HomeMy WebLinkAboutR32-Economic Development Agency
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CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
FROM: Maggie Pacheco
Executive Director
SUBJECT: Single Family IncJusionary Housing Owner
Participation Agreement with GFC Enterprises,
LLC, regarding Lynwood Housing Development
(IVDA Redevelopment Project Area)
DATE:
March 26, 2007
SvnoDsis of Previous Commission/CounciVCommittee Action(s):
On March 8, 2007, Redevelopment Committee Members Estrada, Johnson and Baxter unanimously voted to recommend that
the Community Development Commission consider this action for approval.
Recommended Motionls):
(Communitv DeveloDment Commission)
Resolution of the Community Development COmmiSSiOD of the City of San Bernardino approving and authorizing
the Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to execute (I) a
Redevelopment Cooperation Agreement by and between the Agency and Inland Valley Development Agency
("IVDA") and (2) a Single Family Inelusionary Housing Owner Participation Agreement ("OPA") by and between
the Agency and GFC Enterprises, LLC, for the development of Lynwood Housing Development (IVDA
Redevelopment Project Area)
Contact -Person( s):
Maggie Pacheco
(909) 663-1044
Phone:
Project Area(s):
Ward(s):
7
IVDA Redevelopment Project Area
Supporting Data Attached:
I!'I Staff Report I!'I Resolution(s) I!'I Agreement(s)/Contract(s) I!'I Map(s) 0 Letter(s)
FUNDING REQUIREMENTS:
Amount: $ 270,000
RDA LowlMod Housing Funds
Source:
SIGNATURE:
OJ}') ~A"_
Maggie Pacheco, Executive Director
DirectDr
2006-2007 RDA Budget
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Commission/Council Notes:
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COMMISSION MEETING AGENDA
Meeting Date: 04/0112007
Agenda Item Number: {l;3:J....
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
SINGLE FAMILY INCLUSIONARY HOUSING OWNER PARTICIPATION AGREEMENT
WITH GFC ENTERPRISES, LLC, REGARDING L YNWOOD HOUSING DEVELOPMENT
(IVDA REDEVELOPMENT PROJECT AREA)
BACKGROUND:
GFR Enterprises, Inc., is a local developer (the "Developer") with a main office located at 343 North
Second Street, Upland, Califomia, and has over 30 years of experience in real estate development
comprising in excess of 7,000 residential properties built and sold during that time. The Developer
recently completed the Paraiso Estates development of 54 elegant and luxury single-family homes off
of Belmont Avenue, in the Verdemont Area of the City of San Bernardino (the "City"). The
Developer has been developing up-scale and luxury homes in the City for decades and 3 years ago, the
Developer, Century Crowell and the Redevelopment Agency of the City of San Bernardino (the
"Agency") embarked upon the development of approximately 30 acres of land previously owned by
the Agency in order to pave the way for development of a new 107 single-family home subdivision
and 5-acre park along the area of Palm and Irvington Avenues within the Verdemont Area.
The Developer (dba GFC Enterprises, LLC) owns 7.7 acres of vacant land (APN: 01191-231-40 and
41) located on the east side of Lynwood Way between Byron and Amanda Streets (See Attached Site
Plan), in the Inland Valley Development Agency (IVDA) Redevelopment Project Area ("Project
Area"). On September 19, 2006, the Planning Commission approved Tentative Tract Map No. 17793
(Subdivision No. 05-48), Variance No. 06-02, and Development Permit Type 3 No. 06-03) to develop
18 single-family detached residential homes (the "Project"). In compliance with the California
Environmental Quality Act ("CEQA"), the Planning Commission also made an environmental finding
and adopted a mitigated negative declaration for the Project.
The Developer is proposing 3 models with 2 different exterior styles and exterior treatments. Each
model will have 4 bedrooms, 3 bathrooms, 2-car garage, porch, stucco siding and concrete-tile roof,
ranging in size from 2,399 to 3,195 square feet. Architectural treatments include cultured stone or rock
on front elevations, alternating hip-style and gable roofs, multi-planed roofs, porches and various
window styles. The Project development is estimated to cost $7.5 million and the homes are proposed
to be sold at a price ranging from $389,990 to $439,990. Construction will commence within 30 days
from approval of the proposed Single Family Inclusionary Housing Owner Participation Agreement
("OPA") and is to be completed within 12 months.
CURRENT ISSUE:
On February 3, 2003, the Community Development Commission of the City of San Bernardino
("Commission") agreed to assume the responsibility for the IVDA in implementing, administering and
managing their inclusionary and replacement housing requirements as required per Section 33413 of
the California Redevelopment Law (CRL). Specifically, Section 33413, requires redevelopment
agencies to ensure that at least 15% of all new and substantially rehabilitated dwelling units developed
COMMISSION MEETING AGENDA
Meeting Date: 04/0212007
Agenda Item Number: R3:J..
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Economic Development Agency Staff Report
GFC Enterprises. LLe - OPA
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within a project area by public or private entities or persons other than the Agency will be available at
affordable housing cost to, and occupied by, persons and families of low- or moderate-income, and not
less than 40% of said units shall be made available to very low-income households. A moderate-
income household is considered to be a household that earns less than 120% of the area median income
for the County of San Bernardino ("County"). The County's income ranges from $48,300 for a family
size of I and $91,100 for a family size of8. These income limits are modified annually by HUD and
State HCD.
Furthermore, on January 22, 2007, the Commission approved the Agency Housing Implementation
Plan ("Plan") which incorporated the CRL requirements related to IVDA's responsibility noted above
and the number of units that needed to be produced within the IVDA Project Area during the 10-year
term of the Plan. In addition, IVDA adopted a policy allowing member jurisdictions to undertake
redevelopment activities within the Project Area pursuant to a generic Cooperation Agreement adopted
by the IVDA Board.
The Developer's Project is located within the Project Area, and as such the Inclusionary Housing
Requirements apply to its proposed Project, and Staff and the Developer have agreed to the following
points, which have been incorporated into an OP A:
. Developer will construct the 18 units approved by the Planning Commission and will set
aside and sell 3 ofthe units to households earning up to 120% of the area median income at
e affordable housing costs; and
. Agency will reserve and allocate the sum of not more than $270,000 from the Agency's
Housing Fund to assist 3 eligible homebuyers with down payment assistance
(approximately $90,000 per buyer) and in return, the Agency will receive a 4S-year
affordable and maintenance covenant (CC&R's) on each of the properties. The CC&R is
required by CRL on all newly construct.ed or substantially rehabilitated housing units; and
. Developer shall provide any additional downpayment assistance or obtain affordable
primary mortgage financing for the new eligible homebuyers to qualify and purchase the
affordable new homes as necessary to ensure that the costs to the 3 eligible homebuyers do
not exceed the affordable housing costs; and
. Alternatively, the Developer may elect to provide the 3 affordable units to eligible
homebuyers by I) building up to 3 new housing units on in-fin lots in other locations within
the Project Area and/or 2) acquire vacant single-family homes and substantially rehabilitate
and sell them to eligible homebuyers. The Developer will initially focus its attempts to buy
sirigle-family homes within the Project Area, but more specifically in the area referred to as
the "Operation Phoenix Area" located generally north of Baseline Road, west of Waterman
Avenue east of Sierra Way and south of 16th Street; and
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COMMISSION MEETING AGENDA
Meeting Date: 041O:m007
Agenda Item Number: /l.3J...
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Economic Development Agency Staff Report
GFC Enterprises, LLC - OPA
Page 3
. The Agency and IVDA will enter into a Redevelopment Cooperation Agreement to receive
the IVDA's share of the tax increment generated from the Project to assist the Agency with
its financial obligations under the proposed OP A.
ENVIRONMENTAL IMPACT:
On September 19,2006, the Planning Commission approved a Mitigated Negative Declaration for the
Project in compliance with the CEQA and its requirements under Section 2108\.6 and adopted a
monitoring and or reporting program designated to ensure compliance during the Project
implementation. The Agency will rely on these environmental findings in order to consider approval of
the proposed OP A.
FISCAL IMPACT:
$270,000 will be set aside from the Agency's 2006-2007 Housing Fund for this Project.
RECOMMENDATION:
That the Community Development Commission adopt the attached Resolution.
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Maggie Pacheco, Executive Director
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COMMISSION MEETING AGENDA
Meeting Date: 0410212007
Agenda Item Number: ~
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. RESOJ.,UTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE (I) A
REDEVELOPMENT COOPERATION AGREEMENT BY AND BETWEEN
THE AGENCY AND INLAND VALLEY DEVELOPMENT AGENCY
("IVDA") AND (2) A SINGLE FAMILY INCLUSIONARY HOUSING
OWNER PARTICIPATION AGREEMENT ("OPA") BY AND BETWEEN
HIE AGENCY AND GFC ENTERPRISES, LLC FOR THE
DEVELOPMENT OF L YNWOOD HOUSING DEVELOPMENT (IVDA
REDEVELOPMENT PROJECT AREA)
WHEREAS, the Developer owns 7.7 acres of vacant land (APN: 01191-231-40 and 41)
located on the east side of Lynwood Way between Byron and Amanda Streets ( See Site Plan), in
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the Inland Valley Development Agency (IVDA) Redevelopment Project Area ("Project Area");
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and
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WHEREAS, on September 19, 2006, the Planning Commission approved Tentative Tract
Map No. 17793 (Subdivision No. 05-48), Variance No. 06-02, and Development Permit Type 3
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No. 06-03) to develop 18 single-family detached residential homes (the "Project") consisting of 3
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models with 2 different exterior styles and exterior treatments; and
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WHEREAS, on February 3, 2003, the Community Development Commission of the City 0
San Bernardino ("Commission") agreed to assume the responsibility for implementing,
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administering and managing the IVDA Project Area inclusionary and replacement housing
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requirements as required per Section 33413 of the California Redevelopment Law ("CRL'');
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specifically, Section 33413, requires redevelopment agencies to ensure that at least 15% of all new
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and substantially rehabilitated dwelling units developed within a project area by public or private
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entities or persons other than the Agency be made available at affordable housing cost to, and
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occupied by, persons and families of low- or moderate-income, and not less than 40% of said units
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shall be made available to very low-income households; and
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WHEREAS, a moderate-income household is considered to be a household that earns less
than 120% of the area median income for the County of San Bernardino ("County"), and the
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County's income ranges from $48,300 for a family size of 1 and $91,100 for a family size of 8
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1 which income limits are modified annually by HUD and State HCD; and
2 WHEREAS, on October 8, 2003, the NDA Board adopted a policy allowing member
3 jurisdictions to undertake redevelopment activities within the Project Area pursuant to a generic
4 Cooperation Agreement adopted through Resolution 2003-11; and
5 WHEREAS, the Developer's Project is located within the Project Area, and as such, the
6 Inclusionary Housing Requirements apply and the Developer will construct 18 units and will set
7 aside and sell 3 of the units to households earning up to 120% of the area median income or
8 alternatively as permitted under the Owner Participation Agreement ("OP A"); and
9 WHEREAS, the Agency will reserve and allocate the sum of $270,000 from the Agency's
10 Housing Fund to assist 3 eligible homebuyers with down payment assistance and in return, the
11 Agency will receive a 45-year affordable and maintenance covenant (CC&R's) on the each ofthe 3
12 properties; and
13 WHEREAS, the Developer shall provide additional downpayment assistance or obtain
14 affordable primary mortgage financing for new homebuyers to qualify and purchase the new homes;
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16 WHEREAS, the Developer may provide additional downpayment assistance funds to the
17 Agency to assist eligible homebuyers or reduce the sales prices of affordable new homes to eligible
18 low and moderate income households; and
19 WHEREAS, the Agency and NDA will enter into a Redevelopment Cooperation
20 Agreement to receive the IVDA's share of the tax increment generated from the Project to assist the
21 Agency with its financial obligations under the OP A; and
22 WHEREAS, on January 22, 2007, the Commission approved the Agency Housing
23 Implementation Plan (the "Plan") which incorporated the CRL requirements related to IVDA's
24 responsibility noted above and the number of units that needed to be produced within the NDA
25 Project Area during the 10-year term of the Plan; and
26 WHEREAS, on September 19, 2006, the Planning Commission approved a Mitigated
27 Negative Declaration for the Project in compliance with the California Environmental Quality Act
28 ("CEQA") and its requirements under Section 21081.6 and adopted a monitoring and or reporting
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1 program designated to ensure compliance during the Project implementation, and the Agency will
2 rely on these environmental findings in order to consider approval of the OP A; and
3 WHEREAS, it is appropriate for the Commission to take action with respect to the OPA
4 and the Cooperation Agreement.
NOW, TIlEREFORE, TIlE COMMUNITY DEVELOPMENT COMMISSION OF TIlE CITY
OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER. AS FOLLOWS:
Section 1. The Commission hereby approves (I) the Redevelopment Cooperation
Agreement by and between the Agency and the IVDA and (2) the OPA by and between the Agency
and the Developer in the form as presented at the meeting of the Commission at which this
Resolution is adopted, and the Commission further authorizes the Executive Director of the Agency
to execute said agreements and to take all actions set forth in the agreements and make such
technical and conforming changes as may be approved by the Agency Counsel.
Section 2. The Commission hereby finds and relies on the September 19, 2006,
Planning Commission approved Mitigated Negative Declaration for approval of the Project in
compliance with CEQA and its requirements under Section 21081.6, and the Notice of
Determination will be prepared and filed with the County Clerk within 5 days from the date of the
action of the Commission to approve this Resolution.
The Resolution shall become effective immediately upon its adoption.
18 Section 3.
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RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE (1) A
REDEVELOPMENT COOPERATION AGREEMENT BY AND BETWEEN
THE AGENCY AND INLAND V ALLEY DEVELOPMENT AGENCY
("IVDA") AND (2) A SINGLE FAMILY INCLUSIONARY HOUSING
OWNER PARTICIPATION AGREEMENT ("OPA") BY AND BETWEEN
THE AGENCY AND GFC ENTERPRISES, LLC, FOR THE
DEVELOPMENT OF L YNWOOD HOUSING DEVELOPMENT (IVDA
REDEVELOPMENT PROJECT AREA)
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
9 Development Commission of the City of San Bernardino at a
meeting
10 thereof, held on the day of ,2007, by the following vote to wit:
11 Commission Members: Aves Navs Abstain Absent
12 ESTRADA
13 BAXTER
_ 14 BRINKER
DERRY
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16 KELLEY
17 JOHNSON
18 MC CAMMACK
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Secretary
The foregoing Resolution is hereby approved this
day of
,2007.
Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
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26 Approved as tO~Form.
27 By: r~_
28 Agency unsel
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REDEVELOPMENT COOPERATION AGREEMENT
BY AND BETWEEN THE
INLAND V ALLEY DEVELOPMENT AGENCY
AND THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
(GFC Enterprises, LLC - Lynwood Housing Development Project)
This Redevelopment Cooperation Agreement (this "Agreement") is dated as of April 2, 2007,
by and between the Inland Valley Development Agency, a joint powers authority established under the
laws of the State of California (the "IVDA"), and the Redevelopment Agency of the City of San
Bernardino, a public body, corporate and politic (the "Agency"), and is entered into with respect to the
following facts set forth in the Recitals:
- RECITALS -
WHEREAS, the City of San Bernardino (the "City") and the Agency have been engaged in
efforts to address blighting conditions in a portion of the City location on the east side of Lynwood
Way between Byron and Amanda Streets Avenue (the "Property"); and
WHEREAS, GFC Enterprises, LLC (the "Developer") will undertake a project on the
Property consisting of 7.7 acres of vacant land (APN: 01191-231-40 and 41) to develop 18 single-
family detached residential homes (the "Project"), to be sold to homebuyers, with 3 of the new
homes sold to eligible moderate-income households earning not more than lZO% of the Area
Median Income for the County.
WHEREAS, the 3 eligible new homebuyer will require at least downpayment financial
assistance of approximately $270,000 ($90,000 per homebuyer) to qualify for first mortgage and the
Agency has allocated funds in its 2006-2007 budget to assist the homebuyers; and
WHEREAS, it is necessary and appropriate for the Agency to enter into this Agreement
between the Agency and the IVDA in order to provide for the IVDA to transfer authority to the
Agency to undertake the implementation of the Project with the Developer, and to receive any net tax
increment generated from the Project to the extent that the Agency is able to assist each homebuyer;
and
WHEREAS, the Project, as defined herein, is situated within the redevelopment project area of
the IVDA which is a special redevelopment project area administered by the IVDA; and
WHEREAS, the IVDA has been established pursuant to a joint exercise of powers agreement
in January 1990, for the purpose of assisting in the conversion, redevelopment and civilian reuse of the
former Norton Air Force Base ("NAFB") located within the City; and
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WHEREAS, the member governmental entities of the IVDA include the County of San
Bemardino, a political subdivision of the State of Califomia, and the City of Colton, a municipal
corporation, and the City ofLoma Linda, a municipal corporation, and the City, a charter city; and
WHEREAS, the IVDA has been granted specific powers by the State Legislature in 1989
(Stats. 1989 c.545 and See Now Stats 1997, c.580 and Health and Safety Code Section 33492.40, et
seq.) to assist in the redevelopment of the NAFB and the lands in proximity thereto pursuant to the
Community Redevelopment Law (Health and Safety Code Section 33000, et seq., hereinafter referred
to as the "CRL"); and
WHEREAS, the IVDA has adopted the Redevelopment Plan for the IVDA Redevelopment
Project Area (the "Redevelopment Plan") in accordance with the provisions of the CRL, and the
Redevelopment Plan provides for certain redevelopment activities to be undertaken within the
redevelopment project area as more fully described in the Redevelopment Plan (the "Project Area");
and .
WHEREAS, at the present time, substantially all the financial and administrative staff
resources available to the IVDA are devoted to the implementation of certain agreements affecting the
NAFB, including an agreement entitled "Agreement between the Department of the Air Force and the
Inland Valley Development Agency," dated March 7, 1995, as amended, and an agreement entitled
"Master Disposition and Development Agreement", dated November 6, 2002, both of which
specifically relate to the civilian reuse and redevelopment of the lands comprising the NAFB; and
WHEREAS, the Agency seeks to initiate certain redevelopment activities affecting the Project,
as defined herein, which is situated within the Project Area but which is not part of the NAFB; and
WHEREAS, the IVDA and the Agency deem that the approval and implementation of this
Agreement are consistent with the Redevelopment Plan and the purposes and intent of the CRL and in
particular Health and Safety Code Section 33492.40, et seq., to expeditiously accomplish the
redevelopment of certain lands located in the City which are also within the Project Area.
NOW, THEREFORE, THE INLAND V ALLEY DEVELOPMENT AGENCY AND THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO DO HEREBY
MUTUALLY AGREE AS FOLLOWS:
Section 1. Recitals. The parties acknowledge and agree that the recitals as set forth above
are accurate and correct in all respects.
Section 2. Accomolishment of Public Purooses. The parties acknowledge and agree that
this Agreement provides the IVDA, and the Agency with a means to foster the redevelopment of a
portion of the Project Area located within the municipal boundaries of the City of which could not
otherwise be accomplished within the foreseeable future unless the parties to this Agreement agree to
exe~cise certain responsibilities as set forth herein. This Agreement is intended to be consistent with
the intent and legal requirements of the CRL and in particular Health and Safety Code Section 33413,
et seq., and shall be considered as an agreement entered into by and between the IVDA and the Agency
to accomplish the removal of blighting conditions within the Project Area and to compliment the
civilian reuse and redevelopment of certain lands nearby the NAFB in the Project Area. This
Agreement shall provide the IVDA with additional assistance from the Agency to undertake
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redevelopment activities in the portion of the Project Area where the Project is located, as more fully
depicted in Exhibit "A" attached hereto. The parties presently anticipate that an Owner Participation
Agreement for the redevelopment of the Project site shall be executed with GFC Enterprises, LLC by
the Agency.
Section 3.
