HomeMy WebLinkAboutR30-Economic Development Agency CITY OF SAN BERNARDINO ORIGINAL
ECONOMIC DEVELOPMENT AGENCY
i
FROM: Maggie Pacheco i SUBJECT: Public Hearing - 2006 HOME Funds
Executive Director Development Agreement for development
of four (4) single-family in-fill homes —
Arroyo Valley Community Economic
DATE: September 11,2006 Development Corporation (Arroyo), a non-
profit corporation
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Svnopsis of Previous Commission/Council/Committee Action(s):
On August 8, 2006, Redevelopment Committee Members Estrada, Baxter and Johnson unanimously voted to
recommend that the Community Development Commission consider this action for approval subject to Agency Staff
resolving ownership of the four(4)Agency Lots.
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Recommended Motion(;):
Open/Close Public Hearing
(Mayor and Common Council
A: Resolution of the Mayor and Common Council of the City of San Bernardino approving an Amendment to the
2005/2010 Consolidated Plan and the 2006/2007 Annual Plan and consenting to the disposition of certain
property located on 16th and Harris Street (APN: 0144-131-21) and 17th and"J" Streets (APN: 0144-131-36,
0144-123-03 and 46), City of San Bernar ino, by the Redevelopment Agency of the City of San Bernardino
("Agency") pursuant to the terms of the 2006 HOME Funds Development Agreement, by and between the
Agency and, Arroyo Valley Community Economic Development Corporation ("Arroyo") and Inland Empire
Concerned African American Churches("Churches")(collectively referred to as"Developer")—Inland Valley
Development Agency(IVDA)Redevelopment Project Area
(CommOnity Development Commission
B: Resolution of the Community Develop ent Commission of the City of San Bernardino approving the
disposition of certain property located on 160"and Harris Streets (APN: 0144-131-21)and 17th and"J" Streets
(APN: 0144-131-36,0144-123-03 and 46), City of San Bernardino,by the Redevelopment Agency of the City
of San Bernardino ("Agency") and authorizing the Executive Director of the Agency to execute the 2006
HOME Funds Development Agreement, by and between the Agency and, Arroyo Valley Community
Economic Development Corporation ("A oyo") and Inland Empire Concerned African American Churches
("Churches") (collectively referred to as "Developer") - Inland Valley Development Agency (IVDA)
-------------------Re-development-Project-Area-----------------------------------------------------------------------------------------------------------------------------------------
Contact Person(s): Maggie Pacheco Phone: (909)663-1044
Project Area(s): IVDA Redevelopment Pro' ct Area Ward(s): Sixth
Supporting Data Attached: 0 Staff Report Z Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) ❑ Letters
FUNDING REQUIREMENTS: Amount: $ 415,000 Source: Federal HOME Funds
Budget Authority: 2006/07 EDA Budget
SIGNATURE:
__N)T(aggie7Pach4o,Executi a Director B Services Director
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qr -------------------------------------------
Commission/Council Notes: - ��A -O 3
46
C
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P:\Agendas\Comm Dev Commission\CDC 2006\09-18-06 Arroyo Valley Economic Development Corporation.doc COMMISSION MEETING AGENDA
Meeting Date: 1o11&10&
Agenda Item Number: !
ECONOMIC DEVELOPMENT AGENCY
ST FF REPORT
PUBLIC HEARING - 2006 HOME FUNDS DEVELOPMENT AGREEMENT FOR
DEVELOPMENT OF FOUR (4) SINGLE-FAMILY IN-FILL HOMES—ARROYO VALLEY
COMMUNITY ECONOMIC DEVELOPMENT CORPORATION (ARROYO),
A NON-PR FIT CORPORATION
BACKGROUND/CURRENT ISSUE:
The Inland Empire Concerned African American Churches, a California public benefit corporation (the
"Churches"), located at 1583 West Union S reet, San Bernardino, is a 501 (c)(3) corporation with a
variety of objectives including, but not limi ed to (i) providing education, training, employment and
economic development to the community a d (ii) serving as a focal point and support vehicle for
residents by providing technical support a d other related expertise through seminars, forums and
programs. The ChurchO has requested that the Agency donate four (4) Agency Lots located in the 6th
Ward on 16th and Harris Streets (APN: 0144-131-21) and 17th and "J" Streets (APN: 0144-131-36,
0144-123-03 and 46) to assist them in fulfilling one of their community objectives (See the attached
map). On July 18, 2005, the Community Development Commission ("Commission") approved the
donation of the four (4) Agency Lots to the Churches to construct four (4) new in-fill single-family
homes for the benefit of low-income homebu ers.
On May 5, 2005, the Churches entered into a Development Agreement with Arroyo Valley
Community Economic Development Corpor tion ("Arroyo"), retained for a fee, to construct the four
(4) new homes on Agency Lots ("Project"). The principal of Arroyo has the background, experience
and financial resources needed for the Project and have developed other in-fill single-family homes in
and around the City of San Bernardino. Arroyo is a 501 (c)(3) corporation. Since the execution of the
Development Agreement between the Churches and Arroyo, Arroyo has secured the required
construction financing from Arrowhead Federal Credit Union for $878,000 of the total Project cost of
$1,051,000. Arroyo will be responsible for the repayment of the construction loan and bear all the
risks associated with the construction loan.
Staff has certified Arroyo as a Community Housing Development Organization (CHDO) as per federal
HOME Partnership Act requirements under 24 CFR 92.300. Arroyo is eligible to receive HOME
funding under the fifteen percent (15%) CHDO requirement and the five percent (5%) building
capacity category as approved in the 2005/2010 Five-Year Consolidated Plan and 2006/2007 Annual
Action Plan. Under federal HOME regulation 24 CFR 92.300 and 301, the Agency may allocate
HOME Funds to eligible CHDOs such as, Arroyo for approved projects.
On August 8, 2006, the Redevelopment Committee approved the proposed Agreement between the
Agency, the Churches and Arroyo, subject t Staff's requested meeting with Arroyo and the Churches
representatives to resolve ownership of th� Agency Lots. On August 10, 2006, Staff met with
representatives of the Churches and Arroyo �o discuss the matter and both parties agreed to take joint
ownership of the Agency Lots.
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P:\Agendas\Comm Dev Commission\CDC 2006\09-18-06 Arroyo Valley Economic Deve opment Corporation.doc COMMISSION MEETING AGENDA
Meeting Date:
Agenda Item Number:
Economic Development Agency Staff Report
Arroyo Valley Economic Development Corporation -DDA
Page 2
Consequently, Staff proposes to enter into an Agreement with Arroyo and Churches, which will
contain the following salient points:
• The Agency will transfer four(4) lots to Arroyo and Churches at no cost;
• The Churches and Arroyo have entered into a Development Agreement dated March 3, 2006 for
the development of four (4) in-fill single-family homes of approximately 1,300 square feet with
three (3) bedrooms, two (2) bathrooms and a two (2) car garage that will be developed in
compliance with the City's zoning and development standards as approved by the Development
Services Department;
• The homes will be marketed and sold by both the Churches and Arroyo to eligible low-income
homebuyers with incomes not exceeding eighty percent (80%) of the County median income under
the terms of a marketing agreement;
• The Agency will provide a construction gap grant of$175,000 from HOME CHDO Funds for pre-
development costs for architect, engineering, permit fees, etc. to Arroyo which will be disbursed
for predevelopment costs or during the course of construction, upon presentation to the Agency of
third party invoices; These monies will be combined to Arroyo's construction loan of$878,000 to
make up the total construction funds needed to construct the four(4) homes;
• At the completion of the Project and the sale of all four (4) homes, Arroyo will reinvest $175,000
from the sales proceeds on the acquisition of at least two (2) affordable sites (the purchase of
vacant land or existing housing units);
• The Agency will provide up to $240,000 in HOME Funds for downpayment assistance to eligible
low-income buyers. Each homebuyer will be required to sign a 45-year Covenant (CC&R)
ensuring occupancy and maintenance of the new home;
• If there are any profits remaining after the construction loan repayment, the funds will be used for
additional downpayment assistance for the homebuyers and the balance be split 50/50 by the
Churches and Arroyo. If there is no profit realized from the sale of the homes, the Developer is
responsible for providing additional downpayment funds needed by the homebuyer to complete the
sale through financing pre-arranged by the Developer.
Prior to the approval of the Agreement, an amendment to the City's 2005/2010 Consolidated Plan and
2006/2007 Annual Action Plan are required to allocate $175,000 in Federal HOME CHDO Funds to
Arroyo and the preparation and approval of the Summary Report for the disposition of Agency Lots at
this joint public hearing in compliance with the California Redevelopment Law and City approved
Citizen's Participation Plan.
PAAgcndas\Comm Dev Commission\CDC 2006\09-18-06 Arroyo Valley Economic Development Corporation.doc COMMISSION MEETING AGENDA
Meeting Date:
Agenda Item Number:
Economic Development Agency Staff Report
Arroyo Valley Economic Development Corporation -DDA
Page 3
ENVIRONMENTAL IMPACT:
This request is exempt under the National Environmental Policy Act (NEPA) pursuant to 24 CFR
58.35(a) and California Environmental Quality Act (CEQA), pursuant to § 15332, Class 32, which
consists of projects characterized as in-fill development meeting the following conditions: (a) the
Project is consistent with the applicable general plan, applicable zoning designation and regulations;
(b) the proposed Project occurs within city limits and is not more than five (5) acres; (c) the Project site
has no value as habitat for endangered, rare or threatened species; (d) the Project would not result in
any significant effects relating to traffic, noise, air quality, or water quality; and (e) the Project is
adequately served by all required utilities and public services.
FISCAL IMPACT:
The $415,000 in Federal HOME Funds are available and budgeted in the 2006-2007 EDA budget.
RECOMMENDATION:
That the Mayor and Common Council and the Community Development Commission adopt the
attached Resolutions.
i
Maggie Pac eco, Executive Director
P:\Agendas\Comm Dev Commission\CDC 2006\09-18-06 Arroyo Valley Economic Development Corporation.doc COMMISSION MEETING AGENDA
Meeting Date:
Agenda Item Number:
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SUMMARY REPORT PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 OF
THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW — REGARDING THE
DEVELOPMENT AND DISPOSITION OF AGENCY PROPERTY AT 16TH AND HARRIS
STREETS, (APN: 0144-131-21) AND 17TH AND "J" STREETS (APN: 0144-131-36, 0144-123-03
AND 46) PURSUANT TO THE TERMS OF THE 2006 HOME FUNDS DEVELOPMENT
AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY AND ARROYO
VALLEY ECONOMIC DEVELOPMENT CORPORATION, A NON-PROFIT
CORPORATION AND THE INLAND EMPIRE CONCERNED AFRICAN AMERICAN
CHURCHES,A NON-PROFIT CORPORATION
INTRODUCTION
This Summary Report (the "Report") has been prepared by the Redevelopment Agency of the City of
San Bernardino (the "Agency") in accordance with Health and Safety Code Section 33433. This
Report sets forth certain details of the 2006 Home Funds Development Agreement ("Agreement") by
and between Arroyo Valley Economic Development Corporation, a non-profit corporation, ("Arroyo')
and the Inland Empire Concerned African American Churches, a non-profit corporation ("Churches")
(collectively referred to as "Developer") and the Agency. The Agreement provides for the transfer of
certain Agency Property lands to the Developer for development as new single-family dwellings
located at 16th and Harris Streets (APN: 0144-131-21) and 17th and "J" Streets (APN: 0144-131-36,
0144-123-03 and 46) (the "Properties"). The new housing development project, which may be
undertaken by the Developer, is referred to in the Agreement as the "Project". This report is prepared
for the transfer of the Properties.
This Summary Report is organized into the following six (6) sections:
I. Salient Points of the Proposed Agreement: This section includes a description of the major
responsibilities to be assumed by the Agency and the Developer.
II. Cost of the Agreement to the Agency: This section outlines the proposed Agreement costs to
the Agency.
III. Estimated Value of the Interests to be Conveyed Determined at the Highest and Best Use
Permitted Under the Redevelopment Plan: This section summarizes the value of Agency
Lots to be conveyed by the Agreement to the Developer at the highest use permitted.
IV. Estimated Reuse Value of the Interests Determined at the Required Use and with the
Conditions, Covenants and Development Costs Required by the Proposed Agreement:
This section summarizes the sale price to be paid to the Agency. The sales price is not less than
the fair market value of the interest to be sold, determined at the highest and best use consistent
with the redevelopment plan.
V. Blight Alleviation: This section describes the existing blighting conditions in and around the
Project Area, and an explanation of how the proposed sale and development of the Agency Lots
will assist in alleviating the blighting conditions.
4814-7311-6672.1 1
P:Wgendas\Agenda Attachments\Summary Reports\2006\09-18-06 Arroyo Valley Economic Development Corporation Summary Report.doe
VI. Conformance with the AB 1290 Implementation Plan: This section identifies how the
proposed Agreement will result in a development activity that fulfills goals and objectives
established in the Agency's AB 1290 Five-Year Implementation Plan.
I. SALIENT POINTS OF THE AGREEMENT
A. Description of the proposed Project
• The purpose of the Agreement is to facilitate the development of four (4) single-
family homes at 16th and Harris Streets (APN: 0144-131-21) and 17th and"J" Streets
(APN: 0144-131-36, 0144-123-03 and 46) (the "Agency Lots") in the Inland Valley
Development Agency (IVDA) Redevelopment Project Area. If needed, all
necessary infrastructure improvements such as electricity, sewer, gutter, landscaping
will be provided by the Developer.
B. Agency Responsibilities
• Execute and implement the Agreement with the Developer, for the transfer and
development of four (4) single-family homes on Agency Lots per the terms of the
Agreement.
• Provide up to $240,000 of Federal HOME funds in downpayment assistance to the
Developer's eligible low-income households.
C. Developer Responsibilities
• Execute and implement the Agreement with the Agency and agree to accept Agency
Lots and develop four (4) single-family homes per the Agreement, sell the homes to
low-income households and secure the construction/permanent financing required to
develop the Agency Lots.
• Complete the construction and sale of the four (4) new homes per the Schedule of
Performance in the Agreement.
IL COST OF THE PROJECT AND THE AGREEMENT TO THE AGENCY
The Agency expended an estimated $36,350 for the acquisition and closing costs related to the
four(4) Agency Lots from unrestricted Agency funds.
III. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED BY THE AGENCY
DETERMINED AT THE HIGHEST AND BEST USES PERMITTED UNDER THE
REDEVELOPMENT PLAN:
The value of the interest to be conveyed based upon comparable sales of similar lots in the area
over the past six (6) months approximately $75,000 per Agency Lot. This value is considered
to be the highest and best use for the four (4) Agency Lots permitted as single-family
residential under the IVDA Redevelopment Project Area Plan.
4814-7311-6672.1 2
P:\Agendas\Agenda Attachments\Summary Reports\2006\09-18-06 Arroyo Valley Economic Development Corporation Summary Report.doc
IV. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED BASED ON THE
REQUIRED REUSE AND WITH THE CONDITIONS, COVENANTS AND
RESTRICTIONS REQUIRED:
The estimated fair market value of the interest to be conveyed to the Developer is $300,000 for
all four (4) Agency Lots. The transfer of Agency Lots is necessary to implement the
Redevelopment Plan for the IVDA Redevelopment Project Area and to provide homes for low-
income households. In conclusion, the interest to be conveyed to the Developer has been
determined to be the highest and best use (single-family residential) permitted under the IVDA
Redevelopment Plan and holds true for the reuse value.
V. BLIGHT ALLEVIATION:
The development of Agency Lots will eliminate existing blight, foster the reuse of under
utilized property into new single-family homes for the benefit of the residents of IVDA
Redevelopment Project Area and the City, increase property values and place Agency Lots
back on the tax rolls.
VI. CONFORMANCE WITH THE AB 1290 IMPLEMENTATION PLAN:
The Five-Year Implementation Plan adopted by the IVDA contains several broad operational
goals and objectives for the IVDA Redevelopment Project Area. Among these are the
following:
• Eliminate blighting influences, including, deteriorating buildings, uneconomic
land uses, obsolete structures, and other environmental, economic, and social
deficiencies.
• To re-plan, redesign, and develop underdeveloped areas that are stagnant or
improperly utilized.
• To provide housing opportunities.
The Agreement will assist the Agency in meeting the objectives and goals of the IVDA's Five-Year
Implementation Plan for the IVDA Redevelopment Project Area and the Agency's Housing
Implementation Plan in the following way:
The execution of the Agreement with the Developer will continue redevelopment activities of the
Agency by providing low-income housing within a designated redevelopment project area. The
interest and land conveyed to the Developer will be developed in conformance with the City's General
Plan and Housing Element, Municipal Development Code, and Agency's AB 1290 Housing
Implementation Plan.
4814-7311-6672.1 3
P:\Agendas\Agenda Attachments\Summary Repotts\2006\09-18-06 Arroyo Valley Economic Development Corporation Summary Report.doc
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C (DPY
I RESOLUTION NO.
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
3 OF SAN BERNARDINO APPR VING AN AMENDMENT TO THE 2005/2010
CONSOLIDATED PLAN A D THE 2006/2007 ANNUAL PLAN AND
4 CONSENTING TO THE DISPOSITION OF CERTAIN PROPERTY
LOCATED ON 16TH AND HARRIS STREETS (APN: 0144-131-21) AND 17TH
5 AND "J" STREETS (APN: 014 -131-36, 0144-123-03 AND 46), CITY OF SAN
6 BERNARDINO, BY THE REDEVELOPMENT AGENCY OF THE CITY OF
SAN BERNARDINO ("AGENCY") PURSUANT TO THE TERMS OF THE
7 2006 HOME FUNDS DEVELOPMENT AGREEMENT, BY AND BETWEEN
THE AGENCY AND, ARR YO VALLEY COMMUNITY ECONOMIC
8 DEVELOPMENT CORPORATION ("ARROYO") AND INLAND EMPIRE
CONCERNED AFRICAN AMERICAN CHURCHES ("CHURCHES")
9 (COLLECTIVELY REFERRED TO AS "DEVELOPER") — INLAND VALLEY
10 DEVELOPMENT AGENCY (I V DA) REDEVELOPMENT PROJECT AREA
11 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a
12 public body corporate and politic, exerci ing governmental functions and powers and organized
13 and existing under Chapter 2 of the Community Redevelopment Law of the State of California
14 (Health and Safety Code Section 33020, a seq.); and
15 WHEREAS, the City of San Bernardino is an entitlement city and eligible to participate in
16 the United States Department of Housing and Urban Development's (HUD) Community
17 Development Block Grant (CDBG), HOME and Emergency Shelter Grant (ESG) Programs and
18 has prepared and approved the 2005/2010 Consolidated Plan and Program Year 2006-2007
19 Annual Action plan; and
20 WHEREAS, the City of San Bernardino has designated the Agency to implement the
21 requirements and obligations of Federal programs in the City; and
22 WHEREAS, the Agency, in compliance with the Citizen Participation Plan and 24 CFR
23 570.302 and 24 CFR 91.105 has published in the San Bernardino County Sun newspaper on
24 August 18 and September 11, 2006 the required Public Notice amending the 2005/2010
25 Consolidated Plan and 2006/2007 Annual Action Plan allocating $240,000 in HOME
26 downpayment assistance and $175,000 in HOME Community Housing Development Organization
27 (CHDO) funds for a total of $415,000 towards the development of single-family homes and to
28 provide downpayment assistance to low-i 1come households to purchase the homes; and
1
P:\Agendas\Resolutions\Resolutions\2006\09-18-06 Arroyo&Churches HOME Funds Dev.Agreement MCC Reso A.doc
1 WHEREAS, the Mayor and Common Council (the "Council") desire to amend the
2 2005/2010 Consolidated Plan and the 2006/2007 Annual Action Plan to include the $415,000
3 HOME Funds appropriation; and
4 WHEREAS, the Agency owns real property located on 16th and Harris Streets (APN: 0144-
131-21) and, 17`h and'T' Streets (APN: 0144-131-36, 0144-123-03 and 46) ("Agency Lots") which
6 will be developed into four (4) new single-family homes jointly by Arroyo Economic Development
7 Corporation, a California non-profit b efit corporation ("Arroyo") and the Inland Empire
8 Concerned African American Churches, a California non-profit Corporation ("Churches")
9 (collectively referred to as the "Develope "), per the 2006 HOME Funds Development Agreement
10 (the "Agreement"); and
11 WHEREAS, the Agency has certi led Arroyo as a CHDO, after providing documentation
12 meeting all the requirements of 24 CFR 92.300 and eligible to receive HOME funds under the
13 fifteen percent (15%) CHDO and five p cent (5%) building capacity funds federal requirement;
14 and
15 WHEREAS, the Agency wishes to transfer Properties to the Developer for the development
16 of four (4) single-family homes to be sold to Qualified Homebuyers for the purpose of providing
17 affordable housing consistent with the provisions of the Redevelopment Plan for the IVDA
18 Redevelopment Project Area, the Agency's Housing Implementation Plan ("Project"); and
19 WHEREAS, pursuant to Health ard Safety Code Section 33433(c), the Agency may transfer
20 Agency Lots to the Developer subject to the Mayor and Common Council ("Council") and
21 Community Development Commission ("Commission") of the City of San Bernardino adopting a
22 Resolution authorizing the Agency to transfer such Agency Lots in light of the findings set forth
23 herein; and
24 WHEREAS, the Agency has prepared a Summary Report that describes the salient points of
25 the Agreement and identifies the cost tot the Agency of the disposition of Agency Lots; and
26 WHEREAS, the Project is exempt under the National Environmental Protection Act
27 (NEPA) per 24 CFR 58.35(a) and the California Environmental Quality Act (CEQA) pursuant to
28 Section 15332, Class 32.
2
P:\Agendas\Resolutions\Resolutions\2006\09-18-06 Arroyo&Churches HOME Fuods Dev.Agreement MCC Reso A.doc
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1 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY
2 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
3 FOLLOWS:
4 Section 1. On September 18, 2006, the Council conducted a full and fair joint public
5 hearing with the Commission relating to the amendment of the 2005/2010 Consolidated Plan and
6 the 2006/2007 Annual Action Plan and disposition of the Agency Lots to the Developer for the
7 development of homes to be sold to Qualified Homebuyers in order to effectuate the provisions of
8 the Agreement. The minutes of the City Clerk shall include a record of all communication and
9 testimony submitted to the Council and the Commission by interested persons relating to the joint
10 public hearing.
11 Section 2. This Resolution is adopted in order to satisfy the provisions of Health and
12 Safety Code Section 33433 as it relates to the disposition of Agency Lots. The
13 Council hereby finds and determines that the disposition of Agency Lots to the Developer for the
14 construction of four (4) homes to be sold to Qualified Homebuyers is consistent with the
15 Redevelopment Plan for the IVDA Redevelopment Project Area, the Agency Housing
16 Implementation Plan, and the Agreement.
17 Section 3. The Council hereby find and determine that no further environmental review
18 of the disposition of the Agency Lots pursuant to the Agreement is necessary at this time, under
19 CEQA and development of the Project under both CEQA and NEPA.
20 Section 4. The Council hereby approves the amendment to the 2005/2010 Consolidated
21 Plan and the 2006/2007 Annual Action Plan and the disposition and transfer of the Agency Lots to
22 the Developer pursuant to the terms of the Agreement.
23 Section 5. This Resolution shall take effect upon its adoption and execution in the
24 manner as required by the City Charter.
