HomeMy WebLinkAbout08.A- Execution of Loan Agreement with National CORE Renaissance - Waterman Gardens Project DOC ID: 4315 B
CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION
Agreement/Contract
From: Bill Manis M/CC Meeting Date: 02/16/2016
Prepared by: Georgeann "Gigi" Hanna,
Dept: City Manager Ward(s): All
Subject:
Resolution of the Mayor and Common Council of the City of San Bernardino Authorizing
the City Manager to Execute a Loan Agreement with National CORE Renaissance
(National CORE) for Phase 2 of the Waterman Gardens Project. (#4315)
Current Business Registration Certificate: Not Applicable
Financial Impact:
Account Budgeted Amount: <<Insert Amount>> Account No. <<Insert Account
No.>>
Account Description: <<Insert Account Description>>
Balance as of: <<Insert Date>>
Balance after approval of this item: <<Insert Amount>>
Motion: Adopt the Resolution.
Recommendation
1. Authorize the City Manager to execute Loan Agreement#2 of Home Investment
Partnership (HOME) funds with National Community Renaissance (National
CORE) in the amount of$734,000 for the development of Waterman Gardens 1
(Project).
2. Authorize the City Manager to execute the required Programmatic Agreement
(PA), outlining the method by which the developing partners will preserve
historical structures.
Background
The City, Housing Authority of the County of San Bernardino (HACSB), County of San
Bernardino Housing Department (County Housing Department) and National CORE are
working together as development partners in the redevelopment of the Waterman
Gardens area as contemplated in the Development Agreement that was approved by
the Common Council on December 11, 2013. Specifically, the project includes:
1. Construction of 252 units of affordable housing and units of market rate housing
on the Waterman Gardens site to total 411 units Construction of
2. The construction of new recreational and community center spaces for residents
and the broader community
3. The proposed project will be constructed over eight (8) phases and is located at
the northeast corner of Waterman Avenue and Olive Street, in the Residential
Medium (RM) zone.
Packet Pg. 372
Updated: 2/12/2016 by Jolena E. Grider B
4315
This project will help revitalize the entire neighborhood, creating jobs, improving safety,
dressing up the streetscape, replacing infrastructure and most importantly improving
lives. In addition, the project supports the combined work of the City, National CORE,
HACSB and other partners toward submission of a successful Promise Zone application
on February 23, 2016. Promise Zones are high poverty communities where the federal
government, after the jurisdiction submits a successful application and is designated as
such, partners with local leaders to increase economic activity, improve educational
opportunities, leverage private investment, reduce violent crime, enhance public health
and address other priorities identified by the community.
City has committed $3,044,000 of its HOME funds towards the Waterman Gardens
Project, which includes the Valencia and 9th Avenue project (Val 9). To date the City
has invested $2,310,000 in the Val 9 Project. Val 9 is a 76 unit new construction project
located at Valencia and 9th Street. The City first action was to approve a $1,500,000
loan for the construction of Val 9. The action was later amended to include second loan
of$810,000 of HOME funds for Val 9. (The $810,000 loan was administered by the
County of San Bernardino Office of Housing and Community Development of behalf of
the City).
The project has leveraged City HOME funds to attract over $22,000,000 in tax credit
and bank financing. While not located on the existing Waterman Garden site, Val 9 is
being developed to provide existing Waterman Garden's residents with housing options
so they will not be forced to move outside of their community and to facilitate the onsite
development phases of the project. Construction at Val 9 is scheduled to be completed
in September 2016.
Amendment#2
City Manager office is requesting that the remaining $734,000 in HOME funding
approved by the Common Council for the Waterman Gardens /Val 9 project be
allocated to the developer's Waterman Gardens 1 project (WG1). WG1 is the first
onsite development phase of the Waterman Gardens project and will result in the
construction of sixty-two (62) units on approximately 5.4 acres of the Waterman
Gardens Property.
WG1 has a total project cost of$25,673,883. The City HOME fund investment will
leverage $13,866,145 in tax credit equity and $8,670,000 in construction financing both
of which are being provided by Wells Fargo. The balance of the funding is being
provided by the Housing Authority of San Bernardino County who is lending project
$762,000 and is providing a land for the project.
As a result of this amendment, the City's commitment of HOME funds will result in an
additional 62 units of housing without any additional commitment of City resources.
More specifically the City will receive 138 new housing units for the $3,044,000 in
HOME funds that have been committed to this initiative.
Updated: 2/12/2016 by Jolena E. Grider B
SWUMM-1 = _
4315
Key features of the area revitalization include:
• The Valencia and 9th Street site will feature one-to-four-bedroom units.
Subsidized units will be available to households earning 30 percent to 60 percent
of the Area Median Income (AMI). For San Bernardino County, the AMI is
$60,700 for a family of four.
• An estimated 667 jobs will be directly created and 365 indirectly, generating
$46.8 million in compensation and $81.1 million in direct economic impact to the
surrounding area.
• Amenities include a community center, featuring community meeting rooms,
after-school program facilities and a computer lab; there will also be a children's
play area and swimming pool.
Analysis
As a development partner, the City has utilized a total of$2,310,000 of HOME program
funds to assist with the financing of the "1 St phases" of the project. As noted above, 76
units were constructed at Valencia and 9th Avenue as the 1St Phase" of the Waterman
Gardens Project, referenced as the "Val 9 Project." The City's total contribution to the 1St
Phase:
1. HOME Sub-Recipient Agreement with County in the amount of$810,000
2. HOME Developer Loan #1 with National CORE in the amount of$1,500,00
Phase 2 of the project will include 62 units and will be financed, in part, through an
additional HOME loan of$734,000, which would increase the total funding allocated to
$3,044,000 of HOME program funds. Allocation of this funding was included in the
2015/2016 HOME program budget by Substantial Amendment, approved by the Mayor
and Common Council on December 17, 2015.
Statement of the Issue
The HOME Developer Loan #2 Agreement to allocate an additional $734,000 of HOME
program funds requires approval of the Mayor and Common Council.
Fiscal Impact
This project has no impact on the General Fund.
The Developer will have responsibility to repay HOME funds invested into projects.
However, the HOME Sub-Recipient Agreement of$810,000 with the County Housing
Department is not a loan and those funds will not be paid back.
Loan Repayments:
The City Loan to Val 9 and proposed loan to WG1 have 55 years terms. (Terms are
equal to the affordability period required by California Tax Allocation Committee). Loans
Updated: 2/12/2016 by Jolena E. Grider B
4315
will be repaid to the City through by (a) direct payment and (b) residual receipts. Direct
payments will be made from the proceeds of the permanent financing; to the extent
those funds are available. Residual receipts are (i) revenues that exceed amounts
needed to operate a property on a monthly basis, (ii) maintain a reserve for replacement
funds (maintenance fund) and (iii) make allowable payments to the property's owner
(HACSB owns the Waterman Gardens Public Housing Project).
The structure of the loan is such that the "deferred developer fee" (the amount paid to
National CORE for administrative costs) will be paid first from the proceeds of either an
Affordable Housing Program (AHP) loan or the proceeds of the permanent financing.
After the developer fee is paid, the City and HACSB will split remaining revenue on a
pro-rata share (to the extent those funds are available).
Supporting Documents:
Waterman Gardens Phase 2 Resolution (DOC)
Exhibit A - WG1 Legal Description (3) (PDF)
Exbibt B - Development Budget (PDF)
Exhibit C -WG1 Schedule of Performance (PDF)
Sectiono 3 Plan - Waterman Gardens 1 (PDF)
Exhibit J- Residual Receipts (PDF)
Exhibit I - Project Deliverables (PDF)
WG1 City HOME Loan Agreement (DOC)
WG1 City HOME Promissory Note Secured by Deed of Trust ($762000) (DOC)
WG1 City HOME Deed of Trust with Assignment of Rents Security Agreement and
Fixture Filing (DOC)
WG1 City HOME Regulatory Agreement and Declaration of Restrictive Covenants
(DOC)
Updated: 2/12/2016 by Jolena E. Grider B
&A.a
1 RESOLUTION NO.
2
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
3 BERNARDINO AUTHORIZING THE CITY MANAGER TO EXECUTE A LOAN
4 AGREEMENT WITH NATIONAL CORE RENAISSANCE (NATIONAL CORE) FOR _
PHASE 2 OF WATERMAN GARDENS PROJECT. E
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6 WHEREAS, the housing strategy for the City of San Bernardino (City) supports
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partnerships with non-profit housing developers for the construction of affordable housing d
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10 WHEREAS, National CORE has applied for a loan under the City's HOME Investment v
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11 Partnership Program (HOME) funded by the U.S. Department of Housing and Urban
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Development (HUD) in the amount of seven hundred, thirty-four thousand dollars ($734,000) to
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develop the Second Phase of the Waterman Gardens Project; and
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15 WHEREAS, National CORE is seeking additional financial assistance from other
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16 funding sources, including applying for Affordable Housing Program (AHP) funds; and
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WHEREAS, the 2016 Federal Low Income Housing Tax Credit application requires a N
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letter of commitment for all funding sources; and a
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WHEREAS, the City of San Bernardino will provide the funding described herein for
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21 this affordable family housing project subject to approval of Federal Low Income Housing Tax c
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22 E Credit application, execution of the HOME Loan Agreement, satisfactory document
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demonstrating compliance with HOME program regulations and consistency with the housing c
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25 needs identified in the City's Consolidated Plan; and
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26 WHEREAS, the Mayor and Common Council authorized the allocation of seven
27 hundred, thirty-four thousand dollars ($734,000)to the project on September 21, 2015
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1 NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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3 SECTION 1. The City Manager is hereby authorized to execute the HOME Loan
4 Agreement with National CORE, attached hereto as Exhibit "A" and incorporated herein by £
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5 reference as fully as though set forth at length.
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SECTION 2. The City Manager is hereby authorized to execute any additional
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e documents or agreements necessary to effectuate the loan of $734,000 to National CORE,
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9 including amendments to the attached HOME loan agreement, subordination agreements, c..
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10 recording documents, or regulatory agreements, so long as the additional documents or
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agreements do not increase the amount of the loan or substantially change any other term of the
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13 loan and are approved as to form by the City Attorney or his designee.
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Packet Pg.377
1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE CITY MANAGER TO EXECUTE A LOAN
2 AGREEMENT WITH NATIONAL CORE RENAISSANCE (NATIONAL CORE) FOR
3 PHASE 2 OF WATERMAN GARDENS PROJECT.
4
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
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6 Common Council of the City of San Bernardino at a meeting thereof, held on the z
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7 day of , 2016, by the following vote,to wit:
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8 Council Members: AYES NAYS ABSTAIN ABSENT
9 P•
MARQUEZ
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11 BARRIOS 0
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12 VALDIVIA E
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13 SHORETT
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19 Georgeann Hanna, City Clerk a
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20 The foregoing Resolution is hereby approved this day of , 2016.
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R. Carey Davis, Mayor
23 City of San Bernardino 3
Approved as to form:
24 Gary D. Saenz, City Attorney E
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By: a
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Packet Pg.378
PRELIMINARY REPORT Fidelity National Title Company
Your Reference: Order No.: 989-23058354-C-SG6
EXHIBIT A
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN BERNARDINO, COUNTY OF
SAN BERNARDINO,STATE OF CALIFORNIA,AND IS DESCRIBED AS FOLLOWS:
PARCEL 1: (0147-211-023-0000) m
PARCEL C OF CERTIFICATE OF COMPLIANCE FOR LOT LINE ADJUSTMENT RECORDED MARCH 12,2015,AS
INSTRUMENT NO. 2015-0097328 OFFICIAL RECORDS OF SAN BERNARDINO COUNTY, DESCRIBED AS Z
FOLLOWS: c
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BEING A PORTION OF LOTS 13 AND 14 OF BLOCK 42 OF RANCHO SAN BERNARDINO, AS PER PLAT
RECORDED IN BOOK 7, PAGE 2 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, STATE OF
CALIFORNIA,DESCRIBED AS FOLLOWS: r j
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BEGINNING AT THE INTERSECTION OF THE WEST LINE OF THE EAST 300.00 FEET OF SAID LOT 14 AND THE
SOUTH LINE OF SAID LOT 14,SAID SOUTH LINE ALSO BEING THE CENTERLINE OF OLIVE STREET;THENCE 4)
SOUTH 890 51' 42"WEST ALONG SAID SOUTH LINE A DISTANCE OF 80.17 FEET; THENCE NORTH 89° 59' 48"
WEST A DISTANCE OF 499.98 FEET; THENCE SOUTH 89° 58' 38" WEST A DISTANCE OF 70.92 FEET; THENCE (9
NORTH LEAVING SAID SOUTH LINE A DISTANCE OF 232.27 FEET TO A POINT ON A NON-TANGENT CURVE,
CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 115.00 FEET, A RADIAL TO SAID CURVE BEARS E
SOUTH 130 14' 07" EAST; THENCE EASTERLY AND NORTHEASTERLY ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 400 26' 34" AN ARC LENGTH OF 81.17 FEET; THENCE NORTH 36° 19' 19" EAST A
DISTANCE OF 407.64 FEET; THENCE SOUTH 53° 40' 41" EAST A DISTANCE OF 22.59 FEET TO A TANGENT
CURVE, CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 325.00 FEET; THENCE SOUTHEASTERLY
AND EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 360 19' 19" AN ARC LENGTH OF
206.03 FEET; THENCE EAST A DISTANCE OF 131.28 FEET TO THE WEST LINE OF THE EAST 300.00 FEET OF
SAID LOT 14; THENCE SOUTH 0°08' 27"EAST ALONG SAID WEST LINE A DISTANCE OF 527.82 FEET TO THE
POINT OF BEGINNING. p
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PARCEL 2: (0147-211-21-0000)
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PARCEL A,AS SHOWN ON EXHIBIT"D"OF LOT LINE ADJUSTMENT NO.LLA.2015-002,IN THE CITY OF SAN
BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, RECORDED MARCH 12, 2015, AS
INSTRUMENT NO. 2015-0097328, OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID m
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COUNTY,MORE PARTICULARLY DESCRIBED AS FOLLOWS:
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BEING A PORTION OF LOTS 12, 13, AND 14, OF BLOCK 42, OF RANCHO SAN BERNARDINO PER BOOK 7,
PAGE 2 OF MAPS,,RECORDS OF THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA,DESCRIBED Q
AS FOLLOWS:
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COMMENCING AT THE INTERSECTION OF THE WEST LINE OF THE EAST 300.00 FEET OF SAID LOT 14 AND w
THE SOUTH LINE OF SAID LOT 14, SAID SOUTH LINE ALSO BEING THE CENTERLINE OF OLIVE STREET;
THENCE, SOUTH 89°51'42" WEST ALONG SAID SOUTH LINE A DISTANCE OF 80.17 FEET; THENCE NORTH m
89 059'48"WEST A DISTANCE OF 499.98 FEET;THENCE SOUTH 89°58'38"WEST A DISTANCE OF 70.92 FEET TO E
THE TRUE POINT OF BEGINNING; THENCE CONTINUING SOUTH 89°58'38" WEST ALONG SAID SOUTH LINE
A DISTANCE OF 634.20 FEET TO THE WEST LINE OF SAID LOT 12; THENCE NORTH 00°06'47" WEST ALONG Q
THE SAID WEST LINE 958.01 FEET TO THE SOUTHERLY RIGHT-OF-WAY OF BASELINE STREET; THENCE
EAST ALONG SAID RIGHT-OF-WAY A DISTANCE OF 1284.80 FEET TO THE WEST LINE OF THE EAST 300.00
FEET OF SAID LOT 14;THENCE SOUTH 00°08'27"EAST ALONG SAID WEST LINE 429.75 FEET;THENCE WEST
LEAVING SAID WEST LINE A DISTANCE OF 131.28 FEET TO A TANGENT CURVE, CONCAVE
NORTHEASTERLY AND HAVING A RADIUS OF 325.00 FEET; THENCE WESTERLY AND NORTHWESTERLY
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36 019'19" AN ARC LENGTH 206.03 FEET; THENCE
NORTH 53 040'41" WEST A DISTANCE OF 139.82 FEET TO A TANGENT CURVE, CONCAVE SOUTHWESTERLY
AND HAVING A RADIUS OF 345.00 FEET;THENCE NORTHWESTERLY AND WESTERLY ALONG SAID CURVE
CLTA Preliminary Report Form—Modified(11/17/06) Page 3
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OPERATING EXPENSES 8.A.c
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Project Name:
Project Name: Waterman Gardens Phase I
Developer: NCRC/TCC/HACSB/HPI
Number of Dwelling Units: 62
Description Annual Monthly Per Unit Unit/Month %Total
1.Management
Management Fee $ 39,432 $ 3,286.00 $ 636.00 $ 53.00 9.88%
Management Total: $ 39,432 $ 3,286.00 $ 636.00 $ 53.00 9.88%
2.Administration
Marketing/Credit Checks $ 2,000 $ 166.67 $ 32.26 $ 2.69 0.76%
Audit(Reznick)/File Mgmt(Compliance) $ 15,000 $ 1,250.00 $ 241.94 $ 20.16 2.42%
Legal $ 5,000 $ 416.67 $ 80.65 $ 6.72 1.26%
Office Expenses/MISC $ 8,000 $ 666.67 $ 129.03 $ 10.75 3.69%
Administration Total: $ 30,000 $ 2,500 $ 484 $ 40 8.14%
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3.Salaries and Benefits ='
Manager/Asst.Manager $ 35,000 $ 2,916.67 $ 564.52 $ 47.04 8.85% $
Main Personnel $ 28,000 $ 2,33133 $ 451.61 $ 37.63 6.69% 4)
Leasing Commissions $ 3,985 $ 332.08 $ 64.27 $ 5.36 0.00% 0)
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Case Manager $ - $ - $ - $ - 0.00%
Housekeepers $ - $ - $ - $ - 0.00% C
Payroll Txs,Ins&Wkr.Comp. $ 33,336 $ 2,778.00 $ 537.68 $ 44.81 5.32%
7
Salaries and Benefits Total: $ 100,321 $ 8,360.08 $ 1,618.08 $ 134.84 20.86%
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4.Maintenance M
Supplies $ 8,000 $ 666.67 $ 129.03 $ 10.75 1.69% C
Repairs Contract $ 10,050 $ 837.50 $ 162.10 $ 13.51 2.11% N
Pest Control $ 3,000 $ 250.00 $ 48.39 $ 4.03 0.51% 0-
Fire Prevention $ 7,100 $ 591.67 $ 114.52 $ 9.54 0.42% h
Security Systems $ 9,000 $ 750.00 $ 145.16 $ 12.10 2.32% N
Elevator $ - $ - $ - 1.58% 'a
Misc. $ 10,000 $ 833.33 $ 161.29 W
Pool(Future CAM for WG Facilities) $ $ $ 1.26% 0
Maintenance Total: $ 47,150 $ 3,929.17 $ 760.48 $ 49.93 9.89% C
0
5. Utilities Not Paid by Tenants E
Trash Removal $ 13,000 $ 1,083.33 $ 209.68 $ 17.47 2.21% ate+
Electricity $ 24,800 $ 2,066.67 $ 400.00 $ 33.33 2.48% C
Water/Sewer $ 34,100 $ 2,841.67 $ 550.00 $ 45.83 8.54%
Gas $ 12,000 $ 1,000.00 $ 193.55 $ 16.13 2.74
Utilities Total: $ 83,900 $ 6,991.67 $ 1,353.23 $ 112.77 15.97% 99)
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6.Insurance CO)
Property&Liability Insurance $ 28,500 $ 2,375.00 $ 459.68 $ 38.31 5.45%
Insurance Total: $ 28,500 $ 2,375.00 $ 459.68 $ 38.31 5.45% N
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7.Tax and Reserves V
Real Estate Taxes $ 5,000 $ 416.67 $ 80.65 $ 6.72 1.05% C
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Replacement Reserves $ 24,800 $ 2,066.67 $ 400.00 $ 33.33 8.01% rr
Tax and Reserves Total: $ 29,800 $ 2,483.33 $ 480.65 $ 40.05 9.06%
8.Other E
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Security Patrol $ 8,000 $ 666.67 $ 129.03 $ 10.75 5.06% O
Grounds Contract $ 5,000 $ 416.67 $ 80.65 $ 6.72 8.01% d
Turn Over $ 8,000 $ 666.67 $ 129.03 $ 10.75 1.05% >
Support Services $ 14,880 $ 1,240.00 $ 240.00 $ 20.00 4.55%
D
Payments to Public Agencies $ 3,473 $ 289.42 $ 56.02 $ 4.67 2.09% �
$ 39,353 $ 3,279.42 $ 634.73 $ 52.89 20.76% m
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Operating Expenses Total: $ 398,456 $ 33,204.67 $ 6,426.71 $ 522.12 100.00%
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8.A.d
Schedule of Performance
Waterman Gardens 1
610 Olive Street, San Bernardino California
Milestone Date Key-Prerequisite
Milestone =
Receive Entitlements/ Environmental 4/14/2014 Submit Entitlements
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Clearance Z
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Apply for 9%Tax Credits July 2016 Receive Entitlements y
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Receive 9%Tax Credit Reservation September 2016 Apply for 9% Credits c
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Select Tax Credit Investor October 2016 Receive CTCAC
Award
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Submit plans and applications for plan check LO
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and building permit October 2016 Receive CTCAC
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Obtain Approval of Construction Plans February 2016 No later than 180-
day CTCAC deadline a
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(March 23, 2015)
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Obtain FHA/HUD Loan Commitment February 2016 No later than 180- co
day CTCAC deadline
(March 23, 2015)
Final Construction Contract March 2016 No later than 180- w
day CTCAC deadline
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(March 23, 2015)
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Obtain Construction Permits March 2016 No later than 180-
day CTCAC deadline
(March 23, 2015)
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8.A.d
Notice to Proceed March 2016 No later than 180-
day CTCAC deadline
(March 23, 2015)
Begin Construction April 2016
Apply for AHP Funds March 2015
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Management Plan May 2016
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Complete construction September 2017 y
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100% Occupied January 2018 N
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Permanent Loan Closng December 2018
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SECTION 3 PLAN
(OWNER/DEVELOPER
AND
GENERAL CONTRACTOR)
For: Waterman Gardens 1
(Name of Development)
Submitted bv:
Name of owner/Developer: National Community Renaissance of California
Address: 9421 Haven Avenue, Rancho Cucamonga, CA
Contact: Erik Johnson, Vice President of Development (909) 483-2444
(Name and Telephone Number)
General contractor: National Community Renaissance of California
Address: 9421 Haven Avenue, Rancho Cucamonga, CA
Contact:- Byron Ely, Senior Vice President (909) 483-2444
(Name and Telephone Number)
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General Statement
National Community Renaissance Corporation of California as the owner, and National Community Renaissance Corporation of California
as the general contractor are committed to comply with the Section 3 act, the Section 3
regulations, and the City of San Bernardino ("City") Section 3 Guidelines. It is our desire to
work together to ensure compliance, to the greatest extent feasible, through the awarding of
contracts for work and services to Section 3 companies, and to provide employment and training
to Section 3 residents. We commit to include the Section 3 clause in the construction contract
and all subcontracts in excess of$100,000.00. All subcontractors interested in submitting bids
for contracts will be informed of the Section 3 requirements and goals. We agree to provide the
City with copies of all bids received in response to the invitation to bid and copies of all
contracts awarded in excess of$100,000.00.
Goals
Contracting:
To demonstrate compliance with Section 3 regulations, it is desirous to award at least 10 percent
of the total dollar amount of all Section 3 covered contracts for building trades work,and,at least
3 percent of the total dollar amount of all other Section 3 covered contracts (i.e., professional
services)to Section 3 business concerns.
Construction contract: $17,827,282
10%: $1,782,728
3% $534,818
These goals are affirmed: Initials:
If we do not feel it is feasible to meet the minimum goals set forth above, we will be prepared to
demonstrate why it was not possible. We understand failure to follow our Section 3 Plan could
result in the Secretary of Housing and Urban Development ("HUD") finding us non-compliant
with the Section 3 regulations.
Employment and Training:
To demonstrate compliance with Section 3 regulations, it is desirous to employ Section 3
residents as 30 percent of the aggregate number of new hires, and to provide training to those
new hires. We agree to provide information regarding existing employees and hiring needs as a
part of this plan.
Any goal established in this plan must be met. If we fail to do so, we agree to provide an
explanation and documentation as to why the goal was not met.
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Outreach a
We are committed to conduct an aggressive outreach campaign to make Section 3 Businesses
and Section 3 Residents aware of contracting and possible hiring opportunities in connection
with this Section 3 Covered Project. Efforts will include, but not be limited to, publication of
opportunities in the local newspapers, use of signage at the project site, flyers posted in the
neighborhood and surrounding areas, notification of local housing authorities, contractor and
trade organizations, employment agencies,career centers and local Youthbuild chapters.
Project Neighborhood Area
The project neighborhood area is: central San Bernardino
This area will be the primary focus of all outreach attempts.
Section 3 Coordinator
Name: -Fak4- Y1414
Contact Information: 711 y 321.C�35 -
This person will serve as the main point of contact for all Section 3 related issues on behalf of
the owner, general contractor, and the subcontractor.
Reporting
We agree to submit a Master Subcontractor List on the 20`x' day of each month after construction
of the Section 3 Covered Project has commenced. We agree to submit a final report to the City
on HUD Form 60002 at completion of construction of the Section 3 Covered Project. We agree
to immediately report any changes in this plan, including but not limited to, changes in the dollar
amount of contracts awarded and staffing needs of the subcontractors.
Attachments
The following attachments are incorporated into and made a part of this Section 3 Plan:
Section 3 Clause that will be included in all contracts
Contracting Plan
Outreach to Solicit Bids from Section 3 Businesses
Permanent Employee Listing for the Owner/Developer
Permanent Employee Listing for the General Contractor
Workforce Needed for Section 3 Covered Project for the Owner/Developer
Workforce Needed for Section 3 Covered Project for the General Contractor
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We agree to provide to the City the following documentation as soon as the information is a-
available to us:
• Outreach to Solicit Bids from Section 3 Businesses (updated)
• New Hires for the Owner/Developer
• New Hires for the General Contractor
• Section 3 New Hires Trained for the Owner/Developer
• Section 3 New Hires Trained for the General Contractor
• HUD 60002 Final Report
Submitted to the City of San Bernardino
Date: z �°
OWNER/DEVELOPER:
(Print/type name)
By: �--'C
(Print/type name and title)
Date:
GENERAL CONTRACTOR:
(Print/type name)
By:
(Print/type name and title)
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SECTION 3 CLAUSE/AFFIRMATIVE ACTION 0.
Every applicant, recipient, contracting part, contractor and subcontractor shall incorporate, or cause to be
incorporated, in all contracts for work in connection with a Section 3 covered project, the following
clause(referred to as a Section 3 clause):
The work to be performed under this contract is on a project assisted under a program providing direct
Federal financial assistance from the Department of Housing and Urban Development and is subject to
the requirements of Section 3 of the Housing and Urban Development act of 1968,as amended, 12 U.S.C.
1701 n. Section 3 requires that to the greatest extent feasible opportunities for training and employment be
given to lower income residents of the project area and contracts for work in connection with the project
be awarded to business concerns which are located in,or owned in substantial part by persons residing in
the area of the project.
The parties to this contract certify and agree that they are under no contractual or other disability which
would prevent them from complying with these requirements.
The contractor will send to each labor organization or representative of workers with which he has a
collective bargaining agreement or other contract or understanding, if any, a notice advising the said labor
organization or workers representative of his commitments under this Section 3 clause and shall post
copies of the notice in conspicuous places available to employees and applicants for employment and
training.
The contractor will include this Section 3 clause in every subcontract for work in connection with the
project and will, at the direction of the applicant for, or recipient of Federal financial assistance, take
appropriate action pursuant to the subcontract upon a finding that the subcontractor is in violation of
regulations issued by the Secretary of Housing and Urban Development, 24 CFR 135. The contractor will
not subcontract with any subcontractor where it has notice or knowledge that the latter has been found in
violation of regulations under 24 CFR 135 and will not let any subcontract unless the subcontractor has
first provided it with a preliminary statement of ability to comply with the requirements of these
regulations.
Compliance with the provisions of Section 3, the regulations set forth in 24 CFR 135, and all applicable
rules and orders of the Department issued there under prior to the execution of the contract, shall be a
condition of the Federal financial assistance provided to the project, binding upon the applicant or
recipient, its contractors and subcontractors, its successors, and assigns to those sanctions specified by the
grant or loan agreement or contract though which Federal Assistance is provided and to such sanctions as
are specified by 24 CFR 135.
CONTRACTOR CERTIFICATION
As the contractor for this renovation, I hereby certify that, if I do not have one, I will comply with the
community's Affirmative Action Plan which includes executive order 11246 and Section 3 listed above.
During the term of this contract I intend to hire employees and will be residents of the
community.
Dated:
Contractor Witness
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EXHIBIT J cva
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FORM OF RESIDUAL RECEIPTS REPORT
Residual Receipts Report
for the Year Ending
Date Prepared: ,20_
Please complete the following information and execute the certification at the bottom of this
form.
Annual Operating Income
Please report Annual Operating Income for the year ending on the following lines:
Rent Payments received(including Section 8 tenant assistance (1) $
payments,if any)
Interest Income(do not include interest income from replacement
and operating reserves nor interest income on tenant security
deposits) (2) $
Additional Income Related to Project Operations (for example,
vending machine income, tenant forfeited deposits,laundry
income not paid to the residents' association, business interruption
insurance casualty insurance, not used to rebuild) (3) $
Total Annual Operating Income (Add lines 1, 2,and 3) (4) $
Operating Expenses
Please report Operating Expenses incurred in relation to the
operations of the Project for the year ending ,
on the following lines:
Operating and Maintenance Expenses (5) $
Utilities (6) $
Fees and licenses (7) $
Property management Expenses and On-Site Staff
Payroll (g) $
Administrative Expenses Incurred by Project
1610\08\1662871.1
EXHIBIT I: Project Deliverables
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Activity Deliverable(Completion Date)
Construction of 62 Unit Affordable Housing Z
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Development October 2017
Delivery of 4- HOME Units October 2017 a
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8.A.h
HOME INVESTMENT PARTNERSHIPS ACT LOAN AGREEMENT
(Waterman Gardens Phase 1)
This HOME Investment Partnerships Act Loan Agreement(the "Agreement") is dated
February 15, 2016 (the "Effective Date"),and is between the City of San Bernardino, a charter
city of the State of California(the "City"), and Waterman Gardens Partners 1, L.P., a California
limited partnership ("Borrower"). 4)
v
RECITALS
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A. Defined terms used but not defined in these recitals are as defined in Article 1 of a
this Agreement.
B. The City has received Home Investment Partnerships Act funds from the United N
States Department of Housing and Urban Development("HUD")pursuant to the Cranston- C.-
Gonzales National Housing Act of 1990 ("HOME Funds"). The HOME Funds must be used by
the City in accordance with 24 C.F.R. Part 92.
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C. The Borrower will become the leasehold owner of the real property located at 610
East Olive Street, in the City of San Bernardino, County of San Bernardino, State of California, £
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as more particularly described in Exhibit A (the "Pro e
AY
"). Borrower intends to construct a
sixty-two (62)unit multifamily affordable housing development(including one manager's unit)
(the "Improvements"). The Improvements and the Property are referred to as the
M
"Development." �
D. Borrower desires to borrow from the City and the City desires to lend Borrower a
Seven Hundred Thirty Four Thousand Dollars ($734,000)of HOME Funds (the "Loan"). The
Loan will be evidenced by the Note and secured by the Deed of Trust, as defined below. a,
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E. The Loan is being made to finance construction costs associated with the c
Development in order to help achieve financial feasibility for the Development. The w
Development will increase the supply of affordable rental housing in the City of San Bernardino. 2
Due to the assistance provided Borrower pursuant to this Agreement,the City has classified four =
(4)units as HOME-assisted units (each such unit a "City-Assisted Unit"),which Units are
"floating"Units as defined in 24 C.F.R. 92.2520). The City-Assisted Units are required to be v
four(4)two-bedroom Units and are to be intermingled throughout the Development and of
comparable quality to all other Units and must meet the Uniform Federal Accessibility Standards r
and Section 3.8(f)below. a
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F. The City has prepared a Mitigated Negative Declaration under the California
Environmental Quality Act(Public Resources Code Sections 21000 et seq.) ("CEOA") Q
requirements,pursuant to 14 CCR Section 15070. The City considered the environmental effects
of the Development as show in the Mitigated Negative Declaration and determined that no
further CEQA analysis is required pursuant to 14 California Code of Regulations Section 15162.
G. In accordance with the National Environmental Policy Act of 1969, as amended
(42 U.S.C. 4321-4347) ("NEPA"),the City has completed and approved all applicable
1
Packet Pg. 396
environmental review for the activities proposed to be undertaken under this Agreement and
issued a Finding of No Significant Impact.
