HomeMy WebLinkAboutR45-Economic Development Agency
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT:
Mary Erickson Community Housing, Inc.
("MECH") - Delegation and authorization for
the implementation of the Neighborhood
Stabilization Program ("NSP") and approval of
a certain Master Agreement between the
Agency and MECH
DATE: June 9, 2009
Svnopsis of Previous Commission/Council/Committee Action(s):
On June 4, 2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the
Mayor and Common Council and Community Development Commission consider this action for approval.
Recommended Motion(s):
(Mavor and Common Council)
A: Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the expenditure of
certain Neighborhood Stabilization Program ("NSP") Funds pursuant to the Housing and Economic Recovery Act of 2008
("HERA") in accordance with NSP Grant Number B-08-MN-06-0520 in the principal amount equal to $8,408,558
(Communitv Development Commission)
B: Resolution of the Community Development Commission of the City of San Bernardino accepting the delegation of
administration and management for the use of the City of San Bernardino Neighborhood Stabilization Program ("NSP")
Funds in accordance with the Housing and Economic Recovery Act of2008
C: Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the use
of Low and Moderate Income Housing Funds and Neighborhood Stabilization Program ("NSP") Funds through a certain
Master Agreement by and between the Redevelopment Agency of the City of San Bernardino ("Agency") and Mary
Erickson Community Housing, Inc. ("MECH"), pursuant to the Neighborhood Stabilization Program
Contact Person(s):
Project Area(s):
Supporting Data Attached:
Carey K. Jenkins
Phone:
(909) 663-1044
7th
N/A
Ward(s):
iii Staff Report iii Resolution(s) iii Agreement(s)/Contract(s) iii Map(s) 0 Letter(s)
Funding Requirements:
Amount: $ 4.7 Million
Source:
$2.7 Million NSP Fund and
$2 Million Low and Moderate
Income Housing Fund
Signature:
Emil A. Marzullo, Interim Exec
Budget Authority: N/ A
~ ~/
Fiscal Review ~
Ru DeJesu
rim Administr. Services Director
--Comiiiissiiin/co~-';ciiNotes-;--------------------------------------------------------------------------------------------------------------------------------------------------------------
P,\AgendaslComm Dev CommissionlCDC 2009\06-1$-09 Mary Erickson Community Housing, Inc. _ Master Agreement SR.doc COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: K
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
MARY ERICKSON COMMUNITY HOUSING, INC. ("MECH") - DELEGATION AND
AUTHORIZATION FOR THE IMPLEMENTATION OF THE NEIGHBORHOOD
ST ABILIZA TION PROGRAM ("NSP") AND APPROVAL OF A CERTAIN MASTER
AGREEMENT BETWEEN THE AGENCY AND MECH
BACKGROUND:
On November 17, 2008, the Mayor and Common Council of the City of San Bernardino ("Council")
approved the City of San Bernardino Economic Development Agency's ("Agency") response to the
Neighborhood Stabilization Program ("NSP"). The Agency's plan for deploying the NSP Funds was
detailed in the Agency's "Substantial Amendment to the Fiscal Year 2008-2009 Annual Action Plan".
As described in this Substantial Amendment, the Agency plans to allocate its NSP award of
approximately $8.4 million among four different housing programs. These four programs are:
(1). Down Payment Assistance ($920,000);
(2). Housing Opportunities for Households at or below 50% of the Area Median Income ("AMI")
($2.1 million);
(3). Acquisition, Demolition and Redevelopment ($920,000); and
(4). Acquisition, Rehabilitation and Resale of single-family residences, better known as the
Intermediary Services Program ($3.7 million).
The remainder of the funds shall be used to pay for NSP administrative costs. Of the four programs
mentioned above, only the "Housing Opportunities for Households at or below 50% of the AMI" program
("Rehabilitation Program") is reserved strictly for rental properties. The decision to restrict these funds to
rental housing was made for both strategic and programmatic reasons. From the programmatic
perspective, the u.s. Department of Housing and Urban Development ("HUD") requires that at least 25%
of a participating jurisdiction's NSP grant be used to address the housing needs of individuals and
households whose income is at or below 50% of the AMI. Given this restriction on the use of these
funds, the Agency determined from a strategic perspective that it would be best to use these funds for
rental housing rather than for homeownership units.
Rental is a better option for this category of funds because households earning 50% or below of the AMI
would more than likely struggle to adequately maintain a home for which they would be financially
responsible for maintenance and upkeep given the current depressed housing market. In order to make
the home ownership option viable for these types of households, the Agency would have to provide an
exorbitant amount of subsidy. Therefore, Agency Staff determined that these funds could optimally be
used to acquire and rehabilitate existing multi-family properties that could be rented out by professional
management to households whose income does not exceed 50% of the AMI. This enables the Agency to
provide affordable housing opportunities using NSP funding for this segment of the population.
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COMMISSION MEETING AGENDA
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Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 2
In addition, Agency Staff recommends the use of funds from the "Acquisition, Demolition and
Redevelopment" program ("Demolition Program") mentioned above, to acquire foreclosed, small, multi-
family properties that are beyond repair. In these cases, and unless said properties were already subjected
to a demolition only through the Code Enforcement Department, the Agency would opt to demolish the
structures and hold them for future housing redevelopment opportunities rather than rehabilitating the
properties.
Agency Staff has determined the best method for acquiring, demolishing or rehabilitating and operating
these properties would be through a non-profit corporation that could perform all of these functions on the
Agency's behalf. A non-profit corporation can acquire properties more efficiently than the Agency due to
its more streamlined organizational structure versus that of a public agency. Also, by having the non-
profit corporation acquire the properties on behalf of the Agency, the liability to the Agency is reduced
because it would not be the legal owner of the properties. There are many housing non-profits in the
community that have greater capacity than the Agency for rehabilitating and professionally managing
properties. Finally, the Agency is in the final stages of establishing an Agency-sponsored non-profit
organization that could be the title holder to certain properties acquired under the NSP, including those
properties that are demolished. Given all of these advantages, Agency Staff recommends having a non-
profit corporation acquire, demolish or rehabilitate and manage the properties under consideration.
Through the Agency's 2008 Notice of Funding Availability ("NOFA") the Agency identified a non-profit,
Mary Erickson Community Housing, Inc. ("MECH"), to perform the acquisition, rehabilitation and
management function for households at or below 50% of AMI. Since then, Agency Staff have visited and
inspected several of MECH's existing multi-family rental projects. Also, Agency Staff has reviewed
MECH's organizational structure and fmancial statements. Based on the due diligence performed by
Agency Staff, it was determined that MECH is capable of efficiently and effectively acquiring,
rehabilitating and managing multi-family rental properties on behalf of the Agency.
Also, Agency Staff has decided to utilize the National Community Stabilization Trust ("NCST") in
identifying the multi-family properties to be acquired under the Rehabilitation Program and the
Demolition Program. NCST is a national non-profit clearing house created for the purpose of assisting
public agencies to acquire foreclosed, residential properties on a wholesale basis from the larger banks.
NCST will be responsible for identifying foreclosed properties that are owned by banks within the City
and managing the acquisition process for those properties. NCST will not charge any fee to the Agency
for its services.
CURRENT ISSUE:
As a matter of implementing the Rehabilitation Program as described above, the Agency requests the
authority to enter into a Master Agreement ("Agreement") with MECH. The Agreement would give
MECH the ability to acquire foreclosed, multi-family rental properties on behalf of the Agency and
rehabilitate them, as determined by Agency Staff. The Agreement would also dictate the terms and
guidelines for the operation of the acquired and rehabilitated multi-family properties. Following is a
summary of some of the more important conditions that would be imposed on MECH for the acquisition
of these properties:
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COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: ILiff
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 3
(1). Each acquisition is subject to the administrative oversight by the Agency.
(2). Properties acquired must be within those census tract blocks within the City identified by the
Agency as being the most impacted by the foreclosure crisis, otherwise known as the "NSP Target
Zone".
(3). Properties acquired with NSP funding must be foreclosed and/or abandoned for at least 90 days.
(4). Properties must be obtained at a minimum discount of five percent from the current appraisal
value and in the aggregate all NSP acquired properties must be acquired at a minimum discount of
15% from the appraised value.
(5). All properties acquired for the purpose of rehabilitation must eventually be leased out to
households whose total income is at or below 50% of the AMI.
Given the urgency of community conditions, the opportune availability of funds and current real estate
market prices, there is now a perfect window of time in which to mitigate the negative housing conditions
currently affecting neighborhoods throughout the City.
Orllanization Overview:
The overall mission ofMECH is to promote the well-being of working families in Southern California by
increasing and preserving the supply of affordable housing. Established as a 501(c)(3) non-profit
organization, MECH is designated as a Community Housing Development Organization ("CHDO")
currently serving Orange County and parts of Riverside, Los Angeles and San Bernardino Counties.
MECH was founded in 1991 by its namesake, a retired school teacher who was devoted to the principals
of community participation and well-being. MECH established the first affordable housing complex in
San Clemente and has since grown to include multiple properties serving hundreds of working poor
families within Southern California. Specific affordable multi-family housing developments include:
(1). Acquisition and rehabilitation of a 24-unit multi-family property targeted to households at or
below 50% of AMI located at 25421 Cole Street in Loma Linda, CA with the property currently
managed by Capstone.
(2). Acquisition, rehabilitation and resale of a total of 17 single family homes targeted to home owners
above 80% of AMI for the County of Los Angeles.
(3). Acquisition and rehabilitation of 22 units of scattered site multi-family housing targeted to
households at or below 50% of AMI in the City of San Clemente, CA with the property currently
managed by Del Mar PMC.
(4). New construction of 22 units of multi-family housing targeted to households at or below 50% of
AMI in the County of Riverside. This project is under construction.
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COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: --'ilL
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 4
(5). Acquisition, rehabilitation and resale of a total of 10 single family homes targeted to home owners
above 80% of AMI for the City of Corona Neighborhood Stabilization Program. This program
was recently launched.
The overall goal of MECH is to provide quality affordable housing for working families, promote the
economic self-sufficiency of their tenants through free Life Skills classes, transition tenants into
homebuyers, help transition residents' children into successful, productive adults and develop community
support for affordable housing. Since 2006, the Officers of the Board of Directors for MECH include
Susan McDevitt, Executive Director; Josh Anderson, President; Kathleen K. Loewy, Vice President; John
Gould, Secretary; Gerald Gibbs, Treasurer; and Jeanne Davis, Director at Large.
Proiect Overview:
The primary Project under this Master Agreement consists of the ac~uisition and rehabilitation of the 15
separate 4-plex apartment complexes located on the north side of 19 Street in the City identified by the
following site addresses: 2030, 2042, 2056, 2068, 2082, 2094, 2104, 2II8, 2134, 2148, 2164, 2178, 2194,
2196 and 2198 E. 19th Street. In addition, the Project will also include the 10 separate 4-plex apartment
complexes located on the south side of Sunrise Lane in the City identified by the following site addresses:
2205,2215,2225,2235,2245,2255,2265,2275,2285 and 2295 Sunrise Lane. Together, the acquisition
of these two blocks of four-plexes comprises the first phase ("Phase I") of the Project. Please refer to
Exhibit "A" that is the Site Map of the Project location and identifies the various Project activities.
Based on the terms and conditions of the Agreement, it will be the intent of MECH to acquire title to each
of the 4-plexes through its own efforts either through direct negotiations with the current owners or
through negotiations with lenders for the purchase of the targeted properties. Acquisitions will be funded
with a combination ofNSP funds in the amount of $2.1 million, Agency Housing 20% Set aside funds in
the amount of $1 million and other available funds to be procured by MECH for the balance of the
Project. Please refer to Exhibit "B" that identifies the Preliminary Project Budget.
MECH will also be given the authority to negotiate for the other 4-plexes and vacant lots located in the
area generally bounded by 19th Street to the north, Sunrise Lane to the south, Guthrie to the east and
Argyle to the west. In this case, however, the purchase agreements and escrow documents for these 4-
plexes and vacant lots will then be assigned to the Agency or its designated non-profit corporation, as
assignee, to then close each of these escrows. This component of the Project is considered Phase 2
("Phase 2") and is also identified in Exhibit "A" of the attached map.
In order to provide safeguards to ensure that the Project will be developed as envisioned by the Agency,
after the acquisition of each 4-plex within the Project, MECH will not resell any of the acquired properties
without prior written approval of the Agency. Additionally, once MECH acquires a minimum of five (5)
separate 4-plexes on 19th Street and five (5) separate 4-plexes on Sunrise Lane, it will initiate a process
with the City to prepare and file an application for a new parcel map for these properties by creating one
legal parcel for 19th Street and one legal parcel for Sunrise Lane for all 4-plexes then owned by MECH.
Any subsequently acquired 4-plexes will be amended into the applicable parcel map on 19th Street or
Sunrise Lane so that separate 4-plexes or units within each 4-plex cannot be resold by MECH except to
another single property owner.
P:\Agendas\Comm Dev Commission\CDC 2009\06-15-09 Mary Erickson Community Housing, Inc. - Master Agreement SR.doe
COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: ilK
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 5
Though it will not directly acquire any of the properties identified as Phase 2 of the Project, MECH will
be given the right of first opportunity to undertake all or any portion of the redevelopment of this area
which is presently targeted for a senior citizens apartment complex and a single family owner occupied
housing development. Both of these conceptual proposals will be targeted to low and moderate income
households. After an adequate number of parcels have been acquired under Phase 2, the Agency will
allow MECH to submit a proposal for the development of the parcels under consideration which will be
reviewed by the Agency and negotiated in good faith by both parties.
In all instances MECH will identify Eligible Properties and will negotiate purchase and sale agreements to
be approved by the Agency sponsored non-profit corporation that provide for a discount in purchase price
from the Current Market Appraised Value of no less than five percent (5%) for any individual property,
but a blended aggregate average discount of at least fifteen percent (15%). No property will be purchased
at a price that reflects a discount of not less than the required discount unless MECH obtains written
approval from the Agency Staff as the administrator of the program.
For those properties recommended for demolition, the Agency sponsored non-profit corporation will
acquire them and select the appropriate demolition firm to conduct such work from no less than four (4)
separate solicitations for service or it may utilize the existing pre-approved list of demolition firms
presently used by the City's Code Enforcement Department. This process will be overseen by the Agency
and will include provisions for environmental testing and demolition debris removal services.
Rehabilitation Process:
Once acquired, MECH will ensure that specific activities, goals and milestones are met with respect to the
overall rehabilitation process. Specifically, this will include the following:
(1). Secure the property including a locked perimeter fencing and board up of windows, when
necessary.
(2). Adequate property management including maintaining utility service connections and keeping the
interior and exterior appearance of each property in an attractive manner;
(3). Provide a total development budget and financing plan to the Agency for each property being
purchased. The budget estimate will include all costs associated with the development of the
property, including acquisition, labor and materials for rehabilitation work, contingency,
construction loan interest, construction loan origination fee, the general contractor fee and
overhead, marketing costs, relocation, lease-up costs, replacement reserves, permanent fmancing
origination fee, closing costs and developer fee. The financing plan will demonstrate all sources
of funds readily available for the acquisition and rehabilitation of each property to be purchased.
(4). Provide a timeline in the Agency's format for completion of the various steps involved in the
acquisition, rehabilitation and lease-up of these properties. The timeline will start from the point
that MECH enters into escrow for the acquisition of each specific property through the
stabilization of operations.
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COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: K tiS-
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Page 6
(5). Provide project management services for rehabilitation of projects, to include but not be limited to:
establishing a scope of work, identifying or obtaining the financing to pay for all labor and
materials, conducting weekly on-site project inspections, managing relationships with all sub-
contractors, verifying permits and City compliance, administering both conditional and
unconditional lien releases, advertising the apartments for rental through various local media,
conducting mass mailings targeted at potential renters, partnering with local churches and other
community groups to identify prospective Qualified Tenants, processing the rental application,
coordinating quick close of escrow and expediting lender requirements.
(6). Maintain adequate files for each property, ensuring compliance with all Agency and lender
requirements, all documents required to verify compliance with the Affirmative Marketing
Guidelines such as tenant waiting lists, copies of advertisements published in local and community
newspapers, etc.
Ref!Ular ReCJortinf! ReQuirements:
MECH will commit to an Agency-approved program to provide periodic monitoring of compliance of
each property being purchased under the Program. Additionally, within 30 days after the end of each
calendar quarter, MECH will provide a status report to the Agency Staff, City Council and the CDC
regarding the activities of MECH and progress made on overall NSP objectives. The report will detail,
among other things: (I) funds expended to date; (2) progress made on acquisition activities; (3) any
relocation that has occurred; (4) properties placed back into service; (5) properties in the process of being
rehabilitated; and (6) any unforeseen issues of a material nature.
Defaults and Remedies:
For the occurrence of any identified Event of Default by MECH, the City or the Agency, as an agent of
the City, can take any of the following remedies: (I) demand that the Event of Default be cured (if
curable) within 30 calendar days; (2) declare that any unused amount ofNSP or other Agency funds be
immediately repaid to the City or Agency; (3) take any and all actions permitted by law that is necessary
to enforce performance and observance of any obligation, agreement or covenant of MECH under the
Agreement or any other related agreements; (4) suspend allowing MECH access to any NSP or Agency
funds unless the Event of Default (if curable) is cured: (5) demand reimbursement from MECH for any
payments made to it by the City or Agency for which the contracted work product was not satisfactorily
delivered; and (6) take possession of any material or other work product purchased or produced by MECH
for the Project.
Termination:
The Agreement may be terminated by either party for any reason by giving the other party fifteen (15)
calendar days' prior written notice. The Agency will pay MECH for all work authorized by the Agency
and completed, prior to the effective termination date. In the event of a termination of the Agreement
because of performance, MECH will provide all documents, notes, maps, reports, data or other work
product developed in performance of the Scope of Services to the Agency, within ten (10) calendar days
after the effective date of the termination and without additional charge to the Agency.
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COMMISSION MEETING AGENDA
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Agenda Item Number: /..11('
Economic Development Agency Staff Report
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Compensation:
Compensation for services rendered will be derived from three separate activities which include a
Developer's Fee, Property Management Fee and Residual Receipts Income from the operating cash flows
from the various Eligible Properties that comprise the Project once they are completed, leased and have
reached financial stability.
(I). The Developer's Fee will be included as a line item in the development budget for each property
presented to the Agency prior to its acquisition. The amount of Developer Fee will be equal to
10% of the Total Development Cost for each property as reflected in the Agency established
Development Pro Forma Template. The total development cost will be comprised only of those
approved line items that appear in the Development Pro Forma Template. A Developer Fee
Bonus equal to an additional 2% will be paid if MECH is successful in obtaining a cumulative
amount of at least one million dollars ($1,000,000) from financing sources other than the Agency
that can be applied toward the acquisition, rehabilitation, and/or operations of the properties
approved by the Agency Staff.
(2). The Property Management Fee will be included as a line item in the First Year Operating Budget
for each property presented to the Agency Staff by MECH prior to its acquisition and
rehabilitation. This fee will only be paid in the case where such a property is acquired for the
purpose of rehabilitating it, leasing it to eligible tenants and where there is adequate revenues
generated from the operation ofthe property to pay such a fee. This fee is negotiable and must be
approved by the Agency Staff prior to the execution of any individual development sub-
agreement, but in no event shall the Property Management Fee exceed 6% of any eligible
property's Effective Gross Income.
(3). The Agency is entitled to receive 50% of any surplus cash flow after all operating expenses and
debt service payments have been made on each property acquired, rehabilitated and placed into
service by MECH. This surplus cash flow is commonly called residual receipts income ("Residual
Receipts"). The remaining portion of Residual Receipts will be available to MECH as the owner
of the property. The distribution of Residual Receipts may vary between properties subject to the
terms and conditions negotiated by the Agency and MECH prior to the execution of any
development sub-agreement for each property.
Budeet Request:
For activities associated with Phase I of the Project, the Agency Staff requests authority to utilize NSP
funds derived from the Housing Opportunities for Households at or below 50% of the AMI in the amount
of $2.1 million. In addition, the Agency Staff also requests that an additional $1 million Tax Increment
Housing Set-Aside Funds be made available for Phase I activities. As it relates to Phase 2 activities, the
Agency Staff requests authority for the Agency or its designated non-profit to use $600,000 in NSP
Demolition funds and $1 million in Tax Increment Housing Set-Aside funds for acquisition and
demolition purposes.
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COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: hL
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 8
In those instances where a property needs to be acquired in order to complete the overall redevelopment
strategy but said property has not been foreclosed upon, and thus not eligible under NSP, Tax Increment
Housing Set-Aside Funds can be used for acquisition, demolition or rehabilitation purposes. This is
applicable to both Phases 1 and 2.
ENVIRONMENTAL IMPACT:
None.
FISCAL IMPACT:
There will be no fiscal impact to the City's General Fund. The services provided under the Rehabilitation
Program, the Demolition Program and the associated administration costs, will be funded either with $2.7
Million in NSP funds derived from HUD or $2 Million funds from the Agency's Tax Increment Housing
Set-Aside. As it relates to the $2 Million of Agency Housing set-aside, these funds are being allocated to
assist with NSP activities in the form of the Agency's Residential Revitalization line item in the
upcoming Fiscal Year 2009-2010 Agency Budget.
RECOMMENDATION:
That the Mayor and Common Council and Community Development Commission adopt the attached
Resolutions.
/Q~
Emil A. Marzullo, Interim E~fve Director
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COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: l Sir
"<1
EXHIBIT "A"
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EXHIBIT "B"
NEIGHBORHOOD STABILIZATION PROGRAM
19TH AND SUNRISE PRELIMINARY BUDGET (as of 06-09)
Phase 1 Phase 2
Funding Acquisition Acquisition
Source Rehabilitation Demolition Total
Current Funding
NSP1 (a) 2,100,000 600,000 $ 2,700,000
20% Housing Set-aside (b) 1,000,000 1,000,000 $ 2,000,000
Subtotal 3,100,000 1,600,000 $ 4,700,000
Future Funding
NSP-State (c) 2,000,000 $ 2,000,000
NSP2 (d) 650,000 400,000 $ 1,050,000
CDFI (c) 850,000 $ 850,000
20% Housing Set-aside (e) 4,000,000 $ 4,000,000
Subtotal 3,500,000 4,400,000 $ 7,900,000
TOTAL $ 6,600,000 $ 6,000,000 $ 12,600,000
(a) NSP1 funds have already been allocated to the City and are available for immediate draw down.
(b) RDA Housing set-aside funds have been budgeted for FY09-10.
(c) Requires Mary Erickson to submit an application for funding.
(d) Requires EDA to submit an application for funding.
(e) Based on receipt of future 20% housing setaside funds (FY10-11 and FY11-12).
1
2
3
4
5
6
7
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
10 Approval and Grant Agreement duly executed by and between the City and the United States
11 Department of Housing and Urban Development ("HUD") as NSP Grant Number B-08-MN-06-
12 0520;and
13
WHEREAS, the City intends to authorize the Redevelopment Agency of the City of San
14 Bernardino (the "Agency"), pursuant to this Resolution, to administer all such NSP Funds as shall
15 be received by the City pursuant to said NSP Grant and to otherwise provide for and administer the
16 NSP program that shall be undertaken within the City by the Agency as required of the City under
17 the Funding Approval and Grant Agreement; and
18
WHEREAS, the City recognizes that various non-profit corporations, whether controlled by
19 the Agency or which are independent of the Agency, will be acquiring title to single-family
20 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
21 the applicable lenders in an effort to implement the process for the acquisition, demolition or
22 rehabilitation and resale of all such foreclosed properties or building lots after completion of
23 demolition; and
24
WHEREAS, it is necessary at this time for the City to specifically authorize the actions as
25 required to be undertaken by the Agency for the administration of the NSP funds and the
26 disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
27 properties within designated target areas or elsewhere in the City as may be permitted by HERA and
28 in furtherance of the use of the NSP funds by the Agency on behalf of the City; and
it f( 45A
Ow -IS~Dq
I
P:\Agendas\Rcsolutions\RcsoIuti~009\06-15.()9 Mary Erickson - fupenditure ofNSP Funds MCC Reso Ado<:
1 WHEREAS, the Funding Approval and Grant Agreement (the "NSP Grant Agreement") by
2 and between HUD and the City as was finally executed on April 23, 2009, and a copy of said
3 Agreement is attached to this Resolution as Exhibit "A".
4 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY
5 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
6 FOLLOWS:
7 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
8 respects.
9 Section 2. This Mayor and Common Council of the City of San Bernardino (this "Council")
10 hereby authorizes and directs the Agency staff, subject to confirmation and ratification by the
11 Community Development Commission of the City of San Bernardino (the "Commission"), to
12 implement all aspects of the NSP program and the disbursement of the NSP grant funds that are
13 available to the City pursuant to HERA and as further set forth in the NSP Grant Agreement. The
14 Agency shall be solely responsible for all administrative, audit and compliance matters required
15 either under HERA or the NSP Grant Agreement as may be required for the use of the NSP funds
16 within the City.
17 Section 3. This Council further authorizes and directs that the NSP funds as shall be
18 received by the City and administered by the Agency as authorized by this Resolution shall be used
19 and applied for the following categories of expenditures and programs and not to exceed the dollar
20 amounts as provided in this Section 3:
21
22
23
24
25
26
27
28
(a)
(b)
$920,000 - Down payment assistance for qualified single family homebuyers;
$2,100,000 - rental housing opportunities for households at or below 50% of Area
Median Income for multi-family rentals housing projects to be acquired by non-profit
corporations which are either independent of the Agency or controlled by the
Agency;
(c)
$920,000 for acquisition, demolition and redevelopment of single-family and multi-
family residential structures to be acquired by either the Agency or non-profit
2
P'\A..endu\Rf!sohrtions~lOlutions\2009\06-1S.09 MMv Erickson - Exoenditure ofNSP Funds MCC Reao A.doc
1
2
3
4
5
6
7
corporations which are either independent of the Agency or controlled by the
(d)
Agency; and
$3,700,000 for the acquisition, rehabilitation and resale of single-family foreclosed
residences through an Intermediary Services Program as may be initiated and
approved by the Commission for the Agency either by the Agency or through non-
profit corporations which are either independent of the Agency or controlled by the
.Agency.
8 The Agency shall be further authorized and directed to payor reimburse to the Agency from the
9 NSP funds as are allocated to the various categories of housing activities specified above such dollar
10 amounts as are required to provide for the effective administration and management of the NSP
11 program as shall be implemented by the Agency. Such dollar amounts of the NSP funds to be used
12 and applied by the Agency for such administration and management shall not exceed those dollar
13 limitations and other limitations on eligible expenditures as may be established by HUD either
14 pursuant to HERA or which are otherwise applicable to the use of the NSP funds.
15 Section 4. This Resolution shall take effect upon its adoption and execution in the manner
16 as required by the City Charter.
17 III
18 III
19 /11
20 III
21 III
22 III
23 III
24 III
25 11/
26 11/
27 III
28 11/
3
P:\Agcndas\Resolulions\Resolulions\2009\06-1 5-09 Mary Erickson - EKpenditure ofNSP Funds MCC Reso A.doc
1
2
3
4
5
6
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
Common Council of the City of San Bernardino at a
7
held on the day of
8
Council Members: Aves
9
ESTRADA
10
BAXTER
11
BRINKER
12
SHORETT
13
KELLEY
14
JOHNSON
15
MC CAMMACK
16
17
18
19
meeting thereof,
, 2009, by the following vote to wit:
Navs
Abstain
Absent
Rachel G. Clark, City Clerk
20 The foregoing Resolution is hereby approved this
21
22
23
24
25
26
27 By:
28
day of
,2009.
Patrick J. Morris, Mayor
City of San Bernardino
Approved as to Form:
James F. Penman, City Attorney
4
P:\Agendas\Rcsolutions\Resolutions\2009\06-.IS-09 May Erickson. Expenditure ofNSP funds MCC Reso Ado<:
EXHIBIT "A"
2009-105
FUNDING APPROVAL AND GRANT AGREEMENT FOR
NEIGHBORHOOD STABILIZATION PROGRAM (NSP) FUNDS
AS AUTHORIZED AND APPROPRIATED UNDER THE
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
(PUBLIC LAW 110-289, JULY 30, 2008)
NSP GRANTEE:
City of San Bernardino
NSP GRANT NUMBER:
B-08-MN-06.0520
NSP GRANT AMOUNT:
$8,408,558
MAR - 3 2OJ'
NSP APPROVAL DATE:
This Grant Agreement between the Department of Housing and Urban Development (lllJD) and
City of San Bernardino (Grantee) is made pursuant to the authority of sections 2301- 2304 of
the Housing and Economic Recovery Act of 2008 (public Law 110-289 (July 30, 2008))
(HERA). The program established pursuant to section 2301-2304 is known as the
"Neighborhood Stabilization Program" or "NSP." The Notice of Allocations, Application
Procedures, Regulatory Waivers Granted to and Alternative Requirements for Redevelopment of
Abandoned and Foreclosed Homes Under the Housing and Economic Recovery Act, 2008
published at 73 FR 58330 (October 6, 2008) (Notice); HERA; the Grantee's submission for NSP
assistance (Grantee Submission); the HUn regulations at 24 CFR Part 510 (as modified by the
Notice and as now in effect and as may be amended from time to time) (Regulations); and this
Funding Approval, including any special conditions, constitute part of the Grant Agreement.
Subject to the provisions of this Grant Agreement, HOD will make NSP Grant Funds in the
amount of $8,408,558 available to the Grantee upon execution of this Grant Agreement by the
parties. The Grantee shall have 18 months from the date of HUn's execution of this Grant
Agreement to obligate the NSP Grant Amount pursuant to the requirements of HERA and the
Notice. The Grantee shall have 48 months from the date of HUn's execution of this Grant
Agreement to expend the NSP Grant Amount pursuant to the requirements of the Notice. The
NSP Grant Funds may be used to pay eligible costs arising from eligible uses incurred after the
NSP Approval Date provided the activities to which such costs are related are carried out in
compliance with all applicable requirements. Pre-award planning and general administrative
costs may not be paid with funding assistance except as permitted in the Notice; the Notice limits
such costs to those incurred on or after September 29,2008. Other pre-award costs may not be
paid with funding assistance except as permitted by 24 CFR 510.200(h); for purposes ofjlTSP,
such costs are limited to those incurred on or after the date that the NSP substantial amendment
was received by HUn.
2009-105
2
The Grantee agrees to assume all of the responsibilities for environmental review,
decisionmaking, and actions, as specified and required in regulations issued by the Secretary
pursuant to Section 104(g) of Title I of the Housing and Community Development Act, as
amended (42 U.S.C. 5304) and published in 24 CPR Part 58. The Grantee further acknowledges
its responsibility for adherence to the Grant Agreement by sub-recipient entities to which it
makes funding assistance hereunder available.
This Grant Agreement may be amended only with the prior wlitten approval of ffiJD. In
considering proposed amendments to this Grant Agreement, ffiJD shall review, among other
things, whether the amendment is otherwise consistent with HERA, the Notice, and the
. Regulations.
