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HomeMy WebLinkAboutCDC/2007-28 , , . . 1 RESOLUTION NO. CDC/2007-28 2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE (1) A REDEVELOPMENT COOPERATION AGREEMENT BY AND BETWEEN THE AGENCY AND THE INLAND VALLEY DEVELOPMENT AGENCY ("IVDA") AND (2) A SINGLE FAMILY INCLUSIONARY HOUSING OWNER PARTICIPATION AGREEMENT ("OPA") BY AND BETWEEN THE AGENCY AND GFC ENTERPRISES, LLC, FOR THE DEVELOPMENT OF LYNWOOD HOUSING DEVELOPMENT (IVDA REDEVELOPMENT PROJECT AREA) 3 4 5 6 7 8 9 10 11 WHEREAS, GFC Enterprises, LLC {"Developer"), owns 7.7 acres of vacant land (APN: 01191-231-40 and 41) located on the east side of Lynwood Way between Byron and Amanda Streets (the "Property") as illustrated on the approved Site Plan in the Inland Valley Development 12 Agency {"IVDA") Redevelopment Project Area ("Project Area"); and 13 14 WHEREAS, on September 5, 2007, the Planning Commission approved the revisions to Tentative Tract Map No. 17793 (Subdivision No. 05-48), Variance No. 06-02, and Development 15 Permit Type 3 No. 06-03 to develop 18 single-family detached residential homes (the "Project") 16 consisting of 3 models with 2 different exterior styles and treatments; and 17 18 WHEREAS, on February 3, 2003, the Community Development Commission of the City of San Bernardino {"Commission") agreed to assume the responsibility for implementing, 19 administering and managing the IVDA Project Area inclusionary and replacement housing 20 requirements as required per Section 33413 of the California Community Redevelopment Law 21 {"CRL"); specifically, Section 33413, requires redevelopment agencies to ensure that at least 15% 22 of all new and substantially rehabilitated dwelling units developed within a project area by public or 23 private entities or persons other than the Agency be made available at affordable housing cost to, 24 and occupied by, persons and families of low- or moderate-income, and not less than 40% of said 25 units shall be made available to very low-income households; and 26 27 WHEREAS, a moderate-income household is considered to be a household that eams less than 120% of the area median income for the County of San Bernardino ("County"), and the 28 County's income levels for such households range from $48,300 for a family size of I to $91,100 P \Agendas\Re,olution,\Resolutions\2007\IO_OI_07 GFC Enterprises CDC Reso.doc I . . 1 for a family size of 8 which income limits are modified annually by HUD and State HCD; and 2 WHEREAS, on October 8, 2003, the IVDA Board adopted a policy allowing member 3 jurisdictions to undertake redevelopment activities within the Project Area pursuant to a generic 4 Cooperation Agreement adopted through Resolution 2003-11 of the IVDA; and 5 WHEREAS, the Developer's Project is located within the IVDA Project Area, and as such, 6 the lnclusionary Housing Requirements apply to the Project and the Developer will set aside and 7 sell 3 of the 18 units to households earning up to 120% of the area median income ("Affordable 8 New Homes"); and 9 WHEREAS, the Agency will reserve and allocate the sum of $270,000 from the Agency's 10 Housing Fund to assist 3 eligible homebuyers with down payment assistance and $100,000 to 11 reimburse the Developer for certain development impact fees related to the Affordable New Homes 12 and in return, the Agency will receive a 45-year affordable and maintenance covenant (CC&R's) on 13 the Affordable New Homes; and 14 WHEREAS, the Agency and the IVDA will enter into a Redevelopment Cooperation 15 Agreement to receive the IVDA's share of the tax increment revenues generated from the Project to 16 assist the Agency with its financial obligations under the OPA; and 17 WHEREAS, on January 22, 2007, the Commission approved the Agency's Housing 18 Implementation Plan (the "Plan") which incorporated the CRL requirements related to the IVDA's 19 responsibility as noted above for inclusionary housing and the number of units that needed to be 20 produced within the IVDA Project Area during the 10-year term of the Plan; and 21 WHEREAS, on September 5, 2007, the Planning Commission approved a Mitigated 22 Negative Declaration for the Project in compliance with the California Environmental Quality Act 23 ("CEQA") and its requirements under Section 21081.6 and adopted a monitoring and reporting 24 program designated to ensure compliance during the Project implementation, and the Agency will 25 rely on these environmental findings in order to consider approval of the Single Family 26 Inclusionary Housing Owner Participation Agreement ("OP A"); and 27 WHEREAS, it is appropriate for the Commission to take action with respect to the OP A 28 and the Cooperation Agreement. 2 P:\Agen<l.lsIResolut;onsIResolu{;ons\2007\1O_01_07 GFC Enterp ri""CDCReso.doc . , 1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY 2 OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS FOLLOWS: 3 Section 1. The Commission hereby approves (1) the Redevelopment Cooperation 4 Agreement by and between the Agency and the IVDA and (2) the OP A by and between the Agency 5 and lbe Developer in the form as presented at the meeting of lbe Commission at which this 6 Resolution is adopted, and the Commission further authorizes the Executive Director of the Agency 7 to execute said agreements and to take all actions set forth in the agreements and make such 8 technical and conforming changes as may be approved by the Agency Counsel. 9 Section 2. The Commission hereby finds and relies on the September 5, 2007, Planning ] 0 Commission approved Mitigated Negative Declaration for approval of the Project in compliance 11 with CEQA and its requirements under Section 21081.6, and the Notice of Determination will be 12 prepared and filed with the County Clerk within 5 days from the date of lbe action of the 13 Commission to approve this Resolution. The Resolution shall become effective immediately upon its adoption. 14 Section 3. 15 1// 16 1// 17 1// 18 /1/ ]9 1// 20 1// 21 1// 22 1// 23 1// 24 1// 25 1// 26 1// 27 /1/ 28 1// 1// P:\Agon<l1S\Resolutions\Resolutions\2007l10_01.07 GFC Em"",ri,,," CDC Re,,,.doc 3 1 2 3 4 5 6 7 8 . . RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE (1) A REDEVELOPMENT COOPERATION AGREEMENT BY AND BETWEEN THE AGENCY AND THE INLAND VALLEY DEVELOPMENT AGENCY ("IVDA") AND (2) A SINGLE FAMILY INCLUSIONARY HOUSING OWNER PARTICIPATION AGREEMENT ("OPA") BY AND BETWEEN THE AGENCY AND GFC ENTERPRISES, LLC, FOR THE DEVELOPMENT OF LYNWOOD HOUSING DEVELOPMENT (IVDA REDEVELOPMENT PROJECT AREA) I HEREBY CERTIFY that the foregoing Resolution was duly "dopted by the Community 9 Development Commission of the City of San Bernardino at a j oint regular meeting 10 thereof, held on the 1st day of October ,2007, by the following vote to wit: 11 Commission Members: Ayes Navs Ab3tain Absent 12 ESTRADA X 13 BAXTER ----X- 14 BRINKER --X- 15 DERRY X - 16 KELLEY X 17 JOHNSON --"-- MC CAMMACK X 18 19 20 /111/~ Secretary 22 21 .. IJ The foregoing Resolution is hereby approved this ~ day of October 23 24 25 ,2007. ~~~~ ity Development Commission of the City of San Bernardino 26 Approved as to Form: ~: By ~b~~~- 1':\Agendas\Rcsolut;ons\Resolutjons\2007\IO_OI_07 GFC Enlerpr;.., coc Reso.doc 4 . , 2007 SINGLE FAMILY INCLUSIONARY HOUSING OWNER PARTICIPATION AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND GFC ENTERPRISES, LLC (L YNWOOD HOUSING DEVELOPMENT - IVDA REDEVELOPMENT PROJECT AREA) \ / / 2007 SINGLE FAMILY INCLUSIONARY HOUSING OWNER PARTICIPATION AGREEMENT (L YNWOOD HOUSING DEVELOPMENT - IVDA REDEVELOPMENT PROJECT AREA) This 2007 Single-Family Inclusionary Housing Owner Participation Agreement (IVDA Redevelopment Project Area) (this "Agreement") is dated as of October I, 2007, by and between the Redevelopment Agency of the City of San Bernardino (the "Agency"), a public body, corporate and politic, and GFC Enterprises, LLC, a limited liability company dba Lynwood - GFC Enterprises, LLC (the "Developer"), in light of the facts set forth in the following paragraphs of the Recitals: RECITALS WHEREAS, as of the "Effective Date" of this Agreement (as this term is defined below), the Developer owns approximately 7.7 acres of property located on the east side of Lynwood Way between Byron Street and Amanda Street (APN: 01191-231-40 and 41) (the "Property") in the Residential Suburban (RS) land use district of the City of San Bernardino (the "City") which Property is also within the Inland Valley Development Agency Redevelopment Project Area (the "Project Area") as adopted by the Inland Valley Development Agency (the "IVDA") in July 1990, and which Property is being subdivided by the Developer into eighteen (18) residential lots pursuant to the revised Tentative Tract Map No. 17793 approved by the Planning Commission on September 5, 2007; and WHEREAS, the Developer shall develop and improve each of the eighteen (18) residential lots pursuant to this Agreement with a New Home, and shall reserve three (3) of such New Homes for occupancy by Homebuyers whose household income level is that of a person or family of low- or moderate-income (a "Low- or Moderate-Income Homebuyer") or the Developer may sjlbstitute other homes or housing units within the Project Area in lieu of said three (3) New Homes in the manner as hereinafter provided; and WHEREAS, each of the New Homes under this Agreement shall be developed and improved under design and improvement standards which are consistent with the City's General Plan and Development Standards, and such further separate review and approval by the City of the specific plan of improvement of each lot by the Developer as may hereafter be indicated; and WHEREAS, the Developer has the background, experience and financial capability of developing the Project as hereinafter described and appears well qualified to secure a construction financing commitment from a commercial lending institution in support of the Project; and IO~I-07 GFC Enterprise LLC ~ SF Inclusionary HousingOPA (Executed Version) I WHEREAS, the Agency is responsible for complying with the requirements of the California Community Redevelopment Law ("CRL") aud the Redevelopment Piau for the Project Area which require that fifteen percent (15%) of the housing units developed by private parties within the Project Area must be set-aside for persons aud households who meet the requirements oflow- aud moderate-income as established by the CRL. NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE AGENCY AND THE DEVELOPER HEREBY AGREE AS FOLLOWS: ARTICLE I TERMS AND CONDITIONS Section 1.01. Integration of all Agreements relating to the Proiect and Definition of Terms. (a) This Agreement integrates all of the terms aud conditions mentioned herein aud supersedes all negotiations, discussions aud understaudings between the parties with respect to the Project aud all items of assistauce, which the Agency may hereafter provide to the Developer. (b) In addition to the words, which have defined meanings as set forth in the preceding paragraphs of this Agreement, certain other phrases or terms as used in this Agreement shall have the meauing set forth as follows: Adjusted Family Income. The words "Adjusted Family Income" meau "gross income" as this term is defined in 25 California Code of Regulations Section 6914, for the total annual income of each individual or family residing or deemed to be residing in the Affordable New Home. Affordability Covenant. The words "Affordability Covenaut" meau the Agency, Community Redevelopment Housing Affordability Covenauts and Restrictions, by aud between the Low- or Moderate-Income Hom~buyer aud the Agency pertaining to a Parti~ular Affordable New Home, which has been constructedaud completed. A form of Affortlability Covenaut is attached hereto as Exhibit "A" aud incOrPorated by this reference into the text of this Agreement. An Affordability Covenaut in appropriate final form shall be recorded concurrently with the close of each Affordable New Home Escrow for the sale of each Affordable New Home. Affordable Housing Cost. The words "Affordable Housing Cost" shall have the meauing as set forth in Health aud Safety Code Section 50052.5, as this section may hereafter be amended from time-to-time by the State of California. A Low- or Moderate- Income Homebuyer, aud/or the Successor-In-Interest of such Low- or Moderate-Income Homebuyer, if auy, shall pay as its purchase price for the Affordable New Home no more thau the appropriate Affordable Housing Cost as ofthe applicable Delivery Date. 10-1-07 GFC Enteiprise LLC - Sf Inc1usionary HousingOPA (Executed Version) 2 , , Affordable New Home. The words "Affordable New Home" mean and refer to each of the (i) three (3) single-family residential units to be designed, constructed and improved by the Developer and reserved for sale and occupancy to a Low- or Moderate-Income Homebuyer; (ii) such other three (3) single-family residential units located elsewhere within the Project Area for which the Developer has either constructed or caused to be constructed three (3) new single-family residential dwelling units or has rehabilitated single-family dwelling units that were previously vacant and not in a habitable condition; and (iii) such other substitute single-family dwelling units within the Project Area that may be approved in writing by the Executive Director of the Agency as complying with the requirements of this Agreement. Affordable New Home Escrow, The words "Affordable New Home Escrow" mean and refer to the real estate conveyance transaction or escrow by and between the Developer and each Low- or Moderate-Income Homebuyer and, subsequently, by and between the Low- or Moderate-Income Homebuyer and their Successor-in-Interest, during the conveyance and sale of the Affordable New Home, which shall be accomplished upon the close of the Affordable New Home Escrow. Affordable New Home Escrow Holder. The words "Affordable New Home Escrow Holder" mean and refer to the escrow company designated by the Developer who shall serve as the escrow holder under the Affordable New Home Escrow by and among such New Home Escrow Holder, the Developer and a Low- or Moderate-Income Homebuyer, for the transfer and sale by the Developer of each of the three (3) completed Affordable New Homes. Agency Downpayment Assistance Funds. The words "Agency Downpayment Assistance Funds" mean and refer to the Agency Low and Moderate Income Housing Funds, which the Agency may hereafter provide to no more than three (3) Low- or Moderate-Income Homebuyers of a completed Affordable New Home. The maximum amount of Agency Downpayment Assistance Funds which may hereafter be provided to each of the three (3) Low- or Moderate-Income Homebuyers shall not exceed thirty percent (30%) of the gross sales price of the completed Affordable New Home as provided herein in Section 4.08, but in no event shall exceed Two Hundred Seventy Thousand Dollars ($270,000) in the aggregate for the Affordable New Homes. Agency Low and Moderate Income Housing Fund. The words "Agency Low and Moderate Income Housing Fund" mean and refer to the special affordable housing fund established by the Agency for each of its redevelopment project areas and for similar funds received by the NDA from those portions of the Project Area within the City in accordance with the provisions of Health and Safety Code Section 33334.2, et seq. City Fees. The words "City Fees" mean and refer to those certain City imposed development and all impact fees that are currently in effect or are hereafter applicable to the construction and development of the New Homes during the tenn of this Agreement. The Agency assistance in an amount equal to One Hundred Thousand Dollars ($100,000) shall be used and applied by the Developer for the payment in part of the said development and all pennit fees attributable to the three (3) Affordable New Homes but IO-1..{)7 GFC Enterprise LLC ~ SF Inelusionary Housing OPA (Executed Version) 3 excluding school fees and other fees that are not determined by and assessed or levied by the City. Completed New Home. The words "Completed New Home" mean and refer to each of the eighteen (18) new single-family residential units to be designed, constructed and improved by the Developer and reserved for sale and occupancy to Homebuyers. Three (3) Completed New Homes shall be constructed and reserved and made available for sale and occupancy by a Low- or Moderate-Income Homebuyer designated by the Developer unless such New Homes as substituted in a marmer as hereinafter provided. Completed New Home Purchase Price. The words "Completed New Home Purchase Price" mean and refer to the applicable purchase price payable by the Homebuyer to the Developer for the purchase of each Completed New Home at the close of the applicable New Home Escrow. The Completed New Home Purchase Price includes the cost of options and upgrades to the Completed New Home, which are installed in the New Home prior to the close of the New Home Escrow and paid for by the Homebuyer. The Completed New Home Purchase Price for an Affordable New Home shall be an amount whicb does not exceed the affordability requirements for Low- or Moderate-Income Households under California Health and Safety Code Section 50052.5(b)(3) and (4), as applicable, at the time of the close of the Affordable New Home Escrow. Delivery Date. The words "Delivery Date" mean the close of a New Home Escrow for a particular Completed New Home, at which time, title and possession of a Completed New Home shall be delivered by the Developer to the Homebuyer. Development Project Cost Pro Forma. The words "Development Project Cost Pro Forma" mean and refer to the Development Project Cost Pro Forma dated July 18, 2007, on file with the Agency Secretary. The Development Project Cost Pro Forma sets forth the Developer's best estimate as of the Effective Date of the cost to develop, construct and sell each of the Completed New Homes to Homebuyers, in accordance with the terms of this Agreement. The Development Project Cost Pro Forma includes an estimated gross sales price for each Completed New Home and an estimate of the total amount of New Home Sales Costs. Effective Date. The words "Effective Date" mean and refer to the date on which this Agreement has been fully executed by the officers or representatives of the parties and the conditions of Section 1.05 have been satisfied. Environmental Laws. The words "Environmental Laws" mean all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Site), occupational or environmental couditions on, under, or about the Site or Sales Office, as now or may at any later time be in effect, including, without limitation, the Comprehensive Environmental Response, 10-1-f)7 GFC Enterprise LLC - SF Inclusionary HousingOPA (Executed Version) 4 Compensation and Liability Act of 1980 ("CERCLA") [42 USC Section 9601, et seq.]; the Resource Conservation and Recovery Act of 1976 ("RCRA") [42 USC Section 6901 ,et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act ("FWPCA") [33 USC Section 