient to eliminate any risk of co-
insurance. No less than thirty (30) days prior to the expiration of each policy, Developer shall
deliver to City evidence of renewal or replacement of such policy reasonably satisfactory to the
City Attorney.
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19.2 City Attorney May Modify. The City Attorney may modify the type and
amounts of insurance required pursuant to this Section.
19.3 Claims and Proceedings. Developer shall give City immediate notice
of any material casualty to any portion of the Property, whether or not covered by insurance, and
of the initiation or threatened initiation of any proceeding for the condemnation or other taking
for public or quasi-public use of any portion of the Property (collectively, "Condemnation"), and
shall provide City with copies of all documents which pertain to any such casualty or
Condemnation. Developer shall take all action reasonably required by City in connection
therewith to protect the interests of Developer and/or City, and City shall be entitled (without
regard to the adequacy of its security) to participate in any action, claim, adjustment or
proceeding and to be represented therein by counsel of its choice. Developer shall not settle,
adjust, or compromise any claim, action, adjustment or proceeding without prior written
approval, which approval shall not be unreasonably withheld or delayed.
19.4 Delivery of Proceeds to City. In the event that, notwithstanding the
"lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty
insurance policy described herein are paid to Developer, Developer shall, subject to any superior
rights of the Senior Lender, deliver such proceeds to the City immediately upon receipt.
19.5 Application of Casualty Insurance Proceeds. Any proceeds collected
(the "Proceeds") under any casualty insurance policy described in this Agreement shall be
disbursed to Developer as provided below, but only upon fulfillment of each of the following
conditions (the "Restoration Conditions") within ninety (90) days (unless extended by mutual
agreement of Developer and City) following the occurrence of the 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 construction contract in form and
content, and with a contractor, reasonably satisfactory to City.
(b) To the extent that the Proceeds are insufficient to accomplish the
restoration required above, Developer shall deliver to City 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
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.
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19.6 Method of Disbursement and Undisbursed Funds. Any Proceeds and
Shortfall Funds to be disbursed to Developer shall be held by City and disbursed in accordance
with then customary disbursement procedures and related provisions. Any amounts remaining
undisbursed following completion of such restoration shall be returned to Developer up to the
amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall
either be paid to Developer or applied by City against any obligations to City that are secured by
a lien on the Property, as they elect in their sole and absolute discretion.
19.7 Failure to Satisfy Conditions. In the event that Developer fails to
fulfill 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 its
sole and absolute discretion.
19.8 Restoration. Nothing in this Article 19 shall be construed to excuse
Developer from repairing and restoring all damage to the Property in accordance with other Loan
Document provisions, regardless of whether insurance proceeds are available or sufficient.
19.9 Condemnation; Treatment of Compensation. Subject to any superior
rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to
City secured by a lien on the Property, all amounts payable to Developer in connection with any
Condemnation, and any proceeds of any related settlement (collectively, "Compensation").
Subject to any superior rights of Senior Lender, Developer shall deliver such remaining
Compensation to City immediately upon receipt. If the taking results in a loss of the Property to
an extent that, in the reasonable opinion of City, renders or is likely to render the Property not
economically viable or if, in City's reasonable judgment Developer's security is otherwise
impaired, City may apply the Compensation received due to judgment or settlement in
connection with any condemnation or other taking to reduce the unpaid obligations secured in
such order as City may determine, and without any adjustment in the amount or due dates of
payments due under the Note. If so applied, any award in excess of the unpaid balance of the
Note and other sums due to City shall be paid to Developer or Developer's assignee. City shall
have no obligation to take any action in connection with any actual or threatened condemnation
or other proceeding.
19.9.1 Notwithstanding the foregoing, as long as the value of City's liens are not
impaired, any condemnation proceeds may be used by the Developer for repair and/or restoration
of the Project.
19.9.2 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 may be used by the Developer for repair and/or restoration of the Project.
19.10 Waiver of Subrogation. Developer hereby waives all rights to recover
against the City (or any officer, employee, agent or representative of City) for any loss incurred
by Developer from any cause insured against or required by any Loan Document, to be insured
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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.
20. DEFAULTS AND REMEDIES
20.1 Events of Default. The occurrence of any of the following, whatever the reason
therefore, shall constitute an Event of Default by Developer:
(a) Developer fails to make any payment of principal or interest under
the City Promissory Note when due, and such failure is not cured within fifteen (15) Business
Days after Developer's receipt of written notice that such payment was not received when due;
(b) Developer fails to perform any other obligation for the payment of
money under any Loan Document, and such failure is not cured within fifteen (15) Business
Days after Developer's receipt of written notice that such obligation was not performed when
due;
(c) Developer fails to perform any obligation (other than the
obligations described in subparagraphs (a) and (b) above) under any Loan Document, and such
failure is not cured within thirty (30) days after Developer's receipt of written notice that such
obligation was not performed; provided that, if cure cannot reasonably be effected within such
thirty (30)-day period, such failure shall not be an Event of Default so long as Developer (in any
event, within ten (10) days after receipt of such notice) commences to cure, and thereafter
diligently (in any event within ninety (90) days after receipt of such notice) prosecutes such cure
to completion;
(d) Any representation or warranty in any Loan Document proves to have
been incorrect in any material respect when made;
(e) The Property is materially damaged or destroyed by fire or other
casualty unless Developer fulfills the Restoration Conditions set forth in the insurance provisions
of this Agreement within one hundred twenty (120) days (unless extended pursuant to Section
19.5) and thereafter diligently restores the Property in accordance with this Agreement;
(f) Work on the construction ceases for thirty (30) consecutive days for any
reason (other than governmental orders, decrees or regulations, acts of God or any other deity,
strikes or other causes beyond Developer's reasonable control), provided that the same do not, in
the aggregate and in the City's reasonable judgment, threaten to delay the completion of the
construction beyond the required completion date set forth in this Agreement;
(g) Developer is enjoined or otherwise prohibited by any Governmental
Authority from constructing and/or occupying the improvements and such injunction or
prohibition continues unstayed for sixty (60) days or more for any reason;
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(h) Developer is dissolved, liquidated or terminated, or all or substantially
all of the assets of Developer are sold or otherwise transferred without the City Project
Manager's prior written consent;
(i) Developer is the subject of an order for relief by a bankruptcy court, or
is unable or admits its inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors; or Developer applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or any part of its
property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer is appointed without the application or consent of Developer and the appointment
continues undischarged or unstayed for ninety (90) days; or Developer institutes or consents to
any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution,
custodianship, conservatorship, liquidation, construction or similar proceeding relating to it or
any part of its property; or any similar proceeding is instituted without the consent of Developer
and continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against any property of Developer
and is not released, vacated or fully bonded within ninety (90) days after its issue or levy; or
0) (i) any of the Senior Loan documents is revoked or terminated, in whole or
in part and for any reason (except due to repayment of such loans), without the City Project
Manager's prior written consent, or (ii) Developer defaults or otherwise fails to perform any of
its duties or obligations under or in connection with any of the Senior Loan documents, subject
to all applicable notice and cure periods, or (iii) any of the Senior Loan documents is amended,
supplemented or otherwise modified without City's prior written consent, which consent shall not
be unreasonably withheld. Notwithstanding anything to the contrary contained herein, City
hereby agrees that any cure of any default made or tendered by Developer's Limited Partner
shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as
if made or tendered by Developer.
20.2 Remedies Upon Default. Upon the occurrence of any Event of Default, City may, at its
option and in its absolute discretion, do any or all of the following:
(a) By written notice to Developer, declare the principal of all amounts owing
under the Loan Documents, together with all accrued interest and other amounts owing in
connection therewith, to be immediately due and payable, regardless of any other specified due
date; provided that any Event of Default described in Section 20.1 (e) shall automatically,
without notice or other action on City's part, cause all such amounts to be immediately due and
payable;
(b) In its own right or by a court-appointed receiver, take possession of the
Property, enter into contracts for and otherwise proceed with the completion of the construction
by expenditure of its own funds;
(c) Exercise any of its rights under the Loan Documents and any rights
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provided by law, including, without limitation, the right to seek specific performance and the
right to foreclose on any security and exercise any other rights with respect to any security, all in
such order and manner as City elects in its sole and absolute discretion; and,
(d) Suspend or terminate the award of HOME/CDBG funds if Developer fails
to comply with any term of such award.
20.3 Cumulative Remedies: No Waiver. City's rights and remedies under the Loan
Documents are cumulative and in addition to all rights and remedies provided by law. The
exercise by City of any right or remedy shall not constitute a cure or waiver of any default, nor
invalidate any notice of default or any act done pursuant to any such notice, nor prejudice the
City in the exercise of any other right or remedy. No waiver of any default shall be implied from
any omission by City to take action on account of such default if such default persists or is
repeated. No waiver of any default shall affect any default other than the default expressly
waived, and any such waiver shall be operative only for the time and to the extent stated. No
waiver of any provision of any Loan Document shall be construed as a waiver of any subsequent
breach of the same provision. City's consent to or approval of any act by Developer requiring
further consent or approval shall not be deemed to waive or render unnecessary City's consent to
or approval of any subsequent act. The City's acceptance of the late performance of any
obligation shall not constitute a waiver by City of the right to require prompt performance of all
further obligations; City's acceptance of any performance following the sending or filing of any
notice of default shall not constitute a waiver of either party's right to proceed with the exercise
of its remedies for any unfulfilled obligations; and City's acceptance of any partial performance
shall not constitute a waiver by City of any rights.
21. MISCELLANEOUS
21.1 Obligations Unconditional and Independent. Notwithstanding the existence at any
time of any obligation or liability of City to Developer, or any other claim by developer against
City, in connection with the Loan or otherwise, Developer hereby waives any right it might
otherwise have (a) to offset any such obligation, liability or claim against Developer's obligations
under the Loan Documents, or (b) to claim that the existence of any such outstanding obligation,
liability or claim excuses the nonperformance by Developer of any of its obligations under the
Loan Documents.
