HomeMy WebLinkAbout2020-29 CC Resolution RESOLUTION NO. 2020-29
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TEMECULA, ACTING IN ITS CAPACITY AS THE
HOUSING SUCCESSOR TO THE FORMER TEMECULA
REDEVELOPMENT AGENCY (AND, WITH RESPECT TO
A LOAN OF CITY FEES, ALSO IN ITS CAPACITY AS THE
CITY) APPROVING A LOAN AGREEMENT WITH LAS
HACIENDAS HOUSING ASSOCIATES,L.P. FOR THE "LAS
HACIENDAS" 77 UNIT LOW INCOME AFFORDABLE
MULTI-FAMILY (APARTMENT) PROJECT AT 28715 LAS
HACIENDAS STREET AND 28772 CALLE CORTEZ, AND
THE TAKING OF RELATED ACTIONS, AND MAKING A
FINDING OF EXEMPTION UNDER CALIFORNIA
ENVIRONMENTAL QUALITY ACT SECTION 15182
THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS
FOLLOWS:
Section 1. Recitals. The City Council of the City of Temecula (the "City") hereby
finds, determines and declares that:
(a) The Redevelopment Agency of the City of Temecula(the"Former Agency") was
a duly constituted redevelopment agency pursuant to provisions of the Community Redevelopment
Law(the"Redevelopment Law") set forth in Section 33000 et seq. of the Health and Safety Code
("HSC") of the State of California (the "State").
(b) Under the Redevelopment Law, the Former Agency was authorized, among other
things, to provide assistance to the development of affordable housing projects.
(c) Pursuant to AB X1 26 (which became effective in June 2011), and the California
Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et
al., 53 Cal. 4th 231 (2011), the Former Agency was dissolved as of February 1, 2012, and the
Successor Agency to the Temecula Redevelopment Agency (the "Successor Agency") was
constituted as the successor entity to the Former Agency.
(d) Pursuant to HSC Section 34175(b), all assets of the Former Agency, including so-
called low income housing set aside funds, transferred to the Successor Agency by operation of
law;provided, that pursuant to HSC Section 34176 and Resolution No. 12-11,adopted by the City
Council on January 24, 2012, the City elected to assume the housing functions of the Former
Agency(in such capacity, the "Housing Successor").
(e) Las Haciendas Housing Associates, L.P., a California limited partnership
("Developer") desires to obtain a construction loan from the City of low income set aside funds in
the amount of $8,910,698 and a loan/deferment of $718,445 of development fees in order to
facilitate construction of a 77-unit multifamily apartment complex to be known as"Las Haciendas"
(the"Project").
(t) Developer desires to enter into a Loan Agreement with the City ("Loan
Agreement") to provide for the terms and conditions of the City loans. The form of the Loan
Agreement negotiated by staff is attached hereto as Attachment A and includes the forms of a
promissory note, a subordinate deed of trust, and a regulatory agreement restricting 49% of the
units to affordable low income housing for 55 years (with the other units, except for a manager's
unit, to be restricted by a regulatory agreement required in conjunction with the tax credits);
(g) Developer will be seeking an allocation of low-income housing tax credits and is
also contemplating a financing transaction from a third party lender to help finance the
construction of the Project.
Section 2. Approval of Agreement. The Loan Agreement, in the form set forth in
Attachment A, is hereby approved. The Mayor(or in the Mayor's absence, the Mayor Pro Tem)
and the City Manager(each,an"Authorized Officer"),acting individually,are hereby authorized
to execute and deliver the Loan Agreement, for the City as the Housing Successor and the City as
a city, in substantially such form, with changes therein as the Authorized Officer executing the
same may approve (such approval to be conclusively evidenced by the execution and delivery
thereof).
Section 3. Other Acts. The Authorized Officers and all other officers of the City are
hereby authorized,jointly and severally, to do all things, including the execution and delivery of
documents and instruments, which they may deem necessary or proper to effectuate the purposes
of this Resolution, the Loan Agreement, and all documents contemplated or required by the Loan
Agreement. The City Clerk is authorized to attest to the City officers' signatures to any such
document or instrument.
Section 4. CEOA Exemption Findings. This Loan Agreement was analyzed in
accordance with the California Environmental Quality Act ("CEQA"), the State CEQA
Guidelines, and the City's local CEQA Guidelines. Staff has determined that the proposed Loan
Agreement is exempt from the requirements of CEQA pursuant to State CEQA Guidelines 15162
and 15182. On November 17, 2015, an Environmental Impact Report (EIR) (SCH#2013061012)
was certified in connection with the approval of the Uptown Temecula Specific Plan. The Uptown
Temecula Specific Plan is divided into six planning districts, all of which allow residential uses.
The Uptown Temecula Specific Plan does not contain maximum or minimum density
requirements,although residential development is anticipated at a range of 20 to 60 dwelling units
per acre. For planning purposes,the Uptown Temecula Specific Plan assumes a residential density
of 45 dwelling units per acre in all zoning districts. The proposed project that is the subject matter
of the Loan Agreement proposes to construct 77 units on 2.5 acres,which is under the 45 dwelling
units per acre analyzed by the EIR. As such, the environmental impacts for the project have been
evaluated by the previously adopted EIR for the Uptown Temecula Specific Plan, and no further
environmental review is necessary. None of the circumstances in CEQA Guidelines Section 15162
exist to require any additional environmental review and no further documentation is necessary.
In addition, staff has determined that the project is exempt from CEQA pursuant to CEQA
Guidelines Section 15182 as the proposed residential development is in conformity with the
Uptown Temecula Specific Plan. The City Council has reviewed staff's determination of
exemption and, based on its own independent judgment, concurs in staff's determination that the
proposed Loan Agreement is exempt from CEQA pursuant to State CEQA Guidelines Sections
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15182 and that no further environmental review is needed pursuant to CEQA Guidelines Section
15162. Staff is directed to prepare a Notice of Exemption.
Section 5. Certification. The City Clerk shall certify to the adoption of this
Resolution.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula
this 26th day of May, 2020.
James Stewart, Mayor
ATTEST.
Ran i J , ity Clerk
[SEAL]
3
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, do hereby certify that the foregoing
Resolution No. 2020-29 was duly and regularly adopted by the City Council of the City of
Temecula at a meeting thereof held on the 26th day of May, 2020, by the following vote:
AYES: 5 COUNCIL MEMBERS: Edwards, Naggar, Rahn, Schwank,
Stewart
NOES: 0 COUNCIL MEMBERS: None
ABSTAIN: 0 COUNCIL MEMBERS: None
ABSENT: 0 COUNCIL MEMBERS: None
Randi Johl, City Clerk
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r ATTACHMENT A
Form of Loan Agreement
(Attached.)
DRAFT
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LOAN AGREEMENT
THIS LOAN AGREEMENT “Loan Agreement”) is dated as of May 26, 2020 and is
entered into by and between the CITY OF TEMECULA, as successor to the housing assets and
funds of the former Temecula Redevelopment Agency (“City”), and LAS HACIENDAS
HOUSING ASSOCIATES, L.P., a California limited partnership (“Borrower”).
R E C I T A L S:
A. Borrower has acquired the land located in the City of Temecula, County of
Riverside, State of California, more particularly described on Exhibit “A” attached hereto
(together with any improvements thereon, the “Property”).
B. Borrower intends to construct the improvements on the land that are described on
Exhibit “B” (the “Improvements” and together with the Property, the “Development”).
C. City has agreed to provide a loan to Borrower to pay for City’s impact
development fees in the principal amount of $718,445 and a construction loan of former
Temecula Redevelopment Agency low-mod housing set aside funds in a principal amount not to
exceed $8,910,698 (collectively, the “Loan”), the construction loan portion of which shall be
disbursed in accordance with Section 3.7 of this Loan Agreement and the deferred fee portion of
which shall be deemed outstanding on the closing of the Loan (as a loan by the City of such fees;
in other words, the City will not pay itself those fees from low-mod set aside funds or general
funds at the closing, but will defer those fees, with interest, which is in essence a loan).
NOW, THEREFORE, the Parties agree as follows:
A G R E E M E N T:
1. DEFINITIONS AND EXHIBITS.
1.1. Definitions. The following initially capitalized words and terms have the
meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise
provided to the contrary:
1.1.1. “Closing” shall mean the date on which the Deed of
Trust is recorded in the Official Records of Riverside County, California.
1.1.2. “Completion of Construction” shall mean the date
that Borrower obtains a temporary or final certificate of occupancy for the
Improvements evidencing that the construction of the Improvement is complete except
for certain punch list items.
1.1.3. “Construction Plans” means the construction plans,
specifications and related documents consistent with the Scope of Development
attached hereto as Exhibit “B” for the design and construction of the Improvements.
1.1.4. “Deed of Trust” shall mean a Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing in the form attached
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hereto as Exhibit “C”, executed by Borrower for the benefit of City and,
acknowledged (which is to be recorded against the Property in the Official Records of
Riverside County, California at the Closing) encumbering the Development.
1.1.5. “Developer” shall mean Community
HousingWorks, a California nonprofit public benefit corporation.
1.1.6. “Entitlements” shall mean all authorizations,
approvals, rights, maps, licenses, permits, franchises, certificates, instruments,
documents, agreements, variances and other land use approvals required for the
Development.
1.1.7. “Governmental Authority” shall mean any federal,
state or local governments, and all subdivision thereof, including any City, authority,
board, bureau, commission, department or other public body, including any court,
administrative tribunal or public utility.
1.1.8. “Gross Revenues” means the sum of: the total
rental income and all other revenues or income received by the Borrower or its
successors or assigns in connection with the Project, including without limitation
Housing Rent, laundry charges or consideration received from an entity that contracts
to provide laundry services, payments in connection with Section 8 certificates, if any
(including payments under such certificates that are in excess of the restricted rents
provided for herein), cable income or consideration received from an entity that
contracts to provide cable services, each of (i) amounts paid to Borrower or any
affiliated person on account of Operating Expenses for further disbursement by
Borrower or such affiliate to a third party or parties, including, without limitation,
grants received to fund social services or other housing supportive services at the
Project; (ii) late charges and interest paid on rentals; (iii) rents and receipts from
licenses, concessions, vending machines, coin laundry, and similar sources; (iv) other
fees, charges, or payments not denominated as rental but payable to Borrower in
connection with the rental of office, retail, storage, or other space in the Project;
(v) consideration received in whole or in part for the cancellation, modification,
extension or renewal of leases; (vi) interest and other investment earnings on security
deposits, reserve accounts and other Project accounts to the extent disbursed, and
(vii) all other income from the Project, but does not include insurance proceeds
applied to reconstruct or repair the Project.
1.1.9. “Housing Rent” means the total of payments by the
tenants of the Project for (a) use and occupancy of their rental unit and facilities
associated therewith, (b) any separately charged fees or service charges assessed by
Borrower which are required of all tenants, other than security deposits (until they are
applied), (c) a reasonable allowance for utilities not included in (a) or (b) above,
including garbage collection, sewer, water, electricity and gas, provided that the rent
charged as to any affordable unit shall not exceed the affordable rent described in the
Regulatory Agreement.
1.1.10. “Improvements” or “Project” shall mean the work
described in the Scope of Development attached hereto as Exhibit “B”.
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1.1.11. “Loan” or “City Loan” shall mean the loans by the
City contemplated by this Agreement.
1.1.12. “Loan Documents” shall mean this Agreement, the
Note, the Deed of Trust, the Regulatory Agreement and all other documents and
instruments executed and delivered, or to be executed and delivered, in connection
with the Loan.
1.1.13. “Note” shall mean a Promissory Note Secured by
Deed of Trust, in the form attached hereto as Exhibit “D”, executed by Borrower and
payable to City.
1.1.14. “Notice” shall mean a Notice of Affordability
Restrictions in the form attached hereto as Exhibit “E”.
1.1.15. “Operating Expenses” means actual, reasonable and
customary costs, fees and expenses directly incurred and for which payment has been
made and which are attributable to the operation, maintenance, and management of the
Project, including without limitation the following (to the extent actual, reasonable and
customary, and attributable to the operation, maintenance or management of the
Project): painting, cleaning, repairs and alterations; landscaping; utilities; rubbish
removal; sewer charges; real and personal property taxes and assessments; insurance
premiums; security; advertising, promotion and publicity; office, janitorial, cleaning
and building supplies; actual and customary salary payable to an on-site manager
which directly and exclusively benefits residents of the Project; a management fee
(“Management Fee”) to a third party property manager, not to exceed $48 per month
per unit commencing in the year the Closing occurs, which Management Fee shall
increase 2.5% annually; purchase, repairs, servicing and installation of appliances,
equipment, fixtures and furnishings; reasonable and customary fees and expenses of
accountants, attorneys, consultants and other professionals as incurred commencing
after the Completion of Construction in connection with the operation of the Project;
payments of deductibles in connection with casualty insurance claims not normally
paid from reserves; and payment of any tax credit adjuster payments, general partner
management fee in an amount not to exceed $15,000 per year commencing in the year
of Closing, which fee shall increase at 3% annually, resident services fee in an amount
not to exceed $48,000 per year commencing in the year of Closing, which fee may
accrue to the extent not paid and shall increase at 3% annually, asset management fee
payable to the limited partners of Borrower in the aggregate amount not to exceed
$7,500 per year, which fee shall increase at 3% annually and deferred developer fees.
Operating Expenses shall not include non-cash expenses, including without limitation,
depreciation. Operating Expenses shall also exclude all of the following: (i) salaries
of employees of Borrower or Developer or Borrower’s or Developer’s general
overhead expenses, or expenses, costs and fees paid to any affiliated person or entity;
(ii) any amounts paid directly by a tenant of the Project which, if incurred by
Developer or Borrower, would be any Operating Expenses; (iii) any payments with
respect to any loan or financing; (iv) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Borrower or Developer prior to completion of the
Project, or any portion thereof, including, without limitation, all predevelopment and
preconstruction activities conducted by Borrower or Developer in connection with the
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Project, including, without limitation, the preparation of all plans and the performance
of any tests, studies, investigations or other work, and the construction of the Project
and any on site or off site work in connection therewith; (v) depreciation, amortization,
and accrued principal and interest expense on deferred debt; and (vi) any partnership
internal fees except as set forth above. The Operating Expenses shall be reported in
the Annual Financial Statement and Residual Receipts Report and shall be broken out
in line-item detail.