1251, et seq.]; the Toxic Substances Control Act ("TSCA") [15 USC Section 2601, et seq.]; the Hazardous Materials Transportation Act ("HMTA") [49 USC Section 1801, et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901, et seq.]; the Clean Air Act [42 USC Section 7401, et seq.]; the Safe Drinking Water Act [42 USC Section 300(1), et seq.]; the Solid Waste Disposal Act [42 USC Section 6901, et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101, et seq.]; the Emergency Plarming and Community Right to Know Act [42 USC Section 11001, et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [H & S C Section 25288, et seq.]; the California Hazardous Substances Account Act [H & S C Section 25300, et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [H & S C Section 24249.5, et seq.]; and the Porter-Cologne Water Quality Act [Water Code Section 13000, et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Site, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water or land use. Hazardons Substances. The words "Hazardous Substances" mean and include, without limitation: those substances included within the definiteness of "hazardous substance," "hazardous waste," "hazardous material," "toxic substance," "solid waste," or "pollutant or contaminate" in CERCLA, RCRA, TSCA, HMTA, or under any other environmental law; and those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor agency, as hazardous substances [40 CFR Part 302]; and other substances, materials, and wastes that are or become regulated or classified as hazardous or toxic under federal, state, or local laws or regulations; and any material, waste or substance that is: (I) a petroleum or refined petroleum product, (2) asbestos, (3) polychlorinated biphenyl, (4) designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317, 10-1-07 GFC Enterprise LLC - SF Inclusionary Housing OPA (Executed Versioll) 5 (5) a flammable explosive, or (6) a radioactive material. Homebuyer. The word "Homebuyer" means and refers to each person or family who may hereafter purchase one (I) of the eighteen (18) Completed New Homes from the Developer, and includes a Low- or Moderate-Income Homebuyer. Low- or Moderate-Income Household. The words "Low- or Moderate-Income Household" mean and refer to "persons and families oflow- or moderate-income" as this term is defined in Health and Safety Code Section 50093, as this section may be hereafter amended, from time to time, by the State of California. Low- or Moderate-Income Homebuyer. The words "Low- or Moderate-Income Homebuyer" mean and refer to each of the three (3) purchasers of a constructed Affordable New Home that has been designated by the Developer to receive Agency Downpayment Assistance Funds, and includes all persons identified as having a vested property ownership interest in the Affordable New Home as of the close of the Affordable New Home Escrow. At the close of each Affordable New Home Escrow, such occupants shall have an annual Adjusted Family Income which does not exceed the household income qualification limits of a Low- or Moderate-Income Household. New Home. The words "New Home" mean and refer to each of the eighteen (18) single- family residential dwelling units (including the associated landscape improvements) as shall be constructed and installed by the Developer. New Home Eserow. The words "New Home Escrow" mean and refer to the real estate conveyance transaction or escrow by and between the Developer and each Homebuyer in the Project, except for the three (3) Low- or Moderate-Income Homebuyers. New Home Escrow Holder. The words "New Home Escrow Holder" mean and refer to the escrow company designated by the Developer who shall serve as the escrow holder under the New Home Escrow by and among such New Home Escrow Holder, the Developer and a Homebuyer, other than a Low- or Moderate-Income Homebuyer,for the transfer and sale by the Developer oflhe each Completed New Home. Notice of Ageucy Concurrence. The words "Notice of Agency Concurrence" mean and refer to the acknowledgment executed by the Executive Director of the Agency and delivered to the holder of the Affordable New Home Escrow in which the Agency confirms that the proposed Low- or Moderate-Income Homebuyer appears to satisfy all of the Adjusted Family Income and other requirements of the Affordability Covenant for occupancy of the Affordable New Home. Project. The word "Project" means and refers to the development of a New Home on each of the eighteen (18) residential lots by the Developer located on approximately 7.7 acres on the east side of Lynwood Way between Payton Street and Amanda Street (APN: 01191-231-40 and 41), and the reservation of three (3) of these New Homes for occupancy by a Low- or Moderate-Income Homebuyer. The Project is more particularly 10-1-07 GFC Enterprise LLC -SF fnclusionary Housing OPA (Executed Version) 6 described herein in the Scope of Development by the Developer in Section 3.01. The Project shall be undertaken by the Developer in accordance with the dates set forth in the Schedule of Performance requirements described herein in Section 3.02. Qualified Resideuce Period. The words "Qualified Residence Period" mean in the case of each completed Affordable New Home, the forty-five (45) year period of time beginning on the Delivery Date and ending on that date, forty-five (45) years thereafter. Real Estate Sales and Marketing Work. The words "Real Estate Sales and Marketing Work" refer to the services to be provided by the Developer which relate to the marketing of each Completed New Home for sale to a Homebuyer. The Real Estate Sales and Marketing Work includes, without limitation, the presentation of each Completed New Home to one (I) or more Homebuyers for the purpose of causing such prospective Homebuyer to purchase a Completed New Home from the Developer. Section 1.02. Parties to the Agreement. (a) Tbe Agency. The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the CRL of the State of California (Health and Safety Code Section 33000, et seq.). The principal office of the Agency is located at 201 North "E" Street, Suite 301, San Bernardino, California 92401. (b) The Developer. The Developer is GFC Enterprises, LLC, a limited liability company, dba Lynwood - GFC Enterprises, LLC, for the completion of the Project. The principal office and mailing address of the Developer for purposes of this Agreement is 434 North Second Avenue, Upland, California 91786. Section 1.03. Prohibition against Change in Ownership. Management and Control of Developer and Assignment of Agreement. The qualifications and identity of the Developer are of particular concern to the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Developer. No voluntary or involuntary successor-in-interest of the Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. Except as set forth herein in Section 3.04, prior to the completion of the Project, the Developer shall not assign all or any part of this Agreement, or any rights hereunder, without the prior written approval of the Executive Director of the Agency. The Developer shall promptly notify the Agency in writing of any material change in the identity of the parties either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such party, of which information the Developer or any of its partners or officers has been notified or may otherwise have knowledge or information. This Agreement may be terminated by the Agency prior to the full execution of this Agreement, if there is any material change, whether voluntary or involuntary, in membership, ownership, management or control of the Developer (other than such changes occasioned by the death or incapacity of any individual shareholder or officer) that has not been approved by the Agency prior to the time of such change or the Agency may seek 10-1-07 GFe Entervrise lLC - SF Inclusionary HousingOPA (Executed Version) 7 other appropriate relief in the event that at any time following the full execution of this Agreement such a material change occurs in the ownership or control of the Developer, or the Developer's interest under the Agreement; provided, however, that the Agency shall first notify the Developer in writing as set forth in Section 6.01, of its intention to terminate this Agreement or assert any other remedy under this Agreement. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assigrnnent of this Agreement shall not be required in connection with any transfer to a limited liability company, partnership, corporation, or other entity or entities in which GFC Enterprises, LLC or other such affiliate retains management and control of the transferee entity. For the purpose of this Section 1.03, the words "material change" refer to any total or partial sale, assigrnnent, or conveyance, or any trust power or any transfer in any other mode or form by the Developer of more than a forty-nine percent (49%) interest of the ownership of the Developer and/or a series of such sales, assigrnnents or conveyances which in the aggregate exceed a disposition or change of more than a forty-nine percent (49%) interest of the ownership of the Developer. Section 1.04. Benefit to Proiect Area. The Agency has determined that the development of the Project by the Developer in accordance with this Agreement will eliminate blight and provide needed affordable housing to the Project Area, as well as to areas in proximity thereto, which housing is needed due to the insufficiency of new affordable housing within the City, generally, the development of the Project within the Project Area to make available the three (3) Affordable New Homes will assist the Agency in complying with the indusionary housing requirements as set forth in the CRL. Section 1.05. Effective Date. (a) The Effective Date shall occur when this Agreement has been fully executed by the parties and the Executive Director of the Agency has confirmed that the Developer has provided the Agency with satisfactory evidence of the Developer's compliance with the insurance coverage protections in favor of the Agency as set forth in Section 3.03. (h) In the event that th~DeveloPl'lrfai!s to provide satisfactory evidence ofmsurance coverage within sixty (60) days following the full execution of this Agreement, then regardless of whether this Agreement may have been executed by one (I) of the parties prior to such date, thereafter, this Agreement shall have no further force and effect and the parties shall be mutually discharged from any further responsibility or liability to the other party which may otherwise arise under this Agreement; provided, however, that the Developer shall have the obligation to provide the three (3) Affordable New Homes as required by the conditions of approval as imposed upon the Developer and the Project through the City approval and entitlement process. 10-1-07 GfC Enterprise lLC - SF Inctusionary Housing OPA (Executed Version) 8 ARTICLE II Section 2.01. Satisfaction of Conditions. Each party shall use its diligent best efforts, in good faith, and at its own cost, to satisfy any of the conditions of this Agreement, and if the condition requires the approval of a party, such approval shall be the respective party's sole and absolute responsibility. Either party may waive any of the conditions set forth in this Agreement, but any such waiver shall be effective only if contained in a writing signed by both parties. Section 2.02. Termination. In addition to the right of the Agency to terminate this Agreement pursuant to Section 1.03, in the event that any condition set forth in this Agreement, whether explicitly stated or implied, is not satisfied within one hundred eighty (180) days after the Effective Date of this Agreement or waived by the applicable party pursuant to Section 2.0 I, either party may, at its option, terminate this Agreement, thereby releasing the parties from further obligations hereunder, and thereafter, all documents delivered by the Developer to the Agency shall be returned to the Developer and all documents delivered by the Agency to the Developer shall be returned to the Agency. Nothing in this Section 2.02 shall be construed as releasing any party from liability for any default of its obligations hereunder or breach of its representations and warranties under this Agreement occurring prior to the termination of this Agreement. The obligations of the Developer to provide the three (3) Affordable New Homes shall survive any termination of this Agreement unless and until either (i) the Developer has provided the three (3) Affordable New Homes or substitute dwelling units as allowed pursuant to this Agreement, or (ii) the zoning for the Property has been changed to a zoning designation other than residential and a development other than a residential development has been constructed upon the Property. Section 2.03. Reoresentations and Warranties. (a) Warranties and Reoresentations bv the Agencv. The Agency hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Developer has been made in material reliance by the Devel()per on such covenants, representations and warranties: (i) Warranties True. Each and every undertaking and obligation of the Agency under this Agreement shall be performed by the Agency timely when due; and all representations and warranties of the Agency under this Agreement and its Exhibits shall be true in all material respects as of the Effective Date. (ii) Due Organization. The Agency is a community redevelopment agency, duly formed and operating under the laws of the State of California. The Agency has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consununate the transactions contemplated hereby. 10-1-07 GFC Enterprise LLC - SF Inclusionary HousingOPA (Executed Version) 9 (iii) Requisite Action. The execution of this Agreement has been duly approved by the governing body of the Agency. (iv) Execution of Agreement. The persons executing any instruments for or on behalf of the Agency have been authorized to act on behalf of the Agency in furtherance of the implementation and fulfillment of the Agency commitments under this Agreement. (v) Use of Agencv Low- and Moderate-Income Housing Funds. The sole source of funds, which the Agency will use to provide the Agency Down Payment Assistance and the City Fees, has been derived from the Agency's Low- and Moderate- Income Housing Funds and from no other source of funds of the Agency or the City as contemplated pursuant to Labor Code Section 1720(c)(4), and the Agency reasonably believes that the use of the Agency's Low- and Moderate-Income Housing Fund does not require the construction of any of the New Homes to be deemed a "public work" pursuant to Labor Code Section 1720. The Agency understands that the Developer is relying on this representation in determining whether the construction of the New Homes portion of the Project is a "public work" under Labor Code Section 1720. (b) Warranties and Representations bv the Developer. The Developer hereby, to the best of its knowledge, makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: (i) The Developer is a duly organized and validly existing California limited liability company. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer. (ii) The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, andUll consent of any other party is required fllr the Developer's authorization to eoter into this Agreement. (iii) This Agreement is, and all agreemeots, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. (iv) The Development Project Cost Pro Forma dated July 18, 2007, as prepared by the Developer and on file with the Agency Secretary, is to the best information and belief llf the Developer, a fair and reasonable presentation of the costs, expenses and gross Completed New Home sale proceeds which the Developer expects to incur as of the Effective Date with respect to the development of the Project. 10-1-07 GFC Enterprise LLC - SF Inclusionary HousingOPA (Executed Version) 10 . . (v) The books and accOlmting records of the Developer with respect to the improvement of the Completed New Homes and performance of any of the work and the final accounting for New Home Sales Cost Certificate for Completed New Homes, shall conform to the financial accountability standards of the Office of Management and Budget Circular A-liD, as evidenced by a notarized statement by the certified public accountant. (vi) Neither the execution of this Agreement nor the consununation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer. (vii) The Developer represents and warrants to the Agency that the Developer shall not accept any other financial assistance from any other public agency in connection with the Project, including the City, unless the Developer first complies with the applicable provisions of Labor Code Section 1720 in connection with its acceptance of such other assistance. (viii) The representations and warranties of the Developer contained in this Section 2.03(b) shall be based upon the actual knowledge of only those employees of the Developer who have participated in the negotiation of this transaction and preparation of this Agreement All representations and warranties contained in this Section 2.03(b) are true and correct on the date hereof and on the Effective Date. (c) Change in Facts. If either party becomes aware of any act or circumstance which would change or render incorrect, in whole or in part, any representation or warranty made by such party under this Agreement, whether as of the Effective Date or any time thereafter, and whether or not such representation or warranty was based upon such party's knowledge and/or belief as of a certain date, such party will give immediate written notice of such changed fact or cirell1l1sta!l.ce lathe oth~ party, but such notice shall not release such party of its liabilities or Obligations WithrespecUhereto. ARTICLE III DEVELOPMENT OF THE PROJECT Section 3.01. Scope of Development bv Developer. (a) It is the intent of the parties that the Project shall be developed as follows: (i) the constrnction by the Developer on each of the eighteen (18) residential lots, with a minimum lot size of 11,000 square feet, a single-family detached residential home, together with all on- and off-site improvements such as streets, cnrbs, sidewalks, storm drains, gutters, utilities, etc., with three (3) of such New Homes to be reserved for occupancy by a Low- or Moderate-Income Homebuyer as Affordable New Homes. The specific components of the design constrnction and 10-1-07 GFC Enterprise LLC ~ SF Inclusionary Housing OPA (Exe<:uted Version) II improvement of each Completed New Home is more particularly set forth herein. The approval of this Agreement by the Agency shall concurrently approve the Scope of Development. Any material change to the Scope of Development (or a series of individual changes which are cumulatively material) shall be subject to the prior review and approval of the Agency through the Executive Director of the Agency. (b) The City's zoning ordinance and building requirements