25
26
27
28
3
P\Agendas\Resolutions\Resolutions\2006\09-I8-06 Arroyo&Churches HOME Funds Dev.Agreement MCC Reso A.doc
I
I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPR13VING AN AMENDMENT TO THE 2005/2010
2 CONSOLIDATED PLAN AND THE 2006/2007 ANNUAL PLAN AND
CONSENTING TO THE DISPOSITION OF CERTAIN PROPERTY
3 LOCATED ON 16TH AND HA S STREETS (APN: 0144-131-21) AND 17TH
4 AND "J" STREETS (APN: 0144-131-36, 0144-123-03 AND 46), CITY OF SAN
BERNARDINO, BY THE REDEVELOPMENT AGENCY OF THE CITY OF
5 SAN BERNARDINO ("AGENCY") PURSUANT TO THE TERMS OF THE
2006 HOME FUNDS DEVELOPMENT AGREEMENT, BY AND BETWEEN
6 THE AGENCY AND, ARROYO VALLEY COMMUNITY ECONOMIC
DEVELOPMENT CORPORA ION ("ARROYO") AND INLAND EMPIRE
7 CONCERNED AFRICAN AMERICAN CHURCHES ("CHURCHES")
g (COLLECTIVELY REFERRE TO AS "DEVELOPER") — INLAND VALLEY
DEVELOPMENT AGENCY (I DA) REDEVELOPMENT PROJECT AREA
9
10 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
Common Council of the City of San Bern rdino at a meeting thereof,
11
12 held on the day of , 2006,by the following vote to wit:
13 Council Members: Ayes Nays Abstain Absent
ESTRADA
14
BAXTER
15
VACANT
16
DERRY
17
18 KELLEY
JOHNSON
19
MC CAMMACK
20
21
22 Rachel G. Clark, City Clerk
23 The foregoing resolution is hereby approved this day of , 2006.
24
25
Patrick J. Morris, Mayor
26 City of San Bernardino
Approved as to Form:
27 e L�
28 By.
James F. Penman, City Attorney
4
P\Agendas\Resolutions\Resolutions\2006\09-18-06 Arroyo&Churches HOME Fu ids Dev.Agreement MCC Reso A.doc
C (DPY
I RESOLUTION NO.
2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
3 THE CITY OF SAN BERNARDINO APPROVING THE DISPOSITION OF
CERTAIN PROPERTY LOCA ED ON 16TH AND HARRIS STREETS (APN:
4 0144-131-21) AND 17TH AND `J" STREETS (APN: 0144-131-36, 0144-123-03
AND 46), CITY OF SAN B RNARDINO, BY THE REDEVELOPMENT
5 AGENCY OF THE CITY F SAN BERNARDINO ("AGENCY") AND
6 AUTHORIZING THE EXECUTIVE DIRECTOR OF THE AGENCY TO
EXECUTE THE 2006 HOME FUNDS DEVELOPMENT AGREEMENT, BY
7 AND BETWEEN THE AGENCY AND, ARROYO VALLEY COMMUNITY
ECONOMIC DEVELOPMENT CORPORATION ("ARROYO") AND INLAND
8 EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES ("CHURCHES")
9 (COLLECTIVELY REFERRE TO AS "DEVELOPER") - INLAND VALLEY
DEVELOPMENT AGENCY (I DA) REDEVELOPMENT PROJECT AREA
10
WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a
11
public body corporate and politic, exercising governmental functions and powers and organized
12
and existing under Chapter 2 of the Community Redevelopment Law of the State of California
13
(Health and Safety Code Section 33020, el seq.); and
14
WHEREAS, the Agency owns real properties located on 16th and Harris Streets (APN:
15
0144-131-21) and, 17th and "J" Streets (APN: 0144-131-36, 0144-123-03 and 46) (the "Agency
16
Lots") which will be transferred and dev loped into four (4) new single-family homes jointly by
17
Arroyo Valley Economic Development Corporation, a California non-profit benefit corporation
18
("Arroyo") and Inland Empire Concerned African American Churches, a California non-profit
19
Corporation ("Churches") (collectively referred to as the "Developer") per the 2006 HOME Funds
20
Development Agreement (the "Agreemen "); and
21
WHEREAS, the Agency wishes t transfer the Agency Lots to Qualified Homebuyers for
22
23 the purpose of providing affordable housing consistent with the provisions of the Redevelopment
24 Plan for the IVDA Redevelopment Pro ect Area, the Agency's Housing Implementation Plan
2 S ("Project"); and
26 WHEREAS, the Agency has prepared and published a public notice in the San Bernardino
27 County Sun newspaper on September 4 and 11, 2006 regarding the development and disposition of
28 the Agency Properties by the Developer ft r sale to Qualified Homebuyers; and
1
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I WHEREAS, pursuant to Health and Safety Code Section 33433(c), the Agency may transfer
2 Agency Lots to the Developer subject to the Mayor and Common Council ("Council") and
3 Community Development Commission ("Commission") of the City of San Bernardino adopting a
4 Resolution authorizing the Agency to transfer such Agency Lots in light of the findings set forth
5 herein; and
6 WHEREAS, the Agency has prepared a Summary Report that describes the salient points of
7 the Agreement and identifies the cost to th Agency of the disposition of Agency Lots; and
8 WHEREAS, the Project is exempt under the National Environmental Protection Act
9 (NEPA) per 24 CFR 58.35(a) and the California Environmental Quality Act (CEQA) pursuant to
10 Section 15332, Class 32.
11 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
12 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
13 FOLLOWS:
14 Section 1. On September 18, 2006, the Commission conducted a full and fair joint
15 public hearing with the Council relating t the disposition of the Agency Lots to the Developer for
16 construction of four (4) single-family homes to be sold to Qualified Homebuyers in order to
17 effectuate the provisions of the Agreemen . The minutes of the City Clerk shall include a record of
18 all communication and testimony submitted to the Council and the Commission by interested
19 persons relating to the joint public hearm
20 Section 2. The Commission h .reby approves the Agreement and the Executive Director
21 of the Agency is authorized to execute Lhe Agreement and to make changes to the Agreement
22 provided said changes are not substantive in nature and do not increase the Agency's financial
23 contribution to the Project, and as approv d by Agency Counsel.
24 Section 3. The Commission h reby finds and determines that no further environmental
215 review of the disposition of the Agency Lots pursuant to the Agreement is necessary, at this time,
26 under the California Environmental Quality Act(CEQA) and NEPA.
27 Section 4. The Resolution shall become effective immediately upon its adoption.
28
2
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I RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING THE DISPOSITION OF
2 CERTAIN PROPERTY LOCATED ON 16TH AND HARRIS STREETS (APN:
3 0144-131-21) AND 17TH AND ` J" STREETS (APN: 0144-131-36, 0144-123-03
AND 46), CITY OF SAN B RNARDINO, BY THE REDEVELOPMENT
4 AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") AND
AUTHORIZING THE EXECUTIVE DIRECTOR OF THE AGENCY TO
5 EXECUTE THE 2006 HOME FUNDS DEVELOPMENT AGREEMENT, BY
AND BETWEEN THE AGEN Y AND, ARROYO VALLEY COMMUNITY
6 ECONOMIC DEVELOPMENT CORPORATION ("ARROYO") AND INLAND
7 EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES ("CHURCHES")
(COLLECTIVELY REFERRED TO AS "DEVELOPER") - INLAND VALLEY
g DEVELOPMENT AGENCY (IV DA) REDEVELOPMENT PROJECT AREA
9 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
10 Development Commission of the City of San Bernardino at a meeting
11 thereof, held on the day of , 2006, by the following vote to wit:
12 Commission Members: Ayes Nays Abstain Absent
13 ESTRADA
14 BAXTER
15 VACANT
16 DERRY
I
17 KELLEY
18 JOHNSON
19 MC CAMMACK
20
21
Secretary
22 The foregoing resolution is hereby approv d this day of , 2006.
23
24 Patrick J. Morris, Chairperson
25 Community Development Commission
of the City of San Bernardino
26 Approved as to Form:
27 By:
Agency our el
28
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2006
HOME FUNDS DEVELOPMENT AGREEMENT-
FOUR AGENCY LOTS
by and between
Redevelopment Agency of the
City of San Bernardino, a public body, corporate and politic ("Agency")
and
Arroyo Valley Community Economic Development Corporation("Arroyo"),
a California non-profit benefit corporation
and
Inland Empire Concerned African American Churches ("Churches")
a California non-profit corporation
(Arroyo and the Churches shall collectively be referred to as the "Developer")
Vacant Parcels (APN: 0144-131-21 and 36)
Vacant Parcels (APN: 0144-123-03 and 46)
2006
HOME FUNDS DEVELOPMENT AGREEMENT
(FOUR AGENCY LOTS)
THIS 2006 HOME FUNDS DEVELOPMENT AGREEMENT (this "Agreement") is dated as of
September 18, 2006, by and between the Redevelopment Agency of the City of San Bernardino, a public
body, corporate and politic (the "Agency"), and Arroyo Valley Community Economic Development
Corporation ("Arroyo"), a California non-profit benefit corporation, and an approved Community
Housing Development Organization ("CHDO") and the Inland Empire Concerned African American
Churches (the "Churches"), a California non-profit corporation (Arroyo and the Churches shall
collectively be referred to as the "Developer"). This Agreement is entered into with respect to certain
facts as presented in the following Recitals:
-- RECITALS --
(a) The Agency owns the four (4) vacant parcels of land as listed below and as more
specifically described in Exhibit "A", attached hereto and incorporated herein by reference (the "Agency
Lots").
AGENCY LOTS
Vicinity and Condition of Agency Lot APN Number Approximate Size
of Agency Parcel
Wit and Harris Streets, San Bernardino, CA 0144-131-21 6,750 sq. ft
(Vacant Lot)
17'h and"J" Streets, San Bernardino, CA 0144-131-36 6,750 sq. ft
(Vacant Lot)
17�" and"J" Streets, San Bernardino, CA 0144-123-46 6,750 sq. ft
(Vacant Lot)
17`" and"J" Streets, San Bernardino, CA 0144-123-03 6,750 sq. ft
(Vacant Lot)
The Agency, pursuant to the terms of this Agreement, plans to convey and transfer fee simple title
to the Agency Lots to the Developer to allow the Developer to construct the Project as described in
Recital (b) below.
(b) The Developer desires to construct a 1,300 square foot home with three (3) bedrooms, two
(2) bathrooms and a 400 square foot detached two (2) car garage single-family affordable housing unit on
each of the Agency Lots (the "Project"); and
(c) [RESERVED—NO TEXT]; and
(d) The Developer has obtained the necessary funds required to implement the Project together
with the HOME funds to be provided pursuant to this Agreement under Title 24 Code of Federal
Regulations ("CFR") Part 92; and
(e) The Agency, through the City of San Bernardino, 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 Agency in accordance
with federal program regulations set forth in 24 CFR Part 92; and
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(f) In accordance with the HUD guidelines under the HOME Program, HOME funds may be
used for locally based non-profit housing entities to carry out affordable housing activities in compliance
with the HOME Program regulations; and
(g) 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") to carry out affordable housing opportunities for low-income
households; and
(h) The Agency has designated Arroyo as a CHDO, as this term is defined in 24 CFR Part
92.300, and Arroyo desires to participate with the Agency in activities that are eligible under the HOME
Program, and Arroyo further agrees that the beneficiaries of its activities under the HOME Program and
this Agreement will be for the benefit of low income families and persons who meet the income eligibility
guidelines of 24 CFR Part 92.216 and Part 92.217; and
(i) The Agency's participation in the Project is limited to the transfer of the Agency Lots to
the Developer for the construction by the Developer of four (4) single-family New Homes (as defined
below)to be sold by the Developer and to Qualified Homebuyers; and
0) Each Qualified Homebuyer shall also covenant to the Agency that the New Home shall be
used and occupied as the principal residence of the Qualified Homebuyer for forty-five (45) years
following the date of initial occupancy of the New Home by the Qualified Homebuyer; and
(k) The Developer shall have the responsibility to inform a potential Qualified Homebuyer of
the requirement that the Qualified Homebuyer shall be required to execute a recordable covenant
restricting the use and occupancy of each "New Home" in accordance with the Agency program and the
development goals and objectives, including, but not limited to, recital 0), above; and
(1) The Developer shall further have the responsibility for marketing and the sale of each
Completed New Home at a maximum purchase price for the New Home (including the HOME Lot) that
does not exceed ninety-five percent (95%) of the median purchase price for the areas as set forth at 24
CFR Part 92.254(a)(2)(iii); and
(m) The Developer is responsible for the construction of the Project at its sole expense and will
pay for labor costs to construct the Project at the prevailing wage rate(s) required by the laws of the State
of California, and the Agency is providing HOME funds for the pre-construction costs for the
development of housing units on the Agency Lots for sale to Qualified Homebuyers; and
(n) The Agency is responsible for managing the day-to-day operations of its HOME Program
including 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; and
(o) The Developer has fully reviewed the CHDO requirements under the HOME Program and
hereby certifies and warrants to the Agency that it has the qualifications and the ability to construct the
Project in accordance therewith; and
(p) The Agency has determined that development of the Agency Lots pursuant to this
Agreement and the additional financial incentives provided by this Agreement is vital and in its best
interest of the City and the Agency.
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NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND
COVENANTS SET FORTH HEREIN, THE AGENCY AND THE DEVELOPER HEREBY AGREE AS
FOLLOWS:
1. DEFINITIONS.
In addition to the meaning scribed to
certain words and
g phrases as set
p forth in the Recitals of this
Agreement, other words and phrases shall have the meaning described below:
Adjusted Family Income. The words "Adjusted Family Income" mean the anticipated cipated total
annual income (adjusted for family size) of each individual or family residing or treated as residing in the
New Home as calculated in accordance with Treasury Regulation 1.167(k) — 3(b)(3) under the Code, as
adjusted, based upon family size in accordance with the household income adjustment factors adjusted
and amended from time to time, pursuant to Section 8 of the United States Housing Act of 1937, as
amended.
Affordable Housing Cost. The words "Affordable Housing Cost" shall have the meaning as set
forth in Health and Safety Code Section 50052.5, as this section may hereafter be amended from time-to-
time by the State of California. A Qualified Homebuyer, and/or the Successor-In-Interest of such
Qualified Homebuyer, if any, shall pay no more than an Affordable Housing Cost as its purchase price for
the New Home as of the applicable Delivery Date.
Agency Downpayment Assistance. The words "Agency Downpayment Assistance" mean and
refer to the purchase money financial assistance, which the Agency may provide to Qualified
Homebuyers of New Homes constructed on Agency Lots. The amount of such Agency Downpayment
Assistance in favor of a particular Qualified Homebuyer to purchase a New Home shall not exceed Sixty
Thousand Dollars ($60,000.00), and shall not exceed Two Hundred Forty Thousand Dollars
($240,000.00), in the aggregate, in connection with the purchase by each Qualified Homebuyer of the four
(4)New Homes.
Agency Grant Deed. The term "Agency Grant Deed" shall mean that certain grant deed by
which the Agency shall convey and transfer Agency Lots to the Developer in substantially the form
attached as Exhibit "C".
Agency Lot. The words "Agency Lot" shall mean and refer to any parcel of real property which
is both: ,owned by the Agency, and (ii) made available for transfer to the Developer under the terms and
conditions of this Agreement.
Agency Regulatory Agreement. The term "Agency Regulatory Agreement" shall mean and refer
to that certain regulatory agreement, declaration of covenants, conditions and restrictions (CC&Rs)
affecting the Agency Lots and the Project by and among, the Agency, the Developer and the Qualified
Homebuyer in the form attached hereto as Exhibit"D" and recorded in the Official Records of the County
Recorder's Office for the County of San Bernardino on the closing date of the New Home Escrow (as
defined below).
City. The term "City" shall mean and refer to the City of San Bernardino, a charter city, having
its offices at 300 North "D" Street, San Bernardino, California 92418.
Closing/Closing Date/Close of Escrow. The terms "Closing", "Closing Date" and "Close of
Escrow" shall mean and refer to the date on which the conditions for the completion of the performance
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of the duties of the parties have been satisfied and the Agency Grant Deed is/are recorded in the Office of
the County Recorder of San Bernardino County, California. The Closing shall occur on or before the date
provided in the Schedule of Performance attached hereto as Exhibit`B".
Completed New Home. The words "Completed New Home" shall mean and refer to each new
single-family residential unit to be designed, constructed and improved by the Developer on each Agency
Lot. Each Completed New Home constructed on an Agency Lot shall be reserved and made available for
sale to and occupancy by a Qualified Homebuyer designated by the Developer.
Completed New Home Purchase Price. The words "Completed New Home Purchase Price"
shall mean and refer to the applicable purchase price payable by the Qualified Homebuyer to the
Developer for the purchase of each Completed New Home at the close of the applicable New Home
Escrow. The Completed New Home Purchase Price for a New Home constructed on an Agency Lot shall
be an amount which does not exceed a sum which is payable by the Qualified Homebuyer at the time of
close of the New Home Escrow as an Affordable Housing Cost for a Low-Income Household not to
exceed ninety-five percent (95%) of the median purchase price for the County of San Bernardino as set
forth at 24 CFR Part 92. 254(a)(2)(iii) (which sum shall not exceed Three Hundred Thousand Dollars
($300,000.00)).
Completion of the Project. The term "Completion of the Project" shall mean and refer to the
date that the Developer has caused the last New Home to be sold to a Qualified Homebuyer.
Delivery Date. The words "Delivery Date" shall mean and refer to the close of a New Home
Escrow for a particular New Home following its completion, or in other words, on the Delivery Date, title
and possession of a Completed New Home on an Agency Lot shall be delivered by the Developer to the
Qualified Homebuyer at the close of the New Home Escrow.
Effective Date. The words "Effective Date" shall mean and refer to the date on which this
Agreement has been fully executed by the officers or representatives of the parties following an approving
majority vote of the members of the governing board of the Agency authorizing the execution of this
Agreement by the Agency and the conditions of Section 3.3(b) have been satisfied.
Escrow. The term "Escrow" shall mean and refer to the land transfer and construction financing
transaction account by and among the Agency and the escrow department of the Title Company. For the
purpose of this Agreement, the parties thereto have designated the escrow department of the Title
Company to serve as the "Escrow Agent".
Hazardous Substances. The term "Hazardous Substances" shall mean and refer to (i) any
hazardous or toxic substance or material including petroleum, petroleum-based products, asbestos and
asbestos containing materials (ACM) and lead-based paint (LBP), or waste which is or becomes regulated
by any local governmental authority, the State of California or the United States Government; and/or (ii)
any substance or material identified by the United States Government, the State of California or any local
governmental authority as hazardous or toxic and which is included on any list of such substances
published by any such governmental entity.
Low-Income Household. The term "Low-Income Household" shall mean and refer to a
Household which has the household income characteristics of a "low-income family" as set forth at 42
United States Code Section 1437a(b).
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New Home. The term "New Home" shall mean and refer to the affordable single-family
residential dwelling unit (including the land and landscape improvements thereon) on, in and at the Site as
acquired by the Qualified Homebuyer upon the close of the New Home Escrow.
New Home Closing/New Home Closing Date/New Home Close of Escrow. The terms "New
Home Closing", "New Home Closing Date" and "New Home Close of Escrow" shall mean and refer to
the date on which the conditions for the completion of the performance by the Developer and the
Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest)
have been satisfied and a grant deed and Agency Regulatory Agreement are recorded in the Office of the
County Recorder of San Bernardino, California.
New Home Escrow. The term "New Home Escrow" shall mean and refer to the real estate
conveyance transaction or escrow by and between the Qualified Homebuyer and the seller of the New
Home (or later, by and between the Qualified Homebuyer and the Successor-In-Interest). The transfer of
the New Home to the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the
Successor-In-Interest) shall be accomplished upon the close of the New Home Escrow.
New Home Sales Costs. The words "New Home Sales Costs" shall mean and refer to the actual
and reasonable costs incurred by the Developer in the acquisition, development, improvement and sale to
a Qualified Homebuyer, as enumerated below in subparagraphs (1) through (10), inclusive, of each
Completed New Home on an Agency Lot. Within sixty(60) days following the close of each New Home
Escrow for the sale by the Developer of a Completed New Home on an Agency Lot, the Developer shall
provide the Agency with a suitably detailed written accounting (e.g., the New Home Sale Costs
Certificate) of the New Home Sale Costs for the particular Completed New Home. New Home Sale
Costs for each Completed New Home include each of the following:
(1) the actual and reasonable escrow and title insurance costs paid by the Developer for the
purchase of the Agency Lot through the Escrow, if applicable;
(2) the cost of preparing the Agency Lot for improvement, including demolition expenses, if
any paid by the Developer, grading, and all off-site costs incurred in connection with the
improvement of the Agency Lot, including utility connection charges and adjacent public
right-of-way improvements, if any;
(3) architectural, engineering, legal, accounting, consulting and other professional service fees
paid in connection with the planning, execution and financing of the Project as allocated to
the Agency Lot;
(4) the cost allocated to the Agency Lot of insurance, construction lender financing charges,
points and fees, construction loan interest, surety and completion bonds,property taxes,
assessments as incurred and paid by the Developer between the time of the Closing for the
Agency Lot to the Delivery Date for the Agency Lot;
(5) the cost of construction materials, equipment and furnishings installed in the Completed
New Home and the cost of labor to so construct and install the Completed New Home, and
the cost of the Completed New Home on the Agency Lot, all building permits, public
school fees, and other regulatory agency charges and the cost of landscaping and fencing
as installed and constructed on the Completed New Home;
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(6) the cost allocated to the Agency Lot of construction supervision costs and private security
patrol services incurred by the Developer in connection with the New Home;
(7) New Home sales, marketing and commissions payable at the Delivery Date of the
Completed New Home of six percent (6%) of the gross sales price of the Completed New
Home on the Agency Lot;
(8) New Home Escrow closing costs paid by the Developer at the Delivery Date for the
Completed New Home;
(9) a Developer overhead fee of five percent (5%) of the cost items under (2), (3), (5) and (6),
above; and
(10) a Developer profit allowance of ten percent (10%) of the gross sales price of the
Completed New Home on the Agency Lot.
New Home Sale Costs Certificate. The words "New Home Sale Costs Certificate" shall mean
and refer to the written accounting and cost certification prepared by the Developer and submitted to the
Agency not later than sixty (60) days following the close of each New Home Escrow for a Completed
New Home. Each New Home Sales Costs Certificate shall contain a suitably detailed description of the
costs and expenses allocated to the Completed New Home.
Notice of Agency Concurrence. The words "Notice of Agency Concurrence" shall mean and
refer to the acknowledgment executed by the Executive Director of the Agency and delivered to the
holder of the New Home Escrow, in which the Agency confirms that the proposed Qualified Homebuyer,
appears to satisfy all of the Adjusted Family Income and other requirements of the Agency Regulatory
Agreement for occupancy of the New Home.
Project. The term "Project" shall mean and refer to all of the work of investigation, design,
construction, improvement, modification, and financing necessary in order for the Developer to acquire
the Site and for the Developer to construct four (4) affordable single-family housing units as a project
with each New Home consisting of 1,300 square foot homes with three (3) bedrooms, two (2) bathrooms
and a 400 square feet detached two (2) car garage to be sold to income eligible households. The Project
also includes all related landscaping, driveways, utilities and any improvements which may be required by
the City within the public rights-of-way adjacent to the Site. The functional elements of the Project are
more particularly described in the Scope of Development and Site Improvement Plan Concept in Section
4.1 (the"Scope of Development").
Qualified Homebuyer. The term "Qualified Homebuyer" shall mean and refer to low- and very
low-income families and persons who meet the income eligibility guidelines of 24 CFR Part 92.216 and
Part 92.217.
