HomeMy WebLinkAboutR25-Economic Development
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
OR1G1NAL
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT:
Mary Erickson Community Housing, Inc.
("MECH") - Delegation and authorization for
the implementation of the Neighborhood
Stabilization Program ("NSP") and approval of
a certain Master Agreement between the
Agency and MECH
DATE: July 2, 2009
----------------~-------------------------___________________________________ __________________________ ____________________________u___ _______________________________ _______________________.____________________________.
SvnoDsis of Previous Commission/Council/Committee Action(s):
On June 4, 2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the
Mayor and Common Council and Community Development Commission consider this action for approval.
------------------._-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------.
Recommended Motion(s):
(Mavor and Common Conncil)
A: Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the expenditure of
certain Neighborhood Stabilization Program ("NSP") Funds pursuant to the Housing and Economic Recovery Act of 2008
("HERA") in accordance with NSP Grant Number B-08-MN-06-0520 in the principal amount equal to $8,408,558
(Communitv Develooment Commission)
B: Reso]ution of the Community Development Commission of the City of San Bernardino accepting the delegation of
administration and management for the use of the City of San Bernardino Neighborhood Stabilization Program ("NSP")
Funds in accordance with the Housing and Economic Recovery Act of2008
C: Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the use
of Low and Moderate Income Housing Funds and Neighborhood Stabilization Program ("NSP") Funds through a certain
Master Agreement by and between the Redevelopment Agency of the City of San Bernardino ("Agency") and Mary
Erickson Community Housing, Inc. ("MECH"), pursuant to the Neighborhood Stabilization Program
Contact Person(s):
Carey K. Jenkins
Phone:
(909) 663-] 044
Project Area(s):
Supporting Data Attached:
N/A
Ward(s):
7th
o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s)
Funding Requirements:
Amount: $ 4.7 Million
Source:
$2.7 Million NSP Fund and
$2 Million Low and Moderate
Income Housing Fund
Budget Authority:
N/A
Signature: ~
Emi] A. Marzullo, Interim Executive Director
Fiscal Review: & L ~)
Russ Dejesus
Interim Administrative Services Director
Commission/Council Notes:
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I
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P:\Agendas\Comm Dev Commission\CDC 2009\07-06-09 Mary Erickson _ Master Agreement SR (Con'l) doc
COMMISSION MEETING AGENDA
Meeting Date: 7-2.0-0"1
Agenda Item Number: jtt:r
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
MARY ERICKSON COMMUNITY HOUSING, INC. ("MECH") - DELEGATION AND
AUTHORIZATION FOR THE IMPLEMENTATION OF THE NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") AND APPROVAL OF A CERTAIN MASTER AGREEMENT BETWEEN THE
AGENCY AND MECH
BACKGROUND:
On November 17,2008, the Mayor and Common Council of the City of San Bernardino ("Council") approved
the City of San Bernardino Economic Development Agency's ("Agency") response to the Neighborhood
Stabilization Program ("NSP"). The Agency's plan for deploying the NSP Funds was detailed in the
Agency's "Substantial Amendment to the Fiscal Year 2008-2009 Annual Action Plan". As described in this
Substantial Amendment, the Agency plans to allocate its NSP award of approximately $8.4 million among
four different housing programs. These four programs are:
(I). Down Payment Assistance ($920,000);
(2). Housing Opportunities for Households at or below 50% of the Area Median Income ("AMI") ($2.1
million);
(3). Acquisition, Demolition and Redevelopment ($920,000); and
(4). Acquisition, Rehabilitation and Resale of single-family residences, better known as the Intermediary
Services Program ($3.7 million).
The remainder of the funds shall be used to pay for NSP administrative costs. Of the four programs mentioned
above, only the "Housing Opportunities for Households at or below 50% of the AMI" program
("Rehabilitation Program") is reserved strictly for rental properties. The decision to restrict these funds to
rental housing was made for both strategic and programmatic reasons. From the programmatic perspective,
the U.S. Department of Housing and Urban Development ("HUD") requires that at least 25% ofa participating
jurisdiction's NSP grant be used to address the housing needs of individuals and households whose income is
at or below 50% ofthe AMI. Given this restriction on the use of these funds, the Agency determined from a
strategic perspective that it would be best to use these funds for rental housing rather than for homeownership
units.
Rental is a better option for this category of funds because households earning 50% or below of the AMI
would more than likely struggle to adequately maintain a home for which they would be financially
responsible for maintenance and upkeep given the current depressed housing market. In order to make the
home ownership option viable for these types of households, the Agency would have to provide an exorbitant
amount of subsidy. Therefore, Agency Staff determined that these funds could optimally be used to acquire
and rehabilitate existing multi-family properties that could be rented out by professional management to
households whose income does not exceed 50% of the AMI. This enables the Agency to provide affordable
housing opportunities using NSP funding for this segment of the population.
In addition, Agency Staff recommends the use of funds from the "Acquisition, Demolition and
Redevelopment" program ("Demolition Program") mentioned above, to acquire foreclosed, small, multi-
family properties that are beyond repair. In these cases, and unless said properties were already subjected to a
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P:\Agendas\Comm Dev Commission\CDC 2009\07-06-09 Mary Erickson - Master Agreement SR (Con't) doc COMMISSION MEETING AGENDA
Meeting Date: 7 - 20 - 0 "t
A.~~_""~ T4-~_ 110.1.._....__. a...tS"
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 2
demolition only through the Code Enforcement Department, the Agency would opt to demolish the structures
and hold them for future housing redevelopment opportunities rather than rehabilitating the properties.
Agency Staff has determined the best method for acquiring, demolishing or rehabilitating and operating these
properties would be through a non-profit corporation that could perform all of these functions on the Agency's
behalf. A non-profit corporation can acquire properties more efficiently than the Agency due to its more
streamlined organizational structure versus that of a public agency. Also, by having the non-profit corporation
acquire the properties on behalf of the Agency, the liability to the Agency is reduced because it would not be
the legal owner of the properties. There are many housing non-profits in the community that have greater
capacity than the Agency for rehabilitating and professionally managing properties. Finally, the Agency is in
the final stages of establishing an Agency-sponsored non-profit organization that could be the title holder to
certain properties acquired under the NSP, including those properties that are demolished. Given all of these
advantages, Agency Staff recommends having a non-profit corporation acquire, demolish or rehabilitate and
manage the properties under consideration.
Through the Agency's 2008 Notice of Funding Availability ("NOFA") the Agency identified a non-profit,
Mary Erickson Community Housing, Inc. ("MECH"), to perform the acquisition, rehabilitation and
management function for households at or below 50% of AMI. Since then, Agency Staff have visited and
inspected several ofMECH's existing multi-family rental projects. Also, Agency Staff has reviewed MECH's
organizational structure and financial statements. Based on the due diligence performed by Agency Staff, it
was determined that MECH is capable of efficiently and effectively acquiring, rehabilitating and managing
multi-family rental properties on behalf of the Agency.
Also, Agency Staff has decided to utilize the National Community Stabilization Trust ("NCST") in identifying
the multi-family properties to be acquired under the Rehabilitation Program and the Demolition Program.
NCST is a national non-profit clearing house created for the purpose of assisting public agencies to acquire
foreclosed, residential properties on a wholesale basis from the larger banks. NCST will be responsible for
identifying foreclosed properties that are owned by banks within the City and managing the acquisition
process for those properties. NCST will not charge any fee to the Agency for its services.
CURRENT ISSUE:
As a matter of implementing the Rehabilitation Program as described above, the Agency requests the authority
to enter into a Master Agreement ("Agreement") with MECH. The Agreement would give MECH the ability
to acquire foreclosed, multi-family rental properties on behalf of the Agency and rehabilitate them, as
determined by Agency Staff. The Agreement would also dictate the terms and guidelines for the operation of
the acquired and rehabilitated multi-family properties. Following is a summary of some of the more important
conditions that would be imposed on MECH for the acquisition of these properties:
(I). Each acquisition is subject to the administrative oversight by the Agency.
(2). Properties acquired must be within those census tract blocks within the City identified by the Agency
as being the most impacted by the foreclosure crisis, otherwise known as the "NSP Target Zone".
(3). Properties acquired with NSP funding must be foreclosed and/or abandoned for at least 90 days.
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P\Agendas\Comm Dev CommissionlCDC 2009\07-06_09 Mary Erickson - Master Agreement SR (Con'l)doc
COMMISSION MEETING AGENDA
Meeting Date: 7- 2.0 -O"'J
Agenda Item Number: ps
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 3
(4). Properties must be obtained at a minimum discount of five percent from the current appraisal value
and in the aggregate all NSP acquired properties must be acquired at a minimum discount of 15% from
the appraised value.
(5). All properties acquired for the purpose of rehabilitation must eventually be leased out to households
whose total income is at or below 50% of the AMI.
Given the urgency of community conditions, the opportune availability of funds and current real estate market
prices, there is now a perfect window of time in which to mitigate the negative housing conditions currently
affecting neighborhoods throughout the City.
Orf!anization Overview:
The overall mission of MECH is to promote the well-being of working families in Southern California by
increasing and preserving the supply of affordable housing. Established as a 50 I (c )(3) non-profit
organization, MECH is designated as a Community Housing Development Organization ("CHDO") currently
serving Orange County and parts of Riverside, Los Angeles and San Bernardino Counties.
MECH was founded in 1991 by its namesake, a retired school teacher who was devoted to the principals of
community participation and well-being. MECH established the first affordable housing complex in San
Clemente and has since grown to include multiple properties serving hundreds of working poor families within
Southern California. Specific affordable multi-family housing developments include:
(1). Acquisition and rehabilitation of a 24-unit multi-family property targeted to households at or below
50% of AMI located at 25421 Cole Street in Lorna Linda, CA with the property currently managed by
Capstone.
(2). Acquisition, rehabilitation and resale of a total of 17 single family homes targeted to home owners
above 80% of AMI for the County of Los Angeles.
(3). Acquisition and rehabilitation of 22 units of scattered site multi-family housing targeted to households
at or below 50% of AMI in the City of San Clemente, CA with the property currently managed by Del
Mar PMC.
(4). New construction of22 units of multi-family housing targeted to households at or below 50% of AMI
in the County of Riverside. This project is under construction.
(5). Acquisition, rehabilitation and resale of a total of 10 single family homes targeted to home owners
above 80% of AMI for the City of Corona Neighborhood Stabilization Program. This program was
recently launched.
The overall goal of MECH is to provide quality affordable housing for working families, promote the
economic self-sufficiency of their tenants through free Life Skills classes, transition tenants into homebuyers,
help transition residents' children into successful, productive adults and develop community support for
affordable housing. Since 2006, the Officers of the Board of Directors for MECH include Susan McDevitt,
Executive Director; Josh Anderson, President; Kathleen K. Loewy, Vice President; John Gould, Secretary;
Gerald Gibbs, Treasurer; and Jeanne Davis, Director at Large.
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P-IAgendas\Comm Dev CommissionlCDC 2009\07-06_09 Mary Erickson - Master Agreement SR (Con't) doc
COMMISSION MEETING AGENDA
Meeting Date: 7- 20-0cr
Agenda Item Number: r12.5
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 4
Proiect Overview:
The primary Project under this Master Agreement consists of the acquisition and rehabilitation of the 25
separate 4-plex apartment complexes. The acquisition and ultimate rehabilitation of these four-plexes
comprises the first phase ("Phase I") of the Project.
Based on the terms and conditions of the Agreement, it will be the intent of MECH to acquire title to each of
the 4-plexes through its own efforts either through direct negotiations with the current owners or through
negotiations with lenders for the purchase of the targeted properties. Acquisitions will be funded with a
combination ofNSP funds in the amount of $2.\ million, Agency Housing 20% Set aside funds in the amount
of$1 million and other available funds to be procured by MECH for the balance of the Project. Please refer to
Exhibit "B" that identifies the Preliminary Project Budget.
MECH will also be given the authority to negotiate for the other 4-plexes and vacant lots located in the area
generally bounded by 19th Street to the north, Sunrise Lane to the south, Guthrie to the east and Argyle to the
west. In this case, however, the purchase agreements and escrow documents for these 4-plexes and vacant lots
will then be assigned to the Agency or its designated non-profit corporation, as assignee, to then close each of
these escrows. This component of the Project is considered Phase 2 ("Phase 2") and is also identified in
Exhibit "A" of the attached map.
In order to provide safeguards to ensure that the Project will be developed as envisioned by the Agency, after
the acquisition of each 4-plex within the Project, MECH will not resell any of the acquired properties without
prior written approval of the Agency. Additionally, once MECH acquires a minimum of five (5) separate 4-
plexes on 19th Street and five (5) separate 4-plexes on Sunrise Lane, it will initiate a process with the City to
prepare and file an application for a new parcel map for these properties by creating one legal parcel for] 9th
Street and one legal parcel for Sunrise Lane for all 4-plexes then owned by MECH. Any subsequently
acquired 4-plexes will be amended into the applicable parcel map on 19th Street or Sunrise Lane so that
separate 4-plexes or units within each 4-plex cannot be resold by MECH except to another single property
owner.
Though it will not directly acquire any of the properties identified as Phase 2 of the Project, MECH will be
given the right of first opportunity to undertake all or any portion of the redevelopment of this area which is
presently targeted for a senior citizens apartment complex and a single family owner occupied housing
development. Both of these conceptual proposals will be targeted to low and moderate income households.
After an adequate number of parcels have been acquired under Phase 2, the Agency will allow MECH to
submit a proposal for the development of the parcels under consideration which will be reviewed by the
Agency and negotiated in good faith by both parties.
In all instances, MECH will identify Eligible Properties and will negotiate purchase and sale agreements to be
approved by the Agency sponsored non-profit corporation that provide for a discount in purchase price from
the Current Market Appraised Value of no less than five percent (5%) for any individual property, but a
blended aggregate average discount of at least fifteen percent (15%). No property will be purchased at a price
that reflects a discount of not less than the required discount unless MECH obtains written approval from the
Agency Staff as the administrator of the program.
For those properties recommended for demolition, the Agency sponsored non-profit corporation will acquire
them and select the appropriate demolition firm to conduct such work from no less than four (4) separate
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P:\Agendas\Comm Dev CommissionlCDC 2009\07-06-09 Mary Erickson - Master Agreement SR (Con'tjdoc
COMMISSION MEETING AGENDA
Meeting Date: 7- 20-O"f
Agenda Item Nnmber: ~S-
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 5
solicitations for service or it may utilize the existing pre-approved list of demolition firms presently used by
the City's Code Enforcement Department. This process will be overseen by the Agency and will include
provisions for environmental testing and demolition debris removal services.
Rehabilitation Process:
Once acquired, MECH will ensure that specific activities, goals and milestones are met with respect to the
overall rehabilitation process. Specifically, this will include the following:
(I). Secure the property including a locked perimeter fencing and board up of windows, when necessary.
(2). Adequate property management including maintaining utility service connections and keeping the
interior and exterior appearance of each property in an attractive manner;
(3). Provide a total development budget and financing plan to the Agency for each property being
purchased. The budget estimate will include all costs associated with the development of the
property, including acquisition, labor and materials for rehabilitation work, contingency, construction
loan interest, construction loan origination fee, the general contractor fee and overhead, marketing
costs, relocation, lease-up costs, replacement reserves, permanent financing origination fee, closing
costs and developer fee. The financing plan will demonstrate all sources of funds readily available for
the acquisition and rehabilitation of each property to be purchased.
(4). Provide a timeline in the Agency's format for completion of the various steps involved in the
acquisition, rehabilitation and lease-up of these properties. The time line will start from the point that
MECH enters into escrow for the acquisition of each specific property through the stabilization of
operations.
(5). Provide project management services for rehabilitation of projects, to include but not be limited to:
establishing a scope of work, identifying or obtaining the financing to pay for all labor and materials,
conducting weekly on-site project inspections, managing relationships with all sub-contractors,
verifying permits and City compliance, administering both conditional and unconditional lien releases,
advertising the apartments for rental through various local media, conducting mass mailings targeted at
potential renters, partnering with local churches and other community groups to identify prospective
Qualified Tenants, processing the rental application, coordinating quick close of escrow and
expediting lender requirements.
(6). Maintain adequate files for each property, ensuring compliance with all Agency and lender
requirements, all documents required to verify compliance with the Affirmative Marketing Guidelines
such as tenant waiting lists, copies of advertisements published in local and community newspapers,
etc.
Re!!Ular Reoortinll Reauirements:
MECH will commit to an Agency-approved program to provide periodic monitoring of compliance of each
property being purchased under the Program. Additionally, within 30 days after the end of each calendar
quarter, MECH will provide a status report to the Agency Staff, City Council and the CDC regarding the
activities of MECH and progress made on overall NSP objectives. The report will detail, among other things:
(1) funds expended to date; (2) progress made on acquisition activities; (3) any relocation that has occurred;
(4) properties placed back into service; (5) properties in the process of being rehabilitated; and (6) any
unforeseen issues of a material nature.
P:\AgendasIComm Dev CommissionlCDC 2009\07-06-09 Mary Erickson - Master Agreement SR(Con't),doc
COMMISSION MEETING AGENDA
Meeting Date: 7- 20-09
Agenda Item Nnmber: fl<)
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 6
Defaults and Remedies:
For the occurrence of any identified Event of Default by MECH, the City or the Agency, as an agent of the
City, can take any of the following remedies: (I) demand that the Event of Default be cured (if curable) within
30 calendar days; (2) declare that any unused amount ofNSP or other Agency funds be immediately repaid to
the City or Agency; (3) take any and all actions permitted by law that is necessary to enforce performance and
observance of any obligation, agreement or covenant of MECH under the Agreement or any other related
agreements; (4) suspend allowing MECH access to any NSP or Agency funds unless the Event of Default (if
curable) is cured: (5) demand reimbursement from MECH for any payments made to it by the City or Agency
for which the contracted work product was not satisfactorily delivered; and (6) take possession of any material
or other work product purchased or produced by MECH for the Project.
Termination:
The Agreement may be terminated by either party for any reason by giving the other party ninety (90) calendar
days' prior written notice. The Agency will pay MECH for all work authorized by the Agency and completed,
prior to the effective termination date. In the event of a termination of the Agreement because of performance,
MECH will provide all documents, notes, maps, reports, data or other work product developed in performance
of the Scope of Services to the Agency, within ten (10) calendar days after the effective date of the termination
and without additional charge to the Agency.
Comvensation:
Compensation for services rendered will be derived from three separate activities which include a Developer's
Fee, Property Management Fee and Residual Receipts Income from the operating cash flows from the various
Eligible Properties that comprise the Project once they are completed, leased and have reached "financial
stability".
(I). The Developer's Fee will be included as a line item in the development budget for each property
presented to the Agency prior to its acquisition. The amount of Developer Fee will be equal to a flat
fee based on the Total Development Cost for each property as reflected in the Agency established
Development Pro Forma Template. The total development cost will be comprised of those approved
line items that appear in the Development Pro Forma Template. A Developer Fee Bonus equal to an
additional two percent (2%) that will be paid ifMECH is successful in obtaining a cumulative amount
of at least one million dollars ($1,000,000) from financing sources other than the Agency that is
applied toward the acquisition, rehabilitation, and/or operations of the properties on terms approved by
the Agency Staff in the exercise of their discretion.
(2). The Property Management Fee will be included as a line item in the First Year Operating Budget for
each property presented to the Agency Staff by MECH prior to its acquisition and rehabilitation. This
fee will only be paid in the case where such a property is leased to eligible tenants and where there is
adequate revenues generated from the operation of the property to pay such a fee. This fee shall not
exceed seven percent (7%) of the Effective Gross Income.
(3). The Agency shall receive 50% of any "surplus cash flow" after all operating expenses and debt service
payments have been made on each property acquired, rehabilitated and placed into service by MECH.
This surplus cash flow is commonly called Residual Receipts Income ("Residual Receipts"). The
remaining portion of Residual Receipts will be available to MECH as the owner of the property.
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COMMISSION MEETING AGENDA
Meeting Date: 7- 2tJ -171
Agenda Item Number:
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Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 7
Bude:et Reouest:
For activities associated with Phase I of the Project, the Agency Staffrequests authority to utilize NSP funds
derived from the Housing Opportunities for Households at or below 50% of the AMI in the amount of $2.1
million. In addition, the Agency Staff also requests that an additional $] million Tax Increment Housing Set-
Aside Funds be made available for Phase ] activities. As it relates to Phase 2 activities, the Agency Staff
requests authority for the Agency or its designated non-profit to use $600,000 in NSP Demolition funds and $1
million in Tax Increment Housing Set-Aside funds for acquisition and demolition purposes.
In those instances where a property needs to be acquired in order to complete the overall redevelopment
strategy but said property has not been foreclosed upon, and thus not eligible under NSP, Tax Increment
Housing Set-Aside Funds can be used for acquisition, demolition or rehabilitation purposes. This is applicable
to both Phases I and 2.
ENVIRONMENTAL IMPACT:
None.
FISCAL IMP ACT:
There will be no fiscal impact to the City's General Fund. The services provided under the Rehabilitation
Program, the Demolition Program and the associated administration costs, will be funded either with $2.7
Million in NSP funds derived from HUD or $2 Million funds from the Agency's Tax Increment Housing Set-
Aside. As it relates to the $2 Million of Agency Housing set-aside, these funds are being allocated to assist
with NSP activities in the form of the Agency's Residential Revitalization line item in the upcoming Fiscal
Year 2009-20 I 0 Agency Budget.
RECOMMENDA nON:
That the Mayor and Common Council and Community Development Commission adopt the attached
Resolutions.
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Emil A. Marzullo, Interim Executive Director
n_____________~______________________________________________------------------------~----------------------------------------------- -----------------------------------------------------------------------------
P\Agendas\Comm Dev Commission\CDC 2009\07_06_09 Mary Erickson - Master Agreement SR (Con'l)doc COMMISSION MEETING AGENDA
Meeting Date: 7-2/)-0'7
Agenda Item Number: tt2. c;-
EXHIBIT "A"
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EXHIBIT "B"
NEIGHBORHOOD STABILIZATION PROGRAM
19TH AND SUNRISE PRELIMINARY BUDGET <as of 06-09)
Phase 1 Phase 2
Funding Acquisition Acquisition
Source Rehabilitation Demolition Total
Current Funding
NSP1 (a) 2,100,000 600,000 $ 2,700,000
20% Housing Set-aside (b) 1,000,000 1,000,000 $ 2,000,000
Subtotal 3,100,000 1,600,000 $ 4,700,000
Future Funding
NSP-State (c) 2,000,000 $ 2,000,000
NSP2 (d) 650,000 400,000 $ 1,050,000
CDFI (c) 850,000 $ 850,000
20% Housing Set-aside (e) 4,000,000 $ 4,000,000
Subtotal 3,500,000 4,400,000 $ 7,900,000
TOTAL $ 6,600,000 $ 6,000,000 $ 12,600,000
(a) NSP1 funds have already been allocated to the City and are available for immediate draw down.
(b) RDA Housing set-aside funds have been budgeted for FY09-10.
(c) Requires Mary Erickson to submit an application for funding.
(d) Requires EDA to submit an application for funding.
(e) Based on receipt of future 20% housing setaside funds (FY10-11 and FY11-12).
1
2
3
4
5
6
7
(cOrP
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
] 0 Approval and Grant Agreement duly executed by and between the City and the United States
] 1 Depanment of Housing and Urban Development ("HVD") as NSP Grant Number B-08-MN-06-
I2 0520;and
13
WHEREAS, the City intends to authorize the Redevelopment Agency of the City of San
14 Bernardino (the "Agency"), pursuant to this Resolution, to administer all such NSP Funds as shall
15 be received by the City pursuant to said NSP Grant and to otherwise provide for and administer the
]6 NSP program that shall be undertaken within the City by the Agency as required of the City under
] 7 the Funding Approval and Grant Agreement; and
18
WHEREAS, the City recognizes that various non-profit corporations, whether controlled by
19 the Agency or which are independent of the Agency, will be acquiring title to single-family
20 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
21 the applicable lenders in an effort to implement the process for the acquisition, demolition or
22 rehabilitation and resale of all such foreclosed properties or building lots after completion 0
23 demolition; and
24
WHEREAS, it is necessary at this time for the City to specifically authorize the actions as
25 required to be undertaken by the Agency for the administration of the NSP funds and the
26 disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
~7 properties within designated target areas or elsewhere in the City as may be permitted by HERA and
28 in furtherance of the use of the NSP funds by the Agency on behalf of the City; and
1
P:\Aiendaslhsolutions\R.esolulions\2009'107..()6...09 Mary Erickson. bpendirun, otNSP FlUIds MCC keso A (ConI'd),doc
1 WHEREAS, the Funding Approval and Grant Agreement (the "NSP Grant Agreement") by
2 and between HUD and the City as was finally executed on April 23, 2009, and a copy of said
3 Agreement is attached to this Resolution as Exhibit "A".
4 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY
5 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
6 FOLLOWS:
7 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
8 respects.
9 Section 2. This Mayor and Common Council of the City of San Bernardino (this "Council")
] 0 hereby authorizes and directs the Agency staff, subject to confirmation and ratification by the
]] Community Development Commission of the City of San Bernardino (the "Commission"), to
12 implement all aspects of the NSP program and the disbursement of the NSP grant funds that are
13 available to the City pursuant to HERA and as further set forth in the NSP Grant Agreement. The
14 Agency shall be solely responsible for all administrative, audit and compliance matters required
15 either under HERA or the NSP Grant Agreement as may be required for the use of the NSP funds
16 within the City.
17 Section 3. This Council further authorizes and directs that the NSP funds as shall be
18 received by the City and administered by the Agency as authorized by this Resolution shall be used
19 and applied for the following categories of expenditures and programs and not to exceed the dollar
20 amounts as provided in this Section 3:
21
22
23
24
25
26
27
28
(a)
(b)
$920,000 - Down payment assistance for qualified single family homebuyers;
$2,100,000 - rental housing opportunities for households at or below 50% of Area
Median Income for multi-family rentals housing projects to be acquired by non-profit
corporations which are either independent of the Agency or controlled by the
(c)
Agency;
$920,000 for acquisition, demolition and redevelopment of single-family and multi-
family residential structures to be acquired by either the Agency ot non-profit
2
P:\Aeelldu\R~lutioM\ll.aolutioclsIJ009\07-06-09 Mar)' Erickson. Expenditun orNSP Funds Mec Reset A (Com'd),doc
1
2
3
4
corporations which are either independent of the Agency or controlled by the
Agency; and
$3,700,000 for the acquisition, rehabilitation and resale of single-family foreclosed
(d)
residences through an Intermediary Services Program as may be initiated and
5
approved by the Commission for the Agency either by the Agency or through non-
profit corporations which are either independent of the Agency or controlled by the
6
7
Agency.
8 The Agency shall be further authorized and directed to payor reimburse to the Agency from the
9 NSP funds as are allocated to the various categories of housing activities specified above such dollar
10 amounts as are required to provide for the effective administration and management of the NSP
11 program as shall be implemented by the Agency. Such dollar amounts of the NSP funds to be used
12 and applied by the Agency lor such administration and management shall not exceed those dollar
13 limitations and other limitations on eligible expenditures as may be established by HUD either
14 pursuant to HERA or which are otherwise applicable to the use of the NSP funds.
15 Section 4. This Resolution shall take effect upon its adoption and execution in the manner
16 as required by the City Charter.
17 /11
18 /1/
19 /II
20 /II
21 III
22 /1/
23 III
24 III
25 III
26 1/1
27 /II
28 /II
3
P\Agendu\Rtowrulions\Rcwlulions\2009\07..(l6..oq Mary ErickllOn. bf'Cndilure ofNSP Fundi MeC ReooA {C(lFll'dl_d<X
1
2
3
4
5
6
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
meeting
Common Council of the City of San Bernardino at a
7
18
19
, 2009, by the following vote to wit:
Navs
Abstain
Absent
Rachel G. Clark, City Clerk
day of
,2009.
20 The foregoing Resolution is hereby approved this
21
22
23
24
25
26
27 By:
Patrick J. Morris, Mayor
City of San Bernardino
Approved as to Form:
28
James F. Penman, City Attorney
. 4
P:\Agcndu\Resolutions\RC!olutiom\2009\07~ Mary Erickson. Expend~ ofNSP funds MCC"kao A (COllt'd) doe
EXHIBIT" A"
2009-105
FUNDING APPROVAL AND GRANT AGREEMENT FOR
NEIGHBORHOOD STABILIZATION PROGRAM (NSP) FUNDS
AS AUTHORIZED AND APPROPRIATED UNDER THE
HOUSING AND ECONOMIC RECOVERY ACf OF 2008
(PUBLIC LAW 110-289, JULY 30, 2008)
NSP GRANTEE:
City of San Bernardino
NSP GRANT NUMBER:
B-08-MN-06-0520
NSP GRANT AMOUNT:
$8,408,558
NSP APPROVAL DA TE:
MAR - ,; ,:::
This Grant Agreement between the Department of Housing and Urban Development (ffiJD) and
City of San Bemardino (Grantee) is made pursuant to the authority of sections 230] - 2304 of
the Housing and Economic Recovery Act of 2008 (public Law ] ]0-289 (July 30, 2008))
(HERA). The program established pursuant to section 230]-2304 is known as the
"Neighborhood Stabilization Program" or "NSP." The Notice of Allocations, Application
Procedures, Regulatory Waivers Granted to and Altemative Requirements for Redevelopment of
Abandoned and Foreclosed Homes Under the Housing and Economic Recovery Act, 2008
published at 73 FR 58330 (October 6,2008) (Notice); HERA; the Grantee's submission for NSP
assistance (Grantee Submission); the ffiJD regulations at 24 CPR Part 570 (as modified by the
Notice and as now in effect and as may be amended from time to time) (Regulations); and this
Funding Approval, including any special conditions, constitute part of the Grant Agreement.
Subject to the provisions of this Grant Agreement, HUD will make NSP Grant Funds in the
amount of $8,408,558 available to the Grantee upon execution of this Grant Agreement by the
parties. The Grantee shall have 18 months from the date of HUD's execution of this Grant
Agreement to obligate the NSP Grant Amount pursuant to the requirements of HERA and the
Notice. The Grantee shall have 48 months from the date of HlJD's execution of this Grant
Agreement to expend the NSP Grant Amount pursuant to the requirements of the Notice. The
NSP Grant Funds may be used to pay eligible costs arising from eligible uses incurred after the
NSP Approval Date provided the activities to which such costs are related are carried out in
compliance with all applicable requirements. Pre-award planning and general administrative
costs may not be paid with funding assistance except as permitted in the Notice; the Notice limits
such costs to those incurred on or after September 29, 2008. Other pre-award costs may not be
paid with funding assistance except as pemlitted by24 CPR 570.200(h); for purposes of NSP,
such costs are limited to those incurred on or after the date that the NSP substantial amendment
was received by HlJD.
2009-105
2
The Grantee agrees to assume all of the responsibilities for environmental review,
decisionmaking, and actions, as specified and required in regulations issued by the Secretary
pursuant to Section 100(g) of Title I of the Housing and Community Development Act, as
amended (42 U.S.C. 5304) and published in 24 CPR Part 58. The Grantee further acknowledges
its responsibility for adherence to the Grant Agreement by sub-recipient entities to which it
makes funding assistance hereunder available.
This Grant Agreement may be amended only with the prior written approval of JillD. In
considering proposed amendments to this Grant Agreement, JillD shall review, among other
things, whether the amendment is otherwise consistent with HERA, the Notice, and the
Regulations.
The Grantee may amend its Grantee Submission; however, such amendments, including
substantial amendments as defined in 24 CPR Part 91, will be subject to the requirements of 24
CFR Part 91 (or any successor regulation) and any revisions HUD may make to the Notice (or
any successor Notice or regulation).
The Grantee shall at all times maintain an up-to-date copy of its Grantee Submission, including
all amendments approved by HUD, on its Internet website as required by the Notice. Further,
the Grantee shall maintain information on all drawdowns, deposits, and expenditures of grant
funds and program income under this Funding Approval and Grant Agreement and any other
records required by 24 CFR 570.506, in its files and shall make such information available for
audit or inspection by duly authorized representatives ofHUD, HUD's Office of the Inspector
General, or the Comptroller General of the United States.
The Grantee shall submit information on performance measurement'as established by the
Secretary for activities undertaken with NSP grant funds.
The Grantee is advised that providing false, fictitious or misleading information with respect to
NSP Grant Funds may result in criminal, civil or administrative prosecution under 18 USC
~1001, 18 USC ~1343, 31 USC ~3729, 31 USC ~3801 or another applicable statute.
Close-out of this grant shall be subject to the provisions of 24 CPR 570.509 or such close-out
instructions as may hereafter be issued by HUD specifically for NSP grants.
2009-105
s
This NSP Grant Agreement is binding with respect to HUD in accordance with its teons upon
the execution by HUD in the space provided above. subject to execution on behalf of the
Grantee.
The United States Department of
Housing and Urban Development
The Grantee
City of San Bernardino
Signature of Authorized Offici
~~al
Afie/eK V /:11~~'
Name of Authorized Official
William G. Vasquez
Name of Authorized Official
Director
Community Planning and Development
/??~rl'/A,
Title of Authorized Offici.al
Title of Authorized Official
3<1'1
Date of Sigftu
1//.2.3/09
.
Date of Signature
95-6000772
Grantee Tax Identification Number
For HUD CFO Use Onlv
Current Balances Increases/I)ecreases Endin!! Balance Date
.
1
2
3
4
5
6
7
CCQ)~Y
RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTING THE DELEGATION OF
ADMINISTRATION AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD STABILIZATION PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
10 Approval and Grant Agreement duly executed by and between the City and the United States
11 Department of Housing and Urban Development ("HUD") as NSP Grant Number B-08-MN-06-
12 0520;and
13 WHEREAS, the City pursuant to a duly adopted Resolution on this date has authorized the
14 Redevelopment Agency of the City of San Bernardino (the "Agency") pursuant to said Resolution,
15 to administer all such NSP funds as shall be received by the City pursuant to said NSP Grant and to
16 otherwise authorize the Agency to provide for and administer the NSP program that shall be
17 undertaken within the City by the Agency as required of the City under the Funding Approval and
18 Grant Agreement; and
19 WHEREAS, the Agency intends that various non-profit corporations, whether controlled by
20 the Agency or which are independent of the Agency, will be acquiring title to single-family
21 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
22 the applicable lenders in an effort to implement the process for the acquisition, demolition or
23 rehabilitation and resale of all such foreclosed properties or building lots after completion 0
24 demolition; and
25 WHEREAS, it is necessary at this time for this Community Development Commission of the
26 City of San Bernardino (this "Commission") to concur in the request as made by the Mayor and
27 Common Council of the City of San Bernardino ("Council") and to specifically authorize Agency
28 Staff to undertake the actions as required of the Agency for the administration of the NSP funds and
1
P\A6endas\Raolulionl\Resolutions\2009\07.()6....09 Mary Ericbon. Expenditure arNSP FuDCb CDC Rao B (Cont'd).doe
1 the disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
2 properties within desi!,1l1ated target areas or elsewhere in the City as may be permitted by HERA and
3 in furtherance of the use of the NSP funds by the Agency on behalf of the City; and
4 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
5 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
6 on April 23, 2009.
7 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
8 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
9 FOLLOWS:
10 Section 1. The facts set forth in the Recitals to this Resolution arc accurate and correct in all
11 respects.
12 Section 2. The Commission hereby authorizes and directs Agency Staff to implement all
13 aspects of the NSP program and the disbursement of the NSP grant funds that are available to the
14 City pursuant to HERA and as further set forth in the NSP Grant Agreement. The Commission
] 5 recognizes that the Agency shall be solely responsible for all administrative, audit and compliance
]6 matters required either under HERA or the NSP Grant Agreement as may be required for the use of
] 7 the NSP funds within the City.
]8 Section 3. The use and application of the NSP funds by the Agency shall not exceed those
] 9 limitations set forth in Section 3 of the Resolution of the Council of even date with this Resolution
20 authorizing the Agency to administer and manage the NSP program subject to the contirmation by
2] the official action of this Commission. The Agency is hereby authorized to pay directly or to
22 otherwise reimburse the Agency for those costs and expenses of the administration and management
23 of the NSP program subject to such dollar limitation and other limitations on eligible expenditures
24 as may be established by HUD either pursuant to HERA or which arc otherwise applicable to the
25 use of the NSP funds.
26 Section 4. This Resolution shall take effect from and after its date of adoption by this
27 Commission.
28 III
2
P:\AgendlU\Re!Wllllion~\Re$Uhllionl'JOO9\01-06--(}<) Mary Erickwn - E~pl"ndilUfe ofNSP FUfl(1$ CDC ReS(! B (Cont'd)doc
1
2
3
4
5
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTING THE DELEGA nON OF
ADMINISTRATION AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD ST ABILlZA TION PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
6 Development Commission of the City of San Bernardino at a
17
18
meeting
, 2009, by the following vote to wit:
Navs
Abstain
Absent
Secretary
19 The foregoing Resolution is hereby approved this
20
21
22
23
day of
,2009.
Patrick 1. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
24 Approved as to Form:
25
26
By:
7
28
C0~#
Agenc sel
3
P:\AgendasIResolutionslRuolulions\2009\07-06-09 Mary Erickson.' bpenditure orNSP Funds CDC R.eso B (COlliI'd}doc
1
2
3
4
5
6
7
8
RESOLUTION NO.
(C~~
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
9 WHEREAS. the Mayor and Common Council of the City of San Bernardino ("Council")
10 pursuant to a duly adopted Resolution on this date authorized the Redevelopment Agency of the
11 City of San Bernardino (the "Agency") to administer funds received through the Neighborhood
12 Stabilization Program ("NSP") as shall be received by the City of San Bernardino ("City") pursuant
13 to a grant from the United States Department of Housing and Urban Development ("HUD") and to
14 otherwise provide for and administer the NSP program that shall be undertaken within the City by
15 the Agency as required of the City under the Funding Approval and Grant Agreement duly executed
16 by and between the City and HUD as NSP Grant Number B-08-MN-06-0520; and
17 WHEREAS, Mary Erickson Community Housing, Inc. ("MECH"), a California non-profit
18 public benefit corporation, which is independent of the Agency, will be acquiring title to muIti-
19 family foreclosed properties in an effort to implement the process for the acquisition, redeveloping
20 and operation of foreclosed properties within the area agreed upon pursuant to this Resolution; and
21 WHEREAS, the Agency will be acquiring title to multi-family foreclosed properties in an
22 effort to implement the process for the acquisition and demolition of all such foreclosed properties;
23 and
24 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
25 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
26 on April 23, 2009.
27 / / /
28 II /
1
P:v.,endas\Re$Olutions\Re~lions\2009\07..()6..()9 Muy Erickson - Expenditure orNSP Funds COC Reso C (Com'd).doc
1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
2 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
3 FOLLOWS:
4 Section I. The facts set forth in the Recitals to this Resolution are accurate and correct in all
5 respects.
6 Section 2. The Community Development Commission of the City of San Bernardino
7 ("Commission") hereby authorizes and directs Agency staff to implement the administration and
8 disbursement of the $2,100,000 of NSP grant funds for acquisition of foreclosed properties and
9 $1,000,000 of the Housing set-aside funds for the purpose of acquiring and redeveloping the
10 properties per the NSP Grant Agreement. The Commission recognizes that the Agency shall be
II solely responsible for all administrative, audit and compliance matters required either under HERA,
12 the NSP Grant Agreement and State Community Redevelopment Law as may be required for the
13 use of the NSP and Housing set-aside funds within the City.
14 Section 3. The Commission hereby authorizes and directs Agency Staff to implement the
15 administration and disbursement of $600,000 of the NSP grant funds and an additional $1,000,000
16 of the Housing set-aside funds for the purpose of acquiring and demolishing the properties per the
17 NSP Grant Agreement. The Commission recognizes that the Agency shall be solely responsible for
18 all administrative, audit and compliance matters required either under HERA, the NSP Grant
19 Agreement and State Community Redevelopment Law as may be required for the use of the NSP
20 and Housing set-aside funds within the City.
21 Section 4. The use and application of the NSP and Housing set-aside funds by the Agency
22 shall not exceed those limitations set forth in Sections 2 and 3 of the Resolution of the Mayor and
23 Common Council of even date with this Resolution authorizing the Agency to administer disburse
24 NSP and Housing set-aside funds subject to the confirmation by the official action of this
25 Commission.
26
Section 5.
The Commission hereby approves the use of Low and Moderate Income
27 Housing Funds and NSP Funds through a certain Master Agreement by and between the Agency
28 and MECH and hereby authorizes the Interim Executive Director of the Agency to execute that
2
P;~\R.esolulion,\Resolulions\2009\07.06-09 Mary Eriebon' Expenditure ofN'SP funds CDC Reso C (Com'd).cb;
I Assessors Parcel No.'s 1191-05-170 and 1191-05-171, which are zoned vacant.
2 Section 4. The use and application of the NSP and Housing set-aside funds by the Agency
3 shall not exceed those limitations set forth in Sections 2 and 3 of the Resolution of the Mayor and
4 Common council of even date with this Resolution authorizing the Agency to administer disburse
5 NSP and Housing set-aside funds subject to the confirmation by the official action of this
6 Commission.
7
Section 5.
The Commission hereby approves the use of Low and Moderate Income
8 Housing Funds and NSP Funds through a certain Master Agreement by and between the Agency
9 and MECH and hereby authorizcs thc Interim Executive Director of the Agency to execute that
10 certain Master Agreement on behalf of the Agency together with such technical and conforming
11 changes as may be rccommended by the Interim Executive Director of thc Agcney and approved by
12 the Agency Counsel.
13 Section 6.
14 Commission.
15 III
16 III
17 III
18 III
19 /11
20 /II
21 III
22 /1/
23 /II
24 III
25 III
26 III
27 /11
28 II/
This Resolution shall take effect from and afler its date of adoption by this
3
P'\"gtndu\Resolution5\Rcsol~(;ons\1(l(l9\Q1.()6..()9 fl,Ul)' Erichon. E\pendilure ofNSP FundsCDC Re~'" C (Cont'd) doc
]
2
3
4
5
6
7
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
] HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
8 Development Commission of the City of San Bernardino at a
,2009, by the following vote to wit:
meeting
The foregoing Resolution is hereby approved this
2]
22
23
24
25
26 Approved as to Form:
]8
]9
20
Navs
Abstain
Absent
Secretary
day of
,2009.
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
27 By: ~
28 gen el
4
P\Agendu\Rnolulious\Rcsolutioll$\2009\07..()6.Q9 Mary Eric;bon. ExpaIditurt o(NSP Funds CDC Rae C (COllI'd)doc
NEIGHBORHOOD ST ABILlZA TION PROGRAM
DEVELOPER MASTER AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
AND
MARY ERICKSON COMMUNITY HOUSING, INC.
JUL Y 20, 2009
This Master Agreement (this "Agreement") is made and entered into as of July 20, 2009,
by and between the Redevelopment Agency of the City of San Bernardino (" Agency"), a public
body, corporate and politic, and, Mary Erickson Community Housing, Inc., a California non-
profit corporation, hereinafter referred to as "Developer". The Agency and Developer are
sometimes referred to herein individually as a "Party" and collectively as the "Parties". This
Agreement shall be deemed to be effective as of the date of approval by the governing body of
the Agency which date shall be July 20, 2009 (the "Effective Date").
RECITALS
WHEREAS, on July 30, 2008, the United States Government adopted the Housing and
Economic Recovery Act of2008 ("HERA"); and
WHEREAS, pursuant to Title III of Division B of HERA (Public Law 110-289,122 Stat.
2650), the United States Government created a program known as the Neighborhood
Stabilization Program ("NSP"); and
WHEREAS, the purpose of the NSP is to make funding available for certain qualified
uses in order to assist state and local governments with emergency assistance for the
redevelopment of abandoned and foreclosed upon homes and residential properties; and
WHEREAS, on October 6, 2008, the U.S. Department of Housing and Urban
Development ("HUD") published its "Notice of allocations, waivers granted, alternative
requirements applied, and statutory program requirements" for the NSP in the Federal Register,
Volume 73, No. 194, Docket No. FR-5255-N-Ol ("Notice"); and
WHEREAS, pursuant to the Notice, NSP funds are to be considered Community
Development Block Grant ("CDBG") funds unless stated otherwise in the Notice; and
WHEREAS, in order to qualify for an NSP grant, the City of San Bernardino ("City") has
adopted a substantial amendment to its CDBG program setting forth the criteria and guidelines
for implementation of the NSP within the City ("Substantial Amendment"); and
WHEREAS, the Substantial Amendment, and all provisions contained therein, IS
incorporated by reference into this Agreement as though fully set forth herein; and
WHEREAS, HUD has reviewed and approved the Substantial Amendment, and will
make NSP grant funding available to the Agency as the administrative agent for the City; and
WHEREAS, under the NSP regulations, the City's NSP funding allocation must be
obligated within eighteen (18) months from and after the date of the City's grant agreement with
HUD; and
WHEREAS, the Agency is authorized to administer and distribute the low-moderate
income housing funds ("low-mod funds") generated from the City's Redevelopment Project
Areas, on behalf of the City; and
-1-
P\Agendu\Atleoo. Anadunems\Agenda ANchmerdslASt'nda ~hments\AtVmts-Amend 2009\07-2()..{l9 M.uy ErickJon Community Housing. Inc . Miller Agreement Cont'd (Fi"').doc:
WHEREAS, the City seeks to engage Developer the Developer to assist the City in
utilizing its NSP and low-mod funds for the purchase and rehabilitation of abandoned and/or
foreclosed upon eligible properties ("Eligible Properties") within the NSP Target Zone, as
defined in the Scope of Services attached hereto as Exhibit "A" Section B.2.c., and the rental of
such properties to tenants with household incomes at or below 50% of the Area Median Income
("AMI") who meet all other tenancy requirements established under NSP ("Eligible Tenants"),
all as further set forth in the Substantial Amendment and in this Agreement
NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND MUTUAL
PROMISES CONTAINED HEREIN AND FOR SUCH OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE
PARTIES HERETO AGREE AS FOLLOWS:
o. Incornoration of Recitals
Recitals. The Recitals set forth above are true and correct and are incorporated
into this Agreement as though fully set forth herein.
2. Sunervision of Develoner. The Agency Staff designated in Exhibit "B" shall be
responsible for the direction of any work to be performed by Developer and any other
consultants or subconsultants to the Agency under this Agreement. Developer shall not
undertake any work under the terms of this Agreement, unless instructed to do so by one of the
designated staff members. No other staff member is authorized by the Agency to request
services from Developer.
3. Term of Al!reement. The term of this Agreement shall commence on the date
first appearing in this Agreement as the Effective Date and will terminate one (1) year after the
Effective Date, unless eariier terminated as provided in this Agreement. The Agency will have
the option to extend the term of this Agreement for three (3) additional one-year terms at the sole
option and discretion of the Agency with the consent of Developer. The Agency reserves the
right through the actions of the Interim Executive Director to terminate this Agreement at
anytime either with or without cause and at the sole convenience of the Agency upon delivery of
notice of termination to Developer as set forth in Section 10 hereof; provided, however, that
upon the effective date of any such termination, the Agency shall be responsible to pay and/or
reimburse Developer for all services, materials and supplies as may have been furnished to the
Agency in accordance with the Scope of Services as referenced in Section 3.
4. Scone of Develoner Services.
A. The Agency hereby retains Developer to provide the professional services set
forth in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by this
reference. Developer hereby agrees to perform the work set forth in the Scope of Services, in
accordance with the terms of this Agreement. Developer shall perform the services as set forth
on said Scope of Services within the time periods to be identified by the appropriate Agency
representative.
B. The Parties agree that the acquisition and rehabilitation project as contemplated
by the Scope of Services and as defined herein as the "Project" shall be related specifically to the
- 2 -
P:\Agendl.s~ Anac:hmmulAgenda Anachmems\A8enda Anuhmems\AgTlTl15-An1end 2009\07.20-09 Mary Erickson Community Howing,lnc .. Masler Agreemenc Cont'd (finaJ).doc:
acquisition and rehabilitation of 4-plexes located in the area of East 19th Street and Argyle in the
City consisting of fifteen (15) separate 4-plex buildings each on a separate legal lot. In addition,
the Project shall also include the acquisition and rehabilitation of an additional ten (10) 4-plexes
each on a separate legal lot on Sunrise Lane.
C. It is the intent of the Parties that the Developer shall acquire title to each of the 4-
plexes by means of its own efforts. All such acquisitions may be funded, to the extent NSP
funds remain available, with the use of those NSP funds as shall be made available to the
Developer pursuant to this Agreement. The Parties recognize that the Agency has available an
amount not to exceed $2,100,000 for the acquisition of the 4-plexes within the Project, as
necessary. In addition, the Agency has taken all necessary actioris to make available for other
Project expenditures an amount equal to $1,000,000 of the Agency's Low and Moderate Income
Housing Fund which may be expended by the Agency together with the NSP funds for the
funding, in part, of the costs of the Project.
D. Upon the acquisition of each 4-plex within the Project the Developer shall execute
the applicable program documents as are required by this Agreement to be executed and
delivered upon each such close of escrow and which are set forth as Exhibits "K", "L", "M" and
"N" to this Agreement. After the acquisition of a 4-plex within the Project with funding from the
Agency, the Developer shall not resell that 4-plex or any interest in the 4-plex without the prior
written approval of the Agency which may be granted or denied at the sole and absolute
discretion of the Agency.
E.. Upon acquisition of minimum of five (5) adjacent 4-plexes on 19th Street or five
(5) adjacent 4-plexes on Sunrise Lane, the Developer shall initiate a process with the City of San
Bernardino to prepare and file an application for a new parcel map. The parcel map shall be for
the first combination of properties on either 19th Street or Sunrise Lane upon which five (5) 4-
plexes have been acquired capable of being combined into one (1) legal parcel. Any
subsequently acquired adjacent 4-plexes shall be amended into the applicable parcel map so that
separate 4-plexes, as both 4-plexes and separate units within each 4-plex cannot be resold except
to a purchaser of an entire parcel containing multiple 4-plex structures.
F. The Developer may negotiate for other 4-plexes and vacant lots located on 19th
Street and Sunrise Lane between Guthrie and Argyle (the "Phase II Project") and an escrow may
be commenced by Developer for the purchase of such properties. The purchase agreements and
escrow documents for any such 4-plexes and vacant lots shall be assigned to the Agency or its
designated non-profit corporation, for completion of performance and closure of each escrow on
all such 4-plexes and vacant lots. The Developer shall not acquire title either directly or
indirectly in any properties located within the Phase II Project under any circumstances during
the term of this Agreement.
G. The Developer shall have the right of first opportunity to undertake all or any
portion of the development of a senior citizens apartment project or a single-family owner
occupied housing development on all or any portion of the Phase II Project. Such shall be
contingent upon the determination of the Agency that sufficient property has been acquired by
the Agency to warrant consideration of undertaking a Phase II Project.
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(I) Upon receipt of written notice from the Agency to the Developer
specifying the scope of the intended Phase II Project and the intended land uses, the
Developer shall have thirty (30) calendar days after receipt of such notice to respond to
the Agency as to whether the Developer intends to undertake the proposed Phase II
Project as described by the Agency in such notice.
(2) If the Developer fails to respond to the Agency in the affirmative within
such thirty-day period, such failure to respond shall be deemed to be the refusal of the
Developer to proceed with the Phase II Project.
(3) Upon a timely affirmative response from the Developer to the Agency
regarding the intent of the Developer to undertake the Phase II Project as described by the
Agency, the Parties shall meet and confer to draft and prepare a final agreement
regarding the roles of the Parties and the fmancial contributions and scope of the Phase II
Project. If within ninety (90) calendar days the Parties are unable to negotiate a
substantially final agreement, the Agency may terminate such meet and confer in the
exercise of its sole and absolute discretion. The Agency shall not be liable for any costs
incurred by the Developer with respect to such meet and confer.
(4) Nothing contained herein shall obligate either the Developer or the
Community Development Commission of the City of San Bernardino (the
"Commission") on behalf of the Agency to approve any such fmal agreement that is
presented for consideration and approval regarding such Phase II Project.
(5) Upon any denial or refusal by the Commission to approve any such Phase
II Project agreement, the Agency may proceed to obtain other developers or non-profit
corporations to undertake all of any portion of the Phase II Project and the Developer
shall have no further rights to participate in the Phase II Project. .
5. Pavment bv the Al!:encv for Services Performed bv DeveloDer.
A. The Agency shall compensate Developer for completion of the services described
in the Scope of Services set forth in Exhibit "A" in accordance with the guidelines stipulated in
Exhibit "E" with regard to Developer Payment and Reimbursement.
B. The compensation designated in subsection 4.A. shall be the Total Fee for the
performance of the work and the delivery of the final work product materials, as set forth. in the
Scope of Services.
6. Records Retention. Records, maps, field notes and supporting documents and all
other records pertaining to the use of funds disbursed to the Developer hereunder shall be
retained by the Developer and available to the Agency for examination and for purposes of
performing an audit at all times during the term of this Agreement and for a period of five (5)
years from the date of expiration or termination of this Agreement or for a longer period, as
required by law. Such records shall be available to the Agency and to appropriate county, state
or federal agencies and officials for inspection during the regular business hours of the
Developer. If the Developer does not maintain regular business hours, then such records shall be
available for inspection between the hours of 9 a.m. and 5 p.m. Monday through Friday,
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excluding federal and state government holidays. In the event of litigation or an audit relating to
this Agreement or funds paid to the Developer by the Agency under this Agreement, such
records shall be retained by the Developer until all such litigation or audit has been resolved.
7. Indemnification. The Developer shall defend, indemnify and hold harmless the
Agency, its officers, employees, representatives, and agents from and against any and all actions,
suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and
attorneys fees, for injury or damage of any type claimed as a result of the acts or omissions of the
Developer, its officers, employees, subcontractors and agents, arising from or related to
performance by the Developer of the work required under this Agreement.
8. Insurance. The Developer shall maintain insurance, as set forth in Exhibit "C" to
this Agreement, throughout the term of this Agreement. The Developer shall remain liable to the
Agency pursuant to Section 6. above to the extent the Developer is not covered by applicable
insurance for all losses and damages incurred by the Agency that are caused directly or indirectly
through the actions or inactions, willful misconduct or negligence of the Developer in the
performance of the duties incurred by the Developer pursuant to this Agreement.
9. Press Releases. Press or news releases, including photographs or public
announcements, or confirmation of the same related to the work to be performed by the
Developer under this Agreement shall be made by the Developer only with the prior written
consent of the Agency.
10. Default and Remedies.
A. The occurrence of any of the events listed in Exhibit "G", Section A. (1) to (7),
shall after the giving of any notice described therein, constitute a default by Developer hereunder
("Event of Default").
B. Upon the occurrence of an Event of Default, the Agency may, in its sole
discretion, take any of the actions listed in Exhibit "G", Section B., (1) to (8).
C. Any failure or delay by a party in asserting any of its rights or remedies as to any
default shall not opemte as a waiver of any default or of any rights or remedies associated with a
default. Except with respect to rights and remedies expressly declared to be exclusive in this
Agreement, the rights and remedies of the Parties under this Agreement are cumulative and the
exercise by either Party of one or more of such rights or remedies shall not preclude the exercise
by it, at the same or different times, of any other rights or remedies for the same default or any
other default by the other Party.
D. The Developer has the right to implement the remedies in Exhibit "G", Section
C. (1) and (2), upon default or failure of the Agency to meet any of its obligations under this
Agreement without curing such failure within thirty (30) calendar days after receipt of written
notice of such failure from Developer specifying the nature of the event or deficiency giving rise
to the default and the action required to cure such deficiency.
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11. Termination.
A. This Agreement may be terminated by either party for any reason by giving the
other party thirty (30) calendar days' prior written notice. The Agency shall pay the Developer
for all work authorized by the Agency prior to the date of such notice and completed thereafter
prior to the effective termination date.
B. In the event of a termination of this Agreement under this Section 10, the
Developer shall provide all documents, notes, maps, reports, data or other work product
developed in performance of the Scope of Services of this Agreement to the Agency, within ten
(10) calendar days after the effective date of such terminatiOli and without additional charge to
the Agency.
12. Notice. All notices given hereunder shall be in writing. Notices shall be
presented in person or by certified or registered United States Mail, return receipt requested,
postage prepaid or by ovemight delivery by a nationally recognized delivery service to the
addresses set forth below. Notice presented by United States Mail shall be deemed effective on
the third (3'd) business day following the deposit of such Notice with the United States Postal
Service. This Section II shall not prevent the parties hereto from giving notice by personal
service or telephonically verified fax transmission, which shall be deemed effective upon actual
receipt of such personal service or telephonic verification. Either Party may change their address
for receipt of written notice by notifying the other Party in writing of a new address for
delivering notice to such Party.
AGENCY:
Redevelopment Agency of the City of San Bernardino
Attention: Emil A. Marzullo, Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
Phone: (909) 663-1044
Fax: (909) 663-2294
DEVELOPER:
Mary Erickson Community Housing, Inc.
Attention: Susan McDevitt, Executive Director
P.O. Box 775
San Clemente, CA 92674-0775
Phone: (949)369-5419
Fax: (949) 369-5416
13. Compliance with Law. The Developer shall comply with all local, state and
federal laws, including, but not limited to, environmental acts, rules and regulations applicable to
the work to be performed by the Developer under this Agreement. The Developer shall maintain
all necessary licenses and registrations for the lawful performance of the work required of the
Developer under this Agreement.
14. Nondiscrimination. The Developer shall not discriminate against any person on
the basis of race, color, creed, religion, natural origin, ancestry, sex, marital status or physical
handicap in the performance of the Scope of Services of this Agreement. Without limitation, the
Developer hereby certifies that it will not discriminate against any employee or applicant for
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employment because of race, color, religion, sex, marital status or national origin. Further, the
Developer shall promote affirmative action in its hiring practices and employee policies for
minorities and other designated classes in accordance with federal, state and local laws. Such
action shall include, but not be limited to, the following: recruitment and recruitment advertising,
employment, upgrading and promotion. In addition, the Developer shall not exclude from
participation under this Agreement any employee or applicant for employment on the basis of
age, handicap or religion in compliance with State and Federal laws.
15. Developer and each Subcontractor are Independent Contractors. The
Developer shall at all times during the performance of any work described in the Scope of
Services be deemed to be an independent contractor. Neither the Developer nor any of its
subcontractors shall at any time or in any manner represent that it or any of its employees are
employees of the Agency or any member agency of the Agency. The Agency shall not be
requested or ordered to assume any liability or expense for the direct payment of any salary,
wage or benefit to any person employed by the Developer or its subcontractors to perform any
item of work described in the Scope of Services. The Developer is entirely responsible for the
immediate payment of all subcontractor liens.
16. Severability. Each and every section of this Agreement shall be construed as a
separate and independent covenant and agreement. If any term or provision of this Agreement or
the application thereof to certain circumstances shall be declared invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to circumstances other
than those to which it is declared invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
17. Entire A2reement. (a) This Agreement including all exhibits and addenda
referenced herein constitutes the entire agreement between the parties. This Agreement
supersedes all prior negotiation, discussions and agreements between the parties concerning the
subject matters covered herein. The Parties intend this Agreement to be the fmal expression of
their agreement with respect to the subjects covered herein and a complete and exclusive
statement of such terms.
(b) Included as an integral part of this Agreement are the Exhibits as listed below for
reference purposes. All Exhibits as set forth below and as attached to this Agreement are
incorporated herein by reference regardless of the prior reference of any or all of said Exhibits in
the text of this Agreement All Exhibits to this Agreement shall have the same force and effect as
though the content of each and everyone of said Exhibits had been included within the text of
this Agreement. Unless the context requires to the contrary, all references to this Agreement
shall include each and every Exhibit as set forth below and as attached hereto.
Exhibit "A" - Scope of Services
Exhibit "8" - Supervisory Staff Personnel
Exhibit "C" - Insurance Requirements
Exhibit "D" - Development Pro Forma Template
Exhibit "E" - Developer Payment and Reimbursement
Exhibit "F" - Closing Requirements
Exhibit "G" - Events of Default and Remedies
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Exhibit "H" - Affirmative Marketing Requirements
Exhibit "I" - Project Target Area
Exhibit "J" - Project Tirneline
Exhibit "K"- Agency Acquisition Note
Exhibit "L" - Agency Deed of Trust
Exhibit "M" - Agency CC&R's
Exhibit "N" - Development Agreement
Exhibit "0" - Building Standards
Exhibit "P" - Summary of Program Services
Exhibit "Q" - Developer Leasing Standards
18. Amendment or Modification. This Agreement may only be modified or
amended by written instrument duly approved and executed by each of the Parties hereto. Any
such modification or amendment shall be valid, binding and legally enforceable only if in written
form and executed by each of the Parties hereto, following all necessary approvals and
authorizations for such execution.
19. Governinl! Law. This Agreement shall be governed by the laws of the State of
California. Any legal action arising from or related to this Agreement shall be brought in the
Superior Court of the State of California in and for the County of San Bernardino.
20. Non-Waiver. Failure of either party to enforce any provision of this Agreement
shall not constitute a waiver of the right to compel enforcement of the same provision or any
remaining provisions of this Agreement.
21. Assil!nment. This Agreement shall be assignable by Developer only with the
prior express written consent of the Agency, which consent may be withheld by the Agency in its
sole discretion. Notwithstanding anything to the contrary in this Agreement, no purported
assignment of this Agreement shall be effective if not approved by the Agency, and/or, if such
assignment would violate the terms, conditions and restrictions of any applicable governmental
restrictions. The Agency's consent to such assignment shall be expressly conditioned upon (i)
the assignee's execution of such documents as required by the Agency in its sole discretion,
including, without limitation, any and all documents deemed necessary by the Agency to provide
for said assignee's assumption of all of the obligations of Developer hereunder and under any
documents executed by Developer in connection herewith, and (ii) the Agency's approval of the
financial and credit-worthiness of such proposed assignee and the assignee's ability to perform
all of the Developer's obligations under this Agreement and all documents executed in
connection herewith, as may be determined by the Agency at its sole discretion.
22. Representations of Persons Executinl! this Aereement. The persons executing
this Agreement warrant that they are duly authorized to execute this Agreement on behalf of and
are legally able to bind the respective Party that each purports to represent.
23. Execution in Counterparts. This Agreement may be executed in one (I) or
more counterparts, each of which will constitute an original.
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24. Effectiveness of this Aueement as to the Aeencv. This Agreement shall not be
binding on the Agency until signed by an authorized representative of the Developer, approved
by the Agency and executed by the Interim Executive Director or his designee.
25. Conflicts of Interest. The Developer hereby represents that it has no interests
adverse to the Agency, at the time of execution of this Agreement. The Developer hereby agrees
that, during the term of this Agreement, the Developer shall not enter into any agreement or
acquire any interests detrimental or adverse to the Agency. Additionally, the Developer hereby
represents and warrants to the Agency that the Developer and any partnerships, individual
persons or any other party or parties comprising the Developer, together with each subcontractor
who may hereafter be designated to perform services pursuant to this Agreement, do not have
and, during the term of this Agreement, shall not acquire any property ownership interest,
business interests, professional employment relationships, contractual relationships of any nature
or any other fmancial arrangements relating to the Agency, property over which the Agency has
jurisdiction or any members or staff of the Agency that have not been previously disclosed in
writing to the Agency, and that any such property ownership interests, business interests,
professional employment relationships, contractual relationships or any nature or any other
financial arrangements will not adversely affect the ability of the Developer to perform the
services to the Agency as set forth in this Agreement.
26. Non-Exclusivitv. This Agreement shall not create an exclusive relationship
between the Agency and the Developer for the Scope of Services as set forth in Exhibit "A" or
any similar or related services. The Agency may, during the term of this Agreement, contract
with other real estate development entities for the performance of the same, similar or related
services as those that may be performed by the Developer under this Agreement. The Agency
reserves the discretion and the right to determine the amount of services to be performed by the
Developer for the Agency under this Agreement, including not requesting any services at all.
This Agreement only sets forth the terms upon which any such services will be provided to the
Agency by the Developer, if such services are requested by the Agency, as set forth in this
Agreement.
27. Consequential Damaees and Limitation of LiabiIitv. The Agency and the
Developer agree that except as otherwise provided in this Section 26, in no event will either
Party be liable to the other under this Agreement for any damages, including, but not limited to,
special damages, loss of revenue, loss of profit, operating costs or business interruption losses,
regardless of cause, including breach of contract, negligence, strict liability or otherwise. The
limitations and exclusions of liability set forth in this Section 26 shall apply regardless of fault,
breach of contract, tort, strict liability or otherwise of the Developer and the Agency, their
employees, contractors, agents, subcontractors, or officials.
28. Business Relristration Certificate. The Developer warrants that it possesses, or
shall obtain immediately after the execution and delivery of this Agreement, and maintain during
the period of time that this Agreement is in effect, a business registration certificate pursuant to
Title 5 of the City of San Bernardino Municipal Code, together with any and all other licenses,
permits, qualifications, insurance and approvals of whatever nature that are legally required to be
maintained by the Developer to conduct its business activities within the City.
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29. Al!encv's Assimment to Non-Profit Comoration. The Parties recognize and
agree that it is the intent of the Agency to assign this Agreement, either in whole or in part, to an
Agency designated non-profit corporation such as Affordable Housing Solutions, a California
non-profit corporation ("AHS''), to enable the non-profit to undertake all duties and
responsibilities of the Agency pursuant to this Agreement and the Exhibits as included herein.
The Developer hereby agrees to such assignment by the Agency to the nonprofit and further
agrees to be accept the nonprofit as the assignee of the Agency for all purposes pursuant to this
Agreement as may be further specified in the appropriate assignment document.
30. Enforced Delavs: Extension of Time for Perfor.mance. (a) In addition to
specific provisions of this Agreement, performance by either Party hereunder shall not be
deemed to be in default, or considered to be a default, where delays or defaults are due to force
majeure events beyond the control of such Party, including, without limitation, war, insurrection,
strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public
enemy, epidemics, quarantine restrictions, government imposed moratorium legislation, freight
embargoes, lack of transportation, weather-caused delays, inability to secure necessary labor,
materials or tools, delays of any contractor, subcontractor or supplier, that are not attributable to
the fault of the Party claiming an extension of time, that suspends the commencement of
construction of the Project, or, if after such construction is commenced, suspends the prosecution
of the work of improvement of the Project. An extension of time for any such force majeure
cause shall be for the period of the enforced delay and shall commence to run from the date of
occurrence of the delay; provided, however, that the Party claiming the existence of the delay
first provides the other Party with written notice of the occurrence of the delay, within ten (10)
calendar days after the commencement of such occurrence of a force majeure event and,
thereafter, takes prompt and reasonable action within its control to restore, reconstruct or rebuild
any damage to the Project caused by such force majeure event and resume regular business
operation.
(b) The inability of the Developer to obtain any Acquisition Financing, Rehabilitation
Financing or the Permanent Financing, or the failure of the City to provide any necessary
approval relating to the development of the Project or the inability of the Developer to satisfy
any other condition of this Agreement relating to. the design, financing or development of the
Project, shall not be deemed to be a force majeure event or otherwise provide grounds for the
assertion of the existence of a forced delay under this Section 29. The Parties each expressly
acknowledge and agree that changes in either general economic conditions or changes in the
economic assumptions of either of them that provided a basis for entering into this Agreement
occurring at any time after the execution of this Agreement, are not force majeure events and do
not provide either Party with grounds for asserting the existence of a forced delay in the
performance of any covenant or undertaking arising under this Agreement. Each Party expressly
assumes the risk that changes in general economic conditions or changes in their economic
assumptions could impose an inconvenience or hardship on the continued performance by such
Party under this Agreement and that such inconvenience or hardship is not a force majeure event
and does not excuse the performance by such Party of its obligations under this Agreement.
III
III
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date indicated next to the authorized signatures of the officers of each of them as appear
below.
AGENCY
Redevelopment Agency of the City of San Bemardino,
a public body, corporate and politic
Date:
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By: .Evo//IU r G1Ink.
/
Timothy J. Sabo, Agency Counsel
DEVELOPER
Mary Erickson Community Housing, Inc.,
a California non-profit corporation
Date:
By:
Name:
Title:
Date:
By:
Name:
Title:
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EXHIBIT "A"
Scope of Services
Activities Developer shall supply all labor, services, items of expense and
consultation (hereinafter collectively referred to as "Services") necessary to fully and adequately
meet the Program Delivery requirements set forth in Section B below, and to satisfy all other
requirements of Developer under this Agreement. As part of the Services, Developer shall be
responsible for carrying out the following NSP activities as further described in this Exhibit "A".
Acquisition of abandoned and/or foreclosed residential properties that qualify as Eligible
Properties under the Agency's housing opportunities for households which adjusted gross
income is at or below fifty percent (50%) of the AMI that qualify as Eligible Tenants; demolition
and/or rehabilitation of acquired Eligible Properties; and manage and operate these Eligible
Properties as further negotiated with the Agency. The program shall be carried out in a manner
satisfactory to the City and consistent with this Agreement, the Substantial Amendment and any
standards required as a condition of providing these funds.
Program Delivery
1. General Requirements.
a. As part of the Services, Developer agrees that it shall make
available a primary staff person on an as needed basis within close proximity to the project site
in order to successfully complete program activities
b. As part of the Services, Developer shall provide or cause to be
provided and shall enter into agreements for construction manager services, property
management, property acquisition and relocation consultant services.
c. Developer shall utilize realtors, appraisal services, escrow services
and title companies as approved by the Agency. If such services have not been identified by the
Agency within a pool of Agency pre-approved service providers, Developer shall utilize
businesses located within the City and if they are deemed to be . unavailable, then utilize
businesses in the County of San Bernardino.
d. Developer is required to obtain such additional funding, over and
above that provided by Agency hereunder as is required to complete the Project. NSP funds
shall be separately maintained and accounted for, apart from such additional funds, as required
by federal funding requirements, and as further specified in this Agreement and approved by the
Agency.
e. Developer acknowledges that the Agency in required to utilize the
NSP funds within eighteen (18) months from and after the date of the award of the NSP funds,
and the Developer agrees to access those NSP funds granted to Developer pursuant to this
Agreement, excluding any funds generated from Program Income, on or before September 3,
2010.
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f. Developer warrants that it has the expertise and experience to
perform the Services set forth in this Agreement and that it shall perform said Services pmsuant
to this Agreement and as stated in this Scope of Services.
g. Developer sball document performance on a monthly basis by
submittal of a Monthly Report, whicb report sball be in a form satisfactory to the Agency, The
Monthly Report shall be due by the tenth (lOth) calendar day of the following month after the
Services were rendered.
b. Developer shall provide a Final Evaluation Report of the
Program's progress in meeting established goals on or before DeCember 3, 2010, for the NSP
funds that are currently provided by the terms of this Agreement subject to the filing of
additional Final Evaluation Reports for any other sources of NSP funds that may hereafter be
made available to Developer and approved by the Agency as an amendment to this Agreement.
1. Developer sball provide notification to the Agency of any audits or
investigations including results, fmdings and/or liens within ten (IO) calendar days after
Developer bas first notice regarding sucb audits, investigations, results, findings and/or liens.
2. PropertY Acauisition and Rehabilitation.
a. Developer sball identify Eligible Properties and sball negotiate
purcbase and sale agreements, to be approved by the Agency prior to the execution of such
purcbase and sale agreement by Developer. The purchase and sale agreement shall provide for a
purcbase price that is consistent with the requirements under NSP. No property shall be
purchased pursuant to this Agreement at a sale price in excess of that amount determined after
applying the required discount to the current market appraised value ("Current Market
Appraised Value" as further defmed in the Uniform Relocation Act at 49 CFR 24.103 and the
HERA), unless Developer obtains the prior written approval from the Agency.
b. Prior to purcbase of any Eligible Property under this Agreement,
and in order to determine the Current Market Appraised Value, Developer sball obtain an
appraisal made in conformity witb the appraisal requirements of the Uniform Relocation Act at
49 CFR 24.103 and the HERA. Developer shall utilize the eligible pool of appraisers as
previously provided by the Agency pursuant to the Agency's solicitation and approval of the
approved list of appraisers.
c. Any provision to the contrary contained berein or in the Agreement
notwithstanding, acquisitions of Eligible Properties sball only occur within that specific target
area identified in Exhibit "I".
d. Developer sball submit the completed forms as attacbed bereto as
Exhibit "D" and tbe Development Agreement form as attacbed bereto as Exhibit "N" to be
approved by the Agency to thereby determine whether those Eligible Properties acquired should
be rebabilitated.
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e. Financing - The Developer is required to present and obtain
approval for a financing plan ("Financing Plan") that encompasses the Acquisition Financing,
Rehabilitation Financing and the Permanent Financing (as each of said terms is defined in
Exhibit "F') of each Eligible Property prior to the acquisition of any such property. Such
Financing Plan shall demonstrate that funds are available and that the proposed rental rates will:
(i) support the debt service, (ii) fund operating reserves, assuming a vacancy factor as established
by the underwriting guidelines for each permanent loan, and (iii) provide for the maintenance of
the Eligible Property and the delivery of programs in Section 15 hereof during the term of the
fifty-five (55) year covenant as attached to the Agreement as Exhibit "M'. Additionally, the
Developer through its Financing Plan must demonstrate that funds are available for the
acquisition of the property, payment for the labor, materials and other services required to
complete the Agency approved Scope of Work for each Eligible Property. The Financing Plan
must contain a calculation of the maximum principal amount of the permanent, private loan that
can be supported by the Eligible Property's projected cash flow. Each Financing Plan is subject
to the Agency's approval in its sole discretion. Acquisition, rehabilitation and permanent
financing for any Eligible Property shall be subject to the conditions and requirements set forth
in Exhibit "F" with respect to the Closing Requirements.
f. Other than those liens approved by the Agency, Developer shall
ensure that title to the Eligible Property shall be and remain free and clear from any and all
security interests, liens or other encumbrances. In carrying out the Services, Developer promises
and agrees that it will not pledge, hypothecate or otherwise encumber title to the Eligible
Property in any manner that would result in any lien, security interest, charge or claim upon or
against said property.
g. Rehabilitation of Eligible Properties acquired by Developer
pursuant to this Agreement shall be completed, and said properties shall be ready for rental
within one hundred eighty (180) calendar days following the close of escrow on the Eligible Ie
Property. .
h. Developer shall rehabilitate Eligible Properties in accordance with
Exhibit "N", and pursuant to the terms of this Agreement and in accordance with the plans and
specifications approved by the City.
As part of the Developer's rehabilitation process, Developer shall:
i. Budget Estimate - Provide a total budget estimate for the
Agency approved Scope of Work to be written in the Agency's format as set forth in Exhibit
"D" (Total Development Cost Pro Forma).
ii. Project Timeline - Provide a timeline in the form of Exhibit
"J" for the completion of the various steps involved in the acquisition, rehabilitation and
lease-up of these properties.
iii. Secure Property - Upon acquisition of title to an Eligible
Property, Developer shall provide locked fencing on the perimeter of the site to preclude
unauthorized entry upon an Eligible Property. Developer shall board up the Eligible
Properties in accordance with HUD board up standards.
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iv. Property Maintenance During Rehabilitation Period -
Maintain utilities service, pay for monthly utilities bill( s) during the holding period, maintain
interior and exterior appearance and of the property in accordance with Section 14.
v. Construction Management Services - Provide construction
management services for the rehabilitation of projects, which shall include but not be limited
to: establishing a scope of work, confirm that the financing is adequate to pay for all labor
and materials, conducting weekly on-site project inspections, managing relationships with all
sub-contractors, verifying permits and City compliance, administering both conditional and
unconditional lien releases,.
vi. Marketing - Market the property and adhere to the
Agency's Affirmative Marketing Guidelines in the form as attached to this Agreement as
Exhibit "H".
vii. Lease-up Property - Lease-up the Property in accordance
with the NSP and HERA requirements.
Vlll. Files - Maintain adequate files for each property, ensuring
compliance with all Agency and lender requirements, all documents required to verify
compliance with the Affirmative Marketing Guidelines as attached hereto as Exhibit "H"
such as tenant waiting lists, copies of advertisements published in local and community
newspapers, etc.
ix. Environmental - Implement all environmental mitigation
measures recommended by the Agency's Environmental Consultant and further implement as
part of the rehabilitation work performed on the property. Provide proof of completion of these
mitigation measures.
3. Closing Reauirements.
Developer shall cause the closing of the Acquisition Financing (as defined in Exhibit
"F"), whether from the Agency or another source, for the Eligible Properties by
following the procedUres and complying with the requirements set forth in Exhibit
"F" Section A.
Developer shall cause the closing of the Rehabilitation Financing (as defined in
Exhibit "F") whether from the Agency or another financing source in accordance with
the procedures and requirements established in Exhibit "F" Section B.
Developer shall cause the closing of the Permanent Financing (as defined in Exhibit
"F") whether from the Agency or another financing source in accordance with the
procedures and requirements established in Exhibit "F" Section C.
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4. Building Standards.
The Developer shall adhere to the building standards stipulated in Exhibit "0" when
rehabilitating any Eligible Property.
5. Financial Statements: Tax Returns.
Developer shall deliver to the Agency within one hundred eighty (180) calendar days after the
end of each fiscal year of Developer occurring during the term of any outstanding Development
Loans, a copy of its federal tax return and a financial statement for such preceding fiscal year. In
addition, concurrent with Developer's payment of the annual Residual Receipts installment
payable to the Agency on each June 15th in accordance with the applicable provisions of the
promissory note referred to as the Agency Acquisition Note and as attached as Exhibit "1<.",
Developer shall deliver to the Agency, on forms prepared and provided by the Agency from time
to time, a statement certified by Developer's accountant (the "Annual Statement"), separately
setting forth (i) the aggregate Gross Rents (as defmed in Exhibit "E" Section C.2.a.) received
during the previous calendar year, and (ii) the aggregate Operating Expenses (as defined in
Exhibit "E" Section C.2.b.) expended during the previous calendar year for each Eligible
Property owned by the Developer and financed in whole or in part with a Development Loan
from the Agency.
6. Other Loans.
Developer shall comply with all monetary and non-monetary covenants associated with any loan
secured by an interest in the Eligible Property, including but not limited to the Senior Financing,
the Junior Financing and the Other Financing (as said defmed terms are defined in Exhibit "N").
Developer shall provide to the Agency a copy of any notice of default within three (3) business
days after receiving any notice of a default or alleged default of such covenants by Developer,
and Developer shall promptly cure any such default and cooperate in permitting the Agency, to
the extent the Agency in its sole discretion elects to do so, to cure or assist in curing the default
subject to Developer providing such assurances to the Agency that such funds will be reimbursed
to the Agency from other than the Residual Receipts. Any cost or expenditure incurred by the
Agency in providing or assisting in such a cure shall be deemed added to the outstanding
principal amount of the corresponding Development Loan pertaining to the Eligible Property in
default.
7. Construction Requirements.
Following the Close of Escrow for the acquisition of the Eligible Property, Developer shall cause
the rehabilitation work to proceed diligently in accordance with the agreed upon Rehabilitation
Schedule of Performance as defmed in Section 8. "Completion of the Project" shall occur no
later than six (6) months following the Close of Escrow for Eligible Properties that are to be
rehabilitated. "Completion of the Project" shall be deemed to have occurred when the Agency
has (I) received satisfactory evidence that the City has executed the final inspection for the
particular Eligible Property and, (2) has authorized the unconditional provision of utilities to the
Eligible Property, and (3) Agency, in the sole exercise of its discretion has determined that all
work is completed, at a minimum, to the standards set forth in Exhibit "0."
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Developer shall provide evidence that the rehabilitation work on the Eligible Property has been
completed in compliance with this Agreement, and that all fina1 permits and certificates
necessary to the operation of the Eligible Property have been obtained, including, without
limitation, the following, each of which is subject to the Agency's review and approval: (1) a
minimum S-year warranty from the general contractor, in a form reasonably acceptable to the
Agency, with respect to the rehabilitation work performed and all components and systems
constructed or insta1led upon the Eligible Property provided that the roof, roofing materials and
roof construction shall have a minimum 2S-year warranty; (2) a certificate of occupancy and
other [mal permits and licenses necessary to permit the use and occupancy of the Eligible
Property for its intended purposes, which have been issued by proper governmental agencies;
and (3) evidence satisfactory to the Agency that the statutory period for the filing of mechanics'
liens (Le., sixty (60) calendar days following filing of the statutory notice of completion) has
expired and the Eligible Property is free from such liens. Rehabilitation shall proceed in
accordance with Exhibit "0", Building Standards and in accordance with the Project Timeline
attached as Exhibit "J" to be submitted for each Eligible Property and approved by the Agency
prior to the execution of the Development Agreement for any particular Eligible Property. .
8. Rehabilitation Schedule of Performance.
For any given Eligible Property the Developer shall comply with and meet the deadlines listed in
the Rehabilitation Schedule of Performance which shall be incorporated in and made a part of
the Development Agreement for that particular Eligible Property. Such Rehabilitation Schedule
of Performance shall be submitted by the Developer to the Agency in a format approved by the
Agency.
9. Relocation Requirements.
Developer shall be responsible for compliance with all relocation requirements as governed by
federal relocation laws and regulations for projects funded in whole or in part with NSP funding,
including the Federal Uniform Relocation Assistance and Real Property Policies Act (42 U.S.A.
4601, et seq., as amended), Federal Relocation Regulations (49 CFR Part 24), and HOD
Relocation Handbook 1378. In circumstances where both federal and state funds are contributed
to a program or Eligible Property, Developer shall follow the requirements that provide the
displaced person or household with the greatest benefit
10. Safety and Security Requirements.
Developer shall implement such safety and security programs and measures, including the
installation of security monitoring cameras and locked gates with fencing, to assure the safety
and security of each of the Eligible Properties and the tenants thereof in efforts to eliminate
unauthorized intrusions into the Eligible Properties by non-tenants. Such safety and security
measures shall also be implemented to deter and identify vandalism including graffiti and theft
from the Eligible Properties and the personal properties of the tenants. The plan of security shall
be presented to the Agency by Developer for Agency's review and comment prior to initial
occupancy of any eligible property.
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11. Income Limitations on Tenants.
Notwithstanding anything to the contrary in this Agreement, Developer hereby covenants on
behalf of itself, and its successors and assigns, which covenant shall run with the land and bind
every successor and assign in interest of Developer, that, throughout the term of the CC&Rs in
the form as attached to this Agreement as Exhibit "M" for any Eligible Property, Developer and
such successors and assigns shall use the Eligible Property solely for the purpose of
rehabilitating and operating the Eligible Property as a residential development with the tenant
income levels specified in this Agreement as consideration for any Development Loans that the
Agency might be providing to a particular Eligible Property. All units within any Eligible
Property ("Agency Assisted Units") shall be rented only at an "Affordable Housing Cost" to
"Very Low -Income Households" as hereinafter defined (persons within this group occasionally
referred to as "Eligible Tenants").
"Very Low-Income Households" shall mean persons and families whose gross annual
household incomes do not exceed the qualifYing limits for lower income families as established
and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937,
which qualifYing limits are otherwise set forth in Section 6932 of the California Code of
Regulations and are equivalent to fifty percent (50%) of Area Median Income, adjusted for
family size and other adjustment factors by the United States Department of Housing and Urban
Development ("HUD").
"Affordable Housing Cost" shall mean, as to each Eligible Person, a rental rate which
results in monthly payments which, including a reasonable utility allowance, do not exceed for
an Eligible Person within a Very Low-Income Household, the lesser of the product of thirty
percent (30%) times fifty percent (50%) of Area Median Income adjusted for family size
appropriate to the Agency Assisted Unit.
"Area Median Income" shall mean the median income for San Bernardino/Riverside
Metropolitan Statistical Area, adjusted for family size as periodically adjusted by HUD, or any
successor entity designated under state law as responsible for establishing such "Area Median
Income."
Developer shall specifically provide in each "Agency Assisted Unit Lease" (defmed as a rental
agreement between an Eligible Tenant and Developer for occupancy of an Eligible Property) and
shall strictly enforce the requirement that each Agency Assisted Unit be occupied at all times by
the eligible household who has leased that Agency Assisted Unit, and that any other occupant of
the unit be another qualified member of the lessee's household. The Agency shall be identified
as a third party beneficiary of that covenant and shall have the right to directly enforce that
restriction in the event Developer fails to do so. Prior to execution of any Agency Assisted Unit
lease with respect to the Eligible Property, Developer shall submit to the Agency and obtain its
written approval of a standard form occupancy lease and Developer shall thereafter use the
approved form for all leases of Agency Assisted Units in any Eligible Property, with only such
further modifications thereto as are first submitted to and approved in writing by the Agency.
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12. Tenant Selection Process: Reports and Records Concernim! Tenancies.
(a) Developer shall maintain such records and satisfy such reporting requirements as are set
forth herein by the Agency to monitor compliance with the tenanting requirements described in
Section 11 above. Such requirements, include, without limitation, the requirement that
Developer deliver reports to the Agency commencing as of the date of the initial occupancy of an
Eligible Property, and annually thereafter, setting forth the name of each Eligible Tenant and
members of the household for each Eligible Tenant, the unit occupied and the income of the
Eligible Tenant and the amount of rent payable by each Eligible Tenant. Developer shall require
each prospective Eligible Tenant complete a rental application prior to occupancy and obtain
evidence from each such Eligible Tenant sufficient to certify such Eligible Tenant's qualification
for occupancy of the Eligible Property. Developer shall set forth in each report each incidence
including the date, time, and Eligible Household involved, involvement of law enforcement, and
a description of the event of any act of vandalism, drug sales or use, abuse of alcohol, and any
Part 1 crime, occurring in or affecting the Project and Developer's response to each such
incident. Developer's obligation to provide such reports shall remain in force and effect during
the effective period of the use covenants in the CC&R's attached to the Development Agreement
for any particular Eligible Property.
(b) The following provisions shall be applicable to all tenant leases and all aspects of the
tenant selection rental process for units in the Project as shall be undertaken by Developer with
respect to each Eligible Property and the Project.
Ineligibility of tenants because of eviction for drug crimes,
Any tenant evicted from federally assisted housing by reason of drug-related criminal
activity (as such term is defmed in section 3(b) of the United States Housing act of
1937 (42 U.S.C. l437a(b)) shall not be eligible for rental of a unit in the Project
during the 3-year period beginning on the date of such eviction, unless the evicted
tenant successfully completes a rehabilitation progrilm approved by the Agency
(which shall include a waiver of this subsection if the circumstances leading to
eviction no longer exist).
Ineligibility of illegal drug users and alcohol abusers.
(0) In general.
Notwithstanding any other provision of law, Developer shall establish standards that
prohibit admission to the Project for any household with a member:
(A) who has been determined by Developer, a public housing agency or
other rental housing unit owner as having illegally used a controlled substance; or
(B) with respect to Developer having reasonable cause to believe that
such household member's illegal use (or pattern of illegal use) of a: controlled substance,
or abuse (or pattern of abuse) of alcohol, may interfere with the health, safety or right to
peaceful enjoyment of the premises by other residents.
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Attached hereto as Exhibit "Q" are those standards presently used by Developer for the
leasing of housing units and such standards shall be applicable for all purposes pursuant
to this Agreement.
Developer shall deny admission to criminal offenders for offenses committed during
a reasonable time of not less then three (3) years -preceding the date when the
applicant household would otherwise be selected for admission, engaged in any drug-
related or violent criminal activity or other criminal activity which would adversely
affect the health, safety or right to peaceful enjoyment of the Project by other
residents, the owner or employees, Developer may: -
(I) deny such applicant admission to the Project as a tenant; and
(0) after the expiration of the reasonable period beginning upon the date of the
occurrence of such activity, require the applicant, as a condition of the rental of a unit
in the Project, to submit to Developer evidence sufficient to ensure that the individual
or individuals in the applicant's household who engaged in criminal activity for
which denial was made under paragraph (I) have not engaged in any criminal activity
during such reasonable period.
. In general
Notwithstanding any other provision of law, Developer shall establish standards or lease
provisions for continued assistance or occupancy in the Project that allow Developer to
terminate the tenancy for any household with a member:
(0) who the Developer determines is illegally using a controlled substance;
or
(0) whose illegal use (or pattern of illegal use) of a controlled substance, or
whose abuse (or pattern of abuse) of alcohol, is determined by
Developer to interfere with the health, safety or right to peaceful
enjoyment of the premises by other residents.
In general.
Developer shall prohibit admission to rental units in the Project for any household that includes
any individual who is subject to a lifetime registration requirement under a State sex offender
registration program.
Obtaining information.
Developer shall determine whether an applicant for rental of a unit in the Project is subject to a
lifetime registration requirement under a State sex offender registration program.
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13. Manal!ement of Proiect.
Subject to the terms and conditions contained hereinbelow, Developer shall at all times during
the operation of any Eligible Property pursuant to this Agreement shall perform or cause to be
performed the management andlor supervisory functions ("Manager") with respect to the
operation of any Eligible Property including day-to-day administration, maintenance and repair.
Developer shall, before execution or any subsequent amendment or replacement thereof, submit
and obtain the Agency's written approval of a management contract ("Management Contract")
entered into between Developer and an entity ("Management Entity") acceptable to the Agency.
14. Ooerations and Maintenance.
Developer hereby covenants on behalf of itself, and its successors and assigns, which covenant
shall run with the land and bind every successor and assign in interest of Developer, that
Developer and such successors and assigns shall use each Eligible Property solely for the
purpose of operating each Eligible Property and ancillary improvements thereon, in accordance
with and of the quality prescribed by this Agreement and the CC&Rs and the Agency Deed of
Trust pertaining to the particular Eligible Property.
Developer covenants and agrees for itself, its successors and assigns, which covenants shall run
with the land and bind every successor or assign in interest of Developer, that during
rehabilitation of each Eligible Property pursuant to this Agreement and thereafter, no Eligible
Property, or any portion thereof, shall be improved, used or occupied in violation of any
applicable governmental restrictions or the restrictions contained in this Agreement or the
Agency Deed of Trust pertaining to a particular Eligible Property. Furthermore, Developer and
its successors and assigns shall not maintain, commit, or permit the maintenance or commission
on any Eligible Property, or any portion thereof, of any nuisance, public or private, as now or
hereafter defmed by any statutory or decisional law applicable to any Eligible Property, or any
portion thereof.
In accordance with Exhibit "N" Developer shall, at its expense, (i) maintain all improvements
and landscaping on each Eligible Property in good working order, condition, and repair (and, as
to landscaping, in a healthy and thriving condition) in accordance with the plans for the
particular Eligible Property (which must be approved by the Agency before being incorporated
into the Development Agreement for any particular Eligible Property) (such approved plans, the
"Plans") and all applicable governmental restrictions, and (ii) manage each Eligible Property and
its fmances reasonably prudently and in compliance with applicable governmental restrictions so
as to maintain a safe and attractive living environment for the Eligible Tenants while maximizing
Residual Receipts to the extent reasonably possible consistent with applicable rent and tenant
requirements (including all recorded rent restrictions affecting any Eligible Property) and
without compromising the safety and attractiveness of the living environment of any Eligible
Property.
15. Developer shall implement programs to promote the economic self-sufficiency of the
tenants through free Life Skills classes to be offered by Developer, educational programs for the
transition of tenants into homebuyers, additional programs to assist the transition of the
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residents' children into successful, productive adults and the implementation of programs to
develop community support for affordable housing within the City of San Bernardino. Such
program services and the manner of the delivery of the services in the Project are set forth in
detail on Exhibit "P" as attached hereto and designated as the Summary of Program Services as
prepared by Developer.
III
III
III
III
III
III
III
III
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EXlllBIT "8"
Supervisory StatTPersonnel
Agencv Staff:
Carey K. Jenkins,
Director of Housing and Community Development
Fernando S. Portillo,
Project Manager
Emil A. Marzullo,
Interim Executive Director
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EXHIBIT "C"
Insurance Requirements
The Developer shall maintain insurance policies issued by an insurance company or
companies authorized to do business in the State of California and that maintain during
the term of the policy a "General Policyholders Rating" of at least A(v), as set forth in the
then most current edition of "Bests Insurance Guide," as follows:
(I) Automobile Insurance. The Developer and its general
contractor(s) shall maintain comprehensive automobile liability insurance of not less than
One Million Dollars ($1,000,000) combined single limit per occurrence for each vehicle
leased or owned by the Developer or its general contractor(s) and used in performing
work under this Agreement.
(2) Worker's Comoensation: Developer and Developer's Contractors'
employees shall be covered by Workers' Compensation insurance in an amount and form
to meet all applicable requirements of the Labor Code of the State of California and
Employers Liability limits of One Million Dollars ($1,000,000) per accident.
(3) Liability Insurance. The Agency requires comprehensive liability
insurance, including coverage for personal injury, death, property damage and contractual
liability, with a limit of at least One Million Dollars ($1,000,000) for each occurrence
($2,000,000 general aggregate), and including products and completed operations
coverage. Said insurance shall be primary insurance with respect to the Agency.
Developer shall require and ensure the Developer's contractors to include the Agency as
an additional insured on all general liability insurance covering work at the Eligible
Property. If required by the Agency from time to time, Developer shall increase the
limits of Developer's liability insurance to reasonable amounts customary for owners of
improvements similar to the Eligible Property. The policy shall contain a waiver of
subrogation for the benefit of the Agency.
(4) Pronertv Insurance: "All Risk" ISO Special Form property
insurance, including without limitation builder's risk protection during the course of
construction, covering the full replacement value of real property and equipment utilized
for the rehabilitation of the Eligible Properties. Coverage shall extend to provide debris
removal. The Agency shall be the loss payee under the aforementioned policies under a
standard lender's loss payable endorsement. The amount of the property coverage shall at
all time exceed the full replacement value of all improvements and fixtures on the
Property and the insurer shall waive any coinsurance via an "agreement" endorsement.
Concurrent with the execution of this Agreement and prior to the commencement
of any work by the Developer, the Developer shall deliver to the Agency, copies of
policies or certificates evidencing the existence of the insurance coverage required herein,
which coverage shall remain in full force and effect continuously throughout the term of
this Agreement. Each policy of insurance that the Developer purchases in satisfaction of
the insurance requirements of this Agreement shall name the Agency as an additional
24
P-~~acncIIAlIadImmsIA,endI"""~AlBend2009\07.20-09~I!ricbDnC~HalsinLInc._Mak:rA~C_d(F"lnallcb:
insured and shall provide that the policy may not be cancelled, terminated or modified,
except upon thirty (30) calendar days' prior written notice to the Agency.
Failure on the part of sub-recipient to procure or maintain the insurance coverage
required in this Exhibit "c" shall constitute a material breach of this Agreement pursuant
to which the Agency may immediately terminate this Agreement and exercise all other
rights and remedies set forth herein, at its sole discretion, and without waiving such
default or limiting the rights or remedies of the Agency, procure or renew such insurance
and pay any and all premiums in connection therewith and all monies so paid by the
Agency shall be reimbursed by Developer to the Agency upon demand including interest
thereon at the rate often percent (10%) per annum interest compounded annually from
the date paid by the Agency to the date reimbursed by Developer. The Agency shall have
the right, at its election, to participate in and control any insurance claim adjustment or
dispute with the insurance carrier. Developers' failure to assert or delay in asserting any
claim shall not diminish or impair the rights of the Agency against the Developer or the
insurance carrier.
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"'\Apnlla\Ap::ndlAIIIf;~~~AInaotlWWl1-20<09~~C"""""'~IK.-~~CoIlI'I4{FIIIIl).dDc:
ExmBIT "D"
Development Pro Forma Template
26
P.\AJCIldU\,AJeIldI~~ArlK~Amend2OOWl7-20-09MaryEnck-.C~HOIISi""IK..Maur~C__"IF''''I.doo;
INPUT DATA
2008 AREA MEDIAN INCOME (AMI)
TOTAL" UNITS
VACANCY RATE
TOTAL LAND SQUARE FOOTAGE
TOTAL BLOG SF (NIC PKG STALLS)
RENT INCOME
RENT INCOME INFLATION FACTOR
COMMERCIAL INCOME
COMMERCIAL INCOME INFLATION FACTOR
LAUNDRY & MISC. INCOMEIYEAR
LAUNDRY & MISC. INCOME INFLATION FACTOR
INTEREST INCOME
INTEREST INCOME INFLATION FACTDR
OPERATING EXPENSESlUNITIYEAR
OPERATING EXPENSE INFLATION FACTOR
OPERATING RESERVE
REPLACEMENT RESERVE
LAND COSTS
DEVELOPMENT COSTS (NIC Land + Com)
TOTAL DEVELOPMENT COSTS (NIC Com)
TOTAL CONSTRUCTION COSTS
PARKING CONSTRUCTION COSTS
AGENCY LOAN AMOUNT
AGENCY LOAN RATE
CONVENTIONAL LOAN AMOUNT
CONVENTIONAL LOAN RATE
CONVENTIONAL LOAN YEARS
CONVENTIONAL LOAN TYPE
DEBT COVERAGE RATIO (X:: 1) X=
PROJECT NAME:
PROJECT ADDRESS:
PROJECT DEVELOPER:
DATE ReYIUD:
SO ..... SF~
4
0.00% Residential SF
o Common_~)
.. 2BR 0 950
$0 3BR 0 1100
0.00% T_ _. SF
SO
0.00% Comm~ SF
SO R_(~SF)
0.00% R....(L_SF)
o ~ ~ I CcmmunlIy CenIer
0.00% T_ Cclmmen:lol SF
SO
0.00% T_ Bldg. SF
0.00%
SO.OO /unit P.rkIng Space" & eo.t Cakullltion
SO R.........,
SO CommeodoI
$0 Handicapped (Inclusive)
SO r__
SO
$0 Total Pkg SF 0
0.00%
$0 ea.t PM' s~
0.00%
o
AMORTIZED
0.000
Sunrise & 19th SInIet Project
Address. $en Bemenlino, CA Zip Code
Mary Erickson Community Housing. Inc.
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C:\Documeots and SettingsVportillo\My Documents\NSP Program\RentaI at. 50% AMI Progrwn\NSP M.-y Erickson Master Agreement Exhibit 0 Development Pro-fonna (deen) (J7.
16-09iNSP Mary Eridlson Master Agreement Exhibit 0 Development Pro-forma (dNn) 07-11-01I
EXHIBIT "0"
SOURCES & USES OF FUNDS - 7I1tv2OO11
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
SOURCES: CONSTRUCTION Per Unit USES: Per Unit
Private Acquisition Loan $0 0 Acquisition Costs/Closing $0 0
Private Construction Loan $0 0 ArcMecturelFees & Permits $0 0
NSP1 $0 0 Construction Cost $0 0
Agency Low-Mod Funds $0 0 Indirect ConstructionILegal $0 0
NSP State $0 0 Develope~s Fee $0 0
NSP2 $0 0 Rent-Up CostslReserves $0 0
Other $0 0 Financing Costs $0 0
Deferred Developer Fee $0 0 Other $0 0
Deferred Costs $0 0 Other $0 0
TOTAL $0 0 $0 0
SOURCES: PERMANENT Per Unit
Perm Loan - $0 0 USES: Per Unit
NSP1 $0 0 Acquisition Costs/Closing $0 0
Agency Low-Mod Funds $0 0 Architecture/Fees & Permits $0 0
NSP State $0 0 Construction Cost $0 0
NSP2 $0 0 Indirect ConstructionlLegal $0 0
Deferred Developer Fee $0 0 Develope~s Fee $0 0
Other $0 0 Rent-Up Costs/Reserves $0 0
Other $0 0 Financing Costs $0 0
Other $0 0
TOTAL $0 0 $0 0
EXHIBIT "0"
DEVELOPMENT COSTS - ......
Protect Name: Sun"" & fttlt sv-t ProJ-ct
project Add.....: Addtua. San S.".rrlino. CA Zip Code
IM.4.lop.r: MatyErlcbonCommunHyHowlnfl._
Number of Dwelling Units: . Grosa Building ~. (at) .
TOTAL SPER S PER SF %OF
COST UNIT BUILDING TOTAL
1. ACQUlSf110N COSTS:
-- SO SO.oo SO.oo tDIV1D1
Clooing eo... SO SO.oo SO.OO .DIVIOI
_lul SO SO.OO SO.OO IDlVlOl
_eo... SO SO.OO SO.OO IOMOI
TOTAL ACQUISITION COSTS SO SO.OO SO.OO .DIVIOI
2. FEESlPERMfTS & STUDIES
BuilclingF...&PwrnItI SO SO.OO SO.OO IIDIVlOl
~I1IIfrIcl.tl.-~.""II,c t .. SO SO.OO SO.OO filMOI
En.~_~I""WOoclR~ SO SO.oo SO.OO IDIVJOI
ArttlJEngineeringF...
Dnlgn 0.""' SO SO.OO SO.OO <<nv/O!
__ SO $0.00 SO.OO .orwOI
SubtotBl: SO $0.00 SO.OO 1fD1V101
TOTAL FEESlPERMITS & STUDIES SO SO.oo SO.OO 'DIVIOI
3_ DIRECT CONSTRUCTION COSTS:
eon-.. SO SO.oo SO.oo IIDIVlOl
Rehabilitation SO SO.OO SO.OO IDlVlOl
On-IiteWork SO SO.OO SO.OO .OlVtOl
Oft'.slteWon: SO $0.00 SO.OO mlVlOl
Olhe< $0 SO.OO SO.OO IDIVIOI
Olhe< SO SO.OO SO.OO 'OIVIOI
Subtotal: SO SO.OO SO.OO tOlVlOl
Contractor's Ov.mead & Ptoftt 0.,,", SO $0.00 SO.OO tIOlVlO!
Subtotal: SO SO.OO SO.OO fi)MO!
Genenll CondltloM 0.,,", SO SO.oo SO.OO 1fD1V101
Performance Bond I GL Insurance SO $0.00 $0.00 tDlVlOT
Subtotal: SO SO.oo SO.OO t01V101
Construc:lion Contingency ,_ SO SO.OO SO.OO .eIVlO!
TOTAL DIRECT CONSTRUCTfON COSTS SO SO.OO $0.00 'OIVla!
4. INDIRECT CONSTRUCTION COSTS
Oevelope(s F.. SO $0.00 $0.00 .DIVIOI
Deferred 0ewI0per Fee SO SO.OO SO.OO 'OIVIOI
Subtotal: SO SO.OO. SO.OO 'DIVIO!
Bu~ders RiskJl..iability Insurance SO SO.OO $0.00 'Orv/O!
Real Est8te Taxes SO SO.OO SO.OO 'OM'OI
legal-Organizational SO SO.OO SO.OO .OIVIOI
- SO $0.00 $0.00 'OrvlDl
__ SO SO.OO $0.00 'ONID!
IndinK::I Construction Costs Conlingency SO SO.DO SO.OO IOWlO!
TOTAL INDIRECT CONSTRUCTION COSTS SO SO.OO SO.OO 'DIVIOI
5. RENT-lJP COSTS
MftetinQlAlNertising Expense SO SO.oo $0.00 'DIVIO!
lea~ Reseroe (4 mon1tIleaM--iJp) SO $0.00 SO.OO 'DIV/O!
CapitaIizecIR~Reserve SO SO.OO SO.OO .DIVIOI
Capitalized Operating Reserve SO $0.00 $0.00 fi>1V1O!
Common Area FU'l'Uhings SO $0.00 $0.00 'OIVIO!
TOTAL RENT.UPIMARKETlNG COSTS $0 $0.00 $0.00 'DIVIO!
6. ANANCING COSTS
Construttion loan Interat SO $0.00 $0.00 .OrvlO!
ConslructionLoen Fees.CostI SO $0.00 $0.00 .OIVlOI
lender Appraisal SO SO.OO $0.00 'OIVIa!
lender leglll SO SO.DO SO.OO 'CrvlC!
F~ Loan Fees.Oosing Costs SO SO.OO SO.OO .OrvlOl
Tille Md Rec:crding (ConslrJP.-m.) SO $0.00 SO.OO 'DIVIOI
TOTAL FINANCING COSTS SO SO.OO $0.00 'CIVlO!
7. SUBTOTAL DEVELOPMENT COSTS SO $0.00 $0.00 'OIVlC!
TOTAl LAND COSTS SO $0.00 SO.OO 'DIVIOI
TOTAL DEVELOPMENT COSTS SO '0.00 so.oo "'IVIOI
Consfnlction estimates a,. subjKt to change and may h revl..d due to entitlement JaUN, changes In
eonstnletlon mnrJ.rds, arehltectura/and englneertng ,.qu/,.ments, and othe, unfo,....,. e/rcumsmnees.
2
EXHIBIT "0"
RENT SCHEDULE
Project Name:. Sunrise & 19th Street Project
Project Address: Address, San Bernard/no, CA Zip Code
Developer Name: Mary Erickson Community Housing, Inc.
-
711112OD1
2008 AREA MEDIAN INCOME
$0 2009 2009
Monthly Monthly Monthly Total Total Total
Unit Percent Gross Utility Net Number Monthly Annual 'of
Tvpe Median Rent Allow. Rent of Units Rent Rent ($) Belnn..
ONE BEDROOM 30% $0 $0 $0 0 $0 $0 0
45% $0 $0 $0 0 $0 $0 0
50% $0 $0 $0 0 $0 $0 0
TWO BEDROOM 30% $0 $0 $0 0 $0 $0 0
45% $0 $0 $0 0 $0 $0 0
50% $0 $0 $0 0 $0 $0 0
60% $0 $0 $0 0 $0 $0 0
0
THREE BEDROOM 30% $0 $0 $0 0 $0 $0 0
45% $0 $0 $0 0 $0 $0 0
50% $0 $0 $0 0 $0 $0 0
60% $0 $0 $0 0 $0 $0 0
0
MANAGER'S Exempt $0 $0 $0 0 $0 $0 -1
TOTAL 0 $0 $0 -1
30% 0 #DIV/OI 30% 0 #DIV/OI .
45% 0 #DIV/OI 45% 0 #DIV/OI
50% 0 #DIV/OI 50% 0 #DIV/OI
60% 0 #DIV/OI 60% 0 #DIV/O!
Mgr 0 #DIV/OI Mgr 0 #DIV/O!
0 #DIV/OI 0 #DIV/OI
Includine Mer. Unit Excludino Mor. Unit
3
.
I lio 0 0 00 000 00
n~~~~~~~ :<! ~~ ~ ~ ~
!
llllllllllill .. ill i II II
I J&..iiiliii iO 0 00 00 000 00
: n ~ ~ ~
l ~ ~ 00 II II II
....
& :i~~~~~ 000 00 000 0 000 00
~
~ ~ :! ~~ ~ ~ ~
0 ! ill 0 0 0
.. .. .. .. ..
iO 0 00 00 0 000 00
:! ~~ ~ ~ ~
..
I' ~ ill II i II
;; ...~ ..
.... l'"
l'l iOO 00 000 0 000 00
~, Ii ;: ~~ ~ ~ ~
oi r ~
~~hI~u ill II II II
::!A.ZCl Z
lio 0 00 000 0 000 00
l! ~~ ~ ~ ~
! 00 0 II II
.. .... ..
~o~~s lio 0 00 000 0 000 00
.. ~~ ~ ~ ~
. -0- !
o g & 00 i 0 i
~ .. .... ..
lioO 00 0000 000 00
.. ~~ ~ ~ ~
!
00 II 0 0
.~ .. .... .. ..
; lio 0 00 00 0 000 00
~
... ~ ~ .... ~~ ~ ~ ~
. 15 e .. ..
0 Hih ~
. 00 0 0 0
.... .. .. ..
i ~ ~ ~ ~J
i. ~H~'i lioO 00 0000 000 00
" .. ~~ ~ ~ ~
w ..
iiiu~ ~
HSU co is c c
.. .... .. .. ..
lioO 00 0000 000 00
. ~~ ~ ~ ~
..
~ ill i 0 II
.. ..
li~lili lioO 00 0000 000 00
. ~~ ~ ~ ~
.. ..
~ co 0 0 is
.. .... .. .. ..
li 0 00 0000 ooc 00
~ ~~ ~ ~ ~
. ..
" i ~
ft: .. oc 0 0 0
wcti!1li .. .... .. .. ..
i~ Hii lio 0 00 0000 000 00
u" H ~~ ~ ~ ~
~i H - ..
~1j! 00 f ~ co 0 is i
~~l .. .... .. ..
ht 3 ..~
lioO 00 0000 000 00
-'l!~ ! ~~ ~ ~ ~
l~o
.. u co 0 i 0
SOlo .. .... .. ..
=!a
Ul" ~ uU. c ,
z i!~
0011 t. cic:icic:i .. z
0
i= a "1:. ;::
l.) .. : .. I ~
!!lId t ..
.. ~ w w ~ ii:
o z!z ~15i ,. ~ 0 ....
i ~
0 i ~ a is
0:: l~. a:li~ i ~ ~
Q. d.! w wI ... L ..
"..... i;;~ u ~ 0
~..~ ~ "I~: .. j H - - ...
l'l ....
o .! . . . j~ II ~ ~ i!l t~ ~ II ~
z ii.-e c 5
..J '" - - ......
-0 -r ~.8 11 l
... 2-~'-~ ~~ ~ w : :
_ w_ w.. c .9-.. ~
:I: UHn r! .~.~ ~ :H i H .. 00
Ul ~r ~ ~ n '"
~ ~ .... " ...... "
<( H~i ~~ i j- i ..
l.) : c - ..! - '"
CG::...JO>Z ..~ '" >w 00.. <.> u oc <.>
EXIllBIT "E"
Developer Payment and Reimbursement
The Developer's compensation for executing the Scope of Services described in Exhibit
"A" shall consist of the following components: I. Developer Fee - This is the
compensation that the Developer receives for executing the development of an Eligible
Property, including acquisition, demolition (if so required), rehabilitation and obtaining
all the required governmental approvals and permanent financing required to operate the
Eligible Property for its intended use; 2. Property Management Fee - The Developer shall
receive a monthly fee for managing the Eligible Property on a daily basis once the
Property is leased up. The portion of the Property Management Fee received by the
Developer shall be determined by the extent to which the Developer is involved in the
management of the Eligible Property; and 3. Residual Receipts - Any cash flow
generated by an Eligible Property after operating expenses, debt obligations, and other
fees and reserves approved by the Agency have been paid shall be shared by the Agency
and the owners of the Eligible Property. The Developer is entitled to a portion of the
owner's share of Residual Receipts to the extent that they participate in the ownership of
that particular Eligible Property.
All of the above fees must be reflected in the financing plan presented to the Agency by
the Developer for any particular Eligible Property. The Agency will negotiate these fees
with the Developer prior to the execution of any Development Agreement for any
particular Eligible Property; however, the fees shall generally be determined in
accordance with the definition and formula established for each respective fee below.
The Agency's approval of these fees is a necessary pre-condition for the execution of any
Development Agreement.
A. Developer Fee
The Developer Fee shall be included as a line item in the development budget
for the Eligible Property presented to the Agency by the Developer prior to
the acquisition or rehabilitation of any Eligible Property. It shall be paid from
the fmancing proceeds obtained for the development of an Eligible Property.
The formulas for determining the amount of the Developer Fee are as follows:
(1) Acquisition and Rehabilitation - In the case where the Developer. is
acquiring the Eligible Property for the intended purpose of
rehabilitating the property and renting it to Eligible Tenants, the
Developer shall be entitled to a Developer Fee equal to ten percent
(10%) of the Total Development Cost as reflected in the Development
Pro Forma Template attached to this Agreement as Exhibit "D" and
approved by the Agency. The Total Development Cost shall be
comprised only of those line items that appear in the Development Pro
Forma Template. Any other costs shall only be included as a part of
Total Development Cost upon approval by the Agency.
27
,.~~~AllKInedMpmlS-Aalend2OO9\O'.20-09~ElicbonC""""",""""__.~~Con(c1(FiMI).da:
(2) Developer Fee Bonus - If the Developer is successful in obtaining a
cumulative amount of at least one million five hundred thousand
dollars ($1,500,000) ("Threshold Amount") from financing sources
other than the Agency ("Alternate Funds") that can be applied toward
the acquisition, rehabilitation, and/or operations of Eligible Properties
as defined in this Agreement, then the Developer will receive an
additional two percent (2%) of Total Development Cost for all Eligible
Properties acquired and/or rehabilitated using Alternate Funds, once
such Alternate Funds have been successfully secured by the
Developer. The Alternate Funds will be considered to have been
secured by the Developer after the Alternate Funds have been
effectively applied towards the purchase and/or rehabilitation of
Eligible Properties. The two percent (2%) additional bonus will apply
to all Eligible Properties using Alternate Funds as part of their
financing, including those Eligible Properties that were completed
prior to reaching the $1,500,000 threshold.
(0) Developer Fee Payment Schedule - Twenty-five percent (25%) of the
Developer Fee as defined in Sections A.(1) and A.(2), above, shall be
disbursed to the Developer upon the closing of the Acquisition
Escrow. Fifty percent (50%) shall be paid upon completion of the
rehabilitation work and the receipt of the Certificate of Occupancy. In
the case where a Certificate of Occupancy does not need to be issued
in order to operate the Eligible Property, the Certificate of Completion
from the general contractor and the Unconditional Lien Releases from
the Developer and all of its general contractors and sub-contractors can
be accepted for the purposes of documenting the satisfactory
completion of the rehabilitation work on the Eligible Property, instead
ofa Certificate of Occupancy. The remaining twenty-five (25%) shall
be paid upon the closing of the permanent financing for the Eligible
Property.
Property Management Fee
The Property Management Fee shall be included as a line item in the First
Year Operating Budget (please see Exhibit "D") for the Eligible Property
presented to the Agency by the Developer prior to the acquisition and
rehabilitation of any Eligible Property. This fee shall only be paid in the case
where an Eligible Property is being acquired for the purpose of rehabilitating
it and eventually renting it to Eligible Tenants. It shall be paid from the rental
revenues generated from the operation of the Eligible Property. This fee shall
be negotiated and must be approved by the Agency prior to the execution of
the Development Agreement for any particular Eligible Property, but in no
event shall the Property Management Fee exceed seven percent (7%) of the
Eligible Property's Effective Gross Income. The Effective Gross Income for
any Eligible Property shall be calculated in the manner reflected in the First
Year Operating Budget for the Eligible Property.
28
P:~~AlIxhmms\AscndaAl\ll;'-""'.Apmls-Ammd2(l(1'N11-20-09~Ef"*-"'C""'munIlyHlIIIlIlns.Inc.-Mlar~Conr'd(Fu.J)_dao;
C. Residual Receipts
The Agency is entitled to receive at least fifty percent (50"10) on any Residual
Receipts for any given year that an Eligible Property is in operation. The
remaining portion of Residual Receipts pertains to the Owner of the Eligible
Property. Any portion of Residual Receipts paid to the Developer shall be
distributed from the Owner's portion of Residual Receipts. The distribution
of Residual Receipts may vary between Eligible Properties subject to the
terms and conditions negotiated by the Agency and the Developer prior to the
execution of any Development Agreement for an Eligible Property.