. The Grantee may amend its Grantee Submission; however, such amendments, including
substantial amendments as defined in 24 CPR Part 91, will be subject to the requirements of 24
CPR Part 91 (or any successor regulation) and any revisions ffiJD may make to the Notice (or
any successor Notice or regulation).
The Grantee shall at all times maintain an up-to-date copy of its Grantee Submission, including
all amendments approved by HOD, on its Internet website as required by the Notice. FUlther,
the Grantee shall maintain information on all drawdowns, deposits, and expenditures of grant
funds and program income under this Funding Approval and Grant Agreement and any other
records required by 24 CPR 570.506, in its files and shall make such information available for
audit or inspection by duly authorized representatives of HOD, ffiJD's Office of the Inspector
General, or the Comptroller General of the United States.
The Grantee shall submit information on perronnance measurement as established by the
Secretary for activities undertaken with NSP grant funds.
The Grantee is advised that providing false, fictitious 01' misleading information with respect to
NSP Grant Funds may result in criminal, civil or administrative prosecution under 18 USC
~1001, 18 USC ~1343, 31 USC ~3729, 31 USC ~3801 or another applicable statute.
Close-out of this grant shall be subject to the provisions of 24 CPR 570.509 or such close-out
instructions as may hereafter be issued by ffiJD speGifically for NSP grants.
2009-105
3
This NSP Grant Agreement is binding with respect to HUD in accordance with its terms upon
the execution by HUD in the space provided above, subject to execution on behalf of the
Grantee.
The United States Department of
Housing and Urban Development
Signature of Authorizcil Offici
William G. Vasquez
Name of Authorized Official
Director
Community Planning and Development
Title of Authorized Official
31:;~
Date of Sigrjatu
For HUD CFO Use Only
Current Balances
Increases/Decreases
The Grantee
City of SaD Bernardino
~~al
A,?;e/ak" v( m~S
Name of Authorized Official
/?7--SZp'''''-'<
Title of Authorized Official
4/.23/0 '1
Date of SignahIre
95-6000772
Grantee Tax Identification Number
Endinl! Balance
Date
1
2
3
4
5
6
7
RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTING THE DELEGATION OF
ADMINISTRATION AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD STABILIZATION PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
10 Approval and Grant Agreement duly executed by and between the City and the United States
11 Department of Housing and Urban Development ("HUD") as NSP Grant Number B-08-MN-06-
12 0520;and
13 WHEREAS, the City pursuant to a duly adopted Resolution on this date has authorized the
14 Redevelopment Agency of the City of San Bernardino (the "Agency") pursuant to said Resolution,
15 to administer all such NSP funds as shall be received by the City pursuant to said NSP Grant and to
16 otherwise authorize the Agency to provide for and administer the NSP program that shall be
17 undertaken within the City by the Agency as required of the City under the Funding Approval and
18 Grant Agreement; and
19 WHEREAS, the Agency intends that various non-profit corporations, whether controlled by
20 the Agency or which are independent of the Agency, will be acquiring title to single-family
21 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
22 the applicable lenders in an effort to implement the process for the acquisition, demolition or
23 rehabilitation and resale of all such foreclosed properties or building lots after completion of
24 demolition; and
25 WHEREAS, it is necessary at this time for this Community Development Commission of the
26 City of San Bernardino (this "Commission") to concur in the request as made by the Mayor and
27 Common Council of the City of San Bernardino ("Council") and to specifically authorize Agency
28 Staff to undertake the actions as required of the Agency for the administration of the NSP funds and
I
P:\Agendas\Resolutions\Resolutions\2009\06-1S-09 Mary Erickson - Expenditure ofNSP Funds CDC Reso B.doc
j( Lj 5 4=TB
o & ~ I 5- c:A
1 the disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
2 properties within designated target areas or elsewhere in the City as may be permitted by HERA and
3 in furtherance of the use of the NSP funds by the Agency on behalf of the City; and
4 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
5 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
6 on April 23, 2009.
7 NOW, THEREFORE, THE COMMWITY DEVELOPMENT COMMISSION OF THE
8 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
9 FOLLOWS:
10 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
11 respects.
12 Section 2. The Commission hereby authorizes and directs Agency Staff to implement all
13 aspects of the NSP program and the disbursement of the NSP grant funds that are available to the
14 City pursuant to HERA and as further set forth in the NSP Grant Agreement. The Commission
15 recognizes that the Agency shall be solely responsible for all administrative, audit and compliance
16 matters required either under HERA or the NSP Grant Agreement as may be required for the use of
17 the NSP funds within the City.
18 Section 3. The use and application of the NSP funds by the Agency shall not exceed those
19 limitations set forth in Section 3 of the Resolution of the Council of even date with this Resolution
20 authorizing the Agency to administer and manage the NSP program subject to the confirmation by
21 the official action of this Commission. The Agency is hereby authorized to pay directly or to
22 otherwise reimburse the Agency for those costs and expenses of the administration and management
23 of the NSP program subject to such dollar limitation and other limitations on eligible expenditures
24 as may be established by HUD either pursuant to HERA or which are otherwise applicable to the
25 use of the NSP funds.
26 Section 4. This Resolution shall take effect from and after its date of adoption by this
27 Commission.
28 II I
2
P:\Agendas\Resolutions\Resolutions\2009\06-15-09 Mary Erickson. Expenditure ofNSP Funds CDC Reso B,doc
1
2
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTING THE DELEGATION OF
ADMINISTRATION AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD STABILIZATION PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
3
4
5
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
6 Development Commission of the City of San Bernardino at a
, 2009, by the following vote to wit:
meeting
Navs
Abstain
Absent
Secretary
18
19 The foregoing Resolution is hereby approved this
day of
,2009.
20
21
22
23
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
24 Approved as to Form:
25
26 By: " ;;,~J J_
27 -Agency rv-
28
3
P:\AgendaslR.esolutions\Resolutions\2009\06-15-09 Mal)' Erickson - Expenditure o(NSP Funds CDC Reso B_doc
1
2
3
4
5
6
7
8
RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
9 WHEREAS, the Mayor and Common Council of the City of San Bernardino ("Council")
10 pursuant to a duly adopted Resolution on this date authorized the Redevelopment Agency of the
11 City of San Bernardino (the "Agency") to administer funds received through the Neighborhood
12 Stabilization Program ("NSP") as shall be received by the City of San Bernardino ("City") pursuant
13 to a grant from the United States Department of Housing and Urban Development ("HUD") and to
14 otherwise provide for and administer the NSP program that shall be undertaken within the City by
15 the Agency as required of the City under the Funding Approval and Grant Agreement duly executed
16 by and between the City and HUD as NSP Grant Number B-08-MN-06-0520; and
17 WHEREAS, Mary Erickson Community Housing, Inc. ("MECH"), a California non-profit
18 public benefit corporation, which is independent of the Agency, will be acquiring title to muIti-
19 family foreclosed properties in an effort to implement the process for the acquisition, rehabilitation
20 and operation of all such foreclosed properties within the area described in this Resolution; and
21 WHEREAS, the Agency will be acquiring title to multi-family foreclosed properties in an
22 effort to implement the process for the acquisition and demolition of all such foreclosed properties;
23 and
24 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
25 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
26 on April 23, 2009.
27
28
j( Lj ':J :l:iC
0& ~ 15- c:A
I
P:\Agendas\Resolutioll5\Resolutions\2009\06-15_09 Mary Erickson. Expenditure ofNSP Funds roc Reso C.doc
1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
2 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
3 FOLLOWS:
4 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
5 respects.
6 Section 2. The Community Development Commission of the City of San Bernardino
7 ("Commission") hereby authorizes and directs Agency staff to implement the administration and
8 disbursement of the $2,100,000 of NSP grant funds for acquisition of foreclosed properties and
9 $1,000,000 of the Housing set-aside funds for the purpose of acquiring and rehabilitating the
10 properties located in the Sunrise and 19th Project listed below. The Commission recognizes that the
11 Agency shall be solely responsible for all administrative, audit and compliance matters required
12 either under HERA, the NSP Grant Agreement and State Community Redevelopment Law as may
13 be required for the use of the NSP and Housing set-aside funds within the City.
14 2030,2042,2056,2068,2082,2094,2104,2118,2134,2148,2164,2178, 2194,2196 and
15 2198 East 19th Street.
16 2205,2215,2225,2235,2245,2255,2265,2275,2285 and 2295 Sunrise Lane.
17 Section 3. The Commission hereby authorizes and directs Agency Staff to implement the
18 administration and disbursement of $600,000 of the NSP grant funds and an additional $1,000,000
19 of the Housing set-aside funds for the purpose of acquiring and demolishing the properties located
20 in the Sunrise and 19th Project listed below. The Commission recognizes that the Agency shall be
21 solely responsible for all administrative, audit and compliance matters required either under HERA,
22 the NSP Grant Agreement and State Community Redevelopment Law as may be required for the
23 use of the NSP and Housing set-aside funds within the City.
24 2031,2043,2057,2069,2083,2095,2105,2119,2135,2149,2165,2175, 2195,2197 and
25 2199 East 19th Street.
26 2024, 2025, 2034, 2035,2044, 2045,2054, 2055, 2064, 2065, 2074, 2075, 2084, 2085,
27 2094,2095,2104,2105,2116,2117,2130,2131,2142,2156, 2168, 2169, 2182, 2183,
28 2194 Sunrise Lane.
2
P:\Agendas\Resolutions\Resolutions\2009\06-IS-09 Mary Erickson _ Expenditure ofNSP Funds CDC Reso C.doc
1 Assessors Parcel No. 's 1191-05-170 and 1191-05-171, which are zoned vacant.
2 Section 4. The use and application of the NSP and Housing set-aside funds by the Agency
3 shall not exceed those limitations set forth in Sections 2 and 3 of the Resolution of the Mayor and
4 Common council of even date with this Resolution authorizing the Agency to administer disburse
5 NSP and Housing set-aside funds subject to the confirmation by the official action of this
6 Commission.
7
Section 5.
The Commission hereby approves the use of Low and Moderate Income
8 Housing Funds and NSP Funds through a certain Master Agreement by and between the Agency
9 and MECH and hereby authorizes the Interim Executive Director of the Agency to execute that
10 certain Master Agreement on behalf of the Agency together with such technical and conforming
11 changes as may be recommended by the Interim Executive Director of the Agency and approved by
12 the Agency Counsel.
13 Section 6.
14 Commission.
15 11/
16 11/
17 11/
18 1/1
19 1/1
20 11/
21 11/
22 11/
23 1/1
24 1/1
25 1/1
26 1/1
27 11/
28 1/1
This Resolution shall take effect from and after its date of adoption by this
3
P\Agendas\ResoJulions\Resolutions\2009\06-1 5-09 Mary Erickson - Expenditure ofNSP Funds CDC Reso C.doc
1
2
3
4
5
6
7
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
8 Development Commission of the City of San Bernardino at a
,2009, by the following vote to wit:
meeting
The foregoing Resolution is hereby approved this
21
22
23
24
25
26 Approved as to Form:
:: By \;f.:;;ttij}t
20
Navs
Abstain
Absent
Secretary
day of
,2009.
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
4
P:\Agendas\Resolutions\Resolutions\2009\06-1S-09 Mary Erickson. Expenditure ofNSP Funds CDC Reso Cooc
NEIGHBORHOOD STABILIZATION PROGRAM
DEVELOPER MASTER AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
AND
MARY ERICKSON COMMUNITY HOUSING, INC.
JUNE 15, 2009
This Master Agreement ("Agreement") is made and entered into as of June 15,2009, by
and between the Redevelopment Agency of the City of San Bernardino ("Agency"), a public
body, corporate and politic, and, Mary Erickson Community Housing, Inc., a California non-
profit corporation, hereinafter referred to as "Developer". The Agency and Developer are
sometimes referred to herein individually as a "Party" and collectively as the "Parties".
RECITALS
WHEREAS, on July 30, 2008, the United States Govemment adopted the Housing and
Economic Recovery Act of 2008 ("HERA"); and
WHEREAS, pursuant to Title III of Division B of HERA (Public Law 110-289, 122 Stat.
2650), the United States Government created a program known as the Neighborhood
Stabilization Program ("NSP"); and
WHEREAS, the purpose of the NSP is to make funding available for certain qualified
uses in order to assist state and local governments with emergency assistance for the
redevelopment of abandoned and foreclosed upon homes and residential properties; and
WHEREAS, on October 6, 2008, the U.S. Department of Housing and Urban
Development ("HUD") published its "Notice of allocations, waivers granted, alternative
requirements applied, and statutory program requirements" for the NSP in the Federal Register,
Volume 73, No. 194, Docket No. FR-5255-N-OI ("Notice"); and
WHEREAS, pursuant to the Notice, NSP funds are to be considered Community
Development Block Grant ("CDBG") funds unless stated otherwise in the Notice; and
WHEREAS, in order to qualify for an NSP grant, the City of San Bernardino ("City") has
adopted a substantial amendment to its CDBG program setting forth the criteria and guidelines
for implementation of the NSP within the City ("Substantial Amendment"); and
WHEREAS, the Substantial Amendment, and all provisions contained therein, is
incorporated by reference into this Agreement as though fully set forth herein; and
WHEREAS, HUD has reviewed and approved the Substantial Amendment, and will
make NSP grant funding available to the Agency as the administrative agent for the City; and
WHEREAS, under the NSP regulations, the City's NSP funding allocation must be
obligated within eighteen (18) months from and after the date of the City's grant agreement with
HUD; and
WHEREAS, the Agency is authorized to administer and distribute the low-moderate
income housing funds ("low-mod funds") generated from the City's Redevelopment Project
Areas, on behalf of the City; and
-2-
P:\Agendas\Ageada Attachments\Agenda AttacIunents\AgeDda Anacbments\Agrmts-Amend 2009\06-15-09 Mary- Erickson Community Housing, Inc. - Master Agreement.doc
WHEREAS, the City seeks to engage Developer the Developer to assist the City in
utilizing its NSP and low-mod funds for the purchase and rehabilitation of abandoned and/or
foreclosed upon eligible properties ("Eligible Properties") within the NSP Target Zone, as
defined in Exhibit "A" Section 2.c., and the rental of such properties to tenants with household
incomes at or below 50% of the Area Median Income ("AMI") who meet all other tenancy
requirements established under NSP ("Eligible Tenants"), all as further set forth in the
Substantial Amendment and in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND MUTUAL
PROMISES CONTAINED HEREIN AND FOR SUCH OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE
PARTIES HERETO AGREE AS FOLLOWS:
1. Incorporation of Recitals
Recitals. The Recitals set forth above are true and correct and are incorporated
into this Agreement as though fully set forth herein.
2. Supervision of Developer. The Agency Staff designated in Exhibit "B" shall be
responsible for the direction of any work to be performed by Developer and any other
consultants or subconsultants to the Agency under this Agreement. Developer shall not
undertake any work under the terms of this Agreement, unless instructed to do so by one of the
designated staff members. No other staff member is authorized by the Agency to request
services from Developer.
3. Term of Al!:reement. The term of this Agreement shall commence on the date
first appearing in this Agreement and will terminate one (1) year after this date, unless earlier
terminated as provided in this Agreement. The Agency will have the option to extend the term
of this Agreement for three additional one-year terms at the sole option and discretion of the
Agency with the consent of Developer. The Agency reserves the right through the actions of the
Interim Executive Director to terminate this Agreement at anytime either with or without cause
and at the sole convenience of the Agency upon delivery of notice of termination to Developer;
provided, however, that upon the effective date of any such termination, the Agency shall be
responsible to pay and/or reimburse Developer for all services, materials and supplies as may
have been furnished to the Agency in accordance with the Scope of Services as referenced in
Section 3.
3. Scope of Developer Services.
A. The Agency hereby retains Developer to provide the professional services set
forth in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by this
reference. Developer hereby agrees to perform the work set forth in the Scope of Services, in
accordance with the terms of this Agreement. Developer shall perform the services as set forth
on said Scope of Services within the time periods to be identified by the appropriate Agency
representative.
-3-
P:\AaeDd&s\Aaenda Attaebments\Agenda Attacbments\Agcnda Attachments\Agrmts..Amend 2009\06-1S..Q9 Mary Erickson Community Housing, Inc. . Masl:er Agreement.doc
B. The Parties agree that the Project as contemplated by the Scope of Services shall
be related specifically to the acquisition and rehabilitation of the 4-plexes located on the north
side of 19t1i Street in the City at the following set forth addresses consisting of fifteen (15)
separate 4-plex buildings each on a separate legal lot. In addition, the Project shall also include
the acquisition and rehabilitation of an additional ten (10) 4-plexes each on a separate legal lot on
Sunrise Lane at the addresses set forth below:
Addresses of 4-plexes comprisinl!: the Project:
2030,2042,2056,2068,2082,2094,2104,2118,2134,2148, 2164, 2178, 2194, 2196
and 2198 E. 19th Street
2205,2215,2225,2235,2245,2255,2265,2275,2285 and 2295 Sunrise Lane
C. It is the intent of the Parties that the Developer shall acquire title to each of the 4-
plexes by means of its own efforts either through direct negotiations with the current owners or
through negotiations with lenders for the purchase of those 4-plexes that have been foreclosed by
the applicable lender. All such acquisitions shall be funded, to the extent NSP funds remain
available, with the use of those NSP funds as shall be made available to the Developer pursuant
to this Agreement. The Parties recognize that the Agency has available an amount not to exceed
$2,100,000 for the acquisition of the 4-plexes within the Project, as necessary. In addition, the
Agency has taken all necessary actions to make available for other Project expenditures an
amount equal to $1,000,000 of the Agency's Low and Moderate Income Housing Fund which
may be expended by the Agency together with the NSP funds for the funding, in part, of the
costs of the Project.
D. Upon the acquisition of each 4-plex within the Project the Developer shall execute
the applicable program documents as are required by this Agreement to be executed and
delivered upon each such close of escrow and which are set forth as Exhibits "K", "L", "M" and
"N" to this Agreement. After the acquisition of each 4-plex within the Project, the Developer
shall not resell any such 4-plex or any interest in such 4-plex without the prior written approval
of the Agency which may be granted or denied at the sole absolute discretion of the Agency.
Upon acquisition of minimum of five (5) separate 4-plexes on 19th Street or five (5) separate 4-
plexes on Sunrise Lane, the Developer shall initiate a process with the City of San Bernardino to
prepare and file an application for a new parcel map for properties on the fust of 19th Street or
Sunrise Lane upon which five (5) 4-plexes have been acquired creating one (1) legal parcel on
each of 19th Street and Sunrise Lane for all 4-plexes then owned by the Develoger. Any
subsequently acquired 4-plexes shall be amended into the applicable parcel map on 19 Street or
Sunrise Lane so that separate 4-plexes or units within each 4-plex cannot be resold by the
Developer except to another single property owner.
E. The Developer may negotiate for other 4-plexes and vacant lots located on 19th
Street and Sunrise Lane between Guthrie and Argyle (the "Phase II Project") but the purchase
agreements and escrow documents for all such 4-plexes and vacant lots shall be then be assigned
to the Agency or its designated non-profit corporation, as assignee, to then close each escrow on
all such 4-plexes and vacant lots. The Developer shall not acquire title either directly or
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indirectly in any properties located within the Phase II Project under any circumstances during
the term of this Agreement. The Developer shall have the right of first opportunity to undertake
all or any portion of the development of a senior citizens apartment project or a single family
owner occupied housing development on all or any portion of the Phase II Project for which the
Agency determines that sufficient properties have been acquired by the Agency to warrant the
consideration of undertaking the Phase II Project in such scope as the Parties may determine
based upon the amount of acreage that is then available to the Agency. Upon receipt of written
notice from the Agency to the Developer specifying the scope of the intended portion of the
Phase II Project and the intended land use for such portion, the Developer shall have thirty (30)
calendar days after receipt of such notice to respond to the Agency as to whether the Developer
intends to undertake the proposed portion of the Phase II Project as described by the Agency in
such notice. If the Developer fails to respond to the Agency in the affIrmative within such
thirty-day period, such failure to respond shall be deemed to be the refusal of the Developer to
proceed with the Phase II Project. Upon a timely affirmative response from the Developer to the
Agency regarding the intent of the Developer to undertake the applicable portion of the Phase II
Project, the Parties shall negotiate in good faith to draft and prepare a ftnal agreement within
sixty (60) calendar days thereafter regarding the roles of the Parties and the financial
contributions and scope of the Phase II Project. Nothing contained herein shall obligate either
the Developer or the Community Development Commission of the City of San Bernardino (the
"Commission") on behalf of the Agency to approve any such fmal agreement that is presented
for consideration and approval regarding such Phase II Project. Upon any denial or refusal by
the Commission to approve any such Phase II Project agreement, the Agency may proceed to
obtain other developers or non-profit corporations to undertake all of any portion of the Phase II
Project and the Developer shall have no further rights to participate in the Phase II Project.
4. Payment bv the Al!encv for Services Performed bv Developer.
A. The Agency shall compensate Developer for completion of the services described
in the Scope of Services set forth in Exhibit "A" in accordance with the guidelines stipulated in
Exhibit "E".
B. The compensation designated in subsection 4.A. shall be the Total Fee for the
performance of the work and the delivery of the final work product materials, as set forth in the
Scope of Services.
5. Records Retention. Records, maps, field notes and supporting documents and all
other records pertaining to the use of funds disbursed to the Developer hereunder shall be
retained by the Developer and available to the Agency for examination and for purposes of
performing an audit for a period of five (5) years from the date of expiration or termination of
this Agreement or for a longer period, as required by law. Such records shall be available to the
Agency and to appropriate county, state or federal agencies and offIcials for inspection during
the regular business hours of the Developer. If the Developer does not maintain regular business
hours, then such records shall be available for inspection between the hours of 9 a.m. and 5 p.m.
Monday through Friday, excluding federal and state government holidays. In the event of
litigation or an audit relating to this Agreement or funds paid to the Developer by the Agency
under this Agreement, such records shall be retained by the Developer until all such litigation or
audit has been resolved.
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6. Indemnification. The Developer shaH defend, indemnifY and hold harmless the
Agency, its officers, employees, representatives, and agents from and against any and all actions,
suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and
attorneys fees, for injury or damage of any type claimed as a result of the acts or omissions of the
Developer, its officers, employees, subcontractors and agents, arising from or related to
performance by the Developer of the work required under this Agreement.
7. Insurance. The Developer shall maintain insurance, as set forth in Exhibit "c" to
this Agreement, throughout the term of this Agreement. The Developer shall remain liable to the
Agency pursuant to Section 6. above to the extent the Developer is not covered by applicable
insurance for all losses and damages incurred by the Agency that are caused directly or indirectly
through the actions or inactions, willful misconduct or negligence of the Developer in the
performance of the duties incurred by the Developer pursuant to this Agreement.
8. Press Releases. Press or news releases, including photographs or public
announcements, or confirmation of the same related to the work to be performed by the
Developer under this Agreement shall only be made by the Developer with the prior written
consent of the Agency.
9. Default and Remedies.
A. The occurrence of any of the events listed in Exhibit "0", Section A. (1) to (7),
shall after the giving of any notice described therein, constitute a default by Developer hereunder
("Event of Default").
B. Upon the occurrence of an Event of Default, the Agency may, in its sole
discretion, take any of the actions listed in Exhibit "0", Section B., (1) to (8).
C. Any failure or delay by a party in asserting any of its rights or remedies as to any
default shall not operate as a waiver of any default or of any rights or remedies associated with a
default. Except with respect to rights and remedies expressly declared to be exclusive in this
Agreement, the rights and remedies of the Parties under this Agreement 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.
D. The Developer has the right to implement the remedies in Exhibit "0", Section
C. (1) and (2), upon fault or failure of the Agency to meet any of its obligations under this
Agreement without curing such failure within thirty (30) days after receipt of written notice of
such failure from Developer specifYing the nature of the event or deficiency giving rise to the
default and the action required to cure such deficiency.
10. Termination.
A. This Agreement may be terminated by either party for any reason by giving the
other party fifteen (15) calendar days' prior written notice. The Agency shall pay the Developer
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for all work authorized by the Agency and completed, prior to the effective termination date.
B. In the event of a termination of this Agreement under this Section 10, the
Developer shall provide all documents, notes, maps, reports, data or other work product
developed in performance of the Scope of Services of this Agreement to the Agency, within ten
(10) calendar days after the effective date of such termination and without additional charge to
the Agency.
11. Notice. All notices given hereunder shall be in writing. Notices shall be
presented in person or by certified or registered United States Mail, return receipt requested,
postage prepaid or by overnight delivery by a nationally recognized delivery service to the
addresses set forth below. Notice presented by United States Mail shall be deemed effective on
the third business day following the deposit of such Notice with the United States Postal Service.
This Section 11 shall not prevent the parties hereto from giving notice by personal service or
telephonically verified fax transmission, which shall be deemed effective upon actual receipt of
such personal service or telephonic verification. Either Party may change their address for
receipt of written notice by notifying the other Party in writing of a new address for delivering
notice to such Party.
DEVELOPER:
Mary Erickson Community Housing, Inc.
Attention: Susan McDevitt, Executive Director
P.O. Box 775
San Clemente, CA 92674-0775
Phone: (949)369-5419
Fax: (949) 369-5416
AGENCY:
Redevelopment Agency of the City of San Bernardino
Attention: Emil A. Marzullo, Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
Phone: (909) 663-1044
Fax: (909) 663-2294
12. Comnliance with Law. The Developer shall comply with all local, state and
federal laws, including, but not limited to, environmental acts, rules and regulations applicable to
the work to be performed by the Developer under this Agreement. The Developer shall maintain
all necessary licenses and registrations for the lawful performance of the work required of the
Developer under this Agreement.
13. Nondiscrimination. The Developer shall not discriminate against any person on
the basis of race, color, creed, religion, natural origin, ancestry, sex, marital status or physical
handicap in the performance of the Scope of Services of this Agreement. Without limitation, the
Developer hereby certifies that it will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, marital status of national origin. Further, the
Developer shall promote affirmative action in its hiring practices and employee policies for
minorities and other designated classes in accordance with federal, state and local laws. Such
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action shall include, but not be limited to, the following: recruitment and recruitment advertising,
employment, upgrading and promotion. In addition, the Developer shall not exclude from
participation under this Agreement any employee or applicant for employment on the basis of
age, handicap or religion in compliance with State and Federal laws.
14. Develooer and each. Subcontractor are Indeoendent Contractors. The
Developer shall at all times during the performance of any work described in the Scope of
Services be deemed to be an independent contractor. Neither the Developer nor any of its
subcontractors shall at any time or in any manner represent that it or any of its employees are
employees of the Agency or any member agency of the Agency. The Agency shall not be
requested or ordered to assume any liability or expense for the direct payment of any salary,
wage or benefit to any person employed by the Developer or its subcontractors to perform any
item of work described in the Scope of Services. The Developer is entirely responsible for the
immediate payment of all subcontractor liens.
15. Severabilitv. Each and every section of this Agreement shall be construed as a
separate and independent covenant and agreement. If any term or provision of this Agreement or
the application thereof to certain circumstances shall be declared invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to circumstances other
than those to which it is declared invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
16. Entire Al!:reement. This Agreement constitutes the entire agreement between the
parties. This Agreement supersedes all prior negotiation, discussions and agreements between
the parties concerning the subject matters covered herein. The Parties intend this Agreement to
be the fmal expression of their agreement with respect to the subjects covered herein and a
complete and exclusive statement of such terms.
17. Amendment or Modification. This Agreement may only be modified or
amended by written instrument duly approved and executed by each of the Parties hereto. Any
such modification or amendment shall be valid, binding and legally enforceable only if in written
form and executed by each of the Parties hereto, following all necessary approvals and
authorizations for such execution.
18. Governinl!: Law. This Agreement shall be governed by the laws of the State of
California. Any legal action arising from or related to this Agreement shall be brought in the
Superior Court of the State of California in and for the County of San Bernardino.
19. Non-Waiver. Failure of either party to enforce any provision of this Agreement
shall not constitute a waiver of the right to compel enforcement of the same provision or any
remaining provisions of this Agreement.
20. Assimment. This Agreement shall be assignable by Developer only if
Developer obtains the prior express written consent of the Agency, which consent may be
withheld by the Agency in its sole discretion. Notwithstanding anything to the contrary in this
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Agreement, no purported assignment of this Agreement shall be effective if such assignment
would violate the terms, conditions and restrictions of any applicable governmental restrictions.
The Agency's consent to such assignment shall be expressly conditioned upon (i) the assignee's
execution of such documents as required by the Agency in its sole discretion, including, without
limitation, any and all documents deemed necessary by the Agency to provide for said assignee's
assumption of all of the obligations of Developer hereunder and under any documents executed
by Developer in connection herewith, and (ii) the Agency's approval of the fmancial and credit-
worthiness of such proposed assignee and the assignee's ability to perform all of the Developer's
obligations under this Agreement and all documents executed in connection herewith, as may be
determined by the Agency at its sole discretion.
21. Representations of Persons Executinl! the Al!reement. The persons executing
this Agreement warrant that they are duly authorized to execute this Agreement on behalf of and
bind the respective Party that each purports to represent.
22. Execution in Countemarts. This Agreement may be executed in one (I) or
more counterparts, each of which will constitute an original.
23. Effectiveness of the Al!reement as to the Al!encv. This Agreement shall not be
binding on the Agency until signed by an authorized representative of the Developer, approved
by the Agency and executed by the Interim Executive Director or his designee.
24. Conflicts of Interest. The Developer hereby represents that it has no interests
adverse to the Agency, at the time of execution of this Agreement. The Developer hereby agrees
that, during the term of this Agreement, the Developer shall not enter into any agreement or
acquire any interests detrimental or adverse to the Agency. Additionally, the Developer hereby
represents and warrants to the Agency that the Developer and any partnerships, individual
persons or any other party or parties comprising the Developer, together with each subcontractor
who may hereafter be designated to perform services pursuant to this Agreement, do not have
and, during the term of this Agreement, shall not acquire any property ownership interest,
business interests, professional employment relationships, contractual relationships of any nature
or any other financial arrangements relating to the Agency, property over which the Agency has
jurisdiction or any members or staff of the Agency that have not been previously disclosed in
writing to the Agency, and that any such property ownership interests, business interests,
professional employment relationships, contractual relationships or any nature or any other
fmancial arrangements will not adversely affect the ability of the Developer to perform the
services to the Agency as set forth in this Agreement.
25. Non-Exclusivitv. This Agreement shall not create an exclusive relationship
between the Agency and the Developer for the services set forth in Exhibit "A" or any similar or
related services. The Agency may, during the term of this Agreement, contract with other real
estate development entities for the performance of the same, similar or related services as those
that may be performed by the under this Agreement. The Agency reserves the discretion and the
right to determine the amount of services to be performed by the Developer for the Agency under
this Agreement, including not requesting any services at all. This Agreement only sets forth the
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terms upon which any such services will be provided to the Agency by the Developer, if such
services are requested by the Agency, as set forth in this Agreement.