will be applicable to the development and use of the Completed New Homes on each residential lot. The Developer acknowledges that the plan for development of the New Homes as set forth in the Scope of Development shall be subject to the City's zoning ordinance and building requirements. No action by the Agency or the City with respect to the consideration, review or approval of this Agreement or related documents shall be deemed to constitute a waiver of any lawful City requirements which are applicable to the Developer or the Project, or to any successor-in-interest of the Developer, or any successor-in-interest pertaining to the Project, except by modification or development variance as may specifically relate to such proposed work of improvement by the Developer which is approved by the City. (c) The Completed New Homes shall be constructed and improved on the residential lots in conformance with the Scope of Development and any and all other plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and between the Developer and the Agency, which mutual approval of any such change shall not be unreasonably conditioned, withheld or delayed. The approval by the City of any element of the Project, which may be subject to the ministerial regulatory review of the City, shall be deemed to bc approved by the Agency. (d) The approval of the Scope of Development by the Agency hereunder shall not be binding upon the Mayor and Common Council of the City or the Planning Commission of the City with respect to any regulatory approvals relating to the improvement of the Project or the Completed New Homes and/or the public improvements necessary for the development of the Project as may be required by such other public agencies. If any material change of the Scope of Development as previously approved by the Agency shall be required by another govemment official, agency, department or bureau having jurisdiction over the development of the Project, the Agency shall not unreasonably withhold or delay approval of such revisions to the Scope of Development as the Developer may reasonably request. (e) Subject to the Developer's right to seek an appeal or modification of one (I) or more development conditions relating to the Project, as may hereafter be imposed by the City or any other regulatory agency with jurisdiction over the Project, the Developer agrees to accept and comply fully with any and all lawful and reasonable final conditions of approval applicable to all permits and other governmental actions affecting the Project or the improvement of each residential lot with a Completed New Home. (I) The Developer shall cause landscaping plans for the front yard only in connection with the improvement of each New Home on each residential lot to be prepared by a licensed landscape contractor or architect. The Developer shall prepare and submit preliminary and final landscaping plans for the front yard as part of the improvement of each New Home to the City for its approval, which are consistent with City Code requirements. These plans shall be timely 10-1-07 GFC Enterprise LLC -SF Inclusionary IlousingOPA (Executed Version) 12 . . prepared, submitted and approved so as to complete the Project within the time specified in Section 3.02 herein. (g) The Developer shall prepare and submit development plans, construction drawings and related documents for the improvement of each of the eighteen (18) New Homes consistent with the Scope of Development and the Schedule of Performance to the City. The development plans, construction drawings and related documents submitted by the Developer to the City shaU be in the form of final drawings, plans and specifications. Such final drawings, plans and specifications are hereby defined as those which contain sufficient detail necessary to obtain a building permit from the City for the construction of each New Home. (h) During the preparation of aU drawings and plans in connection with the improvement of the New Homes and the public improvements necessary for the Project, the Developer shall provide to the Agency, regular progress reports to advise the Agency of the status of the preparation by the Developer, and the submission to and review by the City of construction plans and related documents. The Developer shall communicate and consult with the Agency as frequently as is necessary to ensure that any such plans and related documents submitted by the Developer to the City are being processed in a timely manner. (i) The Agency shaU have the right to review aU plans, drawings and related documents pertinent to the development of the improvement of each New Home in order to ensure that they are consistent with this Agreement and with the Scope of Development. (j) The Developer shall timely submit to the City for its review and approval, any and aU plans, drawings and related documents pertinent to the development of the Project, as required by the City. The Agency shaU cooperate with and shall assist the Developer in order for the Developer to obtain the approval of any and all development plans, construction drawings and related documents consistent with this Agreement submitted by the Developer to the City as promptly as feasible following the City's receipt of such plans. Any failure by the City to approve any of such plans or to issue necessary permits for the development of the Project within sixty (60) calendar days following submission by the Developer to the City of complete and correct plans shall constitute an enforced delay hereunder, and the Schedule of Performance shall be extended by that period of time beyond a sixty (60) calendar day period in which the City alWmvessaj9:pl~;provided, hoWever,thl\t inth", event that the City disl\PprQveS of ;my of~nph plans,lhe Developer shaU within thirty (30) calehdar days l\fter receipt of such disapproval revise and resubmit such plans in accordance with the City's requirements and in such form a,r;d substance so as to obtain the City's approval thereof. (k) [RESERVED] (1) The Agency shall approve any modified or revised plans, drawings and related documents to which reference is made in this Agreement as long as such modified or revised plans, drawings and related documents are generally consistent with the Scope of Development, and do not, in the reasonable opinion of the Executive Director of the Agency, require a material change or adjustment in the estimated New Home Sale Costs shown in the Development Project Cost Pro Forma and are consistent with the other plans for the improvement of the New Homes which have been approved by the Agency. Upon any disapproval of such modified or revised 10-1-07 GFC Enterprise LLC SF Inclusionary HousingOPA (Executed Version) 13 plans, drawings or related documents, including the Development Project Cost Pro Forma, the Agency shaH state in writing the reasons for such disapprovaL The Developer, upon receipt of any notice of disapproval, shaH promptly revise such disapproved portions of the plans, drawings or related documents in a manner that addresses the reasons for disapproval and reasonably meets the requirements of the Agency in order to obtain the Agency's approval thereof. The Developer shaH resubmit such revised plans, drawings and related documents to the Agency as soon as possible after its receipt of the notice of disapproval and, in any event, no later than thirty (30) calendar days thereafter. The Agency shaH approve or disapprove such revised plans, drawings and related documents in the same manner and within the same times as provided in this Section for approval or disapproval of plans, drawings and related documents initiaHy submitted to the Agency, and if no specific time for approval is specified then the Agency shaH so approve or disapprove the proposed modifications or revisions promptly upon the written request of the Developer. (m) If the Developer desires to make any material change in the final construction drawings, plans and specifications or related documents, including the Development Project Cost Pro Forma after their approval by the Agency and/or the City, the Developer shaH submit the proposed change in writing to the Agency and/or the City for approvaL The Agency shaH notify the Developer of approval or disapproval thereof in writing within thirty (30) calendar days after submission to the Agency. This thirty (30) calendar day period may be extended by mutual consent of the Developer and the Agency. Any such change shaH, in any event, be deemed to be approved by the Agency unless rejected, in whole or in part, by written notice thereof submitted by the Agency to the Developer, setting forth in detail the reasons therefore, and such rejection shaH be made within said thirty (30) calendar day period unless extended as permitted herein. The Agency shaH use its best efforts to cause the City to review and approve or disapprove any such change as provided in Section 3.01(j) hereof. (n) The Developer, upon receipt of written notice of disapproval of a proposed change in construction drawings, plans and specifications by the Agency and/or the City, may revise such portions of the proposed change in construction drawings, plans and specifications and related documents as are rejected and shaH thereafter resubmit such revisions to the Agency and/or the City for approval in the manner provided in Section 3.01(j) hereof. (0) The Developer sbaIl ha,vethe right, duriug the course of cOll!'truction, to make changes in construction concerning tbe interior design of the New Homes and "minor field changes" with respect to the New Homes, and to make "minor field changes" to the public improvements necessary for the development of the Project without seeking the approval of the Agency; provided, however, that such changes do not materiaHy affect the costs or income for the Project as presented in the Development Project Cost Pro Forma or the ability of the City to approve the completion of construction of the New Home for purposes of authorizing the lawful occupancy thereof, or the acceptance by the City of the public improvements necessary for the development of the Project; and further, provided that the City has approved any such "minor field changes" to either a New Home or the public improvements necessary for the development of the Project in accordance with the standards and practices of the City Building Department and/or City Public Works Department, as applicable. Said "minor field changes" shaH be defined as those changes from the approved final construction drawings, plans and specifications which have no substantial effect on the improvements and are made in order to expedite the work 10-1-07 GFC Enterprise LLC ~ SF Inclusionary Housing OPA (Executed Version) 14 . . of construction in response to field conditions. Nothing contained in this subsection shall be deemed to constitute a waiver of or change in the City's Building Code or Public Works Department requirements goveming such "minor field changes" or in any and all approvals by the City otherwise required for such "minor field changes". (p) The cost of constructing the New Homes and all other improvements on the Project shall be paid for by the Developer. To the extent that the Developer may be eligible to seek a credit, which is generally available to any other similarly situated owner of land on which a former residential dwelling unit has been demolished, for the payment of public school capital facilities city fees, in whole, or in part, upon the construction of a New Home, the Developer may seek and obtain such a credit from the San Bernardino City Unified School District. (q) The Developer shall pay the school capital facility development improvement fees as required and at the time specified by the San Bernardino City Unified School District; provided that the Developer may seek exemptions or modifications to the required fees. All other development fees imposed by the City as a condition of issuance of any permit for the development of the Project shall be paid by the Developer to the City at the time of issuance of each such permit or, subject to the approval ofthe City in its discretion, at the close of each New Home Escrow, or Affordable New Home Escrow, pursuant to the terms of the City's Development Fee Deferral program as may then be in effect. (r) The Developer shall, at its expense, cause to be prepared, and shall pay any and all fees pertaining to the review and approval thereof by the City, all required construction, planning and other documents reasonably required by governmental bodies pertinent to the development of the Project hereunder, including, but not limited to, the public improvements necessary for the development of the Project and to the specifications, drawings, plans, maps, permit applications, land use applications, zoning applications and design review documents for the New Homes. (s) The Developer shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for utility improvements and connections, which may be required in developing the Project. The Developer shall obtain any and all necessary approvals prior to the commencement of applicable portions of the construction of the Project, . and theD!'veloper shall take r!'asoIlablepr""-'autions to !'1I$.ure the safety and habitability of surronnding properties during the construction of the Project. (t) The Developer shall begin and complete all construction and development of the Project and timely undertake all obligations and responsibilities of the Developer in order to complete the Project within twelve (12) months from the Effective Date of this Agreement as set forth in the Schedule of Per.formance and the dates as provided in Section 3.02 hereof, or within such reasonable extensions of such times as may be granted by the Executive Director of the Agency or as otherwise provided for in this Agreement. The Schedule of Performance shall be subject to revisions, from time to time, as mutually agreed upon in writing by and between the Developer and the Executive Director of the Agency. Any and all deadlines for performance by the parties shall be extended for any times attributable to delays which are not the fault of the performing party and are caused by the other party, other than periods for review and approval or lO~I-07 GFC Enterprise LLC - SF Inclusionary HousingOPA (Executed Version) 15 . . reasonable disapprovals of plans, drawings and related documents, specifications or applications for permits as provided in this Agreement (u) The Developer shall, at its own expense, secure or shall cause to be secured, any and all permits, which may be required for the construction, development or work of the Project by the City or any other goverrunental agency having jurisdiction thereof. (v) Officers, employees, agents, or representatives of the Agency and the City shall have the right of reasonable access to the Project site, during normal business hours, during the period of construction for the purposes of monitoring the Developer's performance under this Agreement upon not less than forty-eight (48) hours prior written notice to the Developer. Section 3.02. Schedule of Performance. The Developer shall construct the eighteen (18) single-family detached residential homes, of which three (3) shall be Affordable New Homes, within twelve (12) months after the Effective Date of this Agreement, and shall ensure the timely delivery of all Completed New Homes by December 31, 2008, and the sale to Homebuyers on or before said date, including the three (3) Affordable New Homes. The Agency expressly requires that each of the three (3) Affordable New Home Escrow closings occur no later than December 31, 2008. The Developer understands such Agency limitation and hereby acknowledges that in the event the three (3) Affordable New Home Escrow closings have not occurred by December 31, 2008, no Agency Downpayment Assistance Funds will thereafter be made available for the Project Section 3.03. Insurance Coverage of Developer. By no later than the date indicated in Section 1.05, the Developer shall furnish, or shall cause to be furnished to the Agency, duplicate originals or appropriate certificates of public indemnity and liability insurance in the amount of Two Million Dollars ($2,000,000) combined single limit, naming the Agency, the City and the elected officers, officials, employees, attorneys and agents of both such public entities, as additional insureds. Said insurance shall cover comprehensive general liability including,.. but n?t 1in1i~ed . to, C?lltnlctua1li;iliility; act~ of subc. ontractors;. p.~emi.ses.operatigns. ;expl....gsign, wIlAAseBli... ..dJ1.n de. .ffl!'O. 1IiI<ltra>;ar..<\$, ifapp1icllble; broad form property damage, and persolUllinjuryincludfug Iib"I,~lander and false arrest. In addition, the Developer shall provide to the Agency, adequate proof of comprehensive automobile liability insurance covering owned, non-owned and hired vehicles, combined single limit in the amount of One Million Dollars ($1,000,000) for each occurrence; and proof of workers' compensation insurance. Any and all insurance policies required hereunder shall be obtained from insurance companies admitted in the State of Califomia and rated at least a B+: XII in Best's Insurance Guide, or in special circumstances, be pre-approved by both the Executive Director of the Agency and the Agency Counsel. All said insurance policies shall provide that they may not be cancelled unless the Agency and the City receive written notice of cancellation at least thirty (30) calendar days prior to the effective date of cancellation. Any and all insurance obtained by the Developer hereunder shall be primary to any and all insurance which the Agency and/or the City may otherwise carry, including self insurance, which for all purposes of this Agreement shall be separate and apart from the requirements of this Agreement 10-1-07 GFC Enterprise LLC.. SF [nc1usionary HousiogOPA (Executed Version) 16 . . Any insurance policies governing the Project as obtained by the Agency shall not be transferred from the Agency to the Developer. Appropriate insurance means those insurance policies approved by the Agency Counsel consistent with the foregoing. Any and all insurance required hereunder shall be maintained and kept in force until the "Release Date" as this term is defined in Section 4.10. Section 3.04. Prohibition against Transfer Prior to Release Date. (a) Prior to the Release Date, the Developer shall not, without prior written approval of the Agency or except as permitted by this Agreement, (i) assign or attempt to assign this Agreement or any right herein or (ii) make any total or partial sale, transfer, conveyance, lease, leaseback, or assignment of any portion of the Project, or permit to be placed on any portion of the Project any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien. This prohibition shall not apply to any of the following: (I) the reasonable grant by the Developer of utility easements or permits to facilitate the development of the Project; (2) the assignment of all of the Developer's rights and obligations in this Agreement to a limited liability company of which the Developer andlor an affiliate of the Developer is the managing member (and the assumption of such obligation by such limited liability company); (3) any permitted construction financing interest under Section 3.05; and (4) sales by the Developer of individual Completed New Homes, subject to the provision of Section 4.10. (b) In the absence of any specific written agreement or approval by the Agency, no unauthorized sale, transfer, conveyance, lease, leaseback or assignment of any portion of the Project shall be deemed to relieve the Developer or any other party from any obligations under this Agreement. (c) The Developer shall not lease or rent any Completed New Home for commercial or residential occupancy by any person, pending final sale to a Homebuyer, or in the case of an Affordable New Home pending final sale to a Low- or Moderate-Income Homebuyer. Section 3.05. Securitv Financing; Right of Holders. (a) The words "mortgage" and "deed of trust" as used herein shall be deemed to include all oth.