Qualified Residence Period. The term "Qualified Residence Period" shall mean and refer to the
period of time beginning on the Delivery Date and ending on a date which is forty-five (45) years after the
Delivery Date.
Real Estate Sales and Marketing Work. The words "Real Estate Sales and Marketing Work"
shall mean and refer to the services to be provided by the Developer relating to the marketing of each
New Home for sale to a Qualified Homebuyer. The Real Estate Sales and Marketing Work includes,
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without limitation, the presentation of each New Home to one or more Qualified Homebuyers for the
purpose of causing a Qualified Homebuyer to purchase the New Home constructed on an Agency Lot
from the Developer.
Redevelopment Plan. The term "Redevelopment Plan" shall mean and refer to the Inland Valley
Development Agency Redevelopment Plan. A copy of the Redevelopment Plan is on file in the Office of
the City Clerk of the City. The Redevelopment Plan is incorporated herein by this reference as though
fully set forth herein.
Schedule of Performance. The term "Schedule of Performance" shall mean and refer to that
certain Schedule attached hereto as Exhibit`B".
Site. The term "Site" shall mean and refer to that certain unimproved real property located both
within the Project and in the City of San Bernardino, County of San Bernardino, State of California,
consisting of the four(4) Agency Lots, more particularly described in the legal description attached to this
Agreement as Exhibit"A".
Successor-In-Interest. The term "Successor-In-Interest" shall mean and refer to the person,
family or household who may acquire the New Home from the Qualified Homebuyer at any time during
the Qualified Residence Period by purchase, assignment, transfer or otherwise. The Successor-In-Interest
shall be a "first-time homebuyer" and shall have an income level for the twelve (12) months prior to the
date on which the Successor-In-Interest acquires the New Home which does not exceed the maximum
Adjusted Family Income level for a Low-Income Household. Upon acquisition of the New Home the
Successor-In-Interest shall be bound by each of the CC&Rs of this Covenant.
Title Company. The term "Title Company" shall mean any title company mutually agreeable to
the Agency and the Developer.
2.' PURPOSE OF AGREEMENT.
The purpose of this Agreement is to effectuate the Redevelopment Plan by improving the Site as
well as to assist in providing affordable housing which is reserved for sale and occupancy by Low-Income
Households. The redevelopment of the Project on the Site and the fulfillment generally of this Agreement
are in the best interests of the Agency, the City and the welfare of its residents and are in accordance with
the public purposes and provisions of applicable federal, state and local laws and regulations under which
the Project has been undertaken.
3. DISPOSITION OF THE AGENCY LOTS AND ESCROW.
3.1 Transfer. Subject to the satisfaction of the terms and conditions of this Agreement, the
Developer shall accept from the Agency and the Agency agrees to transfer to the Developer, title to the
Agency Lots on the terms hereinafter set forth. The Agency Lots shall be transferred to the Developer
without any monetary consideration in exchange for the affordability covenant recorded on each Agency
Lot. The Developer desires to acquire the Agency Lots for purposes of constructing affordable housing
units. The Developer shall timely perform and complete the Real Estates Sales and Marketing Work.
The Developer shall cause each New Home Escrow to close with the Qualified Homebuyers with the
various covenants and agreements as required by this Agreement to be recorded as to the affordable
housing units as thus sold by the Developer.
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3.2 Opening of Escrow. The Developer and the Agency hereby agree to establish Escrow for
the transfer of the title to the Agency Lots to the Developer in the manner as provided herein. The
Developer and the Agency shall cause the Escrow to be opened and closed within sixty(60) calendar days
following the full execution of this Agreement. This Agreement shall constitute the joint escrow
instructions of the Agency and the Developer, and a duplicate original of this Agreement shall be
delivered to the Escrow Agent and the Escrow shall be deemed to be opened when the Escrow Agent has
received a fully executed copy of this Agreement and assigned its escrow account transaction
identification to this Agreement. The Escrow Agent is empowered to act under these instructions. The
Agency and the Developer shall cooperate with the Escrow Agent and promptly prepare, execute, and
deliver to the Escrow Agent such additional escrow instructions consistent with the terms herein as shall
be reasonably necessary. No provision of any additional escrow instructions shall modify this Agreement
and in the event of any conflict between the provisions of this Agreement and such additional escrow
instructions, the provisions of this Agreement shall prevail.
3.3 Conditions to Closing.
(a) The obligations of the Developer to accept title to the Agency Lots and to Close the
Escrow shall be contingent upon the satisfaction, or waiver by the Developer, of each and all of the
following conditions (collectively, the "Developer Conditions") by the dates set forth herein:
(i) The Agency has deposited into Escrow a certificate (the "FIRPTA Certificate") in
such form as may be required by the Internal Revenue Service pursuant to Section 1445 of the
Internal Revenue Code and a California Form 590-RE (Residency Certificate), pursuant to Section
18805 of the California Revenue and Taxation Code;
(ii) The Agency has prepared and the Developer has approved a legal description of the
Agency Lots, which shall be attached to the Agency Grant Deed when delivered to the Escrow
Agent;
(iii) The Developer has accepted the condition of the Agency Lots as provided in
section 3.8;
(iv) The Title Company has confirmed that it shall issue a CLTA Owner's policy of
title insurance for the Agency Lots in a form acceptable to the Developer;
(v) The Agency has executed and delivered to the Escrow Agent, in recordable form,
the Agency Grant Deed and all other documents required under this Agreement in recordable
form.
Any waiver of the satisfaction of the foregoing conditions by the Developer must be expressed in
writing. In the event that the foregoing conditions have not been satisfied within the time provided in the
Schedule of Performance but not in all events by a date not later than thirty (30) calendar days after
written request from the Developer, or in the event that the Agency may be in default, the Developer may
terminate this Agreement by delivering a written notice in accordance with Section 3.10, subject to any
cure rights provided therein. From time-to-time, during the period when the Escrow is open, the Agency
may send written notices to the Developer which reference this Section 3.3(a), and within ten (10)
calendar days following the receipt of such a notice the Developer shall provide the Agency with a
suitably detailed written report which describes the action, if any, which the Developer believes may be
necessary in order for any of the Developer Conditions to the Closing to be satisfied.
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(b) The obligation of the Agency to transfer the Agency Lots to the Developer and to Close
the Escrow shall be contingent upon the satisfaction, or waiver by the Agency, of each of the following
conditions (collectively, the "Agency Conditions")by the date set forth herein:
(i) The Developer has provided the Agency with the information set forth in Section
3.7, and development of the Project or otherwise provided the Agency with financial statements or
loan commitments which evidence the Developer's capability to construct the Project and the
ability of the Developer to accept title to the Agency Lots and develop the Project remain in full
force and effect without material modification or change;
(ii) The Developer has delivered its written notice of acceptance of the condition of the
Agency Lots to the Agency as provided in Section 3.8;
(iii) The Developer has not made or attempted to make a Transfer in violation of
Section 4.3 and no default by the Developer exists under this Agreement;
(iv) The Developer has deposited into Escrow and executed, in recordable form, the
certificate of acceptance of the Agency Grant Deed and the other documents required under this
Agreement, and delivered to the Escrow Agent any other funds required to pay costs of the
Developer to be paid at the time of Closing;
(v) The Developer has accepted the condition of the Agency Lots and shall have timely
performed each and every other obligation of the Developer hereunder;
(vi) The Developer has submitted the final building plans for the Project for approval
by the Agency as provided in Section 4.1 below and the Agency has approved such final building
plans;
(vii) The Developer has obtained all other necessary governmental approvals for the
issuance of all permits and other entitlements for the construction of the Project, subject only to
the submission of final plans and the payment of the applicable permit fees and public capital
improvement charges.
Any waiver of the satisfaction of the foregoing conditions by the Agency must be expressed in
writing. In the event that the foregoing conditions have not been satisfied within the time provided in the
Schedule of Performance, or in the event that the Developer may be in default, the Agency may terminate
this Agreement by delivering a written notice in accordance with Section 3.10, subject to any cure rights
provided therein. From time-to-time, during the period when the Escrow is open, the Developer may send
written notices to the Agency which reference this Section 3.3 (b), and within ten (10) calendar days
following the receipt of such notice the Agency shall provide the Developer with 'a suitably detailed
written report which describes the action, if any, which the Agency believes is necessary in order for any
of the foregoing the Agency Conditions to the Closing to be satisfied.
3.4 Tax Reporting and Miscellaneous Matters.
Prior to the Closing, the Developer and the Agency shall execute and deliver a certificate
(Taxpayer ID Certificate) in such form as may be required by the IRS pursuant to Section 6045 of the
Internal Revenue Code, or the regulations issued pursuant thereto, certifying as to the description of the
Agency Lots, date of Closing, gross price, if any, and taxpayer identification number for the Developer
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and the Agency. Prior to the Closing, the Developer and the Agency shall cause to be delivered to the
Escrow Agent such other items, instruments and documents, and the parties shall take such further
actions, as may be necessary or desirable in order to complete the Close of Escrow.
3.5 Escrow Procedures and Conveyance of the Agency Lots.
(a) The Closing shall occur upon satisfaction of the Developer Conditions and the Agency
Conditions as applicable; provided, however, that notwithstanding any other provision of the Schedule of
Performance or Section 7.5 to the contrary, in the event that the Closing has not occurred by a date not
later than on or before November 18, 2006, for any reason, then after such date, either party who is not
then in default may give its written notice of termination of the Escrow which references this Section
3.5(a), whereupon, this Agreement shall terminate and the Escrow shall be canceled. The Escrow Agent
shall return any documents or funds then in its possession to the party who delivered such documents or
funds, and each party shall pay one-half(%2) of the Escrow Agent's reasonable cancellation charges, if
any. Upon the payment of such Escrow cancellation charges the parties shall be mutually released from
any further liability hereunder. The final date for the Closing may be extended by the mutual written
agreement of the parties.
(b) Within ten (10) calendar days prior to the estimated time of the Closing, the Escrow Agent
shall advise the Agency and the Developer, in writing, of the approximate amount of the fees, charges,
and other costs necessary to Close the Escrow, and of any documents which have not been provided by
said party and which must be deposited in Escrow to permit Closing.
(c) On or before the third business day preceding the Closing Date, the Agency shall execute,
acknowledge and deposit into Escrow(i) the Agency Grant Deed, and (ii) the FIRPTA Certificate.
(d) On or before the Closing, the Developer shall execute and acknowledge, as may be
required, and deposit into Escrow (i) the acceptance of the Agency Grant Deed, and (ii) other security
documents of a lender approved by the Agency pursuant to Section 3.7, if any.
(e) Upon the completion by the Agency and the Developer of the deliveries and actions
specified in these escrow instructions the Escrow Agent shall be authorized to pay any documentary
transfer taxes and recording fees, if required by law, and thereafter cause to be recorded in the appropriate
records of San Bernardino County, California, the Agency Grant Deed and the other instruments delivered
or exchanged by the parties through this Escrow. Concurrent with recordation, the Escrow Agent shall
deliver the Title Policy to the Developer. Following recordation, the Escrow Agent shall deliver copies of
said instruments to the Developer and the Agency and provide the parties with copies of the final Escrow
Closing statement. In addition, after deducting any sums specified in this Agreement, the Escrow Agent
shall disburse funds to the party entitled thereto.
3.6 Title Matters.
(a) At Closing, the Agency shall convey fee title to the Agency Lots to the Developer subject
only to: (i) the use restriction as set forth in the Agency Grant Deed; (ii) the other CC&Rs set forth in the
Agency Grant Deed; (iii) nondelinquent real property taxes and assessments; (iv) utility easements; (v)
public street easements; (vi) applicable zoning and development regulation of the City as it affects
Agency Lots, and (vii) CC&Rs, easements, and other encumbrances and title exceptions approved by the
Developer (collectively, the "Permitted Exceptions").
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(b) Within fifteen (15) calendar days after the Escrow is deemed opened, the Agency shall
deliver to the Developer a preliminary title report for the Agency Lots issued by the Title Company, dated
as of the opening of Escrow, together with copies of all title exception/matters referenced therein. Within
thirty (30) calendar days following its receipt of the preliminary title report, the Developer shall deliver to
the Agency written notice specifying in detail any exception (other than those exceptions specifically
listed in Section 3.6(a)) disapproved and the reason therefore. Within fifteen(15) calendar days following
its receipt of such written notice from the Developer, the Agency shall deliver written notice to the
Developer as to whether the Agency will or will not cause the disapproved exceptions to be removed or to
be endorsed with endorsements providing the Developer with reasonable assurance with respect to the
disapproved exceptions. If the Agency elects not to cure the disapproved exceptions, the Developer may
terminate this Agreement, without any liability of the Agency to the Developer by giving notice which
references this Section 3.6(b) and the parties shall be mutually released from any further duty or
responsibility. If the Agency so elects to cure the disapproved exceptions, the Agency shall do so on or
before the Closing.
(c) Upon the Closing, the Title Company shall furnish the Developer with a CLTA owner's
policy of title insurance insuring the Developer's fee interest in the Agency Lots subject only to the
Permitted Exceptions (the "Title Policy"). The Agency shall pay the premium charged by Title Company
for the issuance of the Title Policy. The Developer shall be responsible for obtaining and paying for the
cost of any title policy insuring the interest of any interested person in the Agency Lots and/or the Project.
3.7 The Developer Financing; Agency Grant to Developer and Developer Covenants.
(a) Within thirty (30) calendar days after the date of this Agreement, the Developer shall
submit to the Executive Director of the Agency, for approval, such evidence as may be reasonably
satisfactory to the Executive Director of the Agency demonstrating that the Developer has the financial
capability necessary for the development of the Project pursuant to this Agreement. Such evidence of
financial capability shall include all of the following:
(i) Reliable cost estimates for the Developer's total cost of developing the Project
(including both hard and soft costs);
(ii) a financial statement and/or other documentation reasonably satisfactory to the
Executive Director of the Agency sufficient to demonstrate that the Developer has adequate funds
available and committed to cover the development costs of the Project including any costs
overruns that exceed the amount of the construction loan financing and the other HOME funds to
be provided to the Developer pursuant to this Agreement;
(iii) a copy of any other contracts with the general contractors of the Developer, if any,
for all of the improvement of the Project certified by the Developer to be a true and correct copy
thereof. The Executive Director of the Agency shall also have the right to review and approve any
revisions that are made to the proposed contract(s) with the general contractors after its/their
approval by the Executive Director of the Agency.
(b) The Developer covenants and agrees to take all action and shall furnish all information,
give all consents and pay all sums required and comply with all conditions thereof, and shall promptly
execute, acknowledge and deliver all applications, credit applications and data, financial statements and
documents in connection therewith, for the costs of the Project which include, but are not limited to,
architectural, engineering, legal, organizational, insurance, the other fees and overhead amounts and the
cost of construction and marketing of the Project.
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(c) The Agency agrees to make available to Arroyo an amount of HOME funds equal to One
Hundred Seventy-Five Thousand Dollars ($175,000.00) (the "HOME Funds Grant") which shall be used
by Arroyo for the payment of certain pre-development costs and expenses of the Project related to the
architectural and engineering design fees, payment of City and other governmental agency fees and the
costs of permits, application costs and fees and City inspection fees (collectively referred to herein as the
"Qualified HOME Fund Expenditures"). Such HOME Funds Grant shall be payable to Arroyo on an as-
needed basis upon presentation to the Agency of an invoice from a third party consultant or contractor for
a qualified expenditure item as permitted herein. In the event that the Qualified HOME Fund
Expenditures do not equal the amount of the HOME Funds Grant that has been committed by the Agency
because of cost savings in the dollar amounts of the Qualified HOME Fund Expenditures, the Agency
shall provide a grant to Arroyo equal to the shortfall amount only. Arroyo recognizes and agrees that the
development fees, overhead and general conditions of Arroyo and the manner of the calculation of the net
distributable profits shall be specifically approved by the Executive Director of the Agency and may be
referred by the Executive Director of the Agency to any certified public accountant or real estate
development consultant for concurrence as to the method of such calculation and a determination as to
reasonableness that such net distributable profits will in fact be available to Arroyo as projected. Such
calculation shall also verify that the Qualified HOME Fund Expenditures, based upon the costs of
construction and the anticipated sales prices of the housing units, will be available to Arroyo from such
sales of the housing units in furtherance of the construction of such additional housing units for Low-
Income Households within the City.
(d) In consideration of the receipt of the HOME Funds Grant by Arroyo in the manner as
provided in (c) above, Arroyo agrees to cause to be built in other locations within the City, not less than
two (2) additional affordable housing units available to Low-Income Households (singularly, "Additional
New Home" and collectively, "Additional New Homes") within twenty-four (24) months following the
date of completion of the affordable housing units intended to be constructed on the Agency Lots. Arroyo
shall use and apply from the dollar amounts received by Arroyo from the resale of the affordable housing
units, whether from a reimbursement of the pre-development costs or from other funds received by
Arroyo upon the sale of the housing units built on the Agency Lots, an amount equal to the HOME Funds
Grant that shall thereafter be used and applied for the land acquisition and the payment of Qualified
HOME Fund Expenditures for such two (2) additional affordable housing units within the City. To the
extent the full amount of the dollar equivalent of the HOME Funds Grant exceeds the dollar amount that
can be expended for such two (2) additional affordable housing units, then Arroyo shall be obligated to
undertake such additional number of affordable housing units within the City until the dollar equivalent of
the HOME Funds Grant has been expended on providing affordable housing units within the City together
with an Agency Regulatory Agreement substantially similar to that as is attached hereto. On the closing
date of each escrow in connection with the purchase and sale of each Additional New Home, Arroyo shall
cause a mutually executed and duly notarized Agency Regulatory Agreement to be recorded in the
Official Records of the County Recorder's Office for the County of San Bernardino.
(e) In addition to the HOME Funds Grant as provided herein to the Developer for the benefit
of the Project, the Developer shall encourage Qualified Homebuyers to participate in the down payment
assistance program of the Agency as an additional method to attract qualified Low-Income Households to
acquire the housing units constructed on the Agency Lots. The Agency makes no commitment as to the
availability of funds for the continuation of the down payment assistance program in the future nor does
the Agency represent or warrant that any prospective homebuyer that has been obtained and pre-qualified
by the Developer will qualify for the down payment assistance program of the Agency as the same may
be in effect from time-to-time.
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3.8 Condition of the Agency Lots.
(a) The Developer shall have the right to approve the physical condition of the Agency Lots,
including its soil and environmental condition, based upon the Developer's inspection of the Agency Lots
and the records of the Agency. The Developer shall, at its sole cost and expense, retain the consultant or
consultants of its choice to assist the Developer in its review of any and all aspects of the soils,
environmental, geotechnical and other physical conditions of the Agency Lots, including all information,
reports and records of the Agency pertaining to the physical condition of the Agency Lots. The
Developer and its consultants shall also have the right to make any inspection of the Agency Lots and to
conduct any intrusive soil sampling tests it deems appropriate with respect to either its geotechnical soils
investigations or soils investigations relating to the potential presence of any Hazardous Substance on the
Agency Lots. The Developer shall notify the Agency at least seventy-two (72) hours in advance of any
entry onto the Agency Lots pursuant to Section 3.8(c) and in the event the Developer or its consultant
desires to conduct tests involving the drilling, trenching or boring of the soils located on the Agency Lots,
the Developer's consultant shall work with and cooperate with the Agency to assure that all such tests are
conducted in a manner consistent with the highest industry standards and in a manner that will not
damage or injure the Agency Lots. Within the time provided in the Schedule of Performance, the
Developer shall conduct and complete its own independent inspection and investigation of the Agency
Lots, and its investigation of all records and reports concerning the physical condition of the Agency Lots,
determine if the soils, environmental, geotechnical and other physical conditions of the Agency Lots are
suitable for the development and construction of the Project on the Agency Lots. The Developer shall not
rely on any statement or representation by the Agency or the City relating to the conditions of the Agency
Lots. Without limiting the foregoing, the Agency makes no representation or warranty as to whether the
Agency Lots presently complies with environmental laws or whether the Agency Lots contains any
Hazardous Substance. By not later than the date indicated in the Schedule of Performance, the Developer
shall deliver a written notice to the Agency which references this Section 3.8 and includes a statement that
either (i) the Developer accepts the condition of the Agency Lots in their "AS IS", "WHERE IS" and
"SUBJECT TO ALL FAULTS" conditions; or (ii) the Developer disapproves the condition of the Agency
Lots for the specific reason(s) or grounds set forth in such notice. The Agency shall have no obligation or
liability to the Developer to correct, cure, remedy or abate any soils, environmental, geotechnical or other
physical condition of the Agency Lots, including, without limitation, the remediation of any Hazardous
Substance thereon, which may provide the Developer with a basis to disapprove the condition of the
Agency Lots. If the Developer notifies the Agency in writing of the presence of any Hazardous Materials
upon the Agency Lots, then this Agreement shall be subject to termination by either party without liability
to the other upon the giving of notice of termination which references this Section 3.8, whereupon the
parties shall be mutually released from all further responsibilities or liabilities.
(b) Upon acquisition of title to the Agency Lots by the Developer, the Developer shall take
possession of the Agency Lots in their "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS"
condition and the Developer shall be responsible for any defects in the Agency Lots, whether patent or
latent, including, without limitation, the physical, environmental and geotechnical condition of the
Agency Lots, and the existence of any contamination, Hazardous Substances, vaults, debris, pipelines,
abandoned wells or other structures located on, under or about the Agency Lots. The Agency makes no
representation or warranty concerning the physical, environmental, geotechnical or other condition of the
Agency Lots, the suitability of the Agency Lots for the Project, or the present use of the Agency Lots, and
specifically disclaims all representations or warranties of any nature concerning the Agency Lots made by
it, the City and their employees, agents and representatives. The foregoing disclaimer of the Agency
includes, without limitation, topography, climate, air, water rights, utilities, present and future zoning,
soil, subsoil, existence of Hazardous Substances or similar substances, the purpose for which the Agency
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Lots is suited, or drainage. The Agency shall not be responsible for grading the Agency Lots and makes
neither representation nor warranty concerning the compaction of soil upon the Agency Lots, nor of the
suitability of the soil for construction.
The Developer has specifically reviewed and accepts the provisions of this Section 3.8(b), and the
provisions of this Section 3.8(b) shall survive the Close of Escrow.
Initials of the Developer Initials of the Developer
(c) Prior to the date specified in the Schedule of Performance for the approval of the condition
of the Agency Lots under Section 3.8 thereof, the Developer, its employees, agents or contractors have the
right, at the Developer's sole cost and expense, to enter onto the Agency Lots to conduct soils,
engineering or other tests and studies, to perform preliminary work or for any other purposes to carry out
the terms of this Agreement; provided, however, that no work of improvement of the Project shall
commence until the Escrow has Closed and the Developer has acquired the fee title interest in the Agency
Lots from the Agency. The Developer shall indemnify, defend and hold the Agency harmless from and
against any claims, injuries or damages arising out of or involving any such entry or activity as provided
in Sections 6.1 through 6.8. Any such activity shall be undertaken by the Developer only after securing
any necessary permit(s) from the appropriate governmental agencies and delivering to the Agency
certificates of insurance evidencing the coverages required in Section 4.1(z).
3.9 Cost of Escrow.
(a) At Closing, the Escrow Agent is authorized to allocate certain Escrow costs as follows: the
Agency shall pay (i) the documentary transfer tax; (ii) recording fees for the Agency Grant Deed; (iii) the
premium for the Title Policy, and (iv) all of the customary service charges and expenses of the Escrow
Agent. The Developer shall pay (i) the recording charges for all financing documents and other matters
and (ii) the price for any endorsements or binders to the Title Policy as the Developer may in its discretion
request. Each such party shall pay its own attorneys' fees. Any other usual and customary fees or costs
which are not specifically allocated herein shall be paid by the Agency provided, however, that the parties
who incur special messenger or overnight delivery charges shall be solely responsible for such expenses
of the Escrow Agent.
