HomeMy WebLinkAbout2016-032 I RESOLUTION NO. 2016-32
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
3 BERNARDINO AUTHORIZING THE CITY MANAGER TO EXECUTE A LOAN
4 AGREEMENT WITH NATIONAL CORE RENAISSANCE (NATIONAL CORE) FOR
PHASE 2 OF WATERMAN GARDENS PROJECT.
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6 WHEREAS, the housing strategy for the City of San Bernardino (City) supports
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partnerships with non-profit housing developers for the construction of affordable housing
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9 projects; and
10 WHEREAS, National CORE has applied for a loan under the City's HOME Investment
11 Partnership Program (HOME) funded by the U.S. Department of Housing and Urban
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Development (HUD) in the amount of seven hundred, thirty-four thousand dollars ($734,000) to
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14 develop the Second Phase of the Waterman Gardens Project; and
15 WHEREAS, National CORE is seeking additional financial assistance from other
16 funding sources, including applying for Affordable Housing Program (AHP) funds; and
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WHEREAS, the 2016 Federal Low Income Housing Tax Credit application requires a
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letter of commitment for all funding sources; and
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20 WHEREAS, the City of San Bernardino will provide the funding described herein for
21 this affordable family housing project subject to approval of Federal Low Income Housing Tax
22 Credit application, execution of the HOME Loan Agreement, satisfactory document
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demonstrating compliance with HOME program regulations and consistency with the housing
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25 needs identified in the City's Consolidated Plan; and
26 WHEREAS, the Mayor and Common Council authorized the allocation of seven
27 hundred, thirty-four thousand dollars ($734,000)to the project on September 21, 2015
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1 NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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3 SECTION 1. The City Manager is hereby authorized to execute the HOME Loan
4 Agreement with National CORE, attached hereto as Exhibit "A" and incorporated herein by
5 reference as fully as though set forth at length.
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SECTION 2. The City Manager is hereby authorized to execute any additional
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8 documents or agreements necessary to effectuate the loan of $734,000 to National CORE,
9 including amendments to the attached HOME loan agreement, subordination agreements,
10 recording documents, or regulatory agreements, so long as the additional documents or
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agreements do not increase the amount of the loan or substantially change any other term of the
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loan and are approved as to form by the City Attorney or his designee.
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1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE CITY MANAGER TO EXECUTE A LOAN
2 AGREEMENT WITH NATIONAL CORE RENAISSANCE (NATIONAL CORE) FOR
3 PHASE 2 OF WATERMAN GARDENS PROJECT.
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I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
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6 Common Council of the City of San Bernardino at a joint regular meeting thereof, held on the
16t" day of February, 2016, by the following vote, to wit:
8 Council Members: AYES NAYS ABSTAIN ABSENT
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MARQUEZ X
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11 BARRIOS X
12 VALDIVIA X
13 SHORETT X
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NICKEL X
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16 JOHNSON X
17 MULVIHILL X
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19 George Hanna, MC, City Clerk
2o The foregoing Resolution is hereby approved this day of February 2016.
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R. Carey Davis, ayor
23 City of San Bernardino
Approved as to form:
24 Gary D. Saenz, City Attorney
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By:
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2016-32
HOME INVESTMENT PARTNERSHIPS ACT LOAN AGREEMENT
Between
CITY OF SAN BERNARDINO
and
Waterman Gardens Partners 1, L.P.
(Waterman Gardens Phase 1)
TABLE OF CONTENTS
Paqe
ARTICLE 1. DEFINITIONS AND EXHIBITS.............................................................................2
Section1.1 Definitions................................................................................................... 2
Section1.2 Exhibits....................................................................................................... 6
ARTICLE2. LOAN PROVISIONS............................................................................................... 7
Section2.1 Loan. ........................................................................................................... 7
Section2.2 Interest......................................................................................................... 7
Section 2.3 Use of Loan Funds...................................................................................... 7
Section2.4 Security. ...................................................................................................... 7
Section2.5 Subordination.............................................................................................. 8
Section 2.6 Conditions Precedent to Disbursement of Loan Funds............................... 9
Section 2.7 Repayment Schedule................................................................................. 12
Section2.8 Non-Recourse. .......................................................................................... 14
Section2.9 Other Financing. ....................................................................................... 15
ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT .................................................... 16
Section 3.1 Schedule of Performance.......................................................................... 16
Section 3.2 Permits and Approvals.............................................................................. 16
Section 3.3 Construction Contract............................................................................... 16
Section3.4 Bid Package. ............................................................................................. 16
Section 3.5 Construction Bonds................................................................................... 16
Section 3.6 Commencement of Construction. ............................................................. 17
Section 3.7 Completion of Construction...................................................................... 17
Section 3.8 Construction Pursuant to Plans and Laws; Prevailing Wages;
Accessibility.............................................................................................. 17
Section3.9 Equal Opportunity..................................................................................... 19
Section 3.10 Minority and Women-Owned Contractors. .............................................. 19
Section 3.11 Progress Reports. ...................................................................................... 20
Section 3.12 Construction Responsibilities. .................................................................. 20
Section 3.13 Mechanics Liens, Stop Notices, and Notices of Completion....................20
Section3.14 Inspections. ...............................................................................................21
Section 3.15 Approved Development Budget; Revisions to Budget............................. 21
Section3.16 Developer Fee........................................................................................... 21
Section3.17 Marketing Plan.......................................................................................... 22
Section 3.18 Tenant Services Plan and Budget. ............................................................22
ARTICLE 4. LOAN REQUIREMENTS...................................................................................... 23
Section 4.1 Financial Accountings and Post-Completion Aud its................................ 23
Section 4.2 Annual Operating Budget. ........................................................................ 23
Section4.3 Information. ..............................................................................................24
Section4.4 Records. ....................................................................................................24
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TABLE OF CONTENTS
(continued)
Page
Section4.5 City Audits................................................................................................ 25
Section 4.6 HOME Requirements................................................................................ 26
Section 4.7 Hazardous Materials. ................................................................................ 30
Section 4.8 Maintenance and Damage......................................................................... 32
Section4.9 Fees and Taxes.......................................................................................... 33
Section 4.10 Notice of Litigation................................................................................... 33
Section 4.11 Operation of Development as Affordable Housing. ................................. 33
Section 4.12 Nondiscrimination..................................................................................... 34
Section4.13 Transfer..................................................................................................... 34
Section 4.14 Insurance Requirements............................................................................ 36
Section 4.15 Anti-Lobbying Certification. .................................................................... 39
Section 4.16 Covenants Regarding Approved Financing.............................................. 40
Section 4.17 Affordability and Project Monitoring....................................................... 40
Section 4.18 Crime-Free Multi-Housing Program Participation...................................41
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BORROWER......................... 42
Section 5.1 Representations and Warranties................................................................ 42
ARTICLE 6. DEFAULT AND REMEDIES................................................................................44
Section 6.1 Events of Default. .....................................................................................44
Section6.2 Remedies...................................................................................................45
Section6.3 Right of Contest........................................................................................46
Section 6.4 Remedies Cumulative...............................................................................46
Section 6.5 Limited Partner Cure Rights.....................................................................46
ARTICLE7. GENERAL PROVISIONS .....................................................................................47
Section 7.1 Relationship of Parties..............................................................................47
Section7.2 No Claims. ................................................................................................47
Section 7.3 Discretion Retained By City.....................................................................47
Section 7.4 Indemnification.........................................................................................47
Section 7.5 Non-Liability of City Officials, Employees and Agents. ......................... 48
Section 7.6 No Third Party Beneficiaries. ...................................................................48
Section 7.7 Conflict of Interest.................................................................................... 48
Section 7.8 Notices, Demands and Communications..................................................49
Section7.9 Amendments............................................................................................. 50
Section7.10 City Approval............................................................................................ 50
Section 7.11 Applicable Law......................................................................................... 50
Section7.12 Parties Bound............................................................................................ 50
Section 7.13 Attorneys' Fees.......................................................................................... 50
Section7.14 Severability. .............................................................................................. 50
Section 7.15 Force Majeure........................................................................................... 50
Section7.16 Waivers. .................................................................................................... 51
Section 7.17 Title of Parts and Sections. ....................................................................... 51
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TABLE OF CONTENTS
(continued)
Paqe
Section 7.18 Entire Understanding of the Parties.......................................................... 51
Section 7.19 Multiple Originals; Counterpart................................................................ 51
Exhibit A: Legal Description of the Property
Exhibit B: Approved Development Budget
Exhibit C: Schedule of Performance
Exhibit D: Form of Promissory Note
Exhibit E: From of Deed of Trust
Exhibit F: Form of Regulatory Agreement
Exhibit G: Certification of Continuing Program Compliance
Exhibit H: Section 3 Compliance
Exhibit L• Project Deliverables
Exhibit J: Statement of Residual Receipts
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HOME INVESTMENT PARTNERSHIPS ACT LOAN AGREEMENT
(Waterman Gardens Phase 1)
This HOME Investment Partnerships Act Loan Agreement(the "Agreement") is dated
March 18, 2016, (the "Effective Date"), and is between the City of San Bernardino, a charter city
of the State of California(the "City"), and Waterman Gardens Partners 1, L.P., a California
limited partnership ("Borrower").
RECITALS
A. Defined terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
B. The City has received Home Investment Partnerships Act funds from the United
States Department of Housing and Urban Development("HUD") pursuant to the Cranston-
Gonzales National Housing Act of 1990 ("HOME Funds"). The HOME Funds must be used by
the City in accordance with 24 C.F.R. Part 92.
C. The Borrower will become the leasehold owner of the real property located at 610
East Olive Street, in the City of San Bernardino, County of San Bernardino, State of California,
as more particularly described, in Exhibit A (the "Property"). Borrower intends to construct a
sixty-two (62) unit multifamily affordable housing development(including one manager's unit)
(the "Improvements"). The Improvements and the Property are referred to as the Development."
D. Borrower desires to borrow from the City and the City desires to lend Borrower
Seven Hundred Thirty Four Thousand Dollars ($734,000) of HOME Funds (the "Loan"). The
Loan will be evidenced by the Note and secured by the Deed of Trust, as defined below.
E. The Loan is being made to finance construction costs associated with the
Development in order to help achieve financial feasibility for the Development. The
Development will increase the supply of affordable rental housing in the City of San Bernardino.
Due to the assistance provided Borrower pursuant to this Agreement, the City has classified four
(4) units as HOME-assisted units (each such unit a "City-Assisted Unit"), which Units are
"floating" Units as defined in 24 C.F.R. 92.2520). The City-Assisted Units are required to be
four(4) two-bedroom Units and are to be intermingled throughout the Development and of
comparable quality to all other Units and must meet the Uniform Federal Accessibility Standards
and Section 3.8(f) below.
F. The City has prepared a Mitigated Negative Declaration under the California
Environmental Quality Act(Public Resources Code Sections 21000 et seq.) ("CEQA")
requirements, pursuant to 14 CCR Section 15070. The City considered the environmental effects
of the Development as show in the Mitigated Negative Declaration and determined that no
further CEQA analysis is required pursuant to 14 California Code of Regulations Section 15162.
G. In accordance with the National Environmental Policy Act of 1969, as amended
(42 U.S.C. 4321-4347) ("NEPA"), the City has completed and approved all applicable
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environmental review for the activities proposed to be undertaken under this Agreement and
issued a Finding of No Significant Impact.
H. This Loan Agreement contains certain changes from the version that was approved by
the Common Council of the City on February 15, 2016. The City Manager has determined that
none of the changes constitute material change in the amount or terms of the Loan Agreement
requiring approval by the Mayor and Common Council.
The Parties therefore agree as follows:
AGREEMENT
ARTICLE 1. DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
The following terms have the following meanings:
(a) "Agreement" means this HOME Investment Partnerships Act Loan
Agreement.
(b) "AHP Loan" has the meaning set forth in Section 2.9.
(c) "Annual Payment" has the meaning set forth in Section 2.7(b).
(d) "Approved Development Budget" means the proforma development
budget, including sources and uses of funds, as approved by the City, and attached hereto and
incorporated herein as Exhibit B as such may be modified pursuant to Section 3.15.
(e) "Approved Financing" means all of the following loans, grants and equity
obtained by Borrower and approved by the City for the purpose of financing the Development:
(i) An unsecured construction bridge loan from Wells Fargo Bank,
National Association in the approximate amount of Nine Million One Hundred Thirty-Seven
Thousand Five Hundred Thirty-Seven Dollars ($9,137,537) (the "Construction Loan");
(ii) A secured construction loan from Wells Fargo Bank,National
Association in the approximate amount of Eight Million Eight Hundred Seventy Thousand
Dollars ($8,870,000), which is expected to be replaced by a HUD/FHA 221(d)(4) loan from
Wells Fargo Bank,National Association in the approximate amount of Eight Million Eight
Hundred Seventy Thousand Dollars ($8,870,000), (in either case, the "FHA Loan");
(iii) A loan from the Housing Authority of the County of San
Bernardino (the "Housing Authority") in the total amount of One Million, Four Hundred
Twenty-Five Thousand Dollars ($1,425,000) (the "Housing Authority Loan"), reflecting a
leasehold acquisition loan of Six Hundred Sixty-Three Thousand Dollars ($663,000) (the
"Housing Authority Ground Lease Loan") and a construction/permanent loan of up to Seven
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Hundred Sixty-Two Thousand Dollars ($762,000) (the "Housing Authority Development
Loan");
(iv) Low-Income Housing Tax Credit investor limited partner capital
contribution in the approximate amount of Thirteen Million Eight Hundred Seventy-Six
Thousand One Hundred Forty-Five Dollars ($13,876,145) (the "Tax Credit Investor Equity");
and
(v) Deferred Developer Fees in an approximate amount of Seven
Hundred Eighty-Four Thousand, Seven Hundred Ninety Three Dollars ($784,793), bearing
interest at the Applicable Federal Rate(the "Deferred Developer Fee").
(f) "Bid Package" means the package of documents Borrower's general
contractor is required to distribute to potential bidders as part of the process of selecting
subcontractors for the Development. The Bid Package is to include the following: (i) an
invitation to bid; (ii) copy of the proposed construction contract; and (iii) all Construction Plans.
(g) "Borrower" has the meaning set forth in the first paragraph of this
Agreement.
(h) "CEQA" has the meaning set forth in Paragraph F of the Recitals.
(i) "Certificate of Occupancy" means the certificate of occupancy or
equivalent document issued by the City to certify completion of the construction of the
Development.
0) "CHDO" means a certified Community Housing Development
Organization as defined in 24 C.F.R. 92.300. For the purposes of this Agreement, the certified
CHDO is National Community Renaissance of California, as may be substituted pursuant to
Section 4.6(c) of this Agreement.
(k) "City" has the meaning set forth in the first paragraph of this Agreement.
(1) "City Manager" means the person holding the office of city manager for
the City pursuant to Article V, Section 100 of the Charter of the City of San Bernardino.
(m) "Commencement of Construction" has the meaning set forth in
Section 3.6.
(n) "Completion Component" has the meaning set forth in Section 2.6.
(o) "Completion Date" means the date that all of the following have occurred:
(i) a final certificate of occupancy, or equivalent document is issued by the City to certify
completion of the construction of the Development; (ii) the final disbursement of HOME funds
for the Development has been made; (iii)the City has verified the Development complies with
the property standards set forth in 24 CFR 92.251; and (iv) all project completion information
has been entered by the City into the Integrated Disbursement and Information System (IDIS).
(p) "Completion of Construction" has the meaning set forth in Section 3.7.
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(q) "Construction Closing" means the date that all deeds of trust associated
with Approved Financing necessary for the construction of the Development as shown on the
Approved Development Budget are recorded against the Property.
(r) "Construction Contract" has the meaning set forth in Section 3.3.
(s) "Construction Plans" means all construction documentation upon which
Borrower and the General Contractor rely in constructing the Development on the Property
(including the units in the Development, landscaping, parking, and common areas) as approved
by the City, as applicable, and includes, but is not limited to, final architectural drawings,
landscaping plans and specifications, final elevations, building plans and specifications, and
scope of construction working drawings.
(t) "City-Assisted Units" has the meaning set forth in Paragraph E of the
Recitals.
(u) "Deed of Trust" means the Deed of Trust with Assignment of Rents,
Security Agreement, and Fixture Filing among Borrower, as Trustor, a trustee approved by the
City, and the City, as beneficiary, that will encumber the Property to secure repayment of the
Loan and performance of the covenants of the Loan Documents. A copy of the form of Deed of
Trust is attached as Exhibit E.
(v) "Default Rate" has the meaning set forth in Section 6.2(d).
(w) "Developer Fee" has the meaning set forth in Section 3.16 and includes
the Deferred Developer Fee defined in subsection (e) above.
(x) "Development" has the meaning set forth in Paragraph C of the Recitals.
(y) "Escrow" means the escrow account established by the Borrower for the
closing of Development financing with Fidelity Title Insurance Company in its Newport Beach,
California office or another escrow company satisfactory to the City.
(z) "Event of Default" has the meaning set forth in Section 6.1.
(aa) "Final Cost Certification" has the meaning set forth in Section 4.1.
(bb) "Final Development Cost" means the total of the cost of acquisition,
development and construction (including soft costs) of the Development as shown on the Final
Cost Certification.
(cc) "General Contractor" has the meaning set forth in Section 3.3.
(dd) "Hazardous Materials" has the meaning set forth in Section 4.7.
(ee) "Hazardous Materials Claims" has the meaning set forth in Section 4.7.
(fo "Hazardous Materials Law" has the meaning set forth in Section 4.7.
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(gg) "HOME" means the HOME Investment Partnerships Act Program
pursuant to the Cranston-Gonzales National Affordable Housing Act of 1990 (42 U.S.C. 12705
et seq.), as amended.
(hh) "HOME Funds" has the meaning set forth in Paragraph B of the Recitals.
(ii) "HOME Term" means the period beginning on the date of this Agreement
and ending on the twentieth (20th) anniversary of the Completion Date.
0j) "Housing Authority" means the Housing Authority of the County of San
Bernardino.
(kk) "HUD" has the meaning set forth in Paragraph B of the Recitals.
(11) "Improvements" has the meaning set forth in Paragraph C of the Recitals.
(mm) "Investor Limited Partner" means Wells Fargo Affordable Housing
Community Development Corporation or a permitted transferee.
(nn) "Loan" has the meaning set forth in Paragraph D of the Recitals.
(oo) "Loan Documents" means this Agreement, the Note, the Regulatory
Agreement, and the Deed of Trust.