The Parties therefore agree as follows:
AGREEMENT
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ARTICLE 1. DEFINITIONS AND EXHIBITS '
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Section 1.t Definitions. z
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The following terms have the following meanings: a
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(a) "Agreement"means this HOME Investment Partnerships Act Loan ;
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Agreement.
(b) "AHP Loan"has the meaning set forth in Section 2.9.
(c) "Annual Payment"has the meaning set forth in Section 2.7(b).
(d) "Approved Development Budget" means the proforma development
budget, including sources and uses of funds, as approved by the City, and attached hereto and
incorporated herein as Exhibit B as such may be modified pursuant to Section 3.15.
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(e) "Approved Financing" means all of the following loans, grants and equity
obtained by Borrower and approved by the City for the purpose of financing the Development: _
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(i) An unsecured construction bridge loan from Wells Fargo Bank,
National Association in the approximate amount of Nine Million Two Hundred Seventy Q
Thousand Three Hundred Thirty-Nine Dollars ($9,270,339) (the"Construction Loan"); C
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(ii) A HUD/FHA 221(d)(4) loan from Wells Fargo Bank,National w
Association in the approximate amount of Eight Million Two Hundred Sixty-Seven Thousand
Nine Hundred Dollars ($8,267,900) (the "FHA Loan"); _
(iii) A loan from the Housing Authority of the County of San
Bernardino (the "Housing Authority") in the total amount of One Million, Four Hundred
Twenty-Five Thousand Dollars ($1,425,000) (the "Housing Authority Loan"),reflecting a
leasehold acquisition loan of Six Hundred Sixty-Three Thousand Dollars ($663,000) (the
"Housing Authority Acquisition Loan") and a construction/permanent loan of up to Seven s
Hundred Sixty-Two Thousand Dollars ($762,000) (the"Housing Authority Development
Load'); Q
(iv) Low-Income Housing Tax Credit investor limited partner capital
contribution in the approximate amount of Thirteen Million Eight Hundred Seventy-Six
Thousand One Hundred Forty-Five Dollars ($13,876,145) (the "Tax Credit Investor Equity");
and
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8.A.h
(v) Deferred Developer Fees in an approximate amount of Five
Hundred Two Thousand, Seventy Dollars ($502,070)(the "Deferred Developer Fee").
(f) "Bid Package" means the package of documents Borrower's general
contractor is required to distribute to potential bidders as part of the process of selecting
subcontractors for the Development. The Bid Package is to include the following: (i) an
invitation to bid; (ii) copy of the proposed construction contract; and (iii) all Construction Plans.
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a)
(g) "Borrower" has the meaning set forth in the first paragraph of this =
Agreement. 4)
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(h) "CEQA"has the meaning set forth in Paragraph F of the Recitals.
(i) "Certificate of Occupancy" means the certificate of occupancy or
equivalent document issued by the City to certify completion of the construction of the N
Development. c1.
(j) "CHDO"means a certified Community Housing Development
Organization as defined in 24 C.F.R. 92.300. For the purposes of this Agreement,the certified
CHDO is National Community Renaissance of California, as may be substituted pursuant to
Section 4.6(c) of this Agreement. E
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(k) "City" has the meaning set forth in the first paragraph of this Agreement.
(1) "City Manager"means the person holding the office of city manager for M
the City pursuant to Article V, Section 100 of the Charter of the City of San Bernardino.
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(m) "Commencement of Construction" has the meaning set forth in E
Section 3.6.
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(n) "Completion Component" has the meaning set forth in Section 2.6.
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(o) "Completion Date" means the date that all of the following have occurred: w
(i)a final certificate of occupancy, or equivalent document is issued by the City to certify p
completion of the construction of the Development; (ii)the final disbursement of HOME funds =
for the Development has been made; (iii)the City has verified the Development complies with
the property standards set forth in 24 CFR 92.251; and(iv) all project completion information
has been entered by the City into the Integrated Disbursement and Information System (IDIS).
(p) "Completion of Construction"has the meaning set forth in Section 3.7. E
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(q) "Construction Closing" means the date that all deeds of trust associated
with Approved Financing necessary for the construction of the Development as shown on the a
Approved Development Budget are recorded against the Property.
(r) "Construction Component" has the meaning set forth in Section 2.6.
(s) "Construction Contract"has the meaning set forth in Section 3.3.
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Packet Pg. 398
(t) "Construction Plans" means all construction documentation upon which
Borrower and the General Contractor rely in constructing the Development on the Property
(including the units in the Development, landscaping,parking, and common areas) as approved
by the City, as applicable, and includes, but is not limited to, final architectural drawings,
landscaping plans and specifications, final elevations,building plans and specifications, and
scope of construction working drawings.
(u) "City-Assisted Units"has the meaning set forth in Paragraph E of the
Recitals.
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(v) "Deed of Trust" means the Deed of Trust with Assignment of Rents, ?
Security Agreement, and Fixture Filing among Borrower, as Trustor, a trustee approved by the d
City, and the City, as beneficiary,that will encumber the Property to secure repayment of the
Loan and performance of the covenants of the Loan Documents. A copy of the form of Deed of
Trust is attached as Exhibit E. in
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(w) "Default Rate" has the meaning set forth in Section 6.2(d).
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(x) "Developer Fee" has the meaning set forth in Section 3.16 and includes
the Deferred Developer Fee defined in subsection (e)above. R
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(y) 'Development" has the meaning set forth in Paragraph C of the Recitals.
(z) "Escrow" means the escrow account established by the Borrower for the Lo
closing of Development financing with Fidelity Title Insurance Company in its Newport Beach,
California office or another escrow company satisfactory to the City. r
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(aa) "Event of Default" has the meaning set forth in Section 6.1. E
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(bb) "Final Cost Certification" has the meaning set forth in Section 4.1. a
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(cc) "Final Development Cost" means the total of the cost of acquisition, 0
development and construction (including soft costs)of the Development as shown on the Final w
Cost Certification. p
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(dd) "General Contractor" has the meaning set forth in Section 3.3. v
(ee) "Hazardous Materials"has the meaning set forth in Section 4.7.
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(ff) "Hazardous Materials Claims" has the meaning set forth in Section 4.7. E
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(gg) "Hazardous Materials Law" has the meaning set forth in Section 4.7.
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(hh) "HOME"means the HOME Investment Partnerships Act Program
pursuant to the Cranston-Gonzales National Affordable Housing Act of 1990(42 U.S.C. 12705
et seq.), as amended.
(ii) "HOME Funds" has the meaning set forth in Paragraph B of the Recitals.
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Packet Pg. 399
8.A h
0j) "HOME Term" means the period beginning on the date of this Agreement
and ending on the twentieth(20th)anniversary of the Completion Date.
(kk) "Housing Authority" means the Housing Authority of the County of San
Bernardino.
(11) "HUD"has the meaning set forth in Paragraph B of the Recitals.
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(mm) "Improvements" has the meaning set forth in Paragraph C of the Recitals.
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(nn) "Investor Limited Partner" means Wells Fargo Affordable Housing z
Community Development Corporation or a permitted transferee.
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(oo) "Loan" has the meaning set forth in Paragraph D of the Recitals.
(pp) "Loan Documents" means this Agreement,the Note,the Regulatory co
Agreement, and the Deed of Trust.
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(qq) "Marketing Plan"has the meaning set forth in Section 3.17(a).
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(rr) "NEPA" has the meaning set forth in Paragraph G of the Recitals.
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(ss) "Net Proceeds of Permanent Financing" means the amount by which
Permanent Financing exceeds the Final Development Costs.
(tt) "Note" means the Promissory Note that evidences Borrower's obligation to
repay the Loan. A copy of the form of Note is attached as Exhibit D. _
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(uu) "Notice of Completion" means the Notice of Completion executed by
Borrower in the form specified in California Civil Code Section 3093. a
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(vv) "Partnership Agreement" means the Amended and Restated Agreement of c
Limited Partnership executed by the partners of Borrower and in effect as of Construction W
Closing,as may be further amended pursuant to the requirements of Section 4.13(c)(ii)hereof. M
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(ww) "Permanent Closing"means the date that all deeds of trust(or assignments
of deeds of trust) associated with Approved Financing necessary for the permanent financing of v
the Development as shown on the Approved Development Budget that have been recorded
against the Property are converted to permanent loans deeds of trust(which for the FHA Loan
shall be deemed to occur on the date amortizing payments on the FHA Loan begin),which shall d
also be referenced as the "Conversion Date". _
(xx) "Permanent Financing" means the sum of the following amounts: (i)the a
FHA Loan(ii)the Loan; (iii)the Housing Authority Loan; and (iv)the AHP Loan(if applicable).
(yy) "Permitted Limited Partner"has the meaning set forth in Section 6.5.
(zz) "Permitted Transfer"has the meaning set forth in Section 4.13.
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Packet Pg.400
8.A.h
(aaa) "Predevelopment Component"has the meaning set forth in Section 2.6.
(bbb) "Property"has the meaning set forth in Paragraph C of the Recitals.
(ccc) "Regulatory Agreement" means the Regulatory Agreement and
Declaration of Restrictive Covenants between the City and Borrower related to the Loan,to be
recorded against the Property. A copy of the form of Regulatory Agreement is attached as
Exhibit F. E
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(ddd) 'Residual Receipts" has the meaning set forth in Section 2.7(a)(vi).
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(eee) "Schedule of Performance" means the schedule for performance of various
tasks and obligations under this Agreement that is attached as Exhibit C. as such may be
modified pursuant to Section 3.1.
(M) "Senior Lender"has the meaning set forth in Section 2.5. N
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(ggg) "Services Budget" has the meaning set forth in Section 3.18.
(hhh) "Services Plan"has the meaning set forth in Section 3.18.
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(iii) "TCAC" means the California Tax Credit Allocation Committee. �E`,
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Ojj) "Tenant" means the tenant household that occupies a unit in the
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Development. M
(kkk) "Term"means the period of time that commences on the date of this
Agreement, and expires, unless sooner terminated in accordance with this Agreement, on the
fifty-fifth(55th) anniversary of the Completion Date.
(111) "Transfer" has the meaning set forth in Section 4.13.
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(mmm)"Unit" means one(1)of the sixty-two (62)housing units to be constructed. w
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this v
Agreement by this reference:
Exhibit A: Legal Description of the Property
Exhibit B: Approved Development Budget L
Exhibit C: Schedule of Performance
Exhibit D: Form of Promissory Note Q
Exhibit E: From of Deed of Trust
Exhibit F: Form of Regulatory Agreement
Exhibit G: Certification of Continuing Program Compliance
Exhibit H: Section 3 Compliance
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Packet Pg. 401
ARTICLE 2. LOAN PROVISIONS
Section 2.1 Loan.
The City shall lend to Borrower the Loan for the purposes set forth in Section 2.3 of this
Agreement. Borrower's obligation to repay the Loan is evidenced by the Note.
Section 2.2 Interest. E
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(a) Subject to the provisions of Subsection(b)below, simple interest will
accrue on the outstanding principal balance of the Loan at a per annum rate of interest equal to z
three percent(3%)commencing on the date of each disbursement.
(b) Upon the occurrence of an Event of a Default, interest on the Loan will
begin to accrue,beginning on the date of such occurrence and continuing until the date the Loan CO
is repaid in full or the Event of Default is cured, at the Default Rate. c•.
Section 2.3 Use of Loan Funds.
(a) Borrower shall use the Loan to fund the predevelopment, construction and c
permanent financing of the Development consistent with the Approved Development Budget. E
Borrower shall use the Loan only to fund costs associated with the residential portions of the
Development.
(b) No portion of the Loan shall be used to fund costs incurred more than M
twenty-four(24)months prior to the Effective Date or for any costs not allowed under 24 C.F.R.
92.206. c
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(c) Borrower may not use the Loan proceeds for any other purposes without
the prior written consent of the City. a
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Section 2.4 Security. 0
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Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by p
executing the Deed of Trust, and causing or permitting it to be recorded as a lien against the =
Property in second(2a) lien priority among the deeds of trust securing the Approved Financing in
the following order:the FHA Loan,the Loan, and the Housing Authority Loan, and subject to
Section 2.5 below. Borrower shall also cause or permit the Regulatory Agreement to be
recorded against the Property, with such priority over the FHA Loan as HUD may approve.
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Section 2.5 Subordination.
Any agreement by the City to subordinate the Deed of Trust and/or Regulatory a
Agreement to an encumbrance securing and/or evidencing Approved Financing(each such
Approved Financing, a "Senior Loan"), will be subject to the satisfaction of each of the
following conditions:
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Packet Pg.402
(a) All of the proceeds of the proposed Senior Loan, less any transaction
costs, are used to provide acquisition, construction and/or permanent financing for the
Development.
(b) The proposed lender of a Senior Loan(each a "Senior Lender") is a state
or federally chartered financial institution, a nonprofit corporation or a public entity that is not
affiliated with Borrower or any of Borrower's affiliates, other than as a depositor or a lender,
except as may otherwise be permitted by the City, at its sole and absolute discretion. E
(c) Borrower demonstrates to the City's satisfaction that subordination of the
Deed of Trust and the Regulatory Agreement is necessary to secure adequate acquisition, ?
construction and/or permanent financing to ensure the viability of the Development, including
the operation of the Development as affordable housing, as required by the Loan Documents. To
satisfy this requirement, Borrower must provide to the City, in addition to any other information
reasonably required by the City, evidence demonstrating that the proposed amount of the Senior w
Loan is necessary to provide adequate acquisition, construction and/or permanent financing to
ensure the viability of the Development, and adequate financing for the Development would not
be available without the proposed subordination.
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(d) The subordination agreement(s) is structured to minimize the risk that the
Deed of Trust and the Regulatory Agreement will be extinguished as a result of a foreclosure by £
the Senior Lender or other holder of the Senior Loan. To satisfy this requirement,the cc
subordination agreement must provide the City with adequate rights to cure any defaults by
Borrower, including: (i)providing the City or its successor with copies of any notices of default LO
at the same time and in the same manner as provided to Borrower; and(ii) providing the City
with a cure period of at least sixty(60) days to cure any default.
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(e) The subordination(s)of the Loan is effective only during the original term
of the Senior Loan and any extension of its term that is approved in writing by the City. as
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(f) The subordination does not limit the effect of the Deed of Trust and the o
Regulatory Agreement before a foreclosure,nor require the consent of the Senior Lender prior to J
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the City exercising any remedies available to the City under the Loan Documents. o
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(g) Upon a determination by the City Manager that the conditions in this r
Section have been satisfied,the City Manager will be authorized to execute the approved v
subordination agreement without the necessity of any further action or approval by the Mayor
and Common Council. Execution of any subordination agreement will evidence and constitute
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the determination of the City that all requirements of this Section 2.5 have been satisfied or
waived. L
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(h) So long as the Secretary of Housing and Urban Development or his/her Q
successor or assign is the insurer or holder of the first mortgage on the Waterman Gardens Phase
1,FHA Project No. 143-35131,the provisions of this Section 2.5 shall not apply to a
subordination to the HUD financing. The City Manager has the authority to execute that certain
Subordination Agreement form HUD-92420M or such other form subordination agreement
required by HUD.
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Packet Pg.403
Ft.A.h
Section 2.6 Conditions Precedent to Disbursement of Loan Funds.
The disbursements made pursuant to this Section 2.6 may not exceed the amount of the
Loan. The City shall disburse the Loan into Escrow in two components: (i)a
"Predevelopment/Construction Component" in the amount of Six Hundred Sixty Thousand, Six
Hundred Dollars ($ 660,600); and (ii) a "Completion Component" in the amount of Seventy
Three Thousand Four Hundred Dollars ($73,400). The division of the Loan between the
Predevelopment/Construction Component and the Completion Component may be readjusted by
the City Manager on behalf of the City without the need for formal amendment of this
Agreement. The City will disburse the the Predevelopment/Construction Component at
Construction Closing subject to the conditions precedent set forth in subsection(a)below, and ?
the Completion Component at Permanent Closing subject to the conditions precedent set forth-in
subsection (b).
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(a) Predevelopment/Construction. The City is not obligated to make a co
disbursement of the Predevelopment/Construction Component at Construction Closing, or to
take any other action under the Loan Documents unless the following conditions precedent are d
satisfied:
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(i) There exists no Event of Default nor any act, failure,omission or
condition that would constitute an Event of Default under this Agreement;
(ii) Borrower holds good and marketable leasehold title to the
Property; LO
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(iii) Borrower has delivered to the City a copy of Borrower's
organizational documents and a corporate resolution authorizing Borrower's execution of the
Loan Documents and the transactions contemplated by the Loan Documents;
(iv) There exists no material adverse change in the financial condition Q
of Borrower from that shown by the financial statements and other data and information o
furnished by Borrower to the City prior to the date of this Agreement; w
(v) Borrower has furnished the City with evidence of the insurance i
coverage meeting the requirements of Section 4.14 below;
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(vi) Borrower has caused to be executed and delivered to the City the
Loan Documents and any other instruments, and policies required under the Loan Documents;
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(vii) The Deed of Trust and the Regulatory Agreement have been E
recorded against the Property in the Office of the Recorder of the County of San Bernardino;
(viii) Borrower is in compliance with the Schedule of Performance;
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(ix) All environmental review necessary for the construction of the
Development has been completed, and Borrower has provided the City evidence of compliance
with all CEQA and NEPA mitigation measures;
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Packet Pg.404
(x) The City has determined the undisbursed proceeds of the Loan,
together with other funds or firm commitments for funds that Borrower has obtained in
connection with the acquisition and construction of the Development, are not(ess than the
amount the City determines is necessary to pay for the acquisition and construction of the
Development and to satisfy all of the covenants contained in this Agreement and the Regulatory
Agreement;
(xi) Borrower has obtained all permits and approvals necessary for the
construction of the Development, as required by Section 3.2;
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(xii) Borrower has submitted a certification from the architect certifying Z
that the plans and specifications and design documents for the Development ensure that the City-
Assisted Units are in compliance with Section 3.8(f)of this Agreement. Cr
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(xiii) The City has received a copy of the General Contractor's N
Construction Contract as required pursuant to Section 3.3 below; a
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(xiv) The City has received and approved the labor and material a
(payment) bonds as required pursuant to Section 3.5 below;
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(xv) A title insurer reasonably acceptable to the City is unconditionally E
and irrevocably committed to issuing an LP-10 2006 ALTA Lender's Policy of title insurance
insuring the priority of the Deed of Trust in the amount of the Loan, subject only to such
exceptions and exclusions as may be reasonably acceptable to the City, and containing such
endorsements as the City may reasonably require. The Borrower shall provide whatever
documentation(including an indemnification agreement), deposits or surety as is reasonably
required by the title company in order for the City's Deed of Trust to be senior in lien priority to
any mechanics liens in connection with any start of construction that has occurred prior to the 0
recordation of the Deed of Trust against the Property in the Office of the Recorder of the County
of San Bernardino; Q
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(xvi) Borrower has executed a Partnership Agreement approved by the _J
City,with the Investor Limited Partner, in which the Investor Limited Partner is obligated to 2
provide Borrower the Tax Credit Investor Equity; _
(xvii) Borrower has closed, or is concurrently closing, on the other v
construction financing including the Construction Loan,the FHA Loan, and the Housing
Authority Loan and is eligible to receive the proceeds of those loans and has received the amount
of Tax Credit Investor Equity stated as the first installment in the Partnership Agreement
(estimated to be approximately Two Million Seven Hundred Seventy-Five Thousand Two L
Hundred Twenty Nine Dollars($2,775,229), or so much thereof is required for the closing draw;
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(xviii) The Borrower's sole member and managing general partner, or the
sole member of the general partner, meets the legal and organizational characteristics described
in 24 C.F.R. 92.2 and has been and continues to be annually recertified as a CHDO by the City
of San Bernardino for the entire HOME Term; and
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Packet Pg. 405
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(xix) The City has received a written draw request from Borrower,
including(1) certification that the condition set forth in Section 2.6(a)(i) continues to be
satisfied, (2)certification that the proposed uses of funds are consistent with the Approved
Development Budget, (3)the amount of funds needed, and, (4)where applicable, a copy of the
bill or invoice covering a cost incurred or to be incurred. When a disbursement is requested to
pay any contractor in connection with improvements on the Property,the written request must be
accompanied by(i)certification by the Borrower's architect reasonably acceptable to the City
that the work for which disbursement is requested has been completed(although the City
reserves the right to inspect the Property and make an independent evaluation); and(ii) lien
releases and/or mechanics lien title insurance endorsements reasonably acceptable to the City. a
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(b) Completion Component. The City is not obligated to make a 4)
disbursement of the Completion Component at Permanent Closing,or to take any other action
under the Loan Documents unless the following conditions precedent are satisfied:
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(i) All requirements set forth in Section 2.6(a)have been and continue Cl.-
to be satisfied and there exists no Event of Default nor any act, failure, omission or condition that
would constitute an Event of Default under this Agreement;
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(ii) The Borrower has been issued a Certificate of Occupancy for the
Development by City;
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(iii) The City has received satisfactory evidence that the City-Assisted
Units are rented to eligible tenants at the required rents in compliance with the requirements of U)
this Agreement and the Regulatory Agreement;
(iv) The Borrower has satisfied all conditions for the receipt of the d
second installment of the Tax Credit Investor Equity, consistent with Borrower's Partnership
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Agreement; a,
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(v) The City has received from Borrower current evidence of the c
insurance coverage meeting the requirements of Section 4.14 below;
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(vi) The City has received an approved a report setting forth: (1)the =
income, household size,race, and ethnicity of Tenants of the City-Assisted Units; (2)the unit
size,rent amount and utility allowance for all City-Assisted Units; and(3)the accessible units in v
the Development pursuant to Section 3.8(f); t�
(vii) The City has received a draft of the Final Cost Certification for the
Development from Borrower showing all uses and sources; E
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(viii) The City has received from Borrower and approved a form of a
Tenant lease;
(ix) The City has received from Borrower and approved the Marketing
Plan;
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Packet Pg. 406
(x) The City has received from Borrower and approved a copy of the
Services Plan for the provision of services to residents;
(xi) The City has received from Borrower all relevant contract activity
information, including compliance with Section 3 (including items included in Exhibit H of this
Agreement, incorporated herein by this reference)and MBE/WBE requirements;
(xii) Borrower has submitted a certification from the architect certifying d
that the City-Assisted Units have been constructed in compliance with Section 3.8(f)of this 2
Agreement;
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(xiii) The City has received from Borrower a copy of the management d
agreement and contact information for the property manager of the Development and the name
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and phone number of the on-site property manager; U)
(xiv) If Borrower is required to pay prevailing wages under the Davis- N
Bacon Act(40 U.S.C. 3141-3148),the Borrower has submitted copies of all certified payrolls to c
the City, and any identified payment issues have been resolved, or Borrower is working
diligently to resolve any such issues; and
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(xv) The City has received a written draw request from Borrower, E
including(1) certification that the conditions set forth in Section 2.6(a) continue to be satisfied,
(2)certification that the proposed use of funds is consistent with the Approved Development
Budget, (3)the amount of funds needed, and, (4)where applicable, a copy of the bill or invoice LO
covering a cost incurred or to be incurred.
(c) The Borrower hereby agrees and acknowledges that the City will have not
less than seventy(70)days from the date the City receives a completed draw request to disburse E
funds under this Section 2.6. L
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(d) All funds to be disbursed pursuant to this Agreement shall be available to 0
be disbursed to a Senior Lender, if and to the extent,the Senior Lender takes over the
construction of the Development,the Senior Lender agrees to be bound to the terms hereof and g
the Senior Lender has cured any Default of the Borrower. o
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Section 2.7 Repayment Schedule. v
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(a) Special Definitions. The following definitions apply to this Section 2.7:
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(i) "City Prorata Percentage"means the percentage resulting from E
dividing the Loan funds disbursed to Borrower in accordance with this Agreement,by the sum of
such Loan funds and the Housing Authority Loan funds disbursed (or deemed advanced for a
acquisition)to Borrower.
(ii) "Lenders' Share of Residual Receipts" means twenty-five percent
(25%)of the Residual Receipts, inclusive of any Residual Receipts payment due under the
Housing Authority Loan.
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(iii) "Residual Receipts" means for each calendar year, (i)the amount
of"Cash Flow"as such term is defined in the Partnership Agreement, minus (ii)all amounts
calculated pursuant to Sections 4.02(4)(i)-(ix) of such Partnership Agreement.
(iv) "Statement of Residual Receipts" means the annual statement of
income and expenses prepared by the Borrower and establishing."Cash Flow", accompanied by a
statement of all amounts calculated pursuant to Sections 4.02(a)(i)-(ix)of the Partnership
Agreement. The first Statement of Residual Receipts will cover the period that begins on the E
Completion Date and ends on December 31 St of that same year. Subsequent statements of
Residual Receipts will cover the twelve-month period that ends on December 31 of each year.
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(b) Annual Payments. Commencing on April 1 st of the year following the d
Completion Date, and on April 1 st of each year thereafter during the Term, Borrower shall make
a Loan payment in an amount equal to the City's Prorata Percentage of Lenders' Share of
Residual Receipts (each, an "Annual Payment"). The City shall apply all Annual Payments as in
follows: (1) first,to accrued interest, and(2) second,to principal. On or prior to the date that t`-
Borrower pays its Annual Payment, Borrower shall submit the following to the City:
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(i) A statement from the independent public accountant that audited
the Borrower's financial records for the relevant period,which statement must confirm that
Borrower's calculation of the Lenders' Share of Residual Receipts is consistent with the
definition herein; and
(ii) Any additional documentation reasonably required by the City to uo
substantiate Borrower's calculation of Lenders' Share of Residual Receipts.
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(c) Special Repayment From Net Proceeds. Subject to the rights of Senior a
Lenders and subject to HUD approval, and to the extent additional subordinate loan proceeds,
equity or surplus development sources following a cost certification, Surplus Cash or other non-
Project Assets are available, no later than ten(10) days after the date Borrower receives its final Q
Tax Credit Investor Equity contribution,Borrower may utilize any Net Proceeds of Permanent c
Financing(i) first to reduce or eliminate the outstanding balance of Deferred Developer Fee, (ii) w
then to repay the Housing Authority Acquisition Loan until its principal balance is $500,000; and
then to repay the Loan. No later than one hundred twenty(120)days following completion of x
construction of the Development,Borrower shall submit to the City for its review a preliminary
calculation of the Net Proceeds of Permanent Financing and a draft of the Final Cost v
Certification as defined Section 4.1 below. The City shall approve or disapprove Borrower's
determination of the amount of the Net Proceeds of Permanent Financing in writing within thirty
(30) days of receipt. If Borrower's determination is disapproved by the City, Borrower shall re-
submit documentation to the City until the City approval is obtained. s
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(d) Special Repayment For Un-leased Units. As required under 24 C.F.R. a
92.252, if Borrower fails to lease any one of the City-Assisted Units within eighteen(18)months
of the Completion of Construction of the Development,the Borrower shall pay to the City a
proportionate share of the indebtedness of Borrower to the City under this Agreement and the
Note attributable to each of the City-Assisted Units that has remained unleased for the entire
eighteen(18)month period,together with any accrued interest thereon calculated pursuant to
Section 2.2,which amount shall be immediately due and payable. Amounts required to be repaid
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8.A.h
pursuant to this subsection(d)that are not immediately repaid as required hereunder a result of
the limitations set forth in subsection(g) shall be added to the outstanding principal of the Loan
and become part of the secured obligation of the Borrower. _
(e) Payment in Full. Borrower shall pay all outstanding principal and accrued
interest on the Loan, in full, on the earliest to occur of: (i)an Event of Default, and (ii)the
expiration of the Term.
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(f) Prepayment. Borrower may prepay the Loan at any time without premium
or penalty. However,the Regulatory Agreement and the Deed of Trust will remain in effect for
the entire Term, regardless of any prepayment. z
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(g) Notwithstanding anything to the contrary in this Agreement, so long as the a'
Secretary of Housing and Urban Development("HUD") or his/her successor or assigns, are the
insurers or holders of the first mortgage on the Waterman Gardens Phase 1, FHA Project No.
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143-35131,payments on the Loan shall be payable only from the 75%of"Surplus Cash" or from 0-
non-Project Assets, as the terms "Surplus Cash" and"Project Assets" are defined in the
Regulatory Agreement for Multifamily Projects (the "HUD Regulatory Agreement")between
HUD and Borrower. The restrictions on payment imposed by the previous sentence shall not t�
excuse any default caused by the failure of the Borrower to pay the indebtedness evidenced by cc
the Note or this Agreement. Additionally,the Borrower's obligation to indemnify and hold the
City harmless shall be limited to available Surplus Cash of the Borrower or non-Project assets of
the Borrower, or available liability insurance proceeds. So long as the Secretary of Housing and
Urban Development or his/her successors or assigns, are the insurers or holders of the first LO
mortgage on the Waterman Gardens Phase 1, FHA Project No. 143-35131,the indemnifications
provisions in this Section 2.7 shall not apply to HUD.
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Section 2.8 Non-Recourse.
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Except as provided below, upon recordation of the Deed of Trust against the a
Property,neither Borrower,nor any partner of Borrower,will have any direct or indirect c
personal liability for payment of the principal of, and interest on,the Loan or the performance of w
the covenants of Borrower under the Deed of Trust. Following recordation of the Deed of Trust, 2
the sole recourse of the City with respect to the principal of, or interest on,the Note and defaults x
by Borrower in the performance of its covenants under the Deed of Trust will be to the property
described in the Deed of Trust;provided, however,that nothing contained in the foregoing v
limitation of liability limits or impairs the enforcement of all the rights and remedies of the City
against all such security for the Note, or impairs the right of City to assert the unpaid principal
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amount of the Note as demand for money within the meaning and intendment of Section 431.70
of the California Code of Civil Procedure or any successor provision thereto. The foregoing
limitation of liability is intended to apply only to the obligation to repay the principal of, and
payment of interest on the Note and the performance of Borrower's obligations under the Deed of Q
Trust. Except as hereafter set forth; nothing contained herein is intended to relieve Borrower of
its obligation to indemnify the City under Sections 3.8,4.6, 4.7, and 7.4 of this Agreement, or
liability for(i) loss or damage of any kind resulting from waste, fraud or willful
misrepresentation; (ii)the failure to pay taxes, assessments or other charges which may create
liens on the Property that are payable or applicable prior to any foreclosure under the Deed of
- Trust(to the full extent of such taxes, assessments or other charges); (iii)the fair market value of
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Packet Pg.409
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any personal property or fixtures removed or disposed of by Borrower other than in accordance
with the Deed of Trust; and(iv)the misappropriation of any proceeds under any insurance
policies or awards resulting from: (A)condemnation or the exercise of the power of eminent
domain; or(B)by reason of damage, loss or destruction to any portion of the Property. So long
as the Secretary of Housing and Urban Development or his/her successors or assigns, are the
insurers or holders of the first mortgage on the Waterman Gardens Phase 1,FHA Project No.
143-35131,the indemnifications provisions in this Section 2.8 shall not apply to HUD.
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Section 2.9 Other Financina. =
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(a) The Borrower is required to apply for and utilize,to the extent available, Z
Affordable Housing Program Funds ("AHP Loan") administered by the Federal Home Loan
Bank to partially finance the Development.
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(b) AHP Loan. The Borrower shall submit a timely and complete application N
for the AHP Loan which is subject to a competitive application process implemented by the
Federal Home Loan Bank of San Francisco and its member institutions. To satisfy the
requirements of this Section,the Borrower shall submit a timely and complete AHP Loan
application for the Affordable Housing Program's 2016 Round A Application. If the Borrower t�
does not receive an AHP Loan in the Affordable Housing Program's 2016 first round cycle,then
the City may confer with the Borrower in good faith for a period not to exceed sixty(60) days to
determine if the Borrower should submit a further application for an AHP Loan in a subsequent
application round or if a feasible and mutually acceptable alternate arrangement can be made to
finance the construction of the Development. Any agreement that is reached between the parties to
regarding an alternative financing plan for the Development shall be memorialized in an
amendment to this Agreement. Submitting a timely and complete application for an AHP Loan
shall be a condition precedent to the Agency's obligation to disburse the Completion Component. £
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(c) If and to the extent the Borrower receives an AHP Loan or additional v,
sources of permanent financing,the loan proceeds of the AHP Loan and the additional C
permanent financing, may, subject the consent of the lender of such funds, be utilized in c
accordance with Section 2.7(c). w
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ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT
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Section 3.1 Schedule of Performance. c9
Borrower shall perform the tasks described in the Schedule of Performance no later than
the dates set forth in the Schedule of Performance, subject to Section 7.15. The Schedule of L
Performance may be modified in writing by the City Manager on behalf of the City without the
need for formal amendment of this Agreement or further approval by the Mayor and Common a
Council.
Section 3.2 Permits and Approvals.
Borrower shall obtain all permits and approvals necessary for the construction of the
Development no later than the date set forth in the Schedule of Performance.