26. Conseauential Damae:es and Limitation of Liabilitv. The Agency and the
Developer agree that except as otherwise provided in this Section 26, in no event will either be
liable to the other under this Agreement for any damages including but not limited to, special
damages, loss of revenue, loss of profit, operating costs or business interruption losses,
regardless of cause, including breach of contract, negligence, strict liability or otherwise. The
limitations and exclusions of liability set forth in this Section 26 shall apply regardless of fault,
breach of contract, tort, strict liability or otherwise of the Developer and the Agency, their
employees or subconsultants.
27. Business Ree:istration Certificate. The Developer warrants that it possesses, or
shall obtain immediately after the execution and delivery of this Agreement, and maintain during
the period of time that this Agreement is in effect, a business registration certificate pursuant to
Title 5 of the City of San Bernardino Municipal Code, together with any and all other licenses,
permits, qualifications, insurance and approvals of whatever nature that are legally required to be
maintained by the Developer to conduct its business activities within the City.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date indicated next to the authorized signatures of the officers of each of them as appear
below.
AGENCY
Dated:
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By: \../
Timothy J.
DEVELOPER
Mary Erickson Community Housing, Inc.,
a California non-profit corporation
Dated:
By:
Name:
Title:
Dated:
By:
Name:
Title:
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Exhibit "A"
Scope of Services
A. Activities Developer shall supply all labor, services, items of expense and
consultation (hereinafter collectively referred to as "Services") necessary to fully and adequately
meet the Program Delivery requirements set forth in Section B below, and to satisfy all other
requirements of Developer under this Agreement. As part of the Services, Developer shall be
responsible for carrying out the following NSP activities as further described in this Exhibit "A";
Acquisition of abandoned and/or foreclosed residential properties that qualify as Eligible
Properties under the Agency's housing opportunities for households which adjusted gross
income is at or below 50% of the AMI that qualify as Eligible Tenants; demolition and/or
rehabilitation of acquired Eligible Properties; and manage and operate these Eligible Properties
as further negotiated with the Agency. The program shall be carried out in a manner satisfactory
to the City and consistent with this Agreement, the Substantial Amendment and any standards
required as a condition of providing these funds.
B.
Program Delivery
I. General Requirements
a. As part of the Services, Developer agrees that it shall make
available a primary staff person on an as needed basis within close proximity to the project site
in order to successfully complete program activities
b. As part of the Services, Developer shall solicit, consistent with the
requirements contained herein, construction manager services, property acquisition and
relocation consultant services and enter into a contract for such services.
c. Developer shall, to the extent practicable, utilize realtors, appraisal
services, escrow services and title companies as approved by the Agency. If such services
cannot reasonably be identified by the Agency, Developer shall utilize businesses located first
within the City and if they are deemed to be unavailable, then utilize businesses in the County of
San Bernardino.
d. Developer shall apply for other funding to leverage NSP funds,
provided that NSP funds shall be separately maintained and accounted for, as required by federal
funding requirements, and as further specified in this Agreement and approved by the Agency.
e. Developer shall obligate all NSP funds granted to Developer
pursuant to this Agreement, excluding any funds generated from Program Income, within twelve
(12) months after the execution date of the Agreement (the execution date of this Agreement is
herein referred to as the "Effective Date").. In the case where some act of nature or other
unforeseen event out of the Developer's control, causes a delay in the acquisition and/or
rehabilitation of Eligible Properties, then the Agency may extend the period required to commit
the NSP funds granted to the Developer, in its sole discretion; however, in order to gain such an
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extension of time, the Developer will have to submit in writing to the Agency the reasons for the
schedule delay and it must receive written approval from the Agency for such extension of time,
in order for the extended deadline to be recognized by the Agency.
f. Developer warrants that it has the expertise and experience to
perform the Services set forth in this Agreement and that it shall perform said Services pursuant
to this Agreement and as stated in the Scope of Services.
g. Developer shall document performance on a monthly basis by
submittal of a Monthly Report, which re~ort shall be in a form satisfactory to the Agency. The
Monthly Report shall be due by the 10 day of the following month after the Services were
rendered.
h. Developer shall provide a Final Evaluation Report of the
Program's success in meeting established goals.
i. Developer shall provide notification to the Agency of any audits or
investigations including results, findings and/or liens.
2. PropertY Acauisition and Rehabilitation
a. Developer shall identify Eligible Properties and shall negotiate
purchase and sale agreements, to be approved by the Agency, that provide for a discount in
purchase price from the Current Market Appraised Value of no less than five percent (5%) for
any individual property, but a blended aggregate average discount of at least fifteen percent
(15%). No property shall be purchased pursuant to this Agreement at less than the required
discount, unless Developer obtains written approval from the Agency.
b. Prior to purchase of any Eligible Property under this Agreement,
and in order to determine the Current Market Appraised Value, Developer shall obtain an
appraisal made in conformity with the appraisal requirements of the Uniform Relocation Act at
49 CFR 24.103 and the HERA, and as further specified by the Agency and its approved list of
appraisers.
c. Acquisitions shall be based upon that specific target area identified
in Exhibit "f', depending on the negotiations for purchase of the Eligible Properties but in all
cases must be located within the NSP Target Zone as identified in Exhibit '!~".
d. Developer shall develop a system approved by the Agency to
determine whether those eligible properties acquired should be rehabilitated.
e. For those properties recommended for demolition and approved by
the Agency for such purpose, Developer shall select the appropriate demolition fIrm to conduct
such work from no less than three (3) separate solicitations for service. Such selection shall be
approved by the Agency and include provisions for environmental testing and removal services.
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f. Other than those liens approved by the Agency, Developer shall
ensure that title to the Eligible Property shall be and remain free and clear from any and all
security interests, liens, or other encumbrances. In carrying out the Services, Developer
promises and agrees that it will not pledge, hypothecate or otherwise encumber title to the
Eligible Property in any manner that would result in any lien, security interest, charge or claim
upon or against said property.
g. Rehabilitation of Eligible Properties acquired by Developer
pursuant to this Agreement shall be completed, and said properties shall be ready for rental
within one hundred eighty (180) days following the close of escrow on the property. In the case
where some act of nature or other unforeseen event out of the Developer's control, causes a
delay in the rehabilitation or operation of an Eligible Property, then the Agency may extend the
period required to fInish the rehabilitation work or place the Eligible Property in operation, in its
sole discretion. In order to gain such an extension of time, the Developer will have to submit in
writing to the Agency the reasons for the schedule delay and it must receive written approval
from the Agency for such extension of time, in order for the extended deadline to be recognized
by the Agency.
h. For projects approved by the Agency, Developer shall rehabilitate
as determined solely by the Agency, or shall solicit subcontractors, pursuant to the terms of this
Agreement, to rehabilitate required Eligible Properties in accordance with the standards set forth
in the Substantial Amendment, the NSP and, unless otherwise agreed upon by the Parties, in
accordance with the plans and specifications approved by the City. As part of the Developer's
rehabilitation process, Developer must ensure that tasks/activities i. - x. below are carried out
effectively and efficiently:
i. Secure Property - Ensure that adequate locked fencing is
installed on the perimeter of the site when necessary. Board up windows and outer doorways
when necessary in order to prevent looting of the property.
ii. Property Management - Maintain utilities service, pay for
monthly utilities bilI(s) during the holding period, interior and exterior appearance and
marketability of the property as needed.
lll. Budget Estimate - Provide a total budget estimate for the
Agency approved Scope of Work to be written in the Agency's format as reflected in Exhibit
"D" (Total Development Cost Pro Forma). This budget estimate shall include all costs
associated with the development of the property, including acquisition, labor and materials
for rehabilitation work, contingency, construction loan interest, construction loan origination
fee, the general contractor fee and overhead, marketing costs, relocation, lease-up costs,
replacement reserves, permanent financing origination fee, and closing costs and developer
fee.
iv. Project Timeline - Provide a timeline in the Agency's
format for completion of the various steps involved in the acquisition, rehabilitation and
lease-up of these properties. The timeline shall start from the point that Developer enters into
escrow for the acquisition of each specific property through the stabilization of operations.
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Major steps to be included in the timeline are construction period, completion of
construction, issuance of the Certificate of Occupancy, start of marketing period for the
property, projected number of weeks needed to rent out property, lease-up period and close
of permanent financing.
v. Project Management Services Provide project
. management services for rehabilitation of projects, which shall include but not be limited to:
establishing a scope of work, identifying or obtaining the fmancing to pay for all labor and
materials, conducting weekly on-site project inspections, managing relationships with all
sub-contractors, verifying permits and City compliance, administering both conditional and
unconditional lien releases, advertising the apartments for rental; through various local
media, conducting mass mailings targeted at potential renters, partnering with local churches
and other community groups to identify prospective Qualified Tenants, processing the rental
application, coordinating quick close of escrow and expediting lender requirements.
VI. Marketing - Market the property and the Neighborhood
Stabilization Program overall through advertising and published promotional materials.
Adhere to the Agency's Affirmative Marketing Guidelines (please see Exhibit "H").
vii. Lease-up Property - Identify prospective Qualified Tenants,
qualify the prospective tenants for eligibility to rent very-low income units and collect all
application documents from the Qualified Tenant.
Vlll. Financing - The Developer is required to present a feasible
plan for the acquisition, rehabilitation and permanent financing of each Eligible Property
prior to the acquisition of any such property, whether such financing is obtained in part or in
whole from the Agency. The Developer must demonstrate that its fmancing plan adequately
provides for the acquisition of the property, payment for the labor, materials and other
services required to complete the Agency approved Scope of Work for each Eligible
Property and provide for the maximum permanent, private loan that can be supported by the
Eligible Property's projected cash flow. Each financing plan is subject to the Agency's
approval in its sole discretion.
Acquisition, rehabilitation and permanent fmancing for any Eligible Property shall be subject
to the conditions and requirements set forth in Exhibit "F".
ix. Files - Maintain adequate files for each property, ensuring
compliance with all Agency and lender requirements, all documents required to verify
compliance with the Affirmative Marketing Guidelines such as tenant waiting lists, copies of
advertisements published in local and community newspapers, etc.
x. Environmental - Ensure that all environmental mitigation
measures recommended by the Agency's Environmental Consultant are carried out as part of
the rehabilitation work performed on the property. Provide proof of completion of these
mitigation measures.
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3. Closing Reauirements
A. Developer shall cause the closing of the acquisition financing, whether from the
Agency or another source, for the Eligible Properties by following the procedures and
complying with the requirements set forth in Exhibit ''F'' Section A.
B. Developer shall cause the closing of the rehabilitation financing whether from the
Agency or another fmancing source in accordance with the procedures and
requirements established in Exhibit "F" Section B.
C. Developer shall cause the closing of the permanent fmancing whether from the
Agency or another financing source in accordance with the procedures and
requirements established in Exhibit"F" SectionC;
4. Building Standards
The Developer shall adhere to the building standards stipulated in Exhibit J when rehabilitating
any Eligible Property.
5. Financial Statements; Tax Returns.
Developer shall deliver to the Agency within one hundred twenty (120) days after the end of
each fiscal year of Developer occurring during the term of any outstanding Development Loans,
a copy of its federal tax return and a financial statement for such preceding fiscal year. In
addition, concurrent with Developer's payment of the annual Residual Receipts installment
payable to the Agency on each June 15th in accordance with Sectioll_ oftli~ProtnissoryNote
attached as Exhibit "K", Developer shall deliver to the Agency, on forms prepared and provided
by the Agency from time to time, a statement certified by Developer's accountant (the "Annual
Statement"), separately setting forth (i) the aggregate Gross Rents (as defmed in Exhibit "E"
Section C.2.a.) received during the previous calendar year, and (ii) the aggregate Operating
Expenses (as defined in Exhibit "E" Section C.2.b.) expended during the previous calendar year
for each Eligible Property owned by the Developer and financed in whole or in part with a
Development Loan from the Agency.
6. Other Loans.
Developer shall comply with all monetary and non-monetary covenants associated with any loan
secured by an interest in the Eligible Property, including but not limited to the Senior Financing,
the Junior Financing and the Other Financing. Developer shall provide to the Agency a copy of
any notice of default within three business days after receiving any notice of a default or alleged
default of such covenants by Developer, and Developer shall promptly cure any such default and
cooperate in permitting the Agency, to the extent the Agency in its sole discretion elects to do so,
to cure or assist in curing the default. Any cost or expenditure incurred by the Agency in
providing or assisting in such a cure shall be deemed added to the outstanding principal amount
of the corresponding Development Loan pertaining to the Eligible Property in default.
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7. Construction Requirements
Following the Close of Escrow for the acquisition of the Eligible Property, Developer shall cause
the demolition or rehabilitation work, whichever may apply, to commence promptly, proceed
diligently, and achieve "Completion of the Project" no later than 6 months following the Close of
Escrow for Eligible Properties that are to be rehabilitated, subject to extension for up to an
additional 3 months to the extent of force majeure delays beyond Developer's reasonable control.
"Completion of the Project" shall be deemed to have occurred when the Agency has received
satisfactory evidence that the Project has been completed in compliance with this Agreement,
and that all fInal permits and certificates necessary to the operation of the Eligible Property, in
the case where an Eligible Property is being rehabilitated, as contemplated herein have been
obtained, including, without limitation, the following, each of which is subject to the Agency's
review and approval: (I) a signed certificate from the general contractor, in a form reasonably
acceptable to the Agency, certifying to the Agency that rehabilitation was completed
substantially in accordance with the requirements of the plans and this Agreement, and all other
related on-site and off-site improvements have been completed; (2) a certificate of occupancy
and other final permits and licenses necessary to permit the use and occupancy of the Eligible
Property for its intended purposes, which have been issued by proper governmental agencies;
and (3) evidence satisfactory to the Agency that the statutory period for the filing of mechanics'
liens (60 days following filing of the statutory notice of completion) has expired and the Eligible
Property is free from such liens. Rehabilitation shall proceed in accordance with Exhibit "J",
Building Standards and in accordance with the Schedule of Performance to be submitted for each
Eligible Property and approved by the Agency prior to the execution of the Development
Agreement for any particular Eligible Property.
8. Schedule of Performance
For any given Eligible Property the Developer shall comply with and meet the deadlines listed in
the Schedule of Performance attached to the Development Agreement for that particular Eligible
Property, a template of which is included in this Agreement as Exhibit "I".
9. Relocation Requirements.
If applicable, Developer shall be responsible for assuring compliance with all relocation
requirements as governed by federal relocation laws and regulations for projects funded in whole
or in part with NSP funding, including the Federal Uniform Relocation Assistance and Real
Property Policies Act (42 U.S.A. 4601 et seq., as amended), Federal Relocation Regulations (49
CFR Part 24), and HUD Relocation Handbook 1378. In circumstances where both federal and
state funds are contributed to a program or Eligible Property, it is the policy of the Agency to
follow the requirements that provide the displaced person or household with the greatest benefit.
For example, if in a mixed-funded project, the assistance or benefit under state law is more
favorable to the displaced person or household, then the state law applies, and if the opposite is
the case, then applicable federal laws and regulations (e.g., California Relocation Assistance
Law, etc.) shall apply. Any relocation assistance shall be provided through and in the manner
directed by the Agency. It shall be the responsibility of the Developer to hire a relocation
consultant to coordinate the relocation. The fees and costs of the relocation consultant incurred
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by the Developer shall be included as part of the Total Development Cost for any Eligible
Property, and as such, shall be paid for from the proceeds of the Development Loans.
10. Environmental Conditions
Developer shall comply with any National Environmental Policy Act of 1969 (NEPA) or
California Environmental Quality Act (CEQA) rnitigation measures or other environmental
conditions imposed by Agency or any other applicable governmental authority in connection
with the Eligible Property. The specific mitigation measures to be executed for each particular
Eligible Property shall be attached as an exhibit to the corresponding Development Agreement
for each Eligible Property.
11. Limitations on Tenants.
Notwithstanding anything to the contrary in this Agreement, Developer hereby covenants on
behalf of itself, and its successors and assigns, which covenant shall run with the land and bind
every successor and assign in interest of Developer, that, throughout the term of the CC&Rs for
any Eligible Property, Developer and such successors and assigns shall use the Eligible Property
solely for the purpose of rehabilitating and operating the Eligible Property as a residential
development with the tenant income levels specified in this Agreement as consideration for any
Development Loans that the Agency might be providing to a particular Eligible Property. All
units within any Eligible Property ("Agency Assisted Units") shall be rented only at an
"Affordable Housing Cost" to "Very Low -Income Households" as hereinafter defined (persons
within this group occasionally referred to as "Eligible Tenants").
"Very Low-Income Households" shall mean persons and families whose gross annual
household incomes do 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,
which qualifying limits are otherwise set forth in Section 6932 of the California Code of
Regulations and are equivalent to fifty percent (50%) of Area Median Income, adjusted for
family size and other adjustment factors by the United States Department of Housing and Urban
Development (HUD).
"Affordable Housing Cost" shall'mean, as to each Eligible Person, a rental rate which
results in monthly payments which, including a reasonable utility allowance, do not exceed for
an Eligible Person within a Very Low-Income Household, the lesser of the product of thirty
percent (30%) times fifty percent (50%) of Area Median Income adjusted for family size
appropriate to the Agency Assisted Unit.
"Area Median Income" shall mean the median income for San
BemardinolRiverside Metropolitan Statistical Area, adjusted for family size as
periodically adjusted by HUD, or any successor entity designated under state law as
responsible for establishing such "Area Median Income."
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Developer shall specifically provide in each Agency Assisted Unit lease and shall
strictly enforce the requirement that each Agency Assisted Unit be occupied at all times by the
eligible household who has leased that Agency Assisted Unit, and that any other occupant of the
unit be another qualified member of the lessee's household. The Agency shall be identified as a
third party beneficiary of that covenant and shall have the right to directly enforce that restriction
in the event Developer fails to do so. Prior to execution of any Agency Assisted Unit lease with
respect to the Eligible Property, Developer shall submit to the Agency and obtain its written
approval of a standard form occupancy lease and Developer shall thereafter use the approved
form for all leases of Agency Assisted Units in any Eligible Property, with only such further
modifications thereto as are first submitted to and approved in writing by the Agency.
12. Tenant Selection Process; Reports and Records Concerning Tenancies
Developer shall maintain such records and satisfy such reporting requirements as may be
reasonably imposed by the Agency to monitor compliance with the tenanting requirements
described in Section I labove, including without limitation the requirement that Developer
deliver reports to the Agency commencing at the close of the initial occupancy of an Eligible
Property, and continuing annually thereafter, setting forth the name of each Eligible Tenant, the
unit occupied and the income of the Eligible Tenant and the amount of rent payable by each
Eligible Tenant. Developer shall also be required to have each prospective Eligible Tenant
complete a rental application prior to occupancy and to obtain evidence from each such Eligible
Tenant as may be reasonably required by the Agency to certify such Eligible Tenant's
qualification for occupancy of the Eligible Property. Developer's obligation to provide such
reports shall remain in force and effect for the same duration as the use covenants in the CC&R's
attached to the Development Agreement for any particular Eligible Property.
13. Management of Project
Subject to the terms and conditions contained hereinbelow, Developer shall at all times during
the operation of any Eligible Property pursuant to this Agreement retain an entity to perform the
management and/or supervisory functions ("Manager") with respect to the operation of any
Eligible Property including day-to-day administration, maintenance and repair. Developer shall,
before execution or any subsequent amendment or replacement thereof, submit and obtain the
Agency's written approval of a management contract ("Management Contract") entered into
between Developer and an entity ("Management Entity") acceptable to the Agency. Subject to
any regulatory or licensing requirements of any other applicable governmental agency, the
Management Contract may be for a term of up to fifteen (15) years and may be renewed for
successive terms in accordance with its terms, but may not be amended or modified without the
written consent of Agency. The Management Contract shall also provide that the Management
Entity shall be subject to termination for failure to meet project maintenance and operational
standards set forth herein or in other agreements between Developer and the Agency. Developer
shall promptly terminate any Management Entity which commits or allows such failure, unless
the failure is cured within a reasonable period but in no event exceeding 60 calendar days from
Management Entity's receipt of notice of the failure from either Developer or the Agency.
Developer's obligation to retain a Management Entity shall remain in force and effect for the
same duration as the use covenants set forth in the CC&R's attached to the Development
Agreement for any particular Eligible Property.
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14. Operations and Maintenance
Developer hereby covenants on behalf of itself, and its successors and assigns, which covenant
shall run with the land and bind every successor and assign in interest of Developer, that
Developer and such successors and assigns shall use each Eligible Property solely for the
purpose of operating each Eligible Property and ancillary improvements thereon, in accordance
with and of the quality prescribed by this Agreement and the CC&Rs and the Agency Deed of
Trust pertaining to the particular Eligible Property.
Developer covenants and agrees for itself, its successors and assigns, which covenants shall run
with the land and bind every successor or assign in interest of Developer, that during
rehabilitation of each Eligible Property pursuant to this Agreement and thereafter, no Eligible
Property, or any portion thereof, shall be improved, used or occupied in violation of any
applicable governmental restrictions or the restrictions contained in this Agreement or the
Agency Deed of Trust pertaining to a particular Eligible Property. Furthermore, Developer and
its successors and assigns shall not maintain, commit, or permit the maintenance or commission
on any Eligible Property, or any portion thereof, of any nuisance, public or private, as now or
hereafter defined by any statutory or decisional law applicable to any Eligible Property, or any
portion thereof.
Developer shall, at its expense, (i) maintain all improvements and landscaping on each Eligible
Property in good working order, condition, and repair (and, as to landscaping, in a healthy and
thriving condition) in accordance with the plans for the particular Eligible Property (which must
be approved by the Agency before being incorporated into the Development Agreement for any
particular Eligible Property) (such approved plans, the "Plans") and all applicable govemmental
restrictions, and (ii) manage each Eligible Property and its finances reasonably prudently and in
compliance with applicable governmental restrictions so as to maintain a safe and attractive
living environment for the Eligible Tenants while maximizing Residual Receipts to the extent
reasonably possible consistent with applicable rent and tenant requirements (including all
recorded rent restrictions affecting any Eligible Property) and without compromising the safety
and attractiveness of the living environment of any Eligible Property.
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Exhibit "B"
Supervisory Staff Personnel
Agency Staff:
Carey K. Jenkins,
Director of Housing and Community Development
Fernando S. Portillo,
Project Manager
Emil A. Marzullo,
Interim Executive Director
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EXHIBIT "c"
Insurance Requirements
The Developer shall maintain insurance policies issued by an insurance company or
companies authorized to do business in the State of California and that maintain during
the term of the policy a "General Policyholders Rating" of at least A(v), as set forth in the
then most current edition of "Bests Insurance Guide," as follows:
(I) Automobile Insurance. The Developer and its general
contractor(s) shall maintain comprehensive automobile liability insurance of not less than
$1,000,000.00 combined single limit per occurrence for each vehicle leased or owned by
the Developer or its general contractor(s) and used in performing work under this
Agreement.
(2) Worker's Compensation: Developer and Developer's Contractors'
employees shall be covered by Workers' Compensation insurance in an amount and form
to meet all applicable requirements of the Labor Code of the State of California and
Employers Liability limits of $1,000,000 per accident.
. -.
(3) Liability Insurance. The Agency requires comprehensive liability
insurance, including coverage for personal injury, death, property damage and contractual
liability, with a limit of at least One Million Dollars ($1,000,000) for each occurrence
($2,000,000 general aggregate), and including products and completed operations
coverage. Said insurance shall be primary insurance with respect to the Agency.
Developer shall require and ensure the Developer's contractors to include the Agency as
an additional insured on all general liability insurance covering work at the Eligible
Property. If required by the Agency from time to time, Developer shall increase the
limits of Developer's liability insurance to reasonable amounts customary for owners of
improvements similar to the Eligible Property. The policy shall contain a waiver of
subrogation for the benefit of the Agency.
(4) Prooerty Insurance: "All Risk" ISO Special Form property
insurance, including without limitation builder's risk protection during the course of
construction, covering the full replacement value of real property and equipment utilized
for the rehabilitation of the Eligible Properties. Coverage shall extend to provide debris
removal. The Agency shall be the loss payee under the aforementioned policies under a
standard lender's loss payable endorsement. The amount of the property coverage shall at
all time exceed the full replacement value of all improvements and fixtures on the
Property and the insurer shall waive any coinsurance via an "agreement" endorsement.
Concurrent with the execution of this Agreement and prior to the commencement
of any work by the Developer, the Developer shall deliver to the Agency, copies of
policies or certificates evidencing the existence of the insurance coverage required herein,
which coverage shall remain in full force and effect continuously throughout the term of
this Agreement. Each policy of insurance that the Developer purchases in satisfaction of
the insurance requirements of this Agreement shall name the Agency as an additional
22
insured and shall provide that the policy may not be cancelled, terminated or modified,
except upon thirty (30) calendar days' prior written notice to the Agency.
Failure on the part of sub-recipient to procure or maintain the insurance coverage
required in this Exhibit "c" shall constitute a material breach of this Agreement pursuant
to which the Agency may immediately terminate this Agreement and exercise all other
rights and remedies set forth herein, at its sole discretion, and without waiving such
default or limiting the rights or remedies of the Agency, procure or renew such insurance
and pay any and all premiums in connection therewith and all monies so paid by the
Agency shall be reimbursed by Developer to the Agency upon demand including interest
thereon at the rate of ten percent (10%) per annum interest compounded annually from
the date paid by the Agency to the date reimbursed by Developer. The Agency shall have
the right, at its election, to participate in and control any insurance claim adjustment or
dispute with the insurance carrier. Developers' failure to assert or delay in asserting any
claim shall not diminish or impair the rights of the Agency against the Developer or the
insurance carrier.
23
Exhibit "D"
Development Pro Forma Template
24
EXHIBIT "0"
SOURCES & USES OF FUNDS Revised: 1/2612009
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
SOURCES: CONSTRUCTION Per Unit USES: Per Unit
Private Acquisition Loan $0 0 Acquisition Costs/Closing $0 0
Private Construction Loan $0 0 Architecture/Fees & Pennits $0 0
NSPl $0 0 Construction Cost $0 0
Agency Low-Mod Funds $0 0 Indirect Construction/Legal $0 0
NSP State $0 0 Develope~s Fee $0 0
NSP2 $0 0 Rent-Up Costs/Reserves $0 0
Other $0 0 Financing Costs $0 0
Deferred Developer Fee $0 0 Other $0 0
Deferred Costs $0 0 Other $0 0
TOTAL $0 0 $0 0
SOURCES: PERMANENT Per Unit
Penn Loan - $0 0 USES: Per Unit
NSPl $0 0 Acquisition Costs/Closing $0 0
Agency Low-Mod Funds $0 0 Architecture/Fees & Pennits $0 0
NSP State $0 0 Construction Cost $0 0
NSP2 $0 0 Indirect ConstructionlLegal $0 0
Deferred Developer Fee $0 0 Develope~s Fee $0 0
Other $0 0 Rent-Up Costs/Reserves $0 0
Other $0 0 Financing Costs $0 0
Other $0 0
TOTAL $0 0 $0 0
EXHIBIT "D"
OEVELOPMENTCOSTS - "'."""
Project Name: Sunrise & 19th Street Project
Project Add.....: Address, San Bernardino, CA Zip Code
Developer. Mary Erickson Community Housing, Inc.
Number of Dwelling Units: 4 Gross Building Area (sf) 4
TOTAL $ PER $ PER SF %OF
COST UNIT BUILDING TOTAL
,. ACQUlsmON COSTS:
-- $0 $0.00 $0.00 #OIVtol
"""""Cosm $0 $0.00 $0.00 #OlVto!
Appraisal $0 $0.00 $0.00 #DIVIO!
_Co"" $0 >0.00 $0.00 #ONto!
TOTAL ACQUISITION COSTS $0 $0.00 $0.00 'OIV/O!
2. FEESlPERMITS & STUDtES
BuiklingFees&Permits $0 $0.00 $0.00 'OlVto!
SUfVeysfSoilSlTrafIicIAcoostIcJInspections $0 $0.00 $0.00 'OIVIOI
Environmeotal QooIRemedialionIMitgatlon $0 $0.00 $0.00 #DIV/OI
ArchJEngineering Fees
Design 0.00% $0 $0.00 $0.00 #CIV/OI
Relmbursables $0 SO.OO $0.00 .OIVIOI
Subtotal: $0 0.00 0.00 .OIVIO!
TOTAL FEESlPERMITS & STUDIES $0 $0.00 $0.00 tolVlO!
3. DIRECT CONSTRUCTION COSTS:
Demolition $0 $0.00 $0.00 .OIVtol
Rehabilitation $0 $0.00 $0.00 .OIVlOI
On-siteWork $0 $0.00 $0.00 .OIV/Ol
Off-slteWork $0 $0.00 $0.00 #CIV/O!
"""' $0 $0.00 $0.00 #CIVIOI
"""' $0 SO.OO SO.OO #ONIO!
Subtotal: $0 $0.00 $0.00 MOIV/OI
Contractor's Overhead & Proftt 0..... $0 $0.00 $0.00 #Orv/OI
Subtotal: $0 $0.00 $0.00 tlDlV/Ol
General Conditions 0..... $0 $0.00 $0.00 #OIVIOI
Pedormance Bond , GL Insurance $0 $0.00 $0.00 tlDlV/Ol
Subtotal: $0 $0.00 ~.OO ,OIVIOI
Construclion Contingency 0.00% $0 $0.00 0.00 .OIVIOI
TOTAL DIRECT CONSTRUCTION COSTS $0 $0.00 $0.00 .OIVlOl
4. INDIRECT CONSTRUCTION COSTS
Developer's Fee $0 $0.00 $0.00 'OIV/O!
Deferred Developer Fee $0 $0.00 SO.OO 'OIV/O!
Subtotal: $0 $0.00 $0.00 'OIVIDI
BuidersRiskJliabilltyInsurance $0 $0.00 $0.00 tmIVlO!
Real Estate Taxes $0 $0.00 $0.00 tlDlV/01
Legal-Organizational $0 $0.00 $0.00 #OIVIOI
A""""""""",,,- $0 $0.00 $0.00 .OIVlOI
R_ $0 $0.00 $0.00 'OIV/01
Indirect Construction costs contlngenc:y $0 $0.00 $0.00 'OlVtol
TOTAL INDIRECT CONSTRUCTION COSTS $0 $0.00 $0.00 .OIVlOl
5. RENT-UP COSTS
MarkelingIAdvertisng Expense $0 $0.00 $0.00 'OIVlO!
lease-up Reserve (4 month ~p) $0 $0.00 $0.00 .OIVlOl
Capitalzecl ReplacemGnt Reserve $0 $0.00 $0.00 'ONID!
CapItaized 0penI1hg Reserve $0 :.00 :~?O 'OIVlO!
Common Area FU'TlishIngs $0 0.00 .00 ,OIV/O!
TOTAL RENT-UPIMARKETING COSTS $0 $0.00 $0.00 .OIV/OI
6. FINANCING COSTS
Construction Loan Interest $0 $0.00 $0.00 'OIVIOI
Construction Loan FeesfCosts $0 $0.00 $0.00 .OIVlOl
Lender Appraisal $0 $0.00 $0.00 'OIV/O!