(b) Ad valorem taxes and assessments on the Agency Lots, if any, for the current year shall be
prorated by the Escrow Agent as of the date of Closing, and the Agency responsible for any such taxes or
assessments levied, assessed or imposed prior to Closing, and the Developer responsible for those after
Closing. If the actual taxes are not known at the date of Closing, the proration shall be based upon the
most current tax figures. When the actual taxes for the year of Closing become known, the Developer and
the Agency shall, within thirty (30) days after written notice, prorate the taxes in cash between themselves
outside of the Escrow.
(c) In the event that a party who is not then in default may terminate this Agreement before the
Closing, the parties shall each pay one-half (`/2) of the Escrow Agent's fees, charges, and expenses,
including Title Policy cancellation charges, if any. In the event that a party who is not in default may
terminate this Agreement as provided in Section 3.10, then the party who is in default shall be responsible
for paying for all of the Escrow Agent's fees, charges, and expenses, including Title Policy cancellation
charges, if any.
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3.10 Cancellation of Escrow Prior to Closing upon Failure of Conditions without Fault by
Either Party, Default and Termination.
The Escrow may be canceled and this Agreement terminated prior to the Closing upon the written
notice of either party who then shall have fully performed its obligations hereunder if: (i) either the
Developer's Conditions or the Agency's Conditions have not occurred or have not been approved,
disapproved, or waived as the case may be, by the approving party by the date established either in the
Schedule of Performance or herein for the occurrence of such condition; or (ii) Escrow is not in a position
to close by no later than on or before November 18, 2006, for any reason. In the event of the foregoing,
the terminating party may demand, in writing, return of its money, papers or documents from the Escrow
Agent and shall deliver a copy of such notice to the non-terminating party. Fifteen (15) calendar days
after such notice has been delivered to the Escrow Agent and the other party, this Agreement shall
terminate and the Escrow Agent shall cancel the Escrow without further instruction, whereupon the
parties shall be mutually released from any further obligation; provided, however, that the mutual
representations of the parties under Section 3.12 and the indemnity provisions of Section 3.8(c), and
Section 6.7 shall survive any such termination of this Agreement.
3.11 Responsibilities of Escrow Agent.
(a) All funds received in Escrow shall be deposited by the Escrow Agent in an escrow account
with any state or national bank doing business in the State of California.
(b) All communications from the Escrow Agent shall be directed to the addresses and in the
manner provided in Section 7.2 of this Agreement for notices, demands, and communications between the
Agency and the Developer.
(c) The Escrow Agent is not to be concerned with the sufficiency, validity, correctness of
form, or content of any document prepared outside of Escrow and delivered to Escrow. The sole duty of
the Escrow Agent is to accept such documents and follow the Developer's and the Agency's instructions
for their use.
(d) Upon the satisfaction of the Developer's Conditions and the Agency's Conditions, the
Escrow Agent shall comply with the final written Escrow Closing instructions addressed to the Escrow
Agent by the Developer and by the Agency.
(e) The Escrow Agent shall in no case or event be liable for the failure of any of the conditions
to Closing, or for forgeries or false impersonation, unless such liability or damage is the result of
negligence or willful misconduct by the Escrow Agent.
3.12 No Real Estate or Broker Commission Payable.
The parties mutually represent and warrant that no real estate broker commission or finder's fee is
payable to a third party in connection with the transfer of the Agency Lots by the Agency to the
Developer. However, nothing contained herein shall preclude or limit the ability of the Developer to pay
normal and customary real estate broker fees and commissions to third party licensed real estate brokers
upon the sale of the completed single-family homes on the Agency Lots to Qualified Homebuyers.
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4. DEVELOPMENT OF THE PROJECT BY THE DEVELOPER.
4.1 Scope of Development.
(a) Except for the work of technical investigation and testing of soils as authorized under
Section 3.8, no other work of improvement of the Project shall be undertaken on the Agency Lots prior to
the Closing between the Developer and the Agency. It is the intent of the parties that promptly following
the Close of the Escrow the Developer shall commence the work of improvement of the Project on the
Site referred to herein as the Agency Lots. The Project consists of the elements set forth herein:
I. General Protect Descri tp ion
Each unimproved lot in the Site contains approximately 6,750 square feet each. The Project shall
consist of the construction of not less than four (4) homes each of at least 1,300 square feet with
three (3) bedrooms and two (2) bathrooms, and a 400 square foot detached two (2) car garage
designated as affordable single-family housing units for low-income households as defined by
federal law and regulations.
Il. Design Objectives
The following is a statement of design objectives for development of the Site:
a. The creation and achievement of an attractive and pleasant environment reflecting a high
level of concern for architectural and urban design principles both in terms of the
development itself and its compatibility and suitability with the surrounding community
and the provision of a pleasing, safe and well-maintained living environment, and vehicle
parking in an urban environment.
III. Development Standards
(a) The Project shall be designed and constructed in accordance with the approved terms and
conditions of approval of the land use entitlements approved by the City of San Bernardino for this Project,
if applicable.
(b) The City's zoning ordinance and the City's building requirements will be applicable to the
use of the Site and development of the Project. The Developer acknowledges that the plans for
development of the Site as set forth in the Scope of Development shall be subject to the City's zoning
ordinance and building requirements. No action by the Agency or the City with reference to this
Agreement or related documents shall be deemed to constitute a waiver of any City requirements which
are applicable to the Site or to the Developer or to any Successor-In-Interest of the Developer except by
modification or variance duly approved by the City in accordance with applicable law in its sole and
absolute discretion.
(c) The Scope of Development set forth above is hereby approved by the Agency upon its
execution of this Agreement. The Project shall be developed and completed in conformance with the
Scope of Development and any and all other plans, specifications, and similar development documents
required by this Agreement, except for such changes as may be mutually agreed upon in writing by and
between the Developer and the Agency. The Executive Director of the Agency is authorized to approve
the preliminary and the final construction plans for the Project, together with the preliminary and the final
landscaping plans provided that the Executive Director of the Agency finds at the time of such approval
that such plans are reasonably consistent with the Scope of Development.
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(d) The approval of the Scope of Development by the Agency shall not be binding upon the
Mayor and Common Council or the Planning Commission of the City with respect to any approvals of the
Project required by such other bodies under applicable law. If any revision of the Scope of Development
is required by another government official, the Agency, department or bureau having jurisdiction over the
development of the Site and the Project as a result of development project permits, reviews and approvals
under applicable law, the Developer and the Agency shall cooperate in efforts to either modify the Scope
of Development to accommodate such regulatory requirements or obtain waivers or recommendation of
such revisions by the regulatory agencies. The Agency shall not unreasonably withhold approval of such
revisions to the Scope of Development as may be required by such regulatory approval powers.
(e) Notwithstanding any provision to the contrary in this Agreement, the Developer agrees to
accept and comply fully with any and all conditions of approval applicable to all permits and other
governmental actions affecting the development of the Site and the Project. No development of the Site
and the Project shall occur except in conformity with all governmental approvals as may be granted with
respect to such development.
(f) The Developer shall, at its sole cost and expense, cause landscaping plans in connection
with development of the Project to be prepared and submitted to the City by a licensed landscape architect
within the times provided in the Schedule of Performance. The Developer shall prepare and submit to the
City for its approval, preliminary and landscaping plans for the Project which are consistent with City
Code requirements. These plans shall be prepared, submitted, and approved within the times respectively
established therefore in the Schedule of Performance as shown on Exhibit `B" and shall be consistent
with the Scope of Development.
(g) The Developer shall, at its sole cost and expense, prepare and submit development plans,
construction drawings and related documents within the times provided in the Schedule of Performance
for the development of the Project. Such development plans, construction drawings and related
documents shall be prepared and submitted in sufficient detail necessary to obtain all necessary building
permits from the City for construction of the Project. The Agency shall cooperate with and shall assist the
Developer in order for the Developer to obtain the approval of any and all development plans,
construction drawings and related documents submitted by the Developer to the City consistent with this
Agreement within sixty (60) calendar days following the City's receipt of said plans. Any failure by the
City to approve any such plans or to issue necessary permits for the development of the Site within said
sixty (60) calendar day period shall constitute an enforced delay hereunder, and the Schedule of
Performance shall be extended by that period of time beyond said sixty(60) calendar day period in which
the City approves said plans; provided, however, that in the event that the City disapproves of any such
plans, the Developer shall within sixty (60) calendar days after receipt of such disapproval revise and
resubmit such plans in accordance with the City's requirements and in such form and substance so as to
obtain the City's approval thereof. If the City fails to approve or disapprove the plans within sixty (60)
calendar days following submission, the plans are deemed approved for purposes of this Agreement only
and not for compliance with City requirements for which the Developer are otherwise required to comply.
(h) During the preparation of all drawings and plans in connection with the development of the
Project, the Developer shall provide to the Agency regular progress reports to advise the Agency of the
status of the preparation by the Developer, and the submission to and review by the City of construction
plans and related documents. The Developer shall communicate and consult with the Agency as
frequently as is necessary to ensure that any such plans and related documents submitted by the Developer
to the City are being processed in a timely fashion.
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(i) The Agency shall have the right of reasonable architectural review and approval of
building exteriors and design of the structures to be constructed on the Site. The Agency shall also have
the right to review all plans, drawings and related documents pertinent to the development of the Project
in order to ensure that they are consistent with this Agreement and with the Scope of Development.
0) The Developer must carry out each activity in compliance with all Federal laws and
regulations described in 24 CFR Part 92 and outlined hereinafter, except that the Developer does not
assume the Agency's responsibilities for environmental review in 24 CFR Part 92.352 or the
intergovernmental rnmental review process in 24
CFR Part 2.
g p 9 359. These Federal laws and regulations must be
complied with as follows:
(1) 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).
(2) 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.
(3) Affirmative Marketing. The Developer must adopt affirmative marketing
procedures and requirements for the Units. These must include:
a. Methods for informing the public;
b. Requirements and practices that the Developer must adhere to in
order to carry out the City of San Bernardino's affirmative
marketing procedures and requirements;
C. Procedures used by the Developer 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 the Developer
to affirmatively market units and records to assess the results of
these actions; and
e. A description of how the Developer will assess the success of
affirmative marketing actions and what corrective actions will be
taken where affirmative marketing requirements are not met.
(k) Consistent with the other goals and objectives of 24 CFR Part 92, and if applicable, the
Developer must ensure that it has taken all reasonable steps to minimize the displacement of persons as a
result of the 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 Project
completion. The Developer agrees to minimize displacement in accordance with 24 CFR Part 92.353.
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(1) The Developer must take all reasonable steps to ensure that all applicable disability
accessibility requirements are met in the design and construction of the Project. To this end, the Project
shall be designed and constructed in compliance with all disability accessibility requirements, including,
but not limited to, Title II of the Americans with Disabilities Act, any regulations promulgated or
disseminated by HUD relating to the accessibility of residential facilities for persons with disabilities, The
Uniform Federal Accessibility Standards ("UFAS") and/or the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities ("ADAAG"), Title 24 of the California Building
Code ("CBC"), Section 504 of the Rehabilitation Act, 29 U.S.C. § 794, 28 CFR 35.151, et seq. and 48
U.S.0 12101, et seq,to the extent applicable the Project.
(m) The Developer shall comply with all requirements set forth regarding conflict of interest
provisions as they apply in 24 CFR Part 92.356.
(n) As required in 24 CFR Part 92.357, the Developer will comply with all debarment and
suspension certifications.
(o) Under the Flood Disaster Protection Act of 1973, HOME 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.
(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.
(p) Subject to the terms and conditions of this Agreement and as further set forth in Section
3.7(c) hereof, the Agency shall make available from CHDO/HOME funds for the actual expenses as
provided below, in a total amount not to exceed One Hundred Seventy-Five Thousand Dollars
($175,000.00) which is considered here to be the HOME Funds Grant. The proceeds of the HOME Funds
Grant shall be used and applied by the Developer to carry out the HOME Project as set forth in Section
3.7(c) and elsewhere in this Agreement, specifically for the following purposes: a) Fees and permits; b)
School fees; c) Geological; d) Surveys; e) Environmental reporting; f) Architectural; g) Engineering and
landscaping; h) Course of construction; and i) Liability insurance.
The Developer's expenses qualifying for payment or reimbursement pursuant to the HOME Funds
Grant shall be evidenced by supporting documentation, setting forth the actual expenses of the Developer
in relation to the authorized purposes set forth in this Section, and any costs in excess of the HOME
Funds Grant amount of One Hundred Seventy-Five Thousand Dollars ($175,000.00) shall be borne by the
Developer. The Agency shall have the right, upon reasonable notice, to inspect and audit all books and
records of the Developer pertaining to the use of the HOME Funds Grant. The HOME Funds Grant shall
be disbursed by the Agency to the Developer as set forth in this Agreement. The Agency will submit the
"Designation of Community Housing Development Organization", Form HUD-40098, to reserve funds
for use by the Developer promptly following the approval of this Agreement by the governing board of
the Agency.
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(q) The Executive Director of the Agency shall approve any modified or revised plans,
drawings and related documents to which reference is made in this Agreement within the times
established in the Schedule of Performance as long as such plans, drawings and related documents are
generally consistent with the Scope of Development and any other plans which have been approved by the
Agency. Upon any disapproval of plans, drawings or related documents, the Executive Director of the
Agency shall state, in writing, the reasons for such disapproval. The Developer, upon receipt of notice of
any disapproval, shall promptly revise such disapproved portions of the plans, drawings or related
documents in a manner that addresses the reasons for disapproval and reasonably meets the requirements
of the Agency in order to obtain the Agency's approval thereof. The Developer shall resubmit such
revised plans, drawings and related documents to the Agency as soon as possible after its receipt of the
notice of disapproval and, in any event, no later than thirty (30) calendar days thereafter. The Executive
Director of the Agency shall approve or disapprove such revised plans, drawings and related documents in
the same manner and within the same times as provided in this Section for approval or disapproval of
plans, drawings and related documents initially submitted to the Agency.
(r) If the Developer desires to make any change in the construction drawings, plans and
specifications and related documents after their approval by the Agency and/or the City, the Developer
shall submit the proposed change in writing to the Executive Director of the Agency and/or the City for
their independent approval. The Executive Director of the Agency shall notify the Developer of approval
or disapproval thereof in writing within thirty (30) calendar days after submission to the Agency. This
thirty (30) calendar day period may be extended by mutual consent of the Developer and the Executive
Director of the Agency. Any such change shall, in any event, be deemed to be approved by the Agency
unless rejected, in whole or in part, by written notice thereof submitted by the Executive Director of the
Agency to the Developer, setting forth in detail the reasons therefore, and such rejection shall be made
within said thirty (30) calendar day period unless extended as permitted herein. The Agency shall use its
best efforts to cause the City to review and approve or disapprove any such change as provided in
Section 4.1(s) hereof.
(s) The Developer, upon receipt of a notice of disapproval by the Agency and/or the City, may
revise such portions of the proposed change in construction drawings, plans and specifications and related
documents as are rejected and shall thereafter resubmit such revisions to the Agency and/or the City for
their independent approval in the manner provided in Section 4.1(g) hereof.
(t) The Developer shall have the right during the course of construction of the Project to make
changes in construction of structures and "minor field changes" without seeking the approval of the
Agency; provided, however, that such changes do not affect the type of use to be conducted within all or
any portion of a structure. Said "minor field changes" shall be defined as those changes from the
approved construction drawings, plans, and specifications which have no substantial effect on the
improvements and are made in order to expedite the work of construction in response to field conditions.
Nothing contained in this Section shall be deemed to constitute a waiver of or change in the City's
Building Code requirements governing such "minor field changes" or in any and all approvals by the City
otherwise required for such"minor field changes".
(u) The cost of designing, constructing, installing and equipping the Project, including the
installation of all off-site public improvements, shall be borne by the Developer.
(v) As a non-profit organization and a recipient of HOME funds, the Developer certifies and
warrants that it meets the requirements of OMB Circular No. A-122. The Agency shall monitor the
activities of the Developer in order to ensure the continued compliance with these provisions and any
other provisions applicable under the HOME Program.
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(w) The Developer shall pay for any and all costs, including, but not limited to, the costs of
design, construction, relocation and securing of permits for utility improvements and connections, which
may be required in developing the Project. The Developer shall obtain any and all necessary approvals
for utility services prior to the commencement of applicable portions of said construction, and the
Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties
during said construction.
(x) The Developer shall commence the work of improvements of the Project on the Site within ninety
(90) calendar days following the Close of Escrow for the Site, and thereafter shall diligently prosecute
such construction to completion. All construction and development obligations and responsibilities of the
Developer as related to the Project shall be initiated and completed within the times specified in the
Schedule of Performance, or within such reasonable extensions of such times as may be granted by the
Agency or as otherwise provided for in this Agreement. The Developer shall substantially complete the
improvement of the Project by the date set forth in the Schedule of Performance. During the course of the
construction of the Project, the Schedule of Performance may be revised from time-to-time as mutually
agreed upon.
(y) Prior to the entry by the Developer to conduct limited testing on the Agency Lots pursuant
to Section 3.8, and following the Closing before the commencement of any construction by the Developer
of the Project, the Developer shall procure and maintain, at their sole cost and expense, in a form and
content satisfactory to the Agency, during the entire term of such entry or construction, the following
policies of insurance:
(i) a policy of comprehensive general liability insurance written on a per occurrence
basis in an amount not less than either (i) a combined single limit of One Million Dollars
($1,000,000.00) or (Ii) bodily injury limits of Five Hundred Thousand Dollars ($500,000.00) per
person, One Million Dollars ($1,000,000.00) per occurrence, One Million Dollars ($1,000,000.00)
products and completed operations and property damage limits of Five Hundred Thousand Dollars
($500,000.00) per occurrence and Five Hundred Thousand Dollars ($500,000.00) in the aggregate.
(ii) a policy of workers' compensation insurance in such amount as will fully comply
with the laws of the State of California and which shall indemnify, insure, and provide legal
defense for the Developer, the Agency and the City against any loss, claim or damage arising from
any injuries or occupational diseases occurring to any worker employed by or any persons retained
by the Developer in the course of carrying out the work or services contemplated in this
Agreement.
(iii) a policy of comprehensive automobile liability insurance written on a per
occurrence basis in an amount not less than either (i) bodily injury liability limits of Two Hundred
Fifty Thousand Dollars ($250,000.00) per person and Five Hundred Thousand Dollars
($500,000.00) per occurrence and property damage liability limits of One Hundred Thousand
Dollars ($100,000.00) per occurrence and One Hundred Thousand Dollars ($100,000.00) in the
aggregate or (ii) combined single limit liability of Five Hundred Thousand Dollars ($500,000.00).
Said policy shall include coverage for owned, non-owned, leased and hired vehicles.
(iv) during the course of construction and improvement of the Project, a policy of
builder's risk insurance covering the full replacement value of the Project.
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All of the above policies of insurance shall be primary insurance and shall name the City and the
Agency, and their officers, employees, and agents as additional insureds. The insurer shall waive all
rights of subrogation and contribution it may have against the City and the Agency and their officers,
employees and agents and their respective insurers. All of said policies of insurance shall provide that
said insurance may not be amended or canceled without providing thirty (30) calendar days prior written
notice by registered mail to the Agency. In the event any of said policies of insurance are canceled, the
Developer shall,prior to the cancellation date, submit new evidence of insurance in conformance with this
Section to the Executive Director of the Agency. No work or improvement of the Site or operation of the
Project shall commence until the Developer have provided the Agency with certificates of insurance or
appropriate insurance binders evidencing the above insurance coverages, and said certificates of insurance
or binders are approved by the Agency.
The policies of insurance required by this Agreement shall be satisfactory only if issued by
companies qualified to do business in California, rated at least"A(vii)" or better in the most recent edition
of Bests Insurance Rating Guide or an equivalent rating in The Key Rating Guide or in the Federal
Register unless such requirements are modified or waived by the Executive Director of the Agency due to
unique circumstances.
The Developer shall provide in all contracts with contractors, subcontractors, architects and
engineers who provide services in connection with the improvement of the Project that such persons shall
maintain the same policies of insurance required to be maintained by the Developer pursuant to this
Section, unless waived by the Executive Director of the Agency.
The Developer agrees that the provisions of this Section shall not be construed as limiting in any
way the extent to which the Developer may be held responsible for the payment of damages to any
persons or property resulting from the Developer's activities or the activities of any person or persons for
which the Developer is otherwise responsible.
(aa) The Developer for itself and its successors and assigns agrees that in the construction of
the Project, the Developer will not discriminate against any employee or applicant for employment
because of sex, marital status, race, color, religion, creed, national origin or ancestry.
(bb) The Developer shall carry out its construction of the Project in conformity with all
applicable laws, including all applicable state labor standards and requirements including the payment of
prevailing wages as required by State law for the construction of the Project as a development on Agency
acquired property in addition to the financing incentives as provided herein.
(cc) The Developer shall, at its own expense, secure or shall cause to be secured, any and all
permits which may be required for such construction, development or work by the City or any other
governmental agency having jurisdiction. The Agency shall cooperate in good faith with the Developer in
the Developer's efforts to obtain from the City or any other appropriate governmental agency any and all
such permits applicable to the development of the Project.
(dd) Officers, employees, agents or representatives of the Agency shall have the right of
reasonable access to the Site, without the payment of charges or fees, during normal construction hours
during the period of construction of the Project for the purpose of verifying compliance by the Developer
with the terms of this Agreement. Such officers, employees, agents or representatives of the Agency shall
be those persons who are so identified by the Executive Director of the Agency. Any and all officers,
employees, agents or representatives of the Agency who enter the Site pursuant hereto shall identify
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themselves at the job site office upon their entrance onto the Site and shall at all times be accompanied by
a representative of the Developer while on the Site; provided, however, that the Developer shall make a
representative of the Developer available for this purpose at all times during normal construction hours
upon reasonable notice from the Agency. The Agency shall indemnify and hold the Developer harmless
from injury, property damage or liability arising out of the exercise by the Agency and/or the City of this
right of access, other than injury, property damage or liability relating to the negligence of the Developer
or its officers, agents or employees.
(ee) The Agency shall inspect relevant portions of the construction site prior to issuing any
written statements reflecting adversely on the Developer's compliance with the terms and conditions of
this Agreement pertaining to development of the Site.
4.2 Encumbrances and Liens.
The Developer shall not place and shall not allow to be placed on the Site any mortgage, trust
deed, deed of trust, encumbrance or lien not otherwise authorized by this Agreement, and shall
specifically pay materialmen and laborers in a timely manner so that no mechanics' liens or
materialmens' liens are filed or recorded against the Agency Lots after title has been transferred to the
Developer. The Developer shall remove, or shall have removed, any levy or attachment made on the Site,
or shall assure the satisfaction thereof.
4.3 Change in Ownership Management and Control of the Developer -- Assignment and
Transfer.