(pp) "Marketing Plan" has the meaning set forth in Section 3.17(a).
(qq) "NEPA" has the meaning set forth in Paragraph G of the Recitals.
(rr) "Net Proceeds of Permanent Financing" means the amount by which
Permanent Financing exceeds the Final Development Costs.
(ss) "Note" means the Promissory Note that evidences Borrower's obligation to
repay the Loan. A copy of the form of Note is attached as Exhibit D.
(tt) "Notice of Completion" means the Notice of Completion executed by
Borrower in the form specified in California Civil Code Section 3093.
(uu) "Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership executed by the partners of Borrower and in effect as of Construction
Closing, as may be further amended pursuant to the requirements of Section 4.13(c)(ii) hereof.
(vv) "Permanent Closing" means the date that all deeds of trust(or assignments
of deeds of trust) associated with Approved Financing necessary for the permanent financing of
the Development as shown on the Approved Development Budget that have been recorded
against the Property are converted to permanent loans deeds of trust (which for the FHA Loan
shall be deemed to occur on the date amortizing payments on the FHA Loan begin), which shall
also be referenced as the "Conversion Date".
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(ww) "Permanent Financing" means the sum of the following amounts: (i) the
FHA Loan (ii)the Loan; (iii)the Housing Authority Loan; and (iv)the AHP Loan (if applicable).
(xx) "Permitted Limited Partner" has the meaning set forth in Section 6.5.
(yy) "Permitted Transfer" has the meaning set forth in Section 4.13.
(zz) "Predevelopment/Construction Component" has the meaning set forth in
Section 2.6.
(aaa) "Property" has the meaning set forth in Paragraph C of the Recitals.
(bbb) "Regulatory Agreement" means the Regulatory Agreement and
Declaration of Restrictive Covenants between the City and Borrower related to the Loan, to be
recorded against the Property. A copy of the form of Regulatory Agreement is attached as
Exhibit F.
(ccc) "Residual Receipts" has the meaning set forth in Section 2.7(a)(iii).
(ddd) "Schedule of Performance" means the schedule for performance of various
tasks and obligations under this Agreement that is attached as Exhibit C, as such may be
modified pursuant to Section 3.1.
(eee) "Senior Lender" has the meaning set forth in Section 2.5.
(M) "Services Budget" has the meaning set forth in Section 3.18.
(ggg) "Services Plan" has the meaning set forth in Section 3.18.
(hhh) "TCAC" means the California Tax Credit Allocation Committee.
(iii) "Tenant" means the tenant household that occupies a unit in the
Development.
Ojj) "Term" means the period of time that commences on the date of this
Agreement, and expires, unless sooner terminated in accordance with this Agreement, on the
fifty-fifth (55th) anniversary of the Completion Date.
(kkk) "Transfer" has the meaning set forth in Section 4.13.
(111) "Unit" means one (1) of the sixty-two (62) housing units to be constructed.
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference:
Exhibit A: Legal Description of the Property
Exhibit B: Approved Development Budget
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Exhibit C: Schedule of Performance
Exhibit D: Form of Promissory Note
Exhibit E: From of Deed of Trust
Exhibit F: Form of Regulatory Agreement
Exhibit G: Certification of Continuing Program Compliance
Exhibit H: Section 3 Compliance
ARTICLE 2. LOAN PROVISIONS
Section 2.1 Loan.
The City shall lend to Borrower the Loan for the purposes set forth in Section 2.3 of this
Agreement. Borrower's obligation to repay the Loan is evidenced by the Note.
Section 2.2 Interest.
(a) Subject to the provisions of Subsection (b) below, simple interest will
accrue on the outstanding principal balance of the Loan at a per annum rate of interest equal to
three percent(3%) commencing on the date of each disbursement.
(b) Upon the occurrence of an Event of a Default, interest on the Loan will
begin to accrue, beginning on the date of such occurrence and continuing until the date the Loan
is repaid in full or the Event of Default is cured, at the Default Rate.
Section 2.3 Use of Loan Funds.
(a) Borrower shall use the Loan to fund the predevelopment, construction and
permanent financing of the Development consistent with the Approved Development Budget.
Borrower shall use the Loan only to fund costs associated with the residential portions of the
Development.
(b) No portion of the Loan shall be used to fund costs incurred more than
twenty-four(24) months prior to the Effective Date or for any costs not allowed under 24 C.F.R.
92.206.
(c) Borrower may not use the Loan proceeds for any other purposes without
the prior written consent of the City.
Section 2.4 Securi1y.
Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by
executing the Deed of Trust, and causing or permitting it to be recorded as a lien against the
Property in second (2d) lien priority among the deeds of trust securing the Approved Financing in
the following order: the FHA Loan, the Loan, the Housing Authority Development Loan and the
Housing Authority Ground Lease Loan, and subject to Section 2.5 below. Borrower shall also
cause or permit the Regulatory Agreement to be recorded against the Property, with such partial
priority over the FHA Loan as HUD may approve.
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Section 2.5 Subordination.
Any agreement by the City to subordinate the Deed of Trust and/or Regulatory
Agreement to an encumbrance securing and/or evidencing Approved Financing (each such
Approved Financing, a "Senior Loan"), will be subject to the satisfaction of each of the
following conditions:
(a) All of the proceeds of the proposed Senior Loan, less any transaction
costs, are used to provide acquisition, construction and/or permanent financing for the
Development.
(b) The proposed lender of a Senior Loan (each a "Senior Lender") is a state
or federally chartered financial institution, a nonprofit corporation or a public entity that is not
affiliated with Borrower or any of Borrower's affiliates, other than as a depositor or a lender,
except as may otherwise be permitted by the City, at its sole and absolute discretion.
(c) Borrower demonstrates to the City's satisfaction that subordination of the
Deed of Trust and the Regulatory Agreement is necessary to secure adequate acquisition,
construction and/or permanent financing to ensure the viability of the Development, including
the operation of the Development as affordable housing, as required by the Loan Documents. To
satisfy this requirement, Borrower must provide to the City, in addition to any other information
reasonably required by the City, evidence demonstrating that the proposed amount of the Senior
Loan is necessary to provide adequate acquisition, construction and/or permanent financing to
ensure the viability of the Development, and adequate financing for the Development would not
be available without the proposed subordination.
(d) The subordination agreement(s) is structured to minimize the risk that the
Deed of Trust and the Regulatory Agreement will be extinguished as a result of a foreclosure by
the Senior Lender or other holder of the Senior Loan. To satisfy this requirement,the
subordination agreement must provide the City with adequate rights to cure any defaults by
Borrower, including: (i) providing the City or its successor with copies of any notices of default
at the same time and in the same manner as provided to Borrower; and (ii) providing the City
with a cure period of at least sixty (60) days to cure any default.
(e) The subordination(s) of the Loan is effective only during the original term
of the Senior Loan and any extension of its term that is approved in writing by the City.
(f) The subordination does not limit the effect of the Deed of Trust and the
Regulatory Agreement before a foreclosure, nor require the consent of the Senior Lender prior to
the City exercising any remedies available to the City under the Loan Documents.
(g) Upon a determination by the City Manager that the conditions in this
Section have been satisfied, the City Manager will be authorized to execute the approved
subordination agreement without the necessity of any further action or approval by the Mayor
and Common Council. Execution of any subordination agreement will evidence and constitute
the determination of the City that all requirements of this Section 2.5 have been satisfied or
waived.
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(h) So long as the Secretary of Housing and Urban Development or his/her
successor or assign is the insurer or holder of the first mortgage on the Waterman Gardens Phase
1, FHA Project No. 143-35131, the provisions of this Section 2.5 shall not apply to a
subordination to the HUD financing. The City Manager has the authority to execute that certain
Subordination Agreement form HUD-92420M or such other form subordination agreement
required by HUD.
Section 2.6 Conditions Precedent to Disbursement of Loan Funds.
The disbursements made pursuant to this Section 2.6 may not exceed the amount of the
Loan. The City shall disburse the Loan into Escrow in two components: (i) a
"Predevelopment/Construction Component" in the amount of Six Hundred Sixty Thousand, Six
Hundred Dollars ($ 660,600); and (ii) a "Completion Component" in the amount of Seventy
Three Thousand Four Hundred Dollars ($73,400). The division of the Loan between the
Predevelopment/Construction Component and the Completion Component may be readjusted by
the City Manager on behalf of the City without the need for formal amendment of this
Agreement. The City will disburse the the Predevelopment/Construction Component at
Construction Closing subject to the conditions precedent set forth in subsection (a) below, and
the Completion Component at Permanent Closing subject to the conditions precedent set forth in
subsection (b).
(a) Predevelopment/Construction. The City is not obligated to make a
disbursement of the Predevelopment/Construction Component at Construction Closing, or to
take any other action under the Loan Documents unless the following conditions precedent are
satisfied:
(i) There exists no Event of Default nor any act, failure, omission or
condition that would constitute an Event of Default under this Agreement;
(ii) Borrower holds good and marketable leasehold title to the
Property;
(iii) Borrower has delivered to the City a copy of Borrower's
organizational documents and a corporate authorizing resolution authorizing Borrower's
execution of the Loan Documents and the transactions contemplated by the Loan Documents;
(iv) There exists no material adverse change in the financial condition
of Borrower from that shown by the financial statements and other data and information
furnished by Borrower to the City prior to the date of this Agreement;
(v) Borrower has furnished the City with evidence of the insurance
coverage meeting the requirements of Section 4.14 below;
(vi) Borrower has caused to be executed and delivered to the City the
Loan Documents and any other instruments, and policies required under the Loan Documents;
(vii) The Deed of Trust and the Regulatory Agreement have been
recorded against the Property in the Office of the Recorder of the County of San Bernardino;
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(viii) Borrower is in compliance with the Schedule of Performance;
(ix) All environmental review necessary for the construction of the
Development has been completed, and Borrower has provided the City evidence of compliance
with all CEQA and NEPA mitigation measures;
(x) The City has determined the undisbursed proceeds of the Loan,
together with other funds or firm commitments for funds that Borrower has obtained in
connection with the acquisition and construction of the Development, are not less than the
amount the City determines is necessary to pay for the acquisition and construction of the
Development and to satisfy all of the covenants contained in this Agreement and the Regulatory
Agreement;
(xi) Borrower has obtained all permits and approvals necessary for the
construction of the Development, as required by Section 3.2; provided, however, that Borrower
may satisfy this requirement with regard to the building permit if Borrower obtains a permit
ready letter from the City Building Department.
(xii) Borrower has submitted a certification from the architect certifying
that the plans and specifications and design documents for the Development ensure that the City-
Assisted Units are in compliance with Section 3.8(f) of this Agreement.
(xiii) The City has received a copy of the General Contractor's
Construction Contract as required pursuant to Section 3.3 below;
(xiv) The City has received and approved the labor and material
(payment) bonds as required pursuant to Section 3.5 below;
(xv) A title insurer reasonably acceptable to the City is unconditionally
and irrevocably committed to issuing an LP-10 2006 ALTA Lender's Policy of title insurance
insuring the priority of the Deed of Trust in the amount of the Loan, subject only to such
exceptions and exclusions as may be reasonably acceptable to the City, and containing such
endorsements as the City may reasonably require. The Borrower shall provide whatever
documentation (including an indemnification agreement), deposits or surety is reasonably
required by the title company in order for the City's Deed of Trust to be senior in lien priority to
any mechanics liens in connection with any start of construction that has occurred prior to the
recordation of the Deed of Trust against the Property in the Office of the Recorder of the County
of San Bernardino;
(xvi) Borrower has executed a Partnership Agreement approved by the
City, with the Investor Limited Partner, in which the Investor Limited Partner is obligated to
provide Borrower the Tax Credit Investor Equity;
(xvii) Borrower has closed, or is concurrently closing, on the other
construction financing including the Construction Loan, the FHA Loan, and the Housing
Authority Loan and is eligible to receive the proceeds of those loans and has received the amount
of Tax Credit Investor Equity stated as the first installment in the Partnership Agreement
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(estimated to be approximately Two Million Seven Hundred Seventy-Five Thousand Two
Hundred Twenty Nine Dollars ($2,775,229), or so much thereof is required for the closing draw;
(xviii) The Borrower's sole member and managing general partner, or the
sole member of the general partner, meets the legal and organizational characteristics described
in 24 C.F.R. 92.2 and has been and continues to be annually recertified as a CHDO by the City
of San Bernardino for the entire HOME Term; and
(xix) The City has received a written draw request from Borrower,
including (1) certification that the condition set forth in Section 2.6(a)(i)continues to be
satisfied, (2) certification that the proposed uses of funds consistent with the Approved
Development Budget, (3)the amount of funds needed, and, (4)where applicable, a copy of the
bill or invoice covering a cost incurred or to be incurred. When a disbursement is requested to
pay any contractor in connection with improvements on the Property,the written request must be
accompanied by (i) certification by the Borrower's architect reasonably acceptable to the City
that the work for which disbursement is requested has been completed (although the City
reserves the right to inspect the Property and make an independent evaluation); and (ii) lien
releases and/or mechanics lien title insurance endorsements reasonably acceptable to the City.
(b) Completion Component. The City is not obligated to make a
disbursement of the Completion Component at Permanent Closing, or to take any other action
under the Loan Documents unless the following conditions precedent are satisfied:
(i) All requirements set forth in Section 2.6(a) have been and continue
to be satisfied and there exists no Event of Default nor any act, failure, omission or condition that
would constitute an Event of Default under this Agreement;
(ii) The Borrower has been issued a Certificate of Occupancy for the
Development by City;
(iii) The City has received satisfactory evidence that the City-Assisted
Units are rented to eligible tenants at the required rents in compliance with the requirements of
this Agreement and the Regulatory Agreement;
(iv) The Borrower has satisfied all conditions for the receipt of the
second installment of the Tax Credit Investor Equity, consistent with Borrower's Partnership
Agreement;
(v) The City has received from Borrower current evidence of the
insurance coverage meeting the requirements of Section 4.14 below;
(vi) The City has received an approved a report setting forth: (1)the
income, household size, race, and ethnicity of Tenants of the City-Assisted Units; (2)the unit
size, rent amount and utility allowance for all City-Assisted Units; and (3)the accessible units in
the Development pursuant to Section 3.8(f);
(vii) The City has received a draft of the Final Cost Certification for the
Development from Borrower showing all uses and sources;
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(viii) The City has received from Borrower and approved a form of
Tenant lease;
(ix) The City has received from Borrower and approved the Marketing
Plan;
(x) The City has received from Borrower and approved a copy of the
Services Plan for the provision of service to residents;
(xi) The City has received from Borrower all relevant contract activity
information, including compliance with Section 3 (including items included in Exhibit H of this
Agreement, incorporated herein by this reference) and MBE/WBE requirements;
(xii) Borrower has submitted a certification from the architect certifying
that the City-Assisted Units have been constructed in compliance with Section 3.8(f) of this
Agreement;
(xiii) The City has received from Borrower a copy of the management
agreement and contact information for the property manager of the Development and the name
and phone number of the on-site property manager;
(xiv) If Borrower is required to pay prevailing wages under the Davis-
Bacon Act(40 U.S.C. 3141-3148), the Borrower has submitted copies of all certified payrolls to
the City, and any identified payment issues have been resolved, or Borrower is working
diligently to resolve any such issues; and
(xv) The City has received a written draw request from Borrower,
including (1) certification that the conditions set forth in Section 2.6(a) continue to be satisfied,
(2) certification that the proposed use of funds is consistent with the Approved Development
Budget, (3)the amount of funds needed, and, (4)where applicable, a copy of the bill or invoice
covering a cost incurred or to be incurred.
(c) The Borrower hereby agrees and acknowledges that the City will have not
less than seventy (70) days from the date the City receives a completed draw request to disburse
funds under this Section 2.6.
(d) All funds to be disbursed pursuant to this Agreement shall be available to
be disbursed to a Senior Lender, if and to the extent, the Senior Lender takes over the
construction of the Development, the Senior Lender agrees to be bound to the terms hereof and
the Senior Lender has cured any Default of the Borrower.
Section 2.7 Repayment Schedule.
(a) Special Definitions. The following definitions apply to this Section 2.7:
(i) "City Prorata Percentage" means the percentage resulting from
dividing the Loan funds disbursed to Borrower in accordance with this Agreement, by the sum of
such Loan funds and the Housing Authority Loan funds disbursed (or deemed advanced for
acquisition)to Borrower.
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(ii) "Lenders' Share of Residual Receipts" means twenty-five percent
(25%) of the Residual Receipts, inclusive of any Residual Receipts payment due under the
Housing Authority Loan.
(iii) "Residual Receipts" means for each calendar year, (i) the amount
of"Cash Flow" as such term is defined in the Partnership Agreement, minus (ii) all amounts
calculated pursuant to Sections 4.02(a)(i)-(ix) of such Partnership Agreement.
(iv) "Statement of Residual Receipts" means the annual statement of
income and expenses prepared by the Borrower and establishing"Cash Flow", accompanied by a
statement of all amounts calculated pursuant to Sections 4.02(a)(i)-(ix) of the Partnership
Agreement.. The first Statement of Residual Receipts will cover the period that begins on the
Completion Date and ends on December 31 st of that same year. Subsequent statements of
Residual Receipts will cover the twelve-month period that ends on December 31 of each year.
(b) Annual Paments. Commencing on April 1 st of the year following the
Completion Date, and on April 1 st of each year thereafter during the Term, Borrower shall make
a Loan payment in an amount equal to the City's Prorata Percentage of Lenders' Share of
Residual Receipts (each, an "Annual Payment"). The City shall apply all Annual Payments as
follows: (1) first, to accrued interest, and (2) second, to principal. On or prior to the date that
Borrower pays its Annual Payment, Borrower shall submit the following to the City:
(i) A statement from the independent public accountant that audited
the Borrower's financial records for the relevant period, which statement must confirm that
Borrower's calculation of the Lenders' Share of Residual Receipts is consistent with the
definition herein; and
(ii) Any additional documentation reasonably required by the City to
substantiate Borrower's calculation of Lenders' Share of Residual Receipts.