~rC~t(lI1lllf{'~d"!1'pr?Pri"t!'.m().q!'~.<lrn~'l1cinl: real estat!'. constructionaIlq land development. NotMtlllltanding aIiYl1royisi~~#~'g.\iI;ti"n 3;03 totliecontrary, mOrtl:ages,q~ of trust, or any other form of lien required -for any reasonable rnethod of financing the construction and improvement of the Project are permitted before the completion of the Project. The Developer shall notify the Agency, in writing, in advance of any mortgage, deed of trust, or other form of lien for financing of the Project, which the Developer proposes to be secured by the Project before the recordation of any such Project-related construction financing security interests. The Developer shall not enter into any such conveyance for construction financing withont the prior written approval of the Agency, which approval the Agency shall grant if: (i) any such conveyance is given to a responsible financial or lending institution including, without limitation, banks, savings and loan institutions, insurance companies, real estate investment trusts, pension programs and the like, or other acceptable persons or entities for the purpose of financing the construction of the New Homes, and (ii) such loan contains customary construction lender disbursement controls. 10-1-07 GFC Enterprise LLC -SF Indusionary HousingOPA (Executed Version) 17 . . (b) The Developer shall promptly notify the Agency of any mortgage, deed of trust or other refinancing, encnmbrance or lien that has been created or attached thereto prior to completion of the construction of the New Homes whether by volnntary act of the Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by the Developer to the Agency prior to suit being filed to foreclose such mechanic's lien. (c) The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no manner be obligated by the provisions of this Agreement to construct or complete the Project or to guarantee such construction or completion; provided, however, that each surety nnder any completion and payment surety bond delivered by the Developer to the City, if any, under the terms of any off-site improvement permit issued by the City to the Developer, shall not, by the virtue of any term of this Agreement, be deemed to be discharged from its obligation to the City as arises nnder such surety. (d) In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the Project prior to the completion of the Project, and the holder of such security interest has not exercised its option to complete the Project, the Agency may cure the default of the Developer, but is nnder no obligation to do so prior to completion of any foreclosure. In the event that the Agency may cure any such default by the Developer, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be deemed to have a lien of the Agency as may arise under this Section 3.0S(d) upon the Project to the extent of such costs and disbursements. Any such lien shall be subordinate and subject to mortgage, deed oftmst or other security instrument executed by the Developer encumbering the Project. Section 3.06. Property Taxes and Assessments. The Developer shall pay, prior to delinquency, all real property taxes and assessments assessed and levied on or against the Project property between the time of the full execution of this Agreement and prior to the close of each New Home Escrow or Affordable New Home Escrow. Nothing herein shall be deemed to prohibit the Developer from contesting the validity or amonnts of any tax assessment, encnmbrance or lien, on any lot within the Project following the full e;<ecution of this Agreei)1ent, nor to limit the remedies available to the Develqper in tespecttheteto. ARTICLE IV USE AND DISPOSITION OF THE AFFORDABLE NEW HOMES BY THE DEVELOPER Section 4.01. Uses of the Affordable New Homes. (a) The Developer covenants and agrees for itself, its successors and assigus that three (3) of the eighteen (18) residential lots within the Project shall be developed, constructed, improved with an Affordable New Home as set forth in Section 3.01, and each of these completed Affordable New Homes shall be reserved by the Developer for sale and occupancy by 10-1-07 GFC Enterprise LLC - SF Inclusionary Housing OPA (Executed Version) 18 , , Low- or Moderate-Income Homebuyers, whose Adjusted Family Income at the time of initial occupancy of a completed Affordable New Home does not exceed the household income qualification limits of a Low- or Moderate-Income Household. (b) The Developer shall cause to be recorded, at the time of closing of each Affordable New Home Escrow, the fully executed form of the Affordability Covenant. The final form of the Affordability Covenant shall be delivered to the Affordable New Home Escrow Holder for execution by the Developer and the Low- or Moderate-Income Homebuyer at the time of closing of each applicable Affordable New Home Escrow. If the Low- or Moderate-Income Homebuyer may use Agency Downpayment Assistance Funds for the purchase of the Affordable New Home from the Developer, the Low- or Moderate-Income Homebuyer and the Agency shall execute a separate set of affordability covenants in favor of the Agency to evidence the obligation of the Low- or Moderate-Income Homebuyer to the Agency which arise by virtue of the Qualified Homebuyer's acceptance of Agency Downpayment Assistance Funds under such Agency program. (c) The Developer further covenants and agrees for itself, its successors and assigns that each ofthe three (3) lots within the Project designated for an Affordable New Home shall be improved, developed and used in accordance with the Scope of Development in Section 3.01. Developer covenants to develop and use the designated Affordable New Home lots in conformity with all applicable laws. Section 4,02. Disposition of the Completed New Homes to Homebuvers and Special Provisions for Affordable New Home Escrows. (a) Each Completed New Home shall be transferred aud sold to a Homebuyer through a New Home Escrow. (b) Upon the completion of improvement of an Affordable New Home by the Developer on each of three (3) lots as may later be determined by the Developer, the Developer shall transfer and sell all of its right, title and interest in such completed Affordable New Home to a Low- or Moderate-Income Homebuyer designated by the Developer. The gross sales price of each completed Affordable New Home will be set by the Developer at the time of sale to a l:l~!):I,!1~u,,~~r,b!\S,ydup!>D marketcqn4iti!>ns~t tJ1e~inIe of sl!chsale to tJ1eI!lIl'iiC'~'ll!'lI.o~!1)}llYer; pf(!lVi~efi, however, that thefirstJienpurqb,Memoney mortgage amount andotherh9~i!lg",os~s payable by such Low- or Moderate-Income Homebuyer for the completed Affordable New Home, shall be an amount which does not exceed an Affordable Housing Cost for the Low- or Moderate-Income Homebuyer. The Completed New Home purchase price payable by a Homebuyer for a New Home which is not subject to the affordability covenants of this Agreement shall not be subject to such an Affordable Housing Cost sales price restriction or limitation. (c) The disposition of each Completed New Home to a Homebuyer shall take place through a New Home Escrow or an Affordable New Home Escrow, as applicable, to be administered by the New Home Escrow Holder and Affordable New Home Escrow Holder, respectively. Each of the New Home Escrows or Affordable New Home Escrows shall be deemed open ("Opening of New Home Escrow"), upon delivery of a fully executed copy of the 10-1-07 GFC Enterprise LLC SF Inc1usionary Housing OPA {Executed Version) 19 , . Completed New Home sales contract by and between the Homebnyer and the Developer. The Escrow Holder shall promptly confirm to the parties the escrow nwnber and the title insurance order nwnber assigned to snch escrow. The Escrow Holder shall be a title company or escrow service acceptable to the Developer and the Homebuyer. The Agency shall not be a party to any such New Home Escrow or Affordable New Home Escrow. Notwithstanding the preceding sentence, the Developer shall instruct the Escrow Holder to comply with the provisions of Section 4.02(1) of this Agreement and at the close of each New Home Escrow or Affordable New Home Escrow, the Escrow Holder shall provide the Agency with a copy of both the "seller's" and the "buyer's" closing statement, together with a complete copy of the real estate sales agreement between the Developer and the Homebuyer for the Completed New Home. (d) In the case of an Affordable New Home Escrow, the Developer shall deliver to the Agency, the information relating to each Low- or Moderate-Income Homebuyer described in Section 2(e) of the Affordability Covenant, within five (5) calendar days following the Developer's designation of such Low- or Moderate-Income Homebuyer as the prospective purchaser of the completed Affordable New Home. Concurrently, upon the Developer's delivery to the Agency of the household income and occupancy information described in Section 2( e) of the Affordability Covenant, the Developer shall also request that the Agency issue its Notice of Agency Concurrence with respect to the Low- or Moderate-Income Homebuyer designated by the Developer. Within ten (10) calendar days following its receipt of such written information and request from the Developer relating to the Low- or Moderate-Income Homebuyer, the Agency shall provide the Developer with a preliminary confirmation of the approval or rejection of the income and household occupancy qualifications of the proposed Low- or Moderate- Income Homebuyer. In the event that the Agency may request additional information relating to the confirmation of the matters described in the preceding sentence with respect to the Low- or Moderate-Income Homebuyer, the Developer shall cause such additional information to be provided to the Agency as promptly as feasible. The Executive Director of the Agency shall issue a preliminary determination of concurrence of the eligibility of the Low- or Moderate- Income Homebuyer within ten (10) calendar days following receipt of such completed income and household occupancy information. Provided that the proposed Low- or Moderate-Income Homebuyer also qualifies to obtain purchase money mortgage financing for the purchase of the completed Affordable New Home with terms and costs not in excess of an Affordable Housing Cost for such. Low- or Moderate-Income Homebuyer,as evid~nced by a written mortgage lellder's preqUlllifica,tjon for such Low- or Moderate-Income HOrn~buyer, the ExecutiVe Director of .the Agency shall issue a Notice of Agency Concurrence with respect to such Low- or Moderate-Income Homebuyer to the Escrow Holder. In the event that the Agency may later discover that the written information provided to it in support of a request for issuance of a Notice of Agency Concurrence is false or incorrect in any material respect, then in such event, the Agency may exercise all of its remedies to enforce the provisions of this Agreement and the Affordability Covenant, if applicable, notwithstanding the fact that a Notice of Agency Concurrence may have been issued in favor of a particular Low- or Moderate-Income Homebuyer. (e) The Developer and the Agency mutually covenant and agree to execute all necessary or appropriate written escrow instructions relating to the application of this Agreement to a particular New Home Escrow or Affordable New Home Escrow as may be reasonably requested by the New Home Escrow Holder or the Affordable New Home Escrow Holder, IO-I~7 GFC Enterprise LLC - SF Inc\u5ionary Housing OPA (Executed Version) 20 respectively, in connection with the administration of a New Home Escrow or Affordable New Home Escrow. (f) Each New Home Escrow or Affordable New Home Escrow shall close upon satisfaction of the applicable escrow conditions by and between the Developer and such Homebuyer, as consistent with this Agreement, when the New Home Escrow Holder or Affordable New Home Escrow Holder confirms that: (A) the New Home Escrow Holder or Affordable New Home Escrow Holder has provided the Agency with a copy of the buyer's and the seller's estimated settlement statements for the escrow; (B) if the escrow relates to an Affordable New Home, then the Affordable New Home Escrow Holder shall also provide adequate information or documentation to confirm to the Agency the following: (i) it is in receipt of the Notice of Agency Concurrence for the Low- or Moderate-Income Homebuyer regarding a completed Affordable New Home; (ii) it has received and is in a position to record a fully executed form of the Affordability Covenant for the completed Affordable New Home; (iii) it is in a position to provide the Agency with assurance reasonably satisfactory to the Agency that the Affordability Covenant shall, upon the close of the Affordable New Home Escrow, be subject only to the lien for property taxes and the lien in the completed Affordable New Home of the senior purchase money mortgage lender to the Low- or Moderate-Income Homebuyer; (iv) the Low- or Moderate-Income Homebuyer has executed all of the Agency program documents relating to the Agency Downpayment Assistance Funds, if any, provided by the Agency to such Low- or Moderate-Income Homebuyer; (v) it is in a position to comply with such other instructions of the Developer, the Low- or Moderate-Income Homebuyer, the senior purchase money mortgage lender and the Agency relating to the completed Affordable New Home. (g) In the event that after it is opened, a New Home Escrow or Affordable New Home Escrow may fail to close for any reason, the Developer may cause such escrow to be cancelled without further notice of instruction to the Agency. The Developer shall pay for all of the costs and expenses of such a cancelled New Home Escrow or Affordable New Home Escrow and shall indemnify, defend and hold the Agency harmless from any claim, loss or damage which may be asserted or arise against the Agency by a third party as a result of the cancellation of any such escrow. (Ii) Within five (5) calendar days following the close of each New Home Escrow or Affordable New Home Escrow, the Developer shall provide the Agency with a true and correct copy of the final escrow settlement statement for the buyer and the seller. Within sixty (60) 10.1-07 aFe Enterprise LLC. SF Inc1usionary HousingOPA (Executed Version) 21 , . calendar days following the close of each New Home Escrow or Affordable New Home Escrow, the Developer shall deliver its New Home Sale Costs Certificate to the Agency. Section 4.03. Maintenance ofthe Propertv. The Developer covenants and agrees for itself, its successors, and assigns to maintain each of the eighteen (18) Project lots upon which New Homes have been constructed in a good condition, and free from any accumulation of debris or waste material, subject to normal construction job-site conditions, and shall maintain in a neat, orderly, healthy and good condition, the landscaping on each lot required to be planted in accordance with the Scope of Development in Section 3.01. In the event the Developer, or its successors or assigns, fails to perform the maintenance as required herein, the Agency shall have the right, but not the obligation, to enter any such lot and undertake such maintenance activities. In such event, the Developer shall reimburse the Agency for all reasonable sums incurred by it for such maintenance activities. The obligation of the Developer under this Section 4.03, with respect to the Project lots, shall be discharged for each lot on the applicable Delivery Date for each Completed New Home. The Developer's maintenance obligation to the Agency as arises under this Section 4.03, with respect to the common area of the Project (if any common area exists), will be discharged upon conveyance by the Developer of any such common area to a homeowner's association, if any. Section 4.04. Obligation to Refrain from Discrimination. The Developer covenants and agrees for itself, its successors, its assigns and every successor-in-interest to the Property, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of any lot; nor shall the Developer 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 Property. Section 4.05. Form of Nondiscrimination and Nonsegregation Clauses. The Bevelo,per qo,venants and agrees for itself, itssuceessors, itsassil\11s, and every successor-in-interest to the Affordable New Homes, and each of them, or any part thereof, that the Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of each of the Affordable New Homes, on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining thereto shall contain or be subject to, substantially, the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for itself, its successors 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 premises herein conveyed, nor shall the grantee or any 10-1-07 GFC Enterprise LLC - SF Inclusionary HousingOPA (Executed Version) 22 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, sub lessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land". (b) In leases: "The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, 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 premises herein leased nor shall the lessee 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, oftenants, lessees, sublessees, subtenants, or vendees in the premises 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 herein conveyed or leased, nor shall the transferee 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, sub lessees, subtenants, or vendees of the premises herein transferred". The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. Section 4.06. Effect and Duration of Covenants under Section 4.05 and Section 4.06. (a) The covenants established under Section 4.05 against discrimination shall remain in effect in perpetuity. (b) The covenant of the Developer respecting use and occupancy of each Completed New Home shall remain in effect until the Release Date, except for the three (3) completed Affordable New Homes, which shall remain in effect for the Quatified Residence Period of each su\Oh()<l.Qtple~~1\ifor<l"~let<ew Home, and s~allfltnwitl1thy l:md~d shall constitute e()uitable servit(ii'l!isthereon, and shall, without regard to techillcal classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns and the City. (c) The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land for and in its own rights and for the purposes of protecting the interests of the community. The Agency shall have the right, if such covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in C()uity or such other proper proceedings to enforce the curing of such breaches to which it or any other beneficiary of such covenants may be entitled, including, without limitation, to specific performance, damages and injunctive relief. The Agency shall have the right to assign all of its rights and benefits hereunder to the City. 1O-1.