(a) Transfer as used in this Section 4.3, the term"Transfer"means:
(1) Any total or partial sale, assignment or conveyance, or any trust or power, or any
transfer in any other mode or form, by the Developer of more than a forty-nine percent (49%)
interest (or series of such sales, assignments and the like which in the aggregate exceed a
disposition of more than a forty-nine percent (49%) interest) with respect to their interests in this
Agreement, the Site or the Project, or any part thereof or any interest therein or of the
improvements constructed thereon, or any contract or agreement to do any of the same; or
(2) Any total or partial sale, assignment, conveyance, or transfer in any other mode or
form, of or with respect to any ownership interest of the Developer, its nonprofit corporation
business organization (or series of such sales, assignments and the like which in the aggregate
exceeded a disposition of more than a forty-nine percent (49%) interest); or
(3) Any merger, consolidation, sale or lease of all or substantially all of the assets of
the Developer in this Agreement, the Site or the Project (or series of such sales, assignments and
the like which in the aggregate exceeded a disposition of more than a forty-nine percent (49%)
interest); or
(4) The leasing of part or all of the Site or the Project except for the sale of the Project
upon its completion by the Developer for sale by the Developer to Low-Income Households.
(b) This Agreement is entered into solely for the purpose of the redevelopment of the Site and
the improvement of the Project and the subsequent operation and use of the Site by the Developer for
construction of the New Homes for sale and occupancy by Low-Income Households in accordance with
the terms of this Agreement. The Developer recognizes that the qualifications and identity of the
Developer are of particular concern to the Agency, in view of-
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(1) the importance of the redevelopment of the Site to the general welfare of the
community; and
(2) the fact that a Transfer is for all practical purposes a transfer or disposition of the
responsibilities of the Developer with respect to the redevelopment of the Site and the Project.
The Developer further recognizes and acknowledges that it is because of the qualifications and
identity of the Developer that the Agency is entering into this Agreement with the Developer, and, as a
consequence, Transfers are permitted only as provided in this Agreement.
(c) The limitations on a Transfer as set forth in this Section 4.3 shall apply until the
Completion of the Project. Except as expressly permitted in this Agreement, the Developer represents
and agrees that it has not made nor shall it create or suffer to be made or created, any Transfer, either
voluntarily or by operation of law without the prior written approval of the Agency until after the
Completion of the Project. Any Transfer made in contravention of this Section 4.3 shall be voidable at
the election of the Agency and such action shall then be deemed to be a default under this Agreement.
After the Completion of the Project, certain other provisions of this Agreement shall nonetheless be
applicable to subsequent conveyances of interest in the Site, or portions thereof, as provided in the
Agency Regulatory Agreement.
(d) The following types of a Transfer shall be permitted and approved by the Agency and are
referred to herein as a"Permitted Transfer":
(1) Any Transfer by the Developer creating a "Security Financing Interest" in the Site
which conforms to the provisions of Section 4.4;
(2) Any Transfer directly resulting from the foreclosure of a Security Financing
Interest created by the Developer in the Site or the granting of a deed in lieu of foreclosure of a
Security Financing Interest;
(3) Any Transfer of any interest in the Developer, irrespective of the percentage of
ownership to any non-profit affiliate of or other non-profit entity controlled by the Developer, or
to any other entity in which the Developer owns a controlling interest.
(e) No Permitted Transfer of this Agreement or any interest in the Site or the Project, by the
Developer (other than a Permitted Transfer created pursuant to a Security Financing Interest under
Section 4.3(d)) shall be effective unless, at the time of the Permitted Transfer, the person or entity to
which such Transfer is made, shall expressly assume the obligations of the Developer under this
Agreement and such person also agrees to be subject to the conditions and restrictions to which the
Developer is subject under this Agreement. Such an assumption of obligation shall be evidenced by a
written instrument delivered to the Agency in a recordable form which is satisfactory to the Agency.
(f) Prior to, on and after the Completion of the Project, the covenants of the Developer as set
forth in the Agency Regulatory Agreement shall run with the land for the term as provided in the Agency
Regulatory Agreement.
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4.4 Security Financing; Right of Holders.
(a) Notwithstanding any provision of Section 4.3 to the contrary, mortgages, deeds of trust or
any other form of lien required for any reasonable method of financing the construction and improvement
of the Project and any security interest or lien in the Site, are permitted before the Completion of the
Project. The Developer shall notify the Agency, in writing, in advance of any mortgage, deed of trust or
other form of lien for financing if the Developer proposes to enter into the same before the Completion of
the Project. The Developer shall not enter into any such other conveyance for construction financing
without the prior written approval of the Agency, which approval the Agency shall grant if, given to a
responsible financial or lending institution including, without limitation, banks, savings and loan
institutions, credit unions, insurance companies, real estate investment trusts, pension programs and the
like, or other acceptable persons or entities for the purpose of constructing the Project on the Site.
(b) The Developer shall promptly notify the Agency of any mortgage, deed of.trust or other
refinancing, encumbrance or lien that has been created or attached thereto prior to completion of the
construction of the improvements on the Site whether by voluntary act of the Developer or otherwise;
provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by the
Developer to the Agency prior to suit being filed to foreclose such mechanic's lien.
(c) The words "mortgage" and "deed of trust" as used herein shall be deemed to include all
other customary and appropriate modes of financing real estate construction and land development.
(d) The holder of any mortgage, deed of trust or other security interest authorized by this
Agreement shall in no manner be obligated by the provisions of this Agreement to construct or complete
the improvement of the Site or to guarantee such construction or completion.
(e) Whenever the Agency shall deliver any notice or demand to the Developer with respect to
any breach or default by the Developer in the completion of construction of the Project, or any breach or
default of any other obligations which, if not cured by the Developer, entitle the Agency to terminate this
Agreement or exercise its right to re-enter the Agency Lots, or a portion thereof under the Agency Grant
Deed, the Agency shall at the same time deliver to each holder of record of any mortgage, deed of trust or
other security interest authorized by this Agreement a copy of such notice or demand. Each such holder
shall (insofar as the rights of the Agency are concerned) have the right, at its option, to commence the
cure or remedy of any such default and to diligently and continuously proceed with such cure or remedy,
within one hundred twenty (120) calendar days after the receipt of the notice; and to add the cost thereof
to the security interest debt and the lien of its security interest. If such default shall be a default which can
only be remedied or cured by such holder upon obtaining possession, such holder shall seek to obtain
possession with diligence and continuity through a receiver or otherwise, and shall remedy or cure such
default within one hundred twenty (120) calendar days after obtaining possession; provided that in the
case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot
be commenced, within such one hundred twenty (120) calendar day period, such holder shall have such
additional time as is reasonably necessary to remedy or cure such default of the Developer. Nothing
contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue
the construction or completion of the Project (beyond the extent necessary to conserve or protect the
improvements or construction already made) without first having expressly assumed the.Developer's
obligations by written agreement satisfactory to the Agency. The holder in that event must agree to
complete, in the manner provided in this Agreement, the improvements to which the lien or title of such
holder relates and must submit evidence satisfactory to the Agency that it has the qualifications and
financial responsibility necessary to perform such obligations.
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(f) In any case where one hundred eighty (180) calendar days after default by the Developer,
the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon
the Site or any portion thereof has not exercised the option to construct the applicable portions of the
Project, or has exercised the option but has not proceeded diligently and continuously with construction,
the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder
of the amount of the unpaid debt, including principal, accrued and unpaid interest, late charges, costs,
expenses and other amounts payable to the holder by the Developer under the loan documents between
the holder and the Developer or any guaranty document executed by the Developer. If the ownership of
the Agency Lots has vested in the holder, the Agency, may, at its option but not its obligation be entitled
to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum
of the following:
(1) The unpaid mortgage, deed of trust or other security interest debt, including
principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to
the holder by the Developer under the loan documents between the holder and the Developer, at
the time title became vested in the holder (less all appropriate credits, including those resulting
from collection and application of rentals and other income received during foreclosure
proceedings).
(2) All expenses, if any, incurred by the holder with respect to foreclosure.
(3) The net expenses, if any (exclusive of general overhead), incurred by the holder as
a direct result of the subsequent ownership or management of the Agency Lots, such as insurance
premiums and real estate taxes.
(4) The cost of any improvements made by such holder.
(5) An amount equivalent to the interest that would have accrued on the aggregate on
such amounts had all such amounts become part of the mortgage or deed of trust debt and such
debt had continued in existence to the date of payment by the Agency.
(6) After expiration of the aforesaid one hundred eighty (180) calendar day period, the
holder of any mortgage, deed of trust or other security affected by the option created by this
Section, may demand, in writing, that the Agency act pursuant to the option granted hereby. If the
Agency fails to exercise the right herein granted within sixty (60) calendar days from the date of
such written demand, the Agency shall be conclusively deemed to have waived such right of
purchase of the mortgage, deed of trust or other security interest.
(g) In the event of a default or breach by the Developer of a mortgage, deed of trust or other
security interest with respect to the Agency Lots (or any portion thereof) prior to the Completion of the
Project (or any portion thereof), and the holder has not exercised its option to complete the development,
the Agency may cure the default but is under no obligation to do so prior to completion of any
foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs
and expenses incurred by the Agency in curing the default. The Agency shall also be deemed to have a
lien of the Agency as may arise under this Section 4.4(g) upon the Agency Lots or the Site (or any portion
thereof) to the extent of such costs and disbursements; provided, however, any such lien in favor of the
Agency as may arise under this Section 4.4(g) shall be subordinate and subject to mortgages, deeds of
trust or other security instruments executed by the Developer for the purpose of obtaining the funds to
construct and improve the Site as authorized herein.
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4.5 Right of the Agency to Satisfy Other Liens on the Agency Lots after Conveyance of
Title to the Developer.
After the conveyance of title to the Agency Lots by the Agency to the Developer and prior to the
Completion of the Project, and after the Developer has had a reasonable time to challenge, cure or satisfy
any unauthorized liens or encumbrances on the Agency Lots, the Agency shall after one hundred twenty
(120) calendar days prior written notice to the Developer have the right, but not the obligation, to satisfy
any such liens or encumbrances; provided, however, that nothing in this Agreement shall require the
Developer to pay or make provisions for the payment of any tax, assessment, lien or charge so long as the
Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment
shall not subject the Site, or any portion thereof, to forfeiture or sale.
4.6 [RESERVED—NO TEXT]
4.7 [RESERVED -- NO TEXT]
5. USE OF THE SITE.
5.1 Use of the Agency Lots.
The Developer hereby covenants and agrees, for itself and its successors and assigns, that the
Agency Lots or the Site shall be developed, used and maintained as single-family housing units for
occupancy by Low-Income Households as more fully set forth in the Agency Grant Deed (Exhibit "C")
and the Agency Regulatory Agreement (Exhibit "D" herein). As further set forth in the Recitals to this
Agreement relating to the use of HOME funds pursuant to the various federal statutes and regulations set
forth therein, the maximum purchase price of any New Home to be paid by a Qualified Homebuyer that is
constructed on the Agency Lots or the Site shall not exceed ninety-five percent (95%) of the area median
purchase price for comparable sales as determined by the Agency from time-to-time based upon County
of San Bernardino statistical data. Notwithstanding such HOME funds imposed maximum sales price
limitation, the actual sales price of the housing units to be constructed upon the Agency Lots shall not
exceed a maximum sales price equal to Three Hundred Thousand Dollars ($300,000.00) per housing unit
unless approved by the Executive Director of the Agency, in writing, based upon reasonably demonstrable
increases in building materials and labor costs, exclusive of management, overhead, profit or other
general conditions of the Developer or of any other general contractors that are capable of being verified
on a County-wide basis for comparison purposes. However, it is the intent hereof that the Developer will
be able to achieve a sales price for each housing unit on the Agency Lots that will be at a sales price
substantially lower than the maximum allowed herein and pursuant to the federal statutes and regulations
with respect to the use of HOME Funds for the construction of new single-family housing units.
Additionally, such lower agreed upon maximum sales price limit is also intended to reflect the subsidy
granted by the Agency to the Developer based upon the transfer of the Agency Lots to the Developer for
no monetary consideration except for the commitment of the Developer to be bound by the covenants and
conditions as contained herein and as shall be imposed upon the Agency Lots pursuant to the Agency
Grant Deed and the Agency Regulatory Agreement.
5.2 Disposition of the Agency Lots to Qualified Homebuyers.
(a) Upon the completion of each New Home by the Developer on each Agency Lot, the
Developer shall transfer and sell all of its rights, title and interest in the Agency Lots, as improved with
the Completed New Home to a Qualified Homebuyer designated by the Developer. The Completed New
Home Purchase Price payable by such Qualified Homebuyer to the Developer for the Completed New
Home shall be an amount as referenced in Section 5.1 .
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(b) The disposition of each Completed New Home to the Qualified Homebuyer designated by
the Developer shall take place through a New Home Escrow to be administered by the Escrow Holder.
The Escrow Holder shall promptly confirm to the parties the escrow number and the title insurance order
number assigned to such escrow. The Escrow Holder shall be a title company or escrow service as
acceptable to the Developer and the Qualified Homebuyer.
(c) The Developer shall deliver to the Agency the information relating to each Qualified
Homebuyer described in Section 2(d) of the Agency Regulatory Agreement, within five (5) calendar days
following the Developer's designation of such Qualified Homebuyer as the prospective purchaser of the
Completed New Home. Concurrently, upon the Developer's delivery to the Agency of the household
income and occupancy information described in Section 2(d) of the Agency Regulatory Agreement, the
Developer shall also request that the Agency issue its Notice of Agency Concurrence with respect to the
Qualified Homebuyer designated by the Developer. Within ten (10) calendar days following its receipt of
such written information and request from the Developer relating to the Qualified Homebuyer, the
Agency shall provide the Developer with a preliminary confirmation of the approval or rejection of the
income and household occupancy qualifications of the proposed Qualified Homebuyer. In the event that
the Agency may request additional information relating to the confirmation of the matters described in the
preceding sentence with respect to the Qualified Homebuyer, the Developer shall cause such additional
information to be provided to the Agency as promptly as feasible. The Executive Director of the Agency
shall issue a preliminary determination of his concurrence of the eligibility of the Qualified Homebuyer
within ten (10) calendar days following receipt of such completed income and household occupancy
information. Provided that the proposed Qualified Homebuyer also qualifies to obtain purchase money
mortgage financing for the purchase of the Completed New Home with terms and costs not in excess of
an Affordable Housing Cost for such Qualified Homebuyer, as evidenced by a written mortgage lender's
prequalification for such Qualified Homebuyer within sixty (60) calendar days following the Executive
Director of the Agency's preliminary concurrence of the eligibility of the Qualified Homebuyer
designated by the Developer, the Executive Director of the Agency shall issue a Notice of Agency
Concurrence with respect to such Qualified Homebuyer to the Escrow Holder. In the event that the
Agency may later discover that the written information provided to it in support of a request for issuance
of a Notice of Agency Concurrence is false or incorrect in any material respect, then in such event the
Agency may exercise all of its remedies to enforce the provisions of this Agreement and the Agency
Regulatory Agreement, if applicable, notwithstanding the fact that a Notice of Agency Concurrence may
have been issued in favor of a particular Qualified Homebuyer.
Upon the completion of each New Home, the Developer shall sell such New Home to a Qualified
Homebuyer which New Home shall be transferred to such Qualified Homebuyer through a New Home
Escrow. The Agency shall not be a party to any such New Home Escrow. Notwithstanding the preceding
sentence, the Developer shall instruct the Escrow Holder to comply with the provisions of Section 5.2(e)
of this Agreement and at the close of each New Home Escrow, the Escrow Holder shall provide the
Agency with a copy of both the "seller's" and the "buyer's" closing statement, together with a complete
copy of the real estate sales agreement between the Developer and the Qualified Homebuyer for the New
Home.
(d) The Developer and the Agency mutually covenant and agree to execute all necessary or
appropriate written escrow instructions relating to the application of this Agreement to a particular New
Home Escrow as may be reasonably requested by the Escrow Holder in connection with the
administration of a New Home Escrow.
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(e) Each New Home Escrow shall close upon satisfaction of the applicable escrow conditions
by and between the Developer and such Qualified Homebuyer as consistent with this Agreement when the
Escrow Holder confirms that:
(i) it is in receipt of the Notice of Agency Concurrence for the Qualified Homebuyer in the
case of the Completed New Home;
(ii) it has received and is in a position to record a fully executed form of the Agency
Regulatory Agreement for the Completed New Home;
(iii) it is in a position to provide the Agency within a policy of title insurance in favor of the
Agency which insures that the Agency Regulatory Agreement is subject only to the lien
for property taxes and the lien in the Completed New Home of the senior purchase money
mortgage lender to the Qualified Homebuyer in the case of the Completed New Home;
(iv) the Developer has provided the Agency with a preliminary indication of the Completed
New Home;
(v) the Qualified Homebuyer has executed all of the Agency documents relating to the
Agency Downpayment Assistance, if any, provided by the Agency to such Qualified
Homebuyer pursuant to Section 5.5 of this Agreement;
(vi) it is in receipt of a grant deed (the "Developer Grant Deed") executed and acknowledged
by the Developer, and executed, acknowledged and accepted by the Qualified
Homebuyer, wherein the Developer sells, transfers, conveys,grants and assigns all of its
rights, title and interest in the Completed New Home to the Qualified Homebuyer, and the
Qualified Homebuyer accepts the Developer Grant Deed;
(vii) it is in a position to comply with such other instructions of the Developer, the Qualified
Homebuyer and the senior purchase money mortgage lender relating to the Completed
New Home.
(f) In the event that a New Home Escrow may fail to close for any reason, the Developer may
cause such New Home Escrow to be cancelled without further notice of instruction to the Agency. The
Developer shall pay for all of the costs and expenses of such a cancelled New Home Escrow and shall
indemnify, defend and hold the Agency harmless from any claim,loss or damage which may be asserted
or arise against the Agency by a third party as a result of the cancellation of any such escrow.
(g) Within sixty(60) calendar days following the close of a New Home Escrow, the Developer
shall deliver its New Home Sales Costs Certificate to the Agency, together with adjustments, if any.
5.3. Maintenance of the Agency Lots.
The Developer covenants and agrees for itself, its successors, and assigns to maintain each of the
Agency Lots in a good condition free from any accumulation of debris or waste material, subject to
normal construction job-site conditions, and shall maintain in a neat, orderly, healthy and good condition
the landscaping on each Agency Lot required to be planted in accordance with the Scope of Development.
In the event the Developer, or its successors or assigns, fails to perform the maintenance as required
herein, the Agency shall have the right, but not the obligation, to enter any Agency Lot and undertake
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such maintenance activities. In such event, the Developer shall reimburse the Agency for all reasonable
sums incurred by it for such maintenance activities. The obligation of the Developer under this Section
5.3 with respect to the Agency Lots shall be discharged for each Agency Lot on the applicable Delivery
Date for each Completed New Home.
5.4 Project Development Cost Pro Forma.
(a) As of the Effective Date of this Agreement, the Developer has presented the Agency with a
Project development cost pro forma (the "Pro Forma"). The Agency shall make the Agency Lots
available to the Developer upon its issuance of one (1) or more Notices of Availability for Transfer based
upon the Project development cost estimate presented by the Developer in the Pro Forma.
(b) Upon the request of the Agency (but not more frequently than once every ninety (90)
calendar days) and at such other times as the Developer may in its discretion elect, the Developer shall
modify or update the previously submitted Pro Forma. Upon the written request by the Agency, the
Developer shall deliver to the Agency the updated and revised Pro Forma within ten (10) calendar days
from receipt by the Developer of such written Agency request.
(c) The Developer shall maintain accounting books and records of Project development costs
incurred in accordance with generally accepted principles of business accounting. The Agency and its
accountants and auditors shall have the right to conduct, at its expense, an inspection and review of the
accounting books and records of the Developer relating to the Project, upon the request of the Agency.
The Developer shall cooperate with the Agency in the production of its accounting books and records as
reasonably required by the Agency and its auditors to conduct an audit of actual Project development
costs.
5.5 Agency Downpayment Assistance.
(a) As of the Effective Date, the Agency shall appropriate and reserve the sum of Two
Hundred Forty Thousand Dollars ($240,000.00), in the aggregate, from the HOME Fund to provide
Agency Downpayment Assistance to Qualified Homebuyers of each of the four (4) Completed New
Homes. Agency Downpayment Assistance may hereafter be provided to Qualified Homebuyers upon the
close of each New Home Escrow for a Completed New Home, subject to the terms and conditions of the
Agency's HAP Program and the underwriting and credit evaluation by the Agency of each such Qualified
Homebuyer.
(b) Provided that a Qualified Homebuyer is determined by the Agency to be eligible for
Agency Downpayment Assistance, as part of its acquisition of a Completed New Home upon the close of
the New Home Escrow, such Qualified Homebuyer shall execute and/or acknowledge such instruments,
documents and agreements, as reasonably requested by the Agency.
(c) The amount, if any, of the Agency Downpayment Assistance, which may be provided to
one (1) or more Qualified Homebuyers shall not exceed more than Sixty Thousand Dollars ($60,000.00)
in connection with the sale by the Developer to the Qualified Homebuyer and the purchase by the
Qualified Homebuyer from the Developer of the Completed New Home, and shall be disbursed for the
account of such Qualified Homebuyer through the applicable New Home Escrow for each Completed
New Home.
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(d) In the event a Qualified Homebuyer shall need additional downpayment assistance (the
"Additional Downpayment Assistance") to purchase the Completed New Home upon the close of the
New Home Escrow (should the Agency Downpayment Assistance and the outstanding principal amount
of the loan (the "First Deed of Trust Loan") to be made by a lender to the Qualified Buyer and secured by
a first deed of trust or mortgage encumbering the Completed New Home, in the aggregate, be insufficient
to permit the Qualified Homebuyer to purchase the Completed New Home upon the close of the New
Home Escrow), the Developer shall pay, assume, guarantee, or be responsible for the payment of, the
Additional Downpayment Assistance (for the benefit of the Qualified Homebuyer) needed by such
Qualified Homebuyer to purchase such Completed New Home and to close the New Home Escrow for
such Completed New Home.
(e) Notwithstanding any other provision of this Section 5.5, the Agency shall have no
obligation to grant or to fund any Agency Downpayment Assistance grant or loan to a Qualified
Homebuyer in connection with the purchase by the Qualified Homebuyer of a Completed New Home.
5.6 Agency Participation in New Home Profit for Each New Home.
(a) For the purposes of this Section 5.6, the words "New Home Profit" for each New Home
shall mean and refer to a sum which shall be determined in accordance with the following formula:
(Completed New Home Purchase Price)—(New Home Sales Costs) =New Home Profit
(b) Within five (5) calendar days prior to the New Home Closing for each Completed New
Home sold by the Developer to the Qualified Homebuyer, the Developer shall prepare and provide to the
Agency and to the Escrow Agent for the New Home Escrow a certificate estimating the New Home Profit
for the Completed New Home being sold by the Developer to the Qualified Homebuyer. In connection
with each New Home Escrow, should a Qualified Homebuyer need the Additional Downpayment
Assistance to purchase the Completed New Home (in excess of the Agency's Downpayment Assistance
being paid by the Agency for the benefit of the Qualified Homebuyer to the Escrow Agent of the New
Escrow and of the proceeds from the First Deed of Trust Loan), such excess shall be paid by the
Developer from the New Home Profit (in effect and earned by the Developer on the close of such New
Home Escrow) in connection with such Completed New Home. At the close of the New Home Escrow,
the Escrow Agent for the New Home Escrow shall pay fifty percent (50%) of the New Home Profit less
the Additional Downpayment Assistance (the "Restated New Home Profit") to Arroyo and fifty percent
(50%) of the Restated New Home Profit to the Churches.