21.2 Notices. All notices, demands, approvals and other communications provided for in the
Loan Documents shall be in writing and be delivered to the appropriate party by personal service
or U.S. mail at its address as follows:
If to Developer: Depot at Santiago, LP
c/o Orange Housing Development Corporation
414 E. Chapman Avenue
Orange, CA 92866
Attention: Chief Executive Officer
With a copy to: C&C Development Co., LLC
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14211 Yorba Street, Suite 200
Tustin, CA 92781
If to City: City of Santa Ana
City Project Manager (CDA)
20 Civic Center Plaza (M-25)
P.O. Box 1988
Santa Ana, California 92702
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Addresses for notice may be changed as required by written notice to all other parties. All
notices personally served shall be effective when actually received. All notices mailed shall be
effective three (3) days after deposit in the U.S. Mail, postage prepaid. The foregoing
notwithstanding, the non-receipt of any notice as the result of a change of address of which the
sending party was not notified or as the result of a refusal to accept delivery shall be deemed
receipt of such notice.
21.3 Survival of Representations and Warranties. All representations and warranties in the
Loan Documents shall survive the making of the Loan(s) described herein and have been or will
be relied on by City notwithstanding any investigation made by either party.
21.4 No Third Parties Benefited. This Agreement is made for the purpose of setting forth
rights and obligations of Developer and the City, and no other person shall have any rights
hereunder or by reason hereof.
21.5 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure
to the benefit of, Developer and City and their respective successors and assigns. Other than as
expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights
or obligations under any Loan Document without the prior written consent of City, which
consent may be withheld in City's sole and absolute discretion. Any such assignment without
such consent shall, at City's option, be void.
21.6 Prior Agreements; Amendments; Consents. This Agreement (together with the other
Loan Documents) contains the entire agreement between the City and Developer with respect to
the Loan and the Property, and all prior negotiations, understandings and agreements are
superseded by this Agreement and such other Loan Documents. No modification of any Loan
Document (including waivers of rights and conditions) shall be effective unless in writing and
signed by the party against whom enforcement of such modification is sought, and then only in
the specific instance and for the specific purpose given.
21.7 Governing Law. All of the Loan Documents shall be governed by, and construed and
enforced in accordance with, the laws of the State of California and Federal law, whichever is
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more stringent. Developer irrevocably and unconditionally submits to the jurisdiction of the
Superior Court of the State of California for the County of Orange or the United States District
Court of the Central District of California, as City may deem appropriate, in connection with any
legal action or proceeding arising out of or relating to this Agreement or the Loan Documents.
Assuming proper service of process, Developer also waives any objection regarding personal or
in rem jurisdiction or venue.
21.8 Severability of Provisions. No provision of any Loan Document that is held to be
unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of
the Loan Documents are hereby declared to be severable.
21.9 Headings. Article and section headings are included in the Loan Documents for
convenience of reference only and shall not be used in construing the Loan Documents.
21.10 Conflicts. In the event of any conflict between the provisions of this Agreement and
those of any other Loan Document, this Agreement, unless otherwise expressly provided, shall
prevail; provided however that, with respect to any matter addressed in both such documents, the
fact that one document provides for greater, lesser or different rights or obligations than the other
shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be
simultaneously enforced or performed.
21.11 Time of the Essence. Time is of the essence under this Agreement and in the performance
of every term, covenant, and obligation contained herein.
21.12 Conflict of Interest. No member, official or employee of the City shall have any direct
or indirect interest in this Agreement, nor participate in any decision relating to the Agreement
which is prohibited by law.
21.13 Warranty Against Payment of Consideration. Developer warrants that it has not paid
or given, and will not pay or give, any third person any money or other consideration for
obtaining this Agreement.
21.14 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.
21.15 Plans and Data. Where Developer does not proceed with the work and construction
of the Project, and when this Agreement is terminated with respect thereto for any reason,
Developer shall deliver to City any and all plans and data concerning the Property, and City or
any person or entity designated by City shall have the right to use such plans and data without
compensation to Developer. Such right of City shall be subject to any right of the preparer of the
plans to their use.
21.16 Authority to Enter Agreement. Each undersigned represents and warrants that its
signature hereinbelow has the power, authority and right to bind their respective parties to each of
40
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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.
21.17 Transfer of Developer Limited Partner's Interest. Notwithstanding anything to the
contrary in this Agreement or the Loan Documents, no consent shall be required of the City (and
it shall not be deemed a default or an Event of Default under any of the Loan Documents), in
connection with the transfer and/or the assignment by the Developer's limited partner of its
interest in the Developer to an entity controlled or managed by an entity which is related to or
under common control with the Developer's limited partner.
21.18 Removal of Developer's General Partner. Notwithstanding anything to the contrary in
this Agreement or the Loan Documents, the removal and/or replacement of a General Partner for
cause in accordance with the Partnership Agreement shall not require the consent of the City and
shall not shall not constitute a default or an Event of Default under this Agreement or the Loan
Documents or accelerate the maturity of the City Loan. If the Developer's limited partner
exercises its right to remove a General Partner, City will not unreasonably withhold its consent to
the substitute general partner; provided however, the consent of either the City shall not be
required if the substitute general partner is an affiliate of the Developer's limited partner. The
substitute general partner shall assume all of the rights and obliterations of the removed general
partner hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date set forth at the beginning of this Agreement.
ATTEST:
CITY OF SANTA ANA
Maria D. Huizar Kevin O'Rourke
Clerk of the Council Interim City Manager
APPROVED AS TO FORM
Sonia R. Carvalho
City Attorney
By: Lisa E. Storck
Assistant City Attorney
(Signatures continue on following page)
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DEVELOPER:
Depot at Santiago, LP, a California limited partnership
By: OHDC Depot, LLC,
a California limited liability company,
its managing general partner
By: Orange Housing Development Corporation,
a California nonprofit corporation, its sole member
By:
Todd R. Cottle, its member
By: C&C Depot, LLC,
a California limited liability company,
its developer general partner
By:
By: The Cottle Family Trust Dated 3/8/1987, its member
By:
1076\01\11333668.1
Eunice Bobert, Chief Executive Officer
Barry A. Cottle, Trustee
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OMB Approval No. 2577-0169
(exp. 04/30/2014)
Exhibit 3
1.1 Parties
This Agreement to Enter into Housing Assistance Payments Contract ("Agreement") is
entered into between: Housing Authority of the City of; -Santa, Ana ("PHA") and
Depot at Santiago, LP
1.2 Purpose
The owner agrees to develop the Housing Assistance Payments Contract ("HAP
contract") units to in accordance with Exhibit B to eomply with Housing Quality
Standards ("HQS"), and the PHA agrees that, upon timely completion of such
development in accordance with the terms of the Agreement, the PHA will enter into a
HAP contract with the owner of the contract units.
1.3 Contents of Agreement
This Agreement consists of Part 1, Part It and the following Exhibits:
EXHIBIT A: The approved owner's PBV proposal. (Selection of proposals must be in
accordance with 24 CFR 983.5 1.)
Page I of 17 HUD 52531 A
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Project-based Voucher Program
Exhibit 3
("owner").
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This agency may not conduct or sponsor, and a person is not required to respond to, a collection of information
unless that collection displays a valid OMB control number. Assurances of confidentiality are not provided
under this collection.
EXHIBIT B: Description of work to be performed under this Agreement, including:
• if the Agreement is for rehabilitation of units, this exhibit must include the
rehabilitation work write-up and, where the PHA has determined necessary,
specifications and plans.
• if the Agreement is for new construction of units, the work description must
include the working drawings and specifications.
• any additional requirements beyond HQS relating to quality, design and
architecture that the PHA requires.
• work items resulting from compliance with the design and construction
requirements of the Fair Housing Act and implementing regulations at 24 CFR
100.205 and the accessibility requirements under section 504 of the Rehabilitation
Act of 1973 and implementing regulations at 24 CFR 8.22 and 8.23.
EXHIBIT C: Description of housing, including:
• project site.
• total number of units in project covered by this Agreement.
• location of contract units on site.
• number of contract units by area (size) and number of bedrooms and bathrooms.
• services, maintenance, or equipment to be supplied by the owner without charges
in addition to the rent to owner.
• utilities available to the contract units, including a specification of utility services
to be paid by owner (without charges in addition to rent) and utility services to be
paid by the tenant.
• estimated initial rent to owner for the contract units.
EXHIBIT D: The HAP contract.
_..1.4 Significant Dates
..........
Effective Date of the. Agreement: The Agreement must be executed
promptly after PHA notice of proposal selection to the owner has been
given. The PHA may not enter this Agreement with the owner until any
required subsidy layering review has been performed and an
environmental review has been satisfactorily completed in accordance
with HUD requirements.
B. A project may either be a single-stage or multi-stage project. A single-
stage project will have the same Agreement effective date for all contract
units. A multi-stage project will have separate effective dates for each
stage.
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Single-stage project
i. Effective Date for all contract units:
ii. Date of Commencement of the Work: The date for commencement of work is not
later than calendar days after the effective date of this
Agreement.
iii. Time for Completion of Work: The date for completion of the work is not later
than calendar days after the effective date of this Agreement.
F]Multi-Stage Project
Enter the information for each stage upon execution of the Agreement for the
corresponding stage.
STAGE NUMBER
OF UNITS EFFECTIVE
DATE DATE OF
COMMENCEMENT
OF WORK TIME FOR
COMPLETION
OF WORK
1.5 Nature of the Work
This Agreement is for New Construction of units to be assisted by the
project-based voucher program.
This Agreement is for Rehabilitation of units to be assisted by the
project-based voucher program.
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1.6 Schedule of Completion
A. Timely Performance of Work: The owner agrees to begin work no later than the
date for commencement of work as stated in section 1.4. In the event the work is
not commenced, diligently continued and completed as required under this
Agreement, the PHA may terminate this Agreement or take other appropriate
action. The owner agrees to report promptly to the PHA the date work is
commenced and furnish the PHA with progress reports as required by the PHA.