Lender Legal $0 $0.00 $0.00 .OIVIO!
Permanent Loan FeesKAosing Costs $0 $0.00 $0.00 .OIV/OI
Title and Recording (ConstrJPenn.) $0 $0.00 $0.00 #OIVlO!
TOTAL FINANCING COSTS $0 $0.00 $0.00 .OIVtol
7. SUBTOTAl DEVELOPMENT COSTS $0 $0.00 $0.00 #OIV/OI
TOTAL LAND COSTS $0 $0.00 $0.00 #DIVtol
TOTAL DEVELOPMENT COSTS $0 $0.00 $0.00 #ONto!
Construction estimates are subject to change and may be revised due to entltJement Issues, changes In
construction standards, architectural and engineering requirements, and other unloneen circumstances.
2
EXHIBIT "0"
RENT SCHEDULE
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer Name: Mary Erickson Community Housing, Inc.
Rewsed:
1/2612009
2008 AREA MEDIAN INCOME
$0 2009 2009
Monthly Monthly Monthly Total Total Total
Unit Percent Gross Utility Net Number Monthly Annual #of
TVDe Median Rent Allow. Rent of Units Rent Rent ($) Bdnns.
ONE BEDROOM 30% $420 $48 $372 0 $0 $0 0
45% $584 $48 $536 0 $0 $0 0
50% $649 $48 $601 0 $0 $0 0
TWO BEDROOM 30% $0 $61 ($61) 0 $0 $0 0
45% $0 $61 ($61) 0 $0 $0 0
50% $0 $61 ($61) 0 $0 $0 0
60% $0 $61 ($61) 0 $0 $0 0
0
THREE BEDROOM 30% $0 $74 ($74) 0 $0 $0 0
45% $0 $74 ($74) 0 $0 $0 0
50% $0 $74 ($74) 0 $0 $0 0
60% $0 $74 ($74) 0 $0 $0 0
0
MANAGER'S Exempt $0 $0 $0 0 $0 $0 -1
TOTAL 0 $0 $0 -1
30% 0 #DIV/OI 30% 0 #DIV/OI
45% 0 #DIV/OI 45% 0 #DIV/OI
50% 0 #DIVlOI 50% 0 #DIV/OI
60% 0 #DIV/OI 60% 0 #DIVlOI
Mgr 0 #DIV/OI Mgr 0 #DIV/OI
0 #DIVlOI 0 #DIV/OI
Includino Mor. Unit ExcJudino Mor.Unit
3
EXHIBIT "0"
OPERATING EXPENSES Revised: 1I26l2OO9
Project Name: Sunrise & 19th Street Project
Project Address: Address. San BemarrJino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
ANNUAL MONTHLY PER UNIT UNITIMO. % TOTAL
0
1. MANAGEMENT
Contract Management Fee $0 $0.00 $0.00 $0.00 #DIVIOI
TOTAL MANAGEMENT $0 $0.00 $0.00 $0.00 #DIVIOI
2. ADMINISTRATION
Marketing $0 $0.00 $0.00 $0.00 #DIVlO!
Audn $0 $0.00 $0.00 $0.00 #DIV/OI
Legal $0 $0.00 $0.00 $0.00 #DIVlOI
Office Expenses $0 $0.00 $0.00 $0.00 #DIVIO!
TOTAL ADMINISTRATION $0 $0.00 $0.00 $0.00 #DIVIO!
3. SALARIES AND BEN EmS
On-Site Manager/Assl Manager- $0 $0.00 $0.00 $0.00 #DIVlO!
Maintenance Personnel* $0 $0.00 $0.00 $0.00 #DIV/O!
Janitorial Personnel $0 $0.00 $0.00 $0.00 #DIVlO!
Case Manager $0 $0.00 $0.00 $0.00 #DIVlOI
Housekeepers $0 $0.00 $0.00 $0.00 #DIVlO!
Payroll Txs, Ins & Wkr. Compo $0 $0.00 $0.00 $0.00 #DIVlO!
TOTAL SALARIES $0 $0.00 $0.00 $0.00 #DIVIOI
4. MAINTENANCE
Supplies $0 $0.00 $0.00 $0.00 #DIVIO!
Repairs Contract $0 $0.00 $0.00 $0.00 #DIVIO!
Pest Control $0 $0.00 $0.00 $0.00 #DIVIOI
Grounds Contract $0 $0.00 $0.00 $0.00 #DIV/OI
Turnover Costs $0 $0.00 $0.00 $0.00 #DIV/O!
O1her $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL MAINTENANCE $0 $0 $0 $0 #DIV/O!
5. UTilITIES NOT PAID BY TENANTS
Trash Removal $0 $0.00 $0.00 $0.00 #DIV/O!
ElectJicily $0 $0.00 $0.00 $0.00 #DIVIO!
Water/Sewer $0 $0.00 $0.00 $0.00 #DIVIOI
Gas $0 $0.00 $0.00 $0.00 #DIVIOI
TOTAL UTILITIES $0 $0.00 $0.00 $0.00 #DIVIO!
6. INSURANCE
property & Liability Insurance $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL INSURANCE $0 $0.00 $0.00 $0.00 #DIVIO!
7. TAXESlRESERVES
Real Estate Taxes $0 $0.00 $0.00 $0.00 #DIVlO!
Replacement Reserves $0 $0.00 $0.00 $0.00 #DIV/OI
TOTAL TAXES $0 $0.00 $0.00 $0.00 #DIV/O!
8. OTHER
O1her $0 $0.00 $0.00 $0.00 #DIVlO!
Other $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL OTHER $0 $0 $0 $0 #DIV/OI
TOTAL OPERATING EXPENSES $0 $0 $0.00 $0.00 #DIV/OI
4
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11
00
Exhibit "E"
Developer Payment and Reimbursement
The Developer's compensation for executing the Scope of Services described in Exhibit
"A" shall consist of the following components: 1. Developer Fee - This is the
compensation that the Developer receives for executing the development of an Eligible
Property, including acquisition, demolition (if so required), rehabilitation and obtaining
all the required govemmental approvals and permanent financing required to operate the
Eligible Property for its intended use; 2. Property Management Fee - The Developer shall
receive a monthly fee for managing the Eligible Property on a daily basis once the
Property is leased up. The portion of the Property Management Fee received by the
Developer shall be determined by the extent to which the Developer is involved in the
management of the Eligible Property; and 3. Residual Receipts - Any cash flow
generated by an Eligible Property after operating expenses, debt obligations, and other
fees and reserves approved by the Agency have been paid shall be shared by the Agency
and the owners of the Eligible Property. The Developer is entitled to a portion of the
owner's share of Residual Receipts to the extent that they participate in the ownership of
that particular Eligible Property.
All of the above fees must be reflected in the financing plan presented to the Agency by
the Developer for any particular Eligible Property. The Agency will negotiate these fees
with the Developer prior to the execution of any Development Agreement for any
particular Eligible Property; however, the fees shall generally be determined in
accordance with the definition and formula established for each respective fee below.
The Agency's approval of these fees is a necessary pre-condition for the execution of any
Development Agreement.
A. Developer Fee
The Developer Fee shall be included as a line item in the development budget
for the Eligible Property presented to the Agency by the Developer prior to
the acquisition or rehabilitation of any Eligible Property. It shall be paid from
the fmancing proceeds obtained for the development of an Eligible Property.
The formulas for determining the amount of the Developer Fee are as follows:
(1) Acquisition and Rehabilitation - In the case where the Developer is
acquiring the Eligible Property for the intended purpose of
rehabilitating the property and renting it to Eligible Tenants, the
Developer shall be entitled to a Developer Fee equal to ten percent
(10%) of the Total Development Cost as reflected in the Development
Pro Forma Template attached to this Agreement as Exhibit "D" and
approved by the Agency. The Total Development Cost shall be
comprised only of those line items that appear in the Development Pro
25
Forma Template. Any other costs shall only be included as a part of
Total Development Cost upon approval by the Agency.
(2) Developer Fee Bonus - If the Developer is successful in obtaining a
cumulative amount of at least two million dollars ($2,000,000)
("Threshold Amount") from financing sources other than the Agency
("Alternate Funds") that can be applied toward the acquisition,
rehabilitation, and/or operations of Eligible Properties as defined in
this Agreement, then the Developer will receive an additional two
percent (2%) of Total Development Cost for all Eligible Properties
acquired and/or rehabilitated using Alternate Funds, once such
Alternate Funds have been successfully secured by the Developer.
The Alternate Funds will be considered to have been secured by the
Developer after the Alternate Funds have been effectively applied
towards the purchase and/or rehabilitation of Eligible Properties. The
2% additional bonus will apply to all Eligible Properties using
Alternate Funds as part of their financing, including those Eligible
Properties that were completed prior to reaching the $2,000,000
threshold.
(3) Developer Fee Payment Schedule - Twenty-five percent (25%) of the
Developer Fee as defined in Sections A.(I) and A.(2), above, shall be
disbursed to the Developer upon the closing of the Acquisition
Escrow. Fifty-percent (50%) shall be paid upon completion of the
rehabilitation work and the receipt of the Certificate of Occupancy. In
the case where a Certificate of Occupancy does not need to be issued
in order to operate the Eligible Property, the Certificate of Completion
from the general contractor and the Unconditional Lien Releases from
the Developer and all of its general contractors and sub-contractors can
be accepted for the purposes of documenting the satisfactory
completion of the rehabilitation work on the Eligible Property, instead
of a Certificate of Occupancy. The remaining twenty-five (25%) shall
be paid upon the closing of the permanent financing for the Eligible
Property.
B. Property Management Fee
The Property Management Fee shall be included as a line item in the First
Year Operating Budget (please see Exhibit "D") for the Eligible Property
presented to the Agency by the Developer prior to the acquisition and
rehabilitation of any Eligible Property. This fee shall only be paid in the case
where an Eligible Property is being acquired for the purpose of rehabilitating
it and eventually renting it to Eligible Tenants. It shall be paid from the rental
revenues generated from the operation of the Eligible Property. This fee shall
be negotiated and must be approved by the Agency prior to the execution of
the Development Agreement for any particular Eligible Property, but in no
26
event shall the Property Management Fee exceed seven percent (7%) of the
Eligible Property's Effective Gross Income. Upon the acquisition of five (5)
contiguous Eligible Properties, the Property Management Fee shall not exceed
six percent (6%). The Effective Gross Income for any Eligible Property shall
be calculated in the manner reflected in the First Year Operating Budget for
the Eligible Property.
C. Residual Receipts
The Agency is entitled to receive at least fifty percent (50%) on any Residual
Receipts for any given year that an Eligible Property is in operation. The
remaining portion of Residual Receipts pertains to the Owner of the Eligible
Property. Any portion of Residual Receipts paid to the Developer shall be
distributed from the Owner's portion of Residual Receipts. The distribution
of Residual Receipts may vary between Eligible Properties subject to the
terms and conditions negotiated by the Agency and the Developer prior to the
execution of any Development Agreement for an Eligible Property.
1. Calculation of Residual Receiots
Residual Receipts shall be calculated and reported to the Agency annually
for each calendar year no later than March 15th of the following calendar
year on forms specified and provided by the Agency from time to time.
All calculations and records are subject to audit by the Agency.
Developer shall provide to the Agency for inspection and copying any
records, receipts, account books, ledgers, checks, or other documents or
other evidence requested by the Agency for the purpose of verifying
Developer's calculation of Residual Receipts, and shall promptly pay to
the Agency any further amount due but not paid as a result of any
miscalculation by Agency.
2. Definition of Residual Receiots.
(a) "Residual Receipts" shall mean, with respect to each calendar year, the
amount by which "Gross Rents," as defmed herein, for such calendar
year exceed the "Operating Expenses", as defined herein, for that
calendar year. (b) With the exception of the "Excluded Items" (as
defined below), "Gross Rents" shall mean, with respect to each
calendar year or portion thereof, all gross income, rentals, revenues,
payments and consideration, of whatever form or nature, whether
direct or indirect, received by or paid to or for the account or benefit of
Developer or any "Affiliate" (as defined below) of Developer or any of
their agents or employees, from any and all sources, resulting from or
attributable to the ownership, operation, leasing and occupancy of the
Eligible Property, determined on the basis of generally accepted
accounting principles applied on a consistent basis, and shall include,
but not be limited to: (i) gross rentals paid by occupancy tenants of the
27
Eligible Property under occupancy leases and payments and subsidies
of whatever nature, including without limitation any payments,
vouchers or subsidies from the United States Department of Housing
and Urban Development (HUD) or any other person or organization,
received on behalf of tenants under occupancy leases, (ii) amounts
paid to Developer or any Affiliate of Developer on account of
"Operating Expenses" (as defmed herein) for further disbursement by
Developer or such Affiliate to a third party or parties, (iii) late charges
and interest paid on rentals, (iv) rents and receipts from licenses,
concessions, vending machines, coin laundry and similar sources; (v)
other fees, charges or payments not denominated as rental but payable
to Developer in connection with the rental of office, retail, storage, or
other space in the Project; and (vi) consideration received in whole or
in part for the cancellation, modification, extension or renewal of
occupancy leases. The term "Affiliate" shall mean any person or
entity directly or indirectly, through one or more intermediaries, con-
trolling, controlled by or under common control with Developer
which, if Developer is a partnership or limited liability company, shall
include each of the constituent members or partners, respectively,
thereof. The term "control" as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the
right to exercise, directly or indirectly, more than fifty percent (50%)
of the voting rights attributable to the shares of the controlled
corporation, and, with respect to a person that is not a corporation,
possession directly or indirectly of the power to direct or cause the
direction of the management or policies of the controlled person.
Notwithstanding the foregoing, Gross Rents shall not include the
following items ("Excluded Items"): (aa) security deposits from
tenants (except when applied by Developer to rent or other amounts
owing by tenants); (bb) capital contributions to Developer or its
members, partners or shareholders by its or their members, partners or
shareholders; (cc) condemnation or insurance proceeds constituting
'Net Proceeds' as defined in Section C.2.(d) below; and (dd) funds
received from any source (including but not limited to senior financing
and any junior financing or other fmancing) actually and directly used
for acquisition and/or rehabilitation of the Eligible Property.
(b) "Operating Expenses" shall mean, with respect to each calendar year
or portion thereof, the sum of the following expenses to the extent
reasonably paid by Developer during such period: (i) nonelective
payments made with respect to the Senior Financing; (ii) all taxes and
assessments imposed upon the Eligible Property and required to be
paid by Developer but only to the extent such taxes and assessments
are paid or set aside as a reserve by Developer during such calendar
year; (iii) all amounts paid or set aside as a reserve by Developer on
account of insurance premiums for insurance carried in connection
28
with the Eligible Property, provided that if insurance on the Eligible
Property is maintained as part of a blanket policy covering the Eligible
Property and other properties, the insurance premium included in this
definition shall be the portion of the premium fairly allocable to the
Eligible Property for the period; (iv) ownership and operating costs
incurred by Eligible Property for the management, operation, cleaning,
leasing, marketing, maintenance and repair of the Eligible Property
(including without limitation, property management fees and
administrative fees) properly chargeable against income according to
generally accepted accounting principles, including without limitation
wages, payroll and accounting costs, utility and heating charges,
material costs, maintenance costs, costs of services, water and sewer
charges, travel expenses allocable to the Eligible Property, and license
fees and business taxes; provided, however, that (A) the amount
included as property management fees and administrative fees in
Operating Expenses shall collectively not exceed ten percent (10%) of
Gross Rents from the Eligible Property for such period, all or a portion
of each of which may be paid to Developer and/or an Affiliate of
Developer, (B) such property management fees and administrative fees
shall only be paid on the basis of supporting documentation reasonably
acceptable to the Agency, and shall be paid after the payment of all
other Operating Expenses, and (C) partnership management fees and
other fees payable to a partner in a tax credit limited partnership shall
only be considered Operating Expenses to the extent they do not
exceed $15,000 in the aggregate in any year, which shall be adjusted
annually by a percentage equal to the annual increase in AMI adopted
by HUD; (v) reasonable and ordinary reserves actually set aside for
replacement of roofing, furniture, fixtures, equipment, and other
capital expenditures, in an annual amount no less than $200.00 per unit
and no greater than such higher amount as may be established from
time to time by mutual agreement of the Parties; and (vi) to the extent
not otherwise included in Operating Expenses, amounts paid from any
account as a reserve account for the purpose for which such reserve
was created so long as such purpose would constitute an Operating
Expense.
(c) Notwithstanding any provlSlon of Section C.2.(b) , the term
"Operating Expenses" shall not include any of the following:
(i) salaries of employees of Developer or Developer's general
overhead expenses, or expenses, costs and fees paid to an
Affiliate of Developer, to the extent any of the foregoing
exceed the expenses, costs or fees that would be payable in
a bona fide arms' length transaction between unrelated
parties in the San Bernardino-Riverside County area for the
same work or services;
29
(ii) any amounts paid directly by a tenant of the Eligible
Property to a third party in connection with expenses
which, if incurred by Developer, would be Operating
Expenses;
(iii) optional or elective payments with respect to the Senior
Financing;
(iv) any payments with respect to Junior Financing, Other
Financing, or any other Eligible Property-related loan or
financing other than the Senior Financing; or
(v) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Developer prior to
completion of the Rehabilitation with respect to the
development, maintenance and upkeep of the Eligible
Property, or any portion thereof, including, without
limitation, all costs and expenses incurred by Developer in
connection with the acquisition of the Eligible Property, all
predevelopment activities conducted by Developer in
connection with the Eligible Property, including without
limitation, the preparation of all plans and the performance
of any tests, studies, investigations or other work, and the
construction of the Project and anyon-site or off-site work
in connection therewith.
(d) In addition to the payments provided in Sections 2(a), (b) and (c)
above, and subject to the terms of the Senior Financing, Developer
shall pay to the Agency towards (but not to exceed) any outstanding
amounts associated with the Loan: (a) no later than the date of close of
escrow or other consummation of any Assigmnent other than a Minor
Assigmnent, the Applicable Percentage of the Net Proceeds of such
Assigmnent; and (b) no later than the recording of a Refmancing, fifty-
percent (50%) of the Net Refmancing Proceeds received from any
such Refinancing.
A "Minor Assigmnent" shall mean any lease of an individual unit in the Project
for occupancy by a residential tenant and in the ordinary course of business for operation
of the Project.
"Applicable Percentage" shall mean fifty percent (50%); provided, however, that
the term Applicable Percentage shall mean one hundred percent (100%) with respect to a
payment on the Loan attributable in whole or in part to a condemnation of, or event of
damage, destruction or casualty with respect to, the Eligible Property, the Project or any
portion of either. "Assigmnent" means any voluntary or involuntary conveyance,
disposition, assigmnent, taking, casualty, encumbrance (other than a Refinancing as
30
defined below or the creation of the Senior Financing or any other Project Loan or
limited partner contribution, the proceeds of which are used solely for initial acquisition
of the Eligible Property by Developer or initial development of the Project), sublease,
sale, license, concession, management agreement, operating agreement, transfer or
similar transaction with respect to any direct or indirect interest or economic benefit of
any person or entity in connection with the Project or the use or occupancy of the Eligible
Property including, without limitation, any Transfer by Developer of all or any portion of
its rights under or interest in the Project or the Eligible Property, any change of
ownership or control of Developer, any condemnation or taking of the Eligible Property
or the Project or any portion thereof, any event of damage to or destruction of the Eligible
Property or the Project, any foreclosure of Developer's interest in the Project or the
Eligible Property, whether by judicial proceedings, or by virtue of any power contained
in a deed of trust, indenture or other instrument creating a lien against the Eligible
Property or the Project, or any assignment of Developer's estate in the Project or the
Eligible Property through, or in lieu of, foreclosure or other appropriate and bona fide
proceedings in the nature thereof; provided, however, that the term "Assignment" as used
herein shall not include bona fide transfers of an ownership interest in Developer to any
Affiliate of Developer, so long as the consideration paid to the selling partner, member or
shareholder on account of such transfer does not exceed the actual amount paid by such
partner, member or shareholder for its ownership interest plus reimbursement for any out-
of-pocket expenses incurred by such partner, member or shareholder in connection with
its acquisition of such ownership interest.
"Net Proceeds" of an Assignment shall mean (1) the proceeds received, directly
or indirectly, by Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate as a result of such Assignment, including,
without limitation, cash, the amount of any monetary lien or encumbrance assumed or
taken subject to by the assignee, the fair market value of any noncash consideration,
including the present value of any promissory note received as part of the proceeds of
such Assignment (such present value to be determined based upon a discount rate
reasonably satisfactory to the Agency), the entire condemnation award or compensation
payable to Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate in connection with a condemnation or taking in
eminent domain of any part of the Eligible Property or the Project or any interest therein,
all insurance proceeds or awards payable to Developer or any Affiliate or constituent
member or partner or majority shareholder of Developer or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part
thereof not used for project restoration; less (2) the sum of (i) the actual, documented and
reasonable expenses of effecting such Assignment, including reasonable brokerage
commissions, title insurance premiums, documentary transfer taxes, and reasonable
attorneys' fees, in each case actually paid in connection with the Assignment (provided
that no deduction shall be allowed for payments to an Affiliate of the person or entity
making the Assignment which are in excess of the amount that would be paid for the
same or equivalent services in an arms' length transaction between unrelated parties
acting reasonably), and (ii) the amount of any proceeds of the Assignment paid
(excluding voluntary payments) towards the then-outstanding balance of the Senior
31
Financing. No1withstanding anything above to the contrary, the permissible deductions
for purposes of calculating the Net Proceeds of an Assignment shall not include any
foreign, U.S., state or local income taxes, franchise taxes, or other taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project
Loan") secured by an encumbrance on the Eligible Property, the Project, or any portion
thereof. The term "Refinancing" shall not include the creation of the Senior Financing or
any other Project Loan, the proceeds of which are used solely for initial acquisition of the
Eligible Property by Developer or initial development of the Project.
"Net Refinancing Proceeds" shall mean the gross face amount of the Project Loan
obtained in connection with such Refinancing, after: (1) payment of the actual, docu-
mented and reasonable expenses of such Refinancing, including escrow fees, title policy
expenses, legal expenses, survey fees, recording fees, commissions, and other usual and
reasonable expenses of any such Refmancing (provided, that no deduction shall be
allowed for payments in connection with such Refmancing which are in excess of the
amounts that would be paid for the same or equivalent services in an arms' length
transaction between unrelated parties acting reasonably); and (2) deduction of amounts
repaid (excluding voluntary payments) in connection with the Refinancing towards
amounts outstanding under the Senior Financing.
32
Exhibit "F"
Closing Requirements
Except to the extent Agency's Executive Director directs in writing that some or all of the
disbursement and/or deliveries shall occur outside of Escrow, disbursement of the
Agency's loans to Developer, whether they be for the purpose of acquiring Eligible
Properties, rehabilitating these properties or providing permanent financing for these
properties, delivery of the executed loan documents (as specified in Sections A., B., and
C. below), and recordation of the appropriate documents (as defined in Sections A., B.,
and C. below) to be recorded shall be carried out through an escrow account ("Escrow")
to be established by the Parties with a title or escrow company ("Escrow Holder")
specifically approved in writing by Agency. Developer shall obtain Agency's approval
of an Escrow Holder prior to the opening of Escrow. The Parties may execute
supplemental instructions to Escrow Holder consistent with the terms of this Agreement,
but in the event of a conflict between the terms of this Agreement and any supplemental
escrow instructions, the terms of this Agreement shall control. Except as otherwise
expressly provided herein, any fees and costs incurred by Escrow Holder in the
performance of its duties hereunder and agreed to be paid by the Parties shall be paid
exclusively by the Developer.
A. Acquisition Financing
1. Disbursements made by the Agency for the purpose of acquiring Eligible
Properties under this Agreement, which shall hereafter be referred to as
"Acquisition Financing", shall be expressly subject to satisfaction of all of the
following conditions (collectively, the Acquisition Closing Conditions) on or
before the date ("Acquisition Closing Deadline") which is thirty (30) calendar
days following the execution date of a sub-agreement initially entered into by the
Agency and Developer for the purposes of implementing the acquisition and/or
rehabilitation, or providing permanent financing of an Eligible Property or Set of
Eligible Properties in accordance with the conditions set forth in this Master
Agreement ("Development Agreement").
(a) Execution of the Development Agreement and delivery of a fully
executed copy of the Development Agreement to the Escrow Holder;
(b) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Acquisition Note ("Acquisition Note"), in the form
attached hereto as Exhibit "K";
(c) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the covenants, conditions and restrictions ("Agency
CC&R's") in the form attached hereto as Exhibit "M", recorded against
the ownership interest of the Developer, prior to the start of
construction;
33
(d) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the Agency Deed of Trust ("Agency Deed of Trust"),
attached hereto as Exhibit "L";
(e) Receipt by the Agency from Developer of such other documents,
certifications and authorizations as are reasonably required by the
Agency, in form and substance satisfactory to the Agency, evidencing
that (i) the Development Agreement, the Acquisition Note, the Agency
Deed of Trust, the Agency CC&R's and all other documents given or
executed in connection herewith (collectively the Agreement, the
Acquisition Note, the Deed of Trust and the CC&Rs are referred to
herein as the "Acquisition Loan Documents") are duly and validly
executed by Developer and constitute the valid and enforceable
obligation of Developer pursuant to the respective terms, and (ii) the
execution and delivery of the Acquisition Loan Documents, and the
performances thereunder by Developer, will not breach or violate any
law applicable or govemmental regulation to which Developer is
subject nor constitute a breach of or default under any instrument or
agreement to which Developer may be a party;
(f) First American Title ("Title Company") shall have assured the Agency
in writing that upon recordation of the Agency Deed of Trust there
will be provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including but
not limited to Nos. 100, 103.7, 116 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Acquisition Loan, insuring the
Agency's interest in the Property as beneficiary under the Agency
Deed of Trust, and specifically insuring that the lien of the Agency
Deed of Trust and the Agency CC&R's against the Property are
subject only to the Senior Financing and any exceptions to title
applicable to the Property which were expressly approved in writing
by the Agency (collectively with the Senior Financing, "Permitted
Senior Encumbrances"). Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
(g) Intentionally omitted
(h) No Event of Default shall exist under this Agreement, the
Development Agreement or under any agreement or instrument
relating to any Senior, Junior or Other financing obtained by the
Developer for the purpose of acquiring, rehabilitating or operating an
Eligible Property and Developer has demonstrated to the satisfaction
of the Agency Executive Director (or his designee) that all fmancing
34
sources for acquisition, rehabilitation, and operation of the Eligible
Property, including but not limited to Developer's equity, are or will
be available in sufficient amounts to provide for full and timely
completion and ongoing operation, if and to the extent required in the
Development Agreement, of the Eligible Property;
(i) Developer shall have provided to the Agency, in form satisfactory to
the Agency, certified copies of (i) Developer's governing partnership
agreement, operating agreement, or articles and bylaws, together with
a certification by the managing member, managing general partner, or
president that such agreement or articles and bylaws has not been
amended or modified except as described in the certification (ii) a
good standing certificate from the California Secretary of State,
certifying that Developer is duly qualified and in good standing, and
(iii) all other documents necessary to evidence to the Agency's
satisfaction that the individuals and entities executing this Agreement
and the Loan DocumeIits, and other entities on whose behalf such
documents are executed, are fully authorized to do so and to bind the
respective entities, including Developer, to the terms hereof and
thereof;
(j) Developer shall have furnished the Agency with evidence satisfactory
to the Agency evidencing the insurance coverages required by Exhibit
"C".
2. When, and only when, Escrow Holder has confirmed that Closing Conditions (a),
(b), (c), (d), and (f) of Section 1 above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Closing Conditions have been timely satisfied or waived, then Escrow
Holder shall carry out the close of Escrow ("Close of Escrow") by:
(i) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(ii) delivering the executed original Acquisition Note to the Agency;
(iii)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer;
B. Rehabilitation Financing
1. Disbursements made by the Agency for the purpose of rehabilitating Eligible
Properties under this Agreement, which shall hereafter be referred to as
35
"Rehabilitation Financing", shall be expressly subject to satisfaction of conditions
A.l.(a), (c), (d), (e), (g), (h), (i) and 0) above and conditions B.l.(a) to (e) below,
all of these conditions (collectively, the Rehabilitation Closing Conditions) on or
before the date ("Rehabilitation Closing Deadline") which is thirty (30) calendar
days following the execution date of a Development Agreement or the date that
the Developer receives written approval from the Agency of their Rehabilitation
budget, timeline, design plans, and construction contract (collectively the
"Rehabilitation Plan"), whichever occurs later.
(a) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Rehabilitation Note ("Rehabilitation Note");
(b) Developer shall have commenced or be ready to commence
rehabilitation of the Eligible Property, and shall have furnished the
Agency with copies of (A) a contract for the rehabilitation work and
materials ("Construction Contract") entered into with a general
contractor ("General Contractor") previously approved in writing by
the Agency; (B) a payment bond with respect to the rehabilitation
work and materials posted by the General Contractor which is in an
amount equal to the amount of the contract price identified in the
Construction Contract, is issued by a surety reasonably acceptable to
the Agency, is in form and content reasonably approved by the
Agency, has been recorded in the Official Records of San Bernardino,
and names the Agency as an additional obligee; (C) a performance
bond for one hundred percent (100%) of the contract price,
guaranteeing the completion of the rehabilitation work which is in
form and content reasonably approved by the Agency, is issued by a
surety reasonably acceptable to the Agency, and names the Agency as
an additional obligee; and (D) shall have submitted to the Agency and
received the Agency's approval of any design plans or other design
documents requested by the Agency.
( c) Not as a Closing Condition, but at least ninety (90) calendar days prior
to occupancy and prior to the commencement of tenant selection for
the Eligible Property, Developer shall have obtained the Agency's
written approval of an affirmative marketing plan, leasing guidelines,
and a summary of the rules, procedures and programs for the operation
of the Eligible Property including specifically the procedures to be
employed by which the tenants in the Eligible Property shall be
selected in the event that, at any given time, the number of Eligible
Tenants applying to lease units at the Eligible Property exceeds the
number of units available.
(d) Developer shall have furnished and obtained the Agency's approval of
an Operating Budget and a Management Plan for the Eligible Property.