1.1.16. “Operating Year” shall mean January 1st to
December 31st of each calendar year.
1.1.17. “Parties” shall mean City, Borrower or Developer,
collectively.
1.1.18. “Party” shall mean City, Borrower or Developer,
individually.
1.1.19. “Person” shall mean a natural person, a partnership,
a joint venture, an unincorporated association, a limited liability company, a
corporation, a trust, any other business association or any Governmental Authority.
1.1.20. “Potential Default” shall mean any condition or
event that could, with the lapse of time after Borrower receives notice thereof from
City, constitute a “Default” (as defined in Section 5.1 below).
1.1.21. “Property” shall have the meaning provided in
Recital A, but shall also mean portions thereof or interests therein as the context
requires.
1.1.22. “Preliminary Budget” shall mean the budget for the
costs of the Project attached hereto as Exhibit “F”.
1.1.23. “Regulatory Agreement” shall mean the
Affordability Restrictions and Regulatory Agreement in the form attached hereto as
Exhibit “G”.
1.1.24. “Residual Receipts” for a particular Operating Year
means Gross Revenues for the corresponding Operating Year less (i) debt service
payments made during such Operating Year on the Senior Project Loan in amounts not
in excess of the amounts due and payable during such Operating Year (i.e. not
including prepayments); (ii) to the extent applicable, issuer’s fee payable to the issuer
of tax exempt multifamily bonds used to finance the Development, and (ii) Operating
Expenses. All calculations of Residual Receipts shall be made annually, on or before
April 30 for the preceding Operating Year, on a cash (and not accrual) basis and the
components thereof shall be subject to verification and approval, on an annual basis,
by City.
1.1.25. “Schedule of Performance” shall mean the
schedule for the completion of the Improvements attached to this Agreement as
Exhibit “H”.
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1.1.26. “Senior Project Loan” shall mean the construction
loan obtained by Borrower from a third party lender for the construction of the Project,
and any refinancing loan used to repay such construction loan or any refinancing
thereof, but the amount of any such refinancing may not exceed the outstanding
principal of the loan being refinanced, plus prepayment charges, loan fees and closing
costs payable by Borrower.
1.2. Exhibits. The following exhibits are attached to this Agreement and
incorporated into, and made a part of, this Agreement by this reference:
1.2.1. Exhibit “A”: Legal Description
1.2.2. Exhibit “B”: Scope of Development
1.2.3. Exhibit “C”: Form of Deed of Trust
1.2.4. Exhibit “D”: Form of Promissory Note
1.2.5. Exhibit “E”: Form of Notice of Affordability
Restrictions
1.2.6. Exhibit “F”: Preliminary Project Budget
[INTENTIONALLY OMITTED]
1.2.7. Exhibit “G”: Form of Affordability Restrictions
and Regulatory Agreement
1.2.8. Exhibit “H”: Schedule of Performance
2. CONSTRUCTION OF IMPROVEMENTS
2.1. Construction Pursuant to Plans. The Improvements shall be constructed in
accordance with final Construction Plans approved by the City and the terms and conditions of
the permits and approvals issued or to be issued by the City.
2.2. Commencement and Completion of Improvements; Schedule of
Performance. Borrower shall commence construction of the Improvements no later than the
applicable date set forth in the Schedule of Performance, diligently prosecute to completion the
construction of the Improvements no later than the applicable date set forth in the Schedule of
Performance, and Developer shall otherwise comply with the Schedule of Performance, in each
case subject to Section 6.11 below (Force Majeure).
2.3. Compliance with Applicable Law. Borrower shall cause all construction
to be performed in compliance with: (a) all applicable laws, ordinances, rules and regulations of
federal, state, county or municipal governments or agencies now in force or that may be enacted
hereafter; (b) all directions, rules and regulations of any fire marshal, health officer, building
inspector, or other officer of every governmental City now having or hereafter acquiring
jurisdiction; (c) all applicable permits and governmental approvals.
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2.4. Monthly Draw. Until such time as Borrower has completed the
Improvements, Borrower shall provide City with a copy of the monthly construction draw (by
the fifteenth day of each month) which Borrower is submitting to its senior construction lender
or its tax credit investor, as applicable.
2.5. Construction Responsibilities. Borrower shall be solely responsible for all
aspects of Borrower’s conduct in connection with the Improvements, including (but not limited
to) the quality and suitability of the plans and specifications, the supervision of construction
work, and the qualifications, financial condition, and performance of all architects, engineers,
contractors, subcontractors, suppliers, consultants, and property managers. Any review or
inspection undertaken by City with reference to the Improvements is solely for the purpose of
determining whether Borrower is properly discharging its obligations, and should not be relied
upon by Borrower or by any third parties as a warranty or representation as to the quality of the
design or construction of the Improvements, or for any other purpose.
2.6. Mechanics Liens, Stop Notices, and Notices of Completion. If any claim
of lien is filed against the Property or a stop notice with respect to the Loan is served on City or
any other lender or other third party in connection with the Improvements, then Borrower shall,
subject to Borrower’s right to contest such lien in good faith and in accordance with applicable
law, within ninety (90) days after such filing or service, either pay and fully discharge the lien or
stop notice, effect the release of such lien or stop notice by delivering to City a surety bond from
a surety acceptable to City in sufficient form and amount, or provide City with other assurance
satisfactory to City that the claim of lien or stop notice will be paid or discharged.
2.7. Budget Amendments. After the Closing, Borrower shall submit to City
any material changes to the Project Budget (which will have been delivered to City as a
condition to Closing) for reasonable approval by the City Manager within ten (10) days after
Borrower receives information indicating that actual costs therein vary or will vary from those
shown on the Project Budget, together with evidence that Borrower has funds available from
sources to pay any cost increases and overruns.
2.8. Performance and Payment Bonds. Prior to the Closing, Borrower shall
deliver to Lender copies of performance and payment bonds to assure completion of the Project,
or a letter of credit acceptable in form and substance to Lender from an issuer acceptable to
Lender, in an amount equal to ten percent (10%) of the amount of the Borrower’s stipulated sum
or GMAX construction contract.
2.9 Limited Reimbursement by City. Upon completion of the new road
connecting Las Haciendas and Calle Cortez, which may occur at any time prior to the issuance
Certificate of Occupancy, and City’s acceptance of such road, Borrower may request City’s
reimbursement of the costs incurred by Borrower in connection with the construction such road
for an amount up to a maximum of the lesser of: (i) one and three quarters percent (1.75%) of the
total land acquisition and hard costs of the Project (excluding such road costs) or (ii) the amount
of such road costs. However, provided Borrower is not in default under this Agreement,
Borrower may request and City shall provide such reimbursement in two phases: (i) the first
disbursement shall be made upon completion of the rough improvements including: rough and
finish grading, curb and gutter, apron and approach installations, and initial base course of
asphalt; and (ii) the second disbursement shall be made at end of the completion of the street
improvements, which shall include, without limitation: public sidewalks, final courses and
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sealing of asphalt, and striping, paint and signage and when the City authorizes reduction in the
subdivision improvement bond for such improvements (each of such two reimbursement
payments being limited to the amount of documented costs then incurred, and being further
limited by the first sentence of this Section). Concurrent with Borrower’s requests for
reimbursement, Borrower shall deliver to City reasonable evidence of the out-of-pocket
construction costs incurred by Borrower for which reimbursement is requested.
3. LOAN PROVISIONS.
3.1. Use. The Loan shall be used solely for costs of the Project as shown on
the Project Budget that exceed the equity available for and invested in the Project (and all of
such equity funds must be expended on project costs prior to disbursement of the Loan).
3.2. Interest; Payments. The outstanding principal balance of the Loan shall
accrue interest as set forth in the Note and shall be payable as set forth in the Note.
3.3. Acceleration. Upon a Default by Borrower under Section 5 below, City
may elect by written notice to Borrower that all outstanding principal and accrued interest on the
Loan shall become due and payable.
3.4. Security; Subordination. The Note shall be secured by the Deed of Trust.
The City Manager shall have the authority to enter into reasonable, recordable subordination
agreements subordinating the Deed of Trust to the deed of trust securing any Senior Project Loan
if necessary for Borrower to obtain the applicable Senior Project Loan.
3.5. Residual Receipts Reporting. On or before April 30 of each calendar year
after the Project is placed in service, Borrower shall provide the City with an annual Residual
Receipts report in form and substance reasonably acceptable to City that include annual financial
statements with respect to the Project that have been reviewed by an independent certified public
accountant, together with an express written opinion of such independent certified public
accountant that such report presents the financial position, results of operations and cash flows of
the Project accurately and in accordance with tax accounting principles (“Annual Financial
Report”). If the Residual Receipts reported or paid deviate by three percent (3%) or more from
that amount determined to be owing upon review of Borrower’s submittal and an audit (and the
City shall have the right to audit), Borrower shall reimburse City for City’s cost to review and
audit costs and shall pay the amounts owing within ten (10) days after written notice from City
describing such costs. Borrower shall keep all Residual Receipts records at a location in the
County of Riverside.
3.6. Conditions Precedent to Closing. The obligation of City to close the City
Loan is expressly conditioned upon the satisfaction of the following on or before December 31,
2022:
3.6.1. City’s receipt of this Agreement and the Note, duly executed by
Borrower;
3.6.2. No Default or Potential Default by Borrower exists.
3.6.3. Stewart Title Insurance Company has recorded, or is irrevocably
and unconditionally committed to record, the Deed of Trust and the Regulatory Agreement.
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3.6.4. Stewart Title Insurance Company has unconditionally committed
to issue a lender’s title insurance policy to City in the amount of the City Loan insuring the Deed
of Trust, with exceptions approved by City and otherwise in form and substance acceptable to
City (which may show the deed of trust securing the Senior Project Loan as an exception).
3.6.5. Borrower shall have delivered to City copies of Borrower’s
organizational documents to City (including the partnership agreement for any tax credit limited
partnership formed by the Borrower) as well as any other reasonable evidence requested by City
showing City that Borrower has duly authorized the Loan Documents.
3.6.6. City shall have issued the building permits or permit ready letter
for the improvements and shall have completed environmental (CEQA) review.
3.6.7. Borrower shall have provided to the City: (i) a GMAX or
stipulated sum construction contract from a reputable bondable contractor consistent with the
comprehensive Project Budget and Schedule of Performance; (ii) a comprehensive Project
Budget for the costs of the Project; (iii) a schedule of construction and permanent sources and
uses of funds; and (ii) reasonable evidence that Borrower (i.e., the tax credit limited partnership)
has equity funds to pay for such costs (and that any tax credit equity shall have been obtained
and committed to the Project).
3.6.8. The Senior Project Loan shall have closed, and the Senior Project
Lender shall have executed and delivered the Disbursement Agreement, in form acceptable to the
City Manager, to the City (or such Disbursement Agreement may be delivered through escrow at
the Closing).
3.7. Loan Disbursements; Retainage. Disbursements the Loan shall occur and
be conditioned upon the following:
(i) City shall fund the full amount of the Loan at Closing into a bank
account held by the Senior Project Lender pursuant to a Disbursement Agreement
between City and the Senior Project Lender that is approved and signed by the
City Manager;
(ii) Borrower may draw on the Loan funds after all of Borrower’s
equity that is to be used for construction costs shall have been so used, but prior to
Borrower’s draw on the construction loan provided by the Senior Lender (and
prior to equity funds provided by Borrower’s tax credit limited partner that are not
to be invested until the construction loan is repaid or converted to a permanent
loan), provided, Borrower (or Senior Project Lender acting under the
Disbursement Agreement) shall have delivered to City a written disbursement
request signed by Borrower, together with copies of the applicable invoices or
other appropriate documentation for the costs to be paid and appropriate
mechanics lien waivers for the work performed prior to the date of disbursement
(i.e., unconditional progress payment waivers for all costs paid with the previous
disbursement, and conditional progress payment waivers for the costs to be paid
with the current disbursement, provided that final waivers shall be provided as a
condition to the final disbursement), and any other documentation required by the
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Senior Project Lender as a condition to disbursements of City Loan funds under
the Disbursement Agreement.
(iii) No default shall have occurred under any Loan Document that
remains uncured as of the date of the disbursement request or disbursement.
Except for early subcontractor work including grading, soil improvements, road
improvements, and structural concrete, City may (and the Senior Project Lender under the
Disbursement Agreement handling City Loan funds shall) retain ten percent (10%) of any
disbursement requested for hard costs, and shall not be obligated to disburse the ten percent
(10%) until the Project has been completed and a Certificate of Occupancy for the Project is
issued, and the Borrower has delivered final mechanic’s lien releases conditioned only upon such
final payment.
4. OTHER LOAN REQUIREMENTS.
4.1. Information. Borrower shall provide any information requested by City in
good faith in connection with the Improvements.
4.2. Hazardous Materials. Borrower shall not use, generate, manufacture, store
or dispose of on, under, or about the Property or transport to or from the Property any flammable
explosives, radioactive materials, hazardous wastes, toxic substances or related materials,
including any substances defined as or included in the definition of “hazardous substances,”
hazardous wastes,” “hazardous materials,” or “toxic substances” under any applicable federal or
state laws or regulations (collectively, “Hazardous Materials”), except such of the foregoing as
may be customarily used in connection with the ownership, operation, occupancy, maintenance
and construction of improvements similar to the Improvements. Borrower acknowledges and
agrees that each representation and warranty in this Agreement (together with any indemnity
obligation applicable to a breach of any such representation and warranty) with respect to the
environmental condition of the Property is intended by the Parties to be an “environmental
provision” for purposes of California Code of Civil Procedure Section 736.