B. Time for Completion: All work must be completed no later than the end of the
period stated in section 1.4. Where completion in stages is provided for, work
related to units included in each stage shall be completed by the stage completion
date and all work on all stages must be completed no later than the end of the
period stated in section 1.4.
C. Delays: If there is a delay in the completion due to unforeseen factors beyond the
owner's control as determined by the PHA, the PHA agrees to extend the time for
completion for an appropriate period as determined by the PHA in accordance
with HUD requirements.
1.7 Changes in Work
A. The owner must obtain prior PHA approval for any change from the work
specified in Exhibit B which would alter the design or quality of the rehabilitation
or construction. The PHA is not required to approve any changes requested by
the owner. PHA approval of any change may be conditioned on establishmentof
a lower initial rent to owner as determined by PHA in accordance with HUD
requirements.
B. If the owner makes any changes in the work without prior PHA approval, the
PHA may establish lower initial rents to owner as determined by the PHA in
accordance with HUD requirements.
C. The PHA may inspect the work during rehabilitation or construction to ensure that
work is proceeding on schedule, is being accomplished in accordance with the
terms of the Agreement, meets the level of material described in Exhibit B and
meets typical levels of workmanship for the area.
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1.8 Work Completion
A. Conformance with Exhibit B: The work must be completed in accordance with
Exhibit B. The owner is solely responsible for completion of the work.
B. Evidence of Completion: When the work in completed, the owner must provide
the PHA with the following:
1. A certification by the owner that the work has been completed in
accordance with the HQS and all requirements of this Agreement.
2. A certification by the owner that the owner has complied with labor
standards and equal opportunity requirements in the development of the
housing. (See 24 CFR 983.155(b)(1)(ii).)
3. Additional Evidence of Completion: At the discretion of the PHA, or as
required by HUD, the owner may be required to submit additional
documentation as evidence of completion of the housing. Check the
following that apply:
A certificate of occupancy or other evidence that the contract units
comply with local requirements.
An architect or developer's certification that the housing complies
with:
the HQS;
State, local or other building codes;
Zoning;
The rehabilitation work write-up for rehabilitated housing;
The work description for newly constructed housing; or
Any additional design or quality requirements pursuant to
this Agreement.
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1.9 Inspection and Acceptance by the PHA of Completed
Contract Units
A. Completion of Contract Units: Upon receipt of owner notice of completion of
contract units, the PHA shall take the following steps:
1. Review all evidence of completion submitted by owner.
2. Inspect the units to determine if the housing has been completed in
accordance with this Agreement, including compliance with the HQS and
any additional requirements imposed by the PHA under this Agreement.
B. Non-Acceptance: If the PHA determines the work has not been completed in
accordance with this Agreement, including non-compliance with the HQS, the
PHA shall promptly notify the owner of this decision and the reasons for the non-
acceptance. The parties must not enter into the HAP contract at this point.
However, work deficiencies may be corrected in accordance with Section 1.10 of
this Agreement.
C. Acceptance: If the PHA determines that the work has been completed in
accordance with this Agreement, and that the owner has submitted all required
evidence of completion, the PHA must submit the HAP contract for execution by
the owner and must then execute the HAP contract.
1.10 Acceptance Where Work Deficiencies Exist
A. If the PHA determines that work deficiencies exist, the PHA shall determine
- - whether and to what extent the deficiencies are-correctable, whether the units will
be accepted after correction of the deficiencies, and the requirements and
procedures (consistent with HUD requirements) for such correction and
acceptance of contract units. The PHA shall notify the owner of the PHA's
decision.
B. Completion in Stages: When the units will be completed in stages, the procedures
of this section shall apply to each stage.
1.11 Execution of HAP Contract
A. Time and Execution: Upon acceptance of the units by the PHA, the owner and the
PHA execute the HAP contract.
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B. Completion in Stages: When the units will be completed in stages, the number
and types of units in each stage, and the initial rents to owner for such units, shall
be separately shown in the HAP contract for each stage. Upon acceptance of the
first stage, the owner shall execute the HAP contract and the signature block
provided in the HAP contract for that stage. Upon acceptance of each subsequent
stage, the owner shall execute the signature block provided in the HAP contract
for such stage.
C. Form of HAP contract: The terms of the HAP contract shall be provided in
Exhibit D of this Agreement. There shall be no change in the terms of the HAP
contract unless such change is approved by HUD headquarters. Prior to execution
by the owner, all blank spaces in the HAP contract shall be completed by the
PHA.
D. Survival of Owner Obligations: Even after execution of the HAP contract, the
owner shall continue to be bound by all owner obligations under the Agreement.
1.12 Initial Determination of Rents
A. The estimated initial rent to owner shall be established in Exhibit C of this
Agreement.
B. The initial rent to owner is established at the beginning of the HAP contract term.
C. The estimated and initial contract rents for each unit may in no event exceed the
amount authorized in accordance with HUD requirements. Where the estimated or
the initial rent to owner exceeds the amount authorized under HUD requirements,
the P14A shall establish a lower estimated or initial rent to owner (as applicable),
.,in-accordance. with HUD requirements.
....................... .
1.13 Uniform Relocation Act
A. A displaced person must be provided relocation assistance at the levels described
in and in accordance with the requirements of the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4201-
4655) and implementing regulations at 49 CFR part 24.
B. The cost of required relocation assistance may be paid with funds provided by the
owner, or with local public funds, or with funds available from other sources.
Payment of relocation assistance must be in accordance with HUD requirements.
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C The acquisition of real property for a project to be assisted under the project-
based voucher program is subject to the URA and 49 CFR part 24, subpart B.
D. The PHA must require the owner to comply with the URA and 49 CPR part 24.
E. In computing a replacement housing payment to a residential tenant displaced as a
direct result of privately undertaken rehabilitation or demolition of the real
property, the term "initiation of negotiations" means the execution of the
Agreement between the owner and the PHA.
1.14 Protection of In-Place Families
A. In order to minimize displacement of in-place families, if a unit to be placed
under HAP contract is occupied by an eligible family on the proposal selection
date, the in-place family must be placed on the PHA's waiting list (if it is not
already on the list) and, once its continued eligibility is determined, given an
absolute selection preference and referred to the project owner for an
appropriately sized unit in the project.
B. This protection does not apply to families that are not eligible to participate in the
program on the proposal selection date.
C. The term "in-place family" means an eligible family residing in a proposed
contract unit on the proposal selection date.
D. Assistance to in-place families may only be provided in accordance with HUD
requirements.
1.15 Termination of Agreement and HAP Contract
The Agreement or HAP contract may be terminated upon at least 30 days notice to the
owner by the PHA or HUD if the PHA or HUD determines that the contract units were
not eligible for selection in conformity with HUD requirements.
1.16 Rights of HUD if PHA. Defaults Under Agreement
If HUD determines that the PIIA has failed to comply with this Agreement, or has failed
to take appropriate action, to HUD's satisfaction or as directed by HUD, for enforcement
of the PHA's rights under this Agreement, HUD may assume the PHA's rights and
obligations under the Agreement, and may perform the obligations and enforce the rights
of the PHA under the Agreement. HUD will, if it determines that the owner is not in
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default, pay annual contributions for the purpose of providing housing assistance
payments with respect to the dwelling unit(s) under this Agreement for the duration of the
HAP contract.
1.17 Owner Default and PHA Remedies
A. Owner Default
Any of the following is a default by the owner under the Agreement:
1. The owner has failed to comply with any obligation under the Agreement.
2. The owner has violated any obligation under any other housing assistance
payments contract under Section 8 of the United States Housing Act of
1937 (42 U.S.C. 14371).
3. The owner has committed any fraud or made any false statement to the
PHA or HUD in connection with the Agreement.
4. The owner has committed fraud, bribery or any other corrupt or criminal
act in connection with any Federal housing assistance program.
5. If the property where the contract units are located is subject to a lien or
security interest securing a HUD loan or a mortgage insured by HUD and:
A. The owner has failed to comply with the regulations for the
applicable mortgage insurance or loan program, with the mortgage
or mortgage note, or with the regulatory agreement; or
B. The owner has committed fraud, bribery or any other corrupt or
criminal act in connection with the HUD loan or HUD-insured
mortgage.
6. The owner has engaged in any drug-related criminal activity or any violent
criminal activity.
B. PHA Remedies
1. If the PHA determines that a breach has occurred, the PHA may exercise
any of its rights or remedies under the Agreement.
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2. The PHA must notify the owner in writing of such determination. The
notice by the PHA to the owner may require the owner to take corrective
action (as verified by the PHA) by a time prescribed in the notice.
3. The PHA's rights and remedies under the Agreement include, but are not
limited to: (i) terminating the Agreement; and (ii) declining to execute the
HAP contract for some or all of the units.
C. PHA Remedy is not Waived
The PHA's exercise or non-exercise of any remedy for owner breach of the
Agreement is not a waiver of the right to exercise that remedy or any other right
or remedy at any time.
1.18 PHA and Owner Relation to Third Parties
A. Selection and Performance of Contractor
The PHA has not assumed any responsibility or liability to the owner, or any
other party for performance of any contractor, subcontractor or supplier, whether
or not listed by the PHA as a qualified contractor or supplier under the program.
The selection of a contractor, subcontractor or supplier is the sole responsibility of
the owner and the PHA is not involved in any relationship between the owner and
any contractor, subcontractor or supplier.
2. The owner must select a competent contractor to undertake rehabilitation or
construction. The owner agrees to require from each prospective contractor a
certification that neither the contractor-nor its principals is presently debarred,
suspended, proposed for debarment,. declared ineligible, or otherwise excluded
from participation in contracts by any Federal department or agency or the
Comptroller General. The owner agrees not to award contracts to, otherwise
engage in the service of, or fund any contractor that does not provide this
certification.
B. Injury Resulting from Work under the Agreement: The PHA has not assumed
any responsibility for or liability to any person, including a worker or a resident of
the unit undergoing work pursuant to this Agreement, injured as a result of the
work or as a result of any other action or failure to act by the owner, or any
contractor, subcontractor or supplier.