{J7 GFC Enterprise LLC - SF Induslonary Housing OPA (Executed Version) 23 , , Section 4.07. Development Proiect Cost Pro Forma. (a) As of the Effective Date of this Agreement, the Developer has presented the Agency with a Development Project Cost Pro Forma which is part of the Scope of Development. (b) The Developer shall maintain accounting books and records of Project development costs, the New Home Sales Costs and all income and proceeds realized by the Developer from the Project in accordance with generally accepted principles of business accounting. The Agency and its accountants and auditors shall have the right to conduct, at its expense, an inspection and review of the accounting books and records of the Developer relating to the Project upon the request of the Agency. Provided the Agency has given the Developer at least ten (10) calendar days' prior written notice, the Developer shall cooperate with the Agency in the production of its accounting books and records as reasonably required by the Agency and its auditors to conduct an audit of actual New Home Sales Costs and all income and proceeds realized by the Developer from the Project. Matters discovered by the Agency shall not be disclosed to third parties unless required by law or unless otherwise resulting from or related to the pursuit of any remedies or the assertion of any rights of the Agency hereunder. The Developer shall also have the right, at all reasonable times, to inspect the books and records of the Agency pertaining to the Project andlor the development thereof as pertinent to the purposes of this Agreement. (c) The Developer represents and warrants to the Agency, that as of the Effective Date, the expected fair market value of each Completed New Home is not less than the sum indicated in the Development Project Cost Pro Forma submitted to the Agency for each New Home, as shall be constructed by the Developer on each lot. The Developer agrees to remit to the Agency within thirty (30) calendar days after (i) the completion of the Project; (ii) the payment of all costs and expenses; and (iii) the receipt of all income and other receivables with respect to the Project, a profit sharing distribution to the Agency equal to fifty percent (50%) of all profits generated from that portion of the Project attributable to the three (3) Affordable New Homes that are in excess of a ten percent (10%) profit percentage (the "Profit Percentage") calculated in the mauner as illustrated in the Development Project Cost Pro Forma. Section 4.08. Agencv Downpavrnent Assistance Funds. (a) As of the Effective Date, the Agency sl1al1 appropriate and reservethestl$of Two Hundred Seventy Thousand Dollars ($270,000) from the Agency Low and Moderate Income Housing Funds to provide Agency Downpayment Assistance Funds for Low- or Moderate-Income Homebuyers of completed Affordable New Homes as set forth in this Section 4.08. Agency Downpayment Assistance may hereafter be provided for not to exceed three (3) Low- or Moderate-Income Homebuyers upon the close of each Affordable New Home Escrow for a completed Affordable New Home, subject to the terms and conditions of the Agency program for the use of such Agency Low and Moderate Income Housing Funds and the underwriting and credit evaluation by the Agency of each such Low- or Moderate-Income Homebuyer. 10-1-07 OFC Entcrprise LLC - SF Inclusionary Housing OPA (Executed Version) 24 . . (b) Provided that a Low- or Moderate-Income Homebuyer is determined by the Agency to be eligible for Agency Downpayment Assistance, as part of its acquisition of a completed Affordable New Home upon the close of the Affordable New Home Escrow, such Low- or Moderate-Income Homebuyer shall execute a promissory note, deed oftmst and related Agency Downpayment Assistance loan documents as the Agency may direct. (c) The amount, if any, of the Agency Downpayment Assistance which may be provided to one (I) or more but in no event, more than three (3) Low- or Moderate-Income Homebuyers for an Affordable Lot shall not exceed thirty percent (30%) of the gross sales price of the particular completed Affordable New Home if it is sold to a person or household whose income is not greater than that of a low- or moderate-income household, and shall be disbursed for the account of such Low- or moderate-income Homebuyer through the applicable Affordable New Home Escrow. (d) Notwithstanding any other provision of this Section 4.08, the Agency shall have no obligation to disburse any Agency Downpayment Assistance Funds to originate a mortgage loan for a Low- or moderate-income Homebuyer of a completed Affordable New Home after December 31, 2008, regardless of when the purchase contract was entered into by the Developer and the Low- or moderate-income Homebuyer. Section 4.09. Developer Obligation to provide Additional Subsidies to Low- or Moderate-Income Homebuvers. The Developer shall have the sole obligation to provide such additional amounts of assistance or to obtain such primary mortgage financing for each Affordable New Home so that such Affordable New Homes are sold to Low- or moderate-income Homebuyers who qualify, under all respects, for the Affordable New Homes as required by this Agreement. Nothing shall prevent the Developer from transferring funds to the Agency to fund additional amounts of Agency Downpayment Assistance or to reduce the sales prices of the Affordable New Homes, all as may be determined by the Developer at its election. Section 4.10. Substitution of other Single-Familv Dwelling Units for Affordable New Homes. (a) The Agency agrees that the Developer may substitute other single,family residential dwelling units in lieu of the three (3) Affordable New Homes as presently contemplated under this Agreement for purchase by Low and Moderate Income Homebuyers. The Developer may elect to designate such substitute qualifying housing units at any time on and after the Effective Date ofthis Agreement. Such substitute qualifying housing units may include residential in-fill lots in other areas of the Project Area, the acquisition by the Developer and rehabilitation of presently vacant single-family dwelling units, or such other construction or rehabilitation of single-family dwelling units, as may be approved by the Executive Director of the Agency. (b) The Developer agrees to initially focus any attempts to obtain substitute single- family dwelling units in the area of the City within the Project Area commonly referred to as "Operation Phoenix" located generally north of Baseline Avenue and west of Waterman Avenue. 10-1--07 GFe Enterprise LLC SF lnclusionary HousingOPA (Executed Version) 25 . . Any such substitute single-family dwelling units proposed by the Developer to be in lieu of the three (3) Affordable New Homes shall be subject to the reasonable approval of the Executive Director of the Agency. (c) In the event the Developer elects to substitute other single-family dwelling units in lieu of one (1) or more of the Affordable New Homes to produce at least three (3) single- family homes for Low- or moderate-income Homebuyers, all provisions of this Agreement shall apply to the substitute single-family homes in the same manner as the provision of this Agreement would have applied to the Affordable New Homes. The Developer may provide a combination of one (I) or more Affordable New Homes together with substitute single-family dwelling units so that at least three (3) Low and Moderate Income Homebuyers have been obtained so that the Agency will then be in compliance with the requirements of the CRL pertaining to the inclusionary housing requirements. The Agency is entering into this Agreement in reliance upon the representations of the Developer to assure compliance with the inclusionary housing requirements in the Project Area, as are applicable to the Project and the Agency. Section 4.11. Partial Reimbursement for Citv Fees. The Developer shall be obligated pursuant to the ordinances and other requirements of the City to pay in whole the City Fees for the construction and development of the eighteen (18) New Homes constituting the Project. The Developer shall submit to the Agency on or before the close of escrow for the first New Home appropriate written evidence of payment by the Developer to the effect that the total City Fees as paid by the Developer to the City for the development of the three (3) Affordable New Homes was equal to or in excess of One Hundred Thousand Dollars ($100,000). Upon verification by the Agency staff of the dollar amount of the City Fees as paid by the Developer directly for the three (3) Affordable New Homes, the Agency shall reimburse the Developer for all or the appropriate portion of the One Hundred Thousand Dollars ($100,000) amount that has been verified as having been previously paid by the Developer to the City. In no event shall the Agency reimbursement obligation to the Developer for the City Fees with respect to the three (3) Affordable New Homes exceed the dollar amount as actually paid by the Developer with respect to each such Affordable New Home and provided further that the reimbursement obligation of the Agency under this Section 4.11 shall not exceed One Hundred Thousand Dollars ($100,000) in the aggregate. ARTICLE V DEFAULTS. REMEDIES AND TERMINATION Section 5.01. Defaults - General. (a) Subject to the extensions of time set forth in Section 5.05 hereof, failure or delay by either party to perform any term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if a party otherwise in default commences to cure, correct or remedy such default within thirty (30) calendar days after receipt of written notice specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such party shall not be deemed to be in default hereunder. 1O-1..{l7 GFC Enterprise LLC -SF Inclusionary Housing OPA (Executed Version) 26 . . (b) Tbe injured party shall give written notice of default to the party in default, specitying the default complained of by the non-defaulting party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) Any failure or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. Section 5.02. Legal Actions. (a) In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement including, on behalf of the Agency, requiring the Developer to comply with the obligation to provide the three (3) Affordable New Homes or to pay such damages to the Agency as a court may determine to compensate the Agency for the loss of such number of Affordable New Homes. Such legal actions must be instituted in the Superior Court of the County of San Bernardino, State of California, in any other appropriate court in that County, or in the Federal District Court in the Central District of the State of California. (b) The laws of the State of California shall govern the interpretation and enforcement 0 f this Agreement. (c) In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director of the Agency, or in such other manner as may be provided by law. (d) In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service on any officer of the Developer (or such other agent for service of process and at such address as may be specified in written notice to the Agency), or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. Section 5.03. Ricl1ts and Remedies are Cumulative. Except with respect to any rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one (I) 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. Section 5.04. Default and Damages. If either party defaults with regard to any provision of this Agreement following the full execution of this Agreement, the non-defaulting party shall serve written notice of such default upon the defaulting party. If the defaulting party does not diligently commence to cure such 10-1-07 GFC Enterprise LLC - SF lnclusionary Housing OPA (Executed Version) 27 . . default within thirty (30) calendar days after service of the notice of default and promptly complete the cure of such default within a reasonable amount of time, not to exceed ninety (90) calendar days (or such shorter period as may otherwise be specified in this Agreement for any specific default), after the service of written notice of such default, the defaulting party shall be liable to the other party for damages caused by such default. Section 5.05. Agencv Audit Costs. In the event that based upon the results of its audit of the Developer's New Horne Sales Costs Certificate for one (I) or more Completed New Homes, the Agency may reasonably determine that the amounts set forth in such New Horne Sales Costs Certificate of the Developer is more than ten percent (10%) in excess of the aggregate amount stated by the Developer at the time when such New Horne Sales Costs Certificates are delivered to the Agency or pursuant to the Developer Project Cost Pro Forma, then in such event, in addition to any other sums as may then be payable by the Developer to the Agency, the Developer shall also reimburse the Agency for the reasonable costs the Agency incurred in connection with the Agency's audit of such New Horne Sales Costs Certificates within thirty (30) days following the Agency's written request for such reimbursement. In the event that the Agency may incur third-party audit costs and expense after the date on which final audited financial statement of the Developer for the Project has been submitted to the Agency, which Agency audit may indicate that increases in the costs of the Completed New Homes exceeded the amount specified in the preceding paragraph from deviations from those costs set forth in the New Horne Sales Costs Certificate, the Developer shall also reimburse the Agency for its third-party accounting expenses within thirty (30) days written demand, therefore, from the Agency. ARTICLE VI GENERAL PROVISIONS Section 6.01. Notices. Demands and Communications between the Parties. (a). An. y...an..dall notice.s, demand.so.r.comrn.. ........uru...Cali.o..ns. submitt. ed by.. ;lilY.. p.art.. Y t.o. ;lIl~., e. r.pw.... '. YPi1i"S. lian:t>to or llSreq.' uitedbythis'. Ajlteel\l. <101.....s. .il.lillbepraper, ifinwrltiuIM..arld.' dispatchec1h)'lIlesseflgerfor illlll1ediate personafllelively, or by registered or certiflec1 United States mail, postage prepaid, return receipt requested, to the principal office of the Agency and the Developer, as applicable, as designated in Section 1.05(a) and Section 1.05(b) hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may, from time-to-time, designate as provided in this Section. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is dispatched by messenger for immediate personal delivery, or two (2) calendar days after it is placed in the United States mail, as heretofore provided. 10-1...{)7 GFC Enterprise LLC - SF Inclusionary Housing OPA (Executed Version) 28 (b) In addition to the submission of notices, demands or communications to the parties as set forth above, copies of all notices shall also be delivered by facsimile as follows: To the Developer: GFC Enterprises, LLC Attn.: Chuck Crowell, Vice President 434 North Second Avenue Upland, California 91786 Fax: (909) 949-6091 To the Agency: Redevelopment Agency of the City of San Bernardino Attn.: Maggie Pacheco, Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 Fax: (909) 663-2294 Section 6.02. Conflict of Interest. No member, official or employee of the Agency having any conflict of interest, direct or indirect, related to this Agreement, or in the development of the Site, shall participate in any decision relating to this Agreement. The parties represent and warrant that they do not have knowledge of any such conflict of interest. Section 6.03. Warrantv against Payment of Consideration for Agreement. The Developer warrants that it has not paid or given, and will not payor give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section, shall not include persons to whom fees are paid for professional services if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer. Section 6.04. Nonliabilitv of Agencv Officials and Emplovees. No mYJUj)er,pffieial or employee pf.Ute Agency Shallbej)e~Q!J.ally liaj)leto. th~ Developer, or any successor-in-interest, in the event of any default or breach by the Agency or for any amount which may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement, except for gross negligence or willful acts of such member, officer or employee. Section 6.05. Enforced Delav: Extension of Time of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, or considered to be a default, where delays or defaults are due to the force majeure events of war, terrorism, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes or lack of transportation, weather-caused delays, inability to secure necessary labor, materials or tools, delays of any contractors, subcontractor or 10-1-07 GFC Enterprise LLC - SF Inclusionary Housing OPA (Executed Version) 29 . . supplier, which are not attributable to the fault of the party claiming an extensiou of time to prepare or acts or failure to act of any public or govermnental agency or entity (provided that acts or failure to act of the City or the Agency shall not extend the time for the Agency to act hereunder except for delays associated with lawsuit or injunction including, but without limitation, to lawsuits pertaining to the approval ofthe Agreement, and the like). An extension of time for any such force majeure cause shall be for the period of the enforced delay and shall commence to run from the date of occurrence of the delay; provided, however, that the party which claims the existence of the delay has first provided the other party with written notice of the occurrence of the delay within ten (10) calendar days after the commencement of such occurrence of delay. The inability of the Developer to obtain a satisfactory commitment from a construction lender for the improvement of the Project or to satisfy any other condition of this Agreement relating to the redevelopment of the Project, if applicable, shall not be deemed to be a force majeure event or otherwise provide grounds for the assertion of the existence of a delay under this Section 6.05. The parties hereto expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of any of them which may have provided a basis for entering into this Agreement and which occur at any time after the execution of this Agreement, are not force majeure events and do not provide any party with grounds for asserting the existence of a delay in the performance of any covenant or undertaking which may arise under this Agreement. Each party expressly assumes the risk that changes in general economic conditions or changes in snch economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such party uuder this Agreement, but that such inconvenience or hardship is uot a force majeure event and does not excuse the performance by such party of its obligations under this Agreement. Section 6.06. Inspection of Books and Records. The Agency shall have the right, at all reasonable times, at the Agency's cost and expense, to inspect the books and records of the Developer pertaining to the Project, as necessary for the Agency, in its reasonable discretion, to enforce its rights under this Agreement. Matters discovered by the Agency shall not be disclosed to third parties unless required by law or unless otherwise reSll!hUI;\ Ir?rn orreIat~ 10 the pursuit of aIlyremedies orthe<\SSrtli\?!li".faJ])~ rig!Its of the Agency he",under:The Developer shall also have the right, atalhi,<\Soj!l\bletiInes, to inspect the books and records of the Agency pertaining to the Site and/or the development thereof, as pertinent to the purposes of this Agreement. Section 6.07. Approvals. (a) Except as otherwise provided in this Agreement, approvals required of the Agency or the Developer, or any officers, agents or employees of either the Agency or the Developer, shall not be unreasonably withheld and approval or disapproval shall be given within the time set forth in the Schedule of Performance or, if no time is given, within a reasonable amount of time. !0-!