4.3. Construction Responsibilities; Commencement and Completion.
Borrower shall cause the construction of the Improvements to be prosecuted with diligence, in
good faith, and in accordance with the Schedule of Performance, subject to Section 6.11 below.
Borrower shall cause the construction of the Improvements to be performed in a good and
workmanlike manner in accordance with the Construction Plans approved by the City, in
compliance with all applicable laws, ordinances, rules, regulations, building restrictions,
recorded covenants and restrictions and requirements of each Governmental Authority having
jurisdiction over the Property and free and clear of any liens or claims for liens. Borrower shall
be solely responsible for all aspects of Borrower’s business and conduct in connection with the
Property, including the quality and suitability of the Construction Plans and their compliance
with the requirements of each applicable Governmental Authority and the Loan Documents, and
the supervision of the construction of the Improvements, the qualifications, financial condition
and performance of all architects, engineers, contractors, subcontractors, material suppliers,
consultants and property managers, the accuracy of all applications for payment and loan draw
requests and the proper application of all disbursements.
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4.4. Fees and Taxes. Borrower shall be solely responsible for payment of all
fees, assessments, taxes, charges and levies imposed by any public authority or utility company
with respect to the Property, and shall pay such charges prior to delinquency. However,
Borrower shall not be required to pay and discharge any such charge so long as (a) the legality
thereof is being contested diligently and in good faith and by appropriate proceedings and (b) if
requested by City, Borrower deposits with City such funds or other forms of assurance that City
in good faith from time to time determines appropriate to protect City from the consequences of
the contest being unsuccessful.
4.5. Notice of Litigation. Borrower shall promptly notify City of any litigation
materially affecting Borrower or the Property and of any claims or disputes that involve a
material risk of any such litigation.
4.6. Transfers. The qualifications and identity of the Borrower are of
particular concern to the City and it is because of such qualifications and identity that the City
has entered into this Agreement with the Borrower. No voluntary or involuntary successor in
interest of the Borrower shall acquire any rights or powers under this Agreement except as
expressly set forth herein. Provided, however, should City approves the limited partnership
agreement of Borrower (such approval shall not be unreasonably withheld), the following
transfers shall be permitted: (A) the removal of the General Partner for cause and in accordance
with the terms of the limited partnership agreement of Borrower, provided (i) Borrower shall
provide City with at least 30 days prior written notice of such removal (except in the event of a
removal due to an event of emergency), and (ii) that the identity and qualifications of any
replacement general partner is approved in writing by City prior to the consummation of the
removal of the General Partner (except in the event of a removal due to an event of emergency,
in which case City shall be provided with written notice within five (5) business days of the
removal, setting forth the identity and qualification of the replacement, (B) the transfer of the
limited partner’s interest in Borrower and (C) the transfer of any direct or indirect interests in the
limited partner of Borrower. Except for a transfer that is permitted hereunder, the Loan may be
accelerated by City if there is any conveyance by Borrower of the Property or any portion
thereof or interest therein, or Developer ceases to be (or ceases to own and control, as applicable)
the sole member and manager of the general partner of the Borrower prior to the completion of
the Improvements without the City’s prior written consent in its sole and absolute discretion.
4.7. Insurance Indemnity.
4.7.1. Insurance.
4.7.1.1 Developer shall obtain and maintain at no cost or expense
to the City, with a reputable and financially responsible insurance company reasonably
acceptable to the City, (i) after the opening of the Project for business, commercially reasonable
casualty insurance for the Improvements in an amount not less than the replacement cost of the
Improvements (subject to commercially reasonable deductibles); (ii) commercial general liability
insurance, insuring against claims and liability for bodily injury, death, or property damage
arising from the construction, use, occupancy, condition, or operation of the Land, which liability
insurance shall provide combined single limit protection of at least $2,000,000, contractual
liability coverage and products and completed operations coverage, and (iii) commercial
automobile liability insurance of at least $1,000,000 combined single limit. Such liability
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insurance policies shall name the City and their council members, board members, officers,
agents and employees as additional insureds.
4.7.1.2 Upon the commencement of any construction work by
Developer, Developer shall obtain and maintain in force until completion of such work (i)
builder’s risk insurance, including coverage for vandalism and malicious mischief, in a form and
amount and with a company reasonably acceptable to the City, and (ii) workers’ compensation
insurance covering all persons employed by Developer in connection with work on the Project,
or any portion thereof. During the construction of Improvements on any portion of the Land by
Developer, such builder’s risk insurance shall cover improvements in place and all material and
equipment at the job site furnished under contract, but shall exclude contractors’,
subcontractors’, and construction managers’ tools and equipment and property owned by
contractors’ and subcontractors’ employees.
4.7.1.3 Each architect and each engineer providing work in excess
of $100,000 in costs engaged by Developer shall provide professional liability insurance with a
limit of liability of at least One Million Dollars ($1,000,000.00).
4.7.1.4 Developer shall also furnish or cause to be furnished to
the City evidence satisfactory to the City that any contractor with whom it has contracted for the
performance of work on the Land or otherwise pursuant to this Agreement carries workers’
compensation insurance as required by law.
4.7.1.5 With respect to each policy of insurance required above,
Developer and each of Developer’s general contractors, engineers and architects shall furnish to
the City a certificate on the insurance carrier’s form setting forth the general provisions of the
insurance coverage promptly after written request by City showing the additional insureds. The
certificate shall also be furnished by Developer prior to commencement of construction of any
Improvements.
4.7.1.6 All such policies required by this Section shall contain
(i) language to the effect that the policies cannot be cancelled or materially changed except after
thirty (30) days’ written notice by the insurer to the City, and (ii) a waiver of the insurer of all
rights of subrogation against the City and the other additional insureds.
4.7.17 Procuring the insurance required under this Section shall
not be construed to limit Borrower’s liability under the Loan Documents, or to fulfill its
indemnity obligations under the Loan Documents. Notwithstanding such insurance policies,
Borrower shall be responsible for the total amount of any damage, injury or loss caused by
Borrower’s negligence connected with the ownership, operation or occupancy of the
improvements on the land. The insurance requirements set forth in this Section are for the sole
purpose of protecting City’s security for the Loan and are not to be construed as a representation
by City that the insurance required under this Section is sufficient to cover Borrower from or
against all uninsured losses and Borrower releases City from any liability and forever waives any
claims against City in connection therewith.
4.7.18 All insurance policies shall (a) be issued by an insurance
company having a rating of “A:VII” or better by A.M. Best Co., in Best’s Rating Guide;
(b) name City as an additional insured on all liability insurance and as mortgagee and loss payee
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on all property insurance, (c) contain the “standard non-contributory mortgagee clause” and the
“standard lenders’ loss payable clause,” or their equivalents, (d) not be modified or canceled
without thirty (30) days’ prior written notice to City, and (e) be evidenced by a certificate of
insurance or, if required by City, certified policy to be delivered to City.
4.8. Indemnity. From and after the execution of this Agreement, and in
addition to Developer’s obligations under Section 6.4 below, Developer hereby agrees to
indemnify, defend, protect, and hold harmless the City (as a third party beneficiary) and any and
all agents, employees, representatives, council members, board members, consultants, and
officers of the City, from and against all losses, liabilities, claims, damages (including
foreseeable or unforeseeable consequential damages), penalties, fines, forfeitures, costs and
expenses (including all reasonable out of pocket litigation costs and reasonable attorneys’ fees)
and demands of any nature whatsoever, related directly or indirectly to, or arising out of or in
connection with:
(i) the development and construction by Developer of the
Improvements on the land or the use, ownership, management,
occupancy, or possession of the land during Developer’s period of
ownership of the land;
(ii) any breach or Default by Developer hereunder; and
(iii) any of Developer’s activities on the land (or the activities of
Developer’s agents, employees, lessees, representatives, licensees, guests,
invitees, contractors, subcontractors, or independent contractors on the land).
The City may in its discretion, and at their own cost, participate in the defense of
any legal action naming the City. The provisions of this Section shall survive the Closing or the
termination of this Agreement.
5. DEFAULT AND REMEDIES.
5.1. Events of Default. Each of the following shall constitute a “Default” by
Borrower under this Agreement:
5.1.1. The failure by Borrower to make a payment of money to City
within five (5) business days from the date such payment was due under any of the Loan
Documents.
5.1.2. The failure by Borrower to perform any obligation under the Loan
Documents not involving the payment of money, and, if such failure is curable within thirty (30)
days, the expiration of thirty (30) days after notice of such failure from City to Borrower. If such
failure is not curable within 30 days, Borrower may have such longer period of time as is
reasonably necessary to complete the cure, provided that Borrower has commenced to cure
within the initial 30-day period and diligently prosecutes such cure to completion.
5.1.3. Borrower (a) is unable, or admits in writing its inability, to pay its
monetary obligations as they become due, (b) makes a general assignment for the benefit of
creditors, or (c) applies for, consents to or acquiesces in the appointment of a trustee, receiver or
other custodian for itself or its property, or, in the absence of such application, consent or
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acquiescence, a trustee, receiver or other custodian is appointed for Borrower or the property of
Borrower (including the Development), and such appointment is not discharged within sixty (60)
days.
5.1.4. The commencement of any case under the Bankruptcy Code or
commencement of any other bankruptcy, arrangement, receivership, custodianship or similar
proceeding under any federal, state or foreign law by or against Borrower, provided that if any
such case or other bankruptcy, arrangement, reorganization, receivership, custodianship or
similar proceeding is commenced against Borrower, such case or other bankruptcy, arrangement,
receivership, custodianship or similar proceeding is not dismissed within sixty (60) days after its
commencement.
5.1.5. A final judgment or decree for monetary damages or a monetary
fine or penalty (not subject to appeal or as to which the time for appeal has expired) is entered
against Borrower by any Governmental Authority, and such judgment, decree, fine or penalty is
not paid and discharged or stayed within sixty (60) days after the entry thereof.
5.1.6. The assets of Borrower are attached, levied on or otherwise seized
by legal process, and such attachment, levy or seizure is not quashed, stayed or released within
sixty (60) days of the date thereof.
5.1.7. There shall be filed any claim of lien against the Property or the
service of any notice to withhold proceeds of the Loan and the continued maintenance of such
claim of lien or notice to withhold for a period of sixty (60) days without discharge or
satisfaction thereof or provision therefor (including the posting of bonds) satisfactory to City.
5.1.8. The occurrence of any conveyance that is prohibited under
Section 4.6.
5.1.9. A failure to comply in any respect with the Schedule of
Performance (subject to force majeure delays under Section 6.11 below), and such failure is not
cured within thirty (30) days after written notice from City. If such failure is not curable within
30 days, Borrower may have such longer period of time as is reasonably necessary not to exceed
an additional 30 days to complete the cure, provided that Borrower has commenced to cure
within the initial 30-day period and diligently prosecutes such cure to completion.
5.1.10. Borrower’s violation of any law or permit applicable to the
Property or Improvements (or other improvements on the Property) that is not cured within thirty
(30) days after written notice from City. If such failure is not curable within 30 days, Borrower
may have such longer period of time as is reasonably necessary to complete the cure, provided
that Borrower has commenced to cure within the initial 30-day period and diligently prosecutes
such cure to completion.
5.1.11. Borrower’s default under any other loans secured by the Property
which is not cured within any applicable cure period in the loan documents for such loan.
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5.2. Remedies. The occurrence of any Default by Borrower will relieve City
of any obligation to make further disbursement of the Loan and shall give City the right to
proceed with any and all remedies set forth in the Loan Documents, including the following:
5.2.1. City shall have the right to declare, by written notice to Borrower,
the outstanding principal balance of the Loan, together with any accrued and unpaid interest
thereon, due and payable as of the date stated in such notice as determined by City in its sole and
absolute discretion. City may proceed to enforce payment thereof and to exercise any or all
rights afforded to City as a creditor and secured party under law, including the California,
including foreclosure of the Deed of Trust. Borrower shall be obligated to pay City, on demand,
all reasonable expenses, costs and fees (including reasonable attorney’s fees and expenses) paid
or incurred by City in connection with the collection of the Loan and the preservation,
maintenance, protection, sale or other disposition of the security for the Loan, and such
obligation shall be secured by the Deed of Trust.
5.2.2. City shall have the right to mandamus or other suit, action or
proceeding at law or in equity to require Borrower to perform its obligations under the Loan
Documents or to enjoin acts or things that may be unlawful or in violation of the provisions of
the Loan Documents.
5.2.3. City may cure any default by Borrower under the Loan
Documents. Borrower shall be liable to reimburse City, on demand, for any funds advanced by
City to cure any such monetary default, together with interest thereon at the lesser of the
maximum rate permitted by law or eight percent (8%) per annum from the date of expenditure
until the date of reimbursement.
5.2.4. City shall have the right to file for record, as Borrower’s attorney-
in-fact (which appointment is a power coupled with an interest and is irrevocable), any notices of
completion, notices of cessation of labor, notices of non-responsibility or any other notices that
City considers necessary to protect its security for the Loan.
5.2.5. City shall also be entitled to all other remedies available at law, in
equity or otherwise, including the right to foreclose the Deed of Trust.
5.2.6. Prior to exercising any remedies hereunder, City will give
Borrower’s investor limited partner notice of default at the same time such notice is given to
Borrower provided City shall have been given such investor limited partner’s name and address
by Borrower in writing. The investor limited partner shall have the cure periods set forth above
within which to cure the default and City will accept or reject such cure on the same basis as if
such cure had been tendered by Borrower.
5.3. Right of Contest. Borrower shall have the right to contest in good faith
any claim, demand, levy or assessment the assertion of which would constitute a Default
hereunder. Any such contest shall be prosecuted diligently and in a manner that does not
prejudice the rights of City under the Loan Documents.