(c) Within sixty(60) calendar days following the close of a New Home Escrow,the Developer
shall also prepare and deliver to the Agency its New Home Sales Costs Certificate for such Completed
New Home. Notwithstanding any other provision in this Agreement to the contrary, the Agency, at any
time, shall have the right to conduct and complete an audit (the "Audit") of the information presented in
each New Home Sales Costs Certificate, the books and records of the Developer in connection with and
relating to the acquisition of each Agency Lot, the development, construction and improvement of each
Completed New Home, the marketing and sale of each Completed New Home by the Developer to a
Qualified Homebuyer, and all other financial information, New Home Sales Costs projections, Developer
profit projections in connection with the sale by the Developer to a Qualified Homebuyer of each of the
Completed New Homes, and any other financial information or other information relating to or in
connection with the Project, at the expense of the Agency in accordance with generally accepted
accounting principles. The Developer shall cooperate with the Agency and its agents in the conduct of
any such audit, including, without limitation, the delivery to the Agency, upon request, of underlying
construction or service contracts and invoices for services performed or products delivered to the
Developer by third parties relating to the Project.
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6. ENFORCEMENT.
6.1 General Conditions
(a) In the event that either the Developer Conditions or the Agency Conditions have not been
approved, disapproved or waived by the parties, as the case may be, prior to the Closing by the applicable
date set forth in the Schedule of Performance, then the remedies of the parties shall be as set forth in
Section 3.10 of this Agreement which may result in a termination of this Agreement pursuant to Section
3.10 therein. In the event that a breach or default may occur prior to the Close of Escrow pursuant to this
Agreement, and subject to the extension of time set forth in Section 7.5 hereof, failure or delay by either
party to perform any term or provision of this Agreement shall constitute a default under this Agreement;
provided, however, that if a party otherwise in default commences to cure, correct or remedy such default
within thirty (30) calendar days after receipt of written notice specifying such default and shall diligently
and continuously prosecute such cure, correction or remedy to completion (and where any time limits for
the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within
said time limits), such party shall not be deemed to be in default hereunder.
(b) From and after the Close of Escrow and subject to the extensions of time set forth in
Section 7.5 hereof, failure or delay by either party to perform any term or provision of this Agreement
shall constitute a default under this Agreement; provided, however, that if a party otherwise in default
commences to cure, correct or remedy such default within thirty(30) calendar days after receipt of written
notice specifying such default and shall diligently and continuously prosecute such cure, correction or
remedy to completion (and where any time limits for the completion of such cure, correction or remedy
are specifically set forth in this Agreement, then within said time limits), such party shall not be deemed
to be in default hereunder.
(c) The injured party shall give written notice of default to the party in default, specifying the
default complained of by the nondefaulting party. Delay in giving such notice shall not constitute a
waiver of any default nor shall it change the time of default.
(d) Any failure or delays by either party in asserting any of its rights and remedies as to any
default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either
party in asserting any of its rights and remedies shall not deprive either party of its right to institute and
maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such
rights or remedies.
6.2. Legal Actions.
(a) 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 purposes of this Agreement. Such legal actions must be instituted in the Superior
Court of the County of San Bernardino, San Bernardino District, State of California, or in the Federal
District Court in the Central District of California.
(b) The laws of the State of California shall govern the interpretation and enforcement of this
Agreement.
(c) In the event that any legal action is commenced by the Developer against the Agency,
service of process on the Agency shall be made by personal service upon the Executive Director of the
Agency, or in such other manner as may be provided by law.
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(d) In the event that any legal action is commenced by the Agency against the Developer,
service of process on the Developer shall be made by personal service on the Chief Executive Officer for
service of process and at such address as may be specified in written notice to the Agency, or in such
other manner as may be provided by law, and shall be valid whether made within or without the State of
California.
6.3 Rights and Remedies are Cumulative.
Except with respect to any rights and remedies expressly declared to be exclusive in any Section
of this Agreement as the same relates to a failure of conditions precedent occurring before the Close of
Escrow, the rights and remedies of the parties as set forth in Section 6.1 through Section 6.8, and
specifically this Section 6.3, are cumulative and the exercise by either party of one or more of such rights
or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or
remedies for the same default or any other default by the other party.
6.4. Damages.
If any party or parties default with regard to any provision of this Agreement, the nondefaulting
party or parties shall serve written notice of such default upon the defaulting party or parties. If the
defaulting party or parties do not diligently commence to cure such default after service of the notice of
default and promptly complete the cure of such default within a reasonable time, not to exceed thirty (30)
calendar days (or such shorter period as may otherwise be specified in this Agreement for default), after
the service of written notice of such a default, then the nondefaulting party or parties shall be thereupon
entitled to exercise all remedies as provided in this Agreement. In the event that a default relates to a
matter arising after the Close of Escrow the defaulting party or parties shall be liable to the other party or
parties for damages caused by such default.
6.5 [RESERVED--NO TEXT]
6.6 Right to Re-enter, Repossess and Revert.
(a) The Agency shall, upon thirty (30) calendar days notice to the Developer which notice
shall specify this Section 6.6, have the right, at its option, to re-enter and take possession of all or any
portion of the Agency Lots, together with all improvements thereon, and to terminate and revert to the
Agency the estate conveyed to the Developer hereunder, if after conveyance of title, the Developer (or its
interest) shall:
(1) Failure to commence construction of all or any portion of the improvements as
required by this Agreement for a period of sixty (60) calendar days after written notice to proceed
from the Agency; provided that the Developer shall not have obtained an extension or
postponement to which the Developer may be entitled pursuant to Section 7.5 hereof; or
(2) Abandon or substantially suspend construction of all or any portion of the
improvements for a period of sixty(60) calendar days after written notice of such abandonment or
suspension from the Agency; provided that the Developer shall not have obtained an extension or
postponement to which the Developer may be entitled to pursuant to Section 7.5 hereof, or
(3) Assign or attempt to assign this Agreement, or any rights herein, or transfer, or
suffer any involuntary transfer, of the Agency Lots or the Site or the Project or any part thereof, in
violation of this Agreement, and such violation shall not have been cured within thirty (30)
calendar days after the date of receipt of written notice thereof from the Agency to the Developer.
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(b) The thirty (30) calendar day written notice specified in this Section shall specify that the
Agency proposes to take action pursuant to this Section and shall specify which of the obligations of the
Developer set forth in Subsections (1) through (3) herein have been breached. The Agency shall proceed
with its remedy set forth herein only in the event that the Developer continues in default of said obligation
or obligations for a period of thirty(30) calendar days following such notice or, upon commencing to cure
such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion.
(c) The right of the Agency to reenter, repossess, terminate and revert shall be subject and
subordinate to, shall be limited by and shall not defeat, render invalid or limit:
(1) Any mortgage, deed of trust or other security interest permitted by this Agreement;
(2) Any rights or interests provided in this Agreement for the protection of the holders
of such mortgages, deeds of trust or other security interests;
(3) Any leases, declarations of CC&Rs, easement agreements or other recorded
documents applicable to the Site.
(d) The Agency Grant Deed shall contain appropriate references and provisions to give effect
to the Agency's rights, as set forth in this Section under specified circumstances prior to the Completion
of the Project with respect to such portion, to reenter and take possession of such portion, or any part
thereof, with all improvements thereon, and to terminate and revert in the Agency the estate conveyed to
the Developer.
(e) Upon the reinvesting in the Agency of title to one or more of the Agency Lots, or any part
thereof, as provided in this Section, the Agency shall, pursuant to its responsibilities under State law, use
its best efforts to resell the Agency Lots, or any part thereof, as soon and in such manner as the Agency
shall find feasible and consistent with the objectives of such law, to a qualified and responsible party or
parties (as determined by the Agency) who will assume the obligations of making or completing the
Project, or such other improvements in their stead as shall be satisfactory to the Agency and in accordance
with the uses specified for the Agency Lots and/or the Site, or any part thereof. Upon such resale of the
Agency Lots and/or the Site, or any part thereof, the proceeds thereof shall be applied:
(1) First, to make any payment made or necessary to be made to discharge or prevent
from attaching or being made any subsequent encumbrances or liens due to obligations incurred
with respect to the making or completion of the agreed improvements or any part thereof on the
Site or any portion thereof; next to reimburse the Agency on its own behalf or on behalf of the
City for all actual costs and expenses incurred by the Agency and the City, including, but not
limited to, customary and reasonable fees or salaries to third party personnel engaged in such
action, including the Agency's attorneys fees, in connection with the recapture, management and
resale of the Site or any portion thereof, all taxes, assessments and water and sewer charges paid
by the City and/or the Agency with respect to the Site or any portion thereof, any amounts
otherwise owing to the Agency by either the Developer and its successor transferee; and
(2) Second, to the extent that any and all funds which are proceeds from such resale are
thereafter available, to reimburse the Developer, or its successor transferee, up to the amount equal
to the sum of: the costs incurred for the development of the Agency Lots, or applicable part
thereof, or for the construction of the improvements thereon including, but not limited to, costs of
carry, taxes and items set forth in the Developer's cost statement which shall be submitted to and
approved by the Agency.
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(3) Any balance remaining after the foregoing application of proceeds shall be retained
by the Agency.
6.7 Mutual Indemnification.
The Developer agrees to indemnify and hold the City and the Agency, and their officers,
employees and agents, harmless from and against all claims for liability for damages, judgments, costs,
expenses and fees arising from or related to any act or omission of the Developer in performing its
obligations hereunder. The Agency agrees to indemnify and hold the Developer and its officers,
employees and agents, harmless from and against all claims or liability for damages, judgments, costs,
expenses and fees arising from or related to any act or omission of the Agency in performing its
obligations hereunder.
6.8 Attorneys' Fees.
In the event of litigation between the parties arising out of this Agreement, the prevailing party
shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including
such fees and costs incurred on appeal, in addition to whatever other relief to which it maybe entitled. As
used in the preceding sentence, the words "reasonable attorneys' fees" in the case of the Agency, include
the salary and costs payable to lawyers employed or retained by the Agency, who provide legal counsel to
the Agency in such litigation as allocated on an hourly basis.
7. MISCELLANEOUS.
7.1 Governing Law.
The laws of the State of California shall govern the interpretation and enforcement of this
Agreement.
7.2 Notices.
Notices, demands, and communications between the Agency and the Developer shall be
sufficiently given if personally delivered or dispatched by registered or certified mail, postage prepaid,
return receipt requested, to the following addresses:
If to the Agency: Redevelopment Agency of the City of San Bernardino
Attn.: Executive Director
201 North"E" Street, Suite 301
San Bernardino, California 92401
If to the Developer: Arroyo Valley Community Economic Development Corporation
Attn.: Antonio Dupree Sr., President
P.O. Box 1599
San Bernardino, California 92402
and
Inland Empire Concerned African American Churches
Attn.: Ray Turner
1583 West Union Street
San Bernardino, California 92411
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Any notice shall be deemed to have been received as of the earlier time of actual receipt by the
addressee thereof or the expiration of forty-eight (48) hours after depositing of such notice in the United
States Postal System in the manner described in this Section. Such written notices, demands, and
communications may be sent in the same manner to such other addresses as a party may from time to time
designate by mail.
7.3 Conflicts of Interest.
No member, official, or employee of the Agency shall have any personal interest, direct or
indirect, in this Agreement nor shall any such member, official, or employee participate in any decision
relating to this Agreement which affects his personal interests or the interests of any corporation,
partnership, or association in which he is, directly or indirectly, interested.
7.4 Nonliability of Agency Officials and Employees.
No member, official, employee or consultant of the Agency or City shall be personally liable to
the Developer, or any Successor-In-Interest of the Developer, in the event of any default or breach by the
Agency or for any amount which may become due to the Developer or to its successor, or on any
obligations under the terms of this Agreement.
7.5 Enforced Delay: Extension of Time of Performance.
In addition to specific provisions of this Agreement, performance by either party hereunder shall
not be deemed to be in default, or considered to be a default, where delays or defaults are due to the force
majeure events of war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of
God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes or lack of
transportation, weather-caused delays, inability to secure necessary labor, materials or tools, delays of any
contractors, subcontractor or supplier, which are not attributable to the fault of the party claiming an
extension of time to prepare or acts or failure to act of any public or governmental agency or entity
(provided that acts or failure to act of the City or the Agency shall not extend the time for the Agency to
act hereunder except for delays associated with lawsuit or injunction including, but without limitation to,
lawsuits pertaining to the approval of the Agreement, and the like). Any denial by the City of a building
permit, grading permit or such other ministerial approval that is based upon failure of the Developer or its
authorized representatives to provide adequate information and a completed application with all exhibits,
drawings, maps and attachments in the form and quality as typically received by the City from other
housing developers shall not entitle the Developer to claim any extensions of time pursuant to this Section
7.5. An extension of time for any such force majeure cause shall be for the period of the enforced delay
and shall commence to run from the date of occurrence of the delay- provided, however, that the party
which claims the existence of the delay has first provided the other party with written notice of the
occurrence of the delay within ten(10) calendar days of the commencement of such occurrence of delay.
The inability of the Developer to obtain a satisfactory commitment from a construction lender or
to satisfy any other condition of this Agreement relating to the acquisition of the Site and the development
of the Project shall not be deemed to be a force majeure event or otherwise provide grounds for the
assertion of the existence of a delay under this Section 7.5. The parties hereto expressly acknowledge and
.agree that changes in either general economic or regulatory conditions or changes in the economic or
regulatory assumptions of any of them which may have provided a basis for entering into this Agreement
and which occur at any time after the execution of this Agreement, are not force majeure events and do
not provide any party with grounds for asserting the existence of a delay in the performance of any
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covenant or undertaking which may arise under this Agreement. Each party expressly assumes the risk
that changes in general economic or regulatory conditions or changes in such economic assumptions
relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the
continued performance of such party under this Agreement, but that such inconvenience or hardship is not
a force majeure event and does not excuse the performance by such party of its obligations under this
Agreement.
7.6 Books and Records.
(a) Maintenance of Books and Records. The Developer shall prepare and maintain all books,
records and reports necessary to substantiate the compliance by the Developer with the terms of this
Agreement or otherwise as may be reasonably required by the Agency.
(b) Right to Inspect. The Agency shall have the right, upon not less than seventy-two (72)
hours notice, at all reasonable times, to inspect the books and records of the Developer pertinent to the
purposes of this Agreement. Said right of inspection shall not extend to documents privileged under
attorney-client or other such privileges.
7.7 Modifications.
Any alterations, changes or modifications of or to this Agreement, in order to become effective,
shall be made by written instrument or endorsement thereon and in each such instance executed on behalf
of each party hereto.
7.8 Merger of Prior Agreements and Understandings.
This Agreement and all documents incorporated herein contain the entire understanding among the
parties hereto relating to the transactions contemplated herein and all prior or contemporaneous
agreements, understandings, representations and statements, oral or written are merged herein and shall be
of no further force or effect.
7.9 Representations and Warranties of the Developer.
The Developer hereby makes the following representations, covenants and warranties and
acknowledges that the execution of this Agreement by the Agency has been made in material reliance by
the Agency on such covenants,representations and warranties:
(1) The Developer is duly organized and validly existing. The Developer has the legal
right, power and authority to enter into this Agreement and the instruments and documents
referenced herein and to consummate the transactions contemplated hereby. The persons
executing this Agreement and the instruments referenced herein on behalf of the Developer hereby
represent and warrant that such persons have the power, right and authority to bind the Developer.
(2) The Developer has taken all requisite action and obtained all requisite consents in
connection with entering into this Agreement and the instruments and documents referenced
herein and the consummation of the transactions contemplated hereby, and no consent of any other
party is required.
(3) This Agreement is, and all agreements, instruments and documents to be executed
by the Developer pursuant to this Agreement shall be, duly executed by and are or shall be valid
and legally binding upon the Developer and enforceable in accordance with their respective terms.
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(4) Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby shall result in a breach of or constitute a default under any other agreement,
document, instrument or other obligation to which the Developer is a party or by which the
Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any
writ, injunction, order or decree of any court or governmental body applicable to the Developer or
to the Site.
All representations and warranties contained in this Section 7.9 are true and correct on the date
hereof and on the Closing Date and the Developer's liability for misrepresentation or breach of warranty,
representation or covenant, wherever contained in this Agreement, shall survive the execution and
delivery of this Agreement and the Close of Escrow.
7.10 Representations and Warranties of the Agency.
The Agency hereby makes the following representations, covenants and warranties and
acknowledges that the execution of this Agreement by the Developer has been made and the acquisition
by the Developer of the Site will have been made in material reliance by the Developer on such
covenants, representations and warranties:
(1) Each and every undertaking and obligation of the Agency under this Agreement
shall be performed by the Agency timely when due; and that all representations and warranties of
the Agency under this Agreement and its exhibits shall be true in all material respects at the
Closing as though they were made at the time of Closing.
(2) The Agency is a community redevelopment agency, duly formed, existing and
operating under the laws of California. The Agency has the legal power, right and authority to
enter into this Agreement and to execute the instruments and documents referenced herein, and to
consummate the transactions contemplated hereby.
(3) The Agency has taken all requisite action and obtained all requisite consents in
connection with entering into this Agreement and the instruments and documents referenced
herein and the consummation of the transactions contemplated hereby, and no consent of any other
party is required that has not otherwise been obtained.
(4) The persons executing any instruments for or on behalf of the Agency have been
authorized to act on behalf of the Agency and that the Agreement is valid and enforceable against
the Agency in accordance with its terms and each instrument to be executed by the Agency
pursuant hereto or in connection therewith will, when executed, be valid and enforceable against
the Agency in accordance with its terms. No approval, consent, order or authorization of, or
designation or declaration of any other person, is required in connection with the valid execution
and delivery of and compliance with this Agreement by the Agency.
(5) At the Closing, the Agency will transfer the Agency Lots to effectively vest in the
Developer, good and marketable fee simple title to the Agency Lots, that the Developer will
acquire the Agency Lots free and clear of all liens, encumbrances, claims, rights, demands,
easements, leases or other possessory interests, agreements, CC&Rs of any kind or character
(including, without limiting the generality of the foregoing, liens or claims for taxes, mortgages,
conditional sales contracts, or other title retention agreement, deeds of trust, security agreements
and pledges, and mechanics lien) except for the matters covered in Section 3.6 as the Permitted
Exceptions.
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(6) There are no pending or, to the best of the Agency's knowledge, threatened claims,
actions, allegations or lawsuits of any kind, whether for personal injury, property damage,
property taxes or otherwise, that could materially and adversely affect the value or use of the
Agency Lots or prohibit the sale thereof to the Developer, nor to the best of the Agency's
knowledge, is there any governmental investigation of any type or nature pending or threatened
against or relating to the Agency Lots or the transactions contemplated hereby.
(7) Between the date of this Agreement and the Close of Escrow, the Agency will
continue to manage, operate and maintain the Agency Lots in the same manner as existed prior to
the execution of this Agreement.
(8) There are no contracts or agreements to which the Agency is a party relating to the
operation, maintenance, service, repair, development, improvement or ownership of the Agency
Lots which will survive the Close of Escrow except as may be set forth in the Agency Grant Deed.
(9) The Agency Lots are located within a designated earthquake fault zone pursuant to
California Public Resources Code Section 2621.9 and a designated area that is particularly
susceptible to ground shaking, liquefaction, landslides or other ground failure during an
earthquake pursuant to California Public Resources Code Section 2694.
If the Agency becomes aware of any act or circumstance which would change or render incorrect,
in whole or in part, any representation or warranty made by the Agency under this Agreement, whether as
of the date given or any time thereafter through the Closing Date and whether or not such representation
or warranty was based upon the Agency's knowledge and/or belief as of a certain date, the Agency will
give immediate written notice of such changed fact or circumstance to the Developer, but such notice
shall not release the Agency of its liabilities or obligations with respect thereto.
All representations and warranties contained in this Section 7.10 are true and correct on the date
hereof and as of the Closing Date, and the Agency's liability for misrepresentation or breach of warranty,
representation or covenant, wherever contained in this Agreement, shall terminate on the calendar day
following the Close of Escrow.
7.11 Binding Effect of Agreement.
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their
legal representatives, successors, and assigns. This Agreement shall likewise be binding upon and
obligate the Site and the Successors-In-Interest, owner or owners thereof, and all of the tenants, lessees,
sublessees and occupants of such Site.
7.12 Assurances to Act in Good Faith.
The Agency and the Developer agree to execute all documents and instruments and to take all
action and shall use their best efforts to accomplish the purposes of this Agreement. The Agency and the
Developer shall each diligently and in good faith pursue the satisfaction of any conditions or
contingencies subject to their approval.
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7.13 Severability.
Wherever possible, each provision oft is Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining provisions of this
Agreement.
I
IN WITNESS WHEREOF the Agency and the Developer have executed this Agreement as of the
date first written above.
I
AGENCY
jRedevelopment Agency f the City of San Bernardino,
a public body corporate and politic
Date: By:
Maggie Pacheco, Executive Director
Approved as to Form and Legal Content:
By:
Agency C nsel
DEVELOPER
Arroyo Valley Community Economic Development
Corporation, a California non-profit benefit corporation
Date: By:
Its:
Name:
By:
Its:
Name:
Inland Empire Concerned African American Churches, a
California non-profit corporation
Date: By:
Its:
Name:
By:
Its:
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1
i
EXHIBIT"A"
LEGAL DESCRIPTION OF THE AGENCY LOTS
APN: 0144-131-21
LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO. 2, IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY.
APN: 0144-131-36
LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO. 2, IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY.
APN: 0144-123-03
LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN
BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS,
PAGE 17, RECORDS OF SAID COUNTY.
EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS,
SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES,
MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT
PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE
PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT
ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE
SUBSURFACE OF SAID LAND.
APN: 0144-123-46
LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT
RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY.
EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY
DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS.
EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID,
LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON
SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET
BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO
BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS
INSTRUMENT NO. 91-274307, OFFICIAL RECORDS.
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EXHIBIT "B"
SCHEDULE OF PERFORMANCE
Execution of Agreement On or before September 18, 2006.
Agreement shall be authorized,
executed and delivered by the Developer
to the Agency.
Evidencing of Financing On or before October 18, 2006
The Developer shall provide the Agency with
financing for the Project unless extended for up
to six months, pursuant to Section 3.7 of the
Agreement.
Desi n No later than November 18, 2006
The Developer shall prepare all plans and
specifications and obtain all required
permits.
Evidence of Insurance Prior to the Developer or its agents
The Developer shall furnish to the Agency, a commencing construction of the Site.
certificate of insurance as set forth in
Section 4.1 of the Agreement.
Opening and Closing of Escrow Within 60 calendar days from execution of
The Agency and the Developer shall open and the Agreement November 18, 2006.
Close Escrow
Commencement of Construction Within 90 calendar days of Closing of
The Developer shall commence construction Escrow, February 18, 2007.
of the improvements of the Site pursuant
to Section 4.1.
Completion of Construction Within 6 months from commencement of
The Developer shall complete the construction construction August 18, 2007.
of all improvements on the Site as well as
off-site improvements.
It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text
of the Agreement. The summary of the items in this Schedule of Performance is not intended to
supersede or modify the more complete description in the text; in the event of any conflict of or
inconsistency between this Schedule of Performance and the text of the Agreement, the text shall govern.
The time periods set forth in this Schedule of Performance may be altered or amended only by written
agreement signed by both the Developer and the Agency. The Executive Director of the Agency shall
have the authority to approve extensions of time without action of the Community Development
Commission of the Agency not to exceed a cumulative total of one hundred eighty(180) calendar days.
