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HomeMy WebLinkAboutCDC/2002-03 RESOLUTION NO. CDC/2002-3 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO (1) APPROVING AND AUTHORIZING THE AGENCY CHAIRPERSON, OR ITS DESIGNEE, TO EXECUTE THE 2002 HOME COMMUNITY HOUSING DEVELOPMENT (CHDO) LOAN AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY AND FRAZEE COMMUNITY CENTER RELATED TO FRAZEE'S AFFORDABLE HOUSING PROGRAM IN THE NORTH ARDEN GUTHRIE AREA AND (2) AUTHORIZING THE AGENCY TO ACCEPT TITLE FROM FRAZEE FOR THE PROPERTIES LOCATED AT 2094 & 2104 MCKINLEY AND 2141 DUMBARTON AND TO DEMOLISH IMPROVEMENTS ON SAID PROPERTIES. 4 5 6 7 8 9 WHEREAS, in 1994, the Agency and Frazee Community Center, a California non-profi 10 corporation (the "Participant") entered into a 1994 HOME Loan Agreement to assist Frazee i II the placement of their Affordable Housing Program in the North Arden Guthrie Area (th 12 "Program"), and the Program would provide an opportunity for homeless and low incom families to obtain decent, suitable housing with the goal of stabilizing their lives; and 13 14 WHEREAS, over the years, the North Arden Guthrie Area has deteriorated, has suffere 15 from physical and social blight, and the area has been rezone for public recreational uses, and ha 16 become an area that is no longer conducive to Participant's Program needs and the familie 17 participating in the Program; and the Agency and Frazee have determined that it is in the bes interest of the Program participants to move to a more suitable living environment; and 18 19 WHEREAS, the Agency has agreed to provide Participant with a forgivable loan in th amount of not to exceed $600,000 (the "2002 Loan Agreement") in exchange for Participant' 20 21 agreement and desire to transfer their Program from the North Arden Guthrie Area and to mov 22 to a more suitable location and Participant wishes to buy from the Agency the properties locate 23 at: 851 N. Crescent and 162 W. Wabash (the "Properties") with the third property yet to b identified, but contemplated in the HOME Loan Agreement between the Agency and Participant; and 24 25 -1- CDC/2002-3 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WHEREAS, Participant shall use the Properties for the purpose of providing affordabl housing for homeless and low income households in accordance with the federal HOM Program and HUD regulations; and WHEREAS, in consideration of the $600,000 loan under the Loan Agreement Participant has agreed to convey to the Agency the parcels located at: 2094 McKinley, APN 285 501-07, 2104 McKinley, APN 285-501-06 and 2141 Dumbarton, APN 288-551-17 (th "Parcels") free and clear of liens and encumbrances, but subject to the Agency's HOME Loa Agreement in full satisfaction of the Participant's obligation to repay the Agency the principa balance remaining under the 1994 HOME Loan Agreement. NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY TH COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AS THE GOVERNING BOARD OF THE REDEVELOPMENT AGENCY OF THE CITY 0 SAN BERNARDINO, AS FOLLOWS: Section 1. A detailed description of the HOME Project is set forth in the 200 HOME Loan Agreement by and between the Agency and Participant, which is on file with th Agency Secretary. Section 2. Subject to the terms and conditions of the 2002 HOME Loan Agreement the Community Development Commission ("Commission") hereby reserves the sum of not-to exceed six hundred thousand dollars ($600,000) in fiscal year 2000 and 2001 HOME CHD funds for the HOME Project. Section 3. The Commission hereby authorizes the Agency Chairperson, or his/he designee to accept title to the Parcels and to proceed with the solicitation of bids for the work 0 demolition of the improvements of such Parcels upon completion of the HOME Project pursuan to the 2002 HOME Loan Agreement. Section 4. The Commission hereby finds and determines that the HOME Projec described in the 2002 HOME Loan Agreement requires no further environmental assessmen under the provisions of the National Environmental Protection Act (NEPA) in view of th -2- CDC/2002-3 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HOME Project being categorically exempt from the requirements set forth at 24 CFR Pa 58.35(c)(2). The Chairperson or his /her designee, is hereby authorized and directed to prepar the appropriate forms of written notice of the determinations of categorical exclusion for th HOME Project as provided in the NEP A regulations and as per this Section 4. Section 5. The Agency used and applied the sum of $382,700 from its Low an Moderate Income Housing Fund to provide a portion of the proceeds which were lent to th Participant under the 1994 HOME Loan Agreement to acquire the Properties for affordabl rental housing purposes. The Properties shall be transferred to the Agency by the Participan subject to terms and conditions of the 2002 Loan Agreement. The Agency hereby declares tha within five (5) years following the Participant's transfer to the Agency of each of the Properties that each such Property shall be dedicated by the Agency for public recreational purposes andlo consistent with the City's general plan and zoning. The Agency further finds and declares tha the investment of the Low and Moderate Income Housing Fund assets as represented by each 0 the Properties for such uses is an authorized use of the Low and Moderate Income Housin Funds of the Agency pursuant to Health and Safety Code Section 33334.2(e)(2)(B) in light ofth facts set forth in the Agency staff report which accompanied the adoption of this Resolution an specifically in light of the fact that the portion of the Arden Guthrie neighborhood in which th Properties are situated is so substantially afflicted with symptoms of blight that the health an safety of existing low and moderate income residents of the Arden Guthrie neighborhood will b benefited by the dedication of the Properties for such uses. Section 6. The Commission hereby approves the form of the 2002 HOME Loa Agreement as presented at the meeting at which this Resolution is adopted. The Chairperson, 0 his/her designee is hereby directed and authorized to execute the 2002 HOME Loan Agreemen on behalf of the Agency, and to make any such technical and conforming changes as may b recommended by Agency Counsel. The Chairperson, or his/her designee, is further authorize and directed to execute all ancillary and related documents and agreements necessary t implement the 2002 HOME Loan Agreement. -3- Section 7. 2 adoption. 3 IIII 4 IIII 5 I I I I 6 IIII 7 IIII 8 IIII 9 IIII 10 IIII II IIII 12 IIII 13 IIII 14 IIII 15 IIII 16 IIII 17 IIII 18 IIII 19 IIII 20 IIII 21 IIII 22 IIII 23 IIII 24 IIII 25 IIII IIII CDC/2002-3 This Resolution shall become effective immediately upon it -4- . CDC/2002-3 2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO (1) APPROVING AND AUTHORIZING THE AGENCY CHAIRPERSON, OR ITS DESIGNEE, TO EXECUTE THE 2002 HOME COMMUNITY HOUSING DEVELOPMENT (CHDO) LOAN AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY AND FRAZEE COMMUNITY CENTER RELATED TO FRAZEE'S AFFORDABLE HOUSING PROGRAM IN THE NORTH ARDEN GUTHRIE AREA AND (2) AUTHORIZING THE AGENCY TO ACCEPT TITLE FROM FRAZEE FOR THE PROPERTIES LOCATED AT 2094 & 2104 MCKINLEY AND 2141 DUMBARTON AND TO DEMOLISH IMPROVEMENTS ON SAID PROPERTIES. 3 4 5 6 7 8 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community Development Commission of the City of San Bernardino at a it. reg. meeting thereof, held on the 7th day of January, 2002, by the following vote to wit: 9 10 Commission Members: Abstain Absent Ayes Nays X - -K- -K- -1L -1L -1L -1L 11 ESTRADA LIEN 12 13 MCGINNIS 14 SCHNETZ 15 SUAREZ ANDERSON 16 MC CAMMACK 17 18 19 20 The foregoing resolution is hereby approved this 10TH ,2002. 21 22 23 Approved as 24 By: 25 -5- CDC/2002-3 FRAZEE COMMUNITY CENTER 2002 HOME -COMMUNITY HOUSING DEVELOPMENT ORGANIZATION (CHDO) LOAN AGREEMENT THIS FRAZEE COMMUNITY CENTER 2002 HOME - COMMUNITY HOUSING DEVELOPMENT ORGANIZATION (CHDO) LOAN AGREEMENT (the "Agreement") is dated as of January 7, 2002, by and between the Redevelopment Agency of the City of San Bernardino, a body corporate and politic (the "Agency"), and Frazee Community Center, a California non-profit corporation (the "Participant") and is entered into in light of the facts set forth in the following Recitals: RECITALS WHEREAS, the City of San Bernardino (the "City") is an entitlement City of San Bernardino who receives annual federal funds under the Home Investment Partnership Act ("HOME Program"), from the United States Department of Housing and Urban Development ("HUD") in order to carry out eligible activities of the City and the Agency in accordance with federal program regulations set forth in Title 24 Code of Federal Regulations Part 92; and WHEREAS, the City has designated and authorized the Agency to carry out the day to day administrative and implementation duties of the HOME Program; and WHEREAS, in accordance with the HOME Program requirements, not less than fifteen percent (15%) of HOME funds must be set aside for locally based non-profit entities known as community housing development organizations ("CHDO's") to carry affordable rental housing opportunities for low income households; WHEREAS, the Agency has designated the Participant as a CHDO, as this term is defined at 24 CFR Part 92.300, and the Participant desires to participate with the Agency in activities that are eligible under the HOME Program, and the Participant further agrees that the 1 SB2001:38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc CDC/2002-3 beneficiaries of its activities under the HOME Program and this Agreement, are or will be for the benefit of low and very low income families and persons who meet the income eligibility guidelines of24 CFR Part 92.216 and Part 92.217; and WHEREAS, the Agency deems it desirable to enter