5.4. Remedies Cumulative. No right, power or remedy given to City by the
terms of the Loan Documents is intended to be exclusive of any other right, power or remedy,
and each and every such right, power or remedy shall be cumulative and in addition to every
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other right, power or remedy given to City by the terms of the Loan Documents, by law or
otherwise. Neither the failure nor any delay on the part of City to exercise any such right, power
or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by City of any
such right, power or remedy preclude any other or further exercise of such right, power or
remedy, or any other right, power or remedy.
6. GENERAL PROVISIONS.
6.1. Relationship of Parties. Nothing contained in this Agreement shall be
interpreted by the Parties, or any other party, as creating the relationship of employer and
employee, principal and agent, partnership or any other form of joint venture between City and
Borrower, and Borrower shall at all times be deemed an independent contractor and shall be
completely responsible for the manner in which it performs its obligations under this Agreement.
6.2. No Claims. Nothing contained in this Agreement shall create or authorize
any claim against City by any Person that Borrower may have employed or with whom Borrower
may have contracted related to the purchase of materials, supplies or equipment, or the
furnishing or the performance of any work or services with respect to the construction or
operation of the Property, and Borrower shall include similar requirements in any contracts
entered into for the construction or operation of the Property.
6.3. Amendments. No modification of the terms of this Agreement shall be
valid unless made in writing and signed by the Parties.
6.4. Indemnification for Prevailing Wages Claims. Borrower shall indemnify,
defend, protect and hold harmless City and its councilmembers, officers, employees, agents,
successors and assigns (collectively, “Indemnified Parties”) from and against any and all claims
(including, without limitation, any claim under Labor Code Section 1781), losses, proceedings,
damages, causes of action, liabilities, costs and expenses, (including attorneys’ fees)
(collectively, “Claim”) arising from or in connection with, or caused by any violations of law by
Developer or any contractor, including, without limitation, any failure to comply with Labor
Code Sections 1720 et. seq. If any action or proceeding be brought against City by reason of any
such claim, Borrower, upon notice from City, shall defend the same at Borrower’s expense with
counsel satisfactory to City (which shall not be unreasonably withheld). BORROWER’S DUTY
AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD CITY HARMLESS CITY
SHALL SURVIVE CANCELLATION OF THE NOTE AND THE RECONVEYANCE OF
THE DEED OF TRUST WITH RESPECT TO EVENTS OCCURRING PRIOR TO THE
CANCELLATION OF THE NOTE AND RECONVEYANCE OF THE DEED OF TRUST.
6.5. Non-Liability of City and City Officials, Employees and Agents. No
member, official, employee or agent of City shall be personally liable to Borrower in the event of
any default or breach by City, or for any amount that may become due to Borrower, under the
terms of this Agreement.
6.6. No Third Party Beneficiaries. There shall be no third party beneficiaries
of this Agreement.
6.7. Notices, Demands and Communications. Except as otherwise required by
law, any notice, request, direction, demand, consent, waiver, approval or other communication
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required or permitted to be given hereunder shall not be effective unless it is given in writing and
shall be delivered (a) by certified mail, postage prepaid, return receipt requested, or (b) by a
commercial overnight courier that guarantees next day delivery and provides a receipt, and
addressed to the parties at the addresses stated below, or at such other address as either party may
hereafter notify the other in writing as aforementioned:
City: City of Temecula
41000 Main Street
Temecula, CA 92590
Attn: City Manager
Borrower: Las Haciendas Housing Associates, L.P.
c/o Community HousingWorks
3111 Camino del Rio North, Suite 800
San Diego, CA 92108
Attn: President/CEO, Susan M. Reynolds
With a copy to: Downs Pham & Kuei LLP
235 Montgomery Street, 30th Floor
San Francisco, CA 94010
Attn: Irene C. Kuei
Service of any such notice or other communications so made shall be deemed effective
on the day of actual delivery (whether accepted or refused), as shown by the addressee’s return
receipt if by certified mail, and as confirmed by the courier service if by courier; provided,
however, that if such actual delivery occurs after 5:00 p.m. (local time where received) or on a
non-business day, then such notice or demand so made shall be deemed effective on the first
business day following the day of actual delivery. No communications via electronic mail shall
be effective to give any notice, request, direction, demand, consent, waiver, approval or other
communications hereunder.
6.8. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to conflict of laws
principles.
6.9. Attorneys’ Fees. Should any action be brought to enforce any provision
hereof, the prevailing party in such action shall be entitled to reasonable attorneys’ fees, court
costs and other litigation expenses, including expenses incurred for preparation and discovery.
The right to recover such fees, costs and expenses shall accrue upon the commencement of the
action regardless of whether the action is prosecuted to final judgment.
6.10. Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall
continue in full force and effect unless the rights and obligations of the Parties have been
materially altered or abridged by such invalidation, voiding or unenforceability.
6.11. Force Majeure. A Party shall not be deemed to be in default where delays
are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; quarantine
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restrictions; freight embargoes; lack of transportation; or court order; or any other similar causes
(other than lack of funds of Borrower or Borrower’s inability to finance the construction of the
Development) beyond the control or without the fault of the Party claiming an extension of time
to perform. 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 commencement of the
cause.
6.12. Approvals/Amendments. Whenever this Agreement calls for or
contemplates City approval or consent (including approval of the form and substance of other
documents), the written approval or consent or waiver of the City Manager shall constitute the
approval or consent of City. The City hereby also authorizes the City Manager to make non-
substantial changes to this Agreement, including, reasonable extensions of time deadlines set
forth in this Agreement, and increase in Preliminary Project Budget not in excess of 15%
provided they are in writing, and to send notices and demands, initiate and administer remedies
and otherwise administer the Loan Documents. The City Manager shall have the authority to
review and approve all documents listed in Section 3.5 hereof and may prohibit disbursement of
Loan funds if the documents are not reasonably satisfactory to the City Manager.
6.13. Warranty Against Payment of Consideration for Agreement. Borrower
warrants that it has not paid or given, and will not pay or give, any Person, including the City,
the City, or any member, official or employee thereof, any money or other consideration for
obtaining this Agreement.
6.14. Time. Time is of the essence with respect to this Agreement and the
performance of each obligation contained herein.
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.
WHEREAS, this Agreement has been entered into by the undersigned as of the date first
above written.
CITY: CITY OF TEMECULA
By:
James Stewart
Mayor
ATTEST:
By: ______________________________
Randi Johl, City Clerk
APPROVED AS TO FORM:
By: _______________________________
Peter Thorson, City Attorney
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BORROWER:
LAS HACIENDAS HOUSING ASSOCIATES, L.P.,
a California limited partnership
By: CHW Las Haciendas LLC,
a California limited liability company,
its General Partner
By: Community HousingWorks,
a California nonprofit public benefit corporation,
its Sole Member and Manager
By: ______________________________________
Mary Jane Jagodzinski, Senior Vice President
Exhibit “A”
Page 1 of 1
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
The land referred to herein is situated in the State of California, County of Riverside and described
as follows:
Lots 16 and 20 of Tract 3841, City of Temecula, County of Riverside, State of California, as per map filed
in Book 61, Page(s) 75 and 76 of Maps, and amended by a Certificate of Correction recorded August 25,
1987 as Instrument No. 246382, Records of Riverside County, California.
APN: 921-050-016-2 and 921-050-020-5
Exhbit “B”
Page 1 of 1
EXHIBIT "B"
SCOPE OF DEVELOPMENT
77 unit apartment project, with 111 parking spaces (91 onsite and 20 on street), a community
building, laundry facilities, a computer room and a children’s playground.
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EXHIBIT “C”
FORM OF DEED OF TRUST
RECORDING REQUESTED BY, AND
WHEN RECORDED, MAIL TO:
City of Temecula
41000 Main Street
Temecula, CA 92590
Attn: City Clerk
With a copy to:
Community Housing Works
3111 Camino del Rio North
Suite 800
San Diego, CA 92108
Attn: Mary Jane Jagodzinski
APN(s): 921-050-016-2; 921-050-020-5
(Space Above This Line For Recorder’s Use)
Free Recording Requested Pursuant To Government Code Section 27383
DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
This Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing is dated
, 20__, and is executed by LAS HACIENDAS HOUSING ASSOCIATES,
L.P., a California limited partnership, herein called Trustor, whose address is c/o Community
Housing Works, 3111 Camino del Rio North, Suite 800, San Diego, CA 92108, in favor of First
American Title Insurance Company, as Trustee, for the benefit of the CITY OF TEMECULA,
herein called Beneficiary.
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS
TO TRUSTEE IN TRUST, WITH POWER OF SALE, that property in Riverside County,
California, described in Exhibit “A” attached hereto and incorporated herein by this reference,
together with all improvements and fixtures thereon and all goods and other personal property
owned by Trustor and located thereon (collectively, the “Property”).
TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the
right, power and authority hereinafter given to and conferred upon Beneficiary to collect and
supply such rents, issues and profits.
For the Purpose of Securing:
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Payment of principal and interest, if and when due, under that certain Secured Promissory
Note in the stated principal amount of $ dated substantially concurrently herewith
executed by Trustor in favor of Beneficiary.
A breach or default under said Secured Promissory Note or the Affordability Restrictions
and Regulatory Agreement between Trustor and Beneficiary shall also be a default hereunder.
To Protect the Security of This Deed of Trust, Trustor Agrees:
(1) To keep said Property in good condition and repair; not to remove or demolish
any building thereon; to complete or restore promptly and in good workmanlike manner any
building which may be constructed, damaged or destroyed thereon and to pay when due all
claims for labor performed and materials furnished thereof; to comply with all laws affecting
said Property, or requiring any alterations or improvements to be made thereon; not to commit or
permit waste thereof; not to commit, suffer or permit any act upon said Property in violation of
law; and to do all other acts which from the character or use of said Property may be reasonably
necessary, the specific enumerations herein not excluding the general.
(2) To provide or cause to provide, maintain and deliver to Beneficiary fire insurance
satisfactory to and with loss payable to Beneficiary and any superior trust deed holder, as their
interests may appear. The amount collected under any fire or other insurance policy may be
applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary
may determine, or at option of Beneficiary the entire amount so collected or any part thereof may
be released to Trustor. Such application or release shall not cure or waive any default or notice of
default hereunder or invalidate any act done pursuant to such notice.
(3) To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses,
including cost of evidence of title and attorney’s fees in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary
to foreclose this Deed of Trust.
(4) To pay: at least ten days before delinquency all taxes and assessments affecting
said Property, including assessments on appurtenant water stock; when due, all encumbrances,
charges and liens, with interest, on said Property or any part thereof, which appear to be prior or
superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof, may: (a) make or do the same
in such manner and to such extent as either may deem necessary to protect the security hereof,
Beneficiary or Trustee being authorized to enter upon said Property for such purposes; (b) appear
in and defend any action or proceeding purporting to affect the security hereof or the rights or
powers of Beneficiary or Trustee; (c) pay, purchase, contest or compromise any encumbrance,
charge or lien which in the judgment of either appears to be prior or superior hereto; and (d) in
exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable
fees.
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(5) To pay immediately and without demand all sums so expended by Beneficiary or
Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date
hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the
obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum
allowed by law at the time when said statement is demanded.
(6) That any award of damages in connection with any condemnation for public use
of or injury to said Property or any part thereof is hereby assigned and shall be paid to
Beneficiary (and to any superior trust deed holder, as their interests may appear) who may apply
or release such moneys received by him in the same manner and with the same effect as above
provided for disposition of proceeds of fire or other insurance.
(7) That by accepting payment of any sum secured hereby after its due date,
Beneficiary does not waive his right either to require prompt payment when due of all other sums
so secured or to declare default for failure so to pay.
(8) That at any time or from time to time, without liability therefore and without
notice, upon written request of Beneficiary and presentation of this Deed of Trust and said note
for endorsement, and without affecting the personal liability of any person for payment of the
indebtedness secured hereby, Trustee may: (a) reconvey any part of said Property; (b) consent to
the making of any map or plat thereof; (c) join in granting any easement thereon; or (d) join in
any extension agreement or any agreement subordinating the lien or charge hereof.
(9) That upon written request of Beneficiary stating that all sums secured hereby have
been paid, and upon surrender of this Deed of Trust and said note to Trustee for cancellation and
retention and upon payment of its fees, Trustee shall reconvey, without warranty, the Property
then held hereunder. The recitals in such reconveyance of any matters or facts shall be
conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described
as “the person or persons legally entitled thereto.” Five years after issuance of such full
reconveyance, Trustee may destroy said note and this Deed of Trust (unless directed in such
request to retain them).
(10) That as additional security, subject to the rights of superior trust deed holders, as
their interests may appear, Trustor hereby gives to and confers upon Beneficiary the right, power
and authority, during the continuance of these trusts, to collect the rents, issues and profits of
said Property, reserving unto Trustor the right, prior to any default by Trustor in payment of any
indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain
such rents, issues and profits as they become due and payable. Upon any such default,
Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the indebtedness
hereby secured, enter upon and take possession of said Property or any part thereof, in his own
name sue for or otherwise collect such rents, issues and profits, including those past due and
unpaid, and apply the same, less costs and expenses of operation and collection, including
reasonable attorney’s fees, upon any indebtedness secured hereby, and in such order as
Beneficiary may determine. The entering upon and taking possession of said Property, the
collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure
C-4
or waive any default or notice of default hereunder or invalidate any act done pursuant to such
notice.
(11) That upon default by Trustor in payment of any indebtedness secured hereby, or
in performance of any agreement hereunder, or default by Trustor under the Secured Promissory
Note or the Affordability Restrictions and Regulatory Agreement executed by Trustor that is not
cured within the cure period, if any, expressly described therein and applicable to the default,
Beneficiary may declare all sums secured hereby immediately due and payable by delivery to
Trustee of written declaration of default and demand for sale and of written notice of default and
election to cause to be sold said Property, which notice Trustee shall cause to be filed for record.
