HomeMy WebLinkAboutCDC/2010-09(NOTE: COMPANION RESOLUTIONS 2010-54
AND CDC/2010-10)
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RESOLUTION NO. cDC/2010-9
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING AND
AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") TO EXECUTE AMENDMENT NO. 1 TO THE 2009
AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION,
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN
THE AGENCY AND META HOUSING, INC. -MAGNOLIA HIGHLAND,
L.P. (NORTHWEST REDEVELOPMENT PROJECT AREA)
WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a
public body, corporate and politic; and
WHEREAS, the Agency presently owns properties located on the southwest corner of
Highland Avenue and Medical Center Drive (APNs: 0143-191-38, 46 and 63, collectively
"Property"); and
WHEREAS, the Agency acquired the Property through an assignment of interest under a
purchase contract between Meta Housing, Inc. -Magnolia Highland, L.P. (the "Developer") and
other private parties to the Agency for purchase on an interim basis; and
WHEREAS, the Agency proposes to transfer the Property to the Developer in accordance
with the terms and conditions of Amendment No. 1 to the 2009 Affordable Senior Citizen Rental
Housing Acquisition, Disposition and Development Agreement (the "Amended Agreement") in the
form as attached hereto as Exhibit "A"; and
WHEREAS, the Developer shall develop and improve the Property as may hereafter be
transferred by the Agency to the Developer pursuant to the Amended Agreement with 79 units of
affordable senior citizen rental housing and one on-site manager's unit, using the design and
improvement standards which are consistent with City Tentative Parcel Map No. 19200
(Subdivision No. 09-02) and City Conditional Use Permit No. 09-05, as previously approved by the
City of San Bernardino Planning Commission ("Planning Commission") on May 19, 2009; and
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WHEREAS, the Developer has the background, experience and financial capability to
develop the Project and is seeking a deferred payment second trust deed residual receipts loan from
the Agency in an amended amount up to $7,000,000; and
WHEREAS, the Agency loan will be combined with other funds the Developer is seeking
including an allocation of low-income housing tax credits from the California Tax Credit Allocation
Committee ("TCAC") in the amount of $9,089,353, a permanent first trust deed loan in an amount
up to $2,140,108 and a deferred payment subordinate loan from the Federal Home Loan
Bank/Affordable Housing Program in an amount up to $790,000 to complete the financing of the
Project with an estimated total development cost of approximately $19,030,792; and
WHEREAS, it had been determined that the environmental review of the Amended
Agreement with regards to the disposition and development of Agency Property is a "categorically
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exempt project" for the reasons indicated in the Agency Staff Report and no potentially adverse
environmental effects are anticipated to be associated with the redevelopment of the Project; and
WHEREAS, the Agency has prepared and published a notice of joint public hearing in the
San Bernardino County Sun newspaper on February 24, 2010, and again on March 3, 2010,
regarding the consideration and disposition of the Property to the Developer; and
WHEREAS, pursuant to Health and Safety Code Section 33433(b), the Agency may transfer
the Property to the Developer subject to the Mayor and Common Council of the City of San
Bernardino ("Council") and the Community Development Commission of the City of San
Bernardino ("Commission") adopting a Resolution authorizing the Agency to transfer the Property
in light of the findings set forth herein, pursuant to Health and Safety Code Section 33433; and
WHEREAS, the Agency has prepared a Summary Report that describes the salient points
the Amended Agreement and identifies the cost to the Agency of the disposition and development
the Property.
NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
FOLLOWS:
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Section 1. The Recitals of this Resolution are true and correct.
Section 2. On March 15, 2010, the Community Development Commission of the City of
San Bernardino ("Commission") conducted a full and fair joint public hearing with the Mayor and
Common Council of the City of San Bernardino ("Council"), and considered the written Agency
Staff Report relating to the Amended Agreement, the Summary Report and the testimony submitted
relating to the disposition and redevelopment of the Property by the Developer pursuant to the terms
and conditions of the Amended Agreement. The minutes of the City Clerk for the March 15, 2010,
joint public hearing of the Commission and the Council shall include a record of all communication
and testimony submitted to the Commission and the Council at the joint public hearing by interested
persons relating to the Summary Report, the Project and the approval of the Amended Agreement.
Section 3. This Resolution is adopted in order to satisfy the provisions of Health and
Safety Code Section 33433 as those provisions relate to the disposition of the Property by the
Agency to the Developer on the terms and conditions set forth in the Amended Agreement. The
Commission hereby finds and determines as follows:
(i). The Summary Report contains the information described in Health and Safety Code
Section 33433(a)(2)(B);
(ii). The disposition and redevelopment of the Property by the Developer in accordance
with the Amended Agreement is consistent with the affordable housing supply
preservation and expansion programs of the Agency Housing Implementation Plan;
(iii). The terms and conditions of the Amended Agreement contain assurances that the
Developer will redevelop the Property;
(iv). As required by Health and Safety Code Section 33433(b)(2), the disposition and
redevelopment of the Property by the Developer in accordance with the Amended
Agreement is at a price that is not less than the fair reuse value as affordable senior
housing and with the covenants and conditions and development costs authorized by
said Amended Agreement; and
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(v). The disposition of the Property to the Developer on the terms set forth in the Amended
Agreement shall assist in the elimination of conditions of blight on the Property and in
the Northwest Redevelopment Project Area.
Section 4. The Commission hereby finds and determines that the environmental review
of the Amended Agreement and the redevelopment activities contemplated thereunder is a
"categorically exempt project" for the reasons indicated in the Agency Staff Report. No potentially
adverse environmental effects are anticipated to be associated with the redevelopment of the
Property, and accordingly based upon its own independent review of the information provided to the
Commission regarding the Property; the Commission hereby authorizes the filing of a Notice of
Exemption under CEQA relating to the Project.
Section 5. The Commission hereby receives and approves the Summary Report and the
Amended Agreement in the form as submitted at this joint public hearing.
Section 6. The Commission hereby authorizes the Agency to allocate an additional
$2,400,000 in tax increment housing set aside funds and $600,000 in Northwest Project Area
redevelopment funds to assist the Developer in developing the project more fully described in the
Amended Agreement.
Section 7. The Commission hereby approves the disposition of the Property by the
Agency to the Developer on the terms set forth in the Amended Agreement and hereby authorizes
the Interim Executive Director of the Agency to execute the Amended Agreement on behalf of the
Agency and the Interim Executive Director of the Agency is hereby authorized to make minor
corrections, additions, clarifications, interpretations to the Amended Agreement, provided said
changes are not substantive in nature, do not increase the monetary impact to the Agency and are
consented to by the Agency Counsel.
Section 8. This Resolution shall take effect upon its adoption and execution.
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RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING AND
AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") TO EXECUTE AMENDMENT NO. 1 TO THE 2009
AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION,
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN
THE AGENCY AND META HOUSING, INC. -MAGNOLIA HIGHLAND,
L.P. (NORTHWEST REDEVELOPMENT PROJECT AREA)
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
Development Commission of the City of San Bernardino at a Joint regular meeting)
thereof, held on the 15th day of March , 2010, by the following vote to wit:
Commission Members: Ayes Nays Abstain Absent
MARQUEZ x
DESJARDINS x
BRINKER ~
SHORETT x
KELLEY x
JOHNSON x
MC CAMMACK _x
-, .~
Secretary
The foregoing Resolution is hereby approved this ~~ day of _ rra,-~h , 2010.
trick . Morris, C a~ rson
Co nity Development Commission
of the City of San Bernardino
Approved as to Form:
By:
Agency o sel
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CDC/2010••9
AMENDMENT NO. 1
TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION,
DISPOSITION AND DEVELOPMENT AGREEMENT
This Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition,
Disposition and Development Agreement (the "Amendment") is made and entered into as of this
15`h day of March 2010, by and between Magnolia Highland, L.P., a California limited
partnership (the "Developer"), and the Redevelopment Agency of the City of San Bernardino, a
public body, corporate and politic (the "Agency"), with reference to the following recitals of
fact:
RECITALS
A. WHEREAS, the Developer and the Agency executed that certain 2009 Affordable
Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement
(Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.),
dated as of August 3, 2009 (the "Original Agreement"); and
B. WHEREAS, the Agency and Developer now desire to amend the Original
Agreement in accordance with the terms, covenants and conditions set forth in this Amendment
(the Original Agreement, as amended by the Amendment, shall be referred to as the
"Agreement").
NOW THEREFORE, in consideration of the above recitals, the mutual covenants and
agreements hereinafter set forth and for other good and valuable consideration, the receipt, legal
sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Definitions. All initially capitalized words not defined in the Preamble of this
Amendment, in the recitals of this Amendment or in this Amendment shall have the meanings
provided for in the Original Agreement. Except for the definitions provided in this Amendment
for the "Fund Control Agreement", for the "Off-Site Project Improvements" and for the
"Repayment Guaranty" (which terms are defined for the first time in this Amendment), the
following definitions set forth in Section 1.4 of the Original Agreement are hereby deleted in
their entirety and replaced with the following:
Agency Loan. The words "Agency Loan" means and refers to the loan to be
originated by the Agency in favor of the Developer in a principal amount not to exceed Seven
Million Dollars ($7,000,000). The Developer may use the proceeds of the Agency Loan to pay
for the Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand
Dollars ($600,000), in the aggregate. The provisions of the Agency Loan are set forth in Section
2.8. The Agency Loan shall be evidenced by the Agency Loan Note attached hereto and
incorporated herein by this reference as Exhibit "A" which Agency Loan Note shall cancel,
replace and supersede the Agency Loan Note, dated November 23, 2009, by the Developer, as
borrower, in favor of the Agency, as lender, the general form of which was attached as
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Attachment No. 10 to the Original Agreement) and shall be secured by the Agency Loan Deed of
Trust and shall be evidenced or secured by the other Agency Loan Documents.
A~ency Loan Deed of Trust. The words "Agency Loan Deed of Trust" means
and refers to the Subordinate Deed of Trust, Assignment of Leases and Rents, Fixture Filing and
Security Agreement, which encumbers the Site and the Project as security for the repayment of
the Agency Loan, as the same maybe amended from time-to-time with the mutual consent of the
Developer and the Agency. The general form of the Agency Loan Deed of Trust is attached
hereto and incorporated herein by this reference as Exhibit "B" (which Agency Loan Deed of
Trust shall cancel, replace and supersede the Agency Loan Deed of Trust that was attached as
Attachment No. 11 to the Original Agreement).
A~ency Loan Documents. The words "Agency Loan Documents" means and
refers to collectively, all of the instruments, documents and agreements executed by the
Developer in favor of the Agency which either evidence or relate to the Agency Loan or provide
the Agency with security for the repayment of the Agency Loan. The Agency Loan Documents
include, without limitation, the Repayment Guaranty for the payment of the Initial Agency Loan
Advance, the Agency Loan Note, the Agency Loan Deed of Trust, the Developer Assignment of
Licenses, Permits and Contracts, and the Fund Control Agreement, all as may be amended from
time-to-time by the Developer and by the Agency.
Agency Loan Note. The words "Agency Loan Note" means and refers to the
Amended and Restated Agency Loan Note, of even date herewith, by the Developer, as
borrower, in favor of the Agency, as lender, in the principal amount not to exceed Seven Million
Dollars ($7,000,000), attached hereto and incorporated herein by this reference as Exhibit "A",
as amended from time-to-time by the Developer and by the Agency. This Agency Loan Note
shall cancel, replace and supersede the Agency Loan Note, dated November 23, 2009, by the
Developer, as borrower, in favor of the Agency, as lender, in the principal amount not to exceed
Four Million Dollars ($4,000,000) (the general form of which was attached as Attachment No.
10 to the Original Agreement).
Agency Re ug_lator~Ai~-eement. The term "Agency Regulatory Agreement"
means and refers to that certain Lower-Income Senior Citizen Household rental housing
regulatory agreement and declaration of covenants, conditions and restrictions by and between
the Developer and the Agency affecting the Site and the Project subject to subordination by the
Agency to the Construction Loan and to the Permanent Loam. The Agency Regulatory
Agreement is attached hereto and incorporated herein by this reference as Exhibit "C" and
cancels, replaces and supersedes the Agency Regulatory Agreement that was attached as
Attachment No. 9 to the Original Agreement.
Developer Acquisition Escrow Assignment Agreement. The words "Developer
Acquisition Escrow Assignment Agreement" means and refers to the agreement by and between
the Developer and the Agency, whereby the Developer assigns to the Agency the real property
purchase agreements by and between the Developer and each of the following owners of
property which comprise the Property and as set forth on Attachment No. 5 to the Original
Agreement:
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(i) Elias Chehade Antoun;
(ii) Long Beach, LLC, a California limited liability company; and
(iii) Rodeny J. Edmunds, Frances Hirsh, John S. Edmunds, and First
American Trust.
Developer Project Pro Forma. The words "Developer Project Pro Forma" means
and refers to the document dated 2010, prepared by the Developer and
approved by the Agency on the date of approval of the Original Agreement, as amended by this
Amendment in support of the Developer's request for the Agency to consider the approval of the
Original Agreement, as amended by the Amendment. The Developer Project Pro Forma,
includes the Project Construction Budget. The Developer Project Pro Forma is attached hereto
and incorporated herein by this reference as Exhibit "D" and cancels, replaces and supersedes the
Developer Project Pro Forma attached as Attachment No. 4 to the Original Agreement.
Fund Control Agreement. The words "Fund Control Agreement" means and
refers to the Fund Control Agreement, by and between the Agency, the Developer and First
American Fund Control, Inc., a California corporation, including the Addendum To Fund
Control Agreement and Exhibit A, Exhibit B and Exhibit C to the Fund Control Agreement. The
Fund Control Agreement is attached hereto and incorporated herein by this reference as Exhibit
«E»
Off-Site Project Improvements. The words "Off-Site Project Improvements"
means and refers to the following Off-Site Project Improvements that the City, or any other
governing authority, requires the Developer to construct, to install, to complete and to pay for in
connection with the completion by the Developer of the Project: (i) traffic signal upgrades,
including, without limitation, left turn lights for all four directions, (ii) the widening of the
turning radius at each of the four Project Site corners, (iii) the removal of three utility poles and
the underground installation of utilities, (iv) bus stop improvements, including cover and
American with Disabilities Act upgrades and compliance, and/or (v) construction and installation
of the curb, of the gutter and of street lights along Highland Avenue located in the City of San
Bernardino, State of California. The Developer may use the proceeds from the Agency Loan to
construct and to install the Off-Site Project Improvements, in an amount not to exceed Six
Hundred Thousand Dollars ($600,000), in the aggregate.
Repayment Guaranty. The Words "Repayment Guaranty'' means and refers to the
Amended and Restated Repayment Guaranty, of even date herewith, by Meta Housing
Corporation, a California corporation, as guarantor, in favor of the Agency, as guarantee. The
Repayment Guaranty is attached hereto and incorporated herein by this reference as Exhibit "F"
and cancels, replaces and supersedes the Repayment Guaranty, dated November 23, 2009, by
Meta Housing Corporation, as guarantor, in favor of the Agency, as guarantee, and the "Meta
Housing Corporation Guaranty" where referenced and appearing in the Original Agreement".
All references to the Meta Housing Corporation Guaranty in the Original Agreement and this
Amendment shall be deemed to refer to this Repayment Guaranty.
Senior Citizen Rental Housing Use Covenant. The words. "Senior Citizen Rental
Housing Use Covenant" means and refers to the land use covenant by and between the City and
the Agency which shall be recorded concurrently with Parcel Map 19200. The form of the
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Senior Citizen Rental Housing Use Covenant is attached hereto and incorporated herein by this
reference as Exhibit "G" and at all times shall be in a first recorded priority position superior to
that of the Construction Loan and the Permanent Loan for the period of time as set forth in said
Covenant provided that the Project remains in existence. This Senior Citizen Rental Housing
Use Covenant cancels, replaces and supersedes the Senior Citizen Rental Housing Use Covenant
attached as Attachment 7 to the Original Agreement.
2. Agency Loan. Section 2.8(a) through Section 2.8(h) of the Original Agreement
are hereby deleted in its entirety and replaced with the following:
2.8 Agency Loan.
(a) Subject to the terms and conditions of this Agreement, the Agency
shall make a special affordable housing development loan (the "Agency Loan") to the
Developer in the principal amount not to exceed Seven Million Dollars ($7,000,000).
The Developer may use the proceeds from the Agency Loan to construct and to install the
Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand
Dollars ($600,000), in the aggregate. The outstanding principal balance of the Agency
Loan shall bear a rate of interest of three percent (3%) per annum on the outstanding
principal balance until all principal and accrued and unpaid interest is paid in full:
(b) The Agency Loan shall be for a term of the longer period o£
(i) five (5) years from the date on which the Initial Advance of
the Agency Loan has occurred under Section 2.8(f); or
(ii) fifty-five (55) years from the date when the Site Transfer
Escrow is closed and the Escrow Agent disburses the proceeds of the
Construction Loan to the Developer and the Construction Loan Escrow is closed
provided, however that the Site Transfer Escrow shall have occurred by a date not
later than December 31, 201 1.
(c) The Agency Loan shall be evidenced by the Agency Loan Note to
be executed by the Developer in favor of the Agency concurrently with this Amendment,
and shall be secured initially by the Repayment Guaranty and upon the Close of the Site
Transfer Escrow, by a subordinate deed of trust on the Site substantially in the form of
the Agency Loan Deed of Trust and the other Agency Loan Documents.
Both the Agency Loan Note and the Agency Deed of Trust shall contain
the provisions relating to permitted subordinate debt in compliance with the applicable
provisions of this Agreement. The Agency Loan Note and the Repayment Guaranty shall
be fully executed and delivered no later than the date of this Amendment. The Agency
Deed of Trust and the other Agency Loan Documents shall be executed by the Developer
prior to the Close of the Site Transfer Escrow.
(d) The Developer shall, prig to the maturity date ~ the Agency Loan
Note, repay the Agency Loan phis interest in installments as set forth ::t the Agency Loan
Note. The installments of principal and interest that are due under th= gency Loan Note
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shall be payable by the Developer prior to its maturity solely from the special source of
funds defined in the Agency Loan Note as "Residual Rental Receipts of the Project".
(e) The Agency Loan Note shall be initially secured by the Repayment
Guaranty as provided in Section 2.8(f) and upon the Close of the Site Transfer Escrow,
the Agency Loan shall be secured by the Agency Loan Deed of Trust, pursuant to which
the Developer grants to the Agency a lien on the Site and the Project, subordinate to the
lien created in favor of the Construction Lender (and later, the Permanent Lender) and its
assigns, for the purpose of providing financing for the acquisition and rehabilitation of
the Project.
(f) The principal amount of the Agency Loan shall be disbursed to the
Developer as set forth in this Section 2.8(f).
(i) The term "Repayment Guaranty" means and refers to the
payment guarantee of Meta Housing Corporation in favor of the Agency in which
Meta Housing Corporation unconditionally guarantees to repay the Agency the
principal amount of the Initial Advance of the Agency Loan, not to exceed One
Hundred Thousand Dollars ($100,000), plus interest thereon, together with all
other amounts due thereunder, in the event that the Developer may suffer an
Event of Default to occur under this Agreement prior to the close of the Site
Transfer Escrow or in the event that the Site Transfer Escrow may fail to close for
any reason not attributable to the fault of the Agency on or before December 31,
2011, and the Agency elects to cause an acceleration of the Agency Loan Note.
Upon the close of the Site Transfer Escrow, the Repayment Guaranty shall be
released and discharged by the Agency, and thereafter, the Agency Loan shall not
be further secured by the Repayment Guaranty.
(ii) -The term "Initial Advance of the Agency Loan" means and
refers to a sum not to exceed Three Hundred Thousand Dollars ($300,000), which
may be disbursed to the Developer to pay for pre development expenses of the
Developer, including, without limitation, architectural, engineering, design, and
demolition costs, which have been reasonably approved by the Interim Executive
Director of the Agency.
(iii) The Initial Advance of the Agency Loan shall be disbursed
to the Developer following the close of the Agency Acquisition Escrow and the
satisfaction of the following conditions by the Developer:
(A) the Developer has submitted a suitably detailed
written listing of necessary and reasonable third party predevelopment
costs for the Project as incurred by the Developer. Such a written listing
of predevelopment costs shall be subject to the reasonable review and
approval by the Interim Executive Director of the Agency;
(B) the Developer has caused to be executed and
delivered to the Agency the Repayment Guaranty;
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(C) the Developer has executed and delivered to the
Agency the Agency Loan Note, the Developer Assignment of Licenses,
Permits and Contracts and the Amendment in final form as approved by
the Interim Executive Director of the Agency;
(D) the Developer has delivered a legal opinion of its
counsel in a form reasonably acceptable to the Interim Executive Director of the
Agency that the Agency Loan Note, the Amendment and related documents
executed by the Developer, have been duly executed by the Developer and are
valid, lawful and binding obligations of the Developer.
(iv) Any portion of the Initial Advance of the Agency Loan not
yet disbursed by the Agency to the Developer under the Agency Loan, in an
amount not to exceed Three Hundred Thousand Dollars ($300,000), in the
aggregate, and the Purchase Price, shall be disbursed by the Agency from the
proceeds of the Agency Loan on the Close of the Site Transfer Escrow, provided:
(A) the Interim Executive Director of the Agency has
confirmed that the conditions in favor of the Agency under Section 2.15 have
been satisfied and that the Site Transfer Escrow is in a condition to close;
(B) the Developer has delivered its written Notice of
Acceptance of the Site to the Agency in a form reasonably acceptable to the
Interim Executive Director of the Agency and the Developer has executed its
acceptance of the Agency Grant Deed for the Site and has executed and
acknowledged the Agency Loan Deed of Trust, the Agency Regulatory
Agreement and the other Agency Loan Documents and the Developer has
delivered these documents to the Escrow Agent;
(C) The Escrow Agent shall pay to the Developer any
portion of the Initial Advance of the Agency Loan that has not been disbursed by
the Agency to the Developer, and shall pay to the Agency the Purchase Price for
the Site.
(v) On and after the Close of the Site Transfer Escrow,
pursuant to and in accordance with this Agreement and the Agency Loan
Documents, including, without limitation, the Fund Control Agreement, the
Agency shall make one or more disbursements of principal under the Agency
Loan in a principal amount not to exceed the remaining balance of the Agency
Loan (provided, without limitation, that the Developer is not in default under the
Agreement and/or under the Agency Loan Agreements), to fund hard and soft
costs that have been paid and/or incurred by the Developer and reasonably
approved by the Interim Executive Director, provided:
(A) The Interim Executive Director of the Agency shall
approve the disbursement of the amount of the Agency Loan as provided in
Section 2.8(v) of this Amendment upon the submission by the Developer of a
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written Agency Loan draw request delivered to the Interim Executive Director of
the Agency not less than fifteen (15) days prior to the scheduled requested draw
payment date which sets forth the following information:
(1) is signed by the Developer and is
certified to the Agency to be true and correct;
(2) contains a detailed written
description of the Project development costs to be paid for using such proceeds of
such advance of the Agency Loan. The Interim Executive Director of the Agency
shall not unreasonably withhold, condition or delay approval of the Agency Loan
disbursement request submitted by the Developer under this Section 2.8(v);
(3) Must be in compliance with the
Agency Loan Documents, including, without limitation, the Fund Control
Agreement; and
(4) the Developer must not be in default
under this Agreement and/or under any one of the Agency Loan Documents.
(g) The Developer must not be in default under this Agreement or under any
of the Agency Loan Documents.
"(h) Intentionally Omitted".
Section 2.8 (i) of the Original Agreement through Section 2.8(k) of the Original
Agreement, are not modified or revised by this Amendment and remain in full,
force and effect as if this Amendment had never been executed by the Developer
and by the Agency.
3. Developer Demolition Activities on the Site. • The following subparagraph is
hereby added to the Original Agreement as Section 3.1(c):
"(c) All demolition work at the Site shall be overseen by the Developer's
construction manager. Prior to commencement of any demolition work at the
Site, the Developer shall solicit and receive bids for the demolition work from at
least three (3) contractors on the Agency's list of pre-approved contractors (the
"Approved Contractor List"). In the event a contractor not appearing on the
Approved Contractor List submits the lowest bid, the Developer shall have the
right to select such contractor, provided that Agency Staff approves such bid,
which approval shall not be unreasonably withheld, conditioned or delayed."
7
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4. Developer Compliance with Prevailing Wage Requirements. Section 3.4 of
the Original Agreement is hereby deleted in its entirety and replaced with the following:
" 3.4 Developer Compliance with Prevailing Wage Requirements. The Agency
shall not be responsible or liable for the payment of any sums under Labor Code
Section 1720, et seq., or other prevailing wage requirements as the result of the
activities of the Developer, or any of its affiliates or the contractors or
subcontractors of any of them, in connection with the development and
improvement of the Project. The Developer shall indemnify, defend and hold
harmless the Agency and all officers, officials, employees, consultants and
attorneys of the Agency with respect to all such prevailing wage compliance
issues arising out of the activities of the Developer associated with its acquisition
of the Site from the Agency and in constructing the Project. The Developer
agrees to apprise in writing all third parties seeking to provide labor and
construction work on the Project, as to the provisions of this Section 3.4. Any
indemnification provided to the Developer from such third parties with respect to
compliance of the Project with the public work requirements imposed upon the
Developer and the Project by virtue of the provisions of Labor Code Section
1720, et seq., shall not relieve the Developer of its indemnification obligations to
the Agency arising under this Section 3.4."
5. Developer's Proiect Pro Forma. Attachment No. 4 to the Original Agreement is
hereby deleted in its entirety and replaced with Exhibit "D", attached hereto. All references to
the Developer's Project Pro Forma in the Original Agreement and in this Amendment shall be
deemed to refer to the project pro forma attached hereto as Exhibit "D," as the same may be
amended from time-to-time with the mutual consent of the Developer and the Agency.
6. Notice of Agreement. Attachment No. 8 to the Original Agreement is hereby
deleted in its entirety and is replaced with the Notice of Agreement attached hereto and
incorporated herein by this reference as Exhibit "H". All references to the "Notice of
Agreement" in the Original Agreement and in this Amendment shall be deemed to refer to the
Notice of Agreement attached hereto as Exhibit "H".
7. Ageney Loan Note. Attachment No. 10 to the Original Agreement is hereby
deleted in its entirety and is replaced. with the Amended and Restated Agency Loan Note
attached hereto and incorporated herein by this reference as Exhibit "A". All references to the
"Agency Loan Note" in the Original Agreement and in this Amendment shall be deemed to refer
to the Amended and Restated Agency Loan Note attached hereto as Exhibit "A," as the same
may be amended from time-to-time with the mutual consent of the Developer and the Agency.
8. Agency Loan Deed of Trust. Attachment No. 11 to the Original Agreement is
hereby deleted in its entirety and is replaced with the Subordinate Deed of Trust, Assignment of
Leases and Rents, Fixture Filing and Security Agreement attached hereto and incorporated
herein by this reference as Exhibit "B". All references to the "Agency Loan Deed of Trust" in
the Original Agreement and in this Amendment shall be deemed to refer to the Subordinate Deed
of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement attached
8
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hereto as Exhibit "B," as the same may be amended from time-to-time with the mutual consent
of the Developer and the Agency.
9. Letter Agreement. The Agency and the Developer hereby acknowledge that
they are parties to that certain Letter Agreement dated as of November 20, 2009 (the "Letter
Agreement"), and further acknowledge and agree that all references to the "Amended and
Restated Note" in the Letter Agreement shall be deemed to refer to the Amended and Restated
Agency Loan Note attached hereto as Exhibit "A".
10. Representations, Warranties and Covenants of the Developer and of the
A~ ncy.
10.1 The Developer hereby makes the following representations, covenants
and warranties and acknowledges that the execution of this Amendment by the Agency has been
made in material reliance by the Agency on such covenants, representations and warranties:
10.1.1 The Developer is a duly organized and validly existing
California limited partnership corporation. The Developer has the legal right, power and
authority to enter into this Amendment and the instruments, documents and agreements
referenced herein and to consummate the transactions contemplated hereby. The persons
executing this Amendment and the instruments, documents and agreements referenced herein on
behalf of the Developer hereby represent and warrant that such persons have the power, right and
authority to bind the Developer.
10.1.2 The Developer has taken all requisite action and obtained all
requisite consents in connection with entering into this Amendment and the instruments,
documents and agreements referenced herein and the consummation of the transactions
contemplated hereby, and no consent of any other party is required.
10.1.3 This Amendment is, and all instruments, documents and
agreements to be executed by the Developer pursuant to this Amendment shall be, duly executed
by and/are or shall be valid and legally binding upon the Developer and enforceable in
accordance with their respective terms.
10.1.4 Neither- the execution of this Amendment nor the
consummation of the transactions contemplated hereby shall result in a breach of or constitute a
default under any other instrument, document or agreement or other obligation to which the
Developer is a party or by which the Developer may be bound, or under law, statute, ordinance,
rule, governmental regulation or any writ, injunction, order or decree of any court or
governmental body applicable to the Developer or to the Site.
10.1.5 The Developer shall perform and fully comply with the
Original Agreement, as amended by this Amendment, and with the Agency Loan Documents.
10.1.6 To the best knowledge of the Developer, no default has
occurred, or will occur with the passage of time, the giving of notice, or bosh, under the Original
Agreement, as amended by this Amendment, or under the Agency Loan Documents.
9
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All representations and warranties contained in this Section 10.1 are true and correct on
the effective date of this Amendment and the Developer's liability for misrepresentation or
breach of warranty, representation or covenant, wherever contained in this Amendment, shall
survive the execution and delivery of this Amendment.
10.2 The Agency hereby makes the following representations, covenants and
warranties and acknowledges that the execution of this Amendment by the Developer has been
made in material reliance by the Developer on such covenants, representations and warranties:
10.2.1 Each and every undertaking and obligation of the Agency
under this Amendment shall be performed by the Agency timely when due; and that all
representations and warranties of the Agency under this Amendment and its exhibits shall be true
in all material respects as of the effective date of this Amendment.