1. Calculation of Residual Receiots
Residual Receipts shall be calculated and reported to the Agency annually
for each calendar year no later than June 15th of the following calendar
year on forms specified and provided by the Agency from time to time;
All calculations and records are subject to audit by the Agency.
Developer shall provide to the Agency for inspection and copying any
records, receipts, account books, ledgers, checks, or other documents or
other evidence requested by the Agency for the purpose of verifying
Developer's calculation of Residual Receipts, and shall promptly pay to
the Agency any further amount due but not paid as a result of any
miscalculation by Agency.
2. Definition of Residual Receiots.
(a) "Residual Receipts" shall mean, with respect to each calendar year, the
amount by which "Gross Rents," as defined herein, for such calendar
year exceed the "Operating Expenses", as defmed herein, for that
calendar year. (b) With the exception of the "Excluded Items" (as
defmed below), "Gross Rents" shall mean, with respect to each
calendar year or portion thereof, all gross income, rentals, revenues,
payments and consideration, of whatever form or nature, whether
direct or indirect, received by or paid to or for the account or benefit of
Developer or any "Affiliate" (as defined below) of Developer or any of
their agents or employees, from any and all sources, resulting from or
attributable to the ownership, operation, leasing and occupancy of the
Eligible Property, determined on the basis of generally accepted
accounting principles applied on a consistent basis, and shall include,
but not be limited to; (i) gross rentals paid by occupancy tenants of the
Eligible Property under occupancy leases and payments and subsidies
of whatever nature, including without limitation any payments,
vouchers or subsidies from the United States Department of Housing
and Urban Development (HOD) or any other person or organization,
received on behalf of tenants under occupancy leases, (ii) amounts
paid to Developer or any Affiliate of Developer on account of
"Operating Expenses" (as defmed herein) for further disbursement by
29
"'\A~Anx~~felldIAItIo:mlau\ApmlS-Alnmd2OO'Nl7-2G-09~EricborlC~~Inc.-Maller,,---Coal'd(FlfIIll,doc
Developer or such Affiliate to a third party or parties, (iii) late charges
and interest paid on rentals, (iv) rents and receipts from licenses,
concessions, vending machines, coin laundry and similar sources; (v)
other fees, charges or payments not denominated as rental but payable
to Developer in connection with the rental of office, retail, storage, or
other space in the Project; and (vi) consideration received in whole or
in part for the cancellation, modification, extension or renewal of
occupancy leases. The term "Affiliate" shall mean any person or
entity directly or indirectly, through one or more intermediaries, con-
trolling, controlled by or under common control with Developer
which, if Developer is a partnership or limited liability company, shall
include each of the constituent members or partners, respectively,
thereof. The term "control" as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the
right to exercise, directly or indirectly, more than fifty percent (50%)
of the voting rights attributable to the shares of the controlled
corporation, and, with respect to a person that is not a corporation,
possession directly or indirectly of the power to direct or cause the
direction of the management or policies of the controlled person.
Notwithstanding the foregoing, Gross Rents shall not include the
following items ("Excluded Items"): (aa) security deposits from
tenants (except when applied by Developer to rent or other amounts
owing by tenants); (bb) capital contributions to Developer or its
members, partners or shareholders by its or their members, partners or
shareholders; (cc) condemnation or insurance proceeds constituting
'Net Proceeds' as defined in Section C.2.(d) below; and (dd) funds
received from any source (including but not limited to senior financing
and any junior financing or other financing) actually and directly used
for acquisition and/or rehabilitation of the Eligible Property.
(b) "Operating Expenses" shall mean, with respect to each calendar year
or portion thereof, the sum of the following expenses to the extent
reasonably paid by Developer during such period: (i) nonelective
payments made with respect to the Senior Financing; (ii) all taxes and
assessments imposed upon the Eligible Property and required to be
paid by Developer but only to the extent such taxes and assessments
are paid or set aside as a reserve by Developer during such calendar
year; (iii) all amounts paid or set aside as a reserve by Developer on
account of insurance premiums for insurance carried in connection
with the Eligible Property, provided that if insurance on the Eligible
Property is maintained as part of a blanket policy covering the Eligible
Property and other properties, the insurance premium included in this
definition shall be the portion of the premium fairly allocable to the
Eligible Property for the period; (iv) ownership and operating costs
incurred by Eligible Property for the management, operation, cleaning,
leasing, marketing, maintenance and repair of the Eligible Property
30
"\AICDIla\AsmdI~F"'la~AlIK~AlllCftd2OO9'l)1-20-09~Eric:bmC~Housifta.tnc.-~A&=mmCllnl'd(Final)_
(including without limitation, property management fees and
Administrative fees) properly chargeable against income according to
generally accepted accounting principles, including without limitation
wages, payroll and accounting costs, utility and heating charges,
material costs, maintenance costs, costs of services, water and sewer
charges, travel expenses allocable to the Eligible Property, and license
fees and business taxes; provided, however, that (A) the amount
included as property management fees and administrative fees in
Operating Expenses shall collectively not exceed ten percent (10%) of
Gross Rents from the Eligible Property for such period, all or a portion
of each of which may be paid to Developer and/or an Affiliate of
Developer, (B) such property management fees and lldministrative fees
shall only be paid on the basis of supporting documentation reasonably
acceptable to the Agency, and shall be paid after the payment of all
other Operating Expenses, and (C) partnership management fees and
other fees payable to a partner in a tax credit limited partnership shall
only be considered Operating Expenses to the extent they do not
exceed $15,000 in the aggregate in any year, which shall be adjusted
annually by a percentage equal to the annual increase in AMI adopted
by HUD; (v) reasonable and ordinary reserves actually set aside for
replacement of roofing, furniture, fixtures, equipment, and other
capital expenditures, in an annual amount no less than $200.00 per unit
and no greater than such higher amount as may be established from
time to time by mutual agreement of the Parties; and (vi) to the extent
not otherwise included in Operating Expenses, amounts paid from any
account as a reserve account for the purpose for which such reserve
was created so long as such purpose would constitute an Operating
Expense.
(b) Notwithstanding any provision of Section C.2.(b), the term "Operating
Expenses" shall not include any of the following:
(i) salaries of employees of Developer or Developer's general
overhead expenses, or expenses, costs and fees paid to an
Affiliate of Developer, to the extent any of the foregoing
exceed the expenses, costs or fees that would be payable in
a bona fide arms' length transaction between unrelated
parties in the San Bernardino-Riverside County area for the
same work or services;
(ii) any amounts paid directly by a tenant of the Eligible
Property to a third party in connection with expenses
. which, if incurred by Developer, would be Operating
Expenses;
(iii) optional or elective payments with respect to the Senior
Financing;
31
P,\AfI:DcIII\A....~L....i ~~AaoaI12OOWJ7_2O-O'J;MIry~COlllllDliryIicDli~1E.M.-r~C__d(YmaI),dcc
(iv) any payments with respect to Junior Financing, Other
Financing, or any other Eligible Property-related loan or
financing other than the Senior Financing; or
(v) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Developer prior to
completion of the Rehabilitation with respect to the
development, maintenance and upkeep of the Eligible
Property, or any portion thereof, including, without
limitation, all costs and expenses incurred by Developer in
connection with the acquisition of the Eligible Property, all
predevelopment activities conducted by Developer in
connection with the Eligible Property, including without
limitation, the preparation of all plans and the performance
of any tests, studies, investigations or other work, and the
construction of the Project and anyon-site or off-site work
in connection therewith.
(d) In addition to the payments provided in Sections 2(a), (b) and (c)
above, and subject to the terms of the Senior Financing, Developer
shall pay to the Agency towards (but not to exceed) any outstanding
amounts associated with the Loan: (a) no later than the date of close of
escrow or other consummation of any Assignment other than a Minor
Assignment, the Applicable Percentage of the Net Proceeds of such
Assignment; and (b) no later than the recording of a Refinancing, fifty-
percent (50%) of the Net Refinancing Proceeds received from any
such Refinancing.
A "Minor Assignment" shall mean: any lease of an individual unit in the Project
for occupancy by a residential tenant and in the ordinary course of business for operation
of the Project.
"Applicable Percentage" shall mean fifty percent (50%); provided, however, that
the term Applicable Percentage shall mean one hundred percent (100%) with respect to a
payment on the Loan attributable in whole or in part to a condemnation of, or event of
damage, destruction or casualty with respect to, the Eligible Property, the Project or any
portion of either. "Assignment" means any voluntary or involuntary conveyance,
disposition, assignment, taking, casualty, encumbrance (other than a Refinancing as
defined below or the creation of the Senior Financing or any other Project Loan or
limited partner contribution, the proceeds of which are used solely for initial acquisition
of the Eligible Property by Developer or initial development of the Project), sublease,
sale, license, concession, management agreement, operating agreement, transfer or
similar transaction with respect to any direct or indirect interest or economic benefit of
any person or entity in connection with the Project or the use or occupancy of the Eligible
Property including, without limitation, any Transfer by Developer of all or any portion of
its rights under or interest in the Project or the Eligible Property, any change of
32
,.,~.
~A
.F'+~~Amml2009'07-lO-O\I~Encb>nComnuoilyHoollln&.IK..MaMrA~C_d(F"'I._
ownership or control of Developer, any condemnation or taking of the Eligible Property
or the Project or any portion thereof, any event of damage to or destruction of the Eligible
Property or the Project, any foreclosure of Developer's interest in the Project or the
Eligible Property, whether by judicial proceedings, or by virtue of any power contained
in a deed of trust, indenture or other instrument creating a lien against the Eligible
Property or the Project, or any assignment of Developer's estate in the Project or the
Eligible Property through, or in lieu of, foreclosure or other appropriate and bona tide
proceedings in the nature thereof; provided, however, that the term "Assignment" as used
herein shall not include bona tide transfers of an ownership interest in Developer to any
Affiliate of Developer, so long as the consideration paid to the selling partner, member or
shareholder on account of such transfer does not exceed the actual amount paid by such
partner, member or shareholder for its ownership interest plus reimbursement for any out-
of-pocket expenses incurred by such partner, member or shareholder in connection with
its acquisition of such ownership interest.
"Net Proceeds" of an Assignment shall mean (I) the proceeds received, directly
or indirectly, by Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate as a result of such Assignment, including,
without limitation, cash, the amount of any monetary lien or encumbrance assumed or
taken subject to by the assignee, the fair market value of any noncash consideration,
including the present value of any promissory note received as part of the proceeds of
such Assignment (such present value to be determined based upon a discount rate
reasonably satisfactory to the Agency), the entire condemnation award or compensation
payable to Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate in connection with a condemnation or taking in
eminent domain of any part of the Eligible Property or the Project or any interest therein,
all insurance proceeds or awards payable to Developer or any Affiliate or constituent
member or partner or majority shareholder of Developer or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part
thereof not used for project restoration; less (2) the sum of (i) the actual, documented and
reasonable expenses of effecting such Assignment, including reasonable brokerage
commissions, title insurance premiums, documentary transfer taxes, and reasonable
attorneys' fees, in each case actually paid in connection with the Assignment (provided
that no deduction shall be allowed for payments to an Affiliate of the person or entity
making the Assignment which are in excess of the amount that would be paid for the
same or equivalent services in an arms' length transaction between unrelated parties
acting reasonably), and (ii) the amount of any proceeds of the Assignment paid
(excluding voluntary payments) towards the then-outstanding balance of the Senior
Financing. Notwithstanding anything above to the contrary, the permissible deductions
for purposes of calculating the Net Proceeds of an Assignment shall not include any
foreign, U.S., state or local income taxes, franchise taxes, or other taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project
Loan") secured by an encumbrance on the Eligible Property, the Project, or any portion
thereof. The term "Refinancing" shall not include the creation of the Senior Financing or
any other Project Loan, the proceeds of which are used solely for initial acquisition of the
Eligible Property by Developer or initial development of the Project.
~~......
33
.1""""~'-~pllU-AJIlIIftI!2OO'Nl7.20-09Mwy~CoenuoilyKl:lao;i"IK..~A.-CGntd(F"JaI)_cb:
''Net Refinancing Proceeds" shall mean the gross face amount of the Project Loan
obtained in connection with such Refinancing, after: (1) payment of the actual, docu-
mented and reasonable expenses of such Refinancing, including escrow fees, title policy
expenses, legal expenses, survey fees, recording fees, commissions, and other usual and
reasonable expenses of any such Refmancing (provided, that no deduction shall be
allowed for payments in connection with such Refinancing which are in excess of the
amounts that would be paid for the same or equivalent services in an arms' length
transaction between unrelated parties acting reasonably); and (2) deduction of amounts
repaid (excluding voluntary payments) in connection with the Refmancing towards
amounts outstanding under the Senior Financing.
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
34
P~ARadlmau\Ap:ndIAIladlrrclu~~\Agmlll-AmCftd~7.20-09MaryEnd<maCornllUlityl-l0llli1\i.lDc...MallcrApecmetIlC__d(FinalI6oc
EXHIBIT "F"
Closing Requirements
Except to the extent Agency's Executive Director directs in writing that some or all of the
disbursement and/or deliveries shall occur outside of Escrow, disbursement of the
Agency's loans to Developer, whether they be for the purpose of acquiring Eligible
Properties, rehabilitating these properties or providing permanent financing for these
properties, delivery of the executed loan documents (as specified in Sections A., 8., and
C. below), and recordation of the appropriate documents (as defined in Sections A., B.,
and C. below) to be recorded shall be carried out through an eScrow account ("Escrow")
to be established by the Parties with a title or escrow company ("Escrow Holder")
specifically approved in writing by Agency. Developer shall obtain Agency's approval
of an Escrow Holder prior to the opening of Escrow. The Parties may execute
supplemental instructions to Escrow Holder consistent with the terms of this Agreement,
but in the event of a conflict between the terms of this Agreement and any supplemental
escrow instructions, the terms of this Agreement shall control. Except as otherwise
expressly provided herein, any fees and costs incurred by Escrow Holder in the
performance of its duties hereunder and agreed to be paid by the Parties shall be paid
exclusively by the Developer.
A. Acquisition Financing
I. Disbursements made by the Agency for the purpose of acquiring Eligible
Properties under this Agreement, which shall hereafter be referred to as
"Acquisition Financing", shall be expressly subject to satisfaction of all of the
following conditions (collectively, the Acquisition Closing Conditions) on or
before the date ("Acquisition Closing Deadline") which is thirty (30) calendar
days following the execution date of a sub-agreement initially entered into by the
Agency and Developer. for the purposes of implementing the acquisition and/or
rehabilitation, or providing permanent fmancing of an Eligible Property or Set of
Eligible Properties in accordance with the conditions set forth in this Master
Agreement ("Development Agreement").
(a) Execution of the Development Agreement and delivery of a fully
executed copy of the Development Agreement to the Escrow Holder;
(a) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Acquisition Note ("Acquisition Note"), in the form
attached hereto as Exhibit "K";
(a) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the covenants, conditions and restrictions ("Agency
CC&R's") in the form attached hereto as Exhibit "M", recorded against
the ownership interest of the Developer, prior to the start of
construction;
35
P:~AlIIdlmetu\AsmcII~~"-'-l1OO9lO7.1O-09M1ryEncboaCOllllfUUlyfkMli...IaI:.."'-'A...-eo.rd(firalldDc:
(d) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the Agency Deed of Trust ("Agency Deed of Trust"),
attached hereto as Exhibit "L";
(e) Receipt by the Agency from Developer of such other documents,
certifications and authorizations as are reasonably required by the
Agency, in form and substance satisfactory to the Agency, evidencing
that (i) the Development Agreement, the Acquisition Note, the Agency
Deed of Trust, the Agency CC&R's and all other documents given or
executed in connection herewith (collectively the Agreement, the
Acquisition Note, the Deed of Trust and the CC&Rs are referred to
herein as the "Acquisition Loan Documents") are duly and validly
executed by Developer and constitute the valid and enforceable
obligation of Developer pursuant to the respective terms, and (ii) the
execution and delivery of the Acquisition Loan Documents, and the
performances thereunder by Developer, will not breach or violate any
law applicable or governmental regulation to which Developer is
subject nor constitute a breach of or default under any instrument or
agreement to which Developer may be a party;
(f) First American Title ("Title Company") shall have assured the Agency
in writing that upon recordation of the Agency Deed of Trust there will
be provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including but
not limited to Nos. 100, 103.7, 116 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Acquisition Loan, insuring the
Agency's interest in the Property as beneficiary under the Agency
Deed of Trust, and specifically insuring that the lien of the Agency
Deed of Trust and the Agency CC&R's against the Property are
subject only to the Senior Financing and any exceptions to title
applicable to the Property which were expressly approved in writing
by the Agency (collectively with the Senior Financing, "Permitted
Senior Encumbrances"). Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
(g) Intentionally omitted
(h) No Event of Default shall exist under this Agreement, the
Development Agreement or under any agreement or instrument
relating to any Senior, Junior or Other financing obtained by the
Developer for the purpose of acquiring, rehabilitating or operating an
Eligible Property and Developer has demonstrated to the satisfaction
of the Agency Executive Director (or his designee) that all financing
sources for acquisition, rehabilitation, and operation of the Eligible
36
P:~AladnaulAsmdo~_~~2OOWl~-2O.(l')MlryErickmaC.........uryHoulifll.1nI:.-MMler~c.'4(f_1.cloc
Property, including but not limited to Developer's equity, are or will
be available in sufficient amounts to provide for full and timely
completion and ongoing operation, if and to the extent required in the
Development Agreement, of the Eligible Property;
(i) Developer shall have provided to the Agency, in form satisfactory to
the Agency, certified copies of (i) Developer's governing partnership
agreement, operating agreement, or articles and bylaws, together with
a certification by the managing member, managing general partner, or
president that such agreement or articles and bylaws has not been
amended or modified except as described in the certification (ii) a
good standing certificate from the California Secretary of State,
certifying that Developer is duly qualified and in good standing, and
(iii) all other documents necessary to evidence to the Agency's
satisfaction that the individuals and entities executing this Agreement
and the Loan Documents, and other entities on whose behalf such
documents are executed, are fully authorized to do so and to bind the
respective entities, including Developer, to the terms hereof and
thereof;
(j) Developer shall have furnished the Agency with evidence satisfactory
to the Agency evidencing the insurance coverages required by Exhibit
"C".
2. When, and only when, Escrow Holder has confirmed that Closing Conditions (a),
(b), (c), (d), and (f) of Section I above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Closing Conditions have been timely satisfied or waived, then Escrow
Holder shall carry out the close of Escrow ("Close of Escrow") by:
(i) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(ii) delivering the executed original Acquisition Note to the Agency;
(iii)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
. recorded documents to the Agency and Developer;
B. Rehabilitation Financing
I. Disbursements made by the Agency for the purpose of rehabilitating Eligible
Properties under this Agreement, which shall hereafter be referred to as
"Rehabilitation Financing", shall be expressly subject to satisfaction of conditions
37
P;~p::ndIA&..il._.t>.'I.fadI~'-"~"""""-I1OOWJ7.2G-09"MlryEril:b.C""""""'HoaIU>&.bIc..Mda'A.--c-'d(T_)_
A.1.(a), (c), (d), (e), (g), (h), (i) and G) above and conditions B.1.(a) to (e) below,
all of these conditions (collectively, the Rehabilitation Closing Conditions) on or
before the date ("Rehabilitation Closing Dead1ine") which is thirty (30) calendar
days following the execution date of a Development Agreement or the date that
the Developer receives written approval from the Agency of their Rehabilitation
budget, timeline, design plans, and construction contract (collectively the
"Rehabilitation Plan"), whichever occurs later.
(a) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Rehabilitation Note ("Rehabilitation Note");
(b) Developer shall have commenced or be ready to commence
rehabilitation of the Eligible Property, and shall have furnished the
Agency with copies of (A) a contract for the rehabilitation work and
materials ("Construction Contract") entered into with a general
contractor ("General Contractor") previously approved in writing by
the Agency; (B) a payment bond with respect to the rehabilitation
work and materials posted by the General Contractor which is in an
amount equal to the amount of the contract price identified in the
Construction Contract, is issued by a surety reasonably acceptable to
the Agency, is in form and content reasonably approved by the
Agency, has been recorded in the Official Records of San Bernardino,
and names the Agency as an additional obligee; (C) a performance
bond for one hundred percent (100%) of the contract price,
guaranteeing the completion of the rehabilitation work which is in
form and content reasonably approved by the Agency, is issued by a
surety reasonably acceptable to the Agency, and names the Agency as
an additional obligee; and (0) shall have submitted to the Agency and
received the Agency's approval of any design plans or other design
documents requested by the Agency.
(c) Not as a Closing Condition, but at least ninety (90) calendar days prior
to occupancy and prior to the commencement of tenant selection for
the Eligible Property, Developer shall have obtained the Agency's
written approval of an affirmative marketing plan, leasing guidelines,
and a sununary of the rules, procedures and programs for the operation
of the Eligible Property including specifically the procedures to be
employed by which the tenants in the Eligible Property shall be
selected in the event that, at any given time, the number of Eligible
Tenants applying to lease units at the Eligible Property exceeds the
number of units available.
(d) Developer shall have furnished and obtained the Agency's approval of
an Operating Budget and a Management Plan for the Eligible Property.
The Management Plan shall include a preliminary Operating Budget in
a format mandated by the Agency, approved by the Agency at its sole
38
p,~A-:I_.....All.d>.. ,~"",,~"-"'i2OO'M1_1O-09M1ryEra..C...........,.H_....lIE.,"'-""'-OlaI'd(F_)_
discretion. In the event the preliminary Operating Budget is proposed
for revision at the time the Certificate of Occupancy is issued, any
such revision must be approved by the Agency at its sole discretion;
(a) The Title Company shall have assured the Agency in writing that upon
recordation of the Agency Deed of Trust there will be provided to the
Agency, at Developer's sole expense, a lender's policy of title
insurance (with customary endorsements, including but not limited to
Nos. 100, 103.7, 116 and 122 and such other endorsements as the
Agency shall reasonably require) issued by the Title Company in the
amount of the Rehabilitation Loan, insuring the Agency's interest in
the Property as beneficiary under the Agency Deed of Trust, and
specifically insuring that the lien of the Agency Deed of Trust and the
Agency CC&R's against the Property are subject only to the Permitted
Senior Encumbrances. Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
10. When, and only when, Escrow Holder has confirmed that Rehabilitation Closing
Conditions (a), (c) and (d) of Section A.1. above and Rehabilitation Closing
Conditions (a) to (e) of Section B.1. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Rehabilitation Closing Conditions have been timely satisfied or waived,
then Escrow Holder shall carry out the Close of Escrow by:
(v) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(v) delivering the executed original Rehabilitation Note to the Agency;
(v) causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer;
C. Permanent Financing
O. Disbursements made by the Agency for the purpose of paying off construction or
acquisition financing obtained from Agency approved financing sources in order
to acquire and/or rehabilitate an Eligible Property, which shall hereafter be
referred to as "Permanent Financing", shall be expressly subject to satisfaction of
the conditions set forth below, all of these conditions (collectively, the Permanent
Closing Conditions) on or before the date ("Permanent Closing Deadline") which
is thirty (30) calendar days following the execution date of a Development
Agreement or the date that the Developer receives the Certificate of Occupancy
from the appropriate local government agencies, whichever occurs later.
39
"'~~~~\AptllU-Amaoi1OO'Nl1.:z0..09M1ryEricblneo..-.yHauliI\&.IK..MMaA.-eo.td(l'iMI~_
(c) The rehabilitation work on the Eligible Property is completed. The
rehabilitation work shall be "completed,.. which shall be deemed to
have occurred when the Agency has received satisfactory evidence
that the rehabilitation work has been completed in compliance with the
plans and specifications (collectively, "Plans") referenced in the
construction contract ("Construction Contract") which Developer has
entered into with a general contractor ("General Contractor") with
respect to the Eligible Property, and that all final permits and
certificates necessary to the operation of the Eligible Property as
contemplated herein, and releases, waivers and other instruments
evidencing no claims, stop notices or mechanics liens existing with
respect to the Eligible Property, have been obtained, including, without
limitation, the following, each of which is subject to the Agency's
review and approval:
(i) A signed certificate from the General Contractor, in a form
reasonably acceptable to the Agency, certifying to Agency that
rehabilitation was completed substantially in accordance with
the requirements of the Construction Contract, the Plans and
this Agreement, and all other related on-site and off-site
improvements have been completed;
(ii) A certificate of occupancy (the "Certificate of Occupancy")
and/or any other final permits and licenses necessary to permit
the use and occupancy of the Eligible Property for its intended
purposes, which have been issued by proper governmental
agencies;
(iii)Unconditional Waivers and Releases Upon Final Payment, in
statutory form, showing no amounts in dispute, have been
received from the General Contractor, all subcontractors, and
all other persons or entities providing services or furnishing
materials in connection with the Eligible Property.
(c) Not as a Closing Condition, but at least ninety (90) calendar days
prior to occupancy and prior to the commencement of tenant
selection for the Eligible Property, Developer shall have obtained
the Agency's written approval of an affirmative marketing plan,
leasing guidelines, and a summary of the rules, procedures and
programs for the operation of the Eligible Property including
specifically the procedures to be employed by which the tenants in
the Eligible Property shall be selected in the event that, at any given
time, the number of Eligible Tenants applying to lease units at the
Eligible Property exceeds the number of units available.
40
P,\A.,.saM.....~~~Arnmd2OO9'D1-2G.09M1ryErif;kmnCornIlUliryHmasi"*'Inc..MaMrA.,-COlll'd(J'_\ctx
(c) Developer shall have furnished and obtained the Agency's approval
of an Operating Budget and a Management Plan for the Eligible
Property. The Management Plan shall include a preliminary
Operating Budget in a fonnat mandated by the Agency, approved by
the Agency at its sole discretion. In the event the preliminary
Operating Budget is proposed for revision at the time the Certificate
of Occupancy is issued, any such revision must be approved by the
Agency at its sole discretion;
(c) The Title Company shall have assured the Agency in writing that
upon recordation of the Agency Deed of Trust there will be
provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including
but not limited to Nos. 100, 103.7; 116 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Rehabilitation Loan, insuring
the Agency's interest in the Property as beneficiary under the
Agency Deed of Trust, and specifically insuring that the lien of the
Agency Deed of Trust and the Agency CC&R's against the Property
are subject only to the Permitted Senior Encumbrances. Standard
lender's title insurance coverage (without the need for a survey) will
be accepted by the Agency unless another Project lender requires
extended coverage, in which case an AL T A extended coverage
policy will also be provided to the Agency;
o. When, and only when, Escrow Holder has confinned that Pennanent Closing
Conditions (a) to (d) of Section C.!. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Acquisition or Rehabilitation Closing Conditions have been timely
satisfied or waived, then Escrow Holder shall carry out the Close of Escrow by:
(v) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(v) delivering the executed original Pennanent Financing Note to the
Agency;
(v) causing the Title Policy to be issued to the Agency in the fonn and
amount specified above; and
(iv)promptly following recordation, delivering confonned copies of the
recorded documents to the Agency and Developer
41
1>-\~AIDl;~~~Amell42OO'Nl1.2fl.O'IM.JEricbonC-..iryIfoa8q.IK..~~COIW'drFlMlldoc
ExmBIT "GOO
Events of Default and Remedies
A. Events of Default
The occurrence of any of the following shall, after the giving of any notice and the
expiration of any applicable cure period, shall, constitute a default by Developer
hereunder ("Event of Default"):
(I) The failure of Developer to payor perform any monetary covenant
or obligation hereunder or any of the documents executed in connection herewith,
without curing such failure within ten (10) calendar days after receipt of written notice of
such default from the Agency (or from any party authorized by the Agency to deliver
such notice as identified by the Agency in writing to Developer);
(2) The failure of Developer to perform any nonmonetary covenant or
obligation hereunder or any of the documents executed in connection herewith, without
curing such failure within thirty (30) calendar days after receipt of written notice of such
default from the Agency (or from any party authorized by the Agency to deliver such
notice as identified by the Agency in writing to Developer) specifying the nature of the
event or deficiency giving rise to the default and the action required to cure such
deficiency; provided, however, that if any default with respect to a nonmonetary
obligation is such that it cannot be cured within a thirty-day period, it shall be deemed
cured if Developer commences the cure within said thirty-day period and diligently
prosecutes such cure to completion thereafter.
Notwithstanding anything herein to the contrary, the herein described notice requirements
and cure periods shall not apply to any Event of Default described in Sections (3) through
(6) below;
(3) The material falsity of any representation or breach of any
warranty or covenant made by Developer under the terms of this Agreement or any
documents executed in connection herewith;
(4) Developer or any constituent member or partner, or majority
shareholder, of Developer shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in
writing its inability to pay its debts generally as they become due, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or (e)
commence a voluntary case under the Federal bankruptcy laws of the United States of
America or file a voluntary petition that is not withdrawn within ten (10) calendar days
after the filing thereof or answer seeking an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy or insolvency
proceeding; .
42
p:~.' \FlIdIA~~AJno.tlOO'Xl1.1O-09~ErickDlc..nau.;ryHc.i"J.IIIC..~~eo.rd(l""""~_
(5) If without the application, approval or consent of Developer, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Developer or any constituent member or partner, or
majority shareholder, of Developer, for an order for relief or an adjudication in
bankruptcy, a composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or the like of Developer or of
all or any substantial part of Developer's assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being contested by
Developer, in good faith, the same shall (a) result in the entry of an order for relief or any
such adjudication or appointment, or (b) continue undismissed, or pending and unstayed,
for any period of ninety (90) consecutive calendar days;
(6) Voluntary cessation of the operation of a Project for a continuous
period of more than thirty (30) calendar days or the involuntary cessation of the operation
of the Project in accordance with this Agreement for a continuous period of more than
sixty (60) calendar days;
(7) A mechanic's lien or any other type of encumbrance on any
Eligible Property resulting from the Developer's failure to fulfill its fmancial or other
contractual obligations with respect to any of its vendors or sub-contractors is not
removed within ten (10) calendar days after receipt of written notice of such default from
the Agency (or from any party authorized by the Agency to deliver such notice as
identified by the Agency in writing to Developer);-
B. The Agency Remedies
Upon the occurrence of an Event of Default hereunder, the Agency may, in its sole
discretion, take anyone or more of the following actions:
(I) By notice to Developer declare the entire then unpaid principal
balance of any Acquisition Financing, Rehabilitation Financing or Permanent Financing
loans ("Development Loans") immediately due and payable, and the same shall become
due and payable without further demand, protest or further notice of any kind, all of
which are expressly waived. Upon such declaration, outstanding principal and (to the
extent permitted by law) interest and any other sums outstanding in connection with the
Development Loans shall thereafter bear interest at the Default Rate, payable from the
date of such declaration until paid in full;
(2) Subject to any nonrecourse provisions in this Agreement, take any
and all actions and do any and all things which are allowed, permitted or provided by
law, in equity or by statute, in the sole discretion of Agency, to collect the amounts then
due and thereafter to become due hereunder and under the Development Loans, to
exercise its rights under any outstanding Agency Deeds of Trust, and to enforce
performance and observance of any obligation, agreement or covenant of the Developer
under this Agreement or under any other document executed in connection herewith;
43
p,~""~~AIIX~Amead2009'D7.:!O.mt.4lryErKD:J.C~Housin&.lal:.'~A.-CaIt'd.ff_~clot
."
(3) Cease making any payment of fees, Residual Receipts or
reimbursement of eligible expenses to the Developer unless and until the Event of
Default (if curable) is cured;
(4) Demand reimbursement from the Developer for any payments
made to it by the Agency for which the contracted work product was not satisfactorily
delivered by the Developer;
(5) Confiscate any material or other work product purchased or
produced by the Developer for the Project;
(6) Take any and all actions and do any and all things which are
allowed, permitted or provided by law, in equity or by statute, in the sole discretion of the
Agency, to enforce performance and observance of any obligation, agreement or
covenant of the Developer under this Agreement or under any other document executed
in connection herewith;
(7) Upon the occurrence of an Event of Default which is occasioned
by Developer's failure under this Agreement to pay money, the Agency may, but shall
not be obligated to, make such payment. If such payment is made by the Agency, the
Developer shall deposit with the Agency, upon written demand therefore, such sum plus
interest at the rate of ten percent (10%) per annum interest compounded annually. In
either case, the Event of Default with respect to which any such payment has been made
by the Agency shall not be deemed cured until such repayment (as the case may be) has
been made by the Developer;
(8). Upon the occurrence of an Event of Default described in Section
A.(4) or A.(5) hereof, the Agency shall be entitled and empowered by intervention in
such proceedings or otherwise to file and' prove a claim for any amount owing to the
Agency under this Agreement and unpaid and, in the case of commencement of any
judicial proceedings, to file such proof of claim and other papers or documents as may be
necessary or advisable in the judgment of the Agency and its counsel to protect the
interests of the Agency and to collect and receive any monies or other property in
satisfaction of its claim.
C. Agency Default and Developer Remedies
Upon fault or failure of the Agency to meet any of its obligations under this Agreement
without curing such failure within thirty (30) calendar days after receipt of written notice
of such failure from Developer specifying the nature of the event or deficiency giving rise
to the default and the action required to cure such deficiency, Developer may, as its sole
and exclusive remedies:
(I). Bring an action in equitable relief seeking the specific performance
by the Agency of the terms and conditions of this Agreement or seeking to enjoin any act
by the Agency which is prohibited hereunder; and/or
44
P:\ApIldas\A,mdIAlDdlmcm\AgendI~!lmdaAnx~lS-AftWIld!(lOW)1.20-09M.,-~C"n"''''"lyH....n"IIlC._MaslerA~CoN'd(F;''')doc
(2) Bring an action for declaratory relief seeking judicial
determination of the meaning of any provision of this Agreement. Without limiting the
generality of the foregoing, Developer shall in no event be entitled to, and hereby waives,
any right to seek indirect or consequential damages of any kind or nature from the
Developer arising out of or in connection with this Agreement, and in connection with
such waiver Developer is familiar with and hereby waives the provisions of Section 1542
of the California Civil Code which provides as follows: "A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SEITLEMENT WITH THE DEBTOR."
Initials of Developer:
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
45
"'~An.;~~~AJnend2lXlWn.:z0.09"'ua-C.........,Hami...J.:.-""""A"ee.-C"'d(Fmall,dao:
EXHIBIT "H"
Affirmative Marketing Requirements
In accordance with the California Fair Employment and Housing Act and the policy of the
Agency, property owners or their designees, including the Developer pursuant to this
Agreement, must adhere to the following affirmative marketing guidelines in order to
create awareness for the general public and certain community groups as to the availability
of units designated for lower and/or moderate-income.
Aoolicabilitv
The Developer, including property owners or their designees, are required to provide an
affirmative marketing plan and procedures for all developments with designated units.
Procedures to be used must identify how persons in the housing market area who are not
likely to apply for the housing without special outreach shall be informed and made
aware of available affordable housing opportunities. The Agency has identified two
groups as least likely to apply without special outreach efforts, namely, African-
American and Hispanic persons.
The Affirmative Marketing Plan
The Developer's Affirmative Marketing Plan shall consist of a written marketing strategy
designed to provide information and to attract eligible persons in the housing market area to
the available units without regard to race, color, national origin, sex, religion, marital and
familial status, disability, medical condition, sexual orientation, or ancestry. . It shall
describe initial advertising, outreach (community contacts) and other marketing activities,
which will inform potential buyers of the availability of the units. It shall also outline an
outreach program which includes special measures designed to attract those groups
identified as least likely to apply without speCial outreach efforts, whether because of
existing neighborhood racial or ethnic patterns, location of housing or other factors, and
other efforts designed to attract persons from the total eligible population.
The Developer must do the following:
1. Insert Equal Housing Opportunity logotype, statement or slogan on all written
outreach tools (Le. signs, advertisements, brochures, direct mail solicitations,
press releases, etc.)
2. In addition to the above, the AffIrmative Fair Housing Marketing Plan shall
outline:
a. Commercial Media to be used (Le., community newspapers and
non-English language newspapers, radio, television, billboards,
religious or local real estate publications, etc.).
46
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b. Marketing efforts to be used (i.e., brochures, letters, handouts, direct
mail, signs, etc.)
c. Community Contacts to supplement formal communications media
for the purpose of soliciting groups least likely to purchase the
available housing without special outreach efforts. They should be
individuals or organizations (i.e., service agencies, community
organizations, places of worship, etc.) that have direct and frequent
contact with those identified as least likely to apply. The contacts
should also be chosen on the basis of their positions of influence
within the general community and the particular target group. The
Developer must agree to establish and maintain contact with the
identified contacts.
Buver Selection
1. The Developer or designee shall maintain records of all prospective homebuyer
applicants, including their race, ethnicity and gender, reasons for denial of
application, placement on a waiting list, etc.
2. The Developer or designee shall also provide for the selection of applicants from a
written waiting list in the chronological order of their application, insofar as is
practicable, and provide prompt written notification to any rejected applicants of
the grounds for any rejection.
III
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47
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EXIllBIT "I"
Project Target Area
48
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EXHIBIT" .r'
Project Timeline Template
49
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EXIllBIT "K"
Agency Acquisition Note
50
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EXHIBIT "K" TO MASTER AGREEMENT
PROMISSORY NOTE
$
,20_
For value received, the undersigned, MARY ERICKSON COMMUNITY HOUSING, INC., a
California Non-profit public benefit corporation ("Borrower"), whose principal address is set
forth hereinbelow, promises to pay to the order of the REDEVELOPMENT AGENCY OF TIlE
CITY OF SAN BERNARDINO, a public body corporate and politic ("Agency") at 201 North
"E" Street, Suite 30 I, San Bernardino, California 9240 I (or to such designee and/or at such other .
address as the Agency may from time to time designate in writing), the principal sum of
(the "Loan"), or such amount as may be advanced
hereunder, plus accrued and unpaid interest as provided hereinbelow, and all other charges due
hereunder, in accordance with the terms and conditions of that certain Master Agreement dated
as of , 20 entered into between Borrower and the Agency (the
"Master Agreement") and that certain Development Agreement dated as of
20_, entered into between Borrower and the Agency (the
"Development Agreement"), and the terms and conditions of this Promissory Note (this "Note")..
As set forth in greater detail in the Development Agreement, the purpose of the Loan is to
provide Borrower with acquisition, rehabilitation and/or permanent financing in connection with
a housing project ("Project") on a site more particularly described in the Development
Agreement ("Eligible Property").
I. Interest.
1.1 Basic Interest. Except as provided in Section 1.4 below, the disbursed and unpaid
principal balance of the Loan shall bear interest commencing on the date on which the Loan
proceeds are first disbursed for the account of Borrower, and ending on the date paid, at the rate
of three percent (3%) per annum, simple interest ("Basic Rate"). Interest shall be computed on
the basis of actual number of days elapsed and a 360-day year.
1.2 Pavrnent Dates and Amounts. Except as otherwise provided in this Note,
Borrower shall repay the Loan, together with accrued interest at the Basic Rate in arrears, in
annual installments on June 15th of each calendar year for the previous calendar year,
commencing on June IS, 20_. Absent prepayment or acceleration, each of the annual
payments due June 15, 20_ through and including June 15, 20_ ("Maturity Date") shall be in
Promissory Note
Exhibit "K"
I
an amount equal to percent ( %) of "Residual Receipts" for the
prior calendar year, as defined herein. Residual Receipts shall be calculated and reported to the
Agency annually for each calendar year no later thanJune 15th of the following calendar year on
fonns specified and provided by the Agency from time to time. All calculations and records are
subject to audit by the Agency. Notwithstanding any other provision of this Note, unless due
sooner, the entire outstanding principal balance of the Loan together with any outstanding
interest and any other sums payable under this Note shall be due and payable in full on the
Maturity Date.
1.3 Calculation of Residual ReceiDts. Borrower shall provide to the Agency for
inspection and copying any records, receipts, account books, ledgers, checks, or other documents
or other evidence requested by the Agency for the purpose of verifying Borrower's calculation of
Residual Receipts, and shall promptly pay to the Agency any further amount due but not paid as
a result of any miscalculation by Borrower. in no event shall any Loan payment attributable to
an Event of Default (as hereafter defined) or acceleration be deferred.
1.4 Default Rate. Any amounts (including but not limited to amounts of principal and
interest on the Loan) which Borrower does not pay when due under the tenns of this Note shall
bear interest at the rate of ten percent (10%) per annum, simple interest ("Default Rate"), from
the date due until the date paid.
1.5 Definition of Residual ReceiDts.
1.5.1 "Residual Receipts" shall mean, with respect to each calendar year, the
amount by which "Gross Rents," as defined herein, for such calendar year exceed the "Operating
Expenses", as defined herein, for that calendar year.
1.5.2 With the exception of the "Excluded Items" (as defined below), "Gross
Rents" shall mean, with respect to each calendar year or portion thereof, all gross income,
rentals, revenues, payments and consideration, of whatever fonn or nature, whether direct or
indirect, received by or paid to or for the account or benefit of Borrower or any "Affiliate" (as
defined below) of Borrower or any of their agents or employees, from any and all sources,
resulting from or attributable to the ownership, operation, leasing and occupancy of the Project,
detennined on the basis of generally accepted accounting principles applied on a consistent basis,
and shall include, but not be limited to: (i) gross rentals paid by occupancy tenants of the Project
under occupancy leases and payments and subsidies of whatever nature, including without
limitation any payments, vouchers or subsidies from the United States Department of Housing
and Urban Development (HUD) or any other person or organization, received on behalf of
tenants under occupancy leases, (ii) amounts paid to Borrower or any Affiliate of Borrower on
account of "Operating Expenses" (as defined herein) for further disbursement by Borrower or
such Affiliate to a third party or parties, (iii) late charges and interest paid on rentals, (iv) rents
and receipts from licenses, concessions, vending machines, coin laundry and similar sources;
(v) other fees, charges or payments not denominated as rental but payable to Borrower in
connection with the rental of office, retail, storage, or other space in the Project; and
(vi) consideration received in whole or in part for the cancellation, modification, extension or
Promissory Note
Exhibit "K"
2
renewal of occupancy leases. The term "Affiliate" shall mean any person or entity directly or
indirectly, through one or more intermediaries, controlling, controlled by or under common
control with Borrower which, if Borrower is a partnership or limited liability company, shall
include each of the constituent members or partners, respectively, thereof. The term "control" as
used in the immediately preceding sentence, means, with respect to a person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting rights attributable to the
shares of the controlled corporation, and, with respect to a person that is not a corporation,
possession directly or indirectly of the power to direct or cause the direction of the management
or policies of the controlled person. Notwithstanding the foregoing, Gross Rents shall not
include the following items ("Excluded Items"): (aa) security deposits from tenants (except when
applied by Borrower to rent or other amounts owing by tenants); (bb) capital contributions to
Borrower or its members, partners or shareholders by its or their members, partners or
shareholders; (cc) condemnation or insurance proceeds constituting 'Net Proceeds' as defmed in
Section 1.6 below; and (dd) funds received from any source (including but not limited to the
Senior Financing and any Junior Financing or Other Financing) actually and directly used for
acquisition and/or rehabilitation of the Eligible Property.
1.5.3 "Operating Expenses" shall mean, with respect to each calendar year or
portion thereof, the sum of the following expenses to the extent reasonably paid by Borrower
during such period: (i) nonelective payments made with respect to the Senior Financing; (ii) all
taxes and assessments imposed upon the Project and required to be paid by Borrower but only to
the extent such taxes and assessments are paid or set aside as a reserve by Borrower during such
calendar year; (iii) all amounts paid or set aside as a reserve by Borrower on account of
insurance premiums for insurance carried in connection with the Project, provided that if
insurance on the Project is maintained as part of a blanket policy covering the Project and other
properties, the insurance premium included in this definition shall be the portion of the premium
fairly allocable to the Project for the period; (iv) ownership and operating costs incurred by
Borrower for the management, operation, cleaning, leasing, marketing, maintenance and repair
of the Project (including without limitation, property management fees and administrative fees)
properly chargeable against income according to generally accepted accounting principles,
including without limitation wages, payroll and accounting costs, utility and heating charges,
material costs, maintenance costs, costs of services, water and sewer charges, travel expenses
allocable to the Project, and license fees and business taxes; provided, however, that (A) the
amount included as property management fees and administrative fees in Operating Expenses
shall collectively not exceed ten percent (10%) of Gross Rents from the Project for such period,
all or a portion of each of which may be paid to Borrower and/or an Affiliate of Borrower, (B)
such property management fees and administrative fees shall only be paid on the basis of
supporting documentation reasonably acceptable to the Agency, and shall be paid after the
payment of all other Operating Expenses, and (C) partnership management fees and other fees
payable to a partner in a tax credit limited partnership shall only be considered Operating
Expenses to the extent they do not exceed $10,000 in the aggregate in any year, which shall be
adjusted annually by a percentage equal to the annual increase in AMI adopted by HUD;
(v) reasonable and ordinary reserves actually set aside for replacement of roofing, furniture,
fixtures, equipment, and other capital expenditures, in an annual amount no less than $200.00 per
Promissory Note
Exhibit "K"
3
unit and no greater than such higher amount as may be established from time to time by mutual
agreement of the Parties; and (vi) to the extent not otherwise included in Operating Expenses,
amounts paid from any account as a reserve account for the purpose for which such reserve was .
created so long as such purpose would constitute an Operating Expense.
1.5.4 Notwithstanding any provision of Section 1.5.3, the term "Operating
Expenses" shall not include any of the following:
(i) salaries of employees of Borrower or Borrower's general overhead
expenses, or expenses, costs and fees paid to an Affiliate of Borrower, to the extent any of the
foregoing exceed the expenses, costs or fees that would be payable in a bona fide arms' length
transaction between unrelated parties in the San Bernardino-Riverside County area for the same
work or services;
(ii) any amounts paid directly by a tenant of the Project to a third party
in connection with expenses which, if incurred by Borrower, would be Operating Expenses;
(iii) optional or elective payments with respect to the Senior Financing;
(iv) any payments with respect to Junior Financing, Other Financing,
or any other Project-related loan or fmancing other than the Senior Financing; or
(v) expenses, expenditures, and charges of any nature whatsoever
ansmg or incurred by Borrower prior to completion of the Project with respect to the
development, maintenance and upkeep of the Project, or any portion thereof, including, without
limitation, all costs and expenses incurred by Borrower in connection with the acquisition of the
Property, all predevelopment activities conducted by Borrower in connection with the Project,
including without limitation, the preparation of all plans and the performance of any tests,
studies, investigations or other work, and the construction of the Project and anyon-site or off-
site work in connection therewith.
1.6 In addition to the payments provided in Section 1.2 above, and subject to the
terms of the Senior Financing, Borrower shall pay to the Agency towards (but not to exceed) any
outstanding amounts associated with the Loan: (a) no later than the date of close of escrow or
other consummation of any Assignment other than a Minor Assignment, the Applicable
Percentage of the Net Proceeds of such Assignment; and (b) no later than the recording of a
Refmancing, percent ( %) of the Net Refmancing Proceeds received from
any such Refinancing.
A "Minor Assignment" shall mean any lease of an individual unit in the Project for
occupancy by a residential tenant and in the ordinary course of business for operation of the
Project.
Promissory Note
Exhibit "K"
4
"Applicable Percentage" shall mean percent L%); provided, however,
that the term Applicable Percentage shall mean one hundred percent (100%) with respect to a
payment on the Loan attributable in whole or in part to a condemnation of, or event of damage,
destruction or casualty with respect to, the Eligible Property, the Project or any portion of either.
"Assignment" means any voluntary or involuntary conveyance, disposition, assignment, taking,
casualty, encumbrance (other than a RefInancing as defIned below or the creation of the Senior
Financing or any other Project Loan or limited partner contribution, the proceeds of which are
used solely for initial acquisition of the Eligible Property by Borrower or initial development of
the Project), sublease, sale, license, concession, management agreement, operating agreement,
transfer or similar transaction with respect to any direct or indirect interest or economic benefit
of any person or entity in connection with the Project or the use or occupancy of the Eligible
Property including, without limitation, any Transfer by Borrower of all or any portion of its
rights under or interest in the Project or the Eligible Property, any change of ownership or
control of Borrower, any condemnation or taking of the Eligible Property or the Project or any
portion thereof, any event of damage to or destruction of the Eligible Property or the Project, any
foreclosure of Borrower's interest in the Project or the Eligible Property, whether by judicial
proceedings, or by virtue of any power contained in a deed of trust, indenture or other instrument
creating a lien against the Eligible Property or the Project, or any assignment of Borrower's
estate in the Project or the Eligible Property through, or in lieu of, foreclosure or other
appropriate and bona fIde proceedings in the nature thereof; provided, however, that the term
"Assignment" as used herein shall not include bona fIde transfers of an ownership interest in
Borrower to any Affiliate of Borrower, so long as the consideration paid to the selling partner,
member or shareholder on account of such transfer does not exceed the actual amount paid by
such partner, member or shareholder for its ownership interest plus reimbursement for any out-
of-pocket expenses incurred by such partner, member or shareholder in connection with its
acquisition of such ownership interest.
''Net Proceeds" of an Assignment shall mean (1) the proceeds received, directly or
indirectly, by Borrower or any Affiliate or constituent member or partner, or majority
shareholder, of Borrower or any Affiliate as a result of such Assignment, including, without
limitation, cash, the amount of any monetary lien or encumbrance assumed or taken subject to by
the assignee, the fair market value of any noncash consideration, including the present value of
any promissory note received as part of the proceeds of such Assignment (such present value to
be determined based upon a discount rate reasonably satisfactory to the Agency), the entire
condemnation award or compensation payable to Borrower or any Affiliate or constituent
member or partner, or majority shareholder, of Borrower or any Affiliate in connection with a
condemnation or taking in eminent domain of any part of the Eligible Property or the Project or
any interest therein, all insurance proceeds or awards payable to Borrower or any Affiliate or
constituent member or partner or majority shareholder of Borrower or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part thereof not
used for project restoration; less (2) the sum of (i) the actual, documented and reasonable
expenses of effecting such Assignment, including reasonable brokerage commissions, title
insurance premiums, documentary transfer taxes, and reasonable attorneys' fees, in each case
actually paid in connection with the Assignment (provided that no deduction shall be allowed for
Promissory Note
Exhibit "K"
5
payments to an Affiliate of the person or entity making the Assignment which are in excess of
the amount that would be paid for the same or equivalent services in an arms' length transaction
between unrelated parties acting reasonably), and (ii) the amount of any proceeds of the
Assignment paid (excluding voluntary payments) towards the then-outstanding balance of the
Senior Financing. Notwithstanding anything above to the contrary, the permissible deductions
for purposes of calculating the Net Proceeds of an Assignment shall not include any foreign.
U.S., state or local income taxes, franchise taxes, or other taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project Loan")
secured by an encumbrance on the Eligible Property, the Project, or any portion thereof. The
term "Refinancing" shall not include the creation of the Senior Financing or any other Project
Loan, the proceeds of which are used solely for initial acquisition of the Eligible Property by
Borrower or initial development of the Project.
''Net Refinancing Proceeds" shall mean the gross face amount of the Project Loan
obtained in connection with such Refinancing, after: (1) payment of the actual, documented and
reasonable expenses of such Refinancing, including escrow fees, title policy expenses, legal
expenses, survey fees, recording fees, commissions, and other usual and reasonable expenses of
any such Refmancing (provided, that no deduction shall be allowed for payments in connection
with such Refinancing which are in excess of the amounts that would be paid for the same or
equivalent services in an arms' length transaction between unrelated parties acting reasonably);
and (2) deduction of amounts repaid (excluding voluntary payments) in connection with the
Refinancing towards amounts outstanding under the Senior Financing.
2. Acceleration.
Notwithstanding the payment terms set forth in Section 1 above, upon the occurrence of
any "Event of Default" as set forth in Section 9 below, the entire outstanding principal balance of
this Note, together with any outstanding interest and other amounts payable hereunder, shall, at
the election of the Agency and upon notice to Borrower thereof become immediately due and
payable without presentment, demand, protest or other notices of any. kind, all of which are
hereby wmved by Borrower.
. 3. Prepayment: Application ofPavments.
At any time after the disbursement of the Loan proceeds, Borrower may prepay all or a
portion of the unpaid principal amount of the Loan and accrued interest and any other sums
outstanding without penalty. All payments, including any prepayments or funds received upon
acceleration pursuant to Section 2 above, shall be applied first toward any outstanding costs of
collection or other amounts (excluding Loan principal or interest thereon) due under this Note or
the Development Agreement, then toward outstanding interest accrued at the Default Rate, if
any, then toward outstanding interest accrued at the Basic Rate, if any, arid fmally toward the
remaining principal balance under the Note.
Promissory Note
Exhibit "K"
6
;....,
4. Security and Source ofPavrnent.
Borrower's obligations under this Note and the Master Agreement and the Development
Agreement shall, at all times during which any amount remains .outstanding, be secured by the
deed of trust ("Agency Deed of Trust") of even date herewith, and of which the Agency is the
beneficiary, recorded against Borrower's interest in the Eligible Property and the Project
(collectively, the "Property"). The security interest in the Property granted to the Agency
pursuant to the Agency Deed of Trust shall be subordinate only.to the Senior Financing and such
exceptions to title shown in the title report for the Property which are approved in writing by the
Agency. Except to the extent any Event of Default hereunder results directly or indirectly from
any willful misconduct, fraud or intentional and material misrepresentation by Borrower in
connection with this Note, the Master Agreement, the Development Agreement or the Loan, the
Loan is a nonrecourse obligation of Borrower and, in the event of the occurrence of an Event of
Default, the Agency's only recourse under the Agency Loan Documents shall be against the
Property, the proceeds thereof, the rents and other income arising from its use and occupancy as
provided in the Agency Deed of Trust, and any other collateral given to the Agency as security
for repayment of the Loan.
5. Obligation of Borrower Unconditional.
The obligation of Borrower to repay the Loan and all accrued interest thereon and all
other sums due thereunder shall be absolute and unconditional, and until such time as all of the
outstanding principal of, interest on and all other sums due under, this Note shall have been fully
paid, Borrower agrees that it: (a) will use the funds solely for the purposes set forth herein; and
(b) will not terminate or suspend any payment or obligations under this Note, the Master
Agreement, the Development Agreement, or any other document executed hereunder or in
connection herewith for any cause, including Without limitation, any acts or circumstances that
may constitute failure of consideration, commercial frustration of purpose, or any duty, liability
or obligation arising out of or in connection with this Note, the Master Agreement, the
Development Agreement or any document executed hereunder or in connection herewith.
6. Puroose of Loan.
The Loan proceeds shall be used by Borrower only to provide acquisition, rehabilitation
and/or permanent financing for the housing development described in the Development
Agreement. In no event shall Borrower use or otherwise invest the proceeds of the Loan except
as expressly provided in this Note.
7. Covenants of Borrower.
As additional consideration for the making of the Loan by the Agency, Borrower
covenants as follows:
Promissory Note
Exhibit "K"
7
7.1 Compliance with the Master Al!J'eement. the Development Al!l'eeIIIent and
Al!encv Deed of Trust. Borrower shall comply with all of its obligations under the Master
Agreement, the Development Agreement and the Agency Deed of Trust. Any amounts payable
by Borrower under the Development Agreement or the Agency Deed of Trust (other than
amounts also payable hereunder) shall be deemed added to the principal amount of the Loan
payable hereunder.
7.2 Other Loans. Borrower shall comply with all monetary and nonmonetary
covenants associated with any loan secured by an interest in the Eligible Property or the Project.
Borrower shall provide to the Agency a copy of any notice of default within five business days
after receiving any notice of a default or alleged default of such covenants by Borrower, and
Borrower shall promptly cure any such default and cooperate in permitting the Agency, to the
extent the Agency in its sole discretion elects to do so, to cure or assist in curing the default.
Any cost or expenditure incurred by the Agency in providing or assisting in such a cure shall be
added to the outstanding principal amount of the Loan. .
8. Assismment of this Note.
This Note shall be assignable by Borrower only if Borrower obtains the prior express
written consent of the Agency, which consent may be withheld by the Agency in its sole
discretion. Notwithstanding anything to the contrary in this Note, no purported assignment of
this Note and the Loan shall be effective if such assignment would violate the terms, conditions
and restrictions of any Applicable Governmental Restrictions. The Agency's consent to such
assignment shall be expressly conditioned upon (i) the assignee's execution of such documents as
required by the Agency in its sole discretion, including, without limitation, any and all
documents deemed necessary by the Agency to provide for said assignee's assumption of all of
the obligations of Borrower hereunder and under the Agency Loan Documents, and (ii) the
Agency's approval of the financial and credit worthiness of such proposed assignee and the
assignee's ability to perform all of the Borrower's covenants under this Note and the
Development Agreement and any of the other Agency Loan Documents.
9. Events of Default and Remedies.
A. Borrower Events of Default. The occurrence of any of the following shall, after
the giving of any notice and the expiration of any applicable cure period described therein,
constitute an event of default by Borrower hereunder ("Event of Default"):
(I) The failure of Borrower to payor perform any monetary covenant or
obligation hereunder or under the terms of this Note or the Agency Deed of Trust, the Master
Agreement or the Development Agreement, without curing such failure within ten (10) calendar
days after the date such payment is due. Notwithstanding anything herein to the contrary, the
Promissory Note
Exhibit UK"
8
herein described cure period shaH not apply to a failure by Borrower to timely repay the Agency
Loan at the Maturity Date of this Note;
(2) The failure of Borrower to perform any nonmonetary covenant or
obligation hereunder or under the terms of this Note, the Agency Deed of Trust, the Master
Agreement or the Development Agreement, without curing such failure within thirty (30)
calendar days after receipt of written notice of such default from the Agency (or from any party
authorized by the Agency to deliver such notice as identified by the Agency in writing to
Borrower) specifying the nature of the event or deficiency giving rise to the default and the
action required to cure such deficiency; provided, however, that if any default with respect to a
nonmonetary obligation is such that it cannot be cured within a thirty day period, it shall be
deemed cured if Borrower commences the cure within said thirty day period and diligently
prosecutes such cure to completion thereafter with the cure completed in any event within 180
calendar days after the notice. Notwithstanding anything herein to the contrary, the herein
described notice cure periods shall not apply to any Event of Default described in Sections
9(A)(3) through 9(A)(8) below;
(3) The material falsity of any representation or breach of any warranty or
covenant made by Borrower under the terms of this Note, the Master Agreement, the
Development Agreement or the Agency Deed of Trust;
(4) Borrower shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in writing its
inability to pay its debts generally as they become due, (c) make a general assignment for the
benefit of creditors, (d) be adjudicated a bankrupt or insolvent or (e) commence a voluntary case
under the Federal bankruptcy laws of the United States of America or file a voluntary petition
that is not withdrawn within ten (10) calendar days after the filing thereof or answer seeking an
arrangement with creditors or an order for relief or seeking to take advantage of any insolvency
law or file an answer admitting the material allegations of a petition filed against it in any
bankruptcy or insolvency proceeding;
(5) If without the application, approval or consent of Borrower, a proceeding
shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, in
respect of Borrower or any constituent member or partner or majority shareholder of Borrower,
for an order for relief or an adjudication in bankruptcy, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian
or the like of Borrower or of all or any substantial part of Borrower's assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being
contested by Borrower, in good faith, the same shall (a) result in the entry of an order for relief
or any such adjudication or appointment, or (b) continue undismissed, or pending and unstayed,
for any period of ninety (90) consecutive calendar days;
(6) Following completion of the rehabilitation of the Project, voluntary
cessation of the operation of the Project for a continuous period of more than thirty (30) calendar
Promissory Note
Exhibit "K"
9
days or the involuntary cessation of the operation of the Project in accordance with this Note for
a continuous period of more than sixty (60) calendar days;
(7) Borrower shall suffer or attempt to effect a Transfer (as defined below), in
violation of Section 14; or
(8) Borrower shall be in default under the Agency Affordability Covenant,
Senior Financing, Junior Financing, Other Financing or any other secured or unsecured
obligation relating to the Project, unless the default is cured within the cure period, if any,
applicable thereto under the terms of the obligation which is in default.
B. Agencv Remedies. Upon the occurrence of an Event of Default hereunder, the
Agency may, in its sole discretion, take anyone or more of the following actions:
(1) By notice to Borrower, declare the entire then unpaid principal balance of
the Loan immediately due and payable, and the same shall become due and payable without
further demand, protest or further notice of any kind, all of which are hereby expressly waived
by Borrower. Upon such declaration, outstanding principal and (to the extent permitted by law)
interest and any other sums outstanding in connection with the Loan shall thereafter bear interest
at the Default Rate, payable from the date of such declaration until paid in full;
(2) Subject to the nonrecourse provisions of Section 4 above, take any and all
actions and do any and all things which are allowed, permitted or provided by law, in equity or
by statute, in the sole discretion of the Agency, to collect the amounts then due and thereafter to
become due hereunder, to exercise its rights under the Agency Deed of Trust, and to enforce
performance and observance of any obligation, agreement or covenant of the Borrower under
this Note or under any other document executed in connection herewith;
(3) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default, which is occasioned by Borrower's failure to pay money,
whether under this Note or the Development Agreement, the Agency may, but shall not be
obligated to, make such payment. If such payment is made by the Agency, Borrower shall
deposit with the Agency, upon written demand therefore, such sum plus interest at the Default
Rate. The Event of Default with respect to which any such payment has been made by the
Agency shall not be deemed cured until such repayment has been made by Borrower. Until
repaid, such amounts shall have the security afforded disbursements under this Note;
(4) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default described in Section 9(A)( 4) or 9(A)(5) hereof, the Agency
shall be entitled and empowered by intervention in such proceedings or otherwise to file and
prove a claim for the whole amount owing and unpaid on the Loan and, in the case of
commencement of any judicial proceedings, to file such proof of claim and other papers or
documents as may be necessary or advisable in the judgment of the Agency and its counsel to
Promissory Note
Exhibit "K"
10
protect the interests of the Agency and to collect and receive any monies or other property in
satisfaction of its claim.
C. No Remedv Exclusive. No remedy herein conferred upon or reserved to the
Agency is intended to be exclusive of any other available remedy or remedies, but each such
remedy shall be cumulative and shall be in addition to every other remedy given under this Note
or now or hereafter existing at law or in equity or by statute; and may be exercised in such
number, at such times and in such order as the Agency may determine in its sole discretion. No
delay or omission to exercise any right or power upon the occurrence of any Event of Default
hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may be deemed
expedient by the Agency. In order to entitle the Agency to exercise any right or remedy reserved
to it under this Note, no notice shall be required except as expressly provided herein.
D. Agencv Default and Borrower Remedies. Upon fault or failure of the Agency to
meet any of its obligations under this Note without curing such failure within thirty (30) calendar
days after receipt of written notice of such failure from Borrower specifying the nature of the
event or deficiency giving rise to the default and the action required to cure such deficiency,
Borrower may, as its sole and exclusive remedies:
(1) Demand and obtain payment from the Agency of any sums due to or for
the benefit of Borrower pursuant to the express terms of this Note;
(2) Bring an action in equitable relief seeking the specific performance by the
Agency of the terms and conditions of this Note or seeking to enjoin any act by the Agency
which is prohibited hereunder; or
(3) Bring an action for declaratory relief seeking judicial determination of the
meaning of any provision of this Note.
Without limiting the generality of the foregoing, Borrower shall in no event be
entitled to, and hereby waives, any right to seek indirect or consequential damages of any kind or
nature from the Agency arising out of or in connection with this Note, and in connection with
such waiver Borrower is familiar with and hereby waives the provisions of Section 1542 of the
California Civil Code which provides as follows: "A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."
Promissory Note
Exhibit "K"
II
10. AllreeII1ent to Pav Attornevs' Fees and Exoenses.
In the event that either party hereto brings any action or files any proceeding in connection with
the enforcement of its respective rights under this Note or any of the other Agency Loan
Documents as a consequence of any breach by the other party of its obligations hereunder or
thereunder, the prevailing party in such action or proceeding shall be entitled to have its
reasonable attorneys' fees and out-of-pocket expenditures paid by the losing party. The
attorneys' fees so recovered shall include fees for prosecuting or defending any appeal and shall
be awarded for any supplemental proceedings until the final judgment is satisfied in full. In
addition to the foregoing award of attorneys' fees, the prevailing party in any lawsuit on this Note
or any other Loan Document shall also be entitled to its attorneys' fees incurred in any post-
judgment proceedings to collect or enforce the judgment. In addition to the foregoing, Borrower
agrees to payor reimburse the Agency, upon demand by the Agency, for all costs incurred by the
Agency in connection with the enforcement of this Note, and any other Agency Loan Document,
including without limitation, reasonable attorneys' fees and costs, if there shall be filed by or
against Borrower any proceedings under any federal or state bankruptcy or insolvency laws,
whether the Agency is a creditor in such proceeding or otherwise.
II. Conflict of Interest: No Individual Liabilitv.
No official or employee of the Agency shall have any personal interest, direct or indirect,
in this Note, nor shall any official or employee of the Agency participate in any decision relating
to this Note which affects such official's or employee's pecuniary interest in any corporation,
partnership or association in which such official or employee is directly or indirectly interested.
No official or employee of the Agency shall be personally liable in the event of a breach of this
Note by the Agency,
12. Amendments. Chanl!es and Modifications.
This Note may not be amended, changed, modified, or altered without the prior written
consent of the parties hereto. .
13. Notices.
All notices, demands, requests,elections, approvals, disapprovals, consents or other
communications given under this Note shall be in writing and shall be given by personal
delivery, facsimile, certified mail (return receipt requested), or ovemight guaranteed delivery
service and faxed or addressed as follows:
If to the Agency:
Redevelopment Agency of the City of San Bernardino
20 I North "En Street, Suite 30 I
San Bernardino, California 92401
Attention: Emil A. Manullo, Interim Executive Director
Fax No. (909) 888-9413
Promissory Note
Exhibit "K"
12
With a copy to:
Redevelopment Agency of the City of San Bernardino
20 I North "E" Street, Suite 301
San Bernardino, California 92401
Attention: Carey K. Jenkins,
Director of Housing and Community Development
Fax: (909) 888-9413
If to Borrower:
Mary Erickson Community Housing, Inc.
Irvine, CA
Attn: Director
Fax No. ( )
With a copy to:
Notices shall be effective upon receipt, if given by personal delivery; upon receipt, if faxed,
provided there is written confIrmation ofreceipt (except that if received after 5 p.m., notice shall
be deemed received on the next business day); the earlier of (i) three (3) business days after
deposit with United States Mail, or (ii) the date of actual receipt as evidenced by the return.
receipt, if delivered by certified mail; or (iii) one (l) day after deposit with the delivery service,
if delivered by overnight guaranteed delivery service. Each party shall promptly notify the other
party of any change( s) of address to which notice shall be sent pursuant to this Note.
14. Severabilitv.
The invalidity or unenforceability of anyone or more provisions of this Note will in no
way affect any other provision.
Promissory Note
Exhibit "K"
13
15. Intemretation.
Whenever the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will inClude any other gender. The
captions of the paragraphs of this Note are for convenience only and do not define or limit any
terms or provisions. Time is of the essence in the performance of this Note by Borrower. Each
Party has been represented by counsel in the negotiation of this Note, and it shall not be
interpreted in favor of or against any Party on account of relative responsibilities in drafting.
Notwithstanding any other provision of this Note, nothing herein or in this Note shall be deemed
to require Borrower to pay interest in the amount of any applicable usury law or other legal
limitation on interest, and the terms hereof and of this Note shall be interpreted to require in each
instance the lesser of (i) the amount stated in this Note; and (ii) the maximum applicable legal
limit. Dermed terms not otherwise defined herein shall have the meaning assigned to them by
the Development Agreement.
16. No Waiver: Consents.
Any waiver by the Agency must be in writing and will not be construed as a continuing
waiver. No waiver will be implied from any delay or failure by the Agency to take action on
account of any default of Borrower. Consent by the Agency to any act or omission by Borrower
will not be construed as consent to any other or subsequent act or omission or to waive the
requirement for the Agency's consent to be obtained in any future or other instance.
17. Goveming Law.
This Note shall be governed by the laws of the State ofCalifomia.
18. Representations. Warranties and Additional Covenants of Borrower.
Borrower hereby represents, warrants and covenants to the Agency that:
A. Orl!anization and Standing. Borrower is a California legal entity as described in
the Development Agreement, duly formed, qualified to operate in California and validly existing
and in good standing under all applicable laws, and has all requisite power and authority to enter
into and perform its obligations under this Note, the Master Agreement, the Development
Agreement, the Agency Deed of Trust, the Agency Affordability Covenant and all other
documents executed in connection herewith.
B. Enforceabilitv. This Note and all other instruments to be executed by Borrower in
connection with the Loan constitute the legal, valid and binding obligation of Borrower, without
joinder of any other party.
C. Authorization and Consents. The execution, delivery and performance of this
Note and all other instruments to be executed in connection herewith is consistent with the
operating agreement, partnership agreement or articles and bylaws governing Borrower and have
Promissory Note
Exhibit "K"
14
been duly authorized by all necessary action of Borrower's members, partners, directors, officers
and shareholders.
D. Due and Valid Execution. This Note and all other instruments to be executed in
connection herewith, will, as of the date of their execution, have been duly and validly executed
by Borrower.
E. Licenses. Borrower will obtain and maintain all material licenses, permits,
consents and approvals required by all applicable governmental authorities to own and operate
the Project.
F. Litigation and Compliance. There are no suits, other proceedings or
investigations pending or threatened against, or affecting the business or the properties of
Borrower (other than those as have been previously disclosed in writing to the Agency) which
could impair its ability to perform its obligations under this Note, nor is Borrower in violation of
any laws or ordinances which could materially impair Borrower's ability to perform its
obligations under this Note.
G. Default. There are no facts now in existence which would, with the giving of
notice or the lapse of time, or both, constitute an "Event of Default" hereunder, as described in
Section 9.
H. No Violations. The execution and delivery of this Note, the Development
Agreement and all other documents executed or given thereunder, and the performances
hereunder and thereunder by Borrower, as applicable, will not constitute a breach of or default
under any instrument or agreement to which Borrower may be a party nor will the same
constitute a breach of or violate any law or governmental regulation.
19. Approvals.
Except with respect to those matters set forth hereinabove providing for the Agency's
approval, consent or determination to be at the Agency's "sole discretion" or "sole and absolute
discretion," the Agency hereby agrees to act reasonably with regard to any approval, consent, or
other determination given by the Agency hereunder. The Agency agrees to give Borrower
written notice of its approval or disapproval following submission of items to the Agency for
approval, including, in the case of any disapproved item, the reasons for such disapproval.
Any review or approval of any matter by the Agency or any Agency official or employee
under this Note shall be solely for the benefit of the Agency, and neither Borrower nor any other
person shall rely upon such review or approval as an indication of the wisdom, soundness, safety,
appropriateness, or presence or absence of any matter. Without limiting the generality of the
foregoing, Borrower and not the Agency shall be solely responsible for assuring compliance with
laws, the suitability of the Eligible Property for the Project, the adequacy of the plans, and the
safety of the Project construction site, the completed Project, and the operation thereof.
Promissory Note
Exhibit "K"
15
Any consent to a Transfer given by the Agency under this Note, the Agency Deed of
Trust, the Master Agreement, the Development Agreement or any of the other documents.
executed in connection therewith, may be given by the Agency's Executive Director or its
Director of Housing and Community Development without action by the Agency's governing
board, unless the Executive Director or the Director of Housing and Community Development in
his or her sole discretion elects to refer the matter to the board.
20. Good Faith and Fair Dealing.
The Agency and Borrower agree to perform all of their obligations and the actions
required of each hereunder in good faith and in accordance with fair dealing.
21. Waiver.
Borrower agrees that it will still be liable for repayment of this Note, subject to the
nonrecourse provision of Section 4 above, even if the holder hereof does not follow the
procedures of presentment, protest, demand, diligence, notice of dishonor and of nonpayment,
which requirements are hereby waived. Failure of the Agency or other holder hereof to exercise
any right or remedy hereunder shall not constitute a waiver of any future or other default. No
acceptance of a past due installment or indulgence granted from time to time shall be construed
to be a waiver of, or to preclude the exercise of, the right to insist upon prompt payment
thereafter or to impose late charges retroactively or prospectively, or to waive or preclude the
exercise of any other rights which the Agency may have.
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Promissory Note
Exhibit "K"
16
IN WITNESS WHEREOF, the Borrower has executed this Note as of the date and year first
above written
BORROWER:
Mary Erickson Community Housing, Inc., a California
non-profit public benefit corporation
By:
Susan McDevitt, Director
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Promissory Note
Exhibit "K"
17
"'~.
......
EXHIBIT "L"
AgencyDeed of Trust
51
.....~AIneoo!2OO'HI1.:ZO'O'MIrr~C.....,.HouIi....IK..MMer.........Coatd(filal~_
EXHIBIT "L" TO MASTER AGREEMENT
AGENCY DEED OF TRUST
OFFICIAL BUSINESS
Document entitled to free
recording per Govt. Code
Section 6103.
Recording Requested by and
When Recorded Mail To:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
201 North "E" Street, Suite 301
San Bernardino, CA 92401
Attn.: Director of Housing and
Community Development
Above Space For Recorder's Use Only
DEED OF TRUST, ASSIGNMENT OF RENTS.
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING ("Agency Deed of Trust") is made as of ,20_, by and
between MARY ERICKSON COMMUNITY HOUSING, INC. ("Trustor"), a California Non-
profit public benefit corporation, First American Title ("Trustee"); and the REDEVELOPMENT
AGENCY OF CITY OF SAN BERNARDINO, a public body corporate and politic
("Beneficiary").
Agency Deed of Trust
Exhibit "L"
I
RE{;IIAL~
A. Beneficiary is making a loan to Trustor in the original principal amount of
Dollars . ($ ) (the "Loan")
pursuant to that certain Master Agreement (the "Master Agreement") entered into by Trustor and
Beneficiary and dated as of , 20_ and that certain Development Agreement
(the "Development Agreement") entered into by Trustor and Beneficiary and dated as of
,20_. The Loan is evidenced by a promissory note of even date herewith
executed by Trustor (the ''Note") in the principal amount of the Loan.
B. Trustor intends to use the Loan proceeds for the purpose of providing financing
for the housing development described in the Development Agreement (the "Project"). The
Project will be developed on a site legally described on Attachment "I" to this Agency Deed of
Trust (the "Eligible Property").
NOW THEREFORE, in consideration of the Loan, Trustor hereby irrevocably grants,
conveys, transfers and assigns to Trustee, its successors and assigns, in trust, with power of sale
and right of entry and possession as provided below all of its present and future estate, right, title
and interest in and to the Eligible Property, together with all right, title and interest of Trustor
therein and in and to, and grants to Beneficiary a security interest in, the following:
(A) All development rights, air rights, water, water rights, and water stock relating to the
Eligible Property.
(B) All present and future structures, buildings, improvements, appurtenances and.
fixtures of any kind on the Eligible Property, including but not limited to all apparatus, attached
equipment and appliances used in connection with the operation or occupancy of the Eligible
Property, such as heating and air-conditioning systems and facilities used to provide any utility
services, ventilation, vehicular cleaning, storage or other services on the Eligible Property, and
all signage, carpeting and floor coverings, partitions, generators, screens, awnings, boilers,
furnaces, pipes, plumbing, vacuUm systems, brushes, blowers, cleaning, call and sprinkler
systems, fire extinguishing apparatus and equipment, water tanks, heating, ventilating, air
conditioning and air cooling equipment, and gas and electric machinery and equipment, it being
intended and agreed that all such items will be conclusively considered to be a part of the
Eligible Property conveyed by this Agency Deed of Trust, whether or not attached or affixed to
the Eligible Property.
(C) All appurtenances of the Eligible Property and all rights of Trustor in and to any
streets, roads or public places, easements or rights of way, relating to the Eligible Property.
(0) All of the rents, royalties, profits and income related to the Eligible Property, to the
extent not prohibited by any applicable law.
Agency Deed of Trust
Exhibit "L"
2
(E) All proceeds and claims arising on account of any damage to or taking of the Eligible
Property and all causes of action and recoveries for any loss or diminution in value of the
Eligible Property.
(F) All existing and future goods, inventory, equipment and all other personal property
of any nature whatsoever now or hereafter located on the Eligible Property which are now or in
the future owned by Trustor and used in the operation or occupancy of the Eligible Property or in
any construction on the Eligible Property but which are not effectively made real property under
Clause (B) above, including but not limited to all appliances, furniture and furnishings, building
service equipment, and building materials, supplies, equipment, machinery, plumbing and
plumbing material and supplies, concrete, lumber, hardware, electrical wiring and electrical
material and supplies, roofing material and supplies, doors, paint, drywall, insulation, cabinets,
ceramic material and supplies, flooring, attached appliances, fencing, landscaping and all other
materials, supplies and property of every kind and nature.
(G) All present and future accounts, general intangibles, chattel paper, contract rights,
deposit accounts, instruments and documents as those terms are defined in the California
Uniform Commercial Code, now or hereafter relating or arising with respect to the Eligible
Property and/or the use thereof or any improvements thereto, including without limitation: (i) all
rights to the payment of money, including escrow proceeds arising out of the sale or other
disposition of all or any portion of the estate of Trustor upon the Eligible Property now or
hereafter existing thereon; (ii) all plans, specifications and drawings relating to the development
of the Eligible Property and/or any construction thereon; (iii) all use permits, licenses, occupancy
permits, construction and building permits, and all other permits and approvals required by any
governmental or quasi-governmental authority in connection with the development, construction,
use, occupancy or operation of the Eligible Property; (iv) any and all agreements relating to the
development, construction, use, occupancy and/or operation of the Eligible Property between
Trustor and any contractor, subcontractor, project manager or supervisor, architect, engineer,
laborer or supplier of materials; (v) all lease or rental agreements; (vi) all names under which the
Eligible Property is now or hereafter operated or known and all rights to carry on business under
any such names or any variant thereof; (vii) all trademarks relating to the Eligible Property
and/or the development, construction, use, occupancy or operation thereof; (viii) all goodwill
relating to the Eligible Property and/or the development, construction, use, occupancy or
operation thereof; (ix) all reserves, deferred payments, deposits, refunds, cost savings, bonds,
insurance policies and payments of any kind relating to the Eligible Property; (x) all loan
commitments issued to Trustor in connection with any sale or financing of the Eligible Property;
(xi) all funds deposited with Beneficiary by Trustor, and all accounts of Trustor with
Beneficiary, including all accounts containing security deposits and prepaid rents paid to Trustor
in connection with any leases of the Eligible Property, and all proceeds thereof; and (xii) all
supplements, modifications and amendments to the foregoing.
Agency Deed of Trust
Exhibit "L"
3
(II) All of the right, title and interest of Trustor in and to all sales contracts of any nature
whatsoever now or hereafter executed covering any portion of the Eligible Property, together
with all deposits or other payments made in connection therewith.
(1) All of the right, title and interest of Trustor in and to any construction contracts, plans
and specifications, building permits, and all other documents necessary for completion of the
improvements to the construction of the Eligible Property.
(J) All water stock relating to the Eligible Property, all shares of stock or other
evidence of ownership of any part of the Eligible Property that is owned by Trustor in common
with others, and all documents of membership in any owner's or members' association or similar
group having responsibility for managing or operating any part of the Eligible Property.
Trustor does hereby covenant with Trustee and Beneficiary, that Trustor has good right to
bargain, sell and convey Trustor's interest in the Eligible Property in manner and form as above
written; and Trustor warrants and will defend same to Beneficiary, forever, against all lawful
claims and demands whatsoever except as stated above.
THIS DEED OF TRUST IS FOR THE PURPOSE OF SECURING:
(1) performance of each agreement of Trustor herein contained or incorporated herein
by reference;
(2) payment of the indebtedness (including, without limitation, interest thereon)
evidenced by the Note, and any extension or renewal or modification thereof;
(3) performance of each agreement of Trustor contained'in the Master Agreement and
the Development Agreement, or any of the other "Agency Loan Documents" (as defmed in the
Development Agreement), and any extension, renewal or modification of such Development
Agreement and other Agency Loan Documents;
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR HEREBY
COVENANTS AND AGREES AS FOLLOWS:
I. Payment of Secured Oblil!ations. To pay when due (a) the principal of,
and the interest on, the indebtedness evidenced by the Note, (b) charges, fees and all other sums
as provided in the Development Agreement, and (c) the principal of, and interest on, any future
advances secured by this Agency Deed of Trust.
2. Maintenance. Reoair. Alterations. To keep the Eligible Property in good
condition and repair; to complete promptly and in a good and workmanlike manner all
improvements to be constructed on the Eligible Property, including specifically all improvements
Agency Deed of Trust
Exhibit "L"
4
described in the Development Agreement, and promptly restore in like manner any structure that
may be damaged or destroyed thereon; to pay when due all claims for labor performed and
materials furnished therefor, to comply with all laws, ordinances, regulations, covenants,.
conditions and restrictions now or hereafter affecting the Eligible Property or any part thereof or
requiring any alterations or improvements thereon; not to commit or permit any waste or
deterioration of the Eligible Property; to keep and maintain abutting grounds, sidewalks, roads,
parking and landscape areas in good and neat order and repair; not to commit, suffer or permit, to
the extent Trustor is able by the exercise of commercially reasonable best efforts, any act to be
done in or upon the Eligible Property in violation of any law, ordinance or regulation.
3. Insurance. To provide, maintain at its expense and deliver to Beneficiary
at all times until payment in full of all obligations secured hereby, insurance as required by the
Development Agreement or the Note. In the event of any loss or damage, Trustor shall give
immediate notice thereof to Beneficiary, and Beneficiary may thereupon make proof of such loss
or damage, if the same is not promptly made by Trustor. Trustor and Beneficiary hereby agree
to cooperate in making any adjustment and compromise of any loss covered by the
aforementioned insurance policies upon the Eligible Property, and Trustor authorizes and
empowers Beneficiary, at its option, to collect and receive the proceeds, and endorse checks and
drafts issued therefor. Beneficiary agrees that in the event of any loss covered by insurance
policies on the Eligible Property subject to this Agency Deed of Trust, provided there is not then
existing any material default (or such existing default will be cured by the proceeds of such
insurance) in the observance or performance of any of the covenants and agreements contained
herein or in the Note or any future notes secured hereby, or in any other agreement with or for
the benefit of the Beneficiary in connection with any indebtedness secured hereby, the proceeds
of such insurance shall be used for the repair or restoration of the Eligible Property and wiIl be
disbursed in accordance with such protective terms and conditions as Beneficiary may
reasonably impose.
Trustor hereby fully assigns to Beneficiary all current and future claims it may
have under any policy of insurance related to the Eligible Property or the Project, regardless of
whether such insurance was required to be maintained under the Agency Loan Documents, Any
and all unexpired insurance shall inure to the benefit of and pass to the purchaser of the Eligible
Property at any foreclosure sale, or any Trustee's sale held pursuant hereto.
Further, Beneficiary may at the time in its sole discretion require Trustor to
submit satisfactory evidence of insurance policies obtained pursuant to this Paragraph 3 and of
Trustor's compliance with all the provisions of said policies.
4. Lawsuits. To appear in and defend, or otherwise take such action therein
as the Beneficiary and Trustee or either of them may deem advisable with respect to, any action
or proceeding affecting the security for the Loan in which Beneficiary or Trustee may appear.
Agency Deed of Trust
Exhibit "L"
5
5. Beneficiarv Statement. To pay all charges for all court costs and expenses
which Beneficiary may elect to advance in order to keep unimpaired, protect, and preserve the
title thereto; and to pay for any statement provided for by law in effect at the date hereof
regarding the obligations secured hereby, any amount demanded by the Beneficiary not to
exceed the maximum allowed by law at the time when said statement is demanded.
6. Condemnation. That all judgments, awards of damages and settlements,
hereafter made as a result of or in lieu of any condemnation or other proceedings for public use
of, or for any damage to, the Eligible Property or the improvements thereon, are hereby assigned
to Beneficiary. If (i) Trustor is not then in material default hereunder (or such default will be
cured with the proceeds from the foregoing), and (ii) the taking is a partial taking, all proceeds
thereof shall be applied to restoring the Eligible Property, if practicable, as reasonably
determined by Beneficiary. In the event (i) Trustor is then in material default hereunder (and
such default will not be cured with the proceeds of the foregoing), (ii) the taking is a total taking,
or (iii) the taking is a partial taking and Beneficiary has reasonably determined that restoration of
the Eligible Property is not practicable, the proceeds shall be paid to Beneficiary to the extent of
those monies due and owing under the Note, this Agency Deed of Trust, future notes or future
deeds of trust, and Beneficiary is hereby authorized to receive such monies. Trustor agrees to
execute such further assignments of any such award, judgment or settlement which may be
received by Trustor. Subject to any prior rights of creditors under the Senior Financing (as
defmed in the Development Agreement), Beneficiary may apply any and all such sums to the
indebtedness secured hereby in such manner as it elects or, at its option, the entire amount so
received by it or any part thereof may be released. Neither the application nor the release of any
such sums shall cure or waive any default or notice of default hereunder or invalidate any act
done pursuant to such notice.
7. Permitted Acts of Beneficiarv. That without affecting the liability of any
person, including Trustor (other than any person released pursuant hereto), for the payment of
any indebtedness secured hereby, Beneficiary is authorized and empowered as follows:
Beneficiary may at any time, and from time to time, either before or after the maturity of the
obligations secured hereby, and without notice (a) release any person liable for the payment of
any of the indebtedness, (b) make any agreement extending the time or otherwise altering the
terms of payment of any of the indebtedness, (c) accept additional security therefor of any kind,
or (d) release any property, real or personal, securing the indebtedness.
8. Reconvevance of Elil!ible Prooertv. That upon written request of
Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this
Agency Deed of Trust and the Note to Trustee for cancellation and retention, and upon payment
of its fees, Trustee shall reconvey, without warranty, the Eligible Property then held hereunder.
The recitals in such reconveyance of any matters of fact shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the person or
persons legally entitled thereto."
Agency Deed of Trust
Exhibit "L"
6
9. Default and Trustee's Sale. That upon the occurrence of an "Event of
Default" under this Agency Deed of Trust (as defined in Sectio~ 18 below) Beneficiary may
declare all principal remaining unpaid, all interest then earned and remaining unpaid, and all
sums other than principal or interest secured hereby, immediately due and payable (and
thenceforth at the option of the Beneficiary and except as otherwise prohibited by law, the entire
balance of the unpaid principal shall thereafter bear interest at the Default Rate of interest per
annum set forth in the Note until paid) and may proceed to exercise the power of sale granted by
this Agency Deed of Trust by delivery to Trustee of written declaration of default and demand
for sale and of written notice of default and of election to cause to be sold said Eligible Property,
which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with
Trustee this Agency Deed of Trust, the Note and all documents evidencing expenditures secured
hereby.
After the lapse of such time as may then be required by law following the recordation of
said notice of default, and notice of sale having been given as then required by law, Trustee,
without demand on Trustor, shall sell the Eligible Property at the time and place fixed by it in
said notice of sale, either as a whole or in separate parcels, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United States, payable at
time of sale. Trustee may postpone sale of all or any portion of the Eligible Property by public
announcement at such time and place of sale, and from time to time thereafter may postpone
such sale by public announcement at the time fixed by the preceding postponement. Trustee
shall deliver to such purchaser its deed conveying the Eligible Property so sold, but without any
covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall
be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or'
Beneficiary, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee, including cost of evidence of title
in connection with sale, Trustee shall apply the proceeds of sale to payment of: first, all sums
expended by the Beneficiary under the terms hereof or under the Note, not then repaid, with
accrued interest at the Deferral Rate; second, all other sums then secured hereby; and the
remainder; if any, to the person or persons legally entitled thereto.
10. Substitute Trustees. Beneficiary, or any successor in ownership orany
indebtedness secured hereby, may from time to time, by instrument in writing, substitute a
successor or successors to any Trustee named herein or acting hereunder, which instrument,
executed by the Beneficiary and duly acknowledged and recorded in the Office of the Recorder
of the County of San Bernardino, and by otherwise complying with the provisions of California
Civil Code Section 2934a, or any successor section, shall be conclusive proof of proper
substitution of such successor Trustee or Trustees, who shall, without conveyance from the
Trustee predecessor, succeed to all its title, estate, right, powers and duties. Said instrument
Agency Deed of Trust
Exhibit "L"
7
must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Agency Deed of Trust is recorded and the name and address of the new Trustee.
11. Successors Bound. That this Agency Deed of Trust applies to, inures to
the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors, assigns, trustees and receivers. In this Agency Deed of Trust, whenever
the context so requires, the masculine gender includes the feminine and/or neuter, and the
singular number includes the plural.
12. Evidence of Title. That if, because of any default hereunder, or because of
the filing or contemplated filing of any legal proceedings affecting the Eligible Property,
Beneficiary deems it necessary to obtain an additional evidence of title or to cure any defect in
title, Beneficiary may procure such evidence or cure such defect, pay the cost thereof, and shall
have an immediate claim against Trustor therefor, together with a lien upon the Eligible Property
for the amount so paid, with interest at the Deferral Rate. Beneficiary is further authorized to
require an appraisal of the Eligible Property at any time that Beneficiary may reasonably request.
13. Default in Other Instruments: Bankruotcv. That default in the terms of
any other instrument securing the debt secured hereby, and/or the filing or other commencement
of any bankruptcy or insolvency proceedings including any assignment for the benefit of
creditors or other proceedings intended to liquidate or rehabilitate, by, for or against Trustor shall
after any applicable notice and cure period constitute default under this Agency Deed of Trust.
14. Statute of Limitations. That the pleading of any statute of limitations as a
defense to any and all obligations secured by this Agency Deed of Trust is hereby waived by the.
Trustor, to the full extent permissible by law.
15. Severabilitv. That the invalidity of anyone or more covenants, phrases,
clauses, sentences, paragraphs or sections of this Agency Deed of Trust shall not affect the
remaining portions of this Agency Deed of Trust or any part hereof and this Agency Deed of
Trust shall be constructed as if such invalid covenants, phrases, sentences, paragraphs or sec-
tions, if any, had not been inserted herein.
16. Order of Aoolication. That if the indebtedness secured hereby is now or
hereafter becomes further secured by a security agreement, deed of trust, pledge, contract of
guaranty or other additional securities, Beneficiary may to the full extent allowed by law, at its
option, exhaust anyone or more of said securities as well as the security hereunder, either
concurrently or independently and in such order as it may determine, and may apply the proceeds
received upon the indebtedness secured hereby without affecting the status of, or waiving any
right to exhaust all or any other security including the security thereunder and without waiving
any breach or default in any right or power, whether exercised hereunder or contained herein, or
in any such other security.
Agency Deed of Trust
Exhibit "L"
8
17. Covenants of Trustor.
(a) Audit bv State and Federal A2encies. In the event
the Loan is subjected to audit, monitoring or other inspections by appropriate state and federal
agencies, Trustor shall comply with such inspections and pay, on behalf of itself and Beneficiary,
the full amount of the cost to the inspecting agency of such inspections (unless such inspection
and any resulting liability arises solely from the gross negligence or willful misconduct of
Beneficiary).
(b) Pro2fam Evaluation and Review Trustor shall
allow Beneficiary's authorized personnel to inspect and monitor its facilities and program
operations as they relate to the Project or the Eligible Property, including the interview of
Trustor's staff, tenants, and other program participants, as reasonably required by Beneficiary
during the term of the Loan.
18. Default. The Trustor shall be in default under this Agency Deed of Trust
upon any of the following events which, if not cured within the applicable cure period provided,
if any, shall constitute an event of default hereunder ("Event of Default"): .
a. The failure of Trustor to payor perform any monetary covenant or
obligation hereunder or under the terms of the Note, the Master Agreement, the Development
Agreement or any other documents executed in connection therewith, without curing such failure
within ten (10) calendar days the date such payment is due. Notwithstanding anything herein to
the contrary, the herein described cure period shall not apply to a failure by Trustor to timely
repay the Loan at the Maturity Date of the Note;
b. The failure of Trustor to perform any nonmonetary covenant or
obligation hereunder or under the terms of the Master Agreement, the Development Agreement,
the Note or any other documents executed in connection therewith, without curing such failure
within thirty (30) calendar days after receipt of written notice of such default from Beneficiary
(or from any party authorized by Beneficiary to deliver such notice as identified by Beneficiary
in writing to Trustor) specifying the nature of the event or deficiency giving rise to the default
and the action required to cure such deficiency; provided, however, that if any default with
respect to a nonmonetary obligation is such that it cannot be cured within a 30-day period, it
shall be deemed cured if Trustor commences the cure within said 30-day period and diligently
prosecutes such cure to .completion thereafter. Notwithstanding anything herein to the contrary,
the herein described notice requirements and cure periods shall not apply to any Event of Default
described in Sections 18(c) through 18(h) below;
c. The material falsity of any representation or breach of any
warranty or covenant made by Trustor under the terms of this Agency Deed of Trust, the Note,
Agency Deed of Trust
Exhibit "L"
9
the Master Agreement, the Development Agreement or any other document executed in
connection therewith;
d. Trustor or any constituent member or partner, or majority
shareholder, of Trustor shall (a) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian or the like of its property, (b) fail to payor admit in writing its inability to
pay its debts generally as they become due, (c) make a general assignment for the benefit of
creditors, (d) be adjudicated a bankrupt or insolvent or (e) commence a voluntary case under the
Federal bankruptcy laws of the United States of America or file a voluntary petition that is not
withdrawn within ten (10) days of the filing thereof or answer seeking an arrangement with
creditors or an order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any bankruptcy or
insolvency proceeding;
e. If without the application, approval or consent of Trustor, a
proceeding shall be instituted in any court of competent jurisdiction, under any law relating to
bankruptcy, in respect of Trustor or any constituent member or partner, or majority shareholder,
of Trustor, for an order for relief or an adjudication in bankruptcy, a composition or arrangement
with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of Trustor or of all or any substantial part of Trustor's assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being
contested by Trustor, in good faith, the same shall (a) result in the entry of an order for relief or
any such adjudication or appointment, or (b) continue undismissed, or pending and unstayed, for
any period of ninety (90) consecutive days;
f. Trustor shall suffer or attempt to effect a "Transfer" (as defined in
Section 33 below) other than in full compliance with the terms of this Agency Deed of Trust.
g. Trustor shall be in default under the CC&Rs, the Senior Financing,
any Junior Financing or Other Financing (as all these terms are defined in the Development
Agreement ), or any other secured or unsecured obligation relating to the Project, unless the
default is cured or waived within the cure period, if any, applicable thereto under the terms of the
obligation which is in default; or
h. Following completion of the construction of the Project, voluntary
cessation of the operation of the Project for a continuous period of more than thirty (30) days or
the involuntary cessation of the operation of the Project in accordance with this Agency Deed of
Trust for a continuous period of more than sixty (60) days.
19. Acceleration. The entire principal and all accrued and unpaid interest on
the Note shall be due and payable as therein set forth; provided, however, that the entire balance
Agency Deed of Trust
Exhibit "L"
10
of the outstanding principal and all accrued and unpaid interest on the Note, together with any
outstanding interest and other amounts payable thereunder, shall, at the election of Beneficiary
and upon notice to Trustor thereof (except in the case of default described in Section 18 (c) or (d)
, in which case no notice shall be required), become immediately due and payable upon any
Event of Default as set forth in the Note, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by Trustor.
20. Breach bv Trustor. Cure bv Beneficiary or Trustee. In the event of
Trustor's failure to comply with any or all of the promises and agreements set forth in this
Agency Deed of Trust or to make any payment or to do any act as provided in this Agency Deed
of Trust, then Beneficiary or Trustee, but without obligation to do so and without notice to or
demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do
the same in such manner and to such extent as either in its sole judgment may deem necessary to
protect the security hereof (including, without limitation, to procure insurance and pay the
premiums therefor; to pay unpaid water rents, sewer service charges, and other governmental or
municipal charges and rates, and all or any part of the unpaid taxes, assessments, and reas-
sessments, if in its judgment the same are just and valid; to pay the cost of appraisals,
reappraisals, and extensions of title; to enter or have its agents enter upon the Eligible Property
whenever reasonably necessary for the purpose of inspecting the Eligible Property or making
repairs or installations as it deems necessary to preserve the Eligible Property or to protect the
same from vandalism, without thereby becoming liable as a trespasser or mortgagee or benefici-
ary in possession, and to pay for such repairs and installations). Beneficiary and Trustee are
hereby authorized to enter upon the Eligible Property for such purposes; to appear in and defend
any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; to pay, purchase, contest or compromise any encumbrance, charge or lien
which in the judgment of either appears to be prior or superior hereto; and, in exercising any
such powers, to pay necessary expenses, employ counsel of its choice and pay the reasonable
fees of such counsel. Trustor agrees to pay immediately and without demand all sums so
expended by Beneficiary or Trustee, with interest from the date of expenditure at the amount
allowed by law in effect at the date hereof, and that Beneficiary shall have a lien upon the
Eligible Property for the sums so expended and such interest thereon.
21. Security Agreement. That all property covered by this Agency Deed of
Trust be deemed to constitute real property or interests in real property to the maximum extent
permitted under applicable law. To the extent that any tangible property, equipment or other
property covered by this Agency Deed of Trust constitutes personal property, such personal
property shall constitute additional security. This Agency Deed of Trust shall create in
Beneficiary a security interest in such personal property and shall in respect thereof constitute a
security agreement (the "Security Agreement"). Beneficiary shall be entitled to all of the rights
and remedies in respect of any personal property included in the Eligible Property covered by
this Agency Deed of Trust afforded a secured party under the Uniform Commercial Code and
other applicable law. At Beneficiary's request Trustor will at any time and from time to time
Agency Deed of Trust
Exhibit "L"
11
furnish Beneficiary for filing financing statements signed by Trustor in form satisfactory to
Beneficiary. Trustor acknowledges and agrees that thirty (30) days' notice as to the time, place
and date of any proposed sale of any personal property shall be deemed reasonable for all
purposes. Trustor agrees that the Security Agreement created hereby shall survive the
termination or reconveyance of this Agency Deed of Trust unless Beneficiary executes
documentation expressly terminating the Security Agreement.
22. Assumption of Liabilitv. Except as provided in Section 33, the
assumption of liability for the payment of the indebtedness hereby secured, by any successor in
interest to Trustor in the Eligible Property (in the event Beneficiary elects not to accelerate the
repayment of the Loan pursuant to any transfer or disposition of the Eligible Property by
operation of law or otherwise) shall not release Trustor from any liability Trustor has hereunder
or under the other Agency Loan Documents for the payment of such indebtedness or any sums
advanced under and secured by this Agency Deed of Trust. Any forbearance or indulgence of
Beneficiary, or extensions of time for the payment of all or any part of the indebtedness secured
hereby, or the release of a part of the Eligible Property from the lien of this Agency Deed of
Trust, for, or without, payment of a consideration, shall not in any manner diminish or reduce the
liability of Trustor (subject to the nonrecourse provisions of Section 27) for the payment of the
indebtedness now or hereafter secured hereby; and that any payments made upon the said indebt-
edness shall be deemed to have been made on behalf and for the benefit of all parties obligated to
pay the same. The acceptance of payments in excess of the installments provided to be paid
upon the Note or the consideration paid for any. such release shall not alter or diminish the
obligation of Trustor to thereafter make payments in the amounts and on the dates provided
therein, until the same are fully paid.
23.. Future Advances. That upon the request of the Trustor or its successor in
ownership of the Eligible Property, Beneficiary may, at its option, at any time before full
payment of the Note secured hereby, make further advances to the Trustor or its successors in
ownership, and the same, with interest and late charges as permitted by law, shall be secured by
this Agency Deed of Trust; and provided further that if Beneficiary, at its option, shall make a
further advance or advances as aforesaid, the Trustor or its successorS in ownership agree to
execute and deliver to Beneficiary a note to evidence the same, payable on or before the maturity
of the indebtedness under the Note secured hereby and bearing such other terms as Beneficiary
shall require.
Trustor further acknowledges and agrees: that this Agency Deed of Trust is
intended to, and shall, secure not only the original indebtedness under the Note, but any and all
future advances made by Beneficiary to Trustor; that this Agency Deed of Trust shall secure any
unpaid balances of advances made with respect to the Eligible Property; that Beneficiary shall
have the benefit of all statutes now existing or henceforth enacted to assure repayment of any
such future advances plus interest thereon; that to secure the payment of said original
indebtedness and future advances Beneficiary shall also have a lien upon all other personal
Agency Deed of Trust
Exhibit "L"
12
property and securities now or hereafter in its possession belonging to Trustor; that all rights,
powers and remedies conferred upon Beneficiary herein are in addition to each and every other
right which Beneficiary has hereunder; that all rights, powers ~d remedies conferred upon
Beneficiary in equity or-by law may be enforced concurrently therewith; that Beneficiary shall be
subrogated to the rights and seniority of any prior lien paid or released by reason of the
application thereon of any of the proceeds hereof, and that each and all of the covenants,
agreements, and provisions hereof shall bind the respective heirs, executors, administrators,
successors, and assigns of Trustor and Beneficiary herein, and all others who subsequently
acquire any right, title, or interest in the Eligible Property, or to this Agency Deed of Trust and
the indebtedness secured hereby.
24. Caotions. That the captions of the sections of this Agency Deed of Trust
are for convenience only and shall not be considered in resolving questions of interpretation or
construction.
25. Estoooel Certificates. That Trustor shall from time to time at
Beneficiary's request furnish Beneficiary or any person designated by Beneficiary, a certified
statement in form reasonably satisfactory to Beneficiary confirming as of the date of the
certificate the unpaid principal balance and accrued interest on the Note and stating that Trustor
is not in default hereunder (or describing any default), and stating that Trustor has no defense,
right of set off or counterclaim in the payment of the indebtedness, or any part thereof, or the
observance or performance of any obligation (or describing any such defense, set off or
counterclaim). Any purchaser or assignee of the Note or this Agency Deed of Trust or any
interest therein may rely on such certificate.
26. Books and Records. That Trustor and all subsequent owners of the
Eligible Property, if any, shall keep and maintain full and correct books and records showing in
detail the earnings and expenses of the Eligible Property and shall permit Beneficiary at no
expense to Trustor or its representatives to examine such books and records and all supporting
data and vouchers, from time to time at reasonable times, on request, at Trustor's offices or at
another mutually agreed upon location.
27. Obligation Nonrecourse. Except to the extent any Event of Default
hereunder results directly or indirectly from any fraud or intentional and material
misrepresentation by Borrower in connection with the Loan, the Loan is a nonrecourse obligation
of Trustor and in the event of the occurrence of an Event of Default, Beneficiary's only recourse
under this Agency Deed of Trust shall be against the Eligible Property, the proceeds thereof, the
rents and other income arising from its use and occupancy as provided in the Agency Deed of
Trust, and any other collateral given to Beneficiary as security for repayment of the Loan.
Agency Deed of Trust
Exhibit "L"
13
28. Fixture Filing. This Agency Deed of Trust is also a fixture filing with
respect to the personal property which is or is to become fixtures on the Eligible Property, and is
to be recorded in the real property records of San Bernardino County, California
29. Assie:nment of Rents. All of the existing and future rents, royalties,
income, and profits of the Eligible Property that arise from its use or occupancy are hereby
absolutely and presently assigned to Beneficiary. However, until Trustor is in default under this
Agency Deed of Trust, Trustor will have a license to collect and receive those rents, royalties,
income and profits. Upon any Event of Default by Trustor, Beneficiary may terminate Trustor's
license in its discretion, at any time, without notice to Trustor, and may thereafter collect the
rents, royalties, income and profits itself or by an agent or receiver. No action taken by
Beneficiary to collect any rents, royalties, income or profits will make Beneficiary a "mortgagee-
in-possession" of the Eligible Property, unless Beneficiary personally or by agent enters into
actual possession of the Eligible Property. Possession by a court-appointed receiver will not be
considered possession by Beneficiary. All rents, royalties, income and profits collected by
Beneficiary or a receiver will be applied first to pay all expenses of collection, and then to the
payment of all costs of operation and management of the Eligible Property, and then to the
payment of the indebtedness and obligations secured by the Agency Deed of Trust in whatever
order Beneficiary directs in its absolute discretion and without regard to the adequacy of its
security. If required by Beneficiary, each lease or occupancy agreement affecting any of the
Eligible Property must provide, in a manner approved by Beneficiary, that the tenant will recog-
nize as its lessor any person succeeding to the interest of Trustor upon any foreclosure of this
Agency Deed of Trust. The expenses (including receivers' fees, if any, compensation to any
agent appointed by Beneficiary, counsel fees, costs and compensation to any agent appointed by
Beneficiary, and disbursements) incurred in taking possession and making such collection, shall.
be deemed a portion of the expense of this trust.. The entering upon and taking possession of the
Eligible Property, and/or the collection of such rents, issues and profits and the application
thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice. Beneficiary may exercise anyone or more of the
remedies in this section without waiving its right to exercise any such remedies again or for the
first time in the future. The foregoing shall be subject to the provisions of applicable law.
30. Applicable Law. This Agency Deed of Trust shall be governed by, and
construed in accordance with, the laws of the State of California.
31. Approvals. Except with respect to those matters set forth hereinabove
providing for the Beneficiary's approval, consent or determination to be at the Beneficiary's "sole
discretion" or "sole and absolute discretion," the Beneficiary hereby agrees to act reasonably
with regard to any approval, consent, or other determination given by the Beneficiary hereunder.
The Beneficiary agrees to give Trustor written notice of its approval or disapproval following
submission of items to the Beneficiary for approval, including, in the case of any disapproved
item, the reasons for such disapproval. Any consent to a transfer under Section 33 of this
Agency Deed of Trust
Exhibit "L"
14
Agency Deed of Trust, and any other consent or approval by Beneficiary under this Agency
Deed of Trust or any of the other Agency Loan Documents, may be given by Beneficiary's
Executive Director without action of Beneficiary's governing board unless the Executive
Director in his or her sole discretion elects to refer the matter to the board.
32. Good Faith and Fair DealinlZ. The Beneficiary and Trustor agree to
perform all of their obligations and the actions required of each hereunder in good faith and in
accordance with fair dealing.
33. Assignment oflnterest.
a. Without the prior written approval of the Beneficiary, which
approval the Beneficiary may withhold in its sole and absolute discretion, Trustor shall not (i)
sell, encumber, assign or otherwise transfer (collectively, "Transfer") all or any portion of its
interest in the Eligible Property or the Project (excluding tenant leases pursuant to the terms of
the Master Agreement), (ii) permit the Transfer of greater than 49% of its ownership and/or
control, in the aggregate, taking all transfers into account on a cumulative basis, or (iii) Transfer
any of its rights or obligations under the Agency Loan Documents. Notwithstanding the
foregoing, Beneficiary consents to the events described in the last paragraph of Section 20 of the
Master Agreement without Trustor obtaining any further consent of Beneficiary. Trustor hereby
agrees that any purported Transfer not approved by the Beneficiary as required herein shall be
ipso facto null and void, and no voluntary or involuntary successor to any interest of Trustor
under such a proscribed Transfer shall acquire any rights pursuant to the Master Agreement or
this Agency Deed of Trust.
b. At any time Trustor desires to effect a Transfer hereunder, Trustor
shall notify the Beneficiary in writing (the "Transfer Notice") and shall submit to the Beneficiary
for its prior written approval (i) all proposed agreements and documents (collectively, the
"Transfer Documents") memorializing, facilitating, evidencing and/or relating to the
circumstances surrounding such proposed Transfer, and (ii) a certificate setting forth
representations and warranties by Trustor and the proposed transferee to the Beneficiary
sufficient to establish and ensure that all requirements of this Section 33 have been and will be
met. No Transfer Documents shall be approved by the Beneficiary unless they expressly provide
for the assumption by the proposed transferee of all of Trustor's obligations under the Agency
Loan Documents. The Transfer Notice shall include a request that the Beneficiary consent to the
proposed Transfer and shall also include a request that Trustor be released from further
obligations under the Agency Loan Documents. The Beneficiary agrees to make its decision on
Trustor's request for consent to such Transfer, as promptly as possible, and, in any event, not
later than thirty (30) calendar days after the Beneficiary receives the last of the items required by
this Section 33. In the event the Beneficiary consents to a proposed Transfer, then such Transfer
shall not be effective unless and until the Beneficiary receives copies of all executed and binding
Transfer Documents which Transfer Documents shall conform with the proposed Transfer
Agency Deed of Trust
Exhibit "L"
15
Documents originally submitted by Trustor to the Beneficiary. From and after the effective date
of any such Transfer, Trustor shall be released from its obligations under this Agency Deed of
Trust and the other Agency Loan Documents accruing subsequent to such effective date.
c. Notwithstanding anything in this Agency Deed of Trust to the
contrary, Trustor agrees that it shall not be permitted to make any Transfer, whether or not the
Beneficiary consent is required therefor and even if the Beneficiary has consented thereto, if
there exists an Event of Default under this Agency Deed of Trust at the time the Transfer Notice
is tendered to the Beneficiary or at any time thereafter until such Transfer is to be effective.
d. The provisions of this Section 33 shall apply to each successive
Transfer and proposed transferee in the same manner as initially applicable to Trustor under the
terms set forth herein.
Agency Deed of Trust
Exhibit "L"
16
IN WITNESS WHEREOF, the undersigned have executed this Agency Deed of Trust as of the
date first above written.
TRUSTOR:
MARY ERICKSON COMMUNITY HOUSING, INC.,
a California Non-profit public benefit corporation
By:
Susan McDevitt, Director
BENEFICIARY:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body, corporate
and politic
By:
Emil A. Marzullo, Interim Executive Director
By:
Timothy J. Sabo, Agency Counsel
Agency Deed of Trust
Exhibit "L"
17
I":~.
.......
EXIllBIT 16M"
Agency CC&R's
52
'\p'lII~ABioolI2Oll9'G1->>OtNlry!ra..eo.-ily.......... -"'--'~c..td"'IIIIII~_
ECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
20 I North "E" Street, Suite 30 I
San Bernardino, CA 92401
Attn.: Director of Housing and
Cornmunity Development
(Space Above Line for Recorder's use)
This Agreement is recorded at the request and for the benefit of the Redevelopment Agency of
the City of San Bernardino and is exempt from the payment of a recording fee pursuant to
Government Code Section 6103.
EXHIBIT "M" TO MASTER AGREEMENT
COVENANTS. CONDITIONS. AND RESTRICTIONS
THIS AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND
RESTRICTIONS ("Agreement") is executed as of the _ day of ,20_ by and
between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public
body corporate and politic ("Agency"), and MARY ERICKSON COMMUNITY HOUSING,
INC.. a California Non-profit public benefit corooration ( "Owner"), with reference to the
following:
A. The Agency and Owner are parties to the Master Agreement ("Master
Agreement") dated as of the _day of. , 200_ and the
Development Agreement ("Development Agreement") dated as of the ~ day of .
20_, on the terms and conditions of which Owner shall borrow from the Agency, and the
Agency . shall lend to Owner, the original principal amount of
($ ) in NSP Funds ("Loan") for the
purpose of providing financing for the housing development described in the Development
Agreement (the "Project"). The Project will be developed on a site legally described on Exhibit
"A" to this Agreement (the "Eligible Property").
B. Unless otherwise expressly provided, all dermed terms used in this Agreement
shall have the dermed meanings provided for in the Master Agreement and the Development
Agreement.
NOW THEREFORE, in consideration of the representations, covenants, and
obligations of Owner contained in this Agreement, Owner, on behalf of itself and its successors
and assigns, hereby covenants and agrees as follows:
I
99596.3 388-6 613012009 3:16 PM .":,....,,,. ":,
~':.
(I) Use of the Elil!.ible Prooertv.
The Eligible Property will consist of _ multi-family residential units,
on approximately _ net acres. L) units shall be reserved for households whose
income is at or below 50% Area Median Income ("AMI"), and L) units shall
be reserved for households whose income is at or below _% AMI.
a. Limitations on Tenants. Notwithstanding anything to the contrary in
this Agreement, Owner hereby covenants on behalf of itself, and its successors and
assigns, which covenant shall run with the land and bind every successor and assign in
interest of Owner, that, throughout the Fifty-Five (55) year term of the CC&Rs, Owner
and such successors and assigns shall use the Eligible Property solely for the purpose of
constructing and operating the Proj ect as a residential development with the defined
number of dwelling units and, with respect to the units designated to be assisted as
consideration for the Loan ("Assisted Units"), L...) Assisted Units shall be
in accordance with the tenant income levels specified in this Agreement.
All Assisted Units shall be rented only at an Affordable Housing Cost to
Very Low-Income Households hereinafter defined (households meeting the applicable
criteria are occasionally referred to as "Eligible Households" and persons within any
group occasionally referred to as "Eligible Tenant" or "Eligible Tenants") and as outlined
in the following table:
Household Income 1-BR 2-BR TOTAL Total NSP
Level (% of Area Median units units UNITS Assisted
Incomel Units
Fiftv Percen~~[o)
Percent L%L --------
Per~ent U~L
Manager's Unit
TOTAL
"Very Low-Income Households" shall mean persons and
families whose gross annual household incomes do not exceed the qualifying limits for
lower income families as established and amended from time to time pursuant to Section
8 of the United States Housing Act of 1937, which qualifying limits are otherwise set
forth in Section 6932 of the California Code of Regulations and are equivalent to eighty
percent (50%) of Area Median Income, adjusted for family size and other adjustment
factors by the United States Department of Housing and Urban Development (HUD).
"Affordable Housing Cost" shall mean, as to each Eligible
Tenant, a rental rate which results in monthly payments which, including a reasonable
utility allowance, do not exceed for a Very Low-Income Household, the product of thirty
percent (30%) times fifty percent (50%) of Area Median Income adjusted for family size
appropriate to the Assisted Unit; and
2
99596.3 388-6 613012009 3:16 PM - - - ' "~'
}~~.)-
...",
f.".~
"Area Median Income" shall mean the median income for
the Riverside/San Bernardino/Ontario Metropolitan Statistical Area, adjusted for family
size as periodically adjusted by HOD, or any successor entity designated under state law
as responsible for establishing such Area Median Income.
Owner shall specifically provide in each Assisted Unit
lease and shall strictly enforce the requirement that each Assisted Unit be occupied at all
times by the eligible household who has leased that Assisted Unit, and that any other
occupant of the unit be another qualified member of the. lessee's household. The Agency
shall be identified as a third party beneficiary of that covenant and shall have the right to
directly enforce that restriction in the event Owner fails to do so. Prior to execution of
any Assisted Unit lease with respect to the Project, Owner shall submit to the Agency and
obtain its written approval of a standard form occupancy lease and Owner shall thereafter
use the approved form for all leases of Assisted Units in the Project, with only such
further modifications thereto as are first submitted to and approved in writing by the
Agency.