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i
EXHIBIT"C"
FORM OF AGENCY GRANT DEED
RECORDING REQUESTED BY )
Redevelopment Agency )
of the City of San Bernardino )
AND WHEN RECORDED MAIL TO: )
Arroyo Valley Community Economic )
Development Corporation )
P.O. Box 1599 )
San Bernardino, California 92402 )
Attn.: Antonio Dupree Sr., President )
(Space above line reserved for use by Recorder)
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
GRANT DEED OF A PUBLIC AGENCY
AND
AFFORDABLE SINGLE FAMILY HOUSING
DEVELOPMENT, USE AND OCCUPANCY CONDITIONS,
COVENANT AND RESTRICTIONS
THIS GRANT DEED OF A PUBLIC AGENCY AND COMMUNITY REDEVELOPMENT
AFFORDABLE SINGLE-FAMILY HOUSING DEVELOPMENT, USE AND OCCUPANCY
CONDITIONS, COVENANTS AND RESTRICTIONS (the "Agency Grant Deed") hereby grants from
the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic (the
"Agency") that certain real property situated at (APN: )
San Bernardino, California (the "Property") to Arroyo Valley Community Economic Development
Corporation ("Arroyo'), a California non-profit benefit corporation, and Inland Empire Concerned
African American Churches (the "Churches"), a California non-profit corporation (Arroyo and the
Churches (Joint Owners) shall collectively be referred to as the "Developer") subject to the community
redevelopment affordable single-family housing development, use and occupancy conditions, covenants
and restrictions contained in PART B hereof. The Agency is the grantor in this Grant Deed and the
Developer is the grantee.
For valuable consideration, the receipt of which is hereby acknowledged, the Agency hereby grants to the
Developer, subject to the community redevelopment affordable single-family housing conditions,
covenants and restrictions of this Agency Grant Deed, all of the rights, title and interests of the Agency in
the Property, as more particularly described below:
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(-- The Property--}
See Exhibit"A" attached hereto, on file in the Official Records of the
Office of the Recorder of San Bernardino County.
PART B
The grant of the Property by the Agency to the Developer is expressly subject to the satisfaction of the
following and the community redevelopment affordable single-family housing conditions, covenants and
restrictions as arise under that certain agreement entitled "2006 Home Funds Development Agreement -
Four Agency Lots", dated as of September 18, 2006 (the "Agreement"), by and between the Agency and
the Developer:
1. The Property shall be reserved for use, development and occupancy for Low-Income
Single-Family unit residential purposes, as the term "Low-Income Household" is defined
below; and
2. During the first forty-five (45) years commencing on the date of recordation of this Agency
Grant Deed for the Single-Family Unit shall be restricted, sold to and occupied by Lower
Income Households at"affordable cost"as defined below; and
3. For the purposes of subparagraphs 1 and 2 above, the following definitions of certain terms
shall apply:
"affordable cost" means and refers to a sum of cost, including a reasonable utility
allowance, for a particular Low-Income Household which occupies a single-family
housing unit on the Property which is computed in accordance with the provisions of
Health and Safety Code Section 50053 as may be amended from time to time;
"lower income households" means and refers to persons and families whose income does
not exceed the qualifying limits for lower income families as established and amended
from time to time pursuant to Section 8 of the United States Housing Act of 1937 at 80
percent of the area median income, adjusted for family size and revised annually.
PART C
Subject to the covenant of the Developer as provided in PART B, the Developer shall refrain from
restricting the sale of the Property on the basis of race, color, creed, religion, sex, marital status, age,
physical or mental disability, ancestry, or national origin of any person. All such deeds shall contain or be
subject to, substantially, the following nondiscrimination or nonsegregation clauses:
Deeds: In deeds the following language shall appear: Except as specifically provided in
the Agency Regulatory Agreement with respect to the sale of the unit to a Low-Income
Household, as such term is defined therein and subject to the covenant in the Agency Grant
Deed improved on the Property by the Redevelopment Agency of the City of San
Bernardino which reserves the Property for use, improvement and sold to a Low-Income
Household. The Developer herein covenants by and for itself, its heirs, executors,
administrators, and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of any person or group of persons on
account of race, color, creed, religion, sex, marital status, age, physical or mental
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disability, ancestry, or national origin in the sale, lease, rental, sublease, transfer, use,
occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the Developer
itself, or any persons claiming under or through it, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number
and use in the land herein conveyed. The foregoing covenants shall run with the land.
The foregoing covenants shall remain in effect in perpetuity.
PART D
No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in
PART B, PART C or PART F of this Agency Grant Deed shall defeat or render invalid or in any way
impair the lien or charge of any mortgage, deed of trust or other financing or security instrument
permitted by and approved by the Agency pursuant to the Agreement; provided, however, that any
successor of the Developer to the Property shall be bound by such remaining covenants, conditions,
restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in
lieu of foreclosure, trustee's sale or otherwise.
PART E
The terms and provisions of PART B, PART C and PART F of this Agency Grant Deed shall be
subordinate to the terms and provisions of the construction/permanent financing and any other documents
entered into by the Developer in connection with the development of the Property. Notwithstanding
anything in this Agency Grant Deed to the contrary, no amendment to PART B through PART F,
inclusive of this Agency Grant Deed by the Developer, or its successors or assigns and the Agency Grant
Deed shall be effective at all time.
PART F
The provisions of this Agency Grant Deed are expressly declared by the Agency to promote and increase,
improvement, and preservation of the community's supply of low-income housing. The transfer of the
Property by the Agency to the Developer for this purpose and the recordation of this Agency Grant Deed
is required by the provisions authorized by Health and Safety Code Sections 33334.2 and 33334.3, and
other applicable laws and actions of the Agency. Upon the delivery of this Agency Grant Deed to the
Developer, the community redevelopment affordable single-family housing conditions, covenants, and
restrictions as contained herein shall be covenants and restrictions which affect the Property and shall run
with the land and shall be enforceable by: (i) the Agency as regulatory covenants under Section 33334.3,
(ii) enforceable by either the Agency or by the City of San Bernardino, a municipal corporation, as
community redevelopment affordable single-family housing conditions, covenants, and restrictions
against the Developer and each Successor-In-Interest or assignee of the Developer in the Property as
provided in Health and Safety Code Section 33334.3(f)(2). No person other than the City of San
Bernardino or the Agency shall be deemed to be authorized to enforce any provision of this Agency Grant
Deed as a covenant or restriction which runs with the land and affects the Property.
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THIS AGENCY GRANT DEED is executed
as of the date indicated below next to the authorized
signature of the Executive Director of the Agency.
AGENCY
Redevelopment Agency of the City of San Bernardino
Dated: By:
Maggie Pacheco, Executive Director
Approved as to Form and Legal Content:
Agency Counsel
[NOTARY JURAT ATTACHED]
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ACCEPTANCE OF AGENCY GRANT DEED AND COMMUNITY REDEVELOPMENT
AFFORDABLE SINGLE-FAMILY HOUSING DEVELOPMENT, USE AND OCCUPANCY
CONDITIONS, COVENANTS AND RESTRICTIONS BY THE DEVELOPER
The undersigned officers of Arroyo Valley Community Economic Development Corporation ("Arroyo"),
a California non-profit corporation, and the officers of Inland Empire Concerned African American
Churches (the "Churches"), a California non-profit corporation (Arroyo and the Churches shall
collectively be referred to as the "Developer"), hereby accept the delivery of the instrument identified
above as the "Agency Grant Deed and Community Redevelopment Affordable Single-Family Housing
Development, Use and Occupancy Conditions, Covenants, and Restrictions" (the "Agency Grant Deed"),
and the transfer of the Property from the Redevelopment Agency of the City of San Bernardino, a public
body corporate and politic, subject to the conditions, covenants, and restrictions contained in the Agency
Grant Deed.
The Developer hereby acknowledges and agrees that it accepts the Property in an "AS IS", "WHERE IS"
and"SUBJECT TO ALL FAULTS" condition and that the Developer is solely responsible for causing the
Property to be improved as set forth in the Agreement by and between the Agency and the Developer.
The Developer hereby further accepts and agrees to each of the community redevelopment affordable
single-family residential housing use, improvement and occupancy conditions, covenants and restrictions
contained in the Agency Grant Deed which touch and concern the Property and the community
redevelopment covenants which run with the land, subject to the provisions of PART E of the Agency
Grant Deed.
THE DEVELOPER
Arroyo Valley Community Economic Development
Corporation, a California non-profit benefit corporation
Date: By:
Its:
Name:
By:
Its:
Name:
Inland Empire Concerned African American Churches, a
California non-profit corporation
Date: By:
Its:
Name:
By:
Its:
Name:
[NOTARY JURAT ATTACHED]
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EXHIBIT "D"
THE AGENCY REGULATORY AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency
of the City of San Bernardino
Attn.: Executive Director
201 North"E" Street, Suite 301
San Bernardino, CA 92401
(Space Above Line Reserved For Use By Recorder)
Recording Fee Exempt Pursuant to Government Code Section 6103
ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION AND
INLAND EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES COMMUNITY
REDEVELOPMENT LAW HOUSING PROGRAM REGULATORY AGREEMENT
PROPERTY USE AND COVENANT
THIS COMMUNITY REDEVELOPMENT LAW HOUSING PROGRAM REGULATORY
AGREEMENT PROPERTY USE COVENANT (the "Covenant") is made and entered into as of
, by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN
BERNARDINO (the "Agency"), a public body corporate and politic, and ARROYO VALLEY
COMMUNITY ECONOMIC DEVELOPMENT CORPORATION ("Arroyo"), a California non-profit
benefit corporation(the "Developer") and INLAND EMPIRE CONCERNED AFRICAN AMERICAN
CHURCHES (the "Churches"), a California non-profit corporation (Arroyo and the Churches shall
collectively be referred to as the "Developer"), and (the "Qualified
Homebuyer"), and this Covenant relates to the following facts set forth in Recitals:
--- RECITALS ---
A. The Qualified Homebuyer proposes to acquire a single-family residence (the "New Home"),
located within the City of San Bernardino (the "City"), from the Developer to be owned and
occupied by the Qualified Homebuyer as their principal residence. The legal description of the
New Home is attached hereto as Exhibit"A"and incorporated herein by this reference; and
B. The Agency has entered into that certain "2006 Home Funds Development Agreement— Four
Agency Lots ("Agreement")" whereby the Agency and the Developer have agreed to provide
the Qualified Homebuyer with certain purchase money mortgage financing for the acquisition
of the New Home by the Qualified Homebuyer subject to certain conditions, including the
terms and conditions of this Covenant; and
C. The terms of the Agreement mandate that the acquisition, use and occupancy of the New Home
shall be restricted in certain respects for the term as provided herein (the "Qualified Residence
Period") in order to ensure that the New Home will be used and occupied in accordance with
the Agreement with the Developer, and the affordable single-family residential dwelling unit
development goals and objectives of the program as administered by the Agency.
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NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
UNDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, THE QUALIFIED HOMEBUYER, ARROYO VALLEY COMMUNITY
ECONOMIC DEVELOPMENT CORPORATION, INLAND EMPIRE CONCERNED
AFRICAN AMERICAN CHURCHES AND THE AGENCY DO HEREBY COVENANT AND
AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS AS FOLLOWS:
Section 1. Definitions of Certain Terms.
As used in this Covenant, the following words and terms shall have the meaning as provided in the
Recitals or in this Section 1 unless the specific context of usage of a particular word or term may
otherwise require:
Adjusted Family Income. The words "Adjusted Family Income" mean the anticipated
total annual income (adjusted for family size) of each individual or family residing or
treated as residing in the New Home as calculated in accordance with Treasury
Regulation 1.167(k) - 3(b)(3) under the Code, as adjusted, based upon family size in
accordance with the household income adjustment factors adjusted and amended from
time to time, pursuant to Section 8 of the United States Housing Act of 1937, as
amended.
Affordable Housing Cost. The words "Affordable Housing Cost" shall have the
meaning as set forth in Health and Safety Code Section 50052.5 as this section may
hereafter be amended from time-to-time by the State of California. At the time of the
close of the New Home Escrow, or later when a proposed Successor-In-Interest
acquires the New Home, the amount of the maximum Affordable Housing Cost payable
in connection with the acquisition of the New Home at any time during the Qualified
Residence Period shall be calculated as set forth in Health and Safety Code
50053.5(b)(1) or(2), as applicable.
Code. The word "Code" means the Internal Revenue Code of 1986, as amended, and
any regulations, rulings or procedures with respect thereto.
Covenant. The word "Covenant" means this Redevelopment Agency of the City of
San Bernardino Community Redevelopment Law Housing Program Regulatory
Agreement by and between the Qualified Homebuyer, Arroyo Valley Community
Economic Development Corporation, Inland Empire Concerned African American
Churches and the Agency pertaining to the New Home.
Delivery Date. The words "Delivery Date" mean the date of delivery of title and
possession of the New Home to the Qualified Homebuyer at the close of the New Home
Escrow.
Low-Income Household. The words "Low-Income Household" mean persons and
families whose income does not exceed eighty percent (80%) of the area median
income, adjusted for family size, as set forth in Health and Safety Code Section 50093,
as such section may be amended from time to time.
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New Home. The words "New Home" mean and refer to the affordable single-family
residential dwelling unit (including the land and landscape improvements thereon)
acquired by the Qualified Homebuyer at the close of the New Home Escrow. A legal
description of the New Home is attached to this Covenant as Exhibit"A".
New Home Escrow. The words "New Home Escrow"mean and refer to the real estate
conveyance transaction or escrow by and between the Qualified Homebuyer, Arroyo
Valley Community Economic Development Corporation and the Inland Empire
Concerned African American Churches (or later, by and between the Qualified
Homebuyer and the Successor-In-Interest). The transfer of the New Home from the
seller to the Qualified Homebuyer (or later, by and between the Qualified Homebuyer
and the Successor-In-Interest) shall be accomplished upon the close of the New Home
Escrow.
Notice of Agency Concurrence. The words "Notice of Agency Concurrence" mean
and refer to the acknowledgment, in recordable form, in which the Agency confirms
that the proposed Successor-In-Interest of the Qualified Homebuyer satisfies all of the
requirements of this Covenant for occupancy of the New Home by the Successor-In-
Interest at any time during the Qualified Residence Period.
Qualified Homebuyer. The words "Qualified Homebuyer" mean the purchaser of the
New Home (e.g.: all persons identified as having property ownership interest vested in
the New Home at the close of the New Home Escrow). At the close of the New Home
Escrow, the Qualified Homebuyer shall: (i) have an annual Adjusted Family income
which does not exceed the household income qualification limits of a Low-Income
Household; (ii) shall be a first-time homebuyer, as this term is defined in the Health and
Safety Code Section 50068.5; and (iii) pay no more than an Affordable Housing Cost
for the New Home pursuant to the terms of the purchase transaction for the New Home,
including all sums payable by the Qualified Homebuyer for its purchase money
mortgage financing, insurance, escrow and other fees and costs.
Qualified Residence Period. The words "Qualified Residence Period" mean the
period of time beginning on the Delivery Date and ending on the date which is forty-
five (45) years after the Delivery Date.
Successor-In-Interest. The words "Successor-In-Interest" mean and refer to the
person, family or household who may acquire the New Home from the Qualified
Homebuyer at any time during the Qualified Residence Period by purchase, assignment,
transfer or otherwise. The Successor-In-Interest shall be a "first-time homebuyer" and
shall have an income level for the twelve (12) months prior to the date on which the
Successor-In-Interest acquires the New Home which does not exceed the maximum
Adjusted Family Income level for a Low-Income Household. Upon acquisition of the
New Home the Successor-In-Interest shall be bound by each of the CC&Rs of this
Covenant.
The titles and headings of the sections of this Covenant have been inserted for convenience of
reference only, and are not to be considered a part hereof and shall not in any way modify or restrict
the meaning of any of the terms or provisions hereof.
Section 2. Acknowledgments and Representations of the Qualified Homebuyer.
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The Qualified Homebuyer hereby acknowledges and represents that, as of the Delivery Date:
(a) the total household income for the Qualified Homebuyer does not exceed the maximum amount
permitted as Adjusted Family Income for a Low-Income Household adjusted for family size;
(b) the Qualified Homebuyer intends to promptly occupy the New Home after the Delivery Date as
the principal place of residence for a term of at least forty-five (45) years following the
Delivery Date and the Qualified Homebuyer has not entered into any arrangement and has no
present intention to rent, sell, transfer or assign the New Home to any third party during the
Qualified Residence Period so as to frustrate the purpose of this Covenant;
(c) the Qualified Homebuyer has no present intention to lease or rent any room or sublet or rent a
portion of the New Home to any relative of the Qualified Homebuyer or to any third person at
any time during the Qualified Residence Period;
(d) the Qualified Homebuyer agrees to provide the Agency with the following items of information
for inspection by the Developer and/or the Agency promptly upon written request of the
Developer or the Agency:
(i) State and federal income tax returns filed by all persons who reside in the New Home
for the calendar year preceding the close of the New Home Escrow for inspection of
such State and federal income tax returns;
(ii) current wage, income and salary statements for all persons residing in the New Home at
the close of the New Home Escrow;
(e) the Qualified Homebuyer is aware and has been informed prior to the Delivery Date that this
Covenant imposes certain restrictions on the use and occupancy of the New Home during the
term of this Covenant and that this Covenant imposes certain restrictions on the resale of the
New Home during the Qualified Residence Period. The Qualified Homebuyer acknowledges
and understands that the resale restrictions shall be applicable to the New Home and to any
resale of the New Home from the Delivery Date to the end of the Qualified Residence Period
which is forty five (45) years after the delivery date.
(f) the sum payable each month by the Qualified Homebuyer following the close of the New
Home Escrow as principal and interest due the First Mortgage Lender referenced in Section 3,
plus property taxes, and property casualty insurance for the acquisition of the New Home does
not exceed the Affordable Housing Cost for the household.
Dated:
Initials of Qualified Homebuyer
Section 3. AcknowledLment of Subordination of the Provisions of Section 4 and Section 7 of this
Covenant to the Mortgage Security Interest of the First Mortgage Lender.
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Concurrently, upon the execution and recordation of this Covenant the Qualified Homebuyer
shall obtain certain purchase money mortgage financing for the acquisition of the New Home
from the Developer (the "First Mortgage Lender"). As of the Delivery Date, the Qualified
Homebuyer has provided the Agency with a true and correct copy of the loan agreement by and
between the First Mortgage Lender and the Qualified Homebuyer, if applicable.
As a condition to providing its mortgage loan to the Qualified Homebuyer, the First Mortgage
Lender requires the Agency to agree that the provisions of Section 4 and Section 7 of this
Covenant shall be junior and subordinate to the security interest of the First Mortgage Lender in
the New Home of even date herewith.
The Agency hereby acknowledges and agrees that the provisions of Section 4 and Section 7 of
this Covenant are subordinate and junior to the security interest of the First Mortgage Lender in
the New Home of even date herewith. No breach or default by the Qualified Homebuyer of any
provision of Section 4 and Section 7 of this Covenant, nor the exercise by the Agency of any
remedy it may have against the Qualified Homebuyer in the event of such a breach or default
shall affect or render invalid the lien of the First Mortgage Lender in the New Home. Thus, the
First Mortgage Lender and any good faith purchaser for value from the First Mortgage Lender,
its successors and assigns, including without limitation the United States Secretary of Housing
and Urban Development, if such mortgage has been assigned to the Secretary of Housing and
Urban Development, receiving title to the New Home through a trustee's sale, judicial
foreclosure sale, deed in lieu of foreclosure and any conveyance or transfer thereafter, shall
receive title to the New Home free and clear of the provisions of Section 4 and Section 7 of this
Covenant.
Section 4. Covenant of the Qualified Homebuyer to Maintain Affordability of the New
Home During the Qualified Residence Period and Covenant Relating to Sale or Transfer of
the New Home During the Qualified Residence Period to a Successor-In-Interest.
(a) The Qualified Homebuyer for itself, its heirs, successors and assigns, hereby covenants and
agrees that during the term of the Qualified Residence Period the New Home shall be used and,
occupied by the Qualified Homebuyer as its principal residence, and that the New Home shall
be reserved for sale, use and occupancy by the Qualified Homebuyer and/or for another Lower-
Income Household as a Successor-In-Interest at an Affordable Housing Cost. The Qualified
Homebuyer, for itself, its heirs, successors and assigns, further covenants and agrees that,
during the Qualified Residence Period, the Agency shall have the right and duty as provided in
this Section 4 to verify that each proposed Successor-In-Interest of the Qualified Homebuyer in
the New Home satisfies the income requirements (based upon the Adjusted Family Income of a
Low-Income Family and that the completion of any resale or transfer of the New Home to a
Successor-In-Interest shall be subject to the recordation of the "Notice of Agency Concurrence"
as provided in Section 4(d).
(b) The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees
that during the term of the Qualified Residence Period the Qualified Homebuyer shall not sell,
transfer or otherwise dispose of the New Home (or any interest therein) to a Successor-In-
Interest without first giving written notice to the Agency and without first obtaining the written
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concurrence of the Agency as provided herein. At least sixty (60) calendar days prior to the
date on which the Qualified Homebuyer proposes to transfer title in the New Home to a
Successor-In-Interest, the Qualified Homebuyer shall send a written notice to the Agency as
provided in Section 17 of the intention of the Qualified Home buyer to sell the New Home to a
Successor-In-Interest which includes the following true and correct information:
(i) name of the proposed Successor-In-Interest (including the identity of all persons in the
household of the Successor-In-Interest, proposing to reside in the New Home) together
with a completed HAP Program application executed by the proposed Successor-In-
Interest.
(ii) copies of State and federal income tax returns for the Successor-In-Interest for the
calendar year preceding the year in which the notice of intention to sell the New Home
is given to the Agency;
(iii) resale price of the New Home payable by the Successor-In-Interest, including the terms
of all purchase money mortgage financing to be assumed, provided or obtained by the
Successor-In-Interest, escrow costs and charges, realtor broker fees and all other resale
costs or charges payable by either the Qualified Homebuyer or the Successor-In-
Interest;
(iv) name address, and telephone number of the escrow company which shall coordinate the -
transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest;
(v) appropriate mortgage credit reference for the Successor-In-Interest with a written
authorization signed by the Successor-In-Interest authorizing the Agency to contact
each such reference; and
(vi) such other relevant information as the Agency may reasonably request, as provided in
Section 4(c).
(c) Within thirty (30) calendar days following receipt of the notice of intention described in
Section 4(b), the Agency shall provide the Qualified Homebuyer with either a preliminary
confirmation of approval or a preliminary rejection in writing of the income and household
occupancy qualifications of the Successor-In-Interest. The Agency shall not unreasonably
withhold approval of any proposed sale of the New Home to a Successor-In-Interest who
satisfies the Adjusted Family Income requirements of a Low-Income Family for occupancy of
the New Home and for whom the other information as described in Section 4(b) has been
provided to the Agency. In the event that the Agency may request additional information
relating to the confirmation of the matters described in Section 4(b), the Qualified Homebuyer
shall provide such information to the Agency as promptly as feasible.
(d) Upon its final confirmation of approval of the Adjusted Family Income eligibility of the
Successor-In-Interest to acquire the New Home, the Agency shall deliver a written
acknowledgment and approval of the resale of the New Home to the Successor-In-Interest in
recordable form to the escrow holder referenced in Section 4(b)(iv) above, and thereafter the
Successor-In-Interest may acquire the New Home subject to the satisfaction of the following
conditions:
(i) the recordation of the Notice of Agency Concurrence executed by the Successor-In-
Interest and the Agency at the close of the resale escrow;
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(ii) the escrow holder shall have provided the Agency with a copy of the customary form of
the final escrow closing statement of the Qualified Homebuyer and the final escrow
closing statement for the Successor-In-Interest; and
(iii) the other conditions of the resale escrow as established by the Qualified Homebuyer and
Successor-In-Interest shall have been satisfied.