10.2.2 The Agency is a community redevelopment agency, duly
formed and operating under the laws of California. The Agency has the legal power, right and
authority to enter into this Amendment and to execute the instruments, documents and
agreements referenced herein, and to consummate the transactions contemplated hereby.
10.2.3 The Agency has taken official action to approve this
Amendment and the instruments, documents and agreements referenced herein and the
consummation of the transactions contemplated hereby.
10.2.4 The persons executing any instruments, documents and
agreements for or on behalf of the Agency have been authorized to act on behalf of the Agency
and that this Amendment is valid and enforceable against the Agency in accordance with its
terms and each instrument to be executed by the Agency pursuant hereto or in connection
therewith will, when executed, be valid and enforceable against the Agency in accordance with
its terms. No approval, consent, order or authorization of, or designation or declaration of any
other person, is required in connection with the valid execution and delivery of and compliance
with this Amendment by the Agency.
10.2.5 The Agency shall perform and fully comply with the Original
Agreement, as amended by this Amendment, and with the Agency Loan Documents.
10.2.6 To the best knowledge of the Agency, no default has occurred,
or will occur with the passage of time, the giving of notice, or both, under the Original
Agreement, as amended by this Amendment, or under the Agency Loan Documents.
All representations and warranties contained in this Section 10.2 are true and correct on the
effective date of this Amendment and the Agency's liability for misrepresentation or breach of
warranty, representation or covenant, wherever contained in this Amendment, shall survive the
execution and delivery of this Amendment.
10
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11. Condition. This Amendment shall not become effective until executed and
approved by the Agency and by the Developer and not until the Developer has provided the
Agency with a commitment or other evidence acceptable to the Agency, in its sole discretion,
that the Developer has received an award of Affordable Housing Program Funds from the
Federal Home Loan Bank of San Francisco in the amount of Seven Hundred Ninety Thousand
Dollars ($790,000).
12. Certificate of Completion. In Section 3.11 of the Original Agreement, the words
"Attachment No. 15" shall be deleted in their entirety and replaced by the following words"
"Attachment No. 12". All other provisions of Section 3.11 remain unchanged.
13. Notices. In Section 6.3 of the Original Agreement, the address for the Developer
shall be as follows: Magnolia Highland, L.P., 1604 Sepulveda Boulevard, Suite 425, Los
Angeles, CA 90025, Attention: John M. Huskey. All other provisions of Section 3.11 remain
unchanged.
14. Section Reference Corrections. The following Section reference corrections
shall be made to the Original Agreement: (i) in Section 2.1(e), the reference to Section 2.1(d)
shall be deleted in its entirety and replaced by "Section 2.1(e)", (ii) in Section 2.11(d), the
reference to Section 2.11(c) shall be deleted in its entirety and replaced by "Section 2.11(d)", (iii)
in Section 2.11(f), the reference to Section 4.5(b) shall be deleted in its entirety and replaced by
"Section 4.5", (iv) in Section 2.17(e)(vii), the reference to Section 3.9 shall be deleted in its
entirety and replaced by "Section 3.6, (v) in Section 5.2, the reference to Section 6.5 shall be
deleted in its entirety and replaced by "Section 6.3", and (vi) in Section 6.9, the reference to
Section 6.9(a) shall be deleted in its entirety and replaced with "Section 6.9".
15. Fund Control Agreement. Within two (2) business days after the receipt by the
Developer of the written request from the Agency, and prior to the transfer of the Site by the
Agency to the Developer, the Developer shall execute, shall deliver and shall comply with the
terms, covenants and conditions of the Fund Control Agreement.
16. Ratification. The Agency and the Developer hereby ratify, confirm, restate and
agree to the terms, covenants and conditions of the Original Agreement. The terms, covenants
and conditions of the Original Agreement shall remain unchanged and shall remain in full force
and effect, except as modified by this Amendment.
17. Effect of Amendment. The Original Agreement, as amended by this
Amendment, is referred to as "the Agreement". All terms and conditions of the Original
Agreement will remain the same to the extent they are not expressly modified by this
Amendment. To the extent any provision in the Original Agreement conflicts with this
Amendment, the terms and conditions of this Amendment shall prevail. Unless otherwise
defined in this Amendment, all defined terms used in this Amendment have the meanings set
forth in the Original Agreement (unless the context otherwise clearly requires).
18. Counterparts. This Amendment may be signed in counterparts, including
facsimile counterparts, each of which shall be deemed an original and all of which together shall
constitute one and the same agreement.
11
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19. Severability. Whenever possible, each provision of this Amendment shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provisions of this Amendment is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, and this Amendment shall be reformed,
construed and enforced in such jurisdiction so as to best give effect to the intent of the parties
under this Amendment.
20. Successors and Assigns. Except as otherwise provided in the Original
Agreement, this Amendment shall bind and inure to the benefit of and be enforceable by the
Developer and by the Agency and their respective successors and assigns.
21. Waiver. The failure of any party to enforce any of the provisions of this
Amendment shall in no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this Amendment in
accordance with its terms.
22. Governing Laws. The Original Agreement, as amended by this Amendment,
shall be governed and construed in accordance with the laws of the State of California.
End of Page
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the day and year first above written.
AGENCY
Redevelopment Agency of the City of San
Bernardino, a public body, corporate and politic
Dated: J _ ~ ~ ~ ~ ~
DEVELOPER
Emil A. Marzullo, Interim Executive Director
By:
Approved as to Form and Legal Content:
By:
Agency Cou el
Executed this day of , 2010
Magnolia Highland, L.P., a California limited
partnership
By: Magnolia Highland, LLC, a California
limited liability company
Its: Administrative General Partner
By:
~~' ~ ; _,
John M. Huskey, Manager
By: Western Community Housing, Inc., a
California non-profit public benefit
Corporation
Its: Managing General Partner
By:
By:
Graham Espley-Jones, President
Leanne Truofreh, Secretary
13
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the day and year first above written.
Dated:
Approved as to Form and Legal Content:
By:
Agency Counsel
AGENCY
Redevelopment Agency of the City of San
Bernardino,
a public body, corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
DEVELOPER
Executed this day of , 2010
Magnolia Highland, L.P., a California limited
partnership
By: Magnolia Highland, LLC, a California
limited liability company
Its: Administrative General Partner
By:
John M. Huskey, Manager
By: Western Community Housing, Inc., a
California non-profit public benefit
Corporation
Its: Managing General Partner
By:
By:
4851-4987-1365.4 13
Final
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the day and year first above written.
Dated:
Approved as to Form and Legal Content:
By:
AGENCY
Redevelopment Agency of the City of San
Bernardino, a public body, corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
DEVELOPER
Executed this ~ day of , 2010
Magnolia Highland, L.P., a California limited
partnership
By: Magnolia Highland, LLC, a California
limited liability company
Its: Administrative General Partner
_,
John : Huskey, Manager
By: Western Community Housing, Inc., a
California non-profit public benefit
Corporation
Its: Managing General Partner
By:
Graham Espley-Jones, President
By:
Learme Truofreh, Secretary
Agency Counsel
13
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Exhibit "A"
Amended and Restated Agency Loan Note
14
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(x-~AIT<C~Ii-1~,-~A09 i~-R~+FT
AME'~D1;D AND RI?STA"II:D AGENCY LOAN NOTE
REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO
(Magnolia Highland, L.P.)
Borrower: Lender:
Magnolia Highland, L.P. Redevelopment Agency of the City of San
Bernardino
1604 Sepulveda Blvd., Suite 425 201 North "E" Street, Suite 301
Los Angeles, CA 90025 San Bernardino, California 92401
Principal Amount:
$7,000,000
Rate of Interest
3%
Date of Agency Loan Note:
-~E~Nlarch .2010
----- ------
(=T t+-tic~l+~;er~~1-I3-{<~°iet~r~~>~~er-rt)
Maturity Date of Agency Loan Note:
(See: Section 2.8(b)(i) and 2.8b(ii) of ~H9
DDA)
,--- -- -
-1 Formatted: Font: Bold, Not Superscript/ Rf
Subscript ;
PROMISE TO PAY.-- Magnolia Highland, L.P., a California limited partnership (the.
- _ - .
"Borrower") promises to pay to the Redevelopment Agency of the City of San Bernardino (the
"Agency" or "Holder"), or order, in lawful money of the United States of America, the principal
sum ~f--+=~+rnot to exceed Seven Million Dollars ($~#7 000,000) as disbursed to the Borrower
under the terms of the "Agency Loan", as this term is defined in that certain 2009 Affordable
Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement
(Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.),
dated as of August 3, 2009, by and between the Borrower and the Agency-l-~te~`?E)O4-{3I~A'=~
,~ ., ,. ~_ :., ,,: ~-i~rir-ti+~~alan~~=~~;=t,'~i~•.Arenc +~~an 'ote.___
amcnded_b~ that certain Amendment_No__ I___I o hhe 2009 Affordable Senior C rti~en_ Rc,ntal
.__ --
1lousing Acquisition, Dr5po5iton and _1)c~ clopment ~grcemcnt thercu~,_ dated_ as of March ,,.:
2QlQ~collectivel}. the."DDA~)_under_and pursuant to this Amended and Kestated ~genc~ Loan
Note (the "A~encv Loan Note"). The l3on•ower ma~~ use the~roceeds of_this A~cncti, Goan to
pay 1-or the Off-Site Prc~ect_lm~ro~_emcnts ~~is do tinuc!_in the_DO1). in _an amount not t~_c ~cccd
Sid liunclred "I~housand 1)oll<u:~60() 000),
AMEND AND RI?STA"1'E. This Agency Loan Note_amends and_restat~s.in its entirctTthe
Original Notc~l!~on ehecution ~f this n~~nc~_-1 oan Note, the, Or~inal_Nptc Shall he caneclleti
and of no fuT-thcr force and effect. 'The Urignal tiote_shall be returned to the I3orro~ae~ at, the
address provided in the DDA markedd_C'anccllcr={__,
r__.a,_.~..__._r_____.__~.
-------~
-+ Formatted: No underline
INDEBTEDNESS.-_This Agency Loan Note evidences the indebtedness of the Borrower to --Formatted: No underline _,
_ _. __ ._ _ _ _ - _ _ _ __ _ .. _ _ __ _ __ 1
the Agency under the terms and conditions of the Agency Loan as provided for in the ?F)(-I-9
aasz-ro~o-oaos.r
CDC/ 2010~~~ 9
AF~AI,t ~flFl~3-;3I2-,4-F-~
- -
-.~~E}A}~~=~- j Formatted: Font: Bold, Not Superscript/
- !Subscript
DDA. This Agency Loan Note is referred to in the ?F~)~) DDA as the "Agency Loan Note". The
Maturity Date of this Agency Loan Note is the fifty-fifth (55`h) anniversary following the date
the Project is completed (the "Maturity Date"). Capitalized terms not otherwise defined herein
shall have the meanings set forth in the 2ftta9 DDA. A copy of the ?4-DDA is on file with the
Agency Secretary as a public record of the Agency.
PAYMENT.--_Notwithstanding the foregoing, Borrower will pay the indebtedness evidenced ~ -- Formatted: No underline
by this Agency Loan Note to the Agency in accordance with the terms, covenants and conditions
of this Agency Loan Note. Commencing one (1) year after the date that the Agency has
executed and recorded the Certificate of Completion, as this term is defined in the ~11t39 DDA
(the "Project Acceptance Date"), in the official records of the county recorder's office for the
County of San Bernardino, State of California, and annually thereafter for the term of this
Agency Loan Note, the Borrower shall pay to the Agency annual installments of principal and
interest fully-amortized over the remaining term of the Agency Loan. Borrower shall make such
payments, in annual installment amounts, paid by the Borrower to the Agency from the
"Residual Rental Receipts of the Project", as the term is defined in the ~3Et~3-DDA (each such
installment payment date referred to as a "scheduled debt service payment") until the Maturity
Date or repayment in full of all outstanding principal, accrued and unpaid interest and all other
fees, charges and amounts due under the Agency Loan. If on any scheduled debt service
payment date, the Residual Rental Receipts of the Project are not sufficient to pay in full the
interest accruing under this Agency Loan Note for the prior year, on such scheduled debt service
payment date, that portion of such interest not then paid under this Agency Loan Note (the
"interest deficiency debt service amount") shall be added to the outstanding principal balance of
the Agency Loan on such scheduled debt service payment date and shall accrue interest in
accordance with this Agency Loan Note and be subject to and governed by the terms, covenants
and conditions of this Agency Loan Note, the Agency Loan Deed of Trust, as this term is defined
in the z?1)(}y-DDA, and the Agency Loan Documents, as this term is defined in the 2(~Ai~ DDA. If
on any scheduled debt service payment date, the Residual Rental Receipts are sufficient to pay in
full the annual installment of principal and interest, the Borrower shall pay to the Agency the
installment of principal and interest due on such scheduled debt service payment date. If on any
scheduled debt service payment date, the Residual Rental Receipts exceed the amount of the
installment of principal and interes± then due, such excess amount shall be paid by the Borrower
to the Agency and shall be applied by the Agency to reduce the outstanding principal balance of
the Agency Loan. On the Maturity Date, a balloon payment of the remaining principal balance,
accrued and unpaid interest and all other fees, charges and amounts then due under the Agency
Loan Documents shall be due and payable by the Borrower to the Agency, if such amount has
not been paid in full prior to the Maturity Date. Borrower will make all payments of interest and
principal to the Agency at the address of the Agency: 201 North "E" Street, Suite 301, San
Bernardino, California 92401, or at such other place as the Agency may designate in writing.
Unless otherwise agreed to by the Agency in writing or required by applicable law, payments
will be applied first to any unpaid collection costs, including, without limitation, attorneys' fees
and court costs, then to any late charges, then to any unpaid interest, and any remaining amount
will be applied to principal.
The term "Residual Rental Receipts of the Project" and "Residual Rental Receipts" and
"Residual Receipts" mean and refer to fifty percent (50%) of the "Revenues" of the
4852-1070-0805.1
CDC/2010--9
{~(-~13i3FR-tip ~(1A9-~R~-ET __ _~1,
'~-~)~i-~-) -~ ~ Formatted: Font: Bold, Not Superscript/ !Cf
~, Subscript _~._------------'I
Borrower remaining on any scheduled debt service payment date or other payment date
under the Agency Loan Note or other Agency Loan Documents, reduced in the following
order:
(1) Operating Expenses calculated on a cash basis;
(2) debt services on senior debt secured by the senior position deeds of trust;
(3) cash payments to any reserves required by the Tax Credit Limited
Partnership Agreement or the documents evidencing the Construction
Loan, as defined in the ?~~-DDA, and/or the Permanent Loan, as defined
in the ? DDA;
(4) repayment of general partner loans;
(5) cash payments of deferred developer fees; and
(6) partnership management fees and asset management fee each Project
operating year up to Fifteen Thousand Dollars ($15,000) in the aggregate,
increasing by three percent (3%) annually.
"Operating Expenses" shall mean actual, approved reasonable and customary costs, fees
and expenses directly attributable to the operation, recordkeeping, maintenance, taxes and
management of the Project, including but not limited to, a commercially reasonable
property management fee; taxes and assessments; payroll and payroll taxes for property
employees; insurance; security, painting, cleaning, repairs, and alterations; landscaping;
sewer charges; utility charges; advertising, promotion and publicity; cable television,
satellite and other similar services; office, janitorial, cleaning and building supplies;
approved recreational amenities and supplies; purchase, repair, servicing and installation
of appliances, equipment, fixtures and furnishing; fire alarm monitoring; fees and
expenses of accountants, attorneys, consultants and other professionals. Expenses for the
purpose of calculating residual receipts are subject to Agency's reasonable approval and
shall be calculated on a cash basis. Depreciation and debt service payments are not
eligible operating expenses for calculating residual receipts.
"Revenue" with respect to a particular fiscal year shall mean all revenue, income,
receipts, and other consideration actually received from the operations of the Project.
Revenue shall include, but not be limited to: all rents, fees and charges paid by tenants,
Section 8 payments or other rental subsidy payments received for the dwelling units,
deposits forfeited by tenants, all cancellation fees, price index adjustments and any other
rental adjustments to leases or rental agreements; proceeds from vending and laundry
room machines; the proceeds of business interruption or similar insurance; the proceeds
of casualty insurance (if not used to replace or repair the Project or repay any permitted
financing); and condemnation awards for a taking of part of all of the Project for a
temporary period. Revenue shall also include the fair market value of any goods or
services provided in consideration for the leasing or other use of any portion of the
4852-1070-0805.1
CDC/ 2010-- 9
Project. Revenue shall not include tenants' security deposits, interest on security
deposits, loan proceeds, capital contributions or similar advances, amounts released from
reserves or interest on reserves provided that such reserves and interest are used for the
purposes for which the reserves were established.
INTEREST RATE.-_Interest shall accrue on the outstanding principal balance of this Agency
_ _
Loan Note at a fixed rate of interest. The rate of interest which shall accrue on the unpaid
principal balance of this Agency Loan Note from the date of this Agency Loan Note through the
Maturity Date shall be three percent (3%) per annum until paid in full. Interest on this Agency
Loan Note is computed on a 365/360 simple interest basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding.
Formatted: Font: Bold, Not Superscript/
Subscript
Formatted: No underline
PREPAYMENT ----_Borrower may pay without penalty all or a portion_of the amount owed ;Formatted: No underline !
under this Agency Loan Note earlier than it is due.
LATE CHARGE._-_If apayment is ten (10) calendar days or more late, Borrower_will also be
charged (in addition to the annual installment amount past due) five percent (5%) of the annual
payment amount as a late charge..__[he bate Charec_ma\_t>e leyie~i. t~y_thc fender 1~>r_thc~~ui•pose
of ~cil_aying. the__c~,penses_ineident_to handling. such delinquent payment. ~I'hc Ltitc__Charge
~pr~5cn's_t_reascnable .un, constdcrmr;._I!,.,,~1_~he_ ;:~c mstan~ _s. ~aistin~c>r?h~_d~te_ ~!.th,s
;~ene~f o,an__'~,c~tc and rcgttescnts__a_ iai~. tnd, i~ason~iblr _fst~m rie_c~f the costs that ~~III _be
sustained b~_th_e Lender due to the lI blurt oi_the 13orro~~u to make, timer .pa~mentti~l hey titles
also_lurthcr a~i~,c_that_-piogl:_oi_actual dam_I~c,_ ~~oulG,_b~ ~ostly_or n~omcnienc~_..I_IZ~ I,atc
Lhlrge shall braid without picjudice,_to the right o1_thc Linder to collect and othc,r._amotmt_s
pto~ ided to be~aid_or tg decl u_c a default, under this,,\4~ehc~ L,c~an_'~ote_._ under t.hc \geitc} f uai~
Deed of "Irus_t_or under amp ~1~enc~ if cyan I)ocumcnts of fiom ese>_c~sing tn~_o~.ahc other tiLhts
and remedies o) the Lender.
r-.- -----_______-_.,f
Formatted: No underline ~_ _____"
pEFAULT. --_Botrower will be in default if and of the following happens: _ _ __ _ _ __ _ _ - Formatted: No underline v___ -__,j
(a) Borrower fails to make any payment when due under this Agency Loan
Note or under the other Agency Loan Documents.
(b) Borrower fails to make any other payment when due under the ~~l(~DDA.
(c) Borrower fails to comply with or to perform when due any other term,
obligation, covenant, or condition contained in the 2AN~-DDA, this
Agency Loan Note, in the other Agency Loan Documents or any
agreement related to this Agency Loan Note.
(d} Borrower defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of the Borrower's
property or the Borrower's ability to repay this Agency Loan Note or the
ability of the Borrower to perform its other obligations under this Agency
4852-1070-OSO5.1
CDC/ 2010-~-9
t-K' ~ {~-f{~ Ii-~1-~F1N~--fa--2-,4-F' T
Loan Note, the Agency Loan Deed of Trust or any of the other Agency
Loan Documents.
_ _ _
__
r Formatted: Font: Bold, Not Superscript/
-~~, Subscript
(e) Any representation or statement made or furnished to the Agency by the
Borrower or on the Borrower's behalf under the ?~IA4-DDA, this Agency
Loan Note or any of the other Agency Loan Documents is false or
misleading in any material respect either now or at the time made or
furnished.
(f) Any creditor tries to take any of the Borrower's property on or in which
the Agency has a lien or security interest.
(g) A material adverse change occurs in the Borrower's financial condition, or
the Agency reasonably believes the prospect of payment or performance
of the indebtedness evidenced by this Agency Loan Note is materially
impaired.
Such a default may be cured (and in such event no default will be deemed to have occurred) if
the Borrower, after receiving written notice from the Agency demanding cure of such default:
(i) cures any payment default within seven (7) calendar days; or
(ii) cures any non-monetary default within thirty (30) calendar days; or
(iii) If the cure requires more than thirty (30) calendar days, as determined by
the Agency in its sole discretion, the Borrower shall have such additional
time as is dctet~tiincd by the Agency, in its sole discretion, to be
reasonably necessary to cure the default prior to the exercise of any
remedies by the Agency under this Agency Loan Note or the other Agency
Loan Documents provided.' (al the Borrower initiates corrective action
within said thirty (30)-calendar day period, and (b) the Borrower
diligently, continuously, and in good faith works to effect a cure a soon as
possible.
~iIGHTS OF THE HOLDER.--Upon default by the Borrower (subject to any applicable notice
and cure periods), the Agency may exercise any of its rights and remedies provided under the
?(tE)4-DDA and the "Agency Loan", as this term is defined in the ~ftt?-DDA, including, without
limitation, the declaration by the Agency or the holder in due course of this Agency Loan Note
that the entire unpaid principal balance of this Agency -Loan Note, all accrued unpaid interest is
immediately due and payable, and all other fees, charges and amounts due under the Agency
Loan Note and under the other Agency Loan Documents, without notice. Upon the failure of the
Borrower to pay all amounts declared due pursuant to this paragraph entitled "RIGHTS OF THE
HOLDER," including failure to pay at the Maturity Date, the Holder, at its option, may also, if
permitted under applicable law, increase the interest rate on this Agency Loan Note for interest
which accrues after the date such amount is declared due, to the rate of eight percent (8%) per
annum. The Holder may hire or pay someone else to help collect this Agency Loan Note, if the
Borrower does not pay. The Borrower will pay the Holder the amount of any and all such
-a Formatted;No underline- u___-__-___-__~
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CDC/2010--9
F)FT~3I3F~ 1~-8~({AA-T~ I~z4-F'F
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-'~~ Subscript
collection related expenses, including without limitation, subject to any limits under applicable
law, the Holder's reasonable attorneys' fees, whether or not there is a lawsuit, including, without
limitation, reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and any post-judgment
collection services. The Borrower also will pay any court costs, in addition to all other sums
provided by law. This Agency Loan Note has been delivered to the Holder and accepted by the
Holder in the State of California. If there is a lawsuit arising under this Agency Loan Note, the
Superior Court of the State of California in San Bernardino County shall have jurisdiction of
such lawsuit. This Agency Loan Note shall be governed by and construed in accordance with
the laws of the State of California.
COLLATERAL.------_Upon closing of the Site Transfer Escrow, pursuant to the terms of the
?~30~DDA,-the obligations of this Agency Loan Note ~aN-!,e<~rc secured, without limitation, by
the Agency Loan Deed of Trust. The Agency Loan Deed of Trust shall be subordinate to the
security interest of the Construction Lender and of the Permanent Lender. Subject to the terms,
covenants and conditions of the ?E~1-DDA, the obligation of the Borrower to timely pay the
Agency the amounts due under this Agency Loan Note is assignable by the Borrower to its
transferee in the Site, as defined in the ;?l>E{s~ DDA, upon thirty (30) calendar days prior written
notice to the Agency in which the Borrower and the assignee each certify to the Agency that as
part of such sale, ]ease, or transfer of the Site, the assignee of the Borrower shall also assume the
obligations of the Borrower under the note held by the Construction Lender or by the Permanent
Lender, as then applicable. The Agency Loan Deed of Trust affects certain real property
described in the 2-(~(->~-DDA as the "Site" and/or the "Project".--#={~ r~er~e-~.•-{,~~+~~-keEi-~=~++-~t
~nt;~ij~s tlje-fe{-}ew+t~{}rc~~+4+~
:. #~-FIB--N~?df~{°li-~A-~-~ :-~=}-#=f~-1~Pa:.1{3-'4~ -#-)a~F=-}~Akti~:-_I~MII~I-~~~}'1•=1--~=-13I-rW--~4~iF)
1~?rY;4-F3{--1----A-I-1--~~',^~"~~' -S4=F'1-~fi-I°f-l---+3~=--F+~{-4-I)F,+=N-F?1-~-~=1Z-1~SI=---#-~E}pd---1=
t ~i ~~-,~--~-;-r,ri y u-I,.~d(-' ('-1-~ I~~--fit-'{--('{-A-1--F~l,' ~-~?a~;~-{~ F~-~1 E=E=-1-=-1-}° }~:1=F'-IF-3Ad- r~-~-~1~ {-I-~-a=F; IZ#{--1
~=-I=fPd 1=I3+~{~~:~-~3V+i-:
43trri~e-t+~e--i~~t#-+rJ-tir+3e-k~#err-th~ ~etr~°+tk_~i+~t~t~~--Fri_the Seni~t--I~erjcle+
e+~rr,~-'~"~"i'e>pej~y-++r 4{re--Sor}+a~-1-;entiEr~-.{.)crct+r~tnt~ ~r •~~;p~~c'+al evrnt <rl~
wee{erat+rxr'~t3zrN-c~tt+r~-~laerr~+~t rr~-+4-;~tfair~~nee~r~4~-Iz+~}serf}-wikhet+t-~#~
~rr~;errt--i~-~~~it+~-~r#=-t4~-I~+3<#e+-1e~ftf>t aer-a-Tert~rittc~#-Trirrrste+-a~;--~e{-~~+4h--irr
the -?8f{9--AID,4-i:-cr4=i~-r+~frt--t-i-fk---~~r -++rterert-+r~-i-1~~k'~~rtjet-t~---try-art}y--lrer~~+r
~=~ttc {. .,--ra;~-~#+rra+~>+rw-frr--rr~t+~:{~~=-+ti--~~~ --lrt nel+e+al--.r+'-e~}ttih~{e:
~~hel~iet-v~~{r+r~tt~r-y--~-+~+arktfntar=~--- wkr~~tae+--l~---~~r4e--E1eeH .~~-i~lmerri-~tle
e<~rrt+•~re-t~-1a}~i t~.r}Fr~c~t--+ertti~-e~irtiHr~~=<rnrr~tc=r~~>r-l~-~+It~, try;#~trr<>nt-{>i-+r~rrs4ee-er{
~rr~~k~e+~efie+aN~teres~t-rtt~fi~~e=f~rtrs~>r irr t#re F?tc~pc~+ t<i-str~~~{ant#~~ri~r-imd-+ul~~rds
t>rtit e( st+e~-eErt3~+E~trc-e: t!~^ ~re~rr~+l~-+~~t~rest tit the Se>}+erl,c~~ier+>r rig assignee
;+r-the-Rr~3ej't~~+:..,,--ti;~a=~mt~+rfl-+et=t-r+3~•e}~e~-{fa--Nye-~+-t*:tf++-N~-dare-~er~i~rr-{, ..,~,~~r: <r+'
}t4-atii-it'tree----+4tr-titre-kr-f=c~-~~a+rte rtiiie{~-+~-iiei°+tr+tied-~ar~ier tlte-Senier•--1-ent#e+
{ k~orrrc~~4s~~hull-nc3t-~lae~~~~re~#-re-~~-rt~ wee is{~t~wt~~~r+elera{t<xr~
--- --1t~i-t+rtl-~-t}1-=1~tfa
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assz-io~o-osos.i
CDC/2010--9
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_-_ ~,T~-',{'{_);~{~ - Formatted: Font: Bold, Not SuperscripU ~~f
1 Subscript ~ _ _~___,
GENERAL PROVISIONS. .Except asset forth in the next sentence of this paragraph, following
the date of execution by the Borrower of this Agency Loan Note, upon the failure to pay any sum
provided for in the -DDA, in this Agency Loan Note or under the other Agency Loan
Documents when due, or a material breach of the yA1-)~-DDA, of the Agency Loan Deed of Trust
or of the other Agency Loan Documents by the Borrower, no partner of the Borrower (or in the
case of an assignee of the Borrower - no affiliate, member, partner, shareholder or subsidiary of
such assignee) shall have personal liability for payment of the principal or interest then due
under this Agency Loan Note. The sole recourse of the Holder to recover any sum under this
Agency Loan Note shall be to the Site subject to the Agency Loan Deed of Trust, except in the
event of: (A) fraud by the Borrower (or its assignee), (B) any material misrepresentation made by
the Borrower to the Agency under theme: DDA or under the other Agency Loan Documents,
(C) misappropriation by the Borrower (or its assignee) of any rents, security deposits, tax
collection amounts, security deposits, or insurance or condemnation awards, (D) commission of
bad faith waste by the Borrower (or its assignee) or (E) the presence of "Hazardous Substances"
on the Site, as this term is defined in the Agency Loan Deed of Trust.
The Holder may delay or forego enforcing any of its rights or remedies under this Agency Loan
Note or the other Agency Loan Documents, without losing them. Borrower and any other person
who signs, guarantees or endorses this Agency Loan Note, to the extent allowed by law, each
waive any applicable statute of limitations, presentment, demand for payment, protest and notice
of dishonor. Upon any change in the terms of this Agency Loan Note, and unless otherwise
expressly stated in writing, no party who signs this Agency Loan Note, shall be released from
liability. All such parties agree that the Holder may renew or extend (repeatedly and for any
length of time) this Agency Loan Note, or release any party, or collateral; or impair, fail to
realize upon or perfect the Holder's security interest in the collateral; and take any other action
deemed necessary by the Holder in its sole discretion without the consent of or notice to anyone.