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C. Legal Relationship: The owner is not the agent of the PHA and this Agreement
does not create or affect any relationship between the P14A and any lender to the
owner or any suppliers, employees, contractor or subcontractors used by the
owner in the implementation of the Agreement.
D. Exclusion of Third Party Claims: Nothing in this Agreement shall be construed
as creating any right of any third party (other than HUD) to enforce any provision
of this Agreement or the HAP contract, or to assert any claim against HUD, the
PHA or the owner under the Agreement or the HAP contract.
E. Exclusion of Owner Claims against HUD: Nothing in this Agreement shall be
construed as creating any right of the owner to assert any claim against HUD.
1.19 PHA-Owned Units
Notwithstanding Section 1.18 of this Agreement, a PHA may own units assisted under
the project-based voucher program, subject to the special requirements in 24 CFR 983.59
regarding PHA-owned units.
1.20 Conflict of Interest
A. Interest of Members, Officers, or Employees of PHA, Members of Local
Governing Body, or Other Public Officials
1. No present or former member or officer of the PHA (except tenant-
commissioners), no employee of the PHA who formulates policy or influences
decisions with respect to the housing choice voucher program or project-based
voucher program, and no public official or member of a governing body or State
or local legislator who exercises functions or responsibilities with respect to these
programs, shall have any direct or indirect interest, during his or her tenure or for
one year thereafter, in the Agreement or HAP contract.
2. HUD may waive this provision for good cause.
B. Disclosure
The owner has disclosed to the PHA any interest that would be a violation of the
Agreement or HAP contract. The owner must fully and promptly update such
disclosures.
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1.21 Interest of Member or Delegate to Congress
No member of or delegate to the Congress of the United States of America or resident-
commissioner shall be admitted to any share or part of the Agreement or HAP contract
or to any benefits arising from the Agreement or HAP contract.
1.22 Transfer of the Agreement, HAP Contract or Property
A. PHA Consent to Transfer
The owner agrees that the owner has not made and will not make any transfer in
any form, including any sale or assignment, of the Agreement, HAP contract or
the property without the prior written consent of the PHA. A change in ownership
in the owner, such as a stock transfer or transfer of the interest of a limited
partner, is not subject to the provisions of this section. Transfer of the interest of a
general partner is subject to the provisions of this section.
B. Procedure for PHA Acceptance of Transferee
Where the owner requests the consent of the PHA for a transfer in any form,
including any sale or assignment, of the Agreement, the HAP contract or the
property, the PHA. must consent to a transfer of the Agreement or HAP contract if
the transferee agrees in writing (in a form acceptable to the PHA) to comply with
all the terms of the Agreement and HAP contract, and if the transferee is
acceptable to the PHA. The PHA's criteria for acceptance of the transferee must
be in accordance with HUD requirements.
C. When Transfer is Prohibited
The PHA will not consent to the transfer if any transferee, or any principal or
interested party is debarred, suspended subject to a limited denial of
participation, or otherwise excluded under 2 CFR part 2424, or is listed on the
U.S. General Services Administration list of parties excluded from Federal
procurement or nonprocurement programs.
1.23 Exclusion from Federal Programs
A. Federal Requirements
The owner must comply with and is subject to requirements of 2 CFR part 2424.
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B. Disclosure
The owner certifies that:
1. The owner has disclosed to the PHA the identity of the owner and any
principal or interested party.
Neither the owner nor any principal or interested party is listed on the U.S.
General Services Administration list of parties excluded from Federal
procurement and nonprocurement programs; and none of such parties are
debarred, suspended, subject to a limited denial of participation or
otherwise excluded under 2 CFR part 2424.
1.24 Lobbying Certifications
A. The owner certifies, to the best of owner's knowledge and belief, that:
1. No Federally appropriated funds have been paid or will be paid, by or on
behalf of the owner, to any person for influencing or attempting to
influence an officer or employee of any agency, a Member of Congress, an
officer or employee of Congress, or an employee of a Member of
Congress in connection with the awarding of the Agreement or HAP
contract, or the extension, continuation, renewal, amendment, or
modification of the HAP contract.
2. If any funds other than Federally appropriated funds have been paid or
will be paid to any person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer-or-
employee ofCongress, or an employee of a Member of Congress in
connection with the Agreement or HAP contract, the owner must complete
and submit Standard Form-LLL, "Disclosure Form to Report Lobbying.'
in accordance with its instructions.
B. This certification by the owner is a prerequisite for making or entering into this
transaction imposed by 31 U.S.C. 1352.
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1.25 Subsidy Layering
A. Owner Disclosure
The owner must disclose to the PHA, in accordance with HUD requirements,
information regarding any related assistance from the Federal Government, a
State, or a unit of general local government, or any agency or instrumentality
thereof, that is made available or is expected to be made available with respect to
the contract units. Such related assistance includes, but is not limited to, any loan,
grant, guarantee, insurance, payment, rebate, subsidy, credit, tax benefit, or any
other form of direct or indirect assistance.
B. Limit of Payments
Housing assistance payments under the HAP contract must not be more than is
necessary, as determined in accordance with HUD requirements, to provide
affordable housing after taking account of such related assistance. The PHA will
adjust in accordance with HUD requirements the amount of the housing
assistance payments to the owner to compensate in whole or in part for such
related assistance.
1.26 Prohibition of Discrimination
A. The owner may not refuse to lease contract units to, or otherwise discriminate
against, any person or family in leasing of a contract unit, because of race, color,
religion, sex, national origin, disability, age or familial status.
-B: ----The owner must comply with the following- requirements, -The Fair Housing Act
(42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et seq. ;
Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1959-
1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in
Housing Programs) and implementing regulations at 24 CFR part 107; title VI of
the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4) (Nondiscrimination in
Federally Assisted Programs) and implementing regulations at 24 CFR part 1; the
Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing
regulations at 24 CFR part 146; section 504 of the Rehabilitation Act of 1973 (29
U.S.C. 794) and implementing regulations at part 8 of this title; title Il of the
Americans with Disabilities Act, 42 U.S.C. 12101 et seq. ; 24 CFR part 8; section
3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and
implementing regulations at 24 CFR part 135; Executive Order 11246, as
amended by Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964-
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1965 Comp., p. 339; 3 CPR, 1966-1970 Comp., p. 684; 3 CPR, 1966-1970
Comp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264,
respectively) (Equal Employment Opportunity Programs) and implementing
regulations at 41 CPR chapter 60; Executive Order 11625, as amended by
Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977
Comp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 CFR,
1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive
Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p. 393
and 3 CFR, 1987 Comp., p. 245) (Women's Business Enterprise).
C. The PHA and the owner must cooperate with HUD in the conducting of
compliance reviews and complaint investigations pursuant to all applicable civil
rights statutes, Executive Orders, and all related rules and regulations.
1.27 PHA and HUD Access to Premises and Owner Records
A. The owner must furnish any information pertinent to this Agreement as may be
reasonably required from time to time by the PHA or HUD. The owner shall
furnish such information in the form and manner required by the PHA or HUD.
B. The owner must permit the PHA or HUD or any of their authorized
representatives to have access to the premises during normal business hours and,
for the purpose of audit and examination, to have access to any books, documents,
papers and records of the owner to the extent necessary to determine compliance
with the Agreement.
1.28 Notices and Owner Certifications
A. Where the owner is required to give any notice to the PHA pursuant tot is
Agreement, such notice shall be in writing and shall be given in the manner
designated by the PHA.
B. Any certification or warranty by the owner pursuant to the Agreement shall be
deemed a material representation of fact upon which reliance was placed when
this. transaction was entered into.
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1.29 HUD Requirements
A. The Agreement and the HAP contract shall be interpreted and implemented in
accordance with all statutory requirements, and with all HUD requirements,
including amendments or changes in HUD requirements. The owner agrees to
comply with all such laws and HUD requirements
B. HUD requirements are requirements that apply to the project-based voucher
program. HUD requirements are issued by HUD Headquarters as regulations,
Federal Register notices or other binding program directives.
1.30 Applicability of Part 11 provisions - Check all that apply
? Training, Employment and Contracting Opportunities
Section 2.1 applies if the total of the contract rents for all units under the proposed
HAP contract, over the maximum term of the contract, is more than $200,000.
? Equal Employment Opportunity
Section 2.2 only applies to construction contracts of more than $10,000.
? Labor Standards Requirements
Sections 2.4, 2.8 and 2.10 apply when this Agreement covers nine or more units.
? Flood Insurance
Section 2.11 applies if units are located in areas having special flood hazards and
in which flood insurance is available under the National Flood Insurance
Program.
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EXECUTION OF THE AGREEMENT
PUBLIC HOUSING AGENCY
Name (Print)
By:
Signature of Authorized Representative
Official title (Print):
Date:
OWNER
Name (Prin
By:
Signature of Authorized Representative
Official Title (Print):
Date:
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OMB Approval No. 2577-0169
(exp. 04/30/2014)
2.1 Training, Em to ment and Contracting O ortunities
(a) The project assisted under this Agreement is subject to the requirements of section
3 of the Housing Urban Development Act of 1968, as amended, 12 U.S.C. 1701u.
The owner shall carry out the provisions of section 3 and the regulations issued by
HUD as set forth in 24 CFR part 135 and all applicable rules and orders of HUD
issued thereunder prior to the execution of this Agreement. This shall be a
condition of the Federal financial assistance provided to the project, binding upon
the owner, the owner's contractors and subcontractors, successors and assigns.
Failure to fulfill these requirements shall subject the owner, the owner's
contractors and subcontractors, successors and assigns to the sanctions specified
by this Agreement, and to such sanctions as are specified by 24 CFR part 135.
(b) The owner shall incorporate or cause to be incorporated into any contract or
subcontract for work pursuant to this Agreement in excess of $100,000 the
following clause:
(1) The work to be performed under this contract is subject to the requirements of
section 3 of the Housing Urban Development Act of 1968, as amended, 12 U.S.C.
1701u. The purpose of section 3 is to ensure that employment and other
economic opportunities generated by HUD assistance or HUD-assisted projects
covered by section 3 shall, to the greatest extent feasible, be directed to low- and
very low-income persons, particularly persons who are recipients of HUD
assistance for housing.