(c) Special Repayment From Net Proceeds. Subject to the rights of Senior
Lenders and subject to HUD approval, and to the extent additional subordinate loan proceeds,
equity or surplus development sources following a cost certification, Surplus Cash or other non-
Project Assets are available, no later than ten (10) days after the date Borrower receives its final
Tax Credit Investor Equity contribution, Borrower may utilize any Net Proceeds of Permanent
Financing (i) first to reduce or eliminate the outstanding balance of Deferred Developer Fee, (ii)
then to repay the Housing Authority Ground Lease Loan until its principal balance is $500,000;
and then to repay the Loan, or as otherwise approved by the City and the Housing Authority. No
later than one hundred twenty (120) days following completion of construction of the
Development, Borrower shall submit to the City for its review a preliminary calculation of the
Net Proceeds of Permanent Financing and a draft of the Final Cost Certification as defined
Section 4.1 below. The City shall approve or disapprove Borrower's determination of the
amount of the Net Proceeds of Permanent Financing in writing within thirty (30) days of receipt.
If Borrower's determination is disapproved by the City, Borrower shall re-submit documentation
to the City until the City approval is obtained.
(d) Special Repayment For Un-leased Units. As required under 24 C.F.R.
92.252, if Borrower fails to lease any one of the City-Assisted Units within eighteen (18) months
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of the Completion of Construction of the Development, the Borrower shall pay to the City a
proportionate share of the indebtedness of Borrower to the City under this Agreement and the
Note attributable to each of the City-Assisted Units that has remained un-leased for the entire
eighteen (18) month period, together with any accrued interest thereon calculated pursuant to
Section 2.2, which amount shall be immediately due and payable. Amounts required to be repaid
pursuant to this subsection (d)that are not immediately repaid as required hereunder a result of
the limitations set forth in subsection (g) shall be added to the outstanding principal of the Loan
and become part of the secured obligation of the Borrower.
(e) Payment in Full. Borrower shall pay all outstanding principal and accrued
interest on the Loan, in full, on the earliest to occur of: (i) an Event of Default, and (ii)the
expiration of the Term.
(f) Prepayment. Borrower may prepay the Loan at any time without premium
or penalty. However, the Regulatory Agreement and the Deed of Trust will remain in effect for
the entire Term, regardless of any prepayment.
(g) Notwithstanding anything to the contrary in this Agreement, so long as the
Secretary of Housing and Urban Development("HUD") or his/her successor or assigns, are the
insurers or holders of the first mortgage on the Waterman Gardens Phase 1, FHA Project No.
143-35131, payments on the Loan shall be payable only from the 75% of"Surplus Cash" or from
non-Project Assets, as the terms "Surplus Cash" and "Project Assets" are defined in the
Regulatory Agreement for Multifamily Projects (the "HUD Regulatory Agreement") between
HUD and Borrower. The restrictions on payment imposed by the previous sentence shall not
excuse any default caused by the failure of the Borrower to pay the indebtedness evidenced by
the Note or this Agreement. Additionally, the Borrower's obligation to indemnify and hold the
City harmless shall be limited to available Surplus Cash of the Borrower or non-Project assets of
the Borrower, or available liability insurance proceeds. So long as the Secretary of Housing and
Urban Development or his/her successors or assigns, are the insurers or holders of the first
mortgage on the Waterman Gardens Phase 1, FHA Project No. 143-35131, the indemnifications
provisions in this Section 2.7 shall not apply to HUD.
Section 2.8 Non-Recourse.
Except as provided below, upon recordation of the Deed of Trust against the
Property, neither Borrower, nor any partner of Borrower, will have any direct or indirect
personal liability for payment of the principal of, and interest on, the Loan or the performance of
the covenants of Borrower under the Deed of Trust. Following recordation of the Deed of Trust,
the sole recourse of the City with respect to the principal of, or interest on, the Note and defaults
by Borrower in the performance of its covenants under the Deed of Trust will be to the property
described in the Deed of Trust; provided, however, that nothing contained in the foregoing
limitation of liability limits or impairs the enforcement of all the rights and remedies of the City
against all such security for the Note, or impairs the right of City to assert the unpaid principal
amount of the Note as demand for money within the meaning and intendment of Section 431.70
of the California Code of Civil Procedure or any successor provision thereto. The foregoing
limitation of liability is intended to apply only to the obligation to repay the principal of, and
payment of interest on the Note and the performance of Borrower's obligations under the Deed of
Trust. Except as hereafter set forth; nothing contained herein is intended to relieve Borrower of
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its obligation to indemnify the City under Sections 3.8, 4.6, 4.7, and 7.4 of this Agreement, or
liability for (i) loss or damage of any kind resulting from waste, fraud or willful
misrepresentation; (ii)the failure to pay taxes, assessments or other charges which may create
liens on the Property that are payable or applicable prior to any foreclosure under the Deed of
Trust(to the full extent of such taxes, assessments or other charges); (iii)the fair market value of
any personal property or fixtures removed or disposed of by Borrower other than in accordance
with the Deed of Trust; and (iv)the misappropriation of any proceeds under any insurance
policies or awards resulting from: (A) condemnation or the exercise of the power of eminent
domain; or(B) by reason of damage, loss or destruction to any portion of the Property. So long
as the Secretary of Housing and Urban Development or his/her successors or assigns, are the
insurers or holders of the first mortgage on the Waterman Gardens Phase 1, FHA Project No.
143-35131, the indemnifications provisions in this Section 2.8 shall not apply to HUD.
Section 2.9 Other Financing.
(a) The Borrower is required to apply for and utilize,to the extent available,
Affordable Housing Program Funds ("AHP Loan") administered by the Federal Home Loan
Bank to partially finance the Development.
(b) AHP Loan. The Borrower shall submit a timely and complete application
for the AHP Loan which is subject to a competitive application process implemented by the
Federal Home Loan Bank of San Francisco and its member institutions. To satisfy the
requirements of this Section, the Borrower shall submit a timely and complete AHP Loan
application for the Affordable Housing Program's 2016 Round A Application. The Authority
acknowledges that Borrower submitted an application for AHP Funds on March 7, 2016. If the
Borrower does not receive an AHP Loan in the Affordable Housing Program's 2016 first round
cycle, then the City may confer with the Borrower in good faith for a period not to exceed sixty
(60) days to determine if the Borrower should submit a further application for an AHP Loan in a
subsequent application round or if a feasible and mutually acceptable alternate arrangement can
be made to finance the construction of the Development. Any agreement that is reached between
the parties regarding an alternative financing plan for the Development shall be memorialized in
an amendment to this Agreement. Submitting a timely and complete application for an AHP
Loan shall be a condition precedent to the Agency's obligation to disburse the Completion
Component.
(c) If Borrower is successful in securing all or a portion of the AHP Funds
and/or additional sources of permanent financing, subject to HUD approval, the proceeds of the
AHP Loan and/or the additional permanent financing shall be used for eligible costs within the
Approved Development Budget. The Approved Financing that is freed up as a result shall,
subject to the consent of the lender of such funds, be drawn in such manner and priority as will
pay Deferred Development Fees to the extent possible and, following payment of such fees in
full, in such manner and priority as will result in the Housing Ground Lease Loan not being
drawn in excess of Five Hundred Thousand Dollars ($500,000) and any additional savings being
applied to the Loan.
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ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT
Section 3.1 Schedule of Performance.
Borrower shall perform the tasks described in the Schedule of Performance no later than
the dates set forth in the Schedule of Performance, subject to Section 7.15. The Schedule of
Performance may be modified in writing by the City Manager on behalf of the City without the
need for formal amendment of this Agreement or further approval by the Mayor and Common
Council.
Section 3.2 Permits and Approvals.
Borrower shall obtain all permits and approvals necessary for the construction of the
Development no later than the date set forth in the Schedule of Performance.
Section 3.3 Construction Contract.
(a) Not later than thirty (30) days prior to the proposed Commencement of
Construction, Borrower shall submit to the City for its approval a draft of the proposed
construction contract for the Development (the "Construction Contract") with Borrower's general
contractor(the "General Contractor"). All construction work and professional services are to be
performed by persons or entities licensed or otherwise authorized to perform the applicable
construction work or service in the State of California. The Construction Contract is to provide
that at least ten percent(10%) of the costs incurred will be payable only upon completion of the
construction, or such other amount that may be allowed under a Senior Loan subject to written
approval by the City. The Construction Contract must include all applicable HOME
requirements set forth in Section 4.6 below. The City's approval of the construction contract
may not be deemed to constitute approval of or concurrence with any term or condition of the
construction contract except as such term or condition may be required by this Agreement.
Borrower shall use its best efforts to coordinate with the local County Workforce
Development Department(WDD), and all other applicable County requirements, to maximize
the practicable opportunity to participate in the construction of the Development. Borrower
shall, at a minimum, make contact with the County WDD and provide project information for
local hire opportunities. Documentation of such notifications must be maintained by Borrower
and available to the City as requested.
Section 3.4 Bid Package.
The Borrower shall cause Borrower's General Contractor to provide the Bid Package to
all subcontractors.
Section 3.5 Construction Bonds.
Not later than thirty (30) days prior to the proposed Commencement of Construction
Borrower shall deliver to the City copies of labor and material bonds and performance bonds for
the construction of the Development in an amount equal to one hundred percent (100%) of the
16
scheduled cost of the construction of the Development. Such bonds must name the City as a co-
obligee.
Section 3.6 Commencement of Construction.
Borrower shall cause the Commencement of Construction of the Development no later
than the date set forth in the Schedule of Performance, which in no event shall be any later than
twelve (12) months from the Effective Date. For the purposes of this Agreement,
"Commencement of Construction" means the date set for the start of construction of the
Development in the notice to proceed issued by Borrower to Borrower's general contractor.
Section 3.7 Completion of Construction.
For purposes of this Agreement, "Completion of Construction" means the following:
(a) Borrower shall diligently prosecute construction of the Development to
completion, and shall cause the completion of the construction of the Development no later than
the date set forth in the Schedule of Performance.
(b) Borrower shall record a Notice of Completion within ten (10) days of
completion of construction of the Development and provide the City Manager a copy of the
recorded Notice of Completion.
(c) Borrower shall provide the City Manager a copy of the Certificate of
Occupancy, or other evidence of completion of the Development, within ten (10) days of receipt
from the City.
Section 3.8 Construction Pursuant to Plans and Laws; Prevailing Waves;
Accessibility.
(a) Borrower shall construct the Development in conformance with the
Construction Plans approved by the City's Building Department. Borrower shall notify the City
in a timely manner of any changes in the work required to be performed under this Agreement,
including any additions, changes, or deletions to the Construction Plans. A written change order
authorized by the City must be obtained before any of the following changes, additions, or
deletions in work for the Development may be performed: (i) any change in the work the cost of
which exceeds Seventy-Five Thousand Dollars ($75,000); or(ii) any set of changes in the work
the cost of which cumulatively exceeds One Hundred Twenty-Five Thousand Dollars
($125,000). Consent to any additions, changes, or deletions to the work do not relieve or release
Borrower from any other obligations under this Agreement, or relieve or release Borrower or its
surety from any surety bond.
(b) Borrower shall cause all work performed in connection with the
Development to be performed in compliance with:
(i) all applicable laws, ordinances, rules and regulations of federal,
state, county or municipal governments or agencies now in force or that may be enacted
hereafter, including without limitation and to the extent applicable, the prevailing wage
17
provisions of the federal Davis-Bacon Act and implementing rules and regulations, as further set
forth in subsection (c) below, and state prevailing wages pursuant to California Labor Code
Section 1770 et seq., and the regulations pursuant thereto, as further set forth in subsection (d)
below;
(ii) the property standards set out in 24 C.F.R. 5.701 et seq. and 24
C.F.R. 92.251 or adopted by the City in conformance therewith; and
(iii) all directions, rules and regulations of any fire marshal, health
officer, building inspector, or other officer of every governmental agency now having or
hereafter acquiring jurisdiction. The work will proceed only after procurement of each permit,
license, or other authorization that may be required by any governmental agency having
jurisdiction, and Borrower shall be responsible to the City for the procurement and maintenance
thereof, as may be required of Borrower and all entities engaged in work on the Development.
(c) The Borrower shall cause construction of the Development to be in
compliance with the prevailing wage requirements of the federal Davis-Bacon Act (40 U.S.C.
3141-3148) and the attached labor compliance provisions in the attached Exhibit H incorporated
herein by this reference. Borrower shall indemnify, hold harmless and defend (with counsel
reasonably acceptable to the City) the City against any claim for damages, compensation, fines,
penalties or other amounts arising out of the failure or alleged failure of any person or entity
(including Borrower, its contractor and subcontractors)to pay prevailing wages as determined
pursuant to the prevailing wage provisions of the federal Davis-Bacon Act and implementing
rules and regulations in connection with the construction of the Development or any other work
undertaken or in connection with the Property. The requirements in this Subsection survive
repayment of the Loan and the reconveyance of the Deed of Trust. Borrower agrees and
acknowledges that the City will monitor compliance with federal Davis-Bacon Act requirements,
and will make best efforts to coordinate with HUD.
(d) If applicable, the Borrower shall pay and shall cause the contractor and
subcontractors to pay prevailing wages in the construction of the Development as those wages
are determined pursuant to California Labor Code Section 1720 et seq., to employ apprentices as
required by California Labor Code Sections 1777.5 et seq., and the implementing regulations of
the Department of Industrial Relations (the "DIR"). If applicable,the Borrower shall and shall
cause the contractor and subcontractors to comply with the other applicable provisions of
California Labor Code Sections 1720 et seq., 1777.5 et seq., and implementing regulations of the
DIR. Borrower shall and shall cause the contractor and subcontractors to keep and retain such
records as are necessary to determine if such prevailing wages have been paid as required
pursuant to California Labor Code Section 1720 et seq., and apprentices have been employed are
required by California Labor Code Section 1777.5 et seq. Copies of the currently applicable
current per diem prevailing wages are available from DIR. During the construction of the
Development, Borrower shall or shall cause the contractor to post at the Property the applicable
prevailing rates of per diem wages. Borrower shall indemnify, hold harmless and defend (with
counsel reasonably acceptable to the City) the City against any claim for damages,
compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any
person or entity (including Borrower, its contractor and subcontractors)to pay prevailing wages
as determined pursuant to California Labor Code Section 1720 et seq., to employ apprentices
pursuant to California Labor Code Section 1777.5 et seq., and implementing regulations of the
18
DIR or to comply with the other applicable provisions of California Labor Code Sections 1720 et
seq., 1777.5 et seq., and the implementing regulations of the DIR in connection with the
construction of the Development or any other work undertaken or in connection with the
Property. The requirements in this Subsection survive the repayment of the Loan, and the
reconveyance of the Deed of Trust. So long as the Secretary of Housing and Urban Development
or his/her successors or assigns, are the insurers or holders of the first mortgage on the Waterman
Gardens Phase 1, FHA Project No. 143-35131, the indemnification provisions in this Section 3.8
shall not apply to HUD.
(e) The general contractor and all Subcontractors shall be required to pay their
laborers and mechanics employed under this Contract, a wage not less than minimum wage
classification, as specified in the applicable Federal law when the Contract amount for the Prime
contract exceeds $2,000. The General Contractor is responsible for ensuring Subcontractor
compliance with Davis-Bacon and Related Act Requirements. Federal Labor Standards
Provisions (HUD 4010) apply to this Development. Certified payroll submitted to the City are
required during the term of construction. Payment of disbursement components may be delayed
when certified payrolls are not properly submitted.
(f) The Borrower shall construct the Development to comply with all
applicable federal and state disabled persons accessibility requirements including but not limited
to the Federal Fair Housing Act, Section 504 of the Construction Act of 1973, Title lI and/or
Title III of the Americans with Disabilities Act of 1990, Title 24 of the California Code of
Regulations and the Uniform Federal Accessibility Standards ("UFAS"). In compliance with
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794, et seq.), a minimum of four(4)
units in the Development shall be constructed to be readily accessible and usable by households
with a mobility impaired member and a minimum of two (2) units shall be constructed and to be
readily accessible and usable by households with a hearing or visually impaired member. All
City-Assisted Units in the Development shall also be built to comply with the Uniform Federal
Accessibility Standards under 49 C.F.R. 31528.
Section 3.9 Equal Opportunity.
During the construction of the Development discrimination on the basis of race, color,
creed, religion, age, sex, gender, gender identity, gender expression, sexual orientation, marital
status, national origin, ancestry, military and veteran status, or disability in the hiring, firing,
promoting, or demoting of any person engaged in the construction work is not allowed.
Section 3.10 Minority and Women-Owned Contractors.
Borrower shall use its best efforts to afford minority-owned and women-owned business
enterprises the maximum practicable opportunity to participate in the construction of the
Development. Borrower shall, at a minimum, notify applicable minority-owned and women-
owned business firms located in San Bernardino County of bid opportunities for the construction
of the Development. A listing of minority owned and women owned businesses located in the
County and neighboring counties is available from the County. Documentation of such
notifications must be maintained by Borrower and available to the City as requested.
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Section 3.11 Progress__Reports.
Until such time as Borrower has received a Certificate of Occupancy from the City for
the Development, Borrower shall provide the City with quarterly progress reports regarding the
status of the construction of the Development, including a certification that the actual
construction costs to date conform to the Approved Development Budget, as it may be amended
from time to time pursuant to Section 3.15 below.
Section 3.12 Construction Responsibilities.
(a) Borrower is responsible for the coordination and scheduling of the work to
be performed so that commencement and completion of the construction of the Development
will take place in accordance with this Agreement.
(b) Borrower is solely responsible for all aspects of Borrower's conduct in
connection with the Development, including (but not limited to) the quality and suitability of the
plans and specifications, the supervision of construction work, and the qualifications, financial
condition, and performance of all architects, engineers, contractors, subcontractors, suppliers,
consultants, and property managers. Any review or inspection undertaken by the City with
reference to the Development is solely for the purpose of determining whether Borrower is
properly discharging its obligations to the City, and may not be relied upon by Borrower or by
any third parties as a warranty or representation by the City as to the quality of the design or
construction of the Development.
Section 3.13 Mechanics Liens Stop Notices and Notices of Completion.
(a) If any claim of lien is filed against the Property or a stop notice affecting
the Loan is served on the City or any other lender or other third party in connection with the
Development, then Borrower shall,within twenty (20) days after such filing or service, either
pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by
delivering to the City a surety bond in sufficient form and amount, or provide the City with other
assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
(b) If Borrower fails to discharge any lien, encumbrance, charge, or claim in
the manner required in this Section,then in addition to any other right or remedy, the City may
(but is under no obligation to) discharge such lien, encumbrance, charge, or claim at Borrower's
expense. Alternately, the City may require Borrower to immediately deposit with the City the
amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The
City may use such deposit to satisfy any claim or lien that is adversely determined against
Borrower.