After the lapse of such time as may then be required by law following the recordation of
said notice of default, and notice of sale having been given as then required by law, Trustee,
without demand on Trustor, shall sell said Property at the time and place fixed by it in said notice
of sale, either as a whole or in separate parcels, and in such order as it may determine, at public
auction to the highest bidder for cash in lawful money of the United States, payable at time of
sale. Trustee may postpone sale of all or any portion of said Property by public announcement at
such time and place of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement. Trustee shall deliver to such
highest bidder its deed conveying the Property so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of
the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary may purchase
the Property at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of
evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of:
all sums expended under the terms hereof, not then repaid, with accrued interest at the amount
allowed by law in effect at the date hereof; all other sums then secured hereby; and the
remainder, if any, to the person or persons legally entitled thereto.
(12) Beneficiary, or any successor in ownership of any indebtedness secured hereby,
may from time to time, by instrument in writing, substitute a successor or successors to any
Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and
duly acknowledged and recorded in the office of the recorder of the county or counties where
said Property is situated, shall be conclusive proof of proper substitution of such successor
Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all
its title estate, rights, powers and duties. Said instrument must contain the name of the original
Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is
recorded and the name and address of the new Trustee.
(13) That this Deed of Trust applies to, inures to the benefit of, and binds all parties
hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The
term Beneficiary shall include the owner and holder, including pledges, of the note secured
hereby, whether or not named as Beneficiary herein. In this Deed of Trust, whenever the context
so requires, the masculine gender includes the feminine and/or neuter, and the singular number
includes the plural.
C-5
(14) That Trustee accepts this Trust when this Deed of Trust, duly executed and
acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any
party hereto of pending sale under any Deed of Trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
(15) If the Trustor shall sell, lease, transfer, assign, convey, encumber, mortgage,
hypothecate or alienate the real property described herein, or any part thereof, or any interest
therein, or shall be divested of title or any interest therein in any manner or way, whether
voluntarily or involuntarily prior to completion of the development described in the Loan
Agreement between Trustor and Beneficiary, (except as expressly permitted by Beneficiary
pursuant to the terms and conditions set forth in the Regulatory Agreement between Trustor and
Beneficiary), or if Trustor shall fail to make any payments due under the note secured by this
Deed of Trust, or fail to perform any other obligation under said Restrictive Agreement, this
Deed of Trust or the note secured hereby, or any other deed of trust encumbering the subject
Property, then Beneficiary shall have the right, at its option, to declare any indebtedness or
obligations secured hereby, irrespective of the maturity date specified in any note evidencing the
same, immediately due and payable.
(16) Notwithstanding anything provided herein to the contrary, the Beneficiary agrees
to look solely to the Trustor’s interest in the Property encumbered hereby and improvements
thereon (or the proceeds thereof) for the satisfaction of any remedy of the Beneficiary, and for
the collection of a judgment (or other judicial process) requiring the payment of money by the
Trustor, except where such judgment results from a claim of fraud; intentional misrepresentation;
misapplication; misappropriation; or wrongful retention of rental income; casualty insurance;
condemnation proceeds; or other funds attributable to the Property; the commission of any act of
deliberate waste with respect to the Property encumbered hereby; or the deposit of any hazardous
or toxic materials on the Property encumbered hereby; in which events there shall be no such
limitation on the Beneficiary’s recourse against the Trustor.
(17) This Deed of Trust is also intended to be and shall constitute both a Security
Agreement and a “fixture filing” as defined in the California Commercial Code, the Trustor
being the Debtor and the Beneficiary being the Secured Party. Trustor hereby grants Beneficiary
a security interest in all fixtures, and in all goods which are or are to become fixtures on the
Land, for the purpose of securing all indebtedness and other obligations of Trustor now or
hereafter secured by this Deed of Trust. The products of such collateral are also covered hereby.
This Deed of Trust, as a fixture filing, is to be recorded in the real estate records covering the
real property covered hereby. Trustor authorizes Beneficiary to execute, deliver, file and record
(as necessary) financing and continuation statements covering such property from time to time in
such form as Beneficiary may require to perfect and continue the perfection of Beneficiar y’s
security interest with respect to such property, and to reimburse Beneficiary for any costs
incurred in filing such financing statements and any continuation statements. Trustor shall not
create or allow the creation of any other security interest in such property. Upon the occurrence
of any default by Trustor hereunder, Beneficiary shall have the rights and remedies of a secured
party under the California Commercial Code, as well as all other rights and remedies available at
law or in equity or as provided herein, all at Beneficiary’s option. Trustor and Beneficiary agree
that the filing of a financing statement in the records normally having to do with personal
property shall never be construed as in any way derogating from or impairing this declaration
C-6
and the hereby stated intention of the parties hereto that everything used in connection with the
operation or occupancy of such property or the production of income therefrom is and, at all
times and for all purposes and in all proceedings, both legal and equitable, shall be regarded as
real property encumbered by this Deed of Trust and fixture filing, irrespective of whether (a) any
such item is physically attached to the buildings and improvements, (b) serial numbers are used
for the better identification of certain equipment, or (c) any such item is referred to or reflected in
any such financing statement so filed at any time. Such mention in the financing statement is
declared to be for the protection of the Beneficiary in the event any court or judge shall at any
time hold that notice of Beneficiary’s priority of interest must be filed in the Uniform
Commercial Code records to be effective against a particular class of persons, including, but not
limited to, the federal government and any subdivisions or entities of the federal government.
The undersigned Trustor requests that a copy of any Notice of Default and of any Notice
of Sale hereunder be mailed to him at his address hereinbefore set forth.
C-7
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity, and that by his/her/their signature(s) on the
instrument the person(s), or the entity(ies) upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
C-8
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity, and that by his/her/their signature(s) on the
instrument the person(s), or the entity(ies) upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
C-9
EXHIBIT “A”
LEGAL DESCRIPTION
D-1
EXHIBIT “D”
FORM OF PROMISSORY NOTE
SECURED PROMISSORY NOTE
__________, 202__ $9,629,143.00
Temecula, California
FOR VALUE RECEIVED, the undersigned [LAS HACIENDAS HOUSING ASSOCIATES,
L.P., a California limited partnership] (“Maker” or “Developer”), having its principal place of
business at c/o Community Housingworks, 3111 Camino del Rio North, Suite 800, San Diego,
CA 92108, promises to pay to the order of the CITY OF TEMECULA, a municipal corporation
(“Payee” or “City”), at 41000 Main Street, Temecula, CA 92590, or at such other place as the
holder of this Note from time to time may designate in writing, the principal sum of $718,445.00
constituting deferred development fees and $8,910,698.00 of construction loan funds
(colletively, $9,629,143), together with interest on the outstanding principal amount of this
promissory note (the “City Loan Note”) at the “Applicable Interest Rate,” as defined below, in
lawful money of the United States of America.
This City Loan Note is being delivered, and the loans evidenced hereby are being made, pursuant
to the terms of that certain Loan Agreement between Developer and City (“Loan Agreement”).
All capitalized terms used herein which are not separately defined herein shall have the meanings
set forth therefor in the Loan Agreement.
Upon the date hereof, the sum of $718,445 (consisting of deferred development fees) shall be
deemed outstanding. The remainder of the loan principal (consisting of construction loan funds)
shall be disbursed by City subject to the terms and conditions in Section 3.7 of the Loan
Agreement (or by the Senior Project Lender pursuant to the Disbursement Agreement between
City and such Senior Project Lender) .
“Applicable Interest Rate” means three percent (3%) per annum, simple interest, on outstanding
principal, except that amounts not paid when due shall accrue interest from the date due until the
date paid at the lesser of: (i) seven percent (7%) per annum, simple interest, or (ii) the maximum
rate permitted by applicable law.
1. Payments. Payments under this City Loan Note shall be due and payable as
follow: Payments of fifty percent (50%) of all Residual Receipts (“City Portion”) payable on
April 30 after the first anniversary of completion of construction of the Project pursuant to the
Loan Agreement, and each anniversary thereafter until this City Loan Note has been satisfied in
full. Payments shall first be applied to accrued interest, then to the first $718,445.00 of principal
(representing deferred fees), then to remaining outstanding principal. In addition, the entire
amount of outstanding principal and accrued interest and any additional amounts which become
owing hereunder shall be paid by Maker to Payee as of the earliest of (i) a default under the Loan
Agreement, the Regulatory Agreement entered pursuant to the Loan Agreement, or the deed of
trust securing this City Loan Note not cured within the applicable cure period after delivery of
D-2
required notice; (ii) as provided in Section 4 below; (iii) fifty-five (55) years after the date of this
City Loan Note (the “Maturity Date”).
2. Secured by Deed of Trust. Repayment of this City Loan Note is secured by a
deed of trust (the “City Deed of Trust”) of this date executed by Maker for the benefit of Payee
encumbering the property described in the City Deed of Trust (the “Property” or “Site”).
3. Prepayment. Maker shall have the right to prepay amounts owing under this City
Loan note at any time, without penalty or premium.
4. Due on Sale or Encumbrance. In the event of any Transfer (as defined below) of
the Property, or any portion thereof or interest therein, Payee shall have the absolute right at its
option, without prior demand or notice, to declare all sums secured hereby immediately due and
payable. As used herein, the term “Transfer” means and includes the direct or indirect sale,
transfer, conveyance, assignment, or other alienation of the Property, or any portion thereof or
interest therein, whether voluntary, involuntary, by operation of law or otherwise, or the lease of
all or substantially all of the Property or of all or substantially all of the improvements located
thereon. Transfer shall not include the sale, transfer, assignment, pledge, hypothecation or
encumbrance by Developer’s limited partner of its partnership interest to the extent permitted by
the Loan Agreement, nor shall Transfer include the removal of any general partner of Developer
by the limited partner for cause and the replacement of such removed general partner by another
person or entity in accordance with the terms of Developer’s partnership agreement to the extent
permitted by the Loan Agreement. “Transfer” shall not include a Transfer permitted in the Loan
Agreement so long as Trustor complies with the provisions of the Regulatory Agreement relating
to such leasing activity. “Transfer” shall not include the leasing of individual Units on the
Property. Failure of Beneficiary to exercise the option to declare all sums secured hereby
immediately due and payable upon a Transfer will not constitute waiver of the right to exercise
this option in the event of any subsequent Transfer.
5. Miscellaneous.
(a) Governing Law. All questions with respect to the construction of this City
Loan Note and the rights and liabilities of the parties to this City Loan Note shall be governed by
the laws of the State of California.
(b) Binding on Successors. This City Loan Note shall inure to the benefit of,
and shall be binding upon, the successors and assigns of each of the parties to this City Loan
Note.
(c) Attorneys’ Fees.
(i) Maker shall reimburse Payee for all reasonable attorneys’ fees,
costs and expenses, incurred by Payee in connection with the enforcement of Payee’s rights
under this City Loan Note, including, without limitation, reasonable attorneys’ fees, costs and
expenses for trial, appellate proceedings, out-of-court negotiations, workouts and settlements or
for enforcement of rights under any state or federal statute, including, without limitation,
reasonable attorneys’ fees, costs and expenses incurred to protect Payee’s security and attorneys’
fees, costs and expenses incurred in bankruptcy and insolvency proceedings such as (but not
D-3
limited to) seeking relief from stay in a bankruptcy proceeding. The term “expenses” means any
expenses incurred by Payee in connection with any of the out-of-court, or state, federal or
bankruptcy proceedings referred to above, including, without limitation, the fees and expenses of
any appraisers, consultants and expert witnesses retained or consulted by Payee in connection
with any such proceeding.
(ii) Payee shall also be entitled to its attorneys’ fees, costs and
expenses incurred in any post-judgment proceedings to collect and enforce the judgment. This
provision is separate and several and shall survive the merger of this City Loan Note into any
judgment on this City Loan Note.
(d) Entire Agreement. This City Loan Note and the relevant provisions of the
Loan Agreement constitute the entire agreement and understanding between and among the
parties in respect of the subject matter of such agreements and supersede all prior agreements
and understandings with respect to such subject matter, whether oral or written.
(e) Time of the Essence. Time is of the essence with respect to every
provision hereof.
(f) Waivers by Maker. Except as otherwise provided in any agreement
executed in connection with this City Loan Note, Maker waives: presentment; demand; notice of
dishonor; notice of default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; and diligence in taking any
action to collect any sums arising under this City Loan Note or in any proceeding against any of
the rights or interests in or to properties securing payment of this City Loan Note.
(g) Non-waivers. No previous waiver and no failure or delay by Maker in
acting with respect to the terms of this City Loan Note or the City Deed of Trust shall constitute
a waiver of any breach, default, or failure of condition under this City Loan Note, the City Deed
of Trust or the obligations secured thereby. A waiver of any term of this City Loan Note, the
City Deed of Trust or of any of the obligations secured thereby must be made in writing and shall
be limited to the express written terms of such waiver. In the event of any inconsistencies
between the terms of this City Loan Agreement Note and the terms of any other document
related to the loan evidenced by this City Loan Agreement Note, the terms of this City Loan
Note shall prevail.
(h) Non-Recourse. Repayment of this Note and all other obligations of
Borrower hereunder, under the Loan Agreement, Regulatory Agreement or City Deed of Trust
shall be a non-recourse obligation of Borrower, such that neither Borrower nor any partner of
Borrower shall have any personal obligation to make any payments or perform any other
obligations of Borrower.
(i) Cure by Limited Partners. City hereby agrees that any cure of any default
made or tendered by Developer’s limited partners who shall have been identified in writing by
Developer to City and shall be deemed to be a cure by Developer and shall be accepted or
rejected on the same basis as if made or tendered by Developer; provided City shall have
D-4
received written notice by Developer of the identity of, and address for notices for, such limited
partners and a copy of the applicable limited partnership agreement and amendments showing
they are limited partners.