(e) The Qualified Homebuyer for itself, its successors and assigns hereby ereby covenants and agrees
that during the Qualified Residence Period the New Home shall not be leased, subleased or
rented to any third person, except for a temporary period (not to exceed 12 months) in the event
of an emergency or other unforeseen circumstance as may be expressly approved in writing by
the Agency g y subject to compliance during the temporary rental period with the reasonable
temporary rental occupancy conditions required by the Agency. The Qualified Homebuyer
shall submit a written request to the Agency prior to the commencement of the temporary
occupancy, as practicable, but in any event within not more than sixty (60) calendar days
following the commencement of a temporary rental occupancy of the New Home by a third
party, which notice shall set forth the grounds on which the Qualified Homebuyer believes an
emergency or other unforeseen circumstance has occurred and that a temporary rental
occupancy is necessary.
Section 5. Maintenance Condition of the New Home.
The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that:
(a) The exterior areas of the New Home which are subject to public view (e.g.: all improvements,
paving, walkways, landscaping, 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
during the term of the Qualified Residence Period, there is an occurrence of an adverse
condition on any area of the New Home which is subject to public view in contravention of the
general maintenance standard described above, (a "Maintenance Deficiency") then the Agency
shall notify the Qualified Homebuyer in writing of the Maintenance Deficiency and give the
Qualified Homebuyer thirty (30) calendar days from the date of such notice to cure the
Maintenance Deficiency as identified in the notice. The words "Maintenance Deficiency"
include without limitation the following inadequate or non-confirming property maintenance
conditions and/or breaches of single family dwelling residential property use restrictions:
failure to properly maintain the windows, structural elements, and painted exterior
surface areas of the dwelling unit in a clean and presentable manner;
failure to keep the front and side yard areas of the property free of accumulated debris,
appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of
lumber, building materials or equipment not regularly in use on the property;
failure to regularly mow lawn areas or permit grasses planted in lawn areas to exceed
nine inches (9") in height, or failure to otherwise maintain the landscaping in a
reasonable condition free of wed and debris;
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parking of any commercial motor vehicle in excess of 7,000 pounds gross weight
anywhere on the property, or the parking of motor vehicles, boats, camper shells,
trailers, recreational vehicles and the like in any side yard or on any other parts of the
property which are not covered by a paved and impermeable surface;
the use of the garage area of the dwelling unit for purposes other than the parking of
motor vehicles and the storage of personal possessions and mechanical equipment of
persons residing in the New Home.
In the event the Qualified Homebuyer fails to cure or commence to cure the Maintenance Deficiency
within the time allowed, the Agency may thereafter conduct a public hearing following transmittal of
written notice thereof to the Qualified Homebuyer ten (10) calendar days prior to the scheduled date of
such public hearing in order to verify whether a Maintenance Deficiency exists and whether the
Qualified Homebuyer has failed to comply with the provision of this Section 5(a). 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, as described above,
thereafter the Agency shall have the right to enter the New Home (exterior areas only) and perform all
acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity 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 as authorized by this Section 5(a) shall become
a lien on the New Home. If the amount of the lien is not paid within thirty (30) calendar days after
written demand for payment by the Agency to the Qualified Homebuyer, the Agency shall have the
right to enforce the lien in the manner as provided in Section 5(c).
(b) Graffiti which is visible from any public right-of-way which is adjacent or contiguous to the
New Home shall be removed by the Qualified Homebuyer from any exterior surface of a
structure or improvement on the New Home 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 graffiti is placed on the New Home (exterior areas only) and such graffiti is visible
from an adjacent or contiguous public right-of-way and thereafter such graffiti is not removed
within 72 hours following the time of its application; then in such event and without notice to
the Qualified Homebuyer, the Agency shall have the right to enter the New Home and remove
the graffiti. Notwithstanding any provision of Section 5(a) to the contrary, any sum expended
by the Agency for the removal of graffiti from the New Home as authorized by this Section
t 5(b) shall become a lien on the New Home. If the amount of the lien is not paid within thirty
(30) calendar days after written demand for payment by the Agency to the Qualified
Homebuyer, the Agency shall have the right to enforce its lien in the manner as provided in
Section 5(c).
(c) The parties hereto further mutually understand and agree that the rights conferred upon the
Agency under this Section 4 expressly include the power to establish and enforce a lien or other
encumbrance against the New Home in the manner provided under Civil Code Sections 2924,
2924b and 2924c in the amount as reasonably necessary to restore the New Home to the
maintenance standard required under Section 5(a) or Section 5(b), including attorneys' fees and
costs of the Agency associated with the abatement of the Maintenance Deficiency or removal
of graffiti and the collection of the costs of the Agency in connection with such action. In any
legal proceeding for enforcing such a lien against the New Home, the prevailing party shall be
entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 5, shall be
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a covenant rennin with the land for
g the Qualified Residence Period and shall be enforceable
by the Agency in its discretion, cumulative with any other rights or powers granted by the
Agency under applicable law. Nothing in the foregoing provisions of this Section 5 shall be
deemed to preclude the Qualified Homebuyer from making any alterations, additions, or other
changes to any structure or improvement or landscaping on the New Home, provided that such
changes comply with the zoning and development regulations of the City and other applicable
law.
Section 6. Protection of A-----, Investment of Moneys derived from the Low and
Moderate-Income HOME Fund in the New Home—Agency Investment Reimbursement.
(a) For the purpose of this Section 6, the following terms shall have the meaning as
provided below:
"Agency Investment Reimbursement" means and refers to a portion of the Resale Profit, if
any, which shall be payable to the Agency upon the sale or transfer of the New Home during the
Qualified Residence Period to a person or household which does not qualify as a Successor-In-Interest
to the Qualified Homebuyer. The formula for calculation the amount of the Agency Investment
Reimbursement which may hereafter be payable to the Agency during the Qualified Residence Period
is set forth in this Section 6. In the event that the application of the formula for determining the
Agency Investment Reimbursement in any particular year during the term of the Qualified Residence
Period may produce a sum which is Zero Dollars ($0) or less than Zero Dollars ($0), then in such event
no Agency Investment Reimbursement amount shall be payable by the Qualified Homebuyer to the
Agency.
"Costs of Eligible Capital Improvements" means and refers to any substantial and permanent
structural improvements to the New Home which are made to the New Home completed and paid for
by the Qualified Homebuyer after the Delivery Date which satisfy all of the following conditions: (i)
the improvements are made or installed and conform with all applicable provisions of the San
Bernardino Municipal Code and for which the City has issued building permits; (ii) the particular
improvement is recognized under the Code as a capital improvement (iii) f the total amount of
Eligible Capital Improvements made b the ( )
Dollars ($5,000) in any calendar year, the Qualified omebuyerrhas cgiven d the Agency yiv io Thousand
written
notice of its intention to make such capital improvements to the New Home; (iv) the particular capital
improvement shall exceed the sum of Two Thousand Dollars ($2,000) in value, as installed in the New
Home; and (v) the Qualified Homebuyer has provided suitably detailed written evidence to the Agency
of the actual cost of the particular capital improvement to the New Home.
"Purchase Money Mortgage" means the original balance on the Delivery Date of the New
Home mortgage provided to the Qualified Homebuyer by the conventional mortgage lender (e.g., the
First Mortgage Lender identified in Section 3, above).
"Qualified Homebuyer Equity" means the downpayment amount, if any, in cash paid by the
Qualified Homebuyer for the New Home on the Delivery Date (e.g.: the equity or "basis" as defined
under the Code, net of the Purchase Money Mortgage of the Qualified Homebuyer in the New Home),
plus the reduction, if any, of the outstanding principal balance of the Purchase Money Mortgage
secured by the New Home through the date of the resale of the New Home.
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"Resale Price" means the total consideration paid by the Successor-In-Interest, including real
estate broker fees and commissions for the purchase of the New Home, but excluding escrow fees and
mortgage financing costs payable or otherwise allocated to the Successor-In-Interest in connection
with the transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest.
"Resale Profit" means the balance of the following calculation:
(Resale Price)-(Purchase Money Mortgage)-(Qualified Homebuyer Equity + Resale Cost
Adjustment Factor+Costs of Eligible Capital Improvements)=Resale Profit.
A portion of the Resale Profit shall be payable to the Agency by the Qualified Homebuyer in
accordance with Section 6.
"Resale Cost Adjustment Factor" means one of the following sums determined by reference
to the number of years which have elapsed between the Delivery Date and the date on which the resale
and transfer of the New Home to the Successor-In-Interest occurs:
Date of Resale of New Home after the Resale Cost Adjustment Factor:
Delivery Date:
From the Delivery Date to the 5th $2,000
anniversary after Delivery Date
From and including the 5th anniversary to $5,000
the 10th anniversary after Delivery Date
From and including the 10th anniversary to
the end of the Qualified Residence Period $10,000
(b) The Agency has used and applied certain moneys from the Low-Income Home
Funds of the Agency to assist with the development of the New Home. In the event that the New
Home may be sold, assigned, conveyed or otherwise transferred by the Qualified Homebuyer
during the term of the Qualified Residence Period to a person or household whose Adjusted
Family Income at the time of close of the New Home Escrow for such a person or family,
exceeds the income level for a Low-Income Household, a portion of the Resale Price of the New
Home in excess of the sum of the Qualified Homebuyer Equity, plus the applicable Resale Cost
Adjustment Factor, the Cost of Eligible Capital Improvements, after the applicable amount of the
Purchase Money Mortgage has been paid to the First Mortgage Lender (e.g.: the "Resale Profit"
amount) shall be payable to the Agency as the Agency Investment Reimbursement in accordance
with Health and Safety Code Section 33334.3(f), and as provided in this Section 6.
(c) In the event that, at any time during the Qualified Residence Period, the Qualified
Homebuyer (or any Successor-In-Interest) may sell, assign, convey or otherwise transfer the
New Home to a person or household whose Adjusted Family Income exceeds the income level
for a Low-Income Household, a portion of the Resale Profit realized by the Qualified
Homebuyer shall be payable to the Agency as the "Agency Investment Reimbursement" in the
amounts as follows:
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Date of Resale of New Home After Portion of Resale Profit Payable to
Delivery Date Agency from Resale of New Home
From the Delivery Date to the 2nd 90% of Resale Profit is payable to Agency
anniversary after the Delivery Date as Agency Investment Reimbursement
From the 2nd anniversary to the 10th 75% of Resale Profit is payable to Agency
anniversary after the Delivery Date as Agency Investment Reimbursement
From the 10`h anniversary to end the 20th 50% of Resale Profit is payable to Agency
anniversary after the Delivery Date as Agency Investment Reimbursement
From the 20th anniversary to the 30'h 25% of the Resale Profit is payable to the
anniversary after the Delivery Date Agency as Agency Investment
Reimbursement
From the 30th anniversary after the Delivery 10% of the Resale Profit is payable to the
Date to the end of the Qualified Residence Agency as Agency Investment
Period Reimbursement
(d) Two (2) examples of the application of the formula described above as "Resale
Profit"to determine the amount of the Agency Investment Reimbursement payable on the date of
a hypothetical resale of the New Home are presented as follows:
EXAMPLE A: Resale to a purchaser whose Adjusted Family Income exceeds the income level
of a Low-Income Household or to a purchaser who will not live in the New Home as a principal
residence:
Assume that on the Delivery Date the purchase price of the New Home paid by the
Qualified Homebuyer was $290,000 and that the resale occurs on the 7`h anniversary
following the Delivery Date;
Assume the Resale Price of the New Home is $400,000;
Assume that Qualified Homebuyer Equity as of the date of the resale is $23,500; and
Assume that the Costs of Eligible Capital Improvements as of the date of the resale is
$6,000:
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EXAMPLE A CALCULATION OF RESALE PROFIT: $400,0001 - $302,8502 - ($23,5003 +
$5,0004+ $6,0005) =$62,6506:Resale Profit(SEE ALSO FOOTNOTES, BELOW).
The Agency Investment Reimbursement amount under Example A payable at close of the
resale escrow in this hypothetical example is $46,988 (e.g., 75%of$62,650)
EXAMPLE B: Resale to a purchaser who the Agency has approved as a Successor-In-Interest
(e.g., a purchaser whose Adjusted Family Income DOES NOT exceed the income level of a
Low-Income Household and who will reside in the New Home as their principal residence):
Assume same facts as in Example A and that the Successor-In-Interest also pays no more
than an Affordable Housing Cost for the New Home at a resale price of$322,000 on the
7`n anniversary date following the Delivery Date;
EXAMPLE B CALCULATION OF RESALE PROFIT:
No Agency Reimbursement is payable to Agency as the Successor-In-Interest is a Low-Income
Household in this hypothetical sale and pays to the Qualified Homebuyer no more than
Affordable Housing Cost for its purchase of the New Home. In this example, the seller of the
New Home could retain the full amount of the Resale Profit. Also note that in this example, the
Successor-In-Interest's "Qualified Homebuyer Equity" will be an adjusted amount which reflects
the Successor-In-Interest's new mortgage and equity basis in the New Home based upon its
$322,000 purchase price for purposes of determining whether an Agency Reimbursement
amount may be payable by such Successor-In-Interest in any future resale transaction during the
remaining thirty eight (38) years of the term of the Qualified Residence Period.
' The Resale Price of the New Home to the Successor-In-Interest in Example A.
2 The Purchase Money Mortgage amount ($200,000 conventional mortgage) plus $85,000 Agency HAP
Program, plus $17,850 of deferred interest payable to the Agency under the Agency Loan for seven (7) years
following the Delivery Date.
3 The Qualified Homebuyer Equity in the New Home($5,000 cash down payment plus a$10,000 reduction
of outstanding principal balance on the First Mortgage Lender loan).
4 The Resale Cost Adjustment Factor in the 7d'year following the Delivery Date.
s The aggregate amount of Costs of Eligible Capital Improvements is$6,000 in this example.
6 The Resale Profit of $62,650 is subject to a 75% allocation to pay the Agency Investment
Reimbursement, or $46,988 payable to the Agency (as provided in Section 6(b)). The seller of this New Home
could retain only$15,662 of the"Resale Profit" in this example since the purchaser is not a Low-Income person or
household. However, the portion of the "Resale Profit," if any, allocated to the seller in this example would be in
addition to the seller's recapture of its equity in the New Home, plus the Costs of Eligible Capital Improvements
which in this particular example is a total sum of$34,500 payable to the seller. Thus in this example, the seller's
total cash realized at time of this hypothetical sale would be$50,162. (See also Footnote No. 3 and Footnote No.4,
above)
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(e) The sole source of funds of the Qualified Homebuyer to pay the Agency the
Agency Reimbursement Agreement, shall be from the Resale Profit amount, if any, realized at
the time of resale to a purchaser whose Adjusted Family Income exceeds the income level of a
Low-Income Household.
Section 7. Foreclosure of Purchase Money Mortgage Loan of the First Mortgage Lender
and the Agency Right of First Refusal.
(a) During the Qualified Residence Period the Agency shall have the right (but not the obligation)
to bid on the purchase of mortgage loan lien of the First Mortgage Lender secured by the New
Home at the time of any trustee foreclosure sale or any judicial foreclosure sale.
(b) During the Qualified Residence Period the Agency shall have the right of first refusal to
purchase the New Home from the Qualified Homebuyer on the same terms which the Qualified
Homebuyer may propose to offer the New Home for resale to a Successor-In-Interest. The
Agency must exercise such a right of first refusal within thirty (30) calendar days following
written notification of the intention of the Qualified Homebuyer to resell the New Home, and if
the Agency accepts the offer in writing within such time period the Agency shall be bound to
complete the purchase of the New Home strictly in accordance with the offer. Thereafter the
Agency shall pay the "resale price" to the Qualified Homebuyer and close an escrow for the
transfer of the New Home to the Agency within sixty (60) calendar days following written
notification of the intention of the Qualified Homebuyer to resell the New House.
Section 8. Covenants to Run with the Land.
The Qualified Homebuyer and the Agency hereby declare their specific intent that the covenants, reser-
vations and restrictions set forth herein are part of a plan for the promotion and preservation of
affordable single family housing within the territorial jurisdiction of the Agency and that each shall be
deemed covenants running with the land and shall pass to and be binding upon the New Home and
each Successor-In-Interest of the Qualified Homebuyer in the New Home for the term provided in
Section 10. The Qualified Homebuyer hereby expressly assumes the duty and obligation to perform
each of the covenants and to honor each of the reservations and restrictions set forth in this Covenant.
Each and every contract, deed or other instrument hereafter executed covering or conveying the New
Home or any interest therein shall conclusively be held to have been executed, delivered and accepted
subject to such covenants, reservations, and restrictions, regardless of whether such covenants,
reservations and restrictions are set forth in such contract, deed or other instrument.
Section 9. Burden and Benefit.
The Developer, the Agency and the Qualified Homebuyer hereby declare their understanding and
intent that the burden of the covenants set forth herein touch and concern the land in that the Qualified
Homebuyer's legal interest in the New Home is affected by the affordable single family dwelling use
and occupancy covenants hereunder. The Agency and the Qualified Homebuyer hereby further declare
their understanding and intent that the benefit of such covenants touch and concern the land by
enhancing and increasing the enjoyment and use of the New Home by the intended beneficiaries of
such covenants, reservations and restrictions, and by furthering the affordable single family housing
development goals and objectives of the Agency and in order to make the New Home available for
acquisition and occupancy by the Qualified Homebuyer.
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Section 10. Term.
(a) The provisions of Section 4 and Section 7 of this Covenant shall apply to the New Home and
the Qualified Homebuyer and to each Successor-In-Interest forty-five (45) years after the
Delivery Date.
(b) Except as set forth in Section 10(a), all of the other provisions of this Covenant shall apply to
the New Home for a term of forty-five (45) years after the Delivery Date.
(c) Any provision or section of this Covenant may be terminated after the Delivery Date upon
written agreement by the Agency and the Qualified Homebuyer (or the Successor-In-Interest in
the New Home), if there shall have been provided to the Agency an opinion of special legal
counsel that such a termination under the terms and conditions approved by the Agency in its
reasonable discretion will not adversely affect the affordable single family housing and
development goals and obligations of the Agency.
Section 11. Breach and Default and Enforcement.
(a) Failure or delay by the Qualified Homebuyer to honor or perform any material term or
provision of this Covenant shall constitute a breach under this Agreement; provided, however,
that if the Qualified Homebuyer commences to cure, correct or remedy the alleged breach
within thirty (30) calendar days after the date of written notice specifying such breach and shall
diligently complete such cure, correction or remedy, the Qualified Homebuyer shall not be
deemed to be in default hereunder.
The Agency shall give the Qualified Homebuyer written notice of breach specifying the alleged
breach, which if uncured by the Qualified Homebuyer within thirty (30) calendar days, shall be
deemed to be an event of default. Delay in giving such notice shall not constitute a waiver of
any breach or event of default nor shall it change the time of breach or event of default;
provided, however, the Agency shall not exercise any remedy for an event of default hereunder
without first delivering the written notice of breach as specified in this Section 11.
Except with respect to rights and remedies expressly declared to be exclusive in this Covenant,
the rights and remedies of the Agency are cumulative with any other right or power of the
Agency or the City or other applicable law, including the right to foreclose on the Agency
Grant Deed and/or to call any amounts due and owing to the Agency, and the exercise of one or
more of such rights or remedies shall not preclude the exercise by the Agency at the same or
different times, of any other right or remedy for the same breach or event of default.
In the event that a breach of the Qualified Homebuyer may remain incurred for more than thirty
(30) calendar days following written notice, as provided above, an event of default shall be
deemed to have occurred. In addition to the remedial provisions of Section 5 as related to a
Maintenance Deficiency at the New Home, upon the occurrence of any event of default the
Agency shall be entitled to seek any appropriate remedy or damages by initiating legal
proceedings as follows:
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(i) by mandamus or other suit, action or proceeding at law or in equity, to require the
Qualified Homebuyer to perform its obligations and covenants hereunder, or enjoin any
acts or things which may be unlawful or in violation of the rights of the Agency; or
(ii) by other action at law or in equity as necessary or convenient to enforce the obligations,
covenants and agreements of the Qualified Homebuyer to the Agency.
(b) Except as set forth in the next sentence, no third party shall have any right or power to enforce
any provision of this Covenant on behalf of the Agency or to compel the Agency to enforce any
provision of this Covenant against the Qualified Homebuyer or the New Home. The Agency
may assign the right and power to enforce the provisions of this Covenant against the Qualified
Homebuyer or the New Home as the successor administration agency of the HAP Program to
the City of San Bernardino.
Section 12. Governinil Law.
This Covenant shall be governed by the laws of the State of California.
Section 13. Amendment.
This Covenant may be amended after the Delivery Date only by a written instrument executed by the
Qualified Homebuyer(or the Successor-In-Interest, as applicable) and by the Agency.
Section 14. Attorneys' Fees.
In the event that the Agency brings an action to enforce any condition or covenant,
representation or warranty in this Covenant or otherwise arising out of this Covenant, 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 14, the words "reasonable attorneys' fees" in the case of the Agency include the salaries,
and costs payable to lawyers employed or retained by the Agency, who provide legal counsel to the
Agency in such litigation as allocated on an hourly basis.
Section 15. Severabilitv.
If any provision of this Covenant shall be declared invalid, inoperative or unenforceable by a final
judgment or decree of a court of competent jurisdiction such invalidity or unenforceability of such
provision shall not affect the remaining parts of this Covenant which are hereby declared by the parties
to be severable from any other part which is found by a court to be invalid or unenforceable.
Section 16. Time is of the Essence.
For each provision of this Covenant which states a specific amount of time within which the
requirements thereof are to be satisfied, time shall be deemed to be of the essence.
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Section 17. Notice.
Any notice required to be given under this Covenant shall be given by the Agency or by the Qualified
Homebuyer, by the Developer, as applicable, by personal delivery or by First Class United States mail
at the addresses specified below or at such other address as may be specified in writing by the parties
hereto:
If to the Qualified Homebuyer:
San Bernardino, California
Attn.:
Phone:
If to the Developer: Arroyo Valley Community Economic Development Corporation
Attn.: Antonio Dupree Sr., President
F.O. Box 1599
San Bernardino, California 92402
and
Inland Empire Concerned African American Churches
Attn.: Ray Turner
1583 West Union Street
San Bernardino, California 92411
If to the Agency: Redevelopment Agency of the City of San Bernardino
Attn.: Executive Director
201 North"E" Street, Suite 301
San Bernardino, California 92401
Notice shall be deemed given five (5) calendar days after the date of mailing to the party, or, if
personally delivered, when received by the Executive Director of the Agency, the Qualified
Homebuyer, or the Developer, as applicable.
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IN WITNESS WHEREOF, the Qualified Homebuyer and the Agency have caused this
Covenant to be signed, acknowledged and attested on their behalf by duly authorized representatives in
counterpart original copies which shall upon execution by all of the parties be deemed to be one
original document. The recordation of this Covenant is authorized under Health and Safety Code
Section 33334.3(g).
QUALIFIED HOMEBUYER
Date: By:
By:
DEVELOPER
Arroyo Valley Community Economic Development
Corporation, a California non-profit benefit corporation
Dated: By:
Executive Director
Inland Empire Concerned African American Churches, a
California non-profit corporation
Date: By:
Its:
Name:
By:
Its:
Name:
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Date: By.
Maggie Pacheco, Executive Director
Approved as to Form and Legal Content:
By:
Agency Counsel
[ALL SIGNATURES MUST BE NOTARIZED]
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EXHIBIT "A"
LEGAL DESCRIPTION OF THE AGENCY LOTS
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