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Packet Pg. 410
Section 3.3 Construction Contract.
(a) Not later than thirty(30)days prior to the proposed Commencement of
Construction,Borrower shall submit to the City for its approval a draft of the proposed
construction contract for the Development(the "Construction Contract")with Borrower's general
contractor(the "General Contractor"). All construction work and professional services are to be
performed by persons or entities licensed or otherwise authorized to perform the applicable
construction work or service in the State of California. The Construction Contract is to provide
that at least ten percent(10%) of the costs incurred will be payable only upon completion of the
construction, or such other amount that may be allowed under a Senior Loan subject to written Z
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approval by the City. The Construction Contract must include all applicable HOME
requirements set forth in Section 4.6 below. The City's approval of the construction contract Cr
may not be deemed to constitute approval of or concurrence with any term or condition of the
construction contract except as such term or condition may be required by this Agreement. W=
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Borrower shall use its best efforts to coordinate with the local County Workforce
Development Department(WDD),and all other applicable County requirements,to maximize
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the practicable opportunity to participate in the construction of the Development. Borrower c�
shall, at a minimum,make contact with the County WDD and provide project information for
local hire opportunities. Documentation of such notifications must be maintained by Borrower
and available to the City as requested.
Section 3.4 Bid Package. Ln
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The Borrower shall cause Borrower's General Contractor to provide the Bid Package to ..
all subcontractors. d
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Section 3.5 Construction Bonds. $D
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Not later than thirty(30) days prior to the proposed Commencement of Construction c
Borrower shall deliver to the City copies of labor and material bonds and performance bonds for -J
the construction of the Development in an amount equal to one hundred percent(100%) of the 2
scheduled cost of the construction of the Development. Such bonds must name the City as a co- _
obligee.
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Section 3.6 Commencement of Construction. c�
Borrower shall cause the Commencement of Construction of the Development no later c
than the date set forth in the Schedule of Performance,which in no event shall be any later than r
twelve (12)months from the Effective Date. For the purposes of this Agreement,
"Commencement of Construction" means the date set for the start of construction of the
Development in the notice to proceed issued by Borrower to Borrower's general contractor. a
Section 3.7 Completion of Construction.
For purposes of this Agreement, "Completion of Construction" means the following:
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Packet Pg.411
(a) Borrower shall diligently prosecute construction of the Development to
completion, and shall cause the completion of the construction of the Development no later than
the date set forth in the Schedule of Performance.
(b) Borrower shall record a Notice of Completion within ten (10) days of
completion of construction of the Development and provide the City Manager a copy of the
recorded Notice of Completion.
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(c) Borrower shall provide the City Manager a copy of the Certificate of
Occupancy, or other evidence of completion of the Development,within ten (10) days of receipt
from the City. Z
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Section 3.8 Construction Pursuant to Plans and Laws; Prevailing Wages; Cr
Accessibility.
(a) Borrower shall construct the Development in conformance with the N
Construction Plans approved by the City's Building Department. Borrower shall notify the City
in a timely manner of any changes in the work required to be performed under this Agreement, o
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including any additions; changes, or deletions to the Construction Plans. A written change order
authorized by the City must be obtained before any of the following changes, additions, or
deletions in work for the Development may be performed: (i)any change in the work the cost of
which exceeds Seventy-Five Thousand Dollars($75,000); or(ii)any set of changes in the work
the cost of which cumulatively exceeds One Hundred Twenty-Five Thousand Dollars
($125,000). Consent to any additions, changes, or deletions to the work do not relieve or release
Borrower from any other obligations under this Agreement, or relieve or release Borrower or its
surety from any surety bond.
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(b) Borrower shall cause all work performed in connection with the
Development to be performed in compliance with: a,
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(i) all applicable laws, ordinances, rules and regulations of federal, o
state, county or municipal governments or agencies now in force or that may be enacted _J
hereafter, including without limitation and to the extent applicable,the prevailing wage E
provisions of the federal Davis-Bacon Act and implementing rules and regulations, as further set =
forth in subsection(c)below, and state prevailing wages pursuant to California Labor Code r
Section 1770 et seq., and the regulations pursuant thereto, as further set forth in subsection(d)
below;
(ii) the property standards set out in 24 C.F.R. 5.701 et sue. and 24
C.F.R. 92.251 or adopted by the City in conformance therewith; and L
(iii) all directions, rules and regulations of any fire marshal,health
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officer,building inspector, or other officer of every governmental agency now having or
hereafter acquiring jurisdiction. The work will proceed only after procurement of each permit,
license, or other authorization that may be required by any governmental agency having
jurisdiction, and Borrower shall be responsible to the City for the procurement and maintenance
thereof, as may be required of Borrower and all entities engaged in work on the Development.
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Packet Pg. 412
(c) The Borrower shall cause construction of the Development to be in
compliance with the prevailing wage requirements of the federal Davis-Bacon Act(40 U.S.C.
3141-3148)and the attached labor compliance provisions in the attached Exhibit H incorporated
herein by this reference. Borrower shall indemnify, hold harmless and defend(with counsel
reasonably acceptable to the City)the City against any claim for damages, compensation, fines,
penalties or other amounts arising out of the failure or alleged failure of any person or entity
(including Borrower, its contractor and subcontractors)to pay prevailing wages as determined
pursuant to the prevailing wage provisions of the federal Davis-Bacon Act and implementing
rules and regulations in connection with the construction of the Development or any other work
undertaken or in connection with the Property. The requirements in this Subsection survive a
repayment of the Loan and the reconveyance of the Deed of Trust. Borrower agrees and Z
acknowledges that the City will monitor compliance with federal Davis-Bacon Act requirements,
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and will make best efforts to coordinate with HUD.
(d) The Borrower shall pay and shall cause the contractor and subcontractors in
to pay prevailing wages in the construction of the Development as those wages are determined Cl.-
pursuant to California Labor Code Section 1720 et seq.,to employ apprentices as required by
California Labor Code Sections 1777.5 et seq., and the implementing regulations of the
Department of Industrial Relations (the "DIR"). Borrower shall and shall cause the contractor
and subcontractors to comply with the other applicable provisions of California Labor Code
Sections 1720 et seq., 1777.5 et seq., and implementing regulations of the DIR. Borrower shall
and shall cause the contractor and subcontractors to keep and retain such records as are necessary
to determine if such prevailing wages have been paid as required pursuant to California Labor
Code Section 1720 et seq., and apprentices have been employed are required by California Labor M
Code Section 1777.5 et seq. Copies of the currently applicable current per diem prevailing wages
are available from DIR. During the construction of the Development, Borrower shall or shall
cause the contractor to post at the Property the applicable prevailing rates of per diem wages. E
Borrower shall indemnify,hold harmless and defend (with counsel reasonably acceptable to the
City)the City against any claim for damages, compensation, fines,penalties or other amounts Q
arising out of the failure or alleged failure of any person or entity(including Borrower, its
contractor and subcontractors)to pay prevailing wages as determined pursuant to California �
Labor Code Section 1720 et seq.,to employ apprentices pursuant to California Labor Code W
Section 1777.5 et seq., and implementing regulations of the DIR or to comply with the other
applicable provisions of California Labor Code Sections 1720 et seq., 1777.5 et seq., and the X,
implementing regulations of the DIR in connection with the construction of the Development or v
any other work undertaken or in connection with the Property. The requirements in this
Subsection survive the repayment of the Loan, and the reconveyance of the Deed of Trust. So
long as the Secretary of Housing and Urban Development or his/her successors or assigns, are
the insurers or holders of the first mortgage on the Waterman Gardens Phase 1,FHA Project No. E
143-35131, the indemnification provisions in this Section 3.8 shall not apply to HUD.
(e) The general contractor and all Subcontractors shall be required to pay their a
laborers and mechanics employed under this Contract, a wage not less than minimum wage
classification, as specified in the applicable Federal law when the Contract amount for the Prime
contract exceeds $2,000. The General Contractor is responsible for ensuring Subcontractor
compliance with Davis-Bacon and Related Act Requirements. Federal Labor Standards
Provisions (HUD 4010)apply to this Development. Certified payroll submitted to the City are
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Packet Pg. 413
8.A.h
required during the term of construction. Payment of disbursement components may be delayed
when certified payrolls are not properly submitted.
(f) The Borrower shall construct the Development to comply with all
applicable federal and state disabled persons accessibility requirements including but not limited
to the Federal Fair Housing Act, Section 504 of the Construction Act of 1973, Title II and/or
Title III of the Americans with Disabilities Act of 1990, Title 24 of the California Code of
Regulations and the Uniform Federal Accessibility Standards ("UFAS"). In compliance with E
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794, et sue.), a minimum of four(4)
units in the Development shall be constructed to be readily accessible and usable by households m
with a mobility impaired member and a minimum of two (2)units shall be constructed and to be Z
readily accessible and usable by households with a hearing or visually impaired member. All
City-Assisted Units in the Development shall also be built to comply with the Uniform Federal
Accessibility Standards under 49 C.F.R. 31528.
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Section 3.9 Equal Opportunity. C.'
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During the construction of the Development discrimination on the basis of race, color, Io
creed, religion, age, sex, gender, gender identity, gender expression, sexual orientation,marital c�
status, national origin, ancestry, military and veteran status, or disability in the hiring, firing,
promoting, or demoting of any person engaged in the construction work is not allowed.
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Section 3.10 Minority and Women-Owned Contractors.
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Borrower shall use its best efforts to afford minority-owned and women-owned business
enterprises the maximum practicable opportunity to participate in the construction of the
Development. Borrower shall, at a minimum, notify applicable minority-owned and women- d
owned business firms located in San Bernardino County of bid opportunities for the construction
of the Development. A listing of minority owned and women owned businesses located in the
County and neighboring counties is available from the County. Documentation of such Q
notifications must be maintained by Borrower and available to the City as requested. o
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Section 3.11 Progress Reports. 2
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Until such time as Borrower has received a Certificate of Occupancy from the City for
the Development,Borrower shall provide the City with quarterly progress reports regarding the v
status of the construction of the Development, including a certification that the actual
construction costs to date conform to the Approved Development Budget, as it may be amended
from time to time pursuant to Section 3.15 below.
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Section 3.12 Construction Responsibilities.
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(a) Borrower is responsible for the coordination and scheduling of the work to
be performed so that commencement and completion of the construction of the Development
will take place in accordance with this Agreement.
(b) Borrower is solely responsible for all aspects of Borrower's conduct in
connection with the Development, including(but not limited to)the quality and suitability of the
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Packet Pg. 414
`8IA�i
plans and specifications,the supervision of construction work,and the qualifications, financial
condition, and performance of all architects, engineers, contractors, subcontractors, suppliers,
consultants, and property managers. Any review or inspection undertaken by the City with
reference to the Development is solely for the purpose of determining whether Borrower is
properly discharging its obligations to the City, and may not be relied upon by Borrower or by
any third parties as a warranty or representation by the City as to the quality of the design or
construction of the Development.
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Section 3.13 Mechanics Liens, Stop Notices, and Notices of Completion.
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(a) If any claim of lien is filed against the Property or a stop notice affecting Z
the Loan is served on the City or any other lender or other third party in connection with the d
Development,then Borrower shall,within twenty(20)days after such filing or service, either Cr
pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by U)
delivering to the City a surety bond in sufficient form and amount, or provide the City with other y
assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged. c`'
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(b) If Borrower fails to discharge any lien, encumbrance, charge, or claim in
the manner required in this Section,then in addition to any other right or remedy,the City may t�
(but is under no obligation to) discharge such lien, encumbrance, charge, or claim at Borrower's
expense. Alternately,the City may require Borrower to immediately deposit with the City the
amount necessary to satisfy such lien or claim and any costs,pending resolution thereof. The
City may use such deposit to satisfy any claim or lien that is adversely determined against
Borrower. LO
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(c) Borrower shall file a valid notice of cessation or notice of completion
upon cessation of construction work on the Development for a continuous period of thirty(30) E
days or more, and take all other steps necessary to forestall the assertion of claims of lien against
the Property. Borrower authorizes the City, but the City has no obligation,to record any notices Q
of completion or cessation of labor, or any other notice that the City deems necessary or =
desirable to protect its interest in the Development and Property. o
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Section 3.14 Inspections. E
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Borrower shall permit and facilitate, and shall require its contractors to permit and r
facilitate, observation and inspection at the Development, during construction and after v
completion of construction,by the City and by any public authorities during reasonable business
hours for the purposes of determining compliance with this Agreement. Borrower agrees and
acknowledges that the City must conduct or cause to be conducted on-site inspections, consistent d
with the requirements of 24 C.F.R. 92.504(d),to determine compliance with the property r
standards set forth in 24 C.F.R. 92.251, at least.once every three (3)years after the completion of o
construction of the Development. Q
After the completion of an inspection the City shall deliver a copy of the inspection
report to the Borrower. If the City determines as a result of such inspection that there are any
life-threatening health and safety related deficiencies, Borrower has the obligation to correct
such deficiencies immediately, in accordance with 24 C.F.R. 92.251. If the City determines as a
result of the inspection that there are any deficiencies for any of the inspectable items in the
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Packet Pg. 415
8.A.h
Development,the Borrower shall correct such deficiencies within fifteen(15) days from the
delivery of the inspection report or if a period longer than fifteen(15) days is reasonably
necessary to correct the deficiency,then Borrower must begin to correct the deficiency within
fifteen(15)days and correct the deficiency as soon as reasonably possible. In addition,the
Borrower acknowledges that the City may re-inspect the Development to verify all deficiencies
have been corrected or rely on third party documentation submitted by the Borrower for non-
hazardous deficiencies in conformance with 24 C.F.R. 92.504(d).
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Section 3.15 Approved Development Budget; Revisions to Budget.
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As of the date of this Agreement,the City has approved the Approved Development Z
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Budget set forth in Exhibit B. Borrower shall.submit any proposed or required amendments to
the Approved Development Budget, along with evidence that the changes to the Approved
Development Budget are reasonable and necessary,to the City for approval within five(5)days U)
of the date Borrower receives information indicating that actual costs of the Development vary or in
will vary from the costs shown on the Approved Development Budget,which approval shall not
be unreasonably withheld or delayed. Written consent of the City will be required to amend the
Approved Development Budget. The City will make best efforts to respond in writing within
seven (7)days after receipt of a proposed amendment to the Approved Development Budget. t�
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Section 3.16 Developer Fee. E
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(a) The maximum cumulative Developer Fee that may be paid to any entity or
entities providing development services to the Development, whether paid up-front or on a LO
deferred basis,may not exceed Two Million Dollars ($2,000,000), of the Deferred Developer
Fee (defined in Section 1.1(e)(v))may be deferred, and in no event may exceed the amount
allowed by TCAC and as approved by the City. For the purposes of this Agreement "Developer
Fee" has the meaning set forth in California Code of Regulations, Title 4, Section 10302. Except
for the Developer Fee,no compensation from.any source shall be received by or be payable to c,
the Borrower or any affiliate of the Borrower in connection with the provision of development
and construction management services for the acquisition and construction of the Development. 0
(b) Cost savings at completion. Pursuant to Section 2.7(c),the Borrower may 2
request to reduce the outstanding balance of the Deferred Developer Fee subject to the City's =
reasonable approval.No City approval is required in order to increase the Deferred Developer Y
Fee.
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Section 3.17 Marketing Plan.
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(a) No later than six(6)months prior to the projected date of the Completion r
of Construction of the Improvements, Borrower shall submit to the City for approval its plan for
marketing the Development to income-eligible households as required pursuant to the a
Regulatory Agreement, including information on affirmative marketing efforts and compliance
with fair housing laws and 24 C.F.R. 92.351(a) (the "Marketing Plan").
(b) Upon receipt of the Marketing Plan,the City will promptly review the
Marketing Plan and will approve or disapprove it within fifteen(15) days after submission. If
the Marketing Plan is not approved, Borrower shall submit a revised Marketing Plan within
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Packet Pg.416
fifteen(15)days. Borrower shall follow this procedure for resubmission of a revised Marketing
Plan until the Marking Plan is approved by the City.
(c) If after five (5)months after the Completion of Construction any City-
Assisted Unit remains unoccupied,the Developer shall submit a detail report of the ongoing
marketing efforts, and if deemed appropriate by the City, any necessary amendments or updates
to the Marketing Plan aimed at ensuring any unoccupied City-Assisted Unit is promptly leased.
If any of the City-Assisted Units remain unoccupied eleven (11)months after the Completion of E
Construction,the Developer shall submit a detailed report of the ongoing marketing efforts and
submit to the City an update to the Marketing Plan. Failure to lease all of the City-Assisted a
Units to an eligible tenant within eighteen(18)months of Completion of Construction shall Z
trigger the special repayment pursuant to Section 2.7(d).
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Section 3.18 Tenant Services Plan and Budget.
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(a) Borrower will be providing (or arranging the provision of)on-site services C•
to all tenants in the Development(the "Tenant Services"). No later than six(6)months prior to
the projected date of the Completion of Construction of the Improvements, Borrower shall
submit to the City for approval a proposed services plan which shall include written guidelines or c�
procedures for providing the Tenant Services (the "Services Plan"), and a proposed budget for
the provision of Tenant Services (the "Services Budget").
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(b) The Services Plan shall include the types of Tenant Services provided,
staffing levels (including caseload and hours of employment), and overall coordination of the LO
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Tenant Services. ">
(c) The Services Budget shall show required expenditures from Annual a
Operating Expenses in an approximate amount of Fourteen Thousand Eight Hundred Eighty
Dollars($14,880) ($1,240 per Month) subject to an annual increase that is equal to the greater of
three percent(3%)or the percentage increase in CPI to fund Tenant Services.
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(d) Upon receipt of the proposed Services Plan and Services Budget,the City _J
shall promptly review the proposed Services Plan and Services Budget and shall approve or 2
disapprove them within thirty (30) days after submission. If either the Services Plan or Services X
Budget is not approved,the Borrower shall submit a revised Services Plan and/or Services
Budget within thirty(30) days following the Borrower's receipt of the City's written disapproval. v
If the City does not approve the revised Services Plan and/or Services Budget because the
Borrower fails to make specific revisions requested by the City,the Borrower shall be in default
hereunder. _
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(e) It is currently anticipated that the Borrower will provide additional social
services to Tenants in the Development in excess of those payable from Annual Operating Q
Expenses. The Borrower hereby agrees to make best efforts to apply for and obtain social
services funding to fund approximately Nine Thousand Dollars ($9,000)of additional Tenant
Services at the Development, subject to an annual increase that is equal to the greater of three
percent(3%) or the percentage increase in CPI. To the extent that the Developer obtains such
funding, such funding shall be excluded from Operating Income and shall instead be dedicated to
paying for the additional Tenant Services. If Borrower is unable to obtain additional funds for
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Packet Pg. 417
8.A.h
Tenant Services or to the extent the Developer receives less than the amount necessary to fund
the additional social services actually provided to Tenants of the Development approved under
the Services Plan and Services Budget,the City hereby agrees that Borrower shall be allowed to
accrue such amounts and be paid for such services from future Operating Income.
ARTICLE 4. LOAN REQUIREMENTS
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Section 4.1 Financial Accountings and Post-Completion Audits.
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(a) No later than ninety(90) days following issuance of the Certificate of Z
Occupancy for the Development, Borrower shall provide-to the City for its review and approval a
financial accounting of all sources and uses of funds for the Development.
(b) No later than one hundred fifty(150)days following Completion of
Construction of the Development,Borrower shall submit an audited financial report showing the
sources and uses of all funds utilized for the Development. This requirement may be satisfied by
providing the Final Cost Certification to the City. "Final Cost Certification" means the Final
Cost Certification Sources and Uses of Funds prepared by Borrower for the Development that:
(i)Borrower submits to TCAC; and(ii)has been prepared using generally accepted accounting
procedures in effect in the United States from time to time, consistently applied.
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Section 4.2 Annual Operating Budget.
At the beginning of each year of the Term, Borrower shall provide to the City an annual
budget for the operation of the Development. Unless rejected by the City in writing within
fifteen (15) days after receipt of the budget,the budget will be deemed accepted. If rejected by
the City in whole or in part, Borrower shall submit a new or corrected budget within thirty (30) (D
calendar days of notification of the City's rejection and the reasons therefor. The provisions of
this Section relating to time periods for resubmission of new or corrected budgets will continue Q
to apply until such budget has been approved by the City. c
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Section 4.3 Information.
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Borrower shall provide any information reasonably requested by the City in connection
with the Development, including(but not limited to)any information required by HUD in v
connection with Borrower's use of the Loan funds. c�
Section 4.4 Records.
a)
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(a) Borrower shall keep and maintain at the Development, or elsewhere with v
the City's written consent, full, complete and appropriate books,records and accounts relating to a
the Development, including all such books, records and accounts necessary or prudent to
evidence and substantiate in full detail Borrower's calculation of Residual Receipts, and
disbursements of Residual Receipts. Books,records and accounts relating to Borrower's
compliance with the terms,provisions, covenants and conditions of this Agreement are to be kept
and maintained in accordance with generally accepted accounting principles consistently applied,
and are to be consistent with requirements of this Agreement. All such books, records, and
23
Packet Pg.418
8.A.h
accounts are to be open to and available for inspection and copying by HUD,the City, its
auditors or other authorized representatives at reasonable intervals during normal business hours.
Copies of all tax returns and other reports that Borrower may be required to furnish to any
governmental agency are to be open for inspection by the City at all reasonable times at the place
that the books,records and accounts of Borrower are kept. Borrower shall preserve such records
for a period of not less than five (5) years after the creation of such records in compliance with
all HUD records and accounting requirements. If any litigation, claim, negotiation, audit
exception, monitoring, inspection or other action relating to the use of the Loan is pending at the .,
end of the record retention period stated herein,then Borrower shall retain the records until such
action and all related issues are resolved. The records are to include all invoices,receipts, and 4)
other documents related to expenditures from the Loan funds. Borrower shall cause records to ?
be accurate and current and in such a form as to allow the City to comply with the record
keeping requirements contained in 24 C.F.R. 92.508. Such records are to include but are not 0)
limited to:
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(i) Records providing a full description of the activities undertaken y
with the use of the Loan funds.
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(ii) Records demonstrating compliance with City and HUD property
standards and lead-based paint requirements, including, as applicable,the Uniform Physical v
Conditions Standards established by HUD pursuant to 24 C.F.R. 5.703;
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(iii) Records documenting compliance with the fair housing, equal
opportunity, and affirmative fair marketing requirements;
M
(iv) Financial records as required by 24 C.F.R. 92.505, and OMB r
Circular A-110 (24 C.F.R. Part 84);
a)
(v) Records demonstrating compliance with the Tenant Selection Plan as
requirements pursuant to 24 C.F.R. 92.253(d), and HOME affordability and income Q
requirements;
0
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(vi) Records demonstrating compliance with MBE/WBE requirements; 2
0
x
(vii) Records demonstrating compliance with 24 C.F.R. Part 135 which
implements Section 3 of the Housing Development Act of 1968 (including those in Exhibit H of v
this Agreement);
(viii) Records demonstrating compliance with applicable relocation c
requirements, which must be retained for at least five (5)years after the date by which persons E
displaced from the property have received final payments; R
Q
(ix) Records demonstrating compliance with labor requirements
including certified payrolls from Borrower's General Contractor evidencing that applicable
prevailing wages have been paid.
(x) Records demonstrating compliance with 24 C.F.R. 8.20.
24
Packet Pg.419
R.A.h
(b) The City shall notify Borrower of any records it deems insufficient.
Borrower has fifteen(15) calendar days after the receipt of such a notice to correct any
deficiency in the records specified by the City in such notice, or if a period longer than fifteen
(15)days is reasonably necessary to correct the deficiency,then Borrower must begin to correct
the deficiency within fifteen(15) days and correct the deficiency as soon as reasonably possible.
Section 4.5 City Audits. .,
E
(a) Each year,Borrower shall provide the City with a copy of Borrower's
annual audit,which is to include information on all of Borrower's activities, in addition the
Borrower's general partners shall submit audited financial statements and the Borrower and the Z
Borrower's general partners shall submit all other financial information reasonably requested by d
the City determined by the City as necessary for compliance with the requirements of 24 C.F.R.
504(d). Borrower shall also follow audit requirements of the Single Audit Act and OMB
Circulars A-122 and 110. in
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(b) In addition,the City or any designated agent or employee of the City at
any time is entitled to audit the Residual Receipts of the Development, and all of Borrower's Io
books, records, and accounts pertaining thereto. Such audit is to be conducted during normal c�
business hours at the principal place of business of Borrower and other places where records are
kept. Immediately after the completion of an audit,the City shall deliver a copy of the results of E
the audit to Borrower. If it is determined as a result of such audit that there has been a deficiency
in a loan repayment to the City,then such deficiency will become immediately due and payable
with interest at the Default Rate from the date the deficient amount should have been p aid. In LO
addition, if any audit conducted pursuant to this Section 4.5 determines that Residual Receipts
have been understated for any fiscal year by more than five percent(5%),then the Borrower
shall pay, in addition to the amounts set forth above, all of the costs and expenses incurred by the
City in connection with the audit and review of Borrower's accounts or records.
L
Section 4.6 HOME Requirements.
0
(a) Borrower shall comply with all applicable laws and regulations governing w
the use of the HOME Loan funds as set forth in 24 C.F.R. Part 92, including the requirements of o
the Regulatory Agreement. In the event of any conflict between this Agreement and applicable x
laws and regulations governing the use of the Loan funds,the applicable laws and regulations
govern. During the HOME Term,these requirements are federal requirements, implemented by
the City;thereafter,these requirements are deemed local City requirements.
r
(b) The laws and regulations governing the use of the Loan funds include (but
are not limited to)the following: E
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(i) Eligible Project Costs. Restrictions on funding only eligible Q
project costs as defined under 24 C.F.R. 92.206 (subject to Section 2.3 above).
(ii) Environmental and Historic Preservation. 24 C.F.R. Part 50 and
24 C.F.R. Part 58, which prescribe procedures for compliance with the National Environmental
Policy Act of 1969 (42 U.S.C. 4321-4361), and the additional laws and authorities listed at 24
C.F.R. 58.5.
25
Packet Pg.420
(iii) Applicability of OMB Circulars. The applicable policies,
guidelines, and requirements of OMB Circulars Nos.A-87, A-102,Revised,A-110,A-122, and
A-133.
(iv) Debarred, Suspended or Ineligible Contractors. The prohibition on
the use of debarred, suspended, or ineligible contractors set forth in 24 C.F.R. Part 24.
(v) Civil Rights, Housing and Community Development,and Agee
Discrimination Acts. The Fair Housing Act(42 U.S.C. 3601 et seq.) and implementing =
regulations at 24 C.F.R. Part 100; Title VI of the Civil Rights Act of 1964 as amended; Title VIII
of the Civil Rights Act of 1968 as amended; Section 104(b)and Section 109 of Title I of the Z
Housing and Community Development Act of 1974 as amended; Section 504 of the Construction
Act of 1973 (29.USC 794, et S�Mc.);the Age Discrimination Act of 1975 (42 USC 6101, et SeMc.);
Executive Order 11063 as amended by Executive Order 12259 and implementing regulations at
24 C.F.R. Part 107; Executive Order 11246 as amended by Executive Orders 1 1375, 12086, co
11478, 12107; Executive Order 11625 as amended by Executive Order 12007; Executive Order C'.
12432; Executive Order 12138 as amended by Executive Order 12608,Executive Order 13672
concerning Gender Identity.
(vi) Lead-Based Paint. The requirement of the Lead-Based Paint M
Poisoning Prevention Act, as amended (42 U.S.C. 4821 et se .),the Residential Lead-Based E
Paint Hazard Reduction Act(42 U.S.C. 4851 et sec.), and implementing regulations at 24 C.F.R.
Part 35.
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(vii) Relocation. The requirements of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601, et seq.), and r
implementing regulations at 49 C.F.R. Part 24; 24 C.F.R. 570.606; Section 104(d)of the
Housing and Community Development Act of 1974 and implementing regulations at 24 C.F.R.
42 et seq.; 24 C,F.R. 92.353; and California Government Code Section 7260 et seMc. and
implementing regulations at 25 California Code of Regulations Sections 6000 et seq. If and to
the extent that development of the Development results in the permanent or temporary o
displacement of residential tenants,homeowners, or businesses,then Borrower shall comply with w
all applicable local, state, and federal statutes and regulations with respect to relocation planning, M
0
advisory assistance, and payment of monetary benefits. Borrower shall prepare and submit a =
relocation plan to the City for approval. Borrower is solely responsible for payment of any te
relocation benefits to any displaced persons and any other obligations associated with complying
with such relocation laws. Borrower shall indemnify, defend(with counsel reasonably chosen
b the City),y), and hold harmless the City against all claims that arise out of relocation obligations
to residential tenants, homeowners, or businesses permanently or temporarily displaced by the
Development. s
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(viii) Discrimination against the Disabled. The requirements of the Fair a
Housing Act(42 U.S.C. 3601 et sec.)and implementing regulations at 24 C.F.R. Part 100;
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794),the Uniform Federal Accessibility
Standards (24 C.F.R. 8.20, et seq. 8.51) and federal regulations issued pursuant thereto,which
prohibit discrimination against the disabled in any federally assisted program,the requirements
of the Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157)and the applicable requirements
26
Packet Pg.421
R.A.h
of Title lI and/or Title III of the Americans with Disabilities Act of 1990(42 U.S.C. 12131 et
sM.), and federal regulations issued pursuant thereto.
(ix) Clean Air and Water Acts. The Clean Air Act,as amended, 42
U.S.C. 7401 et sue.,the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251 et
sue., and the regulations of the Environmental Protection Agency with respect thereto, at 40
.C.F.R. Part 1500, as amended from time to time.
E
d
(x) Uniform Administrative Requirements. The provisions of 24
C.F.R. 92.505 regarding cost and auditing requirements.
Z
(xi) Training Opportunities. The requirements of Section 3 of the
Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 170lu("Section 3")and a
implementing regulations 24 C.F.R. 135 et seq., requiring that to the greatest extent feasible n
opportunities for training and employment be given to lower income residents of the project area CO
and agreements for work in connection with the project be awarded to business concerns which C.•
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are located in, or owned in substantial part by persons residing in,the areas of the project.
Borrower agrees to include the following language in all subcontracts executed under this
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Agreement:
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(1) The work to be performed under this contract is subject to E
the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended,
12 U.S.C. 1701u. The purpose of Section 3 is to ensure that employment and other economic
opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3, shall,
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to the greatest extent feasible, be directed to low- and very low-income persons,particularly
persons who are recipients of HUD assistance for housing.
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(2) The parties to this contract agree to comply with HUD's 4)
regulations in 24 C.F.R. Part 135, which implement Section 3. As evidenced by their execution M
of this contract,the parties to this contract certify that they are under no contractual or other Q
impediment that would prevent them from complying with the Part 135 regulations. o
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(3) The contractor agrees to send to each labor organization or 2
representative of workers with which the contractor has a collective bargaining agreement or =
other understanding, if any, a notice advising the labor organization or workers'representative of
the contractor's commitments under this Section 3 clause; and will post copies of the notice in v
conspicuous places at the work site where both employees and applicants for training and
employment positions can see the notice. The notice shall describe the Section 3 preference;
shall set forth minimum number and job titles subject to hire; availability of apprenticeship and
training positions;the qualifications for each;the name and location of the person(s)taking E
applications for each of the positions; and the anticipated date the work shall begin.
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(4) The contractor agrees to include this Section 3 clause in
every subcontract subject to compliance with regulations in 24 C.F.R. Part 135, and agrees to
take appropriate action, as provided in an applicable provision of the subcontract or in this
Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24
C.F.R. Part 135. The contractor will not subcontract with any subcontractor where the contractor
27
Packet Pg.422
has notice or knowledge that the subcontractor has been found in violation of the regulations in
24 C.F.R. Part 135.
(5) The contractor will certify that any vacant employment
positions, including training positions,that are filled(1)after the contractor is selected but before
the contract is executed, and(2)with persons other than those to whom the regulations of 24
C.F.R. Part 135 require employment opportunities to be directed,were not filled to circumvent
the contractor's obligations under 24 C.F.R. Part 135.
(6) Noncompliance with HUD's regulations in 24 C.F.R. Part 4)
135 may result in sanctions,termination of this contract for default, and debarment or suspension Z
from future HUD assisted contracts. a
(7) With respect to work performed in connection with Section
3 covered Indian housing assistance, section 7(b) of the Indian Self-Determination and Education CO
Assistance Act(25 U.S.C. 450e)also applies to the work to be performed under this contract. C•
Section 7(b)requires that to the greatest extent feasible (i)preference and opportunities for a
training and employment shall be given to Indians, and(ii)preference in the award of contracts
and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises. 0
Parties to this contract that'are subject to the provisions of Section 3 and section 7(b) agree to
comply with Section 3 to the maximum extent feasible, but not in derogation of compliance with
a)
section 7(b).
(xii) Labor Standards. The labor requirements set forth in 24 C.F.R.