Grant ofRedeveloDment Powers to the Agencv for the Proiect.
(a) Except as set forth in Section 3(b) and Section 3(c) of this Agreement, the IVDA hereby
grants to the Agency, acting by and through the Community Development Commission of the City of
San Bernardino (the "Commission") and to the legislative body of the Agency acting by and through
the Mayor and Common Council of the City of San Bernardino, as applicable, the right, power and
authority to act for and on behalf of the IVDA for the purpose of exercising all redevelopment powers
legally available to the IVDA as set forth in the Redevelopment Plan, the CRL and in particular the
provisions of Health and Safety Code Section 33492.40, et seq., affecting any landsJIld property
situated within the Project.
In addition to any other powers which the City and/or the Agency may have, the Agency may,
either in its name or on behalf of the IVDA, exercise all of the powers, rights and authorities of the
IVDA as set forth in the Redevelopment Plan with respect to the lands and property situated within the
Project, including, but not limited to, the right to acquire and dispose of real and personal property, to
either exercise the power of eminent domain directly on behalf of the IVDA or request the IVDA to
consider the exercise of such powers in support of the Agency and at the sole discretion of the IVDA,
sue and be sued, enter into agreements and undertake such other actions as appropriate to the intent of
e this Agreement.
No such action of the City or the Agency, as applicable with respect to the exercise of such
redevelopment powers affecting the Project, need be consented to, ratified or confirmed by the IVDA
unless such ratification, consent or confirmation by the IVDA is otherwise requested at the discretion
of the City or the Agency. In the event the IVDA is so requested in writing by either the City or the
Agency to ratify, consent or confirm any action or intended action of the City or the Agency with the
respect to the Project pursuant to this Agreement, the IVDA shall consider such matter as soon as
practicable after receipt of such written request.
The City and the Agency shall be solely responsible for the payment of all costs and expenses
as may be associated with the implementation of any redevelopment activity as may hereafter be
undertaken by the City and the Agency in the Project as authorized by this Agreement.
(b) Notwithstanding the provisions of Section 3(a), the City and the Agency shall not
InItIate any amendment of the Redevelopment Plan or any amendment or supplement to the
Implementation Plan for the IVDA Redevelopment Project Area without first obtaining the written
approval of the IVDA in its sole and absolute discretion.
(c) Notwithstanding the provisions of Section 3(a) or any other part of this Agreement, the
City and the Agency shall take no action under this Agreement which causes the IVDA to incur an
indebtedness which is payable from any funds, revenues or assets of the IVDA, except from "Transfer
Revenues", if any, as this term is defined in Section 4.
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Section 4. Transfer of a Certain Portion of the IVDA Tax Increment Funds for the
Redevelooment of the Proiect
(a) In addition to the meaning of certain words and phrases as set forth in the preceding
Recital paragraphs and sections of this Agreement, the following definitions shall apply to usage of the
terms set forth in this Agreement:
(i) "Project Properties Base Year" means and refers to the secured property tax roll assessed
valuation of the properties within the Project Properties for ad valorem property tax
purposes, for the 2005-2006 fiscal year of the IVDA as shown on the secured property tax
assessment rolls of the County Assessor;
(ii) "Project Properties Indebtedness" means and refers to the indebtedness which the Agency
may incur on or after the date of this Agreement with respect to the Project;
(iii) "Project Properties" means and refers to the approximately 7.7 acres ofland in the Project
which is also depicted in Exhibit "A";
(iv) "GFC Enterprises, LLC - Lynwood Housing Development Project" means and refers to a
community redevelopment project of the Agency, and the related activities which may
hereafter be undertaken by the Agency in the Project The Project shall be more
particularly identified in the written notice provided to the IVDA by the Agency under
Section 4( e);
(v) "Tax Increment Revenue" means and refers to those revenues, if any, received by the IVDA
under Article VII, Section B(702) of the Redevelopment Plan as related to the Project
Properties;
(vi) "Transfer Revenue" means and refers to a portion of the tax increment revenue of the
IVDA attributable to the Project Properties described in Section 4(b) which the IVDA shall
pay to the Agency each year during the term of this Agreement with respect to indebtedness
incurred by the Agency in connection with the redevelopment of the Project Properties
subject to the conditions set forth in Section 4.
'(b) Transfer Revenue is a portion of the tax increment revenue of the IVDA generated by
the Project Properties by virtue of the Project, if any, each fiscal year, in excess of such tax increment
revenue of the IVDA attributed to the Project Properties Base Year, net of the low- and moderate-
income housing set-aside obligation of the IVDA with respect to such tax increment revenue in each
such fiscal year, and further net of the portion of such tax increment revenue of the IVDA with respect
to the Project Properties which is payable by the IVDA in such fiscal year under the School District
Agreements as set forth in Section 4(f).
(c) Provided the Agency has given the IVDA the notice described in Section 4( e),
commencing no sooner than the 2007-2008 fiscal year of the IVDA, and for each fiscal year of the
IVDA thereafter during the term of this Agreement, the IVDA hereby agrees to pay to the Agency the
Transfer Revenue attributable to the Project Properties, if any, for each such fiscal year following the
Project Properties Base Year. The obligation of the IVDA to pay the Transfer Revenue to the Agency
is a special fund obligation of the IVDA payable solely from the portion of the tax increment revenue
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of the IVDA generated by the Project Properties by virtue of the Project, if any, in the amount as
calculated each fiscal year under the formula set forth in Section 4(b). No Transfer Revenues shall be
payable by the IVDA to the Agency for any fiscal year of the IVDA after June 30, 2030. Any unpaid
balance of the Project Properties Indebtedness as may exist as of July I, 2030, shall be discharged,
released and forgiven by the Agency.
(d) The IVDA shall only remit the Transfer Revenues calculated pursuant to Section (b) to
the extent that the Agency has incurred on or after July I, 2006, funds, or incurred indebtedness in
connection with the redevelopment of all or any portion of the Project Properties Indebtedness,
including without limitation indebtedness incurred under one or more separate agreements by and
between the Agency and the City or indebtedness to a noteholder, bondholder, trustee or other creditor
of the Agency'related to costs incurred or paid by the Agency for the redevelopment of the Project.
The Agency shall, as a condition precedent to the receipt of Transfer Revenue on each May I,
commencing on May I, 2008, submit to the IVDA a suitably detailed written statement of the
outstanding unpaid balance of Project Properties Indebtedness incurred by the Agency, including the
relevant terms of repayment of such Project Properties Indebtedness.
(e) By a date not later than April 30, 2007, the Agency shall give notice to the IVDA that
the Agency entered into one or more written agreements with third-parties for the redevelopment of at
least one-half (Yi) of the acres of land included in the Project. Such notice shall contain a suitably
detailed description of the Project and the current balance, as of the date of such notice of the Project
Properties Indebtedness. Concurrently with such notice, the Agency shall also deliver to the IVDA a
copy of such written agreements. In the event that such notice is not given by the Agency, then in such
event, no Transfer Revenues shall be payable to the Agency by the IVDA under this Agreement.
(f) This Agreement and the amounts of Transfer Revenue to be remitted by the IVDA to
the Agency shall at all times be subject to the provisions of the various school district pass-through
agreements between the IVDA and the San Bernardino City Unified School District, Colton Joint
Unified School District; Redlands Unified School District, County Superintendent of Schools and the
San Bernardino Valley College District (collectively, the "School District Pass-Through Agreements")
as the same are applicable to the increases in the tax increment revenues generated by the Project
Properties. The calculation of the amount of the Transfer Revenue to be remitted by the IVDA to the
Agency shall be net of all amounts required to be paid by the IVDA to the various school districts
pursuant to the School District Pass-Through Agreements. The IVDA shall be solely responsibie for
the administration of the School District Pass-Through Agreements and the IVDA may charge a
proportion of fee against the Tax Revenues for third-party costs associated with such administration.
(g) The IVDA has established the Low- and Moderate-Income Housing Fund for the Inland
Valley Redevelopment Project, and twenty percent (20%) of tax increment revenues received by the
IVDA are deposited into such fund each year, subject to certain decreases authorized under applicable
law. Said twenty percent (20%) figure may be decreased pursuant to Health and Safety Code Section
33334.2(a) (I) and (2) from time-to-time by the IVDA. If the IVDA determines for the entire Project
Area, inclusive of the Project Properties, to deposit less than said twenty percent (20%) figure for a
particular fiscal year, as permitted by Health and Safety Code Section 33492.40(e) and
33334.2(a)(2)(A), or if the IVDA determines to make no deposit into the Low- and Moderate-Income
Housing Fund for the entire Project Area, inclusive of the Project Properties, as permitted by Health
and Safety Code Section 33334.2(a)(I)(A), then in any such event, the Transfer Revenue calculation as
set forth in Section 4(b) of this Agreement for the particular fiscal year or fiscal years, as applicable, in
4843-3479-ll912.\ 5
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which such a finding is made by the NDA, shall not be subject to any off-set or adjustment
corresponding to any amounts of such tax increment revenue that the NDA has not deposited into the
NDA Low- and Moderate-Income Housing Fund.
(h) The obligation of the NDA to remit any portion of the Transfer Revenue to the Agency
pursuant to this Agreement is, at all times, subordinate to the obligations of the NDA incurred
pursuant to any and all tax allocation bonds, notes or other forms of indebtedness, and all refinancings
of any of these, issued or incurred by the NDA to the holders of publicly issued bonds, notes or other
forms of indebtedness considered municipal securities sold in the municipal bond market.
(i) The NDA and the Agency will cooperate in each year during the term of this
Agreement in the preparation of the Statement of Indebtedness for the NDA as relates to the Project
Properties Indebtedness and the Transfer Revenue payable by the NDA to the Agency for the Project
Properties Indebtedness. The NDA and the Agency further agree, upon thirty (30) days written
request, to exchange suitably detailed and written accounting and audit records related to the Project
Properties Indebtedness and the Transfer Revenue, including the estimates and final remittance
amounts of Transfer Revenue each fiscal year as calculated by the NDA, and the Project Properties
Indebtedness amounts incurred by the Agency with respect to the redevelopment of the Project
Properties.
(j) Except as set forth in this Agreement as relates to Transfer Revenues, no other tax
increment revenue or other funds or assets of the NDA are subject to this Agreement. The NDA
may, but shall not be required, unless subsequently approved by the IVDA on a case-by-case basis,
advance, loan or otherwise transfer to the Agency other tax increment revenue as may then be available
to the NDA from the Project Area, subject to applicable law.
Section 5. Pre-June 30. 2006 Indebtedness of the Agencv Relating to the Project. As of
June 30, 2006, the Agency has incurred no debt in redevelopment indebtedness with respect to its
efforts to address conditions of blight in the Project, including indebtedness incurred for the acquisition
of the property. No cost, expense or indebtedness incurred by the Agency with respect to the Project
prior to June 30, 2006, shall be deemed to be an eligible cost or indebtedness of the Agency for
purposes of calculating the Project Properties Indebtedness.
Section 6. Notices. Formal notices, demands and communications between the NDA and
the Agency shall be deemed sufficiently given if (i) dispatched registered or certified mail via United
States Postal Service, postage prepaid, return receipt requested, as designated in this Section 6; (ii) by
personal delivery; (iii) express delivery service with written verification of delivery; or (iv) by
electronic transmittal including fax transmissions with telephonic verification of receipt. Such written
notices, demands and communications may be sent in the same manner to such other addresses as any
party may from time-to-time designate by written notice to the other parties.
Copies of all notices, demands and communications shall be sent as follows:
IVDA:
Inland Valley Development Agency
Attention: Executive Director
294 South Leland Norton Way
San Bernardino, California 92408
4843-347~912.1 6
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AGENCY:
. Redevelopment Agency of the City of San Bernardino
Attention: Maggie Pacheco, Executive Director
201 North "E" Street, Suite 301
San Bernardino, California 92401
Notices which are dispatched by registered or certified mail through the United States Postal
Service shall be deemed to be given three (3) business days after deposit with the United States Postal
Service, and notices which are given by personal delivery shall be deemed given upon such personal
delivery. Notices dispatched by express delivery service shall be deemed to have been given upon
receipt by the party receiving such notice and execution of the delivery receipt, and notices dispatched
through electronic transmittals shall be deemed to have been given upon telephonic verification of
receipt.
Section 7. Indemnification and Hold Harmless. The Agency hereby agree to indemnify,
defend and hold harmless the IVDA and each of its officers, officials and employees from any and all
loss, liability, claim, cost, expense or judgment, including attorney's fees, that may result from the
implementation of this Agreement by the Agency. The Agency will also defend, indemnify and
provide the cost of defense on behalf of the IVDA with respect to any third party challenge to the
legality or enforceability of this Agreement pursuant to the CRL. Such indemnification and hold
harmless shall apply whether or not the City and/or the Agency, or either of them was at fault or in any
manner contributed to any such loss, liability, claim, cost, expense or judgment.
Section 8. Entire Agreement of the Parties. This Agreement represents the entire
agreement by and between the IVDA and the Agency with respect to the transfer of the redevelopment
powers of the IVDA affecting the Project.
Section 9. Invaliditv of Anv Provision. In the event it is determined that any provision of
this Agreement is invalid or unenforceable as between the parties, the remaining provisions which are
determined to be valid and enforceable shall remain in full force and effect.
Section 10. Aooroval and Effective Date of Agreement. This Agreement has been duly
approved and authorized for execution and delivery by the governing board of the IVDA and by the
Commission on behalf of the Agency, and this Agreement has been duly executed and delivered by the
parties hereto. This Agreement may be executed in counterparts and when fully executed by the
parties it shall be effective for all purposes as of the date set forth in the introductory paragraph.
/II
/I I .
/II
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THIS AGREEMENT HAS BEEN DULY EXECUTED BY THE AUTHORIZED
REPRESENTATIVES OF THE PARTIES HERETO AS SET FORTH BELOW.
IVDA
Inland Valley Development Agency,
a joint powers authority
Date:
By:
Co-Chair
By:
Co-Chair
(SEAL)
ATTEST:
By:
Clerk of the Board
Approved as to Form:
By:
General Counsel
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Date:
By:
Maggie Pacheco, Executive Director
(SEAL)
ATTEST:
By:
Don Gee, Assistant Secretary
Approved as to Form and Legal Content:
By: C~Ht1b
Agency Couns
4843.3479-0912.1 8
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EXHIBIT "A"
Map ofGFC Enterprises, LLC, Lynwood Housing Development Project
4843-3479-09\2.\ 9
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2007
SINGLE-FAMILY INCLUSIONARY HOUSING
OWNER PARTICIPATION AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO
AND
GFC ENTERPRISES, LLC
(IVDA REDEVELOPMENT PROJECT AREA)
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TABLE OF CONTENTS
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Page
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ARTICLE I TERMS AND CONDITIONS .................................................................................2
. Section 1.01. Integration of all Agreements relating to the Project and Definition of Terms. ................................2
Section 1.02. Parties to the Agreemenl..................................................................................................................7
Section 1.03. Prohibition against Change in Ownership, Management and Control of Developer and Assignment
of Agreement....................... .............................................................................................................. 7
Section 1.04. Benefit to Project Area. .....................................................................................................................8
Section 1.05. Effective Date.................... ............................... .................................................................................8
ARTICLE II .................. ..........................................................................................................8
Section 2.01. Satisfaction of Conditions. ................................................................................................................8
Section 2.02. T ennination. .. .................... ................ ............................... ................... .............................................. 8
Section 2.03. Representations and. Warranties. .......................................................................................................9
ARTICLE III DEVELOPMENT OF THE PROJECT............................................................ 12
Section 3.01. Scope of Development by Developer. .............................................................................................12
Section 3.02. Schedule of Performance. ...............................................................................................................17
Section 3.03. Insurance Coverage of Developer. ..................................................................................................17
Section 3.04. Prohibition against Transfer Prior to Release Date. ........................................................................17
Section 3.05. Security Financing; Right of Holders.............................................................................. ................18
Section 3.06. Property Taxes and Assessments. ...................................................................................................19
ARTICLE IV USE AND DISPOSITION OF THE AFFORDABLE NEW HOMES BY
THE DEVELOPER ................................................................................. 19
Uses of the Affordable New Homes................................................................................................ 19
Disposition of the Completed New Homes to Homebuyers and Special Provisions for Affordable
New Home Escrows. .......................................................................................................................20
Section 4.03. Maintenance of the Project Lots......................................................................................................22
Section 4.04. Obligation to Refrain from Discrimination. ....................................................................................23
Section 4.05. Form of Nondiscrimination and Nonsegregation Clauses...............................................................23
Section 4.06. Effect and Duration of Covenants under Section 4.05 and Section 4.06.........................................24
Section 4.07. Development Project Cost Pro Forma:............................................................................................24
Section 4.08. Agency Downpayment Assistance Funds. ......................................................................................25
Section 4.09. Developer Obligation to provide Additional Subsidies to Low or Moderate Income Homebuyers.26
Section 4.10. Substitution of other Single-family Dwelling Units for Affordable New Homes. ..........................26
ARTICLE V ARTICLE V DEFAULTS, REMEDIES AND TERMINATION ....................27
Section 5.01. Defaults - General...........................................................................................................................27
Section 5.02. Legal Actions. .................................................................................................................................27
Section 5.03. Rights and Remedies are Cumulative. ............................................................................................28
Section 5.04. Default and Damages. .........................................................................:...........................................28
Section 5.05. Agency Audit Costs. .......................................................................................................................28
ARTICLE VI GENERAL PROVISIONS ................................................................................. 28
Section 6.01. Notices, Demands and Communications between the Parties.........................................................28
Section 6.02. Conflict of Interest. .........................................................................................................................29
Section 6.03. Warranty against Payment of Consideration for Agreement...........................................................29
Section 6.04. Nonliability of Agency Officials and Employees. ..........................................................................30
Section 6.05. Enforced Delay: Extension of Time of Performance. .....................................................................30
Section'6.06. Inspection of Books and Records............................................................................................._30
Section 6.07. Approvals. ...................................... ........................... ......................... ............... ............ ..................31
Section 6.08. Real Estate Commissions. ...............................................................................................................31
Section 6.09. Indenmification. ............................. ,....... ................ ............... ........ ..... ................. ............... ..... ........31
Section 6.10. Attorneys' Fees. .....:0........................................................................................................................31
Section 6.11. Effect. ..............................................................................................................................................32
ARTICLE VII ENTIRE AGREEMENT, WAIVERS AND AMENDMENT ........................ 32
Section 7.01. Entire Agreement. ...........................................................................................................................32
EXHIBIT "A" FORM OF AFFORDABILITY COVENANT ...............................................34
EXHIBIT "8" DEVELOPMENT PROJECT COST PRO FORMA .................................... 35
Section 4.01.
Section 4.02.