~"""'.'.
b. Tenant Selection Process: Reoorts and Records ConcemiIu!
Tenancies. Owner shall maintain such records and satisfy such reporting requirements as
may be reasonably imposed by the Agency to monitor compliance with the tenanting
requirements described in Paragraph (l)a above, including without limitation the
requirement that Owner deliver reports to the Agency commencing at the close of the
initial occupancy of the Project, and continuing annually thereafter, setting forth the name
of each tenant, the unit occupied and the income of the tenant and the amount of rent
payable by each tenant. Owner shall also be required to have each prospective tenant
complete a rental application prior to occupancy and to obtain evidence from each such
tenant as may be reasonably required by the Agency to certify such tenant's qualification
for occupancy of the Project. Owner's 'obligation to provide such reports shall remain in
force and effect for the same duration as the use covenants set forth in this Paragraph (1).
,~~c._ .,.
(2) Management of Proiect. Subject to the terms and conditions contained
hereinbelow, Owner shall at all times during the operation of the Project pursuant to this
Agreement retain an entity to perform the management and/or supervisory functions
("Manager") with respect to the operation of the Project, including day-to-day administration,
maintenance and repair. Owner shall, before execution or any subsequent amendment or
replacement thereof, submit and obtain The Agency's written approval (which shall not be
unreasonably withheld, conditioned or delayed) of a management contract ("Management
Contract") entered into between Owner and an entity ("Management Entity") reasonably
acceptable to the. Subject to any regulatory or licensing requirements of any other applicable
governmental agency, the Management Contract may be for a term of up to fifteen (15) years
and may be renewed for successive terms in accordance with its terms, but may not be amended
or modified without the written consent of the Agency. The Management Contract shall also
provide that the Management Entity shall be subject to termination for failure to meet project
maintenance and operational standards set forth herein or in other agreements between Owner
and the Agency. Owner shall promptly terminate any Management Entity which commits or
allows such failure, unless the failure is cured within a reasonable period, but, in no event
3
99596.3 388-6 613012009 3:16 PM..'....~,. . .
-- >:'~.>.~,_,r
"
exceeding 60 calendar days from Management Entity's receipt of notice of the failure from
Owner or the Agency. Owner's obligation to retain a Management Entity shall remain in force
and effect for the same duration as the use covenants set forth in Paragraph (1) of this
Agreement.
(3) Ooerations and Maintenance. Owner hereby covenants on behalf of itself,
and its successors and assigns, which covenant shall run with the land and bind every successor
and assign in interest of Owner, that Owner and such successors and assigns shall use the
Eligible Property solely for the purpose of constructing and operating the Project and ancillary
improvements thereon, in accordance with and of the quality prescribed by this Agreement, the
Master Agreement, the Development Agreement and the Agency Deed of Trust (as defined in
the Development Agreement).
Owner covenants and agrees for itself, its successors and assigns, which
covenants shall run with the land and bind every successor or assign in interest of Owner, that
during development of the Eligible Property pursuant to this Agreement and thereafter, the
Eligible Property, nor any portion thereof, shall be improved, used or occupied in violation of
any Applicable Governmental Restrictions (as defined below) or the restrictions contained in this
Agreement. Furthermore, Owner and its successors and assigns shall not maintain, commit, or
permit the maintenance or commission on the Eligible Property, or any portion thereof, of any
nuisance, public or private, as now or hereafter defined by any statutory or decisional law
applicable to the Eligible Property, or any portion thereof.
As used herein, "Applicable Governmental Restrictions" shall mean and include
any and all laws, statutes, ordinances, codes, rules, regulations, directives, writs, injunctions,
orders, decrees, rulings, conditions of approval, or authorizations, now in force or which may
hereafter be in force, of any governmental entity, agency or political subdivision as they pertain
to the performance of this Agreement or development or operation of the Project, including
specifically but without limitation all code and other requirements of the jurisdiction in which the
Project is located; the California Environmental Quality Act; the laws specified in the
Development Agreement; fair housing laws; and applicable federal, state and local laws. Owner
shall indemnify, defend and hold the Agency harmless for any suit, cost, attorneys' fees, claim,
administrative proceeding, damage, award, fine, penalty or liability arising out of Owner's
failure to comply with any Applicable Governmental Restrictions, including, without limitation,
the nonpayment of any prevailing wages required to be paid in connection with the Project.
Owner shall, at its expense, (i) maintain all improvements and landscaping on the
Eligible Property in first-class order, condition, and repair (and, as to landscaping, in a healthy
and thriving condition) in accordance with the plans for the Project approved by the Agency in
accordance with the Development Agreement and all Applicable Governmental Restrictions, and
(ii) manage the Project and Project finances reasonably prudently and in compliance with
Applicable Governmental Restrictions so as to maintain a safe and attractive living environment
for Project residents.
99596.3 388~ 613012009 3:16 PM
4
(4) Performance of Maintenance.
a. Owner shall maintain in accordance with the Agency Standards, as
hereinafter defined, the private improvements, public improvements and landscaping to the
curbline(s) on and abutting the Eligible Property. Said improvements shall include, but not be
limited to, buildings, sidewalks and other paved areas, pedestrian lighting, landscaping, irrigation
of landscaping, architecturaI elements identifying the Eligible Property and any and all other
improvements on the Eligible Property and in the public right-of-way to the nearest curbline(s)
abutting the Eligible Property.
b. To accomplish the maintenance, Owner shall either staff or
contract with and hire licensed and qualified personnel to perfoml the maintenance work,
including the provision of labor, equipment, materials, support facilities, and any and all other
items necessary to comply with the requirements of this Agreement.
Agency Standards: The following standards ("Agency Standards") shall
be complied with by Owner and its maintenance staff, contractors or subcontractors
(i) Ordinary Maintenance Standards - Owner shall maintain
the Eligible Property in good repair, order and condition at all times in order to
assure that the Eligible Property is kept in a decent, safe, and sanitary condition,
and that the buildings, grounds, and equipment are to be maintained in a manner
that will preserve their condition.
(ii) Annual Inspection Standards - Owner shall annually
inspect the Eligible Property. The completed annual inspection will be
documented and reported to the Agency on an annual basis, and at the end of each
year Owner shall submit to the Agency a declaration certifying that the annual
inspection was performed at the Eligible Property. Owner shall retain records of
the inspection and make them available for review by the Agency at the request of
the Agency.
(iii) Extraordinary Maintenance. Owner shall perform any
extraordinary repairs or replacements necessary in order to maintain the Eligible
Property, including extraordinary replacement of equipment, betterment, and
additions. Extraordinary repairs or replacement consists of major repairs and
rehabilitation involving substantial expenditures which usually are needed only at
relatively long intervals of time, or are caused by such occurrences as earthquake,
fire, obsolescence and, in some instances, neglect. Such items as replacement of
roofs, replacement of corroded gas and heating lines, and rehabilitation of
landscaping (ground-cover) would be considered in this category.
(iv) The Agency may enter and inspect the premises at any time
after notifying Owner 72 hours prior to the planned inspection, and said notice
shall be delivered to Owner at the address indicated in paragraph 17(e) below.
99596.3 388-6 613012009 3:16 PM
5
(5) Failure to Maintain Imorovements. In the event Owner does not maintain
the Eligible Property to the curbline in the manner set forth herein and in accordance with the
Agency Standards, the Agency shall have the right to maintain such private and/or public
improvements, or to contract for the correction of such deficiencies, after (i) written notice to
Owner stating that the condition of said improvements does not meet with the Agency Standards
and specifying the deficiencies and the actions required to be taken by Owner to cure the
deficiencies ("Deficiency Notice"); and (ii) the lapse of the applicable "Cure Period," as
hereinafter defined. Upon receipt of the Deficiency Notice, Owner shall have thirty (30)
calendar days within which to correct, remedy or cure the deficiency, unless such deficiency is
not capable of being cured within such 30 day period, then such amount of time as is needed to
cure such deficiency provided owner is diligently pursuing cure; provided however, if the
Deficiency Notice states the problem is urgent relating to public health and safety, then Owner
shall have forty-eight (48) hours to rectify the problem (collectively the "Cure Periods'').
In the event Owner fails to correct, remedy, or cure such maintenance deficiency
after the Deficiency Notice and after the applicable Cure Period has lapsed, then the Agency
shall have the right to maintain such improvements. Owner agrees to pay the Agency, upon
demand, charges and costs incurred by the Agency in connection with such maintenance. Until
so paid, the Agency shall have a lien on the Eligible Property for the amount of such
maintenance charges and costs, which lien shall be perfected by the recordation of a "Notice of
Claim of Lien" against the Eligible Property. Upon recordation of a Notice of a Claim of Lien
against the Eligible Property, such lien shall constitute a lien on the 'fee estate in and to the
Eligible Property prior and superior to all other monetary liens except: (i) all taxes, bonds,
assessments, and other levies which by law would be superior thereto; (ii) the lien or charges of
any mortgage, deed of trust, or other security interest then of record made in good faith and for
value, it being understood that the priority for any such lien for costs incurred to comply with
this Agreement shall date from the date of the recordation of the Notice of Claim of Lien. Any
such lien shall be subject and subordinate to any lease or sublease of the interest of Owner in the
Eligible Property or any portion thereof and to any easement affeCting the Eligible Property or
any portion thereof entered into at any time (either before or after) the date of recordation of such
a Notice. Any lien in favor of the Agency created or claimed hereunder is expressly made
subject and subordinate to any mortgage or deed of trust made in good faith and for value,
recorded as, of the date of the recordation of the Notice of Claim of Lien describing such lien as
aforesaid, and no such lien shall in any way defeat, invalidate, or impair the obligation or priority
of any such mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly
subordinates his interest, or record, to such lien. No lien in favor of the Agency created or
claimed hereunder shall in any way defeat, invalidate, or impair the obligation or priority of any
lease, sublease or easement unless such instruntent is expressly subordinated to such lien. Upon
foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior
to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure-purchaser shall
take title to the Eligible Property free of any lien imposed herein by the Agency that has accrued
up to the time of the foreclosure sale, and upon taking title to the Eligible Property, such
foreclosure-purchaser shall only be obligated to pay costs associated with this Agreement
accruing after the foreclosure-purchaser acquires title to the Eligible Property. If the Eligible
Property is ever legally divided with the written approval of the Agency and fee title to various
portions of the Eligible Property is held under separate ownerships, then the burdens of the
.99596.3 388-6 613012009 3:16 PM
'~C'
6
maintenance obligations set forth herein and in. the Agreement and the charges levied by the
Agency to reimburse the Agency for the cost of undertaking such maintenance obligations of
Owner and its successors and the lien for such charges shall be apportioned among the fee
owners of the various portions of the Eligible Property under different ownerships proportionate
to the square footage of the land contained in the respective portions of the Eligible Property
owned by them. Upon apportionment, no separate owner of a portion of the Eligible Property
shall have any liability for the apportioned liabilities of any other separate owner of another
portion of the Eligible Property, and the lien shall be similarly apportioned and shall only
constitute a lien against the portion of the Eligible Property owned in fee by the owner who is
liable for the apportioned lien and against no other portion of the Eligible Property. Owner
acknowledges and agrees the Eligible Property may also pursue any and all other remedies
available in law or equity. Owner shall be liable for any and all reasonable attorneys' fees, and
other legal costs or fees incurred in collecting said maintenance costs.
(6) [Reserved.]
(7) Owner's Oblil!ation to Refrain From Discrimination. There shall be no
discrimination against or segregation of any person, or group of persons, on account of race,
color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Eligible Property, nor shall Owner itself or
any person claiming under or through it establish or permit any such practice or practices of dis-
crimination or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sub lessees, or vendees of the Eligible Property or any portion
thereof. The nondiscrimination and nonsegregation covenants set forth herein shall remain in
effect in perpetuity.
Owner shall refrain from restricting the rental, sale or lease of the Eligible
Property or any portion thereof on the basis of race, color, creed, religion, sex, marital status,
national origin, or ancestry of any person. All such deeds, leases or contracts shall contain or be
subject to substantially the following nondiscrimination or nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or herself,
and his or her heirs, executors, administrators and assigns, and all persons claiming under
or through them, that there shall be no discrimination against or segregation of, any
person or group of persons on account of race, color, creed, religion, sex, marital status,
national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the land herein conveyed, nor shall the grantee or any person claiming
under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein
conveyed. The foregoing covenants shall run with the land."
b. In leases: "The lessee herein covenants by and for himself or herself,
and his or her heirs, executors, administrators and assigns, and all persons claiming under
or through him or her, and this lease is made and accepted upon and subject to the
following conditions: That there shall be no discrimination agl!inst or segregation of any
99596.3 388-9 613012009 3:16 PM
.....~~.::
7
;;0'.;.
person or group of persons, on account of race, color, creed, religion, sex, marital status,
national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy,
tenure, or enjoyment of the land herein leased nor shall the lessee himself or herself; or
any person claiming under or through him or her, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location,
number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the
land herein leased."
c. In contracts: "There shall be no discrimination against or segregation
of any person or group of persons, on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the premises, nor shall the parties to this contract or any person
claiming under or through them, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or
occupancy of tenants, lessees, subtenants, sublessees, or vendees of the premises."
Nothing in this Paragraph shall be construed or understood to limit, restrict or in
any way waive the income requirements described in this Agreement.
(8) Covenants Run With the Land: Duration of Covenants. The covenants
and agreements established in this Agreement shall be covenants running with the land and shall,
without regard to technical classification and designation, be binding on Owner and any
successor-in-interest to Owner's interest in the Eligible Property, or any part thereof, for the
benefit of and in favor of the agency and its successors and assigns. The covenants of this
Agreement shall remain in effect through the Term, notwithstanding the repayment of the Loan
by Owner prior to the Maturity Date. The covenants contained in Paragraph 7 of this Agreement
shall remain in effect in perpetuity.
The Improvements to the curbline(s) and the maintenance thereof touch and
concern the Eligible Property and inure to the benefit of any and all present or successive owners
of the Eligible Property. Therefore, whenever the word "owner" is used herein, it shall include
the owner as of date of execution of this Agreement, and any and all successor owners or assigns
of the Eligible Property, and the provisions hereof are expressly binding upon all such successive
owners and.assigns and the parties agree all such provisions shall run with the land. The Agency
shall cause a fully executed copy of this Agreement to be recorded in the Office of the San
Bernardino County Recorder. Notwithstanding the foregoing, in the event Owner or its
successors or assigns shall convey its fee interest in all or any portion of the Eligible Property,
the conveying owner shall be free: from and after the date of recording such conveyance of all
liabilities, respecting the performance of the restrictions, covenants or conditions contained in
this Agreement thereafter to be performed with respect to the Eligible Property, or any part
thereof, it being intended that the restrictions, covenants and conditions shall be binding upon the
record owners of the Eligible Property only during such time as that person is the owner of the
Eligible Property, provided that the conveying owner shall remain liable for any actions prior to
the date of the conveyance. .
:
,
,.-.:.
.,
8
99596.3 388~ 613012009 3:16 PM '\~
'F4.$~.
... ~~~~~
(9) Enforcement. In amplification and not in restriction of the provisions set
forth hereinabove, it is intended and agreed that the Agency shall be deemed the beneficiary of
the terms and provisions of this Agreement and of the restrictions and covenants running with
the land for and in its own right and for the purposes of protecting the interests of the community
and other parties, public or private, in whose favor and for whose. benefit the covenants running
with the land have been provided. Each covenant of Owner, shall, without regard to technical
classification and designation, inure to the benefit of the successors, transferees and assigns of
the Agency for the entire period during which such covenants shall be in force and effect, and
shall be binding upon the successors, transferees and assigns. of Owner, whether by merger,
consolidation, sale, transfer, liquidation or otherwise. Each covenant in favor of the Agency is
for the benefit of the real property owned by the Agency in the area surrounding the Eligible
Property. The covenants herein running with the land shall also be equitable servitudes upon the
Eligible Property and each part thereof and shall bind each and every person having any interest
in the Eligible Property or part thereof, whether such interest is fee, easement, leasehold,
beneficial or otherwise, and each successor or assign of such person having any such interest in
the Eligible Property or part thereof. The Agency shall have the right if any of the cov~ts set
forth in this Agreement which are provided for its benefit are breached, to exercise all rights and
remedies and to maintain any actions or suits at law or in equity or other proper proceedings to
enforce the curing of such breach to which it may be entitled. In the event that suit is brought for
the enforcement of this Agreement or as the result of any alleged breach hereof, the prevailing
party or parties in such suit shall be entitled to recover their reasonable attorneys' fees from the
losing party or parties, and any judgment or decree rendered in such proceedings shall include an
award thereof. Except for the Agency, the covenants and restrictions contained in this
Agreement shall not benefit or be enforceable by any owner of any sother real property or any
person or entity having any interest in any such other real property.
(10) Compliance with Law. Owner shall comply with all Applicable
Governmental Restrictions relating to the uses of or condition of the Eligible Property private
improvements and public improvements to the curbline(s). Local laws for the purposes of this
paragraph shall include only those ordinances which are nondiscriminatory in nature and
applicable to the public welfare, health, safety and aesthetics. If any new local laws relating to
the uses of or condition of the improvements create a condition or situation that constitutes a
lawful nonconforming use as defined by local ordinance with respect to the Eligible Property or
any portion thereof, then so long as the lawful nonconforming use status remains in effect (i.e.,
until such lawful status is properly terminated by amortization as provided for in the new local
law or otherwise), Owner shall be entitled to enjoy the benefits of such lawful nonconforming
use pursuant to the lawful nonconforming uses ordinance.
(II) Indemnification and Insurance.
a. Indemnification. In the event that Owner is not acting as a Design
Professional, Owner agrees to indemnify, defend and save harmless the Agency, and their
elected and appointed officials, officers, representatives, employees, and agents (hereinafter
collectively referred to as "Agents"), from and against any and all liability, demands, damages,
claims, causes of action, fees (including reasonable attorney's fees and costs and expert witness
fees), and expenses, including, but not limited to, claims for bodily injury, property damage, and
99596.3 388-6 613012009 3:16 PM
9
death (hereinafter collectively referred to as "Liabilities"), that arise out of, pertain to, or relate to
this Agreement, the services and/or materials provided pursuant to this Agreement, the Eligible
Property, or Project. Owner shall not be required to indemnify, defend, and save harmless the
Agency and its Agents from any Liabilities that arise from the active negligence, sole negligence
or willful misconduct of the Agency, Agency's agents, servants, or independent contractors who
are directly responsible to the Agency's. Such indemnification language shall also be
incorporated in Owner's contracts with any general contractors and subcontractors in favor of the
Agency.
In the event that Owner is acting as a Design Professional, Owner agrees
to indemnify, defend and save harmless the Agency and their Agents from and against any and
all Liabilities that arise out of,. pertain to, or relate to the negligence, recklessness, or willful
misconduct of Owner. Such indemnification language, in favor of the Agency, shall also be
incorporated in Owner's contracts with any Design Professionals in favor of the Public Agency.
These indemnification provisions shall remain in full force and effect and
survive the cancellation, termination and/or expiration of this Agreement: Owner agrees to
require any entities with which it contracts to agree to and abide by the above mentioned
indemnification requirements in favor of the Agency, as applicable to each of them.
b. Insurance. Without limiting Owner's indemnifications of the Agency
provided in this Agreement, Owner shall procure and maintain at its own expense the insurance
described in this section for the duration of this Agreement, unless otherwise set forth herein.
Such insurance shall be secured from carriers admitted in California, or authorized to do business
in California. Such carriers shall be in good standing with the California Secretary of State's
Office and the California Department of Insurance. Such carriers must be approved by the
California Department of Insurance and must be included on the California Department of
Insurance List of Eligible Surplus Line Insurers (hereinafter "LESLI"). Such carriers must have
a minimum rating of or equivalent to A(v) in Best's Insurance Guide. Owner shall, concurrent
with the execution of this Agreement, deliver to the Agency certificates of insurance with
original endorsements evidencing the general liability, automobile insurance, worker's
compensation and property insurance coverage required by this Agreement at such time that such
exposures are at risk, but in no event later than the Close of Escrow. The certificate and
endorsements shall be signed by. a person authorized by the insurers to bind coverage on its
behalf. The Agency reserves the right to require complete certified copies of all policies at any
time. Said insurance shall be in a form acceptable to the Agency and may provide for such
deductibles as may be acceptable to the Agency. In the event such insurance does provide for
deductibles or self-insurance, Owner agrees that it and/or the entities with which it contracts, will
defend, indemnify and hold harmless the Agency, its elected and appointed officers, officials,
representatives, employees, and agents in the same manner as they would have been defended,
indemnified and held harmless if full coverage under any applicable policy had been in effect.
Each such certificate shall stipulate that the Agency is to be given at least thirty (30) days'
written notice in advance of any cancellation or any reduction in limit(s) for any policy of
insurance required herein. Owner shall give the Agency immediate notice of any insurance
claim or loss which may be covered by insurance. Owner represents and warrants that the
insurance coverage required herein will also be provided by Owner's general contractors as
detailed below.
99596.3 388-6 613012009 3:16 PM
10
The aforementioned insurance policies shall be primary insurance with respect to the Agency.
The aforementioned insurance policies shall contain a waiver of subrogation for the benefit of
the Agency. Failure on the part of Owner and any general contractors hired by owner to perform
work on the Eligible Property, to procure or maintain the insurance coverage required herein
shall constitute a material breach of this Agreement pursuant to which the Agency may
immediately terminate this Agreement and exercise all other rights and remedies set forth herein,
at its sole and absolute discretion, and without waiving such default or limiting the rights or
remedies of the Agency, procure or renew such insurance and pay any and all premiums in
connection therewith and all monies so paid by the Agency shall be immediately repaid by the
Owner to the Agency upon demand including interest thereon at the Default Rate. In the event
of such a breach, the Agency shall have the right, at its sole. election, to participate in and control
any insurance claim adjustment or dispute with the insurance carrier. Owner's failure to assert or
delay in asserting any claim shall not diminish or impair the Agency's rights against the Owner
or the insurance carrier.
When Owner is naming the Agency as additional insureds on any of the commercial general
liability insurance policies set forth herein, then the additional insured endorsement shall contain
language similar to the language contained in ISO form CG 20 10 10 OJ. When any entity, with
which Owner is contracting, is naming the Public Agencies as additional insureds on any of the
commercial general liability insurance policies set forth herein, then the additional insured
endorsement shall contain language similar to the language contained in ISO form CG 20 10 II
85.
The following insurance policies shall be maintained by Owner and any General Contractor with
which Owner contracts for the duration of this Agreement unless otherwise set forth herein:
(i) General Liabilitv: For projects in which the direct construction costs are
projected to be less than $15,000,000, Commercial General Liability insurance, including
coverage for bodily injury, property damage and contractual liability, with a combined single
limit not less than One Million Dollars ($1,000,000) for each occurrence (Two Million Dollars
($2,000,000) General Aggregate), including, but not limited to, products and completed
operations coverage. The Agency and their elected and appointed officers, officials,
representatives, employees, and agents shall be named as additional insureds on such policy.
Owner shall require its general contractor to carry Commercial General Liability insurance of not
less than One Million Dollars ($1,000,000) for each occurrence (Two Million Dollars
($2,000,000) General Aggregate), including, but not limited to, products and completed
operations protection. Owner shall further require its general contractor to provide additional
insured status for Owner and Agency and their elected and appointed officers, officials,
representatives, employees, and agents, on such policy. If required by the Agency from time to
time, Owner shall increase the limits of Owner's liability insurance to reasonable amounts
necessary for owners of improvements similar to the Eligible Property. The policy shall contain
a waiver of subrogation for the benefit of the Agency.
(ii) PrODertv Insurance: "Special Form" property insurance coverage, which shall
include, without limitation, builders risk insurance and insurance against the perils of fire and
physical loss or damage including, without duplication of coverage, theft, vandalism, malicious
99596.3 388-6 613012009 3:16 PM
"
''''"l:;.
11
mischief, collapse, flood, false work, testing and startup, temporary buildings and debris removal
including demolition occasioned by enforcement of any applicable legal requirements. The
amount of the property coverage shall at all times exceed the full replacement value of materials
supplied or installed by others and all existing structures, improvements and fixtures on the
Property. The insurer shall waive any coinsurance via an "agreement" endorsement. Said.
insurance shall be maintained for the duration of this Agreement. The Agency and its elected
and appointed officers, officials; representatives, employees, and agents shall be named as
additional insureds on such policy.
(iii)Workers' Comvensation: Owner's employees, if any, shilll be covered by Workers'
Compensation insurance in an amount and in such form as to meet all applicable requirements of
the Labor Code of the State of California and Employers Liability limits up to One Million
Dollars ($1,000,000) per accident. Owner shall require that the identical worker's compensation
insurance requirements be incorporated into Owner's contract with any general contractors with
which it contracts in relation to the Project. Said entities shall maintain the insurance for the
duration of this Agreement or the duration of the construction that is the subject of their contracts
with Owner, whichever is greater.
(iv)Automobile Liability: Combined single limit automobile liability insurance up to One
Million Dollars ($1,000,000) per accident for bodily injury and property damage, covering
owned (if any), non-owned and hired vehicles. Owner shall require that the identical automobile
liability insurance requirements be incorporated into Owner's contract with any general
contractors with which it contracts in relation to the Project. Said entities shall maintain the
insurance for the duration of this Agreement or the duration of the construction that is the subject
of their contracts with Owner, whichever is greater. The Agency and its elected and appointed
officers, officials, representatives, employees, and agents shall be named as additional insureds
on such policies.
(12) Intentionally Omitted
(13) Waiver. Failure or delay by either party to perform any term or provision
of this Agreement constitutes a default under this Agreement. The aggrieved party shall give
written notice of the default to the party in default in accordance with Paragraph (16)e hereof.
The defaulting party shall no longer be in default if the defaulting party cures such default within
thirty (30) calendar days after receiving the Default Notice; provided, however, that if such
default cannot be reasonably cured within such thirty (30) day period, the defaulting party shall
be given such longer period as reasonably necessary (which in the case of a default by Owner
shall be as reasonably determined by the Agency) and the defaulting party shall no longer be in
default if it commences to cure such default within such thirty (30) day period and completes
such cure with reasonable and due diligence.
The waiver by one party of the performance of any covenant, condition, or
promise shall not invalidate this Agreement nor shall it be considered a waiver by such party of
any other covenant, condition or promise hereunder. The exercise of any remedy shall not
preclude the exercise of other remedies the Agency or Owner may have at law or at equity.
99596.3 388-6 613012009 3:16 Jlt,(
'''~';'<
;.-,
12
(14) Modification. This Agreement may be modified only by subsequent
mutual written agreement executed by Owner and the Agency.
(15) Intentionallv Omitted.
(16) Miscellaneous Provisions.
a. Interoretation. The provisions of this document shall be liberally
construed to effectuate its purpose. Time is of the essence of this Agreement.
b. Severability. Invalidation of any of the covenants, conditions,
restrictions, or other provisions contained in this Agreement by judgment or court
order shall in no way affect any of the other covenants, conditions, restrictions, or
provisions hereof, which shall remain in full force and effect.
c. Headings. The caption headings of the various sections and
paragraphs of this Agreement are for convenience and identification only, and
shall not be deemed to limit or define the contents of their respective sections or
paragraphs.
d. Effective Date. This Agreement shall take effect upon its
recording in the Office of San Bernardino County Recorder.
e. Notices. Formal notices, demands, and communications between
the Agency and Owner shall be given either by personal service, by overnight
courier, or by mailing in the United States mail, certified mail, postage prepaid,
return receipt requested, addressed to the principal. offices of the Agency or
Owner, as follows:
If to the Agency:
Redevelopment Agency of the City of San Bernardino.
201 North "E" Street, Suite 301
San Bernardino, California 9240 I
Attn: Executive Director
With a copy to:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Director of Housing and Community Development
If to Owner:
Fax No.
13
99596.3 388-6 613012009 3:16 PM
-.,~.
With a copy to:
Attn:
Fax No.
Notices shall be effective upon receipt, if given by personal delivery, the
earlier of (i) three (3) business days after deposit with United States Mail, or (ii)
the date of actual receipt as evidenced by the return receipt, if delivered by
certified mail, and one (I) day after deposit with the delivery service, if delivered
by overnight guaranteed delivery service. Each party shall promptly notify the
other party of any change( s) of address to which notice shall be sent pursuant to
this Agreement.
f. Exhibits. Each Exhibit mentioned in this Agreement is attached
hereto and incorporated herein by this reference. .
g. Execution in Countemarts. The parties may execute this document
in two or more counterparts; each counterpart shall be deemed an original
instrument as against any party who has executed it.
99596.3 388-6 613012009 3:16 PM
14
IN WITNESS WHEREOF, the Agency and Owner have caused this instrwnent to be
executed on their behalf by their respective officers hereunto duly authorized as of date first
written above.
AGENCY:
REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO, a public
body, corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and
Legal Content:
By:
Timothy J. Sabo, Agency Counsel
OWNER:
MARY ERICKSON COMMUNITY HOUSING,
INC., a California Non-profit public benefit
corporation
By:
Susan McDevitt, Director
99596.3 388-6 613012009 3:16 PM
15
.,
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On ,200_, before me , Notary Public, personally
appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in hislher/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On ,200_, before me , Notary Public, personally
appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same. in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person( s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
99596.3 388~ 613012009 3:16 PM
16
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On ,200_, before me ,Notary Public, personally
appeared ' who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in hislher/their
authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
99596.3 388-6 613012009 3: 16 PM
17
EXHIBIT "A" TO Cc&Rs
LEGAL DESCRIPTION OF ELIGmLE PROPERTY
18
.99596.3 388-6 613012009 3:16 PM
I"~.
...-.
EXIllBIT "N"
Development Agreement
53
......~AlIleIIllOO9'D7.1G-09~Encb.C--.ilyHo.ill&.Iac. .~""-QWd(f"-n,dllc
EXHIBIT "N"
DEVELOPMENT AGREEMENT
DEVELOPER P ARTlCIP ATlON IN NSP
CITY OF SAN BERNARDINO
THIS DEVELOPMENT AGREEMENT ("Agreement") is made as of the _day of
, 20 ,by and between the REDEVELOPMENT AGENCY OF TIIE CITY OF
SAN BERNARDINO ("AGENCY''), a public body corporate and politic, and MARY .
ERICKSON COMMUNITY HOUSING, INC., a California non-profit public benefit corporation
("Developer"), for the purpose of acauirinl!. rehabilitatinl!. and manalrinl! the property whose
address is indicated below ("Project") in accordance with the terms of that certain Master
Agreement dated as of , 20_ entered into between Developer and
the Agency (the "Master Agreement").
Agency agrees, subject to the terms and conditions of the Master Agreement and this Agreement
and in consideration of the representations, covenants and obligations of Developer contained in
the Master Agreement and this Agreement, to make a Loan to Developer in the amount not to
exceed Dollars ($ ) (the "Loan") for the
purpose of providing acauisition. rehabilitation and/or oermanent financing for a _ unit
building located at ' which units
will be reserved for households whose income is less than or equal to % AMI and whose
legal description is attached herewith as Exhibit "A", to be used solely for the purposes described
herein and secured by the Agency Deed of Trust. The Agency's source of funding for the Loan
is provided from the Neighborhood Stabilization Program ("NSP") administered and funded by
the United States Department of Housing and Urban Development ("HUD") subsequent to Title
III of the Housing and Economic Recovery Act of 2008 (HERA).
Other sources of fmancing for the Project are anticipated to include, but may not be limited to (i)
senior lien fmancing ("Senior Financing"), to which the Agency shall expressly subordinate the
lien of the Agency's Deed of Trust; (ii) fmancing junior in priority to the lien of the Agency
Deed of Trust ("Junior Financing"); and (iii) other financing sources ("Other Financing"), as all
are listed below:
Dsenior Djunior Dparity/NA
o senior Djunior Dparity/NA
Dsenior Djunior Dparity/NA
(I)
(2)
(3)
Developer will deliver to the Agency, among other items, the "Agency Deed of Trust",
"Promissory Note" and the "CC&R's", in the respective forms attached as Exhibits "E", "F" and
"G", herewith to, respectively, secure repayment of the Loan by Developer as provided herein
and to ensure that the affordability and habitability of the Project is maintained in accordance
with the terms of those instruments, the Master Agreement and this Agreement.
Development Agreement
1
'f,
Developer will further attach to this Development Agreement: (i) a completed version of Exhibit
"B" Development Pro Forma, attached herewith, for the above described Property and Project;
and (ii) a project timeline in the format of Exhibit "C" for completion of the Project, attached
herewith; and (iii) a scope of the rehabilitation work to be completed as part of the Project in a
format provided by the Developer and acceptable to the Agency. Together these documents
shall memorialize the Development Budget required to complete the Project, the Schedule of
Performance for the Project and the Scope of Work to be completed as part of the Project, agreed
upon by the Developer and the Agency.
By the execution and submittal of this Development Agreement, and upon acceptance hereofby
the Agency, the Developer shall apply all requirements of the NSP program as required by
federal law, rules and regulations in addition to all other requirements contained in the Master
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Development Agreement
as of the date first above written.
AGENCY:
Redevelopment Agency of the City of San Bemardino,
a public body, corporate and politic
Date:
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By:
Agency Counsel
DEVELOPER:
Mary Erickson Community Housing, Inc.,
a California Non-profit public benefit corporation
Date:
By:
Susan McDevitt, Executive Director
Development Agreement
2
EXlllBIT "0"
Building Standards
54
,",~~~~MaII2OO'107.20-09"'-Y~~~bo:.-~~c-'41T"'l_
EXHIBIT "0"
Building Standards
48
P\AI=d.>Macnd;l AIIX".....III~ ~IMpnio NtadJmCllll\A&mdI-A/!loId 21.1Wl''''.......''~-&i'*-'C_~, Houslnc. k -MaO'AV-I""),doc
an ernar InD.
ECONOMIC DEVELOPMENT AGENCY
Neighborhood Stabilization Program
"Minimum Building Standards"
June 2009
Table of Contents
1000 - G.n.ral R.quirem.nts ...................................................................................................................... 1
1010 - Gen.ral............................................................................................................................................ 1
1020 - T.nninology .................................................................................................................................... 1
1030 - Gen.ral Quality R.quir.m.nts ..................................................................................................... 1
1040 - Substitutions/AIt.rnativ.s .....................................,...................................................................... Z
1050 . Optional Gtefln Building Practic.s .............................................................................................. 3
1100 - T.mporary Faciliti.s and T.mporary Controls .............................................................................. 3
1110 - Sit. Usage ...................................................................................................................................... 3
1200 - Project Clos.out................................................................................................................................. 4
1210 - Final CI.aning ................................................................................................................................4
1220 - Operations Manuals and Warranti.s .......................................................................................... 5
1230 - Syst.ms Startup ............................................................................................................................ 5
2000 - Building Sit.work / Sit. Pr.paration................................................................................................ 5
2010 - Site CI.aring and D.molition........................................................................................................ 5
2020 - Sit. Earthwork ................................................................................................................................ 5
2040 - Site Hazardous Wast. R.m.diation ...........,............................................................................... 6
2100 - Sit. Improvements ...............................................................................................................,............. 6
2110 - Roadways, Driveways, and Walkways .........................................;............................................. 6
2150 - F .ncing ........................................................................................................................................... 7
2150 - Landscaping ................................................................................................................................... B
2200 Sit. Civil/ Sit. Utilities......................................................................................................................... B
2210 _ Utlliti.s ............................................................ ................................................................................. B
3100 - Selectiv. Demolition .......................................................................................................................... B
3110 - Building EI.m.nts Demolition...................................................................................................... B
3120 - Hazardous Compon.nts Abatement ..........................................................................................10
4000 - Foundations .......................................................................................................................................10
4010 - Standard Foundations ..................................................................................................................10
4030 - Slabs on Grad. ..............................................................................................................................11
5000 . Superstructure ...................................................................................................................................11
5010 - Framing / Wood ............................................................................................................................11
5100 . Ext.rIor Enclosure ....................................................................................................................._....12
5110 - Ext.rlor Walls.................................................................................................................................12
5111 - Stucco I Plast.r......................................................................................................................~..12
5112 - Ext.rlor Insulation ....................................................................................................................12
5113 - Caulking and Joint Sealants...................................................................................................13
5120 - Exterior Windows ..........................................................................................................................13
5130. Ext.rior Doors I Garag. Doors....................................................................................................14
5140. Flashing ...........................................................................................................................................16
5200 - Roofing ..............................................................................................................................................16
5210 - Roof Coverings..............................................................................................................................16
5220 - Gutt.rs and Downspouts ............................................................................................................16
6000 . Int.rior Construction ........................................................................................................................17
6010 - Partitions I Ceilings......................................................................................................................17
6011 -Interior Insulation .....................................................................................................................17
6012 - Drywall........................................................................................................................................17
6020 - Interior Doors.................................................................................................................................18
7000 - Finishes ..............................................................................................................................................18
7010 - Ceramic Tile ..................................................................................................................................18
7020 - Floor Finishes ................................................................................................................................19
7030 - C.i1ing Finishes ................................................................................ .............................................20
7040 - Painting........................................................................................................:..................................20
8100 - Furnishings .......................................................................................................................................24
8110 - Carpentry, Cabin.ts, and Millwork.............................................................................................24
9000 - Plumbing, Mechanical, Electrical...................................................................................................25
9010 - Plumbing Fixtures .........................................................................................................................25
9020 - Oom.stic Water Distribution .......................................................................................................26
9030 - Sanitary Waste ...............................................................................................................................26
9100 - H.ating, Ventilating, and Air Conditioning (HVAC)......................................................................27
9110 - Heating and Ventilating ...............................................................................................................27
9200 - Fire Protection Systems ..................................................................................................................28
9210 - Fire Protection Specialties ..........................................................................................................28
9300 - Electrical Systems.............................................................................................:...............................28
9310 - EI.ctrlcal Service and Distribution .............................................................................................28
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 1 of 28
1000 - General Requirements
1010 - General
.1. These Minimum Building Standards (Standards) have been developed by the City of
San Bemardino Economic Development Agency (EDAl. for use on the Neighborhood
Stabilization Program (NSP).
.2. These Standards shall apply to all properties covered by the NSP.
.3. All materials. supplies. costs of permits. and labor to complete the specified
rehabilitation or repairs. shall be the responsibility of the BuilderlDeveloper unless
speCified otherwise by the EDA.
.4. Any drawings or sketches which may be furnished by the EDA or required by the
BuilderlDeveloper are intended to clarify or further describe the propert. Should the
Builder/Developer find discrepancies in. or omissions from. these drawings or sketches
or should he/she be in doubt as to their meaning. they should contact the EDA for
clarification. Because of the nature of work being done. some details of sketches or
drawings may be "typical" and grades, dimensions and exact existing conditions must
be verified at the property before commencing work.
.5. Any additional work that EDA want the Builder/Developer to do should be done after
completion of the Rehabilitation work. if at all possible. A separate contract will be
signed between the EDA and Builder/Developer before the work is to start.
1020. Terminology
.1. When used in these Standards. the following definitions shall apply:
A. Install - The item referred to shall be installed with all necessary hardware, trim,
fittings. and material necessary to make ready for use. All material shall be new.
B. Replace - The existing item referred to shall be removed prior to installation of
the new item.
C. Trim - When used in conjunction with painting. includes roof vents and pipes,
eaves, molding, casing. underside of all doors. and any items other than walls
and ceilings.
D. Rehabilitation - All repairs to or replacement of present elements of an existing
building, such as windows. stairs. flooring. or wiring; rearrangement of rooms by
the relocation of partitions or by the installation of new bathrooms and kitchens;
or the general replacement of the interior of a building. This mayor may not
include changes to structural elements such as floor systems. columns or load
bearing interior or exterior walls.
1030 - General Quality Requirements
.1. In order to establish standards of quality. the Standards may refer to certain products
by name and/or catalog number. This procedure is not to be construed as eliminating
from competition other products of equal or better quality by other manufacturers. at
approximately the same cost.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 2 of 28
.2. All material and each part or detail of the work shall be subject at all times to
inspection by the EDA, and the Builder/Developer will hold to the true intent of the
Standards in regard to - quality of material, workmanship, and the diligent execution of
the contract.
.3. Materials installed shall be of such kind and quality to ensure that the dwelling will
provide acceptable durability, economy of maintenance and adequate resistance to
weather, moisture, corrosion and fire. The EDA may request evidence of a material's
compliance with the requirements of the structure's plans and specifications and these
Standards. Product labels are considered acceptable evidence.
"
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.4. All work shall be executed by skilled craftsman, experienced in their trade, and in
. accordance with accepted practices of their trade. All work shall be of the highest
standards and methods.
.5. Unless specifically noted otherwise, all construction methods and materials used shall
conform to the Califomia Building Code as adopted by the City of San Bemardino and
shall be done in accordance with any other ordinances passed and adopted by the
City of San Bemardino (Le., zoning codes, fire codes, etc.). This includes all repairs,
finishes, fixtures, and new work.
.6. All plumbing and gas work shall be done in accordance with the Uniform Plumbing
Code as adopted by the City of San Bernardino.
.7. All heating and cooling work shall be done in accordance with the Uniform Mechanical
Code as adopted by the City of San Bernardino.
.8. All electrical work shall be done in accordance with the national Electric Code as
adopted by the City of San Bernardino.
.9. Where work involves colors, the Builder/Developer will provide the EDA with samples
of all colors for the particular item (roofing, stucco, paint, stain, flooring, etc.), and the
EDA will select the color and finish by initialing the color sample and state for
what/where it will be used (exterior, interior, fascia, soffit, trim, doors, ceiling, walls,
etc.). A maximum of three colors each may be selected for exterior and interior.
.10. If the EDA has agreed to correct certain specified existing code violations, which are to
be excluded from the work done by the Builder/Developer, the work on such violations,
if done at the same time the Builder/Developer is on the job, shall be coordinated by
the EDA and Builder/Developer so as to provide for a smooth flow of the work.
1040 . Substitutions/Alternatives
.1. The Builder/Developer shall furnish a list of any proposed desired substitutions prior to
the signing of the contract.
.2. These standards are intended to encourage the use of new or innovative technologies,
methods and materials. Alternatives and non-conventional or innovative methods and
materials shall be equivalent to these standards in the areas of quality, durability,
economy of maintenance, operation and usability.
City of San Bernardino
Economic Development Agency
Neighbomood Stabilization Program
Minimum Building Standards
Page 3 of 28
.3. Certain conditions in the geographic area or on the site may justify modification of
specific standards. or make compliance with the standards impracticable or
impossible. In these cases, approval by the EDA is required.
1050 . Optional Green Buildlllg Practices
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1100 - Temporary Facilities and Temporary Controls
1110 - Site Usage
. 1. All temporary facilities and controls required for the project shall be provided by the
Builder/Developer.
.2. The Builder/Developer will provide daily clean-up of all debris related to the work of the
project as required. Provide a dumpster On site for the duratiOn of construction for
disposal of construction debris. All work area(s) shall be left broom clean at the end of
each work day.
.3. Immediately, at the end of the work. the Builder/Developer shall remove all of their
debris. rubbish, refuse. and unused material from the property and street.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 4 of 28
.4. The Builder/Developer will provide all temporary 6-foot high chain link safety and
security fencing for construction operations required for the work of this project.
Fencing shall conform-to the following specifications:
A. 6-foot high chain link fence with 80% or greater green or black wind
screen/mesh.
B. Mesh shall be attached with hog rings.
C. Includes man and vehicle gates where required.
D. Gateposts shall be of size to accommodate the size of opening and its intended
purpose.
E. All gateposts shall be cored or driven into the ground.
F. Core holes shall be filled with concrete once temporary fence is removed. Slurry
seal all in AlC areas.
G. Fencing shall be set back beyond site work improvements.
.5. On-site materials pertaining to the project and partially completed roofs shall be
temporarily protected during inclement weather. It is the responsibility of the
Builder/Developer to maintain a watertight condition to prevent any water damage to
the building once the roof has been removed until it has been completely patched.
.6. The Builder/Developer shall provide temporary power as needed for the project.
L:~ c\ I(~;'; ~:-,c (~,;.-c.." :,-. " CU~; (;!<~ Fi(\~ iC:"; (\.-,'-'t, C' '1:!()c!9~t'iY 11]2 ':1u' Qti::f' c/ 1hE ',\ cd~ {:nd
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.8. The Builder/Developer shall provide protection. acceptable to the EDA. for any existing
surfaces or equipment that have been selected to remain.
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1200 - Project Closeout
1210 - Final Cleaning
.1. Prior to the final inspection, the Builder/Developer will provide final clean-up of the
building and property.
.2. Remove all plaster and paint smears and drops; clean all windows. screens. doors,
finished hardware and plumbing fixtures; polish all chrome. clean and polish all
countertops and floor covering; throughout entire house - new and/or old. Provide
cleaning of all exterior surfaces including walls. windows, landscape areas. driveways,
and walkways.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 5 of 28
1220 - Operations Manuals and Warranties
.1. The Builder/Developer will obtain and fill in all necessary information on all warranties
where applicable, for manufactured products, materials and/or labor used in
connection with the project. He/she shall deliver the original warranties to the EDA
where appropriate copies will be made and the original will be delivered to the EDA
upon completion of the work. Any sections that need to be sent to the manufacturer to
validate the warranty, will be mailed as soon as possible.
~. '~;REEN (JPPORTtI',!!r ,. Pro,l/o'e opttf8tion &nD n'-'n/llter.;;nce m&nUalS, ano' perform
:ro;''''!:~9 ;:;,t ;:.s'r;;!~ j(' i~:-r.,~'(:, (,_ li\"'[fi.Jc.f th[-fJ. (i'~ :'~f- pref:f. tf-?.!UJf-S of tile '..../,operf1' o,t,d
,':(;~', :c n-,h::~ID;r, ;1,60/.'.
1230 - Systems Startup
.1. Prior to turnover of building, Builder/Developer will conduct testing and startup of all
equipment new and/or old for verification of functionality.
.2. Builder/Developer will ensure that all equipment components (such as filters, bulbs,
batteries) are replaced prior to turn over.
2000 - Building Sitework / Site Preparation
2010. Site Clearing and Demolition
.1. This work shall be executed in a safe, orderly manner, and in accordance with all
applicable codes.
.2. The Builder/Developer shall protect all existing materials and apparatus from damage,
and shall repair damage caused by workers at no cost to the EDA.
.3. Remove trees and plant materials, with EDA's approval, from areas to be cleared.
.4. Maintain protection of trees and plant materials which are to remain until completion of
work.
.5. Debris shall not be allowed to accumulate.
.6. Remove all unsightly trash and dangerous material (wood, metal, etc.).
2020 - Site Earthwork
.1 . Placing of footings and foundations on earth fill will not be permitted. Fill excess cuts
under footings and foundations with concrete, and under slabs with tamped gravel.
.2. Excavations for footings shall be neat and accurately cut trenches to depths and
grades shown on drawings/plans. In the absence of drawings/plans, code
requirements shall govern.
.3. All grading around any structures shall have high spots lowered and low spots raised
to a minimum of 6" below top of floor slab; a minimum of 2' out with a slight slope from
structure.
.4. Site grading shall accomplish the following:
A. Allow drainage of surface water away from buildings and off-site.
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 6 of 28
B. Minimize earth settlement problems.
C. Avoid concentrating runoff onto neighboring properties where erosion or other
damage would be caused.
D. Minimize erosion.
E. Minimize potential earth movement problems which might adversely affect
completed construction.
5 GREEN OPPOR7 Uf\,'IT ~" G'2d€~ 8/0U/lC structures stief! ma,lntaiJi at least a 5%.- slope
Rilla,lt (/(;p; t'"lE founoafior,
2040 - Site Hazardous Waste Remediation
.1. The property shall be free of hazards which may adversely affect the health and safety
of the occupants or the structural soundness of the improvements or which may -impair
the customary use and enjoyment of the property. These hazards include toxic
chemicals. radioactive materials. other pollution. hazardous activities. subsidence.
flood. erosion. expansive or compressible soils. inadequate drainage outfall. landslides
or mudflows, and deposition of suspended solids or others located on or off site.
Projects with potentially significant hazards may be acceptable if any such hazards are
effectively mitigated.
2100 - Site Improvements
2110 - Roadways, Driveways, and Walkways
.1 . Surfaces and base courses for roads. streets. parking areas and walks shall be
durable materials. Their construction shall be in conformance with generally accepted
local design practices.
.2. Slabs for roadways. driveways. and walkways shall be designed and constructed in
accordance with standards set forth by the American Concrete Institute. and as may
be necessary to prevent slab damage due to potential soil movements.
.3. Provide for repairs and/or repairs of existing surfaces to match existing.
.4. These surfaces shall be installed with provisions for drainage. Adequate surface and
underground drainage systems shall serve all paving and improvements so as to
ensure continuing stable soil support for these improvements.
.5. Minimum width for driveways shall be 10'. and sidewalks 3'. if installed new; or if
replaced. to match existing if wider than 10'.
.6. All exterior concrete surfaces shall be a light broom finish with expansion joints
approximately every 12' (fiber material). with slope for drainage away from structure
and property.
.7. All flatwork expansion joints shall be filled with clear silicone sealant.
.8. Where soil and/or concrete for porches. steps and other work is in contact with
members. galvanized metal flashing. or solid sheathing and 15 lb. felt shall be
installed. or wrap and scratch coat applied.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 7 of 28
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2150 - Fencing
.1. Check all boundaries to ensure property lines are observed, and City Ordinances are
not violated (front yard, side yard, and back yard maximum heights).
.2. All post setting holes shall not be less than 24" deep and 6" diameter, at a maximum of
10' intervals. When adjacent to a foundation (walls), offset hole to obtain 24" depth.
and fill in any space larger than 2" between wall and post.
.3. Entrance walk gate shall be a minimum of 3' wide, and driveway gates a minimum of
12' wide; including all gate hinges and. padlock latch attachments.
.4. Wrought Iron
A. Posts to be 2" x 2" x .090 (16 gauge).
B. Top and bottom rails to be 1 Yo" x 1 Yo" (16 gauge).
C. Pickets to be 0/." x W' (16 gauge), 4" on center.
.5. Chain Link
A. All galvanized material.
B. 2-3/S" 0.0. end, comer, and gate posts.
C. 1-5/S" 0.0. line and corner diagonal posts.
D. 1-3/S" 0.0. top rail, with bottom tension wire.
E. 11 gauge - 2" mesh; to include all bands and wire ties.
.6. Wood Fence
A. All posts will be of galvanized material (unless otherwise specified).
B. 2-3/S" 0.0. end, corner, and gate posts.
C. 1-5/S" 0.0. line and corner diagonal posts.
D. Two 2 x 4 horizontal support rails.
E. Fencing as specified (redwood or cedar - minimum #2, two nails per rail).
.7. Block Wall
A. Shall be in accordance with the Cijy of San Bernardino drawing on Garden &
Retaining Wall Standards available from the Building & Safety Department.
:..
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 8 of 28
2150 . Landscaping
.1. All trees and shrubbery identified to remain shall be trimmed. Trim to property line and
a minimum of 4' above roofing or structure; removing all debris.
.2. All trees and shrubs identified to be removed shall be cut to surface. Remove stump
and roots a minimum of 8" below surface; removing all debris. and fill in hole with soil.
.3. Natural site assets such as existing trees, shrubs, ground cover, must be preserved,
maintained, and protected whenever possible.
.4. Any existing assets lost due to the construction efforts and/or lack of protection will be
replaced with like kind and size at the Builder/Developer's expense.
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2200 Site Civil/ Site Utilities
2210 - Utilities
.1. Underground piping and related items shall be protected from corrosion. Underground
mechanical and electrical systems shall be protectively coated to minimize corrosion
where soil conditions warrant. Where applicable, sacrificial anodes may be used.
.2. Sacrificial anodes may be used where soil resistivity does not exceed 15,000 ohm -
centimeters. Otherwise, an impressed current system of corrosion prevention shall be
used.
.3. Utilities and other facilities shall be independent for the property, without dependence
upon other properties.
3100. Selective Demolition
3110 - Building Elements Demolition
.1. This work shall be executed in a safe, orderly manner, and in accordance with all
applicable codes.
.2. The Builder/Developer shall protect existing materials and apparatus from damage.
and shall repair damage caused by workers at no cost to the EDA.
City of San Bernardino
Economic Development Agency
Neighborhood. Stabilization Program
Minimum Building Standards
Page 9 of 28
.3. Debris shall not be allowed to accumulate.
.4. The Builder/Developer shall remove all flooring finishes identified to be removed or
replaced. Including abatement of any materials designated as containing asbestos.
.5. Provide all roofing membrane removal as required for the removal of existing and
installation of new roof, equipment, and connections.
.6. The BuilderlDeveloper shall provide shoring of all existing beams/structures being
modified prior to removing existing bearing walls.
.7. Remove all interior and exterior doors and/or frames that are identified for removal.
This activity shall be coordinated with the EDA in an effort to not leave any openings
un-lockable.
.8. Remove all window stops/putty, glass, glazing, and frames as required. Provide
demolition of existing sliding glass doors scheduled to be replaced.
.9. The Builder/Developer shall remove all structural and non-structural wood stud
/gypsum sheathing or wood stud / plaster partition walls, wing walls or portion of walls
determined to be removed.
A. All appurtenances identified to be removed / demolished on walls scheduled to
be removed/demolished shall be removed and disposed of by the
Builder/Developer.
B. Appurtenances identified to remain, shall be removed and re-installed by the
Builder/Developer.
.10. Any specific cutting and patching of drywall needed to install conduit or piping shall be
done by the Builder/Developer.
.11. The Builder/Developer shall remove all wall surface material or portions thereof from
interior and exterior walls for new framed openings such' as but not limited to doors,
windows, recessed electrical panels, louvers, HVAC grills and ducts, backing, etc.
.12. The BuilderlDeveloper shall provide removal of all existing spayed on acoustical
(popcom) ceiling texture. Provide for asbestos abatement as necessary.
.13. The BuilderlDeveloper shall remove existing casework and countertops. backing,
anchors, bases. shims. backsplash. etc. identified to be demolished and disposed of.
.14. Doors and windows must be able to be locked at the end of each day, or proVide a
temporary secure panel (approved by the EDA) closing the opening at no additional
cost to the EDA. This also includes providing a temporary secure panel at all wall,
door or window openings scheduled to be removed.
.15. Removal of Ceramic tile shall include removal and replacement of wall substrate and
any existing mortar bed.
City of San Bemardino
Eoonomic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 10 of 28
3120. Hazardous Components Abatement
.1. The property shall be free of those hazards which may adversely affect the health and
safety of the occupants or the structural soundness of the improvements or which may
impair the customary use and enjoyment of the property. These hazards include toxic
chemicals, radioactive materials, other pollution, hazardous activities, subsidence.
flood, erosion. expansive or compreSSible soils, inadequate' drainage outfall. landslides
or mudflows, and deposition of suspended solids or others located on or off site.
Projects with potentially significant hazards may be acceptable if any such hazards are
effectively mitigated.
.2. The Builder/Developer shall provide all labor, material and equipment required to
complete the work related to the Hazardous Materials Abatement as required.
A. Provide all labor, material and equipment required to abate and legally dispose of
off-site all Asbestos Containing Materials (ACM) and Lead Containing Materials
including but not limited to pipe filling insulation (elbows/ends). roof mastic.
flooring, flexible joints, doors, door frames, plaster walls. sinks. ceramic tile, etc.
B. Provide for the proper removal and disposal of PCB Ballasts and Fluorescent
Light Tubes:
i. It is assumed that all ballasts not labeled "No PCBs. are considered to
contain PCBs and therefore must be treated as hazardous waste. The
Builder/Developer shall disconnect the ballasts (those not labeled "No
PCB's") from the fixtures and is responSible for proper disposal/recycling.
ii. Mercury is present in fluorescent light tubes. which may be present
throughout the project areas. Mercury is considered a hazardous waste
and will be disposed of property by the Builder/Developer.
4000 . Foundations
4010. Standard Foundations
.1. Includes excavation, backfill, compaction, and installation of all foundations.
.2. Concrete materials for foundations shall be in accordance with City of San Bernardino
standards and shall be approved by the EDA prior to placement.
.3. Includes all formwork and accessories for all cast-in place concrete and cement
concrete pavement with shoring, bracing and anchorage. form accessories, form
stripping, and proper layout, location. Provide proper temporary support/shoring (as
required and/or needed).
.4. Furnish and install all reinforcing steel bars, welded steel wire fabric, fabricated steel
bar, slip dowels, or rod mats for all on-site cast-in-place concrete and cement concrete
pavement. Provide and install all necessary accessories as indicated.
.5. All vertical reinforcing steel protection shall be installed in accordance with CAL OSHA
codes and regulations. Maintain said protection throughout the duration of
reinforcement installation and until enclosed by finish material.
.6. When replacing existing concrete with new, the new concrete shall have at least the
same reinforcement as the existing.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 11 of 28
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4030 . Slabs on Grade
.1. Concrete mixture shall be made of a 1-2-3 mix with plastic cement, sand, and 3/4"
rock. Ready mix will be a 5 sack. Minimum 2500 psi.
.2. Slabs shall be constructed in accordance with ACI 302.1 R-80, Guide for Concrete
Floor and Slab Construction, and as may be necessary to prevent slab damage due to
potential soil movements.
.3. Vapor retarders and base course shall be provided for all interior concrete slabs to
which a finish flooring is applied.
A. Acceptable base course materials are gravel, slag, crushed rock, sand, cinders
and certain types of earth when approved by the local EDA. See ASTM C-33-90.
Table 2.
B. Base course material shall be clean, washed and free from deleterious
substances, consistent with ASTM C-33, with 100% of the material passing a 1"
sieve and less than 2% passing a #4 sieve.
All concrete slabs shall be a minimum of 3 y." thick (additions, garages, driveways,
sidewalks).
All interior surfaces shall be troweled smooth.
.1.
.2.
.3.
Includes excavation, backfill, compaction, and installation of all slabs. Completely
fumish and install all concrete accessories, colors, finishes, fonning, admixtures,
reinforcement joint sealers, and curing compounds in accordance with the
Specifications.
5000 . Superstructure
5010 - Framing 1 Wood
.1 . . Framing and wood construction shall be in accordance with the latest edition of the
. National Design Specification for Wood Construction.
.2. A chemical barrier must be provided for structures built in those areas where tennites
are determined by the EDA to be a hazard. A physical barrier will also satisfy this
requirement where the hazard is presented by subterranean termites only.
.3. Where required by the EDA Field Office, protection against damage by decay shall be
provided.
L GREE.', CJfJPC:ld U//," \ <eeL f.i: urlttf:;etec' wcoc cd iec~t .~' ;r;C,I;-=~ abO~0 sOfi in lieu
of ri:e coo'e 'fr;,ui1f:-;f] h i';d,;t-~
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 12 of 28
5100. Exterior Enclosure
5110 . Exterior Walls
5111 - Stucco I Plaster
.1. The Builder/Developer shall investigate the condition of studs and ceiling joist to be
sure framing members comply with appropriate code.
.2. Install or reset all electrical boxes to new surface level.
.3. Exterior angles shall be protected with woven or welded wire fabric of equivalent
strength, or comer bead.
.4. A surface inspection is require<:l after sandblasting and before re-stuccoing by the
EDA.
.5. Application:
A. Portland Cement plastering work shall be three-coat work when applied over
metal and wire lath/wrap.
B. Scratch (first) coat: Apply with sufficient material and pressure to fill solidly all
openings in the lath/wrap, and to cover wall, and then scratch to rough surface.
Allow to dry a minimum of two days. (Example: complete scratch coat Tuesday,
start brown coat Friday).
C. Brown (second) coat: Apply after scratch coat has set firm and hard, bring out to
grounds, and straighten to a true surface with rod and darby; leave rough, ready
to receive finish coat. Surface shall not have variation greater than y." in any
direction under a five-foot straight edge. Allow to dry a minimum of seven full
days before applying color coat. (Example: complete brown coat on Tues., color
coat not to start until following Wed.).
D. Finish (color) coats: Portland Cement and Lime Finish Coats - Apply over base
coats which have set and surface-dry; lay on well, double back and fill out to a
true, even surface. Thickness shall be 1/16" to 1/8", then texture as specified.
E. When structure is to have lath/wrap and stucco over existing siding, the
Builder/Developer is to remove door and window casing; trim out with metal
edging or stucco molding, and seal.
F. Exterior lath/wrap to be applied as per California Building Code.
G. Stucco Color Coat: La Habra, Bauer, or equal.
5112 - Exterior Insulation
.1. Materials used for insulation shall be of proven effectiveness and adequate durability
so as to ensure that required ratings concerning heat transmission, sound control and
fire rating are attained.
A. Manville, Owens/Coming, USG; or equal.
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City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 13 of 28
.2. Insulation in contact with the ground shall be installed so as not to be adversely
affected by soil. vermin and water.
.3. Shall be installed in accordance with Energy Conservation Standards administered by
the Building & Safety Division of the City of San Bernardino.
.4. Attics:
A. If all exterior walls of house are hot insulated, bring to R-38 rating (12").
B. If all exterior walls are insulated and/or new addition, insulate to R-30 rating (9").
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.5. Walls:
A. All exposed exterior walls and new addition, insulated to R-11 rating (3 '/:,"),
.6. Water Heater:
A. If it has access from outside or in garage, install R-6 rating insulation blanket and
wrap all exposed water lines with pipe insulation.
6 GH;'EE:.\ I':_"--~": :/::'/ ~!\'l;) c'':';:('6 ;n~/iic:fi(}rl 21 r;,: l',nif" r,e2;EI~
5113 - Caulking and Joint Sealants
.1. Materials used for caulking and sealants shall be suitable for the use intended, and
shall be compatible with the materials to which they are applied and with any finish that
may be applied over them.
5120 - Exterior Windows
.1 . When required shall be made easily open able, replace sash cords and weights or
install spring loaded sash balances, as necessary.
.2. Windows and operating hardware shall be installed in accordance with the
recommendations of the manufacturer.
.3. When aluminum single hung or slider window(s) is required and the frames are not to
be taken out, use International Window Corporation, Keller, or equal (block frame), to
fit existing opening. Caulk window frame before installing, including necessary trim.
.4. When new aluminum slider or single hung window(s) installation is required, provide
header(s), trimmers, flashing, International Window Corporation, Keller, or equal
(standard frame).
.5. Operating windows shall be manufactured units consisting of the frame, sill, sash,
weather-stripping, and operating hardware. Job site assembled windows composed of
frames and sashes made by different manufacturers are not acceptable.
.6. Glazing:
A. When replacing glass, thickness shall be as recommended by the manufacturer
for the specific use.
B. All bathroom windows shall be glazed with obscure glass.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 14 of 28
C. Glass set in wood shall be secured in place with springs or glazing points and
face puttied, wood and putty to be primed and painted.
D. Glass set in metal shall be secured in place with glazing clips, back and face
puttied with appropriate material, metal and putty to be primed and painted.
E. All glass shall be cleaned, with no cracks or rattles (new installation only).
F. Re-putty shall mean to replace all damage, loose, and missing putty.
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.8. Screens:
A. Screens shall be installed on all openable windows.
B. When re-screening or new screens are required, they shall be aluminum frames,
aluminum screening; tight fitting and easily removed.
C. Nylon screens on newly installed windows and combination doors may be
acceptable. unless otherwise requested or stated.
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5130 - Exterior Doors I Garage Doors
.1. All exterior doors will be 'wood or metal finish (no hardboard). Primed/painted or
stained/varnished.
.2. Doors shall be durable, installed in good operating condition, free of defects, latch
readily and lock securely.
.3. Doors shall fit opening and operate properly.
.4. All new door installation shall include new hinges and all necessary trim.
.5. Entry Doors:
A. Exterior entry doors shall be side-hinged doors not less than 3 ft. in width and 6
ft. 8 in. in height.
B. 1 0/." solid core - Birch, Mahogany, Luan; unless existing jamb takes 1 3/8" door.
C. 3 each - 4" x 4" butt hinges, unless existing jamb takes 1 3/8" door, then 3-3 Y," x
3 'h" butt hinges.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 15 of 28
D. Exterior door frames shall be treated against decay.
E. Locks - Kwikset, Schlage, or equal.
.6. Garage Doors:
A. Steel frame construction.
B. Installing new garage hardware or replacement hardware shall comply with the
following safety notice:
... FOR YOUR SAFETY...
California State Assembly #772 directed the Commission of Housing and
Community Development to change the appropriate rules and regulations in
ways that, "ARE REASONABLY NECESSARY TO PREVENT THE DEATH O~
INJURY OF PERSONS OR DAMAGE RESULTING FROM THE BREAKING OF
GARAGE DOORS SPRINGS". (quoted from Assembly Bill #772)
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.8. Weather-stripping shall be aluminum and vinyl. Install after surfaces are finished and
dry.
.9. Thresholds and door shoes shall be installed at all exterior doors and interior garage
doors and shall be aluminum thresholds, and aluminum/vinyl with drip cap door shoes
(channel type), sealed to be watertight.
.10. Exterior jambs will be rabbet type (fit wall thickness) and to include new wood (pine)
casing material. Replace stucco molding only if required.
,11. A safety door check shall be provided on all outward opening doors, including storm
and screen doors.
.12. Locking devices at doors and windows shall be as follows:'
A. Each exterior doorway and each doorway leading to garage areas, terraces,
balconies, or other areas affording easy access to the premises shall be
protected bya door which, if not a sliding door, shall be equipped with a deadlock
using either an interlocking vertical bolt and striker, a minimum of 1.2 in. throw
dead bolt or a minimum 1/2 in. throw self-locking dead latch. Locks shall not
require the use of a key for operation from the inside.
B. All sliding doors, first floor and basement windows and windows opening onto
stairways, fire escapes, porches, terraces, balconies or other areas affording
easy access to the premises shall be equipped with a locking device. A sliding
door used as a main or service entrance shall be equipped with a keyed locking
device.
.13. Screens shall be aluminum/satin finish with latch set and pneumatic closure or equal.
.14. Security Screen - Jamb/frame will be l' 1/4" x l' 1/4" (18 gauge) with 3/4 x 3/4" center
framing (18 gauge) and heavy gauge metal screening. Combination (Bel-Aire) - Solid
core (no panels). 1 3/8" door, 3 - 3 )1," x 3 %" butt hinges: 1 y." Locks - Kwikset,
Schlage, or equal.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 16 of 28
5140- Flashing
.1. Flashing shall have a service life at least equal to that of the assemblies into which it is
built.
.2. Counter flashing is considered exposed flashing and shall be constructed of sheet
metal.
.3. Alternate products or systems of bitumen-impregnated plastic or elastomeric materials
may be used for flashing if they are installed in accordance with the manufacturer's
recommendations and are acceptable to the EDA.
.4. All openings between wood or metal and masonry shall be caulked with a non-
hardening caulking compound.
5200 - Roofing
5210. Roof Coverings
.1. Strip.. Means to remove "all" roofing material to sheathing. with inspection of sheathing
prior to installation of new roofing.
.2. The Builder/Developer shall guarantee the owner to maintain the entire roofing. and
counterflashing in a watertight condition for a period of fifteen years.
.3. Shingles -
A. Shall be fiberglass of 151b. felt.
B. New metal 1 ',1," drip edge and roof jacks (form over shingles. seal around all
pipes).
.4. Built- Up / Roll Roofing Cap
A. Roll roofing cap to be a minimum of 90 lb. roofing paper and must bear a class
"CO UL listing.
B. One 90 lb. cap sheet to be installed over two layers of 15 lb. felt paper. saturated
with at least 20 lb. of hot mopped tar. between layers.
C. All base sheets to be well nailed with approved galvanized nails providing a
minimum 3/4" penetration into a firm solid sheathed surface.
D. New metal ',1," drip edge and roof jacks.
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5220 - Gutters and Downspouts
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.2. Gutters and downspouts.. Shall be a minimum of 26 gauge galvanized metal. or vinyl
material.
.3. Gutters shall be sloped to downspout and supported a maximum of 3' apart.
.4. End caps. comer joints. splices. outlet tubes shall be soldered or have watertight
joints.
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 17 of 28
.5. Downspouts shall be fastened at top, bottom, and approximately every 6', and directed
to drain away from the structure.
.6. Downspouts shall be sized on the basis of 100 square feet of roof surface to 1 square
inch of leader. More or less leader area may be required by the EDA.
.7. Scuppers shall be installed at the outfall end of a valley for special roof designs, such
as "butterfly" roofs.
.8. Scuppers shall be installed for overflow of all roofs enclosed by parapet walls.
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6000 - Interior Construction
6010 - Partitions I Ceilings
6011 - Interior Insulation
.1. Materials used for insulation shall be of proven effectiveness and adequate durability
so as to ensure that required ratings concerning heat transmission, sound control and
fire rating are attained.
A. Manville, Owens/Corning, or equal.
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.2. Insulation in contact with the ground shall be installed so as not to be adversely
affected by soil, vermin and water.
.3. Shall be installed in accordance with Energy Conservation Standards administered by
the Building & Safety Division of the City of San Bernardino.
6012 - Drywall
.1. When installation of drywall is specified, provide y," U.S. Gypsum wall board or equal,
unless otherwise specified.
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.3. All joints and inside corners shall be taped; outside comers shall have comer bead
troweled with joint compound (a minimum of three coats, and smoothly sanded or
textured).
.4. If kijchen base cabinets, toilet or lavatory are removed, and the drywall is to be
replaced, it must be replaced with green board or equal.
.5. If tub surrounding drywall is to be replaced, it must be replaced with wonder (cement)
board.
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 18 of 28
:.,1: .', e1: ~~..;';';'V~Y '(,
. . .
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in accordanCE wllh thE tOllowlng:
A. Portland Cement plastering work shall be three-coat work when applied over
metal and wire lath/wrap.
B. Scratch (first) coat: Apply with sufficient material and pressure to fill solidly all
openings in the lathlwrap, and to cover wall, and then scratch to rough surface.
Allow to dry a minimum of two days (Example: complete scratch coat Tuesday,
start brown coat Friday).
C. Brown (second) coat: Apply after scratch coat has set firm and hard, bring out to
grounds, and straighten to a true surface with rod and darby; leave rough, ready
to receive finish coat. Surface shall not have variation greater than y.. in any
direction under a five-foot straight edge. Allow to dry a minimum of seven full
days before applying color coat (Example: complete brown coat on Tues., eolor
coat not to start until following Wed.).
6020 - Interior Doors
.1. Doors shall be durable, installed in good operating condition, free of defects, latch
readily and close securely.
.2. Doors shall fit opening and operate properly.
.3. All new door installation shall include new hinges and all necessary trim and hardware.
.4. Interior Hinged I Closet / Bathroom Doors:
A. Shall be side-hinged doors not less than 1 3/8" thick.
B. At least 2 each 3 1',. x 3 1',. butt hinges.
C. Locks - Kwikset, Schlage, or equal.
.5. Shower Door I Tub Enclosure:
A. Shower Doors - MAAX, Kohler, or equal. Seal around frame and walls.
B. Tub Enclosure - MAAX, Kohler, or equal. Seal around frame and walls
.6. Door stops installed at all swinging doors shall be solid (no coil springs).
.7. Interior jambs will be flat type (fit wall thickness) and to include new wood (pine)
material stop molding and casing (both sides).
7000 - Finishes
7010 - Ceramic Tile
.1.
.2.
Install ceramic tile where identified.
Ceramic tile to be American Olean, Dal-Tile, or equal.
c.REEN cr'POF ...~}";(-;- 'r' U~t; ceramiC 1/16 I';ith high fc,.ycl<:-o' ccme
.4.
Submit a complete range of colors and types for the EDA's selection. One of each
color of type selected shall be retained by the EDA. All materials placed in the building
shall match such samples.
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City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 19 of 28
.5. Applications and installation of adhesive, primer, caulking compound, and prepared
grout when used, shall be as recommended by manufacturer of the tile and in
accordance with these standard specifications.
.6. Ceramic tile shall be applied over a water-proof surface only (cement or wonder
(cement) board).
.7. At showers, the top of step shall have slight slope into shower.
7020 - Floor Finishes
.1. The Builder/Developer shall provide all necessary floor preparation of existing surfaces
to properly receive new flooring material.
.2. Sub-flooring shall be a minimum thickness of 3/4- plywood or 1x boards.
.3. Underlayment shall have a maximum thickness 3/8" industrial particle board.
.4. Install all flooring per manufacturer's recommendation.
.5. Existing floor covering to be removed prior to installation of new floor.
.6. Provide underlayment when sub-flooring is in such a condition to warrant replacement.
Bathroom, kitchen, and laundry underlayment to be of water resistant material.
.7. Surfaces to receive flooring shall be clean, dry, smooth, even, and without defects.
.8. At Bathrooms, the toilet and lavatory cabinet shall be removed before flooring installed.
Reinstall toilet and cabinets.
.9. Install new baseboard or shoe after installation of flooring. If cove is required, it shall
be formed integrally of matching sheet material. Adhesives shall be as recommended
by manufacturer.
.10. Coat all concrete floors on earth grade with concrete primer as recommended by
manufacturer.
.11. Leveling compound and crack tiller - As manufactured by Aetna Manufacturing
Company for concrete floors or equal.
.12. Linoleum (sheet goods) - FHA base cushioned, Armstrong - Cambray or equal.
.13. Vinyl Tile - Armstrong - Stylistic or equal.
.14. Carpet - 260z.
A. Base, HUD/FHA bulletin UP- 44c requirement.
B. Pad - 5/8" rebond high plush, HUD bulletin UP-72 requirement.
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A. Fn.)cJu(/s !i~;;O~ :>"_.!", ' ;::::,I_~; rr.'2i6.'[8,l~;
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City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Bunding Standards
Page 20 of 28
. J ~ _" '. ,', ~
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.16. Submit a complete range of colors and types for the EDA's selection.
7030 . Ceiling Finishes
.1. Ceilings shall be drywalled and painted. No sprayed on acoustical ceilings (popcom)
will be allowed.
7040 . Painting
.1. Lead Content:
A. The definition states in part, "..... with respect to paint which is manufactured after
June 22, 1977, lead-based paint means any paint containing more than six one-
hundredths of one percent lead by weight (calculated as lead metal) in total non-
volatile content of the paint or the equivalent measure of lead in the dried film of
paint already applied".
B. All contractors and sub-contractors on rehabilitation activities will comply with the
Lead-Base Paint Regulation under 24 CFR Part 35, requiring:
i. The prohibition of the use of lead-based paint in the rehabilitation of
properties;
ii. The elimination of immediate lead-based paint hazards in residential
structures.
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.3. If exterior painting is required, caulk all exterior door and window frames to seal
completely. Remove all loose and deteriorated putty on windows and re-putty before
painting. When painting of exterior trim is specified, this shall include doors, windows,
all frames, eaves, soffits, porches and all appendages.
.4. If a paint to be used on exterior surfaces is not inherently mold resistant, a suitable
fungicide shall be included in the formulation.
.5. If repair of exterior surfaces is indicated. remove all broken and loose material by
raking out, scraping and sanding if necessary. Repair with proper material for area
being repaired, blending in with texture of area being repaired. Prime the repaired area
prior to painting.
.6. If interior painting is indicated, repair all cracks by "YO scratch approximately 1/8" X
1/8" in walls and ceilings of all rooms being re-painted. Use proper type of patching
material for areas being repaired. Fill all cracks and holes solid and blend in repaired
areas with texture of surface being repaired. Prime cracked areas prior to painting.
When painting of walls and ceilings of a room is specified, this shall include all trim,
windows and door frames, closets, and cabinets (inside).
.7. All surfaces to be painted shall be free of dirt, dust, grease before painting is started.
All knots, pitch streaks, and sappy spots shall be first sealed with shellac or sealer
approved for use with materials as specified, before subsequent coats are applied.
Each coat shall be allowed to dry before subsequent coat is applied.
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 21 of 28
.8. If it should become necessary, in order to give good coverage because of surface
condition of the paint color(s), it is the obligation of the Builder/Developer to apply
sufficient coats to obta.in complete coverage.
.9. All new drywall shall be primed with one coat of Drywall Sealer/Primer before the
application of the finish coat, unless otherwise specified.
.10. Paint to be Dunn-Edwards, Glidden, Sinclair or equal. EDA to select color(s) and
finish.
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.12. Stain - Exterior/interior application (Minwax, Behr, or equal).
.13. Varnish - Exterior/interior application (Behr, Varathane EI~e, or equal).
.14. Spar gloss or satin, EDA to specify (Behr, Varathane Elite, or equal).
.15. Spar gloss or satin, EDA to specify (Behr, Varathane Elite, or equal).
.16. Paint application shall consist of two coats on old material, and three coats on bear
wood or new material. The top and bottom edges of interior doors shall be sealed
(painted or varnished) with one coat, exterior doors with two coats.
.17. Application of paints, stains, or other coating systems shall be in strict accordance with
manufacturer's directions and shall comply with the following:
A. Exterior Wood Siding, Millwork and Trim
i. Knots, resinous wood, and nail holes shall be sealed w~h a prepared
sealer or aluminum paint prior to puttying and priming. Any nail holes or
cracks in surfaces to be painted shall be filled with putty.
ii. A prime coat shall be applied to all surfaces to be painted before or
immediately after installation. Primer shall be formulated specifically for
application to unfinished wood. Finish coats formulated to serve as
primers may be used.
iii. One of the following finish systems shall be applied. Coverage shall be
that which will provide at least the minimum thickness recommended by
the manufacturer.
a. Oil paint systems.
b. Latex paint systems.
c. Pigmented stains' as per manufacturer's directions.
d. Clear penetrating preservatives or water repellent finishing
systems.
iv. The top and bottom of exterior wood doors, casement sash, awning sash
and the bottom of double hung sash shall receive two coats of paint or
sealer.
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 22 of 28
v. Prior to erection, all edges of vertical siding shall be sealed with a heavy
coat of house paint primer. water repellent stain, exterior aluminum house
paint or sealer. Wood batten strips shall be backed-primed or sealed.
B. Wood Shingles, Shakes, Rough-sawn Siding.
i. Two coats of oil stain. pigmented oil stain, or an oil shingle paint shall be
applied.
C. Hardboard and Softwood Plywood Siding.
i. These sidings shall be finished in accordance with the manufacturer's
direction.
D. Wood Porch Floors and Decks.
i. One coat of primer and two coats of floor and deck enamel designed for
exterior use shall be applied. Joints between floor and wall shall be
caulked.
E. Unfinished Surfaces.
i. Shingles and board siding of vertical grain cedar, redwood and bald
cypress may be left unfinished.
F. Exterior Concrete Masonry Units or Concrete Brick
i. At least two coats of masonry paint shall be applied.
ii. Concrete masonry units or concrete brick, except small areas of
foundation walls, shall be painted to provide a water resistant finish.
iii. High density concrete brick or solid split block forming the outer face of
double unit walls (veneer, cavity walls, etc.) may be left unpainted when
acceptable to the EDA.
G. Exterior Galvanized Steel or Iron
i. Field painting shall consist of two coats. One coat shall be a primer
formulated specifically for galvanized surfaces. and the second coat shall
be a finish coat. A finish coat formulated to serve as a primer may be
used as the first coat.
H. Exterior Steel, Iron or Teme Plate
ii. Steel or iron, except stainless steel, weathering steels, or steel treated
with coatings to provide corrosion resistance, shall be painted.
iii. A rust inhibitive primer and a finish coat shall be applied.
I. Interior Millwork and Trim
i. All mill work and trim, including windows; interior doors; window, door and
base trim; paneling and closet shelving and trim shall be finished by
painting or natural finishing.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 23 of 28
ii. If the surface is open grain wood, it shall be filled or sealed to prevent the
grain from rising. Surfaces shall be treated with a primer. One or more
finish coats shall be applied to provide a smooth surface and good hiding.
iii. Natural finishes include stain-wax, stain followed by one or more coats of
varnish, clear coats of varnish with or without wiped paint undercoats or
oil and wax finishes.
J. Wood Floors
i. If flooring is open grain wood, one coat of filler shall be applied. All
excess shall be wiped off.
ii. Flooring shall be finished with:
a. One or two coats of penetrating sealer and one coat of wax; or
b. Two coats of varnish and one coat of wax; or
c. Two coats of polyurethane; or
d. One or more coats of factory-applied finish.
K. Interior Plaster and Gypsum - Walls and Ceilings
i. Plaster surfaces may be painted, covered or left unfinished, except for
surfaces of kitchens and baths. If painted, a finished coat shall be applied
over a primer-sealer, unless finish coats are of the self-priming type.
ii. Gypsum wallboard shall be covered. If painted, one coat of wallboard
sealer shall be applied unless finish coats are of the self-sealing .type.
Two finish coats shall be applied over the sealer. One finish coat, except
in kitchen and baths, may be acceptable if good coverage is obtained.
l. Interior Metal
i. Non-ferrous metals or wrought iron may be painted or left unfinished.
Other metals shall be painted in accordance with 609-3.4.
M. Interior Concrete Floors
i. If painted, at least two coats of resin emulsion paint, a solvent rubber
paint or a floor and deck enamel shall be applied. If oil paint is used, the
surface shall be neutralized before painting.
ii. A coat of wax shall be applied over paint, stain or an integral finish.
N. Wall Coverings
i. Covering material shall be secured to a suitable base in accordance with
the manufacturer's directions.
ii. All roorns that have new wall covering installed will include molding, trim,
base, and painting (if required).
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 24 of 28
8100 - Furnishings
8110 - Carpentry, Cabinets, and Millwork
.1. All manufactured factory finished cabinets shall comply with ANSI A161.1-86,
Recommended Minimum Construction and Performance for Kitchen and Vanity
Cabinets, or with an equivalent standard. .
.2. Workmanship: All interior wood finish, cabinet and casework shall be smooth dressed.
well sanded, and thoroughly cleaned before priming. All material showing machinery.
sandpaper, or other defacing marks will be rejected. Interior wood finish or cabinet
work shall not be installed on newly plastered walls until the plaster in that section is
reasonable dry and approved by the EDA.
.3. All interior wood finish, doors, frames, and other cabinet work or fixed wood equipment
shall be properly installed. level plumb. and true. Members shall be neatly and
accurately scribe in place, maintaining full lengths without splicing, except where the
use of full lengths would be impractical or impossible, and then if joined. butt joints
shall be beveled. Replacement and installation of new trim or molding shall match
existing in size and profile or otherwise be reasonably appropriate upon finished
installation.
.4. All cabinets (kitchen base and wall. bathroom lavatory, etc.) shall be a minimum of
birch plywood construction (stain grade quality), shop fabricated casework, with all
necessary hardware. Shelving shall not be less than 3/4" pine, plywood, or particle
board. Kitchen base cabinets shall have a built-in bread board.
.5. All cabinets and trim shall be scribe to contacting surfaces and shall be straight, plumb
level and in true alignment, closely fitted, and rigidly fastened in place.
.6. Countertops:
A. Top material shall be phenolic laminate, vinyl plastic covering, ceramic tile,
stainless steel or other material suitable for its intended use.
B. The top material shall be securely bonded to a reinforced steel core, to 5/8 in.
plywood, or to any other equivalent material.
C. At least a 3 in. back and end splash shall be provided against all abutting vertical
surfaces which are not water and grease resistant. When a back splash is
omitted, the joints at the juncture of the counter top and vertical surfaces shall. be
tight and sealed.
D. All edges. including the sink and any built-in surface units, shall have a non-
corrodible metal molding or other suitable edging.
E. High Pressured Laminated Plastic (Formica or equal) - Shall be constructed with
a bullnose front edge, minimum of a standard back splash where it abuts walls.
and full length of cabinets. If laminated plastic ends at wall. provide end splash
(material must be identical to counter top original color). Scribe and closely fitted
to adjacent work, and securely anchored to cabinets. Installation of sinks shall
have required mounting flange and sealed against leaking. No butcher block
unless otherwise requested or stated by the EDA.
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 25 of 28
F. Ceramic Tile - Shall be applied over a plastic cement base secured to 3/4"
exterior plywood secured to the cabinets. Raise front edge, minimum of a
standard back splash, and sealed at edges of full length cabinets. (See Ceramic
Tile Specification).
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.7. Interior woodwork:
A. Trim (OF) "B or better".
B. Shelving - Particle board or #2 shelving.
9000 - Plumbing, Mechanical, Electrical
9010 - Plumbing Fixtures
.1. AlI fixture installation is to include trap, vent, faucets, and all trim necessary to mount
fixture in an approved manner, and to include repair of damaged areas affected by the
installation. When kitchen or lavatory faucet is replaced, it will also include risers.
Replace all angle stops.
.2. Fixtures:
A. Water closets - Deep bowl (round or elongated per EDA request). American
Standard - Hydra; Eljer - Titan; Kohler; or equal. Handicap (17" high). Must be
rated at no more than 1.6 gallons per flush.
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B. Bathtubs - 5' pressed steel- American Standard; Kohler, or equal
C. Lavatories - American Standard, Kohler, or equal.
D. Kitchen Sinks -Single or double compartment enameled cast iron - Kohler or
equal; Single or double compartment stainless steel (7" depth, 20 gauge
minimum thickness) - Sterling or equal.
E. Garbage Disposal- Insinkerator - Badger 2, Y, HP (3 year warranty) or equal.
F. Laundry Sinks - American Shower & Bath, or equal.
G. Faucets
i. Lavatory - Delta, Peerless, Kohler, or equal.
ii. Tub/Shower Diverter - Price Pfister, Kohler, or equal.
iii. Shower - Price Pfister, Kohler, or equal.
!\' G.t.:EC/v (;r ;'-<"~F';.. '\ .7)' i-:'"C~'iGE iOl', 1!G~". '(-:'.,(,e:~ 6",'-;(: ~)jL~\I/(-) (leads or
f'l ,<,;2';("61"[: ;F.;);~ t:.: ~'.'I:!, a {ICV,' ledi.'CirlQ c.r:-',;:,).I
H. Bathtubs - 5' Lasco; Hess Co; or equal.
I. Tub Wall Kits - Plaskolite, Elite; Nova, Seville; or equal.
J. Shower - Lasco, or equal.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 26 of 28
K. WATER HEATERS:
i. Shall be Reliance; Galaxie; Whirlpool; or equal, with an eight (8) year
warranty. Size shall be as required to service property.
ii. All shall have pressure/temperature relief valve with a drain line to the
outside; or if located on a concrete floor in center of house -
pressure/temperature relief valve and drain line shall be installed per
Building and Safety requirements.
t.:, \ t ,t~ ,::,'1':::':, ~'E' ~eCVE:.~ 1(' v,alls
iv. All units shall be insulated.
(':I"C r~i\ ~ ,L/_\ ),;': ,-;'v "'-,~ Vl'~le' IrE-Ere; ",.ne,,;!cl r,a,'f 2 t,(qh-f3fficier:cy
Ir-.-!,I'~r'
9020 . Domestic Water Distribution
.1. Each dwelling shall be provided with a continuing and sufficient supply of safe water
under adequate pressure and of appropriate quality for all household uses, and one
that will not impair the functioning or durability of the plumbing system or attachments.
.2. Connection shall be made to a publicly owned or publicly controlled water supply
system that is adequate to serve the demands of the project.
.3. Provide all connections to risers or fixtures from top to mains so that the entire system
can be drained at low point.
.4. Provide hot water supply to all fixtures except water closets.
.5. Support piping from the building structure by means of hangers to maintain required
grading and pitching of lines and to prevent vibration.
;-<L~f-\ ;:,.'~()i'~'i...,!.,\I.'~'~ '(I; ,',r'':;:' ;:'~c--~ .,i'c'.'':..I:'O'''5",'c[t-'-,
,::'-t._~, ~.'i;r(\/~7;;:~:,'\ ,t' ~:7-:-' i;': ,:,~{";_=-,'Dt=);_~,r";-;-
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: /.t; ;- _~'. ,_i'( (. ,'{.( h ,- ;:'/
9030 . Sanitary Waste
.1. Roto Root (clean) all drain lines to street through clean-cut cap, roof vent, etc.
.2. Each dwelling shall be provided with a water-carried system adequate to dispose of
domestic wastes in a manner which will not create a nuisance or endanger the health
of the occupants or the public.
.3. Connection shall be made to a publicly owned or publicly controlled system that is
adequate to serve the needs of the project.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 27 of 28
9100 . Heating, Ventilating, and Air Conditioning (HVAC)
9110 - Heating and Ventilating
.1. Heating and ventilating equipment shall be Trane; Bryant; Carrier; or equal, as
appropriate to the situation.
~,L:':fF..t..
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~,-.~ ..,-- r'r.:~' :r),] ~-,." ;:;::....~ :,./. .;.. sC'r3ceS'
.6. Provide wall thermostat with complete vent system, attic shield, roof jack, and gas
piping/shut-off valve.
,- :, (. _,,-':,~'~ " ,," i ,'~'; ::h!,"''Tl(-' r;r~:)
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.9. Install in an approved manner and location.
,10. Crawl Space Ventilation:
A. The space between the bottom of the floor joists and the earth under any building
(except such space as is occupied by a basement or cellar) shall be provided
with a sufficient number of ventilating openings through foundation walls or
exterior walls to ensure ample ventilation. Such openings shall be covered with a
corrosion-resistant wire mesh with a mesh size not greater than 1/2 in. nor less
than 1/4 in. in any dimension. The minimum net area of ventilating openings
shall not be less than 1 sq. ft. for each 150 sq. ft. of crawl space area.
B. One ventilating opening shall be within 3 ft. of each comer of each building where
such openings are required.
.11. Attic Space Ventilation
A. Cross ventilation shall be provided for each separate space. Ventilation
openings shall be protected against the entrance of rain and snow.
B. The ratio of the total net free ventilation area to the area of ceiling shall be not
less than 1/150, except that the ratio may be 1/300 if:
i. A vapor retarder having a transmission rate not exceeding one perm is
installed on the warm side of the ceiling;
ii. Between 25 and 50 percent of the required ventilating area is provided by
vents located in the eaves or cornices with the balance of the required
ventilation provided by ventilators located at least 3'-0. above the vents in
the eaves or comices; or
City of San Bemardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 28 of 28
iii. The attic space is accessible and suitable for future habitable rooms or
walled-off storage spaces have at least 50% of the required ventilating
area located in the upper part of the ventilated spaces as near the high
point of the roof as practicable and above the probable level of any future
ceiling.
9200 - Fire Protection Systems
9210 - Fire Protection Specialties
;-I:--\::J(;' f.T~'~,6 C(-'e":~r,:.:. ~n2.\ .....1'>: . '.i.. 2fi;;rC'..EC" ~ir~l ,\';~r.. EL.!5C~ ~-, Of eouai. Hard
",:- .~....:" . ,,-, ',' t" ~,: '"~. '. l :". " '.<( ,
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9300 - Electrical Systems
9310. Electrical Service and Distribution
.1. When required, provide a new electrical service box/meter. All existing circuits shall
be checked out and split as required. All new loads, outlets, lights, etc., must be on
additional circuits, unless prior approval is received from the EDA.
.2. Electrical Service installed at location shall be as recommended by Edison Company.
.3. Check all services and verify all electrical service, circuits (marking panel if not done);
replacing all faulty outlets, switches, damage and missing cover plates; for house and
garage.
.4. When encountering non-complying wiring, it is to be removed in its entirety. This is to
include boxes, lights, old panels (unless used for junction box), etc.; and to include
repair, patching, and painting of all areas affected (to match existing) -- ceilings, walls.
etc. All new wiring shall be concealed within walls, ceilings unless approval from the
EDA is obtained prior to installation.
.::r::'.'EE:\' ()~FC:;~' ,:t\,:7 \ /.:; t:;...:~~ ~Cc-,f c:: ri....cJ'€SC(-i;: \< I' ;sc~.o''-~~s(.('n;-ligillinQ wiH
Di7 ai.'o/..6d
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. L";'(; '.; i.),:/.'i.-".' !',f-;;';f-',,: us.:'!iii\
. - ~ . . '.: ",-
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~:";~E E {Ii Gc-por-..:. T (.IN!, y In,':lc'i. 0 .;" :''':-:' ~\'. ;.'(f~e2 E~ ef !,";:,'r.g 2' C n~ F'f;Ftl(j0m~Cj .'>Iic-.il
"'r'..f- ';'(;:"GI, fhSfcclc ,<::,['.:/,:(.)('S
t f~~.':,JE.E \' O,~-FC1RT:j:\;:-'-~-' /,f.; 1(;., ',': 'i;';;'~ "tp.',:;p.'1I)(,~ OE!6 '';':c .o:-.,j,"( ~.-/,c." L.;, "1,'(1 ir;
-;.",,;;,.t.'.>:F: j~} P!O'.i(~'f ;U: ;':;i,,;-'-' (-) .c,:: '~~:',.. ,;.;, YiV ler,':f:Ce"':f':~!
ExmBIT "P"
Summary of Program Services
1. Mission
The Mission of Key Life Skills is to improve lives, strengthen families, and promote self-
sufficiency.
2. Vision
Mary Erickson Community Housing ("MECH") believes in the power of knowledge. Our
vision is to empower individuals to live their best life by providing resources that offer
opportunities for success through guidance, mentoring and training in certain Life Skills
Education Programs that consist of the following areas:
· career development
. education
· financial management
. health and wellness
· personal development and character building
· family enrichment activities
· community involvement
3. Prol!ram Goals
· Provide necessary tools for improving lives through educational workshops
· Strengthen skills for increasing self-sufficiency
· Learn to overcome common barriers
· Develop financial acumen for security and family stability
. Promote career and occupational development for employment success
· Instill a sense of competence and confidence through personal development
. Encourage the belief that everyone in society benefits from individual
participation
· Connect with industry professionals to share their resources
· Offer direction and information for community involvement
· Collaborate with other social service and educational organizations to create
best practices
4. Prol!ram Imolementation
MECH shall begin Life Skills Education Programs upon acquisition/rehabilitation and
lease up of twelve (12) units of multi-family housing as a part of this Agreement.
MECH shall offer or cause to be offered six (6) Life Skills Education Programs
annually. Topics include (but are not limited to): financial management and
improvement; access to City and Community Services; reducing utility expenses and
utility programs; job skills and career opportunities; family interaction and conflict
management; heath, nutrition and food budgeting etc.
Life Skills Education Programs are mandatory for MECH Residents. Households shall
be allowed one warning absence per year. More than one unexcused absence shall be a
material violation of their lease and grounds for termination of tenancy.
55
P:~~AUdnlDMIIC'IdI~AmaIl2OOft17'1O-09M:.'}'era-c.onun.rur,H......IIlc.'~~COlll'd(F_1.,*
EXIllBIT "Q"
Developer Leasing Standards
Mary Erickson Community Housing
Resident Qualifying Standards, Policies and Procedures
1. Income Qualification
All units are to be reserved for Very Low Income Households (no greater than 50% of
Area Median Income). Area Median Income, adjusted for family size, for the Riverside-
San Bernardino Primary Metropolitan Statistical Area is established and amended from
time to time pursuant to Section 8 of the United States Housing Act of 1937 and
published by the California State Department of Housing and Community Development
For 2009, the Area Median Income level, adjusted for a family of four, is $64,500.
2. Employment Requirement
Minimum of one adult per household must be employed.
3. Household Size
Occupancy shall not exceed HUD occupancy standards. Minimum occupancy standards
shall be one person per bedroom.
4. Legal Resident
All tenants must be legal United States Residents or legal Resident Aliens.
5. Selection Considerations
Prospective renters will be pre-screened to confirm income does not exceed parameters
stated. Those that fit criteria will complete a rental application, resident applicant
questionnaire, Tenant Income Certification and appropriate certification and verification
forms. Upon receipt, selection of renters Will take into consideration:
. Date and time application is completed and received
. Credit and Criminal Background reports
. Income
. References
. Past Rental history
6. Required Applicant Documentation
Applicant will be required to provide the following documents to Property Management
Company for further review:
. Previous year's tax returns
. Two (2) most recent pay check stubs
. Copies of Social Security Cards on each family member
· Completed rental application (employment, banking information and
personal references will be checked)
· Criminal Background check and Credit check
. Photo copy of adult Drivers License(s)
. Address oflast two places of residence
56
~""~Alb..j -''-'~J.mend2OO'Nl1-2O-OtMwJ'l!ric:bDnc---,.Haaiq.I:K..to'-crApemmClllll'd(F"....o_...
7. Non Discrimination Policy
Mary Erickson Community Housing ("MECH") wanants that there shall be DO
discrimination against or segregation of any person or group of persons, on account of
race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing,
transferring, use, occupancy, tenure or enjoyment of MECH properties, nor shall the
lessee himself, or any person claiming under or through him, establish or permit any
practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, sub lessees, subtenants or vendees
in the properties herein being leased.
8. Lease Agreements
Standard month to month lease agreements win be used. Lease agreement must include
Mary Erickson Community Housing Rules and Regulations and Crime Free Prevention
Addendum in addition to any addendums used in common practice by the Property
Management Company.
. Renters must agree to standards, rules and procedures as set forth in the lease
agreements
. Renters must sign and agree to adhere to the Crime Free Prevention Addendum
9. Resident Re-certifications
Annually, renters must recertify their qualifications to continue to reside within the
apartments. Renters must complete: questionnaire, provide income and household size
documentation, updated employment information, and any other documents the Property
Management Company deems necessary. Renters must qualify based upon current
income qualifying standards with documentation which shall be provided to the Property
Management Company annually.
10. EvictionslMove Outs
A notice to move may be issued to by the Property Management Company to the Tenant
at any time for the following violations:
. Failure to pay rent
. Violation of the Crime Free Addendum
. Failure to fonow MECH rules and regulations
. Change offamily size (above occupancy limits)
. Change of income level, plus or minus
. Repeated complaints
Residents asked to move due to income considerations will be given 60 days notice.
57
~~~I _~r-1,~Alncnif2OO9'm.20-09M.yEra-~~"I./ae..-~Apa:mal:CoM'dcr_~dDo:
7/20/09" Item No. R25
Item Histor~
Backup distributed on 6/15/09, Item No. R45
::f ~l c;
~:{2{)
COMMUNITY DEVELOPMENT COMMISSION
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
CONTINUED FROM JUNE 15, 2009
Recommended for approval at the Redevelopment Committee meetinl!; on
June 4,2009 - Committee Members Present: Johnson, Baxter, Brinker
R55. Mary Erickson Community Housing, Inc. ("MECH") - Delegation and
authorization for the implementation of the Neighborhood Stabilization Program
("NSP") and approval of a certain Master Agreement between the Agency and
MECH (See New Staff Report and Resolutions) (Backup distributed on June
15, 2009, Item No. R45.) Ward 7
Mayor and Common Council
A. Resolution of the Mayor and Common Council of the City of San
Bernardino approving and authorizing the expenditure of certain
Neighborhood Stabilization Program ("NSP") Funds pursuant to the
Housing and Economic Recovery Act of 2008 ("HERA") in accordance
with NSP Grant Number B-08-MN-06-0520 in the principal amount
equal to $8,408,558. (Resolution not available at time of printing.)
(Community Development Commission)
B. Resolution of the Community Development Commission of the City of
San Bernardino accepting the delegation of administration and
management for the use of the City of San Bernardino Neighborhood
Stabilization Program ("NSP") Funds in accordance with the Housing
and Economic Recovery Act of 2008.
C. Resolution of the Community Development Commission of the City of
San Bernardino approving and authorizing the use of Low and Moderate
Income Housing Funds and Neighborhood Stabilization Program
("NSP") Funds through a certain Master Agreement by and between the
Redevelopment Agency of the City of San Bernardino ("Agency") and
Mary Erickson Community Housing, Inc. ("MECH"), pursuant to the
Neighborhood Stabilization Program.
No Action Taken
MOTION: That said resolutions A - C, be adopted.
Approved
MOTION: That the matter be continued to July 20, 2009.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
26
07/06/2009
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT:
Mary Erickson Community Housing, Inc.
("MECH") - Delegation and authorization for
the implementation of the Neighborhood
Stabilization Program ("NSP") and approval of
a certain Master Agreement between the
Agency and MECH
DATE: July 2,2009
SvnoDsis of Previous Commission/Council/Committee Action{s):
On June 4, 2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the
Mayor and Common Council and Community Development Commission consider this action for approval.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Recommended Motion(s):
(Mavor and Common Council)
A: Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the expenditure of
certain Neighborhood Stabilization Program ("NSP") Funds pursuant to the Housing and Economic Recovery Act of 2008
("HERA") in accordance with NSP Grant Number B-08-MN-06-0520 in the principal amount equal to $8,408,558
(Communitv Development Commission)
B: Resolution of the Community Development Commission of the City of San Bernardino accepting the delegation of
administration and management for the use of the City of San Bernardino Neighborhood Stabilization Program ("NSP")
Funds in accordance with the Housing and Economic Recovery Act of 2008
C: Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the use
of Low and Moderate Income Housing Funds and Neighborhood Stabilization Program ("NSP") Funds through a certain
Master Agreement by and between the Redevelopment Agency of the City of San Bernardino ("Agency") and Mary
Erickson Community Housing, Inc. ("MECH"), pursuant to the Neighborhood Stabilization Program
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Contact Person(s):
Project Area(s):
Supporting Data Attached:
Carey K. Jenkins
Phone:
(909) 663- I 044
N/A
Ward(s):
7th
o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s)
Funding Requirements:
Amount: $ 4.7 Million
Source:
$2.7 Million NSP Fund and
$2 Million Low and Moderate
Income Housing Fund
Budget Authority:
N/A
ezJlJR
Emil A. Marzullo, Interim Executive Director
Fiscal Review:
Russ (f!;; ~ rf)
Signature:
Interim Administrative Services Director
---------------------- ------------------------- ----------------------------- ---------------------- -----------------------------------------------------______________________________________..________~__ _____n_________.
Commission/Council Notes:
____________n______________n_n_____n_n_____________n______________~_n__________________~~_n_____________________________________n__~___n_n___________________n_n________________
P:\Agendas\Comm Dev CommissionlCDC 2009107.06_09 Mary Erickson - Master Agreement SR(Con't),doc
COMMISSION MEETING AGENDA
Meeting Date: 07/06/2009
Agenda Item Number: Ill? 5
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
----------------- ------------------------------- --------------------------------- -----______________________________________________________n__________________ _____________________________ ______________
MARY ERICKSON COMMUNITY HOUSING, INC. ("MECH") - DELEGATION AND
AUTHORIZATION FOR THE IMPLEMENTATION OF THE NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") AND APPROVAL OF A CERTAIN MASTER AGREEMENT BETWEEN THE
AGENCY AND MECH
BACKGROUND:
On November ]7,2008, the Mayor and Common Council of the City of San Bernardino ("Council") approved
the City of San Bernardino Economic Development Agency's ("Agency") response to the Neighborhood
Stabilization Program ("NSP"). The Agency's plan for deploying the NSP Funds was detailed in the
Agency's "Substantial Amendment to the Fiscal Year 2008-2009 Annual Action Plan". As described in this
Substantial Amendment, the Agency plans to allocate its NSP award of approximately $8.4 million among
four different housing programs. These four programs are:
(1). Down Payment Assistance ($920,000);
(2). Housing Opportunities for Households at or below 50% of the Area Median Income ("AMI") ($2.1
million);
(3). Acquisition, Demolition and Redevelopment ($920,000); and
(4). Acquisition, Rehabilitation and Resale of single-family residences, better known as the Intermediary
Services Program ($3.7 million).
The remainder of the funds shall be used to pay for NSP administrative costs. Of the four programs mentioned
above, only the "Housing Opportunities for Households at or below 50% of the AM]" program
("Rehabilitation Program") is reserved strictly for rental properties. The decision to restrict these funds to
rental housing was made for both strategic and programmatic reasons. From the programmatic perspective,
the U.S. Department of Housing and Urban Development ("HUD") requires that at least 25% of a participating
jurisdiction's NSP grant be used to address the housing needs of individuals and households whose income is
at or below 50% of the AMI. Given this restriction on the use of these funds, the Agency determined from a
strategic perspective that it would be best to use these funds for rental housing rather than for homeownership
units.
Rental is a better option for this category of funds because households earning 50% or below of the AMI
would more than likely struggle to adequately maintain a home for which they would be financially
responsible for maintenance and upkeep given the current depressed housing market. In order to make the
home ownership option viable for these types of households, the Agency would have to provide an exorbitant
amount of subsidy. Therefore, Agency Staff determined that these funds could optimally be used to acquire
and rehabilitate existing multi-family properties that could be rented out by professional management to
households whose income does not exceed 50% of the AMI. This enables the Agency to provide affordable
housing opportunities using NSP funding for this segment of the population.
In addition, Agency Staff recommends the use of funds from the "Acquisition, Demolition and
Redevelopment" program ("Demolition Program") mentioned above, to acquire foreclosed, small, multi-
family properties that are beyond repair. ]n these cases, and unless said properties were already subjected to a
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
P:V\gendas\Comm Dev Commission\CDC 2009\07-06-09 Mary Erickson - Master Agreement $R (Con'I).doc COMMISSION MEETING AGENDA
Meeting Date: 07/06/2009
Al!enda Item Nnmber: f2..5"~
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 2
demolition only through the Code Enforcement Department, the Agency would opt to demolish the structures
and hold them for future housing redevelopment opportunities rather than rehabilitating the properties.
Agency Staff has determined the best method for acquiring, demolishing or rehabilitating and operating these
properties would be through a non-profit corporation that could perform all of these functions on the Agency's
behalf. A non-profit corporation can acquire properties more efficiently than the Agency due to its more
streamlined organizational structure versus that of a public agency. Also, by having the non-profit corporation
acquire the properties on behalf of the Agency, the liability to the Agency is reduced because it would not be
the legal owner of the properties. There are many housing non-profits in the community that have greater
capacity than the Agency for rehabilitating and professionally managing properties. Finally, the Agency is in
the final stages of establishing an Agency-sponsored non-profit organization that could be the title holder to
certain properties acquired under the NSP, including those properties that are demolished. Given all of these
advantages, Agency Staff recommends having a non-profit corporation acquire, demolish or rehabilitate and
manage the properties under consideration.
Through the Agency's 2008 Notice of Funding Availability ("NOFA") the Agency identified a non-profit,
Mary Erickson Community Housing, Inc. ("MECH"), to perform the acquisition, rehabilitation and
management function for households at or below 50% of AMI. Since then, Agency Staff have visited and
inspected several ofMECH's existing multi-family rental projects. Also, Agency Staff has reviewed MECH's
organizational structure and financial statements. Based on the due diligence performed by Agency Staff, it
was determined that MECH is capable of efficiently and effectively acquiring, rehabilitating and managing
multi-family rental properties on behalf of the Agency.
Also, Agency Staff has decided to utilize the National Community Stabilization Trust ("NCST") in identifying
the multi-family properties to be acquired under the Rehabilitation Program and the Demolition Program.
NCST is a national non-profit clearing house created for the purpose of assisting public agencies to acquire
foreclosed, residential properties on a wholesale basis from the larger banks. NCST will be responsible for
identifying foreclosed properties that are owned by banks within the City and managing the acquisition
process for those properties. NCST will not charge any fee to the Agency for its services.
CURRENT ISSUE:
As a matter of implementing the Rehabilitation Program as described above, the Agency requests the authority
to enter into a Master Agreement ("Agreement") with MECH. The Agreement would give MECH the ability
to acquire foreclosed, multi-family rental properties on behalf of the Agency and rehabilitate them, as
determined by Agency Staff. The Agreement would also dictate the terms and guidelines for the operation of
the acquired and rehabilitated multi-family properties. Following is a summary of some ofthe more important
conditions that would be imposed on MECH for the acquisition of these properties:
(I). Each acquisition is subject to the administrative oversight by the Agency.
(2). Properties acquired must be within those census tract blocks within the City identified by the Agency
as being the most impacted by the foreclosure crisis, otherwise known as the "NSP Target Zone".
(3). Properties acquired with NSP funding must be foreclosed and/or abandoned for at least 90 days.
___________________u _______________________~_____________________ _____________________ __________________________________________________________________________________________________
P:\AgendasIComm Dev Commission\CDC 2009\07-06-09 Mary Erickson _ Master Agreement SR (Con't).doc
COMMISSION MEETING AGENDA
Meeting Date: 07/06/2009
Agenda Item Nnmber: /l!.65"
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 3
(4). Properties must be obtained at a minimum discount of five percent from the current appraisal value
and in the aggregate all NSP acquired properties must be acquired at a minimum discount of 15% from
the appraised value.
(5). All properties acquired for the purpose of rehabilitation must eventually be leased out to households
whose total income is at or below 50% of the AMI.
Given the urgency of community conditions, the opportune availability of funds and current real estate market
prices, there is now a perfect window of time in which to mitigate the negative housing conditions currently
affecting neighborhoods throughout the City.
Orf!anization Overview:
The overall mission of MECH is to promote the well-being of working families in Southern California by
increasing and preserving the supply of affordable housing. Established as a 501(c)(3) non-profit
organization, MECH is designated as a Community Housing Development Organization ("CHDO") currently
serving Orange County and parts of Riverside, Los Angeles and San Bernardino Counties.
MECH was founded in 1991 by its namesake, a retired school teacher who was devoted to the principals of
community participation and well-being. MECH established the first affordable housing complex in San
Clemente and has since grown to include multiple properties serving hundreds of working poor families within
Southern California. Specific affordable multi-family housing developments include:
(I). Acquisition and rehabilitation of a 24-unit multi-family property targeted to households at or below
50% of AMI located at 25421 Cole Street in Lorna Linda, CA with the property currently managed by
Capstone.
(2). Acquisition, rehabilitation and resale of a total of 17 single family homes targeted to home owners
above 80% of AMI for the County of Los Angeles.
(3). Acquisition and rehabilitation of 22 units of scattered site multi-family housing targeted to households
at or below 50% of AMI in the City of San Clemente, CA with the property currently managed by Del
Mar PMC.
(4). New construction of22 units of multi-family housing targeted to households at or below 50% of AMI
in the County of Riverside. This project is under construction.
(5). Acquisition, rehabilitation and resale of a total of 10 single family homes targeted to home owners
above 80% of AMI for the City of Corona Neighborhood Stabilization Program. This program was
recently launched.
The overall goal of MECH is to provide quality affordable housing for working families, promote the
economic self-sufficiency of their tenants through free Life Skills classes, transition tenants into homebuyers,
help transition residents' children into successful, productive adults and develop community support for
affordable housing. Since 2006, the Officers of the Board of Directors for MECH include Susan McDevitt,
Executive Director; Josh Anderson, President; Kathleen K. Loewy, Vice President; John Gould, Secretary;
Gerald Gibbs, Treasurer; and Jeanne Davis, Director at Large.
--------------------------------- -------------------------------------------------------------------------------------------------------
P:\Agendas\Comm Dev Cornmission\CDC 2009\07-06-09 Mary Erickson - Master Agreement SR (Con't),doc
COMMISSION MEETING AGENDA
Meeting Date: 07/06/2009
Agenda Item Number: /2-15)
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 4
Proiect Overview:
The primary Project under this Master Agreement consists of the acquisition and rehabilitation of the 25
separate 4-plex apartment complexes. The acquisition and ultimate rehabilitation of these four-plexes
comprises the first phase ("Phase I") of the Project.
Based on the terms and conditions of the Agreement, it will be the intent of MECH to acquire title to each of
the 4-plexes through its own efforts either through direct negotiations with the current owners or through
negotiations with lenders for the purchase of the targeted properties. Acquisitions will be funded with a
combination ofNSP funds in the amount of$2.1 million, Agency Housing 20% Set aside funds in the amount
of $1 million and other available funds to be procured by MECH for the balance of the Project. Please refer to
Exhibit "B" that identifies the Preliminary Project Budget.
MECH will also be given the authority to negotiate for the other 4-plexes and vacant lots located in the area
generally bounded by 19th Street to the north, Sunrise Lane to the south, Guthrie to the east and Argyle to the
west. In this case, however, the purchase agreements and escrow documents for these 4-plexes and vacant lots
will then be assigned to the Agency or its designated non-profit corporation, as assignee, to then close each of
these escrows. This component of the Project is considered Phase 2 ("Phase 2") and is also identified in
Exhibit "A" of the attached map.
In order to provide safeguards to ensure that the Project will be developed as envisioned by the Agency, after
the acquisition of each 4-plex within the Project, MECH will not resell any of the acquired properties without
prior written approval of the Agency. Additionally, once MECH acquires a minimum of five (5) separate 4-
plexes on 19th Street and five (5) separate 4-plexes on Sunrise Lane, it will initiate a process with the City to
prepare and file an application for a new parcel map for these properties by creating one legal parcel for 19th
Street and one legal parcel for Sunrise Lane for all 4-plexes then owned by MECH. Any subsequently
acquired 4-plexes will be amended into the applicable parcel map on 19th Street or Sunrise Lane so that
separate 4-plexes or units within each 4-plex cannot be resold by MECH except to another single property
owner.
Though it will not directly acquire any of the properties identified as Phase 2 of the Project, MECH will be
given the right of first opportunity to undertake all or any portion of the redevelopment of this area which is
presently targeted for a senior citizens apartment complex and a single family owner occupied housing
development. Both of these conceptual proposals will be targeted to low and moderate income households.
After an adequate number of parcels have been acquired under Phase 2, the Agency will allow MECH to
submit a proposal for the development of the parcels under consideration which will be reviewed by the
Agency and negotiated in good faith by both parties.
In all instances, MECH will identify Eligible Properties and will negotiate purchase and sale agreements to be
approved by the Agency sponsored non-profit corporation that provide for a discount in purchase price from
the Current Market Appraised Value of no less than five percent (5%) for any individual property, but a
blended aggregate average discount of at least fifteen percent (15%). No property will be purchased at a price
that reflects a discount of not less than the required discount unless MECH obtains written approval from the
Agency Staff as the administrator of the program.
For those properties recommended for demolition, the Agency sponsored non-profit corporation will acquire
them and select the appropriate demolition firm to conduct such work from no less than four (4) separate
------------------------------------------------------------------------------------------------------- ---------------- ---------------------- --------------------------------------------------------------
P:\AgendasIComm Dev Commission\CDC 2009\07-06_09 Mary Erickson - Master Agreement SR (Con'tjdoc
COMMISSION MEETING AGENDA
Meeting Date: 07/06/2009
Agenda Item Number: (2...~~
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 5
solicitations for service or it may utilize the existing pre-approved list of demolition firms presently used by
the City's Code Enforcement Department. This process will be overseen by the Agency and will include
provisions for environmental testing and demolition debris removal services.
Rehabilitation Process:
Once acquired, MECH will ensure that specific activities, goals and milestones are met with respect to the
overall rehabilitation process. Specifically, this will include the following:
(I). Secure the property including a locked perimeter fencing and board up of windows, when necessary.