(c) Borrower shall file a valid notice of cessation or notice of completion
upon cessation of construction work on the Development for a continuous period of thirty (30)
days or more, and take all other steps necessary to forestall the assertion of claims of lien against
the Property. Borrower authorizes the City, but the City has no obligation, to record any notices
of completion or cessation of labor, or any other notice that the City deems necessary or
desirable to protect its interest in the Development and Property.
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Section 3.14 Inspections.
Borrower shall permit and facilitate, and shall require its contractors to permit and
facilitate, observation and inspection at the Development, during construction and after
completion of construction, by the City and by any public authorities during reasonable business
hours for the purposes of determining compliance with this Agreement. Borrower agrees and
acknowledges that the City must conduct or cause to be conducted on-site inspections, consistent
with the requirements of 24 C.F.R. 92.504(d), to determine compliance with the property
standards set forth in 24 C.F.R. 92.251, at least once every three (3)years after the completion of
construction of the Development.
After the completion of an inspection the City shall deliver a copy of the inspection
report to the Borrower. If the City determines as a result of such inspection that there are any
life-threatening health and safety related deficiencies, Borrower has the obligation to correct
such deficiencies immediately, in accordance with 24 C.F.R. 92.251. If the City determines as a
result of the inspection that there are any deficiencies for any of the inspectable items in the
Development, the Borrower shall correct such deficiencies within fifteen (15) days from the
delivery of the inspection report or if a period longer than fifteen (15) days is reasonably
necessary to correct the deficiency,then Borrower must begin to correct the deficiency within
fifteen (15) days and correct the deficiency as soon as reasonably possible. In addition, the
Borrower acknowledges that the City may re-inspect the Development to verify all deficiencies
have been corrected or rely on third party documentation submitted by the Borrower for non-
hazardous deficiencies in conformance with 24 C.F.R. 92.504(d).
Section 3.15 Approved Development Budget; Revisions to Budget.
As of the date of this Agreement, the City has approved the Approved Development
Budget set forth in Exhibit B. Borrower shall submit any proposed or required amendments to
the Approved Development Budget, along with evidence that the changes to the Approved
Development Budget are reasonable and necessary, to the City for approval within five (5) days
of the date Borrower receives information indicating that actual costs of the Development vary or
will vary from the costs shown on the Approved Development Budget, which approval shall not
be unreasonably withheld or delayed. Written consent of the City will be required to amend the
Approved Development Budget. The City will make best efforts to respond in writing within
seven (7) days after receipt of a proposed amendment to the Approved Development Budget.
Section 3.16 Developer Fee.
(a) The maximum cumulative Developer Fee that may be paid to any entity or
entities providing development services to the Development, whether paid up-front or as
Deferred Developer Fee (defined in Section 1.1(e)(v)), may not exceed Two Million Dollars
($2,000,000), and in no event may exceed the amount allowed by TCAC and as approved by the
City. For the purposes of this Agreement "Developer Fee" has the meaning set forth in
California Code of Regulations, Title 4, Section 10302. Except for the Developer Fee, no
compensation from any source shall be received by or be payable to the Borrower or any affiliate
of the Borrower in connection with the provision of development and construction management
services for the acquisition and construction of the Development.
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(b) Cost savings at completion. Pursuant to Section 2.7(c), the Borrower may
request to reduce the outstanding balance of the Deferred Developer Fee subject to the City's
reasonable approval.No City approval is required in order to increase the Deferred Developer
Fee.
Section 3.17 Marketing Plan.
(a) No later than six(6) months prior to the projected date of the Completion
of Construction of the Improvements, Borrower shall submit to the City for approval its plan for
marketing the Development to income-eligible households as required pursuant to the
Regulatory Agreement, including information on affirmative marketing efforts and compliance
with fair housing laws and 24 C.F.R. 92.351(a) (the "Marketing Plan").
(b) Upon receipt of the Marketing Plan, the City will promptly review the
Marketing Plan and will approve or disapprove it within fifteen (15) days after submission. If
the Marketing Plan is not approved, Borrower shall submit a revised Marketing Plan within
fifteen (15) days. Borrower shall follow this procedure for resubmission of a revised Marketing
Plan until the Marketing Plan is approved by the City.
(c) If after five (5) months after the Completion of Construction any City-
Assisted Unit remains unoccupied, the Developer shall submit a detail report of the ongoing
marketing efforts, and if deemed appropriate by the City, any necessary amendments or updates
to the Marketing Plan aimed at ensuring any unoccupied City-Assisted Unit is promptly leased.
If any of the City-Assisted Units remain unoccupied eleven (11) months after the Completion of
Construction, the Developer shall submit a detailed report of the ongoing marketing efforts and
submit to the City an update to the Marketing Plan. Failure to lease all of the City-Assisted
Units to an eligible tenant within eighteen (18) months of Completion of Construction shall
trigger the special repayment pursuant to Section 2.7(d).
Section 3.18 Tenant Services Plan and Budget.
(a) Borrower will be providing (or arranging the provision of) on-site services
to all tenants in the Development(the "Tenant Services"). No later than six(6) months prior to
the projected date of the Completion of Construction of the Improvements, Borrower shall
submit to the City for approval a proposed services plan which shall include written guidelines or
procedures for providing the Tenant Services (the "Services Plan"), and a proposed budget for
the provision of Tenant Services (the "Services Budget").
(b) The Services Plan shall include the types of Tenant Services provided,
staffing levels (including caseload and hours of employment), and overall coordination of the
Tenant Services.
(c) The Services Budget shall show required expenditures from Annual
Operating Expenses in an approximate amount of Fourteen Thousand Eight Hundred Eighty
Dollars ($14,880) per Month subject to an annual increase that is equal to the greater of three
percent (3%) or the percentage increase in CPI to fund Tenant Services.
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(d) Upon receipt of the proposed Services Plan and Services Budget, the City
shall promptly review the proposed Services Plan and Services Budget and shall approve or
disapprove them within thirty (30) days after submission. If either the Services Plan or Services
Budget is not approved, the Borrower shall submit a revised Services Plan and/or Services
Budget within thirty (30) days following the Borrower's receipt of the City's written disapproval.
If the City does not approve the revised Services Plan and/or Services Budget because the
Borrower fails to make specific revisions requested by the City, the Borrower shall be in default
hereunder.
(e) It is currently anticipated that the Borrower will provide additional social
services to Tenants in the Development in excess of those payable from Annual Operating
Expenses. The Borrower hereby agrees to make best efforts to apply for and obtain social
services funding to fund approximately Nine Thousand Dollars ($9,000) of additional Tenant
Services at the Development, subject to an annual increase that is equal to the greater of three
percent(3%) or the percentage increase in CPI. To the extent that the Developer obtains such
funding, such funding shall be excluded from Operating Income and shall instead be dedicated to
paying for the additional Tenant Services. If Borrower is unable to obtain additional funds for
Tenant Services or to the extent the Developer receives less than the amount necessary to fund
the additional social services actually provided to Tenants of the Development approved under
the Services Plan and Services Budget,the City hereby agrees that Borrower shall be allowed to
accrue such amounts and be paid for such services from future Operating Income.
ARTICLE 4. LOAN REQUIREMENTS
Section 4.1 Financial Accountings and Post-Completion Audits.
(a) No later than ninety (90) days following issuance of the Certificate of
Occupancy for the Development, Borrower shall provide to the City for its review and approval a
financial accounting of all sources and uses of funds for the Development.
(b) No later than one hundred fifty (150) days following Completion of
Construction of the Development, Borrower shall submit an audited financial report showing the
sources and uses of all funds utilized for the Development. This requirement may be satisfied by
providing the Final Cost Certification to the City. "Final Cost Certification" means the Final
Cost Certification Sources and Uses of Funds prepared by Borrower for the Development that:
(i) Borrower submits to TCAC; and (ii)has been prepared using generally accepted accounting
procedures in effect in the United States from time to time, consistently applied.
Section 4.2 Annual Operating Budget.
At the beginning of each year of the Term, Borrower shall provide to the City an annual
budget for the operation of the Development. Unless rejected by the City in writing within
fifteen (15) days after receipt of the budget, the budget will be deemed accepted. If rejected by
the City in whole or in part, Borrower shall submit a new or corrected budget within thirty (30)
calendar days of notification of the City's rejection and the reasons therefor. The provisions of
this Section relating to time periods for resubmission of new or corrected budgets will continue
to apply until such budget has been approved by the City.
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Section 4.3 Information.
Borrower shall provide any information reasonably requested by the City in connection
with the Development, including (but not limited to) any information required by HUD in
connection with Borrower's use of the Loan funds.
Section 4.4 Records.
(a) Borrower shall keep and maintain at the Development, or elsewhere with
the City's written consent, full, complete and appropriate books, records and accounts relating to
the Development, including all such books, records and accounts necessary or prudent to
evidence and substantiate in full detail Borrower's calculation of Residual Receipts, and
disbursements of Residual Receipts. Books, records and accounts relating to Borrower's
compliance with the terms, provisions, covenants and conditions of this Agreement are to be kept
and maintained in accordance with generally accepted accounting principles consistently applied,
and are to be consistent with requirements of this Agreement. All such books, records, and
accounts are to be open to and available for inspection and copying by HUD, the City, its
auditors or other authorized representatives at reasonable intervals during normal business hours.
Copies of all tax returns and other reports that Borrower may be required to furnish to any
governmental agency are to be open for inspection by the City at all reasonable times at the place
that the books, records and accounts of Borrower are kept. Borrower shall preserve such records
for a period of not less than five (5) years after the creation of such records in compliance with
all HUD records and accounting requirements. If any litigation, claim, negotiation, audit
exception, monitoring, inspection or other action relating to the use of the Loan is pending at the
end of the record retention period stated herein, then Borrower shall retain the records until such
action and all related issues are resolved. The records are to include all invoices, receipts, and
other documents related to expenditures from the Loan funds. Borrower shall cause records to
be accurate and current and in such a form as to allow the City to comply with the record
keeping requirements contained in 24 C.F.R. 92.508. Such records are to include but are not
limited to:
(i) Records providing a full description of the activities undertaken
with the use of the Loan funds.
(ii) Records demonstrating compliance with City and HUD property
standards and lead-based paint requirements, including, as applicable, the Uniform Physical
Conditions Standards established by HUD pursuant to 24 C.F.R. 5.703;
(iii) Records documenting compliance with the fair housing, equal
opportunity, and affirmative fair marketing requirements;
(iv) Financial records as required by 24 C.F.R. 92.505, and OMB
Circular A-110 (24 C.F.R. Part 84);
(v) Records demonstrating compliance with the Tenant Selection Plan
requirements pursuant to 24 C.F.R. 92.253(d), and HOME affordability and income
requirements;
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(vi) Records demonstrating compliance with MBE/WBE requirements;
(vii) Records demonstrating compliance with 24 C.F.R. Part 135 which
implements Section 3 of the Housing Development Act of 1968 (including those in Exhibit H of
this Agreement);
(viii) Records demonstrating compliance with applicable relocation
requirements, which must be retained for at least five (5) years after the date by which persons
displaced from the property have received final payments;
(ix) Records demonstrating compliance with labor requirements
including certified payrolls from Borrower's General Contractor evidencing that applicable
prevailing wages have been paid.
(x) Records demonstrating compliance with 24 C.F.R. 8.20.
(b) The City shall notify Borrower of any records it deems insufficient.
Borrower has fifteen (15) calendar days after the receipt of such a notice to correct any
deficiency in the records specified by the City in such notice, or if a period longer than fifteen
(15) days is reasonably necessary to correct the deficiency, then Borrower must begin to correct
the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible.
Section 4.5 City Audits.
(a) Each year, Borrower shall provide the City with a copy of Borrower's
annual audit, which is to include information on all of Borrower's activities, in addition the
Borrower's general partners shall submit audited financial statements and the Borrower and the
Borrower's general partners shall submit all other financial information reasonably requested by
the City determined by the City as necessary for compliance with the requirements of 24 C.F.R.
504(d). Borrower shall also follow audit requirements of the Single Audit Act and OMB
Circulars A-122 and 110.
(b) In addition,the City or any designated agent or employee of the City at
any time is entitled to audit the Residual Receipts of the Development, and all of Borrower's
books, records, and accounts pertaining thereto. Such audit is to be conducted during normal
business hours at the principal place of business of Borrower and other places where records are
kept. Immediately after the completion of an audit, the City shall deliver a copy of the results of
the audit to Borrower. If it is determined as a result of such audit that there has been a deficiency
in a loan repayment to the City,then such deficiency will become immediately due and payable
with interest at the Default Rate from the date the deficient amount should have been paid. In
addition, if any audit conducted pursuant to this Section 4.5 determines that Residual Receipts
have been understated for any fiscal year by more than five percent(5%),then the Borrower
shall pay, in addition to the amounts set forth above, all of the costs and expenses incurred by the
City in connection with the audit and review of Borrower's accounts or records.
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Section 4.6 HOME Requirements.
(a) Borrower shall comply with all applicable laws and regulations governing
the use of the HOME Loan funds as set forth in 24 C.F.R. Part 92, including the requirements of
the Regulatory Agreement. In the event of any conflict between this Agreement and applicable
laws and regulations governing the use of the Loan funds, the applicable laws and regulations
govern. During the HOME Term, these requirements are federal requirements, implemented by
the City; thereafter, these requirements are deemed local City requirements.
(b) The laws and regulations governing the use of the Loan funds include (but
are not limited to)the following:
(i) Eligible Project Costs. Restrictions on funding only eligible
project costs as defined under 24 C.F.R. 92.206 (subject to Section 2.3 above).
(ii) Environmental and Historic Preservation. 24 C.F.R. Part 50 and
24 C.F.R. Part 58, which prescribe procedures for compliance with the National Environmental
Policy Act of 1969 (42 U.S.C. 4321-4361), and the additional laws and authorities listed at 24
C.F.R. 58.5.
(iii) Applicability of OMB Circulars. The applicable policies,
guidelines, and requirements of OMB Circulars Nos. A-87, A-102, Revised, A-I 10, A-122, and
A-133.
(iv) Debarred Suspended or Ineligible Contractors. The prohibition on
the use of debarred, suspended, or ineligible contractors set forth in 24 C.F.R. Part 24.
(v) Civil Rights, Housing and Community Development, and Age
Discrimination Acts. The Fair Housing Act (42 U.S.C. 3601 et seq.) and implementing
regulations at 24 C.F.R. Part 100; Title VI of the Civil Rights Act of 1964 as amended; Title VIII
of the Civil Rights Act of 1968 as amended; Section 104(b) and Section 109 of Title I of the
Housing and Community Development Act of 1974 as amended; Section 504 of the Construction
Act of 1973 (29 USC 794, et seg.); the Age Discrimination Act of 1975 (42 USC 6101, et se .);
Executive Order 11063 as amended by Executive Order 12259 and implementing regulations at
24 C.F.R. Part 107; Executive Order 11246 as amended by Executive Orders 11375, 12086,
11478, 12107; Executive Order 11625 as amended by Executive Order 12007; Executive Order
12432; Executive Order 12138 as amended by Executive Order 12608, Executive Order 13672
concerning Gender Identity.
(vi) Lead-Based Paint. The requirement of the Lead-Based Paint
Poisoning Prevention Act, as amended (42 U.S.C. 4821 et sec..), the Residential Lead-Based
Paint Hazard Reduction Act(42 U.S.C. 4851 et se q.), and implementing regulations at 24 C.F.R.
Part 35.
(vii) Relocation. The requirements of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601, et sect.), and
implementing regulations at 49 C.F.R. Part 24; 24 C.F.R. 570.606; Section 104(d) of the
Housing and Community Development Act of 1974 and implementing regulations at 24 C.F.R.
26
42 et se .; 24 C.F.R. 92.353; and California Government Code Section 7260 et sue. and
implementing regulations at 25 California Code of Regulations Sections 6000 et sec. If and to
the extent that development of the Development results in the permanent or temporary
displacement of residential tenants, homeowners, or businesses, then Borrower shall comply with
all applicable local, state, and federal statutes and regulations with respect to relocation planning,
advisory assistance, and payment of monetary benefits. Borrower shall prepare and submit a
relocation plan to the City for approval. Borrower is solely responsible for payment of any
relocation benefits to any displaced persons and any other obligations associated with complying
with such relocation laws. Borrower shall indemnify, defend (with counsel reasonably chosen
by the City), and hold harmless the City against all claims that arise out of relocation obligations
to residential tenants, homeowners, or businesses permanently or temporarily displaced by the
Development.
(viii) Discrimination against the Disabled. The requirements of the Fair
Housing Act (42 U.S.C. 3601 et seq.) and implementing regulations at 24 C.F.R. Part 100;
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), the Uniform Federal Accessibility
Standards (24 C.F.R. 8.20, et M. 8.51) and federal regulations issued pursuant thereto, which
prohibit discrimination against the disabled in any federally assisted program,the requirements
of the Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157) and the applicable requirements
of Title II and/or Title III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12131 et
M.),Mc.), and federal regulations issued pursuant thereto.
(ix) Clean Air and Water Acts. The Clean Air Act, as amended, 42
U.S.C. 7401 et seMc., the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251 et
seq., and the regulations of the Environmental Protection Agency with respect thereto, at 40
C.F.R. Part 1500, as amended from time to time.
(x) Uniform Administrative Requirements. The provisions of 24
C.F.R. 92.505 regarding cost and auditing requirements.
(xi) Training Opportunities. The requirements of Section 3 of the
Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 170lu ("Section 3") and
implementing regulations 24 C.F.R. 135 et seq., requiring that to the greatest extent feasible
opportunities for training and employment be given to lower income residents of the project area
and agreements for work in connection with the project be awarded to business concerns which
are located in, or owned in substantial part by persons residing in, the areas of the project.
Borrower agrees to include the following language in all subcontracts executed under this
Agreement:
(1) The work to be performed under this contract is subject to
the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended,
12 U.S.C. 1701u. The purpose of Section 3 is to ensure that employment and other economic
opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3, shall,
to the greatest extent feasible, be directed to low- and very low-income persons,particularly
persons who are recipients of HUD assistance for housing.
(2) The parties to this contract agree to comply with HUD's
regulations in 24 C.F.R. Part 135, which implement Section 3. As evidenced by their execution
27
of this contract, the parties to this contract certify that they are under no contractual or other
impediment that would prevent them from complying with the Part 135 regulations.