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2007
SINGLE-FAMILY INCLUSIONARY HOUSING
OWNER P ARTICIP A TION AGREEMENT
(IVDA REDEVELOPMENT PROJECT AREA)
THIS 2007 SINGLE-FAMILY INCLUSIONARY HOUSING OWNER
PARTICIPATION AGREEMENT (IVDA REDEVELOPMENT PROJECT AREA) (this
"Agreement") is dated as of April 2, 2007, by and between the Redevelopment Agency of the
City of San Bernardino, a public body, corporate and politic (the "Agency"), and GFC
Enterprises, LLC, a California corporation, dba Lynwood - GFC, Enterprises, LLC (the
"Developer"), in light of the facts set forth in the following paragraphs of the Recitals:
RECITALS
WHEREAS, as of the "Effective Date" of this Agreement (as this term is defined below),
the Developer owns approximately 7.7 acres of property located on the east side of Lynwood
Way between Byron Street and Amanda Street (the "Property") in the RS, Residential Suburban
land use district of the City of San Bernardino (the "City") which Property is also within the
Inland Valley Development Agency Redevelopment Project Area (the "Project Area") as
adopted by the Inland Valley Development Agency (the "IVDA") in July, 1990, and which
Property is being subdivided by the Developer into eighteen (18) residential lots pursuant to
Tentative Tract Map No. 17793; and
WHEREAS, the Developer shall develop and improve each of the eighteen (18)
residential lots pursuant to this Agreement with a New Home, and shall reserve three (3) of such
New Homes for occupancy by Homebuyers whose household income level is that of a person or
family oflow or moderate income (a "Low or,Moderate Income Homebuyer") or the Developer
may substitute other homes or housing units within the Project Area in lieu of said three (3) New
Homes in the manner as hereinafter provided; and
WHEREAS, each of the New Homes under this Agreement shall be developed and
improved under design and improvement standards which are consistent with the City's General
Plan and Development Standards, and such further separate review and approval by the City of
the specific plan of improvement of each lot by the Developer as may hereafter be indicated; and
WHEREAS, the Developer has the background, experience and financial capability of
developing the Project as hereinafter described and appears well qualified to secure a
construction financing commitment from a commercial lending institution in support of the
Project; and
WHEREAS, the Agency is responsible for complying with the requirements of the
Community Redevelopment Law ("CRL") and the Redevelopment Plan for the Project Area
which require that fifteen percent (15%) of the housing units developed by private parties within
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the Project Area must be set-aside for persons and households who meet the requirements of
low- and moderate-income as established by the CRL.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE
AGENCY AND THE DEVELOPER HEREBY AGREE AS FOLLOWS:
ARTICLE I
TERMS AND CONDITIONS
Section 1.01. Integration of all Agreements relating to the Proiect and Definition of
Terms.
(a) This Agreement integrates all of the terms and conditions mentioned herein and
supersedes all negotiations, discussions and understandings between the parties with respect to
the Project and all items of assistance, which the Agency may hereafter provide to the
Developer.
(b) In addition to the words, which have defmed meanings as set forth in the
preceding paragraphs of this Agreement, certain other phrases or terms as used in this Agreement
shall have the meaning set forth as follows:
Adjusted Family Income. The words "Adjusted Family Income" mean "gross income"
as this term is defined in 25 California Code of Regulations Section 6914, for the total
annual income of each individual or family residing or deemed to be residing in the
Affordable New Home.
Affordability Covenant. The words "Affordability Covenant" mean the Agency,
Community Redevelopment Housing Affordability Covenants and Restrictions, by and
between the Low or Moderate Income Homebuyer and the Agency pertaining to a
particular Affordable New Home, which has been constructed and completed. A form of
Affordability Covenant is attached hereto as Exhibit "A" and incorporated by this
reference into the text of this Agreement. An Affordability Covenant in appropriate final
form shall be recorded concurrently with the close of each Affordable New Home
Escrow for the sale of each Affordable New Home.
Affordable Housing Cost. The words "Affordable Housing Cost" shall have the
meaning as set forth in Health and Safety Code Section 50052.5, as this section may
hereafter be amended from time-to-time by the State of California. A Low or Moderate
Income Homebuyer, and/or the Successor-In-Interest of such Low or Moderate Income
Homebuyer, if any, shall pay as its purchase price for the Affordable New Home no more
than the appropriate Affordable Housing Cost as of the applicable Delivery Date.
Affordable New Home. The words "Affordable New Home" mean and refer to each of
the (i) three (3) single-family residential units to be designed, constructed and improved
by the Developer and reserved for sale and occupancy to a Low or Moderate Income
Homebuyer; (ii) such other three (3) single-family residential units located elsewhere
4847-0900-6593.\ 2
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within the Project 'Area for which the Developer has either constructed or caused to be
constructed three (3) new single-family residential dwelling units or has rehabilitated
single-family dwelling units that were previously vacant and not in a habitable condition;
and (iii) such other substitute single-family dwelling units within the Project Area that
may be approved in writing by the Executive Director of the Agency as complying with
the requirements of this Agreement.
Affordable New Home Escrow. The words "Affordable New Home Escrow" mean and
refer to the real estate conveyance transaction or escrow by and between the Developer
and each Low or Moderate Income Homebuyer and, subsequently, by and between the
Low or Moderate Income Homebuyer and their Successor-in-Interest, during the
conveyance and sale of the Affordable New Home, which shall be accomplished upon the
close of the Affordable New Home Escrow.
Affordable New Home Escrow Holder. The words "Affordable New Home Escrow
Holder" mean and refer to the escrow company designated by the Developer who shall
serve as the escrow holder under the Affordable New Home Escrow by and among such
New Home Escrow Holder, the Developer and a Low or Moderate Income Homebuyer,
for the transfer and sale by the Developer of each of the three (3) completed Affordable
New Homes.
Agency Down payment Assistance Funds. The words "Agency Downpayment
Assistance Funds" mean and refer to the Agency Low and Moderate Income Housing
Funds, which the Agency may hereafter provide to no more than three (3) Low or
Moderate Income Homebuyers of a completed Affordable New Home. The maximum
amount of Agency Downpayment Assistance Funds which may hereafter be provided to
each of the three (3) Low or Moderate Income Homebuyers shall not exceed thirty
percent (30%) of the gross sales price of the completed Affordable. New Home as
provided herein in Section 4.08, but in no event shall exceed $270,000 in the aggregate or
$90,000 for each Affordable New Home.
Agency Low and Moderate Income Housing Fund. The words "Agency Low and
Moderate Income Housing Fund" mean and refer to the special affordable housing fund
established by the Agency for each of its redevelopment project areas and for similar
funds received by the IVDA from those portions of the Project Area within the City in
accordance with the provisions of Health and Safety Code Section 33334.2 et seq.
Completed New Home. The words "Completed New Home" mean and refer to each of
the eighteen (18) new single-family residential units to be designed, constructed and
improved by the Developer and reserved for sale and occupancy to Homebuyers. Three
(3) Completed New Homes shall be constructed and reserved and made available for sale
and occupancy by a Low or Moderate Income Homebuyer designated by the Developer
unless such New Homes as substituted in a manner as hereinafter provided.
Completed New Home Purchase Price. The words "Completed New Home Purchase
Price" mean and refer to the applicable purchase price payable by the Homebuyer to the
Developer for the purchase of each Completed New Home at the close of the applicable
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New Home Escrow. The Completed New Home Purchase Price includes the cost of
options and upgrades to the Completed New Home, which are installed in the New Home
prior to the close of the New Home Escrow and paid for by the Homebuyer. The
Completed New Home Purchase Price for an Affordable New Home shall be an amount
which does not exceed the affordability requirements for Low or Moderate Income
Households under California Health and Safety Code Section 50052.5(b)(3) and (4), as
applicable, at the time of the close of the Affordable New Home Escrow.
Delivery Date. The words "Delivery Date" mean the close of a New Home Escrow for a
particular Completed New Home, at which time, title and possession of a Completed
New Home shall be delivered by the Developer to the Homebuyer.
Development Project Cost Pro Forma. The words "Development Project Cost Pro
Forma" mean and refer to the Development Project Cost Pro Forma as attached hereto as
Exhibit "B". The Development Project Cost Pro Forma sets forth the Developer's best
estimate as of the Effective Date, of the cost to develop, construct and sell each of the
Completed New Homes to Homebuyers in accordance with the terms of this Agreement.
The Development Project Cost Pro Forma includes an estimated gross sales price for
each Completed New Home and an estimate of the total amount of New Home Sales
Costs.
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Effective Date. The words "Effective Date" mean and refer to the date on which this
Agreement has been fully executed by the officers or representatives of the parties and
the conditions of Section 1.05 have been satisfied.
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Environmental Laws. The words "Environmental Laws" mean all federal, state, local,
or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or
requirements of any government authority regulating, relating to, or imposing liability of
standards of conduct concerning any hazardous substance (as later defined), or pertaining
to occupational health or industrial hygiene (and only to the extent that the occupational
health or industrial hygiene laws, ordinances, or regulations relate to hazardous
substances on, under, or about the Site), occupational or environmental conditions on,
under, or about the Site or Sales Office, as now or may at any later time be in effect,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") [42 USC Section 9601 et seq.];
the Resource Conservation and Recovery Act of 1976 ("RCRA") [42 USC Section 6901
et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act
("FWPCA") [33 USC Section 1251 et seq.]; the Toxic Substances Control Act (''TSCA'')
[15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act ("HMTA")
[49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC
Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking
Water Act [42 USC Section 300fet seq.]; the Solid Waste Disposal Act [42 USC Section
6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et
seq.] the Emergency Planning and Community Right to Know Act [42 USC Section
llOOI et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657];
the California Underground Storage of Hazardous Substances Act [H & S C Section
25288 et seq.]; the California Hazardous Substances Account Act [H & S C Section
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25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [H & S C
Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [Water Code Section
13000 et seq.] together with any amendments of or regulations promulgated under the
statutes cited above and any other federal, state, or local law, statute, ordinance, or
regulation now in effect or later enacted that pertains to occupational health or industriai
hygiene, and only to the extent the occupational health or industrial hygiene laws,
ordinances, or regulations relate to hazardous substances on, under, or about the Site, or
the regulation or protection of the environment, including ambient air, soil, soil vapor,
groundwater, surface water or land use.
Hazardous Substances. The words "Hazardous Substances" mean and include, without
limitation:
those substances included within the definiteness of "hazardous substance,"
. "hazardous waste," "hazardous material," "toxic substance," "solid waste," or
"pollutant or contaminate" in CERCLA, RCRA, TSCA, HMT A, or under any
other environmental law; and
those substances listed in the United States Department of Transportation (DOT)
Table [49 CFR 172.101], or by the EPA, or any successor agency, as hazardous
substances [40 CFR Part 302]; and
other substances, materials,. and wastes that are or become regulated or classified
as hazardous or toxic under federal, state, or local laws or regulations; and
any material, waste or substance that is:
(I) a petroleum or refined petroleum product,
(2) asbestos,
(3) polychlorinated biphenyl,
(4) designated as a hazardous substance pursuant to 33 USC Section
1321 or listed pursuant to 33 USC Section 1317,
(5) a flammable explosive, or
(6) a radioactive material.
Homebuyer. The word "Homebuyer" means and refers to each person or family who
may hereafter purchase one (I) of the eighteen (18) Completed New Homes from the
Developer, and includes a Low or Moderate Income Homebuyer.
Low or Moderate Income Household. The words "Low or Moderate Income
Household" mean and refer to "persons and families of low or moderate income" as this
term is defined in Health and Safety Code Section 50093, as this section may be hereafter
amended, from time to time, by the State of California.
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Low or Moderate Income Homebuyer. The words "Low or Moderate Income
Homebuyer" mean and refer to each of the three (3) purchasers of a constructed
Affordable New Home that has been designated by the Developer to receive Agency
Downpayment Assistance Funds, and includes all persons identified as having a vested
property ownership interest in the Affordable New Home as of the close of the
Affordable New Home Escrow. At the close of each Affordable New Home Escrow,
such occupants shall have an annual Adjusted Family Income which does not exceed the
household income qualification limits of a Low or Moderate Income Household.
New Home. The words "New Home" mean and refer to each of the eighteen (18) single-
family residential dwelling units (including the associated landscape improvements) as
shall be constructed and installed by the Developer.
New Home Escrow. The words "New Home Escrow" mean and refer to the real estate
conveyance transaction or escrow by and between the Developer and each Homebuyer in
the Project, except for the three (3) Low or Moderate Income Homebuyers.
New Home Escrow Holder. The words "New Home Escrow Holder" mean and refer to
the escrow company designated by the Developer who shall serve as the escrow holder
under the New Home Escrow by and among such New Home Escrow Holder, the
Developer and a Homebuyer, other than a Low or Moderate Income Homebuyer, for the
transfer and sale by the Developer of the each Completed New Home.
Notice of Agency Concurrence. The words "Notice of Agency Concurrence" mean and
refer to the acknowledgment executed by the Executive Director of the Agency and
delivered to the holder of the Affordable New Home Escrow in which the Agency
confirms that the proposed Low or Moderate Income Homebuyer appears to satisfy all of
the Adjusted Family Income and other requirements of the Affordability Covenant for
occupancy of the Affordable New Home.
Project. The word "Project" means and refers to the development of a New Home on
each of the eighteen (18) residential lots by the Developer, and the reservation of three
(3) of these New Homes for occupancy by a Low or Moderate Income Homebuyer. The
Project is more particularly described herein in the Scope of Development by the
Developer in Section 3.01. The Project shall be undertaken by the Developer in
accordance with the dates set forth in the Schedule of Performance requirements
described herein in Section 3.02.
Qualified Residence Period. The words "Qualified Residence Period" mean in the case
of each completed Affordable New Home, the forty-five (45) year period of time
beginning on the Delivery Date and ending on that date, forty-five (45) years thereafter.
Real Estate Sales and Marketing Work. The words "Real Estate Sales and Marketing
Work" refer to the services to be provided by the Developer which relate to the marketing
of each Completed New Home for sale to a Homebuyer. The Real Estate Sales and
Marketing Work includes, without limitation, the presentation of each Completed New
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Home to one (1) or more Homebuyers for the purpose of causing such prospective
Homebuyer to purchase a Completed New Home from the Developer.
Section 1.02. Parties to the Agreement.
(a) The Aeencv. The Agency is a public body, corporate and politic, exercising
governmental functions and powers and organized and existing under Chapter 2 of the CRL of
the State of California (Health and Safety Code Section 33000, et seq.). The principal office of
the Agency is located at 201 North "E" Street, Suite 301, San Bernardino, California 92401.
(b) The Develooer. The Developer is GFC Enterprises, LLC, a California
corporation, dba Lynwood - GFC Enterprises, LLC, for the completion of the Project. The
principal office and mailing address of the Developer for purposes of this Agreement is 434
North Second Avenue, Upland, California 91786.
Section 1.03. Prohibition against Change in Ownershio. Manaeement and Control of
Develooer and Assil!DIDent of Agreement.
The qualifications and identity of the Developer are of particular concern to the Agency.
It is because of those qualifications and identity that the Agency has entered into this Agreement
with the Developer. No voluntary or involuntary successor-in-interest of the Developer shall
acquire any rights or powers under this Agreement except as expressly set forth herein.
Except as set forth herein in Section 3.04, prior to the completion of the Project, the
Developer shall not assign all or any part of this Agreement, or any rights hereunder, without the
prior written approval of the Executive Director of the Agency.
The Developer shall promptly notify the Agency in writing of any material change in the
identity of the parties either comprising or in control of the Developer, as well as any and all
changes in the interest or the degree of control of the Developer by any such party, of which
information the Developer or any of its partneI's or officers has been notified or may otherwise
have knowledge or information. This Agreement may be terminated by the Agency prior to the
full execution of this Agreement, if there is any material change, whether voluntary or
involuntary, in membership, ownership, management or control of the Developer (other than
such changes occasioned by the death or incapacity of any individual shareholder or officer) that
has not been approved by the Agency prior to the time of such change or the Agency may seek
other appropriate relief in the event that at any time following the full execution of this
Agreement such a material change occurs in the ownership or control of the Developer, or the
Developer's interest under the Agreement; provided, however, that the Agency shall first notify
the Developer in writing as set forth in Section 6.01, of its intention to terminate this Agreement
or assert any other remedy under this Agreement.
Notwithstanding any other provision of this Agreement to the contrary, Agency approval
of an assignment of this Agreement shall not be required in connection with any transfer to a
limited liability company, partnership, corporation, or other entity or entities in which GFC
Enterprises, LLC or other such affiliate retains management and control of the transferee entity.
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For the purpose of this SeCtion 1.03, the words "material change" refer to any total or
partial sale, assignment, or conveyance, or any trust power or any transfer in any other mode or
form by the Developer of more than a forty-nine percent (49%) interest of the ownership of the
Developer, and/or a series of such sales, assignments or conveyances which in the aggregate
exceed a disposition or change of more than a forty-nine percent (49%) interest of the ownership
of the Developer.
Section 1.04. Benefit to Proiect Area.
The Agency has determined that the development of the Project by the Developer in
accordance with this Agreement will eliminate blight and provide needed affordable housing to
the Project Area as weIl as to areas in proximity thereto, which housing is needed due to the
insufficiency of new affordable housing within the City generally, the development of the Project
within the Project Area to make available the three (3) Affordable New Homes willllSsist the
Agency in complying with the incIusionary housing requirements as set forth in the CRL.
Section 1.05. Effective Date.
(a) The Effective Date shaIl occur when this Agreement has been fuIly executed by
the parties and the Executive Director of the Agency has confirmed that the Developer has
provided the Agency with satisfactory evidence of the Developer's compliance with the
insurance coverage protections in favor ofthe Agency as set forth in Section 3.03.
(b) In the event that the Developer fails to provide satisfactory evidence of insurance
coverage within sixty (60) days foIlowing the fuIl execution of this Agreement, then regardless
of whether this Agreement may have been executed by one (1) of the parties prior to such date,
thereafter, this Agreement shaIl have no further force and effect and the parties shall be mutuaIly
discharged from any further responsibility or liability to the other party which may otherwise
arise under this Agreement; provided, however, that the Developer shaIl have the obligation to
provide the three (3) Affordable New Homes as required by the conditions of approval as
imposed upon the Developer and the Project through the City approval and entitlement process
ARTICLE II
Section 2.01. Satisfaction of Conditions.
Each party shaIl use its diligent best efforts, in good faith, and at its own cost, to satisfy
any of the conditions of this Agreement, and if the condition requires the approval of a party,
such approval shaIl be the respective party's sole and absolute responsibility.
Either party may waive any of the conditions set forth in the Agreement, but any such
waiver shaIl be effective only if contained in a writing signed by both parties.
Section 2.02. Termination.
In addition to the right of the Agency to terminate this Agreement pursuant to Section
1.03, in the event that any condition set forth in this Agreement, whether explicitly stated or
implied, is not satisfied within one hundred eighty (180) days after the Effective Date of this
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Agreement or waived by the applicable party pursuant to Section 2.01, either party may, at its
option, terminate this Agreement, thereby releasing the parties from further obligations
hereunder, and thereafter, all documents delivered by the Developer to the Agency shall be
returned to the Developer and all documents delivered by the Agency to the Developer shall be
returned to the Agency. Nothing in this Section 2.02 shall be construed as releasing any party
from liability for any default of its obligations hereunder or breach of its representations and
warranties under this Agreement occurring prior to the termination of this Agreement. The
obligations of the Developer to provide the three (3) Affordable New Homes shall survive any
termination of this Agreement unless and until either (i) the Developer has provided the three (3)
Affordable New Homes or substitute dwelling units as allowed pursuant to this Agreement, or
(ii) the zoning for the Property has been changed to a zoning designation other than residential
and a development other than a residential development has been constructed upon the Property.
Section 2.03. Representations and Warranties.
(a) Warranties and Representations bv the Agencv. The Agency hereby makes the
following representations, covenants and warranties and acknowledges that the execution of this
Agreement by the Developer has been made in material reliance by the Developer on such
covenants, representations and warranties:
(i) Warranties True. Each and every undertaking and obligation of the
Agency under this Agreement shall be performed by the Agency timely when due; and all
representations and warranties of the Agency under this Agreement and its exhibits shall
be true in all material respects as of the Effective Date.
(ii) Due Organization. The Agency is a community redevelopment agency,
duly formed and operating under the laws of the State of California. The Agency has the
legal power, right and authority to enter into this Agreement and. to execute the
instruments and documents referenced herein, and to consummate the transactions
contemplated hereby.
(iii) Reauisite Action. The execution of this Agreement has been duly
approved by the governing body of the Agency.
(iv) Execution of Agreement. The persons executing any instruments for or on
behalf of the Agency have been authorized to act on behalf of the Agency in furtherance
of the implementation and fulfillment ofthe Agency commitments under this Agreement.
(v) Use of Agencv Low and Moderate Income Housing Funds. The sole
. source of funds, which the Agency will use to provide the Agency Down Payment
Assistance, has been derived from the Agency's Low and Moderate Income Housing
Funds and from no other source of funds of the Agency or the City. The Agency
understands that the Developer is relying on this representation in determining whether
the Project is a "public work" under Labor Code Section 1720.