All such parties also agree that the Holder may modify this Agency Loan Note and/or the other
Agency Loan Documents without the consent of or notice to anyone other than the party with
whom the modification is made.
All defined words, terms or phrases indicated by initial capital letters used ir. this Agency Lear.
Note and not specifically defined in this Agency Loan Note shall have the meanings ascribed to
them in the ~-0A9-DDA.
-1 Formatted: No underline i
Except as provided in this Agency Loan Note, upon the execution date by the Borrower of this
Agency Loan Note, this Agency Loan Note shall be a nonrecourse obligation of the Borrower.
Neither the Borrower nor any other party, including, without limitation, any partner (general or
limited) of the Borrower, shall have personal liability for repayment of this Agency Loan. The
sole recourse of the Agency for any obligation of the Borrower under this Agency Loan ?>}c~tr.
~rli->~ecxce~t-i3~the rtert~-sec~en~of_.~.~~,ii_tuc!.b~;the-~t*errE~-+++Hl~ttgua+n tl3orio~~_c3 0~ am__
partner,~l3.1 an~_matcrial mist~chrc5entation rnacc b~_lhc 13orrci~~~r_gr an~_partiier_to the _ngcncv .,
under the DD/1 ctr-_undcr thc,_uthc~_~~gc,nc~-._I,_ct~n ,)gcumcnts._I~;L!nLSap~rc~riation_b}_-the
Borrcn~~er or any partner of am~ icnts- secunt~_de~o5its,.t1~ ~~>Ilection_amounts_s~etu~it~_d~osit
of m5uran~c-car condemnation a~~~ards,_~l)! cotnm~5sicm cif bid faith ~~atite b~ thc_I3on<t~ret or any
r------- -----------
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CDC/2010•-9
_ __ ___ ______ __ _ -___-_. _ -- - --~~j~}7>d{,} ;Formatted: Font: Bold, Not Superscript/ i
--1 Subscript
~..a.t
partner o~T~the presence of "lia~~irdc~u5_Substances'• ~r~the~Site, as_this term is defined in the - Formatted: Font color: Auto
/~~encY I,oat~ Decd othrtisi.. _ _ _._ __ _ ._ ._ _ _ .__. __ _. ._ _~ ~FOrmatted: Font color: Black
~ ~ Formatted: Font color: Auto m~~
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a85z-io~o-0805.1
CDC/ 2010-- 9
~3t'TA(3i~'~2-$, ~AFIi> I}R-Af~T __ --
------l-__-___---_ _.___-_-_.___-.-__._- ~ - For am Ked Font: Bold, Not Superscript/
Subscript - --_---.A--_..
PRIOR TO SIGNING THIS AGENCY LOAN NOTE, BORROWER HAS READ AND
UNDERSTANDS ALL OF ITS PROVISIONS. BORROWER AGREES TO THE TERMS OF
THIS AGENCY LOAN NOTE AND ACKNOWLEDGES RECEIPT OF A COPY HEREOF.
BORROWER
Magnolia Highland, L.P.
a California limited partnership
By: Magnolia Highland, LLC,
a California limited liability company
Its: Administrative General Partner
By:
John M. Huskey
Manager
By: Western Community Housing, Inc.
a California non-profit public benefit Corporation
Its: Managing General Partner
By:
Leanne Truofreh
Secretary
aas2-too-osos t
CDC/2010--9
Exhibit "B"
Agency Loan Deed of Trust
15
P:Wgendas\Agenda Attachments\Agenda At[achmentsWgrmts-Amend 2010\03-15-10 Meta Housing- Magnolia Highland -Amend. No. I [0 2009 Affordable Senior Ci[izen Rental Housing DDA.docx
CDC/2010~~9
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of San Bernardino
Attn.: Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
(Space Above Line For Use By Recorder)
Recording Fee Exempt Pursuant to Government Code Section 6103
SUBORDINATE DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT
(Agency Loan Deed of Trust)
THIS SUBORDINATE DEED OF TRUST, ASSIGNMENT OF LEASES AND
RENTS, FIXTURE FILING AND SECURITY AGREEMENT ("Deed of Trust") is made as of
by Magnolia Highland, L.P., a California limited partnership
(hereinafter referred to as "Trustor"), whose address is 1604 Sepulveda Blvd., Suite 425, Los
Angeles, CA 90025, to Title Insurance Company (hereinafter
referred to as "Trustee"), whose address is ,for the
benefit of the Redevelopment Agency of the City of San Bernardino, a public body corporate and
politic, its successors and assigns (herein called "Beneficiary"), whose address is 201 North "E"
Street, Suite 301, San Bernardino, California 92401. , is a
limited partner of the Trustor (the "Investor Limited Partner") pursuant to that certain Limited
Partnership Agreement dated (the "Partnership Agreement").
WITNESSETH
That Trustor, for valuable consideration, grants, bargains, sells, conveys and
warrants to Trustee, in trust with power of sale, that property in the City of San Bernardino,
County of San Bernardino, State of California, more particularly described in Exhibit "A"
attached hereto and made a part hereof (the "Land"), together with the following described
estate, property and rights of Trustor in the Land and/or in any improvements now or hereafter
constructed thereon (herein severally and collectively referred to as the "Property") as security
for the performance of each covenant and agreement of Trustor contained herein and in all other
instruments executed in connection herewith, and for the payment of all sums of money secured
hereby.
A. All the fee and leasehold estates and rights of Trustor now held and
hereafter acquired in and to the Property and in and to land lying in streets and roads adjoining
the Property, and all access rights and easements appertaining thereto; and
1
P~Wgendas\Agenda Attachments\Exhibits\2010\03-I 5-10 Meta Housing -Magnolia Highland -Agency Loan Deed of Trust (Exhibit B) - FINAI-.docx
CDC/2010•• 9
B. All buildings, structures, improvements, furnishings, fixtures and
equipment, real, personal and mixed, now or hereafter attached to, or used or adapted for use in
the operation of the Property and any and all replacements and additions thereto, including
without limitation, all heating apparatus and equipment whatsoever, all boilers, engines, motors,
dynamos, generating equipment, pumps, piping and plumbing fixtures, cooling, ventilating,
sprinkling, fire-extinguishing apparatus, gas and electric fixtures, elevators, escalators, partitions,
and shrubbery and plants; and including also all interest of any owner of the Property in any of
such items hereafter at any time acquired under conditional sales contract, chattel mortgage or
other title-retaining or security instrument, all of which property mentioned in this paragraph
shall be deemed part of the realty and not severable wholly or in part without material injury to
the freehold; and
C. All and singular the lands, tenements, privileges, water, water rights, water
stock, mineral, oil and gas rights, hereditaments and appurtenances thereto belonging or in
anywise appertaining, and the reversion and reversions, remainder and remainders, rents,
royalties, issues and profits thereof, and all the estate, rights, title, claim, interest and demand
whatsoever of the Trustor either in law or equity, of, in and to the Property, whether now held or
hereafter acquired;
D. All of the right, title and interest of Trustor now or hereafter existing in
and to the following now or hereafter located in, upon, within or about or used in connection
with the construction, use, operation or occupancy of the Property and/or the improvements
thereon and any business or activity conducted thereon or therein, together with all accessories,
additions, accessions, renewals, replacements and substitutions thereto or therefor and the
proceeds and products thereof: (i) all materials, supplies, furniture, furnishings, appliances, office
supplies, equipment, construction materials, vehicles, machinery, computer hardware and
software, maintenance equipment, window washing equipment, repair equipment and other
equipment and tools, telephone and other communications equipment; (ii) all books, ledgers,
records, accounting records, files, tax records and returns, policy manuals, papers,
correspondence, and electronically recorded data; (iii) all "General Intangibles" (as such term is
defined in the California Uniform Commercial Code), instruments, money, "Accounts," (as such
term is defined in the California Uniform Commercial Code), accounts receivable, notes,
certificates of deposit, chattel paper, letters of credit, chows in action, good will, rights to
payment of money, rents, rental fees, equipment fees and other amounts payable by persons who
utilize the Property or any of the improvements or paid by persons in order to obtain the right to
use the Property and any of the improvements, whether or not so used; trademarks, service
marks, trade dress, tradenames, licenses, sales contracts, deposits, plans and specifications,
drawings, working drawings, studies, maps, surveys; soils, environmental, engineering or other
reports, architectural and engineering contracts, construction contracts, construction management
contracts, surety bonds, feasibility and market studies, management and operating agreements,
service agreements and contracts, landscape maintenance agreements, security service and other
services agreements and vendors agreements; (iv) all compensation, awards and other payments
or relief (and claims therefor) made for a taking by eminent domain, or by any event in lieu
thereof (including, without limitation, property and rights and interests in property receive~t in
lieu of any such taking), of all or any part of the Property (including without limitation, awards
2
P:Wgendas\Agenda Attachments\Exhibits\2010\03-I 5-10 Meta Housing -Magnolia Highland -Agency Loan Deed of Trust (Exhibit B) - PINAL.docx
CDC/ 2010~~-9
for severance damages), together with interest thereon, and any and all proceeds (or claims for
proceeds) of casualty, liability or other insurance pertaining to the Property, together with
interest thereon; (v) any and all claims or demands against any person with respect to damage or
diminution in value to the Property or damage or diminution in value to any business or other
activity conducted on the Property; (vi) any and all security deposits, deposits of security or
advance payments made to others with respect to: (1) insurance policies relating to the Property;
(2) taxes or assessments of any kind or nature affecting the Property; (3) utility services for the
Property and/or the improvements; (4) maintenance, repair or similar services for the Property or
any other services or goods to be used in any business or other activity conducted on the
Property; (vii) any and all authorizations, consents, licenses, permits and approvals of and from
all persons required from time to time in connection with the construction, use, occupancy or
operation of the Property, the improvements, or any business or activity conducted thereon or
therein or in connection with the operation, occupancy or use thereof, (viii) all warranties,
guaranties, utility or street improvement bonds, utility contracts, telephone exchange numbers,
yellow page or other directory advertising and the like; (ix) all goods, contract rights, and
inventory; (x) all leases and use agreements of machinery, equipment and other personal
property; (xi) all insurance policies covering all or any portion of the Property; (xii) all reserves
(including those provided for in Section 17 hereof) and funds held in escrow by Beneficiary or
other person for Beneficiary's benefit and any funds deposited with Beneficiary, all accounts into
which such funds are deposited and all accounts, contract rights and general intangibles or other
rights relating thereto; (xiii) all names by which the Property is now or hereafter known; (xiv) all
interests in the security deposits of tenants; (xv) all management agreements, blueprints, plans,
maps, documents, books and records relating to the Property; (xvi) the proceeds from sale,
assignment, conveyance or transfer of all or, any portion of the Property or any interest therein,
or from the sale of any goods, inventory or services from, upon or within the Property and/or the
improvements (but nothing contained herein shall be deemed a consent by Beneficiary to such
sale, assignment, conveyance or transfer, except as expressly provided in this Deed of Trust);
(xvii) any property described in paragraph B, above, which are not fixtures under California law;
(xviii) all other property (other than fixtures) of any kind or character as defined in or subject to
the provisions of the California Uniform Commercial Code, Secured Transactions, as amended
and; (xix) all proceeds of the conversions, voluntarily or involuntarily, of any of the foregoing
into cash or liquidated claims.
TO HAVE AND TO HOLD the Property, together with all and singular the
lands, tenements, privileges, water, water rights, water stock, mineral, oil and gas rights,
hereditaments and appurtenances thereto belonging or in any wise appertaining, and the
reversion and reversions, remainder and remainders, rents, royalties, issues and profits thereof,
and all of the estate, right, title, claims and demands whatsoever of the Trustor, either in law or in
equity, of, in and to the Property, forever as security for the faithful performance of the Note (as
defined below) secured hereby and as security for the faithful performance of each and all of the
covenants, agreements, terms and conditions of this Deed of Trust, and in all other instruments
executed in connection herewith, SUBJECT, HOWEVER, to the right, power and authority
given to and conferred upon Beneficiary to collect and apply such rents, issues and profits. This
Deed of Trust also constitutes a security agreement in all of the property above described or
referenced in which such interest may be created under the California Uniform Commercial
Code and for such purposes Trustor hereby grants to Beneficiary a security interest therein.
3
P:\Agendas\Agenda Attachments\Exhibits\2010\03-I 5-10 Meta Housing -Magnolia Highland -Agency Loan Deed of Trust (Exhibit B) - FMAL,.docx
CDC/ 2010--- 9
1. Note Secured. This Deed of Trust is made for the purpose of securing the
performance of each covenant, agreement and obligation of Trustor herein and of each covenant,
agreement and obligation of Trustor described as the Agency Loan in that certain 2009
Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Grant
Agreement (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia
Highland, L.P.), dated as of August 3, 2009, by and between the Trustor and the Beneficiary, as
amended by the Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing
Acquisition, Disposition and Development Agreement, dated as of March _, 2010 (collectively,
the "2009 DDA") as evidenced by the Agency Loan Note, dated November 23, 2009, executed
by the Trustor, as borrower, in favor of the Beneficiary, as lender, in the principal amount of
Four Million Dollars, as amended by the Amended and Restated Agency Loan Note, dated
March _, 2010, executed by the Trustor, as borrower, in favor of the Beneficiary, as lender, in
the principal amount of Seven Million Dollars (the "Note") and all interest thereon and other
amounts evidenced thereby; all future advances made to Trustor by Beneficiary, its successors
and assigns, under the Note or pursuant to the terms of this Deed of Trust or the 2009 DDA; the
obligations evidenced by all renewals, extensions, modifications, substitutions and conditions of
the Note; and any and all other obligations of Trustor to Beneficiary, its successors and assigns,
now existing and hereafter arising and which are at any time specifically declared by Beneficiary
in writing to be secured by this Deed of Trust or which specifically indicate in the instruments
which evidence the same that they are intended to be so secured. Unless otherwise indicated in
this Deed of Trust, the meaning of defined terms and phrases as denoted by an initial capitalized
letter in a word or phrase, shall be the same as set forth in the 2009 DDA.
2. Trustor's Covenant of Payment. Trustor shall perform all of its
obligations under the Note, the 2009 DDA and under this Deed of Trust when due, without
excuse or delay of any kind whatsoever, except as expressly provided herein or therein, and
Trustor shall pay the Note, and all other debts and monies secured by this Deed of Trust when
due, without set off or deduction of any kind.
3. Trustor's Warranties of Title. Trustor warrants to Beneficiary that it is
the sole holder of fee simple absolute title to all of the Property and that except as set forth in this
Deed of Trust, the Note and the 2009 DDA relative to the Senior Lender Documents said title is
marketable and free from any lien or encumbrance, unless approved in writing by Beneficiary,
and the liens imposed by law for nondelinquent real property taxes and assessments. Trustor
further covenants and agrees as follows: that except as required under the 2009 DDA and/or the
Senior Lender Documents, Trustor will keep the Property free from all liens of any kind,
including, without limitation, statutory and governmental; that no lien superior or junior to this
Deed of Trust will be created or suffered to be created by Trustor during the life of this Deed of
Trust without Beneficiary's prior written consent; that Trustor has good right to make this Deed
of Trust and the person or persons executing this Deed of Trust on behalf of Trustor has or have
the authority to do so; and that Trustor will forever warrant and defend Beneficiary's interest in
the Property against every person, whomsoever, claiming any right or interest in the Property or
any part thereof.
4. Trustor's Right to Contest Statutory Liens. As used herein the words
"mechanic's lien" and "materialmen's lien" means and includes a stop notice as this term is
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defined in California Civil Code Section 3179, et seq. The filing of a mechanic's or
materialmen's lien against the Property or a stop notice against the Trustor or the Beneficiary
and/or funds held by or owed to the Trustor for the improvement of the Property shall not
constitute a default hereunder, if and so long as (a) no defaults exist under the Note, the 2009
DDA or this Deed of Trust; (b) within fifteen (15) days after filing of such lien, Trustor obtains
and maintains in effect a bond issued by a California admitted surety acceptable to Beneficiary in
an amount not less than the entire sum alleged to be owed to the lien claimant or such other
amount as is required to obtain a court order to release said lien of record; (c) Trustor provides to
Beneficiary and pays for an endorsement to Beneficiary's title insurance policy, in a form
satisfactory to Beneficiary, which insures the priority of this Deed of Trust over the lien being
contested; (d) Trustor immediately commences its contest of such lien and continuously pursues
the same in good faith and with due diligence; (e) such bond or contest stays the foreclosure of
the lien; and (f) Trustor pays in full any judgment rendered for the lien ,claimant within ten (10)
days following entry of any such judgment.
5. Maintenance and Inspection of Improvements. Trustor shall maintain the
buildings and other improvements now or hereafter located on the Property in a first class
condition and state of repair, reasonable wear and tear excepted. Trustor shall not commit or
suffer any waste; shall promptly comply with all requirements of federal, state and municipal
authorities and all other laws, ordinances, regulations, covenants, conditions and restrictions
respecting the Property or the use thereof, and shall pay all fees or charges of any kind in
connection therewith.
6. Construction and Repairs. Trustor shall complete or restore promptly and
in a good and workmanlike manner any building or improvement that may be constructed,
damaged or destroyed on the Property, and pay when due all costs incurred therefor.
7. Alterations. No building or other improvement on the Property shall be
structurally altered, removed or demolished without the Beneficiary's prior written consent, nor
shall any fixture or chattel covered by this Deed of Trust and adapted to the proper use and
enjoyment of the Property be removed at any time without Beneficiary's prior written consent,
unless actually replaced by an article of equal suitability and value, owned by the Trustor, free
and clear of any lien or security interest, except such as may be approved in writing by the
Beneficiary.
8. Compliance With -Laws. Trustor shall comply with all statutes, laws,
ordinances and regulations which now or hereafter pertain to the construction, repair, condition,
use and occupancy of the Property, including, without limitation, all environmental, subdivision,
zoning, building code, fire, occupational, health, safety, occupancy and other similar or
dissimilar statutes, and shall not permit any tenant or other occupant to violate the same. If any
statute or order of any court of competent jurisdiction requires any correction, alteration or
retrofitting of any improvements on or related to the Property, Trustor shall promptly undertake
the required repairs and restoration and complete the same with due diligence at its sole cost and
expense.
9. Envirorunental Covenants. Re sentations. Warranties and Indemnity.
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(a) Trustor will not use any Hazardous Materials (as defined herein below) in
the construction of any improvements on or about the Property.
(b) Trustor shall, at its sole expense, comply and cause each tenant leasing
space within the Property to comply with all applicable laws, regulations, codes and ordinances
relating to any Hazardous Materials or to any Environmental Activities (as defined herein
below), including, without limitation, obtaining, filing, serving or posting all applicable notices,
permits, licenses and similar authorizations. Trustor shall establish and maintain a management
and operating policy for the Property to assure and monitor continued compliance by Trustor and
each tenant leasing space in the Property with all such laws, regulations, codes and ordinances.
(c) Trustor agrees to submit from time to time, if requested by Beneficiary, a
report, satisfactory to Beneficiary, certifying that the Property is not now being used nor has it
ever been used for any Environmental Activities. Beneficiary reserves the right, in its reasonable
discretion, to retain, at Trustor's expense, an independent professional consultant to review any
report prepared by Trustor and/or to conduct its own investigation of the Property for Hazardous
Materials. Trustor hereby grants to Beneficiary, its agents, employees, consultants and
contractors the right to enter upon the Property to perform such tests as are reasonably necessary
to conduct such a review and/or investigation.
(d) Upon the discovery by Trustor of any event or situation which would
render any of the representations or warranties contained in subparagraph 9(g) hereof inaccurate
in any respect, if made at the time of such discovery, Trustor shall promptly notify Beneficiary of
such event or situation and, within thirty (30) days after such discovery, submit to Beneficiary a
preliminary written environmental plan setting forth a general description of such event or
situation and the action that Trustor proposes to take with respect thereto. Within sixty (60) days
after such discovery, Trustor shall submit to Beneficiary a final written environmental report,
setting forth a detailed description of such event or situation and the action that Trustor proposes
to take with respect thereto, including, without limitation, any proposed corrective work, the
estimated cost and time of completion, the name of the contractor and a copy of the construction
contract, if any, and such additional data, instruments, documents, agreements or other materials
or information as Beneficiary may reasonably request. The plan shall be subject to Beneficiary's
written approval, which approval may be granted or withheld in Beneficiary's sole but
reasonable discretion. Beneficiary shall notify Trustor in writing of its approval or disapproval of
the final plan within fifteen (15) days -after receipt thereof by Beneficiary. If Beneficiary
disapproves the plan, Beneficiary's notice to Trustor of such disapproval shall include a brief
explanation of the reasons therefor. Trustor shall submit to Beneficiary a revised final written
environmental plan that remedies the defects identified by Beneficiary as reasons for
Beneficiary's disapproval of the previous plan. If Trustor fails to submit a revised plan to
Beneficiary within said thirty (30) day period, or if such revised plan is submitted to Beneficiary
and Beneficiary disapproves said plan, such failure or disapproval shall, at Beneficiary's option
and upon notice to Trustor, constitute an "Event of Default" hereunder. If Beneficiary does not
notify Trustor of its approval or disapproval of the final plan or any revisions thereof within the
fifteen (15) day period described above, Trustor shall provide written notice to Beneficiary of
Beneficiary's failure to respond, at which time Beneficiary shall have an additional forty-five
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(45) days after receipt of such notice from Trustor to notify Trustor of its approval or disapproval
of the final plan within said additional forty-five (45) day period. If Beneficiary fails to notify
Trustor of its disapproval or approval of said plan within said forty-five (45) day period the plan
shall be deemed approved. Once any such plan is approved in writing or deemed approved by
Beneficiary, Trustor shall promptly commence all action necessary to implement such plan and
to comply with any requirements or conditions imposed by Beneficiary, and shall diligently and
continuously pursue such action to completion in strict accordance with the terms of said plan.
The rights of Beneficiary with respect to the approval or disapproval of the environmental plan
set forth herein and the actions of Beneficiary pursuant to such rights are not intended to, and
shall not, in and of themselves, confer on Beneficiary a right to manage, operate or control the
Property on a continuing basis following the discovery of the event(s) or occurrence(s) described
in this subparagraph 9(d).
(e) Trustor agrees to submit from time to time, if requested by Beneficiary, a
report, satisfactory to Beneficiary, specifying any activities involving, directly or indirectly, the
use, generation, treatment, storage or disposal of any Hazardous Materials on the Property.
Beneficiary reserves the right, in its sole and reasonable discretion, to retain, at Trustor's
expense, an independent professional consultant to review any report prepared by Trustor and/or
to conduct its own investigation of the Property. Trustor hereby grants to Beneficiary, its agent,
employees, consultants and contractors the right to enter upon the Property and to perform such
tests as Beneficiary deems are necessary to conduct such a review and/or investigation.
Beneficiary shall hold in confidence any report delivered by Trustor to Beneficiary pursuant to
this Section 9, except for disclosure to (a) any consultant(s) hired by Beneficiary to review said
report, (b) legal counsel, accountants and other professional advisors to Beneficiary, (c)
regulatory officials having jurisdiction over Beneficiary who may request said report, (d) as
required by any federal, state, county, regional or local authority or law, rule, regulation or
ordinance, (e) as required in connection with any legal proceeding, and (f) any financial
institution in connection with a disposition or proposed disposition of all or part of Beneficiary's
or any participant's interests hereunder.
"Hazardous Materials" as used in this Deed of Trust shall mean any hazardous or
toxic materials, pollutants, effluents, contaminants, radioactive materials, flammable explosives,
chemicals known to cause cancer or reproductive toxicity, emissions or wastes and any other
chemical, material or substance, the handling, storage, release, transportation, or disposal of
which is or becomes prohibited, limited or regulated by any federal, state, county, regional or
local authority or which, even if not so regulated, is or becomes known to pose a hazard to the
health and safety of the occupants of the Property including, without limitation, (i) asbestos, (ii)
petroleum and petroleum by-products, (iii) urea formaldehyde foam insulation, (iv)
polychlorinated biphenyls, (v) all substances now or hereafter designated as "hazardous
substances," "hazardous materials" or "toxic substances" pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq. the
Clean Air Act, 42 U.S.C. Section 7401 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., or the Resource, Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq.; (vi) all substances now or hereafter designated as "hazardous wastes" in Section
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25117 of the California Health & Safety Code or as "hazardous substances" in Section 253 16 of
the California Health & Safety Code; (vii) all substances now or hereafter designated by the
Governor of the State of California pursuant to the Safe Drinking Water and Toxic Enforcement
Act of 1986 as being known to cause cancer or reproductive toxicity, or (viii) all substances now
or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances"
under any other federal, state or local laws or in any regulations adopted and publications
promulgated pursuant to said laws.
"Environmental Laws" as used herein shall mean all laws, rules, regulations and
ordinances relating to Hazardous Materials, including, but not limited to, those relating to soil
and groundwater conditions and those statutes referred to in the definition of Hazardous
Materials set forth hereinabove.
"Environmental Activities" as used herein shall mean the use, generation,
transportation, treatment, storage or disposal of any Hazardous Materials at any time located on
or present on, under or about the Property.
(f) Trustor hereby agrees, at its sole cost and expense, to indemnify, protect,
hold harmless and defend (with counsel of Beneficiary's choice), Beneficiary, its successors and
assignees, and the officials, officers, agents, attorneys and employees of each of them
(individually, each an "Indemnitee", and collectively, the "Indemnitees") from and against any
and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes
of action, judgments, suits, proceedings, costs, disbursements and expenses (including, without
limitation, attorneys' and experts' reasonable fees, disbursements and costs) of any kind or of
any nature whatsoever (collectively, "Claims") which may at any time be imposed upon,
incurred or suffered by, or asserted or awarded against, any Indemnitee directly or indirectly
relating to or arising from any of the following "Environmental Matters," but excluding any
Claims arising solely from the gross negligence or willful misconduct of Beneficiary:
(i) Any past, present or future presence of any Hazardous Materials
on, in, under or affecting all or any portion of the Property or on, in, under or affecting all
or any portion of any property adjacent or proximate to the Property, if such Hazardous
Materials originated or allegedly originated on or from the Property;
(ii) Any past, present or future storage, holding, handling, release,
threatened release, discharge, generation, leak, abatement, removal or transportation of
any Hazardous Materials on, in, under or from the Property or any portion thereof,
(iii) The failure of Trustor to comply with any and all laws, rules,
regulations, judgments, orders, permits, licenses, agreements, covenants, restrictions,
requirements or the like now or hereafter relating to or governing in any way the
environmental condition of the Property or the presence of Hazardous Materials on, in,
under or affecting all or any portion of the Property including, without limitation, all
Environmental Laws;
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(iv) The failure of Trustor to properly complete, obtain, submit and/or
file any and all notices, permits, licenses, authorizations, covenants, and the like relative
to any of the Environmental Matters described herein in connection with the Property or
the ownership, use, operation or enjoyment thereof,
(v) The extraction, removal, containment, transportation or disposal
of any and all Hazardous Materials from any portion of the Property or any other
property adjacent or proximate to the Property, if such Hazardous Materials originated or
allegedly originated on or from the Property;
(vi) Any past, present or future presence, permitting, operation,
closure, abandonment or removal from the Property of any storage tank that at any time
contains or contained any Hazardous Materials and is or was located on, in or under the
Property or any portion thereof;
(vii) The implementation and enforcement of any monitoring,
notification or other precautionary measures that may at any time become necessary to
protect against the release or discharge of Hazardous Materials on, in, under or affecting
the Property or into the air, any body of water, any other public domain or any property
adjacent or proximate to the Property;
(viii) Any failure of any Hazardous Materials generated or moved from
the Property to be removed, contained, transported or disposed of in compliance with all
applicable Environmental Laws; or
(ix) Any breach by Trustor of any of its covenants, representations or
warranties regarding Environmental Matters contained in this Deed of Trust or any of the
other Transaction Documents.
The indemnity contained herein shall terminate and be of no further force
and effect, if no Claim is pending, upon the repayment of the Long Term Project Loan in
accordance with its terms.
(g) Trustor hereby represents and warrants as follows:
(i) The Property is not and has not been a site for the use, generation,
manufacture, storage, treatment, release, threatened release, discharge, disposal, or
transportation of any Hazardous Materials;
(ii) The Property is in compliance with all Environmental Laws;
(iii) Trustor has not received any written notice of claims or actions
(collectively, "Hazardous Materials Claims") pending or threatened against Trustor or
any previous owner or user of the Property (and relating to Trustor's and/or such previous
owner's or user's ownership of the Property), by any governmental entity or agency or
any other person or entity and relating to Hazardous Materials or pursuant to
Environmental Laws; and
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(iv) Trustor has not received any written notice (i) pursuant to which
the Property has been designated as "border zone property" under the provisions of
California Health and Safety Code Sections 25220 et seq., or any regulation adopted in
accordance therewith, (ii) of a hearing at which the Property will be considered for
designation as "border zone property," or (iii) of an occurrence or condition on any real
property adjoining or in the vicinity of the Property that could cause the Property or any
part thereof to be designated as "border zone property."
The foregoing shall constitute environmental provisions for purposes of
California Code of Civil Procedure Section 736.