into this Agreement with Participant in order to provide for the acquisition and rehabilitation of a minimum of twelve (12) residential units pursuant to the general Scope of the Work, attached hereinto as Exhibit "A" and incorporated herein by this reference (the "HOME Project") as herein defined: Parcell consists of four (4) rental dwelling units: 951 North Crescent Avenue APN 0140-134-23; Parcel 2 consists of five (5) rental dwelling units 162 West Wabash Avenue APN 0146-163-31; Parcel 3 consist of three (3) rental dwelling units 1331 North Mountain View Avenue, APN 0146-193-24; and Parcell, Parcel 2, and Parcel 3, are collectively referred to herein as the "HOME Parcels" and each Parcel is more particularly described in the legal description attached hereto as Exhibit "B" and incorporated herein by this reference; and WHEREAS, concurrently upon the acquisition by Participant of each HOME Parcel, Participant shall execute and cause to be recorded as an affordable housing HOME Program Covenant which runs with the land against the title of such HOME Parcel a Regulatory Agreement, Property Use and Covenant ( the "HOME Regulatory Agreement"), substantially in the form as attached as Exhibit "c" to this Agreement and incorporated herein by this reference; WHEREAS, in additional consideration for the Agency's assistance to the Participant for the HOME Project under the Agreement, the Participant shall transfer and convey, free and clear SB2001 :38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 2 CDC/2002-3 from any encumbrances not approved by the Agency, as set forth herein, the properties located at: 2094 McKinley (APN #285-501-07); 2104 McKinley (APN #285-501-06); and 2141 Dumbarton (APN #288-551-17) (collectively, the "North Arden Guthrie Properties"). A legal description of the North Arden Guthrie Properties is attached as Exhibit "B-1". NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE AGENCY AND THE PARTICIPANT HEREBY AGREE AS FOLLOWS: General Covenants and Qualifications Section 1. The terms and provisions of the Recitals of this Agreement are material to its consideration and formation and are hereby incorporated into this Agreement. Participant has fully reviewed all of the requirements of a CHDO under the HOME Program and hereby certifies and warrants to the Agency that it is a CHDO and that the Participant has satisfied the qualifications and rights of a CHDO as set forth in 24 CFR Part 92.2. Participant hereby further warrants and covenants to the Agency that it has met the following requirements: 1.1 Legal Status. Participant is organized under State law, as evidenced by its articles of incorporation. No part of its net earnings inure to the benefit of any member, founder, contributor, or individual. Participant has a tax exemption ruling from the Internal Revenue Service (hereinafter referred to as the "IRS") under Section 501 (c) of the Internal Revenue Code of 1986, as evidenced by a certificate from the IRS. Also, Participant has among its purposes the provision of safe, decent and affordable housing that is affordable to low and moderate-income persons. 1.2 Capacity. The accounting books and records of the Participant conforms to the financial accountability standards of Attachment F of Office of Management and Budget SB2001:38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 3 CDC/2002-3 Circular A-IIO, as evidenced by a notarized statement by the organization's Certified Public Accountant. Participant is qualified to carry out activities assisted with HOME Program funds and specifically the HOME Project through the experience of key staff members each of whom Participant hereby certifies to the Agency to be experienced and knowledgeable regarding the HOME Program and the HOME Project. 1.3 Organizational Structure. The governmg board of directors of Participant contains at least 33 percent low-income representation. Participant provides a formal process for low-income program beneficiaries to advise the organization in all of its decisions regarding the design, siting, development, and management of all affordable housing projects through its by- laws and operating procedures approved by the governing board of directors. 1.4 Relationship with For-Profit Entities. Participant is not controlled nor receives directions from individuals or entities seeking profit from the organization. Participant is free to contract for goods and services from vendor(s) of its own choosing. 1.5 Maintenance of Warranties During Term of Loan. During the term of the Loan as described in Section 2 of this Agreement, the Participant shall maintain each of the foregoing covenants set forth in this Section 1. Section 2. Loan Amount and use of Loan Subject to the terms and conditions of this Agreement, the Agency shall Loan to Participant for the implementation of the HOME Project, a total amount of not to exceed Six Hundred Thousand Dollars ($600,000) in HOME Program 2000-2001 funds (the "Loan") subject to the provisions of the Promissory Note, (Exhibit "D") and the Deed of Trust, (Exhibit "E"). The Note contains provisions for the waiver and forgiveness of the repayment of principal to the Agency, subject to certain conditions and provided no default has occurred. No other source of SB2001:38430.1 P:IClerical Services DepllSlephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 4 CDC/2002-3 Agency or City funds are pledged or otherwise made available to the Participant for the HOME Project. The proceeds of the Loan shall be used and applied by the Participant to carry out the HOME Project as set forth in this Agreement. Specifically, the Loan shall be used for the following purposes: Phase I - up to Four Hundred Thirty-Four Thousand, Three Hundred and Fifty Dollars ($434,350) shall be used and applied by Participant to acquire and rehabilitate Parcell and Parcel 2 and to pay up to $9,000 of moving expenses for all twelve (12) families moving from the North Arden Guthrie Properties to Parcel 1, Parcel 2 and Parcel 3, as applicable; and Phase II - up to One Hundred Sixty Five Thousand, Six Hundred and Fifty Dollars ($165,650) shall be used and applied by Participant for acquisition and rehabilitation of future Parcel 3 to be identified by Participant by a date not later than January 31, 2003, as set forth below. The Loan shall be evidenced by three (3) separate promissory notes which shall each be the initial principal amount of: (i) Two Hundred Eighteen Thousand Six Hundred Dollars ($218,600) for Parcell, (ii) Two Hundred Fifteen Thousand Seven Hundred and Fifty Dollars ($215,750) for Parcel 2, and (iii) One Hundred Sixty Five Thousand Five Hundred Dollars ($165,500) for the future acquisition and rehabilitation of Parcel 3. The Loan shall be disbursed by the Agency to the Participant in multiple draws as set forth in this Agreement. J, During the term of the Loan, Participant shall own and shall have effective management control of the HOME Project and the HOME Parcels and the Participant shall comply with the provisions of 24 CFR 92.504. SB2001 :38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement.from LDBB Final.doc 5 CDC/2002-3 The Agency will submit the "Designation of Community Housing Development Organization", Form HUD-40098, to reserve funds for use by Participant promptly following the approval of this Agreement by the governing board of the Agency. The HOME Program funds for FY 2000 and 2001, which are set aside for use by Participant and which are not committed by or for Participant within 12 months following the approval of this Agreement, will be automatically returned to the HOME Line of Credit and shall not be available for disbursement to Participant thereafter, unless the parties mutually agree to an extension of time. The Loan shall be used by the Participant to cover the HOME Project costs and any costs in excess of the HOME Project costs shall be borne by the Participant. The Agency shall have the right, upon reasonable notice, to inspect and audit all books and records of Participant pertaining to the use of the Loan and payment of HOME Project costs. Section 3. Disbursement of Loan to Participant and Conditions Precedent to Disbursement. 3.1 Subject to the terms and conditions of this Agreement, the Participant hereby agrees to undertake the HOME Project pursuant to the terms of this Agreement. 3.2 The Participant shall acquire each of the HOME Parcels from the Agency as provided below. Concurrently with the approval of this Agreement by the governing board of the Agency, the Participant shall execute one or more real property transfer and escrow agreements substantially in the form attached hereto as Exhibit "F" to transfer fee title interest of each of the HOME Parcels to the Participant. In the case of Parcel 3, if such property is not under the ownership or control of the Agency at the time of designation or selection by the Participant as set forth in Section 5.1, the Participant shall enter into a purchase and sale SB200] :38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 6 CDCj2002-3 agreement with the owner thereof, in such form as mutually acceptable to such owner and the Participant. 