(3) The contractor agrees to send to each labor organization or
representative of workers with which the contractor has a collective bargaining agreement or
other understanding, if any, a notice advising the labor organization or workers' representative of
the contractor's commitments under this Section 3 clause; and will post copies of the notice in
conspicuous places at the work site where both employees and applicants for training and
employment positions can see the notice. The notice shall describe the Section 3 preference;
shall set forth minimum number and job titles subject to hire; availability of apprenticeship and
training positions; the qualifications for each; the name and location of the person(s) taking
applications for each of the positions; and the anticipated date the work shall begin.
(4) The contractor agrees to include this Section 3 clause in
every subcontract subject to compliance with regulations in 24 C.F.R. Part 135, and agrees to
take appropriate action, as provided in an applicable provision of the subcontract or in this
Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24
C.F.R. Part 135. The contractor will not subcontract with any subcontractor where the contractor
has notice or knowledge that the subcontractor has been found in violation of the regulations in
24 C.F.R. Part 135.
(5) The contractor will certify that any vacant employment
positions, including training positions, that are filled (1) after the contractor is selected but before
the contract is executed, and (2) with persons other than those to whom the regulations of 24
C.F.R. Part 135 require employment opportunities to be directed, were not filled to circumvent
the contractor's obligations under 24 C.F.R. Part 135.
(6) Noncompliance with HUD's regulations in 24 C.F.R. Part
135 may result in sanctions, termination of this contract for default, and debarment or suspension
from future HUD assisted contracts.
(7) With respect to work performed in connection with Section
3 covered Indian housing assistance, section 7(b) of the Indian Self-Determination and Education
Assistance Act(25 U.S.C. 450e) also applies to the work to be performed under this contract.
Section 7(b) requires that to the greatest extent feasible (i) preference and opportunities for
training and employment shall be given to Indians, and (ii) preference in the award of contracts
and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises.
Parties to this contract that are subject to the provisions of Section 3 and section 7(b) agree to
comply with Section 3 to the maximum extent feasible, but not in derogation of compliance with
section 7(b).
(xii) Labor Standards. The labor requirements set forth in 24 C.F.R.
92.354; the prevailing wage requirements of the Davis-Bacon Act and implementing rules and
regulations (40 U.S.C. 3141-3148); the Copeland "Anti-Kickback" Act(40 U.S.C. 276(c)) which
requires that workers be paid at least once a week without any deductions or rebates except
permissible deductions; the Contract Work Hours and Safety Standards Act—CWHSSA (40
U.S.C. 3701-3708)which requires that workers receive "overtime" compensation at a rate of 1-
1/2 times their regular hourly wage after they have worked forty (40)hours in one (1)week; and
28
Title 29, Code of Federal Regulations, Subtitle A, Parts 1, 3 and 5 are the regulations and
procedures issued by the Secretary of Labor for the administration and enforcement of the Davis-
Bacon Act, as amended.
(xiii) Drug Free Workplace. The requirements of the Drug Free
Workplace Act of 1988 (P.L. 100-690) and implementing regulations at 24 C.F.R. Part 24.
(xiv) Anti-Lobbying; Disclosure Requirements. The disclosure
requirements and prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 C.F.R.
Part 87.
(xv) Historic Preservation. The historic preservation requirements set
forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. Section 470) and
the procedures set forth in 36 C.F.R. Part 800. If archeological, cultural, or historic period
resources are discovered during construction, all construction work must come to a halt and
Borrower shall immediately notify the City. Borrower shall not shall alter or move the
discovered material(s) until all appropriate procedures for "post-review discoveries" set forth in
Section 106 of the National Historic Preservation Act have taken place, which include, but are
not limited to, consultation with the California State Historic Preservation Officer and evaluation
of the discovered material(s) by a qualified professional archeologist.
(xvi) Flood Disaster Protection. The requirements of the Flood Disaster
Protection Act of 1973 (P.L. 93-234) (the "Flood Act"). No portion of the assistance provided
under this Agreement is approved for acquisition or construction purposes as defined under
Section 3(a) of the Flood Act, for use in an area identified by HUD as having special flood
hazards which is not then in compliance with the requirements for participation in the national
flood insurance program pursuant to Section 201(d) of the Flood Act. The use of any assistance
provided under this Agreement for such acquisition or construction in such identified areas in
communities then participating in the National Flood Insurance Program is subject to the
mandatory purchase of flood insurance requirements of Section 102(a) of the Flood Act. If the
Property is located in an area identified by HUD as having special flood hazards and in which
the sale of flood insurance has been made available under the National Flood Insurance Act of
1968, as amended, 42 U.S.C. 4001 et SeMc., the property owner and its successors or assigns must
obtain and maintain, during the ownership of the Property, such flood insurance as required with
respect to financial assistance for acquisition or construction purposes under-Section 102(s) of
the Flood Act. Such provisions are required notwithstanding the fact that the construction on the
Property is not itself funded with assistance provided under this Agreement.
(xvii) Religious Organizations. If the Borrower is a religious
organization, as defined by the HOME requirements, the Borrower shall comply with all
conditions prescribed by HUD for the use of HOME funds by religious organizations, including
the First Amendment of the United States Constitution regarding church/state principles and the
applicable constitutional prohibitions set forth in 24 C.F.R. 92.257.
(xviii) HUD Regulations. Any other HUD regulations present or as may
be amended, added, or waived in the future pertaining to the Loan funds.
29
(c) To be eligible to receive disbursements of the Completion Component, the
Borrower's sole and managing general partner, or its sole member, must meet the legal and
organizational characteristics described in 24 C.F.R. 92.2 and must have been and continues to
be annually certified as a CHDO by the City. The City hereby acknowledges and agrees that
Borrower may request to substitute the sole member of its sole and managing general partner, or
the sole member of the general partner, for the purpose of complying with the requirements of
this subsection (c) at any time prior to the disbursement of the Construction Component and
Completion Component. Any time prior to the Construction Closing, the Borrower may request
in writing to substitute the sole member of its sole and managing general partner, and the City
hereby agrees to such substitution so long as the entity substituted entity meets the requirements
hereof and expressly agrees to assume the obligations of the Borrower's sole and managing
general partner hereunder. Notwithstanding anything to the contrary, if at any time after the
execution of this document,the City determines that the Borrower's sole and managing general
partner does not satisfy the conditions hereunder, the City may at its sole and absolute discretion
choose not to disburse the Construction Component and the Completion Component. So long as
the Secretary of Housing and Urban Development or his/her successors or assigns, are the
insurers or holders of the first mortgage on the Waterman Gardens Phase 1, FHA Project No.
143-35131, any substitutions under this Section 4.6 (c) shall be subject to prior HUD approval.
Section 4.7 Hazardous Materials.
(a) Borrower shall keep and maintain the Property in compliance with, and
may not cause or permit the Property to be in violation of any federal, state or local laws,
ordinances or regulations relating to industrial hygiene or to the environmental conditions on,
under or about the Property including, but not limited to, soil and ground water conditions.
Borrower may not use, generate, manufacture, store or dispose of on, under, or about the
Property or transport to or from the Property any flammable explosives, radioactive materials,
hazardous wastes, toxic substances or related materials, including without limitation, any
substances defined as or included in the definition of"hazardous substances," hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or state laws or
regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the
foregoing as may be customarily used in construction of projects like the Development or kept
and used in and about residential property of this type.
(b) Borrower shall immediately advise the City in writing if at any time it
receives written notice of(i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against Borrower or the Property pursuant
to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazardous Materials Law"), (ii) all claims made or threatened by any third party
against Borrower or the Property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above are hereinafter referred to as "Hazardous Materials Claims"), and (iii) Borrower's
discovery of any occurrence or condition on any real property adjoining or in the vicinity of the
Property that could cause the Property or any part thereof to be classified as "border-zone
property" (as defined in California Health and Safety Code Section 25117.4) under the provision
of California Health and Safety Code, Section 25220 et seq., or any regulation adopted in
30
accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy,
transferability or use of the Property under any Hazardous Materials Law.
(c) The City has the right to join and participate in, as a party if it so elects,
any legal proceedings or actions initiated in connection with any Hazardous Materials Claims
and to have its reasonable attorneys' fees in connection therewith paid by Borrower. Borrower
shall indemnify and hold harmless the City and its board members, supervisors, directors,
officers, employees, agents, successors and assigns from and against any loss, damage, cost,
expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (i) all foreseeable consequential
damages, (ii)the costs of any required or necessary repair, cleanup or detoxification of the
Property and the preparation and implementation of any closure, remedial or other required
plans, and (iii) all reasonable costs and expenses incurred by the City in connection with clauses
(i) and (ii), including but not limited to reasonable attorneys' fees and consultant's fees. This
indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision
include, but are not limited to: (1) losses attributable to diminution in the value of the Property,
(2) loss or restriction of use of rentable space on the Property, (3) adverse effect on the marketing
of any rental space on the Property, and (4) penalties and fines levied by, and remedial or
enforcement actions of any kind issued by any regulatory agency (including but not limited to
the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the
Property and surrounding properties). This obligation to indemnify will survive termination of
this Agreement. So long as the Secretary of Housing and Urban Development or his/her
successors or assigns, are the insurers or holders of the first mortgage on the Waterman Gardens
Phase 1, FHA Project No. 143-35131, the indemnifications provisions in this Section 4.7 shall
not apply to HUD.
(d) Without the City's prior written consent, which will not be unreasonably
withheld, Borrower may not take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Property, nor enter into any settlement agreement,
consent decree, or other compromise in respect to any Hazardous Material Claims, which
remedial action, settlement, consent decree or compromise might, in the City's judgment, impair
the value of the City's security hereunder; provided, however, that the City's prior consent is not
necessary in the event that the presence of Hazardous Materials on, under, or about the Property
either poses an immediate threat to the health, safety or welfare of any individual or is of such a
nature that an immediate remedial response is necessary and it is not reasonably possible to
obtain the City's consent before taking such action, provided that in such event Borrower shall
notify the City as soon as practicable of any action so taken. The City agrees not to withhold its
consent, where such consent is required hereunder, if(i) a particular remedial action is ordered
by a court of competent jurisdiction, (ii) Borrower will or may be subjected to civil or criminal
sanctions or penalties if it fails to take a required action, (iii) Borrower establishes to the
satisfaction of the City that there is no reasonable alternative to such remedial action which
would result in less impairment of the City's security hereunder, or(iv)the action has been
agreed to by the City.
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(e) Borrower hereby acknowledges and agrees that(i)this Section is intended
as the City's written request for information (and Borrower's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure
Section 726.5, and (ii) each representation and warranty in this Agreement(together with any
indemnity obligation applicable to a breach of any such representation and warranty) with
respect to the environmental condition of the Property is intended by the Parties to be an
"environmental provision" for purposes of California Code of Civil Procedure Section 736.
(f) In the event that any portion of the Property is determined to be
"environmentally impaired" (as that term is defined in California Code of Civil Procedure
Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of
Civil Procedure Section 726.5(e)(1)),then, without otherwise limiting or in any way affecting the
City's or the trustee's rights and remedies under the Deed of Trust, the City may elect to exercise
its rights under California Code of Civil Procedure Section 726.5(a)to (i) waive its lien on such
environmentally impaired or affected portion of the Property and (ii) exercise (1) the rights and
remedies of an unsecured creditor, including reduction of its claim against Borrower to
judgment, and (2) any other rights and remedies permitted by law. For purposes of determining
the City's right to proceed as an unsecured creditor under California Code of Civil Procedure
Section 726.5(a), Borrower will be deemed to have willfully permitted or acquiesced in a release
or threatened release of Hazardous Materials, within the meaning of California Code of Civil
Procedure Section 726.5(d)(1), if the release or threatened release of Hazardous Materials was
knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion
of the Property and Borrower knew or should have known of the activity by such lessee,
occupant, or user which caused or contributed to the release or threatened release. All costs and
expenses, including (but not limited to) attorneys' fees, incurred by the City in connection with
any action commenced under this paragraph, including any action required by California Code of
Civil Procedure Section 726.5(b) to determine the degree to which the Property is
environmentally impaired, plus interest thereon at the lesser of ten percent(10%) and the
maximum rate permitted by law, until paid, will be added to the indebtedness secured by the
Deed of Trust and is due and payable to the City upon its demand made at any time following the
conclusion of such action.
Section 4.8 Maintenance and Damage.
(a) During the course of both construction and operation of the Development,
Borrower shall maintain the Development and the Property in good repair and in a neat, clean
and orderly condition. If there arises a condition in contravention of this requirement, and if
Borrower has not cured such condition within thirty (30) days after receiving written notice from
the City of such a condition, then in addition to any other rights available to the City, the City
may perform all acts necessary to cure such condition, and to establish or enforce a lien or other
encumbrance against the Property, subject to the provisions provided in subsection (b) below.
(b) Subject to the requirements of Senior Lenders, and if economically
feasible in the City's judgment after consultation with Borrower, if any improvement now or in
the future on the Property is damaged or destroyed, then Borrower shall, at its cost and expense,
diligently undertake to repair or restore such improvement consistent with the plans and
specifications approved by the City with such changes as have been approved by the City. Such
work or repair is to be commenced no later than the later of one hundred twenty (120) days, or
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such longer period approved by the City in writing, after the damage or loss occurs or thirty (30)
days following receipt of the insurance proceeds, and is to be complete within one (1) year
thereafter. Any insurance proceeds collected for such damage or destruction are to be applied to
the cost of such repairs or restoration and, if such insurance proceeds are insufficient for such
purpose, then Borrower shall make up the deficiency. If Borrower does not promptly make such
repairs then any insurance proceeds collected for such damage or destruction are to be promptly
delivered by Borrower to the City as a special repayment of the Loan, subject to the rights of
HUD and the Senior Lenders, as applicable.
Section 4.9 Fees and Taxes.
Borrower is solely responsible for payment of all fees, assessments,taxes, charges, and
levies imposed by any public authority or utility company with respect to the Property or the
Development, and shall pay such charges prior to delinquency. However, Borrower is not
required to pay and discharge any such charge so long as (i) the legality thereof is being
contested diligently and in good faith and by appropriate proceedings, and (ii) if requested by the
City, Borrower deposits with the City any funds or other forms of assurance that the City in good
faith from time to time determines appropriate to protect the City from the consequences of the
contest being unsuccessful.
Section 4.10 Notice of Litijzation.
Borrower shall promptly notify the City in writing of any litigation that has the potential
to materially affect Borrower or the Property and of any claims or disputes that involve a
material risk of such litigation.
Section 4.11 Operation of Development as Affordable Housing.
(a) Promptly after completion of construction, Borrower shall operate the
Development as an affordable housing development consistent with (i) HUD's requirements for
use of the HOME Funds, (ii)the Regulatory Agreement, and (iii) any other regulatory
requirements imposed on Borrower including but not limited to regulatory agreements associated
with the Housing Authority Loan, the AHP Loan (if applicable) and Low Income Housing Tax
Credits provided by TCAC.
(b) Before leasing any City-Assisted Unit in the Development Borrower shall
submit its proposed form of lease agreement for the City's review and approval. The Lease must
not contain any provision which is prohibited by 24 C.F.R. 92.253(b) and any modifications
thereto. The term of the lease for any unit in the Development is to be for no less than one (1)
year, except by mutual agreement between Borrower and the Tenant. Any Borrower termination
of a lease agreement for any unit in the Development or refusal to renew must be in conformance
with 24 C.F.R. 92.253(c), and must be preceded by not less than sixty (60) days written notice to
the Tenant by Borrower specifying the grounds for the action.
(c) Before leasing any City-Assisted Unit in the Development, Borrower shall
provide the City, for its review and approval, with Borrower's written tenant selection plan (the
"Tenant Selection Plan"), which plan shall be in compliance with the requirements of 24 C.F.R.
92.253(d), and the Marketing Plan.
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(d) Borrower shall evaluate the income eligibility of each Tenant household in
City-Assisted Units pursuant to the City's approved Tenant certification procedures within sixty
(60) days before the household's expected occupancy of one of the City-Assisted Units.
Borrower shall certify each Tenant household's income on an annual basis.
(e) Borrower shall maintain all documents setting forth the household income
of each household occupying a City-Assisted Unit, and the total amount for rent, utilities, and
related services charged to each household occupying the Development, as prescribed by the
Regulatory Agreement.
Section 4.12 Nondiscrimination.
(a) Borrower covenants by and for itself and its successors and assigns that
there will be no discrimination against or segregation of a person or of a group of persons on
account of race, color, religion, creed, age (except for lawful senior housing in accordance with
state and federal law), familial status, disability, sex, sexual orientation, marital status, ancestry
or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Property, nor may Borrower or any person claiming under or through Borrower establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the Property. Borrower shall comply with Executive Orders 11246, 11375, 11625,
12138, 12431, 12250, 13672, Title VII of the Civil Rights Act of 1964, the California Fair
Housing and Employment Act and other applicable Federal, State and local laws and regulations
and policies relating to equal employment and contracting opportunities, including laws and
regulations hereafter enacted. The foregoing covenant will run with the land.
Section 4.13 Transfer.
(a) Definition. For purposes of this Agreement, "Transfer" means any sale,
assignment, or transfer, whether voluntary or involuntary, of(i) any rights and/or duties under
this Agreement, and/or(ii) any interest in the Development, including (but not limited to) a fee
simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a
security interest, or an interest evidenced by a land contract by which possession of the
Development is transferred and Borrower retains title. The term "Transfer" excludes the leasing
of any single unit in the Development to an occupant in compliance with the Regulatory
Agreement. The City Manager is authorized to execute assignment and assumption agreements
on behalf of the City to implement any approved Transfer.
(b) Prohibition. No Transfer is permitted without the prior written consent of
the City, which the City may withhold in its sole discretion. The Loan will automatically
accelerate and be due in full upon any Transfer made without the prior written consent of the
City. So long as the Secretary of Housing and Urban Development or his/her successors or
assigns, are the insurers or holders of the first mortgage on the Waterman Gardens Phase 1, FHA
Project No. 143-35131, the acceleration provisions in this Section 4.13 (b) shall not apply.
(c) Permitted Transfers. The following are permitted Transfers approved by
the City (each a "Permitted Transfer"):
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(i) The grant of the security interests in the Development for
Approved Financing.
(ii) The Borrower anticipates syndicating partnership interests based
on the low income housing tax credits that will be generated by the Development. The City
hereby approves the admission of an investor limited partner into the Borrower, provided that:
(1) all documents associated with the admission of an investor limited partner for purposes of the
low income housing tax credit syndication of the Development, including the Partnership
Agreement, are submitted to the City for review and approval, which approval shall not be
unreasonably withheld or delayed; (2) that the Partnership Agreement and other partnership
documents are consistent with and do not conflict with the Loan Documents and the approved
Development Budget; and (3)the partnership documents provide for capital contributions by the
investor limited partner in the Borrower in amounts not less than those set forth in the Approved
Development Budget or as otherwise approved by the City in its reasonable discretion.