-{)7 GFC Entcrprlse LLC - SF 'nclus;onary Housing OPA (Executed Version) 30 . (b) The Executive Director of the Agency is authorized to sign on his or her own authority, all escrow documents and other documents on behalf of the Agency, as necessary for the Agency to perform its obligations under this Agreement, and the Executive Director of the Agency is further authorized to execute on behalf of the Agency, amendments to this Agreement which are of routine or technical nature, including minor adjustments to the Schedule of Performance. Section 6.08. Real Estate Commissions. The Agency shall not be liable for any real estate commissions, brokerage fees or finder fees, which may arise or be purported to arise from or related to this Agreement. Section 6.09. Indemnification. The Developer agrees to indemnify and hold the City, the Agency, and the elected officers, officials, employees, attorneys and agents of either of them, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission of the Developer in performing its obligations hereunder; provided, however, that such obligation of the Developer to indemnify the City and the Agency and the elected officers, officials, employees, attorneys and agents of either of them shall not apply to any matter arising from the negligence or willful misconduct of the City or the Agency or the elected officers, officials, employees, attorneys or agents of either of them. The Agency agrees to indemnify and hold the Developer and its officers, employees and agents, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission ofthe Agency in performing its obligations hereunder; provided, however, that such obligation of the Agency to indemnify the Developer and its officers, employees, and agents shall not apply to any matter arising from the negligence or willful misconduct of the Developer, its officers, employees and agents. Section 6.10. Attornevs' Fees. If either party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, or is made a party to any action or proceeding brought by the Escrow H.older.or a third party, then as between the Developerand.theAg~llcy, the prevailing partyshallbeep,tit1ed to recpver,as anel<>lllent of its costs of sJ,lit,aIt9.ll"tas ~!ls,its reasonable attorneys' fees as fixed by the Court in such action or proceedil1g or in a seParate action or proceeding brought to recover such attorneys' fees. For the purposes hereof, the words "reasonable attorneys' fees" mean and include, in the case of the Agency, salaries and expenses of the lawyers employed by the Office of the City Attorney (allocated on an hourly basis) who may provide legal services to the Agency in connection with the representation of the Agency in any such matter. Section 6.1 \. Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns. 10-)...07 GFC Enterprise LLC - SF Indusionary Housing OPA (Executed Version) 31 . ARTICLE VII ENTIRE AGREEMENT. WAIVERS AND AMENDMENT Section 7.01. Entire Agreement. (a) This Agreement shall be executed in three (3) originals, each of which is deemed to be an original. This Agreement includes thirty-three (33) pages and one (I) Exhibit, which constitutes the entire understanding and agreement of the parties. (b) All waivers of the provisions of this Agreement and all amendments hereto must be in writing and signed by the appropriate representations of the Agency and the Developer. 10-1-07 GFC Enterprise LLC - SF Inclusionary Housing OPA (Executed Version) 32 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the dates set forth below. AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Dated: 1!lyj08 o;/71? ~~ Maggie Pacheco, Executive Director Approved as to Form and Legal Content: By ~~f!J- DEVELOPER GFC Enterprises LLC, a California limited liability company Dated: /-/,f/-,?Ji3' BY~ Chuck Crowell, Vice President 481] -1676-0578.1 3119107ct 33 C\Documcnt. and Sclting,\marogundodc\Local Sclling,\T cmp",ary Inlernel FLlo,\OLK 161\ I O. 1_07GFCEnlcrpriscLLc.SFlnclusionaryl lousingOr A.doc EXHIBIT "A" FORM OF AFFORDABILITY COVENANT 10-1-07 GFC Enterprise LLC - SF Inc\usionary HousingOPA (Executed Version) 34 GENERAL FORM OF HOMEBUYER ASSISTANCE PROGRAM (HAP) AFFORDABLE HOUSING COVENANT (Redevelopment Agency of the City of San Bernardino) THIS DOCUMENT IS PRESENTED IN GENERAL FORM. The final form of this Affordable Housing Covenant shall be completed and executed by the "Qualified Homebuyer" and the Agency at the time of close of the "New Home Escrow," as each of these items are defined in this Affordable HousinQ Covenant. 4839-9390-0544.1 10-01-Q7GFC Enterprises LLC- CC&R (Exhibit A) 10/25{2oo5 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: Executive Director (Space Above Line Reserved For Use By Recorder) RECORDATION OF THIS INSTRUMENT IS EXEMPT FROM ALL FEES AND TAXES REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO COMMUNITY REDEVELOPMENT LAW HOUSING AFFORDABILlTY COVENANTS AND RESTRICTIONS FOR THE AGENCY HOMEBUYER ASSISTANCE PROGRAM ( ) [0 Agency HAP Program] [0 Agency HOME Program] [Agency Staff to check one of the two (2) boxes indicated above, prior to execution of the Affordable Housing Covenant by the Qualified Homebuyer] THESE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO COMMUNITY REDEVELOPMENT AFFORDABLE HOUSING COVENANTS AND RESTRICTIONS (the "A..fforda~le HOt.lsinQ Coy~nant") is made and entered into as of l1Y~Jl~tPelWlil(,Jnt~Uf!t~j:f)~lil.;~Al\,11~NTAGSl'lCYOF THE:S1TY OF SAN B[RNAR01NO,ap\JbHc bodycotporate and politic (the "Agency"), and (the "Qualified Homebuyer"), and this Affordable Housing Covenant relates to the following facts set forth in Recitals: -- RECITALS --- 4839-9390-0544.1 1 1Q-01..{J7 GFC Enterprises LLC- CC&R (Exhibit A) 10/25/2005 ... A. The Qualified Homebuyer proposes to acquire a single-family residence (the "New Home"), located within the City of San Bernardino (the "City"), from , to be owned and occupied by the Qualified Homebuyer as their principal residence. The legal description of the New Home is attached hereto as Exhibit "A" and incorporated herein by this reference. B. The Agency has entered into that certain Qualified Homebuyer Mortgage Loan Assistance Agreement, dated , (the "Agency Loan Agreement") with the Qualified Homebuyer, pursuant to which the Agency has agreed to provide the Qualified Homebuyer with certain purchase money mortgage financing for the acquisition of the New Home; subject to certain conditions, including the terms and conditions of this Affordable Housing Covenant. The Agency Loan Agreement indicates whether the Qualified Homebuyer is subject to the affordable housing program requirements of the Agency's "HAP Program" or the Agency's "HOME Program", as each of these terms are indicated in Recital Paragraph C of the Agency Loan Agreement; and C. The terms of the Agency Loan Agreement mandate that the acquisition, use and occupancy of the New Home shall be restricted in certain respects for the term as provided herein (the "Qualified Residence Period") in order to ensure that the New Home will be used and occupied in accordance with the Agency Loan Agreement and the affordable single family residential dwelling unit development goals and objectives of the Agency. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND UNDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE QUALIFIED HOMEBUYER AND THE AGENCY DO HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS AS FOLLOWS: Section 1. Definitions of Certain Terms. As used in this Affordable Housing Covenant, the following words and terms shall have the meaning as provided in the Recitals or in this Section 1 unless the specific context of usage of a particular word or term m<:iY otherwise require: Adjusted FaiTlilylncoiTle. The Words "Adjusted Family Income" mean "gross income" as this term is defined in 25 California Code of RegUlations Section 6914 for the total annual income of each individual or family residing or treated as residing in the New Home if the Agency Loan Agreement is subject to the HAP Program, or if the Agency Loan Agreement is subject to the HOME Program, the words "Adjusted Family Income" means "adjusted income" as this term is defined in 24 CFR Part 92.203(b)(3) for the total annual income of each individual or family residing or treated as residing in the New Home. 4839-9390-0544.1 2 10-01-07 GfC Enterprises LLC- CC&R (Exhibit A) 10/2512005 Affordable Housing Cost. The words "Affordable Housing Cost" shall have the meaning as set forth in Health and Safety Code Section 50052.5 as this section may hereafter be amended from time-to-time by the State of California if the Agency Loan Agreement is subject to the HAP Program. At the time of the close of the New Home Escrow, or later when a proposed Successor-In-Interest acquires the New Home, the amount of the maximum Affordable Housing Cost payable in connection with the acquisition of the New Home at any time during the Qualified Residence Period shall be calculated as set forth in Health and Safety Code 50053.5(b)(1) or (2), as applicable. If the Agency Loan Agreement is subject to the Agency's HOME Program, then the words "Affordable Housing Cost" shall mean and refer to the housing affordability requirements set forth under 24 CFR Part 92.254(a)(2) for the Qualified Homebuyer and the Successor- In-Interest of the Qualified Homebuyer. Affordable Housing Covenant. The words "Affordable Housing Covenant" mean these Redevelopment Agency of the City of San Bernardino Community Redevelopment Law Housing Affordability Covenants and Restrictions by and between the Qualified Homebuyer, and the Agency pertaining to the New Home. Code. The word "Code" means the Internal Revenue Code of 1986, as amended, and any regulation, rulings or procedures with respect thereto. Delivery Date. The words "Delivery Date" mean the date of delivery of title and possession of the New Home to the Qualified Homebuyer at the close of the New Home Escrow. Low-Moderate Income Household. The words "Low-Moderate Income Household" mean and refer to persons and families whose income does not exceed 120 % percent of area median income, adjusted for family size, as set forth in Health and Safety Code Section 50093, as such section may be amended from time to time if the Agency Loan Agreement is subject to the Agency's HAP Program. If the Agency Loan Agreement is subject to the Agency's HOME Program, then the words "Low-Moderate Income Household" mean and refer to "19"" income families" as thister91isdEiifinEl(j at 24 CFR Pa~ 92.29riNhe prQ\lisionsof 24<CFRPart 9.2.2 aredispontigu!Jij,thl'ln tMewgrdli "Low-'Moderate Income Household" shall mean and refer to "lower income households" as this term is defined in Health and Safety Code Section 40019.5, as this section may be hereafter amended from time to time by the State of California. Notwithstanding the two (2) preceding sentences in the event that the seller of the New Home identified in Recital Paragraph A of this Affordable Housing Covenant is a participant with the Agency under the terms of an agreement entitled "Acquisition, Rehabilitation, Resale (ARR) Agreement," then in such event the permitted income level for a Low-Moderate Income Household shall not exceed 115% of area median income adjusted for family size. 4839-9390-0544.1 3 1 Q-01..(J7 GFC Enterprises LLC- CC&R (Exhibit A) 10125/2005 New Home. The words "New Home" mean and refer to the affordable single- family residential dwelling unit (including the land and landscape improvements thereon) as acquired by the Qualified Homebuyer upon the close of the New Home Escrow. A legal description of the New Home is attached to this Affordable Housing Covenant as Exhibit "A." New Home Escrow. The words "New Home Escrow" mean and refer to the real estate conveyance transaction or escrow by and between the Qualified Homebuyer and the seller of the New Home (or later, by and between the Qualified Homebuyer and the Successor-In-Interest). The transfer of the New Home to the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest) shall be accomplished upon the close of the New Home Escrow. Notice of Agency Concurrence. The words "Notice of Agency Concurrence" mean and refer to the acknowledgment in recordable form in which the Agency confirms that the proposed Successor-In-Interest of the Qualified Homebuyer satisfies all of the Adjusted Family Income and other requirements of this Affordable Housing Covenant for occupancy of the New Home by the Successor- In-Interest at any time during the Qualified Residence Period. Qualified Homebuyer. The words "Qualified Homebuyer" mean the purchaser of the New Home (e.g.: all persons identified as having a property ownership interest vested in the New Home at the close of the New Home Escrow). At the close of the New Home Escrow, the Qualified Homebuyer shall: (I) have an annual Adjusted Family Income which does not exceed the household income qualification limits of a Low-Moderate Income Household under the Agency HAP Program or the Agency HOME Program, as applicable; (ii) shall be a first-time homebuyer, as this term is defined in Health and Safety Code Section 50068.5 unless this requirement has been waived by the Agency; and (iii) pay no more than an Affordable Housing Cost for the New Home pursuant to the terms of the purchase transaction for the New Home, including all sums payable by the Qualified Homebuyer for its purchase money mortgage financing, insurance, escrow and other fees and costs. Qualified,Residence Period. The words "Qualified Residence Period" mean the period of time beginning on the Delivery Date and ending on the date which is forty-five (45) years after the Delivery Date. Successor-In-Interest. The words "Successor-In-Interest" mean and refer to the person, family or household which may acquire the New Home from the Qualified Homebuyer at any time during the Qualified Residence Period by purchase, assignment, transfer or otherwise. The Successor-In-Interest shall 4839-9390-0544.1 4 1()..Q1~07 GFC Enterprises LlC- CC&R (Exhibit A) 1 0/2512005 have an income level which does not exceed the maximum income level for a Low-Moderate Income Family as applicable to the Qualified Homebuyer under the Agency Loan Agreement and the Successor-In-Interest shall agree to occupy the New Home as its principal residence. Low-Moderate Income Household. Upon acquisition of the New Home the Successor-In-Interest shall be bound by each of the covenants, conditions and restrictions of this Affordable Housing Covenant. The titles and headings of the sections of this Affordable Housing Covenant have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict the meaning any of the terms or provisions hereof. Section 2. Acknowledqments and Representations of the Qualified Homebuver. The Qualified Homebuyer hereby acknowledges and represents that, as of the Delivery Date: (a) the total household income for the Qualified Homebuyer does not exceed the maximum amount permitted as Adjusted Family Income for a Low-Moderate Income Household; (b) the Qualified Homebuyer intends to promptly occupy the New Home after the Delivery Date as the principal place of residence for the term of the Qualified Residence Period and the Qualified Homebuyer has not entered into any arrangement and has no present intention to rent, sell, transfer or assign the New Home to any third party during the Qualified Residence Period so as to frustrate the purpose of this Affordable Housing Covenant; (c) the Qualified Homebuyer has no present intention to lease or rent any room or sublet or rent a portion of the New Home to any relative of the Qualified Homebuyer or to any third person at any time during the Qualified Residence Period; , (d) the Qualified Homebuyer agrees to provide the Agency with the ff;ltl0wing items of information for inspection by the Agency promptly upon written request of the Agency: (i) State and federal income tax returns filed by all persons who reside in the New Home for the calendar year preceding the close of the New Home Escrow for inspection of such State and federal income tax returns; 4839.-9390-0544.1 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 10/2512005 5 (ii) current wage, income and salary statements for all person residing in the New Home at the close of the New Home Escrow; (e) the Qualified Homebuyer that this Affordable Housing Covenant imposes certain restrictions on the use and occupancy of the New Home during the term of this Affordable Housing Covenant and that this Affordable Housing Covenant imposes certain restrictions on the resale of the New Home during the Qualified Residence Period, including without limitation, the "Resale Profit" payment to the Agency as provided in Section 6 of this Affordable Housing covenant in the event that the Qualified Homebuyer sells or transfers the New Home to a person or household which does not qualify as a Successor-In-Interest to the Qualified Homebuyer. The Qualified Homebuyer acknowledges and understands that the resale restrictions of this Affordable Housing Covenant shall be applicable to the New Home and to any resale of the New Home from the Delivery Date to the end of the Qualified Residence Period which is Dated: Initials of Qualified Homebuyer (f) the sum payable each month by the Qualified Homebuyer following the close of the New Home Escrow as principal and interest due the First Mortgage Lender referenced in Section 3, plus property taxes, and property casualty insurance for the acquisition of the New Home does not exceed the Affordable Housing Cost for the household. Section 3. Acknowledqment of Subordination of the Provisions of this Affordable Housinq Covenant to the Mortqaqe Security Interest of the First Mortqaqe Lender. Concurrently upon the execution and recordation of this Affordable Housing Covenant the Qualified Homebuyer shall obtain certain purchase money mortgage financingf~rthe acqllis.itiqn ofth.