MAKER:
__________________________________
D-5
CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity, and that by his/her/their signature(s) on the
instrument the person(s), or the entity(ies) upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
E-1
EXHIBIT “E”
FORM OF NOTICE OF AFFORDABILITY RESTRICTIONS
(Attached.)
E-2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Temecula
41000 Main Street
Temecula, CA 92590
Attention: City Clerk
with a copy to:
Community HousingWorks
3111 Camino del Rio North, Suite 800
San Diego, CA 92108
Attn: Mary Jane Jagodzinski
APN: 921-050-016-2; 921-050-020-5
Exempt From Recording Fee Pursuant to Government Code § 27383
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and title companies,
and other persons, regarding affordable housing restrictions on the real property described in
this Notice: Affordable housing restrictions have been recorded with respect to the property
described below (referred to in this Notice as the “Site”) which require that the Site be developed
as an affordable rental housing development (the “Project”) and that all of the units be rented to
and occupied by persons and households of limited income at affordable rents.
Title of Document Containing Affordable Housing Restrictions: Affordability
Restrictions and Regulatory Agreement (Low/Mod Set-Aside Funds) (“Agreement”).
Parties to Agreement: __________ (“Developer”) and the City of Temecula (“City”).
The Agreement is recorded concurrently with this Notice, in the Official Records of
Riverside County.
Legal Description of Site: See Exhibit “A” attached hereto and incorporated herein by
this reference.
Site Location: 28715 Las Haciendas Street and 28772 Calle Cortez.
Assessor’s Parcel Number of Site: 921-050-016-2; 921-050-020-5
Summary of Agreement:
E-3
o The Agreement requires Developer to develop a seventy-seven (77) unit (each, a
“Unit”) rental housing project on property being acquired by Developer from the
City, but one unit is a manager’s unit.
o The Agreement restricts the rental of
37 Units (“Required Affordable Units”), which are required to be
rented to and occupied by Extremely Low Income Households, Very
Low Income Households and Low Income households, whose annual
income generally cannot exceed 30%, 50%, or 60% (respectively) of
Area Median Income for the Riverside County area, adjusted for
household size.
o Area Median Income limits (or “AMI”) are all as published periodically by the
California Department of Housing and Community Development.
o The Agreement restricts the rents that may be charged to households occupying
Required Household Units to the following maximum rents (“Affordable Rent”):
Affordable Rent for Extremely Low Income Households shall be 30%
x 30% of AMI (as described in the Agreement) for a household size
appropriate to the unit, including a reasonable utility allowance;
Affordable Rent for Very Low Income Households shall be 30% x
50% of AMI for a household size appropriate to the unit, including a
reasonable utility allowance;
Affordable Rent for Low Income Households shall be 30% x 60% of
AMI for a household size appropriate to the unit, including a
reasonable utility allowance;
Household size appropriate to the unit shall be two persons for a one
bedroom unit, three persons for a two bedroom unit, and 4 persons for
a three bedroom unit.
The term of the Agreement is fifty-five (55) years from the date of the
City’s issuance of a Final Certificate of Occupancy for the Project.
This Notice does not contain a full description of the details of all of the terms and
conditions of the Agreement. You will need to obtain and read the Agreement to fully
understand the restrictions and requirements which apply to the Site.
E-4
This Notice is being recorded and filed in compliance with Health and Safety Code
Section 33334.3(f)(3) and (4), and shall be indexed against Developer.
Date: _______________, 202_
CITY:
CITY OF TEMECULA
By:
Print Name:
City Manager
DEVELOPER:
____________________________________
E-5
CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument the
person(s), or the entity(ies) upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
E-6
CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument the
person(s), or the entity(ies) upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
E-7
CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On before me, ________________________________________ Notary
Public, personally appeared ________________________________________, who proved
to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument the
person(s), or the entity(ies) upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public
E-8
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of Temecula, County of Riverside, State of California, described as
follows:
F-1
EXHIBIT “F’
PRELIMINARY PROJECT BUDGET
[INTENTIONALLY OMITTED; DELIVERY OF PROJECT BUDGET IS CONDITION TO
CLOSING]
G-1
EXHIBIT “G”
FORM OF AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT
RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:
City of Temecula
41000 Main Street
Temecula, CA 92590
Attention: City Clerk
with a copy to:
Community HousingWorks
3111 Camino del Rio North, Suite 800
San Diego, CA 92108
Attn: Mary Jane Jagodzinski
APN(s): 921-050-016-2; 921-050-020-5
(Space above for Recorder’s Use.)
This document is exempt from the payment of a recording fee
pursuant to Government Code Section 6103.
AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT
(Low-Mod Set Aside Funds)
These AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT
(“Regulatory Agreement”) is hereby entered, effective as of _______________, 202_, by and
among the CITY OF TEMECULA, a municipal corporation, as successor to the housing assets
and funds of the former Temecula Redevelopment Agency (“City”), and
______________________ (“Developer”) (City and Developer are sometimes collectively
referred to herein as the “Parties.”).
R E C I T A L S
WHEREAS, City and Developer have entered into that certain Loan Agreement dated as of
_________, 2020 (the “Loan Agreement”) for the improvement and development of a 77 unit
apartment project on the real property described in Exhibit “A” (the “Site”) which Loan
Agreement provides for the City to make a loan to Developer of low/mod income housing set
aside funds conditioned upon, among other things, the execution and recordation of this
Regulatory Agreement. Any capitalized term not defined herein shall have the meaning
established therefor in the Loan Agreement.
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NOW, THEREFORE, City and Developer declare that the Site shall be held, transferred,
encumbered, used, sold, conveyed, leased and occupied subject to the covenants, conditions and
restrictions hereinafter set forth expressly and exclusively for the use and benefit of said
property. Each and all of the restrictions, limitations, conditions, covenants, liens, reservations
and charges herein contained shall run with the land and be recorded on the property title and
shall be binding on Parties, their grantees, successors, heirs, executors, administrators, devisees
or assigns, and all subsequent owners of all or any part of the Site, during the term of this
Regulatory Agreement.
ARTICLE I
DEFINITIONS
The definitions provided herein shall be applicable to this Regulatory Agreement and also to any
amendment or supplement (unless the context implicitly or explicitly shall prohibit), recorded
against the Site pursuant to the provision of this Regulatory Agreement.
Section 1. “Affiliated Person” means, when used in reference to a specific person, any
person that directly or indirectly controls or is controlled by or under common control with the
specified person, any person that is an officer or director of, a trustee of, or a general partner,
managing member or operator in, the specified person or of which the specified person is an
officer, director, trustee, general partner or managing member,.
Section 2. “Affordable Housing Development” means an affordable housing project
operated in conformity with this Regulatory Agreement throughout the Required Covenant Period.
Section 3. “Affordable Rent”, per month, means, for an Extremely Low Income
Household, a monthly rent (including a reasonable utility allowance) that does not exceed thirty
percent (30%) of thirty percent (30%) of Median Income for a household size appropriate to the
Unit; for some Very Low Income Households specified herein, a monthly rent (including a
reasonable utility allowance) which does not exceed one-twelfth (1/12th) of thirty percent (30%)
of fifty percent (50%) of Median Income for a household size appropriate to the Unit; and for a
Low Income Household, a monthly rent (including reasonable utility allowance) which does not
exceed one-twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of Median Income for
a household size appropriate to the Unit.
Section 4. “Approved Housing Development” means all improvements as provided to
be developed by Developer under the Loan Agreement. The Approved Housing Development
must be completed in strict conformity with all specifications contained in or referred to in the
Loan Agreement.
Section 5. “Area” means the San Bernardino-Riverside Primary Metropolitan
Statistical Area, as periodically defined by HUD.
Section 6. “Certificate” or “Certification” is defined in Section 3(a).
Section 7. “City”, as defined in the first paragraph hereof, means the City of Yucaipa,
a municipal corporation.
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Section 8. “City Code” means and refers to the City of Temecula Municipal Code, as
revised from time to time.
Section 9. ““Common Areas” means all areas on the Site that are open or accessible to
all tenants of the Site (such as grounds, but excluding interiors of Units).
Section 10. “Extremely Low Income Household” means a household earning not
greater than the extremely low income limit for Riverside County, adjusted for household size,
pursuant to Health and Safety Code Section 50106.
Section 11. “Household size appropriate to the unit” shall be two persons for a one
bedroom unit, three persons for a two bedroom unit, and four persons for a three bedroom unit.
Notwithstanding the foregoing, in the event the determination of Household size appropriate to the
unit set forth in this Section 11 conflicts with the determinatio of California Tax Credit Allocation
Committee (“CTCAC”), then CTCAC’s determination shall control.
Section 12. Gross Income” means all payments from all sources received by a person
(together with the gross income of all persons of the age of 18 years or older who intend to reside
with such person in one residential unit) whether in cash or in kind as calculated pursuant to 25
California Code of Regulations Section 6914.
Section 13. “Low Income Household” or “Lower Income Household” means a
household earning not greater than the lower income household limit for Riverside County
described in Health and Safety Code Section 50079.5 that is not a Very Low Income Household
or Extremely Low Income Household.
Section 14. “Low Income Unit” or “Lower Income Unit” means a Unit occupied at
Affordable Rent by a Low Income Household.
Section 15. “Median Income” or “Median Income for the Area” means the applicable
median income published at 25 California Code of Regulations Section 6932, as modified from
time to time.
Section 16. “Prescribed Income Levels” means the following:
Type Income of Household as Percentage of AMI Number of Units
1BR/1BA 30% 5
1BR/1BA 50% 6
1BR/1BA 60% 4
2BR/1BA 30% 7
2BR/1BA 50% 6
2BR/1BA 60% 3
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Type Income of Household as Percentage of AMI Number of Units
3BR/2BA 50% 6
Section 17. “Regulatory Agreement” means this Regulatory Agreement and any
amendments, modifications or supplements.
Section 18. “Rental Development” means the seventy-seven (77) Unit residential rental
development on the Site.
Section 19. “Required Affordable Unit” means any of the thirty-seven (37) restricted of
the dwelling units in the Rental Development, as constructed under the Loan Agreement, and
available to, occupied by, or held vacant for occupancy only by tenants qualifying as Extemely
Low Income Households, Very Low Income Households and Low Income Households and to be
rented at Affordable Rent.
Section 20. “Required Covenant Period” means the period commencing on the date all
Required Affordable Units have been completed as evidenced by the City’s issuance of a Final
Certificate of Occupancy for the Rental Development, and ending as of the fifty-fifth (55th)
anniversary thereof.
Section 21. “Site” means all of the real property and appurtenances as described in the
Recitals above, including all structures and other improvements thereon, and those hereafter
constructed.
Section 22. “Unit” means a dwelling unit on the Rental Development.
Section 23. “Very Low Income Households” means households earning not greater than
the very low income limit for Riverside County, adjusted for household size, pursuant to Health
and Safety Code Section 50105.
Section 24. “Very Low Income Unit” means a Unit occupied at Affordable Rent by a
Very Low Income Household.
Section 25. “Very Low Income Required Units” means the Required Affordable Units
which are required to be rented to Very Low Income Households at Affordable Rent for Very Low
Income Households.
Section 26. “Year” means a calendar year, excepting that the last Year hereunder shall
be deemed to end as of the expiration of this Regulatory Agreement.
ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. Developer shall develop the Approved Housing Development on the Site in
conformity with the Loan Agreement. Thereafter, the Site shall be operated as an Affordable
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Housing Development and devoted only to the uses specified in the Loan Agreement and for the
period of time specified herein.
None of the units in the Rental Development shall at any time be utilized on a transient basis nor
shall the Rental Development or any portion thereof ever be used as a hotel, motel, dormitory,
fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home or
trailer court or park. No part of the Site, from the date Developer acquired the Site, has been or
will at any time be owned or used as a cooperative housing corporation or a community
apartment project or a stock cooperative.
Section 2. Affordable Housing.
Affordability Restrictions. Throughout the Required Covenant Period, the
Developer shall cause the Required Affordable Units to be rented in accordance with the
definition of “Prescribed Income Levels” in Section 18 at Affordable Rents.
Except to the extent prohibited by federal law, in the event a household’s income
initially complies with the corresponding income restriction but the income of such household
increases, such increase shall not be deemed to result in a violation of the restrictions of this
Regulatory Agreement concerning limitations upon income of occupants, provided that the
occupancy by such household is for a reasonable time of not to exceed three hundred sixty-five
(365) days (measured from the time the income of the household ceases to qualify at the
designated affordability level). Developer shall include in its rental agreements provisions which
implement this requirement and limitation, and Developer shall expressly inform prospective
renters as to this limitation prior to the commencement of a tenancy.
Duration of Affordability Requirements. The restrictions shall apply throughout
the Required Covenant Period. All tenants residing in any Required Affordable Unit for which
rents are limited by virtue of this Regulatory Agreement or pursuant to other regulation during
the last two (2) Years of the Required Covenant Period shall be given notice by Developer at
least once every six (6) months prior to the expiration date of this requirement, that the rent
payable on such Required Affordable Unit may be raised to a market rate rent at the end of the
Required Covenant Period.
Selection of Tenants. Developer shall demonstrate to City that the proposed
tenants of the Required Affordable Unit of the Extremely Low Income Units constitute
Extremely Low Income Households; that the proposed tenants of Very Low Income Required
Units constitute Very Low Income Households; and that the proposed tenants of the Low Income
Required Units constitute Low Income Households.
Prior to the rental or lease of a Required Affordable Unit to a tenant, and as set
forth in this Section 2 of Article II of this Regulatory Agreement, Developer shall require the
tenant to execute a written lease and to complete an Income Verification certifying that the
tenant(s) occupying the Unit is/are in the appropriate income category. Developer shall verify
the income of the tenant(s).
Developer 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 program under Section 8 of the United States Housing Act of 1937, or its successor.
Developer shall not apply selection criteria to Section 8 certificate holders which are more
burdensome than criteria applied to any other prospective tenants.