(2). Adequate property management including maintaining utility service connections and keeping the
interior and exterior appearance of each property in an attractive manner;
(3). Provide a total development budget and financing plan to the Agency for each property being
purchased. The budget estimate will include all costs associated with the development of the
property, including acquisition, labor and materials for rehabilitation work, contingency, construction
loan interest, construction loan origination fee, the general contractor fee and overhead, marketing
costs, relocation, lease-up costs, replacement reserves, permanent financing origination fee, closing
costs and developer fee. The financing plan will demonstrate all sources offunds readily available for
the acquisition and rehabilitation of each property to be purchased.
(4). Provide a time line in the Agency's format for completion of the various steps involved in the
acquisition, rehabilitation and lease-up of these properties. The timeline will start from the point that
MECH enters into escrow for the acquisition of each specific property through the stabilization of
operations.
(5). Provide project management services for rehabilitation of projects, to include but not be limited to:
establishing a scope of work, identifying or obtaining the financing to pay for all labor and materials,
conducting weekly on-site project inspections, managing relationships with all sub-contractors,
verifying permits and City compliance, administering both conditional and unconditional lien releases,
advertising the apartments for rental through various local media, conducting mass mailings targeted at
potential renters, partnering with local churches and other community groups to identify prospective
Qualified Tenants, processing the rental application, coordinating quick close of escrow and
expediting lender requirements.
(6). Maintain adequate files for each property, ensuring compliance with all Agency and lender
requirements, all documents required to verify compliance with the Affirmative Marketing Guidelines
such as tenant waiting lists, copies of advertisements published in local and community newspapers,
etc.
Rel!Ular Revortinf! Reauirements:
MECH will commit to an Agency-approved program to provide periodic monitoring of compliance of each
property being purchased under the Program. Additionally, within 30 days after the end of each calendar
quarter, MECH will provide a status report to the Agency Staff, City Council and the CDC regarding the
activities of MECH and progress made on overall NSP objectives. The report will detail, among other things:
(I) funds expended to date; (2) progress made on acquisition activities; (3) any relocation that has occurred;
(4) properties placed back into service; (5) properties in the process of being rehabilitated; and (6) any
unforeseen issues of a material nature.
-------------------------____________________________________________________u____________________________________ __________________ ______________________________________________________ _____________________
P:\Agendas\Comm Dev Commission\CDC 2009\07-06-09 Mary Erickson - Master Agreement SR (Con't)doc
COMMISSION MEETING AGENDA
Meeting Date: 07/06/2009
Agenda Item Nnmber: j(SS-
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 6
Defaults and Remedies:
For the occurrence of any identified Event of Default by MECH, the City or the Agency, as an agent of the
City, can take any of the following remedies: (1) demand that the Event of Default be cured (if curable) within
30 calendar days; (2) declare that any unused amount ofNSP or other Agency funds be immediately repaid to
the City or Agency; (3) take any and all actions permitted by law that is necessary to enforce performance and
observance of any obligation, agreement or covenant of MECH under the Agreement or any other related
agreements; (4) suspend allowing MECH access to any NSP or Agency funds unless the Event of Default (if
curable) is cured: (5) demand reimbursement from MECH for any payments made to it by the City or Agency
for which the contracted work product was not satisfactorily delivered; and (6) take possession of any material
or other work product purchased or produced by MECH for the Project.
Termination:
The Agreement may be terminated by either party for any reason by giving the other party ninety (90) calendar
days' prior written notice. The Agency will pay MECH for all work authorized by the Agency and completed,
prior to the effective termination date. In the event of a termination of the Agreement because of performance,
MECH will provide all documents, notes, maps, reports, data or other work product developed in performance
of the Scope of Services to the Agency, within ten (10) calendar days after the effective date of the termination
and without additional charge to the Agency.
Comvensation:
Compensation for services rendered will be derived from three separate activities which include a Developer's
Fee, Property Management Fee and Residual Receipts Income from the operating cash flows from the various
Eligible Properties that comprise the Project once they are completed, leased and have reached "financial
stability".
(1). The Developer's Fee will be included as a line item in the development budget for each property
presented to the Agency prior to its acquisition. The amount of Developer Fee will be equal to a flat
fee based on the Total Development Cost for each property as reflected in the Agency established
Development Pro Forma Template. The total development cost will be comprised of those approved
line items that appear in the Development Pro Forma Template. A Developer Fee Bonus equal to an
additional two percent (2%) that will be paid ifMECH is successful in obtaining a cumulative amount
of at least one million dollars ($1,000,000) from financing sources other than the Agency that is
applied toward the acquisition, rehabilitation, and/or operations of the properties on terms approved by
the Agency Staff in the exercise of their discretion.
(2). The Property Management Fee will be included as a line item in the First Year Operating Budget for
each property presented to the Agency Staff by MECH prior to its acquisition and rehabilitation. This
fee will only be paid in the case where such a property is leased to eligible tenants and where there is
adequate revenues generated from the operation of the property to pay such a fee. This fee shall not
exceed seven percent (7%) of the Effective Gross Income.
(3). The Agency shall receive 50% of any "surplus cash flow" after all operating expenses and debt service
payments have been made on each property acquired, rehabilitated and placed into service by MECH.
This surplus cash flow is commonly called Residual Receipts Income ("Residual Receipts"). The
remaining portion of Residual Receipts will be available to MECH as the owner of the property.
____________________________________u_____________________________________________________________~____________________________________________~...._.____________________________-------------------...-
P:\Agcndas\CollUn Dcv Commission\CDC 2009\07.06-09 Mary Erickson - Master Agll;\:mcnl SR (Con'l).doc
COMMISSION MEETING AGENDA
Meeting Date: 07/06/2009
Agenda Item Number: /2...'5'5>
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 7
Bud!!et Request:
For activities associated with Phase 1 of the Project, the Agency Staff requests authority to utilize NSP funds
derived from the Housing Opportunities for Households at or below 50% of the AMI in the amount of $2.1
million. In addition, the Agency Staff also requests that an additional $1 million Tax Increment Housing Set-
Aside Funds be made available for Phase 1 activities. As it relates to Phase 2 activities, the Agency Staff
requests authority for the Agency or its designated non-profit to use $600,000 in NSP Demolition funds and $1
million in Tax Increment Housing Set-Aside funds for acquisition and demolition purposes.
In those instances where a property needs to be acquired in order to complete the overall redevelopment
strategy but said property has not been foreclosed upon, and thus not eligible under NSP, Tax Increment
Housing Set-Aside Funds can be used for acquisition, demolition or rehabilitation purposes. This is applicable
to both Phases 1 and 2.
ENVIRONMENTAL IMP ACT:
None.
FISCAL IMPACT:
There will be no fiscal impact to the City's General Fund. The services provided under the Rehabilitation
Program, the Demolition Program and the associated administration costs, will be funded either with $2.7
Million in NSP funds derived from HUD or $2 Million funds from the Agency's Tax Increment Housing Set-
Aside. As it relates to the $2 Million of Agency Housing set-aside, these funds are being allocated to assist
with NSP activities in the form of the Agency's Residential Revitalization line item in the upcoming Fiscal
Year 2009-2010 Agency Budget.
RECOMMENDATION:
That the Mayor and Common Council and Community Development Commission adopt the attached
Resolutions.
~:;:
Emil A. Marzullo, Interim Executive Director
----------------------------------------------------------------------------------------------------------------- ------------------------ ----------------------------------------------- ----------------------
P:\Agendas\Comm Dev CommissionlCDC 2009\07-06-09 Mary Erickson - Master Agreement SR (Con't) doc
COMMISSION MEETING AGENDA
Meeting Oate: 07/06/2009
Agenda Item Number: Ie.b~
EXHIBIT "A"
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EXHIBIT "B"
NEIGHBORHOOD STABILIZATION PROGRAM
19TH AND SUNRISE PRELIMINARY BUDGET (as of 06-09)
Phase 1 Phase 2
Funding Acquisition Acquisition
Source Rehabilitation Demolition Total
Current Funding
NSP1 (a) 2,100,000 600,000 $ 2,700,000
20% Housing Set-aside (b) 1,000,000 1,000,000 $ 2,000,000
Subtotal 3,100,000 1,600,000 $ 4,700,000
Future Funding
NSP-State (c) 2,000,000 $ 2,000,000
NSP2 (d) 650,000 400,000 $ 1,050,000
CDFf (c) 850,000 $ 850,000
20% Housing Set-aside (e) 4,000,000 $ 4,000,000
Subtotal 3,500,000 4,400,000 $ 7,900,000
TOTAL $ 6,600,000 $ 6,000,000 $ 12,600,000
(a) NSP1 funds have already been allocated to the City and are available for immediate draw down.
(b) RDA Housing set-aside funds have been budgeted for FY09-10.
(c) Requires Mary Erickson to submit an application for funding.
(d) Requires EDA to submit an application for funding.
(e) Based on receipt of future 20% housing setaside funds (FY10-11 and FY11-12).
1
2
3
4
5
6
7
RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
10 Approval and Grant Agreement duly executed by and between the City and the United States
11 Department of Housing and Urban Development ("HUD") as NSP Grant Number B-08-MN-06-
12 0520;and
13
WHEREAS, the City intends to authorize the Redevelopment Agency of the City of San
14 Bernardino (the "Agency"), pursuant to this Resolution, to administer all such NSP Funds as shall
15 be received by the City pursuant to said NSP Grant and to otherwise provide for and administer the
16 NSP program that shall be undertaken within the City by the Agency as required of the City under
17 the Funding Approval and Grant Agreement; and
18
WHEREAS, the City recognizes that various non-profit corporations, whether controlled by
19 the Agency or which are independent of the Agency, will be acquiring title to single-family
20 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
21 the applicable lenders in an effort to implement the process for the acquisition, demolition or
22 rehabilitation and resale of all such foreclosed properties or building lots after completion of
23 demolition; and
24
WHEREAS, it is necessary at this time for the City to specifically authorize the actions as
25 required to be undertaken by the Agency for the administration of the NSP funds and the
26 disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
27 properties within designated target areas or elsewhere in the City as may be permitted by HERA and
28 in furtherance of the use of the NSP funds by the Agency on behalf of the City; and
I
P:\Agendas\ResolutionsIResolutionsI2009\07_06_09 Mary Erickson - Expenditure of"l'<SP Funds MeC Reso A (Cont'd) doc
1 WHEREAS, the Funding Approval and Grant Agreement (the "NSP Grant Agreement") by
2 and between HUD and the City as was finally executed on April 23, 2009, and a copy of said
3 Agreement is attached to this Resolution as Exhibit "A".
4 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY
5 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
6 FOLLOWS:
7 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
8 respects.
9 Section 2. This Mayor and Common Council of the City of San Bernardino (this "Council")
10 hereby authorizes and directs the Agency staff, subject to confirmation and ratification by the
11 Community Development Commission of the City of San Bernardino (the "Commission"), to
12 implement all aspects of the NSP program and the disbursement of the NSP grant funds that are
13 available to the City pursuant to HERA and as further set forth in the NSP Grant Agreement. The
14 Agency shall be solely responsible for all administrative, audit and compliance matters required
15 either under HERA or the NSP Grant Agreement as may be required for the use of the NSP funds
16 within the City.
17 Section 3. This Council further authorizes and directs that the NSP funds as shall be
18 received by the City and administered by the Agency as authorized by this Resolution shall be used
19 and applied for the following categories of expenditures and programs and not to exceed the dollar
20 amounts as provided in this Section 3:
21
22
23
24
25
26
27
28
(a)
(b)
$920,000 - Down payment assistance for qualified single family homebuyers;
$2,100,000 - rental housing opportunities for households at or below 50% of Area
Median Income for multi-family rentals housing projects to be acquired by non-profit
corporations which are either independent of the Agency or controlled by the
Agency;
(c)
$920,000 for acquisition, demolition and redevelopment of single-family and multi-
family residential structures to be acquired by either the Agency or non-profit
2
P:\A.gendas\ResolutionslResolutions\2009\07-06-09 Mary Erickson - Expenditure ofNSP Funds MCC Reso A (Cont'd),doc
1
corporations which are either independent of the Agency or controlled by the
2
3
4
5
6
Agency; and
(d)
$3,700,000 for the acquisition, rehabilitation and resale of single-family foreclosed
residences through an Intermediary Services Program as may be initiated and
approved by the Commission for the Agency either by the Agency or through non-
profit corporations which are either independent of the Agency or controlled by the
7
Agency.
8
9
(e)
Staff is authorized to make a one-time transfer up to twenty percent (20%) of any line
item to another line item based on need.
10 The Agency shall be further authorized and directed to payor reimburse to the Agency from the
11 NSP funds as are allocated to the various categories of housing activities specified above such dollar
12 amounts as are required to provide for the effective administration and management of the NSP
13 program as shall be implemented by the Agency. Such dollar amounts of the NSP funds to be used
14 and applied by the Agency for such administration and management shall not exceed those dollar
15 limitations and other limitations on eligible expenditures as may be established by HUD either
16 pursuant to HERA or which are otherwise applicable to the use of the NSP funds.
17 Section 4. This Resolution shall take effect upon its adoption and execution in the manner
18 as required by the City Charter.
19 /1/
20 /1/
21 //1
22 //1
23 //1
24 /1/
25 /1/
26 //1
27 //1
28 /1/
3
P:\AgendasIResolutionslResolutions\2009\07-06-09 Mary Erickson - Expenditure ofNSP Funds MeC Reso A (Cont'd),doc
1
2
3
4
5
6
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
Common Council of the City of San Bernardino at a
7
17
18
19
meeting
,2009, by the following vote to wit:
Nays
Abstain
Absent
Rachel G. Clark, City Clerk
20 The foregoing Resolution is hereby approved this
21
22
23
24
25
26
27 By:
day of
,2009.
Patrick J. Morris, Mayor
City of San Bernardino
Approved as to Form:
28
James F. Pemnan, City Attorney
4
P:\AgendasIResolutions\ResolulionsU009\07-06-09 Mary Erickson - Expenditure ofNSP Funds MCC Reso A (Cont'd) doc
EXHIBIT "A"
2009-105
FUNDING APPROVAL AND GRANT AGREEMENT FOR
NEIGHBORHOOD STABILIZATION PROGRAM (NSP) FUNDS
AS AUTHORIZED AND APPROPRIATED UNDER THE
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
(PUBLIC LAW 110-289, JULY 30, 2008)
NSP GRANTEE:
City of San Bernardino
NSP GRANT NUMBER:
B-08-MN-06-0520
NSP GRANT AMOUNT:
$8,408,558
MAR -:i 20J
NSP APPROVAL DATE:
This Grant Agreement between the Department of Housing and Urban Development (HUn) and
City of San Bemardino (Grantee) is made pursuant to the authority of sections 2301 - 2304 of
the Housing and Economic Recovery Act of 2008 (public Law 110-289 (July 30, 2008))
(HERA). The program established pursuant to section 2301-2304 is known as the
"Neighborhood Stabilization Program" or "NSP," The Notice of Allocations, Application
Procedures, Regulatory Waivers Granted to and Altemative Requirements for Redevelopment of
Abandoned and Foreclosed Homes Under the Housing and Economic Recovery Act, 2008
published at 73 FR 58330 (October 6, 2008) (Notice); HERA; the Grantee's submission for NSP
assistance (Grantee Submission); the HUn regulations at 24 CFR Part 570 (as modified by the
Notice and as now in effect and as may be amended from time to time) (Regulations); and this
Funding Approval, including any special conditions, constitute pRlt of the Grant Agreement.
Subject to the provisions of this Grant Agreement, HUn will make NSP Grant Funds in the
amount of $8,408,558 available to the Grantee upon execution of this Grant Agreement by the
parties, The Grantee shall have 18 months from the date of HUn's execution of this Grant
Agreement to obligate the NSP Grant Amount pursuant to the requirements of HERA and the
Notice. The Grantee shall have 48 months from the date of HUn's execution of this Grant
Agreement to expend the NSP Grant Amount pursuant to the requirements of the Notice, The
NSP Grant Funds may be used to pay eligible costs arising from eligible uses incun'ed after the
NSP Approval Date provided the activities to which such costs are related are carried out in
compliance with all applicable requirements, Pre-award planning and general administrative
costs may not be paid with funding assistance except as permitted in the Notice; the Notice limits
such costs to those incuned on or after September 29, 2008, Other pre-award costs may not be
paid with funding assistance except as pennitted by 24 CFR 570.200(h); for purposes of NSP,
such costs are limited to those incuned on or after the date that the NSP substantial amendment
was received by HUn.
2009-105
2
The Grantee agrees to assume all of the responsibilities for environmental review,
decisionmaking, and actions, as specified and required in regulations issued by the Secretary
pursuant to Section 104(g) of Title I of the Housing and Community Development Act, as
amended (42 U.S.C. 5304) and published in 24 CPR Patt 58. The Grantee further acknowledges
its responsibility for adherence to the Grant Agreement by sub-recipient entities to which it
makes funding assistance hereunder available.
This Grant Agreement may be amended only with the prior wdtten approval of HUD. In
considering proposed amendments to this Grant Agreement, HUD shall review, among other
things, whether the amendment is otherwise consistent with HERA, the Notice, and the
Regulations.
. The Grantee may amend its Grantee Submission; however, such amendments, including
substantial amendments as defined in 24 CPR Part 91, wiII be subject to the requirements of 24
CFR Patt 91 (or any successor regulation) and any revisions HUD may make to the Notice (or
any successor Notice or regulation).
The Grantee shall at all times maintain an up-to-date copy of its Grantee Submission, including
all amendments approved by HUD, on its Internet website as required by the Notice. FUlther,
the Grantee shall maintain information on all drawdowns, deposits, and expenditures of grant
funds and program income under this Funding Approval and Grant Agreement and any other
records required by 24 CPR 570.506, in its files and shall make such information available for
audit or inspection by duly authodzed representatives of HUD, HUD's Office of the Inspector
General, or the Comptroller General of the United States.
The Grantee shall submit information on performance measurement as established by the
Secretary for activities undertaken with NSP grant funds.
The Grantee is advised that providing false, fictitious or misleading information with respect to
NSP Grant Funds may result in criminal, civil or administrative prosecution under 18 USC
~1001, 18 USC ~1343, 31 USC ~3729, 31 USC ~3801 or another applicable statute.
Close-out of this grant shall be subject to the provisions of 24 CPR 570.509 or such close-out
instructions as may hereafter be issued by HUD specifically for NSP grants.
2009-105
3
This NSP Grant Agreement is binding with respect to HOD in accordance with its terms upon
the execution by HOD in the space provided above, subject to execution on behalf of the
Grantee,
The United States Department of
Housing and Urban Development
The Grantee
City of San Bernardino
~~al
fl-$/eK v: m~.>'
Name of Authorized Official
Signature of Autho!1zed Offici
William G, Vasquez
Name of Authorized Official
DirectOl'
Community Planning and Development
/l/-1lj/i?A.
Title of Autho!1zed Official
Title of Authorized Official
3o/~
Date of Sigftur
1'/.23/07'
Date of Signat~re
95-6000772
Grantee Tax Identification Number
For HUD CFO Use Only
Current Balances
IncreasesfI)ecreases
Ending Balance
Date
1
2
3
4
5
6
RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTING THE DELEGATION OF
ADMINISTRATION AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD STABILIZATION PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
7
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
10 Approval and Grant Agreement duly executed by and between the City and the United States
11 Department of Housing and Urban Development ("HUD") as NSP Grant Number B-08-MN-06-
12 0520;and
13 WHEREAS, the City pursuant to a duly adopted Resolution on this date has authorized the
14 Redevelopment Agency of the City of San Bernardino (the "Agency") pursuant to said Resolution,
15 to administer all such NSP funds as shall be received by the City pursuant to said NSP Grant and to
16 otherwise authorize the Agency to provide for and administer the NSP program that shall be
17 undertaken within the City by the Agency as required of the City under the Funding Approval and
18 Grant Agreement; and
19 WHEREAS, the Agency intends that various non-profit corporations, whether controlled by
20 the Agency or which are independent of the Agency, will be acquiring title to single-family
21 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
22 the applicable lenders in an effort to implement the process for the acquisition, demolition or
23 rehabilitation and resale of all such foreclosed properties or building lots after completion of
24 demolition; and
25 WHEREAS, it is necessary at this time for this Community Development Commission of the
26 City of San Bernardino (this "Commission") to concur in the request as made by the Mayor and
27 Common Council of the City of San Bernardino ("Council") and to specifically authorize Agency
28 Staff to undertake the actions as required of the Agency for the administration of the NSP funds and
I
P:\AgendasIResolutions\ResolutionsI2009\07-06-09 Mary Erickson - Expenditure ofNSP Funds CDC Reso B (Cont'd)doc
1 the disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
2 properties within designated target areas or elsewhere in the City as may be permitted by HERA and
3 in furtherance of the use ofthe NSP funds by the Agency on behalf of the City; and
4 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
5 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
6 on April 23, 2009.
7 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
8 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
9 FOLLOWS:
10 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
11 respects.
12 Section 2. The Commission hereby authorizes and directs Agency Staff to implement all
13 aspects of the NSP program and the disbursement of the NSP grant funds that are available to the
14 City pursuant to HERA and as further set forth in the NSP Grant Agreement. The Commission
15 recognizes that the Agency shall be solely responsible for all administrative, audit and compliance
16 matters required either under HERA or the NSP Grant Agreement as may be required for the use of
17 the NSP funds within the City.
18 Section 3. The use and application of the NSP funds by the Agency shall not exceed those
19 limitations set forth in Section 3 of the Resolution of the Council of even date with this Resolution
20 authorizing the Agency to administer and manage the NSP program subject to the confirmation by
21 the official action of this Commission. The Agency is hereby authorized to pay directly or to
22 otherwise reimburse the Agency for those costs and expenses of the administration and management
23 of the NSP program subject to such dollar limitation and other limitations on eligible expenditures
24 as may be established by HUD either pursuant to HERA or which are otherwise applicable to the
25 use of the NSP funds.
26 Section 4. This Resolution shall take effect from and after its date of adoption by this
27 Commission.
28 III
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1
2
3
4
5
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTING THE DELEGATION OF
ADMINISTRATION AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD ST ABILIZA TION PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
meeting
6 Development Commission of the City of San Bernardino at a
18
, 2009, by the following vote to wit:
Navs
Abstain
Absent
Secretary
19 The foregoing Resolution is hereby approved this
20
21
22
23
day of
,2009.
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
24 Approved as to Form:
25
26
By:
27
28
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1
2
3
4
5
6
7
8
RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
9 WHEREAS, the Mayor and Common Council of the City of San Bernardino ("Council")
10 pursuant to a duly adopted Resolution on this date authorized the Redevelopment Agency of the
11 City of San Bernardino (the "Agency") to administer funds received through the Neighborhood
12 Stabilization Program ("NSP") as shall be received by the City of San Bernardino ("City") pursuant
13 to a grant from the United States Department of Housing and Urban Development ("HUD") and to
14 otherwise provide for and administer the NSP program that shall be undertaken within the City by
15 the Agency as required of the City under the Funding Approval and Grant Agreement duly executed
16 by and between the City and HUD as NSP Grant Number B-08-MN-06-0520; and
17 WHEREAS, Mary Erickson Community Housing, Inc. ("MECH"), a California non-profit
18 public benefit corporation, which is independent of the Agency, will be acquiring title to multi-
19 family foreclosed properties in an effort to implement the process for the acquisition, redeveloping
20 and operation of foreclosed properties within the area agreed upon pursuant to this Resolution; and
21 WHEREAS, the Agency will be acquiring title to multi-family foreclosed properties in an
22 effort to implement the process for the acquisition and demolition of all such foreclosed properties;
23 and
24 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
25 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
26 on April 23, 2009.
27 III
28 III
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1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
2 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
3 FOLLOWS:
4 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
5 respects.
6 Section 2. The Community Development Commission of the City of San Bernardino
7 ("Commission") hereby authorizes and directs Agency staff to implement the administration and
8 disbursement of the $2,100,000 of NSP grant funds for acquisition of foreclosed properties and
9 $1,000,000 of the Housing set-aside funds for the purpose of acquiring and redeveloping the
10 properties per the NSP Grant Agreement. The Commission recognizes that the Agency shall be
11 solely responsible for all administrative, audit and compliance matters required either under HERA,
12 the NSP Grant Agreement and State Community Redevelopment Law as may be required for the
13 use of the NSP and Housing set-aside funds within the City.
14 Section 3. The Commission hereby authorizes and directs Agency Staff to implement the
15 administration and disbursement of $600,000 of the NSP grant funds and an additional $1,000,000
16 of the Housing set-aside funds for the purpose of acquiring and demolishing the properties per the
17 NSP Grant Agreement. The Commission recognizes that the Agency shall be solely responsible for
18 all administrative, audit and compliance matters required either under HERA, the NSP Grant
19 Agreement and State Community Redevelopment Law as may be required for the use of the NSP
20 and Housing set-aside funds within the City.
21 Section 4. The use and application of the NSP and Housing set-aside funds by the Agency
22 shall not exceed those limitations set forth in Sections 2 and 3 of the Resolution of the Mayor and
23 Common Council of even date with this Resolution authorizing the Agency to administer disburse
24 NSP and Housing set-aside funds subject to the confirmation by the official action of this
25 Commission.
26
Section 5.
The Commission hereby approves the use of Low and Moderate Income
27 Housing Funds and NSP Funds through a certain Master Agreement by and between the Agency
28 and MECH and hereby authorizes the Interim Executive Director of the Agency to execute that
2
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1 certain Master Agreement on behalf of the Agency together with such technical and conforming
2 changes as may be recommended by the Interim Executive Director of the Agency and approved by
3 the Agency Counsel.
4 Section 6.
5 Commission.
6 /1/
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8 /1/
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This Resolution shall take effect from and after its date of adoption by this
3
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1
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3
4
5
6
7
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
8 Development Commission of the City of San Bernardino at a
,2009, by the following vote to wit:
meeting
The foregoing Resolution is hereby approved this
21
22
23
24
25
26 Approved as to Form:
19
20
Nays
Abstain
Absent
Secretary
day of
,2009.
Patrick 1. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
27 By: Ck~.AvI /
28 AgenV~;
4
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NEIGHBORHOOD STABILIZATION PROGRAM
DEVELOPER MASTER AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
AND
MARY ERICKSON COMMUNITY HOUSING, INC.
JULY 6, 2009
This Master Agreement ("Agreement") is made and entered into as of July 6, 2009, by
and between the Redevelopment Agency of the City of San Bernardino ("Agency"), a public
body, corporate and politic, and, Mary Erickson Community Housing, Inc., a California non-
profit corporation, hereinafter referred to as "Developer". The Agency and Developer are
sometimes referred to herein individually as a "Party" and collectively as the "Parties".
RECITALS
WHEREAS, on July 30, 2008, the United States Government adopted the Housing and
Economic Recovery Act of2008 ("HERA"); and
WHEREAS, pursuant to Title III of Division B of HERA (Public Law 110-289, 122 Stat.
2650), the United States Government created a program known as the Neighborhood
Stabilization Program ("NSP"); and
WHEREAS, the purpose of the NSP is to make funding available for certain qualified
uses in order to assist state and local governments with emergency assistance for the
redevelopment of abandoned and foreclosed upon homes and residential properties; and
WHEREAS, on October 6, 2008, the U.S. Department of Housing and Urban
Development ("HUD") published its "Notice of allocations, waivers granted, alternative
requirements applied, and statutory program requirements" for the NSP in the Federal Register,
Volume 73, No. 194, Docket No. FR-5255-N-Ol ("Notice"); and
WHEREAS, pursuant to the Notice, NSP funds are to be considered Community
Development Block Grant ("CDBG") funds unless stated otherwise in the Notice; and
WHEREAS, in order to qualify for an NSP grant, the City of San Bernardino ("City") has
adopted a substantial amendment to its CDBG program setting forth the criteria and guidelines
for implementation ofthe NSP within the City ("Substantial Amendment"); and
WHEREAS, the Substantial Amendment, and all provisions contained therein, is
incorporated by reference into this Agreement as though fully set forth herein; and
WHEREAS, HUD has reviewed and approved the Substantial Amendment, and will
make NSP grant funding available to the Agency as the administrative agent for the City; and
WHEREAS, under the NSP regulations, the City's NSP funding allocation must be
obligated within eighteen (18) months from and after the date of the City's grant agreement with
HUD; and
WHEREAS, the Agency is authorized to administer and distribute the low-moderate
income housing funds ("low-mod funds") generated from the City's Redevelopment Project
Areas, on behalf of the City; and
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WHEREAS, the City seeks to engage Developer the Developer to assist the City in
utilizing its NSP and low-mod funds for the purchase and rehabilitation of abandoned and/or
foreclosed upon eligible properties ("Eligible Properties") within the NSP Target Zone, as
defined in Exhibit "A" Section 2.c., and the rental of such properties to tenants with household
incomes at or below 50% of the Area Median Income ("AMI") who meet all other tenancy
requirements established under NSP ("Eligible Tenants"), all as further set forth in the
Substantial Amendment and in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND MUTUAL
PROMISES CONTAINED HEREIN AND FOR SUCH OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE
PARTIES HERETO AGREE AS FOLLOWS:
1. Incorporation of Recitals
Recitals. The Recitals set forth above are true and correct and are incorporated
into this Agreement as though fully set forth herein.
2. Supervision of Developer. The Agency Staff designated in Exhibit "B" shall be
responsible for the direction of any work to be performed by Developer and any other
consultants or subconsultants to the Agency under this Agreement. Developer shall not
undertake any work under the terms of this Agreement, unless instructed to do so by one of the
designated staff members. No other staff member is authorized by the Agency to request
services from Developer.
3. Term of Ae:reement. The term of this Agreement shall commence on the date
first appearing in this Agreement and will terminate one (I) year after this date, unless earlier
terminated as provided in this Agreement. The Agency will have the option to extend the term
of this Agreement for three additional one-year terms at the sole option and discretion of the
Agency with the consent of Developer. The Agency reserves the right through the actions of the
Interim Executive Director to terminate this Agreement at anytime either with or without cause
and at the sole convenience of the Agency upon delivery of notice of termination to Developer;
provided, however, that upon the effective date of any such termination, the Agency shall be
responsible to pay and/or reimburse Developer for all services, materials and supplies as may
have been furnished to the Agency in accordance with the Scope of Services as referenced in
Section 3.
3. Scope of Developer Services.
A. The Agency hereby retains Developer to provide the professional services set
forth in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by this
reference. Developer hereby agrees to perform the work set forth in the Scope of Services, in
accordance with the terms of this Agreement. Developer shall perform the services as set forth
on said Scope of Services within the time periods to be identified by the appropriate Agency
representative.
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B. The Parties agree that the Project as contemplated by the Scope of Services shall
be related specifically to the acquisition and rehabilitation of 4-plexes located in the area of
Eastl9th Street and Argyle in the City consisting of fifteen (15) separate 4-plex buildings each on
a separate legal lot. In addition, the Project shall also include the acquisition and rehabilitation
of an additional ten (10) 4-plexes each on a separate legal lot on Sunrise Lane.
C. It is the intent of the Parties that the Developer shall acquire title to each of the 4-
plexes by means of its own efforts. All such acquisitions may be funded, to the extent NSP
funds remain available, with the use of those NSP funds as shall be made available to the
Developer pursuant to this Agreement. The Parties recognize that the Agency has available an
amount not to exceed $2,100,000 for the acquisition of the 4-plexes within the Project, as
necessary. In addition, the Agency has taken all necessary actions to make available for other
Project expenditures an amount equal to $1,000,000 of the Agency's Low and Moderate Income
Housing Fund which may be expended by the Agency together with the NSP funds for the
funding, in part, of the costs ofthe Project.
D. Upon the acquisition of each 4-plex within the Project the Developer shall execute
the applicable program documents as are required by this Agreement to be executed and
delivered upon each such close of escrow and which are set forth as Exhibits "K", "L", "M" and
"N" to this Agreement. After the acquisition of a 4-plex within the Project with funding from the
Agency, the Developer shall not resell that 4-plex or any interest in the 4-plex without the prior
written approval of the Agency which may be granted or denied at the sole absolute discretion of
the Agency.
E. Upon acquisition of minimum of five (5) adjacent 4-plexes on 19th Street or five
(5) adjacent 4-plexes on Sunrise Lane, the Developer shall initiate a process with the City of San
Bernardino to prepare and file an application for a new parcel map. The parcel map shall be for
the first 19th Street or Sunrise Lane upon which five (5) 4-plexes have been acquired capable of
being combined into one (I) legal parcel. Any subsequently acquired adjacent 4-plexes shall be
amended into the applicable parcel map so that separate 4-plexes, as units within each 4-plex
cannot be resold of an entire parcel except to a purchaser.
F. The Developer may negotiate for other 4-plexes and vacant lots located on 19th
Street and Sunrise Lane between Guthrie and Argyle (the "Phase II Project") and an escrow
commenced for the purchase of such properties. The purchase agreements and escrow
documents for any such 4-plexes and vacant lots shall be assigned to the Agency or its
designated non-profit corporation, for completion of performance and closure of each escrow on
all such 4-plexes and vacant lots. The Developer shall not acquire title either directly or
indirectly in any properties located within the Phase II Project under any circumstances during
the term of this Agreement.
G. The Developer shall have the right of first opportunity to undertake all or any
portion of the development of a senior citizens apartment project or a single-family owner
occupied housing development on all or any portion of the Phase II Project. Such lot should be
configured upon the determination of the Agency that sufficient property has been acquired by
the Agency to warrant consideration of undertaking a Phase II Project.
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I). Upon receipt of written notice from the Agency to the Developer specifying the
scope of the intended Phase II Project and the intended land uses, the Developer shall have thirty
(30) calendar days after receipt of such notice to respond to the Agency as to whether the
Developer intends to undertake the proposed Phase II Project as described by the Agency in such
notice.
2). If the Developer fails to respond to the Agency in the affirmative within such
thirty-day (30) period, such failure to respond shall be deemed to be the refusal of the Developer
to proceed with the Phase II Project.
3). Upon a timely affirmative response from the Developer to the Agency regarding
the intent of the Developer to undertake the Phase II Project as described by the Agency, the
Parties shall meet and confer to draft and prepare a final agreement regarding the roles of the
Parties and the financial contributions and scope of the Phase II Project. If within ninety (90)
calendar days the Parties are unable to come to Substantial Agreement, the Agency may
terminate such meet and confer in the exercise of its discretions. Agency shall not be liable for
any cost incurred by the Developer with respect to such meet and confer.
4). Nothing contained herein shall obligate either the Developer or the Community
Development Commission of the City of San Bernardino (the "Commission") on behalf of the
Agency to approve any such final agreement that is presented for consideration and approval
regarding such Phase II Proj ect.
5). Upon any denial or refusal by the Commission to approve any such Phase II
Project agreement, the Agency may proceed to obtain other developers or non-profit
corporations to undertake all of any portion of the Phase II Project and the Developer shall have
no further rights to participate in the Phase II Project.
4. Payment by the Al!ency for Services Performed by Developer.
A. The Agency shall compensate Developer for completion of the services described
in the Scope of Services set forth in Exhibit "A" in accordance with the guidelines stipulated in
Exhibit "E".
B. The compensation designated in subsection 4.A. shall be the Total Fee for the
performance of the work and the delivery of the final work product materials, as set forth in the
Scope of Services.
5. Records Retention. Records, maps, field notes and supporting documents and all
other records pertaining to the use of funds disbursed to the Developer hereunder shall be
retained by the Developer and available to the Agency for examination and for purposes of
performing an audit at all times during the life of this Agreement and for a period of five (5)
years from the date of expiration or termination of this Agreement or for a longer period, as
required by law. Such records shall be available to the Agency and to appropriate county, state
or federal agencies and officials for inspection during the regular business hours of the
Developer. If the Developer does not maintain regular business hours, then such records shall be
available for inspection between the hours of 9 a.m. and 5 p.m. Monday through Friday,
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excluding federal and state government holidays. In the event of litigation or an audit relating to
this Agreement or funds paid to the Developer by the Agency under this Agreement, such
records shall be retained by the Developer until all such litigation or audit has been resolved.
6. Indemnification. The Developer shall defend, indemnifY and hold harmless the
Agency, its officers, employees, representatives, and agents from and against any and all actions,
suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and
attorneys fees, for injury or damage of any type claimed as a result of the acts or omissions of the
Developer, its officers, employees, subcontractors and agents, arising from or related to
performance by the Developer of the work required under this Agreement.
7. Insurance. The Developer shall maintain insurance, as set forth in Exhibit "Coo to
this Agreement, throughout the term of this Agreement. The Developer shall remain liable to the
Agency pursuant to Section 6. above to the extent the Developer is not covered by applicable
insurance for all losses and damages incurred by the Agency that are caused directly or indirectly
through the actions or inactions, willful misconduct or negligence of the Developer in the
performance of the duties incurred by the Developer pursuant to this Agreement.
8. Press Releases. Press or news releases, including photographs or public
armouncements, or confirmation of the same related to the work to be performed by the
Developer under this Agreement shall be made by the Developer only with the prior written
consent of the Agency.
9. Default and Remedies.
A. The occurrence of any of the events listed in Exhibit "Goo, Section A. (I) to (7),
shall after the giving of any notice described therein, constitute a default by Developer hereunder
("Event of Default").
B. Upon the occurrence of an Event of Default, the Agency may, III its sole
discretion, take any of the actions listed in Exhibit "Goo, Section B., (1) to (8).
C. Any failure or delay by a party in asserting any of its rights or remedies as to any
default shall not operate as a waiver of any default or of any rights or remedies associated with a
default. Except with respect to rights and remedies expressly declared to be exclusive in this
Agreement, the rights and remedies of the Parties under this Agreement are cumulative and the
exercise by either Party of one or more of such rights or remedies shall not preclude the exercise
by it, at the same or different times, of any other rights or remedies for the same default or any
other default by the other Party.
D. The Developer has the right to implement the remedies in Exhibit "Goo, Section
C. (I) and (2), upon default or failure of the Agency to meet any of its obligations under this
Agreement without curing such failure within thirty (30) days after receipt of written notice of
such failure from Developer specifying the nature of the event or deficiency giving rise to the
default and the action required to cure such deficiency.
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10. Termination.
A. This Agreement may be terminated by either party for any reason by giving the
other party ninety (90) calendar days' prior written notice. The Agency shall pay the Developer
for all work authorized by the Agency and completed, prior to the effective termination date.
B. In the event of a termination of this Agreement under this Section 10, the
Developer shall provide all documents, notes, maps, reports, data or other work product
developed in performance of the Scope of Services of this Agreement to the Agency, within ten
(10) calendar days after the effective date of such termination and without additional charge to
the Agency.
11. Notice. All notices given hereunder shall be in wrltmg. Notices shall be
presented in person or by certified or registered United States Mail, return receipt requested,
postage prepaid or by overnight delivery by a nationally recognized delivery service to the
addresses set forth below. Notice presented by United States Mail shall be deemed effective on
the third business day following the deposit of such Notice with the United States Postal Service.
This Section I I shall not prevent the parties hereto from giving notice by personal service or
telephonically verified fax transmission, which shall be deemed effective upon actual receipt of
such personal service or telephonic verification. Either Party may change their address for
receipt of written notice by notifying the other Party in writing of a new address for delivering
notice to such Party.
AGENCY:
Redevelopment Agency of the City of San Bernardino
Attention: Emil A. Marzullo, Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 9240 I
Phone: (909) 663-1044
Fax: (909) 663-2294
DEVELOPER:
Mary Erickson Community Housing, Inc.
Attention: Susan McDevitt, Executive Director
P.O. Box 775
San Clemente, CA 92674-0775
Phone: (949) 369-5419
Fax: (949) 369-5416
12. Compliance with Law. The Developer shall comply with all local, state and
federal laws, including, but not limited to, environmental acts, rules and regulations applicable to
the work to be performed by the Developer under this Agreement. The Developer shall maintain
all necessary licenses and registrations for the lawful performance of the work required of the
Developer under this Agreement.
13. Nondiscrimination. The Developer shall not discriminate against any person on
the basis of race, color, creed, religion, natural origin, ancestry, sex, marital status or physical
handicap in the performance of the Scope of Services of this Agreement. Without limitation, the
Developer hereby certifies that it will not discriminate against any employee or applicant for
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employment because of race, color, religion, sex, marital status of national origin. Further, the
Developer shall promote affirmative action in its hiring practices and employee policies for
minorities and other designated classes in accordance with federal, state and local laws. Such
action shall include, but not be limited to, the following: recruitment and recruitment advertising,
employment, upgrading and promotion. In addition, the Developer shall not exclude from
participation under this Agreement any employee or applicant for employment on the basis of
age, handicap or religion in compliance with State and Federal laws.
14. Developer and each Subcontractor are Independent Contractors. The
Developer shall at all times during the performance of any work described in the Scope of
Services be deemed to be an independent contractor. Neither the Developer nor any of its
subcontractors shall at any time or in any manner represent that it or any of its employees are
employees of the Agency or any member agency of the Agency. The Agency shall not be
requested or ordered to assume any liability or expense for the direct payment of any salary,
wage or benefit to any person employed by the Developer or its subcontractors to perform any
item of work described in the Scope of Services. The Developer is entirely responsible for the
immediate payment of all subcontractor liens.
15. Severability. Each and every section of this Agreement shall be construed as a
separate and independent covenant and agreement. If any term or provision ofthis Agreement or
the application thereof to certain circumstances shall be declared invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to circumstances other
than those to which it is declared invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
16. Entire Aereement. This Agreement including all exhibits and addenda
referenced herein constitutes the entire agreement between the parties. This Agreement
supersedes all prior negotiation, discussions and agreements between the parties concerning the
subject matters covered herein. The Parties intend this Agreement to be the final expression of
their agreement with respect to the subjects covered herein and a complete and exclusive
statement of such terms.
17. Amendment or Modification. This Agreement may only be modified or
amended by written instrument duly approved and executed by each of the Parties hereto. Any
such modification or amendment shall be valid, binding and legally enforceable only if in written
form and executed by each of the Parties hereto, following all necessary approvals and
authorizations for such execution.
18. Governine Law. This Agreement shall be governed by the laws of the State of
California. Any legal action arising from or related to this Agreement shall be brought in the
Superior Court of the State of California in and for the County of San Bernardino.
19. Non-Waiver. Failure of either party to enforce any provision of this Agreement
shall not constitute a waiver of the right to compel enforcement of the same provision or any
remaining provisions of this Agreement.
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20. Assh!:nment. This Agreement shall be assignable by Developer only with the
prior express written consent ofthe Agency, which consent may be withheld by the Agency in its
sole discretion. Notwithstanding anything to the contrary in this Agreement, no purported
assignment of this Agreement shall be effective if not approved by the Agency, and/or, if such
assignment would violate the terms, conditions and restrictions of any applicable governmental
restrictions. The Agency's consent to such assignment shall be expressly conditioned upon (i)
the assignee's execution of such documents as required by the Agency in its sole discretion,
including, without limitation, any and all documents deemed necessary by the Agency to provide
for said assignee's assumption of all of the obligations of Developer hereunder and under any
documents executed by Developer in connection herewith, and (ii) the Agency's approval of the
financial and credit-worthiness of such proposed assignee and the assignee's ability to perform
all of the Developer's obligations under this Agreement and all documents executed in
connection herewith, as may be determined by the Agency at its sole discretion.
21. Representations of Persons Executinl!: the Al!:reement. The persons executing
this Agreement warrant that they are duly authorized to execute this Agreement on behalf of and
bind the respective Party that each purports to represent.
22. Execution in Counterparts. This Agreement may be executed in one (1) or
more counterparts, each of which will constitute an original.
23. Effectiveness of the Al!:reement as to the Al!:encv. This Agreement shall not be
binding on the Agency until signed by an authorized representative of the Developer, approved
by the Agency and executed by the Interim Executive Director or his designee.
24. Conflicts of Interest. The Developer hereby represents that it has no interests
adverse to the Agency, at the time of execution of this Agreement. The Developer hereby agrees
that, during the term of this Agreement, the Developer shall not enter into any agreement or
acquire any interests detrimental or adverse to the Agency. Additionally, the Developer hereby
represents and warrants to the Agency that the Developer and any partnerships, individual
persons or any other party or parties comprising the Developer, together with each subcontractor
who may hereafter be designated to perform services pursuant to this Agreement, do not have
and, during the term of this Agreement, shall not acquire any property ownership interest,
business interests, professional employment relationships, contractual relationships of any nature
or any other financial arrangements relating to the Agency, property over which the Agency has
jurisdiction or any members or staff of the Agency that have not been previously disclosed in
writing to the Agency, and that any such property ownership interests, business interests,
professional employment relationships, contractual relationships or any nature or any other
financial arrangements will not adversely affect the ability of the Developer to perform the
services to the Agency as set forth in this Agreement.
25. Non-Exclusivitv. This Agreement shall not create an exclusive relationship
between the Agency and the Developer for the services set forth in Exhibit "A" or any similar or
related services. The Agency may, during the term of this Agreement, contract with other real
estate development entities for the performance of the same, similar or related services as those
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that may be performed by the under this Agreement. The Agency reserves the discretion and the
right to determine the amount of services to be performed by the Developer for the Agency under
this Agreement, including not requesting any services at all. This Agreement only sets forth the
terms upon which any such services will be provided to the Agency by the Developer, if such
services are requested by the Agency, as set forth in this Agreement.
26. Consequential Dama2es and Limitation of Liabilitv. The Agency and the
Developer agree that except as otherwise provided in this Section 26, in no event will either be
liable to the other under this Agreement for any damages including but not limited to, special
damages, loss of revenue, loss of profit, operating costs or business interruption losses,
regardless of cause, including breach of contract, negligence, strict liability or otherwise. The
limitations and exclusions of liability set forth in this Section 26 shall apply regardless of fault,
breach of contract, tort, strict liability or otherwise of the Developer and the Agency, their
employees, contractors, agents, subcontractors, or officials.
27. Business Re2istration Certificate. The Developer warrants that it possesses, or
shall obtain immediately after the execution and delivery of this Agreement, and maintain during
the period of time that this Agreement is in effect, a business registration certificate pursuant to
Title 5 of the City of San Bernardino Municipal Code, together with any and all other licenses,
permits, qualifications, insurance and approvals of whatever nature that are legally required to be
maintained by the Developer to conduct its business activities within the City.
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
III
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date indicated next to the authorized signatures of the officers of each of them as appear
below.
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Date:
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By: ~r!j-
Timothy:r. a~~, Agency Counsel
DEVELOPER
Mary Erickson Community Housing, Inc.,
a California non-profit corporation
Date:
By:
Name:
Title:
Date:
By:
Name:
Title:
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Exhibit "A"
Scope of Services
A. Activities Developer shall supply all labor, services, items of expense and
consultation (hereinafter collectively referred to as "Services") necessary to fully and adequately
meet the Program Delivery requirements set forth in Section B below, and to satisfy all other
requirements of Developer under this Agreement. As part of the Services, Developer shall be
responsible for carrying out the following NSP activities as further described in this Exhibit "A";
Acquisition of abandoned and/or foreclosed residential properties that qualitY as Eligible
Properties under the Agency's housing opportunities for households which adjusted gross
income is at or below 50% of the AMI that qualify as Eligible Tenants; demolition and/or
rehabilitation of acquired Eligible Properties; and manage and operate these Eligible Properties
as further negotiated with the Agency. The program shall be carried out in a manner satisfactory
to the City and consistent with this Agreement, the Substantial Amendment and any standards
required as a condition of providing these funds.
B.
Program Delivery
I . General Requirements
a. As part of the Services, Developer agrees that it shall make
available a primary staff person on an as needed basis within close proximity to the project site
in order to successfully complete program activities
b. As part of the Services, Developer shall solicit, consistent with the
requirements contained herein, construction manager services, property acquisition and
relocation consultant services and enter into a contract for such services.
c. Developer shall, to the extent practicable, utilize realtors, appraisal
services, escrow services and title companies as approved by the Agency. If such services
cannot reasonably be identified by the Agency, Developer shall utilize businesses located first
within the City and if they are deemed to be unavailable, then utilize businesses in the County of
San Bernardino.
d. Developer shall apply for other funding to leverage NSP funds,
provided that NSP funds shall be separately maintained and accounted for, as required by federal
funding requirements, and as further specified in this Agreement and approved by the Agency.
e. Developer shall obligate all NSP funds granted to Developer
pursuant to this Agreement, excluding any funds generated from Program Income, within twelve
(12) months after the execution date of the Agreement (the execution date of this Agreement is
herein referred to as the "Effective Date").. In the case where some act of nature or other
unforeseen event out of the Developer's control, causes a delay in the acquisition and/or
rehabilitation of Eligible Properties, then the Agency may extend the period required to commit
the NSP funds granted to the Developer, in its sole discretion; however, in order to gain such an
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extension of time, the Developer will have to submit in writing to the Agency the reasons for the
schedule delay and it must receive written approval from the Agency for such extension of time,
in order for the extended deadline to be recognized by the Agency.
f. Developer warrants that it has the expertise and experience to
perform the Services set forth in this Agreement and that it shall perform said Services pursuant
to this Agreement and as stated in the Scope of Services.
g. Developer shall document performance on a monthly basis by
submittal of a Monthly Report, which report shall be in a form satisfactory to the Agency. The
Monthly Report shall be due by the lOth day of the following month after the Services were
rendered.
h. Developer shall provide a Final Evaluation Report of the
Program's success in meeting established goals.
i. Developer shall provide notification to the Agency of any audits or
investigations including results, findings and/or liens.
2. Property Acquisition and Rehabilitation
a. Developer shall identify Eligible Properties and shall negotiate
purchase and sale agreements, to be approved by the Agency, that provide for a purchase price
that is consistent with the requirements under NSP. No property shall be purchased pursuant to
this Agreement at less than the required discount, unless Developer obtains written approval
from the Agency.
b. Prior to purchase of any Eligible Property under this Agreement,
and in order to determine the Current Market Appraised Value, Developer shall obtain an
appraisal made in conformity with the appraisal requirements of the Uniform Relocation Act at
49 CFR 24.103 and the HERA, and as further specified by the Agency and its approved list of
appraIsers.
c. Acquisitions shall be based upon that specific target area identified
in Exhibit "I", depending on the negotiations for purchase of the Eligible Properties but in all
cases must be located within the NSP Target Zone as identified in Exhibit "J".
d. Developer shall develop a system approved by the Agency to
determine whether those eligible properties acquired should be rehabilitated.
e. Intentionally Omitted
f. Other than those liens approved by the Agency, Developer shall
ensure that title to the Eligible Property shall be and remain free and clear from any and all
security interests, liens, or other encumbrances. In carrying out the Services, Developer
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promises and agrees that it will not pledge, hypothecate or otherwise encumber title to the
Eligible Property in any manner that would result in any lien, security interest, charge or claim
upon or against said property.
g. Rehabilitation of Eligible Properties acquired by Developer
pursuant to this Agreement shall be completed, and said properties shall be ready for rental
within one hundred eighty (180) days following the close of escrow on the property. In the case
where some act of nature or other unforeseen event out of the Developer's control, causes a
delay in the rehabilitation or operation of an Eligible Property, then the Agency may extend the
period required to finish the rehabilitation work or place the Eligible Property in operation, in its
sole discretion. In order to gain such an extension of time, the Developer will have to submit in
writing to the Agency the reasons for the schedule delay and it must receive written approval
from the Agency for such extension of time, in order for the extended deadline to be recognized
by the Agency.
h. For projects approved by the Agency, Developer shall rehabilitate
as determined solely by the Agency, or shall solicit subcontractors, pursuant to the terms of this
Agreement, to rehabilitate required Eligible Properties in accordance with the standards set forth
in the Substantial Amendment, the NSP and, unless otherwise agreed upon by the Parties, in
accordance with the plans and specifications approved by the City. As part of the Developer's
rehabilitation process, Developer must ensure that tasks/activities i. ~ x. below are carried out
effectively and efficiently:
i. Secure Property - Ensure that adequate locked fencing is
installed on the perimeter of the site when necessary. Board up windows and outer doorways
when necessary in order to prevent looting of the property.
11. Property Management - Maintain utilities service, pay for
monthly utilities bill(s) during the holding period, interior and exterior appearance and
marketability of the property as needed.
111. Budget Estimate - Provide a total budget estimate for the
Agency approved Scope of Work to be written in the Agency's format as reflected in Exhibit
"D" (Total Development Cost Pro Forma). This budget estimate shall include all costs
associated with the development of the property, including acquisition, labor and materials
for rehabilitation work, contingency, construction loan interest, construction loan origination
fee, the general contractor fee and overhead, marketing costs, relocation, lease-up costs,
replacement reserves, permanent financing origination fee, and closing costs and developer
fee.
iv. Project Timeline - Provide a timeline in the Agency's
format for completion of the various steps involved in the acquisition, rehabilitation and
lease-up of these properties. The time line shall start from the point that Developer enters into
escrow for the acquisition of each specific property through the stabilization of operations.
Major steps to be included in the timeline are construction period, completion of
construction, issuance of the Certificate of Occupancy, or in the case a Certificate of
Occupancy is not required, a Certificate of Completion, start of marketing period for the
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property, projected number of weeks needed to rent out property, lease-up period and close
of permanent financing.
v. Project Management Services Provide project
management services for rehabilitation of projects, which shall include but not be limited to:
establishing a scope of work, identifying or obtaining the financing to pay for all labor and
materials, conducting weekly on-site project inspections, managing relationships with all
sub-contractors, verifying permits and City compliance, administering both conditional and
unconditional lien releases, advertising the apartments for rental; through various local
media, conducting mass mailings targeted at potential renters, partnering with local churches
and other community groups to identify prospective Qualified Tenants, processing the rental
application, coordinating quick close of escrow and expediting lender requirements.
VI. Marketing - Market the property and the Neighborhood
Stabilization Program overall through advertising and published promotional materials.
Adhere to the Agency's Affirmative Marketing Guidelines (Please see Exhibit "H").
vii. Lease-up Property - Identify prospective Qualified Tenants,
qualify the prospective tenants for eligibility to rent very-low income units and collect all
application documents from the Qualified Tenant.
VB\. Financing - The Developer is required to present a feasible
plan for the acquisition, rehabilitation and permanent financing of each Eligible Property
prior to the acquisition of any such property, whether such financing is obtained in part or in
whole from the Agency. The Developer must demonstrate that its financing plan adequately
provides for the acquisition of the property, payment for the labor, materials and other
services required to complete the Agency approved Scope of Work for each Eligible
Property and provide for the maximum permanent, private loan that can be supported by the
Eligible Property's projected cash flow. Each financing plan is subject to the Agency's
approval in its sole discretion.
Acquisition, rehabilitation and permanent financing for any Eligible Property shall be subject
to the conditions and requirements set forth in Exhibit "F".
IX. Files - Maintain adequate files for each property, ensuring
compliance with all Agency and lender requirements, all documents required to verify
compliance with the Affirmative Marketing Guidelines such as tenant waiting lists, copies of
advertisements published in local and community newspapers, etc.
x. Environmental - Ensure that all environmental mitigation
measures recommended by the Agency's Environmental Consultant are carried out as part of
the rehabilitation work performed on the property. Provide proof of completion of these
mitigation measures.
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3. Closing Requirements
A. Developer shall cause the closing of the acqUisItion financing, whether from the
Agency or another source, for the Eligible Properties by following the procedures and
complying with the requirements set forth in Exhibit "F" Section A.
B. Developer shall cause the closing of the rehabilitation financing whether from the
Agency or another financing source in accordance with the procedures and
requirements established in Exhibit "F" Section B.
C. Developer shall cause the closing of the permanent financing whether from the
Agency or another financing source in accordance with the procedures and
requirements established in Exhibit "F" Section C.
4. Building Standards
The Developer shall adhere to the building standards stipulated III Exhibit "0" when
rehabilitating any Eligible Property.
5. Financial Statements; Tax Returns.
Developer shall deliver to the Agency within one hundred eighty (180) days after the end of each
fiscal year of Developer occurring during the term of any outstanding Development Loans, a
copy of its federal tax return and a financial statement for such preceding fiscal year. In
addition, concurrent with Developer's payment of the annual Residual Receipts installment
payable to the Agency on each June 15th in accordance with Section _ of the Promissory Note
attached as Exhibit "K", Developer shall deliver to the Agency, on forms prepared and provided
by the Agency from time to time, a statement certified by Developer's accountant (the "Annual
Statement"), separately setting forth (i) the aggregate Gross Rents (as defined in Exhibit "E"
Section C.2.a.) received during the previous calendar year, and (ii) the aggregate Operating
Expenses (as defined in Exhibit "E" Section C.2.b.) expended during the previous calendar year
for each Eligible Property owned by the Developer and financed in whole or in part with a
Development Loan from the Agency.
6. Other Loans.
Developer shall comply with all monetary and non-monetary covenants associated with any loan
secured by an interest in the Eligible Property, including but not limited to the Senior Financing,
the Junior Financing and the Other Financing. Developer shall provide to the Agency a copy of
any notice of default within three business days after receiving any notice of a default or alleged
default of such covenants by Developer, and Developer shall promptly cure any such default and
cooperate in permitting the Agency, to the extent the Agency in its sole discretion elects to do so,
to cure or assist in curing the default. Any cost or expenditure incurred by the Agency in
providing or assisting in such a cure shall be deemed added to the outstanding principal amount
of the corresponding Development Loan pertaining to the Eligible Property in default.
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7. Construction Requirements
Following the Close of Escrow for the acquisition of the Eligible Property, Developer shall cause
the demolition or rehabilitation work, whichever may apply, to commence promptly, proceed
diligently, and achieve "Completion of the Project" no later than 6 months following the Close of
Escrow for Eligible Properties that are to be rehabilitated, subject to extension for up to an
additional 3 months to the extent of force majeure delays beyond Developer's reasonable control.
"Completion of the Project" shall be deemed to have occurred when the Agency has received
satisfactory evidence that the Project has been completed in compliance with this Agreement,
and that all final permits and certificates necessary to the operation of the Eligible Property, in
the case where an Eligible Property is being rehabilitated, as contemplated herein have been
obtained, including, without limitation, the following, each of which is subject to the Agency's
review and approval: (1) a signed certificate from the general contractor, in a form reasonably
acceptable to the Agency, certifying to the Agency that rehabilitation was completed
substantially in accordance with the requirements of the plans and this Agreement, and all other
related on-site and off-site improvements have been completed; (2) a certificate of occupancy
and other final permits and licenses necessary to permit the use and occupancy of the Eligible
Property for its intended purposes, which have been issued by proper governmental agencies;
and (3) evidence satisfactory to the Agency that the statutory period for the filing of mechanics'
liens (60 days following filing of the statutory notice of completion) has expired and the Eligible
Property is free from such liens. Rehabilitation shall proceed in accordance with Exhibit "0",
Building Standards and in accordance with the Schedule of Performance to be submitted for each
Eligible Property and approved by the Agency prior to the execution of the Development
Agreement for any particular Eligible Property.
8. Schedule of Performance
For any given Eligible Property the Developer shall comply with and meet the deadlines listed in
the Schedule of Performance attached to the Development Agreement for that particular Eligible
Property, such Schedule of Performance shall be submitted by the Developer to the Agency in a
format approved by the Agency.
9. Relocation Requirements.
If applicable, Developer shall be responsible for assuring compliance with all relocation
requirements as governed by federal relocation laws and regulations for projects funded in whole
or in part with NSP funding, including the Federal Uniform Relocation Assistance and Real
Property Policies Act (42 U.S.A. 4601 et seq., as amended), Federal Relocation Regulations (49
CFR Part 24), and HUD Relocation Handbook 1378. In circumstances where both federal and
state funds are contributed to a program or Eligible Property, it is the policy of the Agency to
follow the requirements that provide the displaced person or household with the greatest benefit.
For example, if in a mixed-funded project, the assistance or benefit under state law is more
favorable to the displaced person or household, then the state law applies, and if the opposite is
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the case, then applicable federal laws and regulations (e.g., California Relocation Assistance
Law, etc.) shall apply. Any relocation assistance shall be provided through and in the manner
directed by the Agency. It shall be the responsibility of the Developer to hire a relocation
consultant to coordinate the relocation. The fees and costs of the relocation consultant incurred
by the Developer shall be included as part of the Total Development Cost for any Eligible
Property, and as such, shall be paid for from the proceeds of the Development Loans.
10. Environmental Conditions.
Developer shall comply with any National Environmental Policy Act of 1969 (NEP A) or
California Environmental Quality Act (CEQA) mitigation measures or other environmental
conditions imposed by Agency or any other applicable governmental authority in connection
with the Eligible Property. The specific mitigation measures to be executed for each particular
Eligible Property shall be attached as an exhibit to the corresponding Development Agreement
for each Eligible Property.
Ii. Limitations on Tenants.
Notwithstanding anything to the contrary in this Agreement, Developer hereby covenants on
behalf of itself, and its successors and assigns, which covenant shall run with the land and bind
every successor and assign in interest of Developer, that, throughout the term of the CC&Rs for
any Eligible Property, Developer and such successors and assigns shall use the Eligible Property
solely for the purpose of rehabilitating and operating the Eligible Property as a residential
development with the tenant income levels specified in this Agreement as consideration for any
Development Loans that the Agency might be providing to a particular Eligible Property. All
units within any Eligible Property ("Agency Assisted Units") shall be rented only at an
"Affordable Housing Cost" to "Very Low -Income Households" as hereinafter defined (persons
within this group occasionally referred to as "Eligible Tenants").
"Very Low-Income Households" shall mean persons and families whose gross annual
household incomes do not exceed the qualifying limits for lower income families as established
and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937,
which qualifying limits are otherwise set forth in Section 6932 of the California Code of
Regulations and are equivalent to fifty percent (50%) of Area Median Income, adjusted for
family size and other adjustment factors by the United States Department of Housing and Urban
Development (HUD).
"Affordable Housing Cost" shall mean, as to each Eligible Person, a rental rate which
results in monthly payments which, including a reasonable utility allowance, do not exceed for
an Eligible Person within a Very Low-Income Household, the lesser of the product of thirty
percent (30%) times fifty percent (50%) of Area Median Income adjusted for family size
appropriate to the Agency Assisted Unit.
"Area Median Income" shall mean the median income for San BernardinolRiverside
Metropolitan Statistical Area, adjusted for family size as periodically adjusted by HUD, or any
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successor entity designated under state law as responsible for establishing such "Area Median
Income."
Developer shall specifically provide in each Agency Assisted Unit lease and shall
strictly enforce the requirement that each Agency Assisted Unit be occupied at all times by the
eligible household who has leased that Agency Assisted Unit, and that any other occupant of the
unit be another qualified member of the lessee's household. The Agency shall be identified as a
third party beneficiary of that covenant and shall have the right to directly enforce that restriction
in the event Developer fails to do so. Prior to execution of any Agency Assisted Unit lease with
respect to the Eligible Property, Developer shall submit to the Agency and obtain its written
approval of a standard form occupancy lease and Developer shall thereafter use the approved
form for all leases of Agency Assisted Units in any Eligible Property, with only such further
modifications thereto as are first submitted to and approved in writing by the Agency.
12. Tenant Selection Process; Reports and Records Concerning Tenancies
Developer shall maintain such records and satisfy such reporting requirements as may be
reasonably imposed by the Agency to monitor compliance with the tenanting requirements
described in Section II above, including without limitation the requirement that Developer
deliver reports to the Agency commencing at the close of the initial occupancy of an Eligible
Property, and continuing annually thereafter, setting forth the name of each Eligible Tenant, the
unit occupied and the income of the Eligible Tenant and the amount of rent payable by each
Eligible Tenant. Developer shall also be required to have each prospective Eligible Tenant
complete a rental application prior to occupancy and to obtain evidence from each such Eligible
Tenant as may be reasonably required by the Agency to certify such Eligible Tenant's
qualification for occupancy of the Eligible Property. Developer's obligation to provide such
reports shall remain in force and effect for the same duration as the use covenants in the CC&R's
attached to the Development Agreement for any particular Eligible Property.
13. Management of Project
Subject to the terms and conditions contained hereinbelow, Developer shall at all times during
the operation of any Eligible Property pursuant to this Agreement retain an entity to perform the
management and/or supervisory functions ("Manager") with respect to the operation of any
Eligible Property including day-to-day administration, maintenance and repair. Developer shall,
before execution or any subsequent amendment or replacement thereof, submit and obtain the
Agency's written approval of a management contract ("Management Contract") entered into
between Developer and an entity ("Management Entity") acceptable to the Agency. Subject to
any regulatory or licensing requirements of any other applicable governmental agency, the
Management Contract may be for a term of up to fifteen (15) years and may be renewed for
successive terms in accordance with its terms, but may not be amended or modified without the
written consent of Agency. The Management Contract shall also provide that the Management
Entity shall be subject to termination for failure to meet project maintenance and operational
standards set forth herein or in other agreements between Developer and the Agency. Developer
shall promptly terminate any Management Entity which commits or allows such failure, unless
the failure is cured within a reasonable period but in no event exceeding 60 calendar days from
Management Entity's receipt of notice of the failure from either Developer or the Agency.
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Developer's obligation to retain a Management Entity shall remain in force and effect for the
same duration as the use covenants set forth in the CC&R's attached to the Development
Agreement for any particular Eligible Property.
14. Operations and Maintenance
Developer hereby covenants on behalf of itself, and its successors and assigns, which covenant
shall run with the land and bind every successor and assign in interest of Developer, that
Developer and such successors and assigns shall use each Eligible Property solely for the
purpose of operating each Eligible Property and ancillary improvements thereon, in accordance
with and of the quality prescribed by this Agreement and the CC&Rs and the Agency Deed of
Trust pertaining to the particular Eligible Property.
Developer covenants and agrees for itself, its successors and assigns, which covenants shall run
with the land and bind every successor or assign in interest of Developer, that during
rehabilitation of each Eligible Property pursuant to this Agreement and thereafter, no Eligible
Property, or any portion thereof, shall be improved, used or occupied in violation of any
applicable governmental restrictions or the restrictions contained in this Agreement or the
Agency Deed of Trust pertaining to a particular Eligible Property. Furthermore, Developer and
its successors and assigns shall not maintain, commit, or permit the maintenance or commission
on any Eligible Property, or any portion thereof, of any nuisance, public or private, as now or
hereafter defined by any statutory or decisional law applicable to any Eligible Property, or any
portion thereof.
Developer shall,-at its expense, (i) maintain all improvements and landscaping on each Eligible
Property in good working order, condition, and repair (and, as to landscaping, in a healthy and
thriving condition) in accordance with the plans for the particular Eligible Property (which must
be approved by the Agency before being incorporated into the Development Agreement for any
particular Eligible Property) (such approved plans, the "Plans") and all applicable governmental
restrictions, and (ii) manage each Eligible Property and its finances reasonably prudently and in
compliance with applicable governmental restrictions so as to maintain a safe and attractive
living environment for the Eligible Tenants while maximizing Residual Receipts to the extent
reasonably possible consistent with applicable rent and tenant requirements (including all
recorded rent restrictions affecting any Eligible Property) and without compromising the safety
and attractiveness of the living environment of any Eligible Property.
/II
/II
/II
/II
/II
///
///
/II
20-
P.Agcndas.Agcnda Attachmenls Agenda Attachments' Agenda ^l1nchmcll1~ A!,'r1111s.Amcnd 200907-06-(1'1 Mary l:ricb~Nl (\'mmun;ly Illlusing, Inc. MaSTel' Agl'c.cmcm (Finalldoc
Exhibit "8"'
Supervisory Staff Personnel
Agencv Staff:
Carey K. Jenkins,
Director of Housing and Community Development
Fernando S. Portillo,
Project Manager
Emil A. Marzullo,
Interim Executive Director
-21-
P>A~cnd~,'Aj:cnda AUachlOents'Ag<'l1da All~chmenIS'A!!cnd~ Att3thmtn!s',Agnn(~-Al1lcnd ~OO<),07.06.09 Mary Frichon Communily Hou,ing.ll1c - Master Agreement (Final).dnc
EXHIBIT "C"
Insurance Requirements
The Developer shall maintain insurance policies issued by an insurance company or
companies authorized to do business in the State of California and that maintain during
the term of the policy a "General Policyholders Rating" of at least A(v), as set forth in the
then most current edition of "Bests Insurance Guide," as follows:
(1) Automobile Insurance. The Developer and its general
contractor(s) shall maintain comprehensive automobile liability insurance of not less than
$1,000,000.00 combined single limit per occurrence for each vehicle leased or owned by
the Developer or its general contractor(s) and used in performing work under this
Agreement.
(2) Worker's Compensation: Developer and Developer's Contractors'
employees shall be covered by Workers' Compensation insurance in an amount and form
to meet all applicable requirements of the Labor Code of the State of California and
Employers Liability limits of $1 ,000,000 per accident.
(3) Liability Insurance. The Agency requires comprehensive liability
insurance, including coverage for personal injury, death, property damage and contractual
liability, with a limit of at least One Million Dollars ($1,000,000) for each occurrence
($2,000,000 general aggregate), and including products and completed operations
coverage. Said insurance shall be primary insurance with respect to the Agency.
Developer shall require and ensure the Developer's contractors to include the Agency as
an additional insured on all general liability insurance covering work at the Eligible
Property. If required by the Agency from time to time, Developer shall increase the
limits of Developer's liability insurance to reasonable amounts customary for owners of
improvements similar to the Eligible Property. The policy shall contain a waiver of
subrogation for the benefit of the Agency.
(4) Propertv Insurance: "All Risk" ISO Special Form property
insurance, including without limitation builder's risk protection during the course of
construction, covering the full replacement value of real property and equipment utilized
for the rehabilitation of the Eligible Properties. Coverage shall extend to provide debris
removal. The Agency shall be the loss payee under the aforementioned policies under a
standard lender's loss payable endorsement. The amount of the property coverage shall at
all time exceed the full replacement value of all improvements and fixtures on the
Property and the insurer shall waive any coinsurance via an "agreement" endorsement.
Concurrent with the execution of this Agreement and prior to the commencement
of any work by the Developer, the Developer shall deliver to the Agency, copies of
policies or certificates evidencing the existence of the insurance coverage required herein,
which coverage shall remain in full force and effect continuously throughout the term of
this Agreement. Each policy of insurance that the Developer purchases in satisfaction of
the insurance requirements of this Agreement shall name the Agency as an additional
22
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insured and shall provide that the policy may not be cancelled, terminated or modified,
except upon thirty (30) calendar days' prior written notice to the Agency.
Failure on the part of sub-recipient to procure or maintain the insurance coverage
required in this Exhibit "e" shall constitute a material breach of this Agreement pursuant
to which the Agency may immediately terminate this Agreement and exercise all other
rights and remedies set forth herein, at its sole discretion, and without waiving such
default or limiting the rights or remedies of the Agency, procure or renew such insurance
and pay any and all premiums in connection therewith and all monies so paid by the
Agency shall be reimbursed by Developer to the Agency upon demand including interest
thereon at the rate of ten percent (10%) per annum interest compounded annually from
the date paid by the Agency to the date reimbursed by Developer. The Agency shall have
the right, at its election, to participate in and control any insurance claim adjustment or
dispute with the insurance carrier. Developers' failure to assert or delay in asserting any
claim shall not diminish or impair the rights of the Agency against the Developer or the
. .
msurance carner.
/1/
/1/
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23
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Exhibit "0"
Development Pro Forma Template
24
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INPUT DATA
2008 AREA MEDIAN INCOME (AMI)
TOTAL # UNITS
VACANCY RATE
TOTAL LAND SQUARE FOOTAGE
TOTAL BLDG SF (NIC PKG STALLS)
RENT INCOME
RENT INCOME INFLATION FACTOR
COMMERCIAL INCOME
COMMERCIAL INCOME INFLATION FACTOR
LAUNDRY & MISC INCOMEIYEAR
LAUNDRY & MISC. INCOME INFLATION FACTOR
INTEREST INCOME
INTEREST INCOME INFLATION FACTOR
OPERATING EXPENSES/UNITIYEAR
OPERATING EXPENSE INFLATION FACTOR
OPERATING RESERVE
REPLACEMENT RESERVE
LAND COSTS
DEVELOPMENT COSTS (NIC Land + Com)
TOTAL DEVELOPMENT COSTS (NIC Com)
TOTAL CONSTRUCTION COSTS
PARKING CONSTRUCTION COSTS
AGENCY LOAN AMOUNT
AGENCY LOAN RATE
CONVENTIONAL LOAN AMOUNT
CONVENTIONAL LOAN RATE
CONVENTIONAL LOAN YEARS
CONVENTIONAL LOAN TYPE
DEBT COVERAGE RATIO (X::1) X=
PROJECT NAME:
PROJECT ADDRESS:
PROJECT DEVELOPER:
DATE REVISED:
$0 Bldg. SF Calculation
4
0.00% Residential SF
o Common Area (Estimate)
4 2 SR 0 950
$0 3BR 0 1100
0.00% Total Resie! SF
$0
0.00% Commercial SF
$0 Restaurant (Leasable SF)
0.00% Retad (Leaseable SF)
o Leasing Office I Community Center
0.00% Total Commercial SF
$0
0.00% Total Bldg. SF
0.00%
$0.00 lunit Parking Space tI & Cost Calculation
$0 Residential
$0 Commercial
$0 Handicapped (Inclusive)
$0 Total Spaces
$0
$0 Total Pkg SF 0
0.00%
$0 Cost Per Space
0.00%
o
AMORTIZED
0.000
Sunrise & 19th Street Project
Address, San Bernardino, CA Zip Code
Mary Erickson Community Housing, Inc.
_....-~II.I::.
4 100,00%
o 000%
o 0,00%
4 100.00%
o #DIV/OI
o #DIV/O!
o #DIV/O!
o #DIV/O!
4
!
o
o
9
o
$0
EXHIBIT "0"
SOURCES & USES OF FUNDS Revised" 112612009
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
SOURCES: CONSTRUCTION Per Unit USES: Per Unit
Private Acquisition Loan $0 0 Acquisition Costs/Closing $0 0
Private Construction Loan $0 0 Architecture/Fees & Permits $0 0
NSP1 $0 0 Construction Cost $0 0
Agency Low-Mod Funds $0 0 Indirect Construction/Legal $0 0
NSf'St<<tt' ~;(J 0 Developer's Fee $0 0
~"SF/ SO 0 Rent-Up Costs/Reserves $0 0
Other $0 0 Financing Costs $0 0
Deferred Developer Fee $0 0 Other $0 0
Deferred Costs $0 0 Other $0 0
TOTAL $0 0 $0 0
SOURCES: PERMANENT Per Unit
Perm Loan - $0 0 USES: Per Unit
NSP1 $0 0 Acquisition Costs/Closing $0 0
Agency Low-Mod Funds $0 0 Architecture/Fees & Permits $0 0
NSP State $0 0 Construction Cost $0 0
NSP2 $0 0 Indirect Construction/Legal $0 0
Deferred Developer Fee $0 0 Developer's Fee $0 0
OWe $0 0 Rent-Up Costs/Reserves $0 0
Other $0 0 Financing Costs $0 0
Other $0 0
TOTAL $0 0 $0 0
EXHIBIT "D"
DEVELOPMENT COSTS Revioed 1/:t6f)OOQ
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
Number of Dwelling Units: 4 Gross Building Area (sf) 4
TOTAL $ PER $ PER SF %OF
COST UNIT BUILDING TOTAL
1 ACQUIStTlON COSTS
Purchase Price $0 $0.00 $0.00 #DIV/OI
ClosingCosls $0 $0.00 $0.00 #DIV/OI
.l,cr':di,;: SO 50.PO $-O.OD ;tiDIV/QI
HoldingCosls $0 $0.00 $0.00 #DIV/O!
TOTAL ACQUISITION COSTS $0 $0,00 $0.00 #DIVlOI
2. FEES/PERMITS & STUDIES
Building Fees & Permits $0 $0.00 $0.00 #DIV/OI
SurveyslSoilsfTrafflc/Acouslicllnspeclions $0 $0,00 $0.00 #DIV/O'
Erwironmental Doc/Remedialion/Mitgalion $0 $0,00 $0.00 #OIV/Q!
ArchlEngineeringFees
C tS!~,!. (;1;0% $" ~O.OO ~O.Oi:" #DIV/OI
Reimbursables $0 $0.00 $0.00 #DIV/Ol
Subtotal: $0 $0.00 $0.00 #DIV/O'
TOTAL FEES/PERMITS & STUDIES $0 $0.00 $0.00 #DIV/OI
3 DIRECT CONSTRUCTION COSTS
DemolillOn $0 $0.00 $0,00 #DIV/OI
Rehabilitation $0 $0,00 $0.00 #D1V/01
On-site Work $0 $0,00 $0.00 #DIV/O!
Otl.s'tt ~\\lfk $0 $0.00 $0.00 #OIV!O:
Olher $0 tOOl,) 10.00 t!:L'Iv/(l!
Other $0 $0.00 $0.00 #DIV/O!
Subtotal $0 $0.00 $0.00 #DIV/O!
=:cnl'ilcto"&Over:1e..c /I,Protil 0.00% $0 $0.0(' $0.(10 #DIVJO!
Subtotal: $0 $0.00 $0,00 #DIV/O'
,-;eni;"'~i C{)"dH;O'l~ (l.00% $0 $0.00 $O.OC #[.lIVIOi
FHlow,;;,ncr f.ond iGllllsur.l1l~C; $0 $0.00 $O.lW #DIVfO!
Subtotal: $0 $0,00 $0.00 #DIVIO'
Construction COrlllngency 0,00% $0 $0.00 $0.00 #DIVIO!
TOTAL DIRECT CONSTRUCTION COSTS $0 $0.00 $0,00 #DIV/OI
4 INDIRECT CONSTRUCTION COSTS
De~eloper's Fee $0 $0.00 $0.00 #DIVIO'
Deferred Developer Fee $0 $000 $0.00 #DIV/OI
Subtotal $0 $000 $0.00 #OtV/OI
BUilders Risk/Liabitity Insurance $0 $0.00 $0.00 #OIVIO'
Real Estate Taxes $0 $0.00 $0.00 #DIVIOI
Legal-Organizational $0 $0.00 $0.00 #DIV/O'
Accounllng/lnspection $0 $0.00 $0.00 #DIV/O'
Relocation $0 $0.00 $0.00 #DIV/O'
Indirect Construction Costs Contingency $0 $0,00 $0.00 #DIV/O'
TOTAL INDIRECT CONSTRUCTION COSTS $0 $0.00 $0.00 #DIV/OI
5 RENT.UPCOSTS
Markellng/AdvertisingExpense $0 $0,00 $0.00 #DIV/O'
Lease-up Reserve{4 month lease-up) $0 $0.00 $0.00 #DtVtO!
Capitalized Replacement Reser~e $0 $0.00 $0.00 #DIVtOI
Capitalized Operating Reserve $0 $0.00 $0.00 #DIV/O'
Common Area Furnishings $0 $0.00 $0.00 #DIV/OI
TOTAL RENT-UP/MARKETING COSTS $0 $0.00 $0,00 #OIV/OI
6 FINANCING COSTS
ConstflJction Loan Interest $0 $000 $0.00 #DIVIOI
Construction Loan Fees/Costs $0 $0.00 $0.00 #DIV/O'
Lender Appraisal $0 $0.00 $0.00 #OIV/O'
Lender Legal $0 $0.00 $0.00 #DIV/O!
Permanenl Loan FeeslClosingCosts $0 $0.00 $0.00 #OIVJO!
Title and Recording (ConstrJPerm) $0 $0.00 $0.00 #DIV/O!
TOTAL FINANCING COSTS $0 $0.00 $0_00 #OIV/Of
7, SUBTOTAL DEVELOPMENT COSTS $0 $0.00 $0.00 #OIV/O!
TOTAL LAND COSTS $0 $0.00 $0.00 #DIV/OI
TOTAL DEVELOPMENT COSTS $0 $0,00 $0,00 #OIVlO!
Construction estimates are subject to change and may be revised due to entitlement issues, changes in
construction standards, architectural and engineering requirements, and other unforseen circumstances.
EXHIBIT "0"
RENT SCHEDULE
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer Name: Mary Erickson Community Housing, Inc.
Revised
1/26/2009
2008 AREA MEDIAN INCOME
$0 2009 2009
Monthly Monthly Monthly Total Total Total
Unit Percent Gross Utility Net Number Monthly Annual # of
Type Median Rent Allow. Rent of Units Rent Rent ($) Bdrms.
ONE BEDROOM 30% $420 $48 $372 0 $0 $0 0
45% $584 $48 $536 0 $0 $0 0
50% $649 $48 $601 0 $0 $0 0
TWO BEDROOM 30% $0 $61 ($61) 0 $0 $0 0
45% $0 $61 ($61) 0 $0 $0 0
50% $0 $61 ($61) 0 $0 $0 0
60% $0 $61 ($61) 0 $0 $0 0
0
THREE BEDROOM 30% $0 $74 ($74) 0 $0 $0 0
45% $0 $74 ($74) 0 $0 $0 0
50% $0 $74 ($74) 0 $0 $0 0
60% $0 $74 ($74) 0 $0 $0 0
0
MANAGER'S Exempt $0 $0 $0 0 $0 $0 -1
TOTAL 0 $0 $0 -1
30% 0 #DIVIO! 30% 0 #DIVlO!
45% 0 #DIVIO! 45% 0 #DIVIO!
50% 0 #DIV/O! 50% 0 #DIV/O!
60% 0 #DIV/O! 60% 0 #DIVIO!
Mgr 0 #DIV/O! Mgr 0 #DIVIO!
0 #DIV/OI 0 #DIV/O!
Includinq Mqr. Unit Excludinq Mqr.Unit
3
EXHIBIT "0"
OPERATING EXPENSES Revised 1/26/2009
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
ANNUAL MONTHLY PER UNIT UNIT/MO. % TOTAL
0
1 MANAGEMENT
Contract Management Fee $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL MANAGEMENT $0 $0.00 $0.00 $0.00 #DIV/O!
2 ADMINISTRATION
Marketing $0 $000 $0.00 $0.00 #DIV/O!
Audit $0 $0.00 $0.00 $0.00 #DIV/O!
legal $0 $0.00 $0.00 $0.00 #DIV/O!
Office Expenses $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL ADMINISTRATION $0 $0.00 $0.00 $000 #DIV/O!
3 SALARIES AND BENEFITS
On-Site ManagerfAsst. Manager* $0 $000 $0.00 $0.00 #DIV/O!
Maintenance Personnel. $0 $000 $0.00 $0.00 #DIV/O!
Janitorial Personnel $0 $0.00 $000 $0.00 #DIV/O!
Case Manager $0 $000 $0.00 $0.00 #DIV/O!
Housekeepers $0 $0.00 $0.00 $0.00 #DIV/O!
Payroll T xs, Ins & Wkr. Cemp $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL SALARIES $0 $0.00 $0.00 $0.00 #DIV/O!
4. MAINTENANCE
Supplies $0 $0.00 $0.00 $0.00 #DIV/O!
Repairs Contract $0 $0.00 $0.00 $0.00 #DIV/O'
Pest Control $0 $0.00 $0.00 $0.00 #DIV/O!
Grounds Contract $0 $0.00 $0.00 $000 #DIV/O!
Turnover Costs $0 $0.00 $000 $0.00 #DIV/O!
Other $0 $0.00 $0.00 $0.00 #DIV/O'
TOTAL MAINTENANCE $0 $0 $0 $0 #DIV/O!
5 UTILITIES NOT PAID BY TENANTS
Trash Removal $0 $000 $0.00 $0.00 #DIV/O!
Electricity $0 $0.00 $000 $0.00 #DIV/O!
Water/Sewer $0 $0.00 $0.00 $0.00 #DIV/O!
Gas $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL UTILITIES $0 $0.00 $0.00 $0.00 #DIV/O!
6. INSURANCE
Property & liability Insurance $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL INSURANCE $0 $0.00 $0.00 $0.00 #DIV/O!
7. TAXES/RESERVES
Real Estate Taxes $0 $000 $0.00 $0.00 #DIV/O!
Replacement Reserves $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL TAXES $0 $0.00 $0.00 $0.00 #DIV/O!
8 OTHER
Other $0 $0.00 $0.00 $000 #DIV/O!
Other $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL OTHER $0 $0 $0 $0 #DIV/O!
TOTAL OPERATING EXPENSES $0 $0 $0.00 $0.00 #DIV/O I
4
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Exhibit "E"
Developer Payment and Reimbursement
The Developer's compensation for executing the Scope of Services described in Exhibit
"A" shall consist of the following components: I. Developer Fee - This is the
compensation that the Developer receives for executing the development of an Eligible
Property, including acquisition, demolition (if so required), rehabilitation and obtaining
all the required governmental approvals and permanent financing required to operate the
Eligible Property for its intended use; 2. Property Management Fee - The Developer shall
receive a monthly fee for managing the Eligible Property on a daily basis once the
Property is leased up. The portion of the Property Management Fee received by the
Developer shall be determined by the extent to which the Developer is involved in the
management of the Eligible Property; and 3. Residual Receipts - Any cash flow
generated by an Eligible Property after operating expenses, debt obligations, and other
fees and reserves approved by the Agency have been paid shall be shared by the Agency
and the owners of the Eligible Property. The Developer is entitled to a portion of the
owner's share of Residual Receipts to the extent that they participate in the ownership of
that particular Eligible Property.
All of the above fees must be reflected in the financing plan presented to the Agency by
the Developer for any particular Eligible Property. The Agency will negotiate these fees
with the Developer prior to the execution of any Development Agreement for any
particular Eligible Property; however, the fees shall generally be determined in
accordance with the definition and formula established for each respective fee below.
The Agency's approval of these fees is a necessary pre-condition for the execution of any
Development Agreement.
A. Developer Fee
The Developer Fee shall be included as a line item in the development budget
for the Eligible Property presented to the Agency by the Developer prior to
the acquisition or rehabilitation of any Eligible Property. It shall be paid from
the financing proceeds obtained for the development of an Eligible Property.
The formulas for determining the amount of the Developer Fee are as follows:
(1) Acquisition and Rehabilitation - In the case where the Developer is
acquiring the Eligible Property for the intended purpose of
rehabilitating the property and renting it to Eligible Tenants, the
Developer shall be entitled to a Developer Fee equal to ten percent
(10%) of the Total Development Cost as reflected in the Development
Pro Forma Template attached to this Agreement as Exhibit "D" and
approved by the Agency. The Total Development Cost shall be
comprised only of those line items that appear in the Development Pro
25
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Forma Template. Any other costs shall only be included as a part of
Total Development Cost upon approval by the Agency.
(2) Developer Fee Bonus - If the Developer is successful in obtaining a
cumulative amount of at least one million five hundred thousand
dollars ($1,500,000L("Threshold Amount") from financing sources
other than the Agency ("Alternate Funds") that can be applied toward
the acquisition, rehabilitation, and/or operations of Eligible Properties
as defined in this Agreement, then the Developer will receive an
additional two percent (2%) of Total Development Cost for all Eligible
Properties acquired and/or rehabilitated using Alternate Funds, once
such Alternate Funds have been successfully secured by the
Developer. The Alternate Funds will be considered to have been
secured by the Developer after the Alternate Funds have been
effectively applied towards the purchase and/or rehabilitation of
Eligible Properties. The 2% additional bonus will apply to all Eligible
Properties using Alternate Funds as part of their financing, including
those Eligible Properties that were completed prior to reaching the
$1,500,000 threshold.
(3) Developer Fee Payment Schedule - Twenty-five percent (25%) of the
Developer Fee as defined in Sections A.(l) and A.(2), above, shall be
disbursed to the Developer upon the closing of the Acquisition
Escrow. Fifty-percent (50%) shall be paid upon completion of the
rehabilitation work and the receipt of the Certificate of Occupancy. In
the case where a Certificate of Occupancy does not need to be issued
in order to operate the Eligible Property, the Certificate of Completion
from the general contractor and the Unconditional Lien Releases from
the Developer and all of its general contractors and sub-contractors can
be accepted for the purposes of documenting the satisfactory
completion of the rehabilitation work on the Eligible Property, instead
ofa Certificate of Occupancy. The remaining twenty-five (25%) shall
be paid upon the closing of the permanent financing for the Eligible
Property.
B. Property Management Fee
The Property Management Fee shall be included as a line item in the First
Year Operating Budget (please see Exhibit "D") for the Eligible Property
presented to the Agency by the Developer prior to the acquisition and
rehabilitation of any Eligible Property. This fee shall only be paid in the case
where an Eligible Property is being acquired for the purpose of rehabilitating
it and eventually renting it to Eligible Tenants. It shall be paid from the rental
revenues generated from the operation of the Eligible Property. This fee shall
be negotiated and must be approved by the Agency prior to the execution of
the Development Agreement for any particular Eligible Property, but in no
26
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event shall the Property Management Fee exceed seven percent (7%) of the
Eligible Property's Effective Gross Income. The Effective Gross Income for
any Eligible Property shall be calculated in the manner reflected in the First
Year Operating Budget for the Eligible Property.
C. Residual Receipts
The Agency is entitled to receive at least fifty percent (50%) on any Residual
Receipts for any given year that an Eligible Property is in operation. The
remaining portion of Residual Receipts pertains to the Owner of the Eligible
Property. Any portion of Residual Receipts paid to the Developer shall be
distributed from the Owner's portion of Residual Receipts. The distribution
of Residual Receipts may vary between Eligible Properties subject to the
terms and conditions negotiated by the Agency and the Developer prior to the
execution of any Development Agreement for an Eligible Property.
I. Calculation of Residual Receipts
Residual Receipts shall be calculated and reported to the Agency annually
for each calendar year no later than June 15th of the following calendar
year on forms specified and provided by the Agency from time to time.
All calculations and records are subject to audit by the Agency.
Developer shall provide to the Agency for inspection and copying any
records, receipts, account books, ledgers, checks, or other documents or
other evidence requested by the Agency for the purpose of verifying
Developer's calculation of Residual Receipts, and shall promptly pay to
the Agency any further amount due but not paid as a result of any
miscalculation by Agency.
2. Definition of Residual Receipts.
(a) "Residual Receipts" shall mean, with respect to each calendar year, the
amount by which "Gross Rents," as defined herein, for such calendar
year exceed the "Operating Expenses", as defined herein, for that
calendar year. (b) With the exception of the "Excluded Items" (as
defined below), "Gross Rents" shall mean, with respect to each
calendar year or portion thereof, all gross income, rentals, revenues,
payments and consideration, of whatever form or nature, whether
direct or indirect, received by or paid to or for the account or benefit of
Developer or any "Affiliate" (as defined below) of Developer or any of
their agents or employees, from any and all sources, resulting from or
attributable to the ownership, operation, leasing and occupancy of the
Eligible Property, determined on the basis of generally accepted
accounting principles applied on a consistent basis, and shall include,
but not be limited to: (i) gross rentals paid by occupancy tenants of the
Eligible Property under occupancy leases and payments and subsidies
of whatever nature, including without limitation any payments,
27
P,\AgcndaslAgenda AttachmenlslAgenda AlIaChnlenlOlAgenda An..chmentslAgrtnts-Amend 2009\07-l)6-Q9 Mary Erickson Communily Housing. In<:, _ Master Agrccmcm (Fina1)doc
vouchers or subsidies from the United States Department of Housing
and Urban Development (HUD) or any other person or organization,
received on behalf of tenants under occupancy leases, (ii) amounts
paid to Developer or any Affiliate of Developer on account of
"Operating Expenses" (as defined herein) for further disbursement by
Developer or such Affiliate to a third party or parties, (iii) late charges
and interest paid on rentals, (iv) rents and receipts from licenses,
concessions, vending machines, coin laundry and similar sources; ( v)
other fees, charges or payments not denominated as rental but payable
to Developer in connection with the rental of office, retail, storage, or
other space in the Project; and (vi) consideration received in whole or
in part for the cancellation, modification, extension or renewal of
occupancy leases. The term "Affiliate" shall mean any person or
entity directly or indirectly, through one or more intermediaries, con-
trolling, controlled by or under common control with Developer
which, if Developer is a partnership or limited liability company, shall
include each of the constituent members or partners, respectively,
thereof. The term "control" as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the
right to exercise, directly or indirectly, more than fifty percent (50%)
of the voting rights attributable to the shares of the controlled
corporation, and, with respect to a person that is not a corporation,
possession directly or indirectly of the power to direct or cause the
direction of the management or policies of the controlled person.
Notwithstanding the foregoing, Gross Rents shall not include the
following items ("Excluded Items"): (aa) security deposits from
tenants (except when applied by Developer to rent or other amounts
owing by tenants); (bb) capital contributions to Developer or its
members, partners or shareholders by its or their members, partners or
shareholders; (cc) condemnation or insurance proceeds constituting
'Net Proceeds' as defined in Section C.2.(d) below; and (dd) funds
received from any source (including but not limited to senior financing
and any junior financing or other financing) actually and directly used
for acquisition and/or rehabilitation of the Eligible Property.
(b) "Operating Expenses" shall mean, with respect to each calendar year
or portion thereof, the sum of the following expenses to the extent
reasonably paid by Developer during such period: (i) nonelective
payments made with respect to the Senior Financing; (ii) all taxes and
assessments imposed upon the Eligible Property and required to be
paid by Developer but only to the extent such taxes and assessments
are paid or set aside as a reserve by Developer during such calendar
year; (iii) all amounts paid or set aside as a reserve by Developer on
account of insurance premiums for insurance carried in connection
with the Eligible Property, provided that if insurance on the Eligible
Property is maintained as part of a blanket policy covering the Eligible
28
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Property and other properties, the insurance premium included in this
definition shall be the portion of the premium fairly allocable to the
Eligible Property for the period; (iv) ownership and operating costs
incurred by Eligible Property for the management, operation, cleaning,
leasing, marketing, maintenance and repair of the Eligible Property
(including without limitation, property management fees and
administrative fees) properly chargeable against income according to
generally accepted accounting principles, including without limitation
wages, payroll and accounting costs, utility and heating charges,
material costs, maintenance costs, costs of services, water and sewer
charges, travel expenses allocable to the Eligible Property, and license
fees and business taxes; provided, however, that (A) the amount
included as property management fees and administrative fees in
Operating Expenses shall collectively not exceed ten percent (I 0%) of
Gross Rents from the Eligible Property for such period, all or a portion
of each of which may be paid to Developer and/or an Affiliate of
Developer, (B) such property management fees and administrative fees
shall only be paid on the basis of supporting documentation reasonably
acceptable to the Agency, and shall be paid after the payment of all
other Operating Expenses, and (C) partnership management fees and
other fees payable to a partner in a tax credit limited partnership shall
onl y be considered Operating Expenses to the extent they do not
exceed $ I 5,000 in the aggregate in any year, which shall be adjusted
annually by a percentage equal to the annual increase in AMI adopted
by HUD; (v) reasonable and ordinary reserves actually set aside for
replacement of roofing, furniture, fixtures, equipment, and other
capital expenditures, in an annual amount no less than $200.00 per unit
and no greater than such higher amount as may be established from
time to time by mutual agreement of the Parties; and (vi) to the extent
not otherwise included in Operating Expenses, amounts paid from any
account as a reserve account for the purpose for which such reserve
was created so long as such purpose would constitute an Operating
Expense.
(c) Notwithstanding any provIsIOn of Section C.2.(b) , the term
"Operating Expenses" shall not include any of the following:
(i) salaries of employees of Developer or Developer's general
overhead expenses, or expenses, costs and fees paid to an
Affiliate of Developer, to the extent any of the foregoing
exceed the expenses, costs or fees that would be payable in
a bona fide arms' length transaction between unrelated
parties in the San Bernardino-Riverside County area for the
same work or services;
(ii) any amounts paid directly by a tenant of the Eligible
Property to a third party in connection with expenses
29
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which, if incurred by Developer, would be Operating
Expenses;
(iii) optional or elective payments with respect to the Senior
Financing;
(iv) any payments with respect to Junior Financing, Other
Financing, or any other Eligible Property-related loan or
financing other than the Senior Financing; or
(v) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Developer prior to
completion of the Rehabilitation with respect to the
development, maintenance and upkeep of the Eligible
Property, or any portion thereof, including, without
limitation, all costs and expenses incurred by Developer in
connection with the acquisition of the Eligible Property, all
predevelopment activities conducted by Developer in
connection with the Eligible Property, including without
limitation, the preparation of all plans and the performance
of any tests, studies, investigations or other work, and the
construction of the Project and anyon-site or off-site work
in connection therewith.
(d) In addition to the payments provided in Sections 2(a), (b) and (c)
above, and subject to the terms of the Senior Financing, Developer
shall pay to the Agency towards (but not to exceed) any outstanding
amounts associated with the Loan: (a) no later than the date of close of
escrow or other consummation of any Assignment other than a Minor
Assignment, the Applicable Percentage of the Net Proceeds of such
Assignment; and (b) no later than the recording of a Refinancing, fifty-
percent (50%) of the Net Refinancing Proceeds received from any
such Refinancing.
A "Minor Assignment" shall mean any lease of an individual unit in the Project
for occupancy by a residential tenant and in the ordinary course of business for operation
of the Project.
"Applicable Percentage"' shall mean fifty percent (50%); provided, however, that
the term Applicable Percentage shall mean one hundred percent (100%) with respect to a
payment on the Loan attributable in whole or in part to a condemnation of, or event of
damage, destruction or casualty with respect to, the Eligible Property, the Project or any
portion of either. "Assignment" means any voluntary or involuntary conveyance,
disposition, assignment, taking, casualty, encumbrance (other than a Refinancing as
defined below or the creation of the Senior Financing or any other Project Loan or
limited partner contribution, the proceeds of which are used solely for initial acquisition
30
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of the Eligible Property by Developer or initial development of the Project), sublease,
sale, license, concession, management agreement, operating agreement, transfer or
similar transaction with respect to any direct or indirect interest or economic benefit of
any person or entity in connection with the Project or the use or occupancy of the Eligible
Property including, without limitation, any Transfer by Developer of all or any portion of
its rights under or interest in the Project or the Eligible Property, any change of
ownership or control of Developer, any condemnation or taking of the Eligible Property
or the Project or any portion thereof, any event of damage to or destruction of the Eligible
Property or the Project, any foreclosure of Developer's interest in the Project or the
Eligible Property, whether by judicial proceedings, or by virtue of any power contained
in a deed of trust, indenture or other instrument creating a lien against the Eligible
Property or the Project, or any assignment of Developer's estate in the Project or the
Eligible Property through, or in lieu of, foreclosure or other appropriate and bona fide
proceedings in the nature thereof; provided, however, that the term "Assignment" as used
herein shall not include bona fide transfers of an ownership interest in Developer to any
Affiliate of Developer, so long as the consideration paid to the selling partner, member or
shareholder on account of such transfer does not exceed the actual amount paid by such
partner, member or shareholder for its ownership interest plus reimbursement for any out-
of-pocket expenses incurred by such partner, member or shareholder in connection with
its acquisition of such ownership interest.
"Net Proceeds" of an Assignment shall mean (I) the proceeds received, directly
or indirectly, by Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate as a result of such Assignment, including,
without limitation, cash, the amount of any monetary lien or encumbrance assumed or
taken subject to by the assignee, the fair market value of any noncash consideration,
including the present value of any promissory note received as part of the proceeds of
such Assignment (such present value to be determined based upon a discount rate
reasonably satisfactory to the Agency), the entire condemnation award or compensation
payable to Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate in connection with a condemnation or taking in
eminent domain of any part of the Eligible Property or the Project or any interest therein,
all insurance proceeds or awards payable to Developer or any Affiliate or constituent
member or partner or majority shareholder of Developer or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part
thereof not used for project restoration; less (2) the sum of (i) the actual, documented and
reasonable expenses of effecting such Assignment, including reasonable brokerage
commissions, title insurance premiums, documentary transfer taxes, and reasonable
attorneys' fees, in each case actually paid in connection with the Assignment (provided
that no deduction shall be allowed for payments to an Affiliate of the person or entity
making the Assignment which are in excess of the amount that would be paid for the
same or equivalent services in an arms' length transaction between unrelated parties
acting reasonably), and (ii) the amount of any proceeds of the Assignment paid
(excluding voluntary payments) towards the then-outstanding balance of the Senior
Financing. Notwithstanding anything above to the contrary, the permissible deductions
for purposes of calculating the Net Proceeds of an Assignment shall not include any
31
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foreign, U.S., state or local income taxes, franchise taxes, or other taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project
Loan'') secured by an encumbrance on the Eligible Property, the Project, or any portion
thereof. The term "Refinancing" shall not include the creation of the Senior Financing or
any other Project Loan, the proceeds of which are used solely for initial acquisition of the
Eligible Property by Developer or initial development of the Project.
"Net Refinancing Proceeds" shall mean the gross face amount of the Project Loan
obtained in connection with such Refinancing, after: (I) payment of the actual, docu-
mented and reasonable expenses of such Refinancing, including escrow fees, title policy
expenses, legal expenses, survey fees, recording fees, commissions, and other usual and
reasonable expenses of any such Refinancing (provided, that no deduction shall be
allowed for payments in connection with such Refinancing which are in excess of the
amounts that would be paid for the same or equivalent services in an arms' length
transaction between unrelated parties acting reasonably); and (2) deduction of amounts
repaid (excluding voluntary payments) in connection with the Refinancing towards
amounts outstanding under the Senior Financing.
/1/
1//
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/1/
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1//
1//
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32
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Exhibit "F"
Closing Requirements
Except to the extent Agency's Executive Director directs in writing that some or all of the
disbursement and/or deliveries shall occur outside of Escrow, disbursement of the
Agency's loans to Developer, whether they be for the purpose of acquiring Eligible
Properties, rehabilitating these properties or providing permanent financing for these
properties, delivery of the executed loan documents (as specified in Sections A., 8., and
C. below), and recordation of the appropriate documents (as defined in Sections A., 8.,
and C. below) to be recorded shall be carried out through an escrow account ("Escrow")
to be established by the Parties with a title or escrow company ("Escrow Holder")
specifically approved in writing by Agency. Developer shall obtain Agency's approval
of an Escrow Holder prior to the opening of Escrow. The Parties may execute
supplemental instructions to Escrow Holder consistent with the terms of this Agreement,
but in the event of a conflict between the terms of this Agreement and any supplemental
escrow instructions, the terms of this Agreement shall control. Except as otherwise
expressly provided herein, any fees and costs incurred by Escrow Holder in the
performance of its duties hereunder and agreed to be paid by the Parties shall be paid
exclusively by the Developer.
A. Acquisition Financing
I. Disbursements made by the Agency for the purpose of acqumng Eligible
Properties under this Agreement, which shall hereafter be referred to as
"Acquisition Financing", shall be expressly subject to satisfaction of all of the
following conditions (collectively, the Acquisition Closing Conditions) on or
before the date ("Acquisition Closing Deadline") which is thirty (30) calendar
days following the execution date of a sub-agreement initially entered into by the
Agency and Developer for the purposes of implementing the acquisition and/or
rehabilitation, or providing permanent financing of an Eligible Property or Set of
Eligible Properties in accordance with the conditions set forth in this Master
Agreement ("Development AgreemenC).
(a) Execution of the Development Agreement and delivery of a fully
executed copy of the Development Agreement to the Escrow Holder;
(b) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Acquisition Note ("Acquisition Note"), in the form
attached hereto as Exhibit "K";
(c) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the covenants, conditions and restrictions ("Agency
CC&R's") in the form attached hereto as Exhibit "M'" recorded against
the ownership interest of the Developer, prior to the start of
construction;
33
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(d) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the Agency Deed of Trust ("Agency Deed of Trust"),
attached hereto as Exhibit "L";
(e) Receipt by the Agency from Developer of such other documents,
certifications and authorizations as are reasonably required by the
Agency, in form and substance satisfactory to the Agency, evidencing
that (i) the Development Agreement, the Acquisition Note, the Agency
Deed of Trust, the Agency CC&R's and all other documents given or
executed in connection herewith (collectively the Agreement, the
Acquisition Note, the Deed of Trust and the CC&Rs are referred to
herein as the "Acquisition Loan Documents") are duly and validly
executed by Developer and constitute the valid and enforceable
obligation of Developer pursuant to the respective terms, and (ii) the
execution and delivery of the Acquisition Loan Documents, and the
performances thereunder by Developer, will not breach or violate any
law applicable or governmental regulation to which Developer is
subject nor constitute a breach of or default under any instrument or
agreement to which Developer may be a party;
(f) First American Title ("'Title Company") shall have assured the Agency
in writing that upon recordation of the Agency Deed of Trust there
will be provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including but
not limited to Nos. 100, 103.7, ] 16 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Acquisition Loan, insuring the
Agency's interest in the Property as beneficiary under the Agency
Deed of Trust, and specifically insuring that the lien of the Agency
Deed of Trust and the Agency CC&R's against the Property are
subject only to the Senior Financing and any exceptions to title
applicable to the Property which were expressly approved in writing
by the Agency (collectively with the Senior Financing, "Permitted
Senior Encumbrances"). Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
(g) Intentionally omitted
(h) No Event of Default shall exist under this Agreement, the
Development Agreement or under any agreement or instrument
relating to any Senior, Junior or Other financing obtained by the
Developer for the purpose of acquiring, rehabilitating or operating an
Eligible Property and Developer has demonstrated to the satisfaction
of the Agency Executive Director (or his designee) that all financing
34
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sources for acquisition, rehabilitation, and operation of the Eligible
Property, including but not limited to Developer's equity, are or will
be available in sufficient amounts to provide for full and timely
completion and ongoing operation, if and to the extent required in the
Development Agreement, of the Eligible Property;
(i) Developer shall have provided to the Agency, in form satisfactory to
the Agency, certified copies of (i) Developer's governing partnership
agreement, operating agreement, or articles and bylaws, together with
a certification by the managing member, managing general partner, or
president that such agreement or articles and bylaws has not been
amended or modified except as described in the certification (ii) a
good standing certificate from the California Secretary of State,
certifying that Developer is duly qualified and in good standing, and
(iii) all other documents necessary to evidence to the Agency's
satisfaction that the individuals and entities executing this Agreement
and the Loan Documents, and other entities on whose behalf such
documents are executed, are fully authorized to do so and to bind the
respective entities, including Developer, to the terms hereof and
thereof;
U) Developer shall have furnished the Agency with evidence satisfactory
to the Agency evidencing the insurance coverages required by Exhibit
"C".
2. When, and only when, Escrow Holder has confirmed that Closing Conditions (a),
(b), (c), (d), and (f) of Section 1 above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Closing Conditions have been timely satisfied or waived, then Escrow
Holder shall carry out the close of Escrow ("Close of Escrow") by:
(i) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(ii) delivering the executed original Acquisition Note to the Agency;
(iii)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer;
B. Rehabilitation Financing
1. Disbursements made by the Agency for the purpose of rehabilitating Eligible
Properties under this Agreement, which shall hereafter be referred to as
35
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"Rehabilitation Financing", shall be expressly subject to satisfaction of conditions
A.1.(a), (c), (d), (e), (g), (h), (i) and 0) above and conditions B.1.(a) to (e) below,
all of these conditions (collectively, the Rehabilitation Closing Conditions) on or
before the date ("Rehabilitation Closing Deadline") which is thirty (30) calendar
days following the execution date of a Development Agreement or the date that
the Developer receives written approval from the Agency of their Rehabilitation
budget, timeline, design plans, and construction contract (collectively the
"Rehabilitation Plan"), whichever occurs later.
(a) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Rehabilitation Note ("Rehabilitation Note");
(b) Developer shall have commenced or be ready to commence
rehabilitation of the Eligible Property, and shall have furnished the
Agency with copies of (A) a contract for the rehabilitation work and
materials ("Construction Contract") entered into with a general
contractor ("General Contractor") previously approved in writing by
the Agency; (B) a payment bond with respect to the rehabilitation
work and materials posted by the General Contractor which is in an
amount equal to the amount of the contract price identified in the
Construction Contract, is issued by a surety reasonably acceptable to
the Agency, is in form and content reasonably approved by the
Agency, has been recorded in the Official Records of San Bernardino,
and names the Agency as an additional obligee; (C) a performance
bond for one hundred percent (100%) of the contract price,
guaranteeing the completion of the rehabilitation work which is in
form and content reasonably approved by the Agency, is issued by a
surety reasonably acceptable to the Agency, and names the Agency as
an additional obligee; and (D) shall have submitted to the Agency and
received the Agency's approval of any design plans or other design
documents requested by the Agency.
(c) Not as a Closing Condition, but at least ninety (90) calendar days prior
to occupancy and prior to the commencement of tenant selection for
the Eligible Property, Developer shall have obtained the Agency's
written approval of an affirmative marketing plan, leasing guidelines,
and a summary of the rules, procedures and programs for the operation
of the Eligible Property including specifically the procedures to be
employed by which the tenants in the Eligible Property shall be
selected in the event that, at any given time, the number of Eligible
Tenants applying to lease units at the Eligible Property exceeds the
number of units available.
(d) Developer shall have furnished and obtained the Agency's approval of
an Operating Budget and a Management Plan for the Eligible Property.
The Management Plan shall include a preliminary Operating Budget in
36
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a format mandated by the Agency, approved by the Agency at its sole
discretion. In the event the preliminary Operating Budget is proposed
for revision at the time the Certificate of Occupancy is issued, any
such revision must be approved by the Agency at its sole discretion;
(e) The Title Company shall have assured the Agency in writing that upon
recordation of the Agency Deed of Trust there will be provided to the
Agency, at Developer's sole expense, a lender's policy of title
insurance (with customary endorsements, including but not limited to
Nos. 100, 103.7, 116 and 122 and such other endorsements as the
Agency shall reasonably require) issued by the Title Company in the
amount of the Rehabilitation Loan, insuring the Agency's interest in
the Property as beneficiary under the Agency Deed of Trust, and
specifically insuring that the lien of the Agency Deed of Trust and the
Agency CC&R's against the Property are subject only to the Permitted
Senior Encumbrances. Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
2. When, and only when, Escrow Holder has confirmed that Rehabilitation Closing
Conditions (a), (c) and (d) of Section A.!. above and Rehabilitation Closing
Conditions (a) to (e) of Section 8.1. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Rehabilitation Closing Conditions have been timely satisfied or waived,
then Escrow Holder shall carry out the Close of Escrow by:
(i) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(ii) delivering the executed original Rehabilitation Note to the Agency;
(iii)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer;
C. Permanent Financing
1. Disbursements made by the Agency for the purpose of paying off construction or
acquisition financing obtained from Agency approved financing sources in order
to acquire and/or rehabilitate an Eligible Property, which shall hereafter be
referred to as ""Permanent Financing", shall be expressly subject to satisfaction of
the conditions set forth below, all of these conditions (collectively, the Permanent
Closing Conditions) on or before the date (""Permanent Closing Deadline") which
37
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is thirty (30) calendar days following the execution date of a Development
Agreement or the date that the Developer receives the Certificate of Occupancy
from the appropriate local government agencies, whichever occurs later.
(a) The rehabilitation work on the Eligible Property is completed. The
rehabilitation work shall be "completed," which shall be deemed to
have occurred when the Agency has received satisfactory evidence
that the rehabilitation work has been completed in compliance with the
plans and specifications (collectively, "Plans") referenced in the
construction contract ("Construction Contract") which Developer has
entered into with a general contractor ("General Contractor") with
respect to the Eligible Property, and that all final permits and
certificates necessary to the operation of the Eligible Property as
contemplated herein, and releases, waivers and other instruments
evidencing no claims, stop notices or mechanics liens existing with
respect to the Eligible Property, have been obtained, including, without
limitation, the following, each of which is subject to the Agency's
review and approval:
(i) A signed certificate from the General Contractor, in a form
reasonably acceptable to the Agency, certifying to Agency that
rehabilitation was completed substantially in accordance with
the requirements of the Construction Contract, the Plans and
this Agreement, and all other related on-site and off-site
improvements have been completed;
(ii) A certificate of occupancy (the "Certificate of Occupancy")
and/or any other final permits and licenses necessary to permit
the use and occupancy of the Eligible Property for its intended
purposes, which have been issued by proper governmental
agencies;
(iii)Unconditional Waivers and Releases Upon Final Payment, in
statutory form, showing no amounts in dispute, have been
received from the General Contractor, all subcontractors, and
all other persons or entities providing services or furnishing
materials in connection with the Eligible Property.
(b) Not as a Closing Condition, but at least ninety (90) calendar days
prior to occupancy and prior to the commencement of tenant
selection for the Eligible Property, Developer shall have obtained
the Agency's written approval of an affirmative marketing plan,
leasing guidelines, and a summary of the rules, procedures and
programs for the operation of the Eligible Property including
specifically the procedures to be employed by which the tenants in
the Eligible Property shall be selected in the event that, at any given
38
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time, the number of Eligible Tenants applying to lease units at the
Eligible Property exceeds the number of units available.
(c) Developer shall have furnished and obtained the Agency's approval
of an Operating Budget and a Management Plan for the Eligible
Property. The Management Plan shall include a preliminary
Operating Budget in a format mandated by the Agency, approved by
the Agency at its sole discretion. In the event the preliminary
Operating Budget is proposed for revision at the time the Certificate
of Occupancy is issued, any such revision must be approved by the
Agency at its sole discretion;
(d) The Title Company shall have assured the Agency in writing that
upon recordation of the Agency Deed of Trust there will be
provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including
but not limited to Nos. 100, 103.7, 116 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Rehabilitation Loan, insuring
the Agency's interest in the Property as beneficiary under the
Agency Deed of Trust, and specifically insuring that the lien of the
Agency Deed of Trust and the Agency CC&R's against the Property
are subject only to the Permitted Senior Encumbrances. Standard
lender's title insurance coverage (without the need for a survey) will
be accepted by the Agency unless another Project lender requires
extended coverage, in which case an AL T A extended coverage
policy will also be provided to the Agency;
2. When, and only when, Escrow Holder has confirmed that Permanent Closing
Conditions (a) to (d) of Section c.!. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Acquisition or Rehabilitation Closing Conditions have been timely
satisfied or waived, then Escrow Holder shall carry out the Close of Escrow by:
(iv)causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(v) delivering the executed original Permanent Financing Note to the
Agency;
(vi)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer
39
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EXHIBIT "G"
Events of Default and Remedies
A. Events of Default
The occurrence of any of the following shall, after the giving of any notice and the
expiration of any applicable cure period, shall, constitute a default by Developer
hereunder ("Event of Default"):
(1) The failure of Developer to payor perform any monetary covenant
or obligation hereunder or any of the documents executed in connection herewith,
without curing such failure within ten (10) calendar days after receipt of written notice of
such default from the Agency (or from any party authorized by the Agency to deliver
such notice as identified by the Agency in writing to Developer);
(2) The failure of Developer to perform any nonmonetary covenant or
obligation hereunder or any of the documents executed in connection herewith, without
curing such failure within thirty (30) calendar days after receipt of written notice of such
default from the Agency (or from any party authorized by the Agency to deliver such
notice as identified by the Agency in writing to Developer) specifying the nature of the
event or deficiency giving rise to the default and the action required to cure such
deficiency; provided, however, that if any default with respect to a nonmonetary
obligation is such that it cannot be cured within a thirty-day period, it shall be deemed
cured if Developer commences the cure within said thirty-day period and diligently
prosecutes such cure to completion thereafter.