10. Insurance.
10.1. Casualty Insurance. Trustor shall at all times keep the Property
insured for the benefit of Trustee and Beneficiary as follows:
10.1.1. Against damage or loss by fire and such other hazards
(including lightning, windstorm, hail, explosion, riot, acts of striking employees, civil
commotion, vandalism, malicious mischief, aircraft, vehicle, and smoke) as are covered by the
broadest form of extended coverage endorsement available from time to time, in an amount not
less than the full insurable value (as defined in section 10.9) of the Property, with a deductible
amount not to exceed an amount satisfactory to Beneficiary;
10.1.2. Rent or business interruption or use and occupancy
insurance on such basis and in such amounts and with such deductibles as are satisfactory to
Beneficiary;
10.1.3. Against damage or loss by flood, if the Property is located
in an area identified by the Secretary of Housing and urban Development or any successor or
other appropriate authority (governmental or private) as an area having special flood hazards and
in which flood insurance is available under the National Flood Insurance Act of 1968 or the
Flood Disaster Protection Act of 1973, as amended, modified, supplemented, or replaced from
time to time, on such basis and in such amounts as Beneficiary may require;
10.1.4. Against damage or loss from (a) sprinkler system leakage
and (b) boilers, boiler tanks, heating and air conditioning equipment, pressure vessels, auxiliary
piping, and similar apparatus, on such basis and in such amounts as Beneficiary may require;
10.1.5. During any alteration, construction, or replacement of
improvements on the Property, or any substantial portion thereof, a Builder's All Risk policy
with extended coverage with course of construction and completed value endorsements, for an
amount at least equal to the full insurable value of the improvements on the Property, and
workers' compensation, in statutory amounts, with provision for replacement with the coverage
described in this Section 10, without gaps or lapsed coverage, for any completed portion of
improvements on the Property; and
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10.1.6. If required by the Senior Lender, against damage or loss by
earthquake, in an amount and with a deductible satisfactory to Beneficiary, if such insurance is
required by Beneficiary in the exercise of its business judgment in light of the commercial real
estate practices existing at the time the insurance is issued and in the County where the Property
is located.
10.2. Liability Insurance. Trustor shall procure and maintain workers'
compensation insurance for Trustor's employees and comprehensive general liability insurance
covering Trustor, Trustee, and Beneficiary against claims for bodily injury or death or for
damage occurring in, on, about, or resulting from the Property, or any street, drive, sidewalk,
curb, or passageway adjacent to it, in standard form and with such insurance company or
companies and in an amount of at least $3,000,000 combined single limit, or such greater amount
as Beneficiary may require, which insurance shall include completed operations, product
liability, and blanket contractual liability coverage that insures contractual liability under the
indemnifications set forth in this Deed of Trust and the 2009 DDA (but such coverage or its
amount shall in no way limit such indemnification).
10.3. Other Insurance. Trustor shall procure and maintain such other
insurance or such additional amounts of insurance, covering Trustor and the Property, as (a) may
be required by the terms of any construction contract for any improvements on the Property or by
any governmental authority, other than Beneficiary, (b) may be specified in the 2009 DDA, or
(c) may be reasonably required by Beneficiary from time to time.
10.4. Form of Policies. All insurance required under this Section 10
shall be fully paid for and nonassessable. The policies shall contain such provisions,
endorsements, and expiration dates as Beneficiary from time to time reasonably requests and
shall be in such form and amounts, and be issued by such insurance companies doing business in
the State of California, as Beneficiary shall approve in Beneficiary's sole and absolute discretion.
Unless otherwise expressly approved in writing by Beneficiary, each insurer shall have a Best
Rating of Class A, Category viii, or better. All policies shall (a) contain a waiver of subrogation
endorsement; (b) provide that the policy will not lapse or be canceled, amended, or materially
altered (including by reduction in the scope or limits of coverage) without at least 30 days' prior
written notice to Beneficiary; (c) with the exception of the comprehensive general liability
policy, contain a mortgagee's endorsement (438 BFU Endorsement or equivalent), and name
Beneficiary and Trustee as insureds; and (d) include such deductibles as Beneficiary may
approve. If a policy required under this paragraph contains a co-insurance or overage clause, the
policy shall include a stipulated value or agreed amount endorsement acceptable to Beneficiary.
10.5. Duplicate Originals or Certificates. Duplicate original policies
evidencing the insurance required under this Section 10 and any additional insurance that may be
purchased on the Property by or on behalf of Trustor shall be deposited with and held by
Beneficiary and, in addition, Trustor shall deliver to Beneficiary (a) receipts evidencing payment
of all premiums on the policies and (b) duplicate original renewal policies or a binder with
evidence satisfactory to Beneficiary of payment of all premiums at least 30 days before the
policy expires. In lieu of the duplicate original policies to be delivered to Beneficiary under this
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Section 10.5, Trustor may deliver an underlier of any blanket policy, and Trustor may also
deliver original certificates from the issuing insurance company, evidencing that such policies
are in full force and effect and containing information that, in Beneficiary's reasonable
judgment, is sufficient to allow Beneficiary to ascertain whether such policies comply with the
requirements of this Section 10.
10.6. Increased Coverage. If Beneficiary determines that the limits of
any insurance carried by Trustor are inadequate or that additional coverage is required, Trustor
shall, within 10 days after written notice from Beneficiary, procure such additional coverage as
Beneficiary may require in Beneficiary's sole and absolute discretion.
10.7. No Separate Insurance. Trustor shall not carry separate or
additional insurance concurrent in form or contributing in the event of loss with that required
under this Section 10, unless endorsed in favor of Trustee and Beneficiary, as required by this
Section 10 and otherwise approved by Beneficiary in all respects.
10.8. Transfer of Title. In the event of foreclosure of this Deed of Trust
or other transfer of title or assignment of the Property in extinguishment, in whole or in part, of
the Note, all right, title, and interest of Trustor in and to all insurance policies required under this
Section 10 or otherwise then in force with respect to the Property and all proceeds payable under,
and unearned premiums on, such policies shall immediately vest in the purchaser or other
transferee of the Property.
10.9. Replacement Cost. For purposes of this Section 10, the term "full
insurable value" means the actual cost of replacing the Property in question, without allowing for
depreciation, as calculated from time to time (but not more often than once every calendar year)
by the insurance company or companies holding such insurance or, at Beneficiary's request, by
appraisal made by an appraiser, engineer, architect, or contractor proposed by Trustor and
approved by said insurance company or companies and Beneficiary. Trustor shall pay the cost of
such appraisal.
10.10. Approval Not Warranty. No approval by Beneficiary of any
insurer may be construed to b~e a representation, certification, or warranty of its solvency and no
approval by Beneficiary as to the amount, type, or form of any insurance may be construed to be
a representation, certification, or warranty of its sufficiency.
10.11. Beneficiary's Right To Obtain. Trustor shall deliver to Beneficiary
original policies or certificates evidencing such insurance at least 30 days before the existing
policies expire. If any such policy is not so delivered to Beneficiary or if any such policy is
canceled, whether or not Beneficiary has the policy in its possession, and no reinstatement or
replacement policy is received before termination of insurance, Beneficiary, without notice to or
demand on Trustor, may (but is not obligated to) obtain such insurance insuring only Beneficiary
and Trustee with such company as Beneficiary may deem satisfactory, and pay the premium for
such policies, and the amount of any premium so paid shall be charged to and promptly paid by
Trustor or, at Beneficiary's option, may be added to the Note. Trustor aclcnuwledges that, if
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Beneficiary obtains insurance, it is for the sole benefit of Beneficiary and Trustee, and Trustor
shall not rely on any insurance obtained by Beneficiary to protect Trustor in any way.
10.12. Duty To Restore After Casualty. If any act or occurrence of any
kind or nature (including any casualty for which insurance was not obtained or obtainable)
results in damage to or loss or destruction of the Property, Trustor shall immediately give notice
of such loss or damage to Beneficiary and, if Beneficiary so instructs, shall promptly, at
Trustor's sole cost and expense, regardless of whether any insurance proceeds will be sufficient
for the purpose, shall (i) commence and continue diligently to completion to restore, repair,
replace, and rebuild the Property as nearly as possible to its value, condition, and character
immediately before the damage, loss or destruction; or, (ii) pay all monetary obligations due
under the Senior Lender Documents and pay all monetary obligations then due under the Note to
Beneficiary.
11. Assignment of Insurance and Condemnation Proceeds. Subject to the
rights of the Senior Lender under the Senior Lender Documents, in the event that the Property, or
any part or appurtenance thereof or right or interest therein, be taken or damaged by reason of
any public or private improvement, condemnation proceeding (including change of grade), fire,
earthquake or other casualty, or in any other manner, Beneficiary or Trustee may, at its option,
commence, appear in and prosecute, in its own name, any action or proceeding, or make any
reasonable compromise or settlement in connection with such taking or damage, and obtain all
compensation, awards or other relief therefor. Subject to the HUD Secondary Financing Rider,
attached hereto, all compensation, awards, damages, rights of action and proceeds, including the
policies and the proceeds of any policies of insurance affecting the Property, are hereby assigned
to Beneficiary, but no such assignments shall be effective to invalidate or impair any insurance
policy. Trustor further assigns to Beneficiary any return premiums or other repayments upon
any insurance at any time provided for the benefit of the Beneficiary and all refunds or rebates
made of taxes or assessments on the Property, and Beneficiary may at any time collect said
return premiums, repayments, refunds and rebates in the event of any default by Trustor under
the Note, the 2009 DDA or this Deed of Trust. No insurance proceeds or condemnation awards
at any time assigned to or held by Beneficiary shall be deemed to be held intrust and Beneficiary
may commingle such proceeds with its general assets and shall not be liable for the payment of
any interest thereon. Trustor also agrees to execute such further assignments of any such
policies, compensation, award, damages, rebates, return of premiums, repayments, rights of
action and proceeds as Beneficiary or Trustee may require.
12. Use of Insurance Proceeds. After any damage by casualty to the
Property, whether or not required to be insured against under the policies to be provided by
Trustor, Trustor shall give prompt written notice thereof to Beneficiary generally describing the
nature and cause of such casualty and the extent of the damage to or destruction of the Property.
Subject to the rights of the Senior Lender Documents, Trustor shall have the obligation to
promptly repair the damage, regardless of whether and to the extent the casualty was covered by
an insurance policy. For these purposes, Beneficiary shall make available to Trustor proceeds of
any insurance policy covering the casualty and maintained by Trustor under and subject to each
of the following terms and conditions:
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(a) Insurance proceeds which are directly attributable to the damage
(herein the "Proceeds") shall be released to Trustor upon and subject to satisfaction of
each of the following conditions:
(i) There exists no default under the Note, the 2009 DDA or
this Deed of Trust at any time prior to or during the course of reconstruction;
(ii) Receipt by Beneficiary of satisfactory written evidence
that any proposed restorations by Trustor will comply with all statutes,
ordinances, regulations, rules, rulings, restrictive covenants, reciprocal easements,
leases and contracts; that all proposed plans and specifications are approved by all
required governmental agencies; and that Trustor has obtained all necessary
building and other permits and approvals for such reconstruction;
(iii) Receipt by Beneficiary from Trustor of sufficient cash
funds to cover one hundred percent (100%) of any difference between the
estimated costs of completion, as certified by an architect or engineer approved by
Beneficiary in writing, and the Proceeds, the amount of such difference shall be
paid in cash to Beneficiary with said amount and any interest earned thereon shall
be released to Beneficiary, as necessary, following the exhaustion of available
insurance proceeds, or at such earlier time deemed appropriate by Beneficiary. In
the event of any default under the Note, the 2009 DDA or this Deed of Trust, or
any reconstruction requirements, Beneficiary may, at its option, apply any portion
or all of such amounts and interest against the accrued interest and principal sums
outstanding under the Note;
(iv) Receipt by Beneficiary of a certificate executed by Trustor
describing the work to be performed in connection with such restoration and a
certificate by an independent architect or engineer selected or approved by
Beneficiary in writing stating that the work described in the Trustor's certificate is
adequate to restore the Property to substantially the same size, design, quality and
condition as existed prior to the damage. The architect's or engineer's certificate
shall include its estimate of all costs and expenses which will be required to
complete such restorations; and
(v) Such additional conditions as may reasonably be imposed
by Beneficiary to provide assurance that the Proceeds will be used to restore the
Property to substantially the same condition, to the extent possible, as existed
prior to the damage or taking, including, without limitation, Beneficiary's prior
written approval of all permits, plans, specifications and construction contracts for
such restoration.
(b) Beneficiary shall disburse the Proceeds in increments
corresponding to the percentage of completion costs then incurred for labor performed
and materials furnished (which may, at Beneficiary's discretion, be subject to reasonable
holdbacks required by Beneficiary, not exceeding ten percent (10%) of the total estimated
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cost of completion and which will be released upon lien-free completion of the
restorations in accordance with the requirements of this Deed of Trust and the expiration
of the periods within which any mechanic's or materialman's lien may be filed).
Disbursements shall be conditioned upon Beneficiary's written confirmation that all of its
requirements therefor have been satisfied, including its receipt of periodic inspection and
completion percentage certificates executed by the project architect approved by
Beneficiary in writing, payment acknowledgments and unconditional lien releases, and
such other conditions to periodic disbursements as are customarily imposed by
Beneficiary in connection with its construction loans, no defaults or misrepresentations of
Trustor and Trustor's obtaining all title insurance endorsements, payment and
performance bonds, and builder's risk policies required by Beneficiary. Trustor shall,
during the progress of the work, also submit to the Beneficiary, at periodic intervals not
less frequently than monthly, a certificate satisfactory to Beneficiary furnished by an
architect or engineer approved by Beneficiary in writing showing the cost of labor and
materials incorporated into the work during the period specified in the certificate, which
period shall not include any part of the period covered by any other such certificate; and
(c) After completion of the restoration and subject to the conditions
herein stated, and, if Trustor is not then in default under the Note, the 2009 DDA or this
Deed of Trust, Beneficiary shall pay to Trustor (or such other persons or entities that may
have an interest therein) the undisbursed Proceeds and Trustor's deposit for any estimated
restoration expense held by Beneficiary upon delivery to Beneficiary of (i) a certificate
executed by Trustor showing that the work has been completed and that all bills for labor
performed and materials furnished in connection therewith have been paid, (ii)
unconditional lien releases and other appropriate written acknowledgments of payment in
full executed by all contractors and subcontractors performing labor on or furnishing
materials to the Property; (iii) a certificate executed by an architect or engineer approved
by Beneficiary confirming that the Property has been restored to substantially the same
size, design, quality and condition as existed immediately prior to the damage and in
accordance with all applicable federal, state, local and other governmental laws and
regulations; and (iv) a certificate of occupancy and other permits issued by the
appropriate governmental authorities authorizing the occupancy of the Property for its
intended purposes and use.
If (i) any of the conditions in subparagraph 12(b), above, are not fulfilled within
sixty (60) days after the date of the casualty, or if the reconstruction cannot be completed within
such 60 day period, within such additional time as may be reasonably necessary to complete the
reconstruction, not to exceed one hundred eighty (180) days, and provided such additional time
does not result in a breach by the Trustor under the Note, the 2009 DDA or this Deed of Trust; or
(ii) if Trustor fails to exercise diligence in promptly commencing or continuously prosecuting the
work; or (iii) if Trustor is otherwise in default under the Note, the 2009 DDA or this Deed of
Trust, or any reconstruction requirements set forth therein or herein, Beneficiary may, at its
option, apply the Proceeds and any deposits made by Trustor hereunder to the indebtedness
secured hereby, or to complete the neces: ry repairs and use the Proceeds for the payment
thereof. If the Proceeds are so applied to th ~debtedness and, together with any other payments
due to Beneficiary under the Note, and all er debts of Trustor to Beneficiary are discharged,
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Beneficiary shall not have the right to require the Property to be repaired under the terms of this
Deed of Trust, but Beneficiary's rights under any other lien that it holds against the Property and
which is not also required to be released shall not be thereby impaired or affected.
Subject to the rights of the Senior Lender under the Senior Lender Documents,
Trustor shall not commence any repairs or reconstruction of any casualty until Beneficiary
consents in writing thereto, which consent may be withheld by Beneficiary in its sole discretion,
until all of the conditions contained in this paragraph are satisfied. All work of repairing or
restoring damage shall be done in a good and workmanlike manner with materials of good
quality and in conformity with all applicable laws, ordinances, rules and regulations. Nothing
herein contained shall be construed as authorizing the Trustor to subject the Property to any
mechanic's, materialman's or other lien for the payment of bills for material furnished or labor
performed in connection with any work contemplated by this paragraph.
In any event in which the Beneficiary is not otherwise obligated to permit the
insurance proceeds to be applied to the restoration of the Property as hereinabove described and,
at the option of Beneficiary, the proceeds of a loss under any policy, whether or not endorsed
payable to Beneficiary, may be applied in payment of the principal, interest or any other sums
secured by this Deed of Trust, whether or not then due, or to the restoration or replacement of
any building on the Property, without in any way affecting the enforceability or priority of the
lien of this Deed of Trust or the obligation of the Trustor or any other person for payment of the
indebtedness hereby secured or the reconstruction of the damaged improvements, whether such
Trustor be the then owner of said building or improvements or not.
13. Use of Condemnation Awards. Subject to the rights of the Senior Lender
under the Senior Lender Documents, should the Property or any portion thereof or any
improvements thereon be taken or damaged by reason of any public improvement or
condemnation proceeding, or by any other form of eminent domain, Trustor agrees that
Beneficiary shall be entitled to all compensation, awards and other payments or relief therefor
and may, at its option, commence, appear in or prosecute in its own name any action or
proceeding or make any reasonable compromise or settlement in connection with such taking or
damage, and Trustor agrees to pay Beneficiary's costs and reasonable attorneys' fees incurred in
connection therewith. All such compensation, awards, damages, rights of actions and proceeds
may be applied by Beneficiary toward the repair of any damage to the improvements on any
portion of the Property not subject to the taking as and subject to the same conditions herein
provided with respect to the disposition of insurance proceeds, as set forth in Section 12
hereinabove; provided, however, that if the taking results in a loss of the Property to an extent
which, in the reasonable opinion of Beneficiary, renders or will render the Property not
economically viable or which substantially impairs Beneficiary's security or lessens to any
extent the value, marketability or intended use of the Property, Beneficiary may apply the
condemnation proceeds to reduce the unpaid indebtedness secured hereby in such order as
Beneficiary may determine. Trustor agrees to execute such further assignments of condemnation
proceeds as Beneficiary or Trustee may from time to time require. If so applied, any proceeds in
excess of the unpaid principal and accrued interest due under the Note plus all other sums due to
Beneficiary from Trustor shall be paid to Trustor or Trustor's assignee.
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14. Property Taxes and Assessments. Trustor shall pay in full on or before the
due date thereof all rents, taxes, assessments community redevelopment in lieu of property tax
charges and encumbrances, with interest, that may now or hereafter be levied, assessed or
claimed upon the Trustor's ownership or use of the Property that is the subject of this Deed of
Trust or any part thereof, and upon request, provide the Beneficiary with copies of official
receipts for payment therefor, and shall pay all taxes imposed upon, and reasonable costs, fees
and expenses of, this Deed of Trust.
15. Assessment Districts. Trustor agrees not to consent to inclusion of the
Land in any local improvement or special assessment district or to the imposition of any special
or local improvement assessment against the Property, without Beneficiary's prior written
consent.
16. Mortgage Taxes. In the event of the passage after the date of this Deed of
Trust of any federal, state or municipal law, ordinance or regulation relating to the taxation of
mortgages, deeds of trust or debts secured thereby so as to tax or assess any interest of
Beneficiary or any payments secured hereby. Trustor shall bear and pay the full amount of such
taxes.
17. ~ecial Assessment and Insurance Reserves. Subject to the rights of the
Senior Lender under the Senior Lender Documents, Trustor shall, at the request of the
Beneficiary, pay to Beneficiary equal monthly installments of the special assessments and
insurance premiums estimated by the Beneficiary next to become due, in addition to any other
periodic payment or performances owed by Trustor under the Note or this Deed of Trust, so that
thirty (30) days before the due date thereof, or of the first installment thereof, Beneficiary will
have on hand an amount sufficient to pay the next maturing assessments and insurance
premiums. The amount of the additional payment to be made on account of assessments and
insurance premiums shall be adjusted annually or more frequently as Beneficiary deems
necessary and any deficit shall be immediately paid by Trustor upon request and any surplus
shall be credited on the mortgage account. Subsequent payments on account of assessments and
insurance premiums shall be made in accordance with the next estimate by the Beneficiary of
annual requirements. To the extent permitted by applicable law, all monies paid to Beneficiary
on account of assessments or insurance premiums may be commingled and invested with
Beneficiary's own funds and, unless and to the extent required by law, shall not bear interest for
Trustor. Beneficiary shall not exercise the rights granted in this paragraph so long as the
following conditions are met:
(a) There is no other default under the Note, the 2009 DDA or this
Deed of Trust; or
(b) Trustor pays all assessments and insurance premiums prior to
delinquency.
Upon Trustor's failure to comply with any of the conditions (a) or (b) above,
Beneficiary may, at its option, then or thereafter exercised, require Trustor to pay the additional
sums described in this paragraph. Notwithstanding the foregoing, in the event that the Senior
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Lender releases casualty or condemnation proceeds to the Trustor for the repair or reconstruction
of the Property, Beneficiary shall also consent to the release of such proceeds.
18. Trustor's Right to Contest Taxes. Trustor shall have the right to contest
any real property tax or special assessment so long as (a) no defaults exist under the Note, the
2009 DDA, or this Deed of Trust; (b) Trustor makes any payment or deposit or posts any bond as
and when required as a condition to pursuing such contest; (c) Trustor commences such contest
prior to such tax or assessment becoming delinquent and continuously pursues the same in good
faith and with due diligence; (d) such contest or any bond furnished by Trustor stays the
foreclosure of any lien securing the payment of any such tax or assessment; and (e) Trustor pays
any tax or assessment within ten (10) days following the date of resolution of such contest.
19. Report of Real Estate Transaction. Trustor has made or provided for
making, or will make or provide for making, on a timely basis, any reports or returns required by
state or local law relating to the Property, or the development of the Property, notwithstanding
the fact that the primary reporting responsibility may fall on the Beneficiary, or other party.
Trustor's obligations under this paragraph will be deemed to be satisfied, if proper and timely
reports and returns required under this paragraph are filed by a title company involved in each
real estate transaction relating to the Property, but nothing contained herein shall be construed to
require such returns or reports to be filed by Beneficiary.
20. Leases. With respect to any leases currently or hereafter relating to any
portion of the Property, Trustor agrees that each such lease shall comply with the applicable
provisions of the 2009 DDA.
21. Assignment of Leases. Trustor hereby unconditionally and absolutely
assigns, transfers and sets over unto Beneficiary, all leases, subleases, rental agreements,
occupancy agreements, licenses, concessions, entry fees and other agreements that grant a
possessory interest in all or any part of the Property, together with all rents, issues, deposits and
profits of the Property, together with the immediate and continuing right to collect and receive
the same, for the purpose and upon the terms and conditions hereinafter set forth. Trustor further
unconditionally and absolutely assigns, transfers and sets over unto Beneficiary all of its right,
title and interest in and to any plans, drawings, specifications, permits, engineering reports and
land planning maps, which it now has or may hereafter acquire regarding any improvements now
on or to be constructed upon the Property. Beneficiary confers upon Trustor a license to collect
and retain the rents, issues, deposits and profits of the Property, as they become due and payable,
subject, however, to the right of Beneficiary upon a default hereunder to revoke said license, at
any time, in its sole discretion and without notice to Trustor. Beneficiary may revoke said
license and collect and retain the rents, issues, deposits and profits of the Property assigned
herein to Beneficiary upon the occurrence of an Event of Default hereunder or under any of the
obligations secured hereby, and without taking possession of all or any part of the Property, and
without prejudice to or limitation upon any of its additional rights and remedies granted pursuant
hereto or pursuant to the Note or the 2009 DDA, and Beneficiary shall, in its sole and absolute
discretion, have the right to apply such income for the payment of all expenses or credit the net
amount of income that it receives from the Property, to the indebtedness in the manner, order and
amounts as Beneficiary shall determine. In the event the Beneficiary exercises or is entitled to
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exercise any of its rights or remedies under this Deed of Trust as a result of the default of the
Trustor under the Note or the 2009 DDA, and if any lessee, sublessee or assignee under any lease
assigned under this paragraph files or has filed against it any petition in bankruptcy or for
reorganization or undertakes or is subject to similar action, Beneficiary shall have, and is hereby
assigned by Trustor, all of the rights that would otherwise inure to the benefit of Trustor in such
proceedings, including, without limitation, the right to seek "adequate protection" of its interests,
to compel assumption or rejection of any such lease and to seek such claims and awards as may
be sought or granted in connection with the rejection of any such lease. Unless otherwise agreed
to by Beneficiary in writing, Beneficiary's exercise of any of the rights provided in this
paragraph shall preclude Trustor from the pursuit and benefit thereof, without any further action
or proceeding of any nature. The foregoing assignment shall not impose upon Beneficiary any
duty to produce rents from the Property, and such assignment shall not cause Beneficiary to be a
"mortgagee in possession" for any purpose. The rights granted in this paragraph shall be in
addition to and not in derogation of any similar or related rights granted to Beneficiary in any
separate assignment of leases and rents.
22. Impairment of Security. Trustor shall not, without first obtaining
Beneficiary's written consent, which consent shall not be unreasonably withheld, assign any of
the rents or profits of the Property or change the general nature or use of the Property or initiate
or acquiesce in any zoning reclassification, or do, or suffer to be done, any act or thing that
would impair the security of Beneficiary's lien upon the Property or the rents thereof. Trustor
shall not, without the written consent of Beneficiary, which consent shall not be unreasonably
withheld, (i) initiate or support any zoning reclassification of the Property, seek any variance
under existing zoning ordinances applicable to the Property or use or permit the use of the
Property in a manner that would result in such use becoming anon-conforming use under
applicable zoning ordinances; (ii) modify, amend or supplement any easement, reservation,
restriction, covenant, condition or encumbrance pertaining to the Property; (iii) impose or
consent to any restrictive covenant or encumbrance upon the Property, execute or file any
subdivision or parcel map affecting the Property or consent to the annexation of the Property to
any municipality; or (iv) permit or suffer the Property to be used by the public or any person in
such manner as might make possible a claim of any implied dedication or easement.
23. Defense of Suits. Trustor shall appear in and defend any suit, action or
proceeding that might affect the value, priority or enforceability of this Deed of Trust or the
Property itself or the rights or powers of Beneficiary or Trustee, including any suits relating to
damage to property or death or personal injuries, whether or not Trustor is ultimately found
liable for any negligence or other wrongful conduct or inaction. Trustor, following mutual
negotiations with Beneficiary, has waived and does hereby waive any immunity to such liability
to Beneficiary under any industrial insurance or similar statute, to the extent such immunity
would impair Beneficiary's rights against Trustor. Should Beneficiary elect to appear in or
defend any such action or proceeding or be made a party to any such action or proceeding by
reason of this Deed of Trust, or elect to prosecute such action as appears necessary to preserve
the value, priority or enforceability of this Deed of Trust or the Property itself, Trustor will at all
times indemnify from and, on demand, reimburse Beneficiary and Trustee for, any and all loss,
damage, expense or cost, including cost of evidence of title expert witness fees and attorneys'
fees, arising out of or incurred in connection with any such suit, action or proceeding, and any
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appeal or petition for review thereof, and the sum of such expenditures shall be secured by this
Deed of Trust with interest at the rate of 10% per annum and shall be due and payable on
demand. Trustor shall pay costs of suit, cost of evidence of title expert witness fees and
reasonable attorneys' fees in any proceeding or suit brought by Beneficiary to foreclose this
Deed of Trust and in any appeal therefrom or petition for review thereof.
24. Assignments and Transfers. Trustor acknowledges that Beneficiary relied
upon Trustor's financial statements, credit history, business and real property managerial
expertise and other factors personal to Trustor in making the Note, and Trustor covenants not to
transfer any of the interest in the Property or to permit the transfer of any interest in Trustor,
except as provided in Section 25 hereinbelow, without first receiving Beneficiary's express
written consent in each instance. A breach of this covenant shall constitute a default under the
Note and this Deed of Trust. All sums then due to Beneficiary by Trustor hereunder or under the
Note may, at Beneficiary's option, be declared immediately due and payable if any of Trustor's
interests in the Property, or any part thereof, are sold or transferred, voluntarily or involuntarily,
without Beneficiary's written consent.
25. Permitted Transfers.
(a) Notwithstanding anything to the contrary contained herein, the respective
interests of Trustor's special limited partner and Investor Limited Partner shall be transferable to
any affiliate of Investor Limited Partner in accordance with the terms of the Partnership
Agreement without the consent of the Beneficiary. So long as Trustor is not then in default
under the terms Note, the 2009 DDA or this Deed of Trust and upon the expiration of the tax
credit compliance period, the interests of the Investor Limited Partner in the Trustor may be
transferred to the Trustor's general partner or its affiliate without the consent of the Beneficiary.
(b) Notwithstanding anything to the contrary contained herein, the Trustor's
Investor Limited Partner shall be permitted to remove the Trustor's general partner for cause in
accordance with the Partnership Agreement without the consent of the Beneficiary; provided,
however, that Investor Limited Partner shall not elect and appoint a successor general partner
therefore without the consent of the Beneficiary, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the substitute general partner shall assume all of the
rights and obligations of the removed general partner hereunder and under the 2009 DDA.
26. Further Encumbrances. Trustor acknowledges that Beneficiary relied
upon the Property not being subject to additional liens or encumbrances except as set forth in this
Deed of Trust, the Note and the 2009 DDA for reasons including, but not limited to, the
possibility of competing claims or the promotion of plans disadvantageous to Beneficiary in
bankruptcy; the risks to Beneficiary in a junior lienholder's bankruptcy; questions involving the
priority of future advances, the priority of future leases of the Property, the marshaling of
Trustor's assets, and the Beneficiary's rights to determine the application of condemnation
awards and insurance proceeds; the impairment of the Beneficiary's option to accept a deed in
lieu of foreclosure; the increased difficulty of reaching agreements for workouts or to the actions
to be taken by trustees, receivers, liquidators and fiduciaries; and Beneficiary's requirements of
Trustor's preservation of its equity in the Property and the absence of debt that could increase the
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likelihood of Trustor's being unable to perform its obligations when due. Therefore, as a
principal inducement to Beneficiary to make the Note secured by this Deed of Trust, and with
the knowledge that Beneficiary will materially rely upon this paragraph in so doing, Trustor
covenants not to encumber the Property except as set forth herein without first receiving
Beneficiary's express written consent in each instance, which consent may be withheld by
Beneficiary in its sole discretion. A breach of this covenant shall constitute a default under the
Note, the 2009 DDA and this Deed of Trust, and Beneficiary may exercise all remedies available
to Beneficiary under the Note, the 2009 DDA or this Deed of Trust. Without limiting the
generality of the foregoing, no mortgages, deeds of trust or other forms of security interests prior
or subordinate to the security interests of Beneficiary shall encumber any real or personal
property that is the subject of any lien or security interest granted to Beneficiary.