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This agency may not conduct or sponsor, and a person is not required to respond to, a collection of information
unless that collection displays a valid OMB control number. Assurances of confidentiality are not provided under
this collection.
(2) The parties to this Agreement agree to comply with HUD's regulations in 24 CFR
part 135, which implement section 3. As evidenced by their execution of this
Agreement, the parties to this Agreement certify that they are under no
contractual or other impediment that would prevent them from complying with
the part 135 regulations.
(3) The contractor agrees to send to each labor organization or representative of
workers with which the contractor has a collective bargaining agreement or other
understanding, if any, a notice advising the labor organization or workers'
representative of the contractor's commitments under this section 3 clause, and
will post copies of the notice in conspicuous places at the work site where both
employees and applicants for training and employment positions can see the
notice. The notice shall describe the section 3 preference, and shall set forth
minimum number and job titles subject to hire, availability of apprenticeship and
training positions, the qualifications for each; the name and location of the
person(s) taking applications for each of the positions; and the anticipated date the
work shall begin.
(4) The contractor agrees to include this section 3 clause in every subcontract subject
to compliance with regulations in 24 CFR part 135, and agrees to take appropriate
action, as provided in an applicable provision of the subcontract or in this section
3 clause, upon a finding that the subcontractor is in violation of the regulations in
24 CFR part 135. The contractor will not subcontract with any subcontractor
where the contractor has notice or knowledge that the subcontractor has been
found in violation of the regulations in 24 CFR part 135.
(5) The contractor will certify that any vacant employment positions, including
_.training positions, that are filled (1) after the contractor is..selected but before the
contract is executed, and (2) with persons other than those to whom the
regulations of 24 CFR part 135 require employment opportunities to be directed,
were not filled to circumvent the contractor's obligations under 24 CFR part 135.
(6) Noncompliance with HUD's regulations in 24 CFR part 135 may result in
sanctions, termination of this Agreement for default, and debarment or suspension
from future HUD assisted contracts.
(7) With respect to work performed in connection with section 3 covered Indian
housing assistance, section 7(b) of the Indian Self Determination and Education
Assistance Act (25 U.S.C. 405e) also applies to the work to be performed under
this contract. Section 7(b) requires that to the greatest extent feasible:
(i) preference and opportunities for training and employment shall be given to
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Indians, and (ii) preference in the award of contracts and subcontracts shall be
given to Indian organizations and Indian-owned Economic Enterprise. Parties to
this contract that are subject to the provisions of section 3 and section 7(b) agree
to comply with section 3 to the maximum extent feasible, but not in derogation
of compliance with section 7(b).
.2 EQUAL EMPLOYMENT OPPORTUNIT
(a) The owner shall incorporate or cause to be incorporated into any contract in
excess of $10,000 for construction work, or modification thereof, as defined in the
regulations of the Secretary of Labor at 41 CFR chapter 60, which is to be
performed pursuant to this Agreement, the following nondiscrimination clause:
During the performance of this contract, the contractor agrees as follows:
(1) The contractor will not discriminate against any employee or applicant for
employment because of race, color, creed, religion, sex, or national origin. The
contractor will take affirmative action to ensure that applicants are employed, and
that employees are treated during employment, without regard to their race, color,
religion, creed, sex, or national origin. Such action shall include, but not be
limited to, the following: employment, upgrading, demotion, or transfer;
recruitment or recruitment advertising; layoffs or termination; rates of pay or
other forms of compensation; and selection for training, including apprenticeship.
The contractor agrees to post in conspicuous places, available to employees and
applicants for employment, notices to be provided by the contracting officer
setting forth the provisions of this nondiscrimination clause.
(2) The contractor will, in all-solicitations or advertisements for employees placed by -
or on behalf of the contractor, state that all qualified applicants will receive
consideration for employment without regard to race, color, religion, creed, sex,
or national origin.
(3) The contractor will send to each labor union or representative of workers with
which the contractor has a collective bargaining agreement or other contract or
understanding, a notice to be provided by or at the direction of the Government
advising the labor union or workers representative of the contractor's
commitments under this section, and shall post copies of the notice in
conspicuous places available to employees and applicants for employment.
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(4) The contractor of will comply with all provisions of Executive Order No. 11246
of September 24, 1965, and with the rules, regulations, and relevant orders of the
Secretary of Labor.
(5) The contractor will furnish all information and reports required by Executive
Order No. 11246 of September 24, 1965, and by the rules, regulations, and orders
of the Secretary of Labor, or pursuant thereto, and will permit access to its books,
records, and accounts by HUD and the Secretary of Labor for purposes of
investigation to ascertain compliance with such rules, regulations and orders.
(6) In the event of the contractor's noncompliance with the nondiscrimination clauses
of this contract or with any of the rules, regulations, or orders, the contract may be
canceled, terminated, or suspended in whole or in part and the contractor may be
declared ineligible for further contracts in accordance with procedures authorized
in Executive Order No. 11246 of September 24, 1965, and such other sanctions as
may be imported and remedies invoked as provided in Executive Order No.
11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of
Labor or as otherwise provided by law.
(7) The contractor will include the provisions of paragraphs (1) through (7) in every
subcontract or purchase order unless exempted by the rules, regulations, or orders
of the Secretary of Labor issued pursuant to section 204 of Executive Order No.
11246 of September 24, 1965, so that such provisions will be binding upon each
subcontractor or vendor. The contractor will take such action with respect to any
subcontract or purchase order as the Government may direct as a means of
enforcing such provisions including sanctions for noncompliance; provided,
however, that in the event a contractor becomes involved in, or is threatened with,
litigation with a subcontractor or vendor as a result of such direction by the
Government, the contractor may request the United States to enter into such
litigation to protect the interest of the United States.
(b) The owner agrees to be bound by the above nondiscrimination clause with respect
to his or her own employment practices when participating in federally assisted
construction work.
(c) The owner agrees to assist and cooperate actively with HUD and the Secretary of
Labor in obtaining the compliance of contractors and subcontractors with the
nondiscrimination clause and the rules, regulations, and relevant orders of the
Secretary of Labor, to furnish HUD and the Secretary of Labor such information
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as they may require for the supervision of such compliance, and to otherwise
assist HUD in the discharge of HUD's primary responsibility for securing
compliance.
(d) The owner further agrees to refrain from entering into any contract or contract
modification subject to Executive Order No. 11246 of September 24, 1965, with a
contractor debarred from, or who has not demonstrated eligibility for,
Government contracts and federally assisted construction contracts pursuant to the
Executive Order and will carry out such sanctions and penalties for violation of
the nondiscrimination clause as may be imposed upon contractors and
subcontractors by HUD or the Secretary of Labor pursuant to the Executive
Order. In addition, if the owner fails or refuses to comply with these undertakings,
HUD may take any or all of the following actions; cancel, terminate, or suspend
in whole or in part this Agreement; refrain from extending any further assistance
to the owner under the program with respect to which the failure or refusal
occurred until satisfactory assurance of future compliance has been received from
the owner, and refer the case to the Department of Justice for appropriate legal
proceedings.
.3 RESERVED
.4 HUD-FEDERAL LABOR STANDARDS PROVISIONS
The owner is responsible for inserting the entire text of section 2.4 of this Agreement in
all construction contracts and, if the owner performs any rehabilitation work on the
project, the owner must comply with all provisions of section 2.4. (Note: Sections 2.4(b)
and (c) apply only when the amount of the prime contract exceeds $100,000.)
(a)(1)(i) Minimum Wages. All laborers and mechanics employed or working upon the
site of the work (or under the United States Housing Act of 1937 or under the Housing
Act of 1949 in the construction or development of the project) will be paid
unconditionally and not less often than once a week, and without subsequent deduction or
rebate on any account (except such payroll deductions as are permitted by regulations
issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full
amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time
of payment computed at rates not less than those contained in the wage determination of
the Secretary of Labor which is attached hereto and made part hereof regardless of any
contractual relationship which may be alleged to exist between the contractor and such
laborers and mechanics. Contributions made or costs reasonably anticipated for bona fide
fringe benefits under section l(b)(2) of the Davis-Bacon Act on behalf of laborers or
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mechanics are considered wages paid to such laborers or mechanics, subject to the
provisions of 29 CFR 5.5(a)(1)(iv); also, regular contributions made or costs incurred for
more than a weekly period (but not less often than quarterly) under plans, funds, or
programs, which cover the particular weekly period, are deemed to be constructively
made or incurred during such weekly period.
Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits
on the wage determination for the classification of work actually performed, without
regard to skill, except as provided in 29 CFR 5.5(a)(4). Laborers or mechanics
performing work in more than one classification may be compensated at the rate
specified for each classification for the time actually worked therein: Provided, That the
employer's payroll records accurately set forth the time spent in each classification in
which work is performed. The wage determination (including any additional
classification and wage rates conformed under 29 CFR 5.5(a)(1)(ii) and the Davis-Bacon
poster (WH-1321)) shall be posted at all times by the contractor and its subcontractors at
the site of the work in a prominent and accessible place where it can be easily seen by the
workers.
(ii)(A) Any class of laborers or mechanics which is not listed in the wage determination
and which is to be employed under the contract shall be classified in conformance with
the wage determination. HUD shall approve an additional classification and wage rate
and fringe benefits therefore only when the following criteria have been met:
(1) The work to be performed by the classification requested is not performed by a
classification in the wage determination;
(2) The classification is utilized in the area by the construction industry; and
(3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable
relationship to the wage rates contained in the wage determination.
(B) If the contractor and the laborers and mechanics to be employed in the classification
(if known), or their representatives, and HUD or its designee agree on the classification
and wage rate (including the amount designated for fringe benefits where appropriate), a
report of the action taken shall be sent by HUD or its designee to the Administrator of the
Wage and Hour Division, Employment Standards Administration, U.S. Department of
Labor, Washington, D. C. 20210. The Administrator, or an authorized representative, will
approve, modify, or disapprove every additional classification action within 30 days of
receipt and so advise HUD or its designee or will notify HUD or its designee within the
30-day period that additional time is necessary.