3.3 Concurrently with the close of each of the escrows for the transfer of the HOME Parcels, the Agency shall disburse the Loan to Participant or on behalf of the Participant as follows: For Parcel No.1 $218,600, will be incrementally released at the close of the escrow for Parcel 1 to cover acquisition and escrow fees (presently estimated at $99,787.70) and to disburse the balance as rehabilitation construction progress payments during the course of the Scope of Work by the Participant's designated Contractor, as approved by the Agency, until completion of the Scope of Work for Parcel No. I and to pay moving expenses for four tenant households moving from the North Arden Guthrie Properties. Parcel No.2 $215,750, will be incrementally released at close of the escrow for Parcel 2 to cover acquisition and escrow fees (presently estimated at $101,250) and to disburse the balance as rehabilitation construction progress payments during the course of the Scope of Work by the Participant's designated Contractor, as approved by the Agency, until completion of the Scope of Work for Parcel No.2 and to pay for moving expenses for four tenants moving from the North Arden Guthrie Properties. Parcel No.3 SB200 1 :38430.1 P:\Clerical Services Dept\Stcphanie\Maggie's Work\Static copy of Frazee Loan Agreement-from LDBB Final.doc 7 CDC/2002-3 $165,650, will be incrementally released at close of the escrow to cover acquisition and escrow fees for the future acquisition of Parcel 3, and the balance, if any, may be disbursed by the Agency to pay for the cost of the Scope of Work related to Parcel 3 and to pay for moving expenses for four tenants moving from the North Arden Guthrie Properties. 3.4 The Agency shall disburse the Loan as provided In Section 3.3 when the Participant has satisfied the following conditions: (i) the Participant has provided the Agency with evidence of insurance coverage as required under this Agreement and each deed of trust related to the HOME Parcels; (ii) the applicable escrow referenced in Section 5 is otherwise in a condition to close; (iii) the Participant has executed the applicable form of the Home Regulatory Agreement, the Promissory Note and Deeds of Trust and Notice of Pending Transfer related to the HOME Parcel in favor of the Agency and has executed appropriate escrow instructions in favor of the Agency, in a satisfactory form to the Agency; (iv) in the case of a Loan draw for a progress payment for work of rehabilitation, the Participant has submitted a completed invoice to the Agency for work completed through the date of such invoice; and (v) the Participant has complied with each of the other provisions of this Agreement and is not otherwise in default hereunder. 3.5 The Participant has provided the Agency with evidence of free and clear title of the North Arden Guthrie Properties and Participant shall execute the appropriate grant deeds in SB200 I :38430.1 p:lelerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 8 CDC/2002-3 favor of the Agency for the North Arden Guthrie Properties as set forth in Section 5.3. It is agreed by the parties herein that said grant deeds in favor of the Agency shall be recorded upon the Participant's completion of the Scope of Work for the HOME Parcels and the successful move of all program occupants from the North Arden Guthrie Properties to Parcell, 2 or 3 Section 4. Loan Documents and Grant Deed Covenants 4.1 The Loan shall be evidenced by three (3) promissory notes (each a "Promissory Note") which shall each be secured by a deed of trust on each Parcel as follows: (i) Promissory Note secured by Deed of Trust on Parcel No.1, $218,600; (ii) Promissory Note secured by Deed of Trust on Parcel No.2, $215,750; (iii) Promissory Note secured by Deed of Trust on Parcel No.3, $165,650; 4.2 The general form of the Promissory Note is attached hereto as Exhibit "D". The date of each of the Promissory Notes shall be the date on which the close of each of the escrows for the HOME Parcels referenced in Section 5 occurs. The term of each Promissory Note shall be twenty-five (25) years from its date and each Promissory Note shall bear no interest prior to maturity provided no default exists under the Promissory Note or this Agreement. Provided that Participant is in full compliance with all of the terms and conditions of this Agreement, the principal amount of each Promissory Note shall be forgiven as follows: annually from the date of the Promissory Note, one twenty-fifth (1/25th) of the original principal balance shall be forgiven. The conditions imposed by the HOME Regulatory Agreement on such Parcel shall remain in effect until the term of the affordability expires. 4.3 Each of the Promissory Notes shall be secured by a deed of trust on the applicable Parcel substantially in the form as attached as Exhibit "E". SB2001 :38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 9 CDC/2002-3 4.4 Concurrently with the close of each escrow referenced in Section 5 and the disbursement of the Loan to Participant, the Participant shall execute and cause to be recorded in favor of the Agency a HOME Regulatory Agreement in substantially the form attached as Exhibit "C" for the applicable HOME Parcel. 4.5 Concurrently with the close of the first escrow for the transfer of ownership of the HOME Parcels to the Participant, the Participant shall execute and cause to be recorded a completed form of a Notice of Pending Transfer against each of the North Arden Guthrie Properties in the form attached hereto as Exhibit "G". Section 5. Close of Escrow and Completion of the HOME Project and Participants Grant of North Arden Guthrie Properties to the Agency. 5.1 The Participant shall acquire fee title interest in the Parcell and Parcel 2 by a date not later than March 1, 2002, or this Agreement shall have no further force or effect, unless an extension of time is agreed upon in writing by the parties to this Agreement. The Participant shall select and designate Parcel 3 to the Agency in writing by a date not later than January 31, 2003. Parcel 3 may be vacant multi-family residential property owned by the Agency or vacant multi-family residential property owned by third persons and situated within the territorial jurisdiction of the Agency; provided however, that the Agency shall have no obligation to make such a parcel available for purchase by Participant except from such inventory of property as the Agency may acquire in the regular course of administration of its affordable housing programs. The Participant shall close escrow on Parcel 3 not later than 60 days following the date of selection of Parcel 3. The Participant shall commence the Scope of Work, in accordance with the general scope of work in Exhibit "A" on the subject HOME Parcel promptly following the close of each of the escrows, and Participant shall cause the work of the HOME Project to be SB2001 :38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 10 CDC/2002-3 diligently completed within 120 days following the close of such escrow for each HOME Parcel. The Agency and Participant agree that the exact Scope of Work will be mutually agreed upon by the parties and that said Scope of Work shall be placed out to bid for construction and cost estimating purposes. At the sole discretion of the Participant, the Agency agrees to assist and act as the Participant's Project Administrator for purposes of insuring the Scope of Work is completed in accordance with the contract provisions. Participant agrees to enter into and execute a contract with the lowest responsible acceptable bidder no later than 20 days following submission of the bids. The Agency shall disburse the remaining balance of the Loan for rehabilitation work on Parcell, Parcel 2 and Parcel 3 in installments as progress payments for the rehabilitation work on the subject HOME Parcels as follows: (i) up to $119,600 for rehabilitation work on Parcell; and (ii) up to $114,500 for rehabilitation work on Parcel 2; and (iii) an amount to be determined for rehabilitation work depending upon acquisition cost payable by Participant for Parcel 3. The Agency shall pay the balance of the Loan for such rehabilitation costs within thirty (30) days following receipt of a completed written invoice therefor from Participant. Each such invoice shall be accompanied by mechanics lien releases in form acceptable to the Executive Director for the work performed through the date of such invoice. The Agency shall withhold a rttention of 10% of the amount invoiced and such retained amount shall be disbursed by the Agency to Participant promptly following completion of the HOME Project, as set forth in the next paragraph, and delivery to the Agency of final mechanics lien releases for each of the HOME Parcels. SB2001 :38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 11 CDC/2002-3 The Agency Executive Director, or his/her designee, may for good cause, grant the Participant up to sixty (60) days additional time in which to complete the HOME Project or a particular HOME Parcel. For the purposes of this Section 5, the words "complete the Project," refers to a condition of completed work of improvement and rehabilitation on each of the HOME Parcels whereby the City may issue a certificate of occupancy. 5.2 No later than twenty (20) days from the City's Issuance of a certificate of occupancy for a completed work of rehabilitation of a HOME Parcel, Participant shall promptly cause an appropriate number of its tenant households from the North Arden Guthrie Properties to move to the completed HOME Parcel and Participant shall provide moving expenses to each tenant as provided in Section 2 of this Agreement. Upon the vacation of each of the North Arden Guthrie Properties the Participant shall execute in favor of the Agency a Grant Deed as provided in Section 5.3. 