The Management Plan shall include a preliminary Operating Budget in
36
a format mandated by the Agency, approved by the Agency at its sole
discretion. In the event the preliminary Operating Budget is proposed
for revision at the time the Certificate of Occupancy is issued, any
such revision must be approved by the Agency at its sole discretion;
(e) The Title Company shall have assured the Agency in writing that upon
recordation of the Agency Deed of Trust there will be provided to the
Agency, at Developer's sole expense, a lender's policy of title
insurance (with customary endorsements, including but not limited to
Nos. 100, 103.7, 116 and 122 and such other endorsements as the
Agency shall reasonably require) issued by the Title Company in the
amount of the Rehabilitation Loan, insuring the Agency's interest in
the Property as beneficiary under the Agency Deed of Trust, and
specifically insuring that the lien of the Agency Deed of Trust and the
Agency CC&R's against the Property are subject only to the Permitted
Senior Encumbrances. Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
2. When, and only when, Escrow Holder has confirmed that Rehabilitation Closing
Conditions (a), (c) and (d) of Section A.1. above and Rehabilitation Closing
Conditions (a) to (e) of Section B.1. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Rehabilitation Closing Conditions have been timely satisfied or waived,
then Escrow Holder shall carry out the Close of Escrow by:
(i) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(ii) delivering the executed original Rehabilitation Note to the Agency;
(iii)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer;
C. Permanent Financing
I. Disbursements made by the Agency for the purpose of paying off construction or
acquisition financing obtained from Agency approved fmancing sources in order
to acquire and/or rehabilitate an Eligible Property, which shall hereafter be
referred to as "Permanent Financing", shall be expressly subject to satisfaction of
the conditions set forth below, all of these conditions (collectively, the Permanent
Closing Conditions) on or before the date ("Permanent Closing Deadline") which
37
is thirty (30) calendar days following the execution date of a Development
Agreement or the date that the Developer receives the Certificate of Occupancy
from the appropriate local govemment agencies, whichever occurs later.
(a) The rehabilitation work on the Eligible Property is completed. The
rehabilitation work shall be "completed," which shall be deemed to
have occurred when the Agency has received satisfactory evidence
that the rehabilitation work has been completed in compliance with the
plans and specifications (collectively, "Plans") referenced in the
construction contract ("Construction Contract") which Developer has
entered into with a general contractor ("General Contractor") with
respect to the Eligible Property, and that all final permits and
certificates necessary to the operation of the Eligible Property as
contemplated herein, and releases, waivers and other instruments
evidencing no claims, stop notices or mechanics liens existing with
respect to the Eligible Property, have been obtained, including, without
limitation, the following, each of which is subject to the Agency's
review and approval:
(i) A signed certificate from the General Contractor, in a form
reasonably acceptable to the Agency, certifying to Agency that
rehabilitation was completed substantially in accordance with
the requirements of the Construction Contract, the Plans and
this Agreement, and all other related on-site and off-site
improvements have been completed;
(ii) A certificate of occupancy (the "Certificate of Occupancy")
and/or any other final permits and licenses necessary to permit
the use and occupancy of the Eligible Property for its intended
purposes, which have been issued by proper govemmental
agencies;
(iii)Unconditional Waivers and Releases Upon Final Payment, in
statutory form, showing no amounts in dispute, have been
received from the General Contractor, all subcontractors, and
all other persons or entities providing services or furnishing
materials in connection with the Eligible Property.
(b) Not as a Closing Condition, but at least ninety (90) calendar days
prior to occupancy and prior to the commencement of tenant
selection for the Eligible Property, Developer shall have obtained
the Agency's written approval of an affirmative marketing plan,
leasing guidelines, and a summary of the rules, procedures and
programs for the operation of the Eligible Property including
specifically the procedures to be employed by which the tenants in
the Eligible Property shall be selected in the event that, at any given
38
time, the number of Eligible Tenants applying to lease units at the
Eligible Property exceeds the number of units available.
(c) Developer shall have furnished and obtained the Agency's approval
of an Operating Budget and a Management Plan for the Eligible
Property. The Management Plan shall include a preliminary
Operating Budget in a format mandated by the Agency, approved by
the Agency at its sole discretion. In the event the preliminary
Operating Budget is proposed for revision at the time the Certificate
of Occupancy is issued, any such revision must be approved by the
Agency at its sole discretion;
(d) The Title Company shall have assured the Agency in writing that
upon recordation of the Agency Deed of Trust there will be
provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including
but not limited to Nos. 100, 103.7, 116 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Rehabilitation Loan, insuring
the Agency's interest in the Property as beneficiary under the
Agency Deed of Trust, and specifically insuring that the lien of the
Agency Deed of Trust and the Agency CC&R's against the Property
are subject only to the Permitted Senior Encumbrances. Standard
lender's title insurance coverage (without the need for a survey) will
be accepted by the Agency unless another Project lender requires
extended coverage, in which case an ALTA extended coverage
policy will also be provided to the Agency;
2. When, and only when, Escrow Holder has confirmed that Permanent Closing
Conditions (a) to (d) of Section C.!. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Acquisition or Rehabilitation Closing Conditions have been timely
satisfied or waived, then Escrow Holder shall carry out the Close of Escrow by:
(iv)causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(v) delivering the executed original Permanent Financing Note to the
Agency;
(vi)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer
39
EXHIBIT "G"
Events of Default and Remedies
A. Events of Default
The occurrence of any of the following shall, after the giving of any notice and the
expiration any applicable cure period, shall described therein, constitute a default by
Developer hereunder ("Event of Default"):
(I) The failure of Developer to payor perform any monetary covenant
or obligation hereunder or any of the documents executed in connection herewith,
without curing such failure within ten (10) calendar days after receipt of written notice of
such default from the Agency (or from any party authorized by the Agency to deliver
such notice as identified by the Agency in writing to Developer);
(2) The failure of Developer to perform any nonmonetary covenant or
obligation hereunder or any of the documents executed in connection herewith, without
curing such failure within thirty (30) calendar days after receipt of written notice of such
default from the Agency (or from any party authorized by the Agency to deliver such
notice as identified by the Agency in writing to Developer) specifying the nature of the
event or deficiency giving rise to the default and the action required to cure such
deficiency; provided, however, that if any default with respect to a nonmonetary
obligation is such that it cannot be cured within a thirty-day period, it shall be deemed
cured if Developer commences the cure within said thirty-day period and diligently
prosecutes such cure to completion thereafter.
Notwithstanding anything herein to the contrary, the herein described notice requirements
and cure periods shall not apply to any Event of Default described in Sections (3) through
(6) below;
(3) The material falsity of any representation or breach of any
warranty or covenant made by Developer under the terms of this Agreement or any
documents executed in connection herewith;
(4) Developer or any constituent member or partner, or majority
shareholder, of Developer shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in
writing its inability to pay its debts generally as they become due, ( c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or (e)
commence a voluntary case under the Federal bankruptcy laws of the United States of
America or file a voluntary petition that is not withdrawn within ten (10) calendar days
after the filing thereof or answer seeking an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy or insolvency
proceeding;
40
(5) If without the application, approval or consent of Developer, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Developer or any constituent member or partner, or
majority shareholder, of Developer, for an order for relief or an adjudication in
bankruptcy, a composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or the like of Developer or of
all or any substantial part of Developer's assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being contested by
Developer, in good faith, the same shall (a) result in the entry of an order for relief or any
such adjudication or appointment, or (b) continue undismissed, or pending and unstayed,
for any period of ninety (90) consecutive calendar days;
(6) Voluntary cessation of the operation of a Project for a continuous
period of more than thirty (30) calendar days or the involuntary cessation of the operation
of the Project in accordance with this Agreement for a continuous period of more than
sixty (60) calendar days;
(7) A mechanic's lien or any other type of encumbrance on any
Eligible Property resulting from the Developer's failure to fulfill its fmancial or other
contractual obligations with respect to any of its vendors or sub-contractors is not
removed within ten (10) calendar days after receipt of written notice of such default from
the Agency (or from any party authorized by the Agency to deliver such notice as
identified by the Agency in writing to Developer).
B. The Agency Remedies
Upon the occurrence of an Event of Default hereunder, the Agency may, in its sole
discretion, take anyone or more of the following actions:
(1) By notice to Developer declare the entire then unpaid principal
balance of any Acquisition Financing, Rehabilitation Financing or Permanent Financing
loans ("Development Loans") immediately due and payable, and the same shall become
due and payable without further demand, protest or further notice of any kind, all of
which are expressly waived. Upon such declaration, outstanding principal and (to the
extent permitted by law) interest and any other sums outstanding in connection with the
Development Loans shall thereafter bear interest at the Default Rate, payable from the
date of such declaration until paid in full;
(2) Subject to any nonrecourse provisions in this Agreement, take any
and all actions and do any and all things which are allowed, permitted or provided by
law, in equity or by statute, in the sole discretion of Agency, to collect the amounts then
due and thereafter to become due hereunder and under the Development Loans, to
exercise its rights under any outstanding Agency Deeds of Trust, and to enforce
performance and observance of any obligation, agreement or covenant of the Developer
under this Agreement or under any other document executed in connection herewith;
41
(3) Cease making any payment of fees, Residual Receipts or
reimbursement of eligible expenses to the Developer unless and until the Event of
Default (if curable) is cured;
(4) Demand reimbursement from the Developer for any payments
made to it by the Agency for which the contracted work product was not satisfactorily
delivered by the Developer;
(5) Confiscate any material or other work product purchased or
produced by the Developer for the Project;
(6) Take any and all actions and do any and all things which are
allowed, permitted or provided by law, in equity or by statute, in the sole discretion of the
Agency, to enforce performance and observance of any obligation, agreement or
covenant of the Developer under this Agreement or under any other document executed
in connection herewith;
(7) Upon the occurrence of an Event of Default which is occasioned
by Developer's failure under this Agreement to pay money, the Agency may, but shall
not be obligated to, make such payment. If such payment is made by the Agency, the
Developer shall deposit with the Agency, upon written demand therefore, such sum plus
interest at the rate of ten percent (10%) per annum interest compounded annually. In
either case, the Event of Default with respect to which any such payment has been made
by the Agency shall not be deemed cured until such repayment (as the case may be) has
been made by the Developer;
(8). Upon the occurrence of an Event of Default described in Section
A.(4) or A.(5) hereof, the Agency shall be entitled and empowered by intervention in
such proceedings or otherwise to file and prove a claim for any amount owing to the
Agency under this Agreement and unpaid and, in the case of commencement of any
judicial proceedings, to file such proof of claim and other papers or documents as may be
necessary or advisable in the judgment of the Agency and its counsel to protect the
interests of the Agency and to collect and receive any monies or other property in
satisfaction of its claim.
C. Agency Default and Developer Remedies
Upon fault or failure of the Agency to meet any of its obligations under this Agreement
without curing such failure within thirty (30) calendar days after receipt of written notice
of such failure from Developer specifying the nature of the event or deficiency giving rise
to the default and the action required to cure such deficiency, Developer may, as its sole
and exclusive remedies:
(I). Bring an action in equitable relief seeking the specific performance
by the Agency of the terms and conditions of this Agreement or seeking to enjoin any act
by the Agency which is prohibited hereunder; and/or
42
(2) Bring an action for declaratory relief seeking judicial
determination of the meaning of any provision of this Agreement. Without limiting the
generality of the foregoing, Developer shall in no event be entitled to, and hereby waives,
any right to seek indirect or consequential damages of any kind or nature from the
Developer arising out of or in connection with this Agreement, and in connection with
such waiver Developer is familiar with and hereby waives the provisions of Section 1542
of the California Civil Code which provides as follows: "A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR."
43
EXHIBIT "H"
Affirmative Marketing Requirements
In accordance with the California Fair Employment and Housing Act and the policy of the
Agency, property owners or their designees, including the Developer pursuant to this
Agreement, must adhere to the following affirmative marketing guidelines in order to
create awareness for the general public and certain community groups as to the availability
of units designated for lower and/or moderate-income.
Aoolicabilitv
The Developer, including property owners or their designees, are required to provide an
affIrmative marketing plan and procedures for all developments with designated units.
Procedures to be used must identify how persons in the housing market area who are not
likely to apply for the housing without special outreach shall be informed and made
aware of available affordable housing opportunities. The Agency has identified two
groups as least likely to apply without special outreach efforts, namely, African-
American and Hispanic persons.
The Affirmative Marketing Plan
The Developer's Affirmative Marketing Plan shall consist of a written marketing strategy
designed to provide information and to attract eligible persons in the housing market area to
the available units without regard to race, color, national origin, sex, religion, marital and
familial status, disability, medical condition, sexual orientation, or ancestry. It shall
describe initial advertising, outreach (community contacts) and other marketing activities,
which will inform potential buyers of the availability of the units. It shall also outline an
outreach program which includes special measures designed to attract those groups
identified as least likely to apply without special outreach efforts, whether because of
existing neighborhood racial or ethnic patterns, location of housing or other factors, and
other efforts designed to attract persons from the total eligible population.
The Developer must do the following:
1. Insert Equal Housing Opportunity logotype, statement or slogan on all written
outreach tools (i.e. signs, advertisements, brochures, direct mail solicitations,
press releases, etc.)
2. In addition to the above, the Affirmative Fair Housing Marketing Plan shall
outline:
a. Commercial Media to be used (i.e., community newspapers and
non-English language newspapers, radio, television, billboards,
religious or local real estate publications, etc.).
44
b. Marketing efforts to be used (i.e., brochures, letters, handouts, direct
mail, signs, etc.)
c. Community Contacts to supplement formal communications media
for the purpose of soliciting groups least likely to purchase the
available housing without special outreach efforts. They should be
individuals or organizations (i.e., service agencies, community
organizations, places of worship, etc.) that have direct and frequent
contact with those identified as least likely to apply. The contacts
should also be chosen on the basis of their positions of influence
within the general community and the particular target group. The
Developer must agree to establish and maintain contact with the
identified contacts.
Buver Selection
1. The Developer or designee shall maintain records of all prospective homebuyer
applicants, including their race, ethnicity and gender, reasons for denial of
application, placement on a waiting list, etc.
2. The Developer or designee shall also provide for the selection of applicants from a
written waiting list in the chronological order of their application, insofar as is
practicable, and provide prompt written notification to any rejected applicants of
the grounds for any rejection.
45
EXHIBIT "I"
46
EXHIBIT "J"
47
EXHIBIT "K" TO MASTER AGREEMENT
PROMISSORY NOTE
$
,20_
For value received, the undersigned, MARY ERICKSON COMMUNITY HOUSING,
INC., a California Non-profit public benefit corporation ("Borrower"), whose principal
address is set forth hereinbelow, promises to pay to the order of the
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body
corporate and politic ("Agency") at 201 North "E" Street, Suite 301, San Bernardino,
California 92401 (or to such designee and/or at such other address as the Agency may
from time to time designate in writing), the principal sum of
(the "Loan"), or such
amount as may be advanced hereunder, plus accrued and unpaid interest as provided
hereinbelow, and all other charges due hereunder, in accordance with the terms and
conditions of that certain Master Agreement dated as of
, 20_ entered into between Borrower and the Agency
(the "Master Agreement") and that certain Development Agreement dated as of
20 . entered into between Borrower and the Agency
(the "Development Agreement"), and the terms and conditions of this Promissory Note
(this "Note"). As set forth in greater detail in the Develo ment A reement, the ur ose
of the Loan is to provide Borrower with Isi 0 11m 10 ane
_~jo9lin connection with a housing project ("Project") on a site more particularly
described in the Development Agreement ("Eligible Property").
1. Interest.
1.1 Basic Interest. Except as provided in Section 1.4 below, the disbursed
and unpaid principal balance of the Loan shall bear interest commencing on the date on
which the Loan proceeds are first disbursed for the account of Borrower, and ending on
the date paid, at the rate of three percent (3%) per annum, simple interest ("Basic
Rate"). Interest shall be computed on the basis of actual number of days elapsed and a
360-day year.
1.2 Pavment Dates and Amounts. Except as otherwise provided in this Note,
Borrower shall repay the Loan, together with accrued interest at the Basic Rate in
Promissory Note
Exhibit "K"
I
arrears, in annual installments on June 15th of each calendar year for the previous
calendar year, commencing on June 15, 20_. Absent prepayment or acceleration,
each of the annual payments due June 15, 20_ through and including June 15, 20_
("Maturity Date") shall be in an amount equal to percent
( %) of "Residual Receipts" for the prior calendar year, as defined herein.
Residual Receipts shall be calculated and reported to the Agency annually for each
calendar year no later than June 15th of the following calendar year on forms specified
and provided by the Agency from time to time. All calculations and records are subject
to audit by the Agency. Notwithstanding any other provision of this Note, unless due
sooner, the entire outstanding principal balance of the Loan together with any
outstanding interest and any other sums payable under this Note shall be due and
payable in full on the Maturity Date.
1.3 Calculation of Residual Receipts. Borrower shall provide to the Agency.
for inspection and copying any records, receipts, account books, ledgers, checks, or
other documents or other evidence requested by the Agency for the purpose of verifying
Borrower's calculation of Residual Receipts, and shall promptly pay to the Agency any
further amount due but not paid as a result of any miscalculation by Borrower. In no
event shall any Loan payment attributable to an Event of Default (as hereafter defined)
or acceleration be deferred.
1.4 Default Rate. Any amounts (including but not limited to amounts of
principal and interest on the Loan) which Borrower does not pay when due under the
terms of this Note shall bear interest at the rate of ten percent (10%) per annum, simple
interest ("Default Rate"), from the date due until the date paid.
1.5 Definition of Residual Receipts.
1.5.1 "Residual Receipts" shall mean, with respect to each calendar year,
the amount by which "Gross Rents," as defined herein, for such calendar year exceed
the "Operating Expenses", as defined herein, for that calendar year.
1.5.2 With the exception of the "Excluded Items" (as defined below),
"Gross Rents" shall mean, with respect to each calendar year or portion thereof, all
gross income, rentals, revenues, payments and consideration, of whatever form or
nature, whether direct or indirect, received by or paid to or for the account or benefit of
Borrower or any "Affiliate" (as defined below) of Borrower or any of their agents or
employees, from any and all sources, resulting from or attributable to the ownership,
operation, leasing and occupancy of the Project, determined on the basis of generally
accepted accounting principles applied on a consistent basis, and shall include, but not
be limited to: (i) gross rentals paid by occupancy tenants of the Project under
occupancy leases and payments and subsidies of whatever nature, including without
limitation any payments, vouchers or subsidies from the United States Department of
Housing and Urban Development (HUD) or any other person or organization, received
on behalf of tenants under occupancy leases, (ii) amounts paid to Borrower or any
Promissory Note
Exhibit "K"
2
Affiliate of Borrower on account of "Operating Expenses" (as defined herein) for further
disbursement by Borrower or such Affiliate to a third party or parties, (iii) late charges
and interest paid on rentals, (iv) rents and receipts from licenses, concessions, vending
machines, coin laundry and similar sources;
(v) other fees, charges or payments not denominated as rental but payable to Borrower
in connection with the rental of office, retail, storage, or other space in the Project; and
(vi) consideration received in whole or in part for the cancellation, modification,
extension or renewal of occupancy leases. The term "Affiliate" shall mean any person
or entity directly or indirectly, through one or more intermediaries, controlling, controlled
by or under common control with Borrower which, if Borrower is a partnership or limited
liability company, shall include each of the constituent members or partners,
respectively, thereof. The term "control" as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the right to exercise,
directly or indirectly, more than 50% of the voting rights
attributable to the shares of the controlled corporation, and, with respect to a person
that is not a corporation, possession directly or indirectly of the power to direct or cause
the direction of the management or policies of the controlled person. Notwithstanding
the foregoing, Gross Rents shall not include the following items ("Excluded Items"): (aa)
security deposits from tenants (except when applied by Borrower to rent or other
amounts owing by tenants); (bb) capital contributions to Borrower or its members,
partners or shareholders by its or their members, partners or shareholders; (cc)
condemnation or insurance proceeds constituting 'Net Proceeds' as defined in Section
1.6 below; and (dd) funds received from any source (including but not limited to the
Senior Financing and any Junior Financing or Other Financing) actually and directly
used for acquisition and/or rehabilitation of the Eligible Property.
1.5.3 "Operating Expenses" shall mean, with respect to each calendar
year or portion thereof, the sum of the following expenses to the extent reasonably paid
by Borrower during such period: (i) nonelective payments made with respect to the
Senior Financing; (ii) all taxes and assessments imposed upon the Project and required
to be paid by Borrower but only to the extent such taxes and assessments are paid or
set aside as a reserve by Borrower during such calendar year; (iii) all amounts paid or
set aside as .a reserve by Borrower on account of insurance premiums for insurance
carried in connection with the Project, provided that if insurance on the Project is
maintained as part of a blanket policy covering the Project and other properties, the
insurance premium included in this definition shall be the portion of the premium fairly
allocable to the Project for the period; (iv) ownership and operating costs incurred by
Borrower for the management, operation, cleaning, leasing, marketing, maintenance
and repair of the Project (including without limitation, property management fees and
administrative fees) properly chargeable against income according to generally
accepted accounting principles, including without limitation wages, payroll and
accounting costs, utility and heating charges, material costs, maintenance costs, costs
of services, water and sewer charges, travel expenses allocable to the Project, and
license fees and business taxes; provided, however, that (A) the amount included as
Promissory Note
Exhibit "K"
3
property management fees and administrative fees in Operating Expenses shall
collectively not exceed ten percent (10%) of Gross Rents from the Project for such
period, all or a portion of each of which may be paid to Borrower and/or an Affiliate of
Borrower, (B) such property management fees and administrative fees shall only be
paid on the basis of supporting documentation reasonably acceptable to the Agency,
and shall be paid after the payment of all other Operating Expenses, and (C)
partnership management fees and other fees payable to a partner in a tax credit limited
partnership shall only be considered Operating Expenses to the extent they do not
exceed $10,000 in the aggregate in any year, which shall be adjusted annually by a
percentage equal to the annual increase in AMI adopted by HUD; (v) reasonable and
ordinary reserves actually set aside for replacement of roofing, furniture, fixtures,
equipment, and other capital expenditures, in an annual amount no less than $200.00
per unit and no greater than such higher amount as may be established from time to
time by mutual agreement of the Parties; and (vi) to the extent not otherwise included in
Operating Expenses, amounts paid from any account as a reserve account for the
purpose for which such reserve was created so long as such purpose would constitute
an Operating Expense.
1.5.4 Notwithstanding any provision of Section 1.5.3, the term "Operating
Expenses" shall not include any of the following:
(i) salaries of employees of Borrower or Borrower's general
overhead expenses, or expenses, costs and fees paid to an Affiliate of Borrower, to the
. extent any of the foregoing exceed the expenses, costs or fees that would be payable in
a bona fide arms' length transaction between unrelated parties in the San Bemardino-
Riverside County area for the same work or services;
(ii) any amounts paid directly by a tenant of the Project to a third
party in connection with expenses which, if incurred by Borrower, would be Operating
Expenses;
(Hi) optional or elective payments with respect to the Senior
Financing;
(iv) any payments with respect to Junior Financing, Other
Financing, or any other Project-related loan or financing other than the Senior
Financing; or
(v) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Borrower prior to completion of the Project with
respect to the development, maintenance and upkeep of the Project, or any portion
thereof, including, without limitation, all costs and expenses incurred by Borrower in
connection with the acquisition of the Property, all predevelopment activities conducted
by Borrower in connection with the Project, including without limitation, the preparation
Promissory Note
Exhibit "K"
4
of all plans and the performance of any tests, studies, investigations or other work, and
the construction of the Project and anyon-site or off-site work in connection therewith.
1.6 In addition to the payments provided in Section 1.2 above, and subject to
the terms of the Senior Financing, Borrower shall pay to the Agency towards (but not to
exceed) any outstanding amounts associated with the Loan: (a) no later than the date of
close of escrow or other consummation of any Assignment other than a Minor Assign-
ment, the Applicable Percentage of the Net Proceeds of such Assignment; and (b) no
later than the recording of a Refinancing, percent ( %) of the Net
Refinancing Proceeds received from any such Refinancing.
A "Minor Assignment" shall mean any lease of an individual unit in the Project for
occupancy by a residential tenant and in the ordinary course of business for operation
of the Project.
"Applicable Percentage" shall mean percent L%); provided,
however, that the term Applicable Percentage shall mean one hundred percent (100%)
with respect to a payment on the Loan attributable in whole or in part to a condemnation
of, or event of damage, destruction or casualty with respect to, the Eligible Property, the
Project or any portion of either. "Assignment" means any voluntary or involuntary
conveyance, disposition, assignment, taking, casualty, encumbrance (other than a
Refinancing as defined below or the creation of the Senior Financing or any other
Project Loan or limited partner contribution, the proceeds of which are used solely for
initial acquisition of the Eligible Property by Borrower or initial development of the
Project), sublease, sale, license, concession, management agreement, operating
agreement, transfer or similar transaction with respect to any direct or indirect interest or
economic benefit of any person or entity in connection with the Project or the use or
occupancy of the Eligible Property including, without limitation, any Transfer by
Borrower of all or any portion of its rights under or interest in the Project or the Eligible
Property, any change of ownership or control of Borrower, any condemnation or taking
of the Eligible Property or the Project or any portion thereof, any event of damage to or
destruction of the Eligible Property or the Project, any foreclosure of Borrower's interest
in the Project or the Eligible Property, whether by judicial proceedings, or by virtue of
any power contained in a deed of trust, indenture or other instrument creating a lien
against the Eligible Property or the Project, or any assignment of Borrower's estate in
the Project or the Eligible Property through, or in lieu of, foreclosure or other appropriate
and bona fide proceedings in the nature thereof; provided, however, that the term
"Assignment" as used herein shall not include bona fide transfers of an ownership
interest in Borrower to any Affiliate of Borrower, so long as the consideration paid to the
selling partner, member or shareholder on account of such transfer does not exceed the
actual amount paid by such partner, member or shareholder for its ownership interest
plus reimbursement for any out-of-pocket expenses incurred by such partner, member
or shareholder in connection with its acquisition of such ownership interest.
Promissory Note
Exhibit "K"
5
"Net Proceeds" of an Assignment shall mean (1) the proceeds received, directly
or indirectly, by Borrower or any Affiliate or constituent member or partner, or majority
shareholder, of Borrower or any Affiliate as a result of such Assignment, including,
without limitation, cash, the amount of any monetary lien or encumbrance assumed or
taken subject to by the assignee, the fair market value of any noncash consideration,
including the present value of any promissory note received as part of the proceeds of
such Assignment (such present value to be detennined based upon a discount rate
reasonably satisfactory to the Agency), the entire condemnation award or compensation
payable to Borrower or any Affiliate or constituent member or partner, or majority
shareholder, of Borrower or any Affiliate in connection with a condemnation or taking in
eminent domain of any part of the Eligible Property or the Project or any interest therein,
all insurance proceeds or awards payable to Borrower or any Affiliate or constituent
member or partner or majority shareholder of Borrower or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part
thereof not used for project restoration; less (2) the sum of (i) the actual, documented
and reasonable expenses of effecting such Assignment, including reasonable
brokerage commissions, title insurance premiums, documentary transfer taxes, and
reasonable attorneys' fees, in each case actually paid in connection with the
Assignment (provided that no deduction shall be allowed for payments to an Affiliate of
the person. or entity making the Assignment which are in excess of the amount that
would be paid for the same or equivalent services in an anns' length transaction
between unrelated parties acting reasonably), and (ii) the amount of any proceeds of
the Assignment paid (excluding voluntary payments) towards the then-outstanding
balance of the Senior Financing. Notwithstanding anything above to the contrary, the
pennissible deductions for purposes of calculating the Net Proceeds of an Assignment
shall not include any foreign, U.S., state or local income taxes, franchise taxes, or other
taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project
Loan") secured by an encumbrance on the Eligible Property, the Project, or any portion
thereof. The tenn "Refinancing" shall not include the creation of the Senior Financing or
any other Project Loan, the proceeds of which are used solely for initial acquisition of
the Eligible Property by Borrower or initial development of the Project.
"Net Refinancing Proceeds" shall mean the gross face amount of the Project
Loan obtained in connection with such Refinancing, after: (1) payment of the actual,
documented and reasonable expenses of such Refinancing, including escrow fees, title
policy expenses, legal expenses, survey fees, recording fees, commissions, and other
usual and reasonable expenses of any such Refinancing (provided, that no deduction
shall be allowed for payments in connection with such Refinancing which are in excess
of the amounts that would be paid for the same or equivalent services in an anns' length
transaction between unrelated parties acting reasonably); and (2) deduction of amounts
repaid (excluding voluntary payments) in connection with the Refinancing towards
amounts outstanding under the Senior Financing.
Promissory Note
Exhibit "K"
6
2. Acceleration.
Notwithstanding the payment terms set forth in Section 1 above, upon the
occurrence of any "Event of Default" as set forth in Section 9 below, the entire
outstanding principal balance of this Note, together with any outstanding interest and
other amounts payable hereunder, shall, at the election of the Agency and upon notice
to Borrower thereof become immediately due and payable without presentment,
demand, protest or other notices of any kind, all of which are hereby waived by
Borrower.
3. Prepavment; Application of Pavments.
At any time after the disbursement of the Loan proceeds, Borrower may prepay
all or a portion of the unpaid principal amount of the Loan and accrued interest and any
other sums outstanding without penalty. All payments, including any prepayments or
funds received upon acceleration pursuant to Section 2 above, shall be applied first
toward any outstanding costs of collection or other amounts (excluding Loan principal or
interest thereon) due under this Note or the Development Agreement, then toward
outstanding interest accrued at the Default Rate, if any, then toward outstanding interest
accrued at the Basic Rate, if any, and finally toward the remaining principal balance
under the Note.
4. Security and Source of Pavment.
Borrower's obligations under this Note and the Master Agreement and the
Development Agreement shall, at all times during which any amount remains
outstanding, be secured by the deed of trust ("Agency Deed of Trust") of even date
herewith, and of which the Agency is the beneficiary, recorded against Borrower's
interest in the Eligible Property and the Project (collectively, the "Property"). The
security interest in the Property granted to the Agency pursuant to the Agency Deed of
Trust shall be subordinate only to the Senior Financing and such exceptions to title
shown in the title report for the Property which are approved in writing by the Agency.
Except to the extent any Event of Default hereunder results directly or indirectly from
any willful misconduct, fraud or intentional and material misrepresentation by Borrower
in connection with this Note, the Master Agreement, the Development Agreement or the
Loan, the Loan is a nonrecourse obligation of Borrower and, in the event of the
occurrence of an Event of Default, the Agency's only recourse under the Agency Loan
Documents shall be against the Property, the proceeds thereof, the rents and other
income arising from its use and occupancy as provided in the Agency Deed of Trust,
and any other collateral given to the Agency as security for repayment of the Loan.
Promissory Note
Exhibit "K"
7
5. Oblioation of Borrower Unconditional.
The obligation of Borrower to repay the Loan and all accrued interest thereon
and all other sums due thereunder shall be absolute and unconditional, and until such
time as all of the outstanding principal of, interest on and all other sums due under, this
Note shall have been fully paid, Borrower agrees that it: (a) will use the funds solely for
the purposes set forth herein; and (b) will not terminate or suspend any payment or
obligations under this Note, the Master Agreement, the Development Agreement, or any .
other document executed hereunder or in connection herewith for any cause, including
without limitation, any acts or circumstances that may constitute failure of consideration,
commercial frustration of purpose, or any duty, liability or obligation arising out of or in
connection with this Note, the Master Agreement, the Development Agreement or any
document executed hereunder or in connection herewith.
6. Purpose of Loan.
The Loan roceeds. shall be used by Borrower only to provide ~i.lJ.$,UiQIjj
llitation nalOr.e a 1::: for the housing development described in the
Development Agreement. In no event shall Borrower use or otherwise invest the
proceeds of the Loan except as expressly provided in this Note.