CO
92.354;the prevailing wage requirements of the Davis-Bacon Act and implementing rules and
regulations (40 U.S.C. 3141-3148);the Copeland "Anti-Kickback"Act(40 U.S.C. 276(c))which
requires that workers be paid at least once a week without any deductions or rebates except E
permissible deductions;the Contract Work Hours and Safety Standards Act—CWHSSA(40 a
U.S.C. 3701-3708)which requires that workers receive "overtime" compensation at a rate of 1- Q
1/2 times their regular hourly wage after they have worked forty(40) hours in one (1)week; and
Title 29, Code of Federal Regulations, Subtitle A, Parts 1, 3 and 5 are the regulations and o
procedures issued by the Secretary of Labor for the administration and enforcement of the Davis- w
Bacon Act, as amended. 2
M
(xiii) Drug Free Workplace. The requirements of the Drug Free
Workplace Act of 1988 (P.L. 100-690) and implementing regulations at 24 C.F.R. Part 24. v
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(xiv) Anti-Lobbying; Disclosure Requirements. The disclosure
requirements and prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 C.F.R.
Part 87. E
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(xv) Historic Preservation. The historic preservation requirements set a
forth in the National Historic Preservation Act of 1966,as amended(16 U.S.C. Section 470) and
the procedures set forth in 36 C.F.R. Part 800. If archeological, cultural,or historic period
resources are discovered during construction, all construction work must come to a halt and
Borrower shall immediately notify the City. Borrower shall not shall alter or move the
discovered material(s)until all appropriate procedures for "post-review discoveries" set forth in
Section 106 of the National Historic Preservation Act have taken p lace which include but are
28
Packet Pg. 423
8.A.h
not limited to, consultation with the California State Historic Preservation Officer and evaluation
of the discovered material(s)by a qualified professional archeologist.
(xvi) Flood Disaster Protection. The requirements of the Flood Disaster
Protection Act of 1973 (P.L. 93-234) (the "Flood Act"). No portion of the assistance provided
under this Agreement is approved for acquisition or construction purposes as defined under
Section 3(d)of the Flood Act, for use in an area identified by HUD as having special flood
hazards which is not then in compliance with the requirements for participation in the national
flood insurance program pursuant to Section 201(d)of the Flood Act. The use of any assistance
provided under this Agreement for such acquisition or construction in such identified areas in
communities then participating in the National Flood Insurance Program is subject to the ?
mandatory purchase of flood insurance requirements of Section 102(a) of the Flood Act. If the
Property is located in an area identified by HUD as having special flood hazards and in which
the sale of flood insurance has been made available under the National Flood Insurance Act of
1968, as amended, 42 U.S.C. 4001 et seq.,the property owner and its successors or assigns must U)
obtain and maintain, during the ownership of the Property, such flood insurance as required with N
respect to financial assistance for acquisition or construction purposes under-Section 102(s)of
the Flood Act. Such provisions are required notwithstanding the fact that the construction on the
Property is not itself funded with assistance provided under this Agreement. 0
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(xvii) Religious Organizations. If the Borrower is a religious E
organization, as defined by the HOME requirements,the Borrower shall comply with all
conditions prescribed by HUD for the use of HOME funds by religious organizations, including
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the First Amendment of the United States Constitution regarding church/state principles and the
applicable constitutional prohibitions set forth in 24 C.F.R. 92.257.
c
(xviii) HUD Regulations. Any other HUD regulations present or as may
be amended, added, or waived in the future pertaining to the Loan funds.
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(c) To be eligible to receive disbursements of the Construction Component =
and the Completion Component,the Borrower's sole and managing general partner, or its sole o
member, must meet the legal and organizational characteristics described in 24 C.F.R. 92.2 and W
must have been and continues to be annually certified as a CHDO by the City. The City hereby M
acknowledges and agrees that Borrower may request to substitute the sole member of its sole and =
managing general partner, or the sole member of the general partner, for the purpose of v
complying with the requirements of this subsection(c) at any time prior to the disbursement of
the Construction Component and Completion Component. Any time prior to the Construction
Closing,the Borrower may request in writing to substitute the sole member of its sole and u
managing general partner, and the City hereby agrees to such substitution so long as the entity
substituted entity meets the requirements hereof and expressly agrees to assume the obligations
of the Borrower's sole and managing general partner hereunder. Notwithstanding anything to V
the contrary, if at any time after the execution of this document,the City determines that the Q
Borrower's sole and managing general partner does not satisfy the conditions hereunder,the City
may at its sole and absolute discretion choose not to disburse the Construction Component and
the Completion Component. So long as the Secretary of Housing and Urban Development or
his/her successors or assigns, are the insurers or holders of the first mortgage on the Waterman
Gardens Phase 1, FHA Project No. 143-35131, any substitutions under this Section 4.6 (c) shall
be subject to prior HUD approval.
29
Packet Pg. 424
Section 4.7 Hazardous Materials.
(a) Borrower shall keep and maintain the Property in compliance with, and
may not cause or permit the Property to be in violation of any federal, state or local laws,
ordinances or regulations relating to industrial hygiene or to the environmental conditions on,
under or about the Property including, but not limited to, soil and ground water conditions.
Borrower may not use, generate, manufacture, store or dispose of on, under, or about the
Property or transport to or from the Property any flammable explosives, radioactive materials, d
hazardous wastes,toxic substances or related materials, including without limitation, any
substances defined as or included in the definition of"hazardous substances," hazardous wastes," a
"hazardous materials,"or "toxic substances"under any applicable federal or state laws or Z
regulations(collectively referred to hereinafter as "Hazardous Materials") except such of the 3
foregoing as may be customarily used.in construction of projects like the Development or kept
and used in and about residential property of this type.
(b) Borrower shall immediately advise the City in writing if at any time it
to
receives written notice of(i)any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against Borrower or the Property pursuant °
to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazardous Materials Law"), (ii) all claims made or threatened by any third party
against Borrower or the Property relating to damage, contribution, cost recovery compensation, d
loss or injury resulting from any Hazardous Materials (the matters set forth in clauses(i)and(ii)
above are hereinafter referred to as "Hazardous Materials Claims"), and(iii)Borrower's
discovery of any occurrence or condition on any real property adjoining or in the vicinity of the
Property that could cause the Property or any part thereof to be classified as "border-zone
property" (as defined in California Health and Safety Code Section 25117.4)under the provision =
of California Health and Safety Code, Section 25220 et seq., or any regulation adopted in E
accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, a
transferability or use of the Property under any Hazardous Materials Law. a
(c) The City has the right to join and participate in, as a party if it so elects, 0
any legal proceedings or actions initiated in connection with any Hazardous Materials Claims Ui
and to have its reasonable attorneys'fees in connection therewith paid by Borrower. Borrower p
shall indemnify and hold harmless the City and its board members, supervisors, directors, _
officers, employees, agents, successors and assigns from and against any loss, damage, cost, v
expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release,threatened release, discharge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (i) all foreseeable consequential
damages, (ii)the costs of any required or necessary repair, cleanup or detoxification of the E
Property and the preparation and implementation of any closure, remedial or other required
plans, and(iii)all reasonable costs and expenses incurred by the City in connection with clauses
(i)and(ii), including but not limited to reasonable attorneys'fees and consultant's fees. This Q
indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision
include, but are not limited to: (1) losses attributable to diminution in the value of the Property,
�. (2) loss or restriction of use of rentable space on the Property, (3)adverse effect on the marketing
of any rental space on the Property, and (4)penalties and fines levied by, and remedial or
30
Packet Pg. 425
enforcement actions of any kind issued by any regulatory agency(including but not limited to
the costs of any required testing, remediation,repair,removal, cleanup or detoxification of the
Property and surroundjng properties). This obligation to indemnify will survive termination of
this Agreement. So long as the Secretary of Housing and Urban Development or his/her
successors or assigns,are the insurers or holders of the first mortgage on the Waterman Gardens
Phase 1,FHA Project No. 143-35131,the indemnifications provisions in this Section 4.7 shall
not apply to HUD.
E
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(d) Without the City's prior written consent,which will not be unreasonably
withheld,Borrower may not take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, Z
consent decree, or other compromise in respect to any Hazardous Material Claims,which
remedial action, settlement,consent decree or compromise might, in the City's judgment, impair
the value of the City's security hereunder;provided, however,that the City's prior consent is not
necessary in the event that the presence of Hazardous Materials on,under, or about the Property CO
either poses an immediate threat to the health, safety or welfare of any individual or is of such a
nature that an immediate remedial response is necessary and it is not reasonably possible to
obtain the City's consent before taking such action,provided that in such event Borrower shall
notify the City as soon as practicable of any action so taken. The City agrees not to withhold its
consent,where such consent is required hereunder, if(i) a particular remedial action is ordered
by a court of competent jurisdiction, (ii) Borrower will or may be subjected to civil or criminal
sanctions or penalties if it fails to take a required action, (iii)Borrower establishes to the M
satisfaction of the City that there is no reasonable alternative to such remedial action which
would result in less impairment of the City's security hereunder, or(iv)the action has been M
agreed to by the City.
c
(e) Borrower hereby acknowledges and agrees that(i)this Section is intended E
as the City's written request for information(and Borrower's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure a
Section 726.5, and(ii) each representation and warranty in this Agreement(together with any
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indemnity obligation applicable to a breach of any such representation and warranty)with C
J
respect to the environmental condition of the Property is intended by the Parties to be an LU
it provision" for purposes of California Code of Civil Procedure Section 736. p
(f) In the event that any portion of the Property is determined to be
it impaired" (as that term is defined in California Code of Civil Procedure
Section 726.5(e)(3))or to be an "affected parcel" (as that term is defined in California Code of
Civil Procedure Section 726.5(e)(1)),then,without otherwise limiting or in any way affecting the
City's or the trustee's rights and remedies under the Deed of Trust,the City may elect to exercise
its rights under California Code of Civil Procedure Section 726.5(a)to (i)waive its lien on such
environmentally impaired or affected portion of the Property and(ii) exercise(1)the rights and Q
remedies of an unsecured creditor, including reduction of its claim against Borrower to
judgment, and(2) any other rights and remedies permitted by law. For purposes of determining
the City's right to proceed as an unsecured creditor under California Code of Civil Procedure
Section 726.5(a), Borrower will be deemed to have willfully permitted or acquiesced in a release
or threatened release of Hazardous Materials, within the meaning of California Code of Civil
Procedure Section 726.5(d)(1), if the release or threatened release of Hazardous Materials was
31
Packet Pg. 426
knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion
of the Property and Borrower knew or should have known of the activity by such lessee,
occupant, or user which caused or contributed to the release or threatened release. AU costs and
expenses, including(but not limited to)attorneys' fees, incurred by the City in connection with
any action commenced under this paragraph, including any action required by California Code of
Civil Procedure Section 726.5(b)to determine the degree to which the Property is
environmentally impaired,plus interest thereon at the lesser of ten percent(10%)and the
maximum rate permitted by law, until paid,will be added to the indebtedness secured by the
Deed of Trust and is due and payable to the City upon its demand made at any time following the
conclusion of such action. a
z
Section 4.8 Maintenance and Damage.- a
a
(a) During the course of both construction and operation of the Development,
Borrower shall maintain the Development and the Property in good repair and in a neat, clean
and orderly condition. If there arises a condition in contravention of this requirement, and if 0-
Borrower has not cured such condition within thirty(30) days after receiving written notice from
LO
the City of such a condition,then in addition to any other rights available to the City,the City
may perform all acts necessary to cure such condition, and to establish or enforce a lien or other c�
encumbrance against the Property, subject to the provisions provided in subsection(b)below.
L
(b) Subject to the requirements of Senior Lenders, and if economically
feasible in the City's judgment after consultation with Borrower, if any improvement now or in
the future on the Property is damaged or destroyed,then Borrower shall, at its cost and expense, LO
diligently undertake to repair or restore such improvement consistent with the plans and
specifications approved by the City with such changes as have been approved by the City. Such
work or repair is to be commenced no later than the later of one hundred twenty(120) days, or
such longer period approved by the City in writing, after the damage or loss occurs or thirty(30)
days following receipt of the insurance proceeds,and is to be complete within one (1)year
thereafter. Any insurance proceeds collected for such damage or destruction are to be applied to =
the cost of such repairs or restoration and, if such insurance proceeds are insufficient for such J
purpose,then Borrower shall make up the deficiency. If Borrower does not promptly make such w
repairs then any insurance proceeds collected for such damage or destruction are to be promptly p
delivered by Borrower to the City as a special repayment of the Loan, subject to the rights of =
HUD and the Senior Lenders, as applicable. v
Section 4.9 Fees and Taxes. 0
3
Borrower is solely responsible for payment of all fees, assessments,taxes, charges, and d
levies imposed by any public authority or utility company with respect to the Property or the
Development, and shall pay such charges prior to delinquency. However, Borrower is not
required to pay and discharge any such charge so long as (i)the legality thereof is being a
contested diligently and in good faith and by appropriate proceedings, and(ii) if requested by the
City, Borrower deposits with the City any funds or other forms of assurance that the City in good
faith from time to time determines appropriate to protect the City from the consequences of the
contest being unsuccessful.
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Packet Pg. 427
8.A.h
Section 4.10 Notice of Liti ag tion.
Borrower shall promptly notify the City in writing of any litigation that has the potential
to materially affect Borrower or the Property and of any claims or disputes that involve a
material risk of such litigation.
Section 4.11 Operation of Development as Affordable Housing.
E
(a) Promptly after completion of construction, Borrower shall operate the
Development as an affordable housing development consistent with(i)HUD's requirements for
use of the HOME Funds, (ii)the Regulatory Agreement, and(iii) any other regulatory z
requirements imposed on Borrower including but not limited to regulatory agreements associated
with the Housing Authority Loan,the AHP Loan(if applicable) and Low Income Housing Tax
Credits provided by TCAC.
(b) Before leasing any City-Assisted Unit in the Development Borrower shall
submit its proposed form of lease agreement for the City's review and approval. The Lease must c
not contain any provision which is prohibited by 24 C.F.R. 92.253(b) and any modifications a
thereto. The term of the lease for any unit in the Development is to be for no less than one (1)
year, except by mutual agreement between Borrower and the Tenant. Any Borrower termination
of a lease agreement for any unit in the Development or refusal to renew must be in conformance
with 24 C.F.R. 92.253(c), and must be preceded by not less than sixty(60) days written notice to
the Tenant by Borrower specifying the grounds for the action.
(c) Before leasing any City-Assisted Unit in the Development, Borrower shall co
provide the City, for its review and approval,with Borrower's written tenant selection plan (the
"Tenant Selection Plan"), which plan shall be in compliance with the requirements of 24 C.F.R.
92.253(d), and the Marketing Plan.
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(d) Borrower shall evaluate the income eligibility of each Tenant household in a
City-Assisted Units pursuant to the City's approved Tenant certification procedures within sixty c
(60) days before the household's expected occupancy of one of the City-Assisted Units. J
Borrower shall certify each Tenant household's income on an annual basis. 2
O
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(e) Borrower shall maintain all documents setting forth the household income
of each household occupying a City-Assisted Unit, and the total amount for rent, utilities, and
related services charged to each household occupying the Development, as prescribed by the
Regulatory Agreement.
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Section 4.12 Nondiscrimination. E
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V
(a) Borrower covenants by and for itself and its successors and assigns that Q
there will be no discrimination against or segregation of a person or of a group of persons on
account of race, color, religion, creed, age (except for lawful senior housing in accordance with
state and federal law), familial status, disability, sex, sexual orientation, marital status, ancestry
or national origin in the sale, lease, sublease,transfer, use, occupancy,tenure or enjoyment of the
Property, nor may Borrower or any person claiming under or through Borrower establish or
permit any such practice or practices of discrimination or segregation with reference to the
33
Packet Pg.428
8.A.h
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the Property. Borrower shall comply with Executive Orders 11246, 11375, 11625,
12138, 12431, 12250, 13672, Title VII of the Civil Rights Act of 1964,the California Fair
Housing and Employment Act and other applicable Federal, State and local laws and regulations
and policies relating to equal employment and contracting opportunities, including laws and
regulations hereafter enacted. The foregoing covenant will run with the land.
Section 4.13 Transfer.
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(a) Definition. For purposes of this Agreement, "Transfer" means any sale,
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assignment, or transfer, whether voluntary or involuntary, of(i) any rights and/or duties under Z
this Agreement, and/or(ii) any interest in the Development, including(but not limited to)a fee
simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a
security interest, or an interest evidenced by a land contract by which possession of the
Development is transferred and Borrower retains title. The term "Transfer" excludes the leasing co
of any single unit in the Development to an occupant in compliance with the Regulatory (%-
Agreement. The City Manager is authorized to execute assignment and assumption agreements
on behalf of the City to implement any approved Transfer.
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(b) Prohibition. No Transfer is permitted without the prior written consent of a
the City,which the City may withhold in its sole discretion. The Loan will automatically 9
accelerate and be due in full upon any Transfer made without the prior written consent of the
City. So long as the Secretary of Housing and Urban Development or his/her successors or
assigns, are the insurers or holders of the first mortgage on the Waterman Gardens Phase 1,FHA LO
Project No. 143-35131,the acceleration provisions in this Section 4.13 (b) shall not apply.
(c) Permitted Transfers. The following are permitted Transfers approved by
the City (each a "Permitted Transfer"): 4)
L
(i) The grant of the security interests in the Development for a
Approved Financing. c
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(ii) The Borrower anticipates syndicating partnership interests based
on the low income housing tax credits that will be generated by the Development. The City
hereby approves the admission of an investor limited partner into the Borrower,provided that: Z%
(1)all documents associated with the admission of an investor limited partner for purposes of the v
low income housing tax credit syndication of the Development, including the Partnership
Agreement, are submitted to the City for review and approval,which approval shall not be
unreasonably withheld or delayed; (2)that the Partnership Agreement and other partnership d
documents are consistent with and do not conflict with the Loan Documents and the approved E
Development Budget; and(3)the partnership documents provide for capital contributions by the
investor limited partner in the Borrower in amounts not less than those set forth in the Approved Q
Development Budget or as otherwise approved by the City in its reasonable discretion.
(iii) In the event an investor limited partner is admitted pursuant to the
preceding subsection(c)(2),the City hereby approves future Transfers of the limited partner
interest in the Partnership provided that: (1) such Transfers do not affect the timing and amount
of the limited partner capital contributions provided for in the Partnership Agreement last
34
Packet Pg.429
9.A,
approved by the City pursuant to Section 2.6(b)(x)or Section 4.13(c)(ii); and; (2) in subsequent
Transfers, a wholly owned affiliate of the initial limited partner retains a membership or
partnership interest and serves as a managing member or managing general partner of the
successor limited partner; and (3) in subsequent Transfers the initial limited partner remains
liable for all unpaid capital contributions. Notwithstanding anything to the contrary, once all
capital contributions provided for in the Partnership Agreement have been made,the limited
partner interest in the Partnership may be transferred with prior written notice to the City.
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(iv) The removal, or withdrawal in lieu of removal, of Borrower's
general partner for cause pursuant to the Partnership Agreement shall not require the City's
consent or constitute a default under this Agreement. Notwithstanding anything to the contrary, ?
in the event that the general partner Borrower is removed by the limited partner of Borrower, or
withdraws in lieu of being removed, for cause following default under the Borrower's Cr
Partnership Agreement,the City hereby approves the transfer of the general partner interest to an
affiliate of the limited partner of Borrower(which affiliate is not a 501(c)(3)tax-exempt public CO
benefit corporation and does not meet the requirements of Section 4.6(c)or 5.1(b)hereof)to act U'
as the interim replacement general partner for a period of time not longer than 60 days,with the
understanding and agreement that the replacement general partner following the interim general
partner shall be a 501(c)(3)tax-exempt nonprofit public benefit corporation that is selected by
the limited partner and approved in advance and in writing by the City, which approval shall not E
be unreasonably withheld,provided that: (1) all documents associated with the removal of the
general partner, including the Partnership Agreement,are submitted to the City for review and
approval, which approval shall not be unreasonably withheld or delayed; (2)that the Partnership
Agreement and other partnership documents are consistent with and do not conflict with the M
Loan Documents and the approved Development Budget.
(v) The substitution of the sole and managing general partner of the E
Borrower, or the sole member of the general partner, in place of the current sole and managing
general partner of the Borrower, or the sole member of the general partner, as allowed under a
Section 4.6(c) of this Agreement and for purposes of complying with 24 C.F.R. 300 an 24 C.F.R.
92.2. 0
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(d) During the term of the City Loan Borrower will not refinance, re- p
syndicate,take out a line of credit or otherwise further encumber the property or restructure the =
debt constituting the Approved Financing without prior notification and approval of the City. v
Notwithstanding anything to the contrary, Borrower shall be required to provide written
notification to the City at least one hundred twenty(120) days prior to submittal of applications
for refinancing,tax credits, lines of credit and any other application in which the property may be
used as security. a)
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(e) So long as the Secretary of Housing and Urban Development or his/her
successors or assigns, are the insurers or holders of the first mortgage on the Waterman Gardens Q
Phase 1,FHA Project No. 143-35131, any transfer under this Section 4.13 shall be subject to
prior HUD approval.
35
Packet Pg. 430
Section 4.14 Insurance Requirements.
(a) Borrower shall maintain the following insurance coverage throughout the
Term of the Loan written by insurers authorized to do business in the State of California and
with a minimum "Best" Insurance Guide rating of"A-VII". If the Borrower uses existing
coverage to comply with these requirements and that coverage does not meet the specified
requirements,the Borrower agrees to amend, supplement, or endorse the existing coverage to do
so. The type(s)of insurance required is determined by the scope of the contract services. E
(b) Without in anyway affecting the indemnity herein provided and in
addition thereto,the Borrower shall secure and maintain throughout the contract term the Z
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following types of insurance with limits as shown:
(i) Workers' Compensation/Employers Liability.
(1) A program of Workers' Compensation insurance or a state-
approved, self-insurance program in an amount and form to meet all applicable requirements of c
the Labor Code of the State of California, including Employer's Liability with$250,000 limits a
covering all persons including volunteers providing services on behalf of the Borrower and all
risks to such persons under this Agreement.
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(2) If Borrower has no employees, it may certify or warrant to
the City that it does not currently have any employees or individuals who are defined as
"employees" under the Labor Code and the requirement for Workers'Compensation coverage
will be waived by the City Manager.
(3) With respect to borrowers that are non-profit corporations
organized under California or federal law,volunteers for such entities are required to be covered E
by Workers' Compensation insurance.
a
(ii) Comprehensive General Liability. General Liability Insurance c
covering all operations performed by or on behalf of Borrower providing coverage for bodily _J
injury and property damage with a combined single limit of not less than One Million Dollars 2
($1,000,000),per occurrence. The policy coverage must include: 0
(1) Premises operations and mobile equipment. v
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(2) Products and completed operations. 3
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(3) Broad form property damage (including completed E
operations). �
(4) Explosion, collapse, and underground hazards. a
(5) Personal injury.
(6) Contractual liability.
(7) $2,000,000 general aggregate limit.
36
Packet Pg. 431
(iii) Comprehensive Automobile Liability.
(1) Primary insurance coverage must be written on ISO
Business Auto coverage form for all owned,hired and non-owned automobiles or symbol I (any
auto).
(2) The policy must have a combined single limit of not less
than One Million Dollars($1,000,000) for bodily injury and property damage,per occurrence.
(3) If the Borrower is transporting one or more non-employee 4)
passengers in performance of contract services,the automobile liability policy must have a z
combined single limit of Two Million Dollars ($2,000,000) for bodily injury and property
damage per occurrence.
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(4) If the Borrower owns no autos, a non-owned auto
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endorsement to the General Liability policy described above is acceptable. c�•
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(iv) Builders'Risk/Property Insurance. Builders'Risk insurance during
the course of construction, and upon completion of construction,property insurance covering the
Development, in form appropriate for the nature of such property, covering all risks of loss,
excluding earthquake, for one hundred percent(100%)of the replacement value,with deductible, E
if any, acceptable to the City, naming the City as a Loss Payee, as its interests may appear.
Flood insurance must be obtained if required by applicable federal regulations.
Ln(v) Commercial Crime. Commercial crime insurance covering all
officers and employees, for loss of Loan proceeds caused by dishonesty, in an amount approved
by the City,naming the City a Loss Payee, as its interests may appear.
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(c) Borrower shall cause any general contractor, agent, or subcontractor L
working on the Development under direct contract with Borrower or subcontract to maintain a
insurance of the types and in at least the minimum amounts described in subsections (i), (ii), and c
(iii) above,meeting all of the general requirements of subsections (e) and(f)below and naming _J
the City as an additional insured. The Borrower agrees to monitor and review all such coverage g
and assumes all responsibility ensuring that such coverage is provided as required here. _
(d) An umbrella(over primary) or excess policy may be used to comply with v
limits or other primary coverage requirements. When used,the umbrella policy must apply to
bodily injury/property damage,personal injury/advertising injury and must include a
"dropdown"provision providing primary coverage for any liability not covered by the primary
policy. The coverage must also apply to automobile liability. E
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(e) The required insurance must be provided under an occurrence form, and Q
Borrower shall maintain the coverage described in subsections (a) continuously throughout the
Term. Should any of the required insurance be provided under a form of coverage that includes
an annual aggregate limit or provides that claims investigation or legal defense costs be included
in such annual aggregate limit, such annual aggregate limit must be three times the occurrence
10 limits specified above.
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Packet Pg. 432
8.A.h
(f) Comprehensive General Liability and Comprehensive Automobile
Liability insurance policies must be endorsed to name as an additional insured the City and its
elected officials, officers, agents, and employees.. The additional insured endorsements must not
limit the scope of coverage for the City to vicarious liability but must allow coverage for the City
to the full extent provided by the policy. Such additional insured coverage must be at least as
broad as Additional Insured(Form B) endorsement form ISO, CG 2010.11 85.
(g) All policies and bonds are to contain(i)the agreement of the insurer to a)
give the City at least thirty(30) days' notice prior to cancellation(including, without limitation,
for non-payment of premium)or any material change in said policies; (ii) an agreement that such a
policies are primary and non-contributing with any insurance that may be carried by the City;
(iii)a provision that no act or omission of Borrower shall affect or limit the obligation of the CD
insurance carrier to pay the amount of any loss sustained; and(iv) a waiver by the insurer of all r
rights of subrogation against the City and its authorized parties in connection with any loss or
damage thereby insured against. in
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(h) Construction contracts for projects over Three Million Dollars
($3,000,000)and less than Five Million Dollars($5,000,000)require limits of not less than Five
Million Dollars ($5,000,000) in General Liability and Auto Liability coverage.
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(i) The Borrower shall require the carriers of required coverage's to waive all E
rights of subrogation against the City, its elected officials, officers, employees, agents, M
volunteers, contractors and subcontractors. All general or auto liability insurance coverage
provided shall not prohibit the Borrower and Borrower's employees or agents from waiving the LO
right of subrogation prior to a loss or claim. The Borrower hereby waives all rights of v
subrogation against the City.
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(j) All policies required herein are to be primary and non-contributory with
any insurance or self-insurance programs carried or administered by the City. Q
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(k) The Borrower shall furnish Certificates of Insurance to the City o
evidencing the insurance coverage prior to the close of Escrow, additional endorsements, as w
required shall be provided prior to the commencement of performance of services hereunder, 2
which certificates shall provide that such insurance shall not be terminated or expire without s
thirty(30) days written notice to the City, and Borrower shall maintain such insurance from the
time Borrower commences performance of services hereunder until the completion of such v
services. Within fifteen(15)days following the close of Escrow,the Borrower shall furnish a
copy of the Declaration page for all applicable policies and will provide complete certified
copies of the policies and endorsements immediately upon request. E
(1) The Borrower agrees to ensure that coverage provided to meet these
requirements is applicable separately to each insured and there will be no cross liability a
exclusions that preclude coverage for suits between the Borrower and the City or between the
City and any other insured or additional insured under the policy.
(m) Any and all deductibles or self-insured retentions in excess of Ten
Thousand Dollars ($10,000) shall be declared to and approved by the City Manager.
38
Packet Pg. 433
(n) In the event that any policy of insurance required in this Section does not
comply with the requirements, is not procured, or is canceled and not replaced, the City has the
right but not the obligation or duty to obtain such insurance it deems necessary and any
premiums paid by the City will be promptly reimbursed by Borrower or City disbursements to
Borrower will be reduced to pay for the City purchased insurance.
(o) Insurance requirements are subject to periodic review by the City. The
City Manager is authorized, but not required,to reduce, waive or suspend any insurance 4)
requirements whenever the City Manager determines that any of the required insurance is not
available, is unreasonably priced, or is not needed to protect the interests of the City. In addition, a
if the City determines that heretofore unreasonably priced or unavailable types of insurance ?
coverage or coverage limits become reasonably priced or available,the City Manager is 4)
authorized, but not required,to.change the above insurance requirements to require additional
types of insurance coverage or higher coverage limits,provided that any such change is
reasonable in light of past claims against the City, inflation, or any other item reasonably related in
to the City's risk. Any change requiring additional types of insurance coverage or higher 1.
coverage limits must be made by amendment to this Agreement. Borrower agrees to execute any
such amendment within thirty(30) days of receipt. Any failure, actual or alleged, on the part of
the City to monitor or enforce compliance with any of the insurance and indemnification
requirements will not be deemed as a waiver of any rights on the part of the City.
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Section 4.15 Anti-Lobbying Certification.
Borrower certifies,to the best of Borrower's knowledge or belief,that: LO
M
(a) No Federal appropriated funds have been paid or will be paid, by or on
behalf of it,to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract,the making of any a
Federal grant,the making of any Federal loan,the entering into of any cooperative agreement,
and the extension, continuation, renewal, amendment, or modification of any Federal contract, J
grant, loan, or cooperative agreement; W
2
(b) If any funds other than Federal appropriated funds have been paid or will 0
be paid to any person for influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee of Congress, or an employee of a v
Member of Congress in connection with the awarding of any Federal contract, grant, loan, or 0
cooperative agreement, it will complete and submit Standard Form-LLL, Disclosure Form to
Report Lobbying, in accordance with its instructions. E
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This certification is a material representation of fact upon which reliance was placed v
when this Agreement was made or entered into. Submission of this certification is a prerequisite a
for making or entering into this Agreement imposed by Section 1352, Title 31, U.S. Code. Any
person who fails to file the required certification shall be subject to a civil penalty of not less
than Ten Thousand Dollars($10,000) and no more than One Hundred Thousand Dollars
($100,000) for such failure.
39
Packet Pg.434
8.A.h
Section 4.16 Covenants Regarding_Ap_proved Financing
=(a) Borrower shall promptly pay the principal and interest when due on any
Approved Financing.
(b) Borrower shall promptly notify the City in writing of the existence of any
default under any documents evidencing Approved Financing whether or not a default has been
declared by the lender and provide the City copies of any notice of default. E
2
(c) Borrower may not amend, modify, supplement, cancel or terminate any of m
the documents evidencing Approved Financing without the prior written consent of the City. Z
c
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(d) Borrower may not incur any indebtedness of any kind other than Cr
Approved Financing or encumber the Development with any liens(other than liens for Approved
Financing approved by the City)without the prior written consent of the City.
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Section 4.17 Affordability and Project Monitoring_ U)
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(a) Throughout the Term,the Borrower shall comply with all applicable
record keeping and monitoring requirements set forth in(24 C.F.R. Section 92.508)of the
HOME Regulations and shall annually complete and submit to City a Certification of Continuing E
Program Compliance in the form attached hereto as Exhibit G, and incorporated herein.
(b) Representatives of the City shall be entitled to enter the Property upon at
Lo
least twenty-four(24)hours' notice at reasonable times to monitor compliance with this M
Agreement,to inspect the records of the Development with respect to the Affordable Units, and
to conduct an independent audit of such records. The Borrower agrees to cooperate with the City
in making the Property available for such inspection. If for any reason the City is unable to E
obtain the Borrower's consent to such an inspection,the Borrower understands and agrees that L
the City may obtain, at the Borrower's expense, an administrative inspection warrant or other a
appropriate legal order to obtain access to and search the Property. The Borrower agrees to c
maintain records in a business-like manner and to make such records available to the City upon
twenty-four(24)hours' notice at reasonable times. Unless the City otherwise approves, such g
records shall be maintained for the most recent five years until five years after the HOME Term. 0
r
(c) Throughout the Term,the Borrower grants the City inspection rights as set v
forth in Section 3.14 above, and Borrower shall make best efforts to allow the City to comply 0
with all applicable physical monitoring requirements set forth in(24 C.F.R. Section 92.504(d) 3
and 24 C.F.R. 92.251) of the HOME Regulations. d
E
(d) The City will enforce a per-unit affordability monitoring charge on all
HOME assisted developments. HOME assisted developments will be charged as follows: Q
• 1-20 HOME-assisted units= $35.00 per unit/annually
• 20+ HOME-assisted units=$25.00 per unit/annually
40
Packet Pg. 435
(e) The Housing Authority and the City shall make best efforts to coordinate
physical inspections of the Development. The City will enforce a physical inspection charge on
all HOME-assisted developments. The inspection charge for HOME assisted development will
be the lesser o£ (1) Five Thousand Dollars($5,000)per inspection; or(2)the actual costs
incurred by the City to secure a qualified third party, independent of the Borrower,to conduct the
physical inspections in accordance with the requirements set forth in this Agreement,and any
related staffing costs incurred by the City in association therewith. Notwithstanding anything to
the contrary,the Borrower will not be required to pay the physical inspection charge to the City
if the Housing Authority conducts the required physical inspection and allows the City to rely on
said inspection and so long as the Housing Authority's inspections are materially consistent with z
the City's requirements under this Agreement.