27. jRESERVED - NO TEXTI.
28. Event of Default. An "Event of Default" shall be deemed to have
occurred in any of the following circumstances:
(a) Failure of Trustor to satisfy any performance or payment
obligation required under this Deed of Trust, the Note or the 2009 DDA when due,
however Trustor shall have ten (10) days to cure any such default;
(b) Failure of Trustor to properly perform its obligations under this
Deed of Trust, the Note or the 2009 DDA, by a date specified herein or therein or in a
written notice to Trustor, if applicable, (which date specified shall not be less than thirty
(30) days nor greater than sixty (60) days from the date of such notice, and shall be
determined by Beneficiary in its sole discretion); provided, however, that: (i) if such
default set forth in the notice cannot be cured by the date specified, (ii) Trustor
commences to cure the default prior to the date specified in the notice, and (iii) Trustor
diligently proceeds to cure the default thereafter; then the date specified in the notice
shall be extended by any period reasonably necessary to complete the cure, but in no
event for more than ninety (90) days after the date originally specified in the notice;
(c) Trustor becomes insolvent or generally is not paying its debts as
they become due, as defined in the United States Bankruptcy Reform Act, as amended
from time to time (which Act, as amended, is herein called the "Bankruptcy Code"), or
shall file a voluntary petition in bankruptcy seeking to effect a reorganization plan or
other arrangement with creditors or any other relief under the Bankruptcy Code or under
any other state or federal law relating to bankruptcy or other relief for debtors, whether
now or hereafter in effect, or shall consent to or suffer the entry of any order for relief in
any involuntary case under the Bankruptcy Code, or shall be the defendant or subject of
any involuntary petition filed under the Bankruptcy Code that is not dismissed within
ninety (90) days of the filing thereof, or shall make an assignment for the benefit of
creditors;
(d) Any court (or similar tribunal) having jurisdiction over Trustor or
any of the Property or other property of Trustor shall enter a decree or order appointing a
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receiver, trustee, guardian, conservator, assignee in bankruptcy or insolvency of Trustor,
of any of the Property, of any other real property of Trustor, of any other significant asset
of Trustor, or shall enter a decree or order for relief in any involuntary case under the
Bankruptcy Code;
(e) The entry of any final judgment or arbitration award against
Trustor that is not paid or stayed pending appeal, or the sequestration or attachment of, or
any levy or execution upon (i) any of the Property, (ii) any other collateral provided by
Trustor or any other person under this Deed of Trust, or (iii) any significant portion of the
other assets of Trustor, which is not released, expunged or dismissed prior to the earlier
of (30) days after such sequestration, attachment or execution or five (10) days before the
sale of any such assets;
(f) Trustor shall dissolve, liquidate or wind up its affairs or shall
bring any legal action or take any other action contemplating such dissolution, liquidation
or winding up;
(g) The determination by Beneficiary that any representation,
warranty or statement contained in this Deed of Trust or the Note or the 2009 DDA in
writing delivered to Beneficiary in connection with Note or 2009 DDA was incomplete,
untrue or misleading in any material respect as of the date made and Trustor has not
cured such default within thirty (30) days from written notice by Beneficiary of such
default;
(h) The enactment of any law that deducts from the value of the
Property for the purpose of taxation of any lien thereon or imposing upon Beneficiary the
payment of the whole or any part of the taxes, assessments, charges or liens herein
required to be paid by Trustor or changing in any way the laws relating to the taxation of
deeds of trust or debts secured by deeds of trust or Beneficiary's interest in the Property
or the manner of collection of taxes so as to affect this Deed of Trust or the Note or the
2009 DDA or the holder thereof or imposing a tax, other than a Federal or state income
tax, on or payable by Trustee or Beneficiary by reason of their ownership of this Deed of
Trust or the Note and, in such event, Trustor, after demand by Beneficiary, does not pay
such taxes or assessments within thirty (30) days or reimburse Beneficiary therefor or, in
the opinion of counsel for Beneficiary, it might be unlawful to require Trustor to make
such payment or the making of such payment might result in the imposition of interest
costs beyond the maximum amount permitted by applicable law;
(i) Trustor acknowledges and agrees that all material non-monetary
defaults are conclusively deemed to be and are defaults impairing the security of this
Deed of Trust, and that Beneficiary shall be entitled to exercise any appropriate remedy,
including, without limitation, foreclosure of this Deed of Trust, upon the occurrence of
any such material non-monetary default; and
(j) Notwithstanding the remedies of Beneficiary set forth in Sec: ..1
29, below, the parties hereto agree that the Investor Limited Partner shall be entitled
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cure any default hereunder by the Trustor, and shall have fifteen (15) days after the
expiration of the applicable cure period to effect such cure, and the parties hereto shall
accept performance by the Investor Limited Partner of any obligation of the Trustor
hereunder as though tendered by the Trustor itself, provided such performance by the
Investor Limited Partner has occurred during the cure period, if any, provided to the
Trustor hereunder with respect to such default.
29. Rights and Remedies on Default. Upon the occurrence of any Default or
Event of Default under this Deed of Trust and at any time thereafter, and subject to the rights of
the Senior Lender and the Senior Lender Documents, Trustee or Beneficiary may exercise any
one or more of the following rights and remedies:
(a) Beneficiary may exercise any right or remedy provided for in the
Note, the 2009 DDA or this Deed of Trust;
(b) Beneficiary may declare the Note and all other performances or
sums secured by this Deed of Trust immediately due and payable;
(c) Beneficiary may declare all performances or sums secured hereby
immediately due and payable either by commencing an action to foreclose this Deed of
Trust as a mortgage, or by the delivery to Trustee of a written declaration of default and
demand for sale and of written notice of default and of election to cause the Property to
be sold, which notice Trustee shall cause to be duly filed for record in case of foreclosure
by exercise of the power of sale herein. Should Beneficiary elect to foreclose by exercise
of the power of sale herein, Beneficiary shall also deposit with Trustee this Deed of
Trust, the documents evidencing the Agency Loan and any receipts and evidence of
expenditures made and secured hereby as Trustee may require, and notice of sale having
been given as then required by law and after lapse of such time as may then be required
by law after recordation of such notice of default, Trustee, without demand on Trustor,
shall sell the Property at the time and place of sale 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 upon any terms and conditions specified by Beneficiary and
permitted by applicable law. Trustee may postpone sale of all or any portion of the
Property by public announcement at 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 any purchaser its deed or deeds
conveying the Property, or any portion thereof, so sold, but without any covenant or
warranty, express or implied. The recitals in such deed or deeds of any matters or facts,
shall be conclusive proof of the truthfulness thereof. Any person, including Trustor,
Trustee or Beneficiary, may purchase all or any portion of the Property, as applicable, at
sale.
(d) Beneficiary, from time to time before Trustee's sale, may rescind
any such notice of breach or default and of election to cause the Property to be sold by
executing and delivering to Trustee a written notice of such rescission, which notice,
when recorded, shall also constitute a cancellation of any prior declaration of default and
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demand for sale. The exercise by Beneficiary of such right of rescission shall not
constitute a waiver of any breach or default then existing or subsequently occurring, or
impair the right of Beneficiary to execute and deliver to Trustee, as above provided, other
declarations of default and demand for sale, and notices of breach or default, and of
election to cause the Property to be sold to satisfy the obligations hereof, nor otherwise
affect any provision, agreement, covenant or condition of the Note, the 2009 DDA and/or
of this Deed of Trust or any of the rights, obligations or remedies of the parties
hereunder.
(e) UCC Remedies. Beneficiary shall have all the rights and remedies
of a secured party under the California Uniform Commercial Code, including, without
limitation, Section 9501(4) thereof. Upon request, Trustor shall assemble and make such
collateral available to Beneficiary at a place to be designated by Beneficiary that is
reasonably convenient to both parties. Upon repossession, Beneficiary may propose to
retain the collateral in partial satisfaction of the Note or sell the collateral at public or
private sale in accordance with the Uniform Commercial Code as adopted in the state
where the Property is situated or any other applicable statute. Such sale may be held as a
part of, distinctive from or without a trustee's sale or foreclosure of the real property
secured by this Deed of Trust. If any notification of disposition of all or any portion of
the collateral is required by law, such notification shall be deemed reasonably and
properly given, if mailed at least ten (10) days prior to such disposition. If Beneficiary
disposes of all or any part of the collateral after default, the proceeds of disposition shall
be applied in the following order:
(i) to the reasonable expenses of retaking, holding, preparing
for sale, selling the collateral, and the like;
(ii) to the reasonable attorneys' fees and legal expenses
incurred by Beneficiary; and
(iii) to the satisfaction of the indebtedness secured by this Deed
of Trust.
(f) Remedial Advances. Should Trustor fail to make any payment or
to do any act as herein provided, then Beneficiary or Trustee, without obligation so to do
and without demand upon Trustor and without releasing Trustor from any obligation
hereof, may (i) make or do the same in such manner and to such extent as either may
deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to
enter upon the Property for such purposes; (ii) commence, appear in and defend any
action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee, (iii) pay, purchase, contest or compromise any encumbrance,
charge, lien, tax or assessment, or the premium for any policy of insurance required
herein; and in exercising any such power, incur any liability, expend whatever amounts in
its absolute discretion it may deem necessary therefor, including cost of evidence of title,
employ counsel and pay such counsel's fees. Beneficiary shall be subrogated to the
rights and lien interests of any person who is paid by Beneficiary pursuant to the terms of
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this paragraph. Trustor shall repay immediately on written notice to Trustor all sums
expended or advanced hereunder by or on behalf of Beneficiary, with interest from the
date of such advance or expenditure at the rate of 10% per annum, and the repayment
thereof shall be secured hereby.
(g) Summary Possession. Beneficiary may, at its option, either in
person or by agent, employee or court-appointed receiver, enter upon and take possession
of the Property and continue any work of improvement, repair or renovation thereof at
Trustor's expense and lease the same or any part thereof, making such alterations as it
finds necessary, and may terminate in any lawful manner any lease(s) of the Property,
exercising with respect thereto any right or option available to the Trustor. The entering
upon and taking possession of the Property, the collection of rents, issues and profits, or
the proceeds of fire and other insurance policies or compensation or awards for any
taking or damage to the Property, and the application or release thereof shall not cure or
waive any default or notice of default hereunder or invalidate any act done pursuant to
such notice.
(h) Collection of Rents. Beneficiary may require any tenant or other
user of the Property to make payments of rent or use fees directly to Beneficiary,
regardless of whether Beneficiary has taken possession of the Property. If any rents are
collected by Beneficiary, then Trustor hereby irrevocably designates Beneficiary as
Trustor's attorney-in-fact to endorse instruments received in payment thereof in the name
of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or
other users to Beneficiary in response to Beneficiary's demand shall satisfy the obligation
for which the payments are made, whether or not any proper grounds for the demand
existed. Beneficiary may exercise its rights under this paragraph either in person, by
agent or through a receiver.
(i) Beneficiary's Enforcement of Leases. Beneficiary is hereby
vested with full power to use all measures, legal and equitable, deemed by it necessary or
proper to collect the rents assigned in this Deed of Trust, including the right, in person or
by agent, employee or court-appointed receiver, to enter upon the Property, or any part
thereof, and take possession thereof forthwith to the extent necessary to effect the cure of
any default on the part of Trustor as lessor in any leases or upon Trustor's default under
the Note or the 2009 DDA. Trustor hereby grants to Beneficiary full power and authority
to exercise all rights, privileges and powers herein granted at any and all times hereafter,
without notice to Trustor, including the right to operate and manage the Property, make
and amend leases and perform any other acts reasonably necessary to protect the value,
priority or enforceability of any security for the obligations of the Trustor under the Note
or the 2009 DDA and use and apply all of the rents and other income herein assigned to
the payment of the costs of exercising such remedies, of managing and operating the
Property, and of any indebtedness or liability of Trustor to Beneficiary, including but not
limited to the payment of taxes, special assessments, insurance premiums, damage
claims, the costs of maintai ing, repairing, rebuilding and restoring any improvements on
the Property or of making ~ same rentable, attorneys' fees incurred in connection with
tl~e enforcement of this De ~ of Trust, and any principal and interest payments due from
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Trustor to Beneficiary under the Note and this Deed of Trust, all in such order as
Beneficiary may determine. Beneficiary shall be under no obligation to enforce any of
the rights or claims assigned to it hereunder or to perform or carry out any of the
obligations of the lessor under any leases and does not assume any of the liabilities in
connection with or arising or growing out of the covenants and agreements of Trustor in
any leases. It is further understood that this Deed of Trust shall not operate to place
responsibility for the control, care, management or repair of the Property, or parts thereof,
upon Beneficiary nor shall it operate to make Beneficiary liable for the carrying out of
any of the terms and conditions of any leases, or for any waste of the Property by the
lessee under any leases or by any other party, or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep, repair or control of the
Property resulting in loss or injury or death to any lessee, invitee, licensee, employee or
stranger, except as may result from the gross negligence or willful misconduct of
Beneficiary after taking possession of the Property hereunder.
(j) Beneficiary's Enforcement of Contracts. Beneficiary shall have
the right to enforce Trustor's rights under all architect, engineering, construction and
related contracts and to bring an action for the breach thereof in the name of Beneficiary
or, at Beneficiary's option, in the name of Trustor, in the event any architect, engineer,
contractor or other party breaches their respective contract or contracts, regardless of
whether Beneficiary acquires or retains any interest in the Property. Trustor hereby
irrevocably appoints Beneficiary as its attorney-in-fact for the purposes of the foregoing,
which power shall be durable and coupled with an interest. Beneficiary does not assume
and shall not be obligated to perform any of Trustor's obligations under said contracts nor
shall Beneficiary be required to enforce such contracts or bring action for the breach
thereof, provided; however, any performance of the respective contracts specifically
required by the Beneficiary in writing, following any default by Trustor under the Note,
the 2009 DDA or the contracts, and which is properly and timely undertaken by the
contractor, engineer or architect, shall be paid for by the Beneficiary in accordance with
the terms and conditions of the contracts. Such payments shall be deemed additions to
the amounts owed by Trustor to the Beneficiary under the Note and secured by this Deed
of Trust and shall bear interest at the rate of 10% per annum from the date of advance to
and including the date of full payment, and shall be secured by any deed of trust,
collateral assignment of leases and rents, security agreement and other documents granted
to secure the Note.
(k) Appointment of Receiver. Beneficiary has the right to have a
receiver appointed to take possession of any or all of the Property, with the power to
protect and preserve the Property, to operate the Property preceding foreclosure or sale,
to collect the income from the Property and apply the proceeds, over and above the cost
of the receivership, against the Note. The receiver may serve without bond, if permitted
by law. Beneficiary's right to the appointment of a receiver shall exist whether or not the
apparent value of the Property exceeds the indebtedness secured hereby by a substantial
amount. Employment by Beneficiary shall not disqualify a person from serving as a
receiver. Upon taking possession of all or any part of the Property, the receiver- or
Beneficiary may: (i) use, operate, manage, control and conduct business on the Property
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and make expenditures for all maintenance and improvements as in its judgment are
necessary and proper; (ii) collect the income from the Property and apply such sums to
the expenses of use, operation and management; and (iii) at Beneficiary's option,
complete any construction in progress on the Property, and in that connection pay bills,
borrow funds, employ contractors and make any changes in plans or specifications as
Beneficiary deems reasonably necessary or appropriate. If the revenues produced by the
Property are insufficient to pay expenses, the receiver may borrow, from Beneficiary or
otherwise, as Beneficiary may deem reasonably necessary for the purposes stated in this
paragraph. The amounts borrowed or advanced shall be payable on demand and bear
interest from the date of expenditure until repaid at the rate of 10% per annum. Such
sums shall become a part of the debt secured by this Deed of Trust.
(1) Specific Enforcement. Beneficiary may specifically enforce any
covenant in this Deed of Trust or the Trustor's compliance with its warranties herein and
may restrain and enjoin the breach or prospective breach of any such covenant or the
noncompliance with any condition and Trustor waives any requirement of the posting of
any bond in connection therewith.
(m) General Creditors' Remedies. Beneficiary shall have such other
rights and remedies as are available under any statute or at law or in equity, generally,
and the delineation of certain remedies in this Deed of Trust shall not be deemed in
limitation thereof.
30. Application of Sale Proceeds. After deducting all costs and expenses of
Trustee and of this Deed of Trust and, subject to the rights of the Senior Lender under the Senior
Lender Documents, including cost of evidence of title and reasonable attorneys' fees in
connection with sale, as above set forth, Trustee shall apply the proceeds of sale to payment of
all .sums expended under the terms hereof, not then repaid, with accrued interest at the rate of
10% per annum; all other sums then secured hereby; and the remainder, if any, to the Beneficiary
and any other person or persons legally entitled thereto.
31. Remedies Cumulative. No remedy herein conferred upon or reserved to
Trustee or Beneficiary is intended to be exclusive of any other remedy provided herein or under
the Note, the 2009 DDA or this Deed of Trust, or otherwise by law provided or permitted, or
provided in any guaranty given in connection with the Note, but each shall be cumulative and
shall be in addition to every other remedy. Every power or remedy given by this instrument to
Trustee or Beneficiary or to which either of them may be otherwise entitled, may be exercised
concurrently or independently, from time to time and as often as may be deemed expedient by
Trustee or Beneficiary and either of them may pursue inconsistent remedies.
32. No Waiver. No waiver of any default or failure or delay to exercise any
right or remedy by Beneficiary shall operate as a waiver of any other default or of the same
default in the future or a preclusion of any right or remedy with respect to the same or any other
occurrence.
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33. Marshaling. In case of a sale under this Deed of Trust, the Property, real,
personal and mixed, may be sold in one or more parcels. Neither Trustee nor Beneficiary shall
be required to marshal Trustor's assets.
34. SUBMISSION TO JURISDICTION.
(A) TRUSTOR, TO THE FULLEST EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND
UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL
JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT, ACTION OR
PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS DEED
OF TRUST, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN SAN BERNARDINO COUNTY, CALIFORNIA, (C)
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND, (D) TO THE FULLEST
EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY FORUM OTHER THAN SAN
BERNARDINO COUNTY, CALIFORNIA (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING
IN ANY OTHER FORUM). TRUSTOR FURTHER CONSENTS AND AGREES TO
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO THE TRUSTOR AT THE ADDRESS FOR NOTICES
DESCRIBED HEREIN, AND CONSENTS AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE
(BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS
OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(B) TRUSTOR, TO THE FULLEST EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND
UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND
FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO
THIS DEED OF TRUST OR ANY CONDUCT, ACT OR OMISSION OF BENEFICIARY
OR TRUSTOR, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
35. Trustor's Indemnification. Trustor agrees to indemnify and hold
harmless Trustee and Beneficiary from and against any and all losses, liabilities, penalties,
claims, charges, costs and expenses (including attorneys' fees and disbursements) (the "Losses")
that may be imposed on, incurred or paid by or asserted against Trustee and/or Beneficiary by
reason or on account of, or in connection with: (a) any default by Trustor hereunder or under the
Note or the 2009 DDA; (b) Trustee's and/or Beneficiary's good faith and commercially
reasonable exercise of any of their rights and remedies or the performance of any of their duties
hereunder or under any other documents to which Trustor is a party; (c) the construction,
reconstruction or alteration of the Property; (d) any negligence, willful misconduct or failure to
act of Trustor, or any negligence, willful misconduct or failure to act of any lessee of the
Property, or any of their respective agents, contractors, subcontractors, servants, employees,
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licensees or invitees; or (e) any accident, injury, death or damage to any person or property
occurring in, on or about the Property or any street, drive, sidewalk, curb or passageway adjacent
thereto, except for the willful misconduct or gross negligence of the indemnified person; or (f)
any failure of Trustor to file any tax reports or returns referred to in this Deed of Trust. The
indemnity provided under subsection (f) of this paragraph shall also extend to counsel for the
Beneficiary. Any amount payable to Trustee, Beneficiary or counsel for Beneficiary under this
paragraph shall be due and payable within ten (10) days after demand therefor and receipt by
Trustor of a statement from Trustee, Beneficiary and/or counsel for Beneficiary setting forth in
reasonable detail the amount claimed and the basis therefor, and such amounts shall bear interest
at the rate of 10% per annum from and after the date such amounts are paid by Beneficiary,
Trustee or counsel for Beneficiary, until paid in full by Trustor. Trustor's obligations under this
paragraph shall not be affected by the absence or unavailability of insurance covering the same
or by the failure or refusal by any insurance carrier to perform any obligation on its part under
any such policy of insurance. If any claim, action or proceeding is made or brought against
Trustor and/or Beneficiary that is subject to the indemnity set forth in this paragraph, Trustor
shall resist or defend against the same, if necessary, in the name of Trustee and/or Beneficiary,
with attorneys for Trustor's insurance carrier (if the same is covered by insurance) or otherwise
by attorneys approved by Beneficiary. Notwithstanding the foregoing, Trustee and Beneficiary,
in their reasonable discretion, may engage their own attorneys to resist or defend, or assist
therein, and Trustor shall pay, or, on demand, shall reimburse Trustee and Beneficiary for the
payment of the reasonable fees and disbursements of said attorneys. The indemnity provided for
herein shall survive Trustor's performance of the obligations secured by this Deed of Trust and
foreclosure, whether by judicial foreclosure, power of sale pursuant to this Deed of Trust or by
deed in lieu of foreclosure.
36. Attorneys' Fees; Costs. Trustor agrees to reimburse Beneficiary for all
costs, expenses expert witness and consulting fees and reasonable attorneys' fees that
Beneficiary incurs in connection with the realization or enforcement of any obligation or remedy
contained in this Deed of Trust, the Note or the 2009 DDA, with or without litigation, including
without limitation any costs, expenses and fees incurred: (a) on appeal; (b) in any arbitration or
mediation; (c) in any action contesting or seeking to restrain, enjoin, stay, or postpone the
exercise of any remedy in which Beneficiary prevails; (d) in any bankruptcy, probate,
receivership or other proceeding involving Trustor; and (e) in connection with all negotiations,
documentation, and other actions relating to any work-out, compromise, settlement or
satisfaction of the debt secured hereby or settlement of any covenants and obligations secured by
this Deed of Trust or set forth in the Note or the 2009 DDA. For the purposes hereof, the words
"reasonable attorneys' fees" shall mean and include the salaries and fringe benefits of the City
Attorney and lawyers employed by the City of Attorney of the City of San Bernardino, computed
on a hourly basis, who may provide legal services to the Beneficiary in connection with the
exercise by the Beneficiary of any of its remedies hereunder. All such costs, expenses and fees
shall be due and payable upon demand, shall bear interest from the date incurred through the date
of collection at the rate of 10% per annum, and shall be secured by this Deed of Trust.
37. Acceptance by Trustee. Trustee accepts this Trust when this Deed of
Trust, duly executed and acknowledged, is made a public record, as provided by law.
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38. Successor Trustee. Trustee may resign by an instrument in writing
addressed to Beneficiary, or Trustee may be removed at any time with or without cause by an
instrument in writing executed by Beneficiary and duly recorded. In case of the death,
resignation, removal or disqualification of Trustee or if for any reason Beneficiary shall deem it
desirable to appoint a substitute or successor trustee to act instead of Trustee herein named or
any substitute or successor trustee, then Beneficiary shall have the right and is hereby authorized
and empowered to appoint a successor trustee, or a substitute trustee, without other formality
than appointment and designation in writing executed and acknowledged by Beneficiary and the
recordation of such writing in the office where this Deed of Trust is recorded, and the authority
hereby conferred shall extend to the appointment of other successor and substitute trustees
successively. Such appointment and designation by Beneficiary shall be full evidence of the
right and authority to make the same and of all facts therein recited. If such appointment is
executed on behalf of Beneficiary by an officer of Beneficiary, such appointments shall be
conclusively presumed to be executed with authority and shall be valid and sufficient without
proof of any action by the Trustee or any officer of Beneficiary. Upon the making of such
appointment and designation, all of the estate and title of Trustee in the Property shall vest in the
named successor or substitute trustee and it shall thereupon succeed to and shall hold, possess
and execute all the rights, powers, privileges, immunities and duties herein conferred upon
Trustee; but, nevertheless, upon the written request of Beneficiary or of the successor substitute
trustee, the Trustee shall execute and deliver an instrument transferring to such successor or
substitute trustee all of the estate and title in the Property of the trustee so ceasing to act, together
with all the rights, powers, privileges, immunities and duties herein conferred upon Trustee, and
shall duly assign, transfer and deliver any of the properties and moneys held by the Trustee
hereunder to said successor or substitute trustee. All references herein to Trustee shall be
deemed to refer to any trustee (including any successor or substitute, appointed and designated,
as herein provided) from time to time acting hereunder. Trustor hereby ratifies and confirms any
and all acts that Trustee herein named or its successor or successors, substitute or substitutes, in
this Deed of Trust, shall do lawfully by virtue hereof.
39. Reconvene. Upon written request of Beneficiary, stating that all
performances and sums secured hereby have been satisfied and paid, and upon surrender of this
Deed of Trust to Trustee for cancellation and retention, and upon payment of its fees, Trustee
shall reconvey, without warranty, the Property then held hereunder. The recitals in any
reconveyance executed under this Deed of Trust of any matters or facts shall be conclusive proof
of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or
persons legally entitled thereto."
40. No Releases. The Property shall not be released from the lien of this
Deed of Trust and no person shall be released from liability under the Note or any other
obligation secured hereby, except in the manner herein specified. Without affecting the liability
of any other person for the payment and performance of any obligation herein mentioned
(including Trustor should it convey said Property) and without affecting the lien or priority
hereof upon any Property not released, Beneficiary may, without notice, release any person so
liable, extend the maturity or modify the terms of any such obligation, grant other indulgences,
make future or other advances to Trustor or any one or more parties comprising Trustor, assign
or in any manner transfer this Deed of Trust, release or reconvey or cause to be released or
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reconveyed at any time all or part of the said Property described herein, take or release any other
security or make compositions or other arrangements with debtors. Beneficiary may also accept
additional security, either concurrently herewith or thereafter, and sell same or otherwise realize
thereon, either before, concurrently with, or after sale hereunder.
41. Beneficiary's Consents. At any time, upon written request of Trustor,
Trustor's payment of Beneficiary's fees and presentation of this Deed of Trust (in case of full
reconveyance, for cancellation and retention), without affecting the liability of any person for the
payment of the indebtedness, Beneficiary may: (a) consent to the making of any map or plat of
said Property; (b) join in granting any easement or creating any restriction thereon, (c) join in
any other agreement affecting this Deed of Trust or the lien or charge thereof, and (d) reconvey,
without warranty, all or any part of the Property.
42. Partnership Agreement Amendments. The consent of the Beneficiary is
not required to an amendment of the Partnership Agreement: (i) resulting from the transfer by the
Investor Limited Partner of its interest in the Trustor in accordance with this Deed of Trust; (ii)
which does not result in the reduction of the installments of the Investor Limited Partner's
Capital Contributions to be made during and at the time of completion of construction of the
Project (as defined in the 2009 DDA) under the Partnership Agreement to be used as Trustor's
equity contributions in accordance with the 2009 DDA; or (iii) which does not materially and
adversely affect the ability of the Trustor to perform its obligation under this Deed of Trust, the
Note or the 2009 DDA.
43. Further Assurances. Trustor, from time to time, within fifteen (15) days
after request by Beneficiary, shall execute, acknowledge and deliver to Beneficiary, such chattel
mortgages, security agreements or other similar security instruments, in form and substance
reasonably satisfactory to Beneficiary, covering all property of any kind whatsoever owned by
Trustor or in which Trustor has any interest which, in the reasonable opinion of Beneficiary, is
essential to the operation of the Property covered by this Deed of Trust. Trustor shall further,
from time to time, within fifteen (15) days after request by Beneficiary, execute, acknowledge
and deliver any financing statement, renewal, affidavit, certificate, continuation statement or
other document as Beneficiary may reasonably request in order to perfect, preserve, continue,
extend or maintain the security interest under, and the priority of, this Deed of Trust and the
priority of each such chattel mortgage or other security instrument. Trustor further agrees to pay
to Beneficiary on demand all reasonable costs and expenses incurred by Beneficiary in
connection with the preparation, execution, recording, filing and refiling of any such instrument
or document, including the charges for examining title and the attorneys' fees for rendering an
opinion as to priority of this Deed of Trust and of such chattel mortgage or other security
instrument as a valid and subsisting lien. However, neither a request so made by Beneficiary,
nor the failure of Beneficiary to make such request shall be construed as a release of such
Property, or any part thereof, from the conveyance of title under this Deed of Trust, it being
understood and agreed that this covenant and any such chattel mortgage, security agreement or
other similar security instrument delivered to Beneficiary are cumulative and given as additional
security.
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44. Time of Performance. Time is of the essence hereof in connection with
all obligations of the Trustor herein and under the Note.
45. Notices. The undersigned Trustor requests that a copy of any Notice of
Default or Notice of Sale hereunder be mailed to it at its address as hereinbefore set forth and to
the Investor Limited Partner at:
Attention:
Any notices to be given to Trustor by Beneficiary hereunder shall be sufficient, if personally
delivered or mailed, postage prepaid, to the address of the Trustor stated hereinabove, or to such
other address that Trustor has requested in writing to Beneficiary. Any time period provided in
the giving of any notice hereunder shall commence upon the date such notice is delivered or
deposited with the United States Postal Service for delivery by regular first-class postage pre-
paid mail, as officially recorded on the certified mail receipt.