Notwithstanding anything herein to the contrary, the herein described notice requirements
and cure periods shall not apply to any Event of Default described in Sections (3) through
(6) below;
(3) The material falsity of any representation or breach of any
warranty or covenant made by Developer under the terms of this Agreement or any
documents executed in connection herewith;
(4) Developer or any constituent member or partner, or majority
shareholder, of Developer shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in
writing its inability to pay its debts generally as they become due, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or (e)
commence a voluntary case under the Federal bankruptcy laws of the United States of
America or file a voluntary petition that is not withdrawn within ten (10) calendar days
after the filing thereof or answer seeking an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy or insolvency
proceeding;
40
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(5) If without the application, approval or consent of Developer, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Developer or any constituent member or partner, or
majority shareholder, of Developer, for an order for relief or an adjudication in
bankruptcy, a composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or the like of Developer or of
all or any substantial part of Developer's assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being contested by
Developer, in good faith, the same shall (a) result in the entry of an order for relief or any
such adjudication or appointment, or (b) continue undismissed, or pending and unstayed,
for any period of ninety (90) consecutive calendar days;
(6) Voluntary cessation of the operation of a Project for a continuous
period of more than thirty (30) calendar days or the involuntary cessation ofthe operation
of the Project in accordance with this Agreement for a continuous period of more than
sixty (60) calendar days;
(7) A mechanic's lien or any other type of encumbrance on any
Eligible Property resulting from the Developer's failure to fulfill its financial or other
contractual obligations with respect to any of its vendors or sub-contractors is not
removed within ten (10) calendar days after receipt of written notice of such default from
the Agency (or from any party authorized by the Agency to deliver such notice as
identified by the Agency in writing to Developer).
B. The Agency Remedies
Upon the occurrence of an Event of Default hereunder, the Agency may, In its sole
discretion, take anyone or more of the following actions:
(I) By notice to Developer declare the entire then unpaid principal
balance of any Acquisition Financing, Rehabilitation Financing or Permanent Financing
loans ("Development Loans") immediately due and payable. and the same shall become
due and payable without further demand, protest or further notice of any kind, all of
which are expressly waived. Upon such declaration, outstanding principal and (to the
extent permitted by law) interest and any other sums outstanding in connection with the
Development Loans shall thereafter bear interest at the Default Rate, payable from the
date of such declaration until paid in full;
(2) Subject to any nonrecourse provisions in this Agreement, take any
and all actions and do any and all things which are allowed, permitted or provided by
law, in equity or by statute, in the sole discretion of Agency, to collect the amounts then
due and thereafter to become due hereunder and under the Development Loans, to
exercise its rights under any outstanding Agency Deeds of Trust, and to enforce
performance and observance of any obligation, agreement or covenant of the Developer
under this Agreement or under any other document executed in connection herewith;
41
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(3) Cease making any payment of fees, Residual Receipts or
reimbursement of eligible expenses to the Developer unless and until the Event of
Default (if curable) is cured;
(4) Demand reimbursement from the Developer for any payments
made to it by the Agency for which the contracted work product was not satisfactorily
delivered by the Developer;
(5) Confiscate any material or other work product purchased or
produced by the Developer for the Project;
(6) Take any and all actions and do any and all things which are
allowed, permitted or provided by law, in equity or by statute, in the sole discretion of the
Agency, to enforce performance and observance of any obligation, agreement or
covenant of the Developer under this Agreement or under any other document executed
in connection herewith;
(7) Upon the occurrence of an Event of Default which is occasioned
by Developer's failure under this Agreement to pay money, the Agency may, but shall
not be obligated to, make such payment. If such payment is made by the Agency, the
Developer shall deposit with the Agency, upon written demand therefore, such sum plus
interest at the rate of ten percent (10%) per annum interest compounded annually. In
either case, the Event of Default with respect to which any such payment has been made
by the Agency shall not be deemed cured until such repayment (as the case may be) has
been made by the Developer;
(8). Upon the occurrence of an Event of Default described in Section
A.(4) or A.(5) hereof, the Agency shall be entitled and empowered by intervention in
such proceedings or otherwise to file and prove a claim for any amount owing to the
Agency under this Agreement and unpaid and, in the case of commencement of any
judicial proceedings, to file such proof of claim and other papers or documents as may be
necessary or advisable in the judgment of the Agency and its counsel to protect the
interests of the Agency and to collect and receive any monies or other property in
satisfaction of its claim.
C. Agency Default and Developer Remedies
Upon fault or failure of the Agency to meet any of its obligations under this Agreement
without curing such failure within thirty (30) calendar days after receipt of written notice
of such failure from Developer specifying the nature of the event or deficiency giving rise
to the default and the action required to cure such deficiency, Developer may, as its sole
and exclusive remedies:
(I). Bring an action in equitable relief seeking the specific performance
by the Agency of the terms and conditions of this Agreement or seeking to enjoin any act
by the Agency which is prohibited hereunder; and/or
42
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(2) Bring an action for declaratory relief seeking judicial
determination of the meaning of any provision of this Agreement. Without limiting the
generality of the foregoing, Developer shall in no event be entitled to, and hereby waives,
any right to seek indirect or consequential damages of any kind or nature from the
Developer arising out of or in connection with this Agreement, and in connection with
such waiver Developer is familiar with and hereby waives the provisions of Section 1542
of the California Civil Code which provides as follows: "A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.'"
/11
11/
11/
11/
11/
11/
11/
/11
11/
/11
11/
11/
11/
/11
11/
/11
/11
11/
11/
/11
/11
11/
11/
11/
43
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EXHIBIT "W
Affirmative Marketing Requirements
In accordance with the California Fair Employment and Housing Act and the policy of the
Agency, property owners or their designees, including the Developer pursuant to this
Agreement, must adhere to the following affirmative marketing guidelines in order to
create awareness for the general public and certain community groups as to the availability
of units designated for lower and/or moderate-income.
Applicabilitv
The Developer, including property owners or their designees, are required to provide an
affirmative marketing plan and procedures for all developments with designated units.
Procedures to be used must identify how persons in the housing market area who are not
likely to apply for the housing without special outreach shall be informed and made
aware of available affordable housing opportunities. The Agency has identified two
groups as least likely to apply without special outreach efforts, namely, African-
American and Hispanic persons.
The Affirmative Marketing Plan
The Developer's Affirmative Marketing Plan shall consist of a written marketing strategy
designed to provide information and to attract eligible persons in the housing market area to
the available units without regard to race, color, national origin, sex, religion, marital and
familial status, disability, medical condition, sexual orientation, or ancestry. It shall
describe initial advertising, outreach (community contacts) and other marketing activities,
which will inform potential buyers of the availability of the units. It shall also outline an
outreach program which includes special measures designed to attract those groups
identified as least likely to apply without special outreach efforts, whether because of
existing neighborhood racial or ethnic patterns, location of housing or other factors, and
other efforts designed to attract persons from the total eligible population.
The Developer must do the following:
I. Insert Equal Housing Opportunity logotype, statement or slogan on all written
outreach tools (i.e. signs, advertisements, brochures, direct mail solicitations,
press releases, etc.)
2. In addition to the above, the Affirmative Fair Housing Marketing Plan shall
outline:
44
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a. Commercial Media to be used (i.e., community newspapers and
non-English language newspapers, radio, television, billboards,
religious or local real estate publications, etc.).
b. Marketing efforts to be used (i.e., brochures, letters, handouts, direct
mail, signs, etc.)
c. Community Contacts to supplement formal communications media
for the purpose of soliciting groups least likely to purchase the
available housing without special outreach efforts. They should be
individuals or organizations (i.e., service agencies, community
organizations, places of worship, etc.) that have direct and frequent
contact with those identified as least likely to apply. The contacts
should also be chosen on the basis of their positions of influence
within the general community and the particular target group. The
Developer must agree to establish and maintain contact with the
identified contacts.
Buver Selection
I. The Developer or designee shall maintain records of all prospective homebuyer
applicants, including their race, ethnicity and gender, reasons for denial of
application, placement on a waiting list, etc.
2. The Developer or designee shall also provide for the selection of applicants from a
written waiting list in the chronological order of their application, insofar as is
practicable, and provide prompt written notification to any rejected applicants of
the grounds for any rejection.
III
III
III
III
III
III
III
III
III
III
III
III
III
III
45
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EXHIBIT "I"
Project Target Area
46
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NSP Target Zone
47
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IIIU414
"1
EXHIBIT "K" TO MASTER AGREEMENT
PROMISSORY NOTE
$
,20_
For value received, the undersigned, MARY ERICKSON COMMUNITY HOUSING, INC., a
California Non-profit public benefit corporation ("Borrower"), whose principal address is set
forth hereinbelow, promises to pay to the order of the REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body corporate and politic ("Agency") at 201 North
"E" Street, Suite 301, San Bernardino, California 92401 (or to such designee and/or at such other
address as the Agency may from time to time designate in writing), the principal sum of
(the "Loan"), or such amount as may be advanced
hereunder, plus accrued and unpaid interest as provided hereinbelow, and all other charges due
hereunder, in accordance with the terms and conditions of that certain Master Agreement dated
as of , 20_ entered into between Borrower and the Agency (the
"Master Agreement") and that certain Development Agreement dated as of
20_, entered into between Borrower and the Agency (the
"Development Agreement"), and the terms and conditions of this Promissory Note (this "Note").
As set forth in greater detail in the Development Agreement, the purpose of the Loan is to
provide Borrower with acquisition, rehabilitation and/or permanent financing in connection with
a housing project ("Project") on a site more particularly described in the Development
Agreement ("Eligible Property").
1. Interest.
1.1 Basic Interest. Except as provided in Section 1.4 below, the disbursed and unpaid
principal balance of the Loan shall bear interest commencing on the date on which the Loan
proceeds are first disbursed for the account of Borrower, and ending on the date paid, at the rate
of three percent (3%) per annum, simple interest ("Basic Rate"). Interest shall be computed on
the basis of actual number of days elapsed and a 360-day year.
1.2 Payment Dates and Amounts. Except as otherwise provided in this Note,
Borrower shall repay the Loan, together with accrued interest at the Basic Rate in arrears, in
annual installments on June 15th of each calendar year for the previous calendar year,
commencing on June 15, 20_. Absent prepayment or acceleration, each of the annual
payments due June 15,20_ through and including June 15,20_ ("Maturity Date") shall be in
Promissory Note
Exhibit "K"
1
an amount equal to percent ( %) of "Residual Receipts" for the
prior calendar year, as defined herein. Residual Receipts shall be calculated and reported to the
Agency annually for each calendar year no later than June 15th of the following calendar year on
fonns specified and provided by the Agency from time to time. All calculations and records are
subject to audit by the Agency. Notwithstanding any other provision of this Note, unless due
sooner, the entire outstanding principal balance of the Loan together with any outstanding
interest and any other sums payable under this Note shall be due and payable in full on the
Maturity Date.
1.3 Calculation of Residual Receipts. Borrower shall provide to the Agency for
inspection and copying any records, receipts, account books, ledgers, checks, or other documents
or other evidence requested by the Agency for the purpose of verifying Borrower's calculation of
Residual Receipts, and shall promptly pay to the Agency any further amount due but not paid as
a result of any miscalculation by Borrower. In no event shall any Loan payment attributable to
an Event of Default (as hereafter defined) or acceleration be deferred.
1.4 Default Rate. Any amounts (including but not limited to amounts of principal and
interest on the Loan) which Borrower does not pay when due under the tenns of this Note shall
bear interest at the rate of ten percent (10%) per annum, simple interest ("Default Rate"), from
the date due until the date paid.
1.5 Definition of Residual Receipts.
1.5. I "Residual Receipts" shall mean, with respect to each calendar year, the
amount by which "Gross Rents," as defined herein, for such calendar year exceed the "Operating
Expenses", as defined herein, for that calendar year.
1.5.2 With the exception of the "Excluded Items" (as defined below), "Gross
Rents" shall mean, with respect to each calendar year or portion thereof, all gross income,
rentals, revenues, payments and consideration, of whatever fonn or nature, whether direct or
indirect, received by or paid to or for the account or benefit of Borrower or any "Affiliate" (as
defined below) of Borrower or any of their agents or employees, from any and all sources,
resulting from or attributable to the ownership, operation, leasing and occupancy of the Project,
detennined on the basis of generally accepted accounting principles applied on a consistent basis,
and shall include, but not be limited to: (i) gross rentals paid by occupancy tenants of the Project
under occupancy leases and payments and subsidies of whatever nature, including without
limitation any payments, vouchers or subsidies from the United States Department of Housing
and Urban Development (HUD) or any other person or organization, received on behalf of
tenants under occupancy leases, (ii) amounts paid to Borrower or any Affiliate of Borrower on
account of "Operating Expenses" (as defined herein) for further disbursement by Borrower or
such Affiliate to a third party or parties, (iii) late charges and interest paid on rentals, (iv) rents
and receipts from licenses, concessions, vending machines, coin laundry and similar sources;
(v) other fees, charges or payments not denominated as rental but payable to Borrower in
connection with the rental of office, retail, storage, or other space in the Project; and
(vi) consideration received in whole or in part for the cancellation, modification, extension or
Promissory Note
Exhibit "K"
2
renewal of occupancy leases. The term "Affiliate" shall mean any person or entity directly or
indirectly, through one or more intermediaries, controlling, controlled by or under common
control with Borrower which, if Borrower is a partnership or limited liability company, shall
include each of the constituent members or partners, respectively, thereof. The term "control" as
used in the immediately preceding sentence, means, with respect to a person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting rights attributable to the
shares of the controlled corporation, and, with respect to a person that is not a corporation,
possession directly or indirectly of the power to direct or cause the direction of the management
or policies of the controlled person. Notwithstanding the foregoing, Gross Rents shall not
include the following items ("Excluded Items"): (aa) security deposits from tenants (except when
applied by Borrower to rent or other amounts owing by tenants); (bb) capital contributions to
Borrower or its members, partners or shareholders by its or their members, partners or
shareholders; (cc) condemnation or insurance proceeds constituting 'Net Proceeds' as defined in
Section 1.6 below; and (dd) funds received from any source (including but not limited to the
Senior Financing and any Junior Financing or Other Financing) actually and directly used for
acquisition and/or rehabilitation of the Eligible Property.
1.5.3 "Operating Expenses" shall mean, with respect to each calendar year or
portion thereof, the sum of the following expenses to the extent reasonably paid by Borrower
during such period: (i) nonelective payments made with respect to the Senior Financing; (ii) all
taxes and assessments imposed upon the Project and required to be paid by Borrower but only to
the extent such taxes and assessments are paid or set aside as a reserve by Borrower during such
calendar year; (iii) all amounts paid or set aside as a reserve by Borrower on account of
insurance premiums for insurance carried in connection with the Project, provided that if
insurance on the Project is maintained as part of a blanket policy covering the Project and other
properties, the insurance premium included in this definition shall be the portion of the premium
fairly allocable to the Project for the period; (iv) ownership and operating costs incurred by
Borrower for the management, operation, cleaning, leasing, marketing, maintenance and repair
of the Project (including without limitation, property management fees and administrative fees)
properly chargeable against income according to generally accepted accounting principles,
including without limitation wages, payroll and accounting costs, utility and heating charges,
material costs. maintenance costs, costs of services, water and sewer charges, travel expenses
allocable to the Project, and license fees and business taxes; provided, however, that (A) the
amount included as property management fees and administrative fees in Operating Expenses
shall collectively not exceed ten percent (10%) of Gross Rents from the Project for such period,
all or a portion of each of which may be paid to Borrower and/or an Affiliate of Borrower, (B)
such property management fees and administrative fees shall only be paid on the basis of
supporting documentation reasonably acceptable to the Agency, and shall be paid after the
payment of all other Operating Expenses, and (C) partnership management fees and other fees
payable to a partner in a tax credit limited partnership shall only be considered Operating
Expenses to the extent they do not exceed $10,000 in the aggregate in any year, which shall be
adjusted annually by a percentage equal to the annual increase in AMI adopted by HUD;
(v) reasonable and ordinary reserves actually set aside for replacement of roofing, furniture,
fixtures, equipment, and other capital expenditures, in an annual amount no less than $200.00 per
Promissory Note
Exhibit "K"
3
unit and no greater than such higher amount as may be established from time to time by mutual
agreement of the Parties; and (vi) to the extent not otherwise included in Operating Expenses,
amounts paid from any account as a reserve account for the purpose for which such reserve was
created so long as such purpose would constitute an Operating Expense.
1.5.4 Notwithstanding any provision of Section 1.5.3, the term "Operating
Expenses" shall not include any of the following:
(i) salaries of employees of Borrower or Borrower's general overhead
expenses, or expenses, costs and fees paid to an Affiliate of Borrower, to the extent any of the
foregoing exceed the expenses, costs or fees that would be payable in a bona fide arms' length
transaction between unrelated parties in the San Bernardino-Riverside County area for the same
work or services;
(ii) any amounts paid directly by a tenant of the Project to a third party
in connection with expenses which, if incurred by Borrower, would be Operating Expenses;
(iii) optional or elective payments with respect to the Senior Financing;
(iv) any payments with respect to Junior Financing, Other Financing,
or any other Project-related loan or financing other than the Senior Financing; or
(v) expenses, expenditures, and charges of any nature whatsoever
ansmg or incurred by Borrower prior to completion of the Project with respect to the
development, maintenance and upkeep of the Project, or any portion thereof, including, without
limitation, all costs and expenses incurred by Borrower in connection with the acquisition of the
Property, all predevelopment activities conducted by Borrower in connection with the Project,
including without limitation, the preparation of all plans and the performance of any tests,
studies, investigations or other work, and the construction of the Project and anyon-site or off-
site work in connection therewith.
1.6 In addition to the payments provided in Section 1.2 above, and subject to the
terms of the Senior Financing, Borrower shall pay to the Agency towards (but not to exceed) any
outstanding amounts associated with the Loan: (a) no later than the date of close of escrow or
other consummation of any Assignment other than a Minor Assignment, the Applicable
Percentage of the Net Proceeds of such Assignment; and (b) no later than the recording of a
Refinancing, percent ( %) of the Net Refinancing Proceeds received from
any such Refinancing.
A "Minor Assignment" shall mean any lease of an individual unit in the Project for
occupancy by a residential tenant and in the ordinary course of business for operation of the
Project.
Promissory Note
Exhibit "K"
4
"Applicable Percentage" shall mean percent L%); provided, however,
that the term Applicable Percentage shall mean one hundred percent (100%) with respect to a
payment on the Loan attributable in whole or in part to a condemnation of, or event of damage,
destruction or casualty with respect to, the Eligible Property, the Project or any portion of either.
"Assignment" means any voluntary or involuntary conveyance, disposition, assignment, taking,
casualty, encumbrance (other than a Refinancing as defined below or the creation of the Senior
Financing or any other Project Loan or limited partner contribution, the proceeds of which are
used solely for initial acquisition of the Eligible Property by Borrower or initial development of
the Project), sublease, sale, license, concession, management agreement, operating agreement,
transfer or similar transaction with respect to any direct or indirect interest or economic benefit
of any person or entity in connection with the Project or the use or occupancy of the Eligible
Property including, without limitation, any Transfer by Borrower of all or any portion of its
rights under or interest in the Project or the Eligible Property, any change of ownership or
control of Borrower, any condemnation or taking of the Eligible Property or the Project or any
portion thereof, any event of damage to or destruction of the Eligible Property or the Project, any
foreclosure of Borrower's interest in the Project or the Eligible Property, whether by judicial
proceedings, or by virtue of any power contained in a deed of trust, indenture or other instrument
creating a lien against the Eligible Property or the Project, or any assignment of Borrower's
estate in the Project or the Eligible Property through, or in lieu of, foreclosure or other
appropriate and bona fide proceedings in the nature thereof; provided, however, that the term
"Assignment" as used herein shall not include bona fide transfers of an ownership interest in
Borrower to any Affiliate of Borrower, so long as the consideration paid to the selling partner,
member or shareholder on account of such transfer does not exceed the actual amount paid by
such partner, member or shareholder for its ownership interest plus reimbursement for any out-
of-pocket expenses incurred by such partner, member or shareholder in connection with its
acquisition of such ownership interest.
"Net Proceeds" of an Assignment shall mean (I) the proceeds received, directly or
indirectly, by Borrower or any Affiliate or constituent member or partner, or majority
shareholder, of Borrower or any Affiliate as a result of such Assignment, including, without
limitation, cash, the amount of any monetary lien or encumbrance assumed or taken subject to by
the assignee, the fair market value of any noncash consideration, including the present value of
any promissory note received as part of the proceeds of such Assignment (such present value to
be determined based upon a discount rate reasonably satisfactory to the Agency), the entire
condemnation award or compensation payable to Borrower or any Affiliate or constituent
member or partner, or majority shareholder, of Borrower or any Affiliate in connection with a
condemnation or taking in eminent domain of any part of the Eligible Property or the Project or
any interest therein, all insurance proceeds or awards payable to Borrower or any Affiliate or
constituent member or partner or majority shareholder of Borrower or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part thereof not
used for project restoration; less (2) the sum of (i) the actual, documented and reasonable
expenses of effecting such Assignment, including reasonable brokerage commissions, title
insurance premiums, documentary transfer taxes, and reasonable attorneys' fees, in each case
actually paid in connection with the Assignment (provided that no deduction shall be allowed for
Promissory Note
Exhibit "K"
5
payments to an Affiliate of the person or entity making the Assignment which are in excess of
the amount that would be paid for the same or equivalent services in an arms' length transaction
between unrelated parties acting reasonably), and (ii) the amount of any proceeds of the
Assignment paid (excluding voluntary payments) towards the then-outstanding balance of the
Senior Financing. Notwithstanding anything above to the contrary, the permissible deductions
for purposes of calculating the Net Proceeds of an Assignment shall not include any foreign,
U.S., state or local income taxes, franchise taxes, or other taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project Loan")
secured by an encumbrance on the Eligible Property, the Project, or any portion thereof. The
term "Refinancing" shall not include the creation of the Senior Financing or any other Project
Loan, the proceeds of which are used solely for initial acquisition of the Eligible Property by
Borrower or initial development of the Project.
"Net Refinancing Proceeds" shall mean the gross face amount of the Project Loan
obtained in connection with such Refinancing, after: (1) payment of the actual, documented and
reasonable expenses of such Refinancing, including escrow fees, title policy expenses, legal
expenses, survey fees, recording fees, commissions, and other usual and reasonable expenses of
any such Refinancing (provided, that no deduction shall be allowed for payments in connection
with such Refinancing which are in excess of the amounts that would be paid for the same or
equivalent services in an arms' length transaction between unrelated parties acting reasonably);
and (2) deduction of amounts repaid (excluding voluntary payments) in connection with the
Refinancing towards amounts outstanding under the Senior Financing.
2. Acceleration.
Notwithstanding the payment terms set forth in Section I above, upon the occurrence of
any "Event of Default" as set forth in Section 9 below, the entire outstanding principal balance of
this Note, together with any outstanding interest and other amounts payable hereunder, shall, at
the election of the Agency and upon notice to Borrower thereof become immediately due and
payable without presentment, demand, protest or other notices of any kind, all of which are
hereby waived by Borrower.
3. PreDavment: ADDlication ofPavments.
At any time after the disbursement of the Loan proceeds, Borrower may prepay all or a
portion of the unpaid principal amount of the Loan and accrued interest and any other sums
outstanding without penalty. All payments, including any prepayments or funds received upon
acceleration pursuant to Section 2 above, shall be applied first toward any outstanding costs of
collection or other amounts (excluding Loan principal or interest thereon) due under this Note or
the Development Agreement, then toward outstanding interest accrued at the Default Rate, if
any, then toward outstanding interest accrued at the Basic Rate, if any, and finally toward the
remaining principal balance under the Note.
Promissory Note
Exhibit "K"
6
4. Security and Source of Payment.
Borrower's obligations under this Note and the Master Agreement and the Development
Agreement shall, at all times during which any amount remains outstanding, be secured by the
deed of trust ("Agency Deed of Trust") of even date herewith, and of which the Agency is the
beneficiary, recorded against Borrower's interest in the Eligible Property and the Project
(collectively, the "Property"). The security interest in the Property granted to the Agency
pursuant to the Agency Deed of Trust shall be subordinate only to the Senior Financing and such
exceptions to title shown in the title report for the Property which are approved in writing by the
Agency. Except to the extent any Event of Default hereunder results directly or indirectly from
any willful misconduct, fraud or intentional and material misrepresentation by Borrower in
connection with this Note, the Master Agreement, the Development Agreement or the Loan, the
Loan is a nonrecourse obligation of Borrower and, in the event of the occurrence of an Event of
Default, the Agency's only recourse under the Agency Loan Documents shall be against the
Property, the proceeds thereof, the rents and other income arising from its use and occupancy as
provided in the Agency Deed of Trust, and any other collateral given to the Agency as security
for repayment of the Loan.
5. Obligation of Borrower Unconditional.
The obligation of Borrower to repay the Loan and all accrued interest thereon and all
other sums due thereunder shall be absolute and unconditional, and until such time as all of the
outstanding principal of, interest on and all other sums due under, this Note shall have been fully
paid, Borrower agrees that it: (a) will use the funds solely for the purposes set forth herein; and
(b) will not terminate or suspend any payment or obligations under this Note, the Master
Agreement, the Development Agreement, or any other document executed hereunder or in
connection herewith for any cause, including without limitation, any acts or circumstances that
may constitute failure of consideration, commercial frustration of purpose, or any duty, liability
or obligation arising out of or in connection with this Note, the Master Agreement, the
Development Agreement or any document executed hereunder or in connection herewith.
6. Purpose of Loan.
The Loan proceeds shall be used by Borrower only to provide acquisition, rehabilitation
and/or permanent financing for the housing development described in the Development
Agreement. In no event shall Borrower use or otherwise invest the proceeds of the Loan except
as expressly provided in this Note.
7. Covenants of Borrower.
As additional consideration for the making of the Loan by the Agency, Borrower
covenants as follows:
Promissory Note
Exhibit uK"
7
7.1 Compliance with the Master Agreement. the Development Agreement and
Agencv Deed of Trust. Borrower shall comply with all of its obligations under the Master
Agreement, the Development Agreement and the Agency Deed of Trust. Any amounts payable
by Borrower under the Development Agreement or the Agency Deed of Trust (other than
amounts also payable hereunder) shall be deemed added to the principal amount of the Loan
payable hereunder.
7.2 Other Loans. Borrower shall comply with all monetary and nonmonetary
covenants associated with any loan secured by an interest in the Eligible Property or the Project.
Borrower shall provide to the Agency a copy of any notice of default within five business days
after receiving any notice of a default or alleged default of such covenants by Borrower, and
Borrower shall promptly cure any such default and cooperate in permitting the Agency, to the
extent the Agency in its sole discretion elects to do so, to cure or assist in curing the default.
Any cost or expenditure incurred by the Agency in providing or assisting in such a cure shall be
added to the outstanding principal amount of the Loan.
8. Assignment of this Note.
This Note shall be assignable by Borrower only if Borrower obtains the prior express
written consent of the Agency, which consent may be withheld by the Agency in its sole
discretion. Notwithstanding anything to the contrary in this Note, no purported assignment of
this Note and the Loan shall be effective if such assignment would violate the terms, conditions
and restrictions of any Applicable Governmental Restrictions. The Agency's consent to such
assignment shall be expressly conditioned upon (i) the assignee's execution of such documents as
required by the Agency in its sole discretion, including, without limitation, any and all
documents deemed necessary by the Agency to provide for said assignee's assumption of all of
the obligations of Borrower hereunder and under the Agency Loan Documents, and (ii) the
Agency's approval of the financial and credit worthiness of such proposed assignee and the
assignee's ability to perform all of the Borrower's covenants under this Note and the
Development Agreement and any of the other Agency Loan Documents.
9. Events of Default and Remedies.
A. Borrower Events of Default. The occurrence of any of the following shall, after
the giving of any notice and the expiration of any applicable cure period described therein,
constitute an event of default by Borrower hereunder ("Event of Default"):
(I) The failure of Borrower to payor perform any monetary covenant or
obligation hereunder or under the terms of this Note or the Agency Deed of Trust, the Master
Agreement or the Development Agreement, without curing such failure within ten (10) calendar
days after the date such payment is due. Notwithstanding anything herein to the contrary, the
Promissory Note
Exhibit "K"
8
herein described cure period shall not apply to a failure by Borrower to timely repay the Agency
Loan at the Maturity Date of this Note;
(2) The failure of Borrower to perform any nonmonetary covenant or
obligation hereunder or under the terms of this Note, the Agency Deed of Trust, the Master
Agreement or the Development Agreement, without curing such failure within thirty (30)
calendar days after receipt of written notice of such default from the Agency (or from any party
authorized by the Agency to deliver such notice as identified by the Agency in writing to
Borrower) specifying the nature of the event or deficiency giving rise to the default and the
action required to cure such deficiency; provided, however, that if any default with respect to a
nonmonetary obligation is such that it cannot be cured within a thirty day period, it shall be
deemed cured if Borrower commences the cure within said thirty day period and diligently
prosecutes such cure to completion thereafter with the cure completed in any event within 180
calendar days after the notice. Notwithstanding anything herein to the contrary, the herein
described notice cure periods shall not apply to any Event of Default described in Sections
9(A)(3) through 9(A)(8) below;
(3) The material falsity of any representation or breach of any warranty or
covenant made by Borrower under the terms of this Note, the Master Agreement, the
Development Agreement or the Agency Deed of Trust;
(4) Borrower shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in writing its
inability to pay its debts generally as they become due, (c) make a general assignment for the
benefit of creditors, (d) be adjudicated a bankrupt or insolvent or (e) commence a voluntary case
under the Federal bankruptcy laws of the United States of America or file a voluntary petition
that is not withdrawn within ten (10) calendar days after the filing thereof or answer seeking an
arrangement with creditors or an order for relief or seeking to take advantage of any insolvency
law or file an answer admitting the material allegations of a petition filed against it in any
bankruptcy or insolvency proceeding;
(5) If without the application, approval or consent of Borrower, a proceeding
shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, in
respect of Borrower or any constituent member or partner or majority shareholder of Borrower,
for an order for relief or an adjudication in bankruptcy, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian
or the like of Borrower or of all or any substantial part of Borrower's assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being
contested by Borrower, in good faith, the same shall (a) result in the entry of an order for relief
or any such adjudication or appointment, or (b) continue undismissed, or pending and unstayed,
for any period of ninety (90) consecutive calendar days;
(6) Following completion of the rehabilitation of the Project, voluntary
cessation of the operation of the Project for a continuous period of more than thirty (30) calendar
Promissory Note
Exhibit "K"
9
days or the involuntary cessation of the operation of the Project in accordance with this Note for
a continuous period of more than sixty (60) calendar days;
(7) Borrower shall suffer or attempt to effect a Transfer (as defined below), in
violation of Section 14; or
(8) Borrower shall be in default under the Agency Affordability Covenant,
Senior Financing, Junior Financing, Other Financing or any other secured or unsecured
obligation relating to the Project, unless the default is cured within the cure period, if any,
applicable thereto under the terms of the obligation which is in default.
B. Agencv Remedies. Upon the occurrence of an Event of Default hereunder, the
Agency may, in its sole discretion, take anyone or more of the following actions:
(1) By notice to Borrower, declare the entire then unpaid principal balance of
the Loan immediately due and payable, and the same shall become due and payable without
further demand, protest or further notice of any kind, all of which are hereby expressly waived
by Borrower. Upon such declaration, outstanding principal and (to the extent permitted by law)
interest and any other sums outstanding in connection with the Loan shall thereafter bear interest
at the Default Rate, payable from the date of such declaration until paid in full;
(2) Subject to the nonrecourse provisions of Section 4 above, take any and all
actions and do any and all things which are allowed, permitted or provided by law, in equity or
by statute, in the sole discretion of the Agency, to collect the amounts then due and thereafter to
become due hereunder, to exercise its rights under the Agency Deed of Trust, and to enforce
performance and observance of any obligation, agreement or covenant of the Borrower under
this Note or under any other document executed in connection herewith;
(3) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default, which is occasioned by Borrower's failure to pay money,
whether under this Note or the Development Agreement, the Agency may, but shall not be
obligated to, make such payment. If such payment is made by the Agency, Borrower shall
deposit with the Agency, upon written demand therefore, such sum plus interest at the Default
Rate. The Event of Default with respect to which any such payment has been made by the
Agency shall not be deemed cured until such repayment has been made by Borrower. Until
repaid, such amounts shall have the security afforded disbursements under this Note;
(4) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default described in Section 9(A)(4) or 9(A)(S) hereof, the Agency
shall be entitled and empowered by intervention in such proceedings or otherwise to file and
prove a claim for the whole amount owing and unpaid on the Loan and, in the case of
commencement of any judicial proceedings, to file such proof of claim and other papers or
documents as may be necessary or advisable in the judgment of the Agency and its counsel to
Promissory Note
Exhibit "K"
10
protect the interests of the Agency and to collect and receive any monies or other property in
satisfaction of its claim.
C. No Remedv Exclusive. No remedy herein conferred upon or reserved to the
Agency is intended to be exclusive of any other available remedy or remedies, but each such
remedy shall be cumulative and shall be in addition to every other remedy given under this Note
or now or hereafter existing at law or in equity or by statute; and may be exercised in such
number, at such times and in such order as the Agency may determine in its sole discretion. No
delay or omission to exercise any right or power upon the occurrence of any Event of Default
hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may be deemed
expedient by the Agency. In order to entitle the Agency to exercise any right or remedy reserved
to it under this Note, no notice shall be required except as expressly provided herein.
D. Agencv Default and Borrower Remedies. Upon fault or failure of the Agency to
meet any of its obligations under this Note without curing such failure within thirty (30) calendar
days after receipt of written notice of such failure from Borrower specifying the nature of the
event or deficiency giving rise to the default and the action required to cure such deficiency,
Borrower may, as its sole and exclusive remedies:
(I) Demand and obtain payment from the Agency of any sums due to or for
the benefit of Borrower pursuant to the express terms of this Note;
(2) Bring an action in equitable relief seeking the specific performance by the
Agency of the terms and conditions of this Note or seeking to enjoin any act by the Agency
which is prohibited hereunder; or
(3) Bring an action for declaratory relief seeking judicial determination of the
meaning of any provision of this Note.
Without limiting the generality of the foregoing, Borrower shall in no event be
entitled to, and hereby waives, any right to seek indirect or consequential damages of any kind or
nature from the Agency arising out of or in connection with this Note, and in connection with
such waiver Borrower is familiar with and hereby waives the provisions of Section 1542 of the
California Civil Code which provides as follows: "A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF
KNOWN BY HIM MUST HAVE MA TERIALL Y AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."
Promissory Note
Exhibit "K"
II
10. Agreement to Pav Attornevs' Fees and Expenses.
In the event that either party hereto brings any action or files any proceeding in connection with
the enforcement of its respective rights under this Note or any of the other Agency Loan
Documents as a consequence of any breach by the other party of its obligations hereunder or
thereunder, the prevailing party in such action or proceeding shall be entitled to have its
reasonable attorneys' fees and out-of-pocket expenditures paid by the losing party. The
attorneys' fees so recovered shall include fees for prosecuting or defending any appeal and shall
be awarded for any supplemental proceedings until the final judgment is satisfied in full. In
addition to the foregoing award of attorneys' fees, the prevailing party in any lawsuit on this Note
or any other Loan Document shall also be entitled to its attorneys' fees incurred in any post-
judgment proceedings to collect or enforce the judgment. In addition to the foregoing, Borrower
agrees to payor reimburse the Agency, upon demand by the Agency, for all costs incurred by the
Agency in connection with the enforcement of this Note, and any other Agency Loan Document,
including without limitation, reasonable attorneys' fees and costs, if there shall be filed by or
against Borrower any proceedings under any federal or state bankruptcy or insolvency laws,
whether the Agency is a creditor in such proceeding or otherwise.
II. Conflict ofInterest; No Individual Liabilitv.
No official or employee of the Agency shall have any personal interest, direct or indirect,
in this Note, nor shall any official or employee of the Agency participate in any decision relating
to this Note which affects such official's or employee's pecuniary interest in any corporation,
partnership or association in which such official or employee is directly or indirectly interested.
No official or employee of the Agency shall be personally liable in the event of a breach of this
Note by the Agency.
12. Amendments. Changes and Modifications.
This Note may not be amended, changed, modified, or altered without the prior written
consent of the parties hereto.
13. Notices.
All notices, demands, requests, elections, approvals, disapprovals, consents or other
communications given under this Note shall be in writing and shall be given by personal
delivery, facsimile, certified mail (return receipt requested), or overnight guaranteed delivery
service and faxed or addressed as follows:
If to the Agency:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 9240 I
Attention: Emil A. Marzullo, Interim Executive Director
Fax No. (909) 888-9413
Promissory Note
Exhibit "K"
12
1
With a copy to:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 9240 I
Attention: Carey K. Jenkins,
Director of Housing and Community Development
Fax: (909) 888-9413
If to Borrower:
Mary Erickson Community Housing, Inc.
Irvine, CA
Attn: Director
Fax No. ( )
With a copy to:
Notices shall be effective upon receipt, if given by personal delivery; upon receipt, if faxed,
provided there is written confirmation of receipt (except that if received after 5 p.m., notice shall
be deemed received on the next business day); the earlier of (i) three (3) business days after
deposit with United States Mail, or (ii) the date of actual receipt as evidenced by the return
receipt, if delivered by certified mail; or (iii) one (J) day after deposit with the delivery service,
if delivered by overnight guaranteed delivery service. Each party shall promptly notify the other
party of any change(s) of address to which notice shall be sent pursuant to this Note.
14. Severability.
The invalidity or unenforceability of anyone or more provisions of this Note will in no
way affect any other provision.
Promissory Note
Exhibit "K"
13
15. Interpretation.
Whenever the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other gender. The
captions of the paragraphs of this Note are for convenience only and do not define or limit any
terms or provisions. Time is of the essence in the performance of this Note by Borrower. Each
Party has been represented by counsel in the negotiation of this Note, and it shall not be
interpreted in favor of or against any Party on account of relative responsibilities in drafting.
Notwithstanding any other provision of this Note, nothing herein or in this Note shall be deemed
to require Borrower to pay interest in the amount of any applicable usury law or other legal
limitation on interest, and the terms hereof and of this Note shall be interpreted to require in each
instance the lesser of (i) the amount stated in this Note; and (ii) the maximum applicable legal
limit. Defined terms not otherwise defined herein shall have the meaning assigned to them by
the Development Agreement.
16. No Waiver; Consents.
Any waiver by the Agency must be in writing and will not be construed as a continuing
waiver. No waiver will be implied from any delay or failure by the Agency to take action on
account of any default of Borrower. Consent by the Agency to any act or omission by Borrower
will not be construed as consent to any other or subsequent act or omission or to waive the
requirement for the Agency's consent to be obtained in any future or other instance.
17. Governing Law.
This Note shall be governed by the laws of the State of California.
18. Reoresentations. Warranties and Additional Covenants of Borrower.
Borrower hereby represents, warrants and covenants to the Agency that:
A. Organization and Standing. Borrower is a California legal entity as described in
the Development Agreement, duly formed, qualified to operate in California and validly existing
and in good standing under all applicable laws, and has all requisite power and authority to enter
into and perform its obligations under this Note, the Master Agreement, the Development
Agreement, the Agency Deed of Trust, the Agency Affordability Covenant and all other
documents executed in connection herewith.
B. Enforceabilitv. This Note and all other instruments to be executed by Borrower in
connection with the Loan constitute the legal, valid and binding obligation of Borrower, without
joinder of any other party.
C. Authorization and Consents. The execution, delivery and performance of this
Note and all other instruments to be executed in connection herewith is consistent with the
operating agreement, partnership agreement or articles and bylaws governing Borrower and have
Promissory Note
Exhibit "K"
14
been duly authorized by all necessary action of Borrower's members, partners, directors, officers
and shareholders.
D. Due and Valid Execution. This Note and all other instruments to be executed in
connection herewith, will, as of the date of their execution, have been duly and validly executed
by Borrower.
E. Licenses. Borrower will obtain and maintain all material licenses, permits,
consents and approvals required by all applicable governmental authorities to own and operate
the Project.
F. Litigation and Compliance. There are no suits, other proceedings or
investigations pending or threatened against, or affecting the business or the properties of
Borrower (other than those as have been previously disclosed in writing to the Agency) which
could impair its ability to perform its obligations under this Note, nor is Borrower in violation of
any laws or ordinances which could materially impair Borrower's ability to perform its
obligations under this Note.
G. Default. There are no facts now in existence which would, with the giving of
notice or the lapse of time, or both, constitute an "Event of Default" hereunder, as described in
Section 9.
H. No Violations. The execution and delivery of this Note, the Development
Agreement and all other documents executed or given thereunder, and the performances
hereunder and thereunder by Borrower, as applicable, will not constitute a breach of or default
under any instrument or agreement to which Borrower may be a party nor will the same
constitute a breach of or violate any law or governmental regulation.
19. Approvals.
Except with respect to those matters set forth hereinabove providing for the Agency's
approval, consent or determination to be at the Agency's "sole discretion" or "sole and absolute
discretion," the Agency hereby agrees to act reasonably with regard to any approval, consent, or
other determination given by the Agency hereunder. The Agency agrees to give Borrower
written notice of its approval or disapproval following submission of items to the Agency for
approval, including, in the case of any disapproved item, the reasons for such disapproval.
Any review or approval of any matter by the Agency or any Agency official or employee
under this Note shall be solely for the benefit of the Agency, and neither Borrower nor any other
person shall rely upon such review or approval as an indication ofthe wisdom, soundness, safety,
appropriateness, or presence or absence of any matter. Without limiting the generality of the
foregoing, Borrower and not the Agency shall be solely responsible for assuring compliance with
laws, the suitability of the Eligible Property for the Project, the adequacy of the plans, and the
safety of the Project construction site, the completed Project, and the operation thereof.
Promissory Note
Exhibit "K"
15
Any consent to a Transfer given by the Agency under this Note, the Agency Deed of
Trust, the Master Agreement, the Development Agreement or any of the other documents
executed in connection therewith, may be given by the Agency's Executive Director or its
Director of Housing and Community Development without action by the Agency's governing
board, unless the Executive Director or the Director of Housing and Community Development in
his or her sole discretion elects to refer the matter to the board.
20. Good Faith and Fair Dealing.
The Agency and Borrower agree to perform all of their obligations and the actions
required of each hereunder in good faith and in accordance with fair dealing.
21. Waiver.
Borrower agrees that it will still be liable for repayment of this Note, subject to the
nonrecourse provision of Section 4 above, even if the holder hereof does not follow the
procedures of presentment, protest, demand, diligence, notice of dishonor and of nonpayment,
which requirements are hereby waived. Failure of the Agency or other holder hereof to exercise
any right or remedy hereunder shall not constitute a waiver of any future or other default. No
acceptance of a past due installment or indulgence granted from time to time shall be construed
to be a waiver of, or to preclude the exercise of, the right to insist upon prompt payment
thereafter or to impose late charges retroactively or prospectively, or to waive or preclude the
exercise of any other rights which the Agency may have.
III
III
III
III
III
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III
III
III
III
III
III
III
III
Promissory Note
Exhibit "K"
16
IN WITNESS WHEREOF, the Borrower has executed this Note as of the date and year first
above written
BORROWER:
Mary Erickson Community Housing, Inc., a California
non-profit public benefit corporation
By:
Susan McDevitt, Director
III
III
III
III
III
III
III
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III
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III
Promissory Note
Exhibit "K"
17
EXHIBIT "L" TO MASTER AGREEMENT
AGENCY DEED OF TRUST
OFFICIAL BUSINESS
Document entitled to free
recording per Govt. Code
Section 6103.
Recording Requested by and
When Recorded Mail To:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
20 I North "E" Street, Suite 30 I
San Bernardino, CA 9240 I
Attn.: Director of Housing and
Community Development
Above Space For Recorder's Use Only
DEED OF TRUST. ASSIGNMENT OF RENTS.
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING ("Agency Deed of Trust") is made as of ,20_, by and
between MARY ERICKSON COMMUNITY HOUSING, INC. ("Trustor"), a California Non-
profit public benefit corporation, First American Title ("Trustee"); and the REDEVELOPMENT
AGENCY OF CITY OF SAN BERNARDINO, a public body corporate and politic
("Beneficiary").
Agency Deed of Trust
Exhibit "L"
I
RECIIAL~
A. Beneficiary is making a loan to Trustor in the original principal amount of
Dollars ($ ) (the "Loan")
pursuant to that certain Master Agreement (the "Master Agreement") entered into by Trustor and
Beneficiary and dated as of ,20_ and that certain Development Agreement
(the "Development Agreement") entered into by Trustor and Beneficiary and dated as of
, 20_. The Loan is evidenced by a promissory note of even date herewith
executed by Trustor (the "Note") in the principal amount of the Loan.
B. Trustor intends to use the Loan proceeds for the purpose of providing financing
for the housing development described in the Development Agreement (the "Project"). The
Project will be developed on a site legally described on Attachment "I" to this Agency Deed of
Trust (the "Eligible Property").
NOW THEREFORE, in consideration of the Loan, Trustor hereby irrevocably grants,
conveys, transfers and assigns to Trustee, its successors and assigns, in trust, with power of sale
and right of entry and possession as provided below all of its present and future estate, right, title
and interest in and to the Eligible Property, together with all right, title and interest of Trustor
therein and in and to, and grants to Beneficiary a security interest in, the following:
(A) All development rights, air rights, water, water rights, and water stock relating to the
Eligible Property.
(B) All present and future structures, buildings, improvements, appurtenances and
fixtures of any kind on the Eligible Property, including but not limited to all apparatus, attached
equipment and appliances used in connection with the operation or occupancy of the Eligible
Property, such as heating and air-conditioning systems and facilities used to provide any utility
services, ventilation, vehicular cleaning, storage or other services on the Eligible Property, and
all signage, carpeting and floor coverings, partitions, generators, screens, awnings, boilers,
furnaces, pipes, plumbing, vacuum systems, brushes, blowers, cleaning, call and sprinkler
systems, fire extinguishing apparatus and equipment, water tanks, heating, ventilating, air
conditioning and air cooling equipment, and gas and electric machinery and equipment, it being
intended and agreed that all such items will be conclusively considered to be a part of the
Eligible Property conveyed by this Agency Deed of Trust, whether or not attached or affixed to
the Eligible Property.
(C) All appurtenances of the Eligible Property and all rights of Trustor in and to any
streets, roads or public places, easements or rights of way, relating to the Eligible Property.
(D) All of the rents, royalties, profits and income related to the Eligible Property, to the
extent not prohibited by any applicable law.
Agency Deed of Trust
Exhibit "L"
2
(E) All proceeds and claims arising on account of any damage to or taking of the Eligible
Property and all causes of action and recoveries for any loss or diminution in value of the
Eligible Property.
(F) All existing and future goods, inventory, equipment and all other personal property
of any nature whatsoever now or hereafter located on the Eligible Property which are now or in
the future owned by Trustor and used in the operation or occupancy of the Eligible Property or in
any construction on the Eligible Property but which are not effectively made real property under
Clause (B) above, including but not limited to all appliances, furniture and furnishings, building
service equipment, and building materials, supplies, equipment, machinery, plumbing and
plumbing material and supplies, concrete, lumber, hardware, electrical wiring and electrical
material and supplies, roofing material and supplies, doors, paint, drywall, insulation, cabinets,
ceramic material and supplies, flooring, attached appliances, fencing, landscaping and all other
materials, supplies and property of every kind and nature.
(G) All present and future accounts, general intangibles, chattel paper, contract rights,
deposit accounts, instruments and documents as those terms are defined in the California
Uniform Commercial Code, now or hereafter relating or arising with respect to the Eligible
Property and/or the use thereof or any improvements thereto, including without limitation: (i) all
rights to the payment of money, including escrow proceeds arising out of the sale or other
disposition of all or any portion of the estate of Trustor upon the Eligible Property now or
hereafter existing thereon; (ii) all plans, specifications and drawings relating to the development
of the Eligible Property and/or any construction thereon; (iii) all use permits, licenses, occupancy
permits, construction and building permits, and all other permits and approvals required by any
governmental or quasi-governmental authority in connection with the development, construction,
use, occupancy or operation of the Eligible Property; (iv) any and all agreements relating to the
development, construction, use, occupancy and/or operation of the Eligible Property between
Trustor and any contractor, subcontractor, project manager or supervisor, architect, engineer,
laborer or supplier of materials; (v) all lease or rental agreements; (vi) all names under which the
Eligible Property is now or hereafter operated or known and all rights to carry on business under
any such names or any variant thereof; (vii) all trademarks relating to the Eligible Property
and/or the development, construction, use, occupancy or operation thereof; (viii) all goodwill
relating to the Eligible Property and/or the development, construction, use, occupancy or
operation thereof; (ix) all reserves, deferred payments, deposits, refunds, cost savings, bonds,
insurance policies and payments of any kind relating to the Eligible Property; (x) all loan
commitments issued to Trustor in connection with any sale or financing of the Eligible Property;
(xi) all funds deposited with Beneficiary by Trustor, and all accounts of Trustor with
Beneficiary, including all accounts containing security deposits and prepaid rents paid to Trustor
in connection with any leases of the Eligible Property, and all proceeds thereof; and (xii) all
supplements, modifications and amendments to the foregoing.
Agency Deed of Trust
Exhibit "L"
3
(H) All of the right, title and interest of Trustor in and to all sales contracts of any nature
whatsoever now or hereafter executed covering any portion of the Eligible Property, together
with all deposits or other payments made in connection therewith.
(I) All of the right, title and interest of Trustor in and to any construction contracts, plans
and specifications, building permits, and all other documents necessary for completion of the
improvements to the construction of the Eligible Property.
(1) All water stock relating to the Eligible Property, all shares of stock or other
evidence of ownership of any part of the Eligible Property that is owned by Trustor in common
with others, and all documents of membership in any owner's or members' association or similar
group having responsibility for managing or operating any part of the Eligible Property.
Trustor does hereby covenant with Trustee and Beneficiary, that Trustor has good right to
bargain, sell and convey Trustor's interest in the Eligible Property in manner and form as above
written; and Trustor warrants and will defend same to Beneficiary, forever, against all lawful
claims and demands whatsoever except as stated above.
THIS DEED OF TRUST IS FOR THE PURPOSE OF SECURING:
(I) performance of each agreement of Trustor herein contained or incorporated herein
by reference;
(2) payment of the indebtedness (including, without limitation, interest thereon)
evidenced by the Note, and any extension or renewal or modification thereof;
(3) performance of each agreement of Trustor contained in the Master Agreement and
the Development Agreement, or any of the other "Agency Loan Documents" (as defined in the
Development Agreement), and any extension, renewal or modification of such Development
Agreement and other Agency Loan Documents;
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR HEREBY
COVENANTS AND AGREES AS FOLLOWS:
I. Pavment of Secured Obligations. To pay when due (a) the principal of,
and the interest on, the indebtedness evidenced by the Note, (b) charges, fees and all other sums
as provided in the Development Agreement, and (c) the principal of, and interest on, any future
advances secured by this Agency Deed of Trust.
2. Maintenance. Repair. Alterations. To keep the Eligible Property in good
condition and repair; to complete promptly and in a good and workmanlike manner all
improvements to be constructed on the Eligible Property, including specifically all improvements
Agency Deed of Trust
Exhibit "L"
4
1
described in the Development Agreement, and promptly restore in like manner any structure that
may be damaged or destroyed thereon; to pay when due all claims for labor performed and
materials furnished therefor, to comply with all laws, ordinances, regulations, covenants,
conditions and restrictions now or hereafter affecting the Eligible Property or any part thereof or
requiring any alterations or improvements thereon; not to commit or permit any waste or
deterioration of the Eligible Property; to keep and maintain abutting grounds, sidewalks, roads,
parking and landscape areas in good and neat order and repair; not to commit, suffer or permit, to
the extent Trustor is able by the exercise of commercially reasonable best efforts, any act to be
done in or upon the Eligible Property in violation of any law, ordinance or regulation.
3. Insurance. To provide, maintain at its expense and deliver to Beneficiary
at all times until payment in full of all obligations secured hereby, insurance as required by the
Development Agreement or the Note. In the event of any loss or damage, Trustor shall give
immediate notice thereof to Beneficiary, and Beneficiary may thereupon make proof of such loss
or damage, if the same is not promptly made by Trustor. Trustor and Beneficiary hereby agree
to cooperate in making any adjustment and compromise of any loss covered by the
aforementioned insurance policies upon the Eligible Property, and Trustor authorizes and
empowers Beneficiary, at its option, to collect and receive the proceeds, and endorse checks and
drafts issued therefor. Beneficiary agrees that in the event of any loss covered by insurance
policies on the Eligible Property subject to this Agency Deed of Trust, provided there is not then
existing any material default (or such existing default will be cured by the proceeds of such
insurance) in the observance or performance of any of the covenants and agreements contained
herein or in the Note or any future notes secured hereby, or in any other agreement with or for
the benefit of the Beneficiary in connection with any indebtedness secured hereby, the proceeds
of such insurance shall be used for the repair or restoration of the Eligible Property and will be
disbursed in accordance with such protective terms and conditions as Beneficiary may
reasonably impose.
Trustor hereby fully assigns to Beneficiary all current and future claims it may
have under any policy of insurance related to the Eligible Property or the Project, regardless of
whether such insurance was required to be maintained under the Agency Loan Documents. Any
and all unexpired insurance shall inure to the benefit of and pass to the purchaser of the Eligible
Property at any foreclosure sale, or any Trustee's sale held pursuant hereto.
Further, Beneficiary may at the time in its sole discretion require Trustor to
submit satisfactory evidence of insurance policies obtained pursuant to this Paragraph 3 and of
Trustor's compliance with all the provisions of said policies.
4. Lawsuits. To appear in and defend, or otherwise take such action therein
as the Beneficiary and Trustee or either of them may deem advisable with respect to, any action
or proceeding affecting the security for the Loan in which Beneficiary or Trustee may appear.
Agency Deed of Trust
Exhibit "L"
5
5. Beneficiarv Statement. To pay all charges for all court costs and expenses
which Beneficiary may elect to advance in order to keep unimpaired, protect, and preserve the
title thereto; and to pay for any statement provided for by law in effect at the date hereof
regarding the obligations secured hereby, any amount demanded by the Beneficiary not to
exceed the maximum allowed by law at the time when said statement is demanded.
6. Condemnation. That all judgments, awards of damages and settlements,
hereafter made as a result of or in lieu of any condemnation or other proceedings for public use
of, or for any damage to, the Eligible Property or the improvements thereon, are hereby assigned
to Beneficiary. If (i) Trustor is not then in material default hereunder (or such default will be
cured with the proceeds from the foregoing), and (ii) the taking is a partial taking, all proceeds
thereof shall be applied to restoring the Eligible Property, if practicable, as reasonably
determined by Beneficiary. In the event (i) Trustor is then in material default hereunder (and
such default will not be cured with the proceeds of the foregoing), (ii) the taking is a total taking,
or (iii) the taking is a partial taking and Beneficiary has reasonably determined that restoration of
the Eligible Property is not practicable, the proceeds shall be paid to Beneficiary to the extent of
those monies due and owing under the Note, this Agency Deed of Trust, future notes or future
deeds of trust, and Beneficiary is hereby authorized to receive such monies. Trustor agrees to
execute such further assignments of any such award, judgment or settlement which may be
received by Trustor. Subject to any prior rights of creditors under the Senior Financing (as
defined in the Development Agreement), Beneficiary may apply any and all such sums to the
indebtedness secured hereby in such manner as it elects or, at its option, the entire amount so
received by it or any part thereof may be released. Neither the application nor the release of any
such sums shall cure or waive any default or notice of default hereunder or invalidate any act
done pursuant to such notice.
7. Permitted Acts of Beneficiarv. That without affecting the liability of any
person, including Trustor (other than any person released pursuant hereto), for the payment of
any indebtedness secured hereby, Beneficiary is authorized and empowered as follows:
Beneficiary may at any time, and from time to time, either before or after the maturity of the
obligations secured hereby, and without notice (a) release any person liable for the payment of
any of the indebtedness, (b) make any agreement extending the time or otherwise altering the
terms of payment of any of the indebtedness, (c) accept additional security therefor of any kind,
or (d) release any property, real or personal, securing the indebtedness.
8. Reconvevance of Eligible Propertv. That upon written request of
Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this
Agency Deed of Trust and the Note to Trustee for cancellation and retention, and upon payment
of its fees, Trustee shall reconvey, without warranty, the Eligible Property then held hereunder.
The recitals in such reconveyance of any matters of fact shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the person or
persons legally entitled thereto."
Agency Deed of Trust
Exhibit "L"
6
9. Default and Trustee's Sale. That upon the occurrence of an "Event of
Default" under this Agency Deed of Trust (as defined in Section 18 below) Beneficiary may
declare all principal remaining unpaid, all interest then earned and remaining unpaid, and all
sums other than principal or interest secured hereby, immediately due and payable (and
thenceforth at the option of the Beneficiary and except as otherwise prohibited by law, the entire
balance of the unpaid principal shall thereafter bear interest at the Default Rate of interest per
annum set forth in the Note until paid) and may proceed to exercise the power of sale granted by
this Agency Deed of Trust by delivery to Trustee of written declaration of default and demand
for sale and of written notice of default and of election to cause to be sold said Eligible Property,
which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with
Trustee this Agency Deed of Trust, the Note and all documents evidencing expenditures secured
hereby.
After the lapse of such time as may then be required by law following the recordation of
said notice of default, and notice of sale having been given as then required by law, Trustee,
without demand on Trustor, shall sell the Eligible Property at the time and place fixed by it in
said notice of sale, either as a whole or in separate parcels, and in such order as it may determine,
at public auction to the highest bidder for cash in lawful money of the United States, payable at
time of sale. Trustee may postpone sale of all or any portion of the Eligible Property by public
announcement at such time and place of sale, and from time to time thereafter may postpone
such sale by public announcement at the time fixed by the preceding postponement. Trustee
shall deliver to such purchaser its deed conveying the Eligible Property so sold, but without any
covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall
be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or
Beneficiary, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee, including cost of evidence of title
in connection with sale, Trustee shall apply the proceeds of sale to payment of: first, all sums
expended by the Beneficiary under the terms hereof or under the Note, not then repaid, with
accrued interest at the Deferral Rate; second, all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto.
10. Substitute Trustees. Beneficiary, or any successor in ownership of any
indebtedness secured hereby, may from time to time, by instrument in writing, substitute a
successor or successors to any Trustee named herein or acting hereunder, which instrument,
executed by the Beneficiary and duly acknowledged and recorded in the Office of the Recorder
of the County of San Bernardino, and by otherwise complying with the provisions of California
Civil Code Section 2934a, or any successor section, shall be conclusive proof of proper
substitution of such successor Trustee or Trustees, who shall, without conveyance from the
Trustee predecessor, succeed to all its title, estate, right, powers and duties. Said instrument
Agency Deed of Trust
Exhibit "L"
7
j
must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Agency Deed of Trust is recorded and the name and address of the new Trustee.
II. Successors Bound. That this Agency Deed of Trust applies to, inures to
the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors, assigns, trustees and receivers. In this Agency Deed of Trust, whenever
the context so requires, the masculine gender includes the feminine and/or neuter, and the
singular number includes the plural.
12. Evidence of Title. That if, because of any default hereunder, or because of
the filing or contemplated filing of any legal proceedings affecting the Eligible Property,
Beneficiary deems it necessary to obtain an additional evidence of title or to cure any defect in
title, Beneficiary may procure such evidence or cure such defect, pay the cost thereof, and shall
have an immediate claim against Trustor therefor, together with a lien upon the Eligible Property
for the amount so paid, with interest at the Deferral Rate. Beneficiary is further authorized to
require an appraisal of the Eligible Property at any time that Beneficiary may reasonably request.
13. Default in Other Instruments; Bankruptcv. That default in the terms of
any other instrument securing the debt secured hereby, and/or the filing or other commencement
of any bankruptcy or insolvency proceedings including any assignment for the benefit of
creditors or other proceedings intended to liquidate or rehabilitate, by, for or against Trustor shall
after any applicable notice and cure period constitute default under this Agency Deed of Trust.
14. Statute of Limitations. That the pleading of any statute of limitations as a
defense to any and all obligations secured by this Agency Deed of Trust is hereby waived by the
Trustor, to the full extent permissible by law.
15. Severabilitv. That the invalidity of anyone or more covenants, phrases,
clauses, sentences, paragraphs or sections of this Agency Deed of Trust shall not affect the
remaining portions of this Agency Deed of Trust or any part hereof and this Agency Deed of
Trust shall be constructed as if such invalid covenants, phrases, sentences, paragraphs or sec-
tions, if any, had not been inserted herein.
16. Order of Application. That if the indebtedness secured hereby is now or
hereafter becomes further secured by a security agreement, deed of trust, pledge, contract of
guaranty or other additional securities, Beneficiary may to the full extent allowed by law, at its
option, exhaust anyone or more of said securities as well as the security hereunder, either
concurrently or independently and in such order as it may determine, and may apply the proceeds
received upon the indebtedness secured hereby without affecting the status of, or waiving any
right to exhaust all or any other security including the security thereunder and without waiving
any breach or default in any right or power, whether exercised hereunder or contained herein, or
in any such other security.
Agency Deed of Trust
Exhibit "L"
8
17. Covenants of Trustor.
(a) Audit bv State and Federal Agencies. In the event
the Loan is subjected to audit, monitoring or other inspections by appropriate state and federal
agencies, Trustor shall comply with such inspections and pay, on behalf of itself and Beneficiary,
the full amount of the cost to the inspecting agency of such inspections (unless such inspection
and any resulting liability arises solely from the gross negligence or willful misconduct of
Beneficiary).
(b) Program Evaluation and Review Trustor shall
allow Beneficiary's authorized personnel to inspect and monitor its facilities and program
operations as they relate to the Project or the Eligible Property, including the interview of
Trustor's staff, tenants, and other program participants, as reasonably required by Beneficiary
during the term of the Loan.
18. Default. The Trustor shall be in default under this Agency Deed of Trust
upon any of the following events which, ifnot cured within the applicable cure period provided,
if any, shall constitute an event of default hereunder ("Event of Default"):
a. The failure of Trustor to payor perform any monetary covenant or
obligation hereunder or under the terms of the Note, the Master Agreement, the Development
Agreement or any other documents executed in connection therewith, without curing such failure
within ten (10) calendar days the date such payment is due. Notwithstanding anything herein to
the contrary, the herein described cure period shall not apply to a failure by Trustor to timely
repay the Loan at the Maturity Date of the Note;
b. The failure of Trustor to perform any nonmonetary covenant or
obligation hereunder or under the terms of the Master Agreement, the Development Agreement,
the Note or any other documents executed in connection therewith, without curing such failure
within thirty (30) calendar days after receipt of written notice of such default from Beneficiary
(or from any party authorized by Beneficiary to deliver such notice as identified by Beneficiary
in writing to Trustor) specifying the nature of the event or deficiency giving rise to the default
and the action required to cure such deficiency; provided, however, that if any default with
respect to a nonmonetary obligation is such that it cannot be cured within a 30-day period, it
shall be deemed cured if Trustor commences the cure within said 30-day period and diligently
prosecutes such cure to completion thereafter. Notwithstanding anything herein to the contrary,
the herein described notice requirements and cure periods shall not apply to any Event of Default
described in Sections l8(c) through 18(h) below;
c. The material falsity of any representation or breach of any
warranty or covenant made by Trustor under the terms of this Agency Deed of Trust, the Note,
Agency Deed of Trust
Exhibit "L"
9
'1
the Master Agreement, the Development Agreement or any other document executed in
connection therewith;
d. Trustor or any constituent member or partner, or majority
shareholder, of Trustor shall (a) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian or the like of its property, (b) fail to payor admit in writing its inability to
pay its debts generally as they become due, (c) make a general assigrunent for the benefit of
creditors, (d) be adjudicated a bankrupt or insolvent or (e) commence a voluntary case under the
Federal bankruptcy laws of the United States of America or file a voluntary petition that is not
withdrawn within ten (10) days of the filing thereof or answer seeking an arrangement with
creditors or an order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any bankruptcy or
insolvency proceeding;
e. If without the application, approval or consent of Trustor, a
proceeding shall be instituted in any court of competent jurisdiction, under any law relating to
bankruptcy, in respect of Trustor or any constituent member or partner, or majority shareholder,
of Trustor, for an order for relief or an adjudication in bankruptcy, a composition or arrangement
with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of Trustor or of all or any substantial part of Trustor's assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being
contested by Trustor, in good faith, the same shall (a) result in the entry of an order for relief or
any such adjudication or appointment, or (b) continue undismissed, or pending and unstayed, for
any period of ninety (90) consecutive days;
f. Trustor shall suffer or attempt to effect a "Transfer" (as defined in
Section 33 below) other than in full compliance with the terms of this Agency Deed of Trust.
g. Trustor shall be in default under the CC&Rs, the Senior Financing,
any Junior Financing or Other Financing (as all these terms are defined in the Development
Agreement ), or any other secured or unsecured obligation relating to the Project, unless the
default is cured or waived within the cure period, if any, applicable thereto under the terms of the
obligation which is in default; or
h. Following completion of the construction of the Project, voluntary
cessation of the operation of the Project for a continuous period of more than thirty (30) days or
the involuntary cessation of the operation of the Project in accordance with this Agency Deed of
Trust for a continuous period of more than sixty (60) days.
19. Acceleration. The entire principal and all accrued and unpaid interest on
the Note shall be due and payable as therein set forth; provided, however, that the entire balance
Agency Deed of Trust
Exhibit "L"
10
of the outstanding principal and all accrued and unpaid interest on the Note, together with any
outstanding interest and other amounts payable thereunder, shall, at the election of Beneficiary
and upon notice to Trustor thereof (except in the case of default described in Section 18 (c) or (d)
, in which case no notice shall be required), become immediately due and payable upon any
Event of Default as set forth in the Note, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by Trustor.
20. Breach bv Trustor. Cure bv Beneficiarv or Trustee. In the event of
Trustor's failure to comply with any or all of the promises and agreements set forth in this
Agency Deed of Trust or to make any payment or to do any act as provided in this Agency Deed
of Trust, then Beneficiary or Trustee, but without obligation to do so and without notice to or
demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do
the same in such manner and to such extent as either in its sole judgment may deem necessary to
protect the security hereof (including, without limitation, to procure insurance and pay the
premiums therefor; to pay unpaid water rents, sewer service charges, and other governmental or
municipal charges and rates, and all or any part of the unpaid taxes, assessments, and reas-
sessments, if in its judgment the same are just and valid; to pay the cost of appraisals,
reappraisals, and extensions of title; to enter or have its agents enter upon the Eligible Property
whenever reasonably necessary for the purpose of inspecting the Eligible Property or making
repairs or installations as it deems necessary to preserve the Eligible Property or to protect the
same from vandalism, without thereby becoming liable as a trespasser or mortgagee or benefici-
ary in possession, and to pay for such repairs and installations). Beneficiary and Trustee are
hereby authorized to enter upon the Eligible Property for such purposes; to appear in and defend
any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; to pay, purchase, contest or compromise any encumbrance, charge or lien
which in the judgment of either appears to be prior or superior hereto; and, in exercising any
such powers, to pay necessary expenses, employ counsel of its choice and pay the reasonable
fees of such counsel. Trustor agrees to pay immediately and without demand all sums so
expended by Beneficiary or Trustee, with interest from the date of expenditure at the amount
allowed by law in effect at the date hereof, and that Beneficiary shall have a lien upon the
Eligible Property for the sums so expended and such interest thereon.
21. Security Agreement. That all property covered by this Agency Deed of
Trust be deemed to constitute real property or interests in real property to the maximum extent
permitted under applicable law. To the extent that any tangible property, equipment or other
property covered by this Agency Deed of Trust constitutes personal property, such personal
property shall constitute additional security. This Agency Deed of Trust shall create in
Beneficiary a security interest in such personal property and shall in respect thereof constitute a
security agreement (the "Security Agreement"). Beneficiary shall be entitled to all of the rights
and remedies in respect of any personal property included in the Eligible Property covered by
this Agency Deed of Trust afforded a secured party under the Uniform Commercial Code and
other applicable law. At Beneficiary's request Trustor will at any time and from time to time
Agency Deed of Trust
Exhibit "L"
II
furnish Beneficiary for filing financing statements signed by Trustor in form satisfactory to
Beneficiary. Trustor acknowledges and agrees that thirty (30) days' notice as to the time, place
and date of any proposed sale of any personal property shall be deemed reasonable for all
purposes. Trustor agrees that the Security Agreement created hereby shall survive the
termination or reconveyance of this Agency Deed of Trust unless Beneficiary executes
documentation expressly terminating the Security Agreement.
22. Assumption of Liabilitv. Except as provided in Section 33, the
assumption of liability for the payment of the indebtedness hereby secured, by any successor in
interest to Trustor in the Eligible Property (in the event Beneficiary elects not to accelerate the
repayment of the Loan pursuant to any transfer or disposition of the Eligible Property by
operation of law or otherwise) shall not release Trustor from any liability Trustor has hereunder
or under the other Agency Loan Documents for the payment of such indebtedness or any sums
advanced under and secured by this Agency Deed of Trust. Any forbearance or indulgence of
Beneficiary, or extensions of time for the payment of all or any part of the indebtedness secured
hereby, or the release of a part of the Eligible Property from the lien of this Agency Deed of
Trust, for, or without, payment of a consideration, shall not in any manner diminish or reduce the
liability of Trustor (subject to the nonrecourse provisions of Section 27) for the payment of the
indebtedness now or hereafter secured hereby; and that any payments made upon the said indebt-
edness shall be deemed to have been made on behalf and for the benefit of all parties obligated to
pay the same. The acceptance of payments in excess of the installments provided to be paid
upon the Note or the consideration paid for any such release shall not alter or diminish the
obligation of Trustor to thereafter make payments in the amounts and on the dates provided
therein, until the same are fully paid.
23. Future Advances. That upon the request of the Trustor or its successor in
ownership of the Eligible Property, Beneficiary may, at its option, at any time before full
payment of the Note secured hereby, make further advances to the Trustor or its successors in
ownership, and the same, with interest and late charges as permitted by law, shall be secured by
this Agency Deed of Trust; and provided further that if Beneficiary, at its option, shall make a
further advance or advances as aforesaid, the Trustor or its successors in ownership agree to
execute and deliver to Beneficiary a note to evidence the same, payable on or before the maturity
of the indebtedness under the Note secured hereby and bearing such other terms as Beneficiary
shall require.
Trustor further acknowledges and agrees: that this Agency Deed of Trust is
intended to, and shall, secure not only the original indebtedness under the Note, but any and all
future advances made by Beneficiary to Trustor; that this Agency Deed of Trust shall secure any
unpaid balances of advances made with respect to the Eligible Property; that Beneficiary shall
have the benefit of all statutes now existing or henceforth enacted to assure repayment of any
such future advances plus interest thereon; that to secure the payment of said original
indebtedness and future advances Beneficiary shall also have a lien upon all other personal
Agency Deed of Trust
Exhibit "L"
12
property and securities now or hereafter in its possession belonging to Trustor; that all rights,
powers and remedies conferred upon Beneficiary herein are in addition to each and every other
right which Beneficiary has hereunder; that all rights, powers and remedies conferred upon
Beneficiary in equity or by law may be enforced concurrently therewith; that Beneficiary shall be
subrogated to the rights and seniority of any prior lien paid or released by reason of the
application thereon of any of the proceeds hereof, and that each and all of the covenants,
agreements, and provisions hereof shall bind the respective heirs, executors, administrators,
successors, and assigns of Trustor and Beneficiary herein, and all others who subsequently
acquire any right, title, or interest in the Eligible Property, or to this Agency Deed of Trust and
the indebtedness secured hereby.
24. Captions. That the captions of the sections of this Agency Deed of Trust
are for convenience only and shall not be considered in resolving questions of interpretation or
construction.
25. Estoppel Certificates. That Trustor shall from time to time at
Beneficiary's request furnish Beneficiary or any person designated by Beneficiary, a certified
statement in form reasonably satisfactory to Beneficiary confirming as of the date of the
certificate the unpaid principal balance and accrued interest on the Note and stating that Trustor
is not in default hereunder (or describing any default), and stating that Trustor has no defense,
right of set off or counterclaim in the payment of the indebtedness, or any part thereof, or the
observance or performance of any obligation (or describing any such defense, set off or
counterclaim). Any purchaser or assignee of the Note or this Agency Deed of Trust or any
interest therein may rely on such certificate.
26. Books and Records. That Trustor and all subsequent owners of the
Eligible Property, if any, shall keep and maintain full and correct books and records showing in
detail the earnings and expenses of the Eligible Property and shall permit Beneficiary at no
expense to Trustor or its representatives to examine such books and records and all supporting
data and vouchers, from time to time at reasonable times, on request, at Trustor's offices or at
another mutually agreed upon location.
27. Obligation Nonrecourse. Except to the extent any Event of Default
hereunder results directly or indirectly from any fraud or intentional and material
misrepresentation by Borrower in connection with the Loan, the Loan is a nonrecourse obligation
of Trustor and in the event of the occurrence of an Event of Default, Beneficiary's only recourse
under this Agency Deed of Trust shall be against the Eligible Property, the proceeds thereof, the
rents and other income arising from its use and occupancy as provided in the Agency Deed of
Trust, and any other collateral given to Beneficiary as security for repayment of the Loan.
Agency Deed of Trust
Exhibit "L"
13
l
28. Fixture Filing. This Agency Deed of Trust is also a fixture filing with
respect to the personal property which is or is to become fixtures on the Eligible Property, and is
to be recorded in the real property records of San Bernardino County, California.
29. Assignment of Rents. All of the existing and future rents, royalties,
income, and profits of the Eligible Property that arise from its use or occupancy are hereby
absolutely and presently assigned to Beneficiary. However, until Trustor is in default under this
Agency Deed of Trust, Trustor will have a license to collect and receive those rents, royalties,
income and profits. Upon any Event of Default by Trustor, Beneficiary may terminate Trustor's
license in its discretion, at any time, without notice to Trustor, and may thereafter collect the
rents, royalties, income and profits itself or by an agent or receiver. No action taken by
Beneficiary to collect any rents, royalties, income or profits will make Beneficiary a "mortgagee-
in-possession" of the Eligible Property, unless Beneficiary personally or by agent enters into
actual possession of the Eligible Property. Possession by a court-appointed receiver will not be
considered possession by Beneficiary. All rents, royalties, income and profits collected by
Beneficiary or a receiver will be applied first to pay all expenses of collection, and then to the
payment of all costs of operation and management of the Eligible Property, and then to the
payment of the indebtedness and obligations secured by the Agency Deed of Trust in whatever
order Beneficiary directs in its absolute discretion and without regard to the adequacy of its
security. If required by Beneficiary, each lease or occupancy agreement affecting any of the
Eligible Property must provide, in a manner approved by Beneficiary, that the tenant will recog-
nize as its lessor any person succeeding to the interest of Trustor upon any foreclosure of this
Agency Deed of Trust. The expenses (including receivers' fees, if any, compensation to any
agent appointed by Beneficiary, counsel fees, costs and compensation to any agent appointed by
Beneficiary, and disbursements) incurred in taking possession and making such collection, shall
be deemed a portion of the expense of this trust. The entering upon and taking possession of the
Eligible Property, and/or the collection of such rents, issues and profits and the application
thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice. Beneficiary may exercise anyone or more of the
remedies in this section without waiving its right to exercise any such remedies again or for the
first time in the future. The foregoing shall be subject to the provisions of applicable law.
30. Applicable Law. This Agency Deed of Trust shall be governed by, and
construed in accordance with, the laws of the State of California.
31. Approvals. Except with respect to those matters set forth hereinabove
providing for the Beneficiary's approval, consent or determination to be at the Beneficiary's "sole
discretion" or "sole and absolute discretion," the Beneficiary hereby agrees to act reasonably
with regard to any approval, consent, or other determination given by the Beneficiary hereunder.
The Beneficiary agrees to give Trustor written notice of its approval or disapproval following
submission of items to the Beneficiary for approval, including, in the case of any disapproved
item, the reasons for such disapproval. Any consent to a transfer under Section 33 of this
Agency Deed of Trust
Exhibit "L"
14
Agency Deed of Trust, and any other consent or approval by Beneficiary under this Agency
Deed of Trust or any of the other Agency Loan Documents, may be given by Beneficiary's
Executive Director without action of Beneficiary's governing board unless the Executive
Director in his or her sole discretion elects to refer the matter to the board.
32. Good Faith and Fair Dealing. The Beneficiary and Trustor agree to
perform all of their obligations and the actions required of each hereunder in good faith and in
accordance with fair dealing.
33. Assignment ofInterest.
a. Without the prior written approval of the Beneficiary, which
approval the Beneficiary may withhold in its sole and absolute discretion, Trustor shall not (i)
sell, encumber, assign or otherwise transfer (collectively, "Transfer") all or any portion of its
interest in the Eligible Property or the Project (excluding tenant leases pursuant to the terms of
the Master Agreement), (ii) permit the Transfer of greater than 49% of its ownership and/or
control, in the aggregate, taking all transfers into account on a cumulative basis, or (iii) Transfer
any of its rights or obligations under the Agency Loan Documents. Notwithstanding the
foregoing, Beneficiary consents to the events described in the last paragraph of Section 20 of the
Master Agreement without Trustor obtaining any further consent of Beneficiary. Trustor hereby
agrees that any purported Transfer not approved by the Beneficiary as required herein shall be
ipso facto null and void, and no voluntary or involuntary successor to any interest of Trustor
under such a proscribed Transfer shall acquire any rights pursuant to the Master Agreement or
this Agency Deed of Trust.
b. At any time Trustor desires to effect a Transfer hereunder, Trustor
shall notify the Beneficiary in writing (the "Transfer Notice") and shall submit to the Beneficiary
for its prior written approval (i) all proposed agreements and documents (collectively, the
"Transfer Documents") memorializing, facilitating, evidencing and/or relating to the
circumstances surrounding such proposed Transfer, and (ii) a certificate setting forth
representations and warranties by Trustor and the proposed transferee to the Beneficiary
sufficient to establish and ensure that all requirements of this Section 33 have been and will be
met. No Transfer Documents shall be approved by the Beneficiary unless they expressly provide
for the assumption by the proposed transferee of all of Trustor's obligations under the Agency
Loan Documents. The Transfer Notice shall include a request that the Beneficiary consent to the
proposed Transfer and shall also include a request that Trustor be released from further
obligations under the Agency Loan Documents. The Beneficiary agrees to make its decision on
Trustor's request for consent to such Transfer, as promptly as possible, and, in any event, not
later than thirty (30) calendar days after the Beneficiary receives the last of the items required by
this Section 33. In the event the Beneficiary consents to a proposed Transfer, then such Transfer
shall not be effective unless and until the Beneficiary receives copies of all executed and binding
Transfer Documents which Transfer Documents shall conform with the proposed Transfer
Agency Deed of Trust
Exhibit "L"
15
Documents originally submitted by Trustor to the Beneficiary. From and after the effective date
of any such Transfer, Trustor shall be released from its obligations under this Agency Deed of
Trust and the other Agency Loan Documents accruing subsequent to such effective date.
c. Notwithstanding anything in this Agency Deed of Trust to the
contrary, Trustor agrees that it shall not be permitted to make any Transfer, whether or not the
Beneficiary consent is required therefor and even if the Beneficiary has consented thereto, if
there exists an Event of Default under this Agency Deed of Trust at the time the Transfer Notice
is tendered to the Beneficiary or at any time thereafter until such Transfer is to be effective.
d. The provisions of this Section 33 shall apply to each successive
Transfer and proposed transferee in the same manner as initially applicable to Trustor under the
terms set forth herein.
Agency Deed of Trust
Exhibit "L"
16
IN WITNESS WHEREOF, the undersigned have executed this Agency Deed of Trust as of the
date first above written.
TRUSTOR:
MARY ERICKSON COMMUNITY HOUSING, INC.,
a California Non-profit public benefit corporation
By:
Susan McDevitt, Director
BENEFICIARY:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body, corporate
and politic
By:
Emil A. Marzullo, Interim Executive Director
By:
Timothy J. Sabo, Agency Counsel
Agency Deed of Trust
Exhibit "L"
17
RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
20 I North "E" Street, Suite 30 I
San Bernardino, CA 9240 I
Attn.: Director of Housing and
Community Development
(Space Above Line for Recorder's use)
This Agreement is recorded at the request and for the benefit of the Redevelopment Agency of
the City of San Bernardino and is exempt from the payment of a recording fee pursuant to
Government Code Section 6103.
EXHIBIT "M" TO MASTER AGREEMENT
COVENANTS. CONDITIONS. AND RESTRICTIONS
THIS AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND
RESTRICTIONS ("Agreement") is executed as of the _ day of ,20_ by and
between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public
body corporate and politic ("Agency"), and MARY ERICKSON COMMUNITY HOUSING.
INC.. a California Non-profit public benefit corporation ( "Owner"), with reference to the
following:
A. The Agency and Owner are parties to the Master Agreement ("Master
Agreement") dated as of the _day of , 200_ and the
Development Agreement ("Development Agreement") dated as of the _ day of ,
20_, on the terms and conditions of which Owner shall borrow from the Agency, and the
Agency shall lend to Owner, the original principal amount of
($ ) in NSP Funds ("Loan") for the
purpose of providing financing for the housing development described in the Development
Agreement (the "Project"). The Project will be developed on a site legally described on Exhibit
"A" to this Agreement (the "Eligible Property").
B. Unless otherwise expressly provided, all defined terms used in this Agreement
shall have the defined meanings provided for in the Master Agreement and the Development
Agreement.
NOW THEREFORE, in consideration of the representations. covenants, and
obligations of Owner contained in this Agreement, Owner, on behalf of itself and its successors
and assigns, hereby covenants and agrees as follows:
99596.3 388-6 613012009 3:16 PM
(I) Use of the Eligible Property.
The Eligible Property will consist of _ multi-family residential units,
on approximately _ net acres. L) units shall be reserved for households whose
income is at or below 50% Area Median Income ("AMI"), and L) units shall
be reserved for households whose income is at or below _% AMI.
a. Limitations on Tenants. Notwithstanding anything to the contrary in
this Agreement, Owner hereby covenants on behalf of itself, and its successors and
assigns, which covenant shall run with the land and bind every successor and assign in
interest of Owner, that, throughout the Fifty-Five (55) year term of the CC&Rs, Owner
and such successors and assigns shall use the Eligible Property solely for the purpose of
constructing and operating the Project as a residential development with the defined
number of dwelling units and, with respect to the units designated to be assisted as
consideration for the Loan ("Assisted Units"), L) Assisted Units shall be
in accordance with the tenant income levels specified in this Agreement.
All Assisted Units shall be rented only at an Affordable Housing Cost to
Very Low-Income Households hereinafter defined (households meeting the applicable
criteria are occasionally referred to as "Eligible Households" and persons within any
group occasionally referred to as "Eligible Tenant" or "Eligible Tenants") and as outlined
in the following table:
Household Income 1-BR 2-BR TOTAL Total NSP
Level (% of Area Median units units UNITS Assisted
Incomel Units
Fifty Percent @O%)
PercentL%)
Percent L~)_.
Manager's Unit
TOTAL
"Very Low-Income Households" shall mean persons and
families whose gross annual household incomes do not exceed the qualifying limits for
lower income families as established and amended from time to time pursuant to Section
8 of the United States Housing Act of 1937, which qualifying limits are otherwise set
forth in Section 6932 of the California Code of Regulations and are equivalent to eighty
percent (50%) of Area Median Income, adjusted for family size and other adjustment
factors by the United States Department of Housing and Urban Development (HUD).
"Affordable Housing Cost" shall mean, as to each Eligible
Tenant, a rental rate which results in monthly payments which, including a reasonable
utility allowance, do not exceed for a Very Low-Income Household, the product of thirty
percent (30%) times fifty percent (50%) of Area Median Income adjusted for family size
appropriate to the Assisted Unit; and
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"Area Median Income" shall mean the median income for
the Riverside/San Bernardino/Ontario Metropolitan Statistical Area, adjusted for family
size as periodically adjusted by HUD, or any successor entity designated under state law
as responsible for establishing such Area Median Income.
Owner shall specifically provide in each Assisted Unit
lease and shall strictly enforce the requirement that each Assisted Unit be occupied at all
times by the eligible household who has leased that Assisted Unit, and that any other
occupant of the unit be another qualified member of the lessee's household. The Agency
shall be identified as a third party beneficiary of that covenant and shall have the right to
directly enforce that restriction in the event Owner fails to do so. Prior to execution of
any Assisted Unit lease with respect to the Project, Owner shall submit to the Agency and
obtain its written approval of a standard form occupancy lease and Owner shall thereafter
use the approved form for all leases of Assisted Units in the Project, with only such
further modifications thereto as are first submitted to and approved in writing by the
Agency.
b. Tenant Selection Process: Reports and Records Concerning
Tenancies. Owner shall maintain such records and satisfy such reporting requirements as
may be reasonably imposed by the Agency to monitor compliance with the tenanting
requirements described in Paragraph (1)a above, including without limitation the
requirement that Owner deliver reports to the Agency commencing at the close of the
initial occupancy of the Project, and continuing annually thereafter, setting forth the name
of each tenant, the unit occupied and the income of the tenant and the amount of rent
payable by each tenant. Owner shall also be required to have each prospective tenant
complete a rental application prior to occupancy and to obtain evidence from each such
tenant as may be reasonably required by the Agency to certify such tenant's qualification
for occupancy of the Project. Owner's obligation to provide such reports shall remain in
force and effect for the same duration as the use covenants set forth in this Paragraph (I).
(2) Management of Proiect. Subject to the terms and conditions contained
hereinbelow, Owner shall at all times during the operation of the Project pursuant to this
Agreement retain an entity to perform the management and/or supervisory functions
("Manager") with respect to the operation of the Project, including day-to-day administration,
maintenance and repair. Owner shall, before execution or any subsequent amendment or
replacement thereof, submit and obtain The Agency's written approval (which shall not be
unreasonably withheld, conditioned or delayed) of a management contract ("Management
Contract") entered into between Owner and an entity ("Management Entity") reasonably
acceptable to the. Subject to any regulatory or licensing requirements of any other applicable
governmental agency, the Management Contract may be for a term of up to fifteen (15) years
and may be renewed for successive terms in accordance with its terms, but may not be amended
or modified without the written consent of the Agency. The Management Contract shall also
provide that the Management Entity shall be subject to termination for failure to meet project
maintenance and operational standards set forth herein or in other agreements between Owner
and the Agency. Owner shall promptly terminate any Management Entity which commits or
allows such failure, unless the failure is cured within a reasonable period, but, in no event
99596.3 388-6 613012009 3: 16 PM
3
exceeding 60 calendar days from Management Entity's receipt of notice of the failure from
Owner or the Agency. Owner's obligation to retain a Management Entity shall remain in force
and effect for the same duration as the use covenants set forth in Paragraph (1) of this
Agreement.
(3) Operations and Maintenance. Owner hereby covenants on behalf of itself,
and its successors and assigns, which covenant shall run with the land and bind every successor
and assign in interest of Owner, that Owner and such successors and assigns shall use the
Eligible Property solely for the purpose of constructing and operating the Project and ancillary
improvements thereon, in accordance with and of the quality prescribed by this Agreement, the
Master Agreement, the Development Agreement and the Agency Deed of Trust (as defined in
the Development Agreement).
Owner covenants and agrees for itself, its successors and assigns, which
covenants shall run with the land and bind every successor or assign in interest of Owner, that
during development of the Eligible Property pursuant to this Agreement and thereafter, the
Eligible Property, nor any portion thereof, shall be improved, used or occupied in violation of
any Applicable Governmental Restrictions (as defined below) or the restrictions contained in this
Agreement. Furthermore, Owner and its successors and assigns shall not maintain, commit, or
permit the maintenance or commission on the Eligible Property, or any portion thereof, of any
nuisance, public or private, as now or hereafter defined by any statutory or decisional law
applicable to the Eligible Property, or any portion thereof.
As used herein, "Applicable Governmental Restrictions" shall mean and include
any and all laws, statutes, ordinances, codes, rules, regulations, directives, writs, injunctions,
orders, decrees, rulings, conditions of approval, or authorizations, now in force or which may
hereafter be in force, of any governmental entity, agency or political subdivision as they pertain
to the performance of this Agreement or development or operation of the Project, including
specifically but without limitation all code and other requirements of the jurisdiction in which the
Project is located; the California Environmental Quality Act; the laws specified in the
Development Agreement; fair housing laws; and applicable federal, state and local laws. Owner
shall indemnify, defend and hold the Agency harmless for any suit, cost, attorneys' fees, claim,
administrative proceeding, damage, award, fine, penalty or liability arising out of Owner's
failure to comply with any Applicable Governmental Restrictions, including, without limitation,
the nonpayment of any prevailing wages required to be paid in connection with the Project.
Owner shall, at its expense, (i) maintain all improvements and landscaping on the
Eligible Property in first-class order, condition, and repair (and, as to landscaping, in a healthy
and thriving condition) in accordance with the plans for the Project approved by the Agency in
accordance with the Development Agreement and all Applicable Governmental Restrictions, and
(ii) manage the Project and Project finances reasonably prudently and in compliance with
Applicable Governmental Restrictions so as to maintain a safe and attractive living environment
for Project residents.
995963 388-6 6130/2009 3:16 PM
4
(4) Performance of Maintenance.
a. Owner shall maintain in accordance with the Agency Standards, as
hereinafter defined, the private improvements, public improvements and landscaping to the
curbline(s) on and abutting the Eligible Property. Said improvements shall include, but not be
limited to, buildings, sidewalks and other paved areas, pedestrian lighting, landscaping, irrigation
of landscaping, architectural elements identifying the Eligible Property and any and all other
improvements on the Eligible Property and in the public right-of-way to the nearest curbline(s)
abutting the Eligible Property.
b. To accomplish the maintenance, Owner shall either staff or
contract with and hire licensed and qualified personnel to perform the maintenance work,
including the provision of labor, equipment, materials, support facilities, and any and all other
items necessary to comply with the requirements of this Agreement.
Agency Standards: The following standards ("Agency Standards") shall
be complied with by Owner and its maintenance staff, contractors or subcontractors
(i) Ordinary Maintenance Standards - Owner shall maintain
the Eligible Property in good repair, order and condition at all times in order to
assure that the Eligible Property is kept in a decent, safe, and sanitary condition,
and that the buildings, grounds, and equipment are to be maintained in a manner
that will preserve their condition.
(ii) Annual Inspection Standards - Owner shall annually
inspect the Eligible Property. The completed annual inspection will be
documented and reported to the Agency on an annual basis, and at the end of each
year Owner shall submit to the Agency a declaration certifying that the annual
inspection was performed at the Eligible Property. Owner shall retain records of
the inspection and make them available for review by the Agency at the request of
the Agency.
(iii) Extraordinary Maintenance. Owner shall perform any
extraordinary repairs or replacements necessary in order to maintain the Eligible
Property, including extraordinary replacement of equipment, betterment, and
additions. Extraordinary repairs or replacement consists of major repairs and
rehabilitation involving substantial expenditures which usually are needed only at
relatively long intervals of time, or are caused by such occurrences as earthquake,
fire, obsolescence and, in some instances, neglect. Such items as replacement of
roofs, replacement of corroded gas and heating lines, and rehabilitation of
landscaping (ground-cover) would be considered in this category.
(iv) The Agency may enter and inspect the premises at any time
after notifying Owner 72 hours prior to the planned inspection, and said notice
shall be delivered to Owner at the address indicated in paragraph I7(e) below.
99596.3 388-6 613012009 3:16 PM
5
(5) Failure to Maintain Improvements. In the event Owner does not maintain
the Eligible Property to the curbline in the manner set forth herein and in accordance with the
Agency Standards, the Agency shall have the right to maintain such private and/or public
improvements, or to contract for the correction of such deficiencies, after (i) written notice to
Owner stating that the condition of said improvements does not meet with the Agency Standards
and specifying the deficiencies and the actions required to be taken by Owner to cure the
deficiencies ("Deficiency Notice"); and (ii) the lapse of the applicable "Cure Period," as
hereinafter defined. Upon receipt of the Deficiency Notice, Owner shall have thirty (30)
calendar days within which to correct, remedy or cure the deficiency, unless such deficiency is
not capable of being cured within such 30 day period, then such amount of time as is needed to
cure such deficiency provided owner is diligently pursuing cure; provided however, if the
Deficiency Notice states the problem is urgent relating to public health and safety, then Owner
shall have forty-eight (48) hours to rectify the problem (collectively the "Cure Periods").
In the event Owner fails to correct, remedy, or cure such maintenance deficiency
after the Deficiency Notice and after the applicable Cure Period has lapsed, then the Agency
shall have the right to maintain such improvements. Owner agrees to pay the Agency, upon
demand, charges and costs incurred by the Agency in connection with such maintenance. Until
so paid, the Agency shall have a lien on the Eligible Property for the amount of such
maintenance charges and costs, which lien shall be perfected by the recordation of a "Notice of
Claim of Lien" against the Eligible Property. Upon recordation of a Notice of a Claim of Lien
against the Eligible Property, such lien shall constitute a lien on the fee estate in and to the
Eligible Property prior and superior to all other monetary liens except: (i) all taxes, bonds,
assessments, and other levies which by law would be superior thereto; (ii) the lien or charges of
any mortgage, deed of trust, or other security interest then of record made in good faith and for
value, it being understood that the priority for any such lien for costs incurred to comply with
this Agreement shall date from the date of the recordation of the Notice of Claim of Lien. Any
such lien shall be subject and subordinate to any lease or sublease ofthe interest of Owner in the
Eligible Property or any portion thereof and to any easement affecting the Eligible Property or
any portion thereof entered into at any time (either before or after) the date of recordation of such
a Notice. Any lien in favor of the Agency created or claimed hereunder is expressly made
subject and subordinate to any mortgage or deed of trust made in good faith and for value,
recorded as of the date of the recordation of the Notice of Claim of Lien describing such lien as
aforesaid, and no such lien shall in any way defeat, invalidate, or impair the obligation or priority
of any such mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly
subordinates his interest, or record, to such lien. No lien in favor of the Agency created or
claimed hereunder shall in any way defeat, invalidate, or impair the obligation or priority of any
lease, sublease or easement unless such instrument is expressly subordinated to such lien. Upon
foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior
to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure-purchaser shall
take title to the Eligible Property free of any lien imposed herein by the Agency that has accrued
up to the time of the foreclosure sale, and upon taking title to the Eligible Property, such
foreclosure-purchaser shall only be obligated to pay costs associated with this Agreement
accruing after the foreclosure-purchaser acquires title to the Eligible Property. If the Eligible
Property is ever legally divided with the written approval of the Agency and fee title to various
portions of the Eligible Property is held under separate ownerships, then the burdens of the
99596.3 388-6 613012009 3:16 PM
6
maintenance obligations set forth herein and in the Agreement and the charges levied by the
Agency to reimburse the Agency for the cost of undertaking such maintenance obligations of
Owner and its successors and the lien for such charges shall be apportioned among the fee
owners of the various portions of the Eligible Property under different ownerships proportionate
to the square footage of the land contained in the respective portions of the Eligible Property
owned by them. Upon apportionment, no separate owner of a portion of the Eligible Property
shall have any liability for the apportioned liabilities of any other separate owner of another
portion of the Eligible Property, and the lien shall be similarly apportioned and shall only
constitute a lien against the portion of the Eligible Property owned in fee by the owner who is
liable for the apportioned lien and against no other portion of the Eligible Property. Owner
acknowledges and agrees the Eligible Property may also pursue any and all other remedies
available in law or equity. Owner shall be liable for any and all reasonable attorneys' fees, and
other legal costs or fees incurred in collecting said maintenance costs.
(6) [Reserved.]
(7) Owner's Obligation to Refrain From Discrimination. There shall be no
discrimination against or segregation of any person, or group of persons, on account of race,
color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Eligible Property, nor shall Owner itself or
any person claiming under or through it establish or permit any such practice or practices of dis-
crimination or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees, or vendees of the Eligible Property or any portion
thereof. The nondiscrimination and non segregation covenants set forth herein shall remain in
effect in perpetuity.
Owner shall refrain from restnctmg the rental, sale or lease of the Eligible
Property or any portion thereof on the basis of race, color, creed, religion, sex, marital status,
national origin, or ancestry of any person. All such deeds, leases or contracts shall contain or be
subject to substantially the following nondiscrimination or nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or herself,
and his or her heirs, executors, administrators and assigns, and all persons claiming under
or through them, that there shall be no discrimination against or segregation of, any
person or group of persons on account of race, color, creed, religion, sex, marital status,
national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the land herein conveyed, nor shall the grantee or any person claiming
under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein
conveyed. The foregoing covenants shall run with the land."
b. In leases: "The lessee herein covenants by and for himself or herself,
and his or her heirs, executors, administrators and assigns, and all persons claiming under
or through him or her, and this lease is made and accepted upon and subject to the
following conditions: That there shall be no discrimination against or segregation of any
99596.3 388-6 613012009 3:16 PM
7
person or group of persons, on account of race, color, creed, religion, sex, marital status,
national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy,
tenure, or enjoyment of the land herein leased nor shall the lessee himself or herself, or
any person claiming under or through him or her, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location,
number, use, or occupancy, of tenants, lessees, sub lessees, subtenants, or vendees in the
land herein leased."
c. In contracts: "There shall be no discrimination against or segregation
of any person or group of persons, on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the premises, nor shall the parties to this contract or any person
claiming under or through them, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or
occupancy of tenants, lessees, subtenants, sublessees, or vendees of the premises."
Nothing in this Paragraph shall be construed or understood to limit, restrict or in
any way waive the income requirements described in this Agreement.
(8) Covenants Run With the Land; Duration of Covenants. The covenants
and agreements established in this Agreement shall be covenants running with the land and shall,
without regard to technical classification and designation, be binding on Owner and any
successor-in-interest to Owner's interest in the Eligible Property, or any part thereof, for the
benefit of and in favor of the agency and its successors and assigns. The covenants of this
Agreement shall remain in effect through the Term, notwithstanding the repayment of the Loan
by Owner prior to the Maturity Date. The covenants contained in Paragraph 7 of this Agreement
shall remain in effect in perpetuity.
The Improvements to the curbline(s) and the maintenance thereof touch and
concern the Eligible Property and inure to the benefit of any and all present or successive owners
of the Eligible Property. Therefore, whenever the word "owner" is used herein, it shall include
the owner as of date of execution of this Agreement, and any and all successor owners or assigns
of the Eligible Property, and the provisions hereof are expressly binding upon all such successive
owners and assigns and the parties agree all such provisions shall run with the land. The Agency
shall cause a fully executed copy of this Agreement to be recorded in the Office of the San
Bernardino County Recorder. Notwithstanding the foregoing, in the event Owner or its
successors or assigns shall convey its fee interest in all or any portion of the Eligible Property,
the conveying owner shall be free from and after the date of recording such conveyance of all
liabilities, respecting the performance of the restrictions, covenants or conditions contained in
this Agreement thereafter to be performed with respect to the Eligible Property, or any part
thereof, it being intended that the restrictions, covenants and conditions shall be binding upon the
record owners of the Eligible Property only during such time as that person is the owner of the
Eligible Property, provided that the conveying owner shall remain liable for any actions prior to
the date of the conveyance.
99596.3 388-6 613012009 3:16 PM
8
(9) Enforcement. In amplification and not in restriction of the provisions set
forth hereinabove, it is intended and agreed that the Agency shall be deemed the beneficiary of
the terms and provisions of this Agreement and of the restrictions and covenants running with
the land for and in its own right and for the purposes of protecting the interests of the community
and other parties, public or private, in whose favor and for whose benefit the covenants running
with the land have been provided. Each covenant of Owner, shall, without regard to technical
classification and designation, inure to the benefit of the successors, transferees and assigns of
the Agency for the entire period during which such covenants shall be in force and effect, and
shall be binding upon the successors, transferees and assigns of Owner, whether by merger,
consolidation, sale, transfer, liquidation or otherwise. Each covenant in favor of the Agency is
for the benefit of the real property owned by the Agency in the area surrounding the Eligible
Property. The covenants herein running with the land shall also be equitable servitudes upon the
Eligible Property and each part thereof and shall bind each and every person having any interest
in the Eligible Property or part thereof, whether such interest is fee, easement, leasehold,
beneficial or otherwise, and each successor or assign of such person having any such interest in
the Eligible Property or part thereof. The Agency shall have the right if any of the covenants set
forth in this Agreement which are provided for its benefit are breached, to exercise all rights and
remedies and to maintain any actions or suits at law or in equity or other proper proceedings to
enforce the curing of such breach to which it may be entitled. In the event that suit is brought for
the enforcement of this Agreement or as the result of any alleged breach hereof, the prevailing
party or parties in such suit shall be entitled to recover their reasonable attorneys' fees from the
losing party or parties, and any judgment or decree rendered in such proceedings shall include an
award thereof. Except for the Agency, the covenants and restrictions contained in this
Agreement shall not benefit or be enforceable by any owner of any sother real property or any
person or entity having any interest in any such other real property.
(10) Compliance with Law. Owner shall comply with all Applicable
Governmental Restrictions relating to the uses of or condition of the Eligible Property private
improvements and public improvements to the curbline(s). Local laws for the purposes of this
paragraph shall include only those ordinances which are nondiscriminatory in nature and
applicable to the public welfare, health, safety and aesthetics. If any new local laws relating to
the uses of or condition of the improvements create a condition or situation that constitutes a
lawful nonconforming use as defined by local ordinance with respect to the Eligible Property or
any portion thereof, then so long as the lawful nonconforming use status remains in effect (i.e.,
until such lawful status is properly terminated by amortization as provided for in the new local
law or otherwise), Owner shall be entitled to enjoy the benefits of such lawful nonconforming
use pursuant to the lawful nonconforming uses ordinance.
(II) Indemnification and Insurance.
a. Indemnification. In the event that Owner is not acting as a Design
Professional, Owner agrees to indemnify, defend and save harmless the Agency, and their
elected and appointed officials, officers, representatives, employees, and agents (hereinafter
collectively referred to as "Agents"), from and against any and all liability, demands, damages,
claims, causes of action, fees (including reasonable attorney's fees and costs and expert witness
fees), and expenses, including, but not limited to, claims for bodily injury, property damage, and
99596.3 388-6 613012009 3:16 PM
9
death (hereinafter collectively referred to as "Liabilities"), that arise out of, pertain to, or relate to
this Agreement, the services and/or materials provided pursuant to this Agreement, the Eligible
Property, or Project. Owner shall not be required to indemnify, defend, and save harmless the
Agency and its Agents from any Liabilities that arise from the active negligence, sole negligence
or willful misconduct of the Agency, Agency's agents, servants, or independent contractors who
are directly responsible to the Agency's. Such indemnification language shall also be
incorporated in Owner's contracts with any general contractors and subcontractors in favor of the
Agency.
In the event that Owner is acting as a Design Professional, Owner agrees
to indemnify, defend and save harmless the Agency and their Agents from and against any and
all Liabilities that arise out of, pertain to, or relate to the negligence, recklessness, or willful
misconduct of Owner. Such indemnification language, in favor of the Agency, shall also be
incorporated in Owner's contracts with any Design Professionals in favor of the Public Agency.
These indemnification provisions shall remain in full force and effect and
survive the cancellation, termination and/or expiration of this Agreement. Owner agrees to
require any entities with which it contracts to agree to and abide by the above mentioned
indemnification requirements in favor of the Agency, as applicable to each of them.
b. Insurance. Without limiting Owner's indemnifications of the Agency
provided in this Agreement, Owner shall procure and maintain at its own expense the insurance
described in this section for the duration of this Agreement, unless otherwise set forth herein.
Such insurance shall be secured from carriers admitted in California, or authorized to do business
in California. Such carriers shall be in good standing with the California Secretary of State's
Office and the California Department of Insurance. Such carriers must be approved by the
California Department of Insurance and must be included on the California Department of
Insurance List of Eligible Surplus Line Insurers (hereinafter "LESLI"). Such carriers must have
a minimum rating of or equivalent to A(v) in Best's Insurance Guide. Owner shall, concurrent
with the execution of this Agreement, deliver to the Agency certificates of insurance with
original endorsements evidencing the general liability, automobile insurance, worker's
compensation and property insurance coverage required by this Agreement at such time that such
exposures are at risk, but in no event later than the Close of Escrow. The certificate and
endorsements shall be signed by a person authorized by the insurers to bind coverage on its
behalf. The Agency reserves the right to require complete certified copies of all policies at any
time. Said insurance shall be in a form acceptable to the Agency and may provide for such
deductibles as may be acceptable to the Agency. In the event such insurance does provide for
deductibles or self-insurance, Owner agrees that it and/or the entities with which it contracts, will
defend, indemnify and hold harmless the Agency, its elected and appointed officers, officials,
representatives, employees, and agents in the same manner as they would have been defended,
indemnified and held harmless if full coverage under any applicable policy had been in effect.
Each such certificate shall stipulate that the Agency is to be given at least thirty (30) days'
written notice in advance of any cancellation or any reduction in limit(s) for any policy of
insurance required herein. Owner shall give the Agency immediate notice of any insurance
claim or loss which may be covered by insurance. Owner represents and warrants that the
insurance coverage required herein will also be provided by Owner's general contractors as
detailed below.
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10
The aforementioned insurance policies shall be primary insurance with respect to the Agency.
The aforementioned insurance policies shall contain a waiver of subrogation for the benefit of
the Agency. Failure on the part of Owner and any general contractors hired by owner to perform
work on the Eligible Property, to procure or maintain the insurance coverage required herein
shall constitute a material breach of this Agreement pursuant to which the Agency may
immediately terminate this Agreement and exercise all other rights and remedies set forth herein,
at its sole and absolute discretion, and without waiving such default or limiting the rights or
remedies of the Agency, procure or renew such insurance and pay any and all premiums in
connection therewith and all monies so paid by the Agency shall be immediately repaid by the
Owner to the Agency upon demand including interest thereon at the Default Rate. In the event
of such a breach, the Agency shall have the right, at its sole election, to participate in and control
any insurance claim adjustment or dispute with the insurance carrier. Owner's failure to assert or
delay in asserting any claim shall not diminish or impair the Agency's rights against the Owner
or the insurance carrier.
When Owner is naming the Agency as additional insureds on any of the commercial general
liability insurance policies set forth herein, then the additional insured endorsement shall contain
language similar to the language contained in ISO form CG 20 10 1001. When any entity, with
which Owner is contracting, is naming the Public Agencies as additional insureds on any of the
commercial general liability insurance policies set forth herein, then the additional insured
endorsement shall contain language similar to the language contained in ISO form CG 20 10 II
85.
The following insurance policies shall be maintained by Owner and any General Contractor with
which Owner contracts for the duration of this Agreement unless otherwise set forth herein:
(i) General Liabilitv: For projects in which the direct construction costs are
projected to be less than $15,000,000, Commercial General Liability insurance, including
coverage for bodily injury, property damage and contractual liability, with a combined single
limit not less than One Million Dollars ($1,000,000) for each occurrence (Two Million Dollars
($2,000,000) General Aggregate), including, but not limited to, products and completed
operations coverage. The Agency and their elected and appointed officers, officials,
representatives, employees, and agents shall be named as additional insureds on such policy.
Owner shall require its general contractor to carry Commercial General Liability insurance of not
less than One Million Dollars ($1,000,000) for each occurrence (Two Million Dollars
($2,000,000) General Aggregate), including, but not limited to, products and completed
operations protection. Owner shall further require its general contractor to provide additional
insured status for Owner and Agency and their elected and appointed officers, officials,
representatives, employees, and agents, on such policy. If required by the Agency from time to
time, Owner shall increase the limits of Owner's liability insurance to reasonable amounts
necessary for owners of improvements similar to the Eligible Property. The policy shall contain
a waiver of subrogation for the benefit of the Agency.
(ii) Provertv Insurance: "Special Form" property insurance coverage, which shall
include, without limitation, builders risk insurance and insurance against the perils of fire and
physical loss or damage including, without duplication of coverage, theft, vandalism, malicious
99596.3 388.6 613012009 3:16 PM
II
mischief, collapse, flood, false work, testing and startup, temporary buildings and debris removal
including demolition occasioned by enforcement of any applicable legal requirements. The
amount of the property coverage shall at all times exceed the full replacement value of materials
supplied or installed by others and all existing structures, improvements and fixtures on the
Property. The insurer shall waive any coinsurance via an "agreement" endorsement. Said
insurance shall be maintained for the duration of this Agreement. The Agency and its elected
and appointed officers, officials, representatives, employees, and agents shall be named as
additional insureds on such policy.
(iii) Workers ' Compensation: Owner's employees, if any, shall be covered by Workers'
Compensation insurance in an amount and in such form as to meet all applicable requirements of
the Labor Code of the State of California and Employers Liability limits up to One Million
Dollars ($1,000,000) per accident. Owner shall require that the identical worker's compensation
insurance requirements be incorporated into Owner's contract with any general contractors with
which it contracts in relation to the Project. Said entities shall maintain the insurance for the
duration of this Agreement or the duration of the construction that is the subject of their contracts
with Owner, whichever is greater.
(iv)Automobile Liabilitv: Combined single limit automobile liability insurance up to One
Million Dollars ($1,000,000) per accident for bodily injury and property damage, covering
owned (if any), non-owned and hired vehicles. Owner shall require that the identical automobile
liability insurance requirements be incorporated into Owner's contract with any general
contractors with which it contracts in relation to the Project. Said entities shall maintain the
insurance for the duration of this Agreement or the duration of the construction that is the subject
of their contracts with Owner, whichever is greater. The Agency and its elected and appointed
officers, officials, representatives, employees, and agents shall be named as additional insureds
on such policies.
(12) Intentionally Omitted
(13) Waiver. Failure or delay by either party to perform any term or provision
of this Agreement constitutes a default under this Agreement. The aggrieved party shall give
written notice of the default to the party in default in accordance with Paragraph (l6)e hereof.
The defaulting party shall no longer be in default if the defaulting party cures such default within
thirty (30) calendar days after receiving the Default Notice; provided, however, that if such
default cannot be reasonably cured within such thirty (30) day period, the defaulting party shall
be given such longer period as reasonably necessary (which in the case of a default by Owner
shall be as reasonably determined by the Agency) and the defaulting party shall no longer be in
default if it commences to cure such default within such thirty (30) day period and completes
such cure with reasonable and due diligence.
The waiver by one party of the performance of any covenant, condition, or
promise shall not invalidate this Agreement nor shall it be considered a waiver by such party of
any other covenant, condition or promise hereunder. The exercise of any remedy shall not
preclude the exercise of other remedies the Agency or Owner may have at law or at equity.
995%.3 388-6 6130/2009 3:16 PM
12
(14) Modification. This Agreement may be modified only by subsequent
mutual written agreement executed by Owner and the Agency.
(15) Intentionally Omitted.
(16) Miscellaneous Provisions.
a. Interpretation. The provisions of this document shall be liberally
construed to effectuate its purpose. Time is of the essence of this Agreement.
b. Severability. Invalidation of any of the covenants, conditions,
restrictions, or other provisions contained in this Agreement by judgment or court
order shall in no way affect any of the other covenants, conditions, restrictions, or
provisions hereof, which shall remain in full force and effect.
c. Headings. The caption headings of the various sections and
paragraphs of this Agreement are for convenience and identification only, and
shall not be deemed to limit or define the contents of their respective sections or
paragraphs.
d. Effective Date. This Agreement shall take effect upon its
recording in the Office of San Bernardino County Recorder.
e. Notices. Formal notices, demands, and communications between
the Agency and Owner shall be given either by personal service, by overnight
courier, or by mailing in the United States mail, certified mail, postage prepaid,
return receipt requested, addressed to the principal offices of the Agency or
Owner, as follows:
If to the Agency:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Executive Director
With a copy to:
Redevelopment Agency of the City of San Bernardino
20 I North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Director of Housing and Community Development
If to Owner:
Fax No.
995%.3 388.6 6130/2009 3:16 PM
13
With a copy to:
Attn:
Fax No.
Notices shall be effective upon receipt, if given by personal delivery, the
earlier of (i) three (3) business days after deposit with United States Mail, or (ii)
the date of actual receipt as evidenced by the return receipt, if delivered by
certified mail, and one (1) day after deposit with the delivery service, if delivered
by overnight guaranteed delivery service. Each party shall promptly notify the
other party of any change(s) of address to which notice shall be sent pursuant to
this Agreement.
f. Exhibits. Each Exhibit mentioned in this Agreement is attached
hereto and incorporated herein by this reference.
g. Execution in Counterparts. The parties may execute this document
in two or more counterparts; each counterpart shall be deemed an original
instrument as against any party who has executed it.
99596.3 388-6 613012009 3:16 PM
14
IN WITNESS WHEREOF, the Agency and Owner have caused this instrument to be
executed on their behalf by their respective officers hereunto duly authorized as of date first
written above.
AGENCY:
REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO, a public
body, corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and
Legal Content:
By:
Timothy J. Sabo, Agency Counsel
OWNER:
MARY ERICKSON COMMUNITY HOUSING,
INC., a California Non-profit public benefit
corporation
By:
Susan McDevitt, Director
99596.3 388-6 6130/2009 3:16 PM
15
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On , 200_, before me , Notary Public, personally
appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On ,200_, before me , Notary Public, personally
appeared who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
995%.3 388.6 613012009 3:16 PM
16
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On ,200_, before me , Notary Public, personally
appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
99596.3 J88-6 613012009 J; 16 PM
17
EXHIBIT "A" TO CC&Rs
LEGAL DESCRIPTION OF ELIGIBLE PROPERTY
99596.3 388-6 613012009 3 16 PM
]8
EXHIBIT "N"
DEVELOPMENT AGREEMENT
DEVELOPER PARTICIPATION IN NSP
CITY OF SAN BERNARDINO
THIS DEVELOPMENT AGREEMENT ("Agreement") is made as of the _day of
,20_, by and between the REDEVELOPMENT AGENCY OF THE CITY OF
SAN BERNARDINO ("AGENCY"), a public body corporate and politic, and MARY
ERICKSON COMMUNITY HOUSING, INC., a California non-profit public benefit corporation
("Developer"), for the purpose of acquiring, rehabilitating, and managing the property whose
address is indicated below ("Project") in accordance with the terms of that certain Master
Agreement dated as of ,20_ entered into between Developer and
the Agency (the "Master Agreement").