(iii) In the event an investor limited partner is admitted pursuant to the
preceding subsection (c)(2),the City hereby approves future Transfers of the limited partner
interest in the Partnership provided that: (1) such Transfers do not affect the timing and amount
of the limited partner capital contributions provided for in the Partnership Agreement last
approved by the City pursuant to Section 2.6(b)(x) or Section 4.13(c)(ii); and; (2) in subsequent
Transfers, a wholly owned affiliate of the initial limited partner retains a membership or
partnership interest and serves as a managing member or managing general partner of the
successor limited partner; and (3) in subsequent Transfers the initial limited partner remains
liable for all unpaid capital contributions. Notwithstanding anything to the contrary, once all
capital contributions provided for in the Partnership Agreement have been made, the limited
partner interest in the Partnership may be transferred with prior written notice to the City.
(iv) The removal, or withdrawal in lieu of removal, of Borrower's
general partner for cause pursuant to the Partnership Agreement shall not require the City's
consent or constitute a default under this Agreement. Notwithstanding anything to the contrary,
in the event that the general partner Borrower is removed by the limited partner of Borrower, or
withdraws in lieu of being removed, for cause following default under the Borrower's
Partnership Agreement, the City hereby approves the transfer of the general partner interest to an
affiliate of the limited partner of Borrower (which affiliate is not a 501(c)(3)tax-exempt public
benefit corporation and does not meet the requirements of Section 4.6(c) or 5.1(b) hereof) to act
as the interim replacement general partner for a period of time not longer than 60 days, with the
understanding and agreement that the replacement general partner following the interim general
partner shall be a 501(c)(3) tax-exempt nonprofit public benefit corporation that is selected by
the limited partner and approved in advance and in writing by the City, which approval shall not
be unreasonably withheld, provided that: (1) all documents associated with the removal of the
general partner, including the Partnership Agreement, are submitted to the City for review and
approval, which approval shall not be unreasonably withheld or delayed; (2)that the Partnership
Agreement and other partnership documents are consistent with and do not conflict with the
Loan Documents and the approved Development Budget.
(v) The substitution of the sole and managing general partner of the
Borrower, or the sole member of the general partner, in place of the current sole and managing
general partner of the Borrower, or the sole member of the general partner, as allowed under
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Section 4.6(c) of this Agreement and for purposes of complying with 24 C.F.R. 300 an 24 C.F.R.
92.2.
(d) During the term of the City Loan Borrower will not refinance, re-
syndicate,take out a line of credit or otherwise further encumber the property or restructure the
debt constituting the Approved Financing without prior notification and approval of the City.
Notwithstanding anything to the contrary, Borrower shall be required to provide written
notification to the City at least one hundred twenty (120) days prior to submittal of applications
for refinancing, tax credits, lines of credit and any other application in which the property may be
used as security.
(e) So long as the Secretary of Housing and Urban Development or his/her
successors or assigns, are the insurers or holders of the first mortgage on the Waterman Gardens
Phase 1, FHA Project No. 143-35131, any transfer under this Section 4.13 shall be subject to
prior HUD approval.
Section 4.14 Insurance Requirements.
(a) Borrower shall maintain the following insurance coverage throughout the
Term of the Loan written by insurers authorized to do business in the State of California and
with a minimum "Best" Insurance Guide rating of"A-VII". If the Borrower uses existing
coverage to comply with these requirements and that coverage does not meet the specified
requirements, the Borrower agrees to amend, supplement, or endorse the existing coverage to do
so. The type(s) of insurance required is determined by the scope of the contract services.
(b) Without in anyway affecting the indemnity herein provided and in
addition thereto, the Borrower shall secure and maintain throughout the contract term the
following types of insurance with limits as shown:
(i) Workers' Compensation/Employers Liability.
(1) A program of Workers' Compensation insurance or a state-
approved, self-insurance program in an amount and form to meet all applicable requirements of
the Labor Code of the State of California, including Employer's Liability with $250,000 limits
covering all persons including volunteers providing services on behalf of the Borrower and all
risks to such persons under this Agreement.
(2) If Borrower has no employees, it may certify or warrant to
the City that it does not currently have any employees or individuals who are defined as
"employees" under the Labor Code and the requirement for Workers' Compensation coverage
will be waived by the City Manager.
(3) With respect to borrowers that are non-profit corporations
organized under California or federal law, volunteers for such entities are required to be covered
by Workers' Compensation insurance.
(ii) Comprehensive General Liability. General Liability Insurance
covering all operations performed by or on behalf of Borrower providing coverage for bodily
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injury and property damage with a combined single limit of not less than One Million Dollars
($1,000,000), per occurrence. The policy coverage must include:
(1) Premises operations and mobile equipment.
(2) Products and completed operations.
(3) Broad form property damage (including completed
operations).
(4) Explosion, collapse, and underground hazards.
(5) Personal injury.
(6) Contractual liability.
(7) $2,000,000 general aggregate limit.
(iii) Comprehensive Automobile Liability.
(1) Primary insurance coverage must be written on ISO
Business Auto coverage form for all owned, hired and non-owned automobiles or symbol I (any
auto).
(2) The policy must have a combined single limit of not less
than One Million Dollars ($1,000,000) for bodily injury and property damage, per occurrence.
(3) If the Borrower is transporting one or more non-employee
passengers in performance of contract services, the automobile liability policy must have a
combined single limit of Two Million Dollars ($2,000,000) for bodily injury and property
damage per occurrence.
(4) If the Borrower owns no autos, a non-owned auto
endorsement to the General Liability policy described above is acceptable.
(iv) Builders' Risk/Property Insurance. Builders' Risk insurance during
the course of construction, and upon completion of construction, property insurance covering the
Development, in form appropriate for the nature of such property, covering all risks of loss,
excluding earthquake, for one hundred percent(100%) of the replacement value, with deductible,
if any, acceptable to the City, naming the City as a Loss Payee, as its interests may appear.
Flood insurance must be obtained if required by applicable federal regulations.
(v) Commercial Crime. Commercial crime insurance covering all
officers and employees, for loss of Loan proceeds caused by dishonesty, in an amount approved
by the City, naming the City a Loss Payee, as its interests may appear.
(c) Borrower shall cause any general contractor, agent, or subcontractor
working on the Development under direct contract with Borrower or subcontract to maintain
insurance of the types and in at least the minimum amounts described in subsections (i), (ii), and
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(iii) above, meeting all of the general requirements of subsections (e) and (f)below and naming
the City as an additional insured. The Borrower agrees to monitor and review all such coverage
and assumes all responsibility ensuring that such coverage is provided as required here.
(d) An umbrella(over primary) or excess policy may be used to comply with
limits or other primary coverage requirements. When used, the umbrella policy must apply to
bodily injury/property damage, personal injury/advertising injury and must include a
"dropdown" provision providing primary coverage for any liability not covered by the primary
policy. The coverage must also apply to automobile liability.
(e) The required insurance must be provided under an occurrence form, and
Borrower shall maintain the coverage described in subsections (a) continuously throughout the
Term. Should any of the required insurance be provided under a form of coverage that includes
an annual aggregate limit or provides that claims investigation or legal defense costs be included
in such annual aggregate limit, such annual aggregate limit must be three times the occurrence
limits specified above.
(f) Comprehensive General Liability and Comprehensive Automobile
Liability insurance policies must be endorsed to name as an additional insured the City and its
elected officials, officers, agents, and employees.. The additional insured endorsements must not
limit the scope of coverage for the City to vicarious liability but must allow coverage for the City
to the full extent provided by the policy. Such additional insured coverage must be at least as
broad as Additional Insured (Form B) endorsement form ISO, CG 2010.11 85.
(g) All policies and bonds are to contain (i) the agreement of the insurer to
give the City at least thirty (30) days' notice prior to cancellation (including, without limitation,
for non-payment of premium) or any material change in said policies; (ii) an agreement that such
policies are primary and non-contributing with any insurance that may be carried by the City;
(iii) a provision that no act or omission of Borrower shall affect or limit the obligation of the
insurance carrier to pay the amount of any loss sustained; and (iv) a waiver by the insurer of all
rights of subrogation against the City and its authorized parties in connection with any loss or
damage thereby insured against.
(h) Construction contracts for projects over Three Million Dollars
($3,000,000) and less than Five Million Dollars ($5,000,000) require limits of not less than Five
Million Dollars ($5,000,000) in General Liability and Auto Liability coverage.
(i) The Borrower shall require the carriers of required coverage's to waive all
rights of subrogation against the City, its elected officials, officers, employees, agents,
volunteers, contractors and subcontractors. All general or auto liability insurance coverage
provided shall not prohibit the Borrower and Borrower's employees or agents from waiving the
right of subrogation prior to a loss or claim. The Borrower hereby waives all rights of
subrogation against the City.
0) All policies required herein are to be primary and non-contributory with
any insurance or self-insurance programs carried or administered by the City.
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(k) The Borrower shall furnish Certificates of Insurance to the City
evidencing the insurance coverage prior to the close of Escrow, additional endorsements, as
required shall be provided prior to the commencement of performance of services hereunder,
which certificates shall provide that such insurance shall not be terminated or expire without
thirty (30) days written notice to the City, and Borrower shall maintain such insurance from the
time Borrower commences performance of services hereunder until the completion of such
services. Within fifteen (15) days following the close of Escrow,the Borrower shall furnish a
copy of the Declaration page for all applicable policies and will provide complete certified
copies of the policies and endorsements immediately upon request.
(1) The Borrower agrees to ensure that coverage provided to meet these
requirements is applicable separately to each insured and there will be no cross liability
exclusions that preclude coverage for suits between the Borrower and the City or between the
City and any other insured or additional insured under the policy.
(m) Any and all deductibles or self-insured retentions in excess of Ten
Thousand Dollars ($10,000) shall be declared to and approved by the City Manager.
(n) In the event that any policy of insurance required in this Section does not
comply with the requirements, is not procured, or is canceled and not replaced, the City has the
right but not the obligation or duty to obtain such insurance it deems necessary and any
premiums paid by the City will be promptly reimbursed by Borrower or City disbursements to
Borrower will be reduced to pay for the City purchased insurance.
(o) Insurance requirements are subject to periodic review by the City. The
City Manager is authorized, but not required, to reduce, waive or suspend any insurance
requirements whenever the City Manager determines that any of the required insurance is not
available, is unreasonably priced, or is not needed to protect the interests of the City. In addition,
if the City determines that heretofore unreasonably priced or unavailable types of insurance
coverage or coverage limits become reasonably priced or available, the City Manager is
authorized, but not required, to change the above insurance requirements to require additional
types of insurance coverage or higher coverage limits, provided that any such change is
reasonable in light of past claims against the City, inflation, or any other item reasonably related
to the City's risk. Any change requiring additional types of insurance coverage or higher
coverage limits must be made by amendment to this Agreement. Borrower agrees to execute any
such amendment within thirty (30) days of receipt. Any failure, actual or alleged, on the part of
the City to monitor or enforce compliance with any of the insurance and indemnification
requirements will not be deemed as a waiver of any rights on the part of the City.
Section 4.15 Anti-Lobbying Certification.
Borrower certifies, to the best of Borrower's knowledge or belief, that:
(a) No Federal appropriated funds have been paid or will be paid, by or on
behalf of it, to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, the making of any
Federal grant, the making of any Federal loan, the entering into of any cooperative agreement,
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and the extension, continuation, renewal, amendment, or modification of any Federal contract,
grant, loan, or cooperative agreement;
(b) If any funds other than Federal appropriated funds have been paid or will
be paid to any person for influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, grant, loan, or
cooperative agreement, it will complete and submit Standard Form-LLL, Disclosure Form to
Report Lobbying, in accordance with its instructions.
This certification is a material representation of fact upon which reliance was placed
when this Agreement was made or entered into. Submission of this certification is a prerequisite
for making or entering into this Agreement imposed by Section 1352, Title 31, U.S. Code. Any
person who fails to file the required certification shall be subject to a civil penalty of not less
than Ten Thousand Dollars ($10,000) and no more than One Hundred Thousand Dollars
($100,000) for such failure.
Section 4.16 Covenants Regarding Approved Financing
(a) Borrower shall promptly pay the principal and interest when due on any
Approved Financing.
(b) Borrower shall promptly notify the City in writing of the existence of any
default under any documents evidencing Approved Financing whether or not a default has been
declared by the lender and provide the City copies of any notice of default.
(c) Borrower may not amend, modify, supplement, cancel or terminate any of
the documents evidencing Approved Financing without the prior written consent of the City.
(d) Borrower may not incur any indebtedness of any kind other than
Approved Financing or encumber the Development with any liens (other than liens for Approved
Financing approved by the City) without the prior written consent of the City.
Section 4.17 Affordability and Project Monitoring.
(a) Throughout the Term, the Borrower shall comply with all applicable
record keeping and monitoring requirements set forth in (24 C.F.R. Section 92.508) of the
HOME Regulations and shall annually complete and submit to City a Certification of Continuing
Program Compliance in the form attached hereto as Exhibit G, and incorporated herein.
(b) Representatives of the City shall be entitled to enter the Property upon at
least twenty-four(24) hours' notice at reasonable times to monitor compliance with this
Agreement, to inspect the records of the Development with respect to the Affordable Units, and
to conduct an independent audit of such records. The Borrower agrees to cooperate with the City
in making the Property available for such inspection. If for any reason the City is unable to
obtain the Borrower's consent to such an inspection, the Borrower understands and agrees that
the City may obtain, at the Borrower's expense, an administrative inspection warrant or other
appropriate legal order to obtain access to and search the Property. The Borrower agrees to
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maintain records in a business-like manner and to make such records available to the City upon
twenty-four(24) hours' notice at reasonable times. Unless the City otherwise approves, such
records shall be maintained for the most recent five years until five years after the HOME Term.
(c) Throughout the Term, the Borrower grants the City inspection rights as set
forth in Section 3.14 above, and Borrower shall make best efforts to allow the City to comply
with all applicable physical monitoring requirements set forth in (24 C.F.R. Section 92.504(d)
and 24 C.F.R. 92.251) of the HOME Regulations.
(d) The City will enforce a per-unit affordability monitoring charge on all
HOME assisted developments. HOME assisted developments will be charged as follows:
• 1-20 HOME-assisted units = $35.00 per unit/annually
• 20+ HOME-assisted units = $25.00 per unit/annually
(e) The Housing Authority and the City shall make best efforts to coordinate
physical inspections of the Development. The City will enforce a physical inspection charge on
all HOME-assisted developments. The inspection charge for HOME assisted development will
be the lesser of: (1) Five Thousand Dollars ($5,000) per inspection; or(2) the actual costs
incurred by the City to secure a qualified third party, independent of the Borrower, to conduct the
physical inspections in accordance with the requirements set forth in this Agreement, and any
related staffing costs incurred by the City in association therewith. Notwithstanding anything to
the contrary, the Borrower will not be required to pay the physical inspection charge to the City
if the Housing Authority conducts the required physical inspection and allows the City to rely on
said inspection and so long as the Housing Authority's inspections are materially consistent with
the City's requirements under this Agreement.
(f) The Borrower shall pay such charge within seven (7) days of receipt of an
invoice from the City.
(g) The City reserves the right to waive or defer a portion of the monitoring
charge if a development is unable to pay these costs. All waivers must be submitted in writing,
with adequate supporting financial documentation, for review by the City Manager.
Section 4.18 Crime-Free Multi-Housing Unit Program Participation.
Property owners and managers shall be required to participate in the San
Bernardino Police Department's Crime Free Multi-Housing Program, wherein specialized
training and other resources are provided to multi-family property owners and managers to
reduce the potential for onsite criminal activity. Completion of the Department's training and
designation as a Certified Crime-Free Property shall be achieved and maintained by the
owner/representative and onsite property manager.
41
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1 Representations and Warranties.
Borrower hereby represents and warrants to the City as follows and acknowledges,
understands, and agrees that the representations and warranties set forth in this Article 5 are
deemed to be continuing during all times when any or all of the Loan remains outstanding. The
Borrower shall immediately advise the City in writing if there is any change relating to any
matters set forth or referenced in the items set forth below:
(a) Organization. Borrower is duly organized, validly existing and in good
standing under the laws of the State of California and has the power and authority to own its
property and carry on its business as now being conducted. Copies of the documents evidencing
the organization of the Borrower delivered to the City are true and correct copies of the originals.
(b) CHDO Certification. Borrower's sole and managing general partner, or its
sole member, meets the legal and organizational characteristics described in 24 C.F.R. 92.2 and
has been and continues to be certified as a CHDO by the City for the entire HOME Term.
(c) Authority of Borrower. Borrower has full power and authority to execute
and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to
execute and deliver the Loan Documents and all other documents or instruments executed and
delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and
observe the terms and provisions of all of the above.
(d) Authority of Persons Executing Documents. This Agreement and the
Loan Documents and all other documents or instruments executed and delivered, or to be
executed and delivered, pursuant to this Agreement have been executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all
actions required under Borrower's organizational documents and applicable governing law for
the authorization, execution, delivery and performance of this Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Agreement, have been duly taken.
(e) Valid Binding Agreements. This Agreement and the Loan Documents and
all other documents or instruments which have been executed and delivered pursuant to or in
connection with this Agreement constitute or, if not yet executed or delivered, will when so
executed and delivered constitute, legal, valid and binding obligations of Borrower enforceable
against it in accordance with their respective terms.
(f) No Breach of Law or Agreement. Neither the execution nor delivery of
this Agreement and the Loan Documents or of any other documents or instruments executed and
delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any
provision, condition, covenant or other term hereof or thereof, will conflict with or result in a
breach of any statute, rule or regulation, or any judgment, decree or order of any court, board,
commission or agency whatsoever binding on Borrower, or any provision of the organizational
documents of Borrower, or will conflict with or constitute a breach of or a default under any
42
agreement to which Borrower is a party, or will result in the creation or imposition of any lien
upon any assets or property of Borrower, other than liens established pursuant hereto.
(g) Compliance with Laws; Consents and Approvals. The construction of the
Development will comply with all applicable laws, ordinances, rules and regulations of federal,
state and local governments and agencies and with all applicable directions, rules and regulations
of the fire marshal, health officer, building inspector and other officers of any such government
or agency.