46. Beneficiary's Right to Inspect. Beneficiary and its agents and
representatives may enter upon the Property at all reasonable times to attend to Beneficiary's
interest and to inspect the Property.
47. Reports and Statements. Trustor shall deliver to Beneficiary, within
ninety (90) days after the end of each of Trustor's fiscal years, and within twenty (20) days after
Beneficiary's request, following an Event of Default, reasonably detailed operating statements
and occupancy reports in a form satisfactory to Beneficiary covering the Property, both certified
as correct by Trustor. At Beneficiary's option, after an Event of Default, such operating
statements shall be prepared by an independent certified public accountant at Trustor's expense.
If Beneficiary so requests, such statements shall specify, in addition to other information
requested by Beneficiary, the rents and profits received from the Property, the disbursements
made for such period, the names of the tenants of the Property and a summary of the terms of the
respective leases or the rental arrangements. Trustor shall permit Beneficiary or its
representative to examine all books and records pertaining to the Property, and shall deliver to
Beneficiary all financial statements, credit reports, and other documents pertaining to the
financial condition and obligations of Trustor and any tenants of the Property, and rental,
income, and expense statements, audits, and tax returns relating to the Property.
48. Assignment by Beneficiary; Participation. Beneficiary may assign this
Deed of Trust in whole or in part to any person and may grant participations in any of its rights
under this Deed of Trust, without notice and without affecting Trustor's liability under this Deed
of Trust. In connection with any proposed assignment, participation or similar arrangement,
Beneficiary may make available to any person all credit and financial data furnished or to be
furnished to Beneficiary by Trustor. Trustor agrees to provide to the person dt ;ignated by
Beneficiary any information as such person may reasonabi~~ require to form a decisi regarding
the proposed assigrunent, participation or other arrangement. Trustor may not assi ~ this Deed
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of Trust to any person at any time, except in connection with a transaction approved in writing
by Beneficiary, under the terms of this Deed of Trust.
49. Non-Recourse Liability.
a. As set forth in the Note, the Note is anon-recourse loan and the payment
of the principal, or interest or premium, if any, and/or any other charges of any nature arising out
of the Note or this Deed of Trust, or for any deficiency with respect to principal, or interest or
premium owing on the Note shall be limited to the security given by the Trustor and the
Trustor's general except for the "Nonrecourse Carve-Outs" as defined below.
b. Notwithstanding the provisions of Section 49(a) above, Trustor and
Trustor's general partner shall have full personal joint and several liability for, and shall not be
exonerated or exculpated from, the payment of all losses or damages, liabilities and expenses
suffered, sustained or incurred by Beneficiary as a result of or arising out of, in connection with,
directly or indirectly, or resulting from any of the following matters (such liability and such
matters from which such liability arises, collectively, the "Nonrecourse Carve-Outs") (i) any
fraud, intentional material misrepresentation, misappropriation or insurance proceeds,
condemnation awards, security deposits or trust funds in violation of applicable law or the
provisions of the 2009 DDA; (ii) Trustor's attempts to interfere with Beneficiary's rights under
the Note, the 2009 DDA or this Deed of Trust; (iii) the failure of Trustor to apply proceeds of
rents and other income of the collateral toward, or for sums otherwise advance by Beneficiary
for, the costs of maintenance and operation of the Property and to the payment of taxes, lien
claims, insurance premiums and debt service and other indebtedness to the extent the 2009 DDA
requires such taxes, lien claims and other items to be paid; (iv) statutory liability for waste or the
wilful damage or destruction to the Property, except as a result of casualty or condemnation; (v)
any claims, actions, proceedings and suits initiated by Trustor (or any party empowered to act on
behalf of Trustor) alleging that the relationship of Trustor and Beneficiary is that of joint
venturers, partners, tenants in common or joint tenants or any relationship other that that of
debtor and creditor; (vi) any claim, demand, order, consent decree, settlement, judgment or
verdict arising from the manufacture, deposit, storage, disposal, burial, dumping, injecting,
spilling, leaking or other placement or release, in, on or about any of the Property of a Hazardous
Material; or (vii) the cost to repair the Property as a result of casualty to the extent that such cost
is not reimbursed by insurance.
50. Legal Relationships. The relationship between Beneficiary and Trustor is
similar to that of lender and borrower, and no partnership, joint venture, or other similar
relationship shall be inferred from this Deed of Trust. Trustor shall not have the right or
authority to make representations, to act, or to incur debts or liabilities on behalf of Beneficiary.
Trustor is not executing this Deed of Trust as an agent or nominee for an undisclosed principal,
and no third party beneficiaries are or shall be created by the execution of this Deed of Trust,
other than by the assignment by Beneficiary of this Deed of Trust.
5 L Trustor Certification of Approval. Trustor hereby covenants and certifies
that by executing this Deed of Trust, Trustor has obtained all approvals required by its principals,
members and partners to execute and deliver the Note and this Deed of Trust.
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52. Modification. This Deed of Trust may be amended, modified, changed or
varied only by a written agreement signed by all of the parties hereto. No requirement of this
Deed of Trust may be waived, at any time, except in a writing signed by Beneficiary and any
such waiver shall be effective only as to its terms and on a single occasion. Neither,
Beneficiary's delay or omission in exercising any right, power or remedy under this Deed of
Trust upon default of Trustor nor Beneficiary's failure to insist upon strict performance of any of
the covenants or agreements contained in this Deed of Trust shall be construed as a waiver of
any such right, power, remedy, covenant or agreement or as an acquiescence in Trustor's breach
or default.
53. Successors. Subject to the prohibitions against Trustor's assignments
herein, this Deed of Trust shall inure to the benefit of and bind all of the parties, their successors,
estates, heirs, personal representatives and assigns.
54. Partial Invalidity. If a court of competent jurisdiction finally determines
that any provision of this Deed of Trust is invalid or unenforceable, the court's determination
shall not affect the validity or enforceability of the remaining provisions of this Deed of Trust.
In such event, this Deed of Trust shall be construed as if it did not contain the particular
provision that was determined to be invalid or unenforceable. No such determination shall affect
any provision of this Deed of Trust to the extent that it is otherwise enforceable under the laws of
any other applicable jurisdiction.
55. Mutual Negotiation. Beneficiary and Trustor confirm that they have
mutually negotiated this Deed of Trust and that none of the terms or provisions of this Deed of
Trust shall be construed against either party.
56. Paragraph Headings. The paragraph headings are for convenience only
and in no way define, limit, extend, or describe the scope or intent of this Deed of Trust or any of
its provisions.
57. Applicable Law. This Deed of Trust and the rights of the parties
hereunder shall be governed by, construed and enforced in accordance with the laws of the State
of California.
58. Entire Agreement. This Deed of Trust, including any exhibits or
addenda, contains the entire agreement of the parties with respect to the subject matter hereof
59. Counterparts. This Deed of Trust may be executed by the principals,
members and partners of Trustor in two or more counterparts, all of which together shall
constitute one and the same instrument and lien. The signature pages of exact copies of this
Deed of Trust may be attached to one copy to form one complete document. Additional copies
of this Deed of Trust may be executed in counterparts and recorded in two or more counties, all
of which shall constitute one and the same instrument and lien.
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60. Fixture Filing and Recording. This Deed of Trust constitutes a financing
statement filed as a fixture filing under California Commercial Code Section 9502(c), as
amended or recodified from time to time. This Deed of Trust is to be recorded in the real estate
records of San Bernardino County, California, and covers goods that are, or are to become,
fixtures.
61. Survival of Representations and Warranties. All of Trustor's
representations and warranties contained in this Deed of Trust shall be true and correct at all
times during the term of the Note secured hereby, until performance of all obligations set forth in
the Note and in the 2009 DDA or, alternatively, full repayment of the Note and release and
reconveyance of this Deed of Trust.
62. Conflicting Provisions. To the extent that the provisions of this Deed of
Trust conflict with any provisions of the 2009 DDA, the provisions of this Deed of Trust shall
control.
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IN WITNESS WHEREOF, Trustor hereby duly executes this Agency Loan Deed
of Trust as of the day and year first above written.
TRUSTOR
Magnolia Highland, L.P.
a California limited partnership
By: Magnolia Highland, LLC,
a California limited liability company
Its: Administrative General Partner
By:
John M. Huskey
Manager
By: Western Community Housing, Inc.
a California non-profit public benefit Corporation
Its: Managing General Partner
By:
Graham Espley-Jones
President
By:
Leanne Truofreh
Secretary
[NOTARY JURATS ATTACHED]
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
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Exhibit "C"
Agency Regulatory Agreement and Covenants
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of San Bernardino
Attn.: Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
(Space Above Line Reserved For Use By Recorder)
Recording Fee Exempt Pursuant to Government Code Section 6103
[EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED
IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 AFFORDABLE
SENIOR CITIZEN RENTAL HOUSING ACQUISTION, DISPOSITION AND
DEVELOPMENT AGREEMENT, DATED AS OF AUGUST 3, 2009, AS AMENDED BY THE
AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING
ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF
MARCH _, 2010. THE FINAL FORM OF THIS REGULATORY AGREEMENT SHALL BE
SUBJECT TO THE JOINT REVIEW AND APPROVAL BY THE PARTIES OF THE
SPECIFIC TERMS ON WHICH THE AFFORDABLE RENTAL HOUSING DEVELOPMENT
PROJECT RESERVED FOR OCCUPANCY BY SENIOR CITIZEN HOUSEHOLDS, MAY BE
UNDERTAKEN BY (MAGNOLIA HIGHLAND, L.P.) THE DEVELOPER, AS PART OF THE
PROJECT. THE FINAL TEXT OF THE REGULATORY AGREEMENT IS ALSO SUBJECT
TO THE APPROVAL BY THE PARTIES OF THE CONDITIONS OF THE STATE TCAC
REGULATORY AGREEMENT FOR THE PROJECT.]
REDEVELOPMENT AGENCY FOR THE CITY OF SAN BERNARDINO
REGULATORY AGREEMENT AND COVENANTS
(Magnolia Highland, L.P. Affordable Senior Citizen Housing Project)
THIS REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
REGULATORY AGREEMENT AND COVENANTS (the "Agency Regulatory Agreement") is dated
as of , 2010, by and between the REDEVELOPMENT AGENCY OF THE CITY
OF SAN BERNARDINO, a public body, corporate and politic (the "Agency") and Magnolia
Highland, L.P., a California limited partnership (the "Developer") with reference to the facts set forth
in the following Recitals.
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-- RECITALS --
A. A legal description of the Site (as hereinafter defined) is attached hereto as Exhibit "A"
and incorporated herein by this reference.
B. The Agency and the Developer have entered into that certain agreement entitled "2009
Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement
(Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland L.P.)", dated
as of August 3, 2009, as amended by the Amendment No. 1 to the 2009 Affordable Senior Citizen
Rental Housing Acquisition, Disposition and Development Agreement, dated as of March _, 2010
(collectively, the "2009 DDA") pursuant to which the Agency shall provide certain affordable rental
housing development assistance in support of the affordable senior citizen rental housing development
project constructed as part of the "Project", as the item is defined by the 2009 DDA, subject to certain
conditions, including the terms and conditions of this Agency Regulatory Agreement.
C. The terms of the 2009 DDA require that certain covenants and affordability restrictions
remain in full force and effect on the Site for a term of at least sixty (60) years following the date of
recordation of this Agency Regulatory Agreement (the "Term") in order to ensure that:
(i) the units in the Project (as hereinafter defined) (exclusive of the on-site manager(s)'
unit(s)), shall at all times be occupied or reserved for occupancy by elderly persons who have a
household income which is not more than eighty percent (80%) of median income, adjusted for
family size, as determined by HUD for the San Bernardino -Riverside statistical metropolitan
area ("Median Income"); and
(ii) each elderly person, or elderly person household which qualifies for occupancy in the
Project (each a "Qualifying Resident") shall pay no more as rent than an "Affordable Rent" as
defined below.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
UNDERTAKINGS SET FORTH HEREIN AND FOR SUCH OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY
ACKNOWLEDGED, THE DEVELOPER AND THE AGENCY DO HEREBY COVENANT AND
AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, AS FOLLOWS:
Section 1. Definitions of Certain Terms and Phrases.
As used in this Agency Regulatory Agreement, the following words and terms shall have the
meaning as provided in the Recitals or in this Section 1, unless the specific context of usage of a
particular word or term may otherwise require:
• Affordable Rent. The term "Affordable Rent" means for the total number of units in the
Project reserved for occupancy by Qualifying Residents whose annual household
income may not exceed the annual income fora "lower income household" as defined
in Health and Safety Code Section 50079.5, total charges for rent, utilities and related
services, on an annual basis, shall not exceed eighty percent (80%) of Median Income,
adjusted for family size, and in the case of the total number of units in the Project
reserved for occupancy by Qualifying Residents whose annual household income may
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not exceed the annual income fora "very low income household" as defined in Health
and Safety Code Section 50079.5, total charges for rent, utilities and related services, on
annual basis, shall not exceed fifty percent (50%) of Median Income, adjusted for
family size.
• Agency Subordination Agreement for Project Financing. The words "Agency
Subordination Agreement for Project Financing" mean and refer to the form of the
separate loan subordination agreements by and between the Developer and the Agency
in favor of a lender who provides development financing for the Project, as set forth in
this Agency Regulatory Agreement. The first such Agency Subordination Agreement
for Project Financing shall be in favor of the Construction Lender and the Construction
Loan, and the second shall be in favor of the Permanent Lender and the Permanent
Loan. The Agency Subordination Agreement for Project Financing with respect to the
Construction Loan and/or Permanent Loan may be in the form of an intercreditor
agreement among the Agency and other holders of security interests in the Project if the
Developer obtains a Construction Loan or Permanent Loan, as applicable, from multiple
lending sources, such as a portion of such construction financing from a conventional
lender and a portion from an instrumentality of the State of California, including,
without limitation, the California Housing Finance Agency. Each such Agency
Subordination Agreement for Project Financing shall be subject to the terms and
conditions of this Agency Regulatory Agreement.
• City. The term "City" means and refers to the City of San Bernardino, California.
• Construction Lender. The term "Construction Lender" means and refers to the entity or
entities providing the Construction Loan to the Developer.
• Construction Loan. The term "Construction Loan" means and refers to the loan (or
collectively loans from multiple sources, including instrumentalities of the State of
California) which the Developer shall hereafter obtain in an approximate principal
amount as provided in the 2009 DDA, in order to provide for the construction and
improvement of the Project. The Construction Loan may be derived from one or more
sources of financing obtained by the Developer, including, from the proceeds of a
construction loan or grant of construction funding originated to the Developer by an
instrumentality of the State of California, from the proceeds of a construction loan
provided by a state or federally regulated third-party lending institution, or from a
combination of these funding sources.
• Construction Loan Documents. The term "Construction Loan Documents" shall have
the same meaning as set forth in the 2009 DDA.
• Hazardous Substances. The term "Hazardous Substances" shall have the same meaning
as set forth in the 2009 DDA.
• Median Income. The words "Median Income" mean median income as determined by
the United States Department of Housing and Urban Development for the San
Bernardino -Riverside Metropolitan Area.
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• Permanent Loan. The words "Permanent Loan" shall have the same meaning as set
forth in the 2009 DDA.
• Permanent Loan Documents. The words "Permanent Loan Documents" shall have the
same meaning as set forth in the 2009 DDA.
• Project. The term "Project" shall mean all of the work of investigation, design,
construction, improvement, modification, and financing necessary for the Developer to
acquire the Site and construct and place in service thereon (or on a portion of the Site)
the affordable senior citizen rental housing project consisting of seventy nine (79) rental
units reserved for occupancy by Qualifying Tenants and one (1) unit for occupancy by
on-site management personnel. The Project also includes all related landscaping,
driveways, utilities, and any improvements which may be required by the City on the
Site or within the public rights-of--way adjacent to the Site. The functional elements of
the Project are more particularly described in the Scope of Development and Site
Improvement Plan attached as Exhibit "B" to this Agency Regulatory Agreement.
Qualifying Resident. The words "Qualifying Resident" mean the tenant of any unit
within the Project (other than the single on-site manager's unit) who shall be at least
sixty two (62) years of age and who shall have an income that does not exceed the
Qualifying Resident Income, as provided in this Agency Regulatory Agreement. If
either the Construction Loan Documents or, later, the Permanent Loan Documents do
not have a definition of Qualifying Tenant that supercedes the definition set forth in this
Regulatory Agreement, then during the Term of this Regulatory Agreement, the words
"Qualifying Resident" mean the senior citizen household of any unit within the Project
which shall be composed of at least one (1) member who is sixty two (62) years of age
and whose other members, if any, satisfy the provisions of California Civil Code
Section 51.3, and whose combined household income does not exceed Qualifying
Resident Income.
• Qualifying Resident Income. The words "Qualifying Resident Income" mean in the
case of Qualifying Residents who shall unit in the Project, a household income which is
not more than eighty percent (80%) of Median Income, adjusted for family size; and
• Site. The term "Site" shall have the same meaning as set forth in the 2009 DDA.
• State TCAC Regulatory Agreement. The words "State TCAC Regulatory Agreement"
shall have the same meaning as set forth in the 2009 DDA.
• Term. The word "Term" means the period of time ueginning on the date of the
recordation of this Agency Regulatory Agreement and ending on the sixtieth (60th)
anniversary thereafter.
The titles and headings of the sections of this Agency Regulator, lgreement have been
inserted for convenience of reference only and are not to be considered a pa ~ .ereof and shall not in
any way modify or restrict the meaning of any of the gems or provisions herec
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Section 2. Acknowledgment of the Developer and Acknowledgment of Subordination of
the Agency.
(a) The Developer hereby acknowledges that this Agency Regulatory Agreement imposes
certain restrictions on the use and occupancy of the Project and the Site during the Term of this
Agency Regulatory Agreement. The Developer acknowledges and understands that the restrictions
shall be applicable to the Project and the Site for the Term hereof, commencing on the date of
recordation of this Agency Regulatory Agreement.
Initials of Developer
(b) Concurrently upon the execution and recordation of this Agency Regulatory Agreement
the Developer shall obtain certain purchase money mortgage financing for the improvement of the Site
from (as the Construction Lender), subject to the provisions of the 2009 DDA.
The Developer has provided the Agency with a true and correct copy of the Construction Loan
Documents.
As a condition to providing its mortgage loan to the Developer the Construction Lender
requires the Agency to agree that the provisions of this Agency Regulatory Agreement shall be junior
and subordinate to the security interest of the Construction Lender in the Site securing repayment of
the Construction Loan.
The Agency hereby acknowledges and agrees that the provisions of this Agency Regulatory
Agreement are subordinate and junior to the security interest of the Construction Lender in the Site
securing repayment of the Construction Loan.
Section 3. Covenant of Developer to Rent to Qualifying Tenants; Covenant of Developer
to Charge Affordable Rent; Covenant of Developer Re ag rdin~ Maintenance of Project Operating
Business Records.
(a) Except during the "Temporary Period" as described in subsection (f), below, during the
Term, the Developer covenants that all of the dwelling units in the Project (exclusive of the on-site
manager(s)' unit(s)) shall at all times be occupied or held vacant available for rental by Qualifying
Tenants.
Determination of Qualifying Tenant Income shall be made by the Developer at the time of
initial occupancy of a dwelling unit and, upon each renewal of a Qualifying Tenant's lease,
recertification of Qualifying Tenant Income shall be made by the Developer. The Developer shall
obtain, prior to initial occupancy, and, thereafter, maintain on file, income certifications from each
Qualifying Tenant renting any of the dwelling units in the Project. The Developer shall make a good
faith effort to verify that the income information provided by an applicant (or occupying Qualifying
Tenant household) in an income certification is accurate by taking one or more of the following steps
as a part of the verification process: (1) obtain an income tax return for the most recent tax year; (2)
conduct a credit reporting agency or similar search; (3) obtain an income verification form from the
applicant's current employer; (4) obtain an income verification form from the United States Social
Security Administration and/or the California Department of Social Services, if the applicant receives
assistance from either of such agencies; or (5) if the applicant is unemployed and has no such tax
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return, obtain another form of independent verification of income. All such verification information
shall only be obtained by Developer after obtaining the applicants/Qualifying Tenant's written consent
for the release of such information to the Developer. On the anniversary of the occupancy of each
such dwelling unit the Developer shall recertify the household income of the Qualifying Tenant
household occupying the dwelling unit. Copies of tenant income certifications shall be made available
by the Developer to the Agency upon request. For purposes of this Section 3(a), the Developer may
conclusively rely upon the evidence of the age of the occupant(s) of the unit as presented in a valid
California Driver's License, other form of identification issued by the State of California or the United
States government, which includes a date of birth.
(b) Except during the Temporary Period, the Developer covenants that it shall not charge in
excess of Affordable Rent for any dwelling unit in the Project. The Developer may increase rents
based on changes in Median Income only and no more than once in any twelve-month period.
(c) Except during the Temporary Period, business records for the Project shall be
established and maintained by the Developer relating to the use and occupancy of the Site and the
Project for affordable elderly person rental housing use purposes, as authorized herein. The Developer
shall be responsible for establishing and maintaining such records during the Term of this Agency
Regulatory Agreement, and the Developer shall provide the Agency with copies of such records within
thirty (30) days of written request by the Agency.
(d) Except during the Temporary Period, the Developer and all Qualifying Tenants shall
permit the Agency to conduct inspections of the Site and the Project from time-to-time for purposes of
verifying compliance with this Agency Regulatory Agreement, upon thirty (30) days prior written
notice to the Developer.
(e) Commencing on the June 30 following the fifth (5th) anniversary of the date of
recordation of this Agency Regulatory Agreement or on the June 30 following the date on which 25%
of the dwelling units in the Project are placed in service as rental housing units, whichever date may
first occur, and on each June 30 thereafter during the Term, the Developer shall submit a report to the
Agency, in a form approved by the Agency (the "Annual Report"). The Annual Report shall include
for each dwelling unit in the Project, the rent, income and family size of the Qualifying Tenant
household occupying the dwelling unit. The Annual Report shall also state the date the tenancy
commenced for each dwelling unit and such other information as the Agency may be required by law
to obtain; provided, however, that the Agency shall take reasonable steps to maintain the confidential
nature of the information contained in any Annual Report specifically relating to any dwelling unit.
The Developer shall provide any additional information reasonably requested by the Agency, including
without limitation Project-related income and expense accounting information. The Agency shall have
the right to examine and make copies of all books, records or other documents of Developer which
pertain to any dwelling unit; provided, however, that the Agency shall take reasonable steps to
maintain the confidential nature of such information. The Developer shall maintain complete, accurate
and current records pertaining to the dwelling units, the Site and the Project, and shall permit any duly
authorized representative of the Agency (during business hours and upon prior notice as provided
herein) to inspect such records, including records pertaining to income and household size of
Qualifying Tenants; provided, however, that the Agency shall take reasonable steps to maintain the
confidential nature of information relating to any specific household.
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(f) The "Temporary Period" shall commence on the date of recordation of this Regulatory
Agreement and continue until the end of the twelfth (12th) calendar month following the recordation of
this Agency Regulatory Agreement.
Section 4. Covenant of the Developer With Respect to the Rental of Dwelling Units in the
Project.
The Developer for itself, its successors and assigns hereby covenants and agrees that, in
connection with the rental of units in the Project to Qualifying Tenants during the Term, it shall
comply with the following requirements:
(1) The lease between the Developer and the Qualifying Tenant shall be for not less than
one year, unless by mutual agreement between the Developer and the Qualifying Tenant, but in such a
case for not less than six (6) months, as required by applicable provisions of the Internal Revenue
Code.
(2) The lease shall not contain any of the following provisions:
(i) an agreement by the Qualifying Tenant to be sued, to admit guilt or to entry of a
judgment in favor of the Developer in a lawsuit brought in connection with the lease;
(ii) an agreement by the Qualifying Tenant that the Developer may take, hold or sell
personal property of household members, without notice to the Qualifying Tenant and a court decision
on the rights of the parties, other than an agreement by the tenant concerning disposition of personal
property remaining in the housing unit, after the Qualifying Tenant has moved out of the dwelling unit;
(iii) an agreement by the Qualifying Tenant not to hold the Developer or its agents legally
responsible for any action or failure to act, whether intentional or negligent;
(iv) an agreement by the Qualifying Tenant that the Developer may institute a lawsuit
without notice to the Qualifying Tenant;
(v) an agreement by the Qualifying Tenant that the Developer may evict the Qualifying
'Tenant without instituting a civil court proceeding in which the Qualifying Tenant has the opportunity
to present a defense, or before a court decision on the rights of the parties;
(vi) an agreement by the Qualifying Tenant to waive any right to a trial by jury;
(vii) an agreement by the Qualifying Tenant to waive the Qualifying Tenant's right to
appeal, or to otherwise challenge a court decision in connection with the lease;
(viii) an agreement by the Qualifying Tenant to pay attorney's fees or other legal costs, even
if the Qualifying 7 nant wins in a court proceeding by the Developer against the Qualifying Tenant;
provided, however he Qualifying Tenant may be obligated to pay costs, if the tenant loses such a
legal action.
(3) The >eveloper shall not terminate the tenancy or refuse to renew the lease of a
Qualifying Tenant kept for serious or repeated violations of the terms and conditions of the lease;
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for violation of applicable Federal, State, or local law; or for other good cause. The Developer shall, in
connection with a termination of a tenancy or a refusal to renew a lease, serve written notice upon the
Qualifying Tenant specifying the grounds for the action, at least thirty (30) days before the termination
of the tenancy.
(4) The Developer shall adopt written tenant selection policies and criteria that:
(i) are consistent with the purpose of providing housing for individuals who are at least
sixty two (62) years of age and have an income that is no more than the Qualifying Tenant Income;
(ii) are reasonably related to program eligibility and the applicants' ability to perform the
obligations of the lease;
(iii) give reasonable consideration to the housing needs of individuals who: occupy
substandard housing; individuals that are paying more than fifty (50) percent of their annual income
for rent; or individuals that are involuntarily displaced;
(iv) provide for the selection of tenants from a written waiting list in the chronological order
of their application, insofar as is practicable; and
(v) give prompt written notification to any rejected applicant of the grounds for rejection.
(5) All of the dwelling units in the Project shall be available for occupancy on a continuous
basis to Qualifying Tenants. The Developer shall not give preference to any particular class or group
of persons in renting the dwelling units. There shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, age,
marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy,
tenure, or enjoyment of any dwelling unit. Neither the Developer nor any person claiming under or
through the Developer, shall 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 of any dwelling unit or in connection with the employment of
persons for the operation and management of any dwelling unit, the Project or the Site. All deeds,
leases or contracts made or entered into by Developer as to the dwelling units, the Project or the Site or
any portion thereof, shall contain covenants prohibiting discrimination, as prescribed by this Agency
Regulatory Agreement. The Developer shall include a statement in all advertisements, notices and
signs for the availability of dwelling units for rent to the effect that owner is an Equal Housing
Opportunity Provider.
Section 5. Development and Management of the Project.
(a) The Developer hereby reaffirms its covenant and agreement, as set forth in the 2009
DDA to undertake, and thereafter, diligently complete the development of the Project on the Site in
accordance with the Budget Development/Scope of Work attached hereto as Exhibit "B" (the "Scope
of Development"), within the period of time set forth under the Schedule of Performance attached
hereto as Exhibit "C".
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(b) The Agency shall have no responsibility for the management or operation of the Project
or the Site. The Developer shall be responsible for management of the Project, including, without
limitation, the selection of Qualifying Tenants, certification and recertification of household size, and
income and the age of the head of household of all units, evictions, collection of rents and deposits,
maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security.
The Project shall at all times be managed by an experienced management agent (the "Management
Agent") reasonably acceptable to the Agency, with demonstrated ability to operate senior citizen
residential rental facilities similar to the Project in a manner that will provide decent, safe, and sanitary
housing. For the purposes hereof, if the Developer directly performs the functions of the Management
Agent by its employees or by means of a service contract with an entity which is a partner in the
Developer, such a Management Agent shall be deemed approved by the Agency. If the Management
Agent is an entity or person other than the Developer, its employees a partner in the Developer or an
entity owned or controlled by the Developer, the Developer shall submit for the Agency's approval the
identity of any proposed Management Agent, together with additional information relevant to the
background, experience and financial condition of any proposed Management Agent, as reasonably
requested by the Agency. If the proposed Management Agent meets the standard for a qualified
Management Agent set forth above, the Agency shall approve the proposed Management Agent by
notifying the Developer in writing within thirty (30) days following the written request of the
Developer for such approval. Unless the proposed Management Agent is disapproved by the Agency
within thirty (30) days, which disapproval shall state with reasonable specificity the basis for
disapproval, it shall be deemed approved. The Developer is hereby approved by the Agency as the
Management Agent for the Project. Any Management Agent approved by the Permanent Lender
during the term of the Permanent Loan Documents or by State TCAC shall be deemed approved by the
Agency.
(c) The Developer shall cause to be in full force and effect during the Term hereof
insurance coverage, as follows:
(i) If any building or improvements on the Site shall be damaged or destroyed by an
insurable cause, the Developer shall, at its own cost and expense, diligently repair or restore the Project
consistent with the original plans and specifications for the Project. Such work or repair shall be
commenced within One Hundred Twenty (120) days after the damage or loss occurs and shall be
completed within one year thereafter. All insurance proceeds collected for such damage or destruction
shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be
insufficient for such purpose, the Developer shall make up the deficiency; and
(ii) a policy of comprehensive general liability insurance written on a per
occurrence basis in an amount not less than either (i) a combined single limit of TWO MILLION
DOLLARS ($2,000,000.00) or (ii) bodily injury limits of ONE MILLION DOLLARS ($1,000,000.00)
per person, TWO MILLION DOLLARS ($2,000,000.00) per occurrence, ONE MILLION DOLLARS
($1,000,000.00) products and completed operations.
(iii) a policy of workers' compensation insurance in such amount as will fully
comply with the laws of the State of California and which shall indemnify, insure and provide legal
defense for the Developer against any loss, claim or damage arising from any injuries or occupational
diseases occurring to any worker employed by or any persons retained by the Developer in the course
of carrying out the activities in this Agency Regulatory Agreement.