7. Covenants of Borrower.
As additional consideration for the making of the Loan by the Agency, Borrower
covenants as follows:
7.1 Compliance with the Master AQreement. the Development Aoreement and
Aoency Deed of Trust. Borrower shall comply with all of its obligations under the Master
Agreement, the Development Agreement and the Agency Deed of Trust. Any amounts
payable by Borrower under the Development Agreement or the Agency Deed of Trust .
(other than amounts also payable hereunder) shall be deemed added to the principal
amount of the Loan payable hereunder.
7.2 Other Loans. Borrower shall comply with all monetary and nonmonetary
covenants associated with any loan secured by an interest in the Eligible Property or the
Project. Borrower shall provide to the Agency a copy of any notice of default within five
business days after receiving any notice of a default or alleged default of such
covenants by Borrower, and Borrower shall promptly cure any such default and
cooperate in permitting the Agency, to the extent the Agency in its sole discretion elects
to do so, to cure or assist in curing the default. Any cost or expenditure incurred by the
Agency in providing or assisting in such a cure shall be added to the outstanding
principal amount of the Loan.
Promissory Note
Exhibit "K"
8
8. Assionment of this Note.
This Note shall be assignable by Borrower only if Borrower obtains the prior
express written consent of the Agency, which consent may be withheld by the Agency in
its sole discretion. Notwithstanding anything to the contrary in this Note, no purported
assignment of this Note and the Loan shall be effective if such assignment would violate
the terms, conditions and restrictions of any Applicable Governmental Restrictions. The
Agency's consent to such assignment shall be expressly conditioned upon (i) the
assignee's execution of such documents as required by the Agency in its sole
discretion, including, without limitation, any and all documents deemed necessary by
the Agency to provide for said assignee's assumption of all of the obligations of
Borrower hereunder and under the Agency Loan Documents, and (ii) the Agency's
approval of the financial and credit worthiness of such proposed assignee and the
assignee's ability to perform all of the Borrower's covenants under this Note and the
Development Agreement and any of the other Agency Loan Documents.
9. Events of Default and Remedies.
A. Borrower Events of Default. The occurrence of any of the following shall,
after the giving of any notice and the expiration of any applicable cure period described
therein, constitute an event of default by Borrower hereunder ("Event of Default"):
(1) The failure of Borrower to payor perform any monetary covenant or
obligation hereunder or under the terms of this Note or the Agency Deed of Trust, the
Master Agreement or the Development Agreement, without curing such failure within
ten (10) calendar days after the date such payment is due. Notwithstanding anything
herein to the contrary, the herein described cure period shall not apply to a failure by
Borrower to timely repay the Agency Loan at the Maturity Date of this Note;
(2) The failure of Borrower to perform any nonmonetary covenant or
obligation hereunder or under the terms of this Note, the Agency Deed of Trust, the
Master Agreement or the Development Agreement, without curing such failure within
thirty (30) calendar days after receipt of written notice of such default from the Agency
(or from any party authorized by the Agency to deliver such notice as identified by the
Agency in writing to Borrower) specifying the nature of the event or deficiency giving
rise to the default and the action required to cure such deficiency; provided, however,
that if any default with respect to a nonmonetary obligation is such that it cannot be
cured within a thirty day period, it shall be deemed cured if Borrower commences the
cure within said thirty day period and diligently prosecutes such cure to completion
thereafter with the cure completed in any event within 180 calendar days after the
notice. Notwithstanding anything herein to the contrary, the herein described notice
Promissory Note
Exhibit "K"
9
cure periods shall not apply to any Event of Default described in Sections 9(A)(3)
through 9(A)(8) below;
(3) The material falsity of any representation or breach of any warranty
or covenant made by Borrower under the terms of this Note, the Master Agreement, the
Development Agreement or the Agency Deed of Trust;
(4) Borrower shall (a) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian or the like of its property, (b) fail to payor admit
in writing its inability to pay its debts generally as they become due, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or
(e) commence a voluntary case under the Federal bankruptcy laws of the United States
of America or file a voluntary petition that is not withdrawn within ten (10) calendar days
after the filing thereof or answer seeking an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy or insolvency
proceeding;
(5) If without the application, approval or consent of Borrower, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Borrower or any constituent member or partner or
majority shareholder of Borrower, for an order for relief or an adjudication in bankruptcy,
a composition or arrangement with creditors, a readjusbnent of debts, the appointment
of a trustee, receiver, liquidator or custodian or the like of Borrower or of all or any
substantial part of Borrower's assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by Borrower,
in good faith, the same shall (a) result in the entry of an order for relief or any such
adjudication or appointment, or (b) continue undismissed, or pending and unstayed, for
any period of ninety (90) consecutive calendar days;
(6) Following completion of the rehabilitation of the Project, voluntary
cessation of the operation of the Project for a continuous period of more than thirty (30)
calendar days or the involuntary cessation of the operation of the Project in accordance
with this Note for a continuous period of more than sixty (60) calendar days;
(7) Borrower shall suffer or attempt to effect a Transfer (as defined
below), in violation of Section 14; or
(8) Borrower shall be in default under the Agency Affordability
Covenant, Senior Financing, Junior Financing, Other Financing or any other secured or
unsecured obligation relating to the Project, unless the default is cured within the cure
period, if any, applicable thereto under the terms of the obligation which is in default.
Promissory Note
Exhibit "K"
10
B. AQency Remedies. Upon the occurrence of an Event of Default
hereunder, the Agency may, in its sole discretion, take anyone or more of the following
actions:
(1) By notice to Borrower, declare the entire then unpaid principal
balance of the Loan immediately due and payable, and the same shall become due and
payable without further demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower. Upon such declaration, outstanding principal
and (to the extent permitted by law) interest and any other sums outstanding in
connection with the Loan shall thereafter bear interest at the Default Rate, payable from
the date of such declaration until paid in full;
(2) Subject to the nonrecourse provisions of Section 4 above, take any
and all actions and do any and all things which are allowed, permitted or provided by
law, in equity or by statute, in the sole discretion of the Agency, to collect the amounts
then due and thereafter to become due hereunder, to exercise its rights under the
Agency Deed of Trust, and to enforce performance and observance of any obligation,
agreement or covenant of the Borrower under this Note or under any other document
executed in connection herewith;
(3) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default, which is occasioned by Borrower's failure to pay
money, whether under this Note or the Development Agreement, the Agency may, but
shall not be obligated to, make such payment. If such payment is made by the Agency,
Borrower shall deposit with the Agency, upon written demand therefor, such sum plus
interest at the Default Rate. The Event of Default with respect to which any such
payment has been made by the Agency shall not be deemed cured until such
repayment has been made by Borrower. Until repaid, such amounts shall have the
security afforded disbursements under this Note;
(4) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default described in Section 9(A)(4) or 9(A)(5) hereof, the
Agency shall be entitled and empowered by intervention in such proceedings or
otherwise to file and prove a claim for the whole amount owing and unpaid on the Loan
and, in the case of commencement of any judicial proceedings, to file such proof of
claim and other papers or documents as may be necessary or advisable in the
judgment of the Agency and its counsel to protect the interests of the Agency and to
collect and receive any monies or other property in satisfaction of its claim.
c. No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Agency is intended to be exclusive of any other available remedy or remedies, but
each such remedy shall be cumulative and shall be in addition to every other remedy
given under this Note or now or hereafter existing at law or in equity or by statute; and
may be exercised in such number, at such times and in such order as the Agency may
Promissory Note
Exhibit "K"
11
determine in its sole discretion. No delay or omission to exercise any right or power
upon the occurrence of any Event of Default hereunder shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power may
be exercised from time to time and as often as may be deemed expedient by the
Agency. In order to entitle the Agency to exercise any right or remedy reserved to it
under this Note, no notice shall be required except as expressly provided herein.
D. Aaencv Default and Borrower Remedies. Upon fault or failure of the
Agency to meet any of its obligations under this Note without curing such failure within
thirty (30) calendar days after receipt of written notice of such failure from Borrower
specifying the nature of the event or deficiency giving rise to the default and the action
required to cure such deficiency, Borrower may, as its sole and exclusive remedies:
(1) Demand and obtain payment from the Agency of any sums due to
or for the benefit of Borrower pursuant to the express terms of this Note;
(2) Bring an action in equitable relief seeking the specific performance
by the Agency of the terms and conditions of this Note or seeking to enjoin any act by
the Agency which is prohibited hereunder; or
(3) Bring an action for declaratory relief seeking judicial determination
ofthe meaning ohny provision of this Note.
Without limiting the generality of the foregoing, Borrower shall in no event
be entitled to, and hereby waives, any right to seek indirect or consequential damages
of any kind or nature from the Agency arising out of or in connection with this Note, and
in connection with such waiver Borrower is familiar with and hereby waives the
provisions of Section 1542 of the California Civil Code which provides as follows: "A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Promissory Note
Exhibit "K"
12
10. Aoreement to Pav Attornevs' Fees and Expenses.
In the event that either party hereto brings any action or files any proceeding in
connection with the enforcement of its respective rights under this Note or any of the
other Agency Loan Documents as a consequence of any breach by the other party of its
obligations hereunder or thereunder, the prevailing party in such action or proceeding
shall be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures
paid by the losing party. The attorneys' fees so recovered shall include fees for
prosecuting or defending any appeal and shall be awarded for any supplemental
proceedings until the final judgment is satisfied in full. In addition to the foregoing award
of attorneys' fees, the prevailing party in any lawsuit on this Note or any other Loan
Document shall also be entitled to its attorneys' fees incurred in any post-judgment
proceedings to collect or enforce the judgment. In addition to the foregoing, Borrower
agrees to payor reimburse the Agency, upon demand by the Agency, for all costs
incurred by the Agency in connection with the enforcement of this Note, and any other
Agency Loan Document, including without limitation, reasonable attorneys' fees and
costs, if there shall be filed by or against Borrower any proceedings under any federal or
state bankruptcy or insolvency laws, whether the Agency is a creditor in such
proceeding or otherwise.
11. Conflict of Interest: No Individual Liability.
No official or employee of the Agency shall have any personal interest, direct or
indirect, in this Note, nor shall any official or employee of the Agency participate in any
decision relating to this Note which affects such official's or employee's pecuniary
interest in any corporation, partnership or association in which such official or employee
is directly or indirectly interested. No official or employee of the Agency shall be
personally liable in the event of a breach of this Note by the Agency.
12. Amendments. Chanoes and Modifications.
This Note may not be amended, changed, modified, or altered without the prior
written consent of the parties hereto.
13. Notices.
All notices, demands, requests, elections, approvals, disapprovals, consents or
other communications given under this Note shall be in writing and shall be given by
personal delivery, facsimile, certified mail (return receipt requested), or overnight
guaranteed delivery service and faxed or addressed as follows:
If to Agency:
Redevelopment Agency of the
City of San Bernardino
201 North "En Street, Suite 301
San Bernardino, California 92401
Promissory Note
Exhibit "K"
13
Attn: Executive Director
Fax No. (909) 888-9413
With a copy to:
Redevelopment Agency of the
City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Director of Housing and Community Development
Fax No. (909) 888-9413
If to Borrower:
Mary Erickson Community Housing, Inc.
Irvine, CA
Attn: Director
Fax No. ( )
With a copy to:
Notices shall be effective upon receipt, if given by personal delivery; upon receipt, if
faxed, provided there is written confinnation of receipt (except that if received after 5
p.m., notice shall be deemed received on the next business day); the earlier of (i) three
(3) business days after deposit with United States Mail, or (ii) the date of actual receipt
as evidenced by the return receipt, if delivered by certified mail; or (iii) one (1) day after
deposit with the delivery service, if delivered by overnight guaranteed delivery service.
Each party shall promptly notify the other party of any change(s) of address to which
notice shall be sent pursuant to this Note.
14. Severabilitv.
The invalidity or unenforceability of anyone or more provisions of this Note will in
no way affect any other provision.
Promissory Note
Exhibit "K"
14
15. Interpretation.
Whenever the context requires, all words used in the singular will be construed to
have been used in the plural, and vice versa, and each gender will include any other
gender. The captions of the paragraphs of this Note are for convenience only and do
not define or limit any terms or provisions. Time is of the essence in the performance of
this Note by Borrower. Each Party has been represented by counsel in the negotiation
of this Note, and it shall not be interpreted in favor of or against any Party on account of
relative responsibilities in drafting. Notwithstanding any other provision of this Note,
nothing herein or in this Note shall be deemed to require Borrower to pay interest in the
amount of any applicable usury law or other legal limitation on interest, and the terms
hereof and of this Note shall be interpreted to require in each instance the lesser of (i)
the amount stated in this Note; and (ii) the maximum applicable legal limit. Defined
terms not otherwise defined herein shall have the meaning assigned to them by the
Development Agreement.
16. No Waiver: Consents.
Any waiver by the Agency must be in writing and will not be construed as a
continuing waiver. No waiver will be implied from any delay or failure by the Agency to
take action on account of any default of Borrower. Consent by the Agency to any act or
omission by Borrower will not be construed as consent to any other or subsequent act
or omission or to waive the requirement for the Agency's consent to be obtained in any
future or other instance.
17. Governino Law.
This Note shall be governed by the laws of the State of California.
18. Representations. Warranties and Additional Covenants of Borrower.
Borrower hereby represents, warrants and covenants to the Agency that:
A. Oroanization and Standino. Borrower is a California legal entity as
described in the Development Agreement, duly formed, qualified to operate in California
and validly existing and in good standing under all applicable laws, and has all requisite
power and authority to enter into and perform its obligations under this Note, the Master
Agreement, the Development Agreement, the Agency Deed of Trust, the Agency
Affordability Covenant and all other documents executed in connection herewith.
B. Enforceabilitv. This Note and all other instruments to be executed by
Borrower in connection with the Loan constitute the legal, valid and binding obligation of
Borrower, without joinder of any other party.
Promissory Note
Exhibit "K"
15
C. Authorization and Consents. The execution, delivery and performance of
this Note and all other instruments to be executed in connection herewith is consistent
with the operating agreement, partnership agreement or articles and bylaws governing
Borrower and have been duly authorized by all necessary action of Borrower's
members, partners, directors, officers and shareholders.
D. . Due and Valid Execution. This Note and all other instruments to be
executed in connection herewith, will, as of the date of their execution, have been duly
and validly executed by Borrower.
E. Licenses. Borrower will obtain and maintain all material licenses, permits,
consents and approvals required by all applicable governmental authorities to own and
operate the Project.
F. Litiaation and Compliance. There are no suits, other proceedings or
investigations pending or threatened against, or affecting the business or the properties
of Borrower (other than those as have been previously disclosed in writing to the
Agency) which could impair its ability to perform its obligations under this Note, nor is
Borrower in violation of any laws or ordinances which could materially impair Borrower's
ability to perform its obligations under this Note.
G. Default. There are no facts now in existence which would, with the giving
of notice or the lapse of time, or both, constitute an "Event of Default" hereunder, as
described in Section 9.
H. No Violations. The execution and delivery of this Note, the Development
Agreement and all other documents executed or given thereunder, and the
performances hereunder and thereunder by Borrower, as applicable, will not constitute
a breach of or default under any instrument or agreement to which Borrower may be a
party nor will the same constitute a breach of or violate any law or governmental regula.
tion.
19. Approvals.
Except with respect to those matters set forth hereinabove providing for the
Agency's approval, consent or determination to be at the Agency's "sole discretion" or
"sole and absolute discretion," the Agency hereby agrees to act reasonably with regard
to any approval, consent, or other determination given by the Agency hereunder. The
Agency agrees to give Borrower written notice of its approval or disapproval following
submission of items to the Agency for approval, including, in the case of any
disapproved item, the reasons for such disapproval.
Any review or approval of any matter by the Agency or any Agency official or
employee under this Note shall be solely for the benefit of the Agency, and neither
Borrower nor any other person shall rely upon such review or approval as an indication
Promissory Note
Exhibit "K"
16
of the wisdom, soundness, safety, appropriateness, or presence or absence of any
matter. Without limiting the generality of the foregoing, Borrower and not the Agency
shall be solely responsible for assuring compliance with laws, the suitability of the
Eligible Property for the Project, the adequacy of the plans, and the safety of the Project
construction site, the completed Project, and the operation thereof.
Any consent to a Transfer given by the Agency under this Note, the Agency
Deed of Trust, the Master Agreement, the Development Agreement or any of the other
documents executed in connection therewith, may be given by the Agency's Executive
Director or its Director of Housing and Community Development without action by the
Agency's governing board, unless the Executive Director or the Director of Housing and
Community Development in his or her sole discretion elects to refer the matter to the
board.
20. Good Faith and Fair Dealina.
The Agency and Borrower agree to perform all of their obligations and the
actions required of each hereunder in good faith and in accordance with fair dealing.
21. Waiver.
, Borrower agrees that it will still be liable for repayment of this Note, subject to the
nonrecourse provision of Section 4 above, even if the holder hereof does not follow the
procedures of presentment, protest, demand, diligence, notice of dishonor and of
nonpayment, which requirements are hereby waived. Failure of the Agency or other
holder hereof to exercise any right or remedy hereunder shall not constitute a waiver of
any future or other default. No acceptance of a past due installment or indulgence
granted from time to time shall be construed to be a waiver of, or to preclude the
exercise of, the right to insist upon prompt payment thereafter or to impose late charges
retroactively or prospectively, or to waive or preclude the exercise of any other rights
which the Agency may have.
Promissory Note
Exhibit "K"
17
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written
BORROWER:
Mary Erickson Community Housing, Inc., a
California Non-profrt public benefit corporation
By:
Susan McDevitt, Director
Promissory Note
Exhibit "K"
18
EXHIBIT "L" TO MASTER AGREEMENT
AGENCY DEED OF TRUST
OFFICIAL BUSINESS
Document entitled to free
record in9.,;;er1 t36vt:C6"de-:J
~cfioD 61 o;t
Recording Requested by and
When Recorded Mail To:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
201 North "E" Street, Suite 301
San Bernardino, CA 92401
Attn.: Director of Housing and
Community Development
Above Space For Recorder's Use Only
DEED OF TRUST. ASSIGNMENT OF RENTS.
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING ("Agency Deed ofTrust") is made as of ,20_, by and
between MARY ERICKSON COMMUNITY HOUSING, INC. ("Trustor"), a California
Non-profit public benefit corporation, First American Title ("Trustee"); and the
Agency Deed of Trust
Exhibit "L"
1
REDEVELOPMENT AGENCY OF CITY OF SAN BERNARDINO, a public body
corporate and politic ("Beneficiary").
REClIAbS
A. Beneficiary is making a loan to Trustor in the original principal amount of
Dollars ($ ) (the
"Loan") pursuant to that certain Master Agreement (the "Master Agreement") entered
into by Trustor and Beneficiary and dated as of , 20_ and that
certain Development Agreement (the "Development Agreement") entered into by
Trustor and Beneficiary and dated as of ,20_. The Loan is
evidenced by a promissory note of even date herewith executed by Trustor (the "Note")
in the principal amount of the Loan.
B. Trustor intends to use the Loan proceeds for the purpose of providing
financing for the housing development described in the Development Agreement (the
"Project"). The Project will be developed on a site legally described on Attachment "1"
to this Agency Deed of Trust (the "Eligible Property").
NOW THEREFORE, in consideration of the Loan, Trustor hereby irrevocably
grants, conveys, transfers and assigns to Trustee, its successors and assigns, in trust,
with power of sale and right of entry and possession as provided below all of its present
and future estate, right, title and interest in and to the Eligible Property, together with all
right, title and interest of Trustor therein and in and to, and grants to Beneficiary a
security interest in, the following:
(A) All development rights, air rights, water, water rights, and water stock
relating to the Eligible Property.
(B) All present and future structures, buildings, improvements, appurtenances
and fixtures of any kind on the Eligible Property, including but not limited to all
apparatus, attached equipment and appliances used in connection with the operation or
occupancy of the Eligible Property, such as heating and air-conditioning systems and
facilities used to provide any utility services, ventilation, vehicular cleaning, storage or
other services on the Eligible Property, and all signage, carpeting and floor coverings,
partitions, generators, screens, awnings, boilers, furnaces, pipes, plumbing, vacuum
systems, brushes, blowers, cleaning, call and sprinkler systems, fire extinguishing
apparatus and equipment, water tanks, heating, ventilating, air conditioning and air
cooling equipment, and gas and electric machinery and equipment, it being intended
and agreed that all such items will be conclusively considered to be a part of the Eligible
Property conveyed by this Agency Deed of Trust, whether or not attached or affixed to
the Eligible Property.
Agency Deed of Trust
Exhibit "L"
2
(C) All appurtenances of the Eligible Property and all rights of Trustor in and to
any streets, roads or public places, easements or rights of way, relating to the Eligible
Property.
(D) All of the rents, royalties, profits and income related to the Eligible Property,
to the extent not prohibited by any applicable law.
(E) All proceeds and claims arising on account of any damage to or taking of the
Eligible Property and all causes of action and recoveries for any loss or diminution in
value of the Eligible Property.
(F) All existing and future goods, inventory, equipment and all other personal
property of any nature whatsoever now or hereafter located on the Eligible Property
which are now or in the future owned by Trustor and used in the operation or occupancy
of the Eligible Property or in any construction on the Eligible Property but which are not
effectively made real property under Clause (8) above, including but not limited to all
appliances, furniture and furnishings, building service equipment, and building
materials, supplies, equipment, machinery, plumbing and plumbing material and
supplies, concrete, lumber, hardware, electrical wiring and electrical material and
supplies, roofing material and supplies, doors, paint, drywall, insulation, cabinets,
ceramic material and supplies, flooring, attached appliances, fencing, landscaping and
all other materials, supplies and property of every kind and nature.
(G) All present and future accounts, general intangibles, chattel paper,
contract rights, deposit accounts, instruments and documents as those terms are
defined in the California Uniform Commercial Code, now or hereafter relating or arising
with respect to the Eligible Property and/or the use thereof or any improvements
thereto, including without limitation: (i) all rights to the payment of money, including
escrow proceeds arising out of the sale or other disposition of all or any portion of the
estate of Trustor upon the Eligible Property now or hereafter existing thereon; (ii) all
plans, specifications and drawings relating to the development of the Eligible Property
and/or any construction thereon; (iii) all use permits, licenses, occupancy permits,
construction and building permits, and all other permits and approvals required by any
governmental or quasi-governmental authority in connection with the development,
construction, use, occupancy or operation of the Eligible Property; (iv) any and all
agreements relating to the development, construction, use, occupancy and/or operation
of the Eligible Property between Trustor and any contractor, subcontractor, project
manager or supervisor, architect, engineer, laborer or supplier of materials; (v) all lease
or rental agreements; (vi) all names under which the Eligible Property is now or
hereafter operated or known and all rights to carry on business under any such names
or any variant thereof; (vii) all trademarks relating to the Eligible Property and/or the
development, construction, use, occupancy or operation thereof; (viii) all goodwill
Agency Deed of Trust
Exhibit "L"
3
relating to the Eligible Property and/or the development, construction, use, occupancy
or operation thereof; (ix) all reserves, deferred payments, deposits, refunds, cost
savings, bonds, insurance policies and payments of any kind relating to the Eligible
Property; (x) all loan commitments issued to Trustor in connection with any sale or
financing of the Eligible Property; (xi) all funds deposited with Beneficiary by Trustor,
and all accounts of Trustor with Beneficiary, including all accounts containing security
deposits and prepaid rents paid to Trustor in connection with any leases of the Eligible
Property, and all proceeds thereof; and (xii) all supplements, modifications and
amendments to the foregoing.
(H) All of the right, title and interest of Trustor in and to all sales contracts of any
nature whatsoever now or hereafter executed covering any portion of the Eligible
Property, together with all deposits or other payments made in connection therewith.
(I) All of the right, title and interest of Trustor in and to any construction
contracts, plans and specifications, building permits, and all other documents necessary
for completion of the improvements to the construction of the Eligible Property.
(J) All water stock relating to the Eligible Property, all shares of stock or other
evidence of ownership of any part of the Eligible Property that is owned by Trustor in
common with others, and all documents of membership in any owner's or members'
association or similar group having responsibility for managing or operating any part of
the Eligible Property.
Trustor does hereby covenant with Trustee and Beneficiary, that Trustor has
good right to bargain, sell and convey Trustor's interest in the Eligible Property in
manner and form as above written; and Trustor warrants and will defend same to
Beneficiary, forever, against all lawful claims and demands whatsoever except as stated
above.
THIS DEED OF TRUST IS FOR THE PURPOSE OF SECURING:
(1) performance of each agreement of Trustor herein contained or
incorporated herein by reference;
(2) payment of the indebtedness (including, without limitation, interest
thereon) evidenced by the Note, and any extension or renewal or modification thereof;
(3) performance of each agreement of Trustor contained in the Master
Agreement and the Development Agreement, or any of the other "Agency Loan
Documents" (as defined in the Development Agreement), and any extension, renewal or
modification of such Development Agreement and other Agency Loan Documents;
Agency Deed of Trust
Exhibit "L"
4
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR HEREBY
COVENANTS AND AGREES AS FOLLOWS:
1. Payment of Secured Obliaations. To pay when due (a) the
principal of, and the interest on, the indebtedness evidenced by the Note, (b) charges,
fees and all other sums as provided in the Development Agreement, and (c) the
principal of, and interest on, any future advances secured by this Agency Deed of Trust.
2. Maintenance. Repair. Alterations. To keep the Eligible Property in
good condition and repair; to complete promptly and in a good and workmanlike manner
all improvements to be constructed on the Eligible Property, including specifically all
improvements described in the Development Agreement, and promptly restore in like
manner any structure that may be damaged or destroyed thereon; to pay when due all
claims for labor performed and materials furnished therefor, to comply with all laws,
ordinances, regulations, covenants, conditions and restrictions now or hereafter
affecting the Eligible Property or any part thereof or requiring any alterations or
improvements thereon; not to commit or permit any waste or deterioration of the Eligible
Property; to keep and maintain abutting grounds, sidewalks, roads, parking and land-
scape areas in good and neat order and repair; not to commit, suffer or permit, to the
extent Trustor is able by the exercise of commercially reasonable best efforts, any act to
be done in or upon the Eligible Property in violation of any law, ordinance or regulation.
3. Insurance. To provide, maintain at its expense and deliver to
Beneficiary at all times until payment in full of all obligations secured hereby, insurance
as required by the Development Agreement or the Note. In the event of any loss or
damage, Trustor shall give immediate notice thereof to Beneficiary, and Beneficiary may
thereupon make proof of such loss or damage, if the same is not promptly made by
Trustor. Trustor and Beneficiary hereby agree to cooperate in making any adjustment
and compromise of any loss covered by the aforementioned insurance policies upon the
Eligible Property, and Trustor authorizes and empowers Beneficiary, at its option, to
collect and receive the proceeds, and endorse checks and drafts issued therefor.
Beneficiary agrees that in the event of any loss covered by insurance policies on the
Eligible Property subject to this Agency Deed of Trust, provided there is not then
existing any material default (or such existing default will be cured by the proceeds of
such insurance) in the observance or performance of any of the covenants and
agreements contained herein or in the Note or any future notes secured hereby, or in
any other agreement with or for the benefit of the Beneficiary in connection with any
indebtedness secured hereby, the proceeds of such insurance shall be used for the
repair or restoration of the Eligible Property and will be disbursed in accordance with
such protective terms and conditions as Beneficiary may reasonably impose.
Agency Deed of Trust
Exhibit "L"
5
Trustor hereby fully assigns to Beneficiary all current and future claims it
may have under any policy of insurance related to the Eligible Property or the Project,
regardless of whether such insurance was required to be maintained under the Agency
Loan Documents. Any and all unexpired insurance shall inure to the benefit of and pass
to the purchaser of the Eligible Property at any foreclosure sale, or any Trustee's sale
held pursuant hereto.
Further, Beneficiary may at the time in its sole discretion require Trustor to
submit satisfactory evidence of insurance policies obtained pursuant to this Paragraph 3
and of Trustor's compliance with all the provisions of said policies.
4. Lawsuits. To appear in and defend, or otherwise take such action
therein as the Beneficiary and Trustee or either of them may deem advisable with
respect to, any action or proceeding affecting the security for the Loan in which
Beneficiary or Trustee may appear.
5. Beneficiarv Statement. To pay all charges for all court costs and
expenses which Beneficiary may elect to advance in order to keep unimpaired, protect,
and preserve the title thereto; and to pay for any statement provided for by law in effect
at the date hereof regarding the obligations secured hereby, any amount demanded by
the Beneficiary not to exceed the maximum allowed by law at the time when said
statement is demanded.
6. Condemnation. That all judgments, awards of damages and
settlements, hereafter made as a result of or in lieu of any condemnation or other
proceedings for public use of, or for any damage to, the Eligible Property or the
improvements thereon, are hereby assigned to Beneficiary. If (i) Trustor is not then in
material default hereunder (or such default will be cured with the proceeds from the
foregoing), and (ii) the taking is a partial taking, all proceeds thereof shall be applied to
restoring the Eligible Property, if practicable, as reasonably detennined by Beneficiary.
In the event (i) Trustor is then in material default hereunder (and such default will not be
cured with the proceeds of the foregoing), (ii) the taking is a total taking, or (iii) the
taking is a partial taking and Beneficiary has reasonably detennined that restoration of
the Eligible Property is not practicable, the proceeds shall be paid to Beneficiary to the
extent of those monies due and owing under the Note, this Agency Deed of Trust, future
notes or future deeds of trust, and Beneficiary is hereby authorized to receive such
monies. Trustor agrees to execute such further assignments of any such award,
judgment or settlement which may be received by Trustor. Subject to any prior rights of
creditors under the Senior Financing (as defined in the Development Agreement), Bene-
ficiary may apply any and all such sums to the indebtedness secured hereby in such
manner as it elects or, at its option, the entire amount so received by it or any part
thereof may be released. Neither the application nor the release of any such sums shall
Agency Deed of Trust
Exhibit "L"
6
cure or waive any default or notice of default hereunder or invalidate any act done
pursuant to such notice.
7. Permitted Acts of Beneficiarv. That without affecting the liability of
any person, including Trustor (other than any person released pursuant hereto), for the
payment of any indebtedness secured hereby, Beneficiary is authorized and
empowered as follows: Beneficiary may at any time, and from time to time, either
before or after the maturity of the obligations secured hereby, and without notice (a)
release any person liable for the payment of any of the indebtedness, (b) make any
agreement extending the time or otherwise altering the terms of payment of any of the
indebtedness, (c) accept additional security therefor of any kind, or (d) release any
property, real or personal, securing the indebtedness.
8. Reconvevance of Eliaible Prooertv. That upon written request of
Beneficiary stating that all sums secured hereby have been paid, and upon surrender of
this Agency Deed of Trust and the Note to Trustee for cancellation and retention, and
upon payment of its fees, Trustee shall reconvey, without warranty, the Eligible Property
then held hereunder. The recitals in such reconveyance of any matters of fact Shall be
conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be
described as "the person or persons legally entitled thereto."