5.3 Prior to the close of the initial escrow for the transfer of any HOME Parcel to Participant, the Participant shall instruct a title insurance company acceptable to the Agency to issue a current policy title report to the Agency for each of the North Arden Guthrie Properties. The Agency shall approve the condition of title in each as property as disclosed by such preliminary title report in its sole discretion. From and after the date of opening of the initial escrow for the transfer of any HOME Parcel to Participant, Participant hereby covenants and agrees not to further encumber any of the North Arden Guthrie Properties without the prior written consent of the Agency. Participant further covenants and agrees not to create any new residential tenancies in any of the North Arden Guthrie Properties from and after the date of opening of the initial escrow for the transfer of any of the HOME Parcels by the Agency to Participant. SB200 I :38430.1 P:IClerical Services OeptIStephanie\Maggie's WorklStatie eopy of Frazee Loan Agreement-from LOBB Final.doe 12 CDC/2002-3 For good and valuable consideration, the receipt of which is hereby acknowledged, the Participant hereby agrees to transfer for title interest in each of the North Arden Guthrie Properties to the Agency free and clear of all liens, encumbrances and occupancies, except as approved by the Agency in its discretion. Such transfer of the North Arden Guthrie Properties shall be made by grant deed in the form attached hereto as Exhibit "H". The Participant shall transfer each of the North Arden Guthrie Properties to the Agency within sixty (60) days following the completion of the HOME Project or by March 31, 2003, whichever date first occurs. Upon the recordation of the grant deed for each such North Arden Guthrie Property, the Agency agrees to cancel and discharge the remaining principal balance payable to the Agency for such property under the terms of the 1994 HOME Agreement by and between the Participant and the Agency. The Participant covenants and agrees to comply with all provisions of the 1994 HOME Agreement as relates to each of the North Arden Guthrie Properties until each of such properties is transferred to the Agency. Section 6. Occupancy of Units on the HOME Parcels 6.1 Participant shall ensure that each rental dwelling unit on the HOME Parcels (hereinafter referred to as the "Units") are designated and reserved for occupancy by eligible households as follows: (i) 4 Units: "HOME - Transitional Housing Units" shall be rented or reserved for occupancy by very low-income households. For the purposes of this Agreement, very low-income shall be defined as those households earning fifty percent (50%) of median income, or below; SB2001 :38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 13 CDC/2002-3 (ii) 8 Units: "HOME Low Income Units" shall be rented or reserved for occupancy by households earning (80%) eighty percent of the area median income or below subject to an initial occupancy income qualification set forth in (iii), below; (iii) At the time of initial occupancy (1 year period) of the eight (8) HOME Low Income Units each such Unit shall be rented or reserved for occupancy by households earning sixty percent (60%) of the area median income or below. The eligible household occupancy test of this subparagraph (iii) shall be applied only at the time of initial occupancy of the HOME Low Income Units. The eligible household occupancy tests of subparagraph (i) and (ii), above, shall be applied annually after the first anniversary of this Agreement for the remaining term of the Loan. 6.2 Participant shall ensure that each of the Units shall be available and remained to be available for occupancy by individuals or families who are income-eligible in accordance with the provisions of Section 6.1. Participant shall be responsible for interviewing and selecting occupants for each Unit, and shall file with the Agency the tenant eligibility certification in the form of Exhibit "I" ("Tenant Eligibility Certification Form") commencing on July I first following the initial occupancy of any of the Units and on each July I annually thereafter during the term of the Loan. 6.3 The Participant may charge rent for the occupancy of each Unit which is defined to be an affordable rent in accordance with the initial rent schedule for the Units attached hereto as Exhibit "J", (the "HOME Rent Schedule") and incorporated herein by this reference. The parties recognize that the HOME Rent Schedule is amended and provided by HUD annually. For any household, which at the time of an annual Tenant Eligibility Certification form, may no longer be an "eligible" household under Section 6.1 (ii), Participant may increase the rent payable SB200] :38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 14 CDC/2002-3 by such a household to the then applicable fair market rent for the Unit occupied by such household; provided, however, that upon the termination of occupancy of such Unit by the non- eligible household, such Unit shall be reserved for use and occupancy by an eligible household under Section 6.1 (i) or (ii), as applicable. Section 7. Management of Rental Housin!!: Units 7.1 Participant hereby agrees to be responsible for collecting all rents due and payable in connection with the occupancy of the Units and upon the collection of such rents, pay for all costs and expenses incurred in connection with the operation, occupancy and maintenance of the Units. 7.2 Promptly following the close of the escrows, Participant shall establish, and thereafter maintain, a capital replacement and reserve fund for the HOME Project with an initial fund balance of not less than $2,000. The funds deposited by Participant each year to such capital replacement and reserve fund shall be used and applied by the Participant to pay for the costs of capital replacement of improvement to the HOME Project, and for such extraordinary costs and expenses of the operation and maintenance of the HOME Project as may be approved in writing by the Agency. Such capital replacement and reserve fund shall be specifically identified in the books and financial accounting records of Participant as funds held in trust by Participant for the HOME Project. The cash balance of such capital replacement and reserve fund may be invested with other funds of the Participant until applied by the Participant to pay for capital replacement costs of the HOME Project. Each year during the term of this Agreement, Participant shall contribute additional funds to such capital replacement and reserve fund in an amount of at least one (1 %) of gross rents annually payable from the Units, or a mutually agreed upon percentage by both the Participant and the Agency. Participant shall SB200 I :38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 15 CDC/2002-3 provide the Agency with suitably detailed accounting records relating to the balance and use of the monies deposited into the capital replacement and reserve fund annually. Section 8. Affordability Period - HOME Regulatory Al!:reement The Participant shall insure that the Units remain affordable for a period of not less than (25) years from the date of recordation of the HOME Regulatory Agreement and in accordance with 24 CFR Part 92.252 ( the "Affordability Period"). A breach of the Affordability Period requirements (as set forth in Section 6.1) shall be deemed an event of default under the applicable Promissory Note and Deed of Trust which corresponds to the HOME Parcel on which such Unit is situated. Section 9. Uniform Administrative Requirements As a non-profit organization and a recipient of HOME Program funds, Participant certifies and warrants that it meets the requirements of OMB Circular No. A-122 and the following requirements of OMB circular No. A-II 0: Attachment B; Attachment F; Attachment H, Paragraph 2; and Attachment O. The Agency shall monitor the activities of Participant in order to ensure the continued compliance with these provisions and any other provisions applicable under the HOME Program. Section 10. General Project Requirements The parties hereby agree as follows: 10.1 Maximum Per-Unit Subsidy Amount. The amount of HOME Program funds that Participant may expend on a per-unit basis for the HOME Project shall not exceed the limits established by HUD. 10.2 Property Standards. The HOME Project upon completion shall, at a minimum, meet the property maintenance standards of the federal (Housing Authority) Section 8 Housing SB2001 :38430.1 P:lelerical Services DeptlStephanieIMaggie's WorklSta!ic copy of Frazee Loan Agreement-from LDBB Final.doc 16 CDC/2002-3 Quality Standards ("HQS") for the Term of the Affordability Period within the HOME Regulatory Agreement. Participant hereby agrees that the Agency or its designee shall be permitted regular access to the HOME Parcels in order to physically inspect the Units and ensure compliance with the terms of this Agreement. Such inspections shall occur at least annually, but not more frequently than once every calendar quarter. 10.3 Participants Cooperation in other City/Agency Redevelopment Projects/Activities: The Participant recognizes and acknowledges that the Agency and City are, from time to time, engaged in projects and program that are intended to revitalize, rejuvenate deteriorating neighborhoods that serve to foster economic development within the City of San Bernardino, and in this regard, Participant, agrees that should the Agency or City embark upon such a project, (i.e. Lakes & Stream, or commonly referred to as the 2020 Vision Project), that may necessitate the acquisition of the Participants properties acquired under this Agreement, Participant hereby agrees to facilitate or to cooperate with the City or the Agency to accomplish such objective. lOA Recertification of Occupancy and Rent Requirements Participant shall re-examine the income of each tenant household occupying the Units at least annually and shall provide documentation to the Agency to ensure continued compliance with the provisions of the HOME Regulatory Agreement. The monthly rent for a particular I Unit may be recalculated by Participant based upon increases (or decreases) in the household income of the household since the time of the previous recertification report to the Agency. Any increase in rent for a Unit shall be subject to the provisions of outstanding leases. Participant may increase rent for each Unit not more frequently than once per year and the Participant shall SB2001:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 17 CDC/2002-3 provide tenants of those Units where an increase of rent is proposed not less than thirty (30) days prior written notice before implementing an increase in rent. 10.5 Increases in Tenant Income. The Units shall qualify as affordable housing despite a temporary household income noncompliance by tenant occupants if the noncompliance is caused by increases in the incomes of existing tenants of Units following initial occupancy of a Unit by such tenant and if actions satisfactory to HUD and the Agency are being taken by Participant to ensure that all vacancies of Units occupancy after the time that non-compliance may occur under this Section 7 are rented to new households in accordance with Section 7 until the noncompliance is corrected. Tenants who no longer qualify as low-income households under Section 7 shall pay fair market rent for the Units which such tenant occupies as provided in Section 7. 