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(C) In the event the contractor, the laborers or mechanics to be employed in the
classification or their representatives, and HUD or its designee do not agree on the
proposed classification and wage rate (including the amount designated for fringe
benefits, where appropriate), HUD or its designee shall refer the questions, including the
views of all interested parties and the recommendation of HUD or its designee, to the
Administrator for determination. The Administrator, or an authorized representative, will
issue a determination within the 30 days of receipt and so advise HUD or its designee or
will notify HUD or its designee within 30-day period that additional time is necessary.
(D) The wage rate (including fringe benefits where appropriate) determined pursuant to
subparagraphs (1)(B) or (C) of this paragraph, shall be paid to all workers performing
work in the classification under this contract from the first day on which work is
performed in the classification.
(iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or
mechanics includes a fringe benefit which is not expressed as an hourly rate, the
contractor shall either pay the benefit as stated in the wage determinations or shall pay
another bona fide fringe benefit or an hourly cash equivalent thereof.
(iv) If the contractor does not make payments to a trustee or other third person, the
contractor may consider as part of the wages of any laborer or mechanic the amount of
any costs reasonably anticipated in providing bona fide fringe benefits under a plan or
program: Provided, That the Secretary of Labor has found, upon the written request of
the contractor, that the applicable standards of the Davis-Bacon Act have been met. The
Secretary of Labor may require the contractor to set aside in a separate account assets for
the meeting of obligations under the plan or program.
(2) Withholdine. HUD or its designee shall upon _its.own action or-upon written request
of an authorized representative of the Department of Labor withhold or cause to be
--- ---
withheld from the contractors under this contract or any other Federal contract with the
same prime contractor, or any other Federally-assisted contract subject to Davis-Bacon
prevailing wage requirements, which is held by the same prime contractor so much of the
accrued payments or advances as may be considered necessary to pay laborers and
mechanics, including apprentices, trainees and helpers, employed by the contractor or any
subcontractor the full amount of wages required by the contract. In the event of failure to
pay any laborer or mechanic, including any apprentice, trainee or helper, employed or
working on the site of the work (or under the United States Housing Act of 1937 or under
the Housing Act of 1949 in the construction or development of the project), all or part of
the wages required by the contract, HUD or its designee may, after written notice to the
contractor, sponsor, applicant, or owner, take such action as may be necessary to cause
the suspension of any further payment, advance, or guarantee of funds until such
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violations have ceased. HUD or its designee may, after written notice to the contractor,
disburse such amounts withheld for and on account of the contractor or subcontractor to
the respective employees to whom they are due.
(3)(i) Payrolls and Basic Records. Payrolls and basic records relating thereto shall be
maintained by the contractor during the course of the work and preserved for a period of
three years thereafter for all laborers and mechanics working at the site of the work (or
under the United States Housing Act of 1937, or under the Housing Act of 1949, in the
construction or development of the project). Such records shall contain the naive,
address, and social security number of each such worker, his or her correct classification,
hourly rates of wages paid (including rates of contributions or costs anticipated for bona
fide fringe benefits or cash equivalents thereof of the types described in section l(b)(2)(B)
of the Davis-Bacon Act), daily and weekly number of hours worked, deductions made
and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5
(a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs
reasonably anticipated in providing benefits under a plan or program described in section
l(b)(2)(B) of the Davis-Bacon Act, the contractor shall maintain records which show that
the commitment to provide such benefits is enforceable, that the plan or program is
financially responsible, and that the plan or program has been communicated in writing to
the laborers or mechanics affected, and records which show the costs anticipated or the
actual cost incurred in providing such benefits. Contractors employing apprentices or
trainees under approved programs shall maintain written evidence of the registration of
apprenticeship programs and certification of trainee programs, the registration of the
apprentices and trainees, and the ratios and wage rates prescribed in the applicable
programs.
(ii)(A) The contractor shall submit weekly for each week in which any contract work is
performed a copy of all payrolls to HUD or_ts designee if the agency is a party to the ,
contract, but if the agency is not such a party, the contractor will submit the payrolls to
the applicant, sponsor, or owner, as the case maybe, for transmission to HUD or its
designee. The payrolls submitted shall set out accurately and completely all of the
information required to be maintained under 29 CFR 5.5(a)(3)(i). This information may
be submitted in any form desired. Optional Form WH-347 is available for this purpose
and may be purchased from the Superintendent of Documents (Federal Stock Number
029-005-00014-1), U.S. Government Printing Office, Washington, DC 20402. The prime
contractor is responsible for the submission of copies of payrolls by all subcontractors.
(B) Each payroll submitted shall be accompanied by a "Statement of Compliance,"
signed by the contractor or subcontractor or his or her agent who pays or supervises the
payment of the persons employed under the contract and shall certify the following:
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(1) That the payroll for the payroll period contains the information required to be
maintained under 29 CFR 5.5 (a)(3)(i) and that such information is correct and complete;
(2) That each laborer or mechanic (including each helper, apprentice, and trainee)
employed on the contract during the payroll period has been paid the full weekly wages
earned, without rebate, either directly or indirectly, and that no deductions have been
made either directly or indirectly from the full wages earned, other than permissible
deductions as set forth in 29 CFR part 3;
(3) That each laborer or mechanic has been paid not less than the applicable wage rates
and fringe benefits or cash equivalents for the classification of work performed, as
specified in the applicable wage determination incorporated into the contract.
(C) The weekly submission of a properly executed certification set forth on the reverse
side of Optional Form WH-347 shall satisfy the requirement for submission of the
"Statement of Compliance" required by paragraph (a)(3)(ii)(B) of this section.
(D) The falsification of any of the above certifications may subject the contractor or
subcontractor to civil or criminal prosecution under section 1001 of Title 18 and section
231 of Title 31 of the United States Code.
(iii) The contractor or subcontractor shall make the records required under paragraph
(a)(3)(i) of this section available for inspection, copying, or transcription by authorized
representatives of HUD or its designee or the Department of Labor, and shall permit such
representatives to interview employees during working hours on the job. If the contractor
or subcontractor fails to submit the required records or to make them available, HUD or
its designee may, after written notice to the contractor, sponsor, applicant, or owner, take
such action as may be necessary to cause.-the suspension.of any further payment, advance,
or guarantee of funds. Furthermore, failure to submit the required records upon request or
to make such records available may be grounds for debarment action pursuant to 29 CFR
5.12.
(4)(i) Apprentices and Trainees. Apprentices. Apprentices will be permitted to work at
less than the predetermined rate for the work they performed when they are employed
pursuant to and individually registered in a bona fide apprenticeship program registered
with the U.S. Department of Labor, Employment and Training Administration, Bureau of
Apprenticeship and Training, or with a State Apprenticeship Agency recognized by the
Bureau, or if a person is employed in his or her first 90 days of probationary employment
as an apprentice in such an apprenticeship program, who is not individually registered in
the program, but who has been certified by the Bureau of Apprenticeship and Training or
a State Apprenticeship Agency (where appropriate) to be eligible for probationary
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employment as an apprentice. The allowable ratio of apprentices to journeymen on the
job site in any craft classification shall not be greater than the ratio permitted to the
contractor as to the entire work force under the registered program. Any worker listed on
a payroll at an apprentice wage rate, who is not registered or otherwise employed as
stated above, shall be paid not less than the applicable wage rate on the wage
determination for the classification of work actually performed. In addition, any
apprentice performing work on the job site in excess of the ratio permitted under the
registered program shall be paid not less than the applicable wage rate on the wage
determination for the work actually performed. Where a contractor is performing
construction on a project in a locality other than that in which its program is registered,
the ratios and wage rates (expressed in percentages of the journeymen's hourly rate)
specified in the contractor's or subcontractor's registered program shall be observed.
Every apprentice must be paid at not less than the rate specified in the registered program
for the apprentice's level of progress, expressed as a percentage of the journeymen hourly
rate specified in the applicable wage determination. Apprentices shall be paid fringe
benefits in accordance with the provisions of the apprenticeship program. If the
apprenticeship program does not specify fringe benefits, apprentices must be paid the full
amount of fringe benefits listed on the wage determination for the applicable
classification. If the Administrator determines that a different practice prevails for the
applicable apprentice classification, fringes shall be paid in accordance with that
determination. In the event the Bureau of Apprenticeship and Training, or a State
Apprenticeship Agency recognized by the Bureau, withdraws approval of an
apprenticeship program, the contractor will no longer be permitted to utilize apprentices
at less than the applicable predetermined rate for the work performed until an acceptable
program is approved.
(ii) Trainees. Except as provided in 29 CFR 5.1 b, trainees will not be permitted to work
at less than the predetermined rate for the work performed unless they are employed
pursuant to and individually registered in a program which has received prior approval,
evidenced by formal certification by the U.S. Department of Labor; Employment and
Training Administration. The ratio of trainees to journeymen on the. job site shall not be
greater than permitted under the plan approved by the Employment and Training
Administration. Every trainee must be paid at not less than the rate specified in the
approved program for the trainee's level of progress, expressed as a percentage of the
journeyman hourly rate specified in the applicable wage determination. Trainees shall be
paid fringe benefits in accordance with the provisions of the trainee program. If the
trainee program does not mention fringe benefits, trainees shall be paid the full amount of
fringe benefits listed on the wage determination unless the Administrator of the Wage
and Hour Division determines that there is an apprenticeship program associated with the
corresponding journeyman wage rate on the wage determination which provides for less
than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee
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rate who is not registered and participating in a training plan approved by the
Employment and Training Administration shall be paid not less than the applicable wage
rate on the wage determination for the classification of work actually performed. In
addition, any trainee performing work on the job site in excess of the ratio permitted
under the registered program shall be paid not less than the applicable wage rate on the
wage determination for the work actually performed. In the event the Employment and
Training Administration withdraws approval of a program, the contractor will no longer
be permitted to utilize trainees at less than the applicable predetermined rate for the work
performed until an acceptable program is approved.