~ NeVi HOI1]~ froITI. . (the "FkstM~rt9~~!!&~n<lIlr") and;".;l.'St,l":l(1!"dirjate:;pl;l!'~;:t$e...lTlqney.'mql1g~l3fin.ancingloan,,'fl'@lJ!~ll.!1!:~g~!,!~j?'i/le amount of Dollars {$ ). The subordinate loan of the Agencyto'tfte.Qualifled Homebuyer is referred to in the Affordable Housing Covenant as the "Agency Loan". As of the Delivery Date Qualified Homebuyer has provided the Agency with a true and correct copy of the loan agreement by and between the First Mortgage Lender and the Qualified Homebuyer. 4839-9390-0544.1 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 1012512005 6 As a condition to providing its mortgage loan to the Qualified Homebuyer, the First Mortgage Lender requires the Agency to agree that the provisions of this Affordable Housing Covenant shall be junior and subordinate to the security interest of the First Mortgage Lender in the New Home of even date herewith. The Agency hereby acknowledges and agrees that the proVIsions of this Affordable Housing Covenant are subordinate and junior to the security interest of the First Mortgage Lender in the New Home of even date herewith. No breach or default by the Qualified Homebuyer of any provision of this Affordable Housing Covenant, nor the exercise by the Agency of any remedy it may have against the Qualified Homebuyer in the event of such a breach or default under the Agency Loan or this Affordable Housing Covenant shall affect or render invalid the lien of the First Mortgage Lender in the New Home. Thus, the First Mortgage Lender and any good faith purchaser for value from the First Mortgage Lender, its successors and assigns, including without limitation the United States Secretary of Housing and Urban Development or the California Housing Finance Agency, if such mortgage has been assigned to the Secretary of Housing and Urban Development or the California Housing Financing Agency, as applicable, receiving title to the New Home through a trustee's sale, judicial foreclosure sale, deed in lieu of foreclosure and any conveyance or transfer thereafter, shall receive title to the New Home free and clear of the provisions of this Affordable Housing Covenant. Section 4. Covenant of the Qualified Homebuver to Maintain Affordabilitv of the New Home Durinq the Qualified Residence Period and Covenant Relatinq to Sale or Transfer of the New Home Durinq the Qualified Residence Period to a Successor-In-Interest. (a) The Qualified Homebuyer for itself, its heirs, successors and assigns, hereby covenants and agrees that during the term of the Qualified Residence Period the New Home shall be used and, occupied by the Qualified Homebuyer as its principal residence, and that the New Home shall be reserved for sale, use and occupancy by the Qualified Homebuyer and/or for another Low-Moderate Income Household as a Successor-In-Interest at an Affordable Housing Cost. The Qualified Homebuyer, for itself, it;; heirs, succe;;~?rs and assigns, further covenants ancl <!flrees JI1!it, dll~infl the Ql'laJifi<<@Residef;\qe~~!'il)pi..the.Agengyshall.1\..'tethe.rightaB!ili!'l~'.~$,,\.ll'<?vl~~,il"ltl;lis Section 4 to verify that each proposed Successopln.Jnterestofcttle€lualified Homebuyer in the New Home satisfies the income requirements and Affordable Housing Cost limitations of a Low-Moderate Income Household (based upon the Adjusted Family Income of each household) and that the completion of any resale or transfer of the New Home to a Successor-In-Interest shall be subject to the recordation of the "Notice of Agency Concurrence" as provided in Section 4(d). (b) The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that during the term of the Qualified Residence Period the Qualified Homebuyer shall not sell, transfer or otherwise dispose of the New Home (or any interest therein) to a Successor-in-Interest without first giving written notice to the 4839-9390-0544.1 7 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 10/2512005 Agency and without first obtaining the written concurrence of the Agency as provided herein. At least sixty (60) days prior to the date on which the Qualified Homebuyer proposes to transfer title in the New Home to a Successor-In-Interest, the Qualified Homebuyer shall send a written notice to the Agency as provided in Section 17 of the intention of the Qualified Homebuyer to sell the New Home to a Successor-In-Interest which includes the following true and correct information: (i) name of the proposed Successor-In-Interest (including the identity of all persons in the household of the Successor-In-Interest, proposing to reside in the New Home) together with a completed Agency HAP Program or Agency HOME Program application, as applicable, executed by the proposed Successor-In-Interest; (ii) copies of State and federal income tax returns for the Successor-In- Interest for the calendar year preceding the year in which the notice of intention to sell the New Home is given to the Agency; (iii) resale price of the New Horne payable by the Successor-In-Interest, including the terms of all purchase money mortgage financing to be assumed, provided or obtained by the Successor-In-Interest, escrow costs and charges, realtor broker fees and all other resale costs or charges payable by either the Qualified Homebuyer or the Successor-I n-Interest; (iv) name address, and telephone number of the escrow company which shall coordinate the transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest; (v) appropriate mortgage credit reference for the Successor-In-Interest with a written authorization signed by the Successor-In-Interest authorizing the Agency to contact each such reference; and such other relevant information as the Agency may reasonably request, as provided in Section 4(c). (C)'<<1!!'lII1'~i~(~Q)d\iiy!>f0110Wi!iTgt!;l~i~t!"lft~,~'H'l~!i~~f'lat~dtion~s~~ib~d in S~ctidn4(u),thi'!"A~ency shall providetheQualifiedHom~bi::iyer witheitliera preliminary confirmation of approval or a preliminary rejection in writing of the income and household occupancy qualifications of the Successor-in-Interest. The Agency shall not unreasonably withhold approval of any proposed sale of the New Home to a Successor-In-Interest who satisfies the Adjusted Family Income and the Affordable Housing Cost requirements for occupancy of the New Home and for whom the other information as described in Section 4(b) has been provided to the Agency. In the event that the Agency may request additional information relating to the confirmation of the matters described in Section 4(b), the Qualified Homebuyer shall provide such information to the Agency as promptly as feasible. 4839-9390..0544.1 8 1 0-O1~07 GFC Enterprises LLC- CC&R (Exhibit A) 1012512005 (d) Upon its final confirmation of approval of the Adjusted Family Income and Affordable Housing Cost eligibility of the Successor-In-Interest to acquire the New Home, the Agency shall deliver a written acknowledgment and approval of the resale of the New Home to the Successor-In-Interest in recordable form to the escrow holder referenced in Section 4(b)(iv) above, and thereafter the Successor-In-Interest may acquire the New Home subject to the satisfaction of the following conditions: (i) the recordation of the Notice of Agency Concurrence executed by the Successor-In-Interest and the Agency at the close of the resale escrow; (ii) the escrow holder shall have provided the Agency with a copy of the customary form of the final escrow closing statement of the Qualified Homebuyer and the final escrow closing statement for the Successor-In-Interest; and (iii) the other conditions of the resale escrow as established by the Qualified Homebuyer and Successor-In-Interest shall have been satisfied. (e) The Qualified Homebuyer for itself, its successors and assigns hereby covenants and agrees that during the Qualified Residence Period the New Home shall not be leased, subleased, or rented to any third person, except for a temporary period (not to exceed 12 months) in the event of an emergency or other unforeseen circumstance as may be expressly approved in writing by the Agency subject to compliance during the temporary rental period with the reasonable temporary rental occupancy conditions required by the Agency. The Qualified Homebuyer shall submit a written request to the Agency prior to the commencement of the temporary occupancy, as practicable, but in any event within not more than sixty (60) days following the commencement of a temporary rental occupancy of the New Home by a third party, which notice shall set forth the grounds on which the Qualified Homebuyer believes an emergency or other unforeseen circumstance has occurred and that a temporary rental occupancy is necessary. S~li.~n ~'N,\iI!m~n,G~~~!!,i~~o,f,~l!tF,~:'~ffiJ:1I!. The Qualified Homebuyer, for Itself, Its successars anCl'lISslgns;hereby covenants and agrees that: (a) The exterior areas ofthe New Home which are subject to public view (e.g.: all improvements, paving, walkways, landscaping, and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. I n the event that at any time during the term of the Qualified Residence Period, there is an occurrence of an adverse condition on any area of the New Home which is subject to public view in contravention of the general maintenance standard described above, (a "Maintenance Deficiency") then the Agency shall notify the Qualified Homebuyer in writing of the Maintenance Deficiency and give the Qualified 4839-9390-0544.1 9 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 1012512005 Homebuyer thirty (30) days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. The words "Maintenance Deficiency" include without limitation the following inadequate or non-confirming property maintenance conditions and/or breaches of single family dwelling residential property use restrictions: failure to properly maintain the windows, structural elements, and painted exterior surface areas of the dwelling unit in a clean and presentable manner; failure to keep the front and side yard areas of the property free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not regularly in use on the property; failure to regularly mow lawn areas or permit grasses planted in lawn areas to exceed nine inches (9") in height, or failure to otherwise maintain the landscaping in a reasonable condition free of weeds and debris; parking of any commercial motor vehicle in excess of 7,000 pounds gross weight anywhere on the property, or the parking of motor vehicles, boats, camper shells, trailers, recreational vehicles and the like in any side yard or on any other parts of the property which are not covered by a paved and impermeable surface; the use of the garage area of the dwelling unit for purposes other than the parking of motor vehicles and the storage of personal possessions and mechanical equipment of persons residing in the New Home. In the event the Qualified Homebuyer fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the Agency may thereafter conduct a public hearing following transmittal of written notice thereof to the Qualified Homebuyer ten (10) days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Qualified Homebuyer has f;iile.c::It9'iOmPlywlththepro\iision oft~is~E:lction5(a).. If, upon the concl.u~i()11 o~.a Ji\.'!~~~al!lpg,i~eAg.e~cYm!\l,*l'll;.a.i~Il,~[n..g!;~~~t.li MliintE:lOll.n()El DeficiencYe1\ii~l~!.ia!lj:/ that there appears to be non-'COmpliance with the general maintenance standard, as described above, thereafter the Agency shall have the right to enter the New Home (exterior areas only) and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity the Agency may then have to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the Agency for the abatement of a Maintenance Deficiency as authorized by this Section 5(a) shall become a lien on the New Home. If the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency to the Qualified Homebuyer, the Agency shall have the right to enforce the lien in the manner as provided in Section 5( c). 4839-9390-0544.1 10 10-01-07 GFC Enterprises lLC~ CC&R (Exhibit A) 10/25/2005 (b) Graffiti which is visible from any public right-of-way which is adjacent or contiguous to the New Home shall be removed by the Qualified Homebuyer from any exterior surface of a structure or improvement on the New Home by either painting over the evidence of such vandalism with a paint which has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water as appropriate. In the event that graffiti is placed on the New Home (exterior areas only) and such graffiti is visible from an adjacent or contiguous public right-of-way and thereafter such graffiti is not removed within 72 hours following the time of its application; then in such event and without notice to the Qualified Homebuyer, the Agency shall have the right to enter the New Home and remove the graffiti. Notwithstanding any provision of Section 5(a) to the contrary, any sum expended by the Agency for the removal of graffiti from the New Home as authorized by this Section 5(b) shall become a lien on the New Home. If the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency to the Qualified Homebuyer, the Agency shall have the right to enforce its lien in the manner as provided in Section 5(c). (c) The parties hereto further mutually understand and agree that the rights conferred upon the Agency under this Section 5 expressly include the power to establish and enforce a lien or other encumbrance against the New Home in the manner provided under Civil Code Sections 2924, 2924b and 2924c in the amount as reasonably necessary to restore the New Home to the maintenance standard required under Section 5(a) or Section 5(b), including attorneys fees and costs of the Agency associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the Agency in connection with such action. In any legal proceeding for enforcing such a lien against the New Home, the prevailing path shall be entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 5, shall be a covenant running with the land for the Qualified Residence Period and shall be enforceable by the Agency in its discretion, cumulative with any other rights or powers granted by the Agency under applicable law. Nothing in the foregoing provisions of this Section 5 shall be deemed to preclude the Qualified Homebuyer from making any alterations, additions, or other changes to any structure or improvement or landscaping on the New Home, provided that such changes comply with the zoning and devel()pment regulations of the City and other applicable law. S~ction6. . Protection -of.AqeOCvlnvestrnent of Monevsgerivedl"rorn. the Low-and Mod~rate-Incorne Housinq Fund in the New Home - Aqencv Investrnent Reirnbursement. (a) For the purpose of this Section 6, the following terms shall have the meaning as provided below: 4839-9390-0544.1 11 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 10/2512005 "Agency Investment Reimbursement" means and refers to a portion of the Resale Profit, if any, which shall be payable to the Agency upon the sale or transfer of the New Home during the Qualified Residence Period to a person or household which does not qualify as a Successor-In-Interest to the Qualified Homebuyer. The formula for calculation the amount of the Agency Investment Reimbursement which may hereafter be payable to the Agency during the Qualified Residence Period is set forth in this Section 6. In the event that the application of the formula for determining the Agency Investment Reimbursement in any particular year during the term of the Qualified Residence Period may produce a sum which is Zero Dollars ($0) or less than Zero Dollars ($0), then in such event no Agency Investment Reimbursement amount shall be payable by the Qualified Homebuyer to the Agency. "Costs at Eligible Capital Improvements" means and refers to any substantial and permanent structural improvements to the New Home which are made to the New Home completed and paid for by the Qualified Homebuyer after the Delivery Date which satisfy all of the following conditions: (i) the improvements are made or installed and conform with all applicable provisions of the San Bernardino Municipal Code and for which the City has issued building permits; (ii) the particular improvement is recognized under the Code as a capital improvement; (iii) if the total amount of Eligible Capital Improvements made by the Qualified Homebuyer exceeds the sum of Five Thousand Dollars ($5,000) in any calendar year, the Qualified Homebuyer has given the Agency prior written notice of its intention to make such capital improvements to the New Home; (iv) the particular capital improvement shall exceed the sum of Two Thousand Dollars ($2,000) in value, as installed in the New Home; and (v) the Qualified Homebuyer has provided suitably detailed written evidence to the Agency of the actual cost of the particular capital improvement to the New Home. "Purchase Money Mortgage" means the original balance on the Delivery Date of the New Home mortgage provided to the Qualified Homebuyer by the conventional mortgage lender (e.g., the First Mortgage Lender identified in Section 3, above), plus the original outstanding balance of the Agency Loan also identified in Section 3, above. "Qualified Homebuyer Equity" means the downpayment amount in cash paid by the Qualifieq Homebuyer for the New Hom!,! Onthe Delivery Date (!'!.