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(iv) a policy of comprehensive automobile liability insurance written on a per
occurrence basis in an amount not less than either (i) bodily injury liability limits of FIVE HUNDRED
THOUSAND DOLLARS ($500,000.00) per person and ONE MILLION DOLLARS ($1,000,000.00)
per occurrence and (ii) property damage liability limits of TWO HUNDRED THOUSAND DOLLARS
($200,000.00) per occurrence and FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) in the
aggregate. Said policy shall include coverage for owned, non-owned, leased and hired vehicles.
All of the above policies of insurance shall be primary insurance and shall name the City of San
Bernardino and the Agency, and their officers, employees, and agents as additional insureds. The
insurer shall waive all rights of subrogation and contribution it may have against the City of San
Bernardino and/or the Agency and their officers, employees and agents and their respective insurers.
All of said policies of insurance shall provide that said insurance may not be amended or canceled
without providing thirty (30) days prior written notice by registered mail to Agency. In the event any
of said policies of insurance are canceled, the Developer shall, prior to the cancellation date, submit
new evidence of insurance in conformance with this Section to the Executive Director. No operation of
the Project shall commence until the Developer has provided Agency with certificates of insurance or
appropriate insurance binders evidencing the above insurance coverages, and said certificates of
insurance or binders are approved by Agency.
The policies of insurance required by this Agreement shall be satisfactory only if issued by
companies qualified to do business in California, rated at least "A(vii)" or better in the most recent
edition of Bests Insurance Rating Guide or an equivalent rating in The Key Rating Guide or in the
Federal Register unless such requirements are modified or waived by the Executive Director of the
Agency due to unique circumstances.
Compliance by the Developer with the insurance requirements of the Construction Loan
Documents, the Permanent Loan Documents and/or the State TCAC Regulatory Agreement shall be
deemed to meet the foregoing requirements during the applicable periods of time when those
agreements are in effect so long as the Agency, City and their officers, employees, and agents as
additional insureds on all said policies as evidenced by certificates of insurance issued to the City and
the Agency.
The Developer agrees that the provisions of this Section shall not be construed as limiting in
any way the extent to which the Developer may be held responsible for the payment of damages to any
persons or property resulting from the Developer's activities or the activities of any person or persons
for which the Developer is otherwise responsible.
Section 6. Maintenance of the Project.
The Developer, for itself, its successors and assigns, hereby covenants and agrees that:
(1) The exterior areas of the Project which are subject to public view (e.g.: all
improvements, paving, walkways, landscaping, and ornamentation) shall be maintained in good repair
and a neat, clean and orderly condition, ordinary wear and tear excepted. In the event that at any time
during the Term, there is an occurrence of an adverse condition on any area of the Project which is
subject to public view in contravention of the general maintenance standard described above, (a
"Maintenance Deficiency") then the Agency shall notify the Developer in writing of the Maintenance
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Deficiency and give the Developer thirty (30) days from the date of such notice to cure the
Maintenance Deficiency as identified in the notice. The words "Maintenance Deficiency" include
without limitation the following inadequate or non-confirming property maintenance conditions and/or
breaches of residential property use restrictions:
failure to properly maintain the windows, structural elements, and painted exterior surface areas
of the dwelling units in a clean and presentable manner;
failure to keep the common areas of the Project free of accumulated debris, appliances,
inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building
materials or equipment not regularly in use on the property;
failure to regularly maintain, replace and renew the landscaping in a reasonable condition free
of weed and debris;
parking of any tentative-owned commercial motor vehicle in excess of 7,000 pounds gross
weight anywhere on the Project;
the use of garage areas on the Project for purposes other than the parking of motor vehicles and
the storage of personal possessions and mechanical equipment of persons residing in the
Project.
In the event the Developer fails to cure or commence to cure the Maintenance Deficiency
within the time allowed, the Agency may thereafter conduct a public hearing following transmittal of
written notice thereof to the Developer ten (10) days prior to the scheduled date of such public hearing
in order to verify whether a Maintenance Deficiency exists and whether the Developer has failed to
comply with the provision of this Section 6(1). If, upon the conclusion of a public hearing, the Agency
.makes a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with
the general maintenance standard, as described above, thereafter the Agency shall have the right to
enter the Project (exterior areas only) and perform all acts necessary to cure the Maintenance
Deficiency, or to take other action at law or equity the Agency may then have to accomplish the
abatement of the Maintenance Deficiency. Any sum expended by the Agency for the abatement of a
Maintenance Deficiency as authorized by this Section 6(1) shall become a lien on the Project. If the
amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency
to the Developer, the Agency shall have the right to enforce the lien in the manner as provided in
Section 6(3).
(2) Graffiti which is visible from any public right-of--way which is adjacent or contiguous
to the Project shall be removed by the Developer from any exterior surface of a structure or
improvement on the Project by either painting over the evidence of such vandalism with a paint which
has been color-matched to the surface on which the paint is applied, or graffiti may be removed with
solvents, detergents or water as appropriate. In the event that graffiti is placed on the Project (exterior
areas only) and such graffiti is visible from an adjacent or contiguous public right-of--way and
thereafter such graffiti is not removed within 72 hours following the time of its application; then in
such event and without notice to the Developer, the Agency shall have the right to enter the Project and
remove the graffiti. Notwithstanding any provision of Section 6(1) to the contrary, any sum expended
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by the Agency for the removal of graffiti from the Project as authorized by this Section 6(2) shall
become a lien on the Project. If the amount of the lien is not paid within thirty (30) days after written
demand for payment by the Agency to the Developer, the Agency shall have the right to enforce its
lien in the manner as provided in Section 6(3).
(3) Subject to the lien of the Senior Lender, the parties hereto further mutually understand
and agree that the rights conferred upon the Agency under this Section 6 expressly include the power
to establish and enforce a lien or other encumbrance against the Property in the manner provided under
Civil Code Sections 2924, 2924b and 2924c in the amount as reasonably necessary to restore the
Project to the maintenance standard required under Section 6(1) or Section 6(2), including attorneys
fees and costs of the Agency associated with the abatement of the Maintenance Deficiency or removal
of graffiti and the collection of the costs of the Agency in connection with such action. In any legal
proceeding for enforcing such a lien against the Project, the prevailing path shall be entitled to recover
its attorneys' fees and costs of suit. The provisions of this Section 6 shall be a covenant running with
the land for the Term and shall be enforceable by the Agency in its discretion, cumulative with any
other rights or powers granted by the Agency under applicable law. Nothing in the foregoing
provisions of this Section 6 shall be deemed to preclude the Developer from making any alterations,
additions, or other changes to any structure or improvement or landscaping on the Project, provided
that such changes comply with the zoning and development regulations of the City and other
applicable law.
Section 7. Affordable Rent Levels for Dwelling, Units.
(a) The Developer shall establish and maintain rental levels for the dwelling units in the
Project at the following annual rental rates:
(i) for at least thirty-nine (39) dwelling units, the annual rental rate at the time of
initial occupancy of the Qualifying Resident household shall not exceed an
Affordable Rent for a very low income household adjusted for family size; and
(ii) for not more than forty (40) dwelling units, the annual rental rate at the time of
initial occupancy of the Qualified Resident household shall not exceed an
Affordable Rent for a lower income household„ adjusted for family size.
(b) During the time when the State TCAC Regulatory Agreement is in effect, the Developer
shall establish and maintain rental levels for the dwelling units in the Project at annual rental rates
which do not exceed an amount an annual rent for the dwelling units which exceed an Affordable
Rental for such dwelling units as mandated by the State TCAC Regulatory Agreement. In the event of
any conflict between the Affordable Rent amount as may be charged by the Developer under the State
TCAC Regulatory Agreement and the Affordable Rent amount as may be charged by the Developer
under Section 7(a) of this Agency Regulatory Agreement, the provisions of the State TCAC
Regulatory Agreement shall prevail.
Section 8. Covenants to Run With the Land.
The Developer and the Agency hereby declare their specific intent that the covenants,
reservations and restrictions set forth herein are part of a plan for the promotion and preservation of
affordable housing for senior citizen households within the territorial jurisdiction of the Agency and
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that each shall be deemed covenants running with the land and shall pass to and be binding upon the
Site and each successor-in-interest of the Developer in the Site for the Term. The Developer hereby
expressly assumes the duty and obligation to perform each of the covenants and to honor each of the
reservations and restrictions set forth in this Agency Regulatory Agreement. Each and every contract,
deed or other instrument hereafter executed covering or conveying the Site or any interest therein shall
conclusively be held to have been executed, delivered and accepted subject to such covenants,
reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are
set forth in such contract, deed or other instrument.
Section 9. Burden and Benefit.
The Agency and the Developer hereby declare their understanding and intent that the burden of
the covenants set forth herein touch and concern the land in that the Developer's legal interest in the
Site is affected by the affordable dwelling use and occupancy covenants hereunder. The Agency and
the Developer hereby further declare their understanding and intent that the benefit of such covenants
touch and concern the land by enhancing and increasing the enjoyment and use of the Site by the
intended beneficiaries of such covenants, reservations and restrictions, and by furthering the affordable
housing goals and objectives of the Agency and in order to make the Site available for acquisition by
the Developer.
Section 10. Term.
(a) The provisions of this Agency Regulatory Agreement shall apply to the Site for a term
of sixty (60) years following the date of recordation of this Agency Regulatory Agreement.
(b) Any provision or section of this Agency Regulatory Agreement may be terminated upon
written agreement by the Agency and the Developer if the Agency in its reasonable discretion
determines that such a termination will not adversely affect the affordable housing goals of the
Agency.
Section 11. Defaults.
11.1 Events of Default. The occurrence of any of the following is a default and shall
constitute a material breach of this Agency Regulatory Agreement and, if not corrected, cured or
remedied in the time period set forth in Section 11.2, shall constitute an "Event of Default" hereunder:
(1) an uncured breach or default by the Developer under the 2009 DDA;
(2) failure of the Developer or any person under its direction or control to comply
with or perform when due any material term, obligation, covenant or condition contained in this
Agency Regulatory Agreement;
(3) any warranty, representation or statement made or furnished to the Agency by
the Developer under this Agency Regulatory Agreement or the 2009 DDA is false or misleading in any
material respect either now or at the time made or furnished;
(4) the dissolution or termination of the existence of the Developer as an ongoing
business, insolvency, appoint of a receiver for any part of the property of the Developer, any
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assignment for the benefit of creditors, any type of creditor workout or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against the Developer.
11.2 Notice of Default. The Agency shall give written notice of default to the Developer in
accordance with Section 17, stating that such notice is a "Notice of Default", specifying the default
complained of by the Agency and requiring the default to be remedied within thirty (30) days of the
date of the Notice of Default. Except as required to protect against further material damage, the
Agency may not institute legal proceedings against the Developer until thirty (30) days after giving
notice. Failure or delay in giving notice shall not constitute a waiver of any default, nor shall it change
the time of occurrence of the default.
If the default specified in the Notice of Default is such that it is not reasonably capable of being
cured within thirty (30) days, and if the Developer initiates corrective action within said thirty (30) day
period and diligently works to effect a cure as soon as possible, then the Developer may have such
additional time as authorized in writing by the Agency as reasonably necessary to complete the cure of
the breach prior to exercise of any other remedy for the occurrence of an Event of Default. Such
authorization for additional time to cure shall not be unreasonably withheld. If the Developer fails to
take corrective action relating to a default within thirty (30) days following the date of notice (or to
complete the cure within the additional as may be authorized by the Agency), an Event of Default shall
be deemed to have occurred.
11.3 Inaction Not a Waiver of Default. Any failure or delays by the Agency in asserting any
of its rights and remedies as to any default shall not operate as a waiver of any default or of any such
rights or remedies. Delays by the Agency in asserting any of its rights and remedies shall not deprive
the Agency of its right to institute and maintain any actions or proceedings which it may deem
necessary to protect, assert or enforce any such rights or remedies.
11.4 Remedies. Upon the occurrence of an Event of Default, the Agency shall, in addition to
the remedial provisions of Section 6 as related to a Maintenance Deficiency at the Site, be entitled to
seek any appropriate remedy or damages by initiating legal proceedings as follows:
(i) by mandamus or other suit, action or proceeding at law or in equity, to require
the Developer to perform its obligations and covenants hereunder, or enjoin any acts or things which
may be unlawful or in violation of the rights of the Agency; or
(ii) by other action at law or in equity as necessary or convenient to enforce the
obligations, covenants and agreements of the Developer to the Agency.
11.5 Rights and Remedies are Cumulative. The rights and remedies of the Agency as set
forth in this Section 11 are cumulative and the exercise by the Agency 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 Developer.
11.6 Enforcement by Third Parties. Except for the City of an Bernardino, which shall have
the power to enforce this Agency Regulatory Agreement as th successor of the Agency, and
"residents" and "applicants", as each of these terms are defined i~ Health and Safety Code Section
33334.3(f)(7), no third party shall have any fight or power to enfi ., any provision of this Agency
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Regulatory Agreement on behalf of the Agency or to compel the Agency to enforce any provision of
this Agency Regulatory Agreement against the Developer or the Project.
Section 12. Governing Law.
This Agency Regulatory Agreement shall be governed by the laws of the State of California.
Section 13. Amendment.
This Agency Regulatory Agreement may be amended after its recordation only by a written
instrument executed by the Developer and by the Agency.
Section 14. Attorneys Fees.
In the event that a party brings an action to enforce any condition or covenant, representation
or warranty in this Agency Regulatory Agreement or otherwise arising out of this Agency Regulatory
.Agreement, the prevailing party in such action shall be entitled to recover from the other party
reasonable attorneys' fees to be fixed by the court in which a judgment is entered, as well as the costs
of such suit. For the purposes of this Section 14, the words "reasonable attorneys' fees" in the case of
the Agency, include the salaries, costs and overhead of the lawyers employed in the Office of the City
Attorney of the City of San Bernardino who provide legal counsel to the Agency in such an action, as
allocated on an hourly basis.
Section 15. Severability.
If any provision of this Agency Regulatory Agreement shall be declared invalid, inoperative or
unenforceable by a final judgment or decree of a court of competent jurisdiction such invalidity or
unenforceability of such provision shall not affect the remaining parts of this Agency Regulatory
Agreement which are hereby declared by the parties to be severable from any other part which is found
by a court to be invalid or unenforceable.
Section 16. Time is of the Essence.
For each provision of this Agency Regulatory Agreement which states a specific amount of
time within which the requirements thereof are to be satisfied, time shall be deemed to be of the
essence.
Section 17. Notice.
Any notice required to be given under this Agency Regulatory Agreement shall be given by the
Agency or by the Developer, as applicable, by personal delivery or by First Class United States mail at
the addresses specified below or at such other address as may be specified in writing by the parties
hereto:
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If to the Agency: Redevelopment Agency of the City of San Bernardino
Attn.: Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
Phone: (909) 663-1044
Fax: (909) 663-2294
If to the Developer: Magnolia Highland, L.P.
Attn: John Huskey
1604 Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
Phone: (310) 575-3543 Ext. 110
Fax: (310) 575-3563
Notice shall be deemed given five (5) calendar days after the date of mailing to the party, or, if
personally delivered, when received by the Executive Director of the Agency or the Developer, as
applicable.
Section 18. Priority of State TCAC Re ug latory Agreement and Construction Loan
Documents/Permanent Loan Documents.
(a) During the period of time when the State TCAC Regulatory Agreement, and initially
the Construction Loan Documents and then the State TCAC Regulatory Agreement and the Permanent
Loan Documents are in effect with respect to the Project as evidenced by the recorded "Agency
Subordination Agreement for Project Financing", as this term is defined in the 2009 DDA, compliance
by the Developer with the requirements of the State TCAC and Construction Loan Documents and/or
the State TCAC Regulatory Agreement and Permanent Loan Documents, as applicable, with respect to
Affordable Rents, shall be deemed compliance by the Developer with the Affordable Rent
requirements of this Agency Regulatory Agreement.
(b) Compliance by the Developer with the State TCAC Regulatory Agreement by and
between the Developer and State TCAC which may hereafter affect the Project shall be deemed to be
in compliance by the Developer with Affordable Rent provisions of this Agency Regulatory
Agreement during the time when such State TCAC Regulatory Agreement is in effect with respect to
the Site and the Project.
(c) This Agency Regulatory Agreement may be amended as set forth in the 2009 DDA to
accommodate the affordable senior citizen housing development loan and/or grant financing
underwriting requirements of State TCAC and/or the Construction Lender and/or the Permanent
Lender, or another instrumentality of the State of California, as applicable. Such amendment shall be
initiated upon the written request of the Developer and such lender and shall be executed by the parties
hereto. Any such amendment or modification shall be valid, binding and legally enforceable only if in
written form and executed by the parties hereto and only after the approval thereof by official action of
the Agency, the Developer and such lender.
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[EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED
IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 AFFORDABLE
SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND
DEVELOPMENT AGREEMENT, DATED AS OF AUGUST 3, 2009, AS AMENDED BY THE
AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING
ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF
MARCH _, 2009. THE FINAL FORM OF THIS REGULATORY AGREEMENT SHALL BE
SUBJECT TO THE JOINT REVIEW AND APPROVAL BY THE PARTIES OF THE
SPECIFIC TERMS ON WHICH THE AFFORDABLE RENTAL HOUSING DEVELOPMENT
PROJECT RESERVED FOR OCCUPANCY BY SENIOR CITIZEN HOUSEHOLDS, MAY BE
UNDERTAKEN BY (MAGNOLIA HIGHLAND, L.P.) THE DEVELOPER, AS PART OF THE
PROJECT. THE FINAL TEXT OF THE REGULATORY AGREEMENT IS ALSO SUBJECT
TO THE APPROVAL BY THE PARTIES OF THE CONDITIONS OF THE STATE TCAC
REGULATORY AGREEMENT FOR THE PROJECT.]
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IN WITNESS WHEREOF, the Developer and the Agency have caused this Agency Regulatory
Agreement to be signed, acknowledged and attested on their behalf by duly authorized representatives
in counterpart original copies which shall upon execution by all of the parties be deemed to be one
original document.
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Dated:
Approved as to Form and Legal Content:
By:
Agency Counsel
Dated:
Approved as to Form:
By:
Legal Counsel for Developer
By:
Chair
By:
Emil A. Marzullo, Interim Executive Director
DEVELOPER
Magnolia Highland, L.P., a California limited partnership
By: Magnolia Highland, LLC, a California limited
liability company
Its: Administrative General Partner
By:
John M. Huskey, Manager
By: Western Community Housing, Inc., a California
non-profit public benefit Corporation
Its: Managing General Partner
By:
Graham Espley-Jones, President
By:
Leanne Truofreh, Secretary
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EXHIBIT "A"
Legal Description of the Site
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EXHIBIT "B"
Scope of Development and Site Improvement Plan
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EXHIBIT "C"
Schedule of Performance (During Construction of the Project)
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Exhibit "D"
Developer Project Pro Forma
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Meta Housing -Magnolia at Highland, LP
Project Budget -Sources and Uses of Project Funds
February 16, 2010
Use of Project Funds Source of Project Funds
Tax Credit First Percentage
Aeencv E uit Mortga¢e AHP Developer Total of Total
Land Cost 2,450,000 2,450,000 12.87%
Title/Escrow/legal 27,605 27,605 0.15%
Demolition 30,000 30,000 0.16%
Total Land Acquisition $ 2,507,605 $ 2,507,605 13.18%
Off-Site Improvements 600,000 200,000 800,000 4.20%
Site Work 350,000 350,000 1.84%
Structures 3,722,395 1,635,858 1,864,172 790,000 8,012,425 42.10%
General Requirements 401,200 401,200 2.11%
Contractor Overhead 303,400 303,400 1.59%
Contractor Profit 303,400 303,400 1.59%
General Liabiity Insurance 137,670 137,670 0.72%
Total Direct Construction $ 4,322,395 $ 3,331,528 $ 1,864,172 $ 790,000 $ 1b;348,095 54.17%
Architectural Design 100,000 430,000 530,000 2.78%
Engineering 70,000 195,000 265,000 1.39%
Total d& @ $ 170,000 S 625.000' $ 795,400 4,18%
Construction Loan Interest 256,454 256,454 1.35%
Origination Fee 70,000 70,000 0.37%
Credit Enhancement App. Fee 20,000 20,000 0.11%
Predevelopment Loan Origination Fee 20,000 20,000 0.11%
Predevelopment Loan Interest 40,000 40,000 0.21%
Insurance 116,446 116,446 0.61%
Title and Recording 25,000 25,000 0.13%
TotalConstructtortlnterest/Fees $ 547,900 $ 547,900 2.88%
Origination fee 20,000 20,000 0.11%
Credit Enhancement App. Fee 12,500 12,500 0.07%
Title and Recording 12,500 12,500 0.07%
TotalPermanent Financing Costs $ 45,000 $ 45,000 0.24%
Lender Legal Paid by Developer 40,000 40,000 0.21%
Partnership Legal 100,000 100,000 0.53%
Invsetor Due Dilligence Legal - 0.00%
Accounting and Organizational 135,000 135,000 0.71%
Total Legal Fees $ 275,000 ` $ 275,000 1.45%
3-month Operating Reserve 120,936 120,936 0.64%
Appraisals 10,000 10,000 0.05%
Construction Contingency 401,557 401,557 2.11%
Total Contingency Costs $ a11,557 $ 120,936 $ 532,493 2.80%
TCAC Application/Monitoring Fees 70,000 70,000 0.37%
Reproduction 25,000 25,000 0.13%
Development Impact Fees 1,530,000 1,530,000 8.04%
Permit Processing Fees 70,000 70,000 0.37%
Marketing and Start-up 40,000 40,000 0.21%
Furnishings 90,000 90,000 0.47%
Studies/Surveys 60,000 60,000 0.32%
Contingency 141,322 141,322 0.74%
Total Other Costs: $ 1,916,322: $ .110,000 $` 2,026,322 10.55%
Developer Overhead and Profit 1,982,046 11,331 1,993,377 10.47%
TptaTCeveloperOverheadand'Profit $ '1,982,046 $ 11,331 $ 1,993,377 10.47%
Total Development Costs $ 7,000,000 $ 9,089,353 $ 2,140,108 $ 790,000 $ 11,331 $ 39,030,792 100.00%
CDC / 2010-~- 9
Exhibit "E"
Fund Control Agreement
18
p~\Agendas\P.genda AttachmentsWgenda At[achmen[s1P.grm[s-Amend 2010\03-ISdO Meta Housing- Magnolia Highlane send. No. l [0 2009 Affordable Senior Citizen Rental Housing DDA.docs
CDC/2010~~-9
~~ I F;rstAmerican
Fund Control
First American Fund Control, Inc.
200 Commerce, Irvine, CA 92602
(866) 536-0178 FAX (866) 536-0177
FUND CONTROL AGREEMENT
ESCROW NO.
THIS FUND CONTROL AGREEMENT (the "Agreement") is entered into and effective as of _,
2010, at Irvine, California by and between FIRST AMERICAN FUND CONTROL, INC., a California
corporation ("FAFC"); MAGNOLIA HIGHLAND, L.P., a California limited partnership ("Owner"); and the
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic
("Lender"), on the basis of the following facts:
RECITALS
A. Owner and Lender have entered into that certain 2009 Affordable Senior Citizen Rental Housing
Acquisition, Disposition and Development Agreement (Northwest Redevelopment Project: Meta Housing
Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009, by and between the Borrower and the
Agency, as amended by that certain Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing
Acquisition, Disposition and Development Agreement thereto, dated as of March _, 2010 (collectively, the
"DDA") pursuant to which Owner shall construct an affordable senior housing rental development (the "Project")
on the real property commonly known as Parcel 1 of Tentative Parcel Map No. 19200 consisting of approximately
2.5 acres of land located on the southwest corner of Highland Street and Medical Center Drive, at
in the City of San Bernardino, County of San Bernardino, State of California (the "Property").
FAFC is not a party to the DDA and shall have no obligation or liability in connection therewith.
B. There shall be deposited, in a FAFC trust account, from time to time, funds in the aggregate amount of
$ all of which shall be provided by Lender. FAFC is not a party to any loan documents and shall
have no obligation or liability in connection therewith.
C. Owner and Lender wish to have FAFC make disbursements concerning the Project as provided in this
Agreement.
AGREEMENT
IT IS HEREBY AGREED, on the basis of the foregoing facts and for valuable consideration as follows:
1. Escrow. FAFC shall establish a separate escrow account for the Project (the "Escrow"). All funds
delivered to FAFC shall be deposited in FAFC's trust account and credited to the Escrow in the manner as provided
in Section 2.4 below. All funds disbursed by FAFC shall be disbursed from a trust account and debited to the
Escrow. FAFC shall maintain a record of deposits and disbursements regarding the Escrow. Escrow funds shall not
bear interest.
2. Disbursement Procedures. FAFC is authorized and instructed, subject to available Escrow funds, to make
disbursements in accordance with the provisions set forth below.
2.1 Project Cost Breakdown. Owner shall provide FAFC with a Project Cost Breakdown (the
"Breakdown"), approved by the Lender, setting forth the estimated costs for the Project by cost categories. The
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Breakdown is solely for the purpose of assisting FAFC in maintaining its records. FAFC shad have no obligation in
connection with the Breakdown. The Breakdown may be modified from time to time upon the request of Owner
without the prior written approval of Lender, provided that no increase in the aggregate amount of $ may
be made without the prior written consent of Lender.
2.2 Requests for Advances. From time to time (but not more than once per calendar week) Owner shall
provide FAFC with a request for advance which shall include (a) the amount of funds requested, (b) an allocation of
the funds to the cost categories, (c) the name of each payee and (d) the amount to be disbursed to each payee (the
"Request for Advance"). Each Request for Advance shall be accompanied by a Owner certification to FAFC that all
information included within a Request for Advance shall be true, accurate in all material respects and not subject to
qualification. FAFC is authorized to fully rely upon each Owner certification; and FAFC shall not incur any liability
resulting from such reliance.
2.3 FAFC Report. Following receipt of a Request for Advance, FAFC shall provide Lender and Owner with
a computer-generated report (the "Report") summarizing (a) the Request for Advance and (b) past disbursements by
cost category, and amounts remaining unspent in each cost category.
2.4 Transfer of Funds. Upon Lender's approval of the Report in accordance with the loan arrangements
among Lender and Owner, Lender shall transfer (but only to the extent available under the loan arrangements among
Lender and Owner) to FAFC's trust account all or a portion of the funds identified in the Report (the "Transferred
Amount"). In the event Lender imposes any conditions regarding the Transferred Amount (but only to the extent
available under the loan arrangements among Lender and Owner), FAFC may withhold disbursement until the
conditions are satisfied.
2.5' Vouchers. FAFC's form voucher ("Voucher"), attached hereto as Exhibit "A", shall be used to request
disbursements, including the requirement for the provision that all necessary lien releases be duly signed by the
appropriate parties. The "Authorized Individuals" (identified at the end of this Agreement are appointed and
authorized by Owner and Lender to sign and deliver Vouchers. Only the Authorized Individuals may sign Vouchers.
The Authorized Individuals shall deliver signed Vouchers to FAFC with applicable (a) receipts, invoices or bills and
(b) applicable lien releases to the extent required under the loan arrangements among Lender and Owner (the
Conditional Waiver and Releases are attached hereto as Exhibit "B" and the Unconditional Waiver and Releases are
attached hereto as Exhibit "C".) FAFC is authorized to make disbursements pursuant to Vouchers. FAFC is
authorized to conclusively presume that any Voucher and/or accompanying documentation is given in full
compliance with this Agreement and that all funds to be disbursed pursuant to the Voucher are for the purposes
stated in the Voucher. FAFC shall incur no liability in making disbursements pursuant to the foregoing; unless
FAFC's acts or omissions are grossly negligent or wrongful.
2.6 Disbursement by FAFC. Except as otherwise provided in this Agreement, upon FAFC's receipt of a
signed Voucher, together with the documentation referred to in Section 2.5, FAFC shall disburse the amount set
forth in the Voucher. Provided FAFC complies with this section, FAFC shall incur no liability to any person or
entity for making or not making disbursements; unless FAFC's acts or omission are grossly negligent or wrongful.
3. Limitation on Disbursements. FAFC shall not be obligated to make disbursements which exceed the
balance of funds in the Escrow. The parties to this Agreement shall cooperate fully with FAFC, including delivery
of such documents and information as FAFC may request. FAFC is authorized, but not obligated, to withhold any
disbursement pending receipt of such documents and information.
4. FAFC Fees. FAFC shall receive, as compensation for its basic services under this Agreement, the sum of
One Thousand Seven Hundred and Fifty Dollars ($1,750) set up fee plus $1.75 per thousand dollars
disbursed/processed by FAFC. These fees shall be payable with the first payment deposit of the Transferred
Amount. FAFC is authorized and instructed to immediately disburse such compensation to itself.
2
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4.1 Extraordinary Costs. In the event FAFC is required or requested to produce or dup icate documents;
utilize messengers or delivery services other than first-class U.S. mail; provide testimony or take action in any court,
arbitration or other proceeding, the cost shall be paid to FAFC by the party which request such extraordinary
services, or the party whose conduct requires such extraordinary services. If FAFC receives more than one Request
for Advance during a calendar week (and FAFC elects to process the extra Requests), FAFC shall be entitled to
$100 for each extra Request. Such amounts shall be in addition to the FAFC Fee and FAFC shall not be required to
act until such reimbursement is made. FAFC is authorized to disburse such amounts to itself from funds in the
Escrow.
5. Disputes. Should any controversy arise in connection with this Agreement, FAFC may withhold
disbursements until the controversy is resolved by legal process or an agreement acceptable to FAFC. Prior to
resolution of the controversy, FAFC may, but shall not be obligated to, (a) return the funds then held in the Escrow
to the person who deposited the funds with FAFC, and/or (b) interplead the funds with the court. Upon either (a) or
(b), FAFC shall be fully discharged and relieved from all liability in connection with such funds and shall be entitled
to recover its costs and attorneys' fees in connection therewith.