(iii) Equal Employment Opportunity. The utilization of apprentices, trainees and
journeymen under this part shall be in conformity with the equal employment opportunity
requirements of Executive Order 11246, as amended, and 29 CFR part 30.
(5) Compliance with Copeland Act Requirements. The contractor shall comply with the
requirements of 29 CFR part 3 which are incorporated by reference in this Agreement.
(6) Subcontracts. The contractor or subcontractor will insert in any subcontracts the
clauses contained in section 2.4(a)(1) through (11) and such other clauses as HUD or its
designee may by appropriate instructions require, and also a clause requiring the
subcontractors to include these clauses in any lower tier subcontracts. The prime
contractor shall be responsible for the compliance by any subcontractor or lower tier
subcontractor with all the contract clauses in this section 2.4(a).
(7) Contract Terminations, Debarment. A breach of the contract clauses in 29 CFR 5.5
may be grounds for termination of the contract, and for debarment as a contractor and a
subcontractor as provided in 29 CFR 5.12.
(8) Compliance with Davis-Bacon and Related Act Requirements. All rulings and
interpretations of the Davis-Bacon and related Acts contained in 29 CFR parts , an 5
are herein incorporated by reference in this contract.
(9) Disputes Concerning Labor Standards. Disputes arising out of the labor standards
provisions of this contract shall not be subject to the general disputes clause of this
contract. Such disputes shall be resolved in accordance with the procedures of the
Department of Labor set forth in 29 CFR parts 5, 6, and 7. Disputes within the meaning
of this clause include disputes between the contractor (or any of its subcontractors) and
HUD or its designee, the U. S. Department of Labor, or the employees or their
representatives.
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(10)(i) Certification of Eligibility. By entering into this Agreement, the contractor
certifies that neither it (nor he or she) nor any person or firm who has an interest in the
contractor's firm is a person or firm ineligible to be awarded Government contracts by
virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1) or to be awarded
HUD contracts or participate in HUD programs pursuant to 24 CFR part 24.
(ii) No part of this Agreement shall be subcontracted to any person or firm ineligible for
award of a Government contract by virtue of section 3(a) of the Davis-Bacon Act or 29
CFR S. 12(a)(1) or to be awarded HUD contracts or participate in HUD programs
pursuant to 24 CFR part 24.
(iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18
U.S.C. 1001. Additionally, U.S. Criminal Code, section 1010, Title 18, U.S.C., "Federal
Housing Administration transactions, provides in part: "Whoever, for the purpose of
...influencing in any way the action of such Administration ...makes, utters or publishes
any statement, knowing the same to be false... shall be fined not more than $5,000 or
imprisoned not more than two years, or both."
11. Complaints. Proceedings, or Testimony by Employees. No laborer or mechanic to
whom the wage, salary, or other labor standards provisions of this Agreement are
applicable shall be discharged or in any other manner discriminated against by the
Contractor or any subcontractor because such employee has filed any complaint or
instituted or caused to be instituted any proceeding or has testified or is about to testify in
any proceeding under or relating to the labor standards applicable under this Agreement
to his employer.
(b) Contract Work Hours and Safety Standards Act. The provisions of this paragraph (b)
are applicable only where the amount of the prime contract exceeds $100,000. As used
.. .........
in this paragraph, the terms "laborers" and "mechanics" include watchmen and guards.
(1) Overtime Requirements. No contractor or subcontractor contracting for any part of
the contract work which may require or involve the employment of laborers or mechanics
shall require or permit any such laborer or mechanic in any workweek in which he or she
is employed on such work to work in excess of forty hours in such workweek unless such
laborer or mechanic receives compensation at a rate not less than one and one-half times
the basic rate of pay for all hours worked in excess of forty hours in such workweek.
(2) Violation: Liabili for Unpaid Wages: Liquidated Damages. In the event of any
violation of the clause set forth in subparagraph (1) of this paragraph, the contractor and
any subcontractor responsible therefore shall be liable for the unpaid wages. In addition,
such contractor and subcontractor shall be liable to the United States (in the case of work
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done under- contract for the District of Columbia or a territory, to such District or to such
territory), for liquidated damages. Such liquidated damages shall be computed with
respect to each individual laborer or mechanic, including watchmen and guards,
employed in violation of the clause set forth in subparagraph (1) of this paragraph, in the
sum of $10 for each calendar day on which such individual was required or permitted to
work in excess of the standard workweek of forty hours without payment of the overtime
wages required by the clause set forth in subparagraph (1) of this paragraph.
(3) Withholding for Unpaid Wages and Liquidated Damages. HUD or its designee shall
upon its own action or upon written request of an authorized representative of the
Department of Labor withhold or cause to be withheld, from any monies payable on
account of work performed by the contractor or subcontractor under any such contract or
any other Federal contract with the same prime contractor, or any other Federally-assisted
contract subject to the Contract Work Hours and Safety Standards Act, which is held by
the same prime contractor- such sums as may be determined to be necessary to satisfy any
liabilities of such contractor or subcontractor for unpaid wages and liquidated damages as
provided in the clause set forth in subparagraph (2) of this paragraph.
(4) Subcontractors. The contractor or subcontractor shall insert in any subcontracts the
clauses set forth in subparagraph (1) through (4) of this paragraph and also a clause
requiring the subcontractors to include these clauses in any lower tier subcontracts. The
prime contractor shall be responsible for compliance by any subcontractor or lower tier
subcontractor with the clauses set forth in subparagraphs (1) through (4) of this
paragraph.
(c) Health and Safety. The provisions of this paragraph (c) are applicable only where the
amount of the prime contract exceeds $100,000.
(1) No laborer or mechanic shall be required to work in surroundings or under
working conditions which are unsanitary, hazardous ordarigerous to his health
and safety as determined under construction safety and health standards
promulgated by the Secretary of Labor by regulation.
(2) The contractor shall comply with all regulations issue by the Secretary of Labor
pursuant to Title 29 part 1926 and failure to comply may result in imposition of
sanctions pursuant to the Contract Work Hours and Safety Standards Act, 40 USC
3701 et seq.
(3) The contractor shall include the provisions of this paragraph in every subcontract
so that such provisions will be binding on each subcontractor. The contractor shall
take such action with respect to any subcontract as the Secretary of Housing and
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Urban Development or the Secretary of Labor shall direct as a means of enforcing
such provisions.
2.5-2.7 RESERVED
2.8 WAGE AND CLAIMS ADJUSTMENTS
The owner shall be responsible for the correction of all violations under section 2.4,
including violations committed by other contractors. In cases where there is evidence of
underpayment of salaries or wages to any laborers or mechanics (including apprentices
and trainees) by the owner or other contractor or a failure by the owner or other
contractor to submit payrolls and related reports, the owner shall be required to place an
amount in escrow, as determined by HUD sufficient to pay persons employed on the
work covered by the Agreement the difference between the salaries or wages actually
paid such employees for the total number of hours worked and the full amount of wages
required under this Agreement, as well as an amount determined by HUD to be sufficient
to satisfy any liability of the owner or other contractor for liquidated damages pursuant to
section 2.4. The amounts withheld may be disbursed by HUD for and on account of the
owner or other contractor to the respective employees to whom they are due, and to the
Federal Government in satisfaction of liquidated damages under section 2.4.
2.9 RESERVED
.10 EVIDENCE OF UNITS COMPLETION; ESCRO
(a) The owner shall evidence the completion of the unit(s) by furnishing the PHA, in
addition to the requirements listed in Part I of this Agreement,.a. certification of
compliance with the provisions of sections 2.4 and 2.8 of this Agreement, and that to the
best of the owner's knowledge and belief there are no claims of underpayment to laborers
or mechanics in alleged violation of these provisions of the Agreement. In the event there
are any such pending claims to the knowledge of the owner, the PHA, or HUD, the owner
will place a sufficient amount in escrow, as directed by the PHA or HUD, to assure such
payments.
(b) The escrows required under this section and section 2,8 of shall be paid to HUD, as
escrowee, or to an escrowee designated by HUD, and the conditions and manner of
releasing such escrows shall be designated and approved by HUD.
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2.11 FLOOD INSURANC
If the project is located in an area that has been identified by the Federal Emergency
Management Agency as an area having special flood hazards and if the sale of flood
insurance has been made available under the National Flood Insurance Program, the
owner agrees that: (1) the project will be covered, during the life of the property, by flood
insurance in an amount at least equal to its development or project cost (less estimated
land cost) or to the limit of coverage made available with respect to the particular type of
properly under the National Flood Insurance Act of 1968, whichever is less; and (2) that
it will advise any prospective purchaser or transferee of the property in writing of the
continuing statutory requirement to maintain such flood insurance during the life of the
property.
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Exhibit 4
OMB Approval No. 2577-0169
(exp. 04/30/2014
U.S. Department Of Housing and Urban Development
Office of Public and Indian Housing
SECTION 8 PROJECT-BASED VOUCHER PROGRAM
PBV HOUSING ASSISTANCE PAYMENTS CONTRACT
NEW CONSTRUCTION OR REHABILITATION
PART I OF HAP CONTRACT
This agency may not conduct or sponsor, and a person is not required to respond to, a collection of information
unless that collection displays a valid OMB control number. Assurances of confidentiality are not provided under
this collection.
L CONTRACT INFORMATION
a. Parties
This housing assistance payments (HAP) contract is entered into between:
Housing Authority of the City of Santa Ana
Depot at Santiago, LP
b. Contents of contract-
( PHA) and
(owner),
The HAP contract consists of Part 1, Part 2 and the contract exhibits listed in paragraph c.
c. Contract exhibits
The HAP contract includes the following exhibits:
EXHIBIT A: TOTAL NUMBER OF UNITS IN PROJECT COVERED BY THIS HAP
CONTRACT; INITIAL RENT TO OWNER; AND THE NUMBER AND
DESCRIPTION OF TI4E CONTRACT UNITS. (See 24 CFR 983.203 for
required items.) If this is a multi-stage project, this exhibit must include a
description of the units in each completed phase.