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(vi) DeveloDer ComDliance with Prevailinl! Wal!e Reauirements.
a. Those portions of the Project located within public street rights-of-
way or other public improvements for public agencies will be considered to be a ''public
work" as this term is defined in Labor Code Section. 1720. All employees of the.
Developer and its contractors and subcontractors and each the employees of the
Developer who perform construction work relative to the public works portions of the
Project, shall be compensated at prevailing wage rates, and the Developer, for itself and
its contractors and subcontractors, shall pay prevailing wage rates under the State of
California, as applicable, in performance of any such construction work related to the
public works portions of the Project and each applicable component thereof.
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b. The Developer recognizes and is aware of the existence of the
State legislation adopted by the California Legislature in 2001 and generally referred to
as SB 975 and the present provisions contained in Labor Code Section 1720, et seq. The
Developer shall prepare and maintain, or cause each of its construction contractors and
subcontractors, to prepare and maintain certified payroll records for all work of
improvement undertaken by the Developer. The Developer shall provide the Agency
with copies of all certified payroll records as prepared and maintained by the Developer
and its contractors and subcontractors, for all work of improvement undertaken by the
Developer on the public works portions of the Project within ten (10) days following
written request thereof as provided in Labor Code Section 1776. The Developer shall
cause to be included, in all of its third-party construction contracts relating to the
construction and improvement of the public works portions of the Project, suitable
provisions which compel its contractors and each subcontractor to pay not less than
prevailing wages to their employees engaged in the work of improvement of the public
works portions of the Project and to provide the Agency with copies of the certified
payroll records maintained by such contractors and subcontractors upon ten (10) days
written notice ofrequest for inspection by the Agency.
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c. The Agency shall never be responsible for the payment of any
sums under Labor Code Section 1720, et seq., or other prevailing wage requirements as
the result of the activities of the Developer, or any of its contractors or subcontractors, in
connection with the development and improvement of the public works portions of the
Project. The Developer shall indemnify, defend and hold harmless, the Agency and all
officers, officials, employees, consultants and attorneys of the Agency with respect to all
such prevailing wage compliance issues arising out of the activities of the Developer
associated with constructing the public works portions of the Project or other public
improvements under this Agreement or other agreements between the Developer and
third parties. The Developer agrees to apprise, in writing, all third parties seeking to
provide labor and construction work on the public works portions of the Project as to the
provisions of this Section 2.03 and the compliance required pursuant to State law
regarding the payment of prevailing wages. Any indemnification provided to the
Developer from such third parties with respect to compliance of the public works
portions of the Project with the public work requirements imposed upon the Developer
and the Project by virtue of the provisions of Labor Code Section 1720, et seq., shall not
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relieve the Developer of its indemnification obligations to the Agency arising under this
Section 2.03.
(b) Warranties and Renresentations bv the Developer. The Developer hereby, to the
best of its knowledge, makes the following representations, covenants and warranties and'
acknowledges that the execution of this Agreement by the Agency has been made in material
reliance by the Agency on such covenants, representations and warranties:
(i) The Developer is a duly organized and validly eXlstmg California
corporation. The Developer has the legal right, power and authority to enter into this
Agreement and the instruments and documents referenced herein and to consummate the
transactions contemplated hereby. The persons executing this Agreement and the
instruments referenced herein on behalf of the Developer hereby represent and warrant
that such persons have the power, right and authority to bind the Developer.
(ii) The Developer has taken all requisite action and obtained all requisite
consents in connection with entering into this Agreement and the instruments and
documents referenced herein and the consummation of the transactions contemplated
hereby, and no consent of any other party is required for the Developer's authorization to
enter into this Agreement.
(iii) This Agreement is, and all agreements, instruments and documents to be
executed by the Developer pursuan~ to this Agreement shall be, duly executed by and are
or shall be valid and legally binding upon the Developer and enforceable in accordance
with their respective terms.
(iv) The Development Project Cost Pro Forma as prepared by the Developer
and submitted to the Agency as of the Effective Date as attached hereto as Exhibit "B", is
to the best information and belief of the Developer, a fair and reasonable presentation of
the costs, expenses and gross Completed New Home sale proceeds which the Developer
expects to incur as of the Effective Date with respect to the development ofthe Project.
(v) The books and accounting records of the Developer with respect to the
improvement of the Completed New Homes and performance of any of the work and the
final accounting for New Home Sales Cost Certificate for Completed New Homes, shall
conform to the financial accountability standards of the Office of Management and
Budget Circular A-I 10, as evidenced by a notarized statement by the certified public
accountant.
(vi) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby shall result in a breach of or constitute a default under
any other agreement, document, instrument or other obligation to which the Developer is
a party or by which the Developer may be bound, or under law, statute, ordinance, rule,
governmental regulation or any writ, injunction, order or decree of any court or
governmental body applicable to the Developer.
(vii) The Developer represents and warrants to the Agency that the Developer
shall not accept any other financial assistance from any other public agency in connection
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with the Project, including the City, unless the Developer first complies with the
applicable provisions of Labor Code Section 1720 in connection with its acceptance of
such other assistance.
(viii) The representations and warranties of the Developer contained in this
Section 2.03(b) shall be based upon the actual knowledge of only those employees of the
Developer who have participated in the negotiation of this transaction and preparation of
this Agreement.
All representations and warranties contained in this Section 2.03(b) are true and correct
on the date hereof and on the Effective Date.
(c) Change in Facts. If either party becomes aware of any act or circumstance which
would change or render incorrect, in whole or in part, any representation or warranty made by
such party under this Agreement, whether as of the Effective Date or any time thereafter, and
whether or not such representation or warranty was based upon such party's knowledge and/or
belief as of a certain date, such party will give immediate written notice of such changed fact or
circumstance to the other party, but such notice shall not release such party of its liabilities or
obligations with respect thereto.
ARTICLE III
DEVELOPMENT OF THE PROJECT
Section 3.01. Scope of Development bv Developer.
(a) It is the intent of the parties that the Project shall be developed as follows: (i) the
construction by the Developer on each of the eighteen (18) residential lots, with a minimum lot
size of 11,000 square feet, a single-family detached residential home, together with all on and
off-site improvements such as streets, curbs, sidewalks, storm drains, gutter, utilities, etc., with
three (3) of such New Homes to be reserved. for occupancy by a Low or Moderate Income
Homebuyer as Affordable New Homes. The specific components of the design construction and
improvement of each Completed New Home is more particularly set forth herein. The approval
of this Agreement by the Agency shall concurrently approve the Scope of Development. Any
material change to the Scope of Development (or a series of individual changes which are
cumulatively material) shall be subject to the prior review and approval of the Agency through
the Executive Director of the Agency.
(b) The City's zoning ordinance and building requirements will be applicable to the
development and use of the Completed New Homes on each residential lot. The Developer
acknowledges that the plan for development of the New Homes as set forth in the Scope of
Development shall be subject to the City's zoning ordinance and building requirements. No
action by the Agency or the City with respect to the consideration, review or approval of this
Agreement or related documents shall be deemed to constitute a waiver of any lawful City
requirements which are applicable to the Developer or the Project, or to any successor-in-interest
of the Developer, or any successor-in-interest pertaining to the Project, except by modification or
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development variance as may specifically relate to such proposed work of improvement by the
Developer which is approved by the City.
(c) The Completed New Homes shall be constructed and improved on the residential
lots in conformance with the Scope of Development and any and all other plans, specifications
and similar development documents required by this Agreement, except for such changes as may
be mutually agreed upon in writing by and between the Developer and the Agency, which mutual
approval of any such change shall not be unreasonably conditioned, withheld or delayed. The
approval by the City of any element of the Project, which may be subject to the ministerial
regulatory review of the City, shall be deemed to be approved by the Agency.
(d) The approval of the Scope of Development by the Agency hereunder shall not be
binding upon the Mayor and Common Council of the City or the Planning Commission of the
City with respect to any regulatory approvals relating to the improvement of the Project or the
Completed New Homes and/or the public improvements necessary for the development of the
Project as may be required by such other public agencies. If any material change of the Scope of
Development as previously approved by the Agency shall be required by another government
official, agency, department or bureau having jurisdiction over the development of the Project,
the Agency shall not unreasonably withhold or delay approval of such revisions to the Scope of
Development as the Developer may reasonably request.
(e) Subject to the Developer's right to seek an appeal or modification of one (1) or
more development conditions relating to the Project as may hereafter be imposed by the City or
any other regulatory agency with jurisdiction over the Project, the Developer agrees to accept
and comply fully with any and all lawful and reasonable final conditions of approval applicable
to all permits and other governmental actions affecting the Project or the improvement of each
residential lot with a Completed New Home.
(f) The Developer shall cause landscaping plans for the front yard only in connection
with improvement of each New Home on each residential lot to be prepared by a licensed
landscape contractor or architect. The Developer shall prepare and submit preliminary and fmal
landscaping plans for the front yard as part of the improvement of each New Home to the City
for its approval, which are consistent with City Code requirements. These plans shall be timely
prepared, submitted and approved so as to complete the Project within the time specified in
Section 3.02 herein.
(g) The Developer shall prepare and submit development plans, construction
drawings and related documents for the improvement of each of eighteen (18) New Homes
consistent with the Scope of Development and the Schedule of Performance to the City. The
development plans, construction drawings and related documents submitted by the Developer to
the City shall be in the form of final drawings, plans and specifications. Such final drawings,
plans and specifications are hereby defined as those which contain sufficient detail necessary to
obtain a building permit from the City for the construction of each New Home.
(h) During the preparation of all drawings and plans in connection with the
improvement of the New Homes and the public improvements necessary for the Project, the
Developer shall provide to the Agency, regular progress reports to advise the Agency of the
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status of the preparation by the Developer, and the submission to and review by the City of
construction plans and related documents. The Developer shall communicate and consult with
the Agency as frequently as is necessary to ensure that any such plans and related documents
submitted by the Developer to the City are being processed in a timely manner.
(i) The Agency shall have the right to review all plans, drawings and related
documents pertinent to the development of the improvement of each New Home in order to
ensure that they are consistent with this Agreement and with the Scope of Development.
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G) The Developer shall timely submit to the City for its review and approval, any
and all plans, drawings and related documents pertinent to the development of the Project, as
required by the City. The Agency shall cooperate with and shall assist the Developer in order for
the Developer to obtain the approval of any and all development plans, construction drawings
and related documents consistent with this Agreement submitted by the Developer to tlie City as
promptly as feasible following the City's receipt of such plans. Any failure by the City to
approve any of such plans or to issue necessary permits for the development of the Project within
sixty (60) calendar days following submission by the Developer to the City of complete and
correct plans shall constitute an enforced delay hereunder, and the Schedule of Performance shall
be extended by that period of time beyond a sixty (60) calendar day period in which the City
approves said plans; provided, however, that in the event that the City disapproves of any of such
. plans, the Developer shall within thirty (30) calendar days after receipt of such disapproval
revise and resubmit such plans in accordance with the City's requirements and in such form and
substance so as to obtain the City's approval thereof.
(k) [RESERVED]
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(I) The Agency shall approve any modified or revised plans, drawings and related
documents to which reference is made in this Agreement as long as such modified or revised
plans, drawings and related documents are generally consistent with the Scope of Development,
and do not, in the reasonable opinion of the Executive Director of the Agency, require a material
change or adjustment in the estimated New Home Sale Costs shown in the Development Project
Cost Pro Forma and are consistent with the other plans for the improvement of the New Homes
which have been approved by the Agency. Upon any disapproval of such modified or revised
plans, drawings or related documents, including the Development Project Cost Pro Forma, the
Agency shall state in writing the reasons for such disapproval. The Developer, upon receipt of
any notice of disapproval, shall promptly revise such disapproved portions of the plans, drawings
or related documents in a manner that addresses the reasons for disapproval and reasonably
meets the requirements of the Agency in order to obtain the Agency's approval thereof. The
Developer shall resubmit such revised plans, drawings and related documents to the Agency as
soon as possible after its receipt of the notice of disapproval and, in any event, no later than thirty
(30) calendar days thereafter. The Agency shall approve or disapprove such revised plans,
drawings and related documents in the same manner and within the same times as provided in
thjs Section for approval or disapproval of plans, drawings and related documents initially
submitted to the Agency, and if no specific time for approval is specified then the Agency shall
so approve or disapprove the proposed modifications or revisions promptly upon the written
request of the Developer.
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(m) If the Developer desires to make any material change in the final construction
drawings, plans and specifications or related documents, including the Development Project Cost
Pro Forma after their approval by the Agency and/or the City, the Developer shall submit the
. proposed change in writing to the Agency and/or the City for approval. The Agency shall notify
the Developer of approval or disapproval thereof in writing within thirty (30) calendar days after
submission to the Agency. This thirty (30) calendar day period may be extended by mutual
consent of the Developer and the Agency. Any such change shall, in any event, be deemed to be
approved by the Agency unless rejected, in whole or in part, by written notice thereof submitted
by the Agency to the Developer, setting forth in detail the reasons therefore, and such rejection
shall be made within said thirty (30) calendar day period unless extended as permitted herein.
The Agency shall use its best efforts to cause the City to review and approve or disapprove any
such change as provided in Section 3.01(j) hereof.
(n) The Developer, upon receipt of written notice of disapproval of aproposed
change in construction drawings, plans and specifications by the Agency and/or the City, may
revise such portions of the proposed change in construction drawings, plans and specifications
and related documents as are rejected and shall thereafter resubmit such revisions to the Agency
and/or the City for approval in the manner provided in Section 3.01(j) hereof.
(0) The Developer shall have the right, during the course of construction, to make
changes in construction concerning the interior design of the New Homes and "minor field
changes" with respect to the New Homes, and to make "minor field changes" to the public
improvements necessary for the development of the Project without seeking the approval of the
Agency; provided, however, that such changes do not materially affect the costs or income for
the Project as presented in the Development Project Cost Pro Forma or the ability of the City to
approve the completion of construction of the New Home for purposes of authorizing the lawful
occupancy thereof, or the acceptance by the City of the public improvements necessary for the
development of the Project; and further provided that the City has approved any such minor field
change to either a New Home or the public improvements necessary for the development of the
Project in accordance with the standards and practices of the City Building Department and/or
City Public Works Department, as applicable. Said "minor field changes" shall be defined as
those changes from the approved final construction drawings, plans and specifications which
have no substantial effect on the improvements and are made in order to expedite the work of
construction in response to field conditions. Nothing contained in this subsection shall be
deemed to constitute a waiver of or change in the City's Building Code or Public Works
Department requirements governing such ,"minor field changes" or in any and all approvals by
the City otherwise required for such "minor field changes".
(P) The cost of constructing the New Homes and all other improvements on the
Project shall be paid for by the Developer. To the extent that the Developer may be eligible to
seek a credit, which is generally available to any other similarly situated owner of land on which
a former residential dwelling unit has been demolished, for the payment of public school capital
facilities impact fees, in whole or in part upon the construction of a New Home, the Developer
may seek and obtain such a credit from the San Bernardino City Unified School District.
(q) The Developer shall pay the school capital facility development improvement fees
as required and at the time specified by the San Bernardino City Unified School District;
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provided that the Developer may seek exemptions or modifications to the required fees. All
other development fees imposed by the City as a condition of issuance of any permit for the
development of the Project shall be paid by the Developer to the City at the time of issuance of
. each such permit or, subject to the approval of the City in its discretion, at the close of each New
Home Escrow, or Affordable New Home Escrow, pursuant to the terms of the City's
Development Fee Deferral program as may then be in effect.
(r) The Developer shall, at its expense, cause to be prepared, and shall pay any and
all fees pertaining to the review and approval thereof by the City, all required construction,
planning and other documents reasonably required by governmental bodies pertinent to the
development of the Project hereunder, including, but not limited to, the public improvements
necessary for the development of the Project and to the specifications, drawings, plans, maps,
permit applications, land use applications, zoning applications and design review documents for
the New Homes.
(s) The Developer shall pay for any and all costs, including, but not limited to, the
costs of design, construction, relocation and securing of permits for utility improvements and
connections, which may be required in developing the Project. The Developer shall obtain any
and all necessary approvals prior to the commencement of applicable portions of the construction
of the Project, and the Developer shall take reasonable precautions to ensure the safety and
habitability of surrounding properties during the construction ofthe Project.
(t) The Developer shall begin and complete all construction and development of the
Project and timely undertake all obligations and responsibilities of the Developer in order to
complete the Project within twelve (12) months from the Effective Date of this Agreement as set
forth in the Schedule of Performance and the dates as provided in Section 3.02 hereof, or within
such reasonable extensions of such times as may be granted by the Executive Director of the
Agency or as otherwise provided for in .this Agreement. The Schedule of Performance shall be
subject to revisions, from time to time, as mutually agreed upon in writing by and between the
Developer and the Executive Director of the Agency. Any and all deadlines for performance by
the parties shall be extended for any times attributable to delays which are not the fault of the
performing party and are caused by the other party, other than periods for review and approval or
reasonable disapprovals of plans, drawings and related documents, specifications or applications
for permits as provided in this Agreement.
(u) The Developer shall, at its own expense, secure or shaH cause to be secured, any
and all permits, which may be required for the construction, development or work of the Project
by the City or any other governmental agency having jurisdiction tliereo(
(v) Officers, employees, agents, or representatives of the Agency and the City shall
have the right of reasonable access to the Project site, during normal business hours, during the
period of construction for the purposes of monitoring the Developer's performance under this
Agreement upon not less than forty-eight (48) hours prior written notice to the Developer.
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Section 3.02. Schedule of Performance.
The Developer shan construct the eighteen (18) single-family detached residential homes,
of which three (3) shall be Affordable New Homes, within twelve (12) months after the Effective
Date of this Agreement, and shall ensure the timely delivery 'of an Completed New Homes by
December 31,2008, and the sale to Homebuyers on or before said date, includ_ing the three (3)
Affordable New Homes.
The Agency expressly requires that each of the three (3) Affordable New Home Escrow
closings occur no later than December 31, 2008. The Developer understands such Agency
limitation and hereby acknowledges that in the event the three (3) Affordable New Home Escrow
closing have not occurred by the December 31, 2008, no Agency Downpayment Assistance
Funds will thereafter be made available for the Project.
Section 3.03. Insurance Coverage ofDeveloDer.
By no later than the date indicated in Section 1.05, the Developer shall furnish, or shan
cause to be furnished, to the Agency, duplicate originals or appropriate certificates of public
indemnity and liability insurance in the amount of Two Million Dollars ($2,000,000) combined
single limit, naming the Agency, the City and the elected officers, officials, employees, attorneys
and agents of both such public entities, as additional insureds. Said insurance shan cover
comprehensive general liability including, but not limited to, contractual liability; acts of
subcontractors; premises-operations; explosion, collapse and underground hazards, if applicable;
broad form property damage, and personal injury including libel, slander and false arrest. In
addition, the Developer shall provide to the Agency, adequate proof of comprehensive
automobile liability insurance covering owned, non-owned and hired vehicles, combined single
limit in the amount of One Million Dollars ($1,000,000) for each occurrence; and proof of
workers' compensation insurance. Any and all insurance policies required hereunder shall be
obtained from insurance companies admitted in the State of California and rated at least B+; XII
in Best's Insurance Guide, or in special circumstances, be pre-approved by both the Executive
Director of the Agency and the Agency Counsel. An said insurance policies shan provide that
they may not be canceled unless the Agency and the City receive written notice of cancenation at
least thirty (30) calendar days prior to the effective date of cancellation. Any and all insurance
obtained by the Developer hereunder shall be primary to any and all insurance which the Agency
and/or the City may otherwise carry, including self insurance, which for all purposes of this
Agreement shall be separate and apart from the requirements of this Agreement. Any insurance
policies governing the Project as obtained by the Agency shall not be transferred from the
Agency to the Developer. Appropriate insurance means those insurance policies approved by the
Agency Counsel consistent with the foregoing. Any and all insurance required hereunder shall
be maintained and kept in force until the "Release Date" as this term is defined in Section 4.10.