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(f) The Borrower shall.pay such charge within seven (7)days of receipt of an
_
invoice from the City.
(g) The City reserves the right to waive or defer a portion of the monitoring
charge if a development is unable to pay these costs. All waivers must be submitted in writing,
with adequate supporting financial documentation, for review by the City Manager.
0
Section 4.18 Crime-Free Multi-Housing Unit Program Participation. M
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Property owners and managers shall be required to participate in the San
Bernardino Police Department's Crime Free Multi-Housing Program, wherein specialized
training and other resources are provided to multi-family property owners and managers to
reduce the potential for onsite criminal activity. Completion of the Department's training and co
designation as a Certified Crime-Free Property shall be achieved and maintained by the
owner/representative and onsite property manager.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BORROWER a
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Section 5.1 Representations and Warranties. J
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Borrower hereby represents and warrants to the City as follows and acknowledges, _
understands, and agrees that the representations and warranties set forth in this Article 5 are
deemed to be continuing during all times when any or all of the Loan remains outstanding. The v
Borrower shall immediately advise the City in writing if there is any change relating to any
matters set forth or referenced in the items set forth below:
(a) Organization. Borrower is duly organized,validly existing and in good
standing under the laws of the State of California and has the power and authority to own its
property and carry on its business as now being conducted. Copies of the documents evidencing a
the organization of the Borrower delivered to the City are true and correct copies of the originals.
(b) CHDO Certification. Borrower's sole and managing general partner, or its
sole member,meets the legal and organizational characteristics described in 24 C.F.R. 92.2 and
has been and continues to be certified as a CHDO by the City for the entire HOME Term.
i
41
Packet Pg.436
8.A.h
(c) Authority of Borrower. Borrower has full power and authority to execute
and deliver this Agreement and to make and accept the borrowings contemplated hereunder,to
execute and deliver the Loan Documents and all other documents or instruments executed and
delivered, or to be executed and delivered,pursuant to this Agreement, and to perform and
observe the terms and provisions of all of the above.
(d) Authority of Persons Executing Documents. This Agreement and the
Loan Documents and all other documents or instruments executed and delivered,or to be
executed and delivered,pursuant to this Agreement have been executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all
actions required under Borrower's organizational documents and applicable governing law for ?
the authorization, execution, delivery and performance of this Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered,pursuant to this Agreement,have been duly taken. c
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(e) Valid Binding Agreements. This Agreement and the Loan Documents and C'
all other documents or instruments which have been executed and delivered pursuant to or in
connection with this Agreement constitute or, if not yet executed or delivered,will when so
executed and delivered constitute, legal, valid and binding obligations of Borrower enforceable 0
against it in accordance with their respective terms.
L
(f) No Breach of Law or Agreement. Neither the execution nor delivery of
this Agreement and the Loan Documents or of any other documents or instruments executed and
delivered, or to be executed or delivered,pursuant to this Agreement, nor the performance of any
provision, condition, covenant or other term hereof or thereof,will conflict with or result in a a
breach of any statute, rule or regulation, or any judgment, decree or order of any court,board,
commission or agency whatsoever binding on Borrower, or any provision of the organizational E
documents of Borrower, or will conflict with or constitute a breach of or a default under any
agreement to which Borrower is a party, or will result-in the creation or imposition of any lien a
upon any assets or property of Borrower, other than liens established pursuant hereto.
0
(g) Compliance with Laws; Consents and Approvals. The construction of the W
Development will comply with all applicable laws, ordinances, rules and regulations of federal, 2
0
state and local governments and agencies and with all applicable directions, rules and regulations =
of the fire marshal,health officer, building inspector and other officers of any such government v
or agency.
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(h) Pending Proceedings. Borrower is not in default under any law or
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regulation or under any order of any court,board, commission or agency whatsoever, and there
are no claims, actions, suits or proceedings pending or,to the knowledge of Borrower,threatened
against or affecting Borrower or the Development, at law or in equity, before or by any court,
board, commission or agency whatsoever which might, if determined adversely to Borrower, a
materially affect Borrower's ability to repay the Loan or impair the security to be given to the
City pursuant hereto.
(i) Title to Land. At the time of recordation of the Deed of Trust, Borrower
will have good and marketable leasehold title to the Development and there will exist thereon or
with respect thereto no mortgage, lien,pledge or other encumbrance of any character whatsoever
42
Packet Pg. 437
other than liens for current real property taxes and liens ancillary to the Approved Financing and
liens in favor of the City or approved in writing by the City.
(j) Financial Statements. The financial statements of Borrower and other
financial data and information furnished by Borrower to the City fairly and accurately present the
information contained therein. As of the date of this Agreement,there has not been any material
adverse change in the financial condition of Borrower from that shown by such financial. _
statements and other data and information.
d
(k) Sufficient Funds. Borrower holds or reasonably expects to receive firm
financial commitments for sufficient funds to complete the acquisition of the Property and the z
construction of the Development in accordance with the plans and specifications approved by the d
City. a
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(1) Taxes. Borrower and its subsidiaries have filed all federal and other co
material tax returns and reports required to be filed, and have paid all federal and other material
taxes,assessments, fees and other governmental charges levied or imposed upon them or their
income or the Property otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been provided in
accordance with generally accepted accounting principles. There is no proposed tax assessment
against Borrower or any of its subsidiaries that could, if made, be reasonably expected to have a E
material adverse effect upon the Property, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of Borrower and its subsidiaries,taken as a whole,which
would be expected to result in a material impairment of the ability of Borrower to perform under LO
any Loan Document to which it is a party, or a material adverse effect upon the legality,validity,
binding effect or enforceability against Borrower of any Loan Document.
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ARTICLE 6. DEFAULT AND REMEDIES v,
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Section 6.1 Events of Default. c
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Each of the following constitutes an 'Event of Default" by Borrower under this 2
Agreement: O_
(a) Failure to Construct. Failure of Borrower to obtain permits, commence, v
and prosecute to completion, construction of the Development within the times set forth in the o
Schedule of Performance.
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(b) Failure to Make Payment. Failure to repay the principal and any interest E
on the Loan when such payment is due pursuant to the Loan Documents.
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(c) Breach of Covenants. Failure by Borrower to duly perform, comply with,
or observe any of the conditions,terms, or covenants of any of the Loan Documents (other than
obligations described in subsections(a) and(b) above), and Borrower fails to cure such default
within thirty(30) days after receipt of written notice thereof from the City to Borrower;
provided, however,that if a different period or notice requirement is specified under any other
section of this Article 6,the specific provisions shall control.
43
Packet Pg.438
(d) Default Under Other Loans. A default is declared under any other
financing for the Development by the lender of such financing and such default remains uncured
following any applicable notice and qure period.
(e) Insolvency. A court having jurisdiction makes or enters any decree or
order(i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly filed a
petition seeking reorganization of Borrower, or seeking any arrangement for Borrower under the
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction, (iii)appointing a receiver,trustee, liquidator, or assignee of Borrower
in bankruptcy or insolvency or for any of their properties, (iv) directing the winding up or
liquidation of Borrower if any such decree or order described in clauses (i)to (iv), inclusive, is ?
unstayed or undischarged for a period of ninety(90)calendar days; or(v)Borrower admits in CD
writing its inability to pay its debts as they fall due or will have voluntarily submitted to or filed
a petition seeking any decree or order of the nature described in clauses (i)to (iv), inclusive. The n
occurrence of any of the Events of Default in this paragraph will act to accelerate automatically, (0
without the need for any action by the City,the indebtedness evidenced by the Note.
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(f) Assignment;Attachment. Borrower assigns its assets for the benefit of its
creditors or suffers a sequestration or attachment of or execution on any substantial part of its
property, unless the property so assigned, sequestered, attached or executed upon is returned or
released within ninety(90) calendar days after such event or, if sooner,prior to sale pursuant to
such sequestration, attachment, or execution. The occurrence of any of the events of default in
this paragraph shall act to accelerate automatically, without the need for any action by the City,
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the indebtedness evidenced by the Note.
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(g) Suspension; Termination. Borrower voluntarily suspends its business or,
the partnership is dissolved or terminated, other than a technical termination of the partnership
for tax purposes.
(h) Liens on Property and the Development. Any claim of lien(other than a
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liens approved in writing by the City) is filed against the Development or any part thereof, or any J
interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of w
the Loan and the continued maintenance of said claim of lien or notice to withhold for a period
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of twenty(20)days, without discharge or satisfaction thereof or provision therefor(including, _
without limitation,the posting of bonds) satisfactory to the City. v
(i) Condemnation. The condemnation, seizure, or appropriation of all or the O
substantial part of the Property and the Development, except that condemnation by the County or
City shall cause the Loan to accelerate but shall not be a Default.
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(j) Unauthorized Transfer. Any Transfer other than as permitted pursuant to
Section 4.13. a
(k) Representation or Warranty Incorrect. Any Borrower representation or
warranty contained in this Agreement, or in any application, financial statement, certificate, or
report submitted to the City in connection with any of the Loan Documents,proves to have been
incorrect in any material respect when made.
44
Packet Pg.439
(1) Failure to Timely Lease. Failure of Borrower to lease all of the City-
Assisted Units within eighteen (18)months of the Completion of Construction of the
Development. _
(m) Applicability to General Partner. The occurrence of any of the events set
forth in subsection(e), subsection(f), or subsection(g) in relation to Borrower's managing
general partner.
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Section 6.2 Remedies. =
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Upon the occurrence of an Event of Default and following the expiration of all applicable z
notice and cure periods the City(i) is relieved of any obligation to make or continue the Loan
and(ii)has the right to proceed with any and all remedies set forth in this Agreement and the rr
Loan Documents, including but not limited to the following:
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(a) Acceleration of Note. The City may cause all indebtedness of Borrower to C%•
the City under this Agreement and the Note,together with any accrued interest thereon,to
become immediately due and payable. Borrower waives all right to presentment, demand,
protest or notice of protest or dishonor. The City may proceed to enforce payment of the
indebtedness and to exercise any or all rights afforded to the City as a creditor and secured party
under the law including the Uniform Commercial Code, including foreclosure under the Deed of
Trust. Borrower is liable to pay the City on demand all reasonable expenses, costs and fees
(including,without limitation,reasonable attorney's fees and expenses)paid or incurred by the
City in connection with the collection of the Loan and the preservation, maintenance,protection,
sale, or other disposition of the security given for the Loan. So long as the Secretary of Housing
and Urban Development or his/her successors or assigns, are the insurers or holders of the first
mortgage on the Waterman Gardens—Valencia 9, FHA Project No. 143-35130, the acceleration
provisions in this Section 6.2 shall not apply.
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(b) Specific Performance. The City has the right to mandamus or other suit,
action or proceeding at law or in equity to require Borrower to perform its obligations and J
covenants under the Loan Documents or to enjoin acts on things that may be unlawful or in W
violation of the provisions of the Loan Documents. 2
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(c) Termination. The City has the right to terminate this Agreement and, at its Y
sole option,to seek any remedies at law or equity available hereunder. v
(d) Right to Cure at Borrower's Expense. The City has the right(but not the
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obligation)to cure any monetary default by Borrower under a loan other than the Loan.
Borrower shall reimburse the City for any funds advanced by the City to cure a monetary default E
by Borrower.upon demand therefor,together with interest thereon at the lesser of the maximum
rate permitted by law and ten percent(10%)per annum (the "Default Rate") from the date of a
expenditure until the date of reimbursement.
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Packet Pg.440
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Section 6.3 Right of Contest.
Borrower may contest in good faith any claim,demand, levy,or assessment the assertion
of which would constitute an Event of Default hereunder. Any such contest is to be prosecuted
diligently and in a manner unprejudicial to the City or the rights of the City hereunder.
Section 6.4 Remedies Cumulative.
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No right, power, or remedy given to the City by the terms of this Agreement or the Loan
Documents is intended to be exclusive of any other right,power, or remedy;and each and every
such right,power, or remedy will be cumulative and in addition to every other right,power, or z
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remedy given to the City by the terms of any such instrument, or by any statute or otherwise
against Borrower and any other person. Neither the failure nor any delay on the part of the City a
to exercise any such rights and remedies will operate as a waiver thereof, nor does any single or
partial exercise by the City of any such right or remedy preclude any other or further exercise of in
such right or remedy, or any other right or remedy.
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Section 6.5 Limited Partner Cure Rights ..
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The City agrees to provide any limited partner of Borrower who has requested written
notice from the City("Permitted Limited Partner") a duplicate copy of all notices of default that E
the City may give to or serve in writing upon Borrower pursuant to the terms of the Loan
Documents, at the address provided to the City,provided, the City shall have no liability to the
Permitted Limited Partner for its failure to do so. The Permitted Limited Partner shall have the u,
right,but not the obligation,to cure any Default of Borrower set forth in such notice,during any V)
applicable cure period described in the Loan Documents, and the City will accept tender of such
cure as if delivered by Borrower. E
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ARTICLE 7. GENERAL PROVISIONS a
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Section 7.1 Relationship of Parties. �
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Nothing contained in this Agreement is to be interpreted or understood by any of the o
Parties, or by any third persons, as creating the relationship of employer and employee,principal X
and agent, limited or general partnership, or joint venture between the City and Borrower or its cv
agents, employees or contractors, and Borrower will at all times be deemed an independent
contractor and to be wholly responsible for the manner in which it or its agents, or both,perform
the services required of it by the terms of this Agreement. Borrower has and retains the right to
exercise full control of employment, direction, compensation, and discharge of all persons E
assisting in the performance of services under the Agreement. In regards to the construction and
operation of the Development, Borrower is solely responsible for all matters relating to payment a
of its employees, including compliance with Social Security,withholding, and all other laws and
regulations governing such matters, and must include requirements in each contract that
contractors are solely responsible for similar matters relating to their employees. Borrower is
solely responsible for its own acts and those of its agents and employees.
46
Packet Pg.441
Section 7.2 No Claims.
Nothing contained in this Agreement creates or justifies any claim against the City by any
person that Borrower may have employed or with whom Borrower may have contracted relative
to the purchase of materials, supplies or equipment, or the furnishing or the performance of any
work or services with respect to the purchase of the Property,the construction or operation of the
Development, and Borrower shall include similar requirements in any contracts entered into for
the construction or operation of the Development.
Section 7.3 Discretion Retained By City.
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The City's execution of this Agreement in no way limits the discretion of the City in the
permit and approval process in connection with the construction of the Development. Cr
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Section 7.4 Indemnification.
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The Borrower agrees to indemnify, defend (with counsel reasonably approved by City) c
and hold harmless the City and its authorized officers, employees, agents and volunteers •a
("Indemnities") from any and all claims, actions, losses, damages, and/or liability arising out of
this contract from any cause whatsoever, including the acts, errors or omissions of any person
and for any costs or expenses incurred by the City on account of any claim except where such E
indemnification is prohibited by law. This indemnification provision shall apply regardless of the
existence or degree of fault of Indemnities. The Borrower's indemnification obligation applies to
the City's "active" as well as "passive" negligence but does not apply to the City's "sole LO
negligence" or "willful misconduct"within the meaning of Civil Code Section 2782. This
indemnification provision is not intended to and does not limit,negate, modify,nullify, or
change the nonrecourse provisions of this Agreement or any other agreement, document, a
instrument, certificate or covenant executed by Borrower. The provisions of this Section will
survive the expiration of the Term and the reconveyance of the Deed of Trust. The Borrower's
duty to indemnify the City shall be limited to available surplus cash and/or residual receipts of Q
the Borrower or non-Project assets of the Borrower. o
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Notwithstanding anything to the contrary in this Agreement, so long as the Secretary of 2
Housing and Urban Development or his/her successors or assigns, are the insurers or holders of M
the first mortgage on the Waterman Gardens Phase 1, FHA Project No. 143-35131, under the
indemnifications provisions, including but not limited to those in Sections 2.7, 2.8, 3.8,4.6, 4.7, v
7.4 of this Agreement, Borrower's obligation to indemnify and hold the City harmless shall be
limited to available Surplus Cash of the Borrower or non-Project assets of the Borrower or
available liability insurance proceeds and the indemnification provisions shall not apply to HUD. a
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Section 7.5 Non-Liability of City Officials,Employees and Agents. CU
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No member, official, employee or agent of the City is personally liable to Borrower in the
event of any default or breach by the City or for any amount that may become due to Borrower
or its successor or on any obligation under the terms of this Agreement.
47
Packet Pg.442
8.A.h
Section 7.6 No Third Party Beneficiaries.
There are no third party beneficiaries to this Agreement.
Section 7.7 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs,no person
described in Section 7.7(b)below who exercises or has exercised any functions or E
responsibilities with respect to the activities funded pursuant to this Agreement or who is in a (D
position to participate in a decision-making process or gain inside information with regard to
such activities, may obtain a financial interest or financial benefit from the activity, or have an Z
interest in any contract,subcontract or agreement with respect thereto, or the proceeds
thereunder, either for themselves or those with whom they have family or business ties, during,
or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that U)
the prohibition in this Section 7.7(a) is followed.
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(b) The conflict of interest provisions of Section 7.7(a) above apply to any c
person who is an employee, agent, consultant, officer, or any immediate family member of such
person, or any elected or appointed official of the City, or any person related within the third 0
(3rd)degree of such person. o
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(c) In accordance with California Government Code Section 1090 and the
Political Reform Act, California Government Code section 87100 et siN., no person who is a
director, officer,partner, trustee or employee or consultant of Borrower, or immediate family LO
member of any of the preceding, may make or participate in a decision, made by the City or a
City board, commission or committee, if it is reasonably foreseeable that the decision will have a
material effect on any source of income, investment or interest in real property of that person or d
Borrower. Interpretation of this section is governed by the definitions and provisions used in the
Political Reform Act, California Government Code Section 87100 et sue., its implementing a,
regulations manual and codes, and California Government Code Section 1090. a
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(d) Borrower shall comply with the conflict of interest provisions set forth in
24 C.F.R. 92.356. 2
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Section 7.8 Notices, Demands and Communications.
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All notices required or permitted by any provision of this Agreement must be in writing
and sent by registered or certified mail,postage prepaid, return receipt requested, or delivered by
express delivery service, return receipt requested, or delivered personally,to the principal office
of the Parties as follows: E
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City: City Manager
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City of San Bernardino
300 N"D" Street, Sixth Floor
San Bernardino, CA 92418
Attn: Housing Director
Borrower: Waterman Gardens Partners 1,L.P.
48
Packet Pg.443
9421 Haven Avenue
Rancho Cucamonga, CA 91730
Attn: Chief Financial Officer
With a copy to:
Law Offices of Edward A. Hopson
655A No. Mountain Avenue
Upland, CA 91786 E
Attn: Edward A. Hopson
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With a copy to:
Wells Fargo Community Lending& Investment 3
Wells Fargo Bank Affordable Housing
Community Development Corporation
301 South College Street, 17t"Floor co
MAC D1053-170
Charlotte,NC 28288
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With a copy to:
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Kutak Rock
1650 Farnam Street
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Omaha,NE 68102
Attn: Robert Coon
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Such written notices, demands and communications may be sent in the same manner to such
other addresses as the affected Party may from time to time designate by mail as provided in this
Section. Receipt will be deemed to have occurred on the date shown on a written receipt as the E
date of delivery or refusal of delivery(or attempted delivery if undeliverable). L
Section 7.9 Amendments. c
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No alteration or variation of the terms of this Agreement is valid unless made in writing w
by the Parties. The City Manager is authorized to execute on behalf of the City amendments to p
the Loan Documents or amended and restated Loan Documents as long as any material change in =
the amount or terms of this Agreement is approved by the Mayor and Common Council. So long v
as the Secretary of Housing and Urban Development or his/her successors or assigns, are the
insurers or holders of the first mortgage on the Waterman Gardens Phase 1,FHA Project No.
143-35131, any amendments under this Section 7.9 shall be subject to prior HUD approval.
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Section 7.10 City Approval.
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The City has authorized the City Manager to execute the ancillary Loan documents and a
deliver such approvals or consents as are required by this Agreement, and to execute estoppel
certificates concerning the status of the Loan and the existence of Borrower defaults under the
Loan Documents, including subordination agreements substantially consistent with the terms of
Section 2.5 above.
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Packet Pg.444
8.A.h
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Section 7.11 Applicable Law.
This Agreement is governed by the laws of the State of California.
Section 7.12 Parties Bound.
Except as otherwise limited herein,this Agreement binds and inures to the benefit of the
parties and their heirs, executors, administrators, legal representatives, successors, and assigns. E
This Agreement is intended to run with the land and to bind Borrower and its successors and
assigns in the Property and the Development for the entire Term, and the benefit hereof is to
inure to the benefit of the City and its successors and assigns. z
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Section 7.13 Attorneys'Fees.
If any lawsuit is commenced to enforce any of the terms of this Agreement,the prevailing
Party will have the right to recover its reasonable attorneys' fees and costs of suit from the other �CO,
Party. N
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Section 7.14 Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid, E
void or unenforceable,the remainder of the provisions will continue in full force and effect r
unless the rights and obligations of the Parties have been materially altered or abridged by such
invalidation, voiding or unenforceability.
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Section 7.15 Force Majeure.
In addition to specific provisions of this Agreement,performance by either Party will not E
be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock- a
outs,riots, floods, earthquakes, fires, quarantine restrictions, freight embargoes, lack of a
transportation, or court order. An extension of time for any cause will be deemed granted if
notice by the Party claiming such extension is sent to the other within ten(10)days from the 0
commencement of the cause and such extension of time is not rejected in writing by the other w
Party within ten(10) days of receipt of the notice. In no event will the City be required to agree o
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to cumulative delays in excess of ninety(90)days.
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Section 7.16 Waivers.
Any waiver by the City of any obligation or condition in this Agreement must be in
writing. No waiver will be implied from any delay or failure by the City to take action on any
breach or default of Borrower or to pursue any remedy allowed under this Agreement or
applicable law. Any extension of time granted to Borrower to perform any obligation under this
Agreement does not operate as a waiver or release from any of its obligations under this a
Agreement. Consent by the City to any act or omission by Borrower may not be construed to be
consent to any other or subsequent act or omission or to waive the requirement for the City's
written consent to future waivers.
50
Packet Pg.445
8.A.h
Section 7.17 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and are to be disregarded in interpreting any part of the Agreement's provisions.
Section 7.18 Entire Understanding of the Parties
The Loan Documents constitute the entire agreement of the Parties with respect to the
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Section 7.19 Multiple Originals; Counterpart. z
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This Agreement may be executed in multiple originals, each of which is deemed to be an a
original, and may be signed in counterparts. y
[Signature Page Follows] y
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8. .
WHEREAS,this Agreement has been entered into by the undersigned as of the Effective
Date.
BORROWER:
Waterman Gardens Partners 1, L.P., a California limited partnership
Date: =
By: WG Partners 1 MPG, LLC, a California limited liability
company, its sole general partner Z
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By: National Community Renaissance of California,
its sole member and manager
By:
Michael D. Ruane, Executive Vice d
President
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CITY: v
CITY OF SAN BERNARDINO, a charter city of the State of California E
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By:
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Mark Scott, City Manager
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Georgeann Hanna
City Clerk 0
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APPROVED AS TO FORM: E
Gary D. Saenz,
City Attorney Q
By:
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_ EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
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EXHIBIT B
APPROVED DEVELOPMENT BUDGET
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EXHIBIT C
SCHEDULE OF PERFORMANCE
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EXHIBIT D
FORM OF PROMISSORY NOTE
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EXHIBIT E
FORM OF DEED OF TRUST
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EXHIBIT F
FORM OF REGULATORY AGREEMENT
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EXHIBIT G
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
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8.A.h
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINI_TIONS AND EXHIBITS.............................................................................2
Section1.1 Definitions...................................................................................................2
Section1.2 Exhibits.......................................................................................................6
ARTICLE 2. LOAN PROVISIONS............................................................................................... 7
Section2.1 Loan. ........................................................................................................... 7
Section2.2 Interest........................................................................................................ 7 z
Section 2.3 Use of Loan Funds. 7
Section 2.4 Security 7 Cr
Section 2.5 Subordination. 7 a)
Section 2.6 Conditions Precedent to Disbursement of Loan Funds...............................9 N
Section 2.7 Repayment Schedule................................................................................. 12 C..
Section 2.8 Non-Recourse. 14
Section 2.9 Other Financing 15
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ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT 15
....................................................
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Section 3.1 Schedule of Performance. 15
Section 3.2 Permits and Approvals.............................................................................. 15
Section 3.3 Construction Contract............................................................................... 16
Section3.4 Bid Package. ............................................................................................. 16 co
Section 3.5 Construction Bonds................................................................................... 16
Section 3.6 Commencement of Construction. ............................................................. 16 d
Section 3.7 Completion of Construction...................................................................... 16 aE,
Section 3.8 Construction Pursuant to Plans and Laws; Prevailing Wages;
Accessibility 17 Q
Section 3.9 Equal Opportunity..................................................................................... 19 c
Section 3.10 Minority nd Women-Owned Contractors. 19 J
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Section 3.11 Progress Reports. ...................................................................................... 19 2
Section 3.12 Construction Responsibilities. .................................................................. 19 =
Section 3.13 Mechanics Liens, Stop Notices, and Notices of Completion....................20 '
Section 3.14 Inspections. 20 v
Section 3.15 Approved Development Budget; Revisions to Budget. 21 3
Section3.16 Developer Fee...........................................................................................21 u
Section 3.17 Marketing Plan............. 4)
Section 3.18 Tenant Services Plan and Budget. ............................................................22 r
ARTICLE 4. LOAN REQUIREMENTS......................................................................................23 Q
Section 4.1 Financial Accountings and Post-Completion Audits................................23
Section 4.2 Annual Operating Budget. ........................................................................23
Section4.3 Information. ..............................................................................................23
Section4.4 Records. ....................................................................................................23
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TABLE OF CONTENTS
(continued)
Page
Section4.5 City Audits................................................................................................25
Section 4.6 HOME Requirements................................................................. 25
Section 4.7 Hazardous Materials. ................................................................................30
Section 4.8 Maintenance and Damage......................................................................... 32
Section 4.9 Fees and Taxes.......................................................................................... 32
Section 4.10 Notice of Litigation................................................................................... 33 --
Section 4.11 Operation of Development as Affordable Housing.................................. 33 d
Section 4.12 Nondiscrimination..................................................................................... 33
Section 4.13 Transfer. 34 0
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Section 4.14 Insurance Requirements............................................................................36
i i .................................................................... r
Section 4.15 Anti-Lobbying Certification. 39
Section 4.16 Covenants Regarding Approved Financing..............................................40 m
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Section 4.17 Affordability and Project Monitoring 40
Section 4.18 Crime-Free Multi-Housing Program Participation. 41 N
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BORROWER.........................41 d
Section 5.1 Representations and Warranties................................................................41
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ARTICLE 6. DEFAULT AND REMEDIES 43 E
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Section 6.1 Events of Default. 43
.....................................................................................
Section 6.2 Remedies. 45
Section 6.3 Right of Contest........................................................................................46
Section 6.4 Remedies Cumul ative...............................................................................46 r
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Section 6.5 Limited Partner Cure Rights 46 °'
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ARTICLE 7. GENERAL PROVISIONS 46 `vs
.....................................................................................
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Section 7.1 Relationship of Parties. 46 0
.............................................................................
Section 7.2 No Claims. 47 ''
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Section 7.3 Discretion Retained By City.....................................................................47 2
Section 7.4 Indemnification.........................................................................................47 =
Section 7.5 Non-Liability of City Officials, Employees and Agents. .........................47 '
Section 7.6 No Third Party Beneficiaries. 48 v
Section 7.7 Conflict of Interest....................................................................................48 3
Section 7.8 Notices, Demands and Communications..................................................48
Section 7.9 Amendments. c
Section7.10 City Approval............................................................................................49 r
Section7.11 Applicable Law......................................................................................... 50
Section 7.12 Parties Bound............................................................................................ 50 a
Section7.13 Attorneys' Fees.......................................................................................... 50
Section7.14 Severability. .............................................................................................. 50
Section7.15 Force Majeure........................................................................................... 50
Section7.16 Waivers. .................................................................................................... 50
Section 7.17 Title of Parts and Sections. ....................................................................... 51
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TABLE OF CONTENTS
(continued)
Paqe
Section 7.18 Entire Understanding of the Parties.......................................................... 51
Section 7.19 Multiple Originals; Counterpart................................................................ 51
Exhibit A: Legal Description of the Property
Exhibit B: Approved Development Budget
Exhibit C: Schedule of Performance
Exhibit D: Form of Promissory Note
Exhibit E: From of Deed of Trust -a
Exhibit F: Form of Regulatory Agreement
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Exhibit G: Certification of Continuing Program Compliance
Exhibit H: Section 3 Compliance
Exhibit I: Project Deliverables y
Exhibit J: Statement of Residual Receipts
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HOME INVESTMENT PARTNERSHIPS ACT LOAN AGREEMENT m
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CITY OF SAN BERNARDINO
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Waterman Gardens Partners 1,L.P.
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PROMISSORY NOTE £
SECURED BY DEED OF TRUST ?
(Waterman,Gardens Phase One)
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$734,000 San Bernardino, California
February 15, 2016 y
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FOR VALUE RECEIVED,the undersigned Waterman Gardens Partners I, L.P.,a
California limited partnership("Borrower")hereby promises to pay to the order of the City of
San Bernardino, a charter of the State of California("Holder"),the principal amount of up to c
Seven Hundred Thirty Four Thousand Dollars($734,000), subject to Section 2.6 of the Loan E
Agreement,plus interest thereon pursuant to section 2 below.
1. Borrower's Obligation. This Promissory Note Secured by Deed of Trust(the LO
"Note").evidences Borrower's obligation to repay Holder the principal amount of up to Seven
Hundred Thirty Four Thousand Dollars ($734,000) for the funds loaned to Borrower by Holder
to finance the construction of the Development pursuant to the HOME Investment Partnerships °o
Act Loan Agreement between Borrower and Holder of even date herewith (the "Loan
Agreement"). All capitalized terms used but not defined in this Note have the meanings set forth
in the Loan Agreement. y
2. Interest. c
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(a) Subject to the provisions of subsection (b) below, simple interest o
will accrue on the outstanding principal balance of the Loan at a per annum rate of interest equal
to three percent(3%), commencing on the date of disbursement until full repayment of the
principal of the Loan.
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(b) If an Event of Default occurs, interest will accrue on all amounts
due under this Note at the Default Rate until such Event of Default is cured by Borrower or z0
waived by Holder.
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3. Term and Repayment Requirements. The unpaid principal balance hereunder, E
together with accrued interest thereon, is due and payable no later than the date that is the fifty- a0`.
fifth(55th)anniversary of the Completion Date (as defined in the Loan Agreement),but in no UJ
event will the Loan mature prior to the maturity of any HUD insured senior loan approved by the 0
City. This Note is due and payable as set forth in Section 2.7 of the Loan Agreement. _
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4. No Assumption. This Note is not assumable by the successors and assigns of
Borrower without the prior written consent of Holder, except as provided in the Loan
Agreement.
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5. Security. This Note, with interest, is secured by the Deed of Trust. Upon
execution,the Deed of Trust will be recorded in the official records of San Bernardino County, a
California. Upon recordation of the Deed of Trust,this Note will become nonrecourse to
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8.AA
Borrower,pursuant to and except as provided in Section 2.8 of the Loan Agreement which
section is hereby incorporated into this Note. The terms of the Deed of Trust are hereby w
incorporated into this Note and made a part hereof.
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6. Terms of Payment. c
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(a) Borrower shall make all payments due under this Note in currency 0
of the United States of America to Holder at Office of the City Manager, City of San Bernardino, �
300 N"D" Street, Sixth Floor, San Bernardino, CA 92418, Attn: Housing Director, or to such co
other place as Holder may from time to time designate.
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(b) All payments on this Note shall be without expense to Holder, and M
Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable
attorney's fees of Holder, incurred in connection with the payment of this Note and the release of E
any security hereof.