Agency agrees, subject to the terms and conditions of the Master Agreement and this Agreement
and in consideration of the representations, covenants and obligations of Developer contained in
the Master Agreement and this Agreement, to make a Loan to Developer in the amount not to
exceed Dollars ($ ) (the "Loan") for the
purpose of providing acquisition, rehabilitation and/or permanent financing for a _ unit
building located at , which units
will be reserved for households whose income is less than or equal to % AMI and whose
legal description is attached herewith as Exhibit "A", to be used solely for the purposes described
herein and secured by the Agency Deed of Trust. The Agency's source of funding for the Loan
is provided from the Neighborhood Stabilization Program ("NSP") administered and funded by
the United States Department of Housing and Urban Development ("HUD") subsequent to Title
III of the Housing and Economic Recovery Act of2008 (HERA).
Other sources of financing for the Project are anticipated to include, but may not be limited to (i)
senior lien financing ("Senior Financing"), to which the Agency shall expressly subordinate the
lien of the Agency's Deed of Trust; (ii) financing junior in priority to the lien of the Agency
Deed of Trust ("Junior Financing"); and (iii) other financing sources ("Other Financing"), as all
are listed below:
Dsenior Djunior Dparity/NA
o senior Djunior Dparity/NA
Dsenior Djunior Dparity/NA
(I)
(2)
(3)
Developer will deliver to the Agency, among other items, the "Agency Deed of Trust",
"Promissory Note" and the "CC&R's", in the respective forms attached as Exhibits "E", "F" and
"G", herewith to, respectively, secure repayment of the Loan by Developer as provided herein
and to ensure that the affordability and habitability of the Project is maintained in accordance
with the terms of those instruments, the Master Agreement and this Agreement.
Development Agreement
I
l
Developer will further attach to this Development Agreement: (i) a completed version of Exhibit
"B" Development Pro Forma, attached herewith, for the above described Property and Project;
and (ii) a project timeline in the format of Exhibit "C" for completion of the Project, attached
herewith; and (iii) a scope of the rehabilitation work to be completed as part of the Project in a
format provided by the Developer and acceptable to the Agency. Together these documents
shall memorialize the Development Budget required to complete the Project, the Schedule of
Performance for the Project and the Scope of Work to be completed as part of the Project, agreed
upon by the Developer and the Agency.
By the execution and submittal of this Development Agreement, and upon acceptance hereof by
the Agency, the Developer shall apply all requirements of the NSP program as required by
federal law, rules and regulations in addition to all other requirements contained in the Master
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Development Agreement
as of the date first above written.
AGENCY:
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Date:
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By:
Agency Counsel
DEVELOPER:
Mary Erickson Community Housing, Inc.,
a California Non-profit public benefit corporation
Date:
By:
Susan McDevitt, Executive Director
Development Agreement
2
EXHIBIT "0"
Building Standards
48
p 1A&<;nd;,J\Al""da "'1~,<:lllna'll\Acc:nd:l "u.d,mOlli\Aicnda Alladtn'CfIIM.mllJ-AmOld 21~m)7",1l',-O? M~- Eri~_ C"'lIIm.,ll~' HOIISIIII In,. . MaJId' "creanenl (l'Inal),doc
,
m
an ernar Ino
ECONOMIC DEVELOPMENT AGENCY
Neighborhood Stabilization Program
"Minimum Building Standards"
June 2009
Table of Contents
1000 - General Requirements ...................................................................................................................... 1
1010 - General............................................................................................................................................ 1
1020. Terminology ....................................................................................................................................1
1030. General Quality Requirements..................................................................................................... 1
1040 . Substitutions/Alternatives ............................................................................................................ 2
1050. Optional Green Building Practices .............................................................................................. 3
1100. Temporary Facilities and Temporary Controls .............................................................................. 3
1110 - Site Usage ...................................................................................................................................... 3
1200. Project Closeout................................................................................................................................. 4
1210 - Final Cleaning ................................................................................................................................ 4
1220 - Operations Manuals and Warranties .......................................................................................... 5
1230 - Systems Startup ............................................................................................................................ 5
2000. Building Sitework / Site Preparation................................................................................................ 5
2010. Site Clearing and Demolition........................................................................................................ 5
2020 . Site Earthwork ................................................................................................................................ 5
2040 - Site Hazardous Waste Remediation ........................................................................................... 6
2100. Site Improvements ............................................................................................................................. 6
2110 - Roadways, Driveways, and Walkways ....................................................................................... 6
2150 - Fencing ...........................................................................................................................................7
2150. Landscaping ................................................................................................................................... 8
2200 Site Civil/ Site Utilities......................................................................................................................... 8
2210 . Util ities..... ........... ............... ........... ......................... ........................... ........................................ ....... 8
3100 . Selective Demolition .......................................................................................................................... 8
3110. Building Elements Demolition......................................................................................................8
3120 . Hazardous Components Abatement ..........................................................................................10
4000 . Foundations .......................... ................... ............... ............... .......................... ...... .......... ........ ....... ...10
4010 . Standard Foundations ..................................................................................................................10
4030 . Slabs on Grade ..............................................................................................................................11
5000 . Su perstructure ......... ..... .................... ............................................ ..... .................................... ........ ....11
5010 - Framing / Wood ............................................................................................................................11
5100 - Exterior Enclosure ......... ..... ............. ....... ..... ....................... ................................................. .............12
5110 - Exterior Walls. .... ........... ......... ............ ................ ................................... ........... ....... ............. ...... ....12
5111 - Stucco I Plaster.........................................................................................................................12
5112 - Exterior Insulation ....................... ...... ..... .......................................... ....... .......................... .......12
5113 - Caulking and Joint Sealants ...................................................................................................13
5120 - Exterior Windows ..........................................................................................................................13
5130 - Exterior Doors I Garage Doors....................................................................................................14
5140- Flash ing . ............................... ............ .......... ................... ............ ..... ........... ............. .........................16
5200 - Roofing ..... ......... .................. .......... ............ ........ ........... ....... ................... ............. ....................... ...... .16
5210 . Roof Coverings........................ ................................. ................ ............. ....... ..... ...................... ......16
5220 - Gutters and Downspouts ............................................................................................................16
6000 . Interior Construction ........................................................................................................................17
6010 - Partitions I Ceilings......................................................................................................................17
6011 - Interior Insulation .....................................................................................................................17
6012 - Drywall ........... .......... ........ .......... ..... .................. .......... ......... ...................... .............. ............... ....17
6020 - I nterior Doors ......... .......... ....... ..... ...... ..... ....... ........ ..... ...... ..................... ....... .......... ........... ........... .18
7000 . Finishes ............. ........... ..... ........ ............ ........... ....... ......... ......... ................... ............ .............. ............18
7010 - Ceramic Tile ..................................................................................................................................18
7020 - Floor Fin ishes ...... ....... ............. ....................... .............. ............. ............. ................. ................ ......19
7030 - Ceiling Fi nishes ................ .................. ............. ................................. ................... ..........................20
7040 - Painting ..... ......... .................. ....... ..... ...... ........ ....... ..... ....................... ........... .................................. .20
8100 - Furnish ings ... ........ ............. ........ ............ .............. ............................... ....... ................ ....... ..... ........... 24
8110 - Carpentry, Cabinets, and Millwork.............................................................................................24
9000 - Plumbing, Mechanical, Electrical...................................................................................................25
9010. Plumbing Fixtures.........................................................................................................................25
9020 - Domestic Water Distribution .......................................................................................................26
9030 . Sa nitary Waste ..... .............. ....... ......... ......... .............. ....... .......... ...... ........ ............ .................. ........26
9100. Heating, Ventilating, and Air Conditioning (HVAC) ......................................................................27
9110 - Heating and Ventilating ...............................................................................................................27
9200 - Fire Protection Systems ..................................................................................................................28
9210 - Fire Protection Specialties..........................................................................................................28
9300 . Electrical Systems........................ .......... ........ ........ ............... ............... ................ ..... ..... .................. .28
9310 - Electrical Service and Distribution .............................................................................................28
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 1 of 26
1000 - General Requirements
1010 - General
.1. These Minimum Building Standards (Standards) have been developed by the City of
San Bernardino Economic Development Agency (EDA) for use on the Neighborhood
Stabilization Program (NSP).
.2. These Standards shall apply to all properties covered by the NSP.
.3. All materials, supplies, costs of permits, and labor to complete the specified
rehabilitation or repairs, shall be the responsibility of the BuilderlDeveloper unless
specified otherwise by the EDA.
.4. Any drawings or sketches which may be furnished by the EDA or required by the
Builder/Developer are intended to clarify or further describe the propert. Should the
Builder/Developer find discrepancies in, or omissions from, these drawings or sketches
or should he/she be in doubt as to their meaning, they should contact the EDA for
clarification. Because of the nature of work being done, some details of sketches or
drawings may be "typical" and grades, dimensions and exact existing conditions must
be verified at the property before commencing work.
.5. Any additional work that EDA want the BuilderlDeveloper to do should be done after
completion of the Rehabilitation work, if at all possible. A separate contract will be
signed between the EDA and Builder/Developer before the work is to start.
1020" Terminology
.1. When used in these Standards, the following definitions shall apply:
A. Install - The item referred to shall be installed with all necessary hardware, trim,
fillings, and material necessary to make ready for use. All material shall be new.
B. Replace - The existing item referred to shall be removed prior to installation of
the new item.
C. Trim - When used in conjunction with painting, includes roof vents and pipes,
eaves, molding, casing, underside of aU doors, and any items other than walls
and ceilings.
D. Rehabilitation - All repairs to or replacement of present elements of an existing
building, such as windows, stairs, flooring, or wiring: rearrangement of rooms by
the relocation of partitions or by the installation of new bathrooms and kitchens:
or the general replacement of the interior of a building. This mayor may not
include changes to structural elements such as floor systems, columns or load
bearing interior or exterior walls.
1030" General Quality Requirements
.1. In order to establish standards of quality, the Standards may refer to certain products
by name and/or catalog number. This procedure is not to be construed as eliminating
from competition other products of equal or beller quality by other manufacturers, at
approximately the same cost.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 2 of 28
.2. All material and each part or detail of the work shall be subject at all times to
inspection by the EDA, and the Builder/Developer will hold to the true intent of the
Standards in regard to - quality of material, workmanship, and the diligent execution of
the contract.
.3. Materials installed shall be of such kind and quality to ensure that the dwelling will
provide acceptable durability, economy of maintenance and adequate resistance to
weather, moisture, corrosion and fire. The EDA may request evidence of a material's
compliance with the requirements of the structure's plans and specifications and these
Standards. Product labels are considered acceptable evidence.
11 The FDA I11Ay ,equile I/,al the BUllder/Developel can l' oul a olllabililj' eva/11m/on
or r:onrfucr fi tllJ';ejm!} fissesHllenllo dcrerl11l11e If Ihe marella/s /u lJe useo conllAy
W,I/l anl' gleen stlalegies.
.4. All work shall be executed by skilled craftsman, experienced in their trade, and in
accordance with accepted practices of their trade. All work shall be of the highest
standards and methods.
.5. Unless specifically noted otherwise, all construction methods and materials used shall
conform to the California Building Code as adopted by the City of San Bernardino and
shall be done in accordance with any other ordinances passed and adopted by the
City of San Bernardino (i.e., zoning codes, fire codes, etc.). This includes all repairs,
finishes, fixtures, and new work.
.6. All plumbing and gas work shall be done in accordance with the Uniform Plumbing
Code as adopted by the City of San Bernardino.
.7. All heating and cooling work shall be done in accordance with the Uniform Mechanical
Code as adopted by the City of San Bernardino.
.8. All electrical work shall be done in accordance with the national Electric Code as
adopted by the City of San Bernardino.
.9. Where work involves colors, the Builder/Developer will provide the EDA with samples
of all colors for the particular item (roofing, stucco, paint, stain, flooring, etc.), and the
EDA will select the color and finish by initialing the color sample and state for
what/where it will be used (exterior, interior, fascia, soffit, trim, doors, ceiling, walls,
etc.). A maximum of three colors each may be selected for exterior and interior.
.10. If the EDA has agreed to correct certain specified existing code violations, which are to
be excluded from the work done by the Builder/Developer, the work on such violations,
if done at the same time the Builder/Developer is on the job, shall be coordinated by
the EDA and BuilderlDeveloper so as to provide for a smooth flow of the work.
1040. Substitutions/Alternatives
.1. The BuilderlDeveloper shall furnish a list of any proposed desired substitutions prior to
the signing of the contract.
.2. These standards are intended to encourage the use of new or innovative technologies,
methods and materials. Alternatives and non-conventional or innovative methods and
materials shall be equivalent to these standards in the areas of quality, durability,
economy of maintenance, operation and usability.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 3 of 28
.3. Certain conditions in the geographic area or on the site may justify modification of
specific standards, or make compliance with the standards impracticable or
impossible. In these cases, approval by the EDA is required.
1050 - Optional Green Building Practices
1 Builder/Developel$ ale fjncOurage"lo Incorporate dny green building practice thai
offel6 an oppoltum/y to CI eate environmentally soulld allo resoulce'fjff,c/en: buile!lI1gs
2 In all effon 10 encouragG moe!erl1. green buildinp. and energy-efficiency imiJlovem0nt6.
Blliloer/DeveloiJer.' we enGoUlagud 10 I/1co/pola/e liUO's Ileall/Jy /Jomes IIllerventror,,'
I/lcltidll1g tt/ese 6even ,Iepo< ensurillg I10118111g is made a"d Aepl.
A Ory' EnsU/& plOpel e!lfJ/nage away flom housing,' clean lep8/1 gutfU/B "fiG
rlownspoU/,. 'f!pai/ leaAs seal roofs and windows.
B. Safe. Inslall safely device~ on rlOors, cabmels. ."indow blinds amf oullefs.
prov,oe i-Idequal€ storage fOl all poisonous ,Iems oul of leacl; of c(didlen ane!
labeler/ln If;", prope, COI J/ainers. ms/all smoke aeteclo/s ano' cal bon monoxlCJe
(le/ecIOl~: l18ve appropllalP file extfl1g/lisl1els available
C Well-ven/it8Ied Service and mamlaln heating an(/ cool1ng sJ,stems' plO1'ICle
ext1"u.'1 fam fOI kllc;l,ens, bathroom and dlyels to Ine ouls/rle to IedUCe mold,
change fimlace fl/r""
D. Pes/.free P"MOC propel sI0("ge and disposal fOl (ood products. cautA and sf!ai
IJO/es. use leas/ lonc J.,esr rnanagemel/lmetflOds.
E Conra11ill1onl.fIH,.. Remov(, lead based palllt hazale!s ploperly' provide test Ail6
(olladol1: ,educe vo/rtflle: OIganic compounds m pam!, calpel. elC.
F Clean. II/sIal/ dUf./ wi-lf~-off sy~tems In entry ways: iJlovlde smooll1. cl..al1,,&le
slillaces. Dfol'lrie efff!<:Iwe SIOI age space and conta,nels: Cl100SG floormg Iha1 is
easy 10 clean.
G Well-m"il1/ameci Imoor/anl maintenance calelid81 fo, II1specfmg c/e81,;ng.
lepamng. rep/acIIIg "ousIng compoflents/systems
.3. 7 hroughoul tf1ese Slanofmfs, the EDA /las Inselle(J oppOl1unltles 111 IViJlct1 greu,
l'vildmg practlce~ can be achieved
1100 - Temporary Facilities and Temporary Controls
1110 - Site Usage
.1 . All temporary facilities and controls required for the project shall be provided by the
Builder/Developer.
.2. The Builder/Developer will provide daily clean-up of all debris related to the work of the
project as required. Provide a dumpster on site for the duration of construction for
disposal of construction debris. All work area(s) shall be left broom clean at the end of
each work day.
.3. Immediately, at the end of the work, the Builder/Developer shall remove all of their
debris, rubbish, refuse, and unused material from the property and street.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 4 of 28
.4. The BuilderlDeveloper will provide all temporary 6-foot high chain link safety and
security fencing for construction operations required for the work of this project.
Fencing shall conform to the following specifications:
A. 6-foot high chain link fence with 80% or greater green or black wind
screen/mesh.
B. Mesh shall be attached with hog rings.
C. Includes man and vehicle gates where required.
D. Gateposts shall be of size to accommodate the size of opening and its intended
purpose.
E. All gateposts shall be cored or driven into the ground.
F. Core holes shall be filled with concrete once temporary fence is removed. Slurry
seal all in Ale areas.
G. Fencing shall be set back beyond site work improvements.
.5. On-site materials pertaining to the project and partially completed roofs shall be
temporarily protected during inclement weather. It is the responsibility of the
Builder/Developer to maintain a watertight condition to prevent any water damage to
the building once the roof has been removed until it has been completely patched.
.6. The Builder/Developer shall provide temporary power as needed for the project.
7 PrOVide and mamli'lln dUSl ,;Od eroSion contloi througl1out the dUlation ot the work "nct
as required for the work of the proJecl.
.8. The BuilderlDeveloper shall provide protection, acceptable to the EDA. for any existing
surfaces or equipment that have been selected to remain.
.9 GREEN OPPORTUNITY: M/flilnin the site disturbance dUl/ng constructloll
A. Contro/the, inll,ad arGa IJ)! deSignating vehicle parking fal/her from the slle.
1:3 Store building :ncrel/[;I~ int'i,ie a garage or protected 81 ea
C Protecl all eXisting 1/(,6~ wllh fenCing 10 1I1c/ude the dl/p line 111 ;;n eflOll1O avoid
over cornpacfiof/ of the; MAl around the trees
1200. Project Closeout
1210 - Final Cleaning
.1. Prior to the final inspection, the Builder/Developer will provide final clean-up of the
building and property.
.2. Remove all plaster and paint smears and drops; clean all windows, screens, doors,
finished hardware and plumbing fixtures; polish all chrome, clean and polish all
countertops and floor covering; throughout entire house - new and/or old. Provide
cleaning of all exterior surfaces including walls, windows, landscape areas, driveways,
and walkways.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 5 of 28
1220 - Operations Manuals and Warranties
.1. The Builder/Developer will obtain and fill in all necessary information on all warranties
where applicable, for manufactured products, materials and/or labor used in
connection with the project. He/she shall deliver the original warranties to the EDA
where appropriate copies will be made and the original will be delivered to the EDA
upon completion of the work. Any sections that need to be sent to the manufacturer to
validate the warranty, will be mailed as soon as possible.
? GREEN OPPOR7UN17 Y ProvII1F opf:/ation Bnd mallJlenRnCf: lJl"nuals, an(1 perform
I/amillg olliser, /0 p/operly im:lllic/ them ()n The green fea/llles 01 the property ami
lIoVl' 10 mwn/am lhem
1230 - Systems Startup
.1. Prior to turnover of building, Builder/Developer will conduct testing and startup of all
equipment new and/or old for verification of functionality.
.2. Builder/Developer will ensure that all equipment components (such as filters, bulbs,
balleries) are replaced prior to turn over.
2000 " Building Sitework / Site Preparation
2010" Site Clearing and Demolition
.1. This work shall be executed in a safe, orderly manner, and in accordance with all
applicable codes.
.2. The Builder/Developer shall protect all existing materials and apparatus from damage,
and shall repair damage caused by workers at no cost to the EDA.
.3. Remove trees and plant materials, with EDA's approval, from areas to be cleared.
.4. Maintain protection of trees and plant materials which are to remain until completion of
work.
.5. Debris shall not be allowed to accumulate.
.6. Remove all unsightly trash and dangerous material (wood, metal, etc.).
2020 " Site Earthwork
.1. Placing of footings and foundations on earth fill will not be permitted. Fill excess cuts
under footings and foundations with concrete, and under slabs with tamped gravel.
.2. Excavations for footings shall be neat and accurately cut trenches to depths and
grades shown on drawings/plans. In the absence of drawings/plans, code
requirements shall govern.
.3. All grading around any structures shall have high spots lowered and low spots raised
to a minimum of 6" below top of floor slab; a minimum of 2' out with a slight slope from
structure.
.4. Site grading shall accomplish the following:
A. Allow drainage of surface water away from buildings and off-site.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 6 of 28
B. Minimize earth settlement problems.
C. Avoid concentrating runoff onto neighboring properties where erosion or other
damage would be caused.
D. Minimize erosion.
E. Minimize potential earth movement problems which might adversely affect
completed construction.
5 GREEN OPPOR7 UN!7 \' Glades mound Sllllclllles stml/ malmain ill/eas/" 5% sloDe
away flOm tile fOllnda/lon
2040 - Site Hazardous Waste Remediation
.1. The property shall be free of hazards which may adversely affect the health and safety
of the occupants or the structural soundness of the improvements or which may impair
the customary use and enjoyment of the property. These hazards include toxic
chemicals, radioactive materials, other pollution. hazardous activities, subsidence.
flood, erosion, expansive or compressible soils. inadequate drainage outfall, landslides
or mudflows. and deposition of suspended solids or others located on or off site.
Projects with potentially significant hazards may be acceptable if any such hazards are
effectively mitigated.
2100 - Site Improvements
2110 - Roadways, Driveways, and Walkways
.1. Surfaces and base courses for roads. streets, parking areas and walks shall be
durable materials. Their construction shall be in conformance with generally accepted
local design practices.
.2. Slabs for roadways, driveways, and walkways shall be designed and constructed in
accordance with standards set forth by the American Concrete Institute, and as may
be necessary to prevent slab damage due to potential soil movements.
.3. Provide for repairs and/or repairs of existing surfaces to match existing.
.4. These surfaces shall be installed with provisions for drainage. Adequate surface and
underground drainage systems shall serve all paving and improvements so as to
ensure continuing stable soil support for these improvements.
.5. Minimum width for driveways shall be 10', and sidewalks 3', if installed new; or if
replaced, to match existing if wider than 10'.
.6. All exterior concrete surfaces shall be a light broom finish with expansion joints
approximately every 12' (fiber material), with slope for drainage away from structure
and property.
.7. All flatwork expansion joints shall be filled with clear silicone sealant.
.8. Where soil and/or concrete for porches. steps and other work is in contact with
members, galvanized metal flashing, or solid sheathing and 15 lb. felt shall be
installed, or wrap and scratch coat applied.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 7 of 28
.9. (,RFclV OPPOR7UNITY Lirml waler runoff and ITIbximiz& Ilifilt'&t!onlJy avoIding
ImpervIOuS SUrfdC"'> and ills/ailing permeable d'8".,agfi area~ between SIdewalks,
c'riVf{WbYS, walkways, patio::', and patln.vays
A. Open Il1d/rix concrete grid pavel s.
13 Specialized honeycomb substf alef 101 91 avel or tw f.
C. Pelviuus mixes of COIJClete or o~ph8/t
2150 - Fencing
.1. Check all boundaries to ensure property lines are observed, and City Ordinances are
not violated (front yard, side yard, and back yard maximum heights).
.2. All post setting holes shall not be less than 24" deep and 6" diameter, at a maximum of
10' intervals. When adjacent to a foundation (walls), offset hole to obtain 24" depth,
and fill in any space larger than 2" between wall and post.
.3. Entrance walk gate shall be a minimum of 3' wide, and driveway gates a minimum of
12' wide; including all gate hinges and. padlock latch attachments.
.4. Wrought Iron
A. Posts to be 2" x 2" x .090 (16 gauge).
B. Top and bottom rails to be 1 )1," x 1 )1," (16 gauge).
C. Pickets to be '%" x '%" (16 gauge), 4" on center.
.5. Chain Link
A. All galvanized material.
B. 2-3/8" 0.0. end, corner, and gate posts.
C. 1-5/8" 0.0. line and corner diagonal posts.
D. 1-3/8" 0.0. top rail, with bottom tension wire.
E. 11 gauge - 2" mesh; to include all bands and wire ties.
.6. Wood Fence
A. All posts will be of galvanized material (unless otherwise specified).
B. 2-3/8" 0.0. end, corner, and gate posts.
C. 1-5/8" 0.0. line and corner diagonal posts.
D. Two 2 x 4 horizontal support rails.
E. Fencing as specified (redwood or cedar - minimum #2, two nails per rail).
.7. Block Wall
A. Shall be in accordance with the City of San Bernardino drawing on Garden &
Retaining Wall Standards available from the Building & Safety Department.
r
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 8 of 28
2150 - Landscaping
.1. All trees and shrubbery identified to remain shall be trimmed. Trim to property line and
a minimum of 4' above roofing or structure; removing all debris.
.2. All trees and shrubs identified to be removed shall be cut to surface. Remove stump
and roots a minimum of 8" below surface; removing all debris, and fill in hole with soil.
.3. Natural site assets such as existing trees, shrubs, ground cover, must be preserved,
maintained, and protected whenever possible.
.4. Any existing assets lost due to the construction efforts and/or lack of protection will be
replaced with like kind and size at the Builder/Developer's expense.
S GREEN OPPORTUNITY Cteale en"ilonments/lJ' I/lendly lawns and landscaping liy
A Covel play "rens Wilil wood ~h"viIlQ,<.
B LlInd 1he amuunt of fawn spacf U)" "1~"f;;llillg nalwaf/2ed plalllmgs
C Provide ai/emalive watel sources
o Pianl (froug/JI-/olelBl1llandscapAs.
f Plal1l s/18de trees 111 an effol1/o leduc.e Ihe coofmg loads lequ"ed IIllhe house
F ConSider ptantlrl9 ediblE: plants
G Use wftler-cOnservlflg ",.igri1km equiprnef11 where landscape IlHgatton is requheo
Dnp /l/Iga/lol1.
" Advancea Il"lIga1/on confrolt like 1'8//1 sensol s.
2200 Site Civil I Site Utilities
2210 - Utilities
.1. Underground piping and related items shall be protected from corrosion. Underground
mechanical and electrical systems shall be protectively coated to minimize corrosion
where soil conditions warrant. Where applicable, sacrificial anodes may be used.
.2. Sacrificial anodes may be used where soil resistivity does not exceed 15,000 ohm -
centimeters. Otherwise, an impressed current system of corrosion prevention shall be
used.
.3. Utilities and other facilities shall be independent for the property, without dependence
upon other properties.
3100. Selective Demolition
3110 - Building Elements Demolition
.1. This work shall be executed in a safe, orderly manner, and in accordance with all
applicable codes.
.2. The Builder/Developer shall protect existing materials and apparatus from damage,
and shall repair damage caused by workers at no cost to the EDA.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 9 of 28
.3. Debris shall not be allowed to accumulate.
.4. The Builder/Developer shall remove all flooring finishes identified to be removed or
replaced. Including abatement of any materials designated as containing asbestos.
.5. Provide all roofing membrane removal as required for the removal of existing and
installation of new roof, equipment, and connections.
.6. The Builder/Developer shall provide shoring of all existing beams/structures being
modified prior to removing existing bearing walls.
.7. Remove all interior and exterior doors and/or frames that are identified for removal.
This activity shall be coordinated with the EDA in an effort to not leave any openings
un-lockable.
.8. Remove all window stops/putty, glass, glazing, and frames as required. Provide
demolition of existing sliding glass doors scheduled to be replaced.
.9. The BuilderlDeveloper shall remove all structural and non-structural wood stud
/gypsum sheathing or wood stud / plaster partition walls, wing walls or portion of walls
determined to be removed.
A. All appurtenances identified to be removed / demolished on walls scheduled to
be removed/demolished shall be removed and disposed of by the
Builder/Developer.
B. Appurtenances identified to remain, shall be removed and re-installed by the
Builder/Developer.
.10. Any specific cutting and patching of drywall needed to install conduit or piping shall be
done by the Builder/Developer.
.11. The BuilderlDeveloper shall remove all wall surface material or portions thereof from
interior and exterior walls for new framed openings such as but not limited to doors,
windows, recessed electrical panels, louvers, HVAC grills and ducts, backing, etc.
.12. The Builder/Developer shall provide removal of all existing spayed on acoustical
(popcorn) ceiling texture. Provide for asbestos abatement as necessary.
.13. The Builder/Developer shall remove existing casework and countertops, backing,
anchors, bases, shims, backsplash, etc. identified to be demolished and disposed of.
.14. Doors and windows must be able to be locked at the end of each day, or provide a
temporary secure panel (approved by the EDA) closing the opening at no additional
cost to the EDA. This also includes providing a temporary secure panel at all wall,
door or window openings scheduled to be removed.
.15. Removal of Ceramic tile shall include removal and replacement of wall substrate and
any existing mortar bed.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 10 of 28
3120 - Hazardous Components Abatement
.1. The property shall be free of those hazards which may adversely affect the health and
safety of the occupants or the structural soundness of the improvements or which may
impair the customary use and enjoyment of the property. These hazards include toxic
chemicals, radioactive materials, other pollution, hazardous activities, subsidence,
flood, erosion, expansive or compressible soils, inadequate drainage outfall, landslides
or mudflows, and deposition of suspended solids or others located on or off site.
Projects with potentially significant hazards may be acceptable if any such hazards are
effectively mitigated.
.2. The Builder/Developer shall provide all labor, material and equipment required to
complete the work related to the Hazardous Materials Abatement as required.
A. Provide all labor, material and equipment required to abate and legally dispose of
off-site all Asbestos Containing Materials (ACM) and Lead Containing Materials
including but not limited to pipe fitting insulation (elbows/ends), roof mastic,
flooring, flexible joints, doors, door frames, plaster walls, sinks, ceramic tile, etc.
B. Provide for the proper removal and disposal of PCB Ballasts and Fluorescent
Light Tubes:
i. It is assumed that all ballasts not labeled "No PCBs" are considered to
contain PCBs and therefore must be treated as hazardous waste. The
Builder/Developer shall disconnect the ballasts (those not labeled "No
PCB's") from the fixtures and is responsible for proper disposal/recycling.
ii. Mercury is present in fluorescent light tubes, which may be present
throughout the project areas. Mercury is considered a hazardous waste
and will be disposed of properly by the Builder/Developer.
4000 . Foundations
4010 - Standard Foundations
.1. Includes excavation, backfill, compaction, and installation of all foundations.
.2. Concrete materials for foundations shall be in accordance with City of San Bernardino
standards and shall be approved by the EDA prior to placement.
.3. Includes all formwork and accessories for all cast-in place concrete and cement
concrete pavement with shoring, bracing and anchorage, form accessories, form
stripping, and proper layout, location. Provide proper temporary support/shoring (as
required and/or needed).
.4. Furnish and install all reinforcing steel bars, welded steel wire fabric, fabricated steel
bar, slip dowels, or rod mats for all on-site cast-in-place concrete and cement concrete
pavement. Provide and install all necessary accessories as indicated.
.5. All vertical reinforcing steel protection shall be installed in accordance with CAL OSHA
codes and regulations. Maintain said protection throughout the duration of
reinforcement installation and until enclosed by finish material.
.6. When replacing existing concrete with new, the new concrete shall have at least the
same reinforcement as the existing.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 11 of 28
7 GREEN OPPORTilNi7Y: Provioe foundat!(J/l wale/ management s)'slel/l
IJ GREFN OPPOf?7 UNO y. U610 cone/tIe II/al contain, a percentage of fly ast! in place
at pO/lland cemenl
4030 - Slabs on Grade
.1. Concrete mixture shall be made of a 1-2-3 mix with plastic cement, sand, and 3/4"
rock. Ready mix will be a 5 sack. Minimum 2500 psi.
.2. Slabs shall be constructed in accordance with ACI 302.1 R-80, Guide for Concrete
Floor and Slab Construction, and as may be necessary to prevent slab damage due to
potential soil movements.
.3. Vapor retarders and base course shall be provided for all interior concrete slabs to
which a finish flooring is applied.
A. Acceptable base course materials are gravel, slag, crushed rock, sand, cinders
and certain types of earth when approved by the local EDA. See ASTM C-33-90,
Table 2.
B. Base course material shall be clean, washed and free from deleterious
substances, consistent with ASTM C-33, with 100% of the material passing a 1"
sieve and less than 2% passing a #4 sieve.
.1. All concrete slabs shall be a minimum of 3 y," thick (additions, garages, driveways,
sidewalks).
.2. All interior surfaces shall be troweled smooth.
.3. Includes excavation, backfill, compaction, and installation of all slabs. Completely
furnish and install all concrete accessories, colors, finishes, forming, admixtures,
reinforcement joint sealers, and curing compounds in accordance with the
Specifications.
5000 - Superstructure
5010 - Framing I Wood
.1. Framing and wood construction shall be in accordance with the latest edition of the
National Design Specification for Wood Construction.
.2. A chemical barrier must be provided for structures built in those areas where termites
are determined by the EDA to be a hazard. A physical barrier will also satisfy this
requirement where the hazard is presented by subterranean termites only.
.3. Where required by the EDA Field Office, protection against damage by decay shall be
provided.
4 GREEN OPPORTUNITY Keep all untlealed 11'000 allea~t 12 inches above sOil In lieu
of the code required 8 inches.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 12 of 28
5100 " Exterior Enclosure
5110 - Exterior Walls
5111 - Stucco I Plaster
.1. The BuilderlDeveloper shall investigate the condition of studs and ceiling joist to be
sure framing members comply with appropriate code.
.2. Install or reset all electrical boxes to new surface level.
.3. Exterior angles shall be protected with woven or welded wire fabric of equivalent
strength, or corner bead.
.4. A surface inspection is required after sandblasting and before re-stuccoing by the
EDA.
.5. Application:
A. Portland Cement plastering work shall be three-coat work when applied over
metal and wire lath/wrap.
B. Scratch (first) coat: Apply with sufficient material and pressure to fill solidly all
openings in the lath/wrap, and to cover wall, and then scratch to rough surface.
Allow to dry a minimum of two days. (Example: complete scratch coat Tuesday,
start brown coat Friday).
C. Brown (second) coat: Apply after scratch coat has set firm and hard, bring out to
grounds, and straighten to a true surface with rod and darby; leave rough, ready
to receive finish coat. Surface shall not have variation greater than )I." in any
direction under a five-foot straight edge. Allow to dry a minimum of seven full
days before applying color coat. (Example: complete brown coat on Tues., color
coat not to start until following Wed.).
D. Finish (color) coats: Portland Cement and Lime Finish Coats - Apply over base
coats which have set and surface-dry; lay on well, double back and fill out to a
true, even surface. Thickness shall be 1/16" to 1/8", then texture as specified.
E. When structure is to have lath/wrap and stucco over existing siding, the
Builder/Developer is to remove door and window casing; trim out with metal
edging or stucco molding, and seal.
F. Exterior lath/wrap to be applied as per California Building Code.
G. Stucco Color Coat: La Habra, Bauer, or equal.
5112 - Exterior Insulation
.1. Materials used for insulation shall be of proven effectiveness and adequate durability
so as to ensure that required ratings concerning heat transmission, sound control and
fire rating are attained.
A. Manville, Owens/Corning, USG; or equal.
B. Proper sound Insulation shalllo" used at ali walls.
C GREEN OPPOR7VN17 Y: Use cellu/use if/sulal/olI.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 13 of 28
.2. Insulation in contact with the ground shall be installed so as not to be adversely
affected by soil, vermin and water.
.3. Shall be installed in accordance with Energy Conservation Standards administered by
the Building & Safety Division of the City of San Bernardino.
A. Allies:
A. If all exterior walls of house are not insulated, bring to R-38 rating (12").
B. If all exterior walls are insulated and/or new addition, insulate to R-30 rating (9").
C GREEN OPPORT UNITY AI/ attic spare~ iile to receflle msulatron
.5. Walls:
A. All exposed exterior walls and new addition, insulated to R-11 rating (3 y,").
.6. Water Heater:
A. If it has access from outside or in garage, install R-6 rating insulation blanket and
wrap all exposed water lines with pipe insulation.
B. GREEN OPPORTUNITY Prov/[!ll ;nl.W"fion al al/walel 11eatelS.
5113 - Caulking and Joint Sealants
.1. Materials used for caulking and sealants shall be suitable for the use intended, and
shall be compatible with the materials to which they are applied and with any finish that
may be applied over them.
5120 - Exterior Windows
.1. When required shall be made easily openable, replace sash cords and weights or
install spring loaded sash balances, as necessary.
.2. Windows and operating hardware shall be installed in accordance with the
recommendations of the manufacturer.
.3. When aluminum single hung or slider window(s) is required and the frames are not to
be taken out, use International Window Corporation, Keller, or equal (block frame), to
fit existing opening. Caulk window frame before installing, including necessary trim.
A. When new aluminum slider or single hung window(s) installation is required, provide
header(s), trimmers, flashing, International Window Corporation, Keller, or equal
(standard frame).
.5. Operating windows shall be manufactured units consisting of the frame, sill, sash,
weather-stripping, and operating hardware. Job site assembled windows composed of
frames and sashes made by different manufacturers are not acceptable.
.6. Glazing:
A. When replacing glass, thickness shall be as recommended by the manufacturer
for the specific use.
B. All bathroom windows shall be glazed with obscure glass.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 14 of 28
C. Glass set in wood shall be secured in place with springs or glazing points and
face puttied, wood and putty to be primed and painted.
D. Glass set in metal shall be secured in place with glazing clips, back and face
puttied with appropriate material, metal and putty to be primed and painted.
E. All glass shall be cleaned, with no cracks or rattles (new installation only).
F. Re-putty shall mean to replace all damage, loose, and missing putty.
7 VVeather-strlpping shall be properly h1ted to elim'nfl\e exce&Slve infiltration ot dust
snuw, or ram
.8. Screens:
A. Screens shall be installed on all openable windows.
B. When re-screening or new screens are required, they shall be aluminum frames,
aluminum screening; tight fitting and easily removed.
C. Nylon screens on newly installed windows and combination doors may be
acceptable, unless otherwise requested or stated.
9 If a wln,low of any kind musl be installed InlO thr, wet area utthe tub or shower
~urr()und ,t must
A COnlall' a Sill made of matenal that IS water 'mpermeable , such as marble 01
Corian. not tiled and grouted
B. Have a sill that is ran. flashed or s€aled
C Have frame made of mOlsture.tolerant maten'll
10. GREFN OPPORTUNITY' Replace exi,'rin9 ,,'I/1(/OI<'S and 'l!o""je new wmdows will; a
/dgh energy and /ow-e peri01l11anCe ralir/9
11 GREEN OPPORTUNITY PrOVide oWI,mgs. ol'"rhangs, or olher shading deVices OJ)
eXlerrOI windows
5130. Exterior Doors I Garage Doors
.1. All exterior doors will be wood or metal finish (no hardboard). Primed/painted or
stained/varnished.
.2. Doors shall be durable, installed in good operating condition, free of defects, latch
readily and lock securely.
.3. Doors shall fit opening and operate properly.
.4. All new door installation shall include new hinges and all necessary trim.
.5. Entry Doors:
A Exterior entry doors shall be side-hinged doors not less than 3 ft. in width and 6
ft. 8 in. in height.
B. 1 0/," solid core - Birch, Mahogany, Luan; unless existing jamb takes 1 3/8" door.
C. 3 each - 4" x 4" butt hinges, unless existing jamb takes 1 3/8" door, then 3-3 1'2" x
3 /'2" butt hinges.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 15 of 28
D. Exterior door frames shall be treated against decay.
E. Locks - Kwikset, Schlage, or equal.
.6. Garage Doors:
A. Steel frame construction.
B. Installing new garage hardware or replacement hardware shall comply with the
following safety notice:
... FOR YOUR SAFETY...
California State Assembly #772 directed the Commission of Housing and
Community Development to change the appropriate rules and regulations in
ways that, "ARE REASONABLY NECESSARY TO PREVENT THE DEATH OR
INJURY OF PERSONS OR DAMAGE RESULTING FROM THE BREAKING OF
GARAGE DOORS SPRINGS". (quoted from Assembly Bill #772)
7 WeaHler-str'ppmg shalllle applied to all e,leflor doors ana 1I11e"Or garage dOOr
.8. Weather-stripping shall be aluminum and vinyl. Install after surfaces are finished and
dry.
.9. Thresholds and door shoes shall be installed at all exterior doors and interior garage
doors and shall be aluminum thresholds, and aluminum/vinyl with drip cap door shoes
(channel type), sealed to be watertight,
.10. Exterior jambs will be rabbet type (fit wall thickness) and to include new wood (pine)
casing material. Replace stucco molding only if required.
.11. A safety door check shall be provided on all outward opening doors, including storm
and screen doors.
.12. Locking devices at doors and windows shall be as follows:
A. Each exterior doorway and each doorway leading to garage areas, terraces,
balconies, or other areas affording easy access to the premises shall be
protected by a door which, if not a sliding door, shall be equipped with a deadlock
using either an interlocking vertical bolt and striker, a minimum of 1.2 in. throw
dead bolt or a minimum 1/2 in. throw self-locking dead latch. Locks shall not
require the use of a key for operation from the inside.
B. All sliding doors, first floor and basement windows and windows opening onto
stairways, fire escapes, porches, terraces, balconies or other areas affording
easy access to the premises shall be equipped with a locking device. A sliding
door used as a main or service entrance shall be equipped with a keyed locking
device.
.13. Screens shall be aluminum/satin finish with latch set and pneumatic closure or equal.
.14. Security Screen - Jamb/frame will be l' 1/4" x l' 1/4" (18 gauge) with 3/4 x 3/4" center
framing (18 gauge) and heavy gauge metal screening. Combination (Bel-Aire) - Solid
core (no panels). 1 3/8" door, 3 - 3 y," x 3 y," butt hinges: 1 W Locks - Kwikset,
Schlage, or equal.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 16 of 28
5140- Flashing
.1. Flashing shall have a service life at least equal to that of the assemblies into which it is
buill.
.2. Counter flashing is considered exposed flashing and shall be constructed of sheet
metal.
.3. Alternate products or systems of bitumen-impregnated plastic or elastomeric materials
may be used for flashing if they are installed in accordance with the manufacturer's
recommendations and are acceptable to the EDA.
.4. All openings between wood or metal and masonry shall be caulked with a non-
hardening caulking compound.
5200 - Roofing
5210 - Roof Coverings
.1. Strip - Means to remove "all" roofing material to sheathing, with inspection of sheathing
prior to installation of new roofing.
.2. The Builder/Developer shall guarantee the owner to maintain the entire roofing, and
counterflashing in a watertight condition for a period of fifteen years.
.3. Shingles -
A. Shall be fiberglass of 151b. fell.
B. New metal 1 )1," drip edge and roof jacks (form over shingles, seal around all
pipes).
.4. Built- Up / Roll Roofing Cap
A. Roll roofing cap to be a minimum of gO lb. roofing paper and must bear a class
"C" UL listing.
B. One 90 lb. cap sheet to be installed over two layers of 15 lb. felt paper, saturated
with at least 20 lb. of hot mopped tar, between layers.
C. All base sheets to be well nailed with approved galvanized nails providing a
minimum 3/4" penetration into a firm solid sheathed surface.
D. New metal )I," drip edge and roof jacks.
[) GRFEN OPPORTUNITY Provrd6 lel16clive (Iugh'albedo) rooling system" will1 an
Energy SIal /allng.
5220 - Gutters and Downspouts
.1 Gutters and downspouts shall be proVidEd at all projects
.2. Gullers and downspouts - Shall be a minimum of 26 gauge galvanized metal, or vinyl
material.
.3. Gullers shall be sloped to downspout and supported a maximum of 3' apart.
.4. End caps, corner joints, splices, outlet tubes shall be soldered or have watertight
joints.
City ot San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 17 of 28
.5. Downspouts shall be fastened at top, bottom, and approximately every 6', and directed
to drain away from the structure.
.6. Downspouts shall be sized on the basis of 100 square feet of roof surface to 1 square
inch of leader. More or less leader area may be required by the EDA.
.7. Scuppers shall be installed at the outfall end of a valley for special roof designs, such
as "butterfly" roofs.
.8. Scuppers shall be installed for overflow of all roofs enclosed by parapet walls.
!=< GREEN Of'f'ORTUNITI P,ovlrie a simple r81111',oatel harve,'/mg system lor use Oil
IllIgBIIOIl.
6000 - Interior Construction
6010 - Partitions I Ceilings
6011 - Interior Insulation
.1. Materials used for insulation shall be of proven effectiveness and adequate durability
so as to ensure that required ratings concerning heat transmission, sound control and
fire rating are attained.
A. Manville, Owens/Corning, or equal.
B. GREEN OPPORTUNITY Use cellulose I/",,,ula/IOII.
.2. Insulation in contact with the ground shall be installed so as not to be adversely
affected by soil, vermin and water.
.3. Shall be installed in accordance with Energy Conservation Standards administered by
the Building & Safety Division of the City of San Bernardino.
6012 - Drywall
.1. When installation of drywall is specified, provide Y:," U.S. Gypsum wall board or equal,
unless otherwise specified.
/ GREEN OPPRTUNITY' Seleel ulywall proGue!s WI/h a hlgl; leeyc/ed cOIl/elll and tlSe
foping Inaterwls and joint compound wit/lOut h81nrdous Hdditl\./~s that aiu ;n (1ryillg 8110
selting.
.3. All joints and inside corners shall be taped; outside comers shall have corner bead
troweled with joint compound (a minimum of three coats, and smoothly sanded or
textured).
.4. If kitchen base cabinets, toilet or lavatory are removed, and the drywall is to be
replaced, it must be replaced with green board or equal.
.5. If tub surrounding drywall is to be replaced, it must be replaced with wonder (cement)
board.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 18 of 28
6 All wall surf8ce~ to IfJcelve cf-f8mic tile sholl receive wonder (cemen1) bo&rd 01 plas1er
in oCCOI dcll1ce with the 10110>-,ing:
A. Portland Cement plastering work shall be three-coat work when applied over
metal and wire lath/wrap.
B. Scratch (first) coat: Apply with sufficient material and pressure to fill solidly all
openings in the lath/wrap, and to cover wall, and then scratch to rough surface.
Allow to dry a minimum of two days (Example: complete scratch coat Tuesday,
start brown coat Friday).
C. Brown (second) coat: Apply after scratch coat has set firm and hard, bring out to
grounds, and straighten to a true surface with rod and darby; leave rough, ready
to receive finish coat. Surface shall not have variation greater than '(." in any
direction under a five-foot straight edge. Allow to dry a minimum of seven full
days before applying color coat (Example: complete brown coat on Tues., color
coat not to start until following Wed.).
6020 . Interior Doors
.1. Doors shall be durable, installed in good operating condition, free of defects, latch
readily and close securely.
.2. Doors shall fit opening and operate properly.
.3. All new door installation shall include new hinges and all necessary trim and hardware.
.4. Interior Hinged / Closet / Bathroom Doors:
A. Shall be side-hinged doors not less than 1 3/8" thick.
B. At least 2 each 3 Yo" x 3 Yo" butt hinges.
C. Locks - Kwikset, Schlage, or equal.
.5. Shower Door / Tub Enclosure:
A. Shower Doors - MAAX, Kohler, or equal. Seal around frame and walls.
B. Tub Enclosure - MAAX, Kohler, or equal. Seal around frame and walls
.6. Door stops installed at all swinging doors shall be solid (no coil springs).
.7. Interior jambs will be flat type (fit wall thickness) and to include new wood (pine)
material stop molding and casing (both sides).
7000 - Finishes
7010 - Ceramic Tile
.1. Install ceramic tile where identified.
.2. Ceramic tile to be American Olean, Dal-Tile, or equal.
.3. GREEN OPPORTUNITY US(] ceramic file viilf1 f1if)f1 recycled content.
.4. Submit a complete range of colors and types for the EDA's selection. One of each
color of type selected shall be retained by the EDA. All materials placed in the building
shall match such samples.
l
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 19 of 28
.5. Applications and installation of adhesive, primer, caulking compound, and prepared
grout when used, shall be as recommended by manufacturer of the tile and in
accordance with these standard specifications.
.6. Ceramic tile shall be applied over a water-proof surface only (cement or wonder
(cement) board).
.7. At showers, the top of step shall have slight slope into shower.
7020 - Floor Finishes
.1. The Builder/Developer shall provide all necessary floor preparation of existing surfaces
to properly receive new flooring material.
.2. Sub-flooring shall be a minimum thickness of 3/4" plywood or 1x boards.
.3. Underlayment shall have a maximum thickness 3/8" industrial particle board.
.4. Install all flooring per manufacturer's recommendation.
.5. Existing floor covering to be removed prior to installation of new floor.
.6. Provide underlayment when sub-flooring is in such a condition to warrant replacement.
Bathroom, kitchen, and laundry underlayment to be of water resistant material.
.7. Surfaces to receive flooring shall be clean, dry, smooth, even, and without defects.
.8. At Bathrooms, the toilet and lavatory cabinet shall be removed before flooring installed.
Reinstall toilet and cabinets.
.9. Install new baseboard or shoe after installation of flooring. If cove is required, it shall
be formed integrally of matching sheet material. Adhesives shall be as recommended
by manufacturer.
.10. Coat all concrete floors on earth grade with concrete primer as recommended by
manufacturer.
.11. Leveling compound and crack filler - As manufactured by Aetna Manufacturing
Company for concrete floors or equal.
.12. Linoleum (sheet goods) - FHA base cushioned, Armstrong - Cambray or equal.
.13. Vinyl Tile - Armstrong - Stylistic or equal.
.14. Carpet - 260z.
A. Base, HUD/FHA bulletin UP- 44c requirement.
B. Pad - 5/8" rebond high plush, HUD bulletin UP-72 requirement.
15. GREEN OPPORTUNITY. Provioe gl""I1"1 carpelll1g wch as:
A. I'rodur.;ts made from natU/al materials;
8 PlOduc/s /I-,al rio not contain resiriues from dyes and finis tieS used 1/1
manufacturmg;
C. Products that dO not he or; surface /reatmenls Ie repel slBiliS:
o PlOdlJUs wilh d0cumen/{ir} 10VI vac of/gassing.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 20 of 28
E f>lOduct; wIth ("911 recyclf2u contents
.16. Submit a complete range of colors and types for the EDA's selection.
7030 " Ceiling Finishes
.1. Ceilings shall be drywalled and painted. No sprayed on acoustical ceilings (popcorn)
will be allowed.
7040 " Painting
.1. Lead Content:
A. The definition states in part, "..... with respect to paint which is manufactured after
June 22, 1977, lead-based paint means any paint containing more than six one-
hundredths of one percent lead by weight (calculated as lead metal) in total non-
volatile content of the paint or the equivalent measure of lead in the dried film of
paint already applied".
B. All contractors and sub-contractors on rehabilitation activities will comply with the
Lead-Base Paint Regulation under 24 CFR Part 35, requiring:
i. The prohibition of the use of lead-based paint in the rehabilitation of
properties;
ii. The elimination of immediate lead-based paint hazards in residential
structures.
.2 /,11 paml shall have low vac levels.
.3. If exterior painting is required, caulk all exterior door and window frames to seal
completely. Remove all loose and deteriorated putty on windows and re-putty before
painting. When painting of exterior trim is specified, this shall include doors, windows,
all frames, eaves, soffits, porches and all appendages.
.4. If a paint to be used on exterior surfaces is not inherently mold resistant, a suitable
fungicide shall be included in the formulation.
.5. If repair of exterior surfaces is indicated, remove all broken and loose material by
raking out, scraping and sanding if necessary. Repair with proper material for area
being repaired, blending in with texture of area being repaired. Prime the repaired area
prior to painting.
.6. If interior painting is indicated, repair all cracks by "V" scratch approximately 1/8" X
1/8" in walls and ceilings of all rooms being re-painted. Use proper type of patching
material for areas being repaired. Fill all cracks and holes solid and blend in repaired
areas with texture of surface being repaired. Prime cracked areas prior to painting.
When painting of walls and ceilings of a room is specified, this shall include all trim,
windows and door frames, closets, and cabinets (inside).
.7. All surfaces to be painted shall be free of dirt, dust, grease before painting is started.
All knots, pitch streaks, and sappy spots shall be first sealed with shellac or sealer
approved for use with materials as specified, before subsequent coats are applied.
Each coat shall be allowed to dry before subsequent coat is applied.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 21 of 28
.8. If it should become necessary, in order to give good coverage because of surface
condition of the paint color(s), it is the obligation of the Builder/Developer to apply
sufficient coats to obtain complete coverage.
.9. All new drywall shall be primed with one coat of Drywall Sealer/Primer before the
application of the finish coat, unless otherwise specified.
.10. Paint to be Dunn-Edwards, Glidden, Sinclair or equal. EDA to select color(s) and
finish.
, 1 l.Jalnl IOf kitchen service "I pa, balhroom(s) to be a durable and washable gloss tlnlsh
("nle,s, EUA req\J(;,ts a sPIllI.gloss)
.12. Stain - Exterior/interior application (Minwax, Behr, or equal).
.13. Varnish - Exterior/interior application (Behr, Varathane Elite, or equal).
.14. Spar gloss or satin, EDA to specify (Behr, Varathane Elite, or equal).
.15. Spar gloss or satin, EDA to specify (Behr, Varathane Elite, or equal).
.16. Paint application shall consist of two coats on old material, and three coats on bear
wood or new material. The top and bottom edges of interior doors shall be sealed
(painted or varnished) with one coat, exterior doors with two coats.
.17. Application of paints, stains, or other coating systems shall be in strict accordance with
manufacturer's directions and shall comply with the following:
A. Exterior Wood Siding, Millwork and Trim
i. Knots, resinous wood, and nail holes shall be sealed with a prepared
sealer or aluminum paint prior to puttying and priming. Any nail holes or
cracks in surfaces to be painted shall be filled with putty.
ii. A prime coat shall be applied to all surfaces to be painted before or
immediately after installation. Primer shall be formulated specifically for
application to unfinished wood. Finish coats formulated to serve as
primers may be used.
iii. One of the fOllowing finish systems shall be applied. Coverage shall be
that which will provide at least the minimum thickness recommended by
the manufacturer.
a. Oil paint systems.
b. Latex paint systems.
c. Pigmented stains as per manufacturer's directions.
d. Clear penetrating preservatives or water repellent finishing
systems.
iv. The top and bottom of exterior wood doors, casement sash, awning sash
and the bottom of double hung sash shall receive two coats of paint or
sealer.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 22 of 28
v. Prior to erection, all edges of vertical siding shall be sealed with a heavy
coat of house paint primer, water repellent stain, exterior aluminum house
paint or sealer. Wood batten strips shall be backed-primed or sealed.
B. Wood Shingles, Shakes, Rough-sawn Siding.
i. Two coats of oil stain, pigmented oil stain, or an oil shingle paint shall be
applied.
C. Hardboard and Softwood Plywood Siding.
i. These sidings shall be finished in accordance with the manufacturer's
direction.
D. Wood Porch Floors and Decks.
i. One coat of primer and two coats of floor and deck enamel designed for
exterior use shall be applied. Joints between floor and wall shall be
caulked.
E. Unfinished Surfaces.
i. Shingles and board siding of vertical grain cedar, redwood and bald
cypress may be left unfinished.
F. Exterior Concrete Masonry Units or Concrete Brick
i. At least two coats of masonry paint shall be applied.
ii. Concrete masonry units or concrete brick, except small areas of
foundation walls, shall be painted to provide a water resistant finish.
iii. High density concrete brick or solid split block forming the outer face of
double unit walls (veneer, cavity walls, etc.) may be left unpainted when
acceptable to the EDA.
G. Exterior Galvanized Steel or Iron
i. Field painting shall consist of two coats. One coat shall be a primer
formulated specifically for galvanized surfaces, and the second coat shall
be a finish coat. A finish coat formulated to serve as a primer may be
used as the first coat.
H. Exterior Steel, Iron or Terne Plate
ii. Steel or iron, except stainless steel, weathering steels, or steel treated
with coatings to provide corrosion resistance, shall be painted.
iii. A rust inhibitive primer and a finish coat shall be applied.
I. Interior Millwork and Trim
i. All mill work and trim, including windows; interior doors; window, door and
base trim; paneling and closet shelving and trim shall be finished by
painting or natural finishing.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 23 of 28
ii. If the surface is open grain wood, it shall be filled or sealed to prevent the
grain from rising. Surfaces shall be treated with a primer. One or more
finish coats shall be applied to provide a smooth surface and good hiding.
iii. Natural finishes include stain-wax, stain followed by one or more coats of
varnish. clear coats of varnish with or without wiped paint undercoats or
oil and wax finishes.
J. Wood Floors
i. If flooring is open grain wood. one coat of filler shall be applied. All
excess shall be wiped off.
ii. Flooring shall be finished with:
a. One or two coats of penetrating sealer and one coat of wax: or
b. Two coats of varnish and one coat of wax; or
c. Two coats of polyurethane; or
d. One or more coats of factory-applied finish.
K. Interior Plaster and Gypsum - Walls and Ceilings
i. Plaster surfaces may be painted, covered or left unfinished. except for
surfaces of kitchens and baths. If painted. a finished coat shall be applied
over a primer-sealer. unless finish coats are of the self-priming type.
ii. Gypsum wallboard shall be covered. If painted. one coat of wallboard
sealer shall be applied unless finish coats are of the self-sealing type.
Two finish coats shall be applied over the sealer. One finish coat, except
in kitchen and baths. may be acceptable if good coverage is obtained.
L. Interior Metal
i. Non-ferrous metals or wrought iron may be painted or left unfinished.
Other metals shall be painted in accordance with 609-3.4.
M. Interior Concrete Floors
i. If painted, at least two coats of resin emulsion paint, a solvent rubber
paint or a floor and deck enamel shall be applied. If oil paint is used, the
surface shall be neutralized before painting.
ii. A coat of wax shall be applied over paint. stain or an integral finish.
N. Wall Coverings
i. Covering material shall be secured to a suitable base in accordance with
the manufacturer's directions.
ii. All rooms that have new wall covering installed will include molding, trim.
base. and painting (if required).
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 24 of 28
8100 - Furnishings
8110 - Carpentry, Cabinets, and Millwork
.1. All manufactured factory finished cabinets shall comply with ANSI A161.1-86,
Recommended Minimum Construction and Performance for Kitchen and Vanity
Cabinets, or with an equivalent standard.
.2. Workmanship: All interior wood finish, cabinet and casework shall be smooth dressed,
well sanded, and thoroughly cleaned before priming. All material showing machinery,
sandpaper, or other defacing marks will be rejected. Interior wood finish or cabinet
work shall not be installed on newly plastered walls until the plaster in that section is
reasonable dry and approved by the EDA.
.3. All interior wood finish, doors, frames, and other cabinet work or fixed wood equipment
shall be properly installed, level plumb, and true. Members shall be neatly and
accurately scribe in place, maintaining full lengths without splicing, except where the
use of full lengths would be impractical or impossible, and then if joined, butt joints
shall be beveled. Replacement and installation of new trim or molding shall match
existing in size and profile or otherwise be reasonably appropriate upon finished
installation.
.4. All cabinets (kitchen base and wall, bathroom lavatory, etc.) shall be a minimum of
birch plywood construction (stain grade quality), shop fabricated casework, with all
necessary hardware. Shelving shall not be less than 3/4" pine, plywood, or particle
board. Kitchen base cabinets shall have a built-in bread board.
.5. All cabinets and trim shall be scribe to contacting surfaces and shall be straight. plumb
level and in true alignment, closely fitled, and rigidly fastened in place.
.6. Countertops:
A. Top material shall be phenolic laminate, vinyl plastic covering, ceramic tile,
stainless steel or other material suitable for its intended use.
B. The top material shall be securely bonded to a reinforced steel core, to 5/8 in.
plywood, or to any other equivalent material.
C. At least a 3 in. back and end splash shall be provided against all abutting vertical
surfaces which are not water and grease resistant. When a back splash is
omitted, the joints at the juncture of the counter top and vertical surfaces shall be
tight and sealed.
D. All edges, including the sink and any built-in surface units, shall have a non-
corrodible metal molding or other suitable edging.
E. High Pressured Laminated Plastic (Fonmica or equal) - Shall be constructed with
a bullnose front edge, minimum of a standard back splash where it abuts walls,
and full length of cabinets. If laminated plastic ends at wall, provide end splash
(material must be identical to counter top original color). Scribe and closely fitled
to adjacent work, and securely anchored to cabinets. Installation of sinks shall
have required mounting flange and sealed against leaking. No butcher block
unless otherwise requested or stated by the EDA.
r
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 25 of 28
F. Ceramic Tile - Shall be applied over a plastic cement base secured to 3/4"
exterior plywood secured to the cabinets. Raise front edge, minimum of a
standard back splash, and sealed at edges of full length cabinets. (See Ceramic
Tile Specification).
G GREI:N OPPORTUNITY Counter/ops sh&1/ /)e made 01 n61uIA/Q0l16 (gliJr1Ite).
We6. Of m&IIulacfUlftd soltd St,dace6 (Colian).
.7. Interior woodwork:
A. Trim (DF) "B or better".
B. Shelving - Particle board or #2 shelving.
9000 - Plumbing, Mechanical, Electrical
9010 - Plumbing Fixtures
.1. All fixture installation is to include trap, vent, faucets, and all trim necessary to mount
fixture in an approved manner, and to include repair of damaged areas affected by the
installation. When kitchen or lavatory faucet is replaced, it will also include risers.
Replace all angle stops.
.2. Fixtures:
A. Water closets - Deep bowl (round or elongated per EDA request). American
Standard - Hydra; Eljer - Titan: Kohler; or equal. Handicap (17" high). Must be
rated at no more than 1.6 gallons per flush.
GRFEN OPPORT UN/7 Y Use 01 a hlgh'efflciency lo/Iel 1!.a1 u'u 18"S
IIlal1 1 (; gal/OilS pel //usl1ls lecommended.
B. Bathtubs - S' pressed steel- American Standard: Kohler, or equal
C. Lavatories - American Standard, Kohler, or equal.
D. Kitchen Sinks -Single or double compartment enameled cast iron - Kohler or
equal: Single or double compartment stainless steel (7" depth, 20 gauge
minimum thickness) - Sterling or equal.
E. Garbage Disposal- Insinkerator - Badger 2, y, HP (3 year warranty) or equal.
F. Laundry Sinks - American Shower & Bath, or equal.
G. Faucets
i. Lavatory - Delta, Peerless, Kohler, or equal.
ii. Tub/Shower Diverter - Price Pfister, Kohler, or equal.
iii. Shower - Price Pfister, Kohler, or equal.
Iv GREEN OPPORTUNITY. ProVide low 1/01'1 laucets and shower heads 01
1'1 slandard laucltls Wlttl a flow reducmg aeralor
H. Bathtubs - S' Lasco; Hess Co: or equal.
I. Tub Wall Kits - Plaskolite, Elite; Nova, Seville: or equal.
J. Shower - Lasco, or equal.
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 26 of 28
K. WATER HEATERS:
i. Shall be Reliance; Galaxie; Whirlpool; or equal, with an eight (8) year
warranty. Size shall be as required to service property.
ii. All shall have pressure/temperature relief valve with a drain line to the
outside; or if located on a concrete floor in center of house -
pressure/temperature relief valve and drain line shall be installed per
Building and Safety requirements.
iii /\11 ur1l1~ sllall be secured to walls.
iv. All units shall be insulated.
v GI~[FN 0PPorn UNI1Y Walel I/ealel should liaVe a 1",,11-efficiellcy
lal;r;9.
9020 - Domestic Water Distribution
.1. Each dwelling shall be provided with a continuing and sufficient supply of safe water
under adequate pressure and of appropriate quality for all household uses, and one
that will not impair the functioning or durability of the plumbing system or attachments.
.2. Connection shall be made to a publicly owned or publicly controlled water supply
system that is adequate to serve the demands of the project.
.3. Provide all connections to risers or fixtures from top to mains so that the entire system
can be drained at low point.
.4. Provide hot water supply to all fixtures except water closets.
.5. Support piping from the building structure by means of hangers to maintain required
grading and pitching of lines and to prevent vibration.
6. GREEN OPPOr?TUNIT Y All 1/01 walel Imes shall be illsulaleo.
7 GREEN UPPORTUl,!ITY' Cons/del the use of PEX pipmg.
S GREEN OPPORT UNITY Ploll/de a s;ngle-ll1row shul-off va/,'e;;l Wrvl(.C to clnU1es
wrishu IQ nlaCf /fIleS (f mGclune located at)ove a livable space provit1G;:' f/vol e1, am fInd
shO\'l,et patl undw lh6 Vl;&~hlflg machme.
9030 - Sanitary Waste
.1. Roto Root (clean) all drain lines to street through clean-out cap, roof vent, etc.
.2. Each dwelling shall be provided with a water-carried system adequate to dispose of
domestic wastes in a manner which will not create a nuisance or endanger the health
of the occupants or the public.
.3. Connection shall be made to a publicly owned or publicly controlled system that is
adequate to serve the needs of the project.
"I
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 27 of 28
9100. Heating, Ventilating, and Air Conditioning (HVAC)
9110 - Heating and Ventilating
.1. Heating and ventilating equipment shall be Trane; Bryant; Carrier; or equal, as
appropriate to the situation.
;; GREEN OPPOR7 UNI1 Y EqUipment should bG r8ted &S 1119'1 eff,,,clency.
GREEN OprOFd uNIT Y. Evaluate eXlsling hearing and ventilatIon ~ystR'" &lId down
S'26 or recOil figw b to l>e ,-nore effIcient Do nOl ovel sue equipment
4 GREEN OPPOR7 UNI7 \' Conslde/alion should be given to [/5/119 equlpmellt Illal
ptov'/oes alt(;(na1i\les 10 c(;n\lf:~l1tionHllefllgeranl such as non 0201i6 (1etJiofll19 HFC
refrige,,,nts
6. GREEf/ OPPUR7 UNIT)' PCOIi,de ceii/ng fans 1/1 bed loom' and IWlng spares
.6. Provide wall thermostat with complete vent system, attic shield, roof jack, and gas
piping/shut-off valve.
( GREEN OPPOR7UN17 I' In.'',,,, ploglal/1/11able rhermostats I'mh (10Tll diw1i/nc ;,nd
I1Igh(I/I1'" setflar.ks S"par"tc comrol 01 (1lfferent spaces m/o zones SG 1/)"111", Wi/I
workS mOl t f!fff(;I(,fj1Iy
8 GREfN OPPORTUNITY PlOvlde dUCI clea/1mg pno/ 10 turn over
.9. Install in an approved manner and location.
.10. Crawl Space Ventilation:
A. The space between the bottom of the floor joists and the earth under any building
(except such space as is occupied by a basement or cellar) shall be provided
with a sufficient number of ventilating openings through foundation walls or
exterior walls to ensure ample ventilation. Such openings shall be covered with a
corrosion-resistant wire mesh with a mesh size not greater than 1/2 in. nor less
than 1/4 in. in any dimension. The minimum net area of ventilating openings
shall not be less than 1 sq. ft. for each 150 sq. ft. of crawl space area.
B. One ventilating opening shall be within 3 ft. of each corner of each building where
such openings are required.
.11. Attic Space Ventilation
A. Cross ventilation shall be provided for each separate space. Ventilation
openings shall be protected against the entrance of rain and snow.
B. The ratio of the total net free ventilation area to the area of ceiling shall be not
less than 1/150, except that the ratio may be 1/300 if:
i. A vapor retarder having a transmission rate not exceeding one perm is
installed on the warm side of the ceiling;
ii. Between 25 and 50 percent of the required ventilating area is provided by
vents located in the eaves or cornices with the balance of the required
ventilation provided by ventilators located at least 3'-0. above the vents in
the eaves or cornices; or
City of San Bernardino
Economic Development Agency
Neighborhood Stabilization Program
Minimum Building Standards
Page 28 of 28
iii. The attic space is accessible and suitable for future habitable rooms or
walled-off storage spaces have at least 50% of the required ventilating
area located in the upper part of the ventilated spaces as near the high
point of the roof as practicable and above the probable level of any future
ceiling.
9200 - Fire Protection Systems
9210 - Fire Protection Specialties
Provide "1110k6 delfictr,rs thai are U.L. approved, rlfst Alert SAI50L 1. or equal. Hard
wife will "ave baller,' back-up
? GREEN OPPORTUNIT)' Provicie falboll mOlloxlde detectors
9300 . Electrical Systems
9310 - Electrical Service and Distribution
.1. When required. provide a new electrical service boxlmeter. All existing circuits shall
be checked out and split as required. All new loads, outlets. lights. etc" must be on
additional circuits, unless prior approval is received from the EDA.
.2. Electrical Service installed at location shall be as recommended by Edison Company.
.3. Check all services and verify all electrical service, circuits (marking panel if not done);
replacing all faulty outlets, switches. damage and missing cover plates; for house and
garage.
.4. When encountering non-complying wiring, it is to be removed in its entirety. This is to
include boxes, lights, old panels (unless used for junction box), etc.; and to include
repair, patching, and painting of all areas affected (to match existing) .. ceilings, walls,
etc. All new wiring shall be concealed within walls, ceilings unless approval from the
EDA is obtained prior to installation.
.5 GREEN OPPOFlTUNI7 v All bulbs ~haf/ be fluorescent No mcandeswnI "911110g w!l!
be allowed
6 GRE E IV OPPOR 7 U/JITl-'. A v0rd lecessecf !lghtmg. When I eqUlreo use /fiSulc.l/on-
conlael fi~fule5 filii! ;:ealllg1lfly iind allow ill~ulatloll to be packed ag;,i',~1 flwp,
7 GREEN OPPORTUfJl7 Y If/stall dimmer swilches al alllilling areas. Re,q'oo1l1~ sl1811
have motion defector swifcrws.
8 GREEN OPPORTUNITY: 1,1/ 10"," voltage (Ielephone, dala. teleVision) sllal/ be run in
conduits 10 provide lor lulum expansion and/ol leplacemenl
t R45. Continued.
(Community Development Commission)
B. Resolution of the Community Development Commission of the City of
San Bernardino accepting the delegation of administration and
management for the use of the City of San Bernardino Neighborhood
Stabilization Program ("NSP") Funds in accordance with the Housing
and Economic Recovery Act of 2008.
C. Resolution of the Community Development Commission of the City of
San Bernardino approving and authorizing the use of Low and Moderate
Income Housing Funds and Neighborhood Stabilization Program
("NSP") Funds through a certain Master Agreement by and between the
Redevelopment Agency of the City of San Bernardino ("Agency") and
Mary Erickson Community Housing, Inc. ("MECH"), pursuant to the
Neighborhood Stabilization Program.
No Action Taken
MOTION: That said resolutions A - C, be adopted.
Approved
MOTION: That the matter be continued to July 6, 2009.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
END OF COMMUNITY DEVELOPMENT COMMISSION
PLANNING ITEMS
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
CONTINUED FROM JUNE I, 2009
Development Services
46. Appeal Hearing - Conditional Use Permit No. 08-21 (Appeal No. 08-07) -
Appeal of the Planning Commission's denial of a Conditional Use Permit to
convert an existing 6,747 square foot church building into a 56-bed homeless
shelter with related support facilities and office space located at 840 North
Sierra Way in the RM, Residential Medium, land use district. (Backup
distributed on March 16, 2009, Item No. 24; item continued to April 6,
2009, Item No. 36; item continued to April 20, 2009, Item No. 47; item
continued to May 18, 2009, Item No. 28; item continued to June 1, 2009,
Item No. 38.) Ward 1
Owner:
Faith Temple AP Ministries
840 North Sierra Way
San Bernardino, CA 92401
I
! -4f ~5S-
j(r.o{o1
(Item Continued on Next Page)
24
06/15/2009
.
Community Development Commission
B. 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 a Construction Contract by and between the
Agency and Inland Building Construction Companies, Inc., for a fire
sprinkler and Fire Suppression System at the California Theatre (Central
City North Redevelopment Project Area).
Adopted CDC/2009-27
Approved
MOTION: That said resolutions A and B, be adopted.
Recommended for approval at the Redevelopment Committee meetin~ on
May 7,2009 - Committee Members Present: Johnson, Brinker
R44. 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 (I)
the Termination Agreement of the HOME Grant Agreement dated December
19,2005, by and between Mary's Mercy Center, Inc., and the Agency; and (2)
the 2009 Low and Moderate Income Housing Funds Grant Development
Agreement by and between Mary's Mercy Center, Inc., and the Agency for
Veronica's Home of Mercy II transitional housing project (IVDA
Redevelopment Project Area). (See Attached) Ward 1
Approved
MOTION:
That said resolution be adopted.
Adopted CDC/2009-28
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Recommended for approval at the Redevelopment Committee meetin~ on
June 4,2009 - Committee Members Present: Johnson, Baxter, Brinker
R45. Mary Erickson Community Housing, Inc. ("MECH") - Delegation and
authorization for the implementation of the Neighborhood Stabilization Program
("NSP") and approval of a certain Master Agreement between the Agency and
MECH (See Attached) Ward 7
Mayor and Common Council
A. Resolution of the Mayor and Common Council of the City of San
Bernardino approving and authorizing the expenditure of certain
Neighborhood Stabilization Program ("NSP") Funds pursuant to the
Housing and Economic Recovery Act of 2008 ("HERA") in accordance
with NSP Grant Number B-08-MN-06-0520 in the principal amount
equal to $8,408,558. (Resolution not available at time of printing.)
(Item Continued on Next Page)
23
06/15/2009
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT:
Mary Erickson Community Housing, Inc.
("MECH") - Delegation and authorization for
the implementation of lhe Neighborhood
Stabilization Program ("NSP") and approval of
a certain Master Agreement between the
Agency and MECH
DATE: June 9, 2009
Synopsis of Previous Commission/Council/Committee Action(s):
On June 4, 2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the
Mayor and Common Council and Community Development Commission consider this action for approval.
Recommended Molion(s):
(Mavor and Common Council)
A: Resolution of the Mayor and Common Council of the City of San Bernardino approving and authorizing the expenditure of
certain Neighborhood Stabilization Program ("NSP") Funds pursuant to the Housing and Economic Recovery Act of 2008
("HERA") in accordance with NSP Grant Number B-08-MN-06-0520 in the principal amount equal to $8,408,558
(Communitv Development Commission)
B: Resolution of the Community Development Commission of the City of San Bernardino accepting the delegation of
administration and management for the use of the City of San Bernardino Neighborhood Stabilization Program ("NSP")
Funds in accordance with the Housing and Economic Recovery Act of2008
C: Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the use
of Low and Moderate Income Housing Funds and Neighborhood Stabilization Program ("NSP") Funds through a certain
Master Agreement by and between the Redevelopment Agency of the City of San Bernardino ("Agency") and Mary
Erickson Community Housing, Inc. ("MECH"), pursuant to the Neighborhood Stabilization Program
----~-------------------------------------------------------------------------------------------------------.------------------------
Contact Person(s):
Project Area(s):
Supporting Data Attached:
Carey K. Jenkins
Phone:
(909) 663-1044
7th
N/A
Ward(s).:
o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s)
Funding Requirements:
Amount: $ 4.7 Million
Source:
$2.7 Million NSP Fund and
$2 Million Low and Moderate
Income Housing Fund
Budget Authority:
N/A
Fiscal Review ~
CRU DeJesus,
rim Administraf Services Director
Signature:
--------------.----------------------------------------..------------------.------------------------.--------------------.----------.,
Commission/Council Notes:
-.-.-------------------.---------------.---.-.--------------.-.--.--------------.--....--...-.------------..-.--.----------
P"~endas\COmm DevCommi!sion\CDC 2009\06-15-09 Mary EriclsonCommunily Housing,ln<:.. Ma\ter Agreement SRdoc COMM ISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: K
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
MARY ERICKSON COMMUNITY HOUSING, INC. ("MECH") - DELEGATION AND
AUTHORIZATION FOR THE IMPLEMENTATION OF THE NEIGHBORHOOD
STABILIZATION PROGRAM ("NSP") AND APPROVAL OF A CERTAIN MASTER
AGREEMENT BETWEEN THE AGENCY AND MECH
BACKGROUND:
On November 17, 2008, the Mayor and Common Council of the City of San Bernardino ("Council")
approved the City of San Bernardino Economic Development Agency's ("Agency") response to the
Neighborhood Stabilization Program ("NSP"). The Agency's plan for deploying the NSP Funds was
detailed in the Agency's "Substantial Amendment to the Fiscal Year 2008-2009 Annual Action Plan".
As described in this Substantial Amendment, the Agency plans to allocate its NSP award of
approximately $8.4 million among four different housing programs. These four programs are:
(I). Down Payment Assistance ($920,000);
(2). Housing Opportunities for Households at or below 50% of the Area Median Income ("AMI")
($2. I million);
(3). Acquisition, Demolition and Redevelopment ($920,000); and
(4). Acquisition, Rehabilitation and Resale of single-family residences, better known as the
Intermediary Services Program ($3.7 million).
The remainder of the funds shall be used to pay for NSP administrative costs. Of the four programs
mentioned above, only the "Housing Opportunities for Households at or below 50% of the AMI" program
("Rehabilitation Program") is reserved strictly for rental properties. The decision to restrict these funds to
rental housing was made for both strategic and programmatic reasons. From the programmatic
perspective, the U.S. Department of Housing and Urban Development ("HUD") requires that at least 25%
of a participating jurisdiction's NSP grant be used to address the housing needs of individuals and
households whose income is at or below 50% of the AMI. Given this restriction on the use of these
funds, the Agency determined from a strategic perspective that it would be best to use these funds for
rental housing rather than for homeownership units.
Rental is a better option for this category of funds because households earning 50% or below of the AMI
would more than likely struggle to adequately maintain a home for which they would be financially
responsible for maintenance and upkeep given the current depressed housing market. In order to make
the home ownership option viable for these types of households, the Agency would have to provide an
exorbitant amount of subsidy. Therefore, Agency Staff determined that these funds could optimally be
used to acquire and rehabilitate existing multi-family properties that could be rented out by professional
management to households whose income does not exceed 50% of the AMI. This enables the Agency to
provide affordable housing opportunities using NSP funding for this segment of the population.
P:\AgendasIComm De\' Commission\COC 2009\06-15-09 Mary Erickson Community Housing. Inc. . Master Agreement SRdoc
COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Al!enda Item Number:
rur
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 2
In addition, Agency Staff recommends the use of funds from the "Acquisition, Demolition and
Redevelopment" program ("Demolition Program") mentioned above, to acquire foreclosed, small, multi-
family properties that are beyond repair. In these cases, and unless said properties were already subjected
to a demolition only through the Code Enforcement Department, the Agency would opt to demolish the
structures and hold them for future housing redevelopment opportunities rather than rehabilitating the
properties.
Agency Staff has determined the best method for acquiring, demolishing or rehabilitating and operating
these properties would be through a non-profit corporation that could perform all of these functions on the
Agency's behalf. A non-profit corporation can acquire properties more efficiently than the Agency due to
its more streamlined organizational structure versus that of a public agency. Also, by having the non-
profit corporation acquire the properties on behalf of the Agency, the liability to the Agency is reduced
because it would not be the legal owner of the properties. There are many housing non-profits in the
community that have greater capacity than the Agency for rehabilitating and professionally managing
properties. Finally, the Agency is in the final stages of establishing an Agency-sponsored non-profit
organization that could be the title holder to certain properties acquired under the NSP, including those
properties that are demolished. Given all of these advantages, Agency Staff recommends having a non-
profit corporation acquire, demolish or rehabilitate and manage the properties under consideration.
Through the Agency's 2008 Notice of Funding Availability ("NOF A") the Agency identified a non-profit,
Mary Erickson Community Housing, Inc. ("MECH"), to perform the acquisition, rehabilitation and
management function for households at or below 50% of AMI. Since then, Agency Staff have visited and
inspected several of MECH's existing multi-family rental projects. Also, Agency Staff has reviewed
MECH's organizational structure and financial statements. Based on the due diligence performed by
Agency Staff, it was determined that MECH is capable of efficiently and effectively acquiring,
rehabilitating and managing multi-family rental properties on behalf of the Agency.
Also, Agency Staff has decided to utilize the National Community Stabilization Trust ("NCST") in
identifying the multi-family properties to be acquired under the Rehabilitation Program and the
Demolition Program. NCST is a national non-profit clearing house created for the purpose of assisting
public agencies to acquire foreclosed, residential properties on a wholesale basis from the larger banks.
NCST will be responsible for identifying foreclosed properties that are owned by banks within the City
and managing the acquisition process for those properties. NCST will not charge any fee to the Agency
for its services.
CURRENT ISSUE:
As a matter of implementing the Rehabilitation Program as described above, the Agency requests the
authority to enter into a Master Agreement ("Agreement") with MECH. The Agreement would give
MECH the ability to acquire foreclosed, multi-family rental properties on behalf of the Agency and
rehabilitate them, as determined by Agency Staff. The Agreement would also dictate the terms and
guidelines for the operation of the acquired and rehabilitated multi-family properties. Following is a
summary of some of the more important conditions that would be imposed on MECH for the acquisition
of these properties:
P:\Agendas\Comm Dev CornmissionlCDC 2009\06-15-09 Mary Erichon Community Housing, 1rK:.' Master Agreement SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number:
fL'Ir
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 3
(I). Each acquisition is subject to the administrative oversight by the Agency.
(2). Properties acquired must be within those census tract blocks within the City identified by the
Agency as being the most impacted by the foreclosure crisis, otherwise known as the "NSP Target
Zone".
(3). Properties acquired with NSP funding must be foreclosed and/or abandoned for at least 90 days.
(4). Properties must be obtained at a minimum discount of five percent from the current appraisal
value and in the aggregate all NSP acquired properties must be acquired at a minimum discount of
15% from the appraised value.
(5). All properties acquired for the purpose of rehabilitation must eventually be leased out to
households whose total income is at or below 50% of the AMI.
Given the urgency of community conditions, the opportune availability of funds and current real estate
market prices, there is now a perfect window of time in which to mitigate the negative housing conditions
currently affecting neighborhoods throughout the City.
Orf!anization Overview:
The overall mission of MECH is to promote the well-being of working families in Southern California by
increasing and preserving the supply of affordable housing. Established as a 501(c)(3) non-profit
organization, MECH is designated as a Community Housing Development Organization ("CHDO")
currently serving Orange County and parts of Riverside, Los Angeles and San Bernardino Counties.
MECH was founded in 1991 by its namesake, a retired school teacher who was devoted to the principals
of community participation and well-being. MECH established the first affordable housing complex in
San Clemente and has since grown to include multiple properties serving hundreds of working poor
families within Southern California. Specific affordable multi-family housing developments include:
(I). Acquisition and rehabilitation of a 24-unit multi-family property targeted to households at or
below 50% of AMI located at 25421 Cole Street in Lorna Linda, CA with the property currently
managed by Capstone.
(2). Acquisition, rehabilitation and resale of a total of 17 single family homes targeted to home owners
above 80% of AMI for the County of Los Angeles.
(3). Acquisition and rehabilitation of 22 units of scattered site multi-family housing targeted to
households at or below 50% of AMI in the City of San Clemente, CA with the property currently
managed by Del Mar PMC.
(4). New construction of 22 units of multi-family housing targeted to households at or below 50% of
AMI in the County of Riverside. This project is under construction.
P:\Agendu\Comm Dev Commission\CDC 2009\06-1S-()9 Mary Erick5Of1 Communit)' Housing.lnc_. Master Agreement SR doc
COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: ~
Economic Development Agency Staff Report
Mary Erickson Community Housing. Inc. - Master Agreement
Page 4
(5). Acquisition, rehabilitation and resale ofa total of 10 single family homes targeted to home owners
above 80% of AMI for the City of Corona Neighborhood Stabilization Program. This program
was recently launched.
The overall goal of MECH is to provide quality affordable housing for working families, promote the
economic self-sufficiency of their tenants through free Life Skills classes, transition tenants into
homebuyers, help transition residents' children into successful, productive adults and develop community
support for affordable housing. Since 2006, the Officers of the Board of Directors for MECH include
Susan McDevitt, Executive Director; Josh Anderson, President; Kathleen K. Loewy, Vice President; John
Gould, Secretary; Gerald Gibbs, Treasurer; and Jeanne Davis, Director at Large.
Proiect Overview:
The primary Project under this Master Agreement consists of the ac~uisition and rehabilitation of the 15
separate 4-plex apartment complexes located on the north side of 19 Street in the City identified by the
following site addresses: 2030, 2042, 2056, 2068, 2082, 2094, 2104, 2 I 18, 2134, 2 I 48, 2164, 2 I 78, 2 194,
2 I 96 and 2198 E. 19th Street. In addition, the Project will also include the 10 separate 4-plex apartment
complexes located on the south side of Sunrise Lane in the City identified by the following site addresses:
2205,2215,2225,2235,2245,2255,2265,2275,2285 and 2295 Sunrise Lane. Together, the acquisition
of these two blocks of four-plexes comprises the first phase ("Phase I") of the Project. Please refer to
Exhibit "A" that is the Site Map of the Project location and identifies the various Project activities.
Based on the terms and conditions of the Agreement, it will be the intent ofMECH to acquire title to each
of the 4-plexes through its own efforts either through direct negotiations with the current owners or
through negotiations with lenders for the purchase of the targeted properties. Acquisitions will be funded
with a combination ofNSP funds in the amount of $2.1 million, Agency Housing 20% Set aside funds in
the amount of $1 million and other available funds to be procured by MECH for the balance of the
Project. Please refer to Exhibit "B" that identifies the Preliminary Project Budget.
MECH will also be given the authority to negotiate for the other 4-plexes and vacant lots located in the
area generally bounded by 19th Street to the north, Sunrise Lane to the south, Guthrie to the east and
Argyle to the west. In this case, however, the purchase agreements and escrow documents for these 4-
plexes and vacant lots will then be assigned to the Agency or its designated non-profit corporation, as
assignee, to then close each of these escrows. This component of the Project is considered Phase 2
("Phase 2") and is also identified in Exhibit "A" of the attached map.
In order to provide safeguards to ensure that the Project will be developed as envisioned by the Agency,
after the acquisition of each 4-plex within the Project, MECH will not resell any of the acquired properties
without prior written approval of the Agency. Additionally, once MECH acquires a minimum of five (5)
separate 4-plexes on 19th Street and five (5) separate 4-plexes on Sunrise Lane, it will initiate a process
with the City to prepare and file an application for a new parcel map for these properties by creating one
legal parcel for 19th Street and one legal parcel for Sunrise Lane for all 4-plexes then owned by MECH.
Any subsequently acquired 4-plexes will be amended into the applicable parcel map on 19th Street or
Sunrise Lane so that separate 4-plexes or units within each 4-plex cannot be resold by MECH except to
another single property owner.
P:\AgenduIComm Dev Commi$sionlCDC 2009\06-1 5-09 Mary Erickson Community Housing. Inc_ - Master Agreement SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 06115/2009
Agenda Item Number: Il'l(
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 5
Though it will not directly acquire any of the properties identified as Phase 2 of the Project, MECH will
be given the right of first opportunity to undertake all or any portion of the redevelopment of this area
which is presently targeted for a senior citizens apartment complex and a single family owner occupied
housing development. Both of these conceptual proposals will be targeted to low and moderate income
households. After an adequate number of parcels have been acquired under Phase 2, the Agency will
allow MECH to submit a proposal for the development of the parcels under consideration which will be
reviewed by the Agency and negotiated in good faith by both parties.
In all instances MECH will identifY Eligible Properties and will negotiate purchase and sale agreements to
be approved by the Agency sponsored non-profit corporation that provide for a discount in purchase price
from the Current Market Appraised Value of no less than five percent (5%) for any individual property,
but a blended aggregate average discount of at least fifteen percent (15%). No property will be purchased
at a price that reflects a discount of not less than the required discount unless MECH obtains written
approval from the Agency Staff as the administrator of the program.
For those properties recommended for demolition, the Agency sponsored non-profit corporation will
acquire them and select the appropriate demolition firm to conduct such work from no less than four (4)
separate solicitations for service or it may utilize the existing pre-approved list of demolition firms
presently used by the City's Code Enforcement Department. This process will be overseen by the Agency
and will include provisions for environmental testing and demolition debris removal services.
Rehabilitation Process:
Once acquired, MECH will ensure that specific activities, goals and milestones are met with respect to the
overall rehabilitation process. Specifically, this will include the following:
(I). Secure the property including a locked perimeter fencing and board up of windows, when
necessary.
(2). Adequate property management including maintaining utility service connections and keeping the
interior and exterior appearance of each property in an attractive manner;
(3). Provide a total development budget and financing plan to the Agency for each property being
purchased. The budget estimate will include all costs associated with the development of the
property, including acquisition, labor and materials for rehabilitation work, contingency,
construction loan interest, construction loan origination fee, the general contractor fee and
overhead, marketing costs, relocation, lease-up costs, replacement reserves, permanent financing
origination fee, closing costs and developer fee. The financing plan will demonstrate all sources
of funds readily available for the acquisition and rehabilitation of each property to be purchased.
(4). Provide a timeline in the Agency's format for completion of the various steps involved in the
acquisition, rehabilitation and lease-up of these properties. The timeline will start from the point
that MECH enters into escrow for the acquisition of each specific property through the
stabilization of operations.
P:\Agendu\Comm Dev CommissionlCDC 2009\06-1 S-09 Mary Erickson Community Housing, Inc. . Master Agreement SRdoc
COMMISSION MEETING AGENDA
Meeting Date: 06/t5/2009
Agenda Item Number: f{ l/r
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 6
(5). Provide project management services for rehabilitation of projects, to include but not be limited to:
establishing a scope of work, identifying or obtaining the financing to pay for all labor and
materials, conducting weekly on-site project inspections, managing relationships with all sub-
contractors, verifying permits and City compliance, administering both conditional and
unconditional lien releases, advertising the apartments for rental through various local media,
conducting mass mailings targeted at potential renters, partnering with local churches and other
community groups to identify prospective Qualified Tenants, processing the rental application,
coordinating quick close of escrow and expediting lender requirements.
(6). Maintain adequate files for each property, ensuring compliance with all Agency and lender
requirements, all documents required to verify compliance with the Affirmative Marketing
Guidelines such as tenant waiting lists, copies of advertisements published in local and community
newspapers, etc.
ReVJlar RelJortinf! Requirements:
MECH will commit to an Agency-approved program to provide periodic monitoring of compliance of
each property being purchased under the Program. Additionally, within 30 days after the end of each
calendar quarter, MECH will provide a status report to the Agency Staff, City Council and the CDC
regarding the activities of MECH and progress made on overall NSP objectives. The report will detail,
among other things: (I) funds expended to date; (2) progress made on acquisition activities; (3) any
relocation that has occurred; (4) properties placed back into service; (5) properties in the process of being
rehabilitated; and (6) any unforeseen issues of a material nature.
Defaults and Remedies:
For the occurrence of any identified Event of Default by MECH, the City or the Agency, as an agent of
the City, can take any of the following remedies: (I) demand that the Event of Default be cured (if
curable) within 30 calendar days; (2) declare that any unused amount of NSP or other Agency funds be
immediately repaid to the City or Agency; (3) take any and all actions permitted by law that is necessary
to enforce performance and observance of any obligation, agreement or covenant of MECH under the
Agreement or any other related agreements; (4) suspend allowing MECH access to any NSP or Agency
funds unless the Event of Default (if curable) is cured: (5) demand reimbursement from MECH for any
payments made to it by the City or Agency for which the contracted work product was not satisfactorily
delivered; and (6) take possession of any material or other work product purchased or produced by MECH
for the Project.
Termination:
The Agreement may be terminated by either party for any reason by giving the other party fifteen (IS)
calendar days' prior written notice. The Agency will pay MECH for all work authorized by the Agency
and completed, prior to the effective termination date. In the event of a termination of the Agreement
because of performance, MECH will provide all documents, notes, maps, reports, data or other work
product developed in performance of the Scope of Services to the Agency, within ten (10) calendar days
after the effective date of the termination and without additional charge to the Agency.
P:\Agcrnias\Comm Ikv Commi5sionlCDC 2009\06-1 S..Q9 Mary Erickson Community Housing, 11lC. _ Master Agreement SR.doc
COMMISSION MEETING AGENDA
Meeting Dale: 06/t512009
Agenda Item Number: /-VI/
Economic Development Agency Staff Report
Mary Erickson Community Housing, Inc. - Master Agreement
Page 7
Compensation:
Compensation for services rendered will be derived from three separate activIties which include a
Developer's Fee, Property Management Fee and Residual Receipts Income from the operating cash flows
from the various Eligible Properties that comprise the Project once they are completed, leased and have
reached financial stability.
(I). The Developer's Fee will be included as a line item in the development budget for each property
presented to the Agency prior to its acquisition. The amount of Developer Fee will be equal to
10% of the Total Development Cost for each property as reflected in the Agency established
Development Pro Forma Template. The total development cost will be comprised only of those
approved line items that appear in the Development Pro Forma Template. A Developer Fee
Bonus equal to an additional 2% will be paid if MECH is successful in obtaining a cumulative
amount of at least one million dollars ($ I ,000,000) from financing sources other than the Agency
that can be applied toward the acquisition, rehabilitation, and/or operations of the properties
approved by the Agency Staff.
(2). The Property Management Fee will be included as a line item in the First Year Operating Budget
for each property presented to the Agency Staff by MECH prior to its acquisition and
rehabilitation. This fee will only be paid in the case where such a property is acquired for the
purpose of rehabilitating it, leasing it to eligible tenants and where there is adequate revenues
generated from the operation of the property to pay such a fee. This fee is negotiable and must be
approved by the Agency Staff prior to the execution of any individual development sub-
agreement, but in no event shall the Property Management Fee exceed 6% of any eligible
property's Effective Gross Income.
(3). The Agency is entitled to receive 50% of any surplus cash flow after all operating expenses and
debt service payments have been made on each property acquired, rehabilitated and placed into
service by MECH. This surplus cash flow is commonly called residual receipts income ("Residual
Receipts"). The remaining portion of Residual Receipts will be available to MECH as the owner
of the property. The distribution of Residual Receipts may vary between properties subject to the
terms and conditions negotiated by the Agency and MECH prior to the execution of any
development sub-agreement for each property.
Budl!et Request:
For activities associated with Phase I of the Project, the Agency Staff requests authority to utilize NSP
funds derived from the Housing Opportunities for Households at or below 50% of the AMI in the amount
of $2.1 million. In addition, the Agency Staff also requests that an additional $1 million Tax Increment
Housing Set-Aside Funds be made available for Phase I activities. As it relates to Phase 2 activities, the
Agency Staff requests authority for the Agency or its designated non-profit to use $600,000 in NSP
Demolition funds and $ I million in Tax Increment Housing Set-Aside funds for acquisition and
demolition purposes.
P:\Agendas\Comm Dev CommissionlCDC ZQ09\06.IS.09 Mary Erkk$On Community Housing. loc.. Master Agrccment SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 06/15/2009
Agenda Item Number: -YL
Economic Development Agency Staff Report
Mary Erickson Community Housing. Inc. - Master Agreement
Page 8
In those instances where a property needs to be acquired in order to complete the overall redevelopment
strategy but said property has not been foreclosed upon, and thus not eligible under NSP, Tax Increment
Housing Set-Aside Funds can be used for acquisition, demolition or rehabilitation purposes. This is
applicable to both Phases I and 2.
ENVIRONMENTAL IMPACT:
None.
FISCAL IMPACT:
There will be no fiscal impact to the City's General Fund. The services provided under the Rehabilitation
Program, the Demolition Program and the associated administration costs, will be funded either with $2.7
Million in NSP funds derived from HUD or $2 Million funds from the Agency's Tax Increment Housing
Set-Aside. As it relates to the $2 Million of Agency Housing set-aside, these funds are being allocated to
assist with NSP activities in the form of the Agency's Residential Revitalization line item in the
upcoming Fiscal Year 2009-20 I 0 Agency Budget.
RECOMMENDATION:
That the Mayor and Common Council and Community Development Commission adopt the attached
Resolutions.
EmU f.S"&nm Ek'b" m,,"",
P:\Agendas\Comm Dev CommissionlCDC 2009\06-15-09 Mill)' Eri~k50n CommLlnity HOllsing.lnc.. MastCT Agr<<ment SR,doc
COMMISSION MEETING AGENDA
Meeling Dale: 06115/2009
Agenda Item Number: l vr-
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EXHIBIT "B"
NEIGHBORHOOD STABILIZATION PROGRAM
19TH AND SUNRISE PRELIMINARY BUDGET (as of 06-09)
Phase 1 Phase 2
Funding Acquisition Acquisition
Source Rehabilitation Demolition Total
Current Funding
NSP1 (a) 2,100,000 600,000 $ 2,700,000
20% Housing Set-aside (b) 1,000,000 1,000,000 $ 2,000,000
Subtotal 3,100,000 1,600,000 $ 4,700,000
Future Funding
NSP-State (c) 2,000,000 $ 2,000,000
NSP2 (d) 650,000 400,000 $ 1,050,000
CDFI (c) 850,000 $ 850,000
20% Housing Set-aside (e) 4,000,000 $ 4,000,000
Subtotal 3,500,000 4,400,000 $ 7,900,000
TOTAL $ 6,600,000 $ 6,000,000 $ 12,600,000
(a) NSP1 funds have already been allocated to the City and are available for immediate draw down.
(b) RDA Housing set-aside funds have been budgeted for FY09-10.
(c) Requires Mary Erickson to submit an application for funding.
(d) Requires EDA to submit an application for funding.
(e) Based on receipt of future 20% housing setaside funds (FY1 0-11 and FY11-12).
1
2
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4
5
6
7
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
10 Approval and Grant Agreement duly executed by and between the City and the United States
11 Department of Housing and Urban Development ("HUD") as NSP Grant Number B-08-MN-06-
12 0520;and
13
WHEREAS, the City intends to authorize the Redevelopment Agency of the City of San
14 Bernardino (the "Agency"), pursuant to this Resolution, to administer all such NSP Funds as shall
15 be received by the City pursuant to said NSP Grant and to otherwise provide for and administer the
16 NSP program that shall be undertaken within the City by the Agency as required of the City under
17 the Funding Approval and Grant Agreement; and
18
WHEREAS, the City recognizes that various non-profit corporations, whether controlled by
19 the Agency or which are independent of the Agency, will be acquiring title to single-family
20 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
21 the applicable lenders in an effort to implement the process for the acquisition, demolition or
22 rehabilitation and resale of all such foreclosed properties or building lots after completion of
23 demolition; and
24
WHEREAS, it is necessary at this time for the City to specifically authorize the actions as
25 required to be undertaken by the Agency for the administration of the NSP funds and the
26 disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
27 properties within designated target areas or elsewhere in the City as may be permitted by HERA and
28 in furtherance of the use of the NSP funds by the Agency on behalf of the City; and
1
P:\Agendas\Resolutions\Resolutions\2009\06-15-09 Mary Erickson _ Expenditure ofNSP Funds MCC Reso A.doc
1 WHEREAS, the Funding Approval and Grant Agreement (the "NSP Grant Agreement") by
2 and between HUD and the City as was finally executed on April 23, 2009, and a copy of said
3 Agreement is attached to this Resolution as Exhibit "A".
4 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY
5 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
6 FOLLOWS:
7 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
8 respects.
9 Section 2. This Mayor and Common Council of the City of San Bernardino (this "Council")
10 hereby authorizes and directs the Agency staff, subject to confirmation and ratification by the
11 Community Development Commission of the City of San Bernardino (the "Commission"), to
12 implement all aspects of the NSP program and the disbursement of the NSP grant funds that are
13 available to the City pursuant to HERA and as further set forth in the NSP Grant Agreement. The
14 Agency shall be solely responsible for all administrative, audit and compliance matters required
15 either under HERA or the NSP Grant Agreement as may be required for the use of the NSP funds
16 within the City.
17 Section 3. This Council further authorizes and directs that the NSP funds as shall be
18 received by the City and administered by the Agency as authorized by this Resolution shall be used
19 and applied for the following categories of expenditures and programs and not to exceed the dollar
20 amounts as provided in this Section 3:
21
22
23
24
25
26
27
28
(a)
(b)
$920,000 - Down payment assistance for qualified single family homebuyers;
$2,100,000 - rental housing opportunities for households at or below 50% of Area
Median Income for multi-family rentals housing projects to be acquired by non-profit
corporations which are either independent of the Agency or controlled by the
(c)
Agency;
$920,000 for acquisition, demolition and redevelopment of single-family and multi-
family residential structures to be acquired by either the Agency or non-profit
2
.____'__<'A_.' _., ~ ___,,____~....."nru_~.U,...,...D_M~,.l~~
1
corporations which are either independent of the Agency or controlled by the
2
Agency; and
3
4
5
6
7
(d)
$3,700,000 for the acquisition, rehabilitation and resale of single-family foreclosed
residences through an Intermediary Services Program as may be initiated and
approved by the Commission for the Agency either by the Agency or through non-
profit corporations which are either independent of the Agency or controlled by the
.Agency.
8 The Agency shall be further authorized and directed to payor reimburse to the Agency from the
9 NSP funds as are allocated to the various categories of housing activities specified above such dollar
10 amounts as are required to provide for the effective administration and management of the NSP
11 program as shall be implemented by the Agency. Such dollar amounts of the NSP funds to be used
12 and applied by the Agency for such administration and management shall not exceed those dollar
13 limitations and other limitations on eligible expenditures as may be established by HUD either
14 pursuant to HERA or which are otherwise applicable to the use of the NSP funds.
15 Section 4. This Resolution shall take effect upon its adoption and execution in the manner
16 as required by the City Charter.
17 /1/
18 /1/
19 //1
20 /1/
21 //1
22 //1
23 //1
24 //1
25 /1/
26 /1/
27 //1
28 //1
3
P:\Agendas\Resolutions\Resolutions\2009\06" I 5-09 Mary Erickson - Expenditure ofNSP Funds MCC Reso Adoc
1
2
3
4
5
6
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING AND AUTHORIZING THE
EXPENDITURE OF CERTAIN NEIGHBORHOOD STABILIZATION
PROGRAM ("NSP") FUNDS PURSUANT TO THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008 ("HERA") IN ACCORDANCE
WITH NSP GRANT NUMBER B-08-MN-06-0520 IN THE PRINCIPAL
AMOUNT EQUAL TO $8,408,558
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
Common Council of the City of San Bernardino at a
7
17
18
19
meeting thereof,
,2009, by the following vote to wit:
Navs
Abstain
Absent
Rachel G. Clark, City Clerk
20 The foregoing Resolution is hereby approved this
21
22
23
24
25
26
27 By:
day of
,2009.
Patrick J. Morris, Mayor
City of San Bernardino
Approved as to Form:
28
James F. Penman, City Attorney
4
P:\Alzendas\Resolutions\Resolutions\2009\06-15-09 Marv Erickson - El<oenditure ofNSP Funds MCC Reso A.doc
EXHIBIT "A"
2009-105
FUNDING APPROVAL AND GRANT AGREEMENT FOR
NEIGHBORHOOD STABILIZATION PROGRAM (NSP) FUNDS
AS AUTHORIZED AND APPROPRIATED UNDER THE
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
(PUBLIC LAW 110-289, JULY 30, 2008)
NSP GRANTEE:
City of San Bernardino
NSP GRANT NUMBER:
B-08-MN.06.0520
NSP GRANT AMOUNT:
$8,408,558
MAR - j 20(('
NSP APPROVAL DATE:
This Grant Agreement between the Department of Housing and Urban Development (HUD) and
City of San Bemardino (Grantee) is made pursuant to the authority of sections 2301- 2304 of
the Housing and Economic Recovery Act of 2008 (public Law 110-289 (July 30, 2008))
(HERA). The program established pursuant to section 2301-2304 is known as the
"Neighborhood Stabilization Program" or "NSP." The Notice of Allocations, Application
Procedures, Regulatory Waivers Granted to and Altemative Requirements for Redevelopment of
Abandoned and Foreclosed Homes Under the Housing and Economic Recovery Act, 2008
published at 73 FR 58330 (October 6, 2008) (Notice); HERA; the Grantee's submission for NSP
assistance (Grantee Submission); the HUD regulations at 24 CFR Part 570 (as modified by the
Notice and as now in effect and as may be amended from time to time) (Regulations); and this
Funding Approval, including any special conditions, constitute part of the Grant Agreement.
Subject to the provisions of this Grant Agreement, HUD will make NSP Grant Funds in the
amount of $8,408,558 available to the Grantee upon execution of this Grant Agreement by the
parties. The Grantee shall have 18 months from the date of HUD's execution of this Grant
Agreement to obligate the NSP Grant Amount pursuant to thc rcquirements of HERA and the
Notice. The Grantee shall have 48 months from the date of HUD's execution of this Grant
Agreement to expend the NSP Grant Amount pursuant to the requirements of the Notice. The
NSP Grant Funds may be used to pay eligible costs arising from eligible uses incurred after the
NSP Approval Date provided the activities to which such costs arc related are carried out in
compliance with all applicable requirements. Pre-award planning and general administrati ve
costs may not be paid with funding assistance except as permitted in the Notice; the Notice limits
such costs to those incun-ed on 01' after September 29, 2008. Other pre-award costs may not be
paid with funding assistance except as pennitted by 24 CFR 570.200(h); for purposes of NSP,
such costs are limited to those incurred on 01' after the date that the NSP substantial amendment
was received by HUD.
2009-105
2
The Grantee agrees to assume all of the responsibilities for environmental review,
decisionmaking, and actions, as specified and required in regulations issued by the Secretary
pursuant to Section 104(g) of Title I of the Housing and Community Development Act, as
amended (42 U.S.C. 5304) and published in 24 CPR Plllt 58. The Grantee further acknowledges
its responsibility for adherence to the Grant Agreement by sub-recipient entities to which it
makes funding assistance hereunder available.
This Grant Agreement may be amended only with the prior wtitten approval of HUD. In
considering proposed amendments to this Grant Agreement, HUD shall review, among other
things, whether the amendment is otherwise consistent with HERA, the Notice, and the
Regulations.
. The Grantee may amend its Grantee Submission; however, such amendments, including
substantial amendments as defined in 24 CPR Part 91, will be subject to the requirements of 24
CFR Pm 91 (or any successor regulation) and any revisions HUD may make to the Notice (or
any successor Notice or regulation).
The Grantee shall at all times maintain an up-to-date copy of its Grantee Submission, including
all amendments approved by HUD, on its Internet website as required by the Notice. FUl1her,
the Grantee shall maintain information on all drawdowns, deposits, and expenditures of grant
funds and program income under this Funding Approval and Grant Agreement and any other
records required by 24 CPR 570.506, in its files and shall make such information available for
audit or inspection by duly authorized representatives ofHUD, HUD's Office of the Inspector
General, or the Comptroller General of the United States.
The Grantee shall submit information on performance measurement as established by the
Secretary for activities undertaken with NSP grant funds.
The Grantee is advised that providing false, fictitious or misleading information with respect to
NSP Grant Funds may result in criminal, civil or administrative prosecution under 18 USC
glOOI, 18 USC g1343, 31 USC g3729, 31 USC g3801 or another applicable statute.
Close-out of this grant shall be subject to the provisions of 24 CPR 570.509 or such close-out
instructions as may hereafter be issued by HUD specifically for NSP grants.
2009-105
::;
This NSP Grant Agreement is binding with respect to ffiJD in accordance with its terms upon
the execution by ffiJD in the space provided above, subject to execution on behalf of the
Grantee.
The United States Department of
Housing and Urban Development
The Grantee
City of San Bernardino
~~al
Ap?/eK V m~.>.
Name of Authorized Official
Signature of Authorized Offici
William G. Vasquez
Name of Authorized Official
Director
Community Planning and Development
//?~l'tYA,
Title of Authorized Official
Title of Authorized Official
3o/~
Date of sigrtur
1//23/09
Date of Signat~re
95-6000772
Grantee Tax Identification Number
For Hun CFO Use Onlv
Current Balances
Increases/I)ecreases
Ending Balance
Date
1
RESOLUTION NO.
2
3
4
5
6
7
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTING THE DELEGATION OF
ADMINISTRATION AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD STABILIZATION PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
WHEREAS, the City of San Bernardino (the "City") has received a certain grant in the
8 principal amount of $8,408,558 as Neighborhood Stabilization Program ("NSP") funds pursuant to
9 the Housing and Economic Recovery Act of 2008 ("HERA") and in accordance with a Funding
10 Approval and Grant Agreement duly executed by and between the City and the United States
11 Department of Housing and Urban Development ("HUD") as NSP Grant Number B-08-MN-06-
12 0520; and
13 WHEREAS, the City pursuant to a duly adopted Resolution on this date has authorized the
14 Redevelopment Agency of the City of San Bernardino (the "Agency") pursuant to said Resolution,
15 to administer all such NSP funds as shall be received by the City pursuant to said NSP Grant and to
16 otherwise authorize the Agency to provide for and administer the NSP program that shall be
17 undertaken within the City by the Agency as required of the City under the Funding Approval and
18 Grant Agreement; and
19 WHEREAS, the Agency intends that various non-profit corporations, whether controlled by
20 the Agency or which are independent of the Agency, will be acquiring title to single-family
21 foreclosed homes and multi-family foreclosed rental projects that have similarly been foreclosed by
22 the applicable lenders in an effort to implement the process for the acquisition, demolition or
23 rehabilitation and resale of all such foreclosed properties or building lots after completion of
24 demolition; and
25 WHEREAS, it is necessary at this time for this Community Development Commission of the
26 City of San Bernardino (this "Commission") to concur in the request as made by the Mayor and
27 Common Council of the City of San Bernardino ("Council") and to specifically authorize Agency
28 Staff to undertake the actions as required of the Agency for the administration of the NSP funds and
I
P:\AgendaslResolutionslResolutions\2009\06-1 5-09 Mary Erickson _ Expenditure ofNSP Funds CDC Reso B.doc
1 the disbursement of such NSP funds to various non-profit corporations accepting title to foreclosed
2 properties within designated target areas or elsewhere in the City as may be permitted by HERA and
3 in furtherance of the use of the NSP funds by the Agency on behalf of the City; and
4 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
5 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
6 on April 23, 2009.
7 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
8 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
9 FOLLOWS:
10 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
11 respects.
12 Section 2. The Commission hereby authorizes and directs Agency Staff to implement all
13 aspects of the NSP program and the disbursement of the NSP grant funds that are available to the
14 City pursuant to HERA and as further set forth in the NSP Grant Agreement. The Commission
15 recognizes that the Agency shall be solely responsible for all administrative, audit and compliance
16 matters required either under HERA or the NSP Grant Agreement as may be required for the use of
17 the NSP funds within the City.
18 Section 3. The use and application of the NSP funds by the Agency shall not exceed those
19 limitations set forth in Section 3 of the Resolution of the Council of even date with this Resolution
20 authorizing the Agency to administer and manage the NSP program subject to the confirmation by
21 the official action of this Commission. The Agency is hereby authorized to pay directly or to
22 otherwise reimburse the Agency for those costs and expenses ofthe administration and management
23 of the NSP program subject to such dollar limitation and other limitations on eligible expenditures
24 as may be established by HUD either pursuant to HERA or which are otherwise applicable to the
25 use of the NSP funds.
26 Section 4. This Resolution shall take effect from and after its date of adoption by this
27 Commission.
28 / / /
2
P\Agcndas\ResolutionslResolutions\2009\06-15-09 Mary Erickson _ Expenditure ofNSP Funds CDC Reso B.doc
1
2
3
4
5
RESOLUTiON OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO ACCEPTiNG THE DELEGATiON OF
ADMINISTRATiON AND MANAGEMENT FOR THE USE OF THE CITY
OF SAN BERNARDINO NEIGHBORHOOD STABILIZATiON PROGRAM
("NSP") FUNDS IN ACCORDANCE WITH THE HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
6 Development Commission ofthe City of San Bernardino at a
meeting
,2009, by the following vote to wit:
Navs
Abstain
Absent
Secretary
18
19 The foregoing Resolution is hereby approved this
day of
,2009.
20
21
22
23
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
24 Approved as to Form:
25
26 By: '- (A~j .J_
27 -Agency J~v
28
3
P:\Agendas\Resolulions\ResolutiollsI2009\06-15-09 Mary Erickson _ Expendilllre ofNSP Funds CDC Reso Bdoc
1
2
3
4
5
6
7
8
RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
9 WHEREAS, the Mayor and Common Council of the City of San Bernardino ("Council")
10 pursuant to a duly adopted Resolution on this date authorized the Redevelopment Agency of the
11 City of San Bernardino (the "Agency") to administer funds received through the Neighborhood
12 Stabilization Program ("NSP") as shall be received by the City of San Bernardino ("City") pursuant
13 to a grant from the United States Department of Housing and Urban Development ("HUD") and to
14 otherwise provide for and administer the NSP program that shall be undertaken within the City by
15 the Agency as required ofthe City under the Funding Approval and Grant Agreement duly executed
16 by and between the City and HUD as NSP Grant Number B-08-MN-06-0520; and
17 WHEREAS, Mary Erickson Community Housing, Inc. ("MECH"), a California non-profit
18 public benefit corporation, which is independent of the Agency, will be acquiring title to multi-
19 family foreclosed properties in an effort to implement the process for the acquisition, rehabilitation
20 and operation of all such foreclosed properties within the area described in this Resolution; and
21 WHEREAS, the Agency will be acquiring title to multi-family foreclosed properties in an
22 effort to implement the process for the acquisition and demolition of all such foreclosed properties;
23 and
24 WHEREAS, it is necessary for the Agency to comply with the Funding Approval and Grant
25 Agreement (the "NSP Grant Agreement") by and between HUD and the City was finally executed
26 on April 23, 2009.
27
28
1
P:\AgendasIResolutions\Resolutions\2009\06-15"'()9 Mary Erickson _ Expenditure ofNSP Funds CDC Reso C.doc
1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
2 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
3 FOLLOWS:
4 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
5 respects.
6 Section 2. The Community Development Commission of the City of San Bernardino
7 ("Commission") hereby authorizes and directs Agency staff to implement the administration and
8 disbursement of the $2,100,000 of NSP grant funds for acquisition of foreclosed properties and
9 $1,000,000 of the Housing set-aside funds for the purpose of acquiring and rehabilitating the
10 properties located in the Sunrise and 19th Project listed below. The Commission recognizes that the
11 Agency shall be solely responsible for all administrative, audit and compliance matters required
12 either under HERA, the NSP Grant Agreement and State Community Redevelopment Law as may
13 be required for the use of the NSP and Housing set-aside funds within the City.
14 2030,2042,2056,2068,2082,2094,2104,2118,2134,2148, 2164, 2178, 2194, 2196 and
15 2198 East 19th Street.
16 2205,2215,2225,2235,2245,2255,2265,2275,2285 and 2295 Sunrise Lane.