10.6 Tenant Protection. (i) Lease. Except for the HOME Transitional Housing Units, the lease between each tenant and Participant for a Unit must be for not less than one year, unless by mutual agreement between the tenant and Participant, with the prior written approval of the Agency. The lease shall provide that the maximum occupancy of the Units shall be two persons for each bedroom plus one additional person for each unit. (ii) Prohibited Lease Terms. The lease may not contain any of the following provisions: (a) an agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of Participant in a lawsuit brought in connection with the lease. (b) an agreement by the tenant that Participant may take, hold, or sell personal property of household members without notice to the tenant and a court decision SB2001 :38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 18 CDC/2002-3 on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the Unit after the tenant has moved out of the Unit. Participant may dispose of this personal property in accordance with State of California law. (c) an agreement by the tenant not to hold Participant or Participant's agency legally responsible for any action or failure to act, whether intentional or negligent. (d) an agreement of the tenant that Participant may institute a lawsuit without notice to the tenant. (e) an agreement of the tenant that Participant may evict the tenant or household members without instituting a civil court proceeding 1ll which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties. (f) an agreement by the tenant to waive any right to a trial by jury. (g) an agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease. (h) an agreement by the tenant to pay attorneys' fees or other legal costs, even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. 10.7 Termination of Tenancy. Participant may not terminate the tenancy or refuse to renew the lease of a tenant for any Unit except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable federal, state, or local law, or for other good SB2001:38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 19 CDC/2002-3 cause. Any termination or refusal to renew must be preceded by not less than 30 days by Participant's service upon the tenant of a written notice specifying the grounds of the action. Section 11. Maintenance and Replacement Participant must maintain the HOME Project in compliance with all applicable housing quality standards and local code requirements, including, but not limited, to the San Bernardino Municipal Code. 11.1 Tenant Selection. Participant must adopt written tenant selection policies and criteria for the Units that: (i) are consistent with the purpose of providing housing for very low-income and low-income families; (ii) are reasonably related to HOME Program eligibility and the applicants' ability to perform the obligations of the lease; (iii) give reasonable consideration to the housing needs of families that would have a federal preference under section 960.211 of Title II of the Cranston-Gonzalez National Affordable Housing Act of 1992; and (iv) provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable, and the prompt written notification, to any rejected applicant setting forth the grounds for any rejection. (v) provide that a preference be given to residents or occupants of the City of San Bernardino with respect to the occupancy of the Units. 11.2 Compliance. Participant must carry out each activity III compliance with all Federal laws and regulations described in 24 CFR Part 92 and outlined hereinafter, except that Participant does not assume the Agency's responsibilities for environmental review in 24 CFR SB200\:38430.\ P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 20 CDC/2002-3 Part 92.352 or the intergovernmental review process in 24 CFR Part 92.359. These Federal laws and regulations must be complied with as follows: (i) Equal Opportunity. No person shall be excluded from participation in, be denied the benefits of or be subjected to discrimination under any program or activity funded in whole or in part with HOME funds. In addition, HOME funds must be made available in accordance with all laws and regulations listed in 24 CFR Part 92.350(a). (ii) Fair Housing. In accordance with the certification made with its housing strategy, each participating jurisdiction receiving HOME Program funds, must affirmatively further fair housing. Actions described in Section 570.904(c) of Title II of the Cranston-Gonzalez National Affordable Housing Act will satisfy this requirement. (iii) Affirmative Marketing. Participant must adopt affirmative marketing procedures and requirements for the Units. These must include: (a) Methods for informing the public; (b) Requirements and practices that Participant must adhere to in order to carry out the City of San Bernardino's affirmative marketing procedures and requirements; (c) Procedures used by Participant to inform and solicit applications from persons in the housing market area who are not likely to apply without special outreach; (d) Records that will be kept describing actions taken by Participant to affirmatively market units and records to assess the results of these actions; and SB2001:38430.1 P:IClerical Services DeptIStephanie\Maggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 21 CDC/2002-3 (e) A description of how Participant will assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative marketing requirements are not met. (iv) Displacement, Relocation and Acquisition. Consistent with the other goals and objectives of 24 CFR Part 92, and if applicable, Participant must ensure that it has taken all reasonable steps to minimize the displacement of persons as a result of the HOME Project, if applicable. 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 upon HOME Project completion. Participant agrees to minimize displacement in accordance with 24 CFR Part 92.353 and has agreed to provide moving assistance to those tenants moving from the North Arden Guthrie Properties to each of the HOME Parcels as provided for in this Agreement. Participant warrants and represents to the Agency that it shall offer each of its existing tenants in the North Arden Guthrie Properties occupancy in a comparably sized or larger Unit at a rental rate which is not greater than the amount of rent paid by such household at its present address in a North Arden Guthrie Property. No existing tenant of Participant in the North Arden Guthrie Property shall be required to vacate its North Arden Guthrie Property address (except for good cause) until such time as a Unit is ready for occupancy by such household. As of the date of this Agreement, all Units on the HOME Parcels are vacant. (v) Labor. If applicable, any contract executed by participant for the rehabilitation of affordable housing with 12 or more Units using HOME Program funds must contain a provision requiring that not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.c. 2761-5), will be paid to all laborers and mechanics employed in the development of affordable housing involved, and such 22 SB2001:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc CDC/2002-3 contacts must also be subject to overtime provisions, as applicable, of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-332). The Agency may require certification as to compliance with the provisions of 24 CFR Part 92.354 before making any payment under such contract. (vi) Lead-based Paint. It is understood that the rehabilitation, improvement and maintenance of the Units is subject to 24 CFR Part 35. (vii) Conflict of Interest. Participant shall comply with all requirements set forth regarding conflict of interest provisions as they apply in 24 CFR Part 92.356. (viii) Debarment and Suspension. As required in 24 CFR Part 92.357, Participant will comply with all debarment and suspension certifications. (ix) Flood Insurance. Under the Flood Disaster Protection Act of 1973, HOME Program funds may not be used with respect to the acquisition or rehabilitation of a project located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless: (A) The community in which the area is situated is participating in the National Flood Insurance Program, or less than a year has passed since FEMA notification regarding such hazards; and (B) Flood insurance is obtained as a condition of approval of the commitment. (C) The Agency is responsible for assuring that flood insurance under the National Flood Insurance Program is obtained and maintained. SB2001:38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 23 CDC/2002-3 Section 12. Scope of Work, Construction Contracts for the Project and Construction Disbursements: 12.1 Participant, in its sole discretion, shall be responsible for the selection of the contractors to undertake the Scope of Work. The Participant and Agency, however, agree that should the Participant desire, the Agency may act as the Project Administrator for the Project in order to facilitate the prompt completion of the HOME Project. 