9. Default and Trustee's Sale. That upon the occurrence of an "Event
of Default" under this Agency Deed of Trust (as defined in Section 18 below) Beneficiary
may declare all principal remaining unpaid, all interest then earned and remaining
unpaid, and all sums other than principal or interest secured hereby, immediately due
and payable (and thenceforth at the option of the Beneficiary and except as otherwise
prohibited by law, the entire balance of the unpaid principal shall thereafter bear interest
at the Default Rate of interest per annum set forth in the Note until paid) and may
proceed to exercise the power of sale granted by this Agency Deed of Trust by delivery
to Trustee of written declaration of default and demand for sale and of written notice of
default and of election to cause to be sold said Eligible Property, which notice Trustee
shall cause to be filed for record. Beneficiary also shall deposit with Trustee this
Agency Deed of Trust, the Note and all documents evidencing expenditures secured
hereby.
After the lapse of such time as may then be required by law following the
recordation of said notice of default, and notice of sale having been given as then
required by law, Trustee, without demand on Trustor, shall sell the Eligible Property at
the time and place fixed by it in said notice of sale, either as a whole or in separate
parcels, and in such order as it may determine, at public auction to the highest bidder
for cash in lawful money of the United States, payable at time of sale. Trustee may
postpone sale of all or any portion of the Eligible Property by public announcement at
Agency Deed of Trust
Exhibit "L"
7
such time and place of sale, and from time to time thereafter may postpone such sale
by public announcement at the time fixed by the preceding postponement. Trustee
shall deliver to such purchaser its deed conveying the Eligible Property so sold, but
without any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any person,
including Trustor, Trustee or Beneficiary, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee, including cost of
evidence of title in connection with sale, Trustee shall apply the proceeds of sale to
payment of: first, all sums expended by the Beneficiary under the terms hereof or under
the Note, not then repaid, with accrued interest at the Deferral Rate; second, all other
sums then secured hereby; and the remainder, if any, to the person or persons legally
entitled thereto.
10. Substitute Trustees. Beneficiary, or any successor in ownership of
any indebtedness secured hereby, may from time to time, by instrument in writing,
substitute a successor or successors to any Trustee named herein or acting hereunder,
which instrument, executed by the Beneficiary and duly acknowledged and recorded in
the Office of the Recorder of the County of San Bernardino, and by otherwise complying
with the provisions of California Civil Code Section 2934a, or any successor section,
shall be conclusive proof of proper substitution of such successor Trustee or Trustees,
who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, right, powers and duties. Said instrument must contain the name of the original
Trustor, Trustee and Beneficiary hereunder, the book and page where this Agency
Deed of Trust is recorded and the name and address of the new Trustee.
11. Successors Bound. That this Agency Deed of Trust applies to,
inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees,
administrators, executors, successors, assigns, trustees and receivers. In this Agency
Deed of Trust, whenever the context so requires, the masculine gender includes the
feminine and/or neuter, and the singular number includes the plural.
12. Evidence of Title. That if, because of any default hereunder, or
because of the filing or contemplated filing of any legal proceedings affecting the
Eligible Property, Beneficiary deems it necessary to obtain an additional evidence of title
or to cure any defect in title, Beneficiary may procure such evidence or cure such
defect, pay the cost thereof, and shall have an immediate claim against Trustor therefor,
together with a lien upon the Eligible Property for the amount so paid, with interest at
the Deferral Rate. Beneficiary is further authorized to require an appraisal of the
Eligible Property at any time that Beneficiary may reasonably request.
Agency Deed of Trust
Exhibit "L"
8
13. Default in Other Instruments: Bankruotcv. That default in the terms
of any other instrument securing the debt secured hereby, and/or the filing or other
commencement of any bankruptcy or insolvency proceedings including any assignment
for the benefit of creditors or other proceedings intended to liquidate or rehabilitate, by,
for or against Trustor shall after any applicable notice and cure period constitute default
under this Agency Deed of Trust.
14. Statute of Limitations. That the pleading of any statute of
limitations as a defense to any and all obligations secured by this Agency Deed of Trust
is hereby waived by the Trustor, to the full extent permissible by law.
15. Severabilitv. That the invalidity of anyone or more covenants,
phrases, clauses, sentences, paragraphs or sections of this Agency Deed of Trust shall
not affect the remaining portions of this Agency Deed of Trust or any part hereof and
this Agency Deed of Trust shall be constructed as if such invalid covenants, phrases,
sentences, paragraphs or sections, if any, had not been inserted herein.
16. Order of Aoolication. That if the indebtedness secured hereby is
now or hereafter becomes further secured by a security agreement, deed of trust,
pledge, contract of guaranty or other additional securities, Beneficiary may to the full
extent allowed by law, at its option, exhaust anyone or more of said securities as well
as the security hereunder, either concurrently or independently and in such order as it
may determine, and may apply the proceeds received upon the indebtedness secured
hereby without affecting the status of, or waiving any right to exhaust all or any other
security including the security thereunder and without waiving any breach or default in
any right or power, whether exercised hereunder or contained herein, or in any such
other security.
17. Covenants of Trustor.
(a) Audit bv State and Federal Aaencies. In the
event the Loan is subjected to audit, monitoring or other inspections by appropriate
state and federal agencies, Trustor shall comply with such inspections and pay, on
behalf of itself and Beneficiary, the full amount of the cost to the inspecting agency of
such inspections (unless such inspection and any resulting liability arises solely from the
gross negligence or willful misconduct of Beneficiary).
(b) Proaram Evaluation and Review Trustor shall
allow Beneficiary's authorized personnel to inspect and monitor its facilities and program
operations as they relate to the Project or the Eligible Property, including the interview
of Trustor's staff, tenants, and other program participants, as reasonably required by
Beneficiary during the term of the Loan.
Agency Deed of Trust
Exhibit "L"
9
18. Default. The Trustor shall be in default under this Agency Deed of
Trust upon any of the following events which, if not cured within the applicable cure
period provided, if any, shall constitute an event of default hereunder ("Event of
Default"):
a. The failure of Trustor to payor perform any monetary
covenant or obligation hereunder or under the terms of the Note, the Master Agreement,
the Development Agreement or any other documents executed in connection therewith,
without curing such failure within ten (10) calendar days the date such payment is due.
Notwithstanding anything herein to the contrary, the herein described cure period shall
not apply to a failure by Trustor to timely repay the Loan at the Maturity Date of the
Note;
b. The failure of Trustor to perform any nonmonetary covenant
or obligation hereunder or under the terms of the Master Agreement, the Development
Agreement, the Note or any other documents executed in connection therewith, without
curing such failure within thirty (30) calendar days after receipt of written notice of such
default from Beneficiary (or from any party authorized by Beneficiary to deliver such
notice as identified by Beneficiary in writing to Trustor) specifying the nature of the event
or deficiency giving rise to the default and the action required to cure such deficiency;
provided, however, that if any default with respect to a nonmonetary obligation is such
that it cannot be cured within a30-day period, it shall be deemed cured if Trustor
commences the cure within said 3D-day period and diligently prosecutes such cure to
completion thereafter. Notwithstanding anything herein to the contrary, the herein
described notice requirements and cure periods shall not apply to any Event of Default
described in Sections 18(c) through 18(h) below;
c. The material falsity of any representation or breach of any
warranty or covenant made by Trustor under the terms of this Agency Deed of Trust,
the Note, the Master Agreement, the Development Agreement or any other document
executed in connection therewith;
d. Trustor or any constituent member or partner, or majority
shareholder, of Trustor shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in writing
its inability to pay its debts generally as they become due, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or
(e) commence a voluntary case under the Federal bankruptcy laws of the United States
of America or file a voluntary petition that is not withdrawn within ten (10) days of the
filing thereof or answer seeking an arrangement with creditors or an order for relief or
Agency Deed of Trust
Exhibit "L"
10
seeking to take advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy or insolvency proceeding;
e. If without the application, approval or consent of Trustor, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Trustor or any constituent member or partner, or
majority shareholder, of Trustor, for an order for relief or an adjudication in bankruptcy,
a composition or arrangement with creditors, a readjustment of debts, the appointment
of a trustee, receiver, liquidator or custodian or the like of Trustor or of all or any
substantial part of Trustor's assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by Trustor, in
good faith, the same shall (a) result in the entry of an order for relief or any such
adjudication or appointment, or (b) continue undismissed, or pending and unstayed, for
any period of ninety (90) consecutive days;
f. Trustor shall suffer or attempt to effect a "Transfer" (as
defined in Section 33 below) other than in full compliance with the terms of this Agency
Deed of Trust.
g. Trustor shall be in default under the CC&Rs, the Senior
Financing, any Junior Financing or Other Financing (as all these terms are defined in
the Development Agreement ), or any other secured or unsecured obligation relating to
the Project, unless the default is cured or waived within the cure period, if any,
applicable thereto under the terms of the obligation which is in default; or
h. Following completion of the construction of the Project,
voluntary cessation of the operation of the Project for a continuous period of more than
thirty (30) days or the involuntary cessation of the operation of the Project in accordance
with this Agency Deed of Trust for a continuous period of more than sixty (60) days.
19. Acceleration. The entire principal and all accrued and unpaid
interest on the Note shall be due and payable as therein set forth; provided, however,
that the entire balance of the outstanding principal and all accrued and unpaid interest
on the Note, together with any outstanding interest and other amounts payable
thereunder, shall, at the election of Beneficiary and upon notice to Trustor thereof
(except in the case of default described in Section 18 (c) or (d) , in which case no notice
shall be required), become immediately due and payable upon any Event of Default as
set forth in the Note, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by Trustor.
Agency Deed of Trust
Exhibit "L"
11
20. Breach bv Trustor. Cure bv Beneficiarv or Trustee. In the event of
Trustor's failure to comply with any or all of the promises and agreements set forth in
this Agency Deed of Trust or to make any payment or to do any act as provided in this
Agency Deed of Trust, then Beneficiary or Trustee, but without obligation to do so and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may make or do the same in such manner and to such extent as
either in its sole judgment may deem necessary to protect the security hereof (including,
without limitation, to procure insurance and pay the premiums therefor; to pay unpaid
water rents, sewer service charges, and other govemmental or municipal charges and
rates, and all or any part of the unpaid taxes, assessments, and reassessments, if in its
judgment the same are just and valid; to pay the cost of appraisals, reappraisals, and
extensions of title; to enter or have its agents enter upon the Eligible Property whenever
reasonably necessary for the purpose of inspecting the Eligible Property or making
repairs or installations as it deems necessary to preserve the Eligible Property or to
protect the same from vandalism, without thereby becoming liable as a trespasser or
mortgagee or beneficiary in possession, and to pay for such repairs and installations).
Beneficiary and Trustee are hereby authorized to enter upon the Eligible Property for
such purposes; to appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of Beneficiary or Trustee; to pay, purchase,
contest or compromise any encumbrance, charge or lien which in the judgment of either
appears to be prior or superior hereto; and, in exercising any such powers, to pay
necessary expenses, employ counsel of its choice and pay the reasonable fees of such.
counsel. Trustor agrees to pay immediately and without demand all sums so expended
by Beneficiary or Trustee, with interest from the date of expenditure at the amount
allowed by law in effect at the date hereof, and that Beneficiary shall have a lien upon
the Eligible Property for the sums so expended and such interest thereon.
21. Security Aareement. That all property covered by this Agency
Deed of Trust be deemed to constitute real property or interests in real property to the
maximum extent pennitted under applicable law. To the extent that any tangible
property, equipment or other property covered by this Agency Deed of Trust constitutes
personal property, such personal property shall constitute additional security. This
Agency Deed of Trust shall create in Beneficiary a security interest in such personal
property and shall in respect thereof constitute a security agreement (the "Security
Agreemenf'). Beneficiary shall be entitled to all of the rights and remedies in respect of
any personal property included in the Eligible Property covered by this Agency Deed of
Trust afforded a secured party under the Unifonn Commercial Code and other
applicable law. At Beneficiary's request Trustor will at any time and from time to time
furnish Beneficiary for filing financing statements signed by Trustor in fonn satisfactory
to Beneficiary. Trustor acknowledges and agrees that thirty (30) days' notice as to the
time, place and date of any proposed sale of any personal property shall be deemed
reasonable for all purposes. Trustor agrees that the Security Agreement created
Agency Deed of Trust
Exhibit "L"
12
hereby shall survive the termination or reconveyance of this Agency Deed of Trust
unless Beneficiary executes documentation expressly terminating the Security
Agreement.
22. Assumption of Liabilitv. Except as provided in Section 33, the
assumption of liability for the payment of the indebtedness hereby secured, by any
successor in interest to Trustor in the Eligible Property (in the event Beneficiary elects
not to accelerate the repayment of the Loan pursuant to any transfer or disposition of
the Eligible Property by operation of law or otherwise) shall not release Trustor from any
liability Trustor has hereunder or under the other Agency Loan Documents for the
payment of such indebtedness or any sums advanced under and secured by this
Agency Deed of Trust. Any forbearance or indulgence of Beneficiary, or extensions of
time for the payment of all or any part of the indebtedness secured hereby, or the
release of a part of the Eligible Property from the lien of this Agency Deed of Trust, for,
or without, payment of a consideration, shall not in any manner diminish or reduce the
liability of Trustor (subject to the nonrecourse provisions of Section 27) for the payment
of the indebtedness now or hereafter secured hereby; and that any payments made
upon the said indebtedness shall be deemed to have been made on behalf and for the
benefit of all parties obligated to pay the same. The acceptance of payments in excess
of the installments provided to be paid upon the Note or the consideration paid for any
such release shall not alter or diminish the obligation of Trustor to thereafter make
payments in the amounts and on the dates provided therein, until the same are fully
paid.
23. Future Advances. That upon the request of the Trustor or its
successor in ownership of the Eligible Property, Beneficiary may, at its option, at any
time before full payment of the Note secured hereby, make further advances to the
Trustor or its successors in ownership, and the same, with interest and late charges as
permitted by law, shall be secured by this Agency Deed of Trust; and provided further
that if Beneficiary, at its option, shall make a further advance or advances as aforesaid,
the Trustor or its successors in ownership agree to execute and deliver to Beneficiary a
note to evidence the same, payable on or before the maturity of the indebtedness under
the Note secured hereby and bearing such other terms as Beneficiary shall require.
Trustor further acknowledges and agrees: that this Agency Deed of Trust
is intended to, and shall, secure not only the original indebtedness under the Note, but
any and all future advances made by Beneficiary to Trustor; that this Agency Deed of
Trust shall secure any unpaid balances of advances made with respect to the Eligible
Property; that Beneficiary shall have the benefit of all statutes now existing or
henceforth enacted to assure repayment of any such future advances plus interest
thereon; that to secure the payment of said original indebtedness and future advances
Beneficiary shall also have a lien upon all other personal property and securities now or
Agency Deed of Trust
Exhibit "L"
13
hereafter in its possession belonging to Trustor; that all rights, powers and remedies
conferred upon Beneficiary herein are in addition to each and every other right which
Beneficiary has hereunder; that all rights, powers and remedies conferred upon
Beneficiary in equity or by law may be enforced concurrently therewith; that Beneficiary
shall be subrogated to the rights and seniority of any prior lien paid or released by
reason of the application thereon of any of the proceeds hereof, and that each and all of
the covenants, agreements, and provisions hereof shall bind the respective heirs,
executors, administrators, successors, and assigns of Trustor and Beneficiary herein,
and all others who subsequently acquire any right, title, or interest in the Eligible
Property, or to this Agency Deed of Trust and the indebtedness secured hereby.
24. Captions. That the captions of the sections of this Agency Deed of
Trust are for convenience only and shall not be considered in resolving questions of
interpretation or construction.
25. Estoppel Certificates. That Trustor shall from time to time at
Beneficiary's request fumish Beneficiary or any person designated by Beneficiary, a
certified statement in form reasonably satisfactory to Beneficiary confirming as of the
date of the certificate the unpaid principal balance and accrued interest on the Note and
stating that Trustor is not in default hereunder (or describing any default), and stating
that Trustor has no defense, right of set off or counterclaim in the payment of the
indebtedness, or any part thereof, or the observance or performance of any obligation
(or describing any such defense, set off or counterclaim). Any purchaser or assignee of
the Note or this Agency Deed of Trust or any interest therein may rely on such
certificate.
26. Books and Records. That Trustor and all subsequent owners of the
Eligible Property, if any, shall keep and maintain full and correct books and records
showing in detail the earnings and expenses of the Eligible Property and shall permit
Beneficiary at no expense to Trustor or its representatives to examine such books and
records and all supporting data and vouchers, from time to time at reasonable times, on
request, at Trustor's offices or at another mutually agreed upon location.
27. Obliaation Nonrecourse. Except to the extent any Event of Default
hereunder results directly or indirectly from any fraud or intentional and material
misrepresentation by Borrower in connection with the Loan, the Loan is a nonrecourse
obligation of Trustor and in the event of the occurrence of an Event of Default,
Beneficiary's only recourse under this Agency Deed of Trust shall be against the Eligible
Property, the proceeds thereof, the rents and other income arising from its use and
occupancy as provided in the Agency Deed of Trust, and any other collateral given to
Beneficiary as security for repayment of the Loan.
Agency Deed of Trust
Exhibit "L"
14
28. Fixture Filing. This Agency Deed of Trust is also a fixture filing with
respect to the personal property which is or is to become fixtures on the Eligible
Property, and is to be recorded in the real property records of San Bernardino County,
California.
29. Assianment of Rents. All of the existing and future rents, royalties,
income, and. profits of the Eligible Property that arise from its use or occupancy are
hereby absolutely and presently assigned to Beneficiary. However, until Trustor is in
default under this Agency Deed of Trust, Trustor will have a license to collect and
receive those rents, royalties, income and profits. Upon any Event of Default by
Trustor, Beneficiary may terminate Trustor's license in its discretion, at any time, without
notice to Trustor, and may thereafter collect the rents, royalties, income and profits itself
or by an agent or receiver. No action taken by Beneficiary to collect any rents, royalties,
income or profits will make Beneficiary a "mortgagee-in-possession" of the Eligible
Property, unless Beneficiary personally or by agent enters into actual possession of the
Eligible Property. Possession by a court-appointed receiver will not be considered
possession by Beneficiary. All rents, royalties, income and profits collected by
Beneficiary or a receiver will be applied first to pay all expenses of collection, and then
to the payment of all costs of operation and management of the Eligible Property, and
then to the payment of the indebtedness and obligations secured by the Agency Deed
of Trust in whatever order Beneficiary directs in its absolute discretion and without
regard to the adequacy of its security. If required by Beneficiary, each lease or
occupancy agreement affecting any of the Eligible Property must provide, in a manner
approved by Beneficiary, that the tenant will recognize as its lessor any person
succeeding to the interest of Trustor upon any foreclosure of this Agency Deed of Trust.
The expenses (including receivers' fees, if any, compensation to any agent appointed
by Beneficiary, counsel fees, costs and compensation to any agent appointed by
Beneficiary, and disbursements) incurred in taking possession and making such
collection, shall be deemed a portion of the expense of this trust. The entering upon
and taking possession of the Eligible Property, and/or the collection of such rents,
issues and profits and the application thereof as aforesaid, shall not cure or waive any
default or notice of default hereunder or invalidate any act done pursuant to such notice.
Beneficiary may exercise anyone or more of the remedies in this section without
waiving its right to exercise any such remedies again or for the first time in the future.
The foregoing shall be subject to the provisions of applicable law.
30. ADPlicable Law. This Agency Deed of Trust shall be govemed by,
and construed in accordance with, the laws of the State of California.
31. Approvals. Except with respect to those matters set forth
hereinabove providing for the Beneficiary's approval, consent or determination to be at
the Beneficiary's "sole discretion" or "sole and absolute discretion," the Beneficiary
Agency Deed of Trust
Exhibit "L"
15
hereby agrees to act reasonably with regard to any approval, consent, or other
determination given by the Beneficiary hereunder. The Beneficiary agrees to give
Trustor written notice of its approval or disapproval following submission of items to the
Beneficiary for approval, including, in the case of any disapproved item, the reasons for
such disapproval. Any consent to a transfer under Section 33 of this Agency Deed of
Trust, and any other consent or approval by Beneficiary under this Agency Deed of
Trust or any of the other Agency Loan Documents, may be given by Beneficiary's
Executive Director without action of Beneficiary's governing board unless the Executive
Director in his or her sole discretion elects to refer the matter to the board.
32. Good Faith and Fair Dealing. The Beneficiary and Trustor agree to
perform all of their obligations and the actions required of each hereunder in good faith
and in accordance with fair dealing.
33. Assianment of Interest.
a. Without the prior written approval of the Beneficiary, which
approval the Beneficiary may withhold in its sole and absolute discretion, Trustor shall
not (i) sell, encumber, assign or otherwise transfer (collectively, "Transfer") all or any
portion of its interest in the Eligible Property or the Project (excluding tenant leases
pursuant to the terms of the Master Agreement), (ii) permit the Transfer of greater than
49% of its ownership and/or control, in the aggregate, taking all transfers into account
on a cumulative basis, or (iii) Transfer any of its rights or obligations under the Agency
Loan Documents. Notwithstanding the foregoing, Beneficiary consents to the events
described in the last paragraph of Section 20 of the Master Agreement without Trustor
obtaining any further consent of Beneficiary. Trustor hereby agrees that any purported
Transfer not approved by the Beneficiary as required herein shall be ipso facto null and
void, and no voluntary or involuntary successor to any interest of Trustor under such a
proscribed Transfer shall acquire any rights pursuant to the Master Agreement or this
Agency Deed of Trust.
b. At any time Trustor desires to effect a Transfer hereunder,
Trustor shall notify the Beneficiary in writing (the "Transfer Notice") and shall submit to
the Beneficiary for its prior written approval (i) all proposed agreements and documents
(collectively, the "Transfer Documents") memorializing, facilitating, evidencing and/or
relating to the circumstances surrounding such proposed Transfer, and (ii) a certificate
setting forth representations and warranties by Trustor and the proposed transferee to
the Beneficiary sufficient to establish and ensure that all requirements of this Section 33
have been and will be met. No Transfer Documents shall be approved by the
Beneficiary unless they expressly provide for the assumption by the proposed
transferee of all of Trustor's obligations under the Agency Loan Documents. The
Transfer Notice shall include a request that the Beneficiary consent to the proposed
Agency Deed of Trust
Exhibit "L"
16
Transfer and shall also include a request that Trustor be released from further
obligations under the Agency Loan Documents. The Beneficiary agrees to make its
decision on Trustor's request for consent to such Transfer, as promptly as possible,
and, in any event, not later than thirty (30) calendar days after the Beneficiary receives
the last of the items required by this Section 33. In the event the Beneficiary consents
to a proposed Transfer, then such Transfer shall not be effective unless and until the
Beneficiary receives copies of all executed and binding Transfer Documents which
Transfer Documents shall conform with the proposed Transfer Documents originally
submitted by Trustor to the Beneficiary. From and after the effective date of any such
Transfer, Trustor shall be released from its obligations under this Agency Deed of Trust
and the other Agency Loan Documents accruing subsequent to such effective date.
c. Notwithstanding anything in this Agency Deed of Trust to the
contrary, Trustor agrees that it shall not be permitted to make any Transfer, whether or
not the Beneficiary consent is required therefor and even if the Beneficiary has
consented thereto, if there exists an Event of Default under this Agency Deed of Trust at
the time the Transfer Notice is tendered to the Beneficiary or at any time thereafter until
such Transfer is to be effective.
d. The provisions of this Section 33 shall apply to each
successive Transfer and proposed transferee in the same manner as initially applicable
to Trustor under the terms set forth herein.
Agency Deed of Trust
Exhibit "L"
17
IN WITNESS WHEREOF, the undersigned have executed this Agency Deed of Trust as
of the date first above written.
TRUSTOR:
MARY ERICKSON COMMUNITY HOUSING, INC.,
a California Non-profit public benefit corporation
By:
Susan McDevitt, Director
BENEFICIARY:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body
corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
By:
Timothy J. Sabo, Agency Counsel
Agency Deed of Trust
Exhibit "L"
18
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On before me,
Notary Public, personally appeared
personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/shelthey executed the same in his/herltheir authorized capacity(ies), and that by
hislherltheir signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On before me,
Notary Public, personally appeared
personally known
to me (or proved to me on the. basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/shelthey executed the same in his/herltheir authorized capacity(ies), and that by
hislher/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
Agency Deed of Trust
Exhibit "L"
19
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On before me,
Notary Public, personally appeared
personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/shelthey executed the same in his/her/their authorized capacity(ies), and that by
hislherltheir signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
Agency Deed of Trust
Exhibit "L"
20
RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
201 North "E" Street, Suite 301
San Bernardino, CA 92401
Attn.: Director of Housing and
Community Development
(Space Above Line for Recorder's use)
This Agreement is recorded at the request and for the benefit of the Redevelopment
Agency of the Ci of San Bernardino and is exempt from the payment of a recording
fee pursuant to o'Jer ent Go e Sec Ion 6 03
EXHIBIT "M" TO MASTER AGREEMENT
COVENANTS. CONDITIONS. AND RESTRICTIONS
THIS AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND
RESTRICTIONS ("Agreement") is executed as of the _ day of , 20_ by
and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,
a public body corporate and politic ("Agency"), and MARY ERICKSON COMMUNITY
HOUSING. INC.. a California Non-profit public benefit corporation ( "Owner"), with
reference to the following:
A. The Agency and Owner are parties to the Master Agreement ("Master
Agreement") dated as of the day of , 200_ and the
Development Agreement ("Development Agreement") dated as of the _ day of
, 20_, on the terms and conditions of which Owner shall borrow from the Agency, and
the Agency shall lend to Owner, the original principal amount of
($ ) in NSP Funds ("Loan") for
the purpose of providing financing for the housing development described in the
Development Agreement (the "Project"). The Project will be developed on a site legally
described on Exhibit "A" to this Agreement (the "Eligible Property").
B. Unless otherwise expressly provided, all defined terms used in this
Agreement shall have the defined meanings provided for in the Master Agreement and
the Development Agreement.
NOW THEREFORE, in consideration of the representations, covenants,
and obligations of Owner contained in this Agreement, Owner, on behalf of itself and its
successors and assigns, hereby covenants and agrees as follows:
I 99596.3 388-6 6/10120091:28 PM
(1) Use of the Eliaible Property.
The Eligible Property will consist of _ multi-family residential
units, on approximately _ net acres. <-J units shall be reserved for
households whose income is at or below 50% Area Median Income ("AMI"), and
<-J units shall be reserved for households whose income is at or below
_%AMI.
a. Limitations on Tenants. Notwithstanding anything to the contrary
in this Agreement, Owner hereby covenants on behalf of itself, and its
successors and assigns, which covenant shall run with the land and bind every
successor and assign in interest of Owner, that, throughout the Fifty-Five (55)
year term of the CC&Rs, Owner and such successors and assigns shall use the
Eligible Property solely for the purpose of constructing and operating the Project
as a residential development with the defined number of dwelling units and, with
respect to the units designated to be assisted as consideration for the Loan
("Assisted Units"), <-J Assisted Units shall be in accordance with
the tenant income levels specified in this Agreement
All Assisted Units shall be rented only at an Affordable Housing
Cost to Very Low-Income Households hereinafter defined (households meeting
the applicable criteria are occasionally referred to as "Eligible Households" and
persons within any group occasionally referred to as "Eligible Tenant" or "Eligible
Tenants") and as outlined in the following table:
Household Income 1-BR 2-BR TOTAL Total NSP
level (% of Area Median units units UNITS Assisted
Incomel Units
Fifty Percent {50%l
Percent { %l
Percent ( %l
Manager's Unit
TOTAL
"Very Low-Income Households" shall mean persons
and families whose gross annual household incomes do 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, which
qualifying limits are otherwise set forth in Section 6932 of the California Code of
Regulations and are equivalent to eighty percent (50%) of Area Median Income,
adjusted for family size and other adjustment factors by the United States
Department of Housing and Urban Development (HUD).
2
99596.3 388-6 6/1012009 1:28 PM
"Affordable Housing Cost" shall mean, as to each
Eligible Tenant, a rental rate which results in monthly payments which, including
a reasonable utility allowance, do not exceed for a Very Low-Income Household,
the product of thirty percent (30%) times fifty percent (50%) of Area Median
Income adjusted for family size appropriate to the Assisted Unit; and
"Area Median Income" shall mean the median income
for the Riverside/San Bernardino/Ontario Metropolitan Statistical Area, adjusted
for family size as periodically adjusted by HUD, or any successor entity
designated under state law as responsible for establishing such Area Median
Income.
Owner shall specifically provide in each Assisted Unit
lease and shall strictly enforce the requirement that each Assisted Unit be
occupied at all times by the eligible household who has leased that Assisted Unit,
and that any other occupant of the unit be another qualified member of the
lessee's household. The Agency shall be identified as a third party beneficiary of
that covenant and shall have the right to directly enforce that restriction in the
event Owner fails to do so. Prior to execution of any Assisted Unit lease with
respect to the Project, Owner shall submit to the Agency and obtain its written
approval of a standard form occupancy lease and Owner shall thereafter use the
approved form for all leases of Assisted Units in the Project, with only such
further modifications thereto as are first submitted to and approved in writing by
the Agency.
b. Tenant Selection Process: Reports and Records Concemina
Tenancies. Owner shall maintain such records and satisfy such reporting
requirements as may be reasonably imposed by the Agency to monitor
compliance with the tenanting requirements described in Paragraph (1)a above,
including without limitation the requirement that Owner deliver reports to the
Agency commencing at the close of the initial occupancy of the Project, and
continuing annually thereafter, setting forth the name of each tenant, the unit
occupied and the income of the tenant and the amount of rent payable by each
tenant. Owner shall also be required to have each prospective tenant complete a
rental application prior to occupancy and to obtain evidence from each such
tenant as may be reasonably required by the Agency to certify such tenant's
qualification for occupancy of the Project. Owner's obligation to provide such
reports shall remain in force and effect for the same duration as the use
covenants set forth in this Paragraph (1).
(2) Manaaement of Proiect. Subject to the terms and conditions
contained hereinbelow, Owner shall at all times during the operation of the Project
pursuant to this Agreement retain an entity to perform the management and/or
supervisory functions ("Manager") with respect to the operation of the Project, including
day-to-day administration, maintenance and repair. Owner shall, before execution or
any subsequent amendment or replacement thereof, submit and obtain The Agency's
3 995%.3 388-6 6/10120091:28 PM
written approval (which shall not be unreasonably withheld, conditioned or delayed) of a
management contract ("Management Contract") entered into between 'Owner and an
entity ("Management Entity") reasonably acceptable to the. Subject to any regulatory
or licensing requirements of any other applicable governmental agency, the
Management Contract may be for a term of up to fifteen (15) years and may be
renewed for successive terms in accordance with its terms, but may not be amended or
modified without the written consent of the Agency. The Management Contract shall
also provide that the Management Entity shall be subject to termination for failure to
meet project maintenance and operational standards set forth herein or in other
agreements between Owner and the Agency. Owner shall promptly terminate any
Management Entity which commits or allows such failure, unless the failure is cured
within a reasonable period, but, in no event exceeding 60 calendar days from
Management Entity's receipt of notice of the failure from Owner or the Agency. Owner's
obligation to retain a Management Entity shall remain in force and effect for the same
duration as the use covenants set forth in Paragraph (1) of this Agreement.