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(c) Notwithstanding any other provision of this Note, or any Lo
instrument securing the obligations of Borrower under this Note, if, for.any reason whatsoever,
the payment of any sums by Borrower pursuant to the terms of this Note would result in the
payment of interest that exceeds the amount that Holder may legally charge under the laws of the c
State of California,then the amount by which payments exceed the lawful interest rate will
automatically be deducted from the principal balance owing on this Note, so that in no event is
Borrower obligated under the terms of this Note to pay any interest that would exceed the lawful
rate. '
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(d) The obligations of Borrower under this Note are absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges due o
under this Note for any reason whatsoever.
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(e) Borrower may prepay the amounts due under this Note at any time
without premium or penalty.
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7. Event of Default:Acceleration. z0
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(a) Upon the occurrence of an Event of Default,the entire unpaid N
principal balance,together with all interest thereon, and together with all other sums then E
payable under this Note and the Deed of Trust will, at the option of Holder, become immediately �°
due and payable without further demand. W
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(b) Holder's failure to exercise the remedy set forth in subsection 7(a)
above or any other remedy provided by law upon the occurrence of an Event of Default does not
constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the
same or any other Event of Default. The acceptance by Holder of any payment that is less than
the total of all amounts due and payable at the time of such payment does not constitute a waiver
of the right to exercise any of the foregoing remedies or options at that time or at any subsequent E
time, or nullify any prior exercise of any such remedy or option,without the express consent of
Holder, except as and to the extent otherwise provided by law. a
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(c) So long as the Secretary of Housing and Urban Development or
his/her successors or assigns, are the insurers or holders of the first mortgage on the Waterman 0
Gardens Phase 1, FHA Project No. 143-35131,the provisions of this Section 7 shall not apply. a
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8. Waivers. c
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(a) Borrower hereby waives diligence,presentment,protest and 0
demand, and notice of protest,notice of demand, notice of dishonor and notice of non-payment M
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of this Note. Borrower expressly agrees that this Note or any payment hereunder may be
extended from time to time, and that Holder may accept further security or release any security c
for this Note, all without in any way affecting the liability of Borrower.
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(b) Any extension of time for payment of this Note or any installment a
hereof made by agreement of Holder with any person now or hereafter liable for payment of this E
Note must not operate to release, discharge,modify, change or affect the original liability of
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Borrower under this Note, either in whole or in part.
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9. Miscellaneous Provisions.
(a) All notices to Holder or Borrower shall be given in the manner and c
at the addresses set forth in the Loan Agreement, or to such addresses as Holder and Borrower o
may therein designate.
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(b) Borrower promises to pay all costs and expenses, including
reasonable attorney's fees, incurred by Holder in the enforcement of the provisions of this Note, o
regardless of whether suit is filed to seek enforcement.
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(c) This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
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(d) This Note shall be governed by and construed in accordance with
the laws of the State of California. z0
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(e) The times for the performance of any obligations hereunder are to N
be strictly construed,time being of the essence. E
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(f) The Loan Documents, of which this Note is a part, contain the w
entire agreement between the parties as to the Loan. This Note may not be modified except upon p
the written consent of the parties. _
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(g) So long as the Secretary of Housing and Urban Development or £
his/her successors or assigns, are the insurers or holders of the first mortgage on the Waterman 2
Gardens Phase 1, FHA Project No. 143-35131,payments due under this soft note shall be
payable only from 75%of available surplus cash of said project, as the term surplus cash is z
defined in the Regulatory Agreement for Multifamily Projects between HUD and the Borrower. c
The restriction on payment imposed by this paragraph shall not excuse any default caused by the
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failure of the maker to pay the indebtedness evidenced by this soft note. N
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IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the day °)
and year first above written. _
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BORROWER: c
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Waterman Gardens Partners I, L.P., a California limited partnership
By: WG Partners I MGP, LLC, its sole and managing general C'.
partner c
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By: National Community Renaissance of California, its
sole and managing member
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By:
Michael M. Ruane, Executive Vice
President to
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RECORDING REQUESTED BY N
AND WHEN RECORDED MAIL TO:
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Office of the City Manager t�
City of San Bernardino 0
300 N"D" Street, Sixth Floor
San Bernardino, CA 92418
Attn: Housing Director
No fee for recording pursuant to
Government Code Section 27383 rn
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DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, AND FIXTURE FILING ii
(Waterman Gardens Phase 1) _
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THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY d
AGREEMENT,AND FIXTURE FILING("Deed of Trust") is made as of February 15,2016, by
and among Waterman Gardens Partners 1, L.P., a California limited partnership("Trustor"), a,
Fidelity National Title Insurance Company Name (as "Trustee"), and the City of San
Bernardino, a political subdivision of the State of California(as "Beneficiary").
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FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein co
recited and the trust herein created,the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions o
hereinafter set forth, Trustor's fee interest in the property located in the County of San
Bernardino, State of California,that is described in the attached Exhibit A, incorporated herein c
by this reference(the "Pro e
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TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents; ;
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TOGETHER WITH all easements,rights-of-way and rights used in connection therewith
or as a means of access thereto, including(without limiting the generality of the foregoing) all c
tenements,hereditaments and appurtenances thereof and thereto;
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TOGETHER WITH any and all buildings and improvements of every kind and
description now or hereafter erected thereon, and all property of the Trustor now or hereafter o
affixed to or placed upon the Property;
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TOGETHER WITH all building materials and equipment now or hereafter delivered to
said property and intended to be installed therein;
TOGETHER WITH all right,title and interest of Trustor,now owned or hereafter
acquired, in and to any land lying within the right-of-way of any street, open or proposed,
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adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to
or used in connection with the Property;
TOGETHER WITH all estate, interest, right,title, other claim or demand, of every c�
nature, in and to such property, including the Property, both in law and in equity, including, but o
not limited to, all deposits made with or other security given by Trustor to utility companies,the
proceeds from any or all of such property, including the Property, claims or demands with
respect to the proceeds of insurance in effect with respect thereto,which Trustor now has or may
hereafter acquire, any and all awards made for the taking by eminent domain or by any LO
proceeding or purchase in lieu thereof of the whole or any part of such property, including
without limitation, any awards resulting from a change of grade of streets and awards for rn
severance damages to the extent Beneficiary has an interest in such awards for taking as
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provided in Paragraph 4.1 herein;
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures
now or hereafter attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Property which are necessary to the complete and comfortable use
and occupancy of such building or buildings for the purposes for which they were or are to be
erected, including all other goods and chattels and personal property as are ever used or
furnished in operating a building, or the activities conducted therein, similar to the one herein a,
described and referred to, and all renewals or replacements thereof or articles in substitution a
therefor, whether or not the same are, or will be, attached to said building or buildings in any
manner; and
TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment,
work in process and other personal property to be incorporated into the Property; all goods,
materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other o
personal property now or hereafter appropriated for use on the Property, whether stored on the
Property or elsewhere, and used or to be used in connection with the Property; all rents, issues E
and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles, P
chattel paper, instruments, documents,notes drafts, letters of credit, insurance policies, insurance Q
and condemnation awards and proceeds,trade names,trademarks and service marks arising from
or related to the Property and any business conducted thereon by Trustor; all replacements, 3
additions, accessions and proceeds; and all books, records and files relating to any of the
foregoing.
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All of the foregoing,together with the Property, is herein referred to as the "Security."
To have and to hold the Security together with acquittances to the Trustee, its successors and o
assigns forever. w M
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FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS
(collectively,the "Secured Obligations"): v
A. Payment to Beneficiary of all sums at any time owing under or in connection with
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the Note (defined in Section 1.4 below)until paid or cancelled and any other amounts owing
under the Loan Documents (defined in Section 1.3 below). Said principal and other payments
are due and payable as provided in the Note or other Loan Documents, as applicable. The Note U
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8.A J
and all its terms are incorporated herein by reference, and this conveyance secures any and all N
extensions thereof, however evidenced;
B. Payment of any sums advanced by Beneficiary to protect the Security pursuant to c�
the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to
advance said sums and the expiration of any applicable cure period,with interest thereon as d
provided herein; M
C. Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents; and
D. All modifications, extensions and renewals of any of the Secured Obligations
(including without limitation, (i)modifications, extensions or renewals at a different rate of LL
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interest, or(ii)deferrals or accelerations of the required principal payment dates or interest r
payment dates or both, in whole or in part),however evidenced,whether or not any such 25
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modification, extension or renewal is evidenced by a new or additional promissory note or notes.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST,TRUSTOR
COVENANTS AND AGREES: E
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ARTICLE 1 r
DEFINITIONS
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In addition to the terms defined elsewhere in this Deed of Trust,the following terms have
the following meanings in this Deed of Trust: 4)
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Section 1.1 The term "Loan"means the loan made by the Beneficiary to the Trustor in
the amount up to Seven Hundred Thirty Four Thousand Dollars ($734,000), subject to Section E
2.6 of the Loan Agreement. a,
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Section 1.2 The term "Loan Agreement" means that certain HOME Investment s
Partnerships Act Loan Agreement between Trustor and Beneficiary, dated February 15, 2016, as
such may be amended from time to time,providing for the Beneficiary to loan to Trustor up to w
Seven Hundred Thirty Four Thousand Dollars($734,000), subject to Section 2.6 of the Loan
Agreement. o
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Section 1.3 The term "Loan Documents"means this Deed of Trust,the Note,the Loan o
Agreement, and the Regulatory Agreement, and any other debt, loan or security instruments w
between Trustor and the Beneficiary relating to the Loan. o
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Section 1.4 The term "Note" means the Promissory Note in the principal amount of up v
to Seven Hundred Thirty Four Thousand Dollars ($734,000)of even date herewith, executed by
Trustor in favor of the Beneficiary,the payment of which is secured by this Deed of Trust. (A 3
copy of the Note is on file with the Beneficiary and terms and provisions of the Note are c
incorporated herein by reference.) E
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Section 1.5 The term "Principal"means the amount required to be paid under the N
Note.
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Section 1.6 The term "Regulatory Agreement"means the Regulatory Agreement and
Declaration of Restrictive Covenants of even date herewith by and between the Beneficiary and
the Trustor.
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ARTICLE 2
MAINTENANCE AND MODIFICATION OF THE PROPERTY
AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
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The Trustor agrees that at all times prior to full payment and performance of the Secured 25
Obligations,the Trustor will, at the Trustor's own expense,maintain,preserve and keep the
Security or cause the Security to be maintained and preserved in good condition. The Trustor
will from time to time make or cause to be made all repairs, replacements and renewals deemed a
proper and necessary by it. The Beneficiary has no responsibility in any of these matters or for
the making of improvements or additions to the Security. a,
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Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all r
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claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty(30)days or
more, and to take all other reasonable steps to forestall the assertion of claims of lien against the
Security or any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary o
as its agent(said agency being coupled with an interest)with the authority,but without any
obligation,to file for record any notices of completion or cessation of labor or any other notice E
that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the P
Loan Documents;provided,however,that Beneficiary exercises its rights as agent of Trustor Q
only in the event that Trustor fails to take, or fails to diligently continue to take,those actions as Y
hereinbefore provided. ;
Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or
claims as Beneficiary specifies upon laborers, materialmen, subcontractors or other persons who 0
have furnished or claim to have furnished labor, services or materials in connection with the
Security. Nothing herein contained requires Trustor to pay any claims for labor, materials or o
services which Trustor in good faith disputes and is diligently contesting provided that Trustor w
shall, within thirty(30)days after the filing of any claim of lien,record in the Office of the
Recorder of San Bernardino County, a surety bond in an amount 1 and 1/2 times the amount of y
such claim item to protect against a claim of lien, or provide other form of security acceptable to v
the Beneficiary at the Beneficiary's sole and absolute discretion.
Section 2.2 Granting of Easements.
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Trustor may not grant easements, licenses,rights-of-way or other rights or privileges in
the nature of easements with respect to any property or rights included in the Security except a
KH 378971.3
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those required or desirable for installation and maintenance of public utilities including,without 1.
limitation,water, gas, electricity, sewer,telephone and telegraph, or those required by law, and
as approved, in writing, by Beneficiary.
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Section 2.3 Assignment of Rents. R
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Subject to the rights of any approved senior mortgage lender, as part of the consideration
for the indebtedness evidenced by the Note, Trustor hereby absolutely and unconditionally
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assigns and transfers to Beneficiary all the rents and revenues of the Property including those
now due,past due, or to become due by virtue of any lease or other agreement for the occupancy
or use of all or any part of the Property,regardless of to whom the rents and revenues of the
Property are payable. Trustor hereby authorizes Beneficiary or Beneficiary's agents to collect the
aforesaid rents and revenues and hereby directs each tenant of the Property to pay such rents to d
Beneficiary or Beneficiary's agents;provided, however,that prior to written notice given by
Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the LL
Loan Documents, Trustor shall collect and receive all rents and revenues of the Property as
trustee for the benefit of Beneficiary and Trustor to apply the rents and revenues so collected to ;°
the Secured Obligations with the balance, so long as no such breach has occurred,to the account E
of Trustor, it being intended by Trustor and Beneficiary that this assignment of rents constitutes
an absolute assignment and not an assignment for additional security only. Upon delivery of
written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement
of Trustor in the Loan Documents, and without the necessity of Beneficiary entering upon and
taking and maintaining full control of the Property in person, by agent or by a court-appointed
receiver, Beneficiary shall immediately be entitled to possession of all rents and revenues of the Co
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Property as specified in this Section 2.3 as the same becomes due and payable, including but not a
limited to, rents then due and unpaid, and all such rents will immediately upon delivery of such
notice be held by Trustor as trustee for the benefit of Beneficiary only;provided, however,that Y
the written notice by Beneficiary to Trustor of the breach by Trustor contains a statement that
Beneficiary exercises its rights to such rents. Trustor agrees that'commencing upon delivery of c
such written notice of Trustor's breach by Beneficiary to Trustor, each tenant of the Property y
shall make such rents payable to and pay such rents to Beneficiary or Beneficiary's agents on a
Beneficiary's written demand to each tenant therefor, delivered to each tenant personally, by mail
or by delivering such demand to each rental unit, without any liability on the part of said tenant 3
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to inquire further as to the existence of a default by Trustor.
Subject to the rights of any approved senior mortgage lender, Trustor hereby covenants °
that Trustor has not executed any prior assignment of said rents,that Trustor has not performed,
and will not perform, any acts or has not executed and will not execute, any instrument which °
would prevent Beneficiary from exercising its rights under this Section 2.3, and that at the time 2
of execution of this Deed of Trust,there has been no anticipation or prepayment of any of the x
rents of the Property for more than two (2)months prior to the due dates of such rents. Trustor Y
covenants that Trustor will not hereafter collect or accept payment of any rents of the Property v
more than two (2)months prior to the due dates of such rents. Trustor further covenant that
Trustor will execute and deliver to Beneficiary such further assignments of rents and revenues of
the Property as Beneficiary may from time to time request. a
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Upon Trustor's breach of any covenant or agreement of Trustor in the Loan Documents, N
Beneficiary may in person,by agent or by a court-appointed receiver, regardless of the adequacy
of Beneficiary's security, enter upon and take and maintain full control of the Property in order to
perform all acts necessary and appropriate for the operation and maintenance thereof including,
but not limited to,the execution, cancellation or modification of leases,the collection of all rents
and revenues of the Property,the making of repairs to the Property and the execution or
termination of contracts providing for the management or maintenance of the Property, all on
such terms as are deemed best to protect the security of this Deed of Trust. In the event
Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of
any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to
the appointment of such receiver. Beneficiary or the receiver will be entitled to receive a
reasonable fee for so managing the Property. LL
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All rents and revenues collected subsequent to delivery of written notice by Beneficiary z
to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan U.
Documents are to be applied first to the costs, if any, of taking control of and managing the c
Property and collecting the rents, including,but not limited to, attorney's fees, receiver's fees,
premiums on receiver's bonds, costs of repairs to the Property,premiums on insurance policies, E
taxes, assessments and other charges on the Property, and the costs of discharging any obligation
or liability of Trustor as lessor or landlord of the Property and then to the sums secured by this Q
deed of Trust. Beneficiary or the receiver is to have access to the books and records used in the
operation and maintenance of the Property and will be liable to account only for those rents
actually received. Beneficiary is not liable to Trustor, anyone claiming under or through Trustor
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or anyone having an interest in the Property by reason of anything done or left undone by
Beneficiary under this Section 2.3.
If the rents of the Property are not sufficient to meet the costs, if any, of taking control of °
and managing the Property and collecting the rents, any funds expended by Beneficiary for such
purposes will become part of the Secured Obligations pursuant to Section 3.3 hereof. Subject to r_
Section 2.8 of the Loan Agreement,unless Beneficiary and Trustor agree in writing to other '
terms of payment, such amounts are payable by Trustor to Beneficiary upon notice from a
Beneficiary to Trustor requesting payment thereof and will bear interest from the date of r
disbursement at the rate stated in Section 3.3. 3
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If the Beneficiary or the receiver enters upon and takes and maintains control of the
Property, neither that act nor any application of rents as provided herein will cure or waive any �°
default under this Deed of Trust or invalidate any other right or remedy available to Beneficiary o
under applicable law or under this Deed of Trust. This assignment of rents of the Property will W
terminate at such time as this Deed of Trust ceases to secure the Secured Obligations. M
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ARTICLE 3
TAXES AND INSURANCE; ADVANCES 0
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
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Trustor shall pay,or cause to be paid,prior to the date of delinquency, all taxes, `,
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assessments, charges and levies imposed by any public authority or utility company that are or
may become a lien affecting the Security or any.part thereof;provided,however,that Trustor is
not required to pay and discharge any such tax, assessment, charge or levy so long as(a)the
legality thereof is promptly and actively contested in good faith and by appropriate proceedings,
and(b)Trustor maintains reserves adequate to pay any liabilities contested pursuant to this
Section 3.1. With respect to taxes, special assessments or other similar governmental charges,
Trustor shall pay such amount in full prior to the attachment of any lien therefor on any part of
the Security;provided,however, if such taxes, assessments or charges can be paid in M
installments, Trustor may pay in such installments. Except as provided in clause (b)of the first
sentence of this paragraph,the provisions of this Section 3.1 may not be construed to require that
Trustor maintain a reserve account, escrow account, impound account or other similar account LL
for the payment of future taxes, assessments, charges and levies.
In the event that Trustor fails to pay any of the items required by this Section to be paid U-
by Trustor, Beneficiary may(but is under no obligation to)pay the same, after the Beneficiary
has notified the Trustor of such failure to pay and the Trustor fails to fully pay such items within
seven (7)business days after receipt of such notice. Any amount so advanced therefor by
Beneficiary,together with interest thereon from the date of such advance at the maximum rate a
permitted by law,will become part of the Secured Obligations secured hereby, and Trustor a,
agrees to pay all such amounts. a
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Section 3.2 Provisions Respecting Insurance.
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Trustor agrees to provide insurance conforming in all respects to that required under the
Loan Documents during the course of construction and following completion, and at all times 4)
until all amounts secured by this Deed of Trust have been paid, all Secured Obligations secured o
hereunder have been fulfilled, and this Deed of Trust has been reconveyed.
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All such insurance policies and coverages are to be maintained at Trustor's sole cost and rn
expense. Certificates of insurance for all of the above insurance policies, showing the same to be a
in full force and effect, are to be delivered to the Beneficiary upon demand therefor at any time s
prior to Trustor's satisfaction of the Secured Obligations. 3
Section 3.3 Advances.
In the event the Trustor fails to maintain the full insurance coverage required by this
Deed of Trust or fails to keep the Security in accordance with the Loan Documents,the o
Beneficiary, after at least seven (7)days prior notice to Trustor, may(but is under no obligation w
to) (i)take out the required policies of insurance and pay the premiums on the same, and(ii) p
make any repairs or replacements that are necessary and provide for payment thereof. All =
amounts so advanced by the Beneficiary will become part of the Secured Obligations (together v
with interest as set forth below)and will be secured hereby, which amounts the Trustor agrees to
pay on the demand of the Beneficiary, and if not so paid, will bear interest from the date of the
advance at the lesser of ten percent(10%)per annum or the maximum rate permitted by law. So
long as the Secretary of Housing and Urban Development or his/her successors or assigns, are E
the insurers or holders of the first mortgage on the Waterman Gardens—Valencia 9,FHA Project U
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No. 143-35130,no advances may be made under this Section 3.3 without the prior written
consent of the U.S. Department of Housing and Urban Development(HUD). a
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ARTICLE 4 M
DAMAGE,DESTRUCTION OR CONDEMNATION E
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Section 4.1 Awards and Damages.
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All judgments, awards of damages, settlements and compensation made in connection
with or in lieu of(1)the taking of all or any part of or any interest in the Property by or under a,
assertion of the power of eminent domain, (2)any damage to or destruction of the Property or
any part thereof by insured casualty, and(3)any other injury or damage to all or any part of the
Property(collectively,the "Funds") are hereby assigned to and are to be paid to the Beneficiary
by a check made payable to the Beneficiary. The Beneficiary is authorized and empowered(but U-
not required)to collect and receive any Funds and is authorized to apply them in whole or in part
to any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary
determines at its sole option. The Beneficiary is entitled to settle and adjust all claims under
insurance policies provided under this Deed of Trust and may deduct and retain from the
proceeds of such insurance the amount of all expenses incurred by it in connection with any such a,
settlement or adjustment. All or any part of the amounts so collected and recovered by the
Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for
its disposition. Application of all or any part of the Funds collected and received by the
Beneficiary or the release thereof will not cure or waive any default under this Deed of Trust. co
The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior
mortgage lender. The Beneficiary shall release the Funds to Trustor to be used to reconstruct the
improvements on the Property provided that Beneficiary reasonably determines that Trustor c
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(taking into account the Funds)has sufficient funds to rebuild the improvements in substantially
the form that existed prior to the casualty or condemnation.
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ARTICLE 5 r
AGREEMENTS AFFECTING THE PROPERTY; FURTHER 3
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ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST 3
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Section 5.1 Other Agreements Affecting Property. o
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The Trustor shall duly and punctually perform all terms, covenants, conditions and °
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof. _
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses. v
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In the event of any Event of Default(as defined in Section 7.1)hereunder, and if the
Beneficiary employs attorneys or incurs other expenses for the collection of amounts due
hereunder or the enforcement of performance or observance of an obligation or agreement on the E
part of the Trustor in this Deed of Trust,the Trustor agrees that it will, on demand therefor,pay U
to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so
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incurred by the Beneficiary. Any such amounts paid by the Beneficiary will be added to the
Secured Obligations, and will bear interest from the date such expenses are incurred at the lesser
of ten percent(10%)per annum or the maximum rate penritted by law. So long as the Secretary
of Housing and Urban Development or his/her successors or assigns, are the insurers or holders
of the first mortgage on the Waterman Gardens Phase 1, FHA Project No. 143-35131,the
provisions of this Section 5.2 shall not apply to HUD. E
Section 5.3 Payment of the Principal.
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The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and by the times set out therein. rn
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Section 5.4 Personal Property. a
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To the maximum extent permitted by law,the personal property subject to this Deed of k
Trust is deemed to be fixtures and part of the real property and this Deed of Trust constitutes a a
fixtures filing under the California Commercial Code. As to any personal property not deemed
or permitted to be fixtures,this Deed of Trust constitutes a security agreement under the
California Commercial Code. E
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Section 5.5 Financing Statement. Q
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The Trustor shall execute and deliver to the Beneficiary such financing statements
pursuant to the appropriate statutes, and any other documents or instruments as are required to
convey to the Beneficiary a valid perfected security interest in the Security. The Trustor shall r
perform all acts that the Beneficiary reasonably requests so as to enable the Beneficiary to d
maintain a valid perfected security interest in the Security in order to secure the payment of the o
Note in accordance with its terms. The Beneficiary is authorized to file a copy of any such =
financing statement in any jurisdiction(s) as it deems appropriate from time to time in order to E
protect the security interest established pursuant to this instrument. r,
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Section 5.6 Operation of the Security. a
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The Trustor shall operate the Security(and, in case of a transfer of a portion of the y
Security subject to this Deed of Trust,the transferee shall operate such portion of the Security) in L
full compliance with the Loan Documents. o
Section 5.7 Inspection of the Security. o
At any and all reasonable times upon forty-eight(48)hours'notice,the Beneficiary and 2
its duly authorized agents, attorneys, experts, engineers, accountants and representatives, may =
inspect the Security, without payment of charges or fees.
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Section 5.8 Nondiscrimination.
3
The Trustor herein covenants by and for itself, its heirs,executors, administrators, and
assigns, and all persons claiming under or through them,that there will be no discrimination L
against or segregation of, any person or group of persons on account of race, color, creed,
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religion, age, sex, sexual orientation,marital status, national origin or ancestry in the sale, lease, N
sublease,transfer,use, occupancy,tenure or enjoyment of the Security,nor will the Trustor itself a
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 0
of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants
run with the land. E
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ARTICLE 6
M
HAZARDOUS WASTE
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Trustor shall keep and maintain the Property in compliance with, and shall not-cause or LL
permit the Property to be in violation of any federal, state or local laws, ordinances or regulations L
relating to industrial hygiene or to the environmental conditions on, under or about the Property
including,but not limited to, soil and ground water conditions. Trustor shall not use, generate, U_
manufacture, store or dispose of on, under, or about the Property or transport to or from the
Property any flammable explosives, radioactive materials, hazardous wastes,toxic substances or
related materials, including without limitation, any substances defined as or included in the
definition of"hazardous substances," hazardous wastes," "hazardous materials," or "toxic
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substances"under any applicable federal or state laws or regulations (collectively referred to a
hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily used
in construction or operation of a multi-family residential development.
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Trustor shall immediately advise Beneficiary in writing if at any time it receives written y
notice of: (i) any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against Trustor or the Property pursuant to any
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applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party E
against Trustor or the Property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and(ii) '
above are hereinafter referred to as "Hazardous Materials Claims"); and (iii) Trustor's discovery Q
of any occurrence or condition on any real property adjoining or in the vicinity of the Property 5
that could cause the Property or any part thereof to be classified as "border-zone property" (as 3
defined in California Health and Safety Code Section 25117.4)under the provision of California
Health and Safety Code Section 25220 et sue., or any regulation adopted in accordance
therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, °
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transferability or use of the Property under any Hazardous Materials Law. 4)
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Beneficiary has the right to join and participate in, as a party if it so elects,any legal 2
proceedings or actions initiated in connection with any Hazardous Materials Claims and to have =
its reasonable attorneys'fees in connection therewith paid by Trustor. Trustor shall indemnify r
and hold harmless Beneficiary and its elected officials, supervisors, directors, officers, v
employees, agents, successors and assigns from and against any loss, damage, cost, expense or 0
liability directly or indirectly arising out of or attributable to the use, generation, storage,release,
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threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about a
the Property including without limitation: (a) all foreseeable consequential damages; (b)the r
costs of any required or necessary repair, cleanup or detoxification of the Property and the
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preparation and implementation of any closure, remedial or other required plans; and (c) all N
reasonable costs and expenses incurred by Beneficiary in connection with clauses(a) and (b),
including but not limited to reasonable attorneys' fees and consultant's fees. This
indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision
include, but are not limited to: (1) losses attributable to diminution in the value of the Property;
(2) loss or restriction of use of rentable space on the Property; (3) adverse effect on the
marketing of any rental space on the Property; and(4)penalties and fines levied by, and remedial
or enforcement actions of any kind issued by any regulatory agency(including but not limited to M
the costs of any required testing,remediation, repair, removal, cleanup or detoxification of the
Property and surrounding properties).
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Without Beneficiary's prior written consent, which may not be unreasonably withheld, CD
Trustor may not take any remedial action in response to the presence of any Hazardous Materials
on,under or about the Property,nor enter into any settlement agreement,consent decree,or other LL
compromise in respect to any Hazardous Material Claims,which remedial action, settlement,
consent decree or compromise might, in Beneficiary's reasonable judgment, impairs the value of
the Beneficiary's security hereunder;provided, however, that Beneficiary's prior consent is not
necessary in the event that the presence of Hazardous Materials on, under, or about the Property
either poses an immediate threat to the health, safety or welfare of any individual or is of such a a,
nature that an immediate remedial response is necessary and it is not reasonably possible to
obtain Beneficiary's consent before taking such action,provided that in such event Trustor
notifies Beneficiary as soon as practicable of any action so taken. Beneficiary agrees not to
withhold its consent, where such consent is required hereunder, if. (i) a particular remedial action CO
is ordered by a court of competent jurisdiction; (ii)Trustor will or may be subjected to civil or
criminal sanctions or penalties if it fails to take a required action; (iii)Trustor establishes to the
reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial c
action which would result in less impairment of Beneficiary's security hereunder; or(iv)the a
action has been agreed to by Beneficiary. E
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The Trustor hereby acknowledges and agrees that: (i)this Article is intended as the a
Beneficiary's written request for information(and the Trustor's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure 3
Section 726.5, and(ii) each representation and warranty in this Deed of Trust or any of the other
Loan Documents (together with any indemnity applicable to a breach of any such representation
and warranty)with respect to the environmental condition of the property is intended by the
Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code
of Civil Procedure Section 736.
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In the event that any portion of the Property is determined to be "environmentally =
impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3))or r
to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section
726.5(e)(1)),then,without otherwise limiting or in any way affecting the Beneficiary's or the
Trustee's rights and remedies under this Deed of Trust,the Beneficiary may elect to exercise its
rights under California Code of Civil Procedure Section 726.5(a)to (1)waive its lien on such
environmentally impaired or affected portion of the Property and (2) exercise (a)the rights and L
remedies of an unsecured creditor, including reduction of its claim against the Trustor to
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judgment, and(b)any other rights and remedies permitted by law. For purposes of determining "
the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.5(a),the Trustor will be deemed to have willfully permitted or acquiesced
in a release or threatened release of hazardous materials,within the meaning of California Code
of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials
was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any
portion of the Property and the Trustor knew or in the exercise of reasonable diligence should
have known of the activity by such lessee, occupant, or user which caused or contributed to the
release or threatened release. All costs and expenses, including(but not limited to) attorneys' M
fees, incurred by the Beneficiary in connection with any action commenced under this paragraph,
including any action required by California Code of Civil Procedure Section 726.5(b)to
determine the degree to which the Property is environmentally impaired,plus interest thereon at =UL
the default rate specified in the Loan Agreement until paid,will be added to the indebtedness
secured by this Deed of Trust and will be due and payable to the Beneficiary upon its demand x
made at any time following the conclusion of such action. LL
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ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES a
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Section 7.1 Events of Default. >,
The following are events of default following the expiration of any applicable notice and a
cure periods (each an "Event of Default"): (i)failure to make any payment to be paid by Trustor )
under the Loan Documents; (ii) failure to observe or perform any of Trustor's other covenants,
agreements or obligations under the Loan Documents, including, without limitation,the
provisions concerning discrimination; (iii)failure to make any payment or observe or perform
any of Trustor's other covenants, agreements, or obligations under any Secured Obligations,
which default is not cured within the times and in the manner provided therein; and (iv)failure to r-
make any payments or observe or perform any of Trustor's other covenants, agreements or 2M
obligations under any other debt instrument or regulatory agreement secured by the Property, a
which default is not cured within the time and in the manner provided therein.
•3
Section 7.2 Acceleration of Maturity.
If an Event of Default has occurred and is continuing,then at the option of the o
Beneficiary,the amount of any payment related to the Event of Default and all unpaid Secured
Obligations are immediately due and payable, and no omission on the part of the Beneficiary to 0
exercise such option when entitled to do so may be construed as a waiver of such right. So long 2
as the Secretary of Housing and Urban Development or his/her successors or assigns, are the O
x
insurers or holders of the first mortgage on the Waterman Gardens Phase 1,FHA Project No.
143-35131,the provisions of this Section 7.2 shall not apply. v
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Section 7.3 The Beneficiary's Right to Enter and Take Possession.
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If an Event of Default has occurred and is continuing,the Beneficiary may: U
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(a) Either in person or by agent,with or without bringing any action or 1.
proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its
security,enter upon the Property and take possession thereof(or any part thereof)and of any of
the Security, in its own name or in the name of Trustee, and do any acts that it deems necessary
or desirable to preserve the value or marketability of the Property, or part thereof.or interest
therein, increase the income therefrom or protect the security thereof. The entering upon and
taking possession of the Security will not cure or waive any Event of Default or Notice of Sale
(as defined in Section 73(c),below)hereunder or invalidate any act done in response to such
Event of Default or pursuant to such Notice of Sale, and, notwithstanding the continuance in M
possession of the Security, Beneficiary will be entitled to exercise every right provided for in this
Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise =
the power of sale; LL
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(b) Commence an action to foreclose this Deed of Trust as a mortgage, x
appoint a receiver, or specifically enforce any of the covenants hereof; U.