12.2 Participant may only request disbursement of funds for the Scope of Work in accordance with the Payment Schedule contained in the Construction Contract between the Participant and the lowest responsible selected Contractor. The amount of each construction disbursement or request will be limited to said upon Payment Schedule and must be approved by the Agency Executive Director, or his/her designee. Section 13. Records and Reports 13.1 The Agency will require that Participant maintain and supply the Agency upon written request the following records and reports for the affordability period in order to assist the Agency in meeting its record keeping and reporting requirements: (i) development and all funding documentation for the Project; (ii) property management and building maintenance reserves and related records; (iii) files on the annual review and certification of all applicable tenant income; (iv) terms and conditions of all signed leasehold agreements between tenants and Participant; and (v) any legal reports and records required by City Attorney's Office or the Agency, as requested. SB2001:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 24 CDC/2002-3 13.2 Program Agent, on behalf of the Agency, will review the Project annually during the Affordability Period for: (i) recertification of tenant income; (ii) review of rent and utility allowances; (iii) on-site inspections for compliance with Section 8 Housing Quality Standards; and (vi) review of Participant compliance with this written Agreement. Section 14. Indemnification The Participant shall indemnify and hold harmless the Agency and the City and the officials, officers, employees and agents of the City and the Agency from and against any and all claims or liability arising from Participant's actions under this Agreement or from the conduct of Participant's business or from any activity, work or things done, permitted or suffered by Participant and shall further indemnify and hold harmless the Agency and City and their officers, employees and agents from and against any and all claims arising from any breach or default in the performance of any obligation of Participant under the terms of this Agreement arising from any negligent or wrongful act or omission of the Participant or Participant's agents, contractors, employees or invitees and from and against all costs, attorneys' fees, expenses and liability incurred in the defense of any such claim or any action or proceeding brought thereon. Participant's agreement to indemnify and hold the Agency and City harmless shall extend to any claims or liabilities, including but not limited to claims pertaining to environmental conditions, alleged construction defects, or other matters, that may arise as a result of the Participant's acquisition and ownership of the HOME Parcels and the rehabilitation, improvement and occupancy of each Rental Unit thereon. SB200\:38430.\ P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 25 CDCj2002-3 Section 15. Breach and Termination. 15.1 Termination Without Default or Breach Prior to Transfer of Title in the HOME Parcels to the Participant. This Agreement may be terminated for the convenience of either party who is not then in default upon sixty (60) days notice provided that said parties have performed their respective obligations contained in this Agreement. 15.2 Defaults and Breach - General. Failure or delay by either party to perform any material term or provision of this Agreement shall constitute a default under this Agreement; provided however, that if the party who is otherwise claimed to be in default by the other party commences to cure, correct or remedy the alleged default within thirty (30) calendar days after receipt of written notice specifying such default and shall diligently complete such cure, correction or remedy, such party shall not be deemed to be in default hereunder. The party which may claim that a default has occurred shall give written notice of default to the party in default, specifying the alleged default. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default; provided, however, the injured party shall have no right to exercise any remedy for a default hereunder without delivering the written default notice as specified herein. Any failure to delay by a party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any rights or remedies associated with a default. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 8B2001:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 26 CDC/2002-3 In the event that a default of either party may remain uncured for more than thirty (30) calendar days following written notice, as provided above, a "breach" shall be deemed to have occurred. In the event of a breach, the party who is not in default shall be entitled to terminate this Agreement and seek any appropriate remedy or damages by initiating legal proceedings, if necessary. 15.3 In the event that either party brings an action to enforce any condition or covenant, representation or warranty arising out of this Agreement, the prevailing party in such action shall be entitled to recover from the other party reasonable attorneys' fees to be fixed by the court in which a judgment is entered, as well as the costs of such suit. For the purposes of this Section 15.3, the words "reasonable attorneys' fees" in the case of the Agency include the salaries, costs and overhead of lawyer's employed in the Office of the City Attorney of the City of San Bernardino, allocated on a hourly basis for the performance of any services rendered to the Agency under this Agreement. Section 16. Enforcement of this Agreement 16.1 The Agency shall have the right, by prior written notice to Participant, to enforce affordability and occupancy requirements. Should any such violation be brought to the attention of the Agency regarding the Project, the Agency shall have the right, by prior written notice to Participant, to suspend or terminate this Agreement and may avail itself of all remedies under this Agreement, the Promissory Note, the Deed of Trust and the Agency HOME Program Regulatory Agreement. 16.2 The Agency at its discretion may terminate this Agreement, in whole or in part, by giving Participant written notice in accordance with 24 CFR Part 85.44. SB200 1:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 27 CDC/2002-3 16.3 The Agency also reserves the right to reallocate HOME funds pnor to commitment of said funds to Participant. Section 17. Commercial General Liability Insurance and Workman's Compensation Insurance 17.1 The Participant shall obtain and keep in force during the term of this HOME Agreement a commercial general liability policy of insurance with coverage at least as broad as "Insurance Services Office Commercial General Liability Form (GOOO 1)," including but not limited to insurance against assumed contractual liability under this HOME Agreement protecting the city and the Agency and the officers, employees and agents of each of them, as additional insured against claims for bodily injury, personal injury and property loss or damage based upon, involving or arising out of the HOME Project. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than One Million Dollars ($1,000,000) in the event of bodily injury, personal injury and property loss or damage to any number of persons per occurrence. The policy shall not contain any intra-insured exclusions as between insured persons and organization, but shall include coverage for liability assumed under this HOME Agreement as an "insured contract" for the performance of the indemnity obligations of the Participant to the City and the Agency. The limits or exclusions from coverage of such insurance shall not however limit the liability of the Participant nor relieve the Participant of any other obligation under this Agreement. All insurance to be carried by the Participant shall be primary to and not contributing to any single insurance carried by the City or the Agency whose insurance shall be considered excess insurance only. 17.2 To the extent required by the law, the Participant shall carry and maintain workers' compensation or similar insurance in form and amounts required by law. Such a SB2001:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc 28 CDC/2002-3 program of worker's compensation insurance shall include coverage of all "volunteers" and "students" and "apprentices" of the Participant who perform any work on the Project. 17.3 All insurance which the Participant shall carry or maintain pursuant to this Section shall be in such form, for such amounts, for such periods of time as the Agency may require or approve and shall be issued by an insurance company or companies authorized to do business in California and which maintains during the term of the policy a "General Policy Holder's Rating" of at least A(v), as set forth in the most current edition of "Best's Insurance Guide". In no circumstance will the Participant be entitled to assign to any third party rights of action which the Participant may have against the Agency or the City. All policies or endorsements issued by the respective insurers for commercial general liability insurance will name the City and the Agency and the officers, employees and agents of each of them, as additional insureds and provide that: (i) any loss shall be notwithstanding any act or failure to act or negligence of the Participant or the Agency or any other person; (ii) no cancellation, reduction in amount, or material change in coverage thereof shall be effective until at least thirty (30) days after receipt by the Agency of written notice thereof; and (iii) the insurer shall have no right of subrogation against the City or the Agency or the officers, agents, or employees of either of them. 17.4 The Participant shall deliver or cause to be delivered to the Agency by not later than the time set forth in Section 2 an endorsement of its commercial general liability insurance policy evidencing the existence of the insurance coverage required by the Agency and shall also deliver, no later than thirty (30) days prior to the expiration of any such policy, a certificate of insurance evidencing each renewal policy covering the same risks. 