(3) Operations and Maintenance. Owner hereby covenants on behalf
of itself, and its successors and assigns, which covenant shall run with the land and
bind every successor and assign in interest of Owner, that Owner and such successors
and assigns shall use the Eligible Property solely for the purpose of constructing and
operating the Project and ancillary improvements thereon, in accordance with and of the
quality prescribed by this Agreement, the Master Agreement, the Development
Agreement and the Agency Deed of Trust (as defined in the Development Agreement).
Owner covenants and agrees for itself, its successors and assigns, which
covenants shall run with the land and bind every successor or assign in interest of
Owner, that during development of the Eligible Property pursuant to this Agreement and
thereafter, the Eligible Property, nor any portion thereof, shall be improved, used or
occupied in violation of any Applicable Governmental Restrictions (as defined below) or
the restrictions contained in this Agreement. Furthermore, Owner and its successors
and assigns shall not maintain, commit, or permit the maintenance or commission on
the Eligible Property, or any portion thereof, of any nuisance, public or private, as now
or hereafter defined by any statutory or decisional law applicable to the Eligible
Property, or any portion thereof.
As used herein, "Applicable Governmental Restrictions" shall mean and
include any and all laws, statutes, ordinances, codes, rules, regulations, directives,
writs, injunctions, orders, decrees, rulings, conditions of approval, or authorizations, now
in force or which may hereafter be in force, of any governmental entity, agency or
political subdivision as they pertain to the performance of this Agreement or
development or operation of the Project, including specifically but without limitation all
code and other requirements of the jurisdiction in which the Project is located; the
California Environmental Quality Act; the laws specified in the Development Agreement;
fair housing laws; and applicable federal, state and local laws. Owner shall indemnify,
defend and hold the Agency harmless for any suit, cost, attorneys' fees, claim,
administrative proceeding, damage, award, fine, penalty or liability arising out of
4 99596.3 388~ 611012009 1 :28 PM
Owner's failure to comply with any Applicable Governmental Restrictions, including,
without limitation, the nonpayment of any prevailing wages required to be paid in
connection with the Project.
Owner shall, at its expense, (i) maintain all improvements and landscaping
on the Eligible Property in first-class order, condition, and repair (and, as to
landscaping, in a healthy and thriving condition) in accordance with the plans for the
. Project approved by the Agency in accordance with the Development Agreement and all
Applicable Governmental Restrictions, and (ii) manage the Project and Project finances
reasonably prudently and in compliance with Applicable Governmental Restrictions so
as to maintain a safe and attractive living environment for Project residents.
(4) Performance of Maintenance.
a. Owner shall maintain in accordance with the Agency
Standards, as hereinafter defined, the private improvements, public improvements and
landscaping to the curbline(s) on and abutting the Eligible Property. Said improvements
shall include, but not be limited to, buildings, sidewalks and other paved areas,
pedestrian lighting, landscaping, irrigation of landscaping, architectural elements
identifying the Eligible Property and any and all other improvements on the Eligible
Property and in the public right-of-way to the nearest curbline(s) abutting the Eligible
Property.
b. To accomplish the maintenance, Owner shall either staff or
contract with and hire licensed and qualified personnel to perform the maintenance
work, including the provision of labor, equipment, materials, support facilities, and any
and all other items necessary to comply with the requirements of this Agreement.
Agency Standards: The following standards ("Agency Standards")
shall be complied with by Owner and its maintenance staff, contractors or
subcontractors
(i) Ordinary Maintenance Standards - Owner shall
maintain the Eligible Property in good repair, order and condition at all
times in order to assure that the Eligible Property is kept in a decent, safe,
and sanitary condition, and that the buildings, grounds, and equipment are
to be maintained in a manner that will preserve their condition.
(ii) Annual Inspection Standards - Owner shall annually
inspect the Eligible Property. The completed annual inspection will be
documented and reported to the Agency on an annual basis, and at the
end of each year Owner shall submit to the Agency a declaration certifying
that the annual inspection was performed at the Eligible Property. Owner
shall retain records of the inspection and make them available for review
by the Agency at the request of the Agency.
5
99596.3 388-6 611012009 1 :28 PM
(iii) Extraordinary Maintenance. Owner shall perform any
extraordinary repairs or replacements necessary in order to maintain the
Eligible Property, including extraordinary replacement of equipment,
betterment, and additions. Extraordinary repairs or replacement consists
of major repairs and rehabilitation involving substantial expenditures which
usually are needed only at relatively long intervals of time, or are caused
by such occurrences as earthquake, fire, obsolescence and, in some
instances, neglect. Such items as replacement of roofs, replacement of
corroded gas and heating lines, and rehabilitation of landscaping
(ground-cover) would be considered in this category.
(iv) The Agency may enter and inspect the premises at
any time after notifying Owner 72 hours prior to the planned inspection,
and said notice shall be delivered to Owner at the address indicated in
paragraph 17(e) below.
(5) Failure to Maintain Improvements. In the event Owner does not
maintain the Eligible Property to the curbline in the manner set forth herein and in
accordance with the Agency Standards, the Agency shall have the right to maintain
such private and/or public improvements, or to contract for the correction of such
deficiencies, after (i) written notice to Owner stating that the condition of said
improvements does not meet with the Agency Standards and specifying the deficiencies
and the actions required to be taken by Owner to cure the deficiencies ("Deficiency
Notice"); and (ii) the lapse of the applicable .Cure Period: as hereinafter defined. Upon
receipt of the Deficiency Notice, Owner shall have thirty (30) calendar days within which
to correct, remedy or cure the deficiency, unless such deficiency is not capable of being
cured within such 30 day period, then such amount of time as is needed to cure such
deficiency provided owner is diligently pursuing cure; provided however, if the
Deficiency Notice states the problem is urgent relating to public health and safety, then
Owner shall have forty-eight (48) hours to rectify the problem (collectively the "Cure
Periods.).
In the event Owner fails to correct, remedy, or cure such maintenance
deficiency after the Deficiency Notice and after the applicable Cure Period has lapsed,
then the Agency shall have the right to maintain such improvements. Owner agrees to
pay the Agency, upon demand, charges and costs incurred by the Agency in connection
with such maintenance. Until so paid, the Agency shall have a lien on the Eligible
Property for the amount of such maintenance charges and costs, which lien shall be
perfected by the recordation of a "Notice of Claim of Lien" against the Eligible Property.
Upon recordation of a Notice of a Claim of Lien against the Eligible Property, such lien
shall constitute a lien on the fee estate in and to the Eligible Property prior and superior
to all other monetary liens except: (i) all taxes, bonds, assessments, and other levies
which by law would be superior thereto; (ii) the lien or charges of any mortgage, deed
of trust, or other security interest then of record made in good faith and for value, it
being understood that the priority for any such lien for costs incurred to comply with this
Agreement shall date from the date of the recordation of the Notice of Claim of Lien.
6 99596.3 388-6 611012009 I :28 PM
Any such .lien shall be subject and subordinate to any lease or sublease of the interest
of Owner in the Eligible Property or any portion thereof and to any easement affecting
the Eligible Property or any portion thereof entered into at any time (either before or
after) the date of recordation of such a Notice. Any lien in favor of the Agency created
or claimed hereunder is expressly made subject and subordinate to any mortgage or
deed of trust made in good faith and for value, recorded as of the date of the
recordation of the Notice of Claim of Lien describing such lien as aforesaid, and no such
lien shall in any way defeat, invalidate, or impair the obligation or priority of any such
mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly
subordinates his interest, or record, to such lien. No lien in favor of the Agency created
or claimed hereunder shall in any way defeat, invalidate, or impair the obligation or
priority of any lease, sublease or easement unless such instrument is expressly
subordinated to such lien. Upon foreclosure of any mortgage or deed of trust made in
good faith and for value and recorded prior to the recordation of any unsatisfied Notice
of Claim of Lien, the foreclosure-purchaser shall take title to the Eligible Property free of
any lien imposed herein by the Agency that has accrued up to the time of the
foreclosure sale, and upon taking title to the Eligible Property, such foreclosure-
purchaser shall only be obligated to pay costs associated with this Agreement accruing
. after the foreclosure-purchaser acquires title to the Eligible Property. If the Eligible
Property is ever legally divided with the written approval of the Agency and fee title to
various portions of the Eligible Property is held under separate ownerships, then the
burdens of the maintenance obligations set forth herein and in the Agreement and the
charges levied by the Agency to reimburse the Agency for the cost of undertaking such
maintenance obligations of Owner and its successors and the lien for such charges
shall be apportioned among the fee owners of the various portions of the Eligible
. Property under different ownerships proportionate to the square footage of the land
contained in the respective portions of the Eligible Property owned by them. Upon
apportionment, no separate owner of a portion of the Eligible Property shall have any
liability for the apportioned liabilities of any other separate owner of another portion of
the Eligible Property, and the lien shall be similarly apportioned and shall only constitute
a lien against the portion of the Eligible Property owned in fee by the owner who is liable
for the apportioned lien and against no other portion of the Eligible Property. Owner
acknowledges and agrees the Eligible Property may also pursue any and all other
remedies available in law or equity. Owner shall be liable for any and all reasonable
attorneys' fees, and other legal costs or fees incurred in collecting said maintenance
costs.
(6) [Reserved.]
7 99596.3 388-6 611012009 1 :28 PM
(7) Owner's ObliQation to Refrain From Discrimination. There shall be
no discrimination against or segregation of any person, or group of persons, on account
of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Eligible Property,
nor shall Owner itself or any person claiming under or through it establish or permit any
such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees of the Eligible Property or any portion thereof. The
nondiscrimination and nonsegregation covenants set forth herein shall remain in effect
in perpetuity.
Owner shall refrain from restricting the rental, sale or lease of the Eligible
Property or any portion thereof on the basis of race, color, creed, religion, sex, marital
status, national origin, or ancestry of any person. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or
non segregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or
herself, and his or her 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, national origin, or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land
herein conveyed, nor shall the grantee or any person claiming under or through
him or her, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees, or vendees in the land herein
conveyed. The foregoing covenants shall run with the land."
b. In leases: "The lessee herein covenants by and for himself or
herself,and his or her heirs, executors, administrators and assigns, and all
persons claiming under or through him or her, and this lease is made and
accepted upon and subject to the following conditions: 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, national origin, or
ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or
enjoyment of the land herein leased nor shall the lessee himself or herself, or any
person claiming under or through him or her, establish or permit any such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vendees in the land herein leased:
c. In contracts: "There shall be no discrimination against or
segregation of any person or group of persons, on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry, in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor
8 99596.3 388-6 6/1012009 1 :28 PM
shall the parties to this contract or any person claiming under or through them,
establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy of tenants,
lessees, subtenants, sublessees, or vendees of the premises."
Nothing in this Paragraph shall be construed or understood to limit, restrict
or in any way waive the income requirements described in this Agreement.
(8) Covenants Run With the Land: . Duration of Covenants. The
covenants and agreements established in this Agreement shall be covenants running
with the land and shall, without regard to technical classification and designation, be
binding on Owner and any successor-in-interest to Owner's interest in the Eligible
Property, or any part thereof, for the benefit of and in favor of the agency and its
successors and assigns. The covenants of this Agreement shall remain in effect through
the Term, notwithstanding the repayment of the Loan by Owner prior to the Maturity
Date. The covenants contained in Paragraph 7 of this Agreement shall remain in effect
in perpetuity.
The Improvements to the curbline(s) and the maintenance thereof touch
and concern the Eligible Property and inure to the benefit of any and all present or
successive owners of the Eligible Property. Therefore, whenever the word "owner" is
used herein, itshall include the owner as of date of execution of this Agreement, and
any and all successor owners or assigns of the Eligible Property, and the provisions
hereof are expressly binding upon all such successive owners and assigns and the
parties agree all such provisions shall run with the land. The Agency shall cause a fully
executed copy of this Agreement to be recorded in the Office of the San Bernardino
County Recorder. Notwithstanding the foregoing, in the event Owner or its successors
or assigns shall convey its fee interest in all or any portion of the Eligible Property, the
conveying owner shall be free from and after the date of recording such conveyance of
all liabilities, respecting the performance of the restrictions, covenants or conditions
contained in this Agreement thereafter to be perforrl1ed with respect to the Eligible
Property, or any part thereof, it being intended that the restrictions, covenants and
conditions shall be binding upon the record owners of the Eligible Property only during
such time as that person is the owner of the Eligible Property, provided that the
conveying owner shall remain liable for any actions prior to the date of the conveyance.
(9) Enforcement. In amplification and not in restriction of the
provisions set forth hereinabove, it is intended and agreed that the Agency shall be
deemed the benefiCiary of the terms and provisions of this Agreement and of the
restrictions and covenants running with the land for and in its own right and for the
purposes of protecting the interests of the community and other parties, public or
private, in whose favor and for whose benefit the covenants running with the land have
been provided. Each covenant of Owner, shall, without regard to technical classification
and designation, inure to the benefit of the successors, transferees and assigns of the
Agency for the entire period during which such covenants shall be in force and effect,
and shall be binding upon the successors, transferees and assigns of Owner, whether
9 99596.3 388-6 611012009 1 :28 PM
by merger, consolidation, sale, transfer, liquidation or otherwise. Each covenant in
favor of the Agency is for the benefrt of the real property owned by the Agency in the
area surrounding the Eligible Property. The covenants herein running with the land
shall also be equitable servitudes upon the Eligible Property and each part thereof and
shall bind each and every person having any interest in the Eligible Property or part
thereof, whether such interest is fee, easement, leasehold, beneficial or otherwise, and
each successor or assign of such person having any such interest in the Eligible
Property or part thereof. The Agency shall have the right if any of the covenants set
forth in this Agreement which are provided for its benefit are breached, to exercise all
rights and remedies and to maintain any actions or suits at law or in equity or other
proper proceedings to enforce the curing of such breach to which it may be entitled. In
the event that suit is brought for the enforcement of this Agreement or as the result of
any alleged breach hereof, the prevailing party or parties in such suit shall be entitled to
recover their reasonable attorneys' fees from the losing party or parties, and any
judgment or decree rendered in such proceedings shall include an award thereof.
Except for the Agency, the covenants and restrictions contained in this Agreement shall
not benefrt or be enforceable by any owner of any sother real property or any person or
entity having any interest in any such other real property.
(10) Compliance with Law. Owner shall comply with all Applicable
Governmental Restrictions relating to the uses of or condition of the Eligible Property
private improvements and public improvements to the curbline(s). Local laws for the
purposes of this paragraph shall include only those ordinances which are
nondiscriminatory in nature and applicable to the public welfare, health, safety and
aesthetics. If any new local laws relating to the uses of or condition of the
improvements create a condition or situation that constitutes a lawful nonconforming
use as defined by local ordinance with respect to the Eligible Property or any portion
thereof, then so long as the lawful nonconforming use status remains in effect (i.e., until
such lawful status is properly terminated by amortization as provided for in the new local
law or otherwise), Owner shall be entitled to enjoy the benefits of such lawful
nonconforming use pursuant to the lawful nonconforming uses ordinance.
(11) Indemnification and Insurance.
a. Indemnification. In the event that Owner is not acting as a
Design Professional, Owner agrees to indemnify, defend and save harmless the
Agency, and their elected and appointed officials, officers, representatives, employees,
and agents (hereinafter collectively referred to as "Agents"), from and against any and
all liability, demands, damages, claims, causes of action, fees (including reasonable
attorney's fees and costs and expert witness fees), and expenses, including, but not
limited to, claims for bodily injury, property damage, and death (hereinafter collectively
referred to as "Liabilities"), that arise out of, pertain to, or relate to this Agreement, the
services and/or materials provided pursuant to this Agreement, the Eligible Property, or
Project. Owner shall not be required to indemnify, defend, and save harmless the
Agency and its Agents from any Liabilities that arise from the active negligence, sole
negligence or willful misconduct of the Agency, Agency's agents, servants, or
10 99596.3 388~ 6/1012009 1 :28 PM
independent contractors who are directly responsible to the Agency's. Such
indemnification language shall also be incorporated in Owner's contracts with any
general contractors and subcontractors in favor of the Agency.
In the event that Owner is acting as a Design Professional, Owner
agrees to indemnify, defend and save harmless the Agency and their Agents from and
against any and all Liabilities that arise out of, pertain to, or relate to the negligence,
recklessness, or willful misconduct of Owner. Such indemnification language, in favor
of the Agency, shall also be incorporated in Owner's contracts with any Design
Professionals in favor of the Public Agency.
These indemnification provisions shall remain in full force and effect
and survive the cancellation, termination and/or expiration of this Agreement. Owner
agrees to require any entities with which it contracts to agree to and abide by the above
mentioned indemnification requirements in favor of the Agency, as applicable to each of
them.
b. Insurance. Without limiting Owner's indemnifications of the
Agency provided in this Agreement, Owner shall procure and maintain at its own
expense the insurance described in this section for the duration of this Agreement,
unless otherwise set forth herein. Such insurance shall be secured from carriers
admitted in California, or authorized to do business in California. Such carriers shall be
in good standing with the California Secretary of State's Office and the California
Department of Insurance. Such carriers must be approved by the California
Department of Insurance and must be included on the California Department of
Insurance List of Eligible Surplus Line Insurers (hereinafter "LESLI"). Such carriers
must have a minimum rating of or equivalent to A(v) in Best's Insurance Guide. Owner
shall, concurrent with the execution of this Agreement, deliver to the Agency certificates
of insurance with original endorsements evidencing the general liability, automobile
insurance, worker's compensation and property insurance coverage required by this
Agreement at such time that such exposures are at risk, but in no event later than the
Close of Escrow. The certificate and endorsements shall be signed by a person
authorized by the insurers to bind coverage on its behalf. The Agency reserves the
right to require complete certified copies of all policies at any time. Said insurance shall
be in a form acceptable to the Agency and may provide for such deductibles as may be
acceptable to the Agency. In the event such insurance does provide for deductibles or
self-insurance, Owner agrees that it and/or the entities with which it contracts, will
defend, indemnify and hold harmless the Agency, its elected and appointed officers,
officials, representatives, employees, and agents in the same manner as they would
have been defended, indemnified and held harmless if full coverage under any
applicable policy had been in effect. Each such certificate shall stipulate that the
Agency is to be given at least thirty (30) days' written notice in advance of any
cancellation or any reduction in Iimit(s) for any policy of insurance required herein.
Owner shall give the Agency immediate notice of any insurance claim or loss which may
be covered by insurance. Owner represents and warrants that the insurance coverage
required herein will also be provided by Owner's general contractors as detailed below.
11 99596.3 388-6 6/1012009 1 :28 PM
The aforementioned insurance policies shall be primary insurance with respect to the
Agency. The aforementioned insurance policies shall contain a waiver of subrogation
for the benefit of the Agency. Failure on the part of Owner and any general contractors
hired by owner to perform work on the Eligible Property, to procure or maintain the
insurance coverage required herein shall constitute a material breach of this Agreement
pursuant to which the Agency may immediately terminate this Agreement and exercise
all other rights and remedies set forth herein, at its sole and absolute discretion, and
without waiving such default or limiting the rights or remedies of the Agency, procure or
renew such insurance and pay any and all premiums in connection therewith and all
monies so paid by the Agency shall be immediately repaid by the Owner to the Agency
upon demand including interest thereon at the Default Rate. In the event of such a
breach, the Agency shall have the right, at its sole election, to participate in and control
any insurance claim adjustment or dispute with the insurance carrier. Owner's failure to
assert or delay in asserting any claim shall not diminish or impair the Agency's rights
against the Owner or the insurance carrier.
When Owner is naming the Agency as additional insureds on any of the commercial
general liability insurance policies set forth herein, then the additional insured
endorsement shall contain language similar to the language contained in ISO form CG
20 10 1001. When any entity, with which Owner is contracting, is naming the Public
Agencies as additional insureds on any of the commercial general liability insurance
policies set forth herein, then the additional insured endorsement shall contain language
similar to the language contained in ISO form CG 20 10 11 85.
The following insurance policies shall be maintained by Owner and any General
Contractor with which Owner contracts for the duration of this Agreement unless
otherwise set forth herein:
(i) General Liabilitv: For projects in which the direct construction costs are
projected to be less than $15,000,000, Commercial General Liability insurance,
including coverage for bodily injury, property damage and contractual liability, with a
combined single limit not less than One Million Dollars ($1,000,000) for each occurrence
(Two Million Dollars ($2,000,000) General Aggregate), including, but not limited to,
products and completed operations coverage. The Agency and their elected and
appointed officers, officials, representatives, employees, and agents shall be named as
additional insureds on such policy. Owner shall require its general contractor to carry
Commercial General Liability insurance of not less than One Million Dollars
($1,000,000) for each occurrence (Two Million Dollars ($2,000,000) General
Aggregate), including, but not limited to, products and completed operations protection.
Owner shall further require its general contractor to provide additional insured status for
Owner and Agency and their elected and appointed officers, officials, representatives,
employees, and agents, on such policy. If required by the Agency from time to time,
Owner shall increase the limits of Owner's liability insurance to reasonable amounts
12
99596.3 388~ 6/1012009 I :28 PM
necessary for owners of improvements similar to the Eligible Property. The policy shall
contain a waiver of subrogation for the benefit of the Agency.
(ii) Prooertv Insurance: "Special Form" property insurance coverage, which shall
include, without limitation, builders risk insurance and insurance against the perils of
fire and physical loss or damage including, without duplication of coverage, theft,
vandalism, malicious mischief, collapse, flood, false work, testing and startup,
temporary buildings and debris removal including demolition occasioned by
enforcement of any applicable legal requirements. The amount of the property
coverage shall at all times exceed the full replacement value of materials supplied or
installed by others and all existing structures, improvements and fixtures on the
Property. The insurer shall waive any coinsurance via an "agreement" endorsement.
Said insurance shall be maintained for the duration of this Agreement. The Agency and
its elected and appointed officers, officials, representatives, employees, and agents
shall be named as additional insureds on such policy.
(iii) Workers' Comoensation: Owner's employees, if any, shall be covered by
Workers' Compensation insurance in an amount and in such form as to meet all
applicable requirements of the labor Code of the State of California and Employers
Liability limits up to One Million Dollars ($1,000,000) per accident. Owner shall require
that the identical worker's compensation insurance requirements be incorporated into
Owner's contract with any general contractors with which it contracts in relation to the
Project. Said entities shall maintain the insurance for the duration of this Agreement or
the duration of the construction that is the subject of their contracts with Owner,
whichever is greater.
(iv)Automobile Liabilitv: Combined single limit automobile liability insurance up
to One Million Dollars ($1,000,000) per accident for bodily injury and property damage,
covering owned (if any), non-owned and hired vehicles. Owner shall require that the
identical automobile liability insurance requirements be incorporated into Owner's
contract with any general contractors with which it contracts in relation to the Project.
Said entities shall maintain the insurance for the duration of this Agreement or the
duration of the construction that is the subject of their contracts with Owner, whichever
is greater. The Agency and its elected and appointed officers, officials, representatives,
employees, and agents shall be named as additional insureds on such policies.
(12) Intentionally Omitted
(13) Waiver. Failure or delay by either party to perform any term or
provision of this Agreement constitutes a default under this Agreement. The aggrieved
party shall give written notice of the default to the party in default in accordance with
Paragraph (16)e hereof. The defaulting party shall no longer be in default if the
defaulting party cures such default within thirty (30) calendar days after receiving the
Default Notice; provided, however, that if such default cannot be reasonably cured
within such thirty (30) day period, the defaulting party shall be given such longer period
as reasonably necessary (which in the case of a default by Owner shall be as
13 99596.3 388-6 6/1012009 1:28 PM
reasonably determined by the Agency) and the defaulting party shall no longer be in
default if it commences to cure such default within such thirty (30) day period and
completes such cure with reasonable and due diligence.
The waiver by one party of the performance of any covenant, condition, or
promise shall not invalidate this Agreement nor shall it be considered a waiver by such
party of any other covenant, condition or promise hereunder. The exercise of any
remedy shall not preclude the exercise of other remedies the Agency or Owner may
have at law or at equity.
(14) Modification. This Agreement may be modified only by subsequent
mutual written agreement executed by Owner and the Agency.
(15) Intentionallv Omitted.
(16) Miscellaneous Provisions.
a. Interoretation. The prOVIsions of this document shall be
liberally construed to effectuate its purpose. Time is of the essence of this
Agreement.
b. Severabilitv. Invalidation of any of the covenants,
conditions, restrictions, or other provisions contained in this Agreement by
judgment or court order shall in no way affect any of the other covenants,
conditions, restrictions, or provisions hereof, which shall remain in full
force and effect.
c. Headinas. The caption headings of the various sections and
paragraphs of this Agreement are for convenience and identification only,
and shall not be deemed to limit or define the contents of their respective
sections or paragraphs.
d. Effective Date. This Agreement shall take effect upon its
recording in the Office of San Bernardino County Recorder.
e. Notices. Formal notices, demands, and communications
between the Agency and Owner shall be given either by personal service,
by ovemight courier, or by mailing in the United States mail, certified mail,
postage prepaid, return receipt requested, addressed to the principal
offices of the Agency or Owner, as follows:
If to the Agency: Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Executive Director
14 99596.3 388-6 6/1012009 1 :28 PM
With a copy to:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Director of Housing and Community
Development
If to Owner:
Fax No.
With a copy to:
Attn:
Fax No.
Notices shall be effective upon receipt, if given by personal
delivery, the earlier of (i) three (3) business days after deposit with United
States Mail, or (ii) the date of actual receipt as evidenced by the return
receipt, if delivered by certified mail, and one (1) day after deposit with the
delivery service, if delivered by overnight guaranteed delivery service.
Each party shall promptly notify the other party of any change(s) of
address to which notice shall be sent pursuant to this Agreement.
1. Exhibits. Each Exhibit mentioned in this Agreement is
attached hereto and incorporated herein by this reference.
g. Execution in Countemarts. The parties may execute this
document in two or more counterparts; each counterpart shall be deemed
an original instrument as against any party who has executed it.
15
995%.3 388-6 6/1012009 1 :28 PM
IN WITNESS WHEREOF, the Agency and Owner have caused this instrument to be
executed on their behalf by their respective officers hereunto duly authorized as of date
first written above.
AGENCY:
REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO, a public
body corporate and politic
By:
EMIL A. MARZULLO
Interim Executive Director
APPROVED AS TO FORM AND
LEGAL CONTENT:
By:
Timothy J. Sabo
Agency Counsel
OWNER:
MARY ERICKSON COMMUNITY HOUSING,
INC.,
A California Non-profit public benefit
corporation
By:
Susan McDevitt, Director
16
99596.3 388-6 6/1012009 1 :28 PM
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On ,200, before me , Notary Public,
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in hislherltheir authorized capacity(ies), and that by his/herltheir
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of Califomia that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On , 200 ,before me , Notary Public,
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/herltheir authorized capacity(ies), and that by his/herltheir
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of Califomia that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
17
99596.3 388~ 6110120091:28 PM
Signature
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On ,200, before me , Notary Public,
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/shelthey
executed the same in his/her/their authorized capacity(ies), and that by his/herltheir
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of Califomia that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
18
99596.3 388-6 611012009 1 :28 PM
19
99596.3 388~ 611012009 1 :28 PM
EXHIBIT "A" TO CC&Rs
LEGAL DESCRIPTION OF ELIGIBLE PROPERTY
20
99596.3 388-6 6110120091:28 PM
EXHIBIT "N"
DEVELOPMENT AGREEMENT
DEVELOPER PARTICIPATION IN NSP
CITY OF SAN BERNARDINO
THIS DEVELOPMENT AGREEMENT ("Agreement") is made as of the _day of
, 20_, by and between the REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body corporate and politic ("AGENCY"), and
MARY ERICKSON COMMUNITY HOUSING, INC., a California Non-profit public
benefit corporation ("Developer"), for the purpose of acauiring, rehabilitating, and
managing the property whose address is indicated below ("Project") in accordance with
the terms of that certain Master Agreement dated as of
20_ entered into between Developer and the Agency (the "Master Agreement").
Agency agrees, subject to the terms and conditions of the Master Agreement and this
Agreement and in consideration of the representations, covenants and obligations of
Developer contained in the Master Agreement and this Agreement, to make a Loan to
Developer in the amount not to exceed Dollars
($ ) (the "Loan") for the purpose of providing acauisition, rehabilitation
and/or permanent financing for a unit building located at
, which units will be
reserved for households whose income is less than or equal to % AMI and whose
legal description is attached herewith as Exhibit "A", to be used solely for the purposes
described herein and secured by the Agency Deed of Trust. The Agency's source of
funding for the Loan is provided from the Neighborhood Stabilization Program ("NSP")
administered and funded by the United States Department of Housing and Urban
Development ("HUD") subsequent to Title III of the Housing and Economic Recovery
Act of2008 (HERA).
Other sources of fmancing for the Project are anticipated to include, but may not be
limited to (i) senior lien financing ("Senior Financing"), to which the Agency shall
expressly subordinate the lien of the Agency's Deed of Trust; (ii) financing junior in
priority to the lien of the Agency Deed of Trust ("Junior Financing"); and (iii) other
financing sources ("Other Financing"), as all are listed below:
Osenior Ojunior OparitylNA
o senior Ojunior OparitylNA
Osenior Ojunior OparitylNA
(1)
(2)
(3)
Developer will deliver to the Agency, among other items, the "Agency Deed of Trust",
"Promissory Note" and the "CC&R's", in the respective forms attached as Exhibits "E",
"F" and "G", herewith to, respectively, secure repayment of the Loan by Developer as
provided herein and to ensure that the affordability and habitability of the Project is
Development Agreement
1
maintained in accordance with the terms of those instruments, the Master Agreement and
this Agreement.
Developer will further attach to this Development Agreement: (i) a completed version of
Exhibit "B" Development Pro Forma. attached herewith, for the above described
Property and Project; and (ii) a project timeline in the format of Exhibit "c" for
completion of the Project, attached herewith; and (iii) a scope of the rehabilitation work
to be completed as part of the Project in a format provided by the Developer and
acceptable to the Agency. Together these documents shall memorialize the Development
Budget required to complete the Project, the Schedule of Performance for the Project and
the Scope of Work to be completed as part of the Project, agreed upon by the Developer
and the Agency.
By the execution and submittal of this Development Agreement, and upon acceptance
hereof by the Agency, the Developer shall apply all requirements of the NSP program as
required by federal law, rules and regulations in addition to all other requirements
contained in the Master Agreement.
[Continued on Next Page]
Development Agreement
2
IN WITNESS WHEREOF, the undersigned have executed this Development
Agreement as of the date first above written.
DEVELOPER:
MARY ERICKSON COMMUNITY HOUSING, INC.,
a California Non-profit public benefit
corporation
By:
Susan McDevitt, Director
AGENCY:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body
corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
By:
Timothy J. Sabo, Agency Counsel
Development Agreement
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