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(c) Deliver to Trustee a written declaration of an Event of Default and
demand for sale, and a written notice of default and election to cause Trustor's interest in the
Security to be sold("Notice of Sale"),which notice Trustee or Beneficiary shall cause to be duly
filed for record in the Official Records of San Bernardino County; or a
(d) Exercise all other rights and remedies provided herein, in the instruments
by which the Trustor acquires title to any Security, or in any other document or agreement now a
or hereafter evidencing, creating or securing the Secured Obligations. o
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Section 7.4 Foreclosure By Power of Sale.
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Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained,the Beneficiary shall deliver to the Trustee the Notice of Sale and shall deposit with r
Trustee the Note which is secured hereby (and the deposit of which will be deemed to constitute L'
evidence that the Secured Obligations are immediately due and payable), and such receipts and a
evidence of any expenditures made that are additionally secured hereby as Trustee may require. r
3
(a) Upon receipt of the Notice of Sale from the Beneficiary, Trustee shall U)
cause to be recorded,published and delivered to Trustor such Notice of Sale as is then required
by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after the lapse of 0
that amount of time as is then required by law and after recordation of such Notice of Sale as
required by law, sell the Security, at the time and place of sale set forth in the Notice of Sale, °
whether as a whole or in separate lots or parcels or items, as Trustee deems expedient and in 2
such order as it determines, unless specified otherwise by the Trustor according to California =
Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of
the United States payable at the time of sale. Trustee shall deliver to such purchaser or
purchasers thereof its good and sufficient deed or deeds conveying the property so sold,but
without any covenant or warranty, express or implied. The recitals in such deed or any matters
of facts will be conclusive proof of the truthfulness thereof. Any person, including, without a
limitation, Trustor, Trustee or Beneficiary, may purchase at such sale. E
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(b) After deducting all reasonable costs, fees and expenses of Trustee, N
including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds
of sale to payment o£ (i)the,unpaid Principal amount of the Note; (ii) all other Secured E
Obligations owed to Beneficiary under the Loan Documents; (iii)all other sums then secured 0
hereby; and(iv)the remainder, if any,to Trustor. o
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(c) Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and from time to time thereafter, and without
further notice make such sale at the time fixed by the last postponement, or may, in its discretion, M
give a new Notice of Sale.
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Section 7.5 Receiver. LL
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If an Event of Default occurs and is continuing, Beneficiary, as a matter of right and r
without further notice to Trustor or anyone claiming under the Security, and without regard to U-
the then value of the Security or the interest of Trustor therein, may apply to any court having c
jurisdiction to appoint a receiver or receivers of the Security(or a part thereof), and Trustor ;`
hereby irrevocably consents to such appointment and waives further notice of any application a
therefor. Any such receiver or receivers will have all the usual powers and duties of receivers in
like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided
herein, and will continue as such and exercise all such powers until the date of confirmation of
sale of the Security, unless such receivership is sooner terminated.
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Section 7.6 Remedies Cumulative. N
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No right,power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right,power or remedy, but each and every such o
right,power and remedy will be cumulative and concurrent and will be in addition to any other a
right,power and remedy given hereunder or now or hereafter existing at law or in equity. E
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Section 7.7 No Waiver. U)
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(a) No delay or omission of the Beneficiary to exercise any right,power or 3
remedy accruing upon any Event of Default will exhaust or impair any such right,power or U)
remedy,and may not be construed to be a waiver of any such Event of Default or acquiescence
therein; and every right,power and remedy given by this Deed of Trust to the Beneficiary may c
be exercised from time to time and as often as may be deemed expeditious by the Beneficiary.
Beneficiary's express or implied consent to breach, or waiver of, any obligation of the Trustor o
hereunder will not be deemed or construed to be a consent to any subsequent breach, or further W
waiver, of such obligation or of any other obligations of the Trustor hereunder. Failure on the o
part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, ;
8.AJ
Loan Documents, (iv)releases any part of the Security from the lien of this Deed of Trust, or N
otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents,
(v)consents to the granting of any easement or other right affecting the Security, or(vi)mares or
consents to any agreement subordinating the lien hereof, any such act or omission will not
release, discharge,modify, change or affect the original liability under this Deed of Trust, or any
other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or
any maker, co-signer, endorser, surety or guarantor(unless expressly released);nor will any.such
act or omission preclude the Beneficiary from exercising any right,power or privilege herein
granted or intended to be granted in any Event of Default then made or of any subsequent Event
of Default,nor, except as otherwise expressly provided in an instrument or instruments executed
by the Beneficiary,will the lien of this Deed of Trust be altered thereby. _
Section 7.8 Suits to Protect the Security.
The Beneficiary has the power to (a) institute and maintain such suits and proceedings as
it may deem expedient to prevent any impairment of the Security and the rights of the
Beneficiary as may be unlawful or any violation of this Deed of Trust, (b)preserve or protect its
interest(as described in this Deed of Trust) in the Security, and(c)restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, Q
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
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Section 7.9 Trustee May file Proo's of Claim.
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In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, Ix
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property, o
the Beneficiary,to the extent permitted by law, will be entitled to file such proofs of claim and
other-documents as may be necessary or advisable in order to have the claims of the Beneficiary E
allowed in such proceedings and for any additional amount that becomes due and payable by the a)
Trustor hereunder after such date. Q
Section 7.10 Waiver. 3
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The Trustor waives presentment, demand for payment,notice of dishonor, notice of
protest and nonpayment,protest, notice of interest on interest and late charges, and diligence in o
taking any action to collect any Secured Obligations or in proceedings against the Security, in
connection with the delivery, acceptance,performance, default, endorsement or guaranty of this o
Deed of Trust. UJ
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ARTICLE 8
MISCELLANEOUS
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Section 8.1 Amendments.
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This Deed of Trust cannot be waived, changed, discharged or terminated orally,but only
by an instrument in writing signed by Beneficiary and Trustor. So long as the Secretary of Q
KH 378971.3
Packet Pg. 480
8.A.1
Housing and Urban Development or his/her successors or assigns, are the insurers or holders of y
the first mortgage on the Waterman Gardens—Valencia 9, FHA Project No. 143-35130, any
amendments under this Section 8.1 shalt be subject to prior HUD approval. R
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Section 8.2 Reconveyance by Trustee. E
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Upon written request of Beneficiary stating that all Secured Obligations have been paid
or forgiven, and all obligations under the Loan Documents have been performed in full,and
upon surrender of this Deed of Trust to Trustee for cancellation and retention,and upon payment
by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor,or to the a,
person or persons legally entitled thereto.
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Section 8.3 Notices.
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If at any time after the execution of this Deed of Trust it becomes necessary or
convenient for one of the parties hereto to serve any notice, demand or communication upon the
other party, such notice, demand or communication must be in writing and is to be served
personally or by depositing the same in the registered United States mail,return receipt E
requested, postage prepaid and (1) if intended for Beneficiary is to be addressed to: P
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Office of the City Manager
City of San Bernardino
300 N"D" Street, Sixth Floor
San Bernardino, CA 92418
Attn: Housing Director
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and(2) if intended for Trustor is to be addressed to:
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Waterman Gardens Partners 1,L.P. a,
9421 Haven Avenue y
Rancho Cucamonga, CA 91730 a
Attn: Chief Financial Officer 3
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Any notice, demand or communication will be deemed given,received,made or communicated o
on the date personal delivery is effected or, if mailed in the manner herein specified, on the a
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either o
party may change its address at any time by giving written notice of such change to Beneficiary w
or Trustor as the case may be, in the manner provided herein, at least ten(10)days prior to the o
date such change is desired to be effective. Trustor's limited partner shall have all the notice and cure >,
rights set forth in the Loan Agreement. j
Section 8.4 Successors and Joint Trustors.
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Where an obligation created herein is binding upon Trustor,the obligation also applies to a
and binds any transferee or successors in interest. Where the terms of the Deed of Trust have the
effect of creating an obligation of the Trustor and a transferee, such obligation will be deemed to
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KH 378971.3
Packet Pg.481
8.A.i
be a joint and several obligation of the Trustor and such transferee. Where Trustor is more than y
one entity or person, all obligations of Trustor will be deemed to be a joint and several obligation
of each and every entity and person comprising Trustor.
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Section 8.5 Captions. E
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The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
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Section 8.6 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or LL
other body of competent jurisdiction, such illegality or invalidity will not affect the balance of
the terms and provisions hereof,which terms and provisions will remain binding and x
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security,the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary or a
under foreclosure or other enforcement action or procedure,will be'considered to have been first E
paid or applied to the full payment of that portion of the debt that is not secured or partially
secured by the lien of this Deed of Trust. a
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Section 8.7 Governing Law.
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This Deed of Trust is governed by the laws of the State of California.
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Section 8.8 Gender and Number.
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In this Deed of Trust the singular includes the plural and the masculine includes the E
feminine and neuter and vice versa, if the context so requires. C
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Section 8.9 Deed of Trust. Mortgage. a
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Any reference in this Deed of Trust to a mortgage also refers to a deed of trust and any 3
reference to a deed of trust also refers to a mortgage. 3
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Section 8.10 Actions. o
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Trustor shall appear in and defend any action or proceeding purporting to affect the o
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Section 8.11 Substitution of Trustee. _
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Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee,the latter will be vested with all title,powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and E
substitution is to be made by written instrument executed by Beneficiary, containing reference to
this Deed of Trust and its place of record, which, when duly recorded in the proper office of the a
KH 378971.3
Packet Pg. 482
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8.A.i
county or counties in which the Property is situated,will be conclusive proof of proper N
appointment of the successor trustee.
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Section 8.12 Statute of Limitations. cM
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The pleading of any statute of limitations as a defense to any and all obligations secured E
by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 8.13 Acceptance by Trustee.
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Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is
made public record as provided by law. Except as otherwise provided by law,the Trustee is not
obligated to notify any party hereto of a pending sale under this Deed of Trust or of any action or
proceeding in which Trustor, Beneficiary, or Trustee is a party unless brought by Trustee.
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Section 8.14 Tax Credit Provisions. LL
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Notwithstanding anything to the contrary contained herein or in any documents secured
by this Deed of Trust or contained in any subordination agreement, and to the extent applicable, E
the Beneficiary acknowledges and agrees that in the event of a foreclosure or deed-in-lieu of
foreclosure(collectively, "Foreclosure")with respect to the Security encumbered by this Deed of a
Trust,the following rule contained in 26 U.S.C. Section 42(h)(6)(E)(ii), as amended, applies:
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For a period of three (3)years from the date of Foreclosure, with respect to any unit that M
had been regulated by the Regulatory Agreement with the California Tax Credit Allocation r
Committee: (i)none of the tenants occupying those units at the time of Foreclosure may be
evicted or their tenancy terminated(other than for good cause); (ii)nor may any rent be o
increased except as otherwise permitted under Section 42 of the Internal Revenue Code. _
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IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first N
above written.
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TRUSTOR: E
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Waterman Gardens Partners 1, L.P., a California limited partnership M
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By: WG Partners 1 MPG, LLC, a California limited liability c
company, its sole general partner =
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By: National Community Renaissance of California, its
sole member and manager U.
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A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.
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STATE OF CALIFORNIA )
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On , before me, ,Notary Public, x
personally appeared ,who proved to me on the LL
basis of satisfactory evidence to be the person(s)whose name(s) is/are subscribed to the within =
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s), or E
the entity upon behalf of which the person(s)acted, executed the instrument.
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I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the a
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
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EXHIBIT A
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LEGAL DESCRIPTION
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The land is situated in the State of California, County of San Bernardino, City of San
Bernardino and is described as follows: d
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RECORDING REQUESTED BY z
AND WHEN RECORDED MAIL TO:
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Office of the City Manager y
City of San Bernardino
300 N"D" Street, Sixth Floor co
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San Bernardino, CA -92418
Attn: Housing Director
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No fee for recording pursuant to E
Government Code Section 27383 a?
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REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Waterman Gardens Phase 1) c
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This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement") 'o
is dated February 15, 2016 and is between the City of San Bernardino, a charter city of the State
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of California(the "City"), and Waterman Gardens Partners 1, L.P., a California limited '-
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partnership ("Borrower").
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RECITALS r-
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A. Defined Terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
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B. Borrower is acquiring a leasehold interest in real property located at the northwest
corner of 610 East Olive Street, in the City of San Bernardino, County of San Bernardino, State
of California, as more particularly described in Exhibit A (the "Pro e "). Borrower intends to E
construct on the Property a sixty-two (62)unit multifamily affordable housing development d
(including one manager's unit) (the "Improvements"). The Improvements and the Property are a
referred to as the "Development".
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C. Pursuant to a HOME Investment Partnerships Act Loan Agreement by and
between the City and Borrower, dated as of March 17, 2015 (the "Loan Agreement"),the City
has made a loan of up to Seven Hundred Thirty Four Thousand Dollars ($734,000)of HOME w
Investment Partnerships Act funds ("HOME Funds")to fund costs associated with the p
construction of the Improvements(the "Loan"). The City has the authority to loan the HOME
Funds pursuant to 24 C.F.R. 92.205. v
D. The City has agreed to make the Loan on the condition that the Development be
maintained and operated in accordance with restrictions concerning affordability, operation, and
maintenance that are set forth in this Agreement and in the related documents evidencing the E
Loan.
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E. In consideration of receipt of the Loan at an interest rate substantially below the z
market rate, Borrower agrees to observe all the terms and conditions set forth below. _
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The parties therefore agree as follows. Cr
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ARTICLE 1
DEFINITIONS; EXHIBITS a
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1.1 Definitions.
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The following terms have the following meanings:
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(a) "Actual Household Size" means the actual number of persons in the
applicable household. to
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(b) "Adjusted Income" means the total anticipated annual income of all
persons in the Tenant household as calculated pursuant to 24 C.F.R. 92.203(b)(1). Adjusted
income includes income from all persons in the household, including nonrelated individuals.
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(c) "Agreement"has the meaning set forth in the first paragraph of this
Agreement.
(d) "City" has the meaning set forth in the first paragraph of this Agreement. y
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(e) "City Manager"means the person holding the office of city manager for c
the City pursuant to Article V, Section 100 of the Charter of the City of San Bernardino. o
(f) "County" means the County of San Bernardino, a political subdivision of v
the State of California. a
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(g) "Completion Date" means the date that all of the following have occurred:
(i)a final certificate of occupancy, or equivalent document is issued by the City to certify c
completion of the construction of the Development; (ii)the final disbursement of HOME funds E
for the Development has been made; (iii)the City has verified the Development complies with
the property standards set forth in 24 C.F.R. 92.251; and(iv)all project completion information a
has been entered by the City into the Integrated Disbursement and Information System (IDIS). Z
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(h) "Completion of Construction" means the date the construction of the
Development is completed as evidenced by the issuance of a certificate of occupancy or
equivalent document issued by the City,to certify completion of the construction of the UJ
Development. 0
(i) "City-Assisted Units"means the four(4)Units within the Development
designated as assisted by the City pursuant to this Agreement,which Units are "floating"Units
as defined in 24 C.F.R. 92.2520).
0) 'Deed of Trust"means the Deed of Trust with Assignment of Rents, d
Security Agreement and Fixture Filing of even date herewith by and among Borrower, as trustor,
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Packet Pg.489
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Fidelity National Title Insurance Company, as trustee, and the City, as beneficiary,that will z
encumber the Property to secure repayment of the Loan and Borrower's performance of the
covenants set forth in the documpnts evidencing the Loan.
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(k) "Development" has the meaning set forth in Paragraph B of the Recitals.
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(1) "High HOME Rent" means a monthly Rent amount not exceeding the y
maximum rent published by HUD for a Low Income Household for the applicable bedroom size
as set forth in 24 C.F.R. 92.252(a).
(m) "HOME" means Home Investment Partnerships Act Program funded
pursuant to the Cranston-Gonzales National Housing Act of 1990. r
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(n) "HOME Funds" has the meaning set forth in Paragraph C of the Recitals. LO
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(o) "HOME Regulations" means the regulations set forth in 24 C.F.R. Part 92.
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(p) "HOME Term" means the period beginning on the date of this Agreement
and ending on the twentieth(20th)anniversary of the date of this Agreement. ;
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(q) "HUD" means the United States Department of Housing and Urban
Development. 2
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(r) "Loan" has the meaning set forth in Paragraph C of the Recitals.
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(s) "Loan Agreement"has the meaning set forth in Paragraph C of the o
Recitals.
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(t) "Loan Documents" means the documents executed by Borrower o
evidencing the Loan including this Agreement,the Note, Deed of Trust, and Loan Agreement.
(u) "Low HOME Rent" means a monthly Rent amount not exceeding the
maximum rent published by HUD for a Very Low Income Household for the applicable bedroom
size or as otherwise set forth in 24 C.F.R. 92.252(b). a,
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(v) "Low Income Household" means a Tenant household with an Adjusted o
Income that does not exceed eighty percent(80%) of Median Income,with adjustments for
smaller and larger families, except that HUD may establish income ceilings higher or lower than
eighty percent(80%) of Median Income on the basis of HUD findings that such variations are W
necessary because of prevailing levels of construction costs or fair market rents, or unusually Z
high or low family incomes, as such definition may be amended pursuant to 24 C.F.R. Section x
92.2. An individual who is a student that is ineligible to receive Section 8 assistance under 24 :�
C.F.R. 5.612, and thus ineligible to receive any type of HOME assistance, shall not qualify as a
Low Income Household.
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(x) "Median Income" means the median gross yearly income, adjusted for z
Actual Household Size as specified herein, in the County of San Bernardino, California, as
published from time to time by HUD. In the event that such income determinations are no =
longer published, or are not updated for a period of at least eighteen(18)months,the City shall y
provide Borrower with other income determinations that are reasonably similar with respect to
methods of calculation to those previously published by HUD. co
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(y) "Note" means the promissory note of even date herewith that evidences
Borrower's obligation to repay the Loan, as such may be amended from time to time.
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(z) "Property" has the meaning set forth in Paragraph B of the Recitals. E
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(aa) "Rent"means the total monthly payments by the Tenant of a Unit for the
following: (i)use and occupancy of the Unit and land and associated facilities, including LO
parking; (ii)any reasonable and customary separately charged fees or service charges assessed
by Borrower which are required of all Tenants which meet the requirements under 24 C.F.R.
92.214(b)(3), other than security deposits; (iii)the City-approved utility allowance, calculated
pursuant to 24 C.F.R. 92.252(d), for the cost of an adequate.level of service for utilities paid by
the Tenant, including garbage collection, sewer,water, electricity, gas and other heating, cooking 'o
and refrigeration fuel, but not telephone service or cable TV; and (iv) any other interest,taxes,
fees or charges for use of the land or associated facilities and assessed by a public or private
entity other than Borrower, and paid by the Tenant. In no event shall the Rent of a City-Assisted L
Unit exceed the amount approved by the City pursuant to Section 2.2 hereof.
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(bb) "Service Provider" has the meaning set forth in Section 5.6.
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(cc) "Tenant" means the tenant household that occupies a Unit in the
Development.
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(dd) "Tenant Services" has the meaning set forth in Section 5.6.
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(ee) "Term" means the term of this Agreement which commences as of the
date of this Agreement, and unless sooner terminated pursuant to the terms of this Agreement,
expires on the date fifty-five (55) years from the Completion Date. Q
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(ff) "Unit(s)" means one (1) or more of the units in the Development. o
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(gg) "Very Low Income Household" means a household with an Adjusted
Income that does not exceed fifty percent(50%) of Median Income,with adjustments for smaller W
and larger families, except that HUD may establish income ceilings higher or lower than fifty 2
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percent(50%)of Median Income on the basis of HUD findings that such variations are necessary =
because of prevailing levels of construction costs or fair market rents, or unusually high or low
family incomes, as set forth in 24 C.F.R. Section 92.2. An individual who is a student that is
ineligible to receive Section 8 assistance under 24 C.F.R. 5.612, and thus ineligible to receive 0
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any type of HOME assistance, shall not qualify as a Very Low Income Household.
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' (hh) "Very Low Income Units" means the Units which,pursuant to Section a
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2.1(a)below, are required to be occupied by Very Low Income Households. _
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1.2 Exhibits N
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference: v,
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Exhibit A: Legal Description of the Property
Exhibit B: Schedule of HOME Rents
Exhibit C: Certificate of Continuing Program Compliance
Exhibit D: Form of Certification of Tenant Eligibility ;
Exhibit E: HUD Rider
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ARTICLE 2 7t,
AFFORDABILITY AND OCCUPANCY COVENANTS
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2.1 Occupancy Requirements. c
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(a) Very Low Income Units. During the Term, Borrower shall rent four(4)
City-Assisted Units, and ensure that these Units are occupied or, if vacant, available for
occupancy, by Very Low Income Households. a
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(b) Intermingling of Units. The City-Assisted Units are required to be four o
(4)two-bedroom Units and are to be intermingled throughout the Development and of o
comparable quality to all other Units. All Tenants must have equal access to and enjoyment of all L
common facilities in the Development.
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(c) Disabled Persons Occupancy. Borrower shall cause the Development to =
be operated at all times in compliance with the provisions of: (i)the Unruh Act, (ii)the
California Fair Employment and Housing Act, (iii) Section 504 of the Rehabilitation Act of
1973, (iv)the United States Fair Housing Act, as amended, and(v)the Americans With
Disabilities Act of 1990,which relate to disabled persons access. Borrower shall indemnify, a
protect,hold harmless and defend(with counsel reasonably satisfactory to the City)the City, and
its elected officials, officers and employees, from all suits, actions, claims, causes of action, S
costs, demands,judgments and liens arising out of Borrower's failure to comply with applicable
legal requirements related to housing for persons with disabilities. The provisions of this
subsection will survive expiration of the Term or other termination of this Agreement, and W
remain in full force and effect. 2
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2.2 Allowable Rent.
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(a) Very Low Income Rent. Subject to the provisions of Section 2.3 below, 0
the Rent paid by Tenants of Very Low Income Units may not exceed the Low HOME Rent
provided annually by the City.
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(b) No Additional Fees. Borrower may not charge any fee, other than Rent,to z
any Tenant of the City-Assisted Units for any housing or other services provided by Borrower. _
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2.3 Rent Increases; Increased Income of Tenants.
(a) Rent Increases. The proposed initial Rents and subsequent Rents for all
: City-Assisted Units shall be provided to the Borrower by the City prior to initial or subsequent C1,
occupancy and prior to a rent increase, and shall be subject to the HOME Regulations. A
schedule of current HOME rents is attached as Exhibit B. Borrower may not impose any Rent
increases on City-Assisted Units,without prior submission to the City of any proposed Rent
increases and without written approval from the City of the proposed Rent increases. The Rent
for such City-Assisted Units may be increased no more than once annually based upon the
annual income certification described in Article 3 and in no event shall.any increase exceed three
(3%)percent. Tenants shall be given at least sixty(60) days written notice prior to any Rent
increase. The City will provide Borrower with a schedule of maximum permissible Rents for the M
City-Assisted Units annually. v
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(b) Non-Qualifying Household. If, upon the annual certification of the income
a Tenant of a City-Assisted Unit, Borrower determines that the income of a Very Low Income c
Household has increased above the qualifying limit for a Low Income Household, such Tenant
shall be permitted to retain the Unit and upon expiration of the Tenant's lease and upon sixty(60)
days written notice,the Rent must be increased to the lesser of one-twelfth(1/12 th of thirty
percent(30%)of the actual Adjusted Income of the Tenant, or fair market rent(subject to 24
C.F.R. 92.252(i)(2)regarding low income housing tax credit requirements), and Borrower shall
rent the next available Unit to a Very Low Income Household as applicable to comply with the c
requirements of Section 2.1 above, at a Rent not exceeding the maximum Rent specified in o
Section 2.2, or re-designate another comparable Unit in the Development with a Very Low 2-
Income Household as applicable as a City-Assisted Unit,to meet the requirements of Section 2.1
above. Upon renting the next available Unit in accordance with Section 2.1 or re-designating o
another Unit in the Development as a City-Assisted Unit,the Unit with the over-income Tenant =
will no longer be considered a City-Assisted Unit.
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(c) Termination of Occupancy. Upon termination of occupancy of a City-
Assisted Unit by a Tenant, such Unit will be deemed to be continuously occupied by a household a
of the same income level as the initial income level of the vacating Tenant, until such Unit is Z,
reoccupied or another Unit is re-designated as a City-Assisted Unit, at which time categorization 0
of the Unit will be established based on the occupancy requirements of Section 2.1.
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2.4 Units Available to the Disabled. Borrower shall construct the Development in w
compliance with all applicable federal and state disabled persons accessibility requirements
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including but not limited to the Federal Fair Housing Act; Section 504 of the Rehabilitation Act =
of 1973; Title II and/or Title III of the Americans with Disabilities Act; and Title 24 of the
California Code of Regulations. In compliance with Section 504 of the Rehabilitation Act,
Borrower shall construct a minimum of four(4)units in the Development shall be constructed to
be readily accessible and usable by households with a mobility impaired member and a minimum
of two (2)units shall be constructed and to be readily accessible and usable by households with a
hearing or visually impaired member. L
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ARTICLE 3
INCOME CERTIFICATION AND REPORTING
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3.1 Income Certification. Borrower shall obtain, complete, and maintain on file,
immediately prior to initial occupancy and annually thereafter, income certifications from each N
Tenant renting any of the City-Assisted Units. Borrower shall cause each Tenant in a City- c
Assisted Unit to execute a Certification of Tenant Eligibility in the form attached as Exhibit D.
Borrower shall fill out the "Development Owner"portion of the Certification of Tenant
Eligibility and provide it to the City along with supporting documentation collected by Borrower.
Borrower shall make a good faith effort to verify the accuracy of the income provided by all E
applicants or all members of the occupying household, as the case may be, in the income ;;
certification. To verify the information Borrower shall take two or more of the following steps: 3
(i)obtain pay stubs for the most recent two months; (ii)obtain an income tax return for the most
recent tax year; (iii)conduct a credit agency or similar search; (iv)obtain an income verification co
form from the applicant's current employer verifying employment for the last two months; (v) v
obtain an income verification form from the Social Security Administration and/or the California
Department of Social Services if the applicant receives assistance from either of such agencies,
verifying assistance for the last two months; or(vi) if the applicant is unemployed and does not 'o
have a tax return, obtain another form of independent verification. Copies of the Certifications v
of Tenant Eligibility and accompanying documentation must be submitted to the City annually
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3.2 Reporting_Requirements. Borrower shall submit to the City(a)not later than the
forty-fifth (45th) day after the close of each calendar year, or such other date as may be requested °
by the City, a signed copy of the Certification of Program Compliance in the form attached as c
Exhibit C, and(b)within fifteen(15)days after receipt of a written request, any other
information or completed forms requested by the City in order to comply with reporting
requirements of HUD,the State of California, and the City. o
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3.3 Additional Information. Borrower shall provide any additional information
reasonably requested by the City. £
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3.4 Records. Borrower shall maintain complete, accurate and current records a,
pertaining to the Development, and shall permit any duly authorized representative of the City to a
inspect records, including records pertaining to income and household size of Tenants and Rent o
charged to such Tenants. All Tenant lists, applications and waiting lists relating to the
Development are to be at all times: (i) separate and identifiable from any other business of
Borrower, (ii)maintained as required by the City, in a reasonable condition for proper audit, and w
(iii) subject to examination during business hours by representatives of the City. Borrower shall 2
retain copies of all materials obtained or produced with respect to occupancy of the units for a =
period of at least five (5)years. The City may audit, examine and make copies of all books,
records or other documents of Borrower that pertain to the Development.
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3.5 HOME Record Requirements. For the period of the HOME Term all records
maintained by Borrower pursuant to Sections 3.2 and 3.4 above are to be (i)maintained in
compliance with all applicable HUD records and accounting requirements, and (ii) open to and z
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available for inspection and copying by HUD and its authorized representatives at reasonable z
intervals during normal business hours;provided however, records pertaining to Tenant income
vekifications, Rents, and Development physical inspections must be kept for the most recent
five(5)year period and are subject to HUD inspection for five(5)years after expiration of the 0)
HOME Term. Borrower is subject to the audit requirements set forth in 24 CFR 92.505 during
the HOME Term. N
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3.6 On-Site Inspection. The City may perform, or cause to be performed, an on-site
inspection of the Development(including Units, subject to the rights of Tenants) at least one (1) o
time per year upon twenty-four(24)hours' notice during normal business hours to monitor
compliance with this Agreement. Borrower shall cooperate in making the Property available for
such inspection. Borrower agrees and acknowledges that the City must conduct on-site ;
inspections, consistent with the requirements of 24 C.F.R. 92.504(d),to determine.compliance 3
with the property standards set forth in 24 C.F.R. 92.251, at least once every three (3) years after
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the completion of construction of the Development. M
After the completion of an inspection the City shall deliver a copy of the inspection r
report to the Borrower. If the City determines as a result of such inspection that there are any
life-threatening health and safety related deficiencies, Borrower has the obligation to correct >
such deficiencies immediately, in accordance with 24 C.F.R. 92.251. If the City determines as a v
result of the inspection that there are any deficiencies for any of the inspectable items in the
Development(other than those identified in the preceding sentence),the Borrower shall correct
such deficiencies within fifteen (15)days from the delivery of the inspection report or if a period
longer than fifteen (15) days is reasonably necessary to correct the deficiency,then Borrower
must begin to correct the deficiency within fifteen(15)days and correct the deficiency as soon as c
reasonably possible. In addition, the Borrower acknowledges that the City may re-inspect the o
Development to verify all deficiencies have been corrected or rely on third party documentation 2
submitted by the Borrower for non-hazardous deficiencies in conformance with 24 C.F.R
92.504(d). o
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ARTICLE 4
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OPERATION OF THE DEVELOPMENT
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4.1 Residential Use. Borrower shall operate the Development for residential use only ¢
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and such ancillary uses permitted at the Development as approved by the City. No part of the 0
Development may be operated as emergency shelters (including shelters for disaster victims)or
facilities such as nursing homes, convalescent homes,hospitals,residential treatment facilities,
correctional facilities,halfway houses,housing for students, or dormitories (including w
farmworker dormitories). 2
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4.2 Compliance with Loan Documents and Program Requirements. Borrower's r
actions with respect to the Property shall at all times be in full conformity with: (i)all
requirements of the Loan Documents; (ii) all requirements imposed on projects assisted with
HOME Funds as contained in 42 U.S.C. Section 12701, et seq., 24 C.F.R. Part 92, and other
implementing rules and regulations, as such may be amended or supplemented from time to time,
and (iii) any other regulatory requirements imposed on Borrower.
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4.3 Taxes and Assessments. Borrower shall pay all real and personal property taxes, _
assessments and charges and all franchise, income, employment, qld age benefit,withholding, �
sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to Cr
prevent any penalty from accruing,or any lien or charge from attaching to the Property;
provided,however,that Borrower may apply for a property tax exemption for the Property under co
any provision of law or contest in good faith, any such taxes, assessments, or charges. In the U)
event Borrower exercises its right to contest any tax, assessment, or charge against it, Borrower, °
on final determination of the proceeding or contest,will immediately pay or discharge any
decision or judgment rendered against it,together with all costs, charges and interest.
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4.4 Property Tax Exemption. Borrower shall not without the prior written consent of
the City apply for a property tax exemption for the Property under any provision of law except
California Revenue and Taxation Section 214(g).
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ARTICLE 5 r
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PROPERTY MANAGEMENT,MAINTENANCE AND TENANT SERVICES
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5.1 Management Responsibilities. Borrower is responsible for all management v
functions with respect to the Development, including without limitation the selection of Tenants
in accordance with the requirements of 24 C.F.R. 92.253(d), certification and recertification of U
household size and income, evictions, collection of rents and deposits,maintenance, landscaping, U)
routine and extraordinary repairs, replacement of capital items, and security. The City has no
responsibility for management of the Development. Borrower shall retain a professional property °
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management company approved by the City in its reasonable discretion to perform Borrower's °
management duties hereunder. An on-site property manager is also required.
5.2 Management Agent. Borrower shall cause the Development to be managed by an o
experienced management agent reasonably acceptable to the City,with a demonstrated ability to
operate residential facilities like the Development in a manner that will provide decent, safe, and
sanitary housing(the "Management Agent"). The City pre-approves the National Community
Renaissance of California as the initial Management Agent. Borrower shall submit for the City's
approval the identity of any proposed subsequent Management Agent. Borrower shall also
submit such additional information about the background, experience and financial condition of
any proposed Management Agent as is reasonably necessary for the City to determine whether r
the proposed Management Agent meets the standard for a qualified Management Agent set forth
above. If the proposed Management Agent meets the standard for a qualified Management
Agent set forth above,the City shall approve the proposed Management Agent by notifying W
Borrower in writing. Unless the proposed Management Agent is disapproved by the City within 2
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thirty(30) days,which disapproval is to state with reasonable specificity the basis for =
disapproval, it shall be deemed approved. v
5.3 Periodic Performance Review. The City reserves the right to conduct an annual
(or more frequently, if deemed necessary by the City)review of the management practices and
financial status of the Development. The purpose of each periodic review will be to enable the
City to determine if the Development is being operated and managed in accordance with the
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requirements and standards of this Agreement. Borrower shall cooperate with the City in such Z
reviews. _
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5.4 Replacement of Management Agent. If, as a result of a periodic review,the City a
determines in its reasonable judgment that the Development is not being operated and managed
in accordance with any of the material requirements and standards of this Agreement,the City
shall deliver notice to Borrower of its intention to cause replacement of the Management Agent, c
including the reasons therefor. Within fifteen(15) days after receipt by Borrower of such written a
notice,the City staff and Borrower shall meet in good faith to consider methods for improving o
the financial and operating status of the Development, including,without limitation,replacement
of the Management Agent. HUD and Senior Lender(which for the purposes of this Section shall £
be Wells Fargo Bank,National Association)and the Investor Limited Partner(as defined in
Section 1.1 of the Loan Agreement)will receive an opportunity to participate in all meetings .
required under this Section.