Section 3.04. Prohibition against Transfer Prior to Release Date.
(a) Prior to the Release Date, the Developer shall not, without prior written approval
of the Agency or except as permitted by this Agreement, (i) assign or attempt to assign this
Agreement or any right herein or (ii) make any total or partial sale, transfer, conveyance, lease,
leaseback, or assignment of any portion of the Project, or permit to be placed on any portion of
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the Project any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien. This
prohibition shall not apply to any of the following: (1) the reasonable grant by the Developer of
utility easements or permits to facilitate the development of the Project; (2) the assignment of all
of the Developer's rights and obligations in this Agreement to a limited liability company of
which the Developer and/or an affiliate of the Developer is the managing member (and the
assumption of such obligation by such limited liability company); (3) any permitted construction
financing interest under Section 3.05; and (4) sales by the Developer of individual Completed
New Homes, subject to the provision of Section 4.10.
(b) In the absence of any specific written agreement or approval by the Agency, no
unauthorized sale, transfer, conveyance, lease, leaseback or assignment of any portion of the
Project shall be deemed to relieve the Developer or any other party from any obligations under
this Agreement.
(c) The Developer shall not lease or rent any Completed New Home for commercial
or residential occupancy by any petson, pending final sale to a Homebuyer, or in the case of a
Affordable New Home, pending final sale to a Low or Moderate Income Homebuyer.
Section 3.05. Security Financing: Right of Holders.
(a) The words "mortgage" and "deed of trust" as used herein shall be deemed to
include all other customary and appropriate modes of financing real estate construction and land
development. Notwithstanding any provision of Section 3.03 to the contrary, mortgages, deeds
of trust, or any other form of lien required for any reasonable method of financing the
construction and improvement of the Project are permitted before the completion of the Project.
The Developer shall notify the Agency, in writing, in advance of any mortgage, deed of trust, or
other form of lien for financing of the Project, which the Developer proposes to be secured by
the Project before the recordation of arty such Project-related construction financing security
interests. The Developer shall not enter into any such conveyance for construction financing
without the prior written approval of the Agency, which approval the Agency shall grant if: (i)
any such conveyance is given to a responsible financial or lending institution including, without
limitation, banks; savings and loan institutions, insurance companies, real estate investment
trusts, pension programs and the like, or other acceptable persons or entities for the purpose of
financing the construction of the New Homes, and (ii) such loan contains customary construction
lender disbursement controls.
(b) The Developer shall promptly notify the Agency of any mortgage, deed of trust or
other refinancing, encumbrance or lien that has been created or attached thereto prior to
completion of the construction of the New Homes whether by voluntary act of the Developer or
otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens
need be given by the Developer to the Agency prior to suit being filed to foreclose such
mechanic's lien.
(c) The holder of any mortgage, deed of trust or other security interest authorized by
this Agreement shall in no manner be obligated by the provisions of this Agreement to construct
or complete the Project or to guarantee such construction or completion; provided, however, that
each surety under any completion and payment surety bond delivered by the Developer to the
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City, if any, under the terms of any off-site improvement permit issued by the City to the
Developer, shall not, by the virtue of any term of this Agreement, be deemed to be discharged
from its obligation to the City as arises under such surety.
(d) In the event of a default or breach by the Developer of a mortgage, deed of trust
or other security interest with respect to the Project prior to the completion of the Project, and the
holder of such security interest has not exercised its option to complete the Project, the Agency
may cure the default of the Developer, but is under no obligation to do so prior to completion of
any foreclosure. In the event that the Agency may cure any such default by the Developer, the
Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred
by the Agency in curing the default. The Agency shall also be deemed to have a lien of the
Agency as may arise under this Section 3.05(d) upon the Project to the extent of such costs and
disbursements. Any such lien shaH be subordinate and subject to mortgage, deed of trust or other
security instrument executed by the Developer encumbering the Project.
Section 3.06. Prooerty Taxes and Assessments.
The Developer shaH pay, prior to delinquency, aH real property taxes and assessments
assessed and levied on or against the Project property between the time of the fuH execution of
this Agreement and prior to the close of each New Home Escrow or Affordable New Home
Escrow. Nothing herein shaH be deemed to prohibit the Developer from contesting the validity
or amounts of any tax assessment, encumbrance or lien, on any lot within the Project foHowing
the full execution of this Agreement, nor to limit the remedies available to the Developer in
respect thereto.
ARTICLE IV
USE AND DISPOSITION OF THE AFFORDABLE NEW HOMES BY THE
DEVELOPER
Section 4.01. Uses of the Affordable New Homes.
(a) The Developer covenants and agrees for itself, its successors and assigns that
three (3) of the eighteen (18) residential lots within the Project shaH be developed, constructed,
improved with an Affordable New Home as set forth in Section 3.01, and each of these
completed Affordable New Homes shaH be reserved by the Developer for sale and occupancy by
Low or Moderate Income Homebuyers, whose Adjusted Family Income at the time of initial
occupancy of a completed Affordable New Home does not exceed the household income
qualification limits of a Low or Moderate Income Household.
(b) The Developer shall cause to be recorded, at the time of closing of each
Affordable New Home Escrow, the fuHy executed form of the Affordability Covenant. The final
form of the Affordability Covenant shaH be delivered to the Affordable New Home Escrow
Holder for execution by the Developer and the Low or Moderate Income Homebuyer at the time
of closing of each applicable Affordable New Home Escrow. If the Low or Moderate Income
Homebuyer may use Agency Downpayrnent Assistance Funds for the purchase of the Affordable
New Home from the Developer, the Low or Moderate Income Homebuyer and the Agency shaH
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execute a separate set of affordability covenants in favor of the Agency to evidence the
obligation of the Low or Moderate Income Homebuyer to the Agency which arise by virtue of
the Qualified Homebuyer's acceptance of Agency Downpayment Assistance Funds under such
Agency program.
( c) The Developer further covenants and agrees for itself, its successors and assigns
that each of the three (3) lots within the Project designated for an Affordable New Home shall be
improved, developed and used in accordance with the Scope of Development in Section 3.01.
Developer covenants to develop and use the designated Affordable New Home lots in
conformity with all applicable laws.
Section 4.02. Disposition of the Completed New Homes to Homebuvers and Special
Provisions for Affordable New Home Escrows.
(a) Each Completed New Home shall be transferred and sold to a Homebuyer
through a New Home Escrow.
(b) Upon the completion of improvement of an Affordable New Home by the
Developer on each of three (3) lots as may later be determined by the Developer, the Developer
shall transfer and sell all of its right, title and interest in such completed Affordable New Home
to a Low or Moderate Income Homebuyer designated by the Developer. The gross sales price of
each completed Affordable New Home will be set by the Developer at the time of sale to. a
Homebuyer, based upon market conditions .at the time of such sale to the particular Homebuyer;
provided, however, that the first lien purchase money mortgage amount and other housing costs
payable by such Low or Moderate Income Homebuyer for the completed Affordable New Home,
shall be an amount which does not exceed an Affordable Housing Cost for the Low or Moderate
Income Homebuyer. The Completed New Home purchase price payable by a Homebuyer for a
New Home which is not subject to the affordability covenants of this Agreement shall not be
subject to such an Affordable Housing Cost sales price restriction or limitation.
(c) The disposition of each Completed New Home to a Homebuyer shall take place
through a New Home Escrow or an Affordable New Home Escrow, as applicable, to be
administered by the New Home Escrow Holder and Affordable New Home Escrow Holder,
respectively. Each of the New Home Escrows or Affordable New Home Escrows shall be
deemed open ("Opening of New Home Escrow"), upon delivery of a fully executed copy of the
Completed New Home sales contract by and between the Homebuyer and the Developer. The
Escrow Holder shall promptly confirm to the parties the escrow number and the title insurance
order number assigned to such escrow. The Escrow Holder shall be a title company or escrow
service acceptable to the Developer and the Homebuyer. The Agency shall not be a party to any
such New Home Escrow or Affordable New Home Escrow. Notwithstanding the preceding
sentence, the Developer shall instruct the Escrow Holder to comply with the provisions of
Section 4.02(f) of this Agreement and at the close of each New Home Escrow or Affordable
New Home Escrow, the Escrow Holder shall provide the Agency with a copy of both the
"seller's" and the "buyer's" closing statement, together with a complete copy of the real estate
sales agreement between the Developer and the Homebuyer for the Completed New Home.
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(d) In the case 'of an Affordable New Home Escrow, the Developer shall deliver to
the Agency, the information relating to each Low or Moderate Income Homebuyer described in
Section 2(e) of the Affordability Covenant, within five (5) calendar days following the
, Developer's designation of such Low or Moderate Income Homebuyer as the prospective
purchaser of the completed Affordable New Home. Concurrently, upon the Developer's delivery
to the Agency of the household income and occupancy information described in Section 2(e) of
the Affordability Covenant, the Developer shall also request that the Agency issue its Notice of
Agency Concurrence with respect to the Low or Moderate Income Homebuyer designated by the
Developer. Within ten (10) calendar days following its receipt of such written information and
request from the Developer relating to the Low or Moderate Income Homebuyer, the Agency
shall provide the Developer with a preliminary confirmation of the approval or rejection of the
income and household occupancy qualifications of the proposed Low or Moderate Income
Homebuyer. In the event that the Agency may request additional information relating to the
confirmation of the matters described in the preceding sentence with respect to the Low or
Moderate Income Homebuyer, the Developer shall cause such additional information to be
provided to the Agency as promptly as feasible. The Executive Director of the Agency shall
issue a preliminary determination of concurrence of the eligibility of the Low or Moderate
Income Homebuyer within ten (10) calendar days following receipt of such completed income
and household occupancy information. Provided that the proposed Low or Moderate Income
Homebuyer also qualifies to obtain purchase money mortgage financing for the purchase of the
completed Affordable New Home with terms and costs not in excess of an Affordable Housing
Cost for such Low or Moderate Income Homebuyer, as evidenced by a written mortgage lender's
prequalification for such Low or Moderate Income Homebuyer, the Executive Director of the
Agency shall issue a Notice of Agency Concurrence with respect to such Low or Moderate
Income Homebuyer to the Escrow Holder. In, the event that the Agency may later discover that
the written information provided to it in support of a request for issuance of a Notice of Agency
Concurrence is false or incorrect in any material respect, then in such event, the Agency may
exercise all of its remedies to enforce the provisions of this Agreement and the Affordability
Covenant, if applicable, notwithstanding the fact that a Notice of Agency Concurrence may have
been issued in favor of a particular Low or Moderate Income Homebuyer.
(e) The Developer and the Agency mutually covenant and agree to execute all
necessary or appropriate written escrow instructions relating to the application of this Agreement
to a particular New Home Escrow or Affordable New Home Escrow as may be reasonably
requested by the New Home Escrow Holder or the Affordable New Home Escrow Holder,
respectively, in connection with the administration of a New Home Escrow or Affordable New
Home Escrow.
(f) Each New Home Escrow or Affordable New Home Escrow shall close upon
satisfaCtion' of the applicable escrow conditions by and between the Developer and such
Homebuyer, as consistent with this Agreement, when the New Home Escrow Holder or
Affordable New Home Escrow Holder confirms that:
(A) the New Home Escrow Holder or Affordable New Home Escrow Holder
has provided the Agency with a copy of the buyer's and the seller's estimated settlement
statements for the escrow;
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(B) if the escrow relates to an Affordable New Home, then the Affordable
New Home Escrow Holder shall also provide adequate information or documentation to confirm
to the Agency the following:
(i) it is in receipt of the Notice of Agency Concurrence for the Low or
Moderate Income Homebuyer regarding a completed Affordable New Home;
(ii) it has received and is in a position to record a fully executed form
of the Affordability Covenant for the completed Affordable New Home;
(iii) it is in a position to provide the Agency with assurance reasonably
satisfactory to the Agency that the Affordability Covenant shall, upon the close of
the Affordable New Home Escrow, be subject only to the lien for property taxes
and the lien in the completed Affordable New Home of the senior purchase
. money mortgage lender to the Low or Moderate Income Homebuyer;
(iv) the Low or Moderate Income Homebuyer has executed all of the
Agency program documents relating to the Agency Downpayment Assistance
Funds, if any, provided by the Agency to such Low or Moderate Income
Homebuyer;
(v) it is in a position to comply with such other instructions of the
Developer, the Low or Moderate Income Homebuyer, the senior purchase money
mortgage lender and the Agency relating to the completed Affordable New Home.
(g) In the event that after it is opened, a New Home Escrow or Affordable New Home
Escrow may fail to close for any reason, the Developer may cause such escrow to be cancelled
without further notice of instruction to the Agency. The Developer shall pay for all of the costs
and expenses of such. a cancelled New Home Escrow or Affordable New Home Escrow and shall
indemnify, defend and hold the Agency harmless from any claim, loss or damage which may be
asserted or arise against the Agency by a third party as a result of the cancellation of any such
escrow.
(h) Within five (5) calendar days following the close of each New Home Escrow or
Affordable New Home Escrow, the Developer shall provide the Agency with a true and correct
copy of the final escrow settlement statement for the buyer and the seller. Within sixty (60)
calendar days following the close of each New Home Escrow or Affordable New Home Escrow,
the Developer shall deliver its New Home Sale Costs Certificate to the Agency.
Section 4.03. Maintenance of the Proiect Lots.
The Developer covenants and agrees for itself, its successors, and assigns to maintain
each of the eighteen (18) Project lots upon which New Homes have been constructed in a good
condition, and free from any accumulation of debris or waste material, subject to normal
construction job-site conditions, and shall maintain in a neat, orderly, healthy and good
condition, the landscaping on each lot required to be planted in accordance with the Scope of
Development in Section 3.01. In the event the Developer, or its successors or assigns, fails to
perform the maintenance as required herein, the Agency shall have the right, but not the
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obligation, to enter any such lot and undertake such maintenance activities. In such event, the
Developer shall reimburse the Agency for all reasonable sums incurred by it for such
maintenance activities. The obligation of the Developer under this Section 4.03, with respect to
the Project lots, shall be discharged for each lot on the applicable Delivery Date for each
Completed New Home. The Developer's maintenance obligation to the Agency as arises under
this Section 4.03, with respect to the common area of the Project (if any common area exists),
will be discharged upon conveyance by the Developer of any such common area to a
homeowner's association, if any.
Section 4.04. Obligation to Refrain from Discrimination.
The Developer covenants and agrees for itself, its successors, its assigns and every
successor-in-interest to each of the Project lots, that there shall be no discrimination against or
segregation of any person, or group of persons, on account of sex, marital status, race, color,
religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of any lot; nor shall the Developer itself, or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees, or vendees of the lots.
Section 4.05. Form of Nondiscrimination and Nonsegregation Clauses.
The Developer covenants and agrees for itself, its successors, its assigns, and every
successor-in-interest to the Project lots, and each of them, or any part thereof, that the Developer,
such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental,
transfer, use, occupancy, tenure or enjoyment of each of the Project lots and each of the New
Homes, on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin
of any person. All deeds, leases or contracts pertaining thereto shall contain or be subject to,
substantially, the following nondiscrimination or nonsegregation clauses:
(a) In deeds: "The grantee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The
foregoing covenants shall run with the land".
(b) In leases: "The Lessee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, and this lease is made and accepted
upon and subject to the following conditions: That there shall be no discrimination against or
segregation of any person or group of persons, on account of race, color, creed, religion, sex,
marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any
person claiming under or through it, establish or permit any such practice or practices of
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discrimination or segregation with reference to the selection, location, number, use, or
occupancy, oftenants, lessees, sublessees, subtenants, or vendees in the premises herein leased".
(c) In contracts: "There shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of
the premises herein conveyed or leased, nor shall the transferee or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy, of tenants, lessees,
sublessees, subtenants, or vendees of the premises herein transferred". The foregoing provision
shall be binding upon and shall obligate the contracting party or parties and any subcontracting
party or parties, or other transferees under the instrument.
Section 4.06. Effect and Duration of Covenants under Section 4.05 and Section 4.06.
(a) The covenants established under Section 4.05 against discrimination shall remain
in effect in perpetuity.
(b) The covenant of the Developer respecting use and occupancy of each Completed
New Home shall remain in effect until the Release Date, except for the three (3) completed
Affordable New Homes, which shall remain in effect for the Qualified Residence Period of each
such completed Affordable New Home, and shall run with the land and shall constitute equitable
servitudes thereon, and shall, without regard to technical classification and designation, be
binding for the benefit and in favor of the Agency, its successors and assigns and the City.
(c) The Agency is deemed the beneficiary of the terms and provisions of this
Agreement and of the covenants running with the land for and in its own rights and for the
purposes of protecting the interests of the community. The Agency shall have the right, if such
covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at
law or in equity or such other proper proceedings to enforce the curing of such breaches to which
it or any other beneficiary of such covenants may be entitled, including, without limitation, to
specific performance, damages and injunctive relief. The Agency shall have the right to assign
all of its rights and benefits hereunder to the City.
Section 4.07. Development Proiect Cost Pro Forma
(a) As of the Effective Date of this Agreement, the Developer has presented the
Agency with a Development Project Cost Pro Forma as attached hereto as Exhibit "B", which is
part ofthe Scope of Development.
(b) The Developer shall maintain accounting books and records of Project
development costs, the New Home Sales Costs and all income and proceeds realized by the
Developer from the Project in accordance with generally accepted principles of business
accounting. The Agency and its accountants and auditors shall have the right to conduct, at its
expense, an inspection and review of the accounting books and records of the Developer relating
to the Project upon the request of the Agency. Provided the Agency has given the Developer at
least ten (10) calendar days' prior written notice, the Developer shall cooperate with the Agency
in the production of its accounting books and records as reasonably required by the Agency and
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its auditors to conduct an audit of actual New Home Sales Costs and all income and proceeds
realized by the Developer from the Project. Matters discovered by the Agency shall not be
disclosed to third parties unless required by law or unless otherwise resulting from or related to
the pursuit of any remedies or the assertion of any rights of the Agency hereunder. The
Developer shall also have the right, at all reasonable times, to inspect the books and records of
the Agency pertaining to the Project and/or the development thereof as pertinent to the purposes
of this Agreement.
(c) The Developer represents and warrants to. the Agency, that as of the Effective
Date, the expected fair market value of each Competed New Home is not less than the sum
indicated in the Development Project Cost Pro Forma submitted to the Agency for each New
Home, as shall be constructed by the Developer on each lot.
Section 4.08. Agencv Downoavment Assistance Funds.
(a) As of the Effective Date, the Agency shall appropriate and reserve the sum of
Two Hundred Seventy Thousand Dollars ($270,000) from the Agency LOw and Moderate
Income Housing Funds to provide Agency Downpayment Assistance Funds for LOw or
Moderate Income Homebuyers of completed Affordable New Homes as set forth in this Section
4.08. The maximum amount of the Agency Low and Moderate Income Housing Funds to be
used and applied for each Agency Downpayment Assistance shall not exceed Ninety Thousand
Dollars ($90,000) per New Home. Agency Downpayment Assistance may hereafter be provided
for not to exceed three (3) LOw or Moderate Income Homebuyers upon the close of each
Affordable New Home Escrow for a completed Affordable New Home, subject to the terms and
conditions of the Agency program for the use of such Agency LOw and Moderate Income.
Housing Funds and the underwriting and credit evaluation by the Agency of each such LOw or
Moderate Income Homebuyer.
(b) Provided that a Low or Moderate Income Homebuyer is determined by the
Agency to be eligible for Agency DownpaY,Illent Assistance, as part of its acquisition of a
completed Affordable New Home upon the close of the Affordable New Home Escrow, such
LOw or Moderate Income Homebuyer shall execute a promissory note, deed of trust and related
Agency Downpayment Assistance loan documents as the Agency may direct.