(h) Pending Proceedings. Borrower is not in default under any law or
regulation or under any order of any court, board, commission or agency whatsoever, and there
are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower,threatened
against or affecting Borrower or the Development, at law or in equity, before or by any court,
board, commission or agency whatsoever which might, if determined adversely to Borrower,
materially affect Borrower's ability to repay the Loan or impair the security to be given to the
City pursuant hereto.
(i) Title to Land. At the time of recordation of the Deed of Trust, Borrower
will have good and marketable leasehold title to the Development and there will exist thereon or
with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever
other than liens for current real property taxes and liens ancillary to the Approved Financing and
liens in favor of the City or approved in writing by the City.
0) Financial Statements. The financial statements of Borrower and other
financial data and information furnished by Borrower to the City fairly and accurately present the
information contained therein. As of the date of this Agreement, there has not been any material
adverse change in the financial condition of Borrower from that shown by such financial
statements and other data and information.
(k) Sufficient Funds. Borrower holds or reasonably expects to receive firm
financial commitments for sufficient funds to complete the acquisition of the Property and the
construction of the Development in accordance with the plans and specifications approved by the
City.
(1) Taxes. Borrower and its subsidiaries have filed all federal and other
material tax returns and reports required to be filed, and have paid all federal and other material
taxes, assessments, fees and other governmental charges levied or imposed upon them or their
income or the Property otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been provided in
accordance with generally accepted accounting principles. There is no proposed tax assessment
against Borrower or any of its subsidiaries that could, if made, be reasonably expected to have a
material adverse effect upon the Property, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of Borrower and its subsidiaries, taken as a whole, which
would be expected to result in a material impairment of the ability of Borrower to perform under
any Loan Document to which it is a party, or a material adverse effect upon the legality, validity,
binding effect or enforceability against Borrower of any Loan Document.
43
ARTICLE 6. DEFAULT AND REMEDIES
Section 6.1 Events of Default.
Each of the following constitutes an "Event of Default" by Borrower under this
Agreement:
(a) Failure to Construct. Failure of Borrower to obtain permits, commence,
and prosecute to completion, construction of the Development within the times set forth in the
Schedule of Performance.
(b) Failure to Make Payment. Failure to repay the principal and any interest
on the Loan when such payment is due pursuant to the Loan Documents.
(c) Breach of Covenants. Failure by Borrower to duly perform, comply with,
or observe any of the conditions, terms, or covenants of any of the Loan Documents (other than
obligations described in subsections (a) and (b) above), and Borrower fails to cure such default
within thirty (30) days after receipt of written notice thereof from the City to Borrower;
provided, however, that if a different period or notice requirement is specified under any other
section of this Article 6, the specific provisions shall control.
(d) Default Under Other Loans. A default is declared under any other
financing for the Development by the lender of such financing and such default remains uncured
following any applicable notice and cure period.
(e) Insolvency. A court having jurisdiction makes or enters any decree or
order(i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly filed a
petition seeking reorganization of Borrower, or seeking any arrangement for Borrower under the
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower
in bankruptcy or insolvency or for any of their properties, (iv) directing the winding up or
liquidation of Borrower if any such decree or order described in clauses (i) to (iv), inclusive, is
unstayed or undischarged for a period of ninety (90) calendar days; or(v) Borrower admits in
writing its inability to pay its debts as they fall due or will have voluntarily submitted to or filed
a petition seeking any decree or order of the nature described in clauses (i)to (iv), inclusive. The
occurrence of any of the Events of Default in this paragraph will act to accelerate automatically,
without the need for any action by the City, the indebtedness evidenced by the Note.
(f) Assignment: Attachment. Borrower assigns its assets for the benefit of its
creditors or suffers a sequestration or attachment of or execution on any substantial part of its
property, unless the property so assigned, sequestered, attached or executed upon is returned or
released within ninety (90) calendar days after such event or, if sooner, prior to sale pursuant to
such sequestration, attachment, or execution. The occurrence of any of the events of default in
this paragraph shall act to accelerate automatically, without the need for any action by the City,
the indebtedness evidenced by the Note.
44
(g) Suspension; Termination. Borrower voluntarily suspends its business or,
the partnership is dissolved or terminated, other than a technical termination of the partnership
for tax purposes.
(h) Liens on Property and the Development. Any claim of lien (other than
liens approved in writing by the City) is filed against the Development or any part thereof, or any
interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of
the Loan and the continued maintenance of said claim of lien or notice to withhold for a period
of twenty (20) days, without discharge or satisfaction thereof or provision therefor (including,
without limitation, the posting of bonds) satisfactory to the City.
(i) Condemnation. The condemnation, seizure, or appropriation of all or the
substantial part of the Property and the Development, except that condemnation by the County or
City shall cause the Loan to accelerate but shall not be a Default.
0) Unauthorized Transfer. Any Transfer other than as permitted pursuant to
Section 4.13.
(k) Representation or Warranty Incorrect. Any Borrower representation or
warranty contained in this Agreement, or in any application, financial statement, certificate, or
report submitted to the City in connection with any of the Loan Documents, proves to have been
incorrect in any material respect when made.
(1) Failure to Timely Lease. Failure of Borrower to lease all of the City-
Assisted Units within eighteen (18) months of the Completion of Construction of the
Development.
(m) Applicability to General Partner. The occurrence of any of the events set
forth in subsection (e), subsection (f), or subsection (g) in relation to Borrower's managing
general partner.
Section 6.2 Remedies.
Upon the occurrence of an Event of Default and following the expiration of all applicable
notice and cure periods the City (i) is relieved of any obligation to make or continue the Loan
and (ii) has the right to proceed with any and all remedies set forth in this Agreement and the
Loan Documents, including but not limited to the following:
(a) Acceleration of Note. The City may cause all indebtedness of Borrower to
the City under this Agreement and the Note, together with any accrued interest thereon, to
become immediately due and payable. Borrower waives all right to presentment, demand,
protest or notice of protest or dishonor. The City may proceed to enforce payment of the
indebtedness and to exercise any or all rights afforded to the City as a creditor and secured party
under the law including the Uniform Commercial Code, including foreclosure under the Deed of
Trust. Borrower is liable to pay the City on demand all reasonable expenses, costs and fees
(including, without limitation,reasonable attorney's fees and expenses) paid or incurred by the
City in connection with the collection of the Loan and the preservation, maintenance, protection,
sale, or other disposition of the security given for the Loan. So long as the Secretary of Housing
45
and Urban Development or his/her successors or assigns, are the insurers or holders of the first
mortgage on the Waterman Gardens—Valencia 9, FHA Project No. 143-35130, the acceleration
provisions in this Section 6.2 shall not apply.
(b) Specific Performance. The City has the right to mandamus or other suit,
action or proceeding at law or in equity to require Borrower to perform its obligations and
covenants under the Loan Documents or to enjoin acts on things that may be unlawful or in
violation of the provisions of the Loan Documents.
(c) Termination. The City has the right to terminate this Agreement and, at its
sole option, to seek any remedies at law or equity available hereunder.
(d) Right to Cure at Borrower's Expense. The City has the right (but not the
obligation) to cure any monetary default by Borrower under a loan other than the Loan.
Borrower shall reimburse the City for any funds advanced by the City to cure a monetary default
by Borrower upon demand therefor, together with interest thereon at the lesser of the maximum
rate permitted by law and ten percent(10%) per annum (the "Default Rate") from the date of
expenditure until the date of reimbursement.
Section 6.3 Right of Contest.
Borrower may contest in good faith any claim, demand, levy, or assessment the assertion
of which would constitute an Event of Default hereunder. Any such contest is to be prosecuted
diligently and in a manner unprejudicial to the City or the rights of the City hereunder.
Section 6.4 Remedies Cumulative.
No right, power, or remedy given to the City by the terms of this Agreement or the Loan
Documents is intended to be exclusive of any other right, power, or remedy; and each and every
such right, power, or remedy will be cumulative and in addition to every other right, power, or
remedy given to the City by the terms of any such instrument, or by any statute or otherwise
against Borrower and any other person. Neither the failure nor any delay on the part of the City
to exercise any such rights and remedies will operate as a waiver thereof, nor does any single or
partial exercise by the City of any such right or remedy preclude any other or further exercise of
such right or remedy, or any other right or remedy.
Section 6.5 Limited Partner Cure Rights
The City agrees to provide any limited partner of Borrower who has requested written
notice from the City ("Permitted Limited Partner") a duplicate copy of all notices of default that
the City may give to or serve in writing upon Borrower pursuant to the terms of the Loan
Documents, at the address provided to the City. The Permitted Limited Partner shall have the
right, but not the obligation,to cure any Default of Borrower set forth in such notice, during any
applicable cure period described in the Loan Documents, and the City will accept tender of such
cure as if delivered by Borrower.
46
ARTICLE 7. GENERAL PROVISIONS
Section 7.1 Relationship of Parties.
Nothing contained in this Agreement is to be interpreted or understood by any of the
Parties, or by any third persons, as creating the relationship of employer and employee, principal
and agent, limited or general partnership, or joint venture between the City and Borrower or its
agents, employees or contractors, and Borrower will at all times be deemed an independent
contractor and to be wholly responsible for the manner in which it or its agents, or both, perform
the services required of it by the terms of this Agreement. Borrower has and retains the right to
exercise full control of employment, direction, compensation, and discharge of all persons
assisting in the performance of services under the Agreement. In regards to the construction and
operation of the Development, Borrower is solely responsible for all matters relating to payment
of its employees, including compliance with Social Security, withholding, and all other laws and
regulations governing such matters, and must include requirements in each contract that
contractors are solely responsible for similar matters relating to their employees. Borrower is
solely responsible for its own acts and those of its agents and employees.
Section 7.2 No Claims.
Nothing contained in this Agreement creates or justifies any claim against the City by any
person that Borrower may have employed or with whom Borrower may have contracted relative
to the purchase of materials, supplies or equipment, or the furnishing or the performance of any
work or services with respect to the purchase of the Property, the construction or operation of the
Development, and Borrower shall include similar requirements in any contracts entered into for
the construction or operation of the Development.
Section 7.3 Discretion Retained By City.
The City's execution of this Agreement in no way limits the discretion of the City in the
permit and approval process in connection with the construction of the Development.
Section 7.4 Indemnification.
The Borrower agrees to indemnify, defend (with counsel reasonably approved by City)
and hold harmless the City and its authorized officers, employees, agents and volunteers
("Indemnities") from any and all claims, actions, losses, damages, and/or liability arising out of
this contract from any cause whatsoever, including the acts, errors or omissions of any person
and for any costs or expenses incurred by the City on account of any claim except where such
indemnification is prohibited by law. This indemnification provision shall apply regardless of the
existence or degree of fault of Indemnities. The Borrower's indemnification obligation applies to
the City's "active" as well as "passive" negligence but does not apply to the City's "sole
negligence" or "willful misconduct" within the meaning of Civil Code Section 2782. This
indemnification provision is not intended to and does not limit, negate, modify, nullify, or
change the nonrecourse provisions of this Agreement or any other agreement, document,
instrument, certificate or covenant executed by Borrower. The provisions of this Section will
survive the expiration of the Term and the reconveyance of the Deed of Trust. The Borrower's
47
duty to indemnify the City shall be limited to available surplus cash and/or residual receipts of
the Borrower or non-Project assets of the Borrower.
Notwithstanding anything to the contrary in this Agreement, so long as the Secretary of
Housing and Urban Development or his/her successors or assigns, are the insurers or holders of
the first mortgage on the Waterman Gardens Phase 1, FHA Project No. 143-35131, under the
indemnifications provisions, including but not limited to those in Sections 2.7, 2.8, 3.8, 4.6, 4.7,
7.4 of this Agreement, Borrower's obligation to indemnify and hold the City harmless shall be
limited to available Surplus Cash of the Borrower or non-Project assets of the Borrower or
available liability insurance proceeds and the indemnification provisions shall not apply to HUD.
Section 7.5 Non-Liability of City Officials, Employees and Agents.
No member, official, employee or agent of the City is personally liable to Borrower in the
event of any default or breach by the City or for any amount that may become due to Borrower
or its successor or on any obligation under the terms of this Agreement.
Section 7.6 No Third Party Beneficiaries.
There are no third party beneficiaries to this Agreement.
Section 7.7 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs, no person
described in Section 7.7(b) below who exercises or has exercised any functions or
responsibilities with respect to the activities funded pursuant to this Agreement or who is in a
position to participate in a decision-making process or gain inside information with regard to
such activities, may obtain a financial interest or financial benefit from the activity, or have an
interest in any contract, subcontract or agreement with respect thereto, or the proceeds
thereunder, either for themselves or those with whom they have family or business ties, during,
or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that
the prohibition in this Section 7.7(a) is followed.
(b) The conflict of interest provisions of Section 7.7(a) above apply to any
person who is an employee, agent, consultant, officer, or any immediate family member of such
person, or any elected or appointed official of the City, or any person related within the third
(3rd) degree of such person.
(c) In accordance with California Government Code Section 1090 and the
Political Reform Act, California Government Code section 87100 et seq., no person who is a
director, officer, partner, trustee or employee or consultant of Borrower, or immediate family
member of any of the preceding, may make or participate in a decision, made by the City or a
City board, commission or committee, if it is reasonably foreseeable that the decision will have a
material effect on any source of income, investment or interest in real property of that person or
Borrower. Interpretation of this section is governed by the definitions and provisions used in the
Political Reform Act, California Government Code Section 87100 et seq., its implementing
regulations manual and codes, and California Government Code Section 1090.
48
(d) Borrower shall comply with the conflict of interest provisions set forth in
24 C.F.R. 92.356.
Section 7.8 Notices, Demands and Communications.
All notices required or permitted by any provision of this Agreement must be in writing
and sent by registered or certified mail, postage prepaid, return receipt requested, or delivered by
express delivery service, return receipt requested, or delivered personally, to the principal office
of the Parties as follows:
City: City Manager
City of San Bernardino
300 N "D" Street, Sixth Floor
San Bernardino, CA 92418
Attn: Housing Director
Borrower: Waterman Gardens Partners 1, L.P.
9421 Haven Avenue
Rancho Cucamonga, CA 91730
Attn: Chief Financial Officer
With a copy to:
Law Offices of Edward A. Hopson
655A No. Mountain Avenue
Upland, CA 91786
Attn: Edward A. Hopson
With a copy to:
Wells Fargo Community Lending & Investment
Wells Fargo Affordable Housing
Community Development Corporation
301 South College Street, 17th Floor
MAC D1053-170
Charlotte,NC 28288
With a copy to:
Kutak Rock
1650 Famam Street
Omaha,NE 68102
Attn: Robert Coon
Such written notices, demands and communications may be sent in the same manner to such
other addresses as the affected Party may from time to time designate by mail as provided in this
Section. Receipt will be deemed to have occurred on the date shown on a written receipt as the
date of delivery or refusal of delivery (or attempted delivery if undeliverable).
49
Section 7.9 Amendments.
No alteration or variation of the terms of this Agreement is valid unless made in writing
by the Parties. The City Manager is authorized to execute on behalf of the City amendments to
the Loan Documents or amended and restated Loan Documents as long as any material change in
the amount or terms of this Agreement is approved by the Mayor and Common Council. So long
as the Secretary of Housing and Urban Development or his/her successors or assigns, are the
insurers or holders of the first mortgage on the Waterman Gardens Phase 1, FHA Project No.
143-35131, any amendments under this Section 7.9 shall be subject to prior HUD approval.
Section 7.10 Cit Apl2roval.
The City has authorized the City Manager to execute the ancillary Loan documents and
deliver such approvals or consents as are required by this Agreement, and to execute estoppel
certificates concerning the status of the Loan and the existence of Borrower defaults under the
Loan Documents, including subordination agreements substantially consistent with the terms of
Section 2.5 above.
Section 7.11 Applicable Law.
This Agreement is governed by the laws of the State of California.
Section 7.12 Parties Bound.
Except as otherwise limited herein, this Agreement binds and inures to the benefit of the
parties and their heirs, executors, administrators, legal representatives, successors, and assigns.
This Agreement is intended to run with the land and to bind Borrower and its successors and
assigns in the Property and the Development for the entire Term, and the benefit hereof is to
inure to the benefit of the City and its successors and assigns.
Section 7.13 Attorney, sue.
If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing
Party will have the right to recover its reasonable attorneys' fees and costs of suit from the other
Party.
Section 7.14 Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions will continue in full force and effect
unless the rights and obligations of the Parties have been materially altered or abridged by such
invalidation, voiding or unenforceability.
Section 7.15 Force Majeure.
In addition to specific provisions of this Agreement, performance by either Party will not
be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock-
outs, riots, floods, earthquakes, fires, quarantine restrictions, freight embargoes, lack of
transportation, or court order. An extension of time for any cause will be deemed granted if
50
notice by the Party claiming such extension is sent to the other within ten (10) days from the
commencement of the cause and such extension of time is not rejected in writing by the other
Party within ten (10) days of receipt of the notice. In no event will the City be required to agree
to cumulative delays in excess of ninety (90) days.
Section 7.16 Waivers.
Any waiver by the City of any obligation or condition in this Agreement must be in
writing. No waiver will be implied from any delay or failure by the City to take action on any
breach or default of Borrower or to pursue any remedy allowed under this Agreement or
applicable law. Any extension of time granted to Borrower to perform any obligation under this
Agreement does not operate as a waiver or release from any of its obligations under this
Agreement. Consent by the City to any act or omission by Borrower may not be construed to be
consent to any other or subsequent act or omission or to waive the requirement for the City's
written consent to future waivers.
Section 7.17 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and are to be disregarded in interpreting any part of the Agreement's provisions.
Section 7.18 Entire Understanding of the Parties
The Loan Documents constitute the entire agreement of the Parties with respect to the
Loan.
Section 7.19 Multiple Originals; Counterpart.
This Agreement may be executed in multiple originals, each of which is deemed to be an
original, and may be signed in counterparts.
[Signature Page Follows]
51
WHEREAS, this Agreement has been entered into by the undersigned as of the Effective
Date.