29 SB2001:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc CDC/2002-3 Section 18. Maintenance of Each Parcel or the HOME Project. The Participant for itself, its successors and assigns hereby covenants and agrees that: 18.1 The areas of each HOME Parcel which are subject to public view (including all paving, walkways, landscaping, exterior signage and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. In the event that at any time following the date of recordation of the HOME Program Regulatory Agreement, there is an occurrence of an adverse condition on any area of a HOME Parcel which is subject to public view in contravention of the general maintenance standard described above, (a "Maintenance Deficiency"), then the Agency shall notify the Participant in writing of the Maintenance Deficiency and give the Participant thirty (30) days from receipt of such notice to cure the Maintenance Deficiency as identified in the notice. In the event the Participant fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the Agency may conduct a public hearing following transmittal of written notice thereof to the Participant ten (10) days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Participant has failed to comply with the provisions of this Section. If upon the conclusion of a public hearing, the Agency makes a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with the general maintenance standard described above, thereafter the Agency shall have the right to enter the applicable Parcel and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity which the Agency may then have to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the Agency for the abatement of a Maintenance Deficiency on a HOME Parcel authorized by this Section shall become a lien on that Parcel. If the amount of the lien is not paid within thirty (30) days after written demand for 30 SB2001:38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc CDC/2002-3 payment by the Agency to the Participant, the Agency shall have the right to enforce the lien in the manner as provided in subsection (c), below. 18.2 Graffiti, as this term is described in Government Code Section 38722, which has been applied to any exterior surface of a structure or improvement on a HOME Parcel which is visible from any public right-of-way adjacent or contiguous to such HOME Parcel, shall be removed by the Participant by either painting over the evidence of such vandalism with a paint which has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water as appropriate. In the event that such graffiti may become visible from an adjacent or contiguous public right-of-way but is not removed within 72 hours following the time of such application, the Agency shall have the right to enter the applicable HOME Parcel and remove the graffiti without notice to the Participant. Any sum expended by the Agency for the removal of such graffiti from the applicable HOME Parcel authorized by this Subsection (b) in an amount not to exceed $250.00 per entry by the Agency, shall become a lien on the applicable HOME Parcel. If the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency to the Participant, the Agency shall have the right to enforce its lien in the manner as provided in Subsection (c), below. 18.3 The parties hereto further mutually understand and agree that the rights conferred upon the Agency under this Section expressly include the power to establish and enforce a lien or other encumbrance against the affected HOME Parcel, in the manner provided under Civil Code Section 2924, for sums expended in upholding the maintenance standard required under subsection (a) or subsection (b), including salaries and wages of the legal staff of the Office of City Attorney and/or Agency Counsel as may be associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the Agency in 31 SB2001:38430.1 P:IClerical Services OeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LOBB Final.doc CDC/2002-3 connection with such action. The provisions of this Section 18, shall be a covenant running with the land and each HOME Parcel, and shall be enforceable by the Agency. Nothing in the foregoing provisions of this Section 18 shall be deemed to preclude the Participant from rehabilitating and operating the HOME Project on each HOME Parcel, provided that such construction and improvement of the HOME Project complies with the applicable zoning and building regulations of the City. Section 19. Notice. Any notice, demand, request, consent, approval or communication that either party desires or is required to give to the other party under this Agreement shall be in writing and shall be delivered to the appropriate party by personal service or U.S. Mail at its address as follows: Participant: Frazee Community Center 1140 West Mill Street San Bernardino, California 92410 Attn: Executive Director Agency: Economic Development Agency of the City of San Bernardino Attn: Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 Section 20. Submission of Documents to Agency for Approval. Whenever this Agreement requires Participant to submit any document to the Agency for approval, which shall be deemed approved if not acted on by the Agency within the specified time, said document shall be accompanied by a letter stating that it is being submitted and will be deemed approved unless rejected by the Agency within the stated time. If there is not a time specified herein for such Agency action, Participant may submit a letter requiring the Agency approval or rejection of documents within thirty (30) days after submission to the Agency or such documents shall be deemed approved. 32 SB2001:38430.1 P:IClerical Services OeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LOBB Final.doc CDC/2002-3 The terms, covenants, conditions and restriction of this Agreement shall extend to and shall be binding upon and inure to the benefit of the successors and assigns of Participant. Section 21. Miscellaneous. This Agreement is executed in three (3) duplicate originals, each of which is deemed to be an original. This Agreement includes referenced Exhibits "A" through "H", which together with this Agreement constitute the entire understanding and agreement of the parties. No private entity shall be deemed to be a third party beneficiary with respect to any provision of this Agreement. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements among the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. If any part or provision of this Agreement is in conflict or inconsistent with applicable provisions of federal, state, or city laws, or is otherwise held to be invalid or unenforceable by any court of competent jurisdiction, such part or provision shall be suspended and superseded by such applicable law or regulations, and the remainder of this Agreement shall not be affected thereby. All waivers of the provisions of this Agreement must be in writing by the Executive Director of the Agency, or his or her designee, and the Participant, and all amendments thereto must be in writing by the Executive Director of the Agency and the Participant, except that the Executive Director, or his/her designee, of the Agency may only agree to non-substantive, and technical changes hereto provided said changes do not increase the Agency's financial obligation under said Agreement, and with concurrence by Agency Counsel. Substantial changes to this Agreement shall require the prior approval of the governing board of the Agency. 33 SB2001:38430.1 P:IClerical Services DeptIStephanie\Maggie's Work\Static copy of Frazee Loan Agreement-from LDBB Final.doc CDc/2002-3 This Agreement, when executed by Participant and delivered to the Agency, must be authorized by the governing body of the Agency and executed and delivered on behalf of the Agency by its undersigned officers on or before thirty (30) days after signing and delivery of this Agreement by Participant, or this Agreement shall have no force or effect, except to the extent that Participant shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement. The date of this Agreement shall be the date when it shall have been signed by the Executive Director of the Agency evidence by the date shown next to the authorized signatures of the Agency, below. Section 22. Monitoring The Agency is responsible for managing the day-to-day operations of its HOME Program for monitoring the performance of all entities receiving HOME funds from the Agency to ensure compliance with the requirements of 24 CFR Part 92, and for taking appropriate action when performance problems arise. IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII 34 SB2001:38430.1 P:IClerical Services DeptlStephanielMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB Final.doc CDC/2002-3 IN WITNESS HEREOF, the Agency and Participant have executed this Agreement as of the date first hereinabove set forth. AGENCY Date I ( r v{ (. ~ Redevelopment Agency of the City of San Bernardino ByJnzY~ PARTICIPANT Frazee Community Center Date /-~f- 0"2-- By: /d~~ .au~ Title: Date By: Title: SB2001:38430.1 P:IClerical Services DeptlStephanieIMaggie's WorklStatic copy of Frazee Loan Agreement-from LDBB FinaJ.doc 35 CDC/2002-3 Exhibit "An Scope of Work General Scope of Work The rehabilitation work of the structure include, but not limited to, landscaping, fencing, remove, repair or replace doors, windows and screens with accessories, paint interior and exterior of buildings, repair or replace plumbing and electrical systems, repair or replace the roof, repair flooring, cabinets, and other code deficiencies. Note: Specific activities will be identified prior to Project Bid with mutual conselll of Agency and Participalll. 