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If, after such meeting, City staff recommends in writing the replacement of the �.
Management Agent, Borrower shall promptly dismiss the then-current Management Agent, and
shall appoint as the Management Agent a person or entity meeting the standards for a
management agent set forth in Section 5.2 above and approved by the City pursuant to Section >
5.2 above, and subject to the rights of HUD,the Senior Lender and the Investor Limited Partner. v
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Any contract for the operation or management of the Development entered into by 2
Borrower shall provide that the Management Agent may be dismissed and the contract a
terminated as set forth above. Failure to remove the Management Agent in accordance with the a:
provisions of this Section constitutes a default under this Agreement, and the City may enforce c
this provision through legal proceedings as specified in Section 6.7 below. o
5.5 Approval of Management Policies. Borrower shall submit its written
management policies with respect to the Development to the City for its review, and shall amend o
such policies in any way necessary to ensure that such policies comply with the provisions of this
Agreement.
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5.6 Tenant Services Provider.
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(a) The Borrower will be providing on-site services which Borrower will a
make available to all Tenants in the Development(the "Tenant Services"). The Borrower shall o
submit to the City for approval the name and qualifications of any proposed services provider
(the "Services Provider"). a'
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(b) The Services Provider shall have demonstrated the ability to provide 2
Tenant Services in residential facilities like the Development in an effective manner. The =
Borrower shall submit such additional information about the background, experience and
financial condition of any proposed Services Provider as is reasonably necessary for the City to v
determine whether the proposed Services Provider meets the standards for a qualified Services
Provider of developments of this type.
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(c) If the proposed Services Provider meets the standard for a qualified z
Services Provider set forth above,the City shall approve the proposed Services Provider by
notifying Borrower in writing. Unless the proposed Services Provider is disapproved by the City
within thirty(30) days,which disapproval is to state with reasonable specificity the basis for y
disapproval, it shall be deemed approved. The City hereby approves Hope Through Housing ;
Foundation as the initial Services Provider for the Development. CO
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5.7 Property Maintenance. Borrower shall maintain, for the entire Term of this
Agreement, all interior and exterior Improvements, including landscaping, on the Property in M
good condition and repair(and, as to landscaping, in a healthy condition) and in accordance with C
all applicable laws, rules, ordinances,orders and regulations of all federal, state, county, E
municipal, and other governmental agencies and bodies having or claiming jurisdiction and all
their respective departments, bureaus, and officials, and in a decent, safe, sanitary condition and
in good repair pursuant to the Uniform Physical Conditions Standards established by HUD
pursuant to 24 C.F.R. 5.703 and as required under 24 C.F.R. 92.251.
The City places prime importance on quality maintenance to protect its investment and to
ensure that all City and City-assisted affordable housing projects within the City are not allowed
to deteriorate due to below-average maintenance. Normal wear and tear of the Development will c
be acceptable to the City assuming Borrower agrees to provide all necessary improvements to v
assure the Development is maintained in good condition. Borrower shall make all repairs and
replacements necessary to keep the improvements in good condition and repair. L
In the event that Borrower breaches any of the covenants contained in this section and
such default continues for a period of five(5) days after written notice from the City with respect °
to graffiti, debris,waste material, and general maintenance or thirty(30) days after written notice
from the City with respect to landscaping and building improvements,then the City, in addition
to whatever other remedy it may have at law or in equity, has the right to enter upon the Property
and perform or cause to be performed all such acts and work necessary to cure the default. o
Pursuant to such right of entry,the City is permitted(but is not required)to enter upon the
Property and to perform all acts and work necessary to protect, maintain, and preserve the
improvements and landscaped areas on the Property, and to attach a lien on the Property, or to £
assess the Property, in the amount of the expenditures arising from such acts and work of
protection,maintenance, and preservation by the City and/or costs of such cure,which amount Q
shall be promptly paid by Borrower to the City upon demand. �.
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5.8 Crime Prevention Program. During the Term of this Agreement Borrower agrees
to participate in the San Bernardino Police Department's Crime Free Multi-Housing program(the
"Crime Prevention Program"). The City's periodic review of the management of the w
Development pursuant to Section 5.3 will include an evaluation of Borrower's participation in p
the Crime Prevention Program. _
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ARTICLE 6 i
MISCELLANEOUS
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6.1 Lease Provisions. In leasing the Units within the Development,Borrower shall N
use a form of written lease approved by the City. The lease must not contain any provision
which is prohibited by 24 C.F.R. Section 92.253(b)and any amendments thereto. The form of co
lease must comply with all requirements of this Agreement,the other Loan Documents and must,
among other matters:
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(a) provide for termination of the lease for failure to: (i)provide any
information required under this Agreement or reasonably requested by Borrower to establish or
recertify the Tenant's qualification, or the qualification of the Tenant's household, for occupancy r
in the Development in accordance with the standards set forth in this Agreement, or(ii) qualify
as a Very Low Income Household or Low Income Household as a result of any material
misrepresentation made by such Tenant with respect to the income computation. M
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(b) be for an initial term of not less than one (1) year,unless by mutual
agreement between the Tenant and Borrower, and provide for no increase in Rent during such
year. After the initial year of tenancy,the lease may be month-to-month by mutual agreement of c
Borrower and the Tenant. Notwithstanding the above, any rent increases are subject to the v
requirements of Section 2.3 (a) above.
(c) include a provision which requires a Tenant who is residing in a Unit
required to be accessible pursuant to Section 2.4 and who is not in need of an accessible Unit to
move to a non-accessible Unit when a non-accessible Unit becomes available and another Tenant °
or prospective Tenant is in need of an accessible Unit. c
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6.2 Lease Termination. Any termination of a lease or refusal to renew a lease for a
City-Assisted Unit within the Development must be in conformance with 24 C.F.R. 92.253(c), o
and must be preceded by not less than sixty(60)days written notice to the Tenant by Borrower
specifying the grounds for the action.
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6.3 Nondiscrimination.
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(a) All of the Units must be available for occupancy on a continuous basis to a
members of the general public who are income eligible. Except as provided in subsection(b) o
below,Borrower may not give preference to any particular class or group of persons in renting or
selling the Units, except to the extent that the Units are required to be leased to income eligible
households pursuant to this Agreement. Borrower herein covenants by and for Borrower, w
assigns, and all persons claiming under or through Borrower,that there exist no discrimination
against or segregation of, any person or group of persons on account of race, color, creed, _
religion, sex, gender, gender identity, gender expression, sexual orientation marital status, r
national origin, source of income (e.g., SSI), ancestry, or disability, age, or military and veteran
status, in the leasing, subleasing,transferring, use, occupancy,tenure, or enjoyment of any unit
nor will Borrower or any person claiming under or through Borrower, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection, E
location,number,use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of
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any unit or in connection with the employment of persons for the construction, operation and
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management of any unit. Borrower shall comply with Executive Orders 11246, 11375, 11625, _
12138, 12431, 12250, 13672, Title VII of the Civil Rights Act of 1964,the California Fgir 3
Housing and Employment Act and other applicable Federal, State and County laws and Cr
regulations and policies relating to equal employment and contracting opportunities, including
laws and regulations hereafter enacted.
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(b) Borrower shall accept as Tenants, on the same basis as all other
prospective Tenants,persons who are recipients of federal certificates for rent subsidies pursuant
to the existing housing program under Section 8 of the United States Housing Act,or its
successor. Borrower may not apply selection criteria to Section 8 certificate or voucher holders E
that is more burdensome than criteria applied to all other prospective Tenants,nor will Borrower ;
apply or permit the application of management policies or lease provisions with respect to the
Development which have the effect of precluding occupancy of units by such prospective
Tenants.
6.4 Term. The provisions of this Agreement apply to the Property for the entire Term
even if the Loan is paid in full prior to the end of the.Term. This Agreement binds any c
successor,heir or assign of Borrower,whether a change in interest occurs voluntarily or >
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involuntarily, by operation of law or otherwise, except as expressly released by City. City is
making the Loan on the condition, and in consideration of,this provision, and would not do so
otherwise. .L
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6.5 Notice of Expiration of Term.
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(a) At least six(6)months prior to the expiration of the Term, Borrower shall o
provide by first-class mail,postage prepaid, a notice to all Tenants containing: (i)the anticipated
date of the expiration of the Term; (ii)any anticipated increase in Rent upon the expiration of the
Term; (iii) a statement that a copy of such notice will be sent to the City; and(iv)a statement that o
a public hearing may be held by the City on the issue and that the Tenant will receive notice of c
the hearing at least fifteen(15) days in advance of any such hearing. Borrower shall also file a
copy of the above-described notice with the City Manager. £
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(b) In addition to the notice required above,Borrower shall comply with the a
requirements set forth in California Government Code Sections 65863.10 and 65863.11. Such
notice requirements include: (i)a twelve(12)month notice to existing tenants,prospective Y
tenants and Affected Public Agencies (as defined in California Government Code Section
65863.10(a))prior to the expiration of the Term, (ii) a six(6)month notice requirement to
existing tenants,prospective tenants and Affected Public Agencies prior to the expiration of the W
Term; (iii)a notice of an offer to purchase the Development to "qualified entities" (as defined in 0
California Government Code Section 65863.11(d)), if the Development is to be sold within five =
(5)years of the end of the Term; and (iv) a notice of right of first refusal within the one hundred t
eighty(180) day period that qualified entities may purchase the Development.
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6.6 Covenants to Run With the Land. The City and Borrower hereby declare their
express intent that the covenants and restrictions set forth in this Agreement run with the land, d
and bind all successors in title to the Property,provided, however,that on the expiration of the
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Term of this Agreement said covenants and restrictions expire. Each and every contract, deed or CD
other instrument hereafter executed covering or conveying the Property or any portion thereof, is
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to be held conclusively to have beerk executed, delivered and accepted subject to the covenants
and restrictions, regardless of whether such covenants or restrictions are set forth in such N
contract, deed or other instrument,unless the City expressly releases such conveyed portion of
the Property from the requirements of this Agreement. co
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6.7 Enforcement by The City. If Borrower fails to perform any obligation under this
Agreement, and fails to cure the default within thirty(30)days after the City has notified o
Borrower in writing of the default or, if the default cannot be cured within thirty(30) days, fails
to commence to cure within thirty(30)days and thereafter diligently pursue such cure and £
complete such cure within ninety(90)days,the City may enforce this Agreement by any or all of
the following actions,or any other remedy provided by law: c
(a) Calling the Loan. The City may declare a default under the Note, M
accelerate the indebtedness evidenced by the Note, and proceed with foreclosure under the Deed
of Trust. _
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(b) Action to Compel Performance or for Damages. The City may bring an >
action at law or in equity to compel Borrower's performance of its obligations under this ci
Agreement, and may seek damages. >
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(c) Remedies Provided Under Loan Documents. The City may exercise any
other remedy provided under the Loan Documents. o!
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6.8 Attorneys' Fees and Costs. In any action brought to enforce this Agreement,the o
prevailing party must be entitled to all costs and expenses of suit, including reasonable attorneys'
fees. This section must be interpreted in accordance with California Civil Code Section 1717
and judicial decisions interpreting that statute. o
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6.9 Recording and Filing. The City and Borrower shall cause this Agreement, and all
amendments and supplements to it,to be recorded in the Official Records of the County of San
Bernardino.
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6.10 Governing Law. This Agreement is governed by the laws of the State of Q
California. o
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6.11 Waiver of Requirements. Any of the requirements of this Agreement may be
expressly waived by the City in writing, but no waiver by the City of any requirement of this
Agreement extends to or affects any other provision of this Agreement, and may not be deemed 2
to do so. 0
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6.12 Amendments. This Agreement may be amended only by a written instrument L)
executed by all the parties hereto or their successors in title that is duly recorded in the official
records of the County of San Bernardino.
6.13 Notices. Any notice requirement set forth herein will be deemed to be satisfied E
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three (3) days after mailing of the notice first-class United States certified mail, postage prepaid, z
addressed to the appropriate party as follows:
a)
City: Office of the City Manager 4)
City of San Bernardino
300 N"D" Street, Sixth Floor co
San Bernardino, CA 92418 U)
Attn: Housing Director
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Borrower: Waterman Gardens Partners 1, L.P.
9421 Haven Avenue
Rancho Cucamonga, CA 91730
Attn: Chief Financial Officer
With a copy to: M
Law Offices of Edward A. Hopson
655A No. Mountain Avenue
Upland, CA 91786
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With a copy to:
Wells Fargo Community Lending& Investment
Wells Fargo Bank Affordable Housing
Community Development Corporation
301 South College Street, 171h Floor
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MAC D1053-170 0
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Charlotte,NC 28288 0
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With a copy to:
Kutak Rock o
1650 Farnam Street
Omaha,NE 68102
Attn: Robert Coon E
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Such addresses may be changed by notice to the other party given in the same manner as a
provided above.
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6.14 Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable,the validity, legality and
enforceability of the remaining portions of this Agreement will not in any way be affected or w
impaired thereby. E
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6.15 Multiple Originals; Counterparts. This Agreement may be executed in multiple
originals, each of which is deemed to be an original, and may be signed in counterparts. v
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6.16 Revival of Agreement after Foreclosure. In the event there is a foreclosure of the
Property,this Agreement will revive according to its original terms if, during the Term,the d
owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes =
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the former owner or those with whom the former owner has or had family or business ties, z
obtains an ownership interest in the Development or Property. m,
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6.17 HUD Rider. The HUD Rider is attached to this Agreement as Exhibit E, and
incorporated into this Agreement by this reference.
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WHEREAS,this Agreement has been entered into by the undersigned as of the Effective i
Date. Y
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BORROWER: 0
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WATERMAN GARDENS PARTNERS 1, L.P., a California
limited partnership c
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By: WG Partners 1 MGP, LLC,-a California limited Y
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liability company, its sole general partner
By: National Community Renaissance of
California, its sole member and manager
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By.
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Michael M. Ruane, Executive Vice o
President
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CITY:
CITY OF SAN BERNARDINO �
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By: v�
Allen Parker, City Manager c
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Date:
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APPROVED AS TO FORM:
Gary D. Saenz ;)
City Attorney
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A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
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STATE OF CALIFORNIA ) C
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On , before me, ,Notary Public,
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personally appeared ,who proved to me on the M
basis of satisfactory evidence to be the person(s)whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s), or
the entity upon behalf of which the person(s)acted, executed the instrument. c
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct. '-
WITNESS my hand and official seal. U)
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A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
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personally appeared ,who proved to me on the M
basis of satisfactory evidence to be the person(s)whose name(s) is/are subscribed to the within `
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s), or =
the entity upon behalf of which the person(s) acted, executed the instrument. c
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal. y
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LEGAL DESCRIPTION
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The land is situated in the State of California, County of San Bernardino, City of San Bernardino
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HOME PROGRAM RENTS 0
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The attached HOME Rents reflect the current HOME rents as of the Effective Date. The initial
Rents and subsequent Rents for all City-Assisted Units must be provided to the Borrower by the co
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City prior to occupancy and are subject to the HOME Regulations. The City will provide =
Borrower with a schedule of maximum permissible Rents for the City-Assisted Units annually.
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EXHIBIT C z
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JNITIAL CERTIFICATE OF
PROGRAM COMPLIANCE y
Waterman Gardens Partners 1, L.P.,a California limited partnership("Owner"),hereby certifies that Cn
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it will comply with all applicable, ongoing HOME Program requirements for the Property's U)
Affordability Period which has been determined to be fifty-five(55)years from the date of issuance
of the Certificate of Occupancy for the above-described Project. Affordability shall be maintained
as follows:
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[Insert project description]. ;
During the term of the Regulatory Agreement the Owner will rent seven (7) City-Assisted Units,
and ensure that these units are occupied or, if vacant, available for occupancy, by Very Low
Income Households. —
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Property owners and managers have participated in the San Bernardino Police Department's
Crime Free Multi-Housing Program, wherein specialized training and other resources are 'o
provided to multi-family property owners and managers to reduce the potential for onsite v
criminal activity. Completion of the Department's program has been achieved and will be
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maintained by the owner/representative and/or regional/-onsite property manager.
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Owner is maintaining and attaching the following records and reports in order to assist the City in
meeting its record keeping and reporting requirements under the HOME Program: _
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1. Files on the annual review and certification of tenant income; R
2. All information on the qualification of affordable rents;
3. Terms and conditions of all signed leases between Tenants and Owner; °
4. All other reports and records requested by City pursuant to the Loan
Documents.
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Waterman Gardens Partners 1, L.P., a California limited partnership c
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By: WG Partners 1 MGP, LLC, a California limited liability
company, its sole general partner
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By: National Community Renaissance of California, its r
sole member and manager
By: co
Michael M. Ruane, Executive Vice President
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ANNUAL CERTIFICATION OF z
CONTINUING PROGRAM COMPLIANCE
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Waterman Gardens Partners 1,L.P.,a California limited partnership("Owner"),hereby certifies that Cr
it will comply with all applicable, ongoing HOME Program requirements for the Property's
Affordability Period which has been determined to be fifty-five(55)years from the date of issuance co
of the Certificate of Occupancy for the above-described Project. Affordability shall be maintained
as follows:
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[Insert project description]. E
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During the term of the Regulatory Agreement the Owner will rent four (4) City-Assisted Units,
and ensure that these units are occupied or, if vacant, available for occupancy, by Very Low
Income Households. M
Property owners and managers have participated in the San Bernardino Police Department's
Crime Free Multi-Housing Program, wherein specialized training and other resources are
provided to multi-family property owners and managers to reduce the potential for onsite 'o
criminal activity. Completion of the Department's program has been achieved and will be v
maintained by the owner/representative and/or regional/-onsite property manager.
Owner is maintaining and attaching the following records and reports in order to assist the City in
meeting its record keeping and reporting requirements under the HOME Program:
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1. Files on the annual review and certification of tenant income;
2. All information on the qualification of affordable rents;
3. Terms and conditions of all signed leases between Tenants and Owner;
4. All other reports and records requested by City pursuant to the Loan °
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Documents. _
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OWNER: N
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Waterman Gardens Partners 1, L.P., a California limited partnership
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company, its sole general partner )
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CERTIFICATE OF z
CONTINUING PROGRAM COMPLIANCE
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The following information with respect to Waterman Gardens Phase 1 Apartments (the
"Development"), is being provided by Waterman Gardens Partners 1, L.P., a California limited co
partnership (the "Owner") to the City of San Bernardino, (the "City"), pursuant to that certain
HOME Investment Partnerships Act Loan Agreement dated as of February 15, 2016 and the
Regulatory Agreement dated as of February 15, 2016 with respect to the Development:
(A) The total number of residential units which are completed and available for occupancy E
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The total number of such units occupied is Lo
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(B) The following residential units (identified by unit number) have been designated City-
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Assisted Units, as described in the Regulatory Agreement(for a total of );
(C) The following residential units which are included in (B) above, have been designated as c
City-Assisted Units since 20 , the date on which the last v
"Certificate of Continuing Program Compliance" was filed with the City by
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Unit Number Previous Designation of Replacing Unit Number
Unit(if an )
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If a floating unit was substituted, please attach any information on unit substitutions and
filling of vacancies to evidence maintenance of required unit mix and income targeting.) E
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(D) The following residential units are considered to be occupied by Very Low Income a
Households and Low Income Households based on the information set forth below: Z,
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Date of Persons Total Monthly 0)
Number Adjusted Initial Rental W
Unit Name of Tenant Residing w
of Unit No. in Unit Gross Occupancy Amount g
Income
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(E) In renting the residential units in the Development, Owner has not given preference to z
any particular group or class of persons not allowed under the Regulatory Agreement
(except for persons who qualify as qualified Very Low Income Households). All of the
residential units in the Development have been rented pursuant to a written lease, and Cr
the term of each lease is at least 12 months. A copy of the form lease for City-Assisted
Units is attached.
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(F) Property owners and managers have participated in the San Bernardino Police 4)
Department's Crime Free Multi-Housing Program, wherein specialized training and other
resources are provided to multi-family property owners and managers to reduce the c
potential for onsite criminal activity. Completion of the Department's program has been E
achieved and is being maintained by the owner/representative and/or regional/-onsite 0
property manager.
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(G) Each building in the Development and all City-Assisted Units in the Development are M
suitable for occupancy and comply with all applicable State and local health, safety and
other applicable codes, ordinances, and requirements and the ongoing property
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standards, as specified in Section of the 5.7 of the Regulatory Agreement.
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(H) The information provided in this "Certificate of Continuing Program Compliance" is v
accurate and complete, and no matters have come to the attention of Owner which would
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indicate that any of the information provided herein, or in any "Certification of Tenant
Eligibility obtained from the tenants named herein, is inaccurate or incomplete in any
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IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of Owner, on this
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OWNER: °
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Waterman Gardens Partners 1, L.P., a California limited partnership E
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By: WG Partners 1 MGP,LLC, a California limited liability a
company, its sole general partner
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EXHIBIT D z
FORM OF CERTIFICATION OF TENANT ELIGIBILITY
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Rental Unit U)
Street Address Unit No
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City Zip Code
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I/We, the undersigned, being first duly sworn, state that I/we have read and answered fully and a;
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truthfully each of the following questions for all persons who are to occupy the unit in the above
Development for which application is made, all of whom are listed below:
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1. 2. 3. 4. 5.
Name of Members Relationship to Place of
in the Household Head of Household Age Ethnicity Em to ment c
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Ethnicity: ❑ White ❑ Black or African American ❑ Asian ❑ Asian & White ❑ c
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❑ Native Hawaiian or Other Pacific Islander ❑ American Indian or Alaska Native & White
❑ Black or African American & White ❑ American Indian or Alaska Native&Black or (D
African American
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❑ Other Multi Race ❑ Hispanic
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Date of Occupancy of Rental Unit by Tenant:
Date of Lease Signed for Rental Unit by Tenant: a
Amount of Rent Paid Per Month: Z,
Certification Date (Earlier of Date of Occupancy or Date Lease signed):
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6. Anticipated Annual Income. The anticipated total annual income from all sources of
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each person listed in 1 for the twelve (12) month period beginning on the Certification w
Date listed above, including income described in (a) below, but excluding all income p
described in (b) below, is $ z
(a) The amount set forth above includes all of the following income (unless such
income is described in (b) below): all wages and salaries, overtime pay, 3
commissions, fees, tips and bonuses before payroll deductions; net income from
the operation of a business or profession or from the rental of real or personal a)
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property (without deducting expenditures for business expansion or amortization
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of capital indebtedness or any allowance for depreciation of capital assets); z
interest and dividends (including income from assets as set forth in item 7(b)
= below); full amount of periodic payments received from Social security, annuities,
insurance policies, retirement funds, pensions, disability or death benefits and N
other similar types of periodic receipts; payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation and CO
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severance pay; the maximum amount of public assistance available to the above c
persons; periodic and determinable allowances, such as alimony and child
support payments and regular contributions and gifts received from persons not cc
residing in the dwelling; all regular pay, special pay and allowances of a member r_
of the Armed Forces (whether or not living in the dwelling)who is the head of the E
household or spouse; and any earned income tax credit to the extent it exceeds W
income tax liability. c
(b) The following income is excluded from the amount set forth above: casual,
sporadic or irregular gifts; amounts that are specifically for or in reimbursement
of medical expenses; lump sum additions to family assets, such as inheritances,
insurance payment(including payments under health and accident insurance and c
worker's compensation), capital gains and settlement for personal or property o
losses; amounts of educational scholarships paid directly to student or v
educational institution, and amounts paid by the government to a veteran for
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use in meeting the costs of tuition, fees, books and equipment, but in either case L
only to the extent used for such purposes; hazardous duty pay to a member of
the household in the armed forces who is away from home and exposed to 4-
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hostile fire; relocation payments under Title II of the Uniform Relocation r_
Assistance and Real Property Acquisition Policies Act of 1970; income from r
employment of children (including foster children) under the age of eighteen R
(18) years; foster child care payments; the value of coupon allotments under the
Food Stamp Act of 1977; payments to volunteers under the Domestic Volunteer °
Service Act of 1973; payments received under the Alaska Native Claims
Settlement Act; income derived from certain submarginal land of the United
States that is held in trust for certain Indian tribes; payments on allowances E
made under the Department of Health and Human Services' Low-Income Home a
Energy Assistance Program; and payments received from the Job Partnership a
Training Act. Z
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7. Net Family Assets. If any of the persons described in item 1 above (or any person
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whose income or contributions were included in item 6)has any savings, stocks, bonds,
equity in real property or other form of capital investment(excluding interests in Indian
trust lands), provide: 0
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(a) the total value of all such assets owned by all such persons: $
and
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(b) the amount of income expected to be derived from such assets
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in the twelve (12) month period commencing this date: $ d
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8. Students N
(a) Will any of the persons listed in item 1 above be or have they been full-time N
students during five (5) calendar months of this calendar year at an educational c
institution (other than a correspondence school) with regular faculty and
students? R
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Yes No E
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(b) (Complete only if the answer to Question 8(a) is "Yes"). Is any such person
(other than nonresident aliens) married and eligible to file a joint federal income ;O
tax return, a veteran of the U.S. military?
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The above information is full, true, and complete to the best of my knowledge. I have no c
objections to inquiries being made for the purpose of verifying the statements made herein. v
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Signature: Date 4-
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A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document. z
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STATE OF CALIFORNIA ) O
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On , before me, ,Notary Public,
personally appeared ,who proved to me on the M
basis of satisfactory evidence to be the person(s)whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s)on the instrument the person(s), or
the entity upon behalf of which the person(s)acted, executed the instrument. c
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal. N
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FOR COMPLETION BY DEVELOPMENT OWNER ONLY: z
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A. Calculation of eligible income: _ 3
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(1) Enter amount entered for entire household in 6 above: $
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(2) If the amount entered in 7(a) above is greater than $5,000, enter $
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(i) the product of the amount entered in 7(a) above multiplied c
by the current passbook savings rate as determined by HUD: $ E
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(ii) the amount entered in 7(b) above: $ LO
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(iii) enter the greater of line (i) or line (ii): $
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(3) TOTAL ELIGIBLE INCOME (Line A(1) plus line A(2)(iii)): $ c
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B. Enter number of family members listed in item 1 above:
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C. The amount entered in A(3) (Total Eligible Income) is: $
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Less than $ of median income for the area in which the Development °
is located, which is the maximum income at which a household may be
determined to be a qualifying tenant as that term is defined in the Agreement.
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More than the above-mentioned amount.
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D. Number of units assigned: E
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E. Monthly rent: $ t
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F. This unit (was/was not) last occupied for a period of thirty-one (3 1) consecutive days
by a person or persons whose adjusted income, as certified in the above manner, was
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equal to or less than the amount at which a person would have qualified as a qualifying
tenant under the terms of the Agreement.
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G. Applicant:
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Qualifies as a qualifying tenant.
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Does not qualify as a qualifying tenant.
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EXHIBIT E z
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HUD RIDER
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This RIDER TO RESTRICTIVE COVENANTS is made as of February 15,2016 by
WATERMAN GARDENS PARTNERS 1, L.P., a California limited partnership("Borrower") co
and THE CITY OF SAN BERNARDINO, a public body, corporate and politic ("Agency"),but U)
shall only be effective so long as the Secretary of Housing and Urban Development or his/her
successors or assigns are the insurers or holders of the first mortgage on the Waterman Gardens
Phase 1,FHA Project No. 143-35131.
WHEREAS,Borrower has obtained or intends to obtain financing from Wells Fargo E
Bank,National Association("Lender")for the benefit of the project known as Waterman
Gardens Phase 1, FHA Project No. 143-35131 ("Project"),which loan is or will be secured by a
Multifamily Deed of Trust, Assignment of Rents and Security Agreement("Security M
Instrument")to be recorded in the Recorder's Office of San Bernardino County, California
("Records"), and shall be insured by the United States Department of Housing and Urban
Development("HUD");
WHEREAS, Borrower has received a loan from the Agency, which Agency is requiring C
certain restrictions be recorded against the Project including that certain Regulatory Agreement
and Declaration of Restrictive Covenants dated March 17, 2015 (the "Restrictive Covenants");
and
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WHEREAS, HUD requires as a condition of its insuring Lender's financing to the c
Project,that the lien and covenants of the Restrictive Covenants (with the exception of the r-
affordability covenants and restrictions set forth in Article II hereof)be subordinated to the lien,
covenants, and enforcement of the Security Instrument; and o
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WHEREAS,the Agency has agreed to subordinate the Restrictive Covenants(with the o
exception of the affordability covenants and restrictions set forth in Article II hereof) to the lien
of the Mortgage Loan in accordance with the terms of this Rider.
a)
NOW, THEREFORE, in consideration of the foregoing and for other consideration the
receipt and sufficiency of which are hereby acknowledged,the parties hereby agree as follows: a,
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(a) In the event of any conflict between any provision contained elsewhere in the c
Restrictive Covenants and any provision contained in this Rider, the provision contained in this cc
Rider shall govern and be controlling in all respects as set forth more fully herein.
(b) The following terms shall have the following definitions: w
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"Code"means the Internal Revenue Code of 1986, as amended. _
"HUD" means the United States Department of Housing and Urban Development.
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"HUD Regulatory Agreement"means the Regulatory Agreement between Borrower and HUD
with respect to the Project, as the same may be supplemented, amended or modified from time to
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"Lender" means Wells Fargo Bank,National Association, its successors and assigns. z
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"Mortgage Loan"means the mortgage loan made by Lender to the Borrower pursuant to the
Mortgage Loan Documents with respect to the Project. r
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"Mortgage Loan Documents" means the Security Instrument,the HUD Regulatory Agreement in
and all other documents required by HUD or Lender in connection with the Mortgage Loan.
"National Housing Act" means the National Housing Act of 1934, as amended.
"Program Obligations" has the meaning set forth in the Security Instrument.
"Residual Receipts" has the meaning specified in the HUD Regulatory Agreement. E
"Security Instrument"means the mortgage or deed of trust from Borrower in favor of Lender, as
the same may be supplemented, amended or modified. LO
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"Surplus Cash" has the meaning specified in the HUD Regulatory Agreement.
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(c) Notwithstanding anything in the Restrictive Covenants to the contrary,the
provisions hereof(with the exception of the affordability covenants and restrictions set forth in c
Article II hereof) are expressly subordinate to (i)the Mortgage Loan Documents, including
without limitation,the Security Instrument, and(ii)Program Obligations (the Mortgage Loan
Documents and Program Obligations are collectively referred to herein as the "HUD
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Requirements"). Borrower covenants that it will not take or permit any action that would result
in a violation of the Code, HUD Requirements or Restrictive Covenants. In the event of any
conflict between the provisions of the Restrictive Covenants and the provisions of the HUD
Requirements, HUD shall be and remains entitled to enforce the HUD Requirements. c
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Notwithstanding the foregoing, nothing herein limits the Agency's ability to enforce the terms of
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the Restrictive Covenants,provided such terms do not conflict with statutory provisions of the
National Housing Act or the regulations related thereto. The Borrower represents and warrants o
that to the best of Borrower's knowledge the Restrictive Covenants impose no terms or c
requirements that conflict with the National Housing Act and related regulations.
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(d) In accordance with 26 U.S.C. 42(h)(6)(E)(i)(I), in the event of foreclosure (or
deed in lieu of foreclosure),the Restrictive Covenants(including without limitation, any and all 6,
land use covenants and/or restrictions contained herein) shall automatically terminate,with the a
exception of(i)the requirements of 26 U.S.C. 42(h)(6)(E)(ii)above,to the extent applicable (ii) o
the affordability covenants and restrictions set forth in Article II hereof)or(iii) as otherwise
approved by HUD.
(e) Borrower and the Agency acknowledge that Borrower's failure to comply with the 2
covenants provided in the Restrictive Covenants does not and shall not serve as a basis for =
default under the HUD Requirements, unless a default also arises under the HUD Requirements.
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(f) Except for the Agency's reporting requirement, in enforcing the Restrictive
Covenants the Agency will not file any claim against the Project,the Mortgage Loan proceeds,
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any reserve or deposit required by HUD in connection with the Security Instrument or HUD
Regulatory Agreement, or the rents or other income from the property other than a claim against:
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