17 Section 3. The Commission hereby authorizes and directs Agency Staff to implement the
18 administration and disbursement of $600,000 of the NSP grant funds and an additional $1,000,000
19 of the Housing set-aside funds for the purpose of acquiring and demolishing the properties located
20 in the Sunrise and 19th Project listed below. The Commission recognizes that the Agency shall be
21 solely responsible for all administrative, audit and compliance matters required either under HERA,
22 the NSP Grant Agreement and State Community Redevelopment Law as may be required for the
23 use of the NSP and Housing set-aside funds within the City.
24 2031,2043,2057,2069,2083,2095,2105,2119,2135, 2149, 2165, 2175, 2195, 2197 and
25 2199 East 19th Street.
26 2024, 2025, 2034, 2035,2044, 2045,2054, 2055, 2064, 2065, 2074, 2075, 2084, 2085,
27 2094,2095,2104,2105,2116,2117,2130,2131,2142, 2156, 2168, 2169, 2182, 2183,
28 2194 Sunrise Lane.
2
P\AgendasIResolutionslResolutions\2009\06-1S-09 Mary Erickson- Expenditure ofNSP Funds CDC Reso C.doc
1 Assessors Parcel No.'s 1191-05-170 and 1191-05-171, which are zoned vacant.
2 Section 4. The use and application of the NSP and Housing set-aside funds by the Agency
3 shall not exceed those limitations set forth in Sections 2 and 3 of the Resolution of the Mayor and
4 Common council of even date with this Resolution authorizing the Agency to administer disburse
5 NSP and Housing set-aside funds subject to the confirmation by the official action of this
6 Commission.
7
Section 5.
The Commission hereby approves the use of Low and Moderate Income
8 Housing Funds and NSP Funds through a certain Master Agreement by and between the Agency
9 and MECH and hereby authorizes the Interim Executive Director of the Agency to execute that
10 certain Master Agreement on behalf of the Agency together with such technical and conforming
11 changes as may be recommended by the Interim Executive Director of the Agency and approved by
12 the Agency Counsel.
13 Section 6.
14 Commission.
15 //1
16 /1/
17 /1/
18 //1
19 //1
20 /1/
21 //1
22 /1/
23 /1/
24 //1
25 /1/
26 /1/
27 //1
28 /1/
This Resolution shall take effect from and after its date of adoption by this
3
PIAgendas\ResolulioM\Resolutions\2009\06-15-09 Mary Erickson - Expenditure ofNSP Funds CDC Reso C.doc
1
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE USE OF LOW AND MODERATE INCOME HOUSING FUNDS AND
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") FUNDS
THROUGH A CERTAIN MASTER AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
("AGENCY") AND MARY ERICKSON COMMUNITY HOUSING, INC.
("MECH"), PURSUANT TO THE NEIGHBORHOOD STABILIZATION
PROGRAM
2
3
4
5
6
7
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
8 Development Commission of the City of San Bernardino at a
,2009, by the following vote to wit:
meeting
Navs
Abstain
Absent
Secretary
20
The foregoing Resolution is hereby approved this
21
day of
,2009.
22
23
Patrick 1. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
24
25
26 Approved as to Form:
:: By \:f;:;;;ti~
4
P\Agendas\Resolutiol1sIRe,olulions\2009\06-15-()<) Mary Erickson - Expenditure ofNSP Funds CDC Reso edoc
NEIGHBORHOOD STABILIZATION PROGRAM
DEVELOPER MASTER AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
AND
MARY ERICKSON COMMUNITY HOUSING, INC.
JUNE 15,2009
This Master Agreement ("Agreement") is made and entered into as of June 15,2009, by
and between the Redevelopment Agency of the City of San Bernardino ("Agency"), a public
body, corporate and politic, and, Mary Erickson Community Housing, Inc., a California non-
profit corporation, hereinafter referred to as "Developer". The Agency and Developer are
sometimes referred to herein individually as a "Party" and collectively as the "Parties".
RECITALS
WHEREAS, on July 30, 2008, the United States Government adopted the Housing and
Economic Recovery Act of2008 ("HERA"); and
WHEREAS, pursuant to Title III of Division B of HERA (Public Law 110-289, 122 Stat.
2650), the United States Government created a program known as the Neighborhood
Stabilization Program ("NSP"); and
WHEREAS, the purpose of the NSP is to make funding available for certain qualified
uses in order to assist state and local governments with emergency assistance for the
redevelopment of abandoned and foreclosed upon homes and residential properties; and
WHEREAS, on October 6, 2008, the U.S. Department of Housing and Urban
Development ("HUD") published its "Notice of allocations, waivers granted, alternative
requirements applied, and statutory program requirements" for the NSP in the Federal Register,
Volume 73, No. 194, Docket No. FR-5255-N-OI ("Notice"); and
WHEREAS, pursuant to the Notice, NSP funds are to be considered Community
Development Block Grant ("CDBG") funds unless stated otherwise in the Notice; and
WHEREAS, in order to qualifY for an NSP grant, the City of San Bernardino ("City") has
adopted a substantial amendment to its CDBG program setting forth the criteria and guidelines
for implementation of the NSP within the City ("Substantial Amendment"); and
WHEREAS, the Substantial Amendment, and all provisions contained therein, IS
incorporated by reference into this Agreement as though fully set forth herein; and
WHEREAS, HUD has reviewed and approved the Substantial Amendment, and will
make NSP grant funding available to the Agency as the administrative agent for the City; and
WHEREAS, under the NSP regulations, the City's NSP funding allocation must be
obligated within eighteen (18) months from and after the date of the City's grant agreement with
HUD;and
WHEREAS, the Agency is authorized to administer and distribute the low-moderate
income housing funds ("low-mod funds") generated from the City's Redevelopment Project
Areas, on behalf of the City; and
.2-
P:\AgendaslAgenda Attachments.\Agenda Attachments\Agenda Attachments\Agrmts_Amend 2009\06-15-09 Mary Erickson Community Housing, Inc. - Master Agreement.doc
WHEREAS, the City seeks to engage Developer the Developer to assist the City in
utilizing its NSP and low-mod funds for the purchase and rehabilitation of abandoned and/or
foreclosed upon eligible properties ("Eligible Properties") within the NSP Target Zone, as
defined in Exhibit "A" Section 2.c., and the rental of such properties to tenants with household
incomes at or below 50% of the Area Median Income ("AMI") who meet all other tenancy
requirements established under NSP ("Eligible Tenants"), all as further set forth in the
Substantial Amendment and in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND MUTUAL
PROMISES CONTAINED HEREIN AND FOR SUCH OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE
PARTIES HERETO AGREE AS FOLLOWS:
1. Incorporation of Recitals
Recitals. The Recitals set forth above are true and correct and are incorporated
into this Agreement as though fully set forth herein.
2. Supervision of Developer. The Agency Staff designated in Exhibit "B" shall be
responsible for the direction of any work to be performed by Developer and any other
consultants or subconsultants to the Agency under this Agreement. Developer shall not
undertake any work under the terms of this Agreement, unless instructed to do so by one of the
designated staff members. No other staff member is authorized by the Agency to request
services from Developer.
3. Term of Aereement. The term of this Agreement shall commence on the date
first appearing in this Agreement and will terminate one (1) year after this date, unless earlier
terminated as provided in this Agreement. The Agency will have the option to extend the term
of this Agreement for three additional one-year terms at the sole option and discretion of the
Agency with the consent of Developer. The Agency reserves the right through the actions of the
Interim Executive Director to terminate this Agreement at anytime either with or without cause
and at the sole convenience of the Agency upon delivery of notice of termination to Developer;
provided, however, that upon the effective date of any such termination, the Agency shall be
responsible to pay and/or reimburse Developer for all services, materials and supplies as may
have been furnished to the Agency in accordance with the Scope of Services as referenced in
Section 3.
3. Scope of Developer Services.
A. The Agency hereby retains Developer to provide the professional services set
forth in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by this
reference. Developer hereby agrees to perform the work set forth in the Scope of Services, in
accordance with the terms of this Agreement. Developer shall perform the services as set forth
on said Scope of Services within the time periods to be identified by the appropriate Agency
representative.
-3 -
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B. The Parties agree that the Project as contemplated by the Scope of Services shall
be related specifically to the acquisition and rehabilitation of the 4-plexes located on the north
side of 19th Street in the City at the following set forth addresses consisting of fifteen (15)
separate 4-plex buildings each on a separate legal lot. In addition, the Project shall also include
the acquisition and rehabilitation of an additional ten (10) 4-plexes each on a separate legal lot on
Sunrise Lane at the addresses set forth below:
Addresses of 4-plexes comprisinl!: the Proiect:
2030,2042,2056,2068,2082,2094,2104,2118,2134,2148, 2164, 2178, 2194, 2196
and 2198 E. 19th Street
2205,2215,2225,2235,2245,2255,2265,2275,2285 and 2295 Sunrise Lane
C. It is the intent of the Parties that the Developer shall acquire title to each of the 4-
plexes by means of its own efforts either through direct negotiations with the current owners or
through negotiations with lenders for the purchase of those 4-plexes that have been foreclosed by
the applicable lender. All such acquisitions shall be funded, to the extent NSP funds remain
available, with the use of those NSP funds as shall be made available to the Developer pursuant
to this Agreement. The Parties recognize that the Agency has available an amount not to exceed
$2, I 00,000 for the acquisition of the 4-plexes within the Project, as necessary. In addition, the
Agency has taken all necessary actions to make available for other Project expenditures an
amount equal to $1,000,000 of the Agency's Low and Moderate Income Housing Fund which
may be expended by the Agency together with the NSP funds for the funding, in part, of the
costs of the Project.
D. Upon the acquisition of each 4-plex within the Project the Developer shall execute
the applicable program documents as are required by this Agreement to be executed and
delivered upon each such close of escrow and which are set forth as Exhibits "K", "L", "M" and
"N" to this Agreement. After the acquisition of each 4-plex within the Project, the Developer
shall not resell any such 4-plex or any interest in such 4-plex without the prior written approval
of the Agency which may be granted or denied at the sole absolute discretion of the Agency.
Upon acquisition of minimum of five (5) separate 4-plexes on 19th Street or five (5) separate 4-
plexes on Sunrise Lane, the Developer shall initiate a process with the City of San Bernardino to
prepare and file an application for a new parcel map for properties on the first of 19th Street or
Sunrise Lane upon which five (5) 4-plexes have been acquired creating one (I) legal parcel on
each of 19th Street and Sunrise Lane for all 4-p1exes then owned by the Developer. Any
subsequently acquired 4-plexes shall be amended into the applicable parcel map on 19th Street or
Sunrise Lane so that separate 4-plexes or units within each 4-plex cannot be resold by the
Developer except to another single property owner.
E. The Developer may negotiate for other 4-plexes and vacant lots located on 19th
Street and Sunrise Lane between Guthrie and Argyle (the "Phase II Project") but the purchase
agreements and escrow documents for all such 4-pJexes and vacant lots shall be then be assigned
to the Agency or its designated non-profit corporation, as assignee, to then close each escrow on
all such 4-plexes and vacant lots. The Developer shall not acquire title either directly or
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indirectly in any properties located within the Phase II Project under any circumstances during
the term of this Agreement. The Developer shall have the right of first opportunity to undertake
all or any portion of the development of a senior citizens apartment project or a single family
owner occupied housing development on all or any portion of the Phase II Project for which the
Agency determines that sufficient properties have been acquired by the Agency to warrant the
consideration of undertaking the Phase II Project in such scope as the Parties may determine
based upon the amount of acreage that is then available to the Agency. Upon receipt of written
notice from the Agency to the Developer specifYing the scope of the intended portion of the
Phase II Project and the intended land use for such portion, the Developer shall have thirty (30)
calendar days after receipt of such notice to respond to the Agency as to whether the Developer
intends to undertake the proposed portion of the Phase II Project as described by the Agency in
such notice. If the Developer fails to respond to the Agency in the affirmative within such
thirty-day period, such failure to respond shall be deemed to be the refusal of the Developer to
proceed with the Phase II Project. Upon a timely affirmative response from the Developer to the
Agency regarding the intent of the Developer to undertake the applicable portion of the Phase II
Project, the Parties shall negotiate in good faith to draft and prepare a final agreement within
sixty (60) calendar days thereafter regarding the roles of the Parties and the financial
contributions and scope of the Phase II Project. Nothing contained herein shall obligate either
the Developer or the Community Development Commission of the City of San Bernardino (the
"Commission") on behalf of the Agency to approve any such final agreement that is presented
for consideration and approval regarding such Phase II Project. Upon any denial or refusal by
the Commission to approve any such Phase II Project agreement, the Agency may proceed to
obtain other developers or non-profit corporations to undertake all of any portion of the Phase II
Project and the Developer shall have no further rights to participate in the Phase II Project.
4. Payment bv the Al!:encv for Services Performed bv Developer.
A. The Agency shall compensate Developer for completion of the services described
in the Scope of Services set forth in Exhibit "A" in accordance with the guidelines stipulated in
Exhibit "E".
B. The compensation designated in subsection 4.A. shall be the Total Fee for the
performance of the work and the delivery of the final work product materials, as set forth in the
Scope of Services.
5. Records Retention. Records, maps, field notes and supporting documents and all
other records pertaining to the use of funds disbursed to the Developer hereunder shall be
retained by the Developer and available to the Agency for examination and for purposes of
performing an audit for a period of five (5) years from the date of expiration or termination of
this Agreement or for a longer period, as required by law. Such records shall be available to the
Agency and to appropriate county, state or federal agencies and officials for inspection during
the regular business hours of the Developer. If the Developer does not maintain regular business
hours, then such records shall be available for inspection between the hours of 9 a.m. and 5 p.m.
Monday through Friday, excluding federal and state government holidays. In the event of
litigation or an audit relating to this Agreement or funds paid to the Developer by the Agency
under this Agreement, such records shall be retained by the Developer until all such litigation or
audit has been resolved.
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6. Indemnification. The Developer shall defend, indemnify and hold harmless the
Agency, its officers, employees, representatives, and agents from and against any and all actions,
suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and
attorneys fees, for injury or damage of any type claimed as a result of the acts or omissions of the
Developer, its officers, employees, subcontractors and agents, arising from or related to
performance by the Developer of the work required under this Agreement.
7. Insurance. The Developer shall maintain insurance, as set forth in Exhibit "c" to
this Agreement, throughout the term of this Agreement. The Developer shall remain liable to the
Agency pursuant to Section 6. above to the extent the Developer is not covered by applicable
insurance for all losses and damages incurred by the Agency that are caused directly or indirectly
through the actions or inactions, willful misconduct or negligence of the Developer in the
performance of the duties incurred by the Developer pursuant to this Agreement.
8. Press Releases. Press or news releases, including photographs or public
announcements, or confirmation of the same related to the work to be performed by the
Developer under this Agreement shall only be made by the Developer with the prior written
consent of the Agency.
9. Default and Remedies.
A. The occurrence of any of the events listed in Exhibit "G", Section A. (I) to (7),
shall after the giving of any notice described therein, constitute a default by Developer hereunder
("Event of Default").
B. Upon the occurrence of an Event of Default, the Agency may, In its sole
discretion, take any of the actions listed in Exhibit "G", Section B., (I) to (8).
C. Any failure or delay by a party in asserting any of its rights or remedies as to any
default shall not operate as a waiver of any default or of any rights or remedies associated with a
default. Except with respect to rights and remedies expressly declared to be exclusive in this
Agreement, the rights and remedies of the Parties under this Agreement are cumulative and the
exercise by either Party of one or more of such rights or remedies shall not preclude the exercise
by it, at the same or different times, of any other rights or remedies for the same default or any
other default by the other Party.
D. The Developer has the right to implement the remedies in Exhibit "G", Section
C. (I) and (2), upon fault or failure of the Agency to meet any of its obligations under this
Agreement without curing such failure within thirty (30) days after receipt of written notice of
such failure from Developer specifying the nature of the event or deficiency giving rise to the
default and the action required to cure such deficiency.
10. Termination.
A. This Agreement may be terminated by either party for any reason by giving the
other party fifteen (15) calendar days' prior written notice. The Agency shall pay the Developer
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for all work authorized by the Agency and completed, prior to the effective termination date.
B. In the event of a termination of this Agreement under this Section 10, the
Developer shall provide all documents, notes, maps, reports, data or other work product
developed in performance of the Scope of Services of this Agreement to the Agency, within ten
(10) calendar days after the effective date of such termination and without additional charge to
the Agency.
11. Notice. All notices given hereunder shall be in writing. Notices shall be
presented in person or by certified or registered United States Mail, return receipt requested,
postage prepaid or by overnight delivery by a nationally recognized delivery service to the
addresses set forth below. Notice presented by United States Mail shall be deemed effective on
the third business day following the deposit of such Notice with the United States Postal Service.
This Section 11 shall not prevent the parties hereto from giving notice by personal service or
telephonically verified fax transmission, which shall be deemed effective upon actual receipt of
such personal service or telephonic verification. Either Party may change their address for
receipt of written notice by notifying the other Party in writing of a new address for delivering
notice to such Party.
DEVELOPER:
Mary Erickson Community Housing, Inc.
Attention: Susan McDevitt, Executive Director
P.O. Box 775
San Clemente, CA 92674-0775
Phone: (949) 369-5419
Fax: (949) 369-5416
AGENCY:
Redevelopment Agency of the City of San Bernardino
Attention: Emil A. Marzullo, Interim Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
Phone: (909) 663-1044
Fax: (909) 663-2294
12. Compliance with Law. The Developer shall comply with all local, state and
federal laws, including, but not limited to, environmental acts, rules and regulations applicable to
the work to be performed by the Developer under this Agreement. The Developer shall maintain
all necessary licenses and registrations for the lawful performance of the work required of the
Developer under this Agreement.
13. Nondiscrimination. The Developer shall not discriminate against any person on
the basis of race, color, creed, religion, natural origin, ancestry, sex, marital status or physical
handicap in the performance of the Scope of Services of this Agreement. Without limitation, the
Developer hereby certifies that it will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, marital status of national origin. Further, the
Developer shall promote affirmative action in its hiring practices and employee policies for
minorities and other designated classes in accordance with federal, state and local laws. Such
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action shall include, but not be limited to, the following: recruitment and recruitment advertising,
employment, upgrading and promotion. In addition, the Developer shall not exclude from
participation under this Agreement any employee or applicant for employment on the basis of
age, handicap or religion in compliance with State and Federal laws.
14. Developer and each Subcontractor are Independent Contractors. The
Developer shall at all times during the performance of any work described in the Scope of
Services be deemed to be an independent contractor. Neither the Developer nor any of its
subcontractors shall at any time or in any manner represent that it or any of its employees are
employees of the Agency or any member agency of the Agency. The Agency shall not be
requested or ordered to assume any liability or expense for the direct payment of any salary,
wage or benefit to any person employed by the Developer or its subcontractors to perform any
item of work described in the Scope of Services. The Developer is entirely responsible for the
immediate payment of all subcontractor liens.
15. Severability. Each and every section of this Agreement shall be construed as a
separate and independent covenant and agreement. If any term or provision of this Agreement or
the application thereof to certain circumstances shall be declared invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to circumstances other
than those to which it is declared invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
16. Entire Al!reement. This Agreement constitutes the entire agreement between the
parties. This Agreement supersedes all prior negotiation, discussions and agreements between
the parties concerning the subject matters covered herein. The Parties intend this Agreement to
be the final expression of their agreement with respect to the subjects covered herein and a
complete and exclusive statement of such terms.
17. Amendment or Modification. This Agreement may only be modified or
amended by written instrument duly approved and executed by each of the Parties hereto. Any
such modification or amendment shall be valid, binding and legally enforceable only if in written
form and executed by each of the Parties hereto, following all necessary approvals and
authorizations for such execution.
18. Governinl! Law. This Agreement shall be governed by the laws of the State of
California. Any legal action arising from or related to this Agreement shall be brought in the
Superior Court of the State of California in and for the County of San Bernardino.
19. Non-Waiver. Failure of either party to enforce any provision of this Agreement
shall not constitute a waiver of the right to compel enforcement of the same provision or any
remaining provisions ofthis Agreement.
20. Assil!nment. This Agreement shall be assignable by Developer only if
Developer obtains the prior express written consent of the Agency, which consent may be
withheld by the Agency in its sole discretion. Notwithstanding anything to the contrary in this
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Agreement, no purported assignment of this Agreement shall be effective if such assignment
would violate the terms, conditions and restrictions of any applicable governmental restrictions.
The Agency's consent to such assignment shall be expressly conditioned upon (i) the assignee's
execution of such documents as required by the Agency in its sole discretion, including, without
limitation, any and all documents deemed necessary by the Agency to provide for said assignee's
assumption of all of the obligations of Developer hereunder and under any documents executed
by Developer in connection herewith, and (ii) the Agency's approval of the financial and credit-
worthiness of such proposed assignee and the assignee's ability to perform all of the Developer's
obligations under this Agreement and all documents executed in connection herewith, as may be
determined by the Agency at its sole discretion.
21. Representations of Persons Executinl!: the Al!:reement. The persons executing
this Agreement warrant that they are duly authorized to execute this Agreement on behalf of and
bind the respective Party that each purports to represent.
22. Execution in Counterparts. This Agreement may be executed in one (I) or
more counterparts, each of which will constitute an original.
23. Effectiveness of the Al!:reement as to the Al!:encv. This Agreement shall not be
binding on the Agency until signed by an authorized representative of the Developer, approved
by the Agency and executed by the Interim Executive Director or his designee.
24. Conflicts of Interest. The Developer hereby represents that it has no interests
adverse to the Agency, at the time of execution of this Agreement. The Developer hereby agrees
that, during the term of this Agreement, the Developer shall not enter into any agreement or
acquire any interests detrimental or adverse to the Agency. Additionally, the Developer hereby
represents and warrants to the Agency that the Developer and any partnerships, individual
persons or any other party or parties comprising the Developer, together with each subcontractor
who may hereafter be designated to perform services pursuant to this Agreement, do not have
and, during the term of this Agreement, shall not acquire any property ownership interest,
business interests, professional employment relationships, contractual relationships of any nature
or any other financial arrangements relating to the Agency, property over which the Agency has
jurisdiction or any members or staff of the Agency that have not been previously disclosed in
writing to the Agency, and that any such property ownership interests, business interests,
professional employment relationships, contractual relationships or any nature or any other
financial arrangements will not adversely affect the ability of the Developer to perform the
services to the Agency as set forth in this Agreement.
25. Non-Exclusivity. This Agreement shall not create an exclusive relationship
between the Agency and the Developer for the services set forth in Exhibit "A" or any similar or
related services. The Agency may, during the term of this Agreement, contract with other real
estate development entities for the performance of the same, similar or related services as those
that may be performed by the under this Agreement. The Agency reserves the discretion and the
right to determine the amount of services to be performed by the Developer for the Agency under
this Agreement, including not requesting any services at all. This Agreement only sets forth the
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terms upon which any such services will be provided to the Agency by the Developer, if such
services are requested by the Agency, as set forth in this Agreement.
26. Consequential Damal!es and Limitation of Liabilitv. The Agency and the
Developer agree that except as otherwise provided in this Section 26, in no event will either be
liable to the other under this Agreement for any damages including but not limited to, special
damages, loss of revenue, loss of profit, operating costs or business interruption losses,
regardless of cause, including breach of contract, negligence, strict liability or otherwise. The
limitations and exclusions of liability set forth in this Section 26 shall apply regardless of fault,
breach of contract, tort, strict liability or otherwise of the Developer and the Agency, their
employees or subconsultants.
27. Business Rel!istration Certificate. The Developer warrants that it possesses, or
shall obtain immediately after the execution and delivery of this Agreement, and maintain during
the period of time that this Agreement is in effect, a business registration certificate pursuant to
Title 5 of the City of San Bernardino Municipal Code, together with any and all other licenses,
permits, qualifications, insurance and approvals of whatever nature that are legally required to be
maintained by the Developer to conduct its business activities within the City.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as ofthe date indicated next to the authorized signatures of the officers of each of them as appear
below.
AGENCY
Dated:
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By: V
Timothy J.
DEVELOPER
Mary Erickson Community Housing, Inc.,
a California non-profit corporation
Dated:
By:
Name:
Title:
Dated:
By:
Name:
Title:
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Exhibit "A"
Scope of Services
A. Activities Developer shall supply all labor, services, items of expense and
consultation (hereinafter collectively referred to as "Services") necessary to fully and adequately
meet the Program Delivery requirements set forth in Section B below, and to satisfy all other
requirements of Developer under this Agreement. As part of the Services, Developer shall be
responsible for carrying out the following NSP activities as further described in this Exhibit "A":
Acquisition of abandoned and/or foreclosed residential properties that qualify as Eligible
Properties under the Agency's housing opportunities for households which adjusted gross
income is at or below 50% of the AMI that qualify as Eligible Tenants; demolition and/or
rehabilitation of acquired Eligible Properties; and manage and operate these Eligible Properties
as further negotiated with the Agency. The program shall be carried out in a manner satisfactory
to the City and consistent with this Agreement, the Substantial Amendment and any standards
required as a condition of providing these funds.
B.
Program Delivery
I. General Requirements
a. As part of the Services, Developer agrees that it shall make
available a primary staff person on an as needed basis within close proximity to the project site
in order to successfully complete program activities
b. As part of the Services, Developer shall solicit, consistent with the
requirements contained herein, construction manager services, property acquisition and
relocation consultant services and enter into a contract for such services.
c. Developer shall, to the extent practicable, utilize realtors, appraisal
services, escrow services and title companies as approved by the Agency. If such services
cannot reasonably be identified by the Agency, Developer shall utilize businesses located first
within the City and if they are deemed to be unavailable, then utilize businesses in the County of
San Bernardino.
d. Developer shall apply for other funding to leverage NSP funds,
provided that NSP funds shall be separately maintained and accounted for, as required by federal
funding requirements, and as further specified in this Agreement and approved by the Agency.
e. Developer shall obligate all NSP funds granted to Developer
pursuant to this Agreement, excluding any funds generated from Program Income, within twelve
(12) months after the execution date of the Agreement (the execution date of this Agreement is
herein referred to as the "Effective Date").. In the case where some act of nature or other
unforeseen event out of the Developer's control, causes a delay in the acquisition and/or
rehabilitation of Eligible Properties, then the Agency may extend the period required to commit
the NSP funds granted to the Developer, in its sole discretion; however, in order to gain such an
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extension of time, the Developer will have to submit in writing to the Agency the reasons for the
schedule delay and it must receive written approval from the Agency for such extension of time,
in order for the extended deadline to be recognized by the Agency.
f. Developer warrants that it has the expertise and experience to
perform the Services set forth in this Agreement and that it shall perform said Services pursuant
to this Agreement and as stated in the Scope of Services.
g. Developer shall document performance on a monthly basis by
submittal of a Monthly Report, which report shall be in a form satisfactory to the Agency. The
Monthly Report shall be due by the lOth day of the following month after the Services were
rendered.
h. Developer shall provide a Final Evaluation Report of the
Program's success in meeting established goals.
i. Developer shall provide notification to the Agency of any audits or
investigations including results, findings and/or liens.
2. Propertv Acquisition and Rehabilitation
a. Developer shall identify Eligible Properties and shall negotiate
purchase and sale agreements, to be approved by the Agency, that provide for a discount in
purchase price from the Current Market Appraised Value of no less than five percent (5%) for
any individual property, but a blended aggregate average discount of at least fifteen percent
(15%). No property shall be purchased pursuant to this Agreement at less than the required
discount, unless Developer obtains written approval from the Agency.
b. Prior to purchase of any Eligible Property under this Agreement,
and in order to determine the Current Market Appraised Value, Developer shall obtain an
appraisal made in conformity with the appraisal requirements of the Uniform Relocation Act at
49 CFR 24.103 and the HERA, and as further specified by the Agency and its approved list of
appraisers.
c. Acquisitions shall be based upon that specific target area identified
in Exhibit "I", depending on the negotiations for purchase of the Eligible Properties but in all
cases must be located within the NSP Target Zone as identified in Exhibit "J".
d. Developer shall develop a system approved by the Agency to
determine whether those eligible properties acquired should be rehabilitated.
e. For those properties recommended for demolition and approved by
the Agency for such purpose, Developer shall select the appropriate demolition firm to conduct
such work from no less than three (3) separate solicitations for service. Such selection shall be
approved by the Agency and include provisions for environmental testing and removal services.
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f. Other than those liens approved by the Agency, Developer shall
ensure that title to the Eligible Property shall be and remain free and clear from any and all
security interests, liens, or other encumbrances. In carrying out the Services, Developer
promises and agrees that it will not pledge, hypothecate or otherwise encumber title to the
Eligible Property in any manner that would result in any lien, security interest, charge or claim
upon or against said property.
g. Rehabilitation of Eligible Properties acquired by Developer
pursuant to this Agreement shall be completed, and said properties shall be ready for rental
within one hundred eighty (180) days following the close of escrow on the property. In the case
where some act of nature or other unforeseen event out of the Developer's control, causes a
delay in the rehabilitation or operation of an Eligible Property, then the Agency may extend the
period required to finish the rehabilitation work or place the Eligible Property in operation, in its
sole discretion. In order to gain such an extension of time, the Developer will have to submit in
writing to the Agency the reasons for the schedule delay and it must receive written approval
from the Agency for such extension of time, in order for the extended deadline to be recognized
by the Agency.
h. For projects approved by the Agency, Developer shall rehabilitate
as determined solely by the Agency, or shall solicit subcontractors, pursuant to the terms of this
Agreement, to rehabilitate required Eligible Properties in accordance with the standards set forth
in the Substantial Amendment, the NSP and, unless otherwise agreed upon by the Parties, in
accordance with the plans and specifications approved by the City. As part of the Developer's
rehabilitation process, Developer must ensure that tasks/activities i. - x. below are carried out
effectively and efficiently:
i. Secure Property - Ensure that adequate locked fencing is
installed on the perimeter of the site when necessary. Board up windows and outer doorways
when necessary in order to prevent looting of the property.
11. Property Management - Maintain utilities service, pay for
monthly utilities bill(s) during the holding period, interior and exterior appearance and
marketability of the property as needed.
iii. Budget Estimate - Provide a total budget estimate for the
Agency approved Scope of Work to be written in the Agency's format as reflected in Exhibit
"D" (Total Development Cost Pro Forma). This budget estimate shall include all costs
associated with the development of the property, including acquisition, labor and materials
for rehabilitation work, contingency, construction loan interest, construction loan origination
fee, the general contractor fee and overhead, marketing costs, relocation, lease-up costs,
replacement reserves, permanent financing origination fee, and closing costs and developer
fee.
iv. Project Timeline - Provide a timeline in the Agency's
format for completion of the various steps involved in the acquisition, rehabilitation and
lease-up of these properties. The timeline shall start from the point that Developer enters into
escrow for the acquisition of each specific property through the stabilization of operations.
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Major steps to be included in the timeline are construction period, completion of
construction, issuance of the Certificate of Occupancy, start of marketing period for the
property, projected number of weeks needed to rent out property, lease-up period and close
of permanent financing.
v. Project Management Services Provide project
management services for rehabilitation of projects, which shall include but not be limited to:
establishing a scope of work, identifying or obtaining the financing to pay for all labor and
materials, conducting weekly on-site project inspections, managing relationships with all
sub-contractors, verifying permits and City compliance, administering both conditional and
unconditional lien releases, advertising the apartments for rental; through various local
media, conducting mass mailings targeted at potential renters, partnering with local churches
and other community groups to identify prospective Qualified Tenants, processing the rental
application, coordinating quick close of escrow and expediting lender requirements.
VI. Marketing - Market the property and the Neighborhood
Stabilization Program overall through advertising and published promotional materials.
Adhere to the Agency's Affirmative Marketing Guidelines (Please see Exhibit "H").
vii. Lease-up Property - Identify prospective Qualified Tenants,
qualify the prospective tenants for eligibility to rent very-low income units and collect all
application documents from the Qualified Tenant.
VIII. Financing - The Developer is required to present a feasible
plan for the acquisition, rehabilitation and permanent financing of each Eligible Property
prior to the acquisition of any such property, whether such financing is obtained in part or in
whole from the Agency. The Developer must demonstrate that its financing plan adequately
provides for the acquisition of the property, payment for the labor, materials and other
services required to complete the Agency approved Scope of Work for each Eligible
Property and provide for the maximum permanent, private loan that can be supported by the
Eligible Property's projected cash flow. Each financing plan is subject to the Agency's
approval in its sole discretion.
Acquisition, rehabilitation and permanent financing for any Eligible Property shall be subject
to the conditions and requirements set forth in Exhibit "F".
ix. Files - Maintain adequate files for each property, ensuring
compliance with all Agency and lender requirements, all documents required to verify
compliance with the Affirmative Marketing Guidelines such as tenant waiting lists, copies of
advertisements published in local and community newspapers, etc.
x. Environmental - Ensure that all environmental mitigation
measures recommended by the Agency's Environmental Consultant are carried out as part of
the rehabilitation work performed on the property. Provide proof of completion of these
mitigation measures.
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3. Closing Requirements
A. Developer shall cause the closing of the acquisition financing, whether from the
Agency or another source, for the Eligible Properties by following the procedures and
complying with the requirements set forth in Exhibit "F" Section A.
B. Developer shall cause the closing of the rehabilitation financing whether from the
Agency or another financing source in accordance with the procedures and
requirements established in Exhibit "F" Section B.
C. Developer shall cause the closing of the permanent financing whether from the
Agency or another financing source in accordance with the procedures and
requirements established in Exhibit "F" Section C.
4. Building Standards
The Developer shall adhere to the building standards stipulated in Exhibit J when rehabilitating
any Eligible Property.
5. Financial Statements; Tax Returns.
Developer shall deliver to the Agency within one hundred twenty (120) days after the end of
each fiscal year of Developer occurring during the term of any outstanding Development Loans,
a copy of its federal tax return and a financial statement for such preceding fiscal year. In
addition, concurrent with Developer's payment of the annual Residual Receipts installment
payable to the Agency on each June 15th in accordance with Section _ of the Promissory Note
attached as Exhibit "K", Developer shall deliver to the Agency, on forms prepared and provided
by the Agency from time to time, a statement certified by Developer's accountant (the "Annual
Statement"), separately setting forth (i) the aggregate Gross Rents (as defined in Exhibit "E"
Section Co2.a.) received during the previous calendar year, and (ii) the aggregate Operating
Expenses (as defmed in Exhibit "E" Section C.2.b.) expended during the previous calendar year
for each Eligible Property owned by the Developer and financed in whole or in part with a
Development Loan from the Agency.
6. Other Loans.
Developer shall comply with all monetary and non-monetary covenants associated with any loan
secured by an interest in the Eligible Property, including but not limited to the Senior Financing,
the Junior Financing and the Other Financing. Developer shall provide to the Agency a copy of
any notice of default within three business days after receiving any notice of a default or alleged
default of such covenants by Developer, and Developer shall promptly cure any such default and
cooperate in permitting the Agency, to the extent the Agency in its sole discretion elects to do so,
to cure or assist in curing the default. Any cost or expenditure incurred by the Agency in
providing or assisting in such a cure shall be deemed added to the outstanding principal amount
of the corresponding Development Loan pertaining to the Eligible Property in default.
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7. Construction Requirements
Following the Close of Escrow for the acquisition of the Eligible Property, Developer shall cause
the demolition or rehabilitation work, whichever may apply, to commence promptly, proceed
diligently, and achieve "Completion of the Project" no later than 6 months following the Close of
Escrow for Eligible Properties that are to be rehabilitated, subject to extension for up to an
additional 3 months to the extent of force majeure delays beyond Developer's reasonable control.
"Completion of the Project" shall be deemed to have occurred when the Agency has received
satisfactory evidence that the Project has been completed in compliance with this Agreement,
and that all final permits and certificates necessary to the operation of the Eligible Property, in
the case where an Eligible Property is being rehabilitated, as contemplated herein have been
obtained, including, without limitation, the following, each of which is subject to the Agency's
review and approval: (I) a signed certificate from the general contractor, in a form reasonably
acceptable to the Agency, certifying to the Agency that rehabilitation was completed
substantially in accordance with the requirements of the plans and this Agreement, and all other
related on-site and off-site improvements have been completed; (2) a certificate of occupancy
and other final permits and licenses necessary to permit the use and occupancy of the Eligible
Property for its intended purposes, which have been issued by proper governmental agencies;
and (3) evidence satisfactory to the Agency that the statutory period for the filing of mechanics'
liens (60 days following filing of the statutory notice of completion) has expired and the Eligible
Property is free from such liens. Rehabilitation shall proceed in accordance with Exhibit "J",
Building Standards and in accordance with the Schedule of Performance to be submitted for each
Eligible Property and approved by the Agency prior to the execution of the Development
Agreement for any particular Eligible Property.
8. Schedule of Performance
For any given Eligible Property the Developer shall comply with and meet the deadlines listed in
the Schedule of Performance attached to the Development Agreement for that particular Eligible
Property, a template of which is included in this Agreement as Exhibit "I".
9. Relocation Requirements.
If applicable, Developer shall be responsible for assuring compliance with all relocation
requirements as governed by federal relocation laws and regulations for projects funded in whole
or in part with NSP funding, including the Federal Uniform Relocation Assistance and Real
Property Policies Act (42 U.S.A. 4601 et seq., as amended), Federal Relocation Regulations (49
CFR Part 24), and HUD Relocation Handbook 1378. In circumstances where both federal and
state funds are contributed to a program or Eligible Property, it is the policy of the Agency to
follow the requirements that provide the displaced person or household with the greatest benefit.
For example, if in a mixed-funded project, the assistance or benefit under state law is more
favorable to the displaced person or household, then the state law applies, and if the opposite is
the case, then applicable federal laws and regulations (e.g., California Reloca,tion Assistance
Law, etc.) shall apply. Any relocation assistance shall be provided through and in the manner
directed by the Agency. It shall be the responsibility of the Developer to hire a relocation
consultant to coordinate the relocation. The fees and costs of the relocation consultant incurred
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by the Developer shall be included as part of the Total Development Cost for any Eligible
Property, and as such, shall be paid for from the proceeds of the Development Loans.
10. Environmental Conditions
Developer shall comply with any National Environmental Policy Act of 1969 (NEPA) or
California Environmental Quality Act (CEQA) mitigation measures or other environmental
conditions imposed by Agency or any other applicable governmental authority in connection
with the Eligible Property. The specific mitigation measures to be executed for each particular
Eligible Property shall be attached as an exhibit to the corresponding Development Agreement
for each Eligible Property.
II. Limitations on Tenants.
Notwithstanding anything to the contrary in this Agreement, Developer hereby covenants on
behalf of itself, and its successors and assigns, which covenant shall run with the land and bind
every successor and assign in interest of Developer, that, throughout the term of the CC&Rs for
any Eligible Property, Developer and such successors and assigns shall use the Eligible Property
solely for the purpose of rehabilitating and operating the Eligible Property as a residential
development with the tenant income levels specified in this Agreement as consideration for any
Development Loans that the Agency might be providing to a particular Eligible Property. All
units within any Eligible Property ("Agency Assisted Units") shall be rented only at an
"Affordable Housing Cost" to "Very Low -Income Households" as hereinafter defined (persons
within this group occasionally referred to as "Eligible Tenants").
"Very Low-Income Households" shall mean persons and families whose gross annual
household incomes do not exceed the qualifying limits for lower income families as established
and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937,
which qualifying limits are otherwise set forth in Section 6932 of the California Code of
Regulations and are equivalent to fifty percent (50%) of Area Median Income, adjusted for
family size and other adjustment factors by the United States Department of Housing and Urban
Development (HUD).
"Affordable Housing Cost" shall mean, as to each Eligible Person, a rental rate which
results in monthly payments which, including a reasonable utility allowance, do not exceed for
an Eligible Person within a Very Low-Income Household, the lesser of the product of thirty
percent (30%) times fifty percent (50%) of Area Median Income adjusted for family size
appropriate to the Agency Assisted Unit.
"Area Median Income" shall mean the median income for San
Bernardino/Riverside Metropolitan Statistical Area, adjusted for family size as
periodically adjusted by HUD, or any successor entity designated under state law as
responsible for establishing such "Area Median Income."
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Developer shall specifically provide in each Agency Assisted Unit lease and shall
strictly enforce the requirement that each Agency Assisted Unit be occupied at all times by the
eligible household who has leased that Agency Assisted Unit, and that any other occupant of the
unit be another qualified member of the lessee's household. The Agency shall be identified as a
third party beneficiary of that covenant and shall have the right to directly enforce that restriction
in the event Developer fails to do so. Prior to execution of any Agency Assisted Unit lease with
respect to the Eligible Property, Developer shall submit to the Agency and obtain its written
approval of a standard form occupancy lease and Developer shall thereafter use the approved
form for all leases of Agency Assisted Units in any Eligible Property, with only such further
modifications thereto as are first submitted to and approved in writing by the Agency.
12. Tenant Selection Process; Reports and Records Concerning Tenancies
Developer shall maintain such records and satisfy such reporting requirements as may be
reasonably imposed by the Agency to monitor compliance with the tenanting requirements
described in Section I labove, including without limitation the requirement that Developer
deliver reports to the Agency commencing at the close of the initial occupancy of an Eligible
Property, and continuing annually thereafter, setting forth the name of each Eligible Tenant, the
unit occupied and the income of the Eligible Tenant and the amount of rent payable by each
Eligible Tenant. Developer shall also be required to have each prospective Eligible Tenant
complete a rental application prior to occupancy and to obtain evidence from each such Eligible
Tenant as may be reasonably required by the Agency to certify such Eligible Tenant's
qualification for occupancy of the Eligible Property. Developer's obligation to provide such
reports shall remain in force and effect for the same duration as the use covenants in the CC&R's
attached to the Development Agreement for any particular Eligible Property.
13. Management of Project
Subject to the terms and conditions contained hereinbelow, Developer shall at all times during
the operation of any Eligible Property pursuant to this Agreement retain an entity to perform the
management and/or supervisory functions ("Manager") with respect to the operation of any
Eligible Property including day-to-day administration, maintenance and repair. Developer shall,
before execution or any subsequent amendment or replacement thereof, submit and obtain the
Agency's written approval of a management contract ("Management Contract") entered into
between Developer and an entity ("Management Entity") acceptable to the Agency. Subject to
any regulatory or licensing requirements of any other applicable governmental agency, the
Management Contract may be for a term of up to fifteen (15) years and may be renewed for
successive terms in accordance with its terms, but may not be amended or modified without the
written consent of Agency. The Management Contract shall also provide that the Management
Entity shall be subject to termination for failure to meet project maintenance and operational
standards set forth herein or in other agreements between Developer and the Agency. Developer
shall promptly terminate any Management Entity which commits or allows such failure, unless
the failure is cured within a reasonable period but in no event exceeding 60 calendar days from
Management Entity's receipt of notice of the failure from either Developer or the Agency.
Developer's obligation to retain a Management Entity shall remain in force and effect for the
same duration as the use covenants set forth in the CC&R's attached to the Development
Agreement for any particular Eligible Property.
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14. Operations and Maintenance
Developer hereby covenants on behalf of itself, and its successors and assigns, which covenant
shall run with the land and bind every successor and assign in interest of Developer, that
Developer and such successors and assigns shall use each Eligible Property solely for the
purpose of operating each Eligible Property and ancillary improvements thereon, in accordance
with and of the quality prescribed by this Agreement and the CC&Rs and the Agency Deed of
Trust pertaining to the particular Eligible Property.
Developer covenants and agrees for itself, its successors and assigns, which covenants shall run
with the land and bind every successor or assign in interest of Developer, that during
rehabilitation of each Eligible Property pursuant to this Agreement and thereafter, no Eligible
Property, or any portion thereof, shall be improved, used or occupied in violation of any
applicable governmental restrictions or the restrictions contained in this Agreement or the
Agency Deed of Trust pertaining to a particular Eligible Property. Furthermore, Developer and
its successors and assigns shall not maintain, commit, or permit the maintenance or commission
on any Eligible Property, or any portion thereof, of any nuisance, public or private, as now or
hereafter defined by any statutory or decisional law applicable to any Eligible Property, or any
portion thereof.
Developer shall, at its expense, (i) maintain all improvements and landscaping on each Eligible
Property in good working order, condition, and repair (and, as to landscaping, in a healthy and
thriving condition) in accordance with the plans for the particular Eligible Property (which must
be approved by the Agency before being incorporated into the Development Agreement for any
particular Eligible Property) (such approved plans, the "Plans") and all applicable governmental
restrictions, and (ii) manage each Eligible Property and its finances reasonably prudently and in
compliance with applicable governmental restrictions so as to maintain a safe and attractive
living environment for the Eligible Tenants while maximizing Residual Receipts to the extent
reasonably possible consistent with applicable rent and tenant requirements (including all
recorded rent restrictions affecting any Eligible Property) and without compromising the safety
and attractiveness of the living environment of any Eligible Property.
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Exhibit "B"
Supervisory Staff Personnel
Agency Staff:
Carey K. Jenkins,
Director of Housing and Community Development
Fernando S. Portillo,
Project Manager
Emil A. Marzullo,
Interim Executive Director
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EXHIBIT "C"
Insurance Requirements
The Developer shall maintain insurance policies issued by an insurance company or
companies authorized to do business in the State of California and that maintain during
the term of the policy a "General Policyholders Rating" of at least A(v), as set forth in the
then most current edition of "Bests Insurance Guide," as follows:
(1) Automobile Insurance. The Developer and its general
contractor(s) shall maintain comprehensive automobile liability insurance of not less than
$1,000,000.00 combined single limit per occurrence for each vehicle leased or owned by
the Developer or its general contractor(s) and used in performing work under this
Agreement.
(2) Worker's Compensation: Developer and Developer's Contractors'
employees shall be covered by Workers' Compensation insurance in an amount and form
to meet all applicable requirements of the Labor Code of the State of California and
Employers Liability limits of $1 ,000,000 per accident.
, .
(3) Liabilitv Insurance. The Agency requires comprehensive liability
insurance, including coverage for personal injury, death, property damage and contractual
liability, with a limit of at least One Million Dollars ($1,000,000) for each occurrence
($2,000,000 general aggregate), and including products and completed operations
coverage. Said insurance shall be primary insurance with respect to the Agency.
Developer shall require and ensure the Developer's contractors to include the Agency as
an additional insured on all general liability insurance covering work at the Eligible
Property. If required by the Agency from time to time, Developer shall increase the
limits of Developer's liability insurance to reasonable amounts customary for owners of
improvements similar to the Eligible Property. The policy shall contain a waiver of
subrogation for the benefit of the Agency.
(4) Propertv Insurance: "All Risk" ISO Special Form property
insurance, including without limitation builder's risk protection during the course of
construction, covering the full replacement value of real property and equipment utilized
for the rehabilitation of the Eligible Properties. Coverage shall extend to provide debris
removal. The Agency shall be the loss payee under the aforementioned policies under a
standard lender's loss payable endorsement. The amount of the property coverage shall at
all time exceed the full replacement value of all improvements and fixtures on the
Property and the insurer shall waive any coinsurance via an "agreement" endorsement.
Concurrent with the execution of this Agreement and prior to the commencement
of any work by the Developer, the Developer shall deliver to the Agency, copies of
policies or certificates evidencing the existence of the insurance coverage required herein,
which coverage shall remain in full force and effect continuously throughout the term of
this Agreement. Each policy of insurance that the Developer purchases in satisfaction of
the insurance requirements of this Agreement shall name the Agency as an additional
22
insured and shall provide that the policy may not be cancelled, terminated or modified,
except upon thirty (30) calendar days' prior written notice to the Agency.
Failure on the part of sub-recipient to procure or maintain the insurance coverage
required in this Exhibit "e" shall constitute a material breach of this Agreement pursuant
to which the Agency may immediately terminate this Agreement and exercise all other
rights and remedies set forth herein, at its sole discretion, and without waiving such
default or limiting the rights or remedies of the Agency, procure or renew such insurance
and pay any and all premiums in connection therewith and all monies so paid by the
Agency shall be reimbursed by Developer to the Agency upon demand including interest
thereon at the rate of ten percent (10%) per annum interest compounded annually from
the date paid by the Agency to the date reimbursed by Developer. The Agency shall have
the right, at its election, to participate in and control any insurance claim adjustment or
dispute with the insurance carrier. Developers' failure to assert or delay in asserting any
claim shall not diminish or impair the rights of the Agency against the Developer or the
insurance carrier.
23
Exhibit "D"
Development Pro Forma Template
24
EXHIBIT "D"
SOURCES & USES OF FUNDS Revised: 1/2612009
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
SOURCES: CONSTRUCTION Per Unit USES: Per Unit
Private Acquisition Loan $0 0 Acquisition Costs/Closing $0 0
Private Construction Loan $0 0 Architecture/Fees & Permits $0 0
NSP1 $0 0 Construction Cost $0 0
Agency Low-Mod Funds $0 0 Indirect Construction/Legal $0 0
NSP State $0 0 Developer's Fee $0 0
NSP2 $0 0 Rent-Up Costs/Reserves $0 0
Other $0 0 Financing Costs $0 0
Deferred Developer Fee $0 0 Other $0 0
Deferred Costs $0 0 Other $0 0
TOTAL $0 0 $0 0
SOURCES: PERMANENT Per Unit
Perm Loan - $0 0 USES: Per Unit
NSP1 $0 0 Acquisition Costs/Closing $0 0
Agency Low-Mod Funds $0 0 Architecture/Fees & Permits $0 0
NSP State $0 0 Construction Cost $0 0
NSP2 $0 0 Indirect Construction/Legal $0 0
Deferred Developer Fee $0 0 Developer's Fee $0 0
Other $0 0 Rent-Up Costs/Reserves $0 0
Other $0 0 Financing Costs $0 0
Other $0 0
TOTAL $0 0 $0 0
EXHIBIT "0"
DEVELOPMENT COSTS ~,,;S8d.. ''''''''''
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
Number of Dwelling Units: 4 Gross Building Area (sf) 4
TOTAL $ PER $ PER SF "10 OF
COST UNIT BUilDING TOTAL
1. ACQUISITION COSTS:
Purchase Price $0 $0.00 $0.00 #DIVlO!
Closing Costs $0 $0.00 $0.00 #DIVlO!
Appraisal $0 $0.00 $0.00 #0IV10!
Holding Costs $0 $0.00 $0.00 #OIY/O!
TOTAL ACQUISITION COSTS $0 $0.00 $0.00 #DlV/O!
2. FEESlPERMITS & STUDIES
Building Fees & Permits $0 $0.00 $0.00 #DIV/C!
SurveyslSoilsfTrafficJAcousticllnspections $0 $0.00 $0.00 #DIV/a!
Environmental DodRemediationfMitgation $0 $0.00 $0.00 #DIV/O!
Arch./Engineering Fees
Design 0.00% $0 $0.00 $0.00 #DIVlOI
Reimbursables $0 $0.00 $0.00 #DIVlO!
Subtotal: $0 0.00 $0.00 #DIVlOl
TOTAL FEES/PERMITS & STUDIES $0 $0.00 $0.00 #DIV/OI
3. DIRECT CONSTRUCTION COSTS:
Demolition $0 $0.00 $0.00 #DIVlO!
Rehabilitation $0 $0.00 $0.00 #DIVlO!
On-site Wol1c. $0 $0.00 $0.00 #DIV/O!
Off-site Work $0 $0.00 $0.00 #OIVlO!
Other $0 $0.00 $0.00 #OIV/O!
O~M $0 $0.00 $0.00 #DIVlO!
Subtotal: $0 $0.00 $0.00 #OIVlO!
Contractor's Overhead & Profit 0.00% $0 $0.00 $0.00 #DIV/Ol
Subtotal: $0 $0.00 $0.00 #DIV/C!
General Conditions 0.00% $0 $0.00 $0.00 #DIVlOl
Performance Bond I GL Insurance $0 $0.00 $0.00 #CIVlal
Subtotal: $0 $0.00 $0.00 #DIVlO!
Construction Contingency 0.00% $0 $0.00 $0.00 #DIVlO!
TOTAL DIRECT CONSTRUCTiON COSTS $0 $0.00 $0.00 #DIV/O!
4. INDIRECT CONSTRUCTION COSTS
Developets Fee $0 $0.00 $0.00 #DIV/O!
Deferred Developer Fee $0 $0.00 $0.00 #DIV/O!
Subtotal: $0 $0.00 $0.00 #DIV/OJ
BuUdersRisklLiabilitylnsurance $0 $0.00 $0.00 #DIV/O!
Real Estate Taxes $0 $0.00 $0.00 #DIVlO!
Legal _ Organizational $0 $0.00 $0.00 #DIVlOI
Accountingllnspection $0 $0.00 $0.00 #DIVlC!
Relocation $0 $0.00 $0.00 #DIV/OJ
lndimd. Construction Costs Contingency $0 $0.00 $0.00 #DIV/O!
TOTAL INDIRECT CONSTRUCTION COSTS $0 $0.00 $0.00 #DIV/O!
5, RENT-UP COSTS
Mal1c.etinglAdvertising Expense $0 $0.00 $0.00 #DIV/O!
Lease-up Reserve (4 month Iease-up) $0 $0.00 $0.00 #DIV/O!
Capitalized Replacement Reserve $0 $0.00 $0.00 #DIV/O!
Capitalized Operating Reserve $0 $0.00 $0.00 #DIVlO!
Common Area Furnishings $0 $0.00 $0.00 #DIV/O!
TOTAL RENT-UP/MARKETlNG COSTS $0 $0.00 $0.00 #DIV/O!
6. FINANCING COSTS
Construction Loan Interest $0 $0.00 $0.00 #DIV/C!
Construction Loan FeesICosts $0 $0.00 $0.00 #DIV/O!
Lender Appraisal $0 $0.00 $0.00 #DIVlO!
Lender Legal $0 $0.00 $0.00 #DlV/O!
Permanent Loan FeesIClosing Costs $0 $0,00 $0.00 #DIV/OI
Title and Recording (Constr.lPerm,) $0 $0.00 $0.00 #DIV/O!
TOTAL FINANCING COSTS $0 $0.00 $0.00 #DIV/O!
7. SUBTOTAL DEVELOPMENT COSTS $0 $0.00 $0.00 #DlV/O!
TOTAL LAND COSTS $0 $0.00 $0.00 #DIV/O!
TOTAL DEVELOPMENT COSTS $0 $0.00 $0.00 #DIV/O!
ConstructIon estimates are subject to change and may be revised due to entitlement issues, changes In
construction standards, archltectunJl and engineering requirements, and other unforseen circumstances.
2
EXHIBIT "0"
RENT SCHEDULE
Revised:
1/26/2009
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer Name: Mary Erickson Community Housing, Inc.
2008 AREA MEDIAN INCOME
$0 2009 2009
Monthly Monthly Monthly Total Total Total
Unit Percent Gross Utility Net Number Monthly Annual #of
Type Median Rent Allow. Rent of Units Rent Rent ($) Bdrms.
ONE BEDROOM 30% $420 $48 $372 0 $0 $0 0
45% $584 $48 $536 0 $0 $0 0
50% $649 $48 $601 0 $0 $0 0
TWO BEDROOM 30% $0 $61 ($61) 0 $0 $0 0
45% $0 $61 ($61) 0 $0 $0 0
50% $0 $61 ($61) 0 $0 $0 0
60% $0 $61 ($61) 0 $0 $0 0
0
THREE BEDROOM 30% $0 $74 ($74) 0 $0 $0 0
45% $0 $74 ($74) 0 $0 $0 0
50% $0 $74 ($74) 0 $0 $0 0
60% $0 $74 ($74) 0 $0 $0 0
0
MANAGER'S Exempt $0 $0 $0 0 $0 $0 -1
TOTAL 0 $0 $0 -1
30% 0 #DIV/O! 30% 0 #DIV/O!
45% 0 #DIV/O! 45% 0 #DIV/O!
50% 0 #DIV/O! 50% 0 #DIV/OJ
60% 0 #DIV/O! 60% 0 #DIV/O!
Mgr 0 #DIV/O! Mgr 0 #DIV/OI
0 #DIV/O! 0 #DIV/OI
Includina Mar. Unit Excludina Mar.Unit
3
EXHIBIT "0"
OPERATING EXPENSES Revised: ,"6W09
Project Name: Sunrise & 19th Street Project
Project Address: Address, San Bernardino, CA Zip Code
Developer: Mary Erickson Community Housing, Inc.
ANNUAL MONTHLY PER UNIT UNITIMO. % TOTAL
0
1. MANAGEMENT
Contract Management Fee $0 $0.00 $0.00 $0.00 #DIV/OI
TOTAL MANAGEMENT $0 $0.00 $0.00 $000 #DIV/O!
2. ADM1N1STRA lION
Marketing $0 $0.00 $0.00 $0.00 #DIV/O!
Audit $0 $0.00 $0.00 $0.00 #DIV/O!
legal $0 $0.00 $0.00 $0.00 #DIV/OI
Office Expenses $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL ADMINISTRATION $0 $0.00 $0.00 $0.00 #DIV/O!
3. SAlARIES AND BENEFITS
On-Site Manager/Asst. Manager* $0 $0.00 $0.00 $0.00 #DIV/O!
Maintenance Personnel" $0 $0.00 $0.00 $0.00 #DIV/O!
Janitorial Personnel $0 $0.00 $0.00 $0.00 #DIV/O!
Case Manager $0 $0.00 $0.00 $0.00 #DIV/O!
Housekeepers $0 $0.00 $0.00 $0.00 #DIV/O!
Payroll TX$, Ins & Wkr. Compo $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL SALARIES $0 $0.00 $0.00 $0.00 #DIV/O!
4. MAINTENANCE
Supplies $0 $0.00 $0.00 $0.00 #DIV/O!
Repairs Contract $0 $0.00 $0.00 $0.00 #DIV/O!
Pest Control $0 $0.00 $0.00 $0.00 #DIV/O!
Grounds Contract $0 $0.00 $0.00 $0.00 #DIV/O!
Turnover Costs $0 $0.00 $0.00 $0.00 #DIV/O!
Other $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL MAINTENANCE $0 $0 $0 $0 #DIV/O!
5. UTILITIES NOT PAID BY TENANTS
Trash Removal $0 $0.00 $0.00 $0.00 #DIV/O!
Electricity $0 $0.00 $0.00 $0.00 #DIV/O!
Water/Sewer $0 $0.00 $0.00 $0.00 #DIV/O!
Gas $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL UTILITIES $0 $0.00 $0.00 $0.00 #DIV/O!
6. INSURANCE
Property & liability Insurance $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL INSURANCE $0 $0.00 $0.00 $0.00 #DIV/O!
7. TAXES/RESERVES
Real Estate Taxes $0 $0.00 $0.00 $0.00 #DIV/O!
Replacement Reserves $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL TAXES $0 $0.00 $0.00 $0.00 #DIV/O!
8. OTHER
Other $0 $0.00 $0.00 $0.00 #DIV/O!
Other $0 $0.00 $0.00 $0.00 #DIV/O!
TOTAL OTHER $0 $0 $0 $0 #DIV/O!
TOTAL OPERATING EXPENSES $0 $0 $0.00 $0.00 #DIV/OI
4
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oc
Exhibit "E"
Developer Payment and Reimbursement
The Developer's compensation for executing the Scope of Services described in Exhibit
"A" shall consist of the following components: I. Developer Fee - This is the
compensation that the Developer receives for executing the development of an Eligible
Property, including acquisition, demolition (if so required), rehabilitation and obtaining
all the required governmental approvals and permanent financing required to operate the
Eligible Property for its intended use; 2. Property Management Fee - The Developer shall
receive a monthly fee for managing the Eligible Property on a daily basis once the
Property is leased up. The portion of the Property Management Fee received by the
Developer shall be determined by the extent to which the Developer is involved in the
management of the Eligible Property; and 3. Residual Receipts - Any cash flow
generated by an Eligible Property after operating expenses, debt obligations, and other
fees and reserves approved by the Agency have been paid shall be shared by the Agency
and the owners of the Eligible Property. The Developer is entitled to a portion of the
owner's share of Residual Receipts to the extent that they participate in the ownership of
that particular Eligible Property.
All of the above fees must be reflected in the financing plan presented to the Agency by
the Developer for any particular Eligible Property. The Agency will negotiate these fees
with the Developer prior to the execution of any Development Agreement for any
particular Eligible Property; however, the fees shall generally be determined in
accordance with the definition and formula established for each respective fee below.
The Agency's approval of these fees is a necessary pre-condition for the execution of any
Development Agreement.
A. Developer Fee
The Developer Fee shall be included as a line item in the development budget
for the Eligible Property presented to the Agency by the Developer prior to
the acquisition or rehabilitation of any Eligible Property. It shall be paid from
the financing proceeds obtained for the development of an Eligible Property.
The formulas for determining the amount of the Developer Fee are as follows:
(I) Acquisition and Rehabilitation - In the case where the Developer is
acquiring the Eligible Property for the intended purpose of
rehabilitating the property and renting it to Eligible Tenants, the
Developer shall be entitled to a Developer Fee equal to ten percent
(10%) of the Total Development Cost as reflected in the Development
Pro Forma Template attached to this Agreement as Exhibit "D" and
approved by the Agency. The Total Development Cost shall be
comprised only of those line items that appear in the Development Pro
25
Forma Template. Any other costs shall only be included as a part of
Total Development Cost upon approval by the Agency.
(2) Developer Fee Bonus - If the Developer is successful in obtaining a
cumulative amount of at least two million dollars ($2,000,000)
("Threshold Amount") from financing sources other than the Agency
("Alternate Funds") that can be applied toward the acquisition,
rehabilitation, and/or operations of Eligible Properties as defined in
this Agreement, then the Developer will receive an additional two
percent (2%) of Total Development Cost for all Eligible Properties
acquired and/or rehabilitated using Alternate Funds, once such
Alternate Funds have been successfully secured by the Developer.
The Alternate Funds will be considered to have been secured by the
Developer after the Alternate Funds have been effectively applied
towards the purchase and/or rehabilitation of Eligible Properties. The
2% additional bonus will apply to all Eligible Properties using
Alternate Funds as part of their financing, including those Eligible
Properties that were completed prior to reaching the $2,000,000
threshold.
(3) Developer Fee Payment Schedule - Twenty-five percent (25%) of the
Developer Fee as defined in Sections A.(l) and A.(2), above, shall be
disbursed to the Developer upon the closing of the Acquisition
Escrow. Fifty-percent (50%) shall be paid upon completion of the
rehabilitation work and the receipt of the Certificate of Occupancy. In
the case where a Certificate of Occupancy does not need to be issued
in order to operate the Eligible Property, the Certificate of Completion
from the general contractor and the Unconditional Lien Releases from
the Developer and all of its general contractors and sub-contractors can
be accepted for the purposes of documenting the satisfactory
completion of the rehabilitation work on the Eligible Property, instead
ofa Certificate of Occupancy. The remaining twenty-five (25%) shall
be paid upon the closing of the permanent financing for the Eligible
Property.
B. Property Management Fee
The Property Management Fee shall be included as a line item in the First
Year Operating Budget (please see Exhibit "D") for the Eligible Property
presented to the Agency by the Developer prior to the acquisition and
rehabilitation of any Eligible Property. This fee shall only be paid in the case
where an Eligible Property is being acquired for the purpose of rehabilitating
it and eventually renting it to Eligible Tenants. It shall be paid from the rental
revenues generated from the operation of the Eligible Property. This fee shall
be negotiated and must be approved by the Agency prior to the execution of
the Development Agreement for any particular Eligible Property, but in no
26
event shall the Property Management Fee exceed seven percent (7%) of the
Eligible Property's Effective Gross Income. Upon the acquisition of five (5)
contiguous Eligible Properties, the Property Management Fee shall not exceed
six percent (6%). The Effective Gross Income for any Eligible Property shall
be calculated in the manner reflected in the First Year Operating Budget for
the Eligible Property.
C. Residual Receipts
The Agency is entitled to receive at least fifty percent (50%) on any Residual
Receipts for any given year that an Eligible Property is in operation. The
remaining portion of Residual Receipts pertains to the Owner of the Eligible
Property. Any portion of Residual Receipts paid to the Developer shall be
distributed from the Owner's portion of Residual Receipts. The distribution
of Residual Receipts may vary between Eligible Properties subject to the
terms and conditions negotiated by the Agency and the Developer prior to the
execution of any Development Agreement for an Eligible Property.
I. Calculation of Residual Receipts
Residual Receipts shall be calculated and reported to the Agency annually
for each calendar year no later than March 15th of the following calendar
year on forms specified and provided by the Agency from time to time.
All calculations and records are subject to audit by the Agency.
Developer shall provide to the Agency for inspection and copying any
records, receipts, account books, ledgers, checks, or other documents or
other evidence requested by the Agency for the purpose of verifying
Developer's calculation of Residual Receipts, and shall promptly pay to
the Agency any further amount due but not paid as a result of any
miscalculation by Agency.
2. Definition of Residual Receipts.
(a) "Residual Receipts" shall mean, with respect to each calendar year, the
amount by which "Gross Rents," as defined herein, for such calendar
year exceed the "Operating Expenses", as defined herein, for that
calendar year. (b) With the exception of the "Excluded Items" (as
defined below), "Gross Rents" shall mean, with respect to each
calendar year or portion thereof, all gross income, rentals, revenues,
payments and consideration, of whatever form or nature, whether
direct or indirect, received by or paid to or for the account or benefit of
Developer or any "Affiliate" (as defined below) of Developer or any of
their agents or employees, from any and all sources, resulting from or
attributable to the ownership, operation, leasing and occupancy of the
Eligible Property, determined on the basis of generally accepted
accounting principles applied on a consistent basis, and shall include,
but not be limited to: (i) gross rentals paid by occupancy tenants of the
27
Eligible Property under occupancy leases and payments and subsidies
of whatever nature, including without limitation any payments,
vouchers or subsidies from the United States Department of Housing
and Urban Development (HUD) or any other person or organization,
received on behalf of tenants under occupancy leases, (ii) amounts
paid to Developer or any Affiliate of Developer on account of
"Operating Expenses" (as defined herein) for further disbursement by
Developer or such Affiliate to a third party or parties, (iii) late charges
and interest paid on rentals, (iv) rents and receipts from licenses,
concessions, vending machines, coin laundry and similar sources; (v)
other fees, charges or payments not denominated as rental but payable
to Developer in connection with the rental of office, retail, storage, or
other space in the Project; and (vi) consideration received in whole or
in part for the cancellation, modification, extension or renewal of
occupancy leases. The term "Affiliate" shall mean any person or
entity directly or indirectly, through one or more intermediaries, con-
trolling, controlled by or under common control with Developer
which, if Developer is a partnership or limited liability company, shall
include each of the constituent members or partners, respectively,
thereof. The term "control" as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the
right to exercise, directly or indirectly, more than fifty percent (50%)
of the voting rights attributable to the shares of the controlled
corporation, and, with respect to a person that is not a corporation,
possession directly or indirectly of the power to direct or cause the
direction of the management or policies of the controlled person.
Notwithstanding the foregoing, Gross Rents shall not include the
following items ("Excluded Items"): (aa) security deposits from
tenants (except when applied by Developer to rent or other amounts
owing by tenants); (bb) capital contributions to Developer or its
members, partners or shareholders by its or their members, partners or
shareholders; (cc) condemnation or insurance proceeds constituting
'Net Proceeds' as defined in Section C.2.(d) below; and (dd) funds
received from any source (including but not limited to senior financing
and any junior financing or other financing) actually and directly used
for acquisition and/or rehabilitation of the Eligible Property.
(b) "Operating Expenses" shall mean, with respect to each calendar year
or portion thereof, the sum of the following expenses to the extent
reasonably paid by Developer during such period: (i) nonelective
payments made with respect to the Senior Financing; (ii) all taxes and
assessments imposed upon the Eligible Property and required to be
paid by Developer but only to the extent such taxes and assessments
are paid or set aside as a reserve by Developer during such calendar
year; (iii) all amounts paid or set aside as a reserve by Developer on
account of insurance premiums for insurance carried in connection
28
with the Eligible Property, provided that if insurance on the Eligible
Property is maintained as part of a blanket policy covering the Eligible
Property and other properties, the insurance premium included in this
definition shall be the portion of the premium fairly allocable to the
Eligible Property for the period; (iv) ownership and operating costs
incurred by Eligible Property for the management, operation, cleaning,
leasing, marketing, maintenance and repair of the Eligible Property
(including without limitation, property management fees and
administrative fees) properly chargeable against income according to
generally accepted accounting principles, including without limitation
wages, payroll and accounting costs, utility and heating charges,
material costs, maintenance costs, costs of services, water and sewer
charges, travel expenses allocable to the Eligible Property, and license
fees and business taxes; provided, however, that (A) the amount
included as property management fees and administrative fees in
Operating Expenses shall collectively not exceed ten percent (10%) of
Gross Rents from the Eligible Property for such period, all or a portion
of each of which may be paid to Developer and/or an Affiliate of
Developer, (B) such property management fees and administrative fees
shall only be paid on the basis of supporting documentation reasonably
acceptable to the Agency, and shall be paid after the payment of all
other Operating Expenses, and (C) partnership management fees and
other fees payable to a partner in a tax credit limited partnership shall
only be considered Operating Expenses to the extent they do not
exceed $15,000 in the aggregate in any year, which shall be adjusted
annually by a percentage equal to the annual increase in AMI adopted
by HUD; (v) reasonable and ordinary reserves actually set aside for
replacement of roofing, furniture, fixtures, equipment, and other
capital expenditures, in an annual amount no less than $200.00 per unit
and no greater than such higher amount as may be established from
time to time by mutual agreement of the Parties; and (vi) to the extent
not otherwise included in Operating Expenses, amounts paid from any
account as a reserve account for the purpose for which such reserve
was created so long as such purpose would constitute an Operating
Expense.
(c) Notwithstanding any prOVISIOn of Section C.2.(b) , the term
"Operating Expenses" shall not include any of the following:
(i) salaries of employees of Developer or Developer's general
overhead expenses, or expenses, costs and fees paid to an
Affiliate of Developer, to the extent any of the foregoing
exceed the expenses, costs or fees that would be payable in
a bona fide arms' length transaction between unrelated
parties in the San Bernardino-Riverside County area for the
same work or services;
29
(ii) any amounts paid directly by a tenant of the Eligible
Property to a third party in connection with expenses
which, if incurred by Developer, would be Operating
Expenses;
(iii) optional or elective payments with respect to the Senior
Financing;
(iv) any payments with respect to Junior Financing, Other
Financing, or any other Eligible Property-related loan or
financing other than the Senior Financing; or
(v) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Developer prior to
completion of the Rehabilitation with respect to the
development, maintenance and upkeep of the Eligible
Property, or any portion thereof, including, without
limitation, all costs and expenses incurred by Developer in
connection with the acquisition of the Eligible Property, all
predevelopment activities conducted by Developer in
connection with the Eligible Property, including without
limitation, the preparation of all plans and the performance
of any tests, studies, investigations or other work, and the
construction of the Project and anyon-site or off-site work
in connection therewith.
(d) In addition to the payments provided in Sections 2(a), (b) and (c)
above, and subject to the terms of the Senior Financing, Developer
shall pay to the Agency towards (but not to exceed) any outstanding
amounts associated with the Loan: (a) no later than the date of close of
escrow or other consummation of any Assignment other than a Minor
Assignment, the Applicable Percentage of the Net Proceeds of such
Assignment; and (b) no later than the recording of a Refinancing, fifty-
percent (50%) of the Net Refinancing Proceeds received from any
such Refinancing.
A "Minor Assignment" shall mean any lease of an individual unit in the Project
for occupancy by a residential tenant and in the ordinary course of business for operation
of the Project.
"Applicable Percentage" shall mean fifty percent (50%); provided, however, that
the term Applicable Percentage shall mean one hundred percent (100%) with respect to a
payment on the Loan attributable in whole or in part to a condemnation of, or event of
damage, destruction or casualty with respect to, the Eligible Property, the Project or any
portion of either. "Assignment" means any voluntary or involuntary conveyance,
disposition, assignment, taking, casualty, encumbrance (other than a Refinancing as
30
defined below or the creation of the Senior Financing or any other Project Loan or
limited partner contribution, the proceeds of which are used solely for initial acquisition
of the Eligible Property by Developer or initial development of the Project), sublease,
sale, license, concession, management agreement, operating agreement, transfer or
similar transaction with respect to any direct or indirect interest or economic benefit of
any person or entity in connection with the Project or the use or occupancy of the Eligible
Property including, without limitation, any Transfer by Developer of all or any portion of
its rights under or interest in the Project or the Eligible Property, any change of
ownership or control of Developer, any condemnation or taking of the Eligible Property
or the Project or any portion thereof, any event of damage to or destruction of the Eligible
Property or the Project, any foreclosure of Developer's interest in the Project or the
Eligible Property, whether by judicial proceedings, or by virtue of any power contained
in a deed of trust, indenture or other instrument creating a lien against the Eligible
Property or the Project, or any assignment of Developer's estate in the Project or the
Eligible Property through, or in lieu of, foreclosure or other appropriate and bona fide
proceedings in the nature thereof; provided, however, that the term "Assignment" as used
herein shall not include bona fide transfers of an ownership interest in Developer to any
Affiliate of Developer, so long as the consideration paid to the selling partner, member or
shareholder on account of such transfer does not exceed the actual amount paid by such
partner, member or shareholder for its ownership interest plus reimbursement for any out-
of-pocket expenses incurred by such partner, member or shareholder in connection with
its acquisition of such ownership interest.
"Net Proceeds" of an Assignment shall mean (1) the proceeds received, directly
or indirectly, by Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate as a result of such Assignment, including,
without limitation, cash, the amount of any monetary lien or encumbrance assumed or
taken subject to by the assignee, the fair market value of any noncash consideration,
including the present value of any promissory note received as part of the proceeds of
such Assignment (such present value to be determined based upon a discount rate
reasonably satisfactory to the Agency), the entire condemnation award or compensation
payable to Developer or any Affiliate or constituent member or partner, or majority
shareholder, of Developer or any Affiliate in connection with a condemnation or taking in
eminent domain of any part of the Eligible Property or the Project or any interest therein,
all insurance proceeds or awards payable to Developer or any Affiliate or constituent
member or partner or majority shareholder of Developer or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part
thereof not used for project restoration; less (2) the sum of (i) the actual, documented and
reasonable expenses of effecting such Assignment, including reasonable brokerage
commissions, title insurance premiums, documentary transfer taxes, and reasonable
attorneys' fees, in each case actually paid in connection with the Assignment (provided
that no deduction shall be allowed for payments to an Affiliate of the person or entity
making the Assignment which are in excess of the amount that would be paid for the
same or equivalent services in an arms' length transaction between unrelated parties
acting reasonably), and (ii) the amount of any proceeds of the Assignment paid
(excluding voluntary payments) towards the then-outstanding balance of the Senior
31
Financing. Notwithstanding anything above to the contrary, the permissible deductions
for purposes of calculating the Net Proceeds of an Assignment shall not include any
foreign, U.S., state or local income taxes, franchise taxes, or other taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project
Loan") secured by an encumbrance on the Eligible Property, the Project, or any portion
thereof. The term "Refinancing" shall not include the creation of the Senior Financing or
any other Project Loan, the proceeds of which are used solely for initial acquisition of the
Eligible Property by Developer or initial development of the Project.
"Net Refinancing Proceeds" shall mean the gross face amount of the Project Loan
obtained in connection with such Refinancing, after: (I) payment of the actual, docu-
mented and reasonable expenses of such Refinancing, including escrow fees, title policy
expenses, legal expenses, survey fees, recording fees, commissions, and other usual and
reasonable expenses of any such Refinancing (provided, that no deduction shall be
allowed for payments in connection with such Refinancing which are in excess of the
amounts that would be paid for the same or equivalent services in an arms' length
transaction between unrelated parties acting reasonably); and (2) deduction of amounts
repaid (excluding voluntary payments) in connection with the Refinancing towards
amounts outstanding under the Senior Financing.
32
Exhibit "F"
Closing Requirements
Except to the extent Agency's Executive Director directs in writing that some or all of the
disbursement and/or deliveries shall occur outside of Escrow, disbursement of the
Agency's loans to Developer, whether they be for the purpose of acquiring Eligible
Properties, rehabilitating these properties or providing permanent financing for these
properties, delivery of the executed loan documents (as specified in Sections A., B., and
C. below), and recordation of the appropriate documents (as defined in Sections A., B.,
and C. below) to be recorded shall be carried out through an escrow account ("Escrow")
to be established by the Parties with a title or escrow company ("Escrow Holder")
specifically approved in writing by Agency. Developer shall obtain Agency's approval
of an Escrow Holder prior to the opening of Escrow. The Parties may execute
supplemental instructions to Escrow Holder consistent with the terms of this Agreement,
but in the event of a conflict between the terms of this Agreement and any supplemental
escrow instructions, the terms of this Agreement shall control. Except as otherwise
expressly provided herein, any fees and costs incurred by Escrow Holder in the
performance of its duties hereunder and agreed to be paid by the Parties shall be paid
exclusively by the Developer.
A. Acquisition Financing
I. Disbursements made by the Agency for the purpose of acqumng Eligible
Properties under this Agreement, which shall hereafter be referred to as
"Acquisition Financing", shall be expressly subject to satisfaction of all of the
following conditions (collectively, the Acquisition Closing Conditions) on or
before the date ("Acquisition Closing Deadline") which is thirty (30) calendar
days following the execution date of a sub-agreement initially entered into by the
Agency and Developer for the purposes of implementing the acquisition and/or
rehabilitation, or providing permanent financing of an Eligible Property or Set of
Eligible Properties in accordance with the conditions set forth in this Master
Agreement ("Development Agreement").
(a) Execution of the Development Agreement and delivery of a fully
executed copy of the Development Agreement to the Escrow Holder;
(b) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Acquisition Note ("Acquisition Note"), in the form
attached hereto as Exhibit "K";
(c) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the covenants, conditions and restrictions ("Agency
CC&R's") in the form attached hereto as Exhibit "M", recorded against
the ownership interest of the Developer, prior to the start of
construction;
33
(d) Developer's due execution (with notary acknowledgment) and deposit
into Escrow of the Agency Deed of Trust ("Agency Deed of Trust"),
attached hereto as Exhibit "L";
(e) Receipt by the Agency from Developer of such other documents,
certifications and authorizations as are reasonably required by the
Agency, in form and substance satisfactory to the Agency, evidencing
that (i) the Development Agreement, the Acquisition Note, the Agency
Deed of Trust, the Agency CC&R's and all other documents given or
executed in connection herewith (collectively the Agreement, the
Acquisition Note, the Deed of Trust and the CC&Rs are referred to
herein as the "Acquisition Loan Documents") are duly and validly
executed by Developer and constitute the valid and enforceable
obligation of Developer pursuant to the respective terms, and (ii) the
execution and delivery of the Acquisition Loan Documents, and the
performances thereunder by Developer, will not breach or violate any
law applicable or governmental regulation to which Developer is
subject nor constitute a breach of or default under any instrument or
agreement to which Developer may be a party;
(f) First American Title ("Title Company") shall have assured the Agency
in writing that upon recordation of the Agency Deed of Trust there
will be provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including but
not limited to Nos. 100, 103.7, 116 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Acquisition Loan, insuring the
Agency's interest in the Property as beneficiary under the Agency
Deed of Trust, and specifically insuring that the lien of the Agency
Deed of Trust and the Agency CC&R's against the Property are
subject only to the Senior Financing and any exceptions to title
applicable to the Property which were expressly approved in writing
by the Agency (collectively with the Senior Financing, "Permitted
Senior Encumbrances"). Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
(g) Intentionally omitted
(h) No Event of Default shall exist under this Agreement, the
Development Agreement or under any agreement or instrument
relating to any Senior, Junior or Other financing obtained by the
Developer for the purpose of acquiring, rehabilitating or operating an
Eligible Property and Developer has demonstrated to the satisfaction
of the Agency Executive Director (or his designee) that all financing
34
sources for acquisition, rehabilitation, and operation of the Eligible
Property, including but not limited to Developer's equity, are or will
be available in sufficient amounts to provide for full and timely
completion and ongoing operation, if and to the extent required in the
Development Agreement, of the Eligible Property;
(i) Developer shall have provided to the Agency, in form satisfactory to
the Agency, certified copies of (i) Developer's governing partnership
agreement, operating agreement, or articles and bylaws, together with
a certification by the managing member, managing general partner, or
president that such agreement or articles and bylaws has not been
amended or modified except as described in the certification (ii) a
good standing certificate from the California Secretary of State,
certifying that Developer is duly qualified and in good standing, and
(iii) all other documents necessary to evidence to the Agency's
satisfaction that the individuals and entities executing this Agreement
and the Loan Documents, and other entities on whose behalf such
documents are executed, are fully authorized to do so and to bind the
respective entities, including Developer, to the terms hereof and
thereof;
G) Developer shall have furnished the Agency with evidence satisfactory
to the Agency evidencing the insurance coverages required by Exhibit
"C".
2. When, and only when, Escrow Holder has confirmed that Closing Conditions (a),
(b), (c), (d), and (f) of Section 1 above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Closing Conditions have been timely satisfied or waived, then Escrow
Holder shall carry out the close of Escrow ("Close of Escrow") by:
(i) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(ii) delivering the executed original Acquisition Note to the Agency;
(iii)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer;
B. Rehabilitation Financing
I. Disbursements made by the Agency for the purpose of rehabilitating Eligible
Properties under this Agreement, which shall hereafter be referred to as
35
"Rehabilitation Financing", shall be expressly subject to satisfaction of conditions
A.1.(a), (c), (d), (e), (g), (h), (i) and G) above and conditions B.1.(a) to (e) below,
all of these conditions (collectively, the Rehabilitation Closing Conditions) on or
before the date ("Rehabilitation Closing Deadline") which is thirty (30) calendar
days following the execution date of a Development Agreement or the date that
the Developer receives written approval from the Agency of their Rehabilitation
budget, timeline, design plans, and construction contract (collectively the
"Rehabilitation Plan"), whichever occurs later.
(a) Developer's due execution and deposit into Escrow of a certified copy
of the Agency Rehabilitation Note ("Rehabilitation Note");
(b) Developer shall have commenced or be ready to commence
rehabilitation of the Eligible Property, and shall have furnished the
Agency with copies of (A) a contract for the rehabilitation work and
materials ("Construction Contract") entered into with a general
contractor ("General Contractor") previously approved in writing by
the Agency; (B) a payment bond with respect to the rehabilitation
work and materials posted by the General Contractor which is in an
amount equal to the amount of the contract price identified in the
Construction Contract, is issued by a surety reasonably acceptable to
the Agency, is in form and content reasonably approved by the
Agency, has been recorded in the Official Records of San Bernardino,
and names the Agency as an additional obligee; (C) a performance
bond for one hundred percent (100%) of the contract price,
guaranteeing the completion of the rehabilitation work which is in
form and content reasonably approved by the Agency, is issued by a
surety reasonably acceptable to the Agency, and names the Agency as
an additional obligee; and (D) shall have submitted to the Agency and
received the Agency's approval of any design plans or other design
documents requested by the Agency.
(c) Not as a Closing Condition, but at least ninety (90) calendar days prior
to occupancy and prior to the commencement of tenant selection for
the Eligible Property, Developer shall have obtained the Agency's
written approval of an affirmative marketing plan, leasing guidelines,
and a summary of the rules, procedures and programs for the operation
of the Eligible Property including specifically the procedures to be
employed by which the tenants in the Eligible Property shall be
selected in the event that, at any given time, the number of Eligible
Tenants applying to lease units at the Eligible Property exceeds the
number of units available.
(d) Developer shall have furnished and obtained the Agency's approval of
an Operating Budget and a Management Plan for the Eligible Property.
The Management Plan shall include a preliminary Operating Budget in
36
a format mandated by the Agency, approved by the Agency at its sole
discretion. In the event the preliminary Operating Budget is proposed
for revision at the time the Certificate of Occupancy is issued, any
such revision must be approved by the Agency at its sole discretion;
(e) The Title Company shall have assured the Agency in writing that upon
recordation of the Agency Deed of Trust there will be provided to the
Agency, at Developer's sole expense, a lender's policy of title
insurance (with customary endorsements, including but not limited to
Nos. 100, 103.7, 116 and 122 and such other endorsements as the
Agency shall reasonably require) issued by the Title Company in the
amount of the Rehabilitation Loan, insuring the Agency's interest in
the Property as beneficiary under the Agency Deed of Trust, and
specifically insuring that the lien of the Agency Deed of Trust and the
Agency CC&R's against the Property are subject only to the Permitted
Senior Encumbrances. Standard lender's title insurance coverage
(without the need for a survey) will be accepted by the Agency unless
another Project lender requires extended coverage, in which case an
AL T A extended coverage policy will also be provided to the Agency;
2. When, and only when, Escrow Holder has confirmed that Rehabilitation Closing
Conditions (a), (c) and (d) of Section A.1. above and Rehabilitation Closing
Conditions (a) to (e) of Section B.1. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Rehabilitation Closing Conditions have been timely satisfied or waived,
then Escrow Holder shall carry out the Close of Escrow by:
(i) causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(ii) delivering the executed original Rehabilitation Note to the Agency;
(iii)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer;
C. Permanent Financing
I. Disbursements made by the Agency for the purpose of paying off construction or
acquisition financing obtained from Agency approved financing sources in order
to acquire and/or rehabilitate an Eligible Property, which shall hereafter be
referred to as "Permanent Financing", shall be expressly subject to satisfaction of
the conditions set forth below, all of these conditions (collectively, the Permanent
Closing Conditions) on or before the date ("Permanent Closing Deadline") which
37
is thirty (30) calendar days following the execution date of a Development
Agreement or the date that the Developer receives the Certificate of Occupancy
from the appropriate local government agencies, whichever occurs later.
(a) The rehabilitation work on the Eligible Property is completed. The
rehabilitation work shall be "completed," which shall be deemed to
have occurred when the Agency has received satisfactory evidence
that the rehabilitation work has been completed in compliance with the
plans and specifications (collectively, "Plans") referenced in the
construction contract ("Construction Contract") which Developer has
entered into with a general contractor ("General Contractor") with
respect to the Eligible Property, and that all final permits and
certificates necessary to the operation of the Eligible Property as
contemplated herein, and releases, waivers and other instruments
evidencing no claims, stop notices or mechanics liens existing with
respect to the Eligible Property, have been obtained, including, without
limitation, the following, each of which is subject to the Agency's
review and approval:
(i) A signed certificate from the General Contractor, in a form
reasonably acceptable to the Agency, certifying to Agency that
rehabilitation was completed substantially in accordance with
the requirements of the Construction Contract, the Plans and
this Agreement, and all other related on-site and off-site
improvements have been completed;
(ii) A certificate of occupancy (the "Certificate of Occupancy")
and/or any other final permits and licenses necessary to permit
the use and occupancy of the Eligible Property for its intended
purposes, which have been issued by proper governmental
agencies;
(iii)Unconditional Waivers and Releases Upon Final Payment, in
statutory form, showing no amounts in dispute, have been
received from the General Contractor, all subcontractors, and
all other persons or entities providing services or furnishing
materials in connection with the Eligible Property.
(b) Not as a Closing Condition, but at least ninety (90) calendar days
prior to occupancy and prior to the commencement of tenant
selection for the Eligible Property, Developer shall have obtained
the Agency's written approval of an affirmative marketing plan,
leasing guidelines, and a summary of the rules, procedures and
programs for the operation of the Eligible Property including
specifically the procedures to be employed by which the tenants in
the Eligible Property shall be selected in the event that, at any given
38
time, the number of Eligible Tenants applying to lease units at the
Eligible Property exceeds the number of units available.
(c) Developer shall have furnished and obtained the Agency's approval
of an Operating Budget and a Management Plan for the Eligible
Property. The Management Plan shall include a preliminary
Operating Budget in a format mandated by the Agency, approved by
the Agency at its sole discretion. In the event the preliminary
Operating Budget is proposed for revision at the time the Certificate
of Occupancy is issued, any such revision must be approved by the
Agency at its sole discretion;
(d) The Title Company shall have assured the Agency in writing that
upon recordation of the Agency Deed of Trust there will be
provided to the Agency, at Developer's sole expense, a lender's
policy of title insurance (with customary endorsements, including
but not limited to Nos. 100, 103.7, 116 and 122 and such other
endorsements as the Agency shall reasonably require) issued by the
Title Company in the amount of the Rehabilitation Loan, insuring
the Agency's interest in the Property as beneficiary under the
Agency Deed of Trust, and specifically insuring that the lien of the
Agency Deed of Trust and the Agency CC&R's against the Property
are subject only to the Permitted Senior Encumbrances. Standard
lender's title insurance coverage (without the need for a survey) will
be accepted by the Agency unless another Project lender requires
extended coverage, in which case an AL T A extended coverage
policy will also be provided to the Agency;
2. When, and only when, Escrow Holder has confirmed that Permanent Closing
Conditions (a) to (d) of Section c.!. above have been satisfied, and has received
written certification from the Agency's Executive Director, or his designee, that
all other Acquisition or Rehabilitation Closing Conditions have been timely
satisfied or waived, then Escrow Holder shall carry out the Close of Escrow by:
(iv)causing the Agency Deed of Trust and the Agency CC&R's to be
recorded in the Official Records of San Bernardino County, California;
(v) delivering the executed original Permanent Financing Note to the
Agency;
(vi)causing the Title Policy to be issued to the Agency in the form and
amount specified above; and
(iv)promptly following recordation, delivering conformed copies of the
recorded documents to the Agency and Developer
39
EXHIBIT "0"
Events of Default and Remedies
A. Events of Default
The occurrence of any of the following shall, after the giving of any notice and the
expiration any applicable cure period, shall described therein, constitute a default by
Developer hereunder ("Event of Default"):
(I) The failure of Developer to payor perform any monetary covenant
or obligation hereunder or any of the documents executed in connection herewith,
without curing such failure within ten (10) calendar days after receipt of written notice of
such default from the Agency (or from any party authorized by the Agency to deliver
such notice as identified by the Agency in writing to Developer);
(2) The failure of Developer to perform any nonmonetary covenant or
obligation hereunder or any of the documents executed in connection herewith, without
curing such failure within thirty (30) calendar days after receipt of written notice of such
default from the Agency (or from any party authorized by the Agency to deliver such
notice as identified by the Agency in writing to Developer) specifying the nature of the
event or deficiency giving rise to the default and the action required to cure such
deficiency; provided, however, that if any default with respect to a nonmonetary
obligation is such that it cannot be cured within a thirty-day period, it shall be deemed
cured if Developer commences the cure within said thirty-day period and diligently
prosecutes such cure to completion thereafter.
Notwithstanding anything herein to the contrary, the herein described notice requirements
and cure periods shall not apply to any Event of Default described in Sections (3) through
(6) below;
(3) The material falsity of any representation or breach of any
warranty or covenant made by Developer under the terms of this Agreement or any
documents executed in connection herewith;
(4) Developer or any constituent member or partner, or majority
shareholder, of Developer shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in
writing its inability to pay its debts generally as they become due, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or (e)
commence a voluntary case under the Federal bankruptcy laws of the United States of
America or file a voluntary petition that is not withdrawn within ten (10) calendar days
after the filing thereof or answer seeking an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy or insolvency
proceeding;
40
(5) If without the application, approval or consent of Developer, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Developer or any constituent member or partner, or
majority shareholder, of Developer, for an order for relief or an adjudication in
bankruptcy, a composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or the like of Developer or of
all or any substantial part of Developer's assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being contested by
Developer, in good faith, the same shall (a) result in the entry of an order for relief or any
such adjudication or appointment, or (b) continue undismissed, or pending and unstayed,
for any period of ninety (90) consecutive calendar days;
(6) Voluntary cessation of the operation of a Project for a continuous
period of more than thirty (30) calendar days or the involuntary cessation of the operation
of the Project in accordance with this Agreement for a continuous period of more than
sixty (60) calendar days;
(7) A mechanic's lien or any other type of encumbrance on any
Eligible Property resulting from the Developer's failure to fulfill its financial or other
contractual obligations with respect to any of its vendors or sub-contractors is not
removed within ten (10) calendar days after receipt of written notice of such default from
the Agency (or from any party authorized by the Agency to deliver such notice as
identified by the Agency in writing to Developer).
B. The Agency Remedies
Upon the occurrence of an Event of Default hereunder, the Agency may, in its sole
discretion, take anyone or more of the following actions:
(I) By notice to Developer declare the entire then unpaid principal
balance of any Acquisition Financing, Rehabilitation Financing or Permanent Financing
loans ("Development Loans") immediately due and payable, and the same shall become
due and payable without further demand, protest or further notice of any kind, all of
which are expressly waived. Upon such declaration, outstanding principal and (to the
extent permitted by law) interest and any other sums outstanding in connection with the
Development Loans shall thereafter bear interest at the Default Rate, payable from the
date of such declaration until paid in full;
(2) Subject to any nonrecourse provisions in this Agreement, take any
and all actions and do any and all things which are allowed, permitted or provided by
law, in equity or by statute, in the sole discretion of Agency, to collect the amounts then
due and thereafter to become due hereunder and under the Development Loans, to
exercise its rights under any outstanding Agency Deeds of Trust, and to enforce
performance and observance of any obligation, agreement or covenant of the Developer
under this Agreement or under any other document executed in connection herewith;
41
(3) Cease making any payment of fees, Residual Receipts or
reimbursement of eligible expenses to the Developer unless and until the Event of
Default (if curable) is cured;
(4) Demand reimbursement from the Developer for any payments
made to it by the Agency for which the contracted work product was not satisfactorily
delivered by the Developer;
(5) Confiscate any material or other work product purchased or
produced by the Developer for the Proj ect;
(6) Take any and all actions and do any and all things which are
allowed, permitted or provided by law, in equity or by statute, in the sole discretion of the
Agency, to enforce performance and observance of any obligation, agreement or
covenant of the Developer under this Agreement or under any other document executed
in connection herewith;
(7) Upon the occurrence of an Event of Default which is occasioned
by Developer's failure under this Agreement to pay money, the Agency may, but shall
not be obligated to, make such payment. If such payment is made by the Agency, the
Developer shall deposit with the Agency, upon written demand therefore, such sum plus
interest at the rate of ten percent (10%) per annum interest compounded annually. In
either case, the Event of Default with respect to which any such payment has been made
by the Agency shall not be deemed cured until such repayment (as the case may be) has
been made by the Developer;
(8). Upon the occurrence of an Event of Default described in Section
A.(4) or A.(5) hereof, the Agency shall be entitled and empowered by intervention in
such proceedings or otherwise to file and prove a claim for any amount owing to the
Agency under this Agreement and unpaid and, in the case of commencement of any
judicial proceedings, to file such proof of claim and other papers or documents as may be
necessary or advisable in the judgment of the Agency and its counsel to protect the
interests of the Agency and to collect and receive any monies or other property in
satisfaction of its claim.
C. Agency Default and Developer Remedies
Upon fault or failure of the Agency to meet any of its obligations under this Agreement
without curing such failure within thirty (30) calendar days after receipt of written notice
of such failure from Developer specifYing the nature of the event or deficiency giving rise
to the default and the action required to cure such deficiency, Developer may, as its sole
and exclusive remedies:
(1). Bring an action in equitable relief seeking the specific performance
by the Agency of the terms and conditions of this Agreement or seeking to enjoin any act
by the Agency which is prohibited hereunder; and/or
42
(2) Bring an action for declaratory relief seeking judicial
determination of the meaning of any provision of this Agreement. Without limiting the
generality of the foregoing, Developer shall in no event be entitled to, and hereby waives,
any right to seek indirect or consequential damages of any kind or nature from the
Developer arising out of or in connection with this Agreement, and in connection with
such waiver Developer is familiar with and hereby waives the provisions of Section 1542
of the California Civil Code which provides as follows: "A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR."
43
EXHIBIT "H"
Affirmative Marketing Requirements
In accordance with the California Fair Employment and Housing Act and the policy of the
Agency, property owners or their designees, including the Developer pursuant to this
Agreement, must adhere to the following affirmative marketing guidelines in order to
create awareness for the general public and certain commtmity groups as to the availability
oftmits designated for lower and/or moderate-income.
Applicability
The Developer, including property owners or their designees, are required to provide an
affirmative marketing plan and procedures for all developments with designated units.
Procedures to be used must identity how persons in the housing market area who are not
likely to apply for the housing without special outreach shall be informed and made
aware of available affordable housing opportunities. The Agency has identified two
groups as least likely to apply without special outreach efforts, namely, African-
American and Hispanic persons.
The Affirmative Marketing Plan
The Developer's Affirmative Marketing Plan shall consist of a written marketing strategy
designed to provide information and to attract eligible persons in the housing market area to
the available tmits without regard to race, color, national origin, sex, religion, marital and
familial status, disability, medical condition, sexual orientation, or ancestry. It shall
describe initial advertising, outreach (community contacts) and other marketing activities,
which will inform potential buyers of the availability of the tmits. It shall also outline an
outreach program which includes special measures designed to attract those groups
identified as least likely to apply without special outreach efforts, whether because of
existing neighborhood racial or ethnic patterns, location of housing or other factors, and
other efforts designed to attract persons from the total eligible population.
The Developer must do the following:
I. Insert Equal Housing Opportunity logotype, statement or slogan on all written
outreach tools (i.e. signs, advertisements, brochures, direct mail solicitations,
press releases, etc.)
2. In addition to the above, the Affirmative Fair Housing Marketing Plan shall
outline:
a. Commercial Media to be used (i.e., commtmity newspapers and
non-English language newspapers, radio, television, billboards,
religious or local real estate publications, etc.).
44
b. Marketing efforts to be used (i.e., brochures, letters, handouts, direct
mail, signs, etc.)
c. Commtulity Contacts to supplement formal communications media
for the purpose of soliciting groups least likely to purchase the
available housing without special outreach efforts. They should be
individuals or organizations (i.e., service agencies, community
organizations, places of worship, etc.) that have direct and frequent
contact with those identified as least likely to apply. The contacts
should also be chosen on the basis of their positions of influence
within the general community and the particular target group. The
Developer must agree to establish and maintain contact with the
identified contacts.
Buver Selection
I. The Developer or designee shall maintain records of all prospective homebuyer
applicants, including their race, ethnicity and gender, reasons for denial of
application, placement on a waiting list, etc.
2. The Developer or designee shall also provide for the selection of applicants from a
written waiting list in the chronological order of their application, insofar as is
practicable, and provide prompt written notification to any rejected applicants of
the grounds for any rejection.
45
EXHIBIT "I"
46
EXHIBIT "J"
47
EXHIBIT "K" TO MASTER AGREEMENT
PROMISSORY NOTE
$
,20_
For value received, the undersigned, MARY ERICKSON COMMUNITY HOUSING,
INC., a California Non-profit public benefit corporation ("Borrower"), whose principal
address is set forth hereinbelow, promises to pay to the order of the
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body
corporate and politic ("Agency") at 201 North "E" Street, Suite 301, San Bernardino,
California 92401 (or to such designee and/or at such other address as the Agency may
from time to time designate in writing), the principal sum of
(the "Loan"), or such
amount as may be advanced hereunder, plus accrued and unpaid interest as provided
hereinbelow, and all other charges due hereunder, in accordance with the terms and
conditions of that certain Master Agreement dated as of
, 20_ entered into between Borrower and the Agency
(the "Master Agreement") and that certain Development Agreement dated as of
20 , entered into between Borrower and the Agency
(the "Development Agreement"), and the terms and conditions of this Promissory Note
(this "Note"). As set forth in greater detail in the Develo ment A reement, the ur ose
of the Loan is to provide Borrower with
_in connection with a housing project ("Project") on a site more particularly
described in the Development Agreement ("Eligible Property").
1. Interest.
1.1 Basic Interest. Except as provided in Section 1.4 below, the disbursed
and unpaid principal balance of the Loan shall bear interest commencing on the date on
which the Loan proceeds are first disbursed for the account of Borrower, and ending on
the date paid, at the rate of three percent (3%) per annum, simple interest ("Basic
Rate"). Interest shall be computed on the basis of actual number of days elapsed and a
360-day year.
1.2 Payment Dates and Amounts. Except as otherwise provided in this Note,
Borrower shall repay the Loan, together with accrued interest at the Basic Rate in
Promissory Note
Exhibit "K"
1
arrears, in annual installments on June 15th of each calendar year for the previous
calendar year, commencing on June 15, 20_. Absent prepayment or acceleration,
each of the annual payments due June 15, 20_ through and including June 15, 20_
("Maturity Date") shall be in an amount equal to percent
( %) of "Residual Receipts" for the prior calendar year, as defined herein.
Residual Receipts shall be calculated and reported to the Agency annually for each
calendar year no later than June 15th of the following calendar year on forms specified
and provided by the Agency from time to time. All calculations and records are subject
to audit by the Agency. Notwithstanding any other provision of this Note, unless due
sooner, the entire outstanding principal balance of the Loan together with any
outstanding interest and any other sums payable under this Note shall be due and
payable in full on the Maturity Date.
1.3 Calculation of Residual Receipts. Borrower shall provide to the Agency
for inspection and copying any records, receipts, account books, ledgers, checks, or
other documents or other evidence requested by the Agency for the purpose of verifying
Borrower's calculation of Residual Receipts, and shall promptly pay to the Agency any
further amount due but not paid as a result of any miscalculation by Borrower. In no
event shall any Loan payment attributable to an Event of Default (as hereafter defined)
or acceleration be deferred.
1.4 Default Rate. Any amounts (including but not limited to amounts of
principal and interest on the Loan) which Borrower does not pay when due under the
terms of this Note shall bear interest at the rate of ten percent (10%) per annum, simple
interest ("Default Rate"), from the date due until the date paid.
1.5 Definition of Residual Receipts.
1.5.1 "Residual Receipts" shall mean, with respect to each calendar year,
the amount by which "Gross Rents," as defined herein, for such calendar year exceed
the "Operating Expenses", as defined herein, for that calendar year.
1.5.2 With the exception of the "Excluded Items" (as defined below),
"Gross Rents" shall mean, with respect to each calendar year or portion thereof, all
gross income, rentals, revenues, payments and consideration, of whatever form or
nature, whether direct or indirect, received by or paid to or for the account or benefit of
Borrower or any "Affiliate" (as defined below) of Borrower or any of their agents or
employees, from any and all sources, resulting from or attributable to the ownership,
operation, leasing and occupancy of the Project, determined on the basis of generally
accepted accounting principles applied on a consistent basis, and shall include, but not
be limited to: (i) gross rentals paid by occupancy tenants of the Project under
occupancy leases and payments and subsidies of whatever nature, including without
limitation any payments, vouchers or subsidies from the United States Department of
Housing and Urban Development (HUD) or any other person or organization, received
on behalf of tenants under occupancy leases, (ii) amounts paid to Borrower or any
Promissory Note
Exhibit "K"
2
Affiliate of Borrower on account of "Operating Expenses" (as defined herein) for further
disbursement by Borrower or such Affiliate to a third party or parties, (iii) late charges
and interest paid on rentals, (iv) rents and receipts from licenses, concessions, vending
machines, coin laundry and similar sources;
(v) other fees, charges or payments not denominated as rental but payable to Borrower
in connection with the rental of office, retail, storage, or other space in the Project; and
(vi) consideration received in whole or in part for the cancellation, modification,
extension or renewal of occupancy leases. The term "Affiliate" shall mean any person
or entity directly or indirectly, through one or more intermediaries, controlling, controlled
by or under common control with Borrower which, if Borrower is a partnership or limited
liability company, shall include each of the constituent members or partners,
respectively, thereof. The term "control" as used in the immediately preceding
sentence, means, with respect to a person that is a corporation, the right to exercise,
directly or indirectly, more than 50% of the voting rights
attributable to the shares of the controlled corporation, and, with respect to a person
that is not a corporation, possession directly or indirectly of the power to direct or cause
the direction of the management or policies of the controlled person. Notwithstanding
the foregoing, Gross Rents shall not include the following items ("Excluded Items"): (aa)
security deposits from tenants (except when applied by Borrower to rent or other
amounts owing by tenants); (bb) capital contributions to Borrower or its members,
partners or shareholders by its or their members, partners or shareholders; (cc)
condemnation or insurance proceeds constituting 'Net Proceeds' as defined in Section
1.6 below; and (dd) funds received from any source (including but not limited to the
Senior Financing and any Junior Financing or Other Financing) actually and directly
used for acquisition and/or rehabilitation of the Eligible Property.
1.5.3 "Operating Expenses" shall mean, with respect to each calendar
year or portion thereof, the sum of the following expenses to the extent reasonably paid
by Borrower during such period: (i) nonelective payments made with respect to the
Senior Financing; (ii) all taxes and assessments imposed upon the Project and required
to be paid by Borrower but only to the extent such taxes and assessments are paid or
set aside as a reserve by Borrower during such calendar year; (iii) all amounts paid or
set aside as a reserve by Borrower on account of insurance premiums for insurance
carried in connection with the Project, provided that if insurance on the Project is
maintained as part of a blanket policy covering the Project and other properties, the
insurance premium included in this definition shall be the portion of the premium fairly
allocable to the Project for the period; (iv) ownership and operating costs incurred by
Borrower for the management, operation, cleaning, leasing, marketing, maintenance
and repair of the Project (including without limitation, property management fees and
administrative fees) properly chargeable against income according to generally
accepted accounting principles, including without limitation wages, payroll and
accounting costs, utility and heating charges, material costs, maintenance costs, costs
of services, water and sewer charges, travel expenses allocable to the Project, and
license fees and business taxes; provided, however, that (A) the amount included as
Promissory Note
Exhibit "K"
3
property management fees and administrative fees in Operating Expenses shall
collectively not exceed ten percent (10%) of Gross Rents from the Project for such
period, all or a portion of each of which may be paid to Borrower and/or an Affiliate of
Borrower, (B) such property management fees and administrative fees shall only be
paid on the basis of supporting documentation reasonably acceptable to the Agency,
and shall be paid after the payment of all other Operating Expenses, and (C)
partnership management fees and other fees payable to a partner in a tax credit limited
partnership shall only be considered Operating Expenses to the extent they do not
exceed $10,000 in the aggregate in any year, which shall be adjusted annually by a
percentage equal to the annual increase in AMI adopted by HUD; (v) reasonable and
ordinary reserves actually set aside for replacement of roofing, furniture, fixtures,
equipment, and other capital expenditures, in an annual amount no less than $200.00
per unit and no greater than such higher amount as may be established from time to
time by mutual agreement of the Parties; and (vi) to the extent not otherwise included in
Operating Expenses, amounts paid from any account as a reserve account for the
purpose for which such reserve was created so long as such purpose would constitute
an Operating Expense.
1.5.4 Notwithstanding any provision of Section 1.5.3, the term "Operating
Expenses" shall not include any of the following:
(i) salaries of employees of Borrower or Borrower's general
overhead expenses, or expenses, costs and fees paid to an Affiliate of Borrower, to the
extent any of the foregoing exceed the expenses, costs or fees that would be payable in
a bona fide arms' length transaction between unrelated parties in the San Bernardino-
Riverside County area for the same work or services;
(ii) any amounts paid directly by a tenant of the Project to a third
party in connection with expenses which, if incurred by Borrower, would be Operating
Expenses;
(iii) optional or elective payments with respect to the Senior
Financing;
(iv) any payments with respect to Junior Financing, Other
Financing, or any other Project-related loan or financing other than the Senior
Financing; or
(v) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Borrower prior to completion of the Project with
respect to the development, maintenance and upkeep of the Project, or any portion
thereof, including, without limitation, all costs and expenses incurred by Borrower in
connection with the acquisition of the Property, all predevelopment activities conducted
by Borrower in connection with the Project, including without limitation, the preparation
Promissory Note
Exhibit "K"
4
of all plans and the performance of any tests, studies, investigations or other work, and
the construction of the Project and anyon-site or off-site work in connection therewith.
1.6 In addition to the payments provided in Section 1.2 above, and subject to
the terms of the Senior Financing, Borrower shall pay to the Agency towards (but not to
exceed) any outstanding amounts associated with the Loan: (a) no later than the date of
close of escrow or other consummation of any Assignment other than a Minor Assign-
ment, the Applicable Percentage of the Net Proceeds of such Assignment; and (b) no
later than the recording of a Refinancing, percent ( %) of the Net
Refinancing Proceeds received from any such Refinancing.
A "Minor Assignment" shall mean any lease of an individual unit in the Project for
occupancy by a residential tenant and in the ordinary course of business for operation
of the Project.
"Applicable Percentage" shall mean percent L-%); provided,
however, that the term Applicable Percentage shall mean one hundred percent (100%)
with respect to a payment on the Loan attributable in whole or in part to a condemnation
of, or event of damage, destruction or casualty with respect to, the Eligible Property, the
Project or any portion of either. "Assignment" means any voluntary or involuntary
conveyance, disposition, assignment, taking, casualty, encumbrance (other than a
Refinancing as defined below or the creation of the Senior Financing or any other
Project Loan or limited partner contribution, the proceeds of which are used solely for
initial acquisition of the Eligible Property by Borrower or initial development of the
Project), sublease, sale, license, concession, management agreement, operating
agreement, transfer or similar transaction with respect to any direct or indirect interest or
economic benefit of any person or entity in connection with the Project or the use or
occupancy of the Eligible Property including, without limitation, any Transfer by
Borrower of all or any portion of its rights under or interest in the Project or the Eligible
Property, any change of ownership or control of Borrower, any condemnation or taking
of the Eligible Property or the Project or any portion thereof, any event of damage to or
destruction of the Eligible Property or the Project, any foreclosure of Borrower's interest
in the Project or the Eligible Property, whether by judicial proceedings, or by virtue of
any power contained in a deed of trust, indenture or other instrument creating a lien
against the Eligible Property or the Project, or any assignment of Borrower's estate in
the Project or the Eligible Property through, or in lieu of, foreclosure or other appropriate
and bona fide proceedings in the nature thereof; provided, however, that the term
"Assignment" as used herein shall not include bona fide transfers of an ownership
interest in Borrower to any Affiliate of Borrower, so long as the consideration paid to the
selling partner, member or shareholder on account of such transfer does not exceed the
actual amount paid by such partner, member or shareholder for its ownership interest
plus reimbursement for any out-of-pocket expenses incurred by such partner, member
or shareholder in connection with its acquisition of such ownership interest.
Promissory Note
Exhibit "K"
5
"Net Proceeds" of an Assignment shall mean (1) the proceeds received, directly
or indirectly, by Borrower or any Affiliate or constituent member or partner, or majority
shareholder, of Borrower or any Affiliate as a result of such Assignment, including,
without limitation, cash, the amount of any monetary lien or encumbrance assumed or
taken subject to by the assignee, the fair market value of any noncash consideration,
including the present value of any promissory note received as part of the proceeds of
such Assignment (such present value to be determined based upon a discount rate
reasonably satisfactory to the Agency), the entire condemnation award or compensation
payable to Borrower or any Affiliate or constituent member or partner, or majority
shareholder, of Borrower or any Affiliate in connection with a condemnation or taking in
eminent domain of any part of the Eligible Property or the Project or any interest therein,
all insurance proceeds or awards payable to Borrower or any Affiliate or constituent
member or partner or majority shareholder of Borrower or any Affiliate in connection
with any damage to or destruction of the Eligible Property or the Project or any part
thereof not used for project restoration; less (2) the sum of (i) the actual, documented
and reasonable expenses of effecting such Assignment, including reasonable
brokerage commissions, title insurance premiums, documentary transfer taxes, and
reasonable attorneys' fees, in each case actually paid in connection with the
Assignment (provided that no deduction shall be allowed for payments to an Affiliate of
the person or entity making the Assignment which are in excess of the amount that
would be paid for the same or equivalent services in an arms' length transaction
between unrelated parties acting reasonably), and (ii) the amount of any proceeds of
the Assignment paid (excluding voluntary payments) towards the then-outstanding
balance of the Senior Financing. Notwithstanding anything above to the contrary, the
permissible deductions for purposes of calculating the Net Proceeds of an Assignment
shall not include any foreign, U.S., state or local income taxes, franchise taxes, or other
taxes based on income.
"Refinancing" shall mean creation or substantial modification of a loan ("Project
Loan") secured by an encumbrance on the Eligible Property, the Project, or any portion
thereof. The term "Refinancing" shall not include the creation of the Senior Financing or
any other Project Loan, the proceeds of which are used solely for initial acquisition of
the Eligible Property by Borrower or initial development of the Project.
"Net Refinancing Proceeds" shall mean the gross face amount of the Project
Loan obtained in connection with such Refinancing, after: (1) payment of the actual,
documented and reasonable expenses of such Refinancing, including escrow fees, title
policy expenses, legal expenses, survey fees, recording fees, commissions, and other
usual and reasonable expenses of any such Refinancing (provided, that no deduction
shall be allowed for payments in connection with such Refinancing which are in excess
of the amounts that would be paid for the same or equivalent services in an arms' length
transaction between unrelated parties acting reasonably); and (2) deduction of amounts
repaid (excluding voluntary payments) in connection with the Refinancing towards
amounts outstanding under the Senior Financing.
Promissory Note
Exhibit "K"
6
2. Acceleration.
Notwithstanding the payment terms set forth in Section 1 above, upon the
occurrence of any "Event of Default" as set forth in Section 9 below, the entire
outstanding principal balance of this Note, together with any outstanding interest and
other amounts payable hereunder, shall, at the election of the Agency and upon notice
to Borrower thereof become immediately due and payable without presentment,
demand, protest or other notices of any kind, all of which are hereby waived by
Borrower.
3. Prepavment: Application of Pavments.
At any time after the disbursement of the Loan proceeds, Borrower may prepay
all or a portion of the unpaid principal amount of the Loan and accrued interest and any
other sums outstanding without penalty. All payments, including any prepayments or
funds received upon acceleration pursuant to Section 2 above, shall be applied first
toward any outstanding costs of collection or other amounts (excluding Loan principal or
interest thereon) due under this Note or the Development Agreement, then toward
outstanding interest accrued at the Default Rate, if any, then toward outstanding interest
accrued at the Basic Rate, if any, and finally toward the remaining principal balance
under the Note.
4. Security and Source of Payment.
Borrower's obligations under this Note and the Master Agreement and the
Development Agreement shall, at all times during which any amount remains
outstanding, be secured by the deed of trust ("Agency Deed of Trust") of even date
herewith, and of which the Agency is the beneficiary, recorded against Borrower's
interest in the Eligible Property and the Project (collectively, the "Property"). The
security interest in the Property granted to the Agency pursuant to the Agency Deed of
Trust shall be subordinate only to the Senior Financing and such exceptions to title
shown in the title report for the Property which are approved in writing by the Agency.
Except to the extent any Event of Default hereunder results directly or indirectly from
any willful misconduct, fraud or intentional and material misrepresentation by Borrower
in connection with this Note, the Master Agreement, the Development Agreement or the
Loan, the Loan is a nonrecourse obligation of Borrower and, in the event of the
occurrence of an Event of Default, the Agency's only recourse under the Agency Loan
Documents shall be against the Property, the proceeds thereof, the rents and other
income arising from its use and occupancy as provided in the Agency Deed of Trust,
and any other collateral given to the Agency as security for repayment of the Loan.