(c) The amount, if any, of the Agency Downpayment Assistance which may be
provided to one (1) or more but in no event, more than three (3) LOw or Moderate Income
Homebuyers for an AffordableLot shall not exceed thirty percent (30%) of the gross sales price
of the particular completed Affordable New Home if it is sold to a person or household whose
income is not greater than that of a low or moderate income household, and shall be disbursed
for the account of such Low or Moderate Income Homebuyer through the applicable Affordable
New Home Escrow.
(d) Notwithstanding any other provision of this Section 4.08, the Agency shall have
no obligation to disburse any Agency Downpayment Assistance Funds to originate a mortgage
loan for a Low or Moderate Income Homebuyer of a completed Affordable New Home after
December 31, 2008, regardless of when the purchase contract was entered into by the Developer
and the LOw or Moderate Income Homebuyer.
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Section 4.09. DeveloDer Obligation to Drovide Additional Subsidies to Low or Moderate
Income Homebuvers.
The Developer shall have the sole obligation to provide such additional amounts of
assistance or to obtain such primary mortgage financing for each Affordable New Home so that
such Affordable New Homes are sold to Low or Moderate Income Homebuyers who qualify,
under all respects, for the Affordable New Homes as required by this Agreement. Nothing shall
prevent the Developer from transferring funds to the Agency to fund additional amounts of
Agency Downpayment Assistance or to reduce the sales prices of the Affordable New Homes,
all as may be determined by the Developer at its election.
Section 4.10. Substitution of other Single-Familv Dwelling Units for Mfordable New
Homes.
(a) The Agency agrees that the Developer may substitute other singie-family
residential dwelling units in lieu of the three (3) Affordable New Homes as presently
contemplated under this Agreement for purchase by Low and Moderate Income Homebuyers.
The Developer may elect to designate such substitute qualifying housing units at any time on and
after the Effective Date of this Agreement. Such substitute qualifying housing units may include
residential in-fill lots in other areas of the Project Area, the acquisition by the Developer and
rehabilitation of presently vacant single-family dwelling units, or such other construction or
rehabilitation of single-family dwelling units, as may be approved by the Executive Director of
the Agency.
(b) The Developer agrees to initially focus any attempts to obtain substitute single-
family dwelling units in the area of the City within the Project Area commonly referred to as
"Operation Phoenix" located generally north of Baseline Avenue and west of Waterman Avenue.
Any such substitute single-family dwelling units proposed by the Developer to. be in lieu of the
three (3) Affordable New Homes shall be subject to the reasonable approval of the Executive
Director of the Agency.
( c) In the event the Developer elects to substitute other single-family dwelling units
in lieu of one (1) or more of the Affordable New Homes to produce at least three (3) singie-
family homes for Low or Moderate Income Homebuyers, all provisions of this Agreement shall
apply to the substitute single-family homes in the same manner as the provision of this
Agreement would have applied to the Mfordable New Homes. The Developer may provide a
combination of one (1) or more Affordable New Homes together with substitute single-family
dwelling units so that at least three (3) Low and Moderate Income Homebuyers have been
obtained so that the Agency will then be in compliance with the requirements of the CRL
pertaining to the inclusionary housing requirements. The Agency is entering into this Agreement
in reliance upon the representations of the Developer to assure compliance with the inclusionary
housing requirements in the Project Area, as are applicable to the Project and the Agency.
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ARTICLE V
ARTICLE V DEFAULTS. REMEDIES AND TERMINATION
Section 5.ol. Defaults - General.
(a) Subject to the extensions of time set forth in Section 5.05 hereof, failure or delay
by either party to perform any term or provision of this Agreement shall constitute a default
under this Agreement; provided, however, that if a party otherwise in default commences to cure,
correct or remedy such default within thirty (30) calendar days after receipt of written notice
specifying such default and shall diligently and continuously prosecute such cure, correction or
remedy to completion (and where any time limits for the completion of such cure, correction or
remedy are specifically set forth in this Agreement, then within said time limits), such party shall
not be deemed to be in default hereunder.
(b) The injured party shall give written notice of default to the party .in default,
specifying the default complained of by the non-defaulting party. Delay in giving such notice
shall not constitute a waiver of any default nor shall it change the time of default.
(c) Any failure or delays by either party in asserting any of its rights and remedies as
to any default shall not operate as a waiver of any default or of any such rights or remedies.
Delays by either party in asserting any of its rights and remedies shall not deprive either party of
its right to institute and maintain any actions or proceedings, which it may deem necessary to
protect, assert or enforce any such rights or remedies.
Section 5.02. Legal Actions.
(a) In addition to any other rights or remedies, either party may institute legal action
to cure, correct onemedy any default, to recover damages for any default, or to' obtain any other
remedy consistent with the purposes of this Agreement including, on behalf of the Agency,
requiring the Developer to comply with the obligation to provide the three (3) Affordable New
Homes or to pay such damages to the Agency as a court may determine to compensate the
Agency for the loss of such number of Affordable New Homes. Such legal actions must be
instituted in the Superior Court of the County of San Bernardino, State of California, in any other
appropriate court in that County, or in the Federal District Court in the Central District of the
State of California.
(b) The laws of the State of California shall govern the interpretation and
enforcement of this Agreement.
(c). In the event that any legal action is commenced by the Developer against the
Agency, service of process on the Agency shall be made by personal service upon the Executive
Director of the Agency, or in such other manner as may be provided by law.
(d) In the event that any legal action is commenced by the Agency against the
Developer, service of process on the Developer shall be made by personal service on any officer
of the Developer (or such other agent for service of process and at such address as may be
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specified in written notice to the Agency), or in such other manner as may be provided by law,
and shall be valid whether made within or without the State of California.
Section 5.03. Rights and Remedies are Cumulative.
Except with respect to any rights and remedies expressly declared to be exclusive in this
Agreement, the rights and remedies of the parties are cumulative and the exercise by either party
of one (I) or more of such rights or remedies shall not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any other default by the
other party.
Section 5.04. Default and Damages.
If either party defaults with regard to any provision of this Agreement following the full
execution of this Agreement, the non-defaulting party shall serve written notice of such default
upon the defaulting party. If the defaulting party does not diligently commence to cure such
default within thirty (30) calendar days after service of the notice of default and promptly
complete the cure of such default within a reasonable time, not to exceed ninety (90) calendar
days (or such shorter period as may otherwise be specified in this Agreement for any specific
default), after the service of written notice of such default, the defaulting party shall be liable to
the other party for damages caused by such default.
Section 5.05. Agencv Audit Costs.
In the event that based upon the results of its audit of the Developer's New Home Sales
Costs Certificate for one (I) or more Completed New Homes, the Agency may reasonably
determine that the amounts set forth in such New Home Sales Costs Certificate of the Developer
is more than ten percent (10%) in excess of the aggregate amount stated by the Developer at the
time when such New Home Sales Costs Certificates are delivered to the Agency or pursuant to
the Developer Project Cost Pro Forma, then in such event, in addition to any other sums as may
then be payable by the Developer to the Agency, the Developer shall also reimburse the Agency
for the reasonable costs of the Agency incurred in connection with the Agency's audit of such
New Home Sales Costs Certificates within thirty (30) days following the Agency's written
request for such reimbursement.
In the event that the Agency may incur third-party audit costs and expense after the date
on which final audited financial statement of the Developer for the Project has been submitted to
the Agency, which Agency audit may indicate that increases in the costs of the Completed New
Homes exceeded the amount specified in the preceding paragraph from deviations from those
costs set forth in the New Home Sales Costs Certificate, the Developer shall also reimburse the
Agency for its third-party accounting expenses within thirty (30) days written demand, therefore,
from the Agency.
ARTICLE VI
GENERAL PROVISIONS
Section 6.01. Notices. Demands and Communications between the Parties.
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(a) Any and all notices, demands or communications submitted by any party to
another party pursuant to or as required by this Agreement shall be proper, if in writing, and
dispatched by messenger for immediate personal delivery, or by registered or certified United
States mail, postage prepaid, return receipt requested, to the principal office of the Agency and
the Developer, as applicable, as designated in Section 1.05(a)'and Section 1.05(b) hereof. Such
written notices, demands and communications may be sent in the same manner to such other
addresses as either party may, from time-to-time, designate as provided in this Section. Any
such notice, demand or communication shall be deemed to be received by the addressee,
regardless of whether or when any return receipt is received by the sender or the date set forth on
such return receipt, on the day that it is dispatched by messenger for immediate personal
delivery, or two (2) calendar days after it is placed in the United States mail, as heretofore
provided.
(b) In addition to the submission of notices, demands or communications to the
parties as set forth above, copies of all notices shall also be delivered by facsimile as follows:
To the Developer:
GFC Enterprises, LLC
Attn.: Chuck Crowell
434 North Second Avenue
Upland, California 91786
Fax: (909) 949-6091
To the Agency:
Redevelopment Agency of the City of San Bernardino
Attn.: Maggie Pacheco, Executive Director
201 North "En Street, Suite 301
San Bernardino, California 92401
Fax: (909) 663-2294
Section 6.02. Conflict of Interest.
No member, official or employee of the Agency having any conflict of interest, direct or
indirect, related to this Agreement, or in the development of the Site, shall participate in any
decision relating to this Agreement. The parties represent and warrant that they do not have
knowledge of any such conflict of interest.
Section 6.03. Warrantv against Payment of Consideration for Agreement.
The Developer warrants that it has not paid or given, and will not payor give, any third
party any money or other consideration for obtaining this Agreement. Third parties, for the
purposes of this Section, shall not include persons to whom fees are paid for professional
services if rendered by attorneys, [mancial consultants, accountants, engineers, architects and the
like when such fees are considered necessary by the Developer.
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Section 6.04. Nonliabilitv of Al!encv Officials and EmDlovees.
No member, official or employee of the Agency shall be personally liable to the
Developer, or any successor-in-interest, in the event of any default or breach by the Agency or
for any amount which may become due to the Developer or to its successor, or on any
obligations under the terms of this Agreement, except for gross negligence or wi!lful acts of such
member, officer or employee.
Section 6.05. Enforced Delav: Extension of Time of Performance.
In addition to specific provisions of this Agreement, performance by either party
hereunder shaH not be deemed to be in default, or considered to be a default, where delays or
defaults are due to the force majeure events of war, terrorism, insurrection, strikes, lockouts,
riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics,
quarantine restrictions, freight embargoes or lack of transportation, weather-caused delays,
inability to secure necessary labor, materials or tools, delays of any contractors, subcontractor or
supplier, which are not attributable to the fault of the party claiming an extension of time to
prepare or acts or failure to act of any public or governmental agency or entity (provided that
acts or failure to act of the City or the Agency shaH not extend the time for the Agency to act
hereunder except for delays associated with lawsuit or injunction including, but without
limitation, to lawsuits pertaining to the approval of the Agreement, and the like). An extension
of time for any such force majeure cause shall be for the period of the enforced delay and shall
commence to run from the date of occurrence of the delay; provided, however, that the party
which claims the existence of the delay has first provided the other party with written notice of
the occurrence of the delay within ten (10) calendar days after the commencement of such
occUrrence of delay.
The inability of the Developer to obtain a satisfactory commitment from a construction
lender for the improvement of the Project or to satisfy any other condition of this Agreement
relating to the redevelopment of the Project, if applicable, shaH not be deemed to be a force
majeure event or otherwise provide grounds for the assertion of the existence of a delay under
this Section 6.05; The parties hereto expressly acknowledge and agree that changes in either
general economic conditions or changes in the economic assumptions of any of them which may
have provided a basis for entering into this Agreement and which occur at any time after the
execution of this Agreement, are not force majeure events and do not provide any party with
grounds for asserting the existence of a delay in the performance of any covenant or undertaking
which may arise under this Agreement. Each party expressly assumes the risk that changes in
general economic conditions or changes in such economic assumptions relating to the terms and
covenants of this Agreement could impose an inconvenience or hardship on the continued
performance of such party under this Agreement, but that such inconvenience or hardship is not a
force majeure event and does not excuse the performance by such party of its obligations under
this Agreement.
Section 6.06. InsDection of Books and Records.
The Agency shaH have the right, at aH reasonable times, at the Agency's cost and
expense, to inspect the books and records of the Developer pertaining to the Project, as necessary
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for the Agency, in its reasonable discretion, to enforce its rights under this Agreement. Matters
discovered by the Agency shall not be disclosed to third parties unless required by law or unless
otherwise resulting from or related to the pursuit of any remedies or the assertion of any rights of
the Agency hereunder. The Developer shall also have the right, at all reasonable times, to
inspect the books and records of the Agency pertaining to the Site and/or the development
thereof, as pertinent to the purposes of this Agreement.
Section 6.07. ADDrovals.
(a) Except as otherwise provided in this Agreement, approvals required of the
Agency or .the Developer, or any officers, agents or employees of either the Agency or the
Developer, shall not be unreasonably withheld and approval or disapproval shall be given within
the time set forth in the Schedule of Performance or, if no time is given, within a reasonable
time.
(b) The Executive Director of the Agency is authorized to sign on his or her own
authority, all escrow documents and other documents on behalf of the Agency as necessary for
the Agency to perform its obligations under this Agreement, and the Executive Director of the
Agency is further authorized to execute on behalf of the Agency, amendments to this Agreement
which are of routine or technical nature, including minor adjustments to the Schedule of
Performance.
Section 6.08. Real Estate Commissions.
The Agency shall not be liable for any real estate commissions, brokerage fees or finder
fees, which may arise or be purported to arise from or related to this Agreement.
Section 6.09. Indemnification.
The Developer agrees to indemnify and hold the City, the Agency, and the elected
officers, officials, employees, attorneys and agents of either of them, harmless from and against
all damages, judgments, costs, expenses and fees arising from or related to any act or omission of
the Developer in performing its obligations hereunder; provided, however, that such obligation
of the Developer to indemnify the City and. the Agency and the elected officers, officials,
employees, attorneys and agents of either of them shall not apply to any matter arising from the
negligence or willful misconduct of the City or the Agency or the elected officers, officials,
employees, attorneys or agents of either of them. The Agency agrees to indemnify and hold the
Developer and its officers, employees and agents, harmless from and against all damages,
judgments, costs, expenses and fees arising from or related to any act or omission of the Agency
in performing its obligations hereunder; provided, however, that such obligation of the Agency
to indemnify the Developer and its officers, employees, and agents shall not apply to any matter
arising from the negligence or willful misconduct of the Developer, its officers, employees and
agents.
Section 6.10. Attornevs' Fees.
If either party hereto files any. action or brings any action or proceeding against the other
arising out of this Agreement, or is made a party to any action or proceeding brought by the
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Escrow Holder or a third party, then as between the Developer and the Agency, the prevailing
party shall be entitled to recover, as an element of its costs of suit, and not as damages, its
reasonable attorneys' fees as fixed by the Court, in such action or proceeding or in a separate
action or proceeding brought to recover such attorneys' fees. For the purposes hereof, the words
"reasonable attorneys' fees" mean and include, in the case of the Agency, salaries and expenses
of the lawyers employed by the Office of the City Attorney (allocated on an hourly basis) who
may provide legal services to the Agency in connection with the representation of the Agency in
any such matter.
Section6.11. Effect.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, legal representatives, successors and assigns.
ARTICLE VII
ENTIRE AGREEMENT. WAIVERS AND AMENDMENT
Section 7.01. Entire Agreement.
(a) This Agreement shall be executed in three (3) originals, each of which is deemed
to be an original. This Agreement includes thirty-three (33) pages and two (2) Exhibits, which
constitute the entire understanding and Agreement of the parties.
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(b) All waivers of the provisions of this Agreement and all amendments hereto must
be in writing and signed by the appropriate representations of the Agency and the Developer.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the dates set forth below.
AGENCY
Redevelopment Agency of the City of San
Bernardino, a public body, corporate and politic
Date:
By:
Maggie Pacheco, Executive Director
Approved as to Form and Legal Content:
\./~1~
Agency Counse
DEVELOPER
GFC Enterprises LLC, a California corporation
Date:
By:
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EXHIBIT " A"
FORM OF AFFORDABILITY COVENANT
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GENERAL FORM OF HOMEBUYER ASSISTANCE PROGRAM (HAP)
AFFORDABLE HOUSING COVENANT
(Redevelopment Agency of the City of San Bernardino)
THIS DOCUMENT IS PRESENTED IN GENERAL FORM. The final form of this
Affordable Housing Covenant. shall be completed and executed by the "Qualified
Homebuyer" and the Agency at the time of close of the "New Home Escrow," as each of
these items are defined in this Affordable Housin Covenant.
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Redevelopment Agency
of the City of San Bemardino
Attn.: Executive Director
201 North "E" Street, Suite 301
San Bernardino, CA 92401
(Space Above Line Reserved For Use By Recorder)
Recording Fee Exempt Pursuant to Govemment Code Section 6103
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
COMMUNITY REDEVELOPMENT LAW HOUSING
AFFORDABILITY COVENANTS AND RESTRICTIONS
FOR THE AGENCY HOMEBUYER ASSISTANCE PROGRAM
( )
THESE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
COMMUNITY REDEVELOPMENT AFFORDABLE HOUSING COVENANTS AND
RESTRICTIONS (the "Affordable Housing Covenant") is made and entered into as of
by and between the REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO, a public body, corporate and politic (the "Agency"), and
. (the "Qualified Homebuyer"),
and this Affordable Housing Covenant relates to the following facts set forth in Recitals:
-- RECITALS --
A. The Qualified Homebuyer proposes to acquire a single-family residence
(the "New Home"), located within the City of San Bernardino (the "City"), from
, to be owned and occupied by the Qualified
Homebuyer as their principal residence. The legal description of the New Home is
attached hereto as Exhibit "A" and incorporated herein by this reference;
B. The Agency has entered into that certain Qualified Homebuyer Mortgage
Loan Assistance Agreement, dated , (the "Agency Loan Agreement")
with the Qualified Homebuyer. pursuant to which the Agency has agreed to provide the
Qualified Homebuyer with certain purchase money mortgage financing for the
acquisition of the New Home; subject to certain conditions, including the terms and
conditions of this Affordable Housing Covenant; and
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C. The terms of the Agency Loan Agreement mandate that the acquisition,
use and occupancy of the New Home shall be restricted in certain respects for the term
as provided herein (the "Qualified Residence Period") in order to ensure that the New
Home will be used and occupied in accordance with the Agency Loan Agreement and
the affordable single-family residential dwelling unit development goals and objectives
of the Agency.
D. The First Mortgage Lender, as this term is defined herein, has obtained a
written appraisal of the fair market value of the New Home as of the date of this
Affordable Housing Covenant, which indicates that the New Home has a fair market
value of . Dollars ($ ).
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS
AND UNDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS
HEREBY ACKNOWLEDGED, THE QUALIFIED HOMEBUYER AND THE AGENCY DO
HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND
ASSIGNS AS FOLLOWS:
Section 1. Definitions of Certain Terms. As used in this Affordable Housing
Covenant, the following words and terms shall have the meaning as provided in the
Recitals or in this Section 1 unless the specific context of usage of a particular word or
term may otherwise require:
Adjusted Family Income. The words "Adjusted Family Income" mean "gross
income" as this term is defined in 25 California Code of Regulations Section 6914
for the total annual income of each individual or family residing or treated as
residing in the New Home.
Affordable Housing Cost. The words "Affordable Housing Cost" shall have the
meaning as set forth in Health and Safety Code Section 50052.5 as this section
may hereafter be amended from time-to-time by the State of California. At the
time of the close of the New Home Escrow, or later when a proposed Successor-
In-Interest acquires the New Home, the amount of the maximum Affordable
Housing Cost payable in connection with the acquisition of the New Home at any
time during the Qualified Residence Period shall be calculated as set forth in
Health and Safety Code 50052.5(b)(4).