BORROWER:
Waterman Gardens Partners 1, L.P., a California limited partnership
Date:
By: WG Partners 1 MPG, LLC, a California limited liability
company, its sole general partner
By: National Community Renaissance of California,
its sole member and manager
By:
Tracy T om s, hief Financial Officer
CITY:
CITY OF SAN BERNARDINO, a charter city of the State of California
Date: 3-1�'1pl
By:
Mark Scott, City Manager
ATTEST
Georgeann Hanna
City Clerk
u4'
Date: 33
APPROVED AS TO FORM:
Gary D. Saenz
City Attorney
By: G
52
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
State of California
County of ar (1Z )
On '3�1 1 (P- I otO t , be ore me GQ r
' , a Notary Public, personally
appeared —, who proved to me on a basis of satisfactory evidence
to be the persons) whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
BRENDA GRACE tEGGtTT
COMMssion N 1985198
Notary Public-California
Sin Bernardino County
M Comm.Ex Tres Au 11,2016
SMRH:475575891.4 Acknowledgment
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS:
[TO BE UPDATED]
A-1
EXHIBIT D
FORM OF PROMISSORY NOTE
D-1
EXHIBIT G
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
G-2
EXHIBIT F
FORM OF REGULATORY AGREEMENT
G-2
EXHIBIT E
FORM OF DEED OF TRUST
G-1
EXHIBIT C
SCHEDULE OF PERFORMANCE
C-1
PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Order No.: 989-23058354-C-SG6
EXHIBIT A
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN BERNARDINO, COUNTY OF
SAN BERNARDINO,STATE OF CALIFORNIA,AND IS DESCRIBED AS FOLLOWS:
PARCEL 1: (0147-211-023-0000)
PARCEL C OF CERTIFICATE OF COMPLIANCE FOR LOT LINE ADJUSTMENT RECORDED MARCH 12, 2015,AS
INSTRUMENT NO. 2015-0097328 OFFICIAL RECORDS OF SAN BERNARDINO COUNTY, DESCRIBED AS
FOLLOWS:
BEING A PORTION OF LOTS 13 AND 14 OF BLOCK 42 OF RANCHO SAN BERNARDINO, AS PER PLAT
RECORDED IN BOOK 7. PAGE 2 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, STATE OF
CALIFORNIA,DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE WEST LINE OF THE EAST 300.00 FEET OF SAID LOT 14 AND THE
SOUTH LINE OF SAID LOT 14, SAID SOUTH LINE ALSO BEING THE CENTERLINE OF OLIVE STREET; THENCE
SOUTH 890 51' 42" WEST ALONG SAID SOUTH LINE A DISTANCE OF 80.17 FEET; THENCE NORTH 89° 59' 48"
WEST A DISTANCE OF 499.98 FEET; THENCE SOUTH 89° 58' 38" WEST A DISTANCE OF 70.92 FEET; THENCE
NORTH LEAVING SAID SOUTH LINE A DISTANCE OF 232.27 FEET TO A POINT ON A NON-TANGENT CURVE,
CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 115.00 FEET, A RADIAL TO SAID CURVE BEARS
SOUTH 130 14' 07" EAST; THENCE EASTERLY AND NORTHEASTERLY ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 400 26' 34" AN ARC LENGTH OF 81.17 FEET; THENCE NORTH 36° 19' 19" EAST A
DISTANCE OF 407.64 FEET; THENCE SOUTH 53° 40' 41" EAST A DISTANCE OF 22.59 FEET TO A TANGENT
CURVE, CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 325.00 FEET; THENCE SOUTHEASTERLY
AND EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 360 19' 19" AN ARC LENGTH OF
206.03 FEET; THENCE EAST A DISTANCE OF 131.28 FEET TO THE WEST LINE OF THE EAST 300.00 FEET OF
SAID LOT 14; THENCE SOUTH 0° 08' 27"EAST ALONG SAID WEST LINE A DISTANCE OF 527.82 FEET TO THE
POINT OF BEGINNING.
PARCEL 2: (0147-211-21-0000)
PARCEL A,AS SHOWN ON EXHIBIT"D"OF LOT LINE ADJUSTMENT NO. LLA. 2015-002,IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, RECORDED MARCH 12, 2015, AS
INSTRUMENT NO. 2015-0097328 OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY,MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A PORTION OF LOTS 12, 13, AND 14, OF BLOCK 42, OF RANCHO SAN BERNARDINO PER BOOK 7,
PAGE 2 OF MAPS,,RECORDS OF THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,DESCRIBED
AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE WEST LINE OF THE EAST 300.00 FEET OF SAID LOT 14 AND
THE SOUTH LINE OF SAID LOT 14, SAID SOUTH LINE ALSO BEING THE CENTERLINE OF OLIVE STREET;
THENCE, SOUTH 89°51'42" WEST ALONG SAID SOUTH LINE A DISTANCE OF 80.17 FEET; THENCE NORTH
89 059'48" WEST A DISTANCE OF 499.98 FEET; THENCE SOUTH 89°58'38" WEST A DISTANCE OF 70.92 FEET TO
THE TRUE POINT OF BEGINNING; THENCE CONTINUING SOUTH 89 058'38" WEST ALONG SAID SOUTH LINE
A DISTANCE OF 634.20 FEET TO THE WEST LINE OF SAID LOT 12; THENCE NORTH 00°06'47" WEST ALONG
THE SAID WEST LINE 958.01 FEET TO THE SOUTHERLY RIGHT-OF-WAY OF BASELINE STREET; THENCE
EAST ALONG SAID RIGHT-OF-WAY A DISTANCE OF 1284.80 FEET TO THE WEST LINE OF THE EAST 300.00
FEET OF SAID LOT 14; THENCE SOUTH 00°08'27"EAST ALONG SAID WEST LINE 429.75 FEET; THENCE WEST
LEAVING SAID WEST LINE A DISTANCE OF 131.28 FEET TO A TANGENT CURVE, CONCAVE
NORTHEASTERLY AND HAVING A RADIUS OF 325.00 FEET; THENCE WESTERLY AND NORTHWESTERLY
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36 019'19" AN ARC LENGTH 206.03 FEET; THENCE
NORTH 53°40'41" WEST A DISTANCE OF 139.82 FEET TO A TANGENT CURVE, CONCAVE SOUTHWESTERLY
AND HAVING A RADIUS OF 345.00 FEET; THENCE NORTHWESTERLY AND WESTERLY ALONG SAID CURVE
CLTA Preliminary Report Form—Modified(11/17/06) Page 3
EXHIBIT B
APPROVED DEVELOPMENT BUDGET
B-1
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OPERATING EXPENSES
Project Name:
Project Name: Waterman Gardens Phase I
Developer: NCRC/TCC/HACSB/HPI
Number of Dwelling Units: 62
Description
1.Management
Management Fee $ 39,432 $ 3,286.00 $ 636.00 $ 53.00 9.88%
Management Total: $ 39,432 $ 3,286.00 $ 636.00 $ 53.00 9.88%
2.Administration
Marketing/Credit Checks $ 2,000 $ 166.67 $ 32.26 $ 2.69 0.76%
Audit(Reznick)/File Mgmt(Compliance) $ 15,000 $ 1,250.00 $ 241.94 $ 20.16 2.42%
Legal $ 5,000 $ 416.67 $ 80.65 $ 6.72 1.26%
Office Expenses/MISC $ 8,000 $ 666.67 $ 129.03 $ 10.75 3.69%
Administration Total: $ 30,000 $ 2,500 $ 484 $ 40 8.14%
3.Salaries and Benefits
Manager/Asst.Manager $ 35,000 $ 2,916.67 $ 564.52 $ 47.04 8.85%
Main Personnel $ 28,000 $ 2,333.33 $ 451.61 $ 37.63 6.69%
Leasing Commissions $ 3,985 $ 332.08 $ 64.27 $ 5.36 0.00%
Case Manager $ - $ - $ - $ - 0.00%
Housekeepers $ - $ - $ - $ - 0.00%
Payroll Txs,Ins&Wkr.Comp. $ 33,336 $ 2,778.00 $ 537.68 $ 44.81 5.32%
Salaries and Benefits Total: $ 100,321 $ 8,360.08 $ 1,618.08 $ 134.84 20.86%
4.Maintenance
Supplies $ 8,000 $ 666.67 $ 129.03 $ 10.75 1.69%
Repairs Contract $ 10,050 $ 837.50 $ 162.10 $ 13.51 2.11%
Pest Control $ 3,000 $ 250.00 $ 48.39 $ 4.03 0.51%
Fire Prevention $ 7,100 $ 591.67 $ 114.52 $ 9.54 0.42%
Security Systems $ 9,000 $ 750.00 $ 145.16 $ 12.10 2.32%
Elevator $ - $ - $ - 1.58%
Misc. $ 10,000 $ 833.33 $ 161.29
Pool(Future CAM for WG Facilities) $ - $ - $ - 1.26%
Maintenance Total: $ 47,150 $ 3,929.17 $ 760.48 $ 49.93 9.89%
5. Utilities Not Paid by Tenants
Trash Removal $ 13,000 $ 1,083.33 $ 209.68 $ 17.47 2.21%
Electricity $ 24,800 $ 2,066.67 $ 400.00 $ 33.33 2.48%
Water/Sewer $ 34,100 $ 2,841.67 $ 550.00 $ 45.83 8.54%
Gas $ 12,000 $ 1,000.00 $ 193.55 $ 16.13 2.74%
Utilities Total: $ 83,900 $ 6,991.67 $ 1,353.23 $ 112.77 15.97%
6.Insurance
Property&Liability Insurance $ 28,500 $ 2,375.00 $ 459.68 $ 38.31 5.45%
Insurance Total: $ 28,500 $ 2,375.00 $ 459.68 $ 38.31 5.45%
7.Tax and Reserves
Real Estate Taxes $ 5,000 $ 416.67 $ 80.65 $ 6.72 1.05%
Replacement Reserves $ 24,800 $ 2,066.67 $ 400.00 $ 33.33 8.01%
Tax and Reserves Total: $ 29,800 $ 2,483.33 $ 480.65 $ 40.05 9.06%
8.Other
Security Patrol $ 8,000 $ 666.67 $ 129.03 $ 10.75 5.06%
Grounds Contract $ 5,000 $ 416.67 $ 80.65 $ 6.72 8.01%
Turn Over $ 8,000 $ 666.67 $ 129.03 $ 10.75 1.05%
Support Services $ 14,880 $ 1,240.00 $ 240.00 $ 20.00 4.55%
Payments to Public Agencies $ 3,473 $ 289.42 $ 56.02 $ 4.67 2.09%
$ 39,353 $ 3,279.42 $ 634.73 $ 52.89 20.76%
Operating Expenses Total: $ 398,456 $ 33,204.67 $ 6,426.71 $ 522.12 100.00%
RENT SCHEDULE-CTCAC
Project Name: Waterman Gardens Phase I
Project Financing: 9%Tx Credit Family
County: San Bernardino
Developer: NCRC/TCC/HACSB/HPI
#of Dwelling Units: 62
Number CTCAC 2015 Monthly Monthly Total Annual Total
AMI 0 Restricted Re Utility Allow. Net Rent CTCAC Rents #of Bedrooms 135
1 Bed PHU/RAD 30% 2 $ 349 $ 73 $ 276 $ 6,624 2 761 $ 485
1 Bed PHU/RAD 45% 3 S 524 $ 73 $ 451 $ 16,236 3 882 $ 566
1 Bed PHU/RAD 50% 6 $ 582 $ 73 $ 509 $ 36,648 6 1,076 $ 720
1 Bed PHU/RAD 60% 1 S 699 $ 73 $ 626 $ 7,512 1
Subtotal: 12 $ 67,020 12
2 Bed PHU/RAD 30% 3 S 419 $ 103 $ 316 $ 11,376 6
2 Bed PHU/RAD 45% 14 $ 628 $ 103 $ 525 $ 88,200 28
2 Bed PHU/RAD 50% 6 $ 698 $ 103 $ 595 $ 42,840 12
2 Bed PHU/RAD 60% 7 838 $ 103 $ 735 $ 61,740 14
Subtotal: 30 $ 204,156 60
3 Bed PHU/RAD 30% 2 $ 484 $ 128 $ 356 $ 8,544 6
3 Bed PHU/RAD 45% 11 S 726 $ 128 $ 598 $ 78,936 33
3 Bed PHU/RAD 50% 1 $ 807 $ 128 $ 679 $ 8,148 3
3 Bed PHU/RAD 60% 5 S 969 $ 128 $ 841 $ 50,460 15
Subtotal: 19 $ 146,088 57
Subtotal: 0 $ - 0
3 Bed-Mgr Exempt-Mgr $ - $ - $ - $ 0
Subtotal: 0 $ - 0
CTCAC RENT Total: 61 417,264 129
$ 34,772
Unit Mix w/Mgr Unit Mix w/o Mgr
1 Bed of
12 19.67% 1 Bed of
12 19.677/
2 Bed 30 49.18% 2 Bed 30 49.18%
3 Bed 19 31.15% 3 Bed 19 31.15%
4 Bed 0 0.00% 4 Bed 0 0.00%
4 Bed-Mgr 0 0.00%
Total: 61 100.00% Total: 61 100.00%
AMI Mix w/Mgr AMI Mix w/o Mgr
Number AMI of •
30% 7 11.48% 30% 7
11.48% 15
45% 28 45.90% 45% 28 45.90% 25
50% 13 21.31% 50% 13 21.31% 10
60% 13 21.31% 60% 13 21.31% 0
Exempt-Mgr 0 0.00%
Total: 61 100.00% Total: 61 100.00% 50
EXHIBIT C
SCHEDULE OF PERFORMANCE
C-1
Schedule of Performance
Waterman Gardens 1
610 Olive Street,San Bernardino California
Milestone Date Key-Prerequisite
Milestone
Receive Entitlements/Environmental Clearance 4/14/2014 Submit Entitlements
Apply for 9%Tax Credits July 2016 Receive Entitlements
Receive 9%Tax Credit Reservation September 2016 Apply for 9%Credits
Select Tax Credit Investor October 2016 Receive CTCAC Award
Submit plans and applications for plan check
and building permit October 2016 Receive CTCAC Award
Obtain Approval of Construction Plans February 2016 No later than 180-day CTCAC deadline
(March 23,2015)
Obtain FHA/HUD Loan Commitment February 2016 No later than 180-day CTCAC deadline
(March 23,2015)
Final Construction Contract March 2016 No later than 180-day CTCAC deadline
(March 23,2015)
Obtain Construction Permits March 2016 No later than 180-day CTCAC deadline
(March 23,2015)
Notice to Proceed March 2016 No later than 180-day CTCAC deadline
(March 23,2015)
Begin Construction April 2016
Apply for AHP Funds March 2015
Management Plan May 2016
Complete construction September 2017
100%Occupied January 2018
Permanent Loan Closng December 2018
EXHIBIT D
FORM OF PROMISSORY NOTE
D-1
EXHIBIT H
SECTION 3 COMPLIANCE
H-1
SECTION 3 PLAN
(OWNER/DEVELOPER
AND
GENERAL CONTRACTOR)
For: Waterman Gardens 1
(Name of Development)
Submitted by:
Name of Owner/Developer: National Community Renaissance of California
Address. 9421 Haven Avenue, Rancho Cucamonga, CA
Contact: Erik Johnson, Vice President of Development (909) 483-2444
(Name and Telephone Number)
General contractor: National Community Renaissance of California
address. 9421 Haven Avenue, Rancho Cucamonga, CA
Contact- Byron Ely, Senior Vice President (909) 483-2444
(Name and Telephone Number)
i
i
General Statement
National Community Renaissance Corporation of California as the owner, and National Community Renaissance Corporation of California
as the general contractor are committed to comply with the Section 3 act, the Section 3
regulations, and the City of San Bernardino ("City") Section 3 Guidelines. It is our desire to
work together to ensure compliance, to the greatest extent feasible, through the awarding of
contracts for work and services to Section 3 companies, and to provide employment and training
to Section 3 residents. We commit to include the Section 3 clause in the construction contract
and all subcontracts in excess of$100,000.00. All subcontractors interested in submitting bids
for contracts will be informed of the Section 3 requirements and goals. We agree to provide the
City with copies of all bids received in response to the invitation to bid and copies of all
contracts awarded in excess of$100,000.00.
Goals
Contracting:
To demonstrate compliance with Section 3 regulations, it is desirous to award at least 10 percent
of the total dollar amount of all Section 3 covered contracts for building trades work, and,at least
3 percent of the total dollar amount of all other Section 3 covered contracts (i.e., professional
services)to Section 3 business concerns.
Construction contract: $17,827,282
10%: $1,782,728
3% $534,818
These goals are affirmed: Initials:
If we do not feel it is feasible to meet the minimum goals set forth above, we will be prepared to
demonstrate why it was not possible. We understand failure to follow our Section 3 Plan could
result in the Secretary of Housing and Urban Development ("HUD") finding us non-compliant
with the Section 3 regulations.
Employment and Training:
To demonstrate compliance with Section 3 regulations, it is desirous to employ Section 3
residents as 30 percent of the aggregate number of new hires, and to provide training to those
new hires. We agree to provide information regarding existing employees and hiring needs as a
part of this plan.
Any goal established in this plan must be met. If we fail to do so, we agree to provide an
explanation and documentation as to why the goal was not met.
Outreach
We are committed to conduct an aggressive outreach campaign to make Section 3 Businesses
and Section 3 Residents aware of contracting and possible hiring opportunities in connection
with this Section 3 Covered Project. Efforts will include, but not be limited to, publication of
opportunities in the local newspapers, use of signage at the project site, flyers posted in the
neighborhood and surrounding areas, notification of local housing authorities, contractor and
trade organizations,employment agencies, career centers and local Youthbuild chapters.
Project Neij4hborhood Area
The project neighborhood area is: central San Bernardino
This area will be the primary focus of all outreach attempts.
Section 3 Coordinator
Name:
Contact Information:
This person will serve as the main point of contact for all Section 3 related issues on behalf of
the owner, general contractor, and the subcontractor.
Reporting
We agree to submit a Master Subcontractor List on the 20`h day of each month after construction
of the Section 3 Covered Project has commenced. We agree to submit a final report to the City
on I-IUD Form 60002 at completion of construction of the Section 3 Covered Project. We agree
to immediately report any changes in this plan, including but not limited to, changes in the dollar
amount of contracts awarded and staffing needs of the subcontractors.
Attachments
The following attachments are incorporated into and made a part of this Section 3 Plan:
Section 3 Clause that will be included in all contracts
Contracting Plan
Outreach to Solicit Bids from Section 3 Businesses
Permanent Employee Listing for the Owner/Developer
Permanent Employee Listing for the General Contractor
Workforce Needed for Section 3 Covered Project for the Owner/Developer
Workforce Needed for Section 3 Covered Project for the General Contractor