~.: the !,!quity or "ba~i~" ~s deftntXl underth!,! Code, nelot the purchase Money Mort9<llJe .of the911aIifi.ed Homebuyer in the New Home), plus the reduction, if any, of the outstanding principal balance of the Purchase Money Mortgage secured by the New Home through the date of the resale of the New Home. "Resale Price" means the total consideration paid by the Successor-In-Interest, including real estate broker fees and commissions for the purchase of the New Home, but excluding escrow fees and mortgage financing costs payable or otherwise allocated to the Successor-In-Interest in connection with the transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest. 4839-9390-0544.1 1 2 10-01-07 GFC Enterprises LLG- CC&R (Exhibit A) 10/25/2005 "Resale Profit" means the balance of the following calculation: (Resale Price)-(Purchase Money Mortgage)-(Qualified Homebuyer Resale Cost Adjustment Factor + Costs of Eligible Improvements )=Resale Profit. Equity + Capital A portion of the Resale Profit shall be payable to the Agency by the Qualified Homebuyer in accordance with Section 5(b). "Resale Cost Adjustment Factor" means one of the following sums determined by reference to the number of years which have elapsed between the Delivery Date and the date on which the resale and transfer of the New Home to the Successor-In-Interest occurs: Date of Resale of New Home after the Delivery Date: From the Delivery Date to the 5th anniversary after Delivery Date From and including the 5th anniversary to the 10th anniversary after Delivery Date Resale Cost Adjustment Factor: $2,000 $5,000 From and including the 10th anniversary to the end of the Qualified Residence Period $10,000 (b) The Agency has used and applied certain moneys from the Low-and Moderate-Income Housing Funds of the Agency to assist with the development of the New Home. In the event that the New Home may be sold, assigned, conveyed or otherwise transferred by the Qualified Homebuyer during the term of the Qualified Residence Period to a person or household whose Adjusted Family Income at the time ofciose of the NeY{ HomeEscro~ f9r~l.Jyh13 p!lrson or family, e~Cfl~cls the inC()mel!lyel tor'l3Low or Mgd!lI'J3!!l.lnll()l1n!lil]lQ~~~r;t,.a pi:lrtionof the ~!l$131~"'fil;eoft~fl.!!lw Home in excess otthesurn of the QU€lrified Homebuyer Equity, plus the applicable Resale Cost Adjustment Factor, the Cost of Eligible Capital Improvements, after the applicable amount of the Purchase Money Mortgage has been paid to the First Mortgage Lender and the Agency (e.g.: the "Resale Profit" amount) shall be payable to the Agency as the Agency Investment Reimbursement in accordance with Health and Safety Code Section 33334.3(f), and as provided in this Section 6. 4839-9390-0544.1 13 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 1012512005 (c) In the event that, at any time during the Qualified Residence Period, the Qualified Homebuyer (or any Successor-in-Interest) may sell, assign. conveyor othelWise transfer the New Home to a person or household whose Adjusted Family Income exceeds the income level for a Low or Moderate Income Household, a portion of the Resale Profit realized by the Qualified Homebuyer shall be payable to the Agency as the "Agency Investment Reimbursement" in the amounts as follows: Date of Resale of New Home After Delivery Date From the Delivery Date to the 2nd anniversary after the Delivery Date From the 2nd anniversary to the 10th anniversary after the Delivery Date From the 10th anniversary to end the 20th anniversary after the Delivery Date From the 20th anniversary to the 30th anniversary after the Delivery Date From the 30th anniversary after the Delivery Date to the end of the Qualified Residence Period Portion of Resale Profit Payable to Agency from Resale of New Home 90% of Resale Profit is Agency as Agency Reimbursement payable to Investment 75% of Resale Profit is Agency as Agency Reimbursement payable to Investment 50% of Resale Profit is Agency as Agency Reimbursement payable to Investment 25% of the Resale Profit is payable to the Agency as Agency Investment Reimbursement 10% of the Resale Profit is payable to the Agency as Agency Investment Reimbursement (d) Two (2) examples of the application of the formula described above as "Resale Profit" to determine the amount of the Agency Investment Reimbursement payable on the date of a hypothetical resale of the New Home arepr~sented CIS follows: EXAMPLE A: Resale to a purchaser whos~ Adjusted Pamilylncomeexce~ds the income level of a Low or Moderate Income Household or to a purchaser who will not live in the New Home as a principal residence: Assume that on the Delivery Date the purchase price of the New Home paid b~ the Qualified Homebuyer was $290,000 and that the resale occurs on the 7 anniversary following the Delivery Date; Assume the Resale Price of the New Home is $400.000; 4839-9390-0544.1 14 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 10/25/2005 . Assume that Qualified Homebuyer Equity as of the date of the resale is $23,500; and Assume that the Costs of Eligible Capital Improvements as of the date of the resale is $6,000: EXAMPLE A CALCULATION OF RESALE PROFIT: $400,000' - $302,8502 - ($23,5003 + $5,0004 + $6,0005) = $62,6506:Resale Profit (SEE ALSO FOOTNOTES, BELOW). The Agency Investment Reimbursement amount under Example A payable at close of the resale escrow in this hypothetical example is $46,988 (e.g., 75% of $62,650) EXAMPLE B: Resale to a purchaser who the Agency has approved as a Successor-In- Interest (e.g., a purchaser whose Adjusted Family Income DOES NOT exceed the income level of a Low or Moderate Income Household and who will reside in the New Home as their principal residence): Assume same facts as in Example A and that the Successor-In-Interest also pays no more than an Affordable Housing Cost for the New Home at a resale price of $322,000 on the 7th anniversary date following the Delivery Date; EXHIBIT B CALCULATION OF RESALE PROFIT: No Agency Reimbursement is payable to Agency as the Successor-In-Interest is a Low or Moderate Income Household in this hypothetical sale and pays to the Qualified 1 The Resale Price of the New Home to the Successor-In-Interest in Example A. 2 The Purchase Money Mortgage amount ($200,000 conventional mortgage) plus $85,000 Agency HAP Program, plus $17,850 of deferred interest payable to the Agency under the Agency Loan for seven (7) years following the Delivery Date. 3 The Qualified Homebuyer Equity in the New Home ($5,000 cash down payment plus a $10,000 reduction <If outsjanding princip.,1 balance on the First Mortg.,gel-enderJoan). 4 The Resale Cost Adjustment Factor in the 7th year following the Delivery Date. 5 The aggregate amount of Costs of Eligible Capital Improvements is $6,000 in this example. 6 The Resale Profit of $62,650 is subject to a 75% allocation to pay the Agency Investment Reimbursement, or $46,988 payable to the Agency (as provided in Section 6(b)). The seller of this New Home could retain only $15,662 of the "Resale Profit" in this example since the purchaser is nol a Low or Moderate Income person or household. However, the portion of the "Resale Profit," if any, allocated to the seller in this example would be in addition to the seller's recapture of its equity in the New Home, plus the Costs of Eligible Capital Improvements which in this particutar example is a total sum of $34,500 payable to the seller. Thus in this example, the seller's total cash realized at time of this hypothetical sale would be $50,162. (See also Footnote NO.3 and Footnote No.4, above) 4839-9390-0544.1 15 10-01-07 GFC Enterprises lLC~ CC&R (Exhibit A) 10/2512005 Homebuyer no more than Affordable Housing Cost for its purchase of the New Home. In this example, the seller of the New Home could retain the full amount of the Resale Profit. Also note that in this example, the Successor-In-Interest's "Qualified Homebuyer Equity" will be an adjusted amount which reflects the Successor-In-Interest's new mortgage and equity basis in the New Home based upon its $322,000 purchase price for purposes of determining whether an Agency Reimbursement amount may be payable by such Successor-In-Interest in any future resale transaction during the remaining thirty eight (38) years of the term of the Qualified Residence Period. (e) The sole source of funds of the Qualified Homebuyer to pay the Agency the Agency Reimbursement Agreement, shall be from the Resale Profit amount, if any, realized at the time of resale to a purchaser whose Adjusted Family Income exceeds the income level of a Moderate Income Household. In the event that the applicable amount of the Agency Loan is paid in full to the Agency at the time of resale of the New Home to a person or household which does not qualify as a Successor-In-Interest, the Agency shall cause to be recorded concurrently with the resale of the New Home to such person, a notice of release of the following provisions of this Affordable Housing Covenant: Section 2, Section 3, Section 5 Section 7 Section 7. Foreclosure of Purchase Monev Morlqaqe Loan of the First Morlqaqe Lender and Aqencv Riqht of First Refusal. (a) During the Qualified Residence Period the Agency shall have the right (but not the obligation) to bid on the purchase of mortgage loan lien of the First Mortgage Lender secured by the New Home at the time of any trustee foreclosure sale or any judicial foreclosure sale. (b) During the Qualified Residence Period the Agency shall have the right of first refusal to purchase the New Home from the Qualified Homebuyer on the same terms which the Qualified Homebuyer may propose to offer the New Home for resale to aSuc:cess()r-ln-l~t~r~st. ~heAgencymust .!lxer~is~suc~ a riQ~tof~rstf~f\ls~1 ~i.~\1in tl1irty(~ldC\Ys'f~llli1)Nil1g .VI'fitten.notifiCGltion' ofthe..int\l!lti~flofthe.~~j~~~/'f;!9m~l'l~~~f to resell the New Home. and if the Agency apcepts theoff!lLin writingNlllthinsuch'lirne period the Agency shall be bound to complete the purchase of the New Home strictly in accordance with the offer. Thereafter the Agency shall pay the "resale price" to the Qualified Homebuyer and close an escrow for the transfer of the New Home to the Agency within sixty (60) days following written notification of the intention of the Qualified Homebuyer to resell the New House. 4839-9390-0544.1 16 10-01-07 GFC Enterprises lLG- CC&R (Exhibit A) 10/2512005 . (c) In the event that the Agency may purchase the New Home under Section 7(b), the Agency shall cause the New Home to be reserved for sale and occupancy by a Successor-In-Interest (e.g., an income qualified purchaser of the New Home who is a person or household of Low- or Moderate-Income). Section 8. Covenants to Run With the Land. The Qualified Homebuyer and the Agency hereby declare their specific intent that the covenants, reservations and restrictions set forth herein are part of a plan for the promotion and preservation of affordable single family housing dwelling units within the territorial jurisdiction of the Agency and that each shall be deemed covenants running with the land and shall pass to and be binding upon the New Home and each Successor-In-Interest of the Qualified Homebuyer in the New Home for the term provided in Section 10. The Qualified Home- buyer hereby expressly assumes the duty and obligation to perform each of the covenants and to honor each of the reservations and restrictions set forth in this Affordable Housing Covenant. Each and every contract, deed or other instrument hereafter executed covering or conveying the New Home or any interest therein shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument. Section 9. Burden and Benefit. The Agency and the Qualified Homebuyer hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Qualified Homebuyer's legal interest in the New Home is affected by the affordable single family dwelling use and occupancy covenants hereunder. The Agency and the Qualified Homebuyer hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the New Home by the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the affordable single family housing development goals and objectives of the Agency and in order to make the New Home available for acquisition and occupancy by the Qualified Homebuyer. Section 10. Term. (a) The provisions of Section 4 and Section 7 of this Affordable Housing Covenant shall apply to the New Home and the Qualified Homebuyer and to each Successor-In-Interest for forty-five (45) years after the Delivery Date. (b) Except as set forth in Section 10(a), all of the other provisions of this Affordable Housing Covenant shall apply to the New Home for a term of forty-five (45) years after the Delivery Date. 4839-9390-0544.1 17 10.01~07 GFC Enterprises LLC- CC&R (Exhibit A) 1012512005 . (c) Any provIsion or section of this Affordable Housing Covenant may be terminated after the Delivery Date upon the written agreement by the Agency and the Qualified Homebuyer (or the Successor-In-Interest in the New Home), if there shall have been provided to the Agency an opinion of special legal counsel that such a termination under the terms and conditions approved by the Agency in its reasonable discretion will not adversely affect the affordable single family housing and development goals and obligations of the Agency. Section 11. Breach and Default and Enforcement. (a) Failure or delay by the Qualified Homebuyer to honor or perform any material term or provision of this Affordable Housing Covenant shall constitute a breach hereunder; provided however, that if the Qualified Homebuyer commences to cure, correct or remedy the alleged breach within thirty (30) calendar days after the date of written notice specifying such breach and shall diligently complete such cure, correction or remedy, the Qualified Homebuyer shall not be deemed to be in default hereunder. The Agency shall give the Qualified Homebuyer written notice of breach specifying the alleged breach which if uncured by the Qualified Homebuyer within thirty (30) calendar days, shall be deemed to be an event of default. Delay in giving such notice shall not constitute a waiver of any breach or event of default nor shall it change the time of breach or event of default; provided, however, the Agency shall not exercise any remedy for an event of default hereunder without first delivering the written notice of breach as specified in this Section 11. Except with respect to rights and remedies expressly declared to be exclusive in this Affordable Housing Covenant, the rights and remedies of the Agency are cumulative with any other right or power of the Agency or the City or other applicable law, and the exercise of one or more of such rights or remedies shall not preclude the exercise by the Agency at the same or different times, of any other right or remedy for the same breach or event of default. In the event that a breach of the Qualified Homebuyer may remain incurred for more than thirty (30) ca.lendar d<!ys fOllowing written notice, as provideda~ove, an event of def<!ult st!alllJe deeOJ.ed ta>hay.e'~Clll.llf$d.. In <ilddition to the reOJ.edi~.IPfQyjsions Of Section 5 as related to a Maintenance Deficiency at the New Home, upon the occurrence of any event of default the Agency shall be entitled to seek any appropriate remedy or damages by initiating legal proceedings as follows: (i) by mandamus or other suit, action or proceeding at law or in equity, to require the Qualified Homebuyer to perform its obligations and covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the Agency; or 4839-9390-0544.1 18 10-01-07 GFC Enterprises LLG- CC&R (Exhibit A) 10/2512005 . (ii) by other action at law or in equity as necessary or convenient to enforce the obligations, covenants and agreements of the Qualified Homebuyer to the Agency. (b) Except as set forth in the next sentence, no third party shall have any right or power to enforce any provision of this Affordable Housing Covenant on behalf of the Agency or to compel the Agency to enforce any provision of this Affordable Housing Covenant against the Qualified Homebuyer or the New Home. The Agency may assign the right and power to enforce the provision of this Affordable Housing Covenant against the Qualified Homebuyer or the New Home as the successor administration agency of the Agency HAP Program to the City of San Bernardino. Section 12. Governino Law. This Affordable Housing Covenant shall be govemed by the laws of the State of California. Section 13. Amendment. This Affordable Housing Covenant may be amended after the Delivery Date only by a written instrument executed by the Qualified Homebuyer (or the Successor-in-Interest, as applicable) and by the Agency. Section 14. Attornev's Fees. In the event that the Agency brings an action to enforce any condition or covenant, representation or warranty in this Affordable Housing Covenant or otherwise arising out of this Affordable Housing Covenant, the prevailing party in such action shall be entitled to recover from the other party reasonable attorneys' fees to be fixed by the court in which a judgment is entered, as well as the costs of such suit. For the purposes of this Section 14, the words "reasonable attorneys' fees" in the case of the Agency include the salaries, costs and overhead of lawyer's employed in the Office of the City Attorney of the City of San Bernardino. Section 15. Severabilitv. If any provision of this Affordable Housing Covenant shall be declared invalid, inoperative or unenforceable by a final judgment or decree of a court of competent jurisdiction such invalidity or unenforceability of such provision shall not affect the remaining parts of this Affordable Housing Covenant which are hereby declared by the parties to be severable from any other part which is found by a court to be invalid or .unenforceable. Section 16. .timeis~.ftheE$sence. For each provision of this Affordable Housing Covenant which states a specific amount of time within which the requirements thereof are to be satisfied, time shall be deemed to be of the essence. Section 17. Notice. Any notice required to be given under this Affordable Housing Covenant shall be given by the Agency or by the Qualified Homebuyer, as applicable, by personal delivery or by First Class United States mail at the addresses specified beiow or at such other address as may be specified in writing by the parties hereto: 4839-9390-<J544.1 19 10-01-07 GFC Enterprises LLC- CC&R (Exhibit A) 10125/2005 . If to the Agency: Redevelopment Agency of the City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, CA 92401 Attn: Executive Director Phone: (909) 663-1044 If to the Qualified Homebuyer: San Bernardino, California Attn: Phone: ( ) Notice shall be deemed given five (5) calendar days after the date of mailing to the party, or, if personally delivered, when received by the Executive Director of the Agency or the Qualified Homebuyer, as applicable. 111/ /III /III 111/ 1111 1111 4839-9390-<)544.1 20 10-Q1..{)7 GFC Enterprises LLG- CC&R (Exhibit A) 10/25/2005 . IN WITNESS WHEREOF, the Qualified Homebuyer and the Agency have caused this Affordable Housing Covenant to be signed, acknowledged and attested on their behalf by duly authorized representatives in counterpart original copies which shall upon execution by all of the parties be deemed to be one original document. The recordation of this Affordable Housing Covenant is authorized under Health and Safety Code Section 33334.3(g). QUALIFIED HOMEBUYER Date: By: Printed By: By: Printed By: AGENCY Redevelopment Agency of the City of San Bernardino Dated: By: Executive Director [ALL SIGNATURES MUST BE NOTARIZED] Approved as to Form: By: Agency Counsel 4839-9390-0544.1 10-01-07 GFC Enterprises LLC~ CC&R (Exhibit A) 10/25/2005 21 . . . EXHIBIT "A" Legal Description of the New Home 4839-9390-0544.1 1()"{)1-07 GFC Enterprises LlG- CC&R (Exhibit A) 10/2512005 22