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Determination of Affordable Rent for the Required Affordable Units. The
Required Affordable Units shall be rented or leased at Affordable Rent. The maximum monthly
rental for the Required Affordable Units shall be adjusted annually as permitted by Section
50053 of the California Health and Safety Code based on the annual adjustment to the Median
Income for the Area established pursuant to Section 50093 of the California Health and Safety
Code.
DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE
MAXIMUM RENTAL FOR THE REQUIRED AFFORDABLE UNITS ESTABLISHED BY
THE LOAN AGREEMENT, THIS REGULATORY AGREEMENT AND THE CITY GRANT
DEED IS SUBSTANTIALLY BELOW THE FAIR MARKET RENT FOR THE REQUIRED
AFFORDABLE UNITS.
Section 3. Developer Verification and Program Compliance.
Income Verification and Certification. Developer will obtain and maintain on file
an Income Verification from each tenant (for every Unit on the Site), dated immediately prior to
the initial occupancy of such tenant in the Required Affordable Unit.
On each June 30 following the completion of the Development, Developer shall
file with Authority or its designee a Certificate, containing all information required pursuant to
Health and Safety Code Section 33418. Each Certificate shall cover the immediately preceding
Year.
Developer shall maintain on file throughout the Required Covenant Period each
tenant’s executed lease and Income Verification and rental records for the Required Affordable
Units. Developer shall maintain complete and accurate records pertaining to the Required
Affordable Units, and will permit any duly authorized representative of City to inspect the books
and records of Developer pertaining to the occupancy of the Required Affordable Units.
Developer shall prepare and submit to City annually by each June 30 throughout the Required
Covenant Period, a Certificate of Continuing Program Compliance. Such documentation shall
state for each Unit, the Unit size, the rental amount, the number of occupants, and the income of
the occupants and any other information which may be used to determined compliance with the
terms of this Regulatory Agreement.
In addition, as part of its annual report, at City’s request, but not less frequently
than prior to each initial and subsequent rental of each Required Affordable Unit to a new tenant
household (but not lease renewals) and annually thereafter, Developer shall also provide to City
completed income computation, asset evaluation, and certification forms, for any such tenant or
tenants, in substantially the form provided by City from time to time. Developer shall obtain an
annual certification from each household of each Required Affordable Unit demonstrating that
such household is an Extremely Low Income Household, Very Low Income Household or Low
Income Household, as applicable. Developer shall verify the income certification of each tenant
household. Developer shall submit to City copies of any and all tenant income and occupancy
certifications upon request of City. City may request (and Developer shall provide) additional
documentation to assist City’s evaluation of Developer’s compliance with this Agreement, if
determined to be necessary in the reasonable discretion of the City Manager, specifically
including (without limitation) any documentation or additional certifications that may be
necessary to verify compliance with all requirements from all funding sources, and each tenant’s
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status as to each Required Affordable Unit. (This requirement is in addition to and does not
replace or supersede Developer’s obligation to annually submit the Certificate of Continuing
Program Compliance to City.) Further, City has the right, but not the obligation to monitor
compliance with respect to each tenant household at the Rental Development, and City’s election
to monitor some, but not all, of the Units shall not constitute a waiver of City’s right to monitor
and enforce compliance with respect to all Units in the future.
Verification of Income of New and Continuing Tenants. Gross income
calculations for prospective (and continuing) tenants shall be determined in accordance with 25
Cal. Code Regs. Section 6914. Developer shall verify the income and information provided in
the income certification of the proposed tenant as set forth below.
(a) Developer shall verify the income of each proposed tenant of the
Required Affordable Units and by at least one of the following methods as appropriate to the
proposed tenant:
(i) obtain two (2) paycheck stubs from the person’s two (2)
most recent pay periods;
(ii) obtain a true copy of an income tax return from the person
for the most recent tax year in which a return was filed;
(iii) obtain an income verification certification from the
employer of the person;
(iv) obtain an income verification certification from the Social
Security Administration and/or the California Department of Social Services if the person
receives assistance from such agencies; or
(v) obtain an alternate form of income verification reasonably
requested by Authority, if none of the above forms of verification is available to Developer.
Verification Regarding Eligibility of New Tenants. Developer shall retain
documentation regarding the eligibility of each new tenant household.
Reporting Amounts. In the event Developer fails to submit to City or its designee
the Certification as required by Section 3(a), Developer shall be in noncompliance with this
Regulatory Agreement.
Section 4. Management of the Rental Development.
Manager. The Rental Development shall at all times be managed by an
experienced manager (the “Manager”) reasonably acceptable to the City, with demonstrated
ability to operate residential developments like the Rental Development in a manner that will
provide decent, safe, and sanitary housing. The Developer shall submit for the City’s approval
the identity of any proposed Manager. The Developer shall also submit such additional
information about the background, experience and financial condition of any proposed Manager
as is reasonably necessary for the City to determine whether the proposed Manager meets the
standard for a qualified Manager set forth above. If the proposed Manager meets the standard
for a qualified Manager set forth above, the City shall approve the proposed Manager by
notifying Developer in writing.
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Performance Review. The Developer shall cooperate with the City in an annual
review of management practices, in connection with which the City shall have the right to review
and approve the annual operations and management budget; provided, however, that the City
reserves the right to conduct reviews more frequently at its sole discretion. The purpose of each
annual review will be to enable the City to determine if the Improvements are being operated and
managed in accordance with the requirements and standards of this Agreement.
Replacement of Manager.
(i) If, as a result of the annual review, the City determines in its reasonable
judgment that the Improvements are not being operated and managed in accordance with any of
the requirements and standards of this Agreement, the City shall deliver notice to the Developer
of its intention to cause replacement of the Manager. Within fifteen (15) days of receipt by the
Developer of such written notice, the City and the Developer shall meet in good faith to consider
methods for improving the financial and operating status of the Rental Development, including,
without limitation, replacement of the Manager.
(ii) After such meeting, the Manager shall have a period of thirty (30) days to
cure or address any failure to comply with the requirements and standards of this Agreement, and
to the extent such failure cannot be cured within such thirty (30) day period but the Manager is
diligently pursuing the cure, the Manager shall have an additional 30 days to cure.
(iii) If, after cure period set forth above, the Manager failed to cure and the
City elects to proceed with the replacement of the Manager, the City shall so notify the
Developer of such decision in writing within fifteen (15) days following the expiration of the
cure period. Thereafter, the Developer shall appoint as the Manager a person or entity meeting
the standards for a Manager set forth in this section and approved by the City in its reasonable
discretion. City shall have the right to disapprove the replacement Manager within thirty (30)
days, and in such case Developer shall promptly dismiss the replacement Manager and appoint
another replacement Manager meeting the standards for a Manager set forth in this section and
approved by the City in its reasonable discretion. Notwithstanding the foregoing, the City’s
approval rights shall be subject and subordinate to the rights of senior lender under the senior
deed of trust.
(iv) Any contract for the operation or management of the Property entered into
by the Developer shall provide that the contract can be terminated as set forth above.
The Developer agrees that the Rental Development shall be preserved and
maintained throughout the term hereof in good condition and repair so as to provide decent, safe,
and sanitary housing, and in conformance with all applicable ordinances, statutes and regulations
promulgated by any governmental entity having jurisdiction over the Rental Development.
Annual Inspection. Subject to the rights of the occupants of the Units, City shall
have the right to perform an annual on-site inspection of the units, common areas and grounds
and to perform an annual tenant file review to ensure that Developer is managing the Rental
Development in accordance with the requirements of this Agreement.
Annual Budget. Developer shall submit or shall cause its Property Manager to
submit to the City Manager on or before November 30, and each anniversary thereof, an annual
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budget for the ongoing operation of the Rental Development for approval by City, which will not
be unreasonably withheld. At the City’s request, delivered within thirty (30) days after receipt of
the budget, each of Developer and the City shall cause its respective representative(s) to meet
within thirty (30) days following the receipt of request to review the budget. Such review is
without obligation to either party to propose or agree to any modification of permitted operating
expenses.
Management of Property. Developer shall be completely responsible for the
management, administration and operation of the Rental Development including, but not limited
to the hiring and discharge of employees, salaries and all other related Rental Development
expenses, maintenance and repairs, including capital expenditures, the financial operations of the
Rental Development, the rental and re-rental of the apartment units in accordance with the
occupancy requirements set forth in this Agreement and all operational, maintenance and
management responsibilities of an Developer in a typical multi-family residential housing Rental
Development.
Reserves. The Developer will maintain replacement reserves in accordance with
the Loan Agreement and will not withdraw funds from such reserves without the consent of the
City, which will not be unreasonably withheld, subject and subordinate to the rights of the senior
mortgage lender.
Manager’s Failure to Perform. In the event the manager appointed by Developer
for management of the Rental Development fails to perform the obligations imposed upon
Developer by this Section, such failure shall constitute a default under Section 10 hereof, and if
Developer shall fail to cure such default as provided in Section 10 hereof, then City shall have
the right, in addition to any other remedies of City, to require Developer, upon thirty (30) days’
prior written notice, to appoint a substitute management City, reasonably acceptable to both City
and Developer, subject and subordinate to the rights of the senior mortgage lender.
Gross Mismanagement. During the Required Covenant Period, in the event of
“Gross Mismanagement” (as defined below) of the Development, any acts of Gross
Mismanagement shall cease immediately upon written notice from the City Manager, and any
omissions constituting Gross Mismanagement shall be corrected within thirty (30) days after
written notice from the City Manager. If such an act or omission is not timely ceased/cured,
then, Developer shall within sixty (60) days replace the Property Manager with a new propert y
manager reasonably acceptable to the City Manager, subject to the rights of the senior mortgage
lender.
For purposes of this Agreement, the term “Gross Mismanagement” means
management of the Development in a manner which materially violates the terms and/or
intention of this Agreement to operate a first quality affordable housing complex, and shall
include, but is not limited to, any one or more of the following:
(a) Leasing to tenants who exceed the prescribed income levels;
(b) Subject to fair housing laws, allowing tenants to exceed the
prescribed occupancy levels without taking immediate action to stop such overcrowding;
(c) Under-funding required reserve accounts;
(d) Failing to submit timely and/or adequate annual reports to
Authority as required herein;
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(e) Failing to comply with this Regulatory Agreement;
(f) Fraud or embezzlement of funds, including without limitation
funds in the reserve accounts;
(g) Failing to fully cooperate with the Temecula Police Department or
other local law enforcement agency(ies) with jurisdiction over the Development, in maintaining
a crime-free environment within the Development;
(h) Failing to fully cooperate with the Temecula Fire Department or
other local public safety agency(ies) with jurisdiction over the Development, in maintaining a
safe and accessible environment within the Development; and
(i) Failing to fully cooperate with the Temecula Planning and
Building and Safety Department, or other local health and safety enforcement agency(ies) with
jurisdiction over the Development, in maintaining a decent, safe and sanitary environment within
the Development.
Developer is obligated and shall use commercially reasonable efforts to correct
any defects in property management or operations at the earliest feasible time.
Code Enforcement. Developer acknowledges and agrees that City and its
employees and authorized agents, shall have the right to conduct code compliance and/or code
enforcement inspections of the Development and the individual dwelling units at the
Development (and not limited to the Required Affordable Units), both exterior and interior, at
reasonable times and upon reasonable notice (not less than 48 hours prior notice, except in an
emergency) to Developer and/or an individual tenant. If such notice is provided by Authority
representative(s) to Developer, then Developer shall immediately and directly advise any
affected tenant of such upcoming inspection and cause access to the area(s) and/or Units at the
Rental Development to be made available and open for inspection. Developer shall include
express advisement of such inspection rights within the lease/rental agreements for each Unit in
the Development in order for each and every tenant and tenant household to be aware of this
inspection right. The foregoing portion of this Section 5 is without limitation as to the exercise
of police powers by City.
Section 6. Keeping of Animals. No animals of any kind shall be raised, bred or kept on the
Site, except that domesticated dogs, cats or other household pets may be kept by the tenants in
the Rental Development at the discretion of Developer and subject to compliance with all laws.
However, no animal shall be kept, bred or maintained for any commercial purpose or for fighting
purposes. Nothing permitted herein shall derogate in any way the right of Developer to further
restrict keeping of pets.
Section 7. Parking of Vehicles. Developer shall not permit the parking, storing or keeping
of any vehicle except wholly within the parking areas designated for the Required Affordable
Units. Developer shall not permit the parking, storing or keeping of any large commercial type
vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational vehicle over
twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other similar
vehicle), boats over twenty (20) feet in length, or any vehicle other than a private passenger
vehicle, upon any portion of the Common Areas, including parking spaces. For purposes of this
section, a pickup truck with a pickup bed mounted camper shall be considered a private
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passenger vehicle; provided however, that no such vehicle shall be used for residential purposes
while parked on the premises.
Developer shall not permit major repairs or major restorations of any motor vehicle, boat, trailer,
aircraft or other vehicle to be conducted upon any portion of the Common Area, including the
parking areas, except for emergency repairs thereto and then only to the extent necessary to
enable movement of the vehicle to a proper repair facility. No inoperable vehicle shall be stored
or kept in the Common Area. Developer shall give the vehicle owner not less than four (4) days,
nor more than seven (7) days’ notice and an opportunity to remove any vehicle parked, stored or
kept in violation of the provisions of this Regulatory Agreement. Notice shall consist minimally
of a reasonably diligent attempt to personally notify the vehicle owner or alternatively leaving
written notice on the subject vehicle. After due notice and opportunity have been given to the
vehicle owner, Developer shall have the right to remove, at the vehicle owner’s expense, any
vehicle parked, stored or kept in violation of the provisions of this Regulatory Agreement.
Section 8. Maximum Occupancies. No persons shall be permitted to occupy any Apartment
within the Rental Development in excess of applicable limit of maximum occupancy set by the
City Code and the laws of the State of California.