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Exhibit 4
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EXHIBIT B: SERVICES, MAINTENANCE AND EQUIPMENT TO BE
PROVIDED BY THE OWNER WITHOUT CHARGES IN ADDITION TO
RENT TO OWNER
EXHIBIT C: UTILITIES AVAILABLE IN THE CONTRACT UNITS, INCLUDING A
LISTING OF UTILITIY SERVICES TO BE PAID BY THE OWNER
(WITHOUT CHARGES IN ADDITION TO RENT TO OWNER) AND
UTILITIES TO BE PAID BY THE TENANTS
EXHIBIT D: FEATURES PROVIDED TO COMPLY WITH PROGRAM ACCESSIBILITY
FEATURES OF SECTION 504 OF THE REHABILITATION ACT OF 1973
ADDITIONAL EXHIBITS
d. Single-Stage and Multi-Stage Contracts (Check the applicable box.)
I . ? Single-Stage Project
This is a single-stage project.
For all contract units, the effective date of the HAP contract is:
The PHA enters the effective date, and executes the HAP contract, after completion and PHA
acceptance of all units in the single stage project.
2. ? Multi-Stage Project
This is a multi-stage project. The units in each completed stage are designated in Exhibit A.
The PHA enters the effective date for each stage after completion and PHA acceptance of all
units in that stage. The PHA enters the effective date for each stage in the "Execution of HAP
contract for contract units completed in stages" (starting on page 8).
The annual anniversary date of the HAP contract for all contract units in this multi-stage project
is the anniversary of the effective date of the HAP contract for the contract units included in the
first stage. The expiration date of the HAP contract for all of the contract units completed in
stages must be concurrent with the end of the HAP contract term for the units included in the
first stage. (See 24 CFR 983.206(c).)
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C. Term of the HAP contract
Beginning of Term
The PHA may not enter into a HAP contract for any contract unit until the PHA has
determined that the unit complies with the housing quality standards. The term of the
HAP contract for any unit begins on the effective date of the HAP contract.
2. Length of initial term
a, Subject to paragraph 2.b, the initial term of the HAP contract for any contract units is:
b. The initial term of the HAP contract for any unit may not be less than one year, nor more
than fifteen years.
3. Extension of term
The PHA and owner may agree to enter into an extension of the HAP contract at the time
of initial HAP contract execution or any time prior to expiration of the contract. Any
extension, including the term of such extension, must be in accordance with HUD
requirements.
A PHA must determine that any extension is appropriate to achieve long-term
affordability of the housing or expand housing opportunities.
4, __ Requirement for sufficient appropriated funding
a. The length of the initial term and any extension term shall be subject to availability, as
determined by HUD, or by the PHA in accordance with HUD requirements, of sufficient
appropriated funding (budget authority), as provided in appropriations acts and in the
PHA's annual contributions contract (ACC) with HUD, to make full payment of housing
assistance payments due to the owner for any contract year in accordance with the HAP
contract.
b. The availability of sufficient funding must be determined by HUD or by the PHA in
accordance with HUD requirements. If it is determined that there may not be sufficient
funding to continue housing assistance payments for all contract units and for the full
term of the HAP contract, the PHA. has the right to terminate the HAP contract by notice
to the owner for all or any of the contract units. Such action by the PHA shall be
implemented in accordance with HUD requirements.
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f. Occupancy and payment
1. Payment for occupied unit
During the term of the HAP contract, the PHA shall make housing assistance payments
to the owner for the months during which a contract unit is leased to and occupied by an
eligible family. If an assisted family moves out of a contract unit, the owner may keep
the housing assistance payment for the calendar month when the family moves out
("move-out month"). However, the owner may not keep the payment if the PHA
determines that the vacancy is the owner's fault.
2. Vacancy payment
T14E P14A 14AS DISCRETION WHETHER TO INCLUDE THE VACANCY PAYMENT
PROVISION (PARAGRAPH Q), OR TO STRIKE TIIIS PROVISION FROM THE HAP
CONTRACT FORM.
a. If an assisted family moves out of a contract unit, the PHA may provide vacancy
payments to the owner for a PHA-determined vacancy period extending from the
beginning of the first calendar month after the move-out month for a period not
exceeding two full months following the move-out month.
b. The vacancy payment to the owner for each month of the maximum two-month period
will be determined by the PHA, and cannot exceed the monthly rent to owner under the
assisted lease, minus any portion of the rental payment received by the owner (including
amounts available from the tenant's security deposit). Any vacancy payment may only
cover the period the unit remains vacant.
c. ...... The PHA-may only make vacancy payments to the owner if: -
I. The owner gives the PHA prompt, written notice certifying that the family has
vacated the unit and the date when the family moved out (to the best of the
owner's knowledge and belief};
2. The owner certifies that the vacancy is not the fault of the owner and that the unit
was vacant during the period for which payment is claimed;
3. The owner certifies that it has taken every reasonable action to minimize the
likelihood and length of vacancy; and
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4. The owner provides any additional information required and requested by the
PHA to verify that the owner is entitled to the vacancy payment.
d. The PHA must take every reasonable action to minimize the likelihood and length of
vacancy.
C. The owner may refer families to the PHA, and recommend selection of such families
from the PHA waiting list for occupancy of vacant units.
f The owner must submit a request for vacancy payments in the form and manner required
by the PHA and must provide any information or substantiation required by the PHA to
determine the amount of any vacancy payments.
3. PHA is not responsible for family damage or debt to owner
Except as provided in this paragraph f (Occupancy and Payment), the PHA will not make
any other payment to the owner under the HAP contract. The PHA will not make any
payment to owner for any damages to the unit, or for any other amounts owed by a
family under the family's lease.
g. Income-mixing requirement
Except as provided in paragraphs g.2 and 3, the PHA will not make housing assistance
payments under the HAP contract for more than 25 percent of the total number of
dwelling units (assisted or unassisted) in any project. The term "project" means a single
building, multiple contiguous buildings, or multiple buildings on contiguous parcels of
land assisted under this HAP contract.
2. The limitation in paragraph g.I does not apply to single-family buildings.
In referring eligible families to the owner for admission to the number of contract units in
any project exceeding the 25 percent limitation under paragraph g.l, the PHA shall give
preference to elderly or disabled families, or to families receiving supportive services, for
the number of contract units designated for occupancy by such families. The owner shall
rent the designated number of contract units to such families referred by the PHA from
the PHA waiting list.
4. The PHA and owner must comply with all HUD requirements regarding income mixing.
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5. The following specifies the number of contract units (if any):
a. Designated for occupancy by disabled families;
b Designated for occupancy by elderly families;
C. Designated for occupancy by elderly or disabled families; or
d. Designated for occupancy by families receiving supportive services.
? Check this box if any contract units are designated for disabled families.
The following number of contract units shall be rented to disabled
families:
? Check this box if any contract units are designated for elderly families.
The following number of contract units shall be rented to elderly families:
? Check this box if any contract units are designated for elderly or disabled
families.
The following number of contract -units shall be rented to elderly or disabled
families:
? Check this box if any contract units are designated for families receiving supportive
services.
The following number of contract units shall be rented to families
receiving supportive services:
Project-based Voucher Program
HAP Contract for New Construction or Rehabilitation
Previous editions are obsolete
IUD 52530A Page - G -
of Part I
8OA-90
EXECUTION OF HAP CONTRACT FOR SINGLE-STAGE PROJECT
C HOUSING AGENCY (PHA)
me of PHA (Print)
of authorized representative
and official title (Print)
ime of Owner (Print)
Signature of authorized representative
Name and title (Print)
Project-based Voucher Program
HAP Contract for New Construction or Rehabilitation
Previous editions are obsolete
IUD 52530A Page - 7 -
of Part I
8OA-91
EXECUTION OF HAP CONTRACT FOR CONTRACT UNITS COMPLETED AND
ACCEPTED IN STAGES
(For multi-stage projects, at acceptance of each stage, the PHA and the owner sign the HAP
contract execution for the completed stage.)
AGE NO. 1. The Contract is hereby executed for the contract units in this stage.
AGE EFFECTIVE DATE. The effective date of the Contract for this stage is:
LIC HOUSING AGENCY (PHA)
e of PHA (Print)
of authorized representative
and official title (Print)
of Owner (Print)
(Signature of authorized representative
Name and title (Print)
Previous editions are obsolete
Project-based Voucher Program
HAP Contract for New Construction or Rehabilitation
HUD 52530A Page - 8 -
of Part l
8OA-92
STAGE NO. 2. The Contract is hereby executed for the contract units in this stage.
STAGE EFFECTIVE DATE. The effective date of the Contract for this stage is:
PUBLIC HOUSING AGENCY (PHA)
Name of PHA (Print)
By:
Signature of authorized representative
Name and official title (Print)
Date
OWNER
Name of Owner (Print)
B:
Signature of authorized representative
Name and title (Print)
Date
Project-based Voucher Program
HAP Contract for New Construction or Rehabilitation
Previous editions are obsolete
HUD 52530A Page - 9 -
of Part I
8OA-93
AGE NO. 3. The Contract is hereby executed for the contract units in this stage.
AGE EFFECTIVE DATE. The effective date of the Contract for this stage is:
UBLIC HOUSING AGENCY (PHA)
ame of PHA (Print)
of authorized representative
Name and official title (Print)
of Owner (Print)
Signature of authorized representative
and title (Print)
Project-based Voucher Program
HAP Contract for New Construction or Rehabilitation
Previous editions are obsolete
HUD 52530A Page - 10 -
of Part 1
8OA-94
STAGE NO. The Contract is hereby executed for the contract units in this stage.
STAGE EFFECTIVE DATE. The effective date of the Contract for this stage is:
PUBLIC HOUSING AGENCY (PHA)
Name of PHA (Print)
II:
Signature of authorized representative
Name and official title (Print)
Date
OWNER
Name of Owner (Print)
II:
Signature of authorized representative
Name and title (Print)
Date
Project-based Voucher Program
HAP Contract for New Construction or Rehabilitation
Previous editions are obsolete
IIUD 52530A rage -11-
of Part 1
8OA-95
8OA-96