Affordable Housing Covenant. The words "Affordable Housing Covenant"
mean these Redevelopment Agency of the City of San Bernardino Community
Redevelopment Law Housing Affordability Covenants and Restrictions by and
between the Qualified Homebuyer, and the Agency pertaining to the New Home.
Code. The word "Code" means the . Internal Revenue Code of 1986, as
amended, and any regulation, rulings, or procedures with respect thereto.
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Delivery Date. The words "Delivery Date" mean the date of delivery of title and
possession of the New Home to the Qualified Homebuyer at the close of the New
Home Escrow.
First Mortgage Lender. The words "First Mortgage Lender" mean and refer to
. The First Mortgage Lender has agreed to provide the Qualified
Homebuyer with purchase money mortgage financing for the acquisition of the
New Home in the original principal amount of Dollars ($ ),
concurrently upon the execution and recordation of this Affordable Housing
Covenant by the Qualified Homebuyer and the Agency.
Low-Moderate Income Household. The words "Low-Moderate Income
Household" mean and refer to persons and families whose income does not
exceed 120 % percent of area median income, adjusted for family size, as set
forth in Health and Safety Code Section 50093, as such section may be
amended from time to time.
New Home. The words "New Home" mean and refer to the affordable single-
family residential dwelling unit (including the land and landscape improvements
thereon) as acquired by the Qualified Homebuyer upon the close of the New
Home Escrow. A legal description of the New Home is attached to this
Affordable Housing Covenant as Exhibit "A".
New Home Escrow. The words "New Home Escrow" mean and refer to the real
estate conveyance transaction or escrow by and between the Qualified
Homebuyer and the seller of the New Home (or later, by and between the
Qualified Homebuyer and the Successor-in-Interest).. The transfer of the New
Home to the Qualified Homebuyer (or later, by and between the Qualified
Homebuyer and the Successor-In-Interest) shall be accomplished upon the close
of the New Home Escrow.
Notice of Agency Concurrence. The words "Notice of Agency Concurrence"
mean and refer to the acknowledgment in recordable form in which the Agency
confirms that the proposed Successor-In-Interest of the Qualified Homebuyer
satisfies all of the Adjusted Family Income and other requirements of this
Affordable Housing Covenant for occupancy of the New Home by the Successor-
In-Interest at any time during the Qualified Residence Period.
Qualified Homebuyer. The words "Qualified Homebuyer" mean the purchaser
of the New Home (e.g., all persons identified as having a property ownership
interest vested in the New Home at the close of the New Home Escrow). At the
close of the New Home Escrow, the Qualified Homebuyer shall: (i) have an
annual Adjusted Family Income which does not exceed the household income
qualification limits of a Low-Moderate Income Household; (ii) shall be a first-time
homebuyer, as this term is defined in Health and Safety Code Section 50068.5
unless this requirement has been waived by the Agency; and (iii) pay no more
than an Affordable Housing Cost for the New Home pursuant to the terms of the
purchase transaction for the New Home, including all sums payable by the
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Qualified Hometiuyer for its purchase money mortgage financing, insurance,
escrow and other fees and costs.
Qualified Residence Period. The words "Qualified Residence Period" mean the
period of time beginning on the Delivery Date and ending on the date, which is
forty-five (45) years after the Delivery Date.
Successor-In-Interest. The words "Successor-In-Interest" mean and refer to
the person, family, or household who may acquire the New Home from the
Qualified Homebuyer at any time during the Qualified Residence Period by
purchase, assignment, transfer or otherwise. The Successor-In-Interest shall
have an income level which does not exceed the maximum income level for a
Low-Moderate Income Family as applicable to the Qualified Homebuyer under
the Agency Loan Agreement and the Successor-In-Interest shall agree to occupy
the New Home as its principal residence. Upon acquisition of the New Home,
the Successor-In-Interest shall be bound by each of the covenants, conditions
and restrictions of this Affordable Housing Covenant.
The titles and headings of the sections of this Affordable Housing Covenant have
been inserted for convenience of reference only and are not to be considered a part
hereof and shall not in any way modify or restrict the meaning any of the terms or
provisions hereof.
Section 2. Acknowledaments and ReDresentations of the Qualified
Homebuver.
The Qualified Homebuyer hereby acknowledges and represents that, as of the
Delivery Date: .
(a) the total household income for the Qualified Homebuyer does not exceed
the maximum amount permitted as Adjusted Family Income for a Low-Moderate Income
Household;
(b) the Qualified Homebuyer intends to promptly occupy the New Home after
the Delivery Date as the principal place of residence for the term of the Qualified
Residence Period and the Qualified Homebuyer has not entered into any arrangement
and has no present intention to rent, sell, transfer or assign the New Home to any third
party during the Qualified Residence Period so as to frustrate the purpose of this
Affordable Housing Covenant;
(c) the Qualified Homebuyer has no present intention to lease or rent any
room or sublet or rent a portion of the New Home to any relative of the Qualified
Homebuyer or to any third person at any time during the Qualified Residence Period;
(d) the Qualified Homebuyer agrees to provide the Agency with the following
items of information for inspection by the Agency promptly upon written request of the
Agency:
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(i)
State and federal income tax retums filed by all persons who reside in the
New Home for the calendar year preceding the close of the New Home
Escrow for inspection of such State and federal income tax retums;
(ii) current wage, income and salary statements for all person residing in the
New Home at the close of the New Home Escrow;
(e) the Qualified Homebuyer acknowledges that this Affordable Housing
Covenant imposes certain restrictions on the use and occupancy of the New Home
during the term of this Affordable Housing Covenant and that this Affordable Housing
Covenant imposes certain restrictions on the resale of the New Home during the
Qualified Residence Period, including, without limitation, a prohibition against the resale
of the New Home during the first ten (10) years following the date of recordation of this
Affordable Housing Covenant except to a Successor-In-Interest and thereafter a
"Resale Profit" payment to the Agency as provided in Section 6 of this Affordable
Housing Covenant in the event that the Qualified Homebuyer sells or transfers the New
Home to a person or household which does not qualify as a Successor-in-Interest to the
Qualified Homebuyer. The Qualified Homebuyer acknowledges and understands that
the resale restrictions of this Affordable Housing Covenant shall be applicable to the
New Home and to any resale of the New Home from the Delivery Date to the end of the
Qualified Residence Period which is
Dated:
Initials of Qualified Homebuyer
(f) the sum payable each month by the Qualified Homebuyer following the
close of the New Home Escrow as principal and interest due the First Mortgage Lender
referenced in Section 3, plus property taxes, and property casualty insurance for the
acquisition of the New Home does not exceed the Affordable Housing Cost for the
household.
Section 3. Acknowledament of Subordination of the Provisions of Section
4. Section 6 and Section 7 of this Affordable Housina Covenant to the Mortaaae
Security Interest of the First Mortaaae Lender.
Concurrently, upon the execution and recordation of this Affordable Housing
Covenant the QuaJified Hcimebuyer shall obtain certain purchase money mortgage
financing for the acquisition of the New Home from the First Mortgage Lender and a
subordinate purchase money mortgage financing loan from the Agency in the amount of
Dollars ($ ). The subordinate loan of
the Agency to the Qualified Homebuyer is referred to in the Affordable Housing
Covenant as the "Agency Loan". As of the Delivery Date, Qualified Homebuyer has
provided the Agency with a true and correct copy of the loan agreement by and
between the First Mortgage Lender and the Qualified Homebuyer and a copy of the
written appraisal of the fair market value of the New Home as approved by the First
Mortgage Lender at the time of the origination of its purchase money mortgage loan to
the Qualified Homebuyer.
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As a condition to providing its mortgage loan to the Qualified Homebuyer, the
First Mortgage Lender requires the Agency to agree that the provisions of Section 4,
Section 6 and Section 7 of this Affordable Housing Covenant shall be junior and
subordinate to the security interest of the First Mortgage Lender in the New Home. of
even date herewith. .
-
The Agency hereby acknowledges and agrees that the provisions of Section 4,
Section 6 and Section 7 of this Affordable Housing Covenant are subordinate and junior
to the security interest of the First Mortgage Lender in the New Home of even date
herewith. No breach or default by the Qualified Homebuyer of any provision of Section
4, Section 6 and/or Section 7 of this Affordable Housing Covenant, nor the exercise by
the Agency of any remedy it may have against the Qualified Homebuyer in the event of
such a breach or default under the Agency Loan or this Affordable Housing Covenant
shall affect or render invalid the lien of the First Mortgage Lender in the New Home.
Thus, the First Mortgage Lender and any good faith purchaser for value from the First
Mortgage Lender, its successors and assigns, including, without limitation, the United
States Secretary of Housing and Urban Development ("HUD") or the Califomia Housing
Finance Agency ("CaIHFA"), if such mortgage has been assigned to the HUD or to
CalFHA, as applicable, receiving title to the New Home through a trustee's sale, judicial
foreclosure sale, deed in lieu of foreclosure and any conveyance or transfer thereafter,
shall receive title to the New Home free and clear of the provisions of Section 4, Section
6 and Section 7 of this Affordable Housing Covenant.
e Section 4. Covenant of the Qualified Homebuver to Maintain Affordabilitv
of the New Home Durina the Qualified Residence Period and Covenant Relatina to
Sale or Transfer of the New Home Durina the Qualified Residence Period to a
Successor-In-Interest.
(a) The Qualified Homebuyer, for itself, its heirs, successors and assigns,
hereby covenants and agrees that during the term of the Qualified Residence Period the
New Home shall be used and occupied by the Qualified Homebuyer as its principal
residence, and that the New Home shall be reserved for sale, use and occupancy by
the Qualified Homebuyer and/or for another Low-Moderate Income Household asa
Successor-In-Interest at an Affordable Housing Cost.
(b) For the first ten (10) years following the date of recordation of the
Affordable Housing Covenant, the Qualified Homebuyer shall not sell, transfer or
otherwise dispose of the New Home except to a Successor-in-Interest.
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(c) The Qualified Homebuyer, for itself, its heirs, successors and assigns,
further covenants and agrees that, during the Qualified Residence Period, the Agency
shall have the right and duty as provided in this Section 4 to verify that each proposed
Successor-in-Interest of the Qualified Homebuyer in the New Home either satisfies the
income requirements and Affordable Housing Cost limitations of a Low-Moderate
Income Household (based upon the Adjusted Family Income of each household) and
that the completion of any resale or transfer of the New Home to a Successor-In-
Interest shall be subject to the recordation of the "Notice of Agency Concurrence" as
provided in Section 4(e) or if such a sale, transfer or disposal of the New Home is
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proposed at any time after the tenth (101h) anniversary date of the recordation of this
Affordable Housing Covenant to a person or family who does not qualify as a
Successor-In-Interest, that the provisions of Section 6 relating to the payment by the
Qualified Homebuyer of the Agency Investment Reimbursement shall be applicable.
(d) The Qualified Homebuyer, for itself, its successors and assigns, hereby
covenants and agrees that during the term of the Qualified Residence Period the
Qualified Homebuyer shall not sell, transfer or otherwise dispose of the New Home (or
any interest therein) to a Successor-In-Interest without first giving written notice to the
Agency and without first obtaining the written concurrence of the Agency as provided
herein. At least sixty (60) days prior to the date on which the Qualified Homebuyer
proposes. to transfer title in the New Home to a Successor-in-Interest, the Qualified
Homebuyer shall send a written notice to the Agency as provided in Section 17 of the
intention of the Qualified Homebuyer to sell the New Home to a Successor-in-Interest
which includes the following true and correct information:
(i) name of the proposed Successor-In-Interest (including the identity
of all persons in the household of the Successor-In-Interest,
proposing to reside in the New Home), together with a completed
Agency HAP Program application, as applicable, executed by the
proposed Successor-In-Interest;
(ii) copies of State and federal income tax returns for the Successor-In- .
Interest for the calendar year preceding the year in which the notice
of intention to sell the New Home is given to the Agency;
(iii) resale price of the New Home payable by the Successor-In-Interest,
including the terms of all purchase money mortgage financing to be
assumed, provided or obtained by the Successor-In-Interest,
escrow costs and charges, realtor broker fees and all other resale
costs or charges payable by either the Qualified Homebuyer or the
Successor-I n-Interest;
(iv) name address, and telephone number of the escrow company
which shall coordinate the transfer of the New Home from the
Qualified Homebuyer to the Successor-In-Interest;
(v) appropriate mortgage credit reference for the Successor-in-Interest
with a written authorization signed by the Successor-In-interest
authorizing the Agency to contact each such reference; and such
other relevant information as the Agency may reasonably request,
as provided in Section 4(d).
(e) Within thirty (30) days following receipt of the notice of intention described
in Section 4(d), the Agency shall provide the Qualified Homebuyer with either a
preliminary confirmation of approval or a preliminary rejection in writing of the income
and household occupancy qualifications of the Successor-in-Interest. The Agency shall
not unreasonably withhold approval of any proposed sale of the New Home to a
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Successor-In-Interest who satisfies the Adjusted Family Income and the Affordable
Housing Cost requirements for occupancy of the New Home and for whom the other
information as described in Section 4(d) has been provided to the Agency. In the event
that the Agency may request additional information relating to the confirmation of the
matters described in Section 4(d), the Qualified Homebuyer shall provide such
information to the Agency as promptly as feasible.
(f) Upon its final confirmation of approval of the Adjusted Family Income and
Affordable Housing Cost eligibility of the Successor-In-Interest to acquire the New
Home, the Agency shall deliver a written acknowledgment and approval of the resale of
the New Home to the Successor-in-Interest in recordable form to the escrow holder
referenced in Section 4(d)(iv) above, and thereafter the Successor-In-Interest may
acquire the New Home subject to the satisfaction of the following conditions:
(i) the recordation of the Notice of Agency Concurrence executed by
the Successor-in-Interest and the Agency at the close of the resale
escrow;
(ii) the escrow holder shall have provided the Agency with a copy of the
customary form of the final escrow closing statement of the Qualified
Homebuyer and the final escrow closing statement for the
Successor-In-Interest: and
(iii) the other conditions of the resale escrow as established by the
Qualified Homebuyer and Successor-in-Interest shall have been
satisfied.
(g) The Qualified Homebuyer, for itself, its successors and assigns hereby
covenants and agrees that during the Qualified Residence Period the New Home shall
not be leased, subleased, or rented to any third person, except for a temporary period
(not to exceed twelve (12) months) in the event of an emergency or other unforeseen
circumstance as may be expressly approved in writing by the Agency subject to
compliance during the temporary rental period with the reasonable temporary rental
occupancy conditions required by the Agency. The Qualified Homebuyer shall submit a
written request to the Agency prior to the commencement of the temporary occupancy,
as practicable, but in any event within not more than sixty (60) days following the
commencement of a temporary rental occupancy of the New Home by a third party,
which notice shall set forth the grounds on which the Qualified Homebuyer believes an
emergency or other unforeseen circumstance has occurred and that a temporary rental
occupancy is necessary.
Section 5. Maintenance Condition of the New Home. The Qualified
Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that:
(a) The exterior areas of the New Home which are subject to public view (e.g.,
all improvements, paving, walkways, landscaping, and ornamentation) shall be
maintained in good repair and a neat, clean and orderly condition, ordinary wear and
tear excepted. In the event that at any time during the term of the Qualified Residence
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Period, there is an occurrence' of an adverse condition on any area of the New Home
which is subject to public view in contravention of the general maintenance standard
described above, (a "Maintenance Deficiency") then the Agency shall notify the
Qualified Homebuyer in writing of the Maintenance Deficiency and give the Qualified
Homebuyer thirty (30) days from the date of such notice to cure the Maintenance
Deficiency as identified in the notice. The words "Maintenance Deficiency" include,
without limitation, the following inadequate or non-confirming property maintenance
conditions and/or breaches of single-family dwelling residential property use restrictions:
failure to properly maintain the windows, structural elements, and painted
exterior surface areas of the dwelling unit in a clean and presentable
manner;
failure to keep the front and side yard areas of the property free-of
accumulated debris, appliances, inoperable motor vehicles or motor
vehicle parts, or free of storage of lumber, building materials or equipment
not regularly in use on the property;
failure to regularly mow lawn areas or permit grasses planted in lawn
areas to exceed nine inches (9") in height, or failure to otherwise maintain
the landscaping in a reasonable condition free of weeds and debris;
parking of any commercial motor vehicle in excess of 7,000 pounds gross
weight anywhere on the property, or the parking of motor vehicles, boats,
camper shells, trailers, recreational vehicles and the like in any side yard
or on any other parts of the property which are not covered by a paved
and impermeable surface;
the use of the garage area of the dwelling unit for purposes other than the
parking of motor vehicles and the storage of personal possessions and
mechanical equipment of persons residing in the New Home.
In the event the Qualified Homebuyer fails to cure or commence to cure the
Maintenance Deficiency within the time allowed, the Agency may thereafter conduct a
public hearing following transmittal of written notice thereof to the Qualified Homebuyer
ten (10) days prior to the scheduled date of such public hearing in order to verify
whether a Maintenance Deficiency exists and whether the Qualified Homebuyer has
failed to comply with the provision of this Section 5(a). If, upon the conclusion of a
public hearing, the Agency makes a finding that a Maintenance Deficiency exists and
that there appears to be non-compliance with the general maintenance standard, as
described above, thereafter, the Agency shall have the right to enter the New Home
(exterior areas only) and perform all acts necessary to cure the Maintenance Deficiency,
or to take other action at law or equity the Agency may then have to accomplish the
abatement of the Maintenance Deficiency. Any sum expended by the Agency for the
abatement of a Maintenance Deficiency as authorized by this Section 5(a) shall become
a lien on the New Home. If the amount of the lien is not paid within thirty (30) days after
written demand for payment by the Agency to the Qualified Homebuyer, the Agency
shall have the right to enforce the lien in the manner as provided in Section 5(c).
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(b) Graffiti which is visible from any public right-of-way which is adjacent or
contiguous to the New Home shall be removed by the Qualified Homebuyer from any
exterior surface of a structure or improvement on the New Home by either painting over
. the evidence of such vandalism with a paint which has been color-matched to the
surface on which the paint is applied. or graffiti may be removed with solvents,
detergents or water as appropriate. In the event that graffiti is placed on the New Home
(exterior areas only) and such graffiti is visible from an adjacent or contiguous public
right-of-way and thereafter such graffiti is not removed within seventy-two (72) hours
following the time of its application; then, in such event and without notice to the
Qualified Homebuyer, the Agency shall have the right to enter the New Home and
remove the graffiti. Notwithstanding any provision of Section 5(a) to the contrary, any
sum expended by the Agency for the removal of graffiti from the New Home as
authorized by this Section 5(b) shall become a lien on the New Home. If the amount of
the lien is not paid within thirty (30) days after written demand for payment by the
Agency to the Qualified Homebuyer, the Agency shall have the right to enforce its lien in
the manner as provided in Section 5(c).
(c) The parties hereto further mutually understand and agree that the rights
conferred upon the Agency under this Section 5 expressly include the power to
establish and enforce a lien or other encumbrance against the New Home in the
manner provided under Civil Code Sections 2924, 2924b and 2924c in the amount as
reasonably necessary to restore the New Home to the maintenance standard required
under Section 5(a) or Section 5(b), inCluding attorneys fees and costs of the Agency
associated with the abatement of the Maintenance Deficiency or removal of graffiti and
the collection of the costs of the Agency. in connection with such action. In any legal
proceeding for enforcing such a lien against the New Home, the prevailing path shall be
entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 5.
shall be a covenant running with the land for the Qualified Residence Period and shall
be enforceable by the Agency in its discretion, cumulative with any other rights or
powers granted by the Agency under applicable law. Nothing in the foregoing
provisions of this Section 5 shall be deemed to preclude the Qualified Homebuyer from
making any alterations, additions, or other changes to any structure or improvement or
landscaping on the New Home, provided that such changes comply with the zoning and
devEllopment regulations of the City and other applicable law.
Section 6. Protection of Aaency Investment of Moneys Derived From the
Low-and Moderate-Income Housina Fund in the New Home - Aaency Investment
Reimbursement. .