1. CDC/2002-3 EXHIBIT "B" Legal Description PARCELl 951 North Crescent Avenue- APN: 0140-134-23 The portion of Lots 1 and 2, Block 71, of the City of San Bernardino, County of San Bernardino, State of California, as per Map recorded in Book 7 of Maps, Page 1, in the Office of the County Recorder of said County, described as follows: Beginning at the intersection of the North line of said Lot 2 with the East line of Crescent Avenue, (formerly Myers Street), in said Block; thence South along the East line of said Crescent Avenue, 112.5 feet to a point midway between the North and South lines of the South one-half of the North one-half of said Lots 1 and 2, thence East 137.5 feet; thence North 112.5 feet to the North line of said Lot 1; thence West 137.5 feet to the point of beginning. PARCEL II 162 Wabash Street- APN: 0146-163-31 Lot 37 ad 38, Block 59 of Tract 1766 as per Plat recorded in Book 85 of Maps, Pages 73 and 74, Records of said County. PARCEL III 1331 North Mountain View Avenue- APN: 0146-193-24 The South 50 feet of the Northerly 100 feet of portion of Lot 5, Block 33 of Rancho San Bernardino, in the City of SAN BERNARDINO, County of SAN BERNARDINO, State of California, as per map recorded in Book 7, page(s) 2, of Maps, in the office of the County Recorder of said County, described as follows: Beginning at a point 41.25 feet East and 17.78 feet North of the Southwest corner of Lot 5, being the Northeast corner of 13th Street and "B" Street (now Mountain View); Thence North 308.97 feet along the East line ofB Street to the South line ofa 60 foot street; Thence East parallel to the South line of said Lot 5, 119.9 feet to an Iron pipe; Thence South parallel with the East line ofB Street, 308.97 feet to the North line of 13th Street; Thence West along the North line of 13th Street, 119.9 feet to the Point of Beginning. P:IClerical Services DeptlStephanieIMusi's WorklFrazee Loan Agreemment.doc CDCj2002-3 Exhibit "B-1 " Legal Description for the North Arden Guthrie Properties 2104 McKinely Avenue APN 258-501-06 Lot 49 of tract 6898, in the City of San Bernardino, County of San Bernardino, as shown by Map on file in Book 88, Pages 34 and 35, of Maps, Records of said County. 2094 McKinely Avenue APN 285-501-07 Lot 50 of tract 6898, in the City of San Bernardino, County of San Bernardino, as shown by Map on file in Book 88, Pages 34 and 35, of Maps, Records of said County. 2141 Dumbarton Avenue APN 288-551-17 Lot 11 of tract 7106, in the City of San Bernardino, County of San Bernardino, as plat recorded in Book 90, Pages 61 and 62, of Maps, Records of said County. CDC/2002-3 Exhibit "I" Tenant Eligibility Certification Form <. 1. CDC/2002-3 EXHIBIT "I" CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY HOME CERTIFICATION/ANNUAL RECERTIFICATION OF TENANT ELIGIBILITY Bedroom Size: Unit No.: Zip Code: Rental Unit: Street Address: City: IlWe, the undersigned, being first duly sworn, state that I/we have read and answered fully and truthfully each of the following questions for all persons who are to occupy the unit in the above apartment development for which application is made, all of whom are listed below: HOUSEHOLD Age Ethnicity Social Security # Place of Employment Name of Members Relationship Date of Occupancy of Rental Unit by Tenant: Date of Lease Signed for Rental Unit by Tenant: Certification Date (Earlier of Date of Occupancy or Date Lease Signed): Anticipated Annual Income The anticipated total annual income from all sources of each person listed in above for the twelve month period beginning on the Certification Date listed above, including income described in (a) below, but excluding all income described in (b) below, is $ (a) The amount set forth above includes all of the following income (unless such income is described in (b) below): 1-1 P:\CIcncal Services DcptlStcphanieIMusi's WorklHOME Recertification-Exhibit H.doc CDC/2002-3 (i) all wages and salaries, overtime pay, commissions, fees, tips and bonuses before payroll deductions; (ii) net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets); (iii) interest and dividends (including income from assets as set forth in item (b) below); (iv) full amount of periodic payments received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic reports; (v) payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; (vi) the maximum amount of public assistance available to the above persons; (vii) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (viii) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (ix) any earned income tax credit to the extent it exceeds income tax liability. (b) The following income is excluded from the amount set forth above: (i) casual, sporadic or irregular gifts; (ii) amounts that are specifically for or in reimbursement of medical expenses; (iii) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; .. (iv) amounts of educational scholarships paid directly to student or educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment, but in either case only to the extent used for such purposes; 1-2 P;\CIeric:a1 Services DeptlStephanieIMusi's WorklHOME Recertification-Exhibit H,doc CDC/2002-3 (v) hazardous duty pay to a member of the household in the armed forces who is away from home and exposed to hostile fire; (vi) relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; (vii) income from employment of children (including foster children) under the age of 18 years; (viii) foster child care payments; (ix) the value of coupon allotments under the Food Stamp Act of 1977; (x) payments to volunteers under the Domestic Volunteer Service Act of 1973; (xi) payments received under the Alaska Native Claims Settlement Act; (xii) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; . (xiii) payments on allowances made under the Department of Health and Human Services' Low-Income Home Energy Assistance Program; and (xiv) payments received from the Job Partnership Training Act Net Family Assets If any of the persons described in Members of the Household (or any person whose income or contributions were included in Anticipated Annual Income has any savings, stocks, bonds, equity in real property or other form of capital investment (excluding interest in Indian trust lands), provide: (a) the total value of all such assets owned by all such persons: $ , and (b) the amount of income expected to be derived from such assets in the 12-month period commencing this date: $ Students (a) Will all of the persons listed in Members of Household above be or have they been fulltime students during five calendar months of this calendar year at an educational institution (other than a correspondence school) with regular faculty and students? 0 Yes 0 No 1-3 P;\CIcrical Services DeptlStephanieIMusi's Wori<\HOME Recertification-Exhibit H,doc CDC/2002-3 (b) If yes, is any such person (other than non-resident aliens) married and eligible to file a joint federal income tax return? 0 Yes 0 No The above information is full, true and complete to the best of my knowledge. I have no objections to inquiries being made for the purpose of verifying the statements made herein. I acknowledge that all of the above information is relevant to the status under federal law of the HOME funds used in the acquisition and rehabilitation of the Project for which application is being made. I consent to the disclosure of such information to the Economic Development Agency of the City of San Bernardino, County, State and Federal Department of Housing and Urban Development or agent acting on their behalf and any authorized agent of the Treasury Department or Internal Revenue Service. Date: Signature: (Signature Must be Notarized) 1-4 P:\C1erical Services DcptlStephanieIMusi'. WorklllOME Recertification.Exhibit H.cIoc CDC/2002-3 FOR COMPLETION BY NEIGHBORHOOD HOUSING SERVICES OF THE INLAND EMPIRE, INC., ONLY: A. Calculation of Eligible Income (1) Enter amount entered for entire household in Anticipated Annual Income: $ (2) If the amount entered in (a) of Net Family Assets above is greater than $5,000, enter: (i) the product of the amount entered in (a) of Net Family Assets above multiplied by the current passbook savings rate as determined by HUD: $ (ii) the amount entered in (b) of Net Family Assets above: $ (iii) enter the greater of line (i) or line (ii): $ (3) TOTAL ELIGIBLE INCOME (Line A (1) plus line A (2) (iii): $ B. Enter Number of family members listed in item 1 above: C. The amount entered in A (3) (Total Eligible Income) is: $ o Less than $ of median income for the area in which the Project is located, which is the maximum income at which a household may be determined to be a Qualifying Tenant as that term is defined in the Grant Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") ("Qualifying Tenant"). o More than the above mentioned amount. D. Number of apartment units assigned: E. Monthly Rent: $ F.! This apartment unit (was/was not) last occupied for a period of 31 consecutive days by a person or persons whose adjusted income, as certified in the above manner, was equal to or less than the amount at which a person would have qualified as a Qualifying Tenant under the terms of the Regulatory Agreement. 1-5 P:\C1erical Services DepllSlephanielMusi'. Worl<\HOME Rec:ertificalion-Exhibil H.doc CDC/2002-3 G. Applicant: o Qualifies as a Qualifying Tenant, household income is at or below 50% of the area median income o Qualifies as a Qualifying Tenant, household income is at or below 60% of the area median income o Qualifies as a Qualifying Tenant, household income is at or below 80% of the area median income o Does Not Qualify as a Qualifying Tenant .. 1. 1-6 P:1Clcrical Services Dcpt\Stephanic\Musi'. 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