Promissory Note
Exhibit "K"
7
5. ObliGation of Borrower Unconditional.
The obligation of Borrower to repay the Loan and all accrued interest thereon
and all other sums due thereunder shall be absolute and unconditional, and until such
time as all of the outstanding principal of, interest on and all other sums due under, this
Note shall have been fully paid, Borrower agrees that it: (a) will use the funds solely for
the purposes set forth herein; and (b) will not terminate or suspend any payment or
obligations under this Note, the Master Agreement, the Development Agreement, or any
other document executed hereunder or in connection herewith for any cause, including
without limitation, any acts or circumstances that may constitute failure of consideration,
commercial frustration of purpose, or any duty, liability or obligation arising out of or in
connection with this Note, the Master Agreement, the Development Agreement or any
document executed hereunder or in connection herewith.
6. Purpose of Loan.
. shall be used by Borrower only to provide IIIIIlII
for the housing development described in the
Development Agreement. In no event shall Borrower use or otherwise invest the
proceeds of the Loan except as expressly provided in this Note.
7. Covenants of Borrower.
As additional consideration for the making of the Loan by the Agency, Borrower
covenants as follows:
7.1 Compliance with the Master AGreement. the Development AGreement and
AGency Deed of Trust. Borrower shall comply with all of its obligations under the Master
Agreement, the Development Agreement and the Agency Deed of Trust. Any amounts
payable by Borrower under the Development Agreement or the Agency Deed of Trust
(other than amounts also payable hereunder) shall be deemed added to the principal
amount of the Loan payable hereunder.
7.2 Other Loans. Borrower shall comply with all monetary and nonmonetary
covenants associated with any loan secured by an interest in the Eligible Property or the
Project. Borrower shall provide to the Agency a copy of any notice of default within five
business days after receiving any notice of a default or alleged default of such
covenants by Borrower, and Borrower shall promptly cure any such default and
cooperate in permitting the Agency, to the extent the Agency in its sole discretion elects
to do so, to cure or assist in curing the default. Any cost or expenditure incurred by the
Agency in providing or assisting in such a cure shall be added to the outstanding
principal amount of the Loan.
Promissory Note
Exhibit "K"
8
8. Assiqnment of this Note.
This Note shall be assignable by Borrower only if Borrower obtains the prior
express written consent of the Agency, which consent may be withheld by the Agency in
its sole discretion. Notwithstanding anything to the contrary in this Note, no purported
assignment of this Note and the Loan shall be effective if such assignment would violate
the terms, conditions and restrictions of any Applicable Governmental Restrictions. The
Agency's consent to such assignment shall be expressly conditioned upon (i) the
assignee's execution of such documents as required by the Agency in its sole
discretion, including, without limitation, any and all documents deemed necessary by
the Agency to provide for said assignee's assumption of all of the obligations of
Borrower hereunder and under the Agency Loan Documents, and (ii) the Agency's
approval of the financial and credit worthiness of such proposed assignee and the
assignee's ability to perform all of the Borrower's covenants under this Note and the
Development Agreement and any of the other Agency Loan Documents.
9. Events of Default and Remedies.
A. Borrower Events of Default. The occurrence of any of the following shall,
after the giving of any notice and the expiration of any applicable cure period described
therein, constitute an event of default by Borrower hereunder ("Event of Default"):
(1) The failure of Borrower to payor perform any monetary covenant or
obligation hereunder or under the terms of this Note or the Agency Deed of Trust, the
Master Agreement or the Development Agreement, without curing such failure within
ten (10) calendar days after the date such payment is due. Notwithstanding anything
herein to the contrary, the herein described cure period shall not apply to a failure by
Borrower to timely repay the Agency Loan at the Maturity Date of this Note;
(2) The failure of Borrower to perform any nonmonetary covenant or
obligation hereunder or under the terms of this Note, the Agency Deed of Trust, the
Master Agreement or the Development Agreement, without curing such failure within
thirty (30) calendar days after receipt of written notice of such default from the Agency
(or from any party authorized by the Agency to deliver such notice as identified by the
Agency in writing to Borrower) specifying the nature of the event or deficiency giving
rise to the default and the action required to cure such deficiency; provided, however,
that if any default with respect to a nonmonetary obligation is such that it cannot be
cured within a thirty day period, it shall be deemed cured if Borrower commences the
cure within said thirty day period and diligently prosecutes such cure to completion
thereafter with the cure completed in any event within 180 calendar days after the
notice. Notwithstanding anything herein to the contrary, the herein described notice
Promissory Note
Exhibit "K"
9
cure periods shall not apply to any Event of Default described in Sections 9(A)(3)
through 9(A)(8) below;
(3) The material falsity of any representation or breach of any warranty
or covenant made by Borrower under the terms of this Note, the Master Agreement, the
Development Agreement or the Agency Deed of Trust;
(4) Borrower shall (a) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian or the like of its property, (b) fail to payor admit
in writing its inability to pay its debts generally as they become due, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or
(e) commence a voluntary case under the Federal bankruptcy laws of the United States
of America or file a voluntary petition that is not withdrawn within ten (10) calendar days
after the filing thereof or answer seeking an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy or insolvency
proceeding;
(5) If without the application, approval or consent of Borrower, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Borrower or any constituent member or partner or
majority shareholder of Borrower, for an order for relief or an adjudication in bankruptcy,
a composition or arrangement with creditors, a readjustment of debts, the appointment
of a trustee, receiver, liquidator or custodian or the like of Borrower or of all or any
substantial part of Borrower's assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by Borrower,
in good faith, the same shall (a) result in the entry of an order for relief or any such
adjudication or appointment, or (b) continue undismissed, or pending and unstayed, for
any period of ninety (90) consecutive calendar days;
(6) Following completion of the rehabilitation of the Project, voluntary
cessation of the operation of the Project for a continuous period of more than thirty (30)
calendar days or the involuntary cessation of the operation of the Project in accordance
with this Note for a continuous period of more than sixty (60) calendar days;
(7) Borrower shall suffer or attempt to effect a Transfer (as defined
below), in violation of Section 14; or
(8) Borrower shall be in default under the Agency Affordability
Covenant, Senior Financing, Junior Financing, Other Financing or any other secured or
unsecured obligation relating to the Project, unless the default is cured within the cure
period, if any, applicable thereto under the terms of the obligation which is in default.
Promissory Note
Exhibit "K"
10
B. Aqency Remedies. Upon the occurrence of an Event of Default
hereunder, the Agency may, in its sole discretion, take anyone or more of the following
actions:
(1) By notice to Borrower, declare the entire then unpaid principal
balance of the Loan immediately due and payable, and the same shall become due and
payable without further demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower. Upon such declaration, outstanding principal
and (to the extent permitted by law) interest and any other sums outstanding in
connection with the Loan shall thereafter bear interest at the Default Rate, payable from
the date of such declaration until paid in full;
(2) Subject to the nonrecourse provisions of Section 4 above, take any
and all actions and do any and all things which are allowed, permitted or provided by
law, in equity or by statute, in the sole discretion of the Agency, to collect the amounts
then due and thereafter to become due hereunder, to exercise its rights under the
Agency Deed of Trust, and to enforce performance and observance of any obligation,
agreement or covenant of the Borrower under this Note or under any other document
executed in connection herewith;
(3) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default, which is occasioned by Borrower's failure to pay
money, whether under this Note or the Development Agreement, the Agency may, but
shall not be obligated to, make such payment. If such payment is made by the Agency,
Borrower shall deposit with the Agency, upon written demand therefor, such sum plus
interest at the Default Rate. The Event of Default with respect to which any such
payment has been made by the Agency shall not be deemed cured until such
repayment has been made by Borrower. Until repaid, such amounts shall have the
security afforded disbursements under this Note;
(4) Subject to the nonrecourse provisions of Section 4 above, upon the
occurrence of an Event of Default described in Section 9(A)(4) or 9(A)(5) hereof, the
Agency shall be entitled and empowered by intervention in such proceedings or
otherwise to file and prove a claim for the whole amount owing and unpaid on the Loan
and, in the case of commencement of any judicial proceedings, to file such proof of
claim and other papers or documents as may be necessary or advisable in the
judgment of the Agency and its counsel to protect the interests of the Agency and to
collect and receive any monies or other property in satisfaction of its claim.
C. No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Agency is intended to be exclusive of any other available remedy or remedies, but
each such remedy shall be cumulative and shall be in addition to every other remedy
given under this Note or now or hereafter existing at law or in equity or by statute; and
may be exercised in such number, at such times and in such order as the Agency may
Promissory Note
Exhibit "K"
11
determine in its sole discretion. No delay or omission to exercise any right or power
upon the occurrence of any Event of Default hereunder shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power may
be exercised from time to time and as often as may be deemed expedient by the
Agency. In order to entitle the Agency to exercise any right or remedy reserved to it
under this Note, no notice shall be required except as expressly provided herein.
D. Aqencv Default and Borrower Remedies. Upon fault or failure of the
Agency to meet any of its obligations under this Note without curing such failure within
thirty (30) calendar days after receipt of written notice of such failure from Borrower
specifying the nature of the event or deficiency giving rise to the default and the action
required to cure such deficiency, Borrower may, as its sole and exclusive remedies:
(1) Demand and obtain payment from the Agency of any sums due to
or for the benefit of Borrower pursuant to the express terms of this Note;
(2) Bring an action in equitable relief seeking the specific performance
by the Agency of the terms and conditions of this Note or seeking to enjoin any act by
the Agency which is prohibited hereunder; or
(3) Bring an action for declaratory relief seeking judicial determination
of the meaning of any provision of this Note.
Without limiting the generality of the foregoing, Borrower shall in no event
be entitled to, and hereby waives, any right to seek indirect or consequential damages
of any kind or nature from the Agency arising out of or in connection with this Note, and
in connection with such waiver Borrower is familiar with and hereby waives the
provisions of Section 1542 of the California Civil Code which provides as follows: "A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Promissory Note
Exhibit "K"
12
10. Aqreement to Pay Attorneys' Fees and Expenses.
In the event that either party hereto brings any action or files any proceeding in
connection with the enforcement of its respective rights under this Note or any of the
other Agency Loan Documents as a consequence of any breach by the other party of its
obligations hereunder or thereunder, the prevailing party in such action or proceeding
shall be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures
paid by the losing party. The attorneys' fees so recovered shall include fees for
prosecuting or defending any appeal and shall be awarded for any supplemental
proceedings until the final judgment is satisfied in full. In addition to the foregoing award
of attorneys' fees, the prevailing party in any lawsuit on this Note or any other Loan
Document shall also be entitled to its attorneys' fees incurred in any post-judgment
proceedings to collect or enforce the judgment. In addition to the foregoing, Borrower
agrees to payor reimburse the Agency, upon demand by the Agency, for all costs
incurred by the Agency in connection with the enforcement of this Note, and any other
Agency Loan Document, including without limitation, reasonable attorneys' fees and
costs, if there shall be filed by or against Borrower any proceedings under any federal or
state bankruptcy or insolvency laws, whether the Agency is a creditor in such
proceeding or otherwise.
11. Conflict of Interest No Individual Liability.
No official or employee of the Agency shall have any personal interest, direct or
indirect, in this Note, nor shall any official or employee of the Agency participate in any
decision relating to this Note which affects such official's or employee's pecuniary
interest in any corporation, partnership or association in which such official or employee
is directly or indirectly interested. No official or employee of the Agency shall be
personally liable in the event of a breach of this Note by the Agency.
12. Amendments. ChanQes and Modifications.
This Note may not be amended, changed, modified, or altered without the prior
written consent of the parties hereto.
13. Notices.
All notices, demands, requests, elections, approvals, disapprovals, consents or
other communications given under this Note shall be in writing and shall be given by
personal delivery, facsimile, certified mail (return receipt requested), or overnight
guaranteed delivery service and faxed or addressed as follows:
If to Agency:
Redevelopment Agency of the
City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Promissory Note
Exhibit "K"
13
Attn: Executive Director
Fax No. (909) 888-9413
With a copy to:
Redevelopment Agency of the
City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Director of Housing and Community Development
Fax No. (909) 888-9413
If to Borrower:
Mary Erickson Community Housing, Inc.
Irvine, CA
Attn: Director
Fax No. ( )
With a copy to:
Notices shall be effective upon receipt, if given by personal delivery; upon receipt, if
faxed, provided there is written confirmation of receipt (except that if received after 5
p.m., notice shall be deemed received on the next business day); the earlier of (i) three
(3) business days after deposit with United States Mail, or (ii) the date of actual receipt
as evidenced by the return receipt, if delivered by certified mail; or (iii) one (1) day after
deposit with the delivery service, if delivered by overnight guaranteed delivery service.
Each party shall promptly notify the other party of any change(s) of address to which
notice shall be sent pursuant to this Note.
14. Severabilitv.
The invalidity or unenforceability of anyone or more provisions of this Note will in
no way affect any other provision.
Promissory Note
Exhibit "K"
14
15. Interpretation.
Whenever the context requires, all words used in the singular will be construed to
have been used in the plural, and vice versa, and each gender will include any other
gender. The captions of the paragraphs of this Note are for convenience only and do
not define or limit any terms or provisions. Time is of the essence in the performance of
this Note by Borrower. Each Party has been represented by counsel in the negotiation
of this Note, and it shall not be interpreted in favor of or against any Party on account of
relative responsibilities in drafting. Notwithstanding any other provision of this Note,
nothing herein or in this Note shall be deemed to require Borrower to pay interest in the
amount of any applicable usury law or other legal limitation on interest, and the terms
hereof and of this Note shall be interpreted to require in each instance the lesser of (i)
the amount stated in this Note; and (ii) the maximum applicable legal limit. Defined
terms not otherwise defined herein shall have the meaning assigned to them by the
Development Agreement.
16. No Waiver: Consents.
Any waiver by the Agency must be in writing and will not be construed as a
continuing waiver. No waiver will be implied from any delay or failure by the Agency to
take action on account of any default of Borrower. Consent by the Agency to any act or
omission by Borrower will not be construed as consent to any other or subsequent act
or omission or to waive the requirement for the Agency's consent to be obtained in any
future or other instance.
17. Governino Law.
This Note shall be governed by the laws of the State of California.
18. Representations. Warranties and Additional Covenants of Borrower.
Borrower hereby represents, warrants and covenants to the Agency that:
A. Oroanization and Standino. Borrower is a California legal entity as
described in the Development Agreement, duly formed, qualified to operate in California
and validly existing and in good standing under all applicable laws, and has all requisite
power and authority to enter into and perform its obligations under this Note, the Master
Agreement, the Development Agreement, the Agency Deed of Trust, the Agency
Affordability Covenant and all other documents executed in connection herewith.
B. Enforceabilitv. This Note and all other instruments to be executed by
Borrower in connection with the Loan constitute the legal, valid and binding obligation of
Borrower, without joinder of any other party.
Promissory Note
Exhibit "K"
15
C. Authorization and Consents. The execution, delivery and performance of
this Note and all other instruments to be executed in connection herewith is consistent
with the operating agreement, partnership agreement or articles and bylaws governing
Borrower and have been duly authorized by all necessary action of Borrower's
members, partners, directors, officers and shareholders.
D. Due and Valid Execution. This Note and all other instruments to be
executed in connection herewith, will, as of the date of their execution, have been duly
and validly executed by Borrower.
E. Licenses. Borrower will obtain and maintain all material licenses, permits,
consents and approvals required by all applicable governmental authorities to own and
operate the Project.
F. LitiQation and Compliance. There are no suits, other proceedings or
investigations pending or threatened against, or affecting the business or the properties
of Borrower (other than those as have been previously disclosed in writing to the
Agency) which could impair its ability to perform its obligations under this Note, nor is
Borrower in violation of any laws or ordinances which could materially impair Borrower's
ability to perform its obligations under this Note.
G. Default. There are no facts now in existence which would, with the giving
of notice or the lapse of time, or both, constitute an "Event of Default" hereunder, as
described in Section 9.
H. No Violations. The execution and delivery of this Note, the Development
Agreement and all other documents executed or given thereunder, and the
performances hereunder and thereunder by Borrower, as applicable, will not constitute
a breach of or default under any instrument or agreement to which Borrower may be a
party nor will the same constitute a breach of or violate any law or governmental regula-
tion.
19. Approvals.
Except with respect to those matters set forth hereinabove providing for the
Agency's approval, consent or determination to be at the Agency's "sole discretion" or
"sole and absolute discretion," the Agency hereby agrees to act reasonably with regard
to any approval, consent, or other determination given by the Agency hereunder. The
Agency agrees to give Borrower written notice of its approval or disapproval following
submission of items to the Agency for approval, including, in the case of any
disapproved item, the reasons for such disapproval.
Any review or approval of any matter by the Agency or any Agency official or
employee under this Note shall be solely for the benefit of the Agency, and neither
Borrower nor any other person shall rely upon such review or approval as an indication
Promissory Note
Exhibit "K"
16
of the wisdom, soundness, safety, appropriateness, or presence or absence of any
matter. Without limiting the generality of the foregoing, Borrower and not the Agency
shall be solely responsible for assuring compliance with laws, the suitability of the
Eligible Property for the Project, the adequacy of the plans, and the safety of the Project
construction site, the completed Project, and the operation thereof.
Any consent to a Transfer given by the Agency under this Note, the Agency
Deed of Trust, the Master Agreement, the Development Agreement or any of the other
documents executed in connection therewith, may be given by the Agency's Executive
Director or its Director of Housing and Community Development without action by the
Agency's governing board, unless the Executive Director or the Director of Housing and
Community Development in his or her sole discretion elects to refer the matter to the
board.
20. Good Faith and Fair DealinQ.
The Agency and Borrower agree to perform all of their obligations and the
actions required of each hereunder in good faith and in accordance with fair dealing.
21. Waiver.
Borrower agrees that it will still be liable for repayment of this Note, subject to the
nonrecourse provision of Section 4 above, even if the holder hereof does not follow the
procedures of presentment, protest, demand, diligence, notice of dishonor and of
nonpayment, which requirements are hereby waived. Failure of the Agency or other
holder hereof to exercise any right or remedy hereunder shall not constitute a waiver of
any future or other default. No acceptance of a past due installment or indulgence
granted from time to time shall be construed to be a waiver of, or to preclude the
exercise of, the right to insist upon prompt payment thereafter or to impose late charges
retroactively or prospectively, or to waive or preclude the exercise of any other rights
which the Agency may have.
Promissory Note
Exhibit "K"
17
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year first
above written
BORROWER:
Mary Erickson Community Housing, Inc., a
California Non-profit public benefit corporation
By:
Susan McDevitt, Director
Promissory Note
Exhibit "K"
18
EXHIBIT "L" TO MASTER AGREEMENT
AGENCY DEED OF TRUST
OFFICIAL BUSINESS
Document entitled to free
~--
Recording Requested by and
When Recorded Mail To:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
201 North "E" Street, Suite 301
San Bernardino, CA 92401
Attn.: Director of Housing and
Community Development
Above Space For Recorder's Use Only
DEED OF TRUST. ASSIGNMENT OF RENTS.
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING ("Agency Deed of Trust") is made as of , 20_, by and
between MARY ERICKSON COMMUNITY HOUSING, INC. ("Trustor"), a California
Non-profit public benefit corporation, First American Title ("Trustee"); and the
Agency Deed of Trust
Exhibit "L"
I
REDEVELOPMENT AGENCY OF CITY OF SAN BERNARDINO, a public body
corporate and politic ("Beneficiary").
REClIA1S
A. Beneficiary is making a loan to Trustor in the original principal amount of
Dollars ($ ) (the
"Loan") pursuant to that certain Master Agreement (the "Master Agreement") entered
into by Trustor and Beneficiary and dated as of , 20_ and that
certain Development Agreement (the "Development Agreement") entered into by
Trustor and Beneficiary and dated as of , 20_" The Loan is
evidenced by a promissory note of even date herewith executed by Trustor (the "Note")
in the principal amount of the Loan.
B. Trustor intends to use the Loan proceeds for the purpose of providing
financing for the housing development described in the Development Agreement (the
"Project"). The Project will be developed on a site legally described on Attachment "1"
to this Agency Deed of Trust (the "Eligible Property").
NOW THEREFORE, in consideration of the Loan, Trustor hereby irrevocably
grants, conveys, transfers and assigns to Trustee, its successors and assigns, in trust,
with power of sale and right of entry and possession as provided below all of its present
and future estate, right, title and interest in and to the Eligible Property, together with all
right, title and interest of Trustor therein and in and to, and grants to Beneficiary a
security interest in, the following:
(A) All development rights, air rights, water, water rights, and water stock
relating to the Eligible Property.
(B) All present and future structures, buildings, improvements, appurtenances
and fixtures of any kind on the Eligible Property, including but not limited to all
apparatus, attached equipment and appliances used in connection with the operation or
occupancy of the Eligible Property, such as heating and air-conditioning systems and
facilities used to provide any utility services, ventilation, vehicular cleaning, storage or
other services on the Eligible Property, and all signage, carpeting and floor coverings,
partitions, generators, screens, awnings, boilers, furnaces, pipes, plumbing, vacuum
systems, brushes, blowers, cleaning, call and sprinkler systems, fire extinguishing
apparatus and equipment, water tanks, heating, ventilating, air conditioning and air
cooling equipment, and gas and electric machinery and equipment, it being intended
and agreed that all such items will be conclusively considered to be a part of the Eligible
Property conveyed by this Agency Deed of Trust, whether or not attached or affixed to
the Eligible Property.
Agency Deed of Trust
Exhibit "L"
2
(C) All appurtenances of the Eligible Property and all rights of Trustor in and to
any streets, roads or public places, easements or rights of way, relating to the Eligible
Property.
(D) All of the rents, royalties, profits and income related to the Eligible Property,
to the extent not prohibited by any applicable law.
(E) All proceeds and claims arising on account of any damage to or taking of the
Eligible Property and all causes of action and recoveries for any loss or diminution in
value of the Eligible Property.
(F) All existing and future goods, inventory, equipment and all other personal
property of any nature whatsoever now or hereafter located on the Eligible Property
which are now or in the future owned by Trustor and used in the operation or occupancy
of the Eligible Property or in any construction on the Eligible Property but which are not
effectively made real property under Clause (8) above, including but not limited to all
appliances, furniture and furnishings, building service equipment, and building
materials, supplies, equipment, machinery, plumbing and plumbing material and
supplies, concrete, lumber, hardware, electrical wiring and electrical material and
supplies, roofing material and supplies, doors, paint, drywall, insulation, cabinets,
ceramic material and supplies, flooring, attached appliances, fencing, landscaping and
all other materials, supplies and property of every kind and nature.
(G) All present and future accounts, general intangibles, chattel paper,
contract rights, deposit accounts, instruments and documents as those terms are
defined in the California Uniform Commercial Code, now or hereafter relating or arising
with respect to the Eligible Property and/or the use thereof or any improvements
thereto, including without limitation: (i) all rights to the payment of money, including
escrow proceeds arising out of the sale or other disposition of all or any portion of the
estate of Trustor upon the Eligible Property now or hereafter existing thereon; (ii) all
plans, specifications and drawings relating to the development of the Eligible Property
and/or any construction thereon; (iii) all use permits, licenses, occupancy permits,
construction and building permits, and all other permits and approvals required by any
governmental or quasi-governmental authority in connection with the development,
construction, use, occupancy or operation of the Eligible Property; (iv) any and all
agreements relating to the development, construction, use, occupancy and/or operation
of the Eligible Property between Trustor and any contractor, subcontractor, project
manager or supervisor, architect, engineer, laborer or supplier of materials; (v) all lease
or rental agreements; (vi) all names under which the Eligible Property is now or
hereafter operated or known and all rights to carry on business under any such names
or any variant thereof; (vii) all trademarks relating to the Eligible Property and/or the
development, construction, use, occupancy or operation thereof; (viii) all goodwill
Agency Deed of Trust
Exhibit "L"
3
relating to the Eligible Property and/or the development, construction, use, occupancy
or operation thereof; (ix) all reserves, deferred payments, deposits, refunds, cost
savings, bonds, insurance policies and payments of any kind relating to the Eligible
Property; (x) all loan commitments issued to Trustor in connection with any sale or
financing of the Eligible Property; (xi) all funds deposited with Beneficiary by Trustor,
and all accounts of Trustor with Beneficiary, including all accounts containing security
deposits and prepaid rents paid to Trustor in connection with any leases of the Eligible
Property, and all proceeds thereof; and (xii) all supplements, modifications and
amendments to the foregoing.
(H) All of the right, title and interest of Trustor in and to all sales contracts of any
nature whatsoever now or hereafter executed covering any portion of the Eligible
Property, together with all deposits or other payments made in connection therewith.
(I) All of the right, title and interest of Trustor in and to any construction
contracts, plans and specifications, building permits, and all other documents necessary
for completion of the improvements to the construction of the Eligible Property.
(J) All water stock relating to the Eligible Property, all shares of stock or other
evidence of ownership of any part of the Eligible Property that is owned by Trustor in
common with others, and all documents of membership in any owner's or members'
association or similar group having responsibility for managing or operating any part of
the Eligible Property.
Trustor does hereby covenant with Trustee and Beneficiary, that Trustor has
good right to bargain, sell and convey Trustor's interest in the Eligible Property in
manner and form as above written; and Trustor warrants and will defend same to
Beneficiary, forever, against all lawful claims and demands whatsoever except as stated
above.
THIS DEED OF TRUST IS FOR THE PURPOSE OF SECURING:
(1) performance of each agreement of Trustor herein contained or
incorporated herein by reference;
(2) payment of the indebtedness (including, without limitation, interest
thereon) evidenced by the Note, and any extension or renewal or modification thereof;
(3) performance of each agreement of Trustor contained in the Master
Agreement and the Development Agreement, or any of the other "Agency Loan
Documents" (as defined in the Development Agreement), and any extension, renewal or
modification of such Development Agreement and other Agency Loan Documents;
Agency Deed of Trust
Exhibit "L"
4
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR HEREBY
COVENANTS AND AGREES AS FOLLOWS:
1. Pavment of Secured ObliQations. To pay when due (a) the
principal of, and the interest on, the indebtedness evidenced by the Note, (b) charges,
fees and all other sums as provided in the Development Agreement, and (c) the
principal of, and interest on, any future advances secured by this Agency Deed of Trust.
2. Maintenance. Repair. Alterations. To keep the Eligible Property in
good condition and repair; to complete promptly and in a good and workmanlike manner
all improvements to be constructed on the Eligible Property, including specifically all
improvements described in the Development Agreement, and promptly restore in like
manner any structure that may be damaged or destroyed thereon; to pay when due all
claims for labor performed and materials furnished therefor, to comply with all laws,
ordinances, regulations, covenants, conditions and restrictions now or hereafter
affecting the Eligible Property or any part thereof or requiring any alterations or
improvements thereon; not to commit or permit any waste or deterioration of the Eligible
Property; to keep and maintain abutting grounds, sidewalks, roads, parking and land-
scape areas in good and neat order and repair; not to commit, suffer or permit, to the
extent Trustor is able by the exercise of commercially reasonable best efforts, any act to
be done in or upon the Eligible Property in violation of any law, ordinance or regulation.
3. Insurance. To provide, maintain at its expense and deliver to
Beneficiary at all times until payment in full of all obligations secured hereby, insurance
as required by the Development Agreement or the Note. In the event of any loss or
damage, Trustor shall give immediate notice thereof to Beneficiary, and Beneficiary may
thereupon make proof of such loss or damage, if the same is not promptly made by
Trustor. Trustor and Beneficiary hereby agree to cooperate in making any adjustment
and compromise of any loss covered by the aforementioned insurance policies upon the
Eligible Property, and Trustor authorizes and empowers Beneficiary, at its option, to
collect and receive the proceeds, and endorse checks and drafts issued therefor.
Beneficiary agrees that in the event of any loss covered by insurance policies on the
Eligible Property subject to this Agency Deed of Trust, provided there is not then
existing any material default (or such existing default will be cured by the proceeds of
such insurance) in the observance or performance of any of the covenants and
agreements contained herein or in the Note or any future notes secured hereby, or in
any other agreement with or for the benefit of the Beneficiary in connection with any
indebtedness secured hereby, the proceeds of such insurance shall be used for the
repair or restoration of the Eligible Property and will be disbursed in accordance with
such protective terms and conditions as Beneficiary may reasonably impose.
Agency Deed of Trust
Exhibit "L"
5
Trustor hereby fully assigns to Beneficiary all current and future claims it
may have under any policy of insurance related to the Eligible Property or the Project,
regardless of whether such insurance was required to be maintained under the Agency
Loan Documents. Any and all unexpired insurance shall inure to the benefit of and pass
to the purchaser of the Eligible Property at any foreclosure sale, or any Trustee's sale
held pursuant hereto.
Further, Beneficiary may at the time in its sole discretion require Trustor to
submit satisfactory evidence of insurance policies obtained pursuant to this Paragraph 3
and of Trustor's compliance with all the provisions of said policies.
4. Lawsuits. To appear in and defend, or otherwise take such action
therein as the Beneficiary and Trustee or either of them may deem advisable with
respect to, any action or proceeding affecting the security for the Loan in which
Beneficiary or Trustee may appear.
5. Beneficiarv Statement. To pay all charges for all court costs and
expenses which Beneficiary may elect to advance in order to keep unimpaired, protect,
and preserve the title thereto; and to pay for any statement provided for by law in effect
at the date hereof regarding the obligations secured hereby, any amount demanded by
the Beneficiary not to exceed the maximum allowed by law at the time when said
statement is demanded.
6. Condemnation. That all judgments, awards of damages and
settlements, hereafter made as a result of or in lieu of any condemnation or other
proceedings for public use of, or for any damage to, the Eligible Property or the
improvements thereon, are hereby assigned to Beneficiary. If (i) Trustor is not then in
material default hereunder (or such default will be cured with the proceeds from the
foregoing), and (ii) the taking is a partial taking, all proceeds thereof shall be applied to
restoring the Eligible Property, if practicable, as reasonably determined by Beneficiary.
In the event (i) Trustor is then in material default hereunder (and such default will not be
cured with the proceeds of the foregoing), (ii) the taking is a total taking, or (Hi) the
taking is a partial taking and Beneficiary has reasonably determined that restoration of
the Eligible Property is not practicable, the proceeds shall be paid to Beneficiary to the
extent of those monies due and owing under the Note, this Agency Deed of Trust, future
notes or future deeds of trust, and Beneficiary is hereby authorized to receive such
monies. Trustor agrees to execute such further assignments of any such award,
judgment or settlement which may be received by Trustor. Subject to any prior rights of
creditors under the Senior Financing (as defined in the Development Agreement), Bene-
ficiary may apply any and all such sums to the indebtedness secured hereby in such
manner as it elects or, at its option, the entire amount so received by it or any part
thereof may be released. Neither the application nor the release of any such sums shall
Agency Deed of Trust
Exhibit "L"
6
cure or waive any default or notice of default hereunder or invalidate any act done
pursuant to such notice.
7. Permitted Acts of Beneficiarv. That without affecting the liability of
any person, including Trustor (other than any person released pursuant hereto), for the
payment of any indebtedness secured hereby, Beneficiary is authorized and
empowered as follows: Beneficiary may at any time, and from time to time, either
before or after the maturity of the obligations secured hereby, and without notice (a)
release any person liable for the payment of any of the indebtedness, (b) make any
agreement extending the time or otherwise altering the terms of payment of any of the
indebtedness, (c) accept additional security therefor of any kind, or (d) release any
property, real or personal, securing the indebtedness.
8. Reconvevance of EliQible Property. That upon written request of
Beneficiary stating that all sums secured hereby have been paid, and upon surrender of
this Agency Deed of Trust and the Note to Trustee for cancellation and retention, and
upon payment of its fees, Trustee shall reconvey, without warranty, the Eligible Property
then held hereunder. The recitals in such reconveyance of any matters of fact shall be
conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be
described as "the person or persons legally entitled thereto."
9. Default and Trustee's Sale. That upon the occurrence of an "Event
of Default" under this Agency Deed of Trust (as defined in Section 18 below) Beneficiary
may declare all principal remaining unpaid, all interest then earned and remaining
unpaid, and all sums other than principal or interest secured hereby, immediately due
and payable (and thenceforth at the option of the Beneficiary and except as otherwise
prohibited by law, the entire balance of the unpaid principal shall thereafter bear interest
at the Default Rate of interest per annum set forth in the Note until paid) and may
proceed to exercise the power of sale granted by this Agency Deed of Trust by delivery
to Trustee of written declaration of default and demand for sale and of written notice of
default and of election to cause to be sold said Eligible Property, which notice Trustee
shall cause to be filed for record. Beneficiary also shall deposit with Trustee this
Agency Deed of Trust, the Note and all documents evidencing expenditures secured
hereby.
After the lapse of such time as may then be required by law following the
recordation of said notice of default, and notice of sale having been given as then
required by law, Trustee, without demand on Trustor, shall sell the Eligible Property at
the time and place fixed by it in said notice of sale, either as a whole or in separate
parcels, and in such order as it may determine, at public auction to the highest bidder
for cash in lawful money of the United States, payable at time of sale. Trustee may
postpone sale of all or any portion of the Eligible Property by public announcement at
Agency Deed of Trust
Exhibit "L"
7
such time and place of sale, and from time to time thereafter may postpone such sale
by public announcement at the time fixed by the preceding postponement. Trustee
shall deliver to such purchaser its deed conveying the Eligible Property so sold, but
without any covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any person,
including Trustor, Trustee or Beneficiary, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee, including cost of
evidence of title in connection with sale, Trustee shall apply the proceeds of sale to
payment of: first, all sums expended by the Beneficiary under the terms hereof or under
the Note, not then repaid, with accrued interest at the Deferral Rate; second, all other
sums then secured hereby; and the remainder, if any, to the person or persons legally
entitled thereto.
10. Substitute Trustees. Beneficiary, or any successor in ownership of
any indebtedness secured hereby, may from time to time, by instrument in writing,
substitute a successor or successors to any Trustee named herein or acting hereunder,
which instrument, executed by the Beneficiary and duly acknowledged and recorded in
the Office of the Recorder of the County of San Bernardino, and by otherwise complying
with the provisions of California Civil Code Section 2934a, or any successor section,
shall be conclusive proof of proper substitution of such successor Trustee or Trustees,
who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, right, powers and duties. Said instrument must contain the name of the original
Trustor, Trustee and Beneficiary hereunder, the book and page where this Agency
Deed of Trust is recorded and the name and address of the new Trustee.
11. Successors Bound. That this Agency Deed of Trust applies to,
inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees,
administrators, executors, successors, assigns, trustees and receivers. In this Agency
Deed of Trust, whenever the context so requires, the masculine gender includes the
feminine and/or neuter, and the singular number includes the plural.
12. Evidence of Title. That if, because of any default hereunder, or
because of the filing or contemplated filing of any legal proceedings affecting the
Eligible Property, Beneficiary deems it necessary to obtain an additional evidence of title
or to cure any defect in title, Beneficiary may procure such evidence or cure such
defect, pay the cost thereof, and shall have an immediate claim against Trustor therefor,
together with a lien upon the Eligible Property for the amount so paid, with interest at
the Deferral Rate. Beneficiary is further authorized to require an appraisal of the
Eligible Property at any time that Beneficiary may reasonably request.
Agency Deed of Trust
Exhibit "L"
8
13. Default in Other Instruments: Bankruptcy. That default in the terms
of any other instrument securing the debt secured hereby, and/or the filing or other
commencement of any bankruptcy or insolvency proceedings including any assignment
for the benefit of creditors or other proceedings intended to liquidate or rehabilitate, by,
for or against Trustor shall after any applicable notice and cure period constitute default
under this Agency Deed of Trust.
14. Statute of Limitations. That the pleading of any statute of
limitations as a defense to any and all obligations secured by this Agency Deed of Trust
is hereby waived by the Trustor. to the full extent permissible by law.
15. Severability. That the invalidity of anyone or more covenants,
phrases, clauses, sentences, paragraphs or sections of this Agency Deed of Trust shall
not affect the remaining portions of this Agency Deed of Trust or any part hereof and
this Agency Deed of Trust shall be constructed as if such invalid covenants, phrases,
sentences, paragraphs or sections, if any. had not been inserted herein.
16. Order of Application. That if the indebtedness secured hereby is
now or hereafter becomes further secured by a security agreement, deed of trust,
pledge, contract of guaranty or other additional securities, Beneficiary may to the full
extent allowed by law, at its option, exhaust anyone or more of said securities as well
as the security hereunder, either concurrently or independently and in such order as it
may determine, and may apply the proceeds received upon the indebtedness secured
hereby without affecting the status of, or waiving any right to exhaust all or any other
security including the security thereunder and without waiving any breach or default in
any right or power, whether exercised hereunder or contained herein, or in any such
other security.
17. Covenants of Trustor.
(a) Audit by State and Federal AQencies. In the
eyent the Loan is subjected to audit, monitoring or other inspections by appropriate
state and federal agencies, Trustor shall comply with such inspections and pay, on
behalf of itself and Beneficiary. the full amount of the cost to the inspecting agency of
such inspections (unless such inspection and any resulting liability arises solely from the
gross negligence or willful misconduct of Beneficiary).
(b) ProQram Evaluation and Review Trustor shall
allow Beneficiary's authorized personnel to inspect and monitor its facilities and program
operations as they relate to the Project or the Eligible Property, including the interview
of Trustor's staff, tenants, and other program participants, as reasonably required by
Beneficiary during the term of the Loan.
Agency Deed of Trust
Exhibit "L"
9
18. Default. The Trustor shall be in default under this Agency Deed of
Trust upon any of the following events which, if not cured within the applicable cure
period provided, if any, shall constitute an event of default hereunder ("Event of
Default"):
a. The failure of Trustor to payor perform any monetary
covenant or obligation hereunder or under the terms of the Note, the Master Agreement,
the Development Agreement or any other documents executed in connection therewith,
without curing such failure within ten (10) calendar days the date such payment is due.
Notwithstanding anything herein to the contrary, the herein described cure period shall
not apply to a failure by Trustor to timely repay the Loan at the Maturity Date of the
Note;
b. The failure of Trustor to perform any nonmonetary covenant
or obligation hereunder or under the terms of the Master Agreement, the Development
Agreement, the Note or any other documents executed in connection therewith, without
curing such failure within thirty (30) calendar days after receipt of written notice of such
default from Beneficiary (or from any party authorized by Beneficiary to deliver such
notice as identified by Beneficiary in writing to Trustor) specifying the nature of the event
or deficiency giving rise to the default and the action required to cure such deficiency;
provided, however, that if any default with respect to a nonmonetary obligation is such
that it cannot be cured within a 3D-day period, it shall be deemed cured if Trustor
commences the cure within said 3D-day period and diligently prosecutes such cure to
completion thereafter. Notwithstanding anything herein to the contrary, the herein
described notice requirements and cure periods shall not apply to any Event of Default
described in Sections 18(c) through 18(h) below;
c. The material falsity of any representation or breach of any
warranty or covenant made by Trustor under the terms of this Agency Deed of Trust,
the Note, the Master Agreement, the Development Agreement or any other document
executed in connection therewith;
d. Trustor or any constituent member or partner, or majority
shareholder, of Trustor shall (a) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (b) fail to payor admit in writing
its inability to pay its debts generally as they become due, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent or
(e) commence a voluntary case under the Federal bankruptcy laws of the United States
of America or file a voluntary petition that is not withdrawn within ten (10) days of the
filing thereof or answer seeking an arrangement with creditors or an order for relief or
Agency Deed of Trust
Exhibit "L"
10
seeking to take advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy or insolvency proceeding;
e. If without the application, approval or consent of Trustor, a
proceeding shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, in respect of Trustor or any constituent member or partner, or
majority shareholder, of Trustor, for an order for relief or an adjudication in bankruptcy,
a composition or arrangement with creditors, a readjustment of debts, the appointment
of a trustee, receiver, liquidator or custodian or the like of Trustor or of all or any
substantial part of Trustor's assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by Trustor, in
good faith, the same shall (a) result in the entry of an order for relief or any such
adjudication or appointment, or (b) continue undismissed, or pending and unstayed, for
any period of ninety (90) consecutive days;
f. Trustor shall suffer or attempt to effect a "Transfer" (as
defined in Section 33 below) other than in full compliance with the terms of this Agency
Deed of Trust.
g. Trustor shall be in default under the CC&Rs, the Senior
Financing, any Junior Financing or Other Financing (as all these terms are defined in
the Development Agreement ), or any other secured or unsecured obligation relating to
the Project, unless the default is cured or waived within the cure period, if any,
applicable thereto under the terms of the obligation which is in default; or
h. Following completion of the construction of the Project,
voluntary cessation of the operation of the Project for a continuous period of more than
thirty (30) days or the involuntary cessation of the operation of the Project in accordance
with this Agency Deed of Trust for a continuous period of more than sixty (60) days.
19. Acceleration. The entire principal and all accrued and unpaid
interest on the Note shall be due and payable as therein set forth; provided, however,
that the entire balance of the outstanding principal and all accrued and unpaid interest
on the Note, together with any outstanding interest and other amounts payable
thereunder, shall, at the election of Beneficiary and upon notice to Trustor thereof
(except in the case of default described in Section 18 (c) or (d) , in which case no notice
shall be required), become immediately due and payable upon any Event of Default as
set forth in the Note, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by Trustor.
Agency Deed of Trust
Exhibit "L"
11
20. Breach by Trustor. Cure by Beneficiary or Trustee. In the event of
Trustor's failure to comply with any or all of the promises and agreements set forth in
this Agency Deed of Trust or to make any payment or to do any act as provided in this
Agency Deed of Trust, then Beneficiary or Trustee, but without obligation to do so and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may make or do the same in such manner and to such extent as
either in its sole judgment may deem necessary to protect the security hereof (including,
without limitation, to procure insurance and pay the premiums therefor; to pay unpaid
water rents, sewer service charges, and other governmental or municipal charges and
rates, and all or any part of the unpaid taxes, assessments, and reassessments, if in its
judgment the same are just and valid; to pay the cost of appraisals, reappraisals, and
extensions of title; to enter or have its agents enter upon the Eligible Property whenever
reasonably necessary for the purpose of inspecting the Eligible Property or making
repairs or installations as it deems necessary to preserve the Eligible Property or to
protect the same from vandalism, without thereby becoming liable as a trespasser or
mortgagee or beneficiary in possession, and to pay for such repairs and installations).
Beneficiary and Trustee are hereby authorized to enter upon the Eligible Property for
such purposes; to appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of Beneficiary or Trustee; to pay, purchase,
contest or compromise any encumbrance, charge or lien which in the judgment of either
appears to be prior or superior hereto; and, in exercising any such powers, to pay
necessary expenses, employ counsel of its choice and pay the reasonable fees of such
counsel. Trustor agrees to pay immediately and without demand all sums so expended
by Beneficiary or Trustee, with interest from the date of expenditure at the amount
allowed by law in effect at the date hereof, and that Beneficiary shall have a lien upon
the Eligible Property for the sums so expended and such interest thereon.
21. Security Aqreement. That all property covered by this Agency
Deed of Trust be deemed to constitute real property or interests in real property to the
maximum extent permitted under applicable law. To the extent that any tangible
property, equipment or other property covered by this Agency Deed of Trust constitutes
personal property, such personal property shall constitute additional security. This
Agency Deed of Trust shall create in Beneficiary a security interest in such personal
property and shall in respect thereof constitute a security agreement (the "Security
Agreement"). Beneficiary shall be entitled to all of the rights and remedies in respect of
any personal property included in the Eligible Property covered by this Agency Deed of
Trust afforded a secured party under the Uniform Commercial Code and other
applicable law. At Beneficiary's request Trustor will at any time and from time to time
furnish Beneficiary for filing financing statements signed by Trustor in form satisfactory
to Beneficiary. Trustor acknowledges and agrees that thirty (30) days' notice as to the
time, place and date of any proposed sale of any personal property shall be deemed
reasonable for all purposes. Trustor agrees that the Security Agreement created
Agency Deed of Trust
Exhibit "L"
12
hereby shall survive the termination or reconveyance of this Agency Deed of Trust
unless Beneficiary executes documentation expressly terminating the Security
Agreement.
22. Assumption of Liabilitv. Except as provided in Section 33, the
assumption of liability for the payment of the indebtedness hereby secured, by any
successor in interest to Trustor in the Eligible Property (in the event Beneficiary elects
not to accelerate the repayment of the Loan pursuant to any transfer or disposition of
the Eligible Property by operation of law or otherwise) shall not release Trustor from any
liability Trustor has hereunder or under the other Agency Loan Documents for the
payment of such indebtedness or any sums advanced under and secured by this
Agency Deed of Trust. Any forbearance or indulgence of Beneficiary, or extensions of
time for the payment of all or any part of the indebtedness secured hereby, or the
release of a part of the Eligible Property from the lien of this Agency Deed of Trust, for,
or without, payment of a consideration, shall not in any manner diminish or reduce the
liability of Trustor (subject to the nonrecourse provisions of Section 27) for the payment
of the indebtedness now or hereafter secured hereby; and that any payments made
upon the said indebtedness shall be deemed to have been made on behalf and for the
benefit of all parties obligated to pay the same. The acceptance of payments in excess
of the installments provided to be paid upon the Note or the consideration paid for any
such release shall not alter or diminish the obligation of Trustor to thereafter make
payments in the amounts and on the dates provided therein, until the same are fully
paid.
23. Future Advances. That upon the request of the Trustor or its
successor in ownership of the Eligible Property, Beneficiary may, at its option, at any
time before full payment of the Note secured hereby, make further advances to the
Trustor or its successors in ownership, and the same, with interest and late charges as
permitted by law, shall be secured by this Agency Deed of Trust; and provided further
that if Beneficiary, at its option, shall make a further advance or advances as aforesaid,
the Trustor or its successors in ownership agree to execute and deliver to Beneficiary a
note to evidence the same, payable on or before the maturity of the indebtedness under
the Note secured hereby and bearing such other terms as Beneficiary shall require.
Trustor further acknowledges and agrees: that this Agency Deed of Trust
is intended to, and shall, secure not only the original indebtedness under the Note, but
any and all future advances made by Beneficiary to Trustor; that this Agency Deed of
Trust shall secure any unpaid balances of advances made with respect to the Eligible
Property; that Beneficiary shall have the benefit of all statutes now existing or
henceforth enacted to assure repayment of any such future advances plus interest
thereon; that to secure the payment of said original indebtedness and future advances
Beneficiary shall also have a lien upon all other personal property and securities now or
Agency Deed of Trust
Exhibit "L"
13
hereafter in its possession belonging to Trustor; that all rights, powers and remedies
conferred upon Beneficiary herein are in addition to each and every other right which
Beneficiary has hereunder; that all rights, powers and remedies conferred upon
Beneficiary in equity or by law may be enforced concurrently therewith; that Beneficiary
shall be subrogated to the rights and seniority of any prior lien paid or released by
reason of the application thereon of any of the proceeds hereof, and that each and all of
the covenants, agreements, and provisions hereof shall bind the respective heirs,
executors, administrators, successors, and assigns of Trustor and Beneficiary herein,
and all others who subsequently acquire any right, title, or interest in the Eligible
Property, or to this Agency Deed of Trust and the indebtedness secured hereby.
24. Captions. That the captions of the sections of this Agency Deed of
Trust are for convenience only and shall not be considered in resolving questions of
interpretation or construction.
25. Estoppel Certificates. That Trustor shall from time to time at
Beneficiary's request furnish Beneficiary or any person designated by Beneficiary, a
certified statement in form reasonably satisfactory to Beneficiary confirming as of the
date of the certificate the unpaid principal balance and accrued interest on the Note and
stating that Trustor is not in default hereunder (or describing any default), and stating
that Trustor has no defense, right of set off or counterclaim in the payment of the
indebtedness, or any part thereof, or the observance or performance of any obligation
(or describing any such defense, set off or counterclaim). Any purchaser or assignee of
the Note or this Agency Deed of Trust or any interest therein may rely on such
certificate.
26. Books and Records. That Trustor and all subsequent owners of the
Eligible Property, if any, shall keep and maintain full and correct books and records
showing in detail the earnings and expenses of the Eligible Property and shall permit
Beneficiary at no expense to Trustor or its representatives to examine such books and
records and all supporting data and vouchers, from time to time at reasonable times, on
request, at Trustor's offices or at another mutually agreed upon location.
27. Obliqation Nonrecourse. Except to the extent any Event of Default
hereunder results directly or indirectly from any fraud or intentional and material
misrepresentation by Borrower in connection with the Loan, the Loan is a nonrecourse
obligation of Trustor and in the event of the occurrence of an Event of Default,
Beneficiary's only recourse under this Agency Deed of Trust shall be against the Eligible
Property, the proceeds thereof, the rents and other income arising from its use and
occupancy as provided in the Agency Deed of Trust, and any other collateral given to
Beneficiary as security for repayment of the Loan.
Agency Deed of Trust
Exhibit "L"
14
28. Fixture Filinq. This Agency Deed of Trust is also a fixture filing with
respect to the personal property which is or is to become fixtures on the Eligible
Property, and is to be recorded in the real property records of San Bernardino County,
California.
29. Assiqnment of Rents. All of the existing and future rents, royalties,
income, and profits of the Eligible Property that arise from its use or occupancy are
hereby absolutely and presently assigned to Beneficiary. However, until Trustor is in
default under this Agency Deed of Trust, Trustor will have a license to collect and
receive those rents, royalties, income and profits. Upon any Event of Default by
Trustor, Beneficiary may terminate Trustor's license in its discretion, at any time, without
notice to Trustor, and may thereafter collect the rents, royalties, income and profits itself
or by an agent or receiver. No action taken by Beneficiary to collect any rents, royalties,
income or profits will make Beneficiary a "mortgagee-in-possession" of the Eligible
Property, unless Beneficiary personally or by agent enters into actual possession of the
Eligible Property. Possession by a court-appointed receiver will not be considered
possession by Beneficiary. All rents, royalties, income and profits collected by
Beneficiary or a receiver will be applied first to pay all expenses of collection, and then
to the payment of all costs of operation and management of the Eligible Property, and
then to the payment of the indebtedness and obligations secured by the Agency Deed
of Trust in whatever order Beneficiary directs in its absolute discretion and without
regard to the adequacy of its security. If required by Beneficiary, each lease or
occupancy agreement affecting any of the Eligible Property must provide, in a manner
approved by Beneficiary, that the tenant will recognize as its lessor any person
succeeding to the interest of Trustor upon any foreclosure of this Agency Deed of Trust.
The expenses (including receivers' fees, if any, compensation to any agent appointed
by Beneficiary, counsel fees, costs and compensation to any agent appointed by
Beneficiary, and disbursements) incurred in taking possession and making such
collection, shall be deemed a portion of the expense of this trust. The entering upon
and taking possession of the Eligible Property, and/or the collection of such rents,
issues and profits and the application thereof as aforesaid, shall not cure or waive any
default or notice of default hereunder or invalidate any act done pursuant to such notice.
Beneficiary may exercise anyone or more of the remedies in this section without
waiving its right to exercise any such remedies again or for the first time in the future.
The foregoing shall be subject to the provisions of applicable law.
30. Applicable Law. This Agency Deed of Trust shall be governed by,
and construed in accordance with, the laws of the State of California.
31. Approvals. Except with respect to those matters set forth
hereinabove providing for the Beneficiary's approval, consent or determination to be at
the Beneficiary's "sole discretion" or "sole and absolute discretion," the Beneficiary
Agency Deed of Trust
Exhibit "L"
15
hereby agrees to act reasonably with regard to any approval, consent, or other
determination given by the Beneficiary hereunder. The Beneficiary agrees to give
Trustor written notice of its approval or disapproval following submission of items to the
Beneficiary for approval, including, in the case of any disapproved item, the reasons for
such disapproval. Any consent to a transfer under Section 33 of this Agency Deed of
Trust, and any other consent or approval by Beneficiary under this Agency Deed of
Trust or any of the other Agency Loan Documents, may be given by Beneficiary's
Executive Director without action of Beneficiary's governing board unless the Executive
Director in his or her sole discretion elects to refer the matter to the board.
32. Good Faith and Fair Dealino. The Beneficiary and Trustor agree to
perform all of their obligations and the actions required of each hereunder in good faith
and in accordance with fair dealing.
33. Assionment of Interest.
a. Without the prior written approval of the Beneficiary, which
approval the Beneficiary may withhold in its sole and absolute discretion, Trustor shall
not (i) sell, encumber, assign or otherwise transfer (collectively, "Transfer") all or any
portion of its interest in the Eligible Property or the Project (excluding tenant leases
pursuant to the terms of the Master Agreement), (ii) permit the Transfer of greater than
49% of its ownership and/or control, in the aggregate, taking all transfers into account
on a cumulative basis, or (iii) Transfer any of its rights or obligations under the Agency
Loan Documents. Notwithstanding the foregoing, Beneficiary consents to the events
described in the last paragraph of Section 20 of the Master Agreement without Trustor
obtaining any further consent of Beneficiary. Trustor hereby agrees that any purported
Transfer not approved by the Beneficiary as required herein shall be ipso facto null and
void, and no voluntary or involuntary successor to any interest of Trustor under such a
proscribed Transfer shall acquire any rights pursuant to the Master Agreement or this
Agency Deed of Trust.
b. At any time Trustor desires to effect a Transfer hereunder,
Trustor shall notify the Beneficiary in writing (the "Transfer Notice") and shall submit to
the Beneficiary for its prior written approval (i) all proposed agreements and documents
(collectively, the "Transfer Documents") memorializing, facilitating, evidencing and/or
relating to the circumstances surrounding such proposed Transfer, and (ii) a certificate
setting forth representations and warranties by Trustor and the proposed transferee to
the Beneficiary sufficient to establish and ensure that all requirements of this Section 33
have been and will be met. No Transfer Documents shall be approved by the
Beneficiary unless they expressly provide for the assumption by the proposed
transferee of all of Trustor's obligations under the Agency Loan Documents. The
Transfer Notice shall include a request that the Beneficiary consent to the proposed
Agency Deed of Trust
Exhibit "L"
16
Transfer and shall also include a request that Trustor be released from further
obligations under the Agency Loan Documents. The Beneficiary agrees to make its
decision on Trustor's request for consent to such Transfer, as promptly as possible,
and, in any event, not later than thirty (30) calendar days after the Beneficiary receives
the last of the items required by this Section 33. In the event the Beneficiary consents
to a proposed Transfer, then such Transfer shall not be effective unless and until the
Beneficiary receives copies of all executed and binding Transfer Documents which
Transfer Documents shall conform with the proposed Transfer Documents originally
submitted by Trustor to the Beneficiary. From and after the effective date of any such
Transfer, Trustor shall be released from its obligations under this Agency Deed of Trust
and the other Agency Loan Documents accruing subsequent to such effective date.
c. Notwithstanding anything in this Agency Deed of Trust to the
contrary, Trustor agrees that it shall not be permitted to make any Transfer, whether or
not the Beneficiary consent is required therefor and even if the Beneficiary has
consented thereto, if there exists an Event of Default under this Agency Deed of Trust at
the time the Transfer Notice is tendered to the Beneficiary or at any time thereafter until
such Transfer is to be effective.
d. The provIsions of this Section 33 shall apply to each
successive Transfer and proposed transferee in the same manner as initially applicable
to Trustor under the terms set forth herein.
Agency Deed of Trust
Exhibit "L"
17
IN WITNESS WHEREOF, the undersigned have executed this Agency Deed of Trust as
of the date first above written.
TRUSTOR:
MARY ERICKSON COMMUNITY HOUSING, INC.,
a California Non-profit public benefit corporation
By:
Susan McDevitt, Director
BENEFICIARY:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body
corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
By:
Timothy J. Sabo, Agency Counsel
Agency Deed of Trust
Exhibit "L"
18
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On before me,
Notary Public, personally appeared
personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On before me,
Notary Public, personally appeared
personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
Agency Deed of Trust
Exhibit "L"
19
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On before me,
Notary Public, personally appeared
personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
Agency Deed of Trust
Exhibit "L"
20
RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
201 North "E" Street, Suite 301
San Bernardino, CA 92401
Attn.: Director of Housing and
Community Development
(Space Above Line for Recorder's use)
This Agreement is recorded at the request and for the benefit of the Redevelopment
Agency of the City of San Bernardino and is exempt from the payment of a recording
fee pursuant to
EXHIBIT "M" TO MASTER AGREEMENT
COVENANTS. CONDITIONS. AND RESTRICTIONS
THIS AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND
RESTRICTIONS ("Agreement") is executed as of the _ day of , 20_ by
and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO,
a public body corporate and politic ("Agency"), and MARY ERICKSON COMMUNITY
HOUSING. INC., a California Non-profit public benefit corporation ( "Owner"), with
reference to the following:
A. The Agency and Owner are parties to the Master Agreement ("Master
Agreement") dated as of the day of , 200_ and the
Development Agreement ("Development Agreement") dated as of the _ day of
, 20_. on the terms and conditions of which Owner shall borrow from the Agency, and
the Agency shall lend to Owner, the original principal amount of
($ ) in NSP Funds ("Loan") for
the purpose of providing financing for the housing development described in the
Development Agreement (the "Project"). The Project will be developed on a site legally
described on Exhibit "A" to this Agreement (the "Eligible Property").
B. Unless otherwise expressly provided, all defined terms used in this
Agreement shall have the defined meanings provided for in the Master Agreement and
the Development Agreement.
NOW THEREFORE, in consideration of the representations, covenants,
and obligations of Owner contained in this Agreement, Owner, on behalf of itself and its
successors and assigns, hereby covenants and agrees as follows:
1 99596.3 388-6 6/10/2009 I :28 PM
(1) Use of the Eliqible Propertv.
The Eligible Property will consist of _ multi-family residential
units, on approximately _ net acres. L-) units shall be reserved for
households whose income is at or below 50% Area Median Income ("AMI"), and
L-) units shall be reserved for households whose income is at or below
% AM!.
a. Limitations on Tenants. Notwithstanding anything to the contrary
in this Agreement, Owner hereby covenants on behalf of itself, and its
successors and assigns, which covenant shall run with the land and bind every
successor and assign in interest of Owner, that, throughout the Fifty-Five (55)
year term of the CC&Rs, Owner and such successors and assigns shall use the
Eligible Property solely for the purpose of constructing and operating the Project
as a residential development with the defined number of dwelling units and, with
respect to the units designated to be assisted as consideration for the Loan
("Assisted Units"), L-) Assisted Units shall be in accordance with
the tenant income levels specified in this Agreement.
All Assisted Units shall be rented only at an Affordable Housing
Cost to Very Low-Income Households hereinafter defined (households meeting
the applicable criteria are occasionally referred to as "Eligible Households" and
persons within any group occasionally referred to as "Eligible Tenant" or "Eligible
Tenants") and as outlined in the following table:
Household Income 1-BR 2-BR TOTAL Total NSP
Level (% of Area Median units units UNITS Assisted
Incom~\ Units
Fiftv Percent (50%)
Percent L%) .-----.- -
Percent L"t~ -
Manager's Unit
TOTAL
"Very Low-Income Households" shall mean persons
and families whose gross annual household incomes do not exceed the
qualifying limits for lower income families as established and amended from time
to time pursuant to Section 8 of the United States Housing Act of 1937, which
qualifying limits are otherwise set forth in Section 6932 of the California Code of
Regulations and are equivalent to eighty percent (50%) of Area Median Income,
adjusted for family size and other adjustment factors by the United States
Department of Housing and Urban Development (HUD).
2
99596.3 388-6 6/10/2009 1:28 PM
"Affordable Housing Cost" shall mean, as to each
Eligible Tenant, a rental rate which results in monthly payments which, including
a reasonable utility allowance, do not exceed for a Very Low-Income Household,
the product of thirty percent (30%) times fifty percent (50%) of Area Median
Income adjusted for family size appropriate to the Assisted Unit; and
"Area Median Income" shall mean the median income
for the Riverside/San Bernardino/Ontario Metropolitan Statistical Area, adjusted
for family size as periodically adjusted by HUD, or any successor entity
designated under state law as responsible for establishing such Area Median
Income.
Owner shall specifically provide in each Assisted Unit
lease and shall strictly enforce the requirement that each Assisted Unit be
occupied at all times by the eligible household who has leased that Assisted Unit,
and that any other occupant of the unit be another qualified member of the
lessee's household. The Agency shall be identified as a third party beneficiary of
that covenant and shall have the right to directly enforce that restriction in the
event Owner fails to do so. Prior to execution of any Assisted Unit lease with
respect to the Project, Owner shall submit to the Agency and obtain its written
approval of a standard form occupancy lease and Owner shall thereafter use the
approved form for all leases of Assisted Units in the Project, with only such
further modifications thereto as are first submitted to and approved in writing by
the Agency.
b. Tenant Selection Process; Reports and Records Concerninq
Tenancies. Owner shall maintain such records and satisfy such reporting
requirements as may be reasonably imposed by the Agency to monitor
compliance with the tenanting requirements described in Paragraph (1)a above,
including without limitation the requirement that Owner deliver reports to the
Agency commencing at the close of the initial occupancy of the Project, and
continuing annually thereafter, setting forth the name of each tenant, the unit
occupied and the income of the tenant and the amount of rent payable by each
tenant. Owner shall also be required to have each prospective tenant complete a
rental application prior to occupancy and to obtain evidence from each such
tenant as may be reasonably required by the Agency to certify such tenant's
qualification for occupancy of the Project. Owner's obligation to provide such
reports shall remain in force and effect for the same duration as the use
covenants set forth in this Paragraph (1).
(2) Manaaement of Proiect. Subject to the terms and conditions
contained hereinbelow, Owner shall at all times during the operation of the Project
pursuant to this Agreement retain an entity to perform the management and/or
supervisory functions ("Manager") with respect to the operation of the Project, including
day-to-day administration, maintenance and repair. Owner shall, before execution or
any subsequent amendment or replacement thereof, submit and obtain The Agency's
3 99596.3 388-6 6/10/2009 I :28 PM
written approval (which shall not be unreasonably withheld, conditioned or delayed) of a
management contract ("Management Contract") entered into between Owner and an
entity ("Management Entity") reasonably acceptable to the. Subject to any regulatory
or licensing requirements of any other applicable governmental agency, the
Management Contract may be for a term of up to fifteen (15) years and may be
renewed for successive terms in accordance with its terms, but may not be amended or
modified without the written consent of the Agency. The Management Contract shall
also provide that the Management Entity shall be subject to termination for failure to
meet project maintenance and operational standards set forth herein or in other
agreements between Owner and the Agency. Owner shall promptly terminate any
Management Entity which commits or allows such failure, unless the failure is cured
within a reasonable period, but, in no event exceeding 60 calendar days from
Management Entity's receipt of notice of the failure from Owner or the Agency. Owner's
obligation to retain a Management Entity shall remain in force and effect for the same
duration as the use covenants set forth in Paragraph (1) of this Agreement.
(3) Operations and Maintenance. Owner hereby covenants on behalf
of itself, and its successors and assigns, which covenant shall run with the land and
bind every successor and assign in interest of Owner, that Owner and such successors
and assigns shall use the Eligible Property solely for the purpose of constructing and
operating the Project and ancillary improvements thereon, in accordance with and of the
quality prescribed by this Agreement, the Master Agreement, the Development
Agreement and the Agency Deed of Trust (as defined in the Development Agreement).
Owner covenants and agrees for itself, its successors and assigns, which
covenants shall run with the land and bind every successor or assign in interest of
Owner, that during development of the Eligible Property pursuant to this Agreement and
thereafter, the Eligible Property, nor any portion thereof, shall be improved, used or
occupied in violation of any Applicable Governmental Restrictions (as defined below) or
the restrictions contained in this Agreement. Furthermore, Owner and its successors
and assigns shall not maintain, commit, or permit the maintenance or commission on
the Eligible Property, or any portion thereof, of any nuisance, public or private, as now
or hereafter defined by any statutory or decisional law applicable to the Eligible
Property, or any portion thereof.
As used herein, "Applicable Governmental Restrictions" shall mean and
include any and all laws, statutes, ordinances, codes, rules, regulations, directives,
writs, injunctions, orders, decrees, rulings, conditions of approval, or authorizations, now
in force or which may hereafter be in force, of any governmental entity, agency or
political subdivision as they pertain to the performance of this Agreement or
development or operation of the Project, including specifically but without limitation all
code and other requirements of the jurisdiction in which the Project is located; the
California Environmental Quality Act; the laws specified in the Development Agreement;
fair housing laws; and applicable federal, state and local laws. Owner shall indemnify,
defend and hold the Agency harmless for any suit, cost, attorneys' fees, claim,
administrative proceeding, damage, award, fine, penalty or liability arising out of
4 99596.3 388-6 6/1012009 1:28 PM
Owner's failure to comply with any Applicable Governmental Restrictions, including,
without limitation, the nonpayment of any prevailing wages required to be paid in
connection with the Project.
Owner shall, at its expense, (i) maintain all improvements and landscaping
on the Eligible Property in first-class order, condition, and repair (and, as to
landscaping, in a healthy and thriving condition) in accordance with the plans for the
Project approved by the Agency in accordance with the Development Agreement and all
Applicable Governmental Restrictions, and (ii) manage the Project and Project finances
reasonably prudently and in compliance with Applicable Governmental Restrictions so
as to maintain a safe and attractive living environment for Project residents.
(4) Performance of Maintenance.
a. Owner shall maintain in accordance with the Agency
Standards, as hereinafter defined, the private improvements, public improvements and
landscaping to the curbline(s) on and abutting the Eligible Property. Said improvements
shall include, but not be limited to, buildings, sidewalks and other paved areas,
pedestrian lighting, landscaping, irrigation of landscaping, architectural elements
identifying the Eligible Property and any and all other improvements on the Eligible
Property and in the public right-of-way to the nearest curbline(s) abutting the Eligible
Property.
b. To accomplish the maintenance, Owner shall either staff or
contract with and hire licensed and qualified personnel to perform the maintenance
work, including the provision of labor, equipment, materials, support facilities, and any
and all other items necessary to comply with the requirements of this Agreement.
Agency Standards: The following standards ("Agency Standards")
shall be complied with by Owner and its maintenance staff, contractors or
subcontractors
(i) Ordinary Maintenance Standards - Owner shall
maintain the Eligible Property in good repair, order and condition at all
times in order to assure that the Eligible Property is kept in a decent, safe,
and sanitary condition, and that the buildings, grounds, and equipment are
to be maintained in a manner that will preserve their condition.
(ii) Annual Inspection Standards - Owner shall annually
inspect the Eligible Property. The completed annual inspection will be
documented and reported to the Agency on an annual basis, and at the
end of each year Owner shall submit to the Agency a declaration certifying
that the annual inspection was performed at the Eligible Property. Owner
shall retain records of the inspection and make them available for review
by the Agency at the request of the Agency.
5
99596.3 388-6 6/10/2009 1 :28 PM
(iii) Extraordinary Maintenance. Owner shall perform any
extraordinary repairs or replacements necessary in order to maintain the
Eligible Property, including extraordinary replacement of equipment,
betterment, and additions. Extraordinary repairs or replacement consists
of major repairs and rehabilitation involving substantial expenditures which
usually are needed only at relatively long intervals of time, or are caused
by such occurrences as earthquake, fire, obsolescence and, in some
instances, neglect. Such items as replacement of roofs, replacement of
corroded gas and heating lines, and rehabilitation of landscaping
(ground-cover) would be considered in this category.
(iv) The Agency may enter and inspect the premises at
any time after notifying Owner 72 hours prior to the planned inspection,
and said notice shall be delivered to Owner at the address indicated in
paragraph 17(e) below.
(5) Failure to Maintain Improvements. In the event Owner does not
maintain the Eligible Property to the curbline in the manner set forth herein and in
accordance with the Agency Standards, the Agency shall have the right to maintain
such private and/or public improvements, or to contract for the correction of such
deficiencies, after (i) written notice to Owner stating that the condition of said
improvements does not meet with the Agency Standards and specifying the deficiencies
and the actions required to be taken by Owner to cure the deficiencies ("Deficiency
Notice"); and (ii) the lapse of the applicable "Cure Period," as hereinafter defined. Upon
receipt of the Deficiency Notice, Owner shall have thirty (30) calendar days within which
to correct, remedy or cure the deficiency, unless such deficiency is not capable of being
cured within such 30 day period, then such amount of time as is needed to cure such
deficiency provided owner is diligently pursuing cure; provided however, if the
Deficiency Notice states the problem is urgent relating to public health and safety, then
Owner shall have forty-eight (48) hours to rectify the problem (collectively the "Cure
Periods").
In the event Owner fails to correct, remedy, or cure such maintenance
deficiency after the Deficiency Notice and after the applicable Cure Period has lapsed,
then the Agency shall have the right to maintain such improvements. Owner agrees to
pay the Agency, upon demand, charges and costs incurred by the Agency in connection
with such maintenance. Until so paid, the Agency shall have a lien on the Eligible
Property for the amount of such maintenance charges and costs, which lien shall be
perfected by the recordation of a "Notice of Claim of Lien" against the Eligible Property.
Upon recordation of a Notice of a Claim of Lien against the Eligible Property, such lien
shall constitute a lien on the fee estate in and to the Eligible Property prior and superior
to all other monetary liens except: (i) all taxes, bonds, assessments, and other levies
which by law would be superior thereto; (ii) the lien or charges of any mortgage, deed
of trust, or other security interest then of record made in good faith and for value, it
being understood that the priority for any such lien for costs incurred to comply with this
Agreement shall date from the date of the recordation of the Notice of Claim of Lien.
6 99596.3 388-6 6/1 0/2009 1:28 PM
Any such lien shall be subject and subordinate to any lease or sublease of the interest
of Owner in the Eligible Property or any portion thereof and to any easement affecting
the Eligible Property or any portion thereof entered into at any time (either before or
after) the date of recordation of such a Notice. Any lien in favor of the Agency created
or claimed hereunder is expressly made subject and subordinate to any mortgage or
deed of trust made in good faith and for value, recorded as of the date of the
recordation of the Notice of Claim of Lien describing such lien as aforesaid, and no such
lien shall in any way defeat, invalidate, or impair the obligation or priority of any such
mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly
subordinates his interest, or record, to such lien. No lien in favor of the Agency created
or claimed hereunder shall in any way defeat, invalidate, or impair the obligation or
priority of any lease, sublease or easement unless such instrument is expressly
subordinated to such lien. Upon foreclosure of any mortgage or deed of trust made in
good faith and for value and recorded prior to the recordation of any unsatisfied Notice
of Claim of Lien, the foreclosure-purchaser shall take title to the Eligible Property free of
any lien imposed herein by the Agency that has accrued up to the time of the
foreclosure sale, and upon taking title to the Eligible Property, such foreclosure-
purchaser shall only be obligated to pay costs associated with this Agreement accruing
after the foreclosure-purchaser acquires title to the Eligible Property. If the Eligible
Property is ever legally divided with the written approval of the Agency and fee title to
various portions of the Eligible Property is held under separate ownerships, then the
burdens of the maintenance obligations set forth herein and in the Agreement and the
charges levied by the Agency to reimburse the Agency for the cost of undertaking such
maintenance obligations of Owner and its successors and the lien for such charges
shall be apportioned among the fee owners of the various portions of the Eligible
Property under different ownerships proportionate to the square footage of the land
contained in the respective portions of the Eligible Property owned by them. Upon
apportionment, no separate owner of a portion of the Eligible Property shall have any
liability for the apportioned liabilities of any other separate owner of another portion of
the Eligible Property, and the lien shall be similarly apportioned and shall only constitute
a lien against the portion of the Eligible Property owned in fee by the owner who is liable
for the apportioned lien and against no other portion of the Eligible Property. Owner
acknowledges and agrees the Eligible Property may also pursue any and all other
remedies available in law or equity. Owner shall be liable for any and all reasonable
attorneys' fees, and other legal costs or fees incurred in collecting said maintenance
costs.
(6)
[Reserved.]
7
99596.3 388-6 6/10/20091:28 PM
(7) Owner's Obliqation to Refrain From Discrimination. There shall be
no discrimination against or segregation of any person, or group of persons, on account
of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Eligible Property,
nor shall Owner itself or any person claiming under or through it establish or permit any
such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees, or vendees of the Eligible Property or any portion thereof. The
nondiscrimination and nonsegregation covenants set forth herein shall remain in effect
in perpetuity.
Owner shall refrain from restricting the rental, sale or lease of the Eligible
Property or any portion thereof on the basis of race, color, creed, religion, sex, marital
status, national origin, or ancestry of any person. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or
herself, and his or her heirs, executors, administrators and assigns, and all
persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race,
color, creed, religion, sex, marital status, national origin, or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land
herein conveyed, nor shall the grantee or any person claiming under or through
him or her, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees, or vendees in the land herein
conveyed. The foregoing covenants shall run with the land."
b. In leases: "The lessee herein covenants by and for himself or
herself, and his or her heirs, executors, administrators and assigns, and all
persons claiming under or through him or her, and this lease is made and
accepted upon and subject to the following conditions: That there shall be no
discrimination against or segregation of any person or group of persons, on
account of race, color, creed, religion, sex, marital status, national origin, or
ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or
enjoyment of the land herein leased nor shall the lessee himself or herself, or any
person claiming under or through him or her, establish or permit any such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vendees in the land herein leased."
c. In contracts: "There shall be no discrimination against or
segregation of any person or group of persons, on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry, in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor
8 99596.3 388-6 6/10/2009 1:28 PM
shall the parties to this contract or any person claiming under or through them,
establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy of tenants,
lessees, subtenants, sublessees, or vendees of the premises."
Nothing in this Paragraph shall be construed or understood to limit, restrict
or in any way waive the income requirements described in this Agreement.
(8) Covenants Run With the Land; Duration of Covenants. The
covenants and agreements established in this Agreement shall be covenants running
with the land and shall, without regard to technical classification and designation, be
binding on Owner and any successor-in-interest to Owner's interest in the Eligible
Property, or any part thereof, for the benefit of and in favor of the agency and its
successors and assigns. The covenants of this Agreement shall remain in effect through
the Term, notwithstanding the repayment of the Loan by Owner prior to the Maturity
Date. The covenants contained in Paragraph 7 of this Agreement shall remain in effect
in perpetuity.
The Improvements to the curbline(s) and the maintenance thereof touch
and concern the Eligible Property and inure to the benefit of any and all present or
successive owners of the Eligible Property. Therefore, whenever the word "owner" is
used herein, it shall include the owner as of date of execution of this Agreement, and
any and all successor owners or assigns of the Eligible Property, and the provisions
hereof are expressly binding upon all such successive owners and assigns and the
parties agree all such provisions shall run with the land. The Agency shall cause a fully
executed copy of this Agreement to be recorded in the Office of the San Bernardino
County Recorder. Notwithstanding the foregoing, in the event Owner or its successors
or assigns shall convey its fee interest in all or any portion of the Eligible Property, the
conveying owner shall be free from and after the date of recording such conveyance of
all liabilities, respecting the performance of the restrictions, covenants or conditions
contained in this Agreement thereafter to be performed with respect to the Eligible
Property, or any part thereof, it being intended that the restrictions, covenants and
conditions shall be binding upon the record owners of the Eligible Property only during
such time as that person is the owner of the Eligible Property, provided that the
conveying owner shall remain liable for any actions prior to the date of the conveyance.
(9) Enforcement. In amplification and not in restriction of the
provisions set forth hereinabove, it is intended and agreed that the Agency shall be
deemed the beneficiary of the terms and provisions of this Agreement and of the
restrictions and covenants running with the land for and in its own right and for the
purposes of protecting the interests of the community and other parties, public or
private, in whose favor and for whose benefit the covenants running with the land have
been provided. Each covenant of Owner, shall, without regard to technical classification
and designation, inure to the benefit of the successors, transferees and assigns of the
Agency for the entire period during which such covenants shall be in force and effect,
and shall be binding upon the successors, transferees and assigns of Owner, whether
9 99596.3 388-6 6/10/2009 I :28 PM
by merger, consolidation, sale, transfer, liquidation or otherwise. Each covenant in
favor of the Agency is for the benefit of the real property owned by the Agency in the
area surrounding the Eligible Property. The covenants herein running with the land
shall also be equitable servitudes upon the Eligible Property and each part thereof and
shall bind each and every person having any interest in the Eligible Property or part
thereof, whether such interest is fee, easement, leasehold, beneficial or otherwise, and
each successor or assign of such person having any such interest in the Eligible
Property or part thereof. The Agency shall have the right if any of the covenants set
forth in this Agreement which are provided for its benefit are breached, to exercise all
rights and remedies and to maintain any actions or suits at law or in equity or other
proper proceedings to enforce the curing of such breach to which it may be entitled. In
the event that suit is brought for the enforcement of this Agreement or as the result of
any alleged breach hereof, the prevailing party or parties in such suit shall be entitled to
recover their reasonable attorneys' fees from the losing party or parties, and any
judgment or decree rendered in such proceedings shall include an award thereof.
Except for the Agency, the covenants and restrictions contained in this Agreement shall
not benefit or be enforceable by any owner of any sother real property or any person or
entity having any interest in any such other real property.
(10) Compliance with Law. Owner shall comply with all Applicable
Governmental Restrictions relating to the uses of or condition of the Eligible Property
private improvements and public improvements to the curbline(s). Local laws for the
purposes of this paragraph shall include only those ordinances which are
nondiscriminatory in nature and applicable to the public welfare, health, safety and
aesthetics. If any new local laws relating to the uses of or condition of the
improvements create a condition or situation that constitutes a lawful nonconforming
use as defined by local ordinance with respect to the Eligible Property or any portion
thereof, then so long as the lawful nonconforming use status remains in effect (Le., until
such lawful status is properly terminated by amortization as provided for in the new local
law or otherwise), Owner shall be entitled to enjoy the benefits of such lawful
nonconforming use pursuant to the lawful nonconforming uses ordinance.
(11) Indemnification and Insurance.
a. Indemnification. In the event that Owner is not acting as a
Design Professional, Owner agrees to indemnify, defend and save harmless the
Agency, and their elected and appointed officials, officers, representatives, employees,
and agents (hereinafter collectively referred to as "Agents"), from and against any and
all liability, demands, damages, claims, causes of action, fees (including reasonable
attorney's fees and costs and expert witness fees), and expenses, including, but not
limited to, claims for bodily injury, property damage, and death (hereinafter collectively
referred to as "Liabilities"), that arise out of, pertain to, or relate to this Agreement, the
services and/or materials provided pursuant to this Agreement, the Eligible Property, or
Project. Owner shall not be required to indemnify, defend, and save harmless the
Agency and its Agents from any Liabilities that arise from the active negligence, sole
negligence or willful misconduct of the Agency, Agency's agents, servants, or
10 99596.3 388-6 6/10/20091:28 PM
independent contractors who are directly responsible to the Agency's. Such
indemnification language shall also be incorporated in Owner's contracts with any
general contractors and subcontractors in favor of the Agency.
In the event that Owner is acting as a Design Professional, Owner
agrees to indemnify, defend and save harmless the Agency and their Agents from and
against any and all Liabilities that arise out of, pertain to, or relate to the negligence,
recklessness, or willful misconduct of Owner. Such indemnification language, in favor
of the Agency, shall also be incorporated in Owner's contracts with any Design
Professionals in favor of the Public Agency.
These indemnification provisions shall remain in full force and effect
and survive the cancellation, termination and/or expiration of this Agreement. Owner
agrees to require any entities with which it contracts to agree to and abide by the above
mentioned indemnification requirements in favor of the Agency, as applicable to each of
them.
b. Insurance. Without limiting Owner's indemnifications of the
Agency provided in this Agreement, Owner shall procure and maintain at its own
expense the insurance described in this section for the duration of this Agreement,
unless otherwise set forth herein. Such insurance shall be secured from carriers
admitted in California, or authorized to do business in California. Such carriers shall be
in good standing with the California Secretary of State's Office and the California
Department of Insurance. Such carriers must be approved by the California
Department of Insurance and must be included on the California Department of
Insurance List of Eligible Surplus Line Insurers (hereinafter "LESLI"). Such carriers
must have a minimum rating of or equivalent to A(v) in Best's Insurance Guide. Owner
shall, concurrent with the execution of this Agreement, deliver to the Agency certificates
of insurance with original endorsements evidencing the general liability, automobile
insurance, worker's compensation and property insurance coverage required by this
Agreement at such time that such exposures are at risk, but in no event later than the
Close of Escrow. The certificate and endorsements shall be signed by a person
authorized by the insurers to bind coverage on its behalf. The Agency reserves the
right to require complete certified copies of all policies at any time. Said insurance shall
be in a form acceptable to the Agency and may provide for such deductibles as may be
acceptable to the Agency. In the event such insurance does provide for deductibles or
self-insurance, Owner agrees that it and/or the entities with which it contracts, will
defend, indemnify and hold harmless the Agency, its elected and appointed officers,
officials, representatives, employees, and agents in the same manner as they would
have been defended, indemnified and held harmless if full coverage under any
applicable policy had been in effect. Each such certificate shall stipulate that the
Agency is to be given at least thirty (30) days' written notice in advance of any
cancellation or any reduction in limit(s) for any policy of insurance required herein.
Owner shall give the Agency immediate notice of any insurance claim or loss which may
be covered by insurance. Owner represents and warrants that the insurance coverage
required herein will also be provided by Owner's general contractors as detailed below.
11 99596.3 388-6 6/1012009 1 :28 PM
The aforementioned insurance policies shall be primary insurance with respect to the
Agency. The aforementioned insurance policies shall contain a waiver of subrogation
for the benefit of the Agency. Failure on the part of Owner and any general contractors
hired by owner to perform work on the Eligible Property, to procure or maintain the
insurance coverage required herein shall constitute a material breach of this Agreement
pursuant to which the Agency may immediately terminate this Agreement and exercise
all other rights and remedies set forth herein, at its sole and absolute discretion, and
without waiving such default or limiting the rights or remedies of the Agency, procure or
renew such insurance and pay any and all premiums in connection therewith and all
monies so paid by the Agency shall be immediately repaid by the Owner to the Agency
upon demand including interest thereon at the Default Rate. In the event of such a
breach, the Agency shall have the right, at its sole election, to participate in and control
any insurance claim adjustment or dispute with the insurance carrier. Owner's failure to
assert or delay in asserting any claim shall not diminish or impair the Agency's rights
against the Owner or the insurance carrier.
When Owner is naming the Agency as additional insureds on any of the commercial
general liability insurance policies set forth herein, then the additional insured
endorsement shall contain language similar to the language contained in ISO form CG
20101001. When any entity, with which Owner is contracting, is naming the Public
Agencies as additional insureds on any of the commercial general liability insurance
policies set forth herein, then the additional insured endorsement shall contain language
similar to the language contained in ISO form CG 20 10 11 85.
The following insurance policies shall be maintained by Owner and any General
Contractor with which Owner contracts for the duration of this Agreement unless
otherwise set forth herein:
(i) General Liabilitv: For projects in which the direct construction costs are
projected to be less than $15,000,000, Commercial General Liability insurance,
including coverage for bodily injury, property damage and contractual liability, with a
combined single limit not less than One Million Dollars ($1,000,000) for each occurrence
(Two Million Dollars ($2,000,000) General Aggregate), including, but not limited to,
products and completed operations coverage. The Agency and their elected and
appointed officers, officials, representatives, employees, and agents shall be named as
additional insureds on such policy. Owner shall require its general contractor to carry
Commercial General Liability insurance of not less than One Million Dollars
($1,000,000) for each occurrence (Two Million Dollars ($2,000,000) General
Aggregate), including, but not limited to, products and completed operations protection.
Owner shall further require its general contractor to provide additional insured status for
Owner and Agency and their elected and appointed officers, officials, representatives,
employees, and agents, on such policy. If required by the Agency from time to time,
Owner shall increase the limits of Owner's liability insurance to reasonable amounts
12
99596.3 388-6 6/10/20091:28 PM
necessary for owners of improvements similar to the Eligible Property. The policy shall
contain a waiver of subrogation for the benefit of the Agency.
(ii) Properly Insurance: "Special Form" property insurance coverage, which shall
include, without limitation, builders risk insurance and insurance against the perils of
fire and physical loss or damage including, without duplication of coverage, theft,
vandalism, malicious mischief, collapse, flood, false work, testing and startup,
temporary buildings and debris removal including demolition occasioned by
enforcement of any applicable legal requirements. The amount of the property
coverage shall at all times exceed the full replacement value of materials supplied or
installed by others and all existing structures, improvements and fixtures on the
Property. The insurer shall waive any coinsurance via an "agreement" endorsement.
Said insurance shall be maintained for the duration of this Agreement. The Agency and
its elected and appointed officers, officials, representatives, employees, and agents
shall be named as additional insureds on such policy.
(iii) Workers' Compensation: Owner's employees, if any, shall be covered by
Workers' Compensation insurance in an amount and in such form as to meet all
applicable requirements of the Labor Code of the State of California and Employers
Liability limits up to One Million Dollars ($1,000,000) per accident. Owner shall require
that the identical worker's compensation insurance requirements be incorporated into
Owner's contract with any general contractors with which it contracts in relation to the
Project. Said entities shall maintain the insurance for the duration of this Agreement or
the duration of the construction that is the subject of their contracts with Owner,
whichever is greater.
(iv)Automobile Liabilitv: Combined single limit automobile liability insurance up
to One Million Dollars ($1,000,000) per accident for bodily injury and property damage,
covering owned (if any), non-owned and hired vehicles. Owner shall require that the
identical automobile liability insurance requirements be incorporated into Owner's
contract with any general contractors with which it contracts in relation to the Project.
Said entities shall maintain the insurance for the duration of this Agreement or the
duration of the construction that is the subject of their contracts with Owner, whichever
is greater. The Agency and its elected and appointed officers, officials, representatives,
employees, and agents shall be named as additional insureds on such policies.
(12) Intentionally Omitted
(13) Waiver. Failure or delay by either party to perform any term or
provision of this Agreement constitutes a default under this Agreement. The aggrieved
party shall give written notice of the default to the party in default in accordance with
Paragraph (16)e hereof. The defaulting party shall no longer be in default if the
defaulting party cures such default within thirty (30) calendar days after receiving the
Default Notice; provided, however, that if such default cannot be reasonably cured
within such thirty (30) day period, the defaulting party shall be given such longer period
as reasonably necessary (which in the case of a default by Owner shall be as
13 99596.3 388-6 6/10/2009 I :28 PM
reasonably determined by the Agency) and the defaulting party shall no longer be in
default if it commences to cure such default within such thirty (30) day period and
completes such cure with reasonable and due diligence.
The waiver by one party of the performance of any covenant, condition, or
promise shall not invalidate this Agreement nor shall it be considered a waiver by such
party of any other covenant, condition or promise hereunder. The exercise of any
remedy shall not preclude the exercise of other remedies the Agency or Owner may
have at law or at equity.
(14) Modification. This Agreement may be modified only by subsequent
mutual written agreement executed by Owner and the Agency.
(15) Intentionallv Omitted.
(16) Miscellaneous Provisions.
a. Interpretation. The provIsions of this document shall be
liberally construed to effectuate its purpose. Time is of the essence of this
Agreement.
b. Severabilitv. Invalidation of any of the covenants,
conditions, restrictions, or other provisions contained in this Agreement by
judgment or court order shall in no way affect any of the other covenants,
conditions, restrictions, or provisions hereof, which shall remain in full
force and effect.
c. Headinqs. The caption headings of the various sections and
paragraphs of this Agreement are for convenience and identification only,
and shall not be deemed to limit or define the contents of their respective
sections or paragraphs.
d. Effective Date. This Agreement shall take effect upon its
recording in the Office of San Bernardino County Recorder.
e. Notices. Formal notices, demands, and communications
between the Agency and Owner shall be given either by personal service,
by overnight courier, or by mailing in the United States mail, certified mail,
postage prepaid, return receipt requested, addressed to the principal
offices of the Agency or Owner, as follows:
If to the Agency:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Executive Director
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99596.3 388-{; 6/10120091:28 PM
With a copy to:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 92401
Attn: Director of Housing and Community
Development
If to Owner:
Fax No.
With a copy to:
Attn:
Fax No.
Notices shall be effective upon receipt, if given by personal
delivery, the earlier of (i) three (3) business days after deposit with United
States Mail, or (ii) the date of actual receipt as evidenced by the return
receipt, if delivered by certified mail, and one (1) day after deposit with the
delivery service, if delivered by overnight guaranteed delivery service.
Each party shall promptly notify the other party of any change(s) of
address to which notice shall be sent pursuant to this Agreement.
f. Exhibits. Each Exhibit mentioned in this Agreement is
attached hereto and incorporated herein by this reference.
g. Execution in Counterparts. The parties may execute this
document in two or more counterparts; each counterpart shall be deemed
an original instrument as against any party who has executed it.
15
99596.3 388-6 6/10/2009 I :28 PM
IN WITNESS WHEREOF, the Agency and Owner have caused this instrument to be
executed on their behalf by their respective officers hereunto duly authorized as of date
first written above.
AGENCY:
REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO, a public
body corporate and politic
By:
EMIL A. MARZULLO
Interim Executive Director
APPROVED AS TO FORM AND
LEGAL CONTENT:
By:
Timothy J. Sabo
Agency Counsel
OWNER:
MARY ERICKSON COMMUNITY HOUSING,
INC.,
A California Non-profit public benefit
corporation
By:
Susan McDevitt, Director
16
99596.3 388.6 6/1012009 1:28 PM
STATE OF CALIFORNIA )
) SS.
COUNTY OF )
On , 200_, before me , Notary Public,
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
)SS.
COUNTY OF )
On , 200_, before me , Notary Public,
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
17
99596.3 388-6 6/10/2009 I :28 PM
Signature
STATE OF CALIFORNIA )
)SS.
COUNTY OF )
On , 200 ,before me , Notary Public,
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
18
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19
99596.3 388-6 6/10/20091:28 PM
EXHIBIT "A" TO CC&Rs
LEGAL DESCRIPTION OF ELIGIBLE PROPERTY
20
995963 388-6 6/10/2009 1:28 PM
EXHIBIT "N"
DEVELOPMENT AGREEMENT
DEVELOPER PARTICIPATION IN NSP
CITY OF SAN BERNARDINO
THIS DEVELOPMENT AGREEMENT ("Agreement") is made as of the _day of
, 20 , by and between the REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body corporate and politic ("AGENCY"), and
MARY ERICKSON COMMUNITY HOUSING, INC., a California Non-profit public
benefit corporation ("Developer"), for the purpose of acquiring, rehabilitating, and
managing the property whose address is indicated below ("Project") in accordance with
the terms of that certain Master Agreement dated as of
20_ entered into between Developer and the Agency (the "Master Agreement").
Agency agrees, subject to the terms and conditions of the Master Agreement and this
Agreement and in consideration of the representations, covenants and obligations of
Developer contained in the Master Agreement and this Agreement, to make a Loan to
Developer in the amount not to exceed Dollars
($ ) (the "Loan") for the purpose of providing acquisition, rehabilitation
and/or permanent financing for a unit building located at
, which units will be
reserved for households whose income is less than or equal to % AMI and whose
legal description is attached herewith as Exhibit "A", to be used solely for the purposes
described herein and secured by the Agency Deed of Trust. The Agency's source of
funding for the Loan is provided from the Neighborhood Stabilization Program ("NSP")
administered and funded by the United States Department of Housing and Urban
Development ("HUD") subsequent to Title III of the Housing and Economic Recovery
Act of2008 (HERA).
Other sources of financing for the Project are anticipated to include, but may not be
limited to (i) senior lien financing ("Senior Financing"), to which the Agency shall
expressly subordinate the lien of the Agency's Deed of Trust; (ii) financing junior in
priority to the lien of the Agency Deed of Trust ("Junior Financing"); and (iii) other
financing sources ("Other Financing"), as all are listed below:
Dsenior Djunior DparitylNA
o senior Djunior DparitylNA
Dsenior Djunior DparitylNA
(I)
(2)
(3)
Developer will deliver to the Agency, among other items, the "Agency Deed of Trust",
"Promissory Note" and the "CC&R's", in the respective forms attached as Exhibits "E",
"F" and "G", herewith to, respectively, secure repayment of the Loan by Developer as
provided herein and to ensure that the affordability and habitability of the Project is
Development Agreement
I
maintained in accordance with the terms of those instruments, the Master Agreement and
this Agreement.
Developer will further attach to this Development Agreement: (i) a completed version of
Exhibit "B" Development Pro Forma, attached herewith, for the above described
Property and Project; and (ii) a project timeline in the format of Exhibit "C" for
completion of the Project, attached herewith; and (iii) a scope of the rehabilitation work
to be completed as part of the Project in a format provided by the Developer and
acceptable to the Agency. Together these documents shall memorialize the Development
Budget required to complete the Project, the Schedule of Performance for the Project and
the Scope of Work to be completed as part of the Project, agreed upon by the Developer
and the Agency.
By the execution and submittal of this Development Agreement, and upon acceptance
hereof by the Agency, the Developer shall apply all requirements of the NSP program as
required by federal law, rules and regulations in addition to all other requirements
contained in the Master Agreement.
[Continued on Next Page]
Development Agreement
2
IN WITNESS WHEREOF, the undersigned have executed this Development
Agreement as of the date first above written.
DEVELOPER:
MARY ERICKSON COMMUNITY HOUSING, INC.,
a California Non-profit public benefit
corporation
By:
Susan McDevitt, Director
AGENCY:
REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body
corporate and politic
By:
Emil A. Marzullo, Interim Executive Director
By:
Timothy J. Sabo, Agency Counsel
Development Agreement
3
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MARY ERICKSON COMMUNITY HOUSING PROJECT
General Proiect Statistics
Total Number of Parcels: 71
Total Number of 4-Plexes: 61
Total Number Vacant Land: 9
Total Single Family:
Proposed Number Demolished: 36
Proposed Number Rehabbed: 25
Proposed number of single family homes: 40
Proposed number of senior units: 65
Total Number of Current Apartment Units: 244
Total Number of Proposed Apartment Units: 100
Percentage Reduction in Apartment Units: 59%
MECH Statement of Qualifications:
Current number of dwelling units in operation:
Current acreage owned for development:
44
1. 5 acres
Proposed number of dwelling units (24 months): 25
Acquisition, Rehabilitation and Resale under HUD: 17
Single Family New Construction - Riverside: 6
Employer assisted housing - Orange County: 84
In operations since 1991 as an affordable housing advocacy organization
Initiated development activities in 1996
MRMLS Matrix
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@ 2009 MRMLS. Information Is believed to be accurate, but should not be relied upon without vertficatlon.
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/ tf/ (/ Agenda "em No: ;( ~ S
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8. Y ~ 4-fJ.D City of San Bernardino
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Spend San Bernardino Money Wisely
I.C.C. and H.C.C.
How to honestly, fairly, wisely use 8.5 million dollars Economic Development money:
1. For ALL THE VACANT, abandoned and foreclosed land
between Arden and Sterling and Highland Ave and Pacific Ave
$ 1.5 million
For the H. Community Complex = all the land as noted above in #1
Buy from San Bernardino for $1 K
H.C.C. will be a non-profit foundation like the I.C.C.
Build 25 + New homes that are owner-occupied single family
3-4 Bedroom, 2 bathrooms Home for Habitat homes
$ 1.5 million
Build Teen Nano Sports Complex and Community Center
With community garden and several play areas/Kabooms...
$ 3.5 million
For the I.C.C. (Inghram Community Center)
Present or better location
Build Community Center & Teen Activities Center
$ 2.0 million
To use this money to leverage for grant and other funding to quickly build and provide community
services.
Make areas drug free, tax free Zones
Loan money to I.C.C. foundation and H.C.C. Foundation at 0 % interest
Start paying back money within 3 years
All paid back within 10 years
Till loan completely repaid, 70% of any net accounting goes for repayment
After loan repaid:
20% of any net income goes to San Bernardino City budget
10% of any net income goes to S.B. City Safety Services (Police/Fire/Med/Main)
5% for S.B. Branch libraries
Submitted by Dr. Denise Whisler, 20 July 2009
Entered Into Rec, at MCC/CDC Mtg: '74 alu f
by: J9--- ~'A ,. tfr~
Agenda ffem No: /!..J..S
by: J4..d..d C-.0~
City Clerk/CDC Secretary
City of San Bemardino
~~~~~~~~~~~~~~~~~~
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Blank
Page 1 of 1
....
.
Weeks_Ch
From: Weeks_Ch
Sent: Wednesday, July 15, 2009 9:38 AM
To: ShorettJr
Cc: Carlos_Jo; Hicks_Ch; Ward_Do; Intern_CO
Subject: TELEPHONE MESSAGE FROM NELSON BROWN - (909) 862-3867
Importance: High
Good Morning Fred:
You had a telephone call today from:
Nelson Brown
(909) 862-3867
Mr. Brown would like to discuss issues regarding Arden/Guthrie at your earliest convenience please.
Thank you.
...cdjweeks
07/16/2009
Page I of I
Weeks_Ch
From: swlrd@aol.com
Sent: Wednesday, July 15, 2009 10:21 AM
To: Council
Subject: Arden-Guthrie & Date Street
Dear Council members,
Please do NOT approve funding for Arden/Guthrie. I have been laid off since June 2008 due to the poor
economy and I have had to cut my expenses and deny myself due to my lack of funds. I expect the city
of San Bernardino to do the same. It is time to stop the tax and spend. I'm not expecting you to bail me
out because I'm on hard times (although that seems to be the norm these days). I've worked hard for 38
years in the city of San Bernardino and I will continue to do so. My husband and my 3 children have
also worked hard their entire lives. As a family our philosophy is help each other to help themselves.
When you enable people to remain in their condition they are not motivated to change anything and then
the enabling takes place.
Vote NO on funding for Arden/Guthrie.
Respectfully,
Sandra & James Woolard
191 East 34th Street
San Bernardino, CA 92404
Performance vou need and the value you want! Check out oreat laptop deals from Dell!
07/16/2009
Page 1 of 1
Weeks_Ch
From: VIVOSr@aol.com
Sent: Wednesday, July 15, 2009 3:23 PM
To: Council
Subject: Low-Income Housing
We just got rid of most of the low life in this area. Now you want to move another 400 low Iifes and their
families, friends and their associates, back in. No Thank You! What ever happen to HomeDepot? Take that
property and make it a parking structure for the soccer fields I If the council is going to vote on this on the 20th of
July, then why is there clearing going on right now?
Mr. Kenneth Taylor
(909)-862-7787
VIVOSr@aol.com
******...**...
Can love help you live longer? Find out now.
(htlp:/ /personals. aol. com/ articles/2009/02/ 18/longer -lives-th roug h-relationsh i psI?
ncid=emlweuslove00000001 )
07/16/2009
Page lofl
Weeks_Ch
From: Mjstory@aol.com
Sent: Wednesday, July 15, 2009 5:59 PM
To: Council
Subject: Arden/Guthrie 4-plexes
Dear Council Members:
I was pleased to see a couple of weeks ago that fencing had been erected around the demolished
"Arden/Guthrie" properties, previously known as the Guthrie Apartments owned by absentee landlords, which
became San Bernardino City property via Immanent Domain. This week, I saw a work crew clearing the fenced,
empty properties of trees and debris and was excited about the planned construction of a new Home Depot that
our neighborhood had been told about.
Today, we received a flyer stating that the city doesn't own all the remaining 4-plex properties, and is planning to
purchase them and tum them into low-income rentals.
I have several questions and concerns regarding this new plan:
1) Is Home Depot still going to build here? We really need the jobs.
2) Will this set of 100 4-plexes officially become a city Project like Waterman Gardens?
3) Will it be managed by the city, or by a private contracted Property Manager?
4) In what condition are these apartments?
5) How much money is set aside for rehabilitation of these apartments? Did you get multiple estimates for the
rehab?
6) Will maintenance and be done by city employees or a private concem?
7) What are the anticipated and budgeted maintenance, repairs and management costs?
8) Will these properties qualify for or be mandatory HUD-qualifled rentals? (Please note that mandatory HUD-
qualified properties have high values to screen applicants, with zero tolerance of illicit drugs of any kind.)
9) Will any of the lower level apartments be set aside for the Disabled, with proper access & accommodations for
wheelchairs?
10) If lower level rentals aren't already modified for wheelchairs, what is the cost for those modifications?
11) Will the rentals pay for all their costs, I.e. mortgage payment (if any), property taxes, water, gas, waste
management (it needs to include recycling), and electricity?
12) What amount will be put back into long-term maintenance and improvements of said 4-plexes?
13) Are there any plans to improve the 4-plexes to become eco-friendly; ~ so, what is planned?
14) Will the rentals be considered a source of income for the city? And if so, how much?
15) Where will the money go?
I'm sure that you've considered many, if not all of these concerns + many others. I'm looking forward to your
answers.
Sincerely,
Mary Jane Taylor MJStory@aol.com
**************
Performance you need and the value you want! Check out great laptop deals from Dell!
(http://pr.atwola.com/promoclk/1 00126575x1223081934x1201714279/aol?redir=http:%2F%
2Faltfarm.mediaplex.com%2Fad%2Fck%2F12309%2D81939%2D1629%2D4)
07/16/2009
Blank
Page 1 of1
Weeks_Ch
From:
Weeks_Ch
Sent: Thursday, July 16, 2009 1 :00 PM
To: 'mackexpres@aol.com'
Cc: Carlos_Jo; Hicks_Ch; Ward_Do; Intem_CO
Subject: TELEPHONE MESSAGE - From Robert Morales re Guthrie/Arden Concems
Importance: High
Good Afternoon Wendy:
You received a telephone call today from:
Robert Morales
San Bernardino Resident
(909) 723-2112
Mr. Morales would like to talk to you about what is being built on Guthrie and Arden Streets.
Thank you.
...cdjweeks
07/16/2009
Page I of2
Weeks_Ch
From: Marzullo_Em
Sent: Friday, July 17, 2009 5:07 PM
To: Ray, George
Cc: Scott C. Beard; Tom Swieca; Brian Turnbull; Gee_Do; Strange_Co; Tim Sabo; McCammack_We
Subject: RE: Arden & Highland
George
Our team has met 3 times in the past few weeks to outline and plan our issues for the disposition and
development of the Highland and Arden site. It was imperative that our consultants on the land
consolidation and mapping be in accord with the project management and construction managers
responsible for land clearing.
The propertylhousing acquisition demolition is now completed. Fencing has been installed around the
perimeter of the site and tree removal is scheduled to be completed next week. Coordination with the
public utilities for the removal of electricity, gas, water and sewer is underway. Plans for the demolition
of concrete and asphalt surfaces and grading are in the process of being drawn with an expectation of
completion by October 2009. We plan to have this site ready for acquisition by January 2010.
With that date in mind we are excited to get back into an active working mode with the Home Depot on
the Disposition and Development Agreement which outlines the performance of the future development
project. In discussion between staff and counsel, we have determined the need for a phone or personal
meeting to discuss the environmental review process. Depending upon the track taken (whether negative
declaration or full EIR) our timelines for completion will be affected as will the language in the DDA.
I would like to schedule a discussion for late next week say Thursday or Friday depending on your
availability and preference of phone or face to face meeting. We should have a working draft of the
DDA for distribution at or before that meeting for discussion.
We are excited that this project is now back on the front burner and look forward to working with the
Home Depot and its development partners to accomplish our mutual goals for this site.
From: Ray, George [mailto:George_Ray@HomeDepot.com]
Sent: Tuesday, July 14, 2009 9:06 AM
To: Emil Marzullo
Cc: Scott C. Beard; Tom Swieca
Subject: Arden & Highland
Emil
Your last email indicated that you team was meeting that day to discuss our project. I have not received any
correspondence from your Dept. or from your Attorney. We are processing our REEC Approval to proceed with
this location and I will need some evidence that this is a viable deal. (A confirming email with a time line that I
can depend upon will work)
07/17/2009
-
Page20f2
If I am not assured that we are moving forward, I will pull this deal from our REEC Package so that I am not
personally embarrassed. I must have some response by Monday the 20th.
Than ks
George Ray
The information contained in this e-mail and any attached documents may contain information
that is confidential or otherwise protected from disclosure. If you are not the intended recipient of
this message, or if this message has been sent to you in error, please immediately alert the sender
by reply e-mail and then delete this message, including any attachments. Any dissemination,
distribution or other use of the contents of this message by anyone other than the intended
recipient is strictly prohibited.
07/17/2009
Page 1 of 1
Weeks_Ch
From: Mendy Smith [mendysmith@adelphia.net]
Sent: Sunday, July 19, 2009 9:03 AM
To: Council
Subject: Please read prior to vote on -More low-income housing?
Mr. Mayor and Council Members,
As a lifelong citizen of San Bernardino, I am astounded to learn that there may be members of our City Council
that might actually be considering voting to allow for more low income housing to be built in our city.
We are circling the drain, folks! The very last thing that we as citizens need, are more areas for crime, drugs,
graffiti and blight to develop and thrive!!!
Please, let's use some common sense. San Bernardino is our town, our home. Those of us who have lived
here for years and years, have seen and felt the decline. Can we please, at some point, use the resources
available to us, to improve our city? Bring it back to some semblance of the San Bernardino of old? Rather than
a haven for gangs, drug abusers and other elements that will finally drain us?
Thank you for your consideration.
Mendy Smith
07/20/2009
.
Weeks Ch
From:
Sent:
To:
Subject:
folkens4congress@afo.net
Sunday, July 19, 2009 6:48 PM
Council
Arden-Guthrie Sink Hole
Please pass this on to all City Council Members, the Mayor, and the City Manager.
I do not believe that sinking millions of dollars into the Arden-Guthrie area is a wise
use of our limited financial resources!! Please reconsider your plans and find a better
way to spend the money -- seniors and actual homeowners would be a good place to start!!
Scott Folkens
San Bernardino, 92404
-----------------------------------------
Help protect your family and your marriage!
Take a look at PROTECTED internet service from American Family Online -. http://www.afo.net
1
Page I of I
Weeks_Ch
From: Sandra Niemiec [sniemiec@pacbell.net]
Sent: Monday, July 20, 2009 7:29 AM
To: Council
Subject: Arden-Guthrie and Date Street
We received a public notice that the city is considering building low income housing in the Arden-Guthrie area.
Please do not do this to us again!!!
Look back in the history of this area. The low-income housing brought us crime. Gunshots were common place and we lived
in fear. When the buildings were leveled, we finally had some peace.
Many of us in this nei9hborhood have been hard hit by the economy and we struggle every day to survive. Building low-
income housing in this neighborhood will be the nail in our coffins.
Why do you want to repeat previous mistakes? Please find a better use for the property.
Thank you,
Sandra Niemiec
2211 E. 18th Street
San Bernardino, CA 92404
07/20/2009
..
Weeks Ch
From:
Sent:
To:
Subject:
Hicks_Ch
Monday, July 20, 2009 9:30 AM
Weeks_Ch
RE : PHONE MESSAGE - ARDEN AND GUTHRIE ..
Importance:
High
Cheryl,
Ms. Morgan would like her message given to the Council and the Mayor.
C. Hicks
CALLER: Ladis Morgan
PHONE: 883-5431
MESSAGE: The caller wants to voice her opposition for the project proposed at Arden and
Guthrie. Ms Morgan has lived in
San Bernardino for 80 years, and she also wanted to know what's going to be
done about her old house.
1
,
Carlos Jo
From:
Sent:
To:
Subject:
Carlos_Jo
Monday, July 13, 20094:34 PM
'mackexpres@aol.com'
Mr. Nelson Brown - San Gorgonio Neighborhood Cluster Group - Concern Regarding Mary
Erickson Community Housing Project
Wendy,
FYI
Mr. Nelson Brown, of the San Gorgonio Neighborhood Cluster Group, contacted the Council Office
regarding the proposed Mary Ericksion Community Housing Project in the Arden & Guthrie Area.
Mr. Brown lives in the residential neighborhood south of Arden & Guthrie since 1962. He is very
concerned about the impact of this project on his neighborhood.
Mr. Brown can be contacted at (909) 862-3867.
Jorge
1
Weeks Ch
From:
Sent:
To:
Subject:
Natalie Hernandez [nx.hernandez@yahoo.com]
Monday, July 20,200912:39 PM
Council
Proposed Low-Income Housing in Highland (Arden-Guthrie and Date Street)
Thank you for the opportunity to respond to the proposal of Low-Income Housing to be
developed at Arden-Guthrie and Date Street locations in the City of Highland.
Please be aware that at the Arden-Guthrie location, there is a elementary school, a Middle
School, a High School (1 block away) and a AYSO Soccer complex in that immediate area.
This area already houses young, impressionable children and their safety, health and well-
being will be compromised and influenced negatively by the surge of crime and drugs
initiated by the passing of this proposal.
Would you want your children or grandchildren living, playing soccer or schooling in that
area knowing that within walking distance there are gang members, ex-cons, drug
traffickers and child molesters lurking at every corner? Why do you want to bring more
crime into the San Bernardino area? Why are you putting our children's safety in
immediate danger? Aren't there already enough obstacles and road blocks in their paths of
living a safe and innocent childhood?
This proposal will surely destroy what's left of the neighborhood that has been struggling
for so many years to make a safe and stable environment for their children and to give
their children a chance for a decent education.
Please do not bring more Low-Income Housing to the San Bernardino area. We already have
enough or haven't you noticed?
I request you read my comments into the public record before the vote is taken..
~
1
R'7 J
Weeks Ch
CFrom:
3ent:
To:
Subject:
Cheryle Lane [Cheryle@webtv.net]
Monday, July 20, 2009 2:09 PM
Council
Arden-Guthrie
My city council woman is Wendy McCamrnick and my vote is NO! on sinking federal money into
these buildings. I would much rather see the monies spent in a more productive way ie:
helping seniors with fixing up their places. Thank-you, Cheryle Lane-Huchinson
404 W 24th St
San Brdo,Ca 92405
Cheryle
o
o
1.1~
Entered Into Rec. at MCC/CDC Mfg: /?/zo!or
by; ~:c: ~' ~
Agenda ffe~o: /< ' <7 -:
by: ~.~
"hED ,~ ' C!fY CleW; DC Secretary '-'
INTER OFFICE MEMORA~San Bernardino
OFFICE OF THE CITY ATTORNEY
CITY OF SAN BERNARDINO
TO:
MA YORAND COMMON COUNCIlJREDEVELOPMENT COMMISSION
FROM:
John F. Wilson, Senior Assistant City Attorney
DATE:
July 20,2009
RE:
Transmission and Receipt of Mary Erickson Documents
CC:
James Penman, City Attorney
Charles McNeely, City Manager
Please be advised that this office did not receive the complete Council Agenda package for
item R-25A, the Council Resolution Authorizing the Expenditure ofNSP funds by the RDA and the
associated items B and C, until 8:20 a.m. this date. On Thursday July 16, at 4:30 p.m., we were in
receipt of the Mary Erickson agreement itself with the associated exhibits, but not the full package,
including the final resolutions, as it would be presented to the Mayor and Common Council. The
full set of documentation is required for City Attorney review in order to assure that the presentation
is legally appropriate. In the case of this item there was the added concern that the documentation
reflect the amendments agreed upon since the item was continued at the Council Meeting ofJuly 6th.
Mr. Jenkins, Director of Housing and Community Development, has prepared a
memorandum which chronicles the document flow of the Mary Erickson item between the EDA and
this office as ofJuly 16th. 1 am in substantial agreement with the record of exchange of documents.
However, I believe that the list of changes appearing under the heading Current Issues, reflects only
those changes made at the meeting of Mr. Jenkins, Mr. Sabo and myself on July 141h and in
subsequent e-mail exchanges. It does not reflect the heavy lifting we accomplished at our meeting
of July 10, when the bulk of the issues raised at the City Council meeting of July 6 were addressed.
Jo son
Se ior Assistant City Attorney
F:\WJLSON\EDAIMary Erickson document flow.wpd
R-2 )
1\
ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
INTEROFFICE CORRESPONDENCE g
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July 17, 2009
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Community Development Commission of the City of San Bernardino, CalifOJ'ltia "
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From:
Carey K. Jenkins, Director of Housing and Community Development
Subject:
Mary Erickson Community Housing Corporation
Backl!round
On July 16,2009, at approximately 3:15 pm, I personally hand-delivered the latest agreement
and associated exhibits for the Mary Erickson Community Housing Corporation (MECH)
transaction to Mr. John Wilson, the City Attorney staff person assigned to review this deal. At
that time he and I briefly discussed the agreement and confirmed all changes requested of Mr.
Wilson had been made and that no further changes would be necessary prior to the item being
heard at the July 20, 2009, Community Development Commission (CDC) meeting.
This was followed later by a certain misunderstanding from the City Attorney's Office over the
location of the staff report and associated resolutions concerning the item. It appears the City
Attorney's Office could not move the item forward without the staff report and resolutions.
However, being that the staff report and resolutions had not changed from the previous
Commission meeting and would be continued to the July 20th meeting, there was no need to
replace them. The only item needing to be replaced was the agreement and associated exhibits.
As a result of this confusion, at approximately 5:00 pm I re-visited Mr. Wilson in his office
where he produced the original July 6th version of the staff report and resolutions, handed them
to me and stated that I should move the item on in whatever manner I saw fit. In doing so I
handed the staff report, resolutions and revised agreement to the City Manager's staff for
reproduction in anticipation of the Commission meeting scheduled for July 20th. Given the
sensitivity of this item and a need to provide background on the circumstances surrounding its
processing I am submitting this memorandum for your consideration.
Current Issue
In an attempt to provide you with some clarity regarding the substantive changes made to the
agreement since the July 6th meeting, I have summarized them below by the Section where they
occur in the document. Should you need further information, please do not hesitate to contact
me at (909) 663-1044.
.
.'
Staff Report: No changes.
Resolution A: No changes.
Resolution B: No changes.
Resolution C: No changes.
Agreement: Section 17.
Addition of Exhibit "P" - Summary of Program Services
Addition of Exhibit "Q" - Developer Leasing Standards
Section 30.
Addition of a provision for Enforced Delays and Extension of Time for
Performance (Force Majeure provisions).
Exhibit A:
Section 7.
Addition of language requmng the proVISIOn of warranties for
rehabilitation work performed on all components and systems constructed
or installed.
Section 12.
Addition of language that prohibits drug offenders and those
demonstrating a history of abusing controlled substances or alcohol from
being eligible tenants in the Project.
cc: Patrick J. Morris, Mayor
James F. Penman, City Attorney
Rachel Clark, City Clerk
Charles E. McNeely, City Manager
Emil A. Marzullo, Agency Interim Executive Director
Timothy J. Sabo, Agency Counsel
John F. Wilson, Senior Assistant City Attorney
2