(a). For the purpose of this Section 6, the following terms shall have the
meaning as provided below:
"Agency Investment Reimbursement" mean and refer to a portion of the Resale
Profit, if any, which shall be payable to the Agency upon the sale or transfer of the New
Home following the tenth (101h) anniversary of the recordation of this Affordable Housing
Covenant during the remaining portion of the Qualified Residence Period to a person or
household which does not qualify as a Successor-In-Interest to the Qualified
Homebuyer. The formula for calculation the amount of the Agency Investment
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Reimbursement which may hereafter be payable to the Agency during the Qualified
Residence Period is set forth in this Section 6. In the event that the application of the
formula for determining the Agency Investment Reimbursement in any particular year
. during the term of the Qualified Residence Period may produce a sum which is Zero
Dollars ($0) or less than Zero Dollars ($0), then, in such event, no Agency Investment
Reimbursement amount shall be payable by the Qualified Homebuyer to the Agency.
"Costs of Eligible Capital Improvements" mean and refer to any substantial and
permanent structural improvements to the New Home which are made to the New
Home completed and paid for by the Qualified Homebuyer after the Delivery Date which
satisfy all of the following conditions: (i) the improvements are made or installed and
conform with all applicable provisions of the San Bemardino Municipal Code and for
which the City has issued building permits; (ii) the particular improvement is recognized
under the Code as a capital improvement; (Iii) if the total amount of Eligible Capital
Improvements made by the Qualified Homebuyer exceeds the sum of Five Thousand
Dollars ($5,000) in any calendar year, the Qualified Homebuyer has given the Agency
prior written notice of its intention to make such capital improvements to the New Home;
(iv) the particular capital improvement shall exceed the sum of Two Thousand Dollars
($2,000) in value, as installed in the New Home; and (v) the Qualified Homebuyer has
provided suitably detailed written evidence to the Agency of the actual cost of the
particular capital improvement to the New Home.
"Purchase Money Mortgage" means. the original balance on the Delivery Date of the
New Home mortgage provided to the Qualified Homebuyer by the conventional
mortgage lender (e.g., the First Mortgage Lender identified in Section 3, above), plus
the original outstanding balance of the Agency Loan also identified in Section 3, above.
"Qualified Homebuyer Equity" means the down payment amount in cash paid by the
Qualified Homebuyer for the New Home on the Delivery Date (e.g., the equity or "basis"
as defined under the Code, net of the Purchase Money Mortgage of the Qualified
Homebuyer in the New Home), plus the reduction, if any, of the outstanding principal
balance of the Purchase Money Mortgage secured by the New Home through the date
of the resale of the New Home.
"Resale Price" means the total consideration paid by the Successor-I n-I nterest,
including real estate broker fees and commissions for the purchase of the New Home,
but excluding escrow fees and mortgage financing costs payable or otherwise allocated
to the Successor-In-Interest in connection with the transfer of the New Home from the
Qualified Homebuyer to the Successor-In-Interest.
"Resale Profit" means the balance of the following calculation:
(Resale PriceHPurchase Money MortgageHQualified Homebuyer
Resale Cost Adjustment Factor + Costs of Eligible
Improvements)=Resale Profit.
Equity +
Capital
A portion of the Resale Profit shall be payable to the Agency by the Qualified
Homebuyer in accordance with Section 6(b).
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"Resale Cost Adjustment Factor" means one of the following sums determined by
reference to the number of years, which have elapsed between the Delivery Date and
the date on which the resale and transfer of the New Home to the Successor-In-Interest
occurs:
Date of Resale of New Home after the
Delivery Date:
From the Delivery Date to the 5th
anniversary after Delivery Date
From and including the 5th anniversary
to the 10th anniversary after Delivery
Date
Resale Cost Adjustment Factor:
From and including the 10th anniversary
to the end of the Qualified Residence
Period
$2,000
$5,000
$10,000
(b) The Agency has used and applied certain moneys from the Low-and
Moderate-Income Housing Funds of the Agency to assist with the development of the
New Home. In the event that the New Home may be sold, assigned, conveyed or
otherwise transferred by the Qualified Homebuyer during the term of the Qualified
Residence Period to a person or household whose Adjusted Family Income at the time
of close of the New Home Escrow for such a person or family, exceeds the income level
for a Low or Moderate Income Household, a portion of the Resale Price of the New
Home in excess of the sum of the Qualified Homebuyer Equity, plus the applicable
Resale Cost Adjustment Factor, the Cost of Eligible Capital Improvements, after the
applicable amount of the Purchase Money Mortgage has been paid to the First
Mortgage Lender and the Agency (e.g., the "Resale Profit" amount) shall be payable to
the Agency as the Agency Investment Reimbursement in accordance with Health and
Safety Code Section 33334.3(f), and as provided in this Section 6. No amount of
Resale Profrt shall be payable to the Agency if the New Home is sold, assigned,
conveyed or otherwise transferred by the Qualified Homebuyer to a Successor-In-
Interest (a person or household whose Adjusted Family Income does not exceed the
income level for a Low or Moderate Income Household).
(c) In the event that, at any time during the Qualified Residence Period, the
Qualified Homebuyer (or any Successor-In-Interest) may sell, assign, conveyor
otherwise transfer the New Home to a person or household whose Adjusted Family
Income exceeds the income level for a Low or Moderate Income Household, a portion
of the Resale Profit realized by the Qualified Homebuyer shall be payable to the Agency
as the "Agency Investment Reimbursement" in the amounts as follows:
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Date of' Resale of New Home After
Delivery Date
From the 10th anniversary to end the
20th anniversary after the Delivery Date
Portion of Resale Profit Payable to
Agency from Resale of New Home
50% of Resale Profrt is
Agency as Agency
Reimbursement
payable to
Investment
From the 20th anniversary to the 30th
anniversary after the Delivery Date
-
25% of the Resale Profit is payable to
the Agency as Agency Investment
Reimbursement
From the 30th anniversary after the
Delivery Date to the end of the Qualified
Residence Period
10% of the Resale Profit is payable to
the Agency as Agency Investment
Reimbursement
[-The percentage of the Resale Profit payable to the Agency shall not exceed an
amount which is the ratio of the Agency Investment covenant indicated in the Agency
Loan agreement to the fair market value of the New Home as of the date of recordation
of this Affordable Housing Covenant: for purposes of illustration, it is assumed that the
ratio of the Agency Investment (land value plus Agency mortgage loan) is 50% of the
fair market value of the New Home].
(d) Two (2) examples of the application of the formula described above as
"Resale Profit" to determine the amount of the Agency Investment Reimbursement
payable on the date of a hypothetical resale of the New Home are presented as follows:
EXAMPLE A: Resale to a purchaser whose Adjusted Family Income exceeds the
income level of a Low or Moderate Income Household or to a purchaser who will not live
in the New Home as a principal residence:
Assume that on the Delivery Date the purchase price of the New Home paid b~
the Qualified Homebuyer was $290,000 and that the resale occurs on the 11
anniversary following the Delivery Date;
Assume the Resale Price of the New Home is $400,000;
Assume that Qualified Homebuyer Equity as of the date of the resale is $23,500;
and
Assume that the Costs of Eligible Capital Improvements as of the date of the
resale is $6,000:
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EXAMPLE A CALCULATION OF RESALE PROFIT: $400,0001 - $302,8502 - ($23.5003
+ $5,0004 + $6,0005) = $62,6506: Resale Profit (SEE ALSO FOOTNOTES, BELOW).
The Agency Investment Reimbursement amount under Example A payable at
close of the resale escrow in this hypothetical example is $31,325 (e.g., 50% of
$62,650).
EXAMPLE B: Resale to a purchaser who the Agency has approved as a Successor-In-
Interest (e.g., a purchaser whose Adjusted Family Income DOES NOT exceed the
income level of a Low or Moderate Income Household and who will reside in the New
Home as their principal residence):
Assume same facts as in Example A and that the Successor-In-Interest also
pays no more than an Affordable Housing Cost for the New Home at a resale
price of $322,000 on the 11 th anniversary date following the Delivery Date;
EXHIBIT B CALCULATION OF RESALE PROFIT:
No Agency Reimbursement is payable to Agency as the Successor-In-Interest is a Low
or Moderate Income Household in this hypothetical sale and pays to the Qualified
Homebuyer no more than Affordable Housing Cost for its purchase of the New Home.
In this example, the seller of the New Home could retain the full amount of the Resale
Profit. Also, note that in this example, the Successor-In-Interest's "Qualified Homebuyer
Equity" will be an adjusted amount which reflects the Successor-In-Interest's new
mortgage and equity basis in the New Home based upon its $322,000 purchase price
for purposes of determining whether an Agency Reimbursement amount may be
payable by such Successor-In-Interest in any future resale transaction during the
remaining thirty-four (34) years of the term of the Qualified Residence Period.
, The Resale Price of the New Home to the Successor-in-Interest in Example A.
2 The Purchase Money Mortgage amount ($200,000 conventional mortgage) plus $85,000 Agency HAP
Program, plus $17,850 of deferred interest payable to the Agency under the Agency Loan for ten (10) years following
the Delivery Date.
3 The Qualified Homebuyer Equity in the New Home ($5,000 cash down payment plus a $10,000 reduction
of outstanding principai balance on the First Mortgage Lender loan).
'The Resale Cost Adjustment Factor in the 11th year following the Delivery Date.
S The aggregate amount of Costs of Eligible Capital Improvements is $6,000 in this example.
· The Resale Profit of $62,650 is subject to a 50% allocation to pay the Agency Investment Reimbursement,
or $31,325 payable to the Agency (as provided in Section 6(b)). The seller of this New Home could retain only
$31,325 of the "Resale profir in this example since the purchaser is not a Low or Moderate Income person or
household. However, the portion of the "Resale Profit; if any, allocated to the seller in this example would be in
addition to the seller's recapture of its equity in the New Home, plus the Costs of Eligible Capital Improvements which
in this particuiar example is a total sum of $34,500 payable to the seller. Thus in this example, the seller's total cash
realized at time of this hypothetical sale would be $65,825. (See also Footnote NO.3 and Footnote No.4, above)
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(e) The sole source of funds of the Qualified Homebuyer to pay the Agency
the Agency Reimbursement Agreement, shall be from the Resale Profit amount, if any,
realized at the time of resale to a purchaser whose Adjusted Family Income exceeds
the income level of a Moderate Income Household. In the event that the applicable
amount of the Agency Loan is paid in full to the Agency at the time of resale of the New
Home to a person or household which does not qualify as a Successor-In-Interest, the
Agency shall cause to be recorded concurrently with the resale of the New Home to
such person, a notice of release of the following provisions of this Affordable Housing
Covenant:
Section 2,
Section 3,
Section 5
Section 7
Section 7. Foreclosure of Purchase Money Mortaaae Loan of-the First
Mortaaae Lender and Aaency Riaht of First Refusal.
(a) During the Qualified Residence Period, the Agency shall have the right
(but not the obligation) to bid on the purchase the New Home at the time of any trustee
foreclosure sale or any judicial foreclosure sale.
(b) During the Qualified Residence Period, the Agency shall have the right of
first refusal to purchase the New Home from the Qualified Homebuyer on the same
terms, which the Qualified Homebuyer may propose to offer the New Home for resale to
a Successor-In-Interest. The Agency must exercise such a right of first refusal within
thirty (30) days following written notification of the intention of the Qualified Homebuyer
to resell the New Home, and if the Agency accepts the offer in writing within such time
period, the Agency shall be bound to complete the purchase of the New Home strictly in
accordance with the offer. Thereafter, the Agency shall pay the "resale price" to the
Qualified Homebuyer and close an escrow for the transfer of the New Home to the
Agency within sixty (60) days following written notification of the intention of the
Qualified Homebuyer to resell the New House.
(c) In the event that the Agency may purchase the New Home under Section
7(b), the Agency shall cause the New Home to be reserved for sale and occupancy by a
Successor-in-Interest (e.g., an income qualified purchaser of the New Home who is a
person or household of Low- or Moderate-Income).
Section 8. Covenants to Run with the Land. The Qualified Homebuyer and
the Agency hereby declare their specific intent that the covenants, reservations and
restrictions set forth herein are part of a plan for the promotion and preservation of
affordable single-family housing dwelling units within the territorial jurisdiction of the
Agency and that each shall be deemed covenants running with the land and shall pass
to' and be binding upon the New Home and each Successor-in-Interest of the Qualified
Homebuyer in the New Home for the term provided in Section 10. The Qualified Home-
buyer hereby expressly assumes the duty and obligation to perform each of the
4810-9032-2176.1 15
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covenants and to honor each. of the reservations and restrictions set forth in this
Affordable Housing Covenant. Each and every contract, deed or other instrument
hereafter executed covering or conveying the New Home or any interest therein shall
. conclusively be held to have been executed, delivered and accepted subject to such
covenants, reservations, and restrictions, regardless of whether such covenants,
reservations and restrictions are set forth in such contract, deed or other instrument.
Section 9. Burden and Benefit. The Agency and the Qualified Homebuyer
hereby declare their understanding and intent that the burden of the covenants set forth
herein touch and concem the land in that the Qualified Homebuyer's legal interest in the
New Home is affected by the affordable single-family dwelling use and occupancy
covenants hereunder. The Agency and the Qualified Homebuyer hereby further declare
their understanding and intent that the benefit of such covenants touch and concem the
land by enhancing and increasing the enjoyment and use of the New Home by the
intended beneficiaries of such covenants, reservations and restrictions, and by
furthering the affordable single-family housing development goals and objectives of the
Agency and in order to make the New Home available for acquisition and occupancy by
the Qualified Homebuyer.
Section 10. Term.
(a) The provisions of Section 4 and Section 7 of this Affordable Housing
Covenant shall apply to the New Home and the Qualified Homebuyer and to each
Successor-in-Interest for forty-five (45) years after the Delivery Date.
(b) Except as set forth in Section 10(a), all of the other provisions of this
Affordable Housing Covenant shall apply to the New Home for a term of forty-five (45)
years after the Delivery Date. .
(c) Any provision or section of this Affordable Housing Covenant may be
terminated after the Delivery Date upon the written agreement by the Agency and the
Qualified Homebuyer (or the Successor-In-Interest in the New Home), if an opinion of
special legal counsel have been provided to the Agency that such a termination under
the terms and conditions approved by the Agency in its reasonable discretion will not
adversely affect the affordable single-family housing and development goals and
obligations of the Agency.
Section 11. Breach and Default and Enforcement.
(a) Failure or delay by the Qualified Homebuyer to honor or perform any
material term or provision of this Affordable Housing Covenant shall constitute a breach
hereunder; provided, however, that if the Qualified Homebuyer commences to cure,
correct or remedy the alleged breach within thirty (30) calendar days after the date of
written notice specifying such breach and shall diligently complete such cure, correction
or remedy, the Qualified Homebuyer shall not be deemed to be in default hereunder.
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The Agency shall give the Qualified Homebuyer written notice of breach
specifying the alleged breach which if uncured by the Qualified Homebuyer within thirty
(30) calendar days, shall be deemed to be an event of default. Delay in giving such
. notice shall not constitute a waiver of any breach or event of default nor shall it change
the time of breach or event of default; provided, hoWever, the Agency shall not exercise
any remedy for an event of default hereunder without first delivering the written notice of
breach as specified in this Section 11.
Except with respect to rights and remedies expressly declared to be exclusive in
this Affordable Housing Covenant, the rights and remedies of the Agency are
cumulative with any other right or power of the Agency or the City or other applicable
law, and the exercise of one or more of such rights or remedies shall not preclude the
exercise by the Agency at the same or different times, of any other right or remedy for
the same breach or event of default.
In the event that a breach of the Qualified Homebuyer may remain incurred for
more than thirty (30) calendar days following written notice, as provided above, an event
of default shall be deemed to have occurred. In addition to the remedial provisions of
Section 5 as related to a Maintenance Deficiency at the New Home, upon the
occurrence of any event of default the Agency shall be entitled to seek any appropriate
remedy or damages by initiating legal proceedings as follows:
(i)
by mandamus or other suit, action or proceeding at law or in equity,
to require the Qualified Homebuyer to perform its obligations and
covenants hereunder, or enjoin any acts or things which may be
unlawful or in violation of the rights of the Agency; or
(ii) by other action at law or in equity as necessary or convenient to
enforce the obligations, covenants and agreements of the Qualified
Homebuyer to the Agency.
(b) Except as set forth in the next sentence, no third party shall have any right
or power to enforce any provision of this Affordable Housing Covenant on behalf of the
Age~cy or to compel the Agency to enforce any provision of this Affordable Housing
Covenant against the Qualified Homebuyer or the New Home. The Agency may assign
the right and power to enforce the provision of this Affordable Housing Covenant
against the Qualified Homebuyer or the New Home as the successor administration
agency of the Agency HAP Program to the City.
Section 12. GoveminQ Law. This Affordable Housing Covenant shall be
governed by the laws of the State of California.
Section 13. Amendment. This Affordable Housing Covenant may be amended
after the Delivery Date only by a written instrument executed by the Qualified
Homebuyer (or the Successor-in-Interest, as applicable) and by the Agency.
4810-9032-2176.1 17
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Section 14. Attorney's Fees. In the event that the Agency brings an action to
enforce any condition or covenant, representation or warranty in this Affordable Housing
Covenant or otherwise arising out of this Affordable Housing Covenant, the prevailing
party in such action shall be entitled to recover from the other party reasonable
attomeys' fees to be fixed by the court in which a judgment is entered, as well as the
costs of such suit. For the purposes of this Section 14, the words "reasonable
attorneys' fees" in the case of the Agency include the salaries, costs and overhead of
lawyers employed in the Office of the City Attomey of the City.
Section 15. Severability. If any provision of this Affordable Housing Covenant
shall be declared invalid, inoperative or unenforceable by a final judgment or decree of
a court of competent jurisdiction, such invalidity or unenforceability of such provision
shall not affect the remaining parts of this Affordable Housing Covenant, which are
hereby declared by the parties to be severable from any other part which is found by a
court to be invalid or unenforceable.
Section 16. Time is of the Essence. For each provision of this Affordable
Housing Covenant which states a specific amount of time within which the requirements
thereof are to be satisfied, time shall be deemed to be of the essence.
Section 17. Notice. Any notice required to be given under this Affordable
Housing Covenant shall be given by the Agency or by the Qualified Homebuyer, as
applicable, by personal delivery or by First Class United States mail at the addresses
specified below or at such other address as may be specified in writing by the parties
hereto:
If to the Agel")cy:
Redevelopment Agency of the City of San Bernardino
Attn.: Executive Director
201 North "E" Street, Suite 301
San Bernardino, CA 92401
Phone: (909) 663-1044
If to the
Qualified Homebuyer:
Attn.:
San Bernardino, California
Phone: L)
Notice shall be deemed given five (5) calendar days after the date of mailing to the
party, or, if personally delivered, when received by the Executive Director of the Agency
or the Qualified Homebuyer, as applicable.
4810-9032-2176.1
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IN WITNESS WHEREOF, the Qualified Homebuyer and the Agency have
caused this Affordable Housing Covenant to be signed, acknowledged and attested on
their behalf by duly authorized representatives in counterpart original copies which shall,
upon execution by all of the parties, be deemed to be one (1) original document. The
recordation of this Affordable Housing Covenant is authorized under Health and Safety
Code Section 33334.3(g).
QUALIFIED HOMEBUYER
Date: By:
Printed By:
By:
Printed By:
AGENCY
e Redevelopment Agency
of the City of San Bemardino
Dated: By:
Executive Director
[ALL SIGNATURES MUST BE NOTARIZED]
Approved as to Form:
By:
Agency Special Counsel
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481G-9032-2176.1
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EXHIBIT "A"
Legal Description of the New Home
4810-9032-2176.1
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EXHIBIT "B"
DEVELOPMENT PROJECT COST PRO FORMA
4847'()~S93.1 35
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