6. FAFC's Obli atg_ions. The obligations of FAFC are limited solely to making disbursements pursuant to
Section 2 of this Agreement. Without limiting the generality of the foregoing, FAFC shall not (a) be responsible for
or guarantee that the Project shall be constructed in accordance with the Breakdown, any plans and specifications or
any contract or agreement to which FAFC is not a party; (b) have any duty to inspect the Project or to verify the
information and materials it receives except to the extent as set forth in the Addendum hereto; or (c) be responsible
to determine that funds disbursed by FAFC are actually used as stated in the Requests for Advance or the Vouchers.
7. Indemnity. The parties to this Agreement, jointly and severally, agree to hold FAFC harmless and to
indemnify and defend FAFC from and against any and all claims, demands, liabilities and legal actions, including
those of the undersigned, in connection with or allegedly in connection with this Agreement, the Escrow or the
Project; and they further agree to pay FAFC's reasonable attorneys' fees and costs in connection therewith. FAFC is
authorized to employ legal counsel of its choice; provided, however, this Section 7 shall be of no force or effect
should any or all claims, demands, liabilities and legal actions, result or relate to the grossly negligent acts or
omissions or wrongful conduct of FAFC, its agents, representatives, employees, successors or assigns, in connection
with this Agreement, the Escrow or the Project.
8. Maintenance of Records. FAFC shall keep accurate records as to (a) amounts deposited in the Escrow;
(b) amounts disbursed from the Escrow by cost categories; and (c) the undisbursed amount in each cost category
(based upon the Breakdown). As required by California law, original documents shall remain at FAFC's office and
upon reasonable notice shall be available for inspection by Lender or Owner. Upon not less than 48 hours notice to
FAFC, Owner, or Lender may, through a bonded photocopying service, photocopy, at the requesting party's
expense, documents which relate to this Agreement. In the event any photocopying is done by FAFC, the requesting
party shall reimburse FAFC for the photocopying charges and labor charges relating thereto prior to delivery of the
copies to the requesting party.
9. Amendments. This Agreement may only be amended, supplemented or modified by a written amendment
executed by all parties hereto.
10. Attorneys' Fees. In any action between the parties regarding this Agreement, the Escrow or the Project,
the prwailing party in that action shall be entitled to recover its reasonable costs and expenses, including reasonable
attorn -s' fees.
L Interpretation. This Agreement shall be interpreted and construed in accordance with California law.
Any ~:: ~n against FAFC involving this Agreement, shall be maintained in the appropriate court in Orange County,
Califi ia.
3
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12. No Third-Party Beneficiary. This Agreement is made and intended to be for the benefit of Owner,
Lender and FAFC only and is not intended to be for the benefit of anyone else, including those furnishing labor or
materials.
13. Mer er. This Agreement sets forth the full agreement between the parties regarding the Escrow and the
obligations of FAFC. All prior agreements and understandings shall be deemed terminated and of no further force or
effect.
14. Severability. In the event any provision of this Agreement should be determined by a court of
competent jurisdiction as unenforceable or void under applicable law, that provision shall be deleted; but the
remaining provisions of this Agreement shall remain in full force and effect.
15. Counterparts. This Agreement may be signed in multiple counterparts.
16. Captions. The Caption headings for the sections of this Agreement are for convenience only and shall
not be considered to limit, expand or define the content of the sections.
17. Final Disbursement. Upon the written request of Owner and Lender, FAFC shall disburse any final
balance in the Escrow without following the provisions of Section 2. FAFC may condition the disbursement upon
receipt of (a) an indemnity agreement in form and content approved by FAFC and signed by Owner and/or Lender;
and (b) FAFC's attorneys' fees incurred in connection therewith.
18. Bindin Eg ffect. This Agreement shall be binding upon and shall inure to the benefit of the parties to this
Agreement and their respective successors and assigns.
19. Limitation of Liability. Liability of Owner and Lender shall be limited strictly to funds actually
deposited into Escrow, pursuant to this agreement.
End of Page
4
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IN WITNESS WHEREOF, the parties, individually or through their authorized representatives, have
executed this Agreement as of the date of this Agreement. Each individual executing this Agreement warrants and
represents that he or she has the power and authority to execute this Agreement on behalf of the party for whom the
execution is made.
"Owner"
Magnolia Highland, L.P.,
a California limited partnership
By: Magnolia Highland, LLC,
a California limited liability company
Its: Administrative General Partner
By:
John M. Huskey, Manager
By: Western Community Housing, Inc.,
a California non-profit public benefit Corporation
Its: Managing General Partner
By:
"FAFC"
By:
Graham Espley-Jones, President
Leanne Truofreh, Secretary
FIRST AMERICAN FUND CONTROL, INC.
a California Corporation
By
"Lender"
Its
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,
a public body, corporate and politic
By
Emil A. Marzullo, Interim Executive Director
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This Escrow Company holds Department of Corporations Escrow License No. 963-0921
Attach Exhibit "A"- Voucher Form (Front and Back)
Attach Exhibit "B"- Conditional Waiver and Release Upon Progress Payment and
Conditional Waiver and Release Upon Final Payment
Attach Exhibit "C"- Unconditional Waiver and Release Upon Progress Payment and
Unconditional Waiver and Release Upon Final Payment
6
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AUTHORIZED INDIVIDUALS
The "Authorized Individuals" are identified below. By signing this clause, the Authorized Individuals agree and
represent and warrant to FAFC that they will sign Vouchers only for labor, materials, services, and expenses
actually and properly incurred in the construction of the Project. The Authorized Individuals shall indemnify FAFC
regarding any breach of the foregoing. Vouchers shall be signed as follows: -JOINTLY
On behalf of the Lender one signature as noted below:
On Behalf of Magnolia Highland, L.P. one
of the signature as noted to below:
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ADDENDUM TO FUND CONTROL AGREEMENT cnc/ 20 io.._ 9
(Inspections -Lender Financing)
ESCROW NO.
THIS ADDENDUM TO FUND CONTROL AGREEMENT (the "Addendum") is entered into and effective as of
2010, by the undersigned, for the purpose of supplementing and providing additional terms and provisions
for the Fund Control Agreement for the above-designated Escrow (the "Agreement"). This Addendum shall
constitute a part of the Agreement and the terms and provisions of this Addendum shall be interpreted as though
fully set forth in the Agreement. In the event any party to this Addendum is not a party to the Agreement, the party
agrees to be bound by all of the terms and provisions of the Agreement. Any term not defined in this Addendum
shall be defined as provided in the Agreement.
1. Frequenc oy f Inspections. FAFC is hereby authorized to conduct job-site inspections at the Project once each
month during the course of construction upon at least 24 hours prior written notice to Owner. FAFC shall conduct
additional inspections if requested by Owner or Lender, provided that the request is made no less than three (3)
working days prior to the date of the requested inspection.
2. Purpose of Inspections. The sole purpose of the inspections is to assist FAFC in processing Voucher
disbursements according to the Agreement and to assist FAFC in maintaining records of disbursements by cost
category. The inspections are neither for, nor intended to be for, the benefit of any person or entity other than FAFC
and Lender; and such benefit is strictly limited to the purposes expressly stated above.
3. Limitation of Inspections. The inspections shall not be relied upon or interpreted as an examination or a
determination by FAFC or any other person or entity as to the Project's (a) proper construction; (b) compliance with
building codes and/or governmental regulations and laws; and (c) specific compliance with the plans and
specifications (other than an examination as to the approximate percentage of completion of construction phases as
compared to the plans and specifications) or any matter other than that expressly stated in the preceding section of
this Addendum.
4. Confidentiality. Owner and Lender each agree that the reports and results of FAFC's inspections shall not be
disclosed to any other person or entity without first obtaining FAFC's written consent hereto.
5. Inspection Fee. FAFC shall receive, in addition to its normal fee, an inspection fee of Five Hundred Dollars
($500.00) for each inspection. Owner agrees to provide a sufficient amount in the Breakdown for inspection fees.
FAFC is authorized to disburse to itself, from the construction funds in its possession or under its control, the
inspection fee for each inspection immediately upon completion of each inspection.
6. Cooperation. Owner hereby agrees to reasonably cooperate with, assist and provide information to FAFC to
enable FAFC to conduct inspections.
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"Lender"
"FAFC"
"Owner"
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
Executed this day of , 2010
First American Fund Control, Inc.,
a California Corporation
By:
James L. Rollings, C.O.O.
Executed this day of _
Magnolia Highland, L.P.,
a California limited partnership
2010
By: Magnolia Highland, LLC,
a California limited liability company
Its: Administrative General Partner
By:
John M. Huskey, Manager
By: Western Community Housing, Inc.,
a California non-profit public benefit Corporation
Its: Managing General Partner
By:
Graham Espley-Jones, President
By:
Leanne Truofreh, Secretary
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Exhibit "F"
Amended and Restated Repayment Guaranty
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AMENDED AND RESTATED REPAYMENT GUARANTY
THIS AMENDED AND RESTATED REPAYMENT GUARANTY (the "Guaranty") is made
as of March _, 2010, by Meta Housing Corporation, a California corporation (the "Guarantor"),
in favor of the Redevelopment Agency of the City of San Bernardino, a public body, corporate
and politic (the "Agency").
RECITALS
A. Pursuant to the terms of that certain 2009 Affordable Senior Citizen Rental
Housing Acquisition Disposition and Development Agreement (Northwestern Redevelopment
Project: Meta Housing Corporation and Magnolia Highland, L.P.) between Magnolia Highland,
L.P., a California limited partnership (the "Developer"), and the Agency, dated as of August 3,
2009 (the "2009 DDA"), as amended by the Amendment No. 1 To The 2009 Affordable Senior
Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of
March _, 2010 (the "Amendment") (the 2009 DDA, as amended by the Amendment shall
collectively be referred to as the "DDA"), the Agency has agreed to advance to Developer an
amount not to exceed the sum of ONE HUNDRED THOUSAND AND NO/100THS DOLLARS
($100,000.00) (the "Advance") for the purposes specified in the DDA, which purposes include
payment of approved predevelopment expenses in connection with the construction of seventy-
nine (79) affordable senior citizen rental housing units on that certain real property legally
described in Attachment No. 1A of the 2009 DDA (the "Property") in the City of San Bernardino,
County of San Bernardino, State of California (the "Project").
B. Guarantor executed and delivered to the Agency the Repayment Guaranty,
dated as of November 23, 2009, by the Guarantor in favor of the Agency (the "2009 Repayment
Guaranty").
C. Guarantor and the Agency desire to cancel, revoke and rescind the 2009
Repayment Guaranty in its entirety and to replace the 2009 Repayment Guaranty with this
Guaranty.
D. The DDA provides that as one of the conditions precedent to the Agency's
obligation to make the Advance, the Guarantor shall execute and deliver a guaranty for
repayment of the Advance.
E. The Agency will not execute, deliver and perform under the Amendment unless
the Guarantor executes this Guaranty in favor of the Agency
THEREFORE, to induce Agency to make the Advance and to execute, to deliver and to
perform under the Amendment and the exhibits attached thereto, and for other good and
valuable consideration the receipt and sufficiency of which are hereby acknowledged by
Guarantor, Guarantor unconditionally guarantees and agrees as follows:
1. Guaranty. Guarantor hereby guarantees repayment by Developer of all amounts
advanced by Agency under the Advance to Developer, pursuant to the terms of the DDA, up to
ONE HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00), plus interest
thereon.
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2. Release. The Guarantor shall be deemed released from all of its obligations
under this Guaranty and this Guaranty shall terminate upon the earlier to occur of:
(a) close of Site Acquisition Escrow, as such a term is defined in the DDA; or
(b) default by the Agency of any of its obligations under the DDA;
3. Obligations of Guarantor Upon Default By Developer. Upon any Event of Default
by Developer under the DDA, subject to any notice and cure rights set forth therein, the
Guarantor shall, within thirty (30) days of receipt written demand of Agency, pay to the Agency
in lawful money of the United States, in immediately available funds, all amounts advanced by
Agency under the Advance to Developer, pursuant to the terms of the DDA, up to ONE
HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00), plus interest thereon.
Guarantor's obligations under this Guaranty shall not exceed the sum of ONE HUNDRED
THOUSAND AND NO/100THS DOLLARS ($100,000.00), plus interest thereon.
4. Remedies. If Guarantor fails to promptly perform its obligations under this
Guaranty, Agency shall have the following remedies:
4.1 From time to time and without first requiring performance by Developer or
exhausting any or all security for any loans Agency has made to Developer, to bring any action
at law or in equity or both to compel Guarantor to perform its obligations hereunder, and to
collect in any such action compensation for all loss, cost, damage, injury and expense sustained
or incurred by Agency as a direct consequence of the failure of Guarantor to perform its
obligations.
5. Guarantor's Waivers. Guarantor waives: (a) any defense based upon any legal
disability or other defense of Developer, any other guarantor or other person, or by reason of
the cessation or limitation of the liability of Developer from any cause other than full payment
and performance of those obligations of Developer which are guaranteed hereunder; (b) any
defense based upon any lack of authority of the officers, directors, partners or agents acting or
purporting to act on behalf of Developer or any principal of Developer or any defect in the
formation of Developer or any principal of Developer; (c) any defense based upon the
application by Developer of the proceeds of the Advance for purposes other than the purposes
represented by Developer to Agency or intended or understood by Agency or Guarantor; (d) any
and all rights and defenses arising out of an election of remedies by Agency, even though that
election of remedies; (e) any defense based upon Agency's failure to disclose to Guarantor any
information concerning Developer's financial condition or any other circumstances bearing on
Developer's ability to pay and perform its obligations under the Advance and/or DDA; (f) any
defense based upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in any other respects more burdensome than that of a
principal; (g) any defense based upon Agency's election, in any proceeding instituted under the
Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy
Code or any successor statute; (h) any defense based upon any borrowing or any grant of a
security interest under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation,
any right to enforce any remedy which Agency may have against Developer Q) presentment,
demand, protest and notice of any kind; and (k) the benefit of any statute of limitations affecting
the liability of Guarantor hereunder or the enforcement hereof. Guarantor further waives any
and all rights and defenses that Guarantor may have because Developer's debt is secured by
real property; this means, among other things, that: (1) Agency may collect from Guarantor
without first foreclosing on any real or personal property collateral pledged by Developer; (2) if
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Agency forecloses on any real property collateral pledged by Developer, then (A) the amount of
the debt may be reduced only by the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price, and (B) Agency may collect from
Guarantor even if Agency, by foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from Developer. Without limiting the generality of the foregoing
or any other provision hereof, Guarantor further expressly waives to the extent permitted by law
any and all rights and defenses, including without limitation any rights of subrogation,
reimbursement, indemnification and contribution, which might otherwise be available to
Guarantor under California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433.
6. Guarantor's Warranties. Guarantor warrants and acknowledges that: (a) Agency
would not make the Advance but for this Guaranty; (b) Guarantor has reviewed all of the terms
and provisions of the DDA; (c) Guarantor has not and will not, without the prior written consent
of Agency, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or
substantially all of Guarantor's assets, or any interest therein, other than in the ordinary course
of Guarantor's business.
7. Subordination. Guarantor subordinates all present and future indebtedness
owing by Developer to Guarantor to the obligations at any time owing by Developer to Agency in
connection with the Advance. Guarantor assigns all such indebtedness to Agency as security
for this Guaranty. Guarantor agrees to make no claim for such indebtedness until all obligations
of Developer in connection with the Advance have been fully discharged. Guarantor further
agrees not to assign all or any part of such indebtedness unless Agency is given prior notice
and such assignment is expressly made subject to the terms of this Guaranty.
8. Additional Independent and Unsecured Obligations. This Guaranty is
independent of the obligations of Developer under any other loans Agency has made to
Developer. Agency may bring a separate action to enforce the provisions hereof against
Guarantor without taking action against Developer or any other party or joining Developer or any
other party as a party to such action. Except as otherwise provided in this Guaranty, this
Guaranty is not secured and shall not be deemed to be secured by any security instrument
unless such security instrument expressly recites that it secures this Guaranty.
9. Attorneys' Fees; Enforcement. If any attorney is engaged by Agency to enforce
or defend any provision of this Guaranty, Guarantor shall pay to Agency, immediately upon
demand all reasonable attorneys' fees and costs incurred by Agency in connection therewith.
10. Rules of Construction. The term "person" as used herein shall include any
individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is
executed by more than one person, the term "Guarantor" shall include all such persons. When
the context and construction so require, all words used in the singular herein shall be deemed to
have been used in the plural and vice versa. All headings appearing in this Guaranty are for
convenience only and shall be disregarded in construing this Guaranty.
11. Governing Law. This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of California, except to the extent preempted by federal
laws. Guarantor and all persons and entities in any manner obligated to Agency under this
Guaranty consent to the jurisdiction of any federal or state court within the State of California
having proper venue and also consent to service of process by any means authorized by
California or federal law.
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12. Miscellaneous. The provisions of this Guaranty will bind and benefit the heirs,
executors, administrators, legal representatives, nominees, successors and assigns of
Guarantor and Agency. The liability of all persons and entities who are in any manner obligated
hereunder shall be joint and several. If any provision of this Guaranty shall be determined by a
court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be
deemed severed from this Guaranty and the remaining parts shall remain in full force as though
the invalid, illegal or unenforceable portion had never been part of this Guaranty.
13. Legal Effect. The 2009 Repayment Guaranty is cancelled, revoked and
rescinded, in its entirety, and is replaced and superseded by this Guaranty.
14. Enforceability. Guarantor hereby acknowledges that: (a) the obligations
undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous possible
defenses to the enforceability of these obligations may presently exist and/or may arise
hereafter, and (c) as part of Agency's consideration for entering into this transaction, Agency
has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses,
and (d) Guarantor has had the opportunity to seek and receive legal advice form skilled legal
counsel in the area of financial transactions of that type contemplated herein. Given all of the
above, Guarantor does hereby represent and confirm to Agency that Guarantor is fully informed
regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible
defenses, and (ii) the circumstances under which such defenses may arise, and (iii) the benefits
which such defenses might confer upon Guarantor, and (iv) the legal consequences to
Guarantor of waiving such defenses.
15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS GUARANTY,
AND BY ITS ACCEPTANCE HEREOF, AGENCY, HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(a) ARISING UNDER ADVANCE AND/OR DDA, INCLUDING, WITHOUT LIMITATION, ANY
PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THE ADVANCE AND/OR DDA (AS NOW OR HEREAFTER
MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY AND
AGENCY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY
AND AGENCY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO AND AGENCY TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
appearing on the first page of this Guaranty.
"GUARANTOR"
Meta Housing Corporation,
a California corporation
By:
John M. Huskey, President
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Exhibit "G"
Senior Citizen Rental Housing Use Covenant
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of San Bernardino
Attention: Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
(Space Above Line For Use By Recorder)
Recording Fee Exempt Pursuant to Government Code Section 6103
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
SENIOR CITIZEN RENTAL HOUSING USE COVENANT
(2009 Affordable Senior Citizen Rental Housing
Acquisition, Disposition and Development Agreement)
THIS SENIOR CITIZEN RENTAL HOUSING USE COVENANT (the "Agreement") is
entered into by and between the Redevelopment Agency of the City of San Bernardino, a body
corporate and politic (the "Agency") and the City of San Bernardino (the "City') in light of the
facts set forth in the following paragraphs of the Recitals:
RECITALS
The Agency owns the lands situated within the redevelopment project area of the
Redevelopment Project which are referred to herein as the "Site". A legal description of the Site
is attached hereto as Exhibit "A".
The Agency and the Magnolia Highland, L.P., a California limited partnership (the
"Developer") have entered into an agreement affecting the Site entitled "2009 Affordable Senior
Citizen Rental Housing Acquisition, Disposition and Development Agreement", dated as of
August 3, 2009, as amended by the Amendment No. 1 To The 2009 Affordable Senior Citizen
Rental Housing Acquisition, Disposition and Development, dated as of March, 2010
(collectively, the "2009 DDA"). A copy of the 2009 DDA is on file with the Agency and is
available for inspection as a public record of the Agency.
NOW THEREFORE THE CITY AND THE AGENCY FOR THEMSELVES AND
THEIR SUCCESSORS AND ASSIGNS DO HEREBY COVENANT AND AGREE AS
FOLLOWS:
Section 1. (a) As used in this Agreement, the term "Senior Citizen Household"
means and refers to a person or family who is eligible to occupy a dwelling unit on the Site
because at the time of such person's initial occupancy of such dwelling unit, such person is:
(i) 62 years of age or older; and if applicable
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(ii) provided at least one (1) member of the family is 62 years of age or older, a
"qualified permanent resident", as this term is defined in Civil Code Section 51.3(c)(2) and (3).
(b) As used in this Agreement, the term "Owner" means and refers to the Agency,
and to each successor or assign of the interest of the Agency in the Site, including without
limitation the Developer, at such time as the Developer may acquire the Site from the Agency
under the terms of the 2009 DDA.
Section 2. Except during the temporary period of time of twelve (12) months
following the date of recordation of this Covenant, and the construction of the "Project" as such
term is defined in the 2009 DDA, the Owner hereby agrees to reserve and restrict the Site for
improvement, use and residential occupancy, by persons and families who at the time of initial
occupancy of a dwelling unit on the Site continuously and thereafter satisfy the requirements of a
Senior Citizen Household. Subject to the Owner first obtaining the written permission of the
City, and such permission shall not be unreasonably conditioned, delayed or denied by the City,
nothing in the preceding sentence of this Section 2 shall be deemed to prohibit the Owner from
reserving up to one (1) of the dwelling units on the Site for occupancy by on-site residential
management employees of the Owner, and the household of such on-site residential management
employees of the Owner need not qualify as a Senior Citizen Household.
Section 3. This Agreement, including, without limitations, the Senior Citizen
Household occupancy requirements under Section 2 of this Agreement, shall be in effect
following the date of its recordation for a term of ninety-nine (99) years.
Section 4. The Owner and the City hereby declare their specific intent that the
covenants, reservations and restrictions set forth herein are community redevelopment covenants
and are part of a plan for the promotion and preservation of housing reserved for Senior Citizen
Households within the territorial jurisdiction of the Agency and that each shall be deemed
covenants running with the land and shall pass to and be binding upon the Site and each
successor-in-interest of the Owner in the Site for the term set forth in Section 3. The Owner
hereby expressly assumes the duty and obligation to perform each of the covenants and to honor
each of the reservations and restrictions set forth in this Covenant. Each and every contract, deed
or other instrument hereafter executed covering or conveying the Site or any interest therein shall
conclusively be held to have been executed, delivered and accepted subject to such covenants,
reservations, and restrictions, regardless of whether such covenants, reservations and restrictions
are set forth in such contract, deed or other instrument.
Section 5. The City and the Owner hereby declare their understanding and intent that
the burden of the covenants set forth herein touch and concern the land in that the Owner's legal
interest in the Site is affected by the affordable dwelling use and occupancy covenants
hereunder. The City and the Owner hereby further declare their understanding and intent that the
benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment
and use of the Site by the intended beneficiaries of such covenants, reservations and restrictions,
and by furthering the Senior Citizen Household housing goals and objectives of the Agency and
in order to make the Site available for acquisition and redevelopment by the Owner.
Section 6. (a) The failure of the Owner or any person under its direction or
control to comply with or perform when due any material term, obligation, covenant or condition
contained in this Covenant is a default and shall constitute a material breach of this Agreement
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and, if not corrected, cured or remedied in the time period set forth in Section 6(b), shall
constitute an "Event of Default" hereunder.
(b) The City shall give written notice of default to the Owner stating that such notice
is a "Notice of Default", specifying the default complained of by the City and requiring the
default to be remedied within thirty (30) days of the date of the Notice of Default. Except as
required to protect against further material damage, the Agency may not institute legal
proceedings against the Owner until thirty (30) days after giving notice. Failure or delay in
giving notice shall not constitute a waiver of any default, nor shall it change the time of
occurrence of the default. If the default specified in the Notice of Default is such that it is not
reasonably capable of being cured within thirty (30) days, and if the Owner initiates corrective
action within said thirty (30) day period and diligently works to effect a cure as soon as possible,
then the Owner may have such additional time as authorized in writing by the Agency as
reasonably necessary to complete the cure of the breach prior to exercise of any other remedy for
the occurrence of an Event of Default. Such authorization for additional time to cure shall not be
unreasonably withheld. If the Owner fails to take corrective action relating to a default within
thirty (30) days following the date of notice (or to complete the cure within the additional as may
be authorized by the City), an Event of Default shall be deemed to have occurred.
(c) Any failure or delays by the City in asserting any of its rights and remedies as to
any default arising under this Agreement shall not operate as a waiver of any default or of any
such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not
deprive the City of its right to institute and maintain any actions or proceedings which it may
deem necessary to protect, assert or enforce any such rights or remedies.
(d) Upon the occurrence of an Event of Default, the City shall, be entitled to seek any
appropriate remedy or damages by initiating legal proceedings as follows:
(i) by mandamus or other suit, action or proceeding at law or in equity, to
require the Owner to perform its obligations and covenants hereunder, or
enjoin any acts or things which may be unlawful or in violation of the
rights of the City; or
(ii) by other action at law or in equity as necessary or convenient to enforce
the obligations, covenants and agreements of the Owner to the City.
(e) The rights and remedies of the City as set forth in this Section 6 are cumulative
and the exercise by the City 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 Owner.
(f) In the event of litigation between the parties arising out of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and other costs and
expenses incurred, including such fees and costs incurred on appeal, in addition to whatever
other relief the prevailing party may be entitled to. As used in the preceding sentence, the words
"reasonable attorney's fees" in the case of the City include the salary and benefits payable to
lawyers employed in the Office of the City Attorney of the City, who provide legal counsel to the
City in such litigation as allocated on an hourly basis.
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(g) No third party shall have any right or power to enforce any provision of this
Agreement on behalf of the City or to compel the City to enforce any provision of this
Agreement against the Owner of the Site.
Section 7. This Agreement shall be governed by the laws of the State of California.
Section 8. This Agreement may be amended after its recordation only by a written
instrument executed by the Owner and by the City.
Section 9. Upon the transfer by the Agency of the Site to the Developer, the
Developer shall execute and record concurrently with such transfer, an acknowledgment
substantially in the form attached hereto as Exhibit "B" that this Agreement remains in full force
and effect and that the Developer acquire its interest in the Site subject to the terms and
conditions of this Agreement.
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IN WITNESS WHEREOF, the Owner and the Agency have caused this Covenant to be
signed, acknowledged and attested on their behalf by duly authorized representatives in
counterpart original copies which shall upon execution by all of the parties be deemed to be one
original document.
AGENCY
Redevelopment Agency of the City of
San Bernardino,
a public body, corporate and politic
Dated:
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By:
CITY
City of San Bernardino
By:
By:
Approved As To Form:
By:
City Attorney
Agency Counsel
[NOTARY JURAT ATTACHED]
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EXHIBIT "A"
Legal Description of the Site
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EXHIBIT "B"
Acknowledgement of Developer
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Exhibit "H"
Notice of Agreement
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RECORDING REQUESTED BY:
AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of San Bernardino
Attention: Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
(Space Above Line For Use By Kecorder)
NOTICE OF AGREEMENT
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
(2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition
and Development Agreement: Meta Housing Corporation
and Magnolia Highland, L.P.)
TO ALL INTERESTED PERSONS:
PLEASE TAKE NOTICE:
Magnolia Highland, L.P., a California limited partnership (the "Developer") and the
Redevelopment Agency for the City of San Bernardino, a public body, corporate and politic (the
"Agency") have entered into a community redevelopment agreement entitled: "2009 Affordable
Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement
(Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.",
dated as of August 3, 2009, as amended by the Amendment No. 1 to the 2009 Affordable Senior
Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of
March _, 2010 (collectively, the "2009 DDA").
PLEASE TAKE FURTHER NOTICE that the 2009 DDA affects the real property
situated in the redevelopment project area of the Northwest Redevelopment Project, as described
in the 2009 DDA, as the "Site":
The Site is more particularly described as:
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Parcel 1 of Parcel Map N
Page of Parcel Maps,
San Bernardino, County
~. 19200, Book ,
Office of the Recorder
Interested persons may inspect the 2009 DDA as a public record of the Agency during
the regular business hours of the Agency. The Agency may be contacted as follows:
Redevelopment Agency of the City of San Bernardino
Attention: Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
(909)663-1044
The 2009 DDA contains affordable senior citizen rental housing development, occupancy
and affordable rental rate covenants of the Developer in favor of the Agency which touch and
concern the Site and which run with the land for a term of years as provided in the 2009 DDA as
affordable housing community redevelopment covenants. For additional and more specific
information regarding these affordable rental rate covenants affecting the Site, interested persons
are urged to contact the Agency.
The recordation of this Notice of Agreement is authorized under Health and Safety Code
Section 33336.
This Notice of Agreement may be executed by the parties in counterparts and when each
such counterpart is executed each such counterpart shall be deemed to be one original document.
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IN WITNESS WHEREOF, the undersigned have executed this Notice of Agreement on
the dates indicated next to each of their signatures as appear below.
AGENCY
Dated:
Dated:
Approved As To Form:
Agency Counsel
Redevelopment Agency of the
City of San Bernardino,
a public body, corporate and politic
By:
Chair of the Community Development
Commission of the City of San Bernardino,
its governing board
By:
Emil A. Marzullo, Interim Executive Director
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DEVELOPER
Executed this day of , 2010
Magnolia Highland, L.P., a California limited
partnership
By: Magnolia Highland, LLC, a California
limited liability company
Its: Administrative General Partner
By:
John M. Huskey
Manager
By: Western Community Housing, Inc., a
California non-profit public benefit
Corporation
Its: Managing General Partner
By:
Graham Espley-Jones
President
By:
Approved As To Form:
Legal Counsel for Developer
Leanne Truofreh
Secretary
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