Section 9. Signs Required. “No loitering” signs will be posted at each building and enforced
by Developer. “Illegally parked vehicles will be towed” signs in compliance with California
Vehicle Code requirements will be posted and enforced by Developer.
Section 10. Fences and Electronic Installations. Developer shall not install or knowingly
permit to be installed on the exterior of any improvement or building on any fences or any
antenna or other television or radio receiving device, excepting satellite dishes having a diameter
of eighteen inches (18”) or less, without prior written consent of City. This prohibition shall not
prohibit the installation of cable television or subscription wires or receiving devices.
Section 11. Structural Change. Nothing shall be done on the Site in, on or to any building
which would materially structurally change the exterior or the interior bearing walls of any such
building or structure without the prior written consent of the City and any such changes shall be
in compliance with all applicable laws including any required permits and ordinances of the City.
Nothing herein shall affect the rights of Developer to repair, alter or construct improvements on
the buildings on the Site unless such repair, alteration or improvement would impair the
structural integrity and/or exterior appearance of said buildings. Nothing herein shall be deemed
to prohibit work ordered to be performed by the City building official.
Section 12. Compliance with Laws. Developer shall comply with all applicable laws in
connection with the development and use of the Site, including without limitation the Fair
Housing Act (42 U.S.C. § 3601, et seq., and 24 C.F.R. § 100.300, et seq.). Developer is a
sophisticated party, with substantial experience in the acquisition, development, financing,
obtaining financing for, marketing, and operation of affordable housing projects, and with the
negotiation, review, and preparation of agreements and other documents in connection with such
activities. Developer is familiar with and has reviewed all laws and regulations pertaining to the
acquisition, development and operation of the Rental Development and has obtained advice from
any advisers of its own choosing in connection with this Agreement.
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ARTICLE III
DUTIES OF DEVELOPER: SPECIFIC MAINTENANCE RESPONSIBILITIES
Section 1. Exterior Building Maintenance. All exterior, painted surfaces shall be maintained
at all times in a clean and presentable manner, free from chipping, cracking and defacing marks.
Any such defacing marks shall be cleaned or removed within a reasonable period of time as set
forth herein.
Section 2. Front and Side Exteriors. Developer shall at all times maintain the front exterior
and yard in a clean, safe and presentable manner, free from defacing marks or any disrepair and
any visible side exteriors. Developer shall hire maintenance personnel to maintain and/or repair
any front exterior or yard or visible side yard and exterior of any lot or building.
Section 3. Graffiti Removal. All graffiti, and defacement of any type, including marks,
words and pictures must be removed and any necessary painting or repair completed by the later
to occur of (i) seventy-two (72) hours of their creation or (ii) seventy-two (72) hours after notice
to Developer.
Section 4. Driveways. All driveways must be paved and maintained with impervious
material in accordance with the City Code. In addition, all water must be made to drain freely to
the public part of the waterway without any pooling.
Section 5. Exterior Illumination. Developer shall at all times maintain adequate lighting in
all entrance ways and parking areas. Adequate lighting means outdoor, night lighting designed
and installed, which provides no less than one (1.0) foot candles in the parking areas and no less
than one and one-half (1-1/2) foot candles in the walking areas or common areas and no less than
0.2 foot candles at the point of least illumination.
Section 6. Front Setbacks. All front setback areas that are not buildings, driveways or
walkways shall be adequately and appropriately landscaped in accordance with minimum
standards established by City and shall be maintained by Developer. The landscaping shall meet
minimum standards set from time to time by City.
Section 7. Trash Bins. All trash shall be collected and placed at all times in an enclosable
bin to be placed in a designated refuse/trash bin area. The designated area shall be located so
that the bin will, to the extent possible, be readily accessible from the street.
Section 8. Prohibited Signs. No sign of any kind shall be displayed to the public view on or
from any portion of the Site without the approval of City and appropriate City departments, if
any such approval is required by the City Code.
ARTICLE IV
OBLIGATION TO MAINTAIN, REPAIR AND REBUILD
Section 1. Maintenance. If, at any time, Developer fails to maintain the Rental Development
or any portion thereof, and said condition is not corrected after the expiration of forty-five (45)
days from the date of written notice from City to both Developer and its limited partner., City
may perform the necessary maintenance and Developer shall pay such costs as are reasonably
incurred for such maintenance. Payment shall be due within fifteen (15) days of receipt of an
invoice from City.
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City hereby agrees that any cure of any default made or tendered by Developer’s limited partners
who shall have been identified in writing by Developer to City and shall be deemed to be a cure
by Developer and shall be accepted or rejected on the same basis as if made or tendered by
Developer; provided City shall have received written notice by Developer of the identity of, and
address for notices for, such limited partners and a copy of the applicable limited partnership
agreement and amendments showing they are limited partners.
Developer agrees to assume full responsibility for the operation and maintenance
of the Rental Development throughout the Required Covenant Period without expense to City,
and to perform all repairs and replacements necessary to maintain and preserve the Rental
Development and the Site in good repair, in a neat, clean, safe and orderly condition reasonably
satisfactory to City and in compliance with all applicable laws. Developer agrees that City shall
not be required to perform any maintenance, repairs or services or to assume any expense in
connection with the Rental Development and the Site. Developer hereby waives all rights to
make repairs or to cause any work to be performed at the expense of City as provided for in
Section 1941 and 1942 of the California Civil Code.
The following standards shall be complied with by Developer and its maintenance
staff, contractors or subcontractors:
(1) Developer shall maintain the Rental Development, including individual
Required Affordable Units, all common areas, all interior and exterior facades, and all exterior
project site areas, in a safe and sanitary fashion suitable for a high quality, rental housing project.
Developer agrees to provide utility services, administrative services, supplies, contract services,
maintenance, maintenance reserves, and management for the entire project including interior
tenant spaces, common area spaces and exterior common areas. The services provided by
Developer shall include, but not be limited to, providing all common area electricity, gas, water,
property, fire and liability insurance in the amounts set forth in this Regulatory Agreement, all
property taxes and personal property taxes, any and all assessments, maintenance and
replacement of all exterior landscaping, and all administration and overhead required for any
property manager.
(2) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing, edging, and trimming of grass; tree and shrub pruning;
trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road
conditions and visibility, and optimum irrigation coverage; replacement, as needed, of all plant
materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas;
and staking for support of trees.
(3) Clean-up maintenance shall include, but not be limited to: maintenance of
all private paths, parking areas, driveways and other paved areas in clean and weed-free
condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is
unsafe or unsightly; removal of all trash, litter and other debris from improvements and
landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of
the day on which the maintenance operations are performed to ensure that all cuttings, weeds,
leaves and other debris are properly disposed of by maintenance workers.
(4) The Rental Development shall be maintained in conformance and in
compliance with the approved construction and architectural plans and design scheme, as the
same may be amended from time to time with the approval of City.
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(5) All maintenance work shall conform to all applicable federal and state
Occupational Safety and Health Act standards and regulations for the performance of
maintenance.
(6) Any and all chemicals, unhealthful substances, and pesticides used in and
during maintenance shall be applied only by persons in strict accordance with all governing
regulations.
(7) Parking lots, lighting fixtures, trash enclosures, and all areas shall be kept
free from any accumulation of debris or waste materials by regularly scheduled maintenance.
Section 2. Damage and Destruction Affecting Development - Developer’s Duty to Rebuild.
If all or any portion of the Site and the improvements thereon is damaged or destroyed by fire or
other casualty, Developer shall promptly proceed to obtain insurance proceeds and subject to the
terms of the senior loan secured by the Site and improvements, take all steps necessary to begin
reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently
commence the repair or replacement of the Rental Development to substantially the same
condition as the Rental Development is required to be constructed pursuant to the Loan
Agreement, subject to the sufficiency of the insurance proceeds to cover the actual cost of repair,
replacement, or restoration, and Developer shall complete the same as soon as possible thereafter
so that the Rental Development can be occupied as an affordable housing project in accordance
with the Loan Agreement. In no event shall the repair, replacement, or restoration period exceed
eighteen (18) months from the date Developer obtains insurance proceeds unless the City
Manager, in his or her reasonable discretion, approves a longer period of time, subject to the
terms of the senior loan secured by the Site and improvements. If the then-existing laws of any
other governmental agencies with jurisdiction over the Site do not permit the repair, replacement,
or restoration, Developer may elect not to repair, replace, or restore the Rental Development by
giving notice to City (in which event the insurance proceeds shall be treated as Residual Receipts
and shall be distributed to the Parties in accordance with the terms of the City Loan Promissory
Note entered pursuant to the Loan Agreement, and Developer shall be required to remove all
debris from the Site) or Developer may reconstruct such other Rental Development on the Site as
is consistent with applicable land use regulations and approved by City, and any other
governmental agency or agencies with jurisdiction, and City may pursue remedies of its choosing
under this Agreement, including without limitation termination of the Loan Agreement and
accelerating the payment of the City Loan in accordance with the terms of the City Loan
Promissory Note.
In furtherance of the requirements of this Section 2, Developer shall keep the construction on the
Site insured by carriers at all times reasonably satisfactory to City against loss by fire and such
other hazards, casualties, liabilities and contingencies as included within an all risk extended
coverage hazard insurance policy, in an amount of the full replacement cost of the constructions.
In the event of loss, Developer shall give prompt notice to the insurance carrier and to Authority.
If the Site is abandoned by Developer, or if Developer fails to respond to City within thirty (30)
days from the date notice is mailed by City to Developer that the insurance carrier off ers to settle
a claim for insurance benefits, City is authorized to collect and apply the insurance proceeds at
City’s option either to restoration or repair of the Site.
Section 3. Variance in Exterior Appearance and Design. In the event the Rental
Development sustains substantial physical damage due to a casualty event, Developer may apply
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to City for approval to reconstruct, rebuild or repair in a manner which will provide different
exterior appearance and lot design from that which existed prior to the date of the casualty.
Section 4. Time Limitation. Upon damage to the Site or the Rental Development or other
improvements, Developer shall be obligated to proceed with all due diligence hereunder and
commence reconstruction within two (2) months after the damage occurs and complete
reconstruction within six (6) months after damage occurs or demolition and vacate within two (2)
months, unless prevented by causes beyond their reasonable control, in which event
reconstruction shall be commenced and completed at the earliest feasible time.
ARTICLE V
ENFORCEMENT
Section 1. Remedies. Breach of the covenants contained in the Regulatory Agreement may
be enjoined, abated or remedied by appropriate legal proceeding by City. No remedies shall be
instituted until the party complaining of a violation has provided written notice to the other party
and such party has failed to cure the alleged violation within thirty (30) days of receipt of the
written notice. City hereby agrees that an y cure of any default made or tendered by Developer’s
limited partners who shall have been identified in writing by Developer to City and shall be
deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made
or tendered by Developer; provided City shall have received written notice by Developer of the
identity of, and address for notices for, such limited partners and a copy of the applicable limited
partnership agreement and amendments showing they are limited partners.
This Regulatory Agreement does not in any way infringe on the right or duties of City to enforce
any of the provisions of the City Code including, but not limited to, the abatement of dangerous
buildings.
A default hereunder may constitute a default under the Loan Agreement and the Loan described
therein.
Section 2. Nuisance. The result of every act or omission whereby any of the covenants
contained in this Regulatory Agreement are violated in whole or in part is hereby declared to be
and constitutes a nuisance, and every remedy allowable at law or equity, against a nuisance,
either public or private, shall be applicable against every such result and may be exercised by
any owner or its successors in interest, without derogation of City’s rights under law.
Section 3. Right of Entry. In addition to the above general rights of enforcement, City shall
have the right through its agents and employees, to enter upon any part of the project area for the
purpose of enforcing the California Vehicle Code, and the ordinances and other regulations of
City, and for maintenance and/or repair of any or all publicly owned utilities. In addition, City
has the right of entry at reasonable hours and upon and after reasonable attempts to contact
Developer, on any lot to effect emergency repairs or maintenance which Developer has failed to
perform. Subsequent to sixty (60) days written notice to Developer specifically outlining
Developer’s noncompliance, City shall have the right of entry on the Site at reasonable hours to
enforce compliance with this Regulatory Agreement which Developer has failed to perform.
This Section 3 is without limitation as to the exercise of police powers of City.
Section 4. Costs of Repair. The costs borne by City for any such repairs or maintenance
emergency and/or non-emergency, shall become a charge for which Developer shall be
responsible.
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Section 5. Cumulative Remedies. The remedies herein provided for breach of the covenants
contained in this Regulatory Agreement shall be deemed cumulative, and none of such remedies
shall be deemed exclusive.
Section 6. Failure to Enforce. The failure to enforce any of the covenants contained in this
Regulatory Agreement shall not constitute a waiver of the right to enforce the same thereafter.
Section 7. Enforcement and Nonliability. City may from time to time make such efforts, if
any, as it shall deem appropriate enforce and/or assist in enforcing this Regulatory Agreement.
However, City will not be subject to any liability for failure to affirmatively enforce any
provision of this Regulatory Agreement.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Covenant Against Partition. By acceptance of its interest in the Site, Developer
shall be deemed to covenant for itself and for its heirs, representatives, successors and assigns,
that it will not institute legal proceedings or otherwise seek to effect partition of its right and
interest in the interest being conveyed to Developer, or the burdens running with the land as a
result of this Regulatory Agreement.
Section 2. Severability. Invalidation of any one of these covenants or restrictions by
judgment or court order shall in no way affect any other provisions which shall remain in all
force and effect.
Section 3. Term. This Regulatory Agreement shall run with and bind the interest of
Developer in the Site, and shall inure to the owner(s) of any property subject to this Regulatory
Agreement, his legal representatives, heirs, successors and assigns, and as provided in Article VI,
Sections 2 and 3, be enforceable by City, for a term equal to the Required Covenant Period as
defined herein, provided; however, that the covenants regarding nondiscrimination set forth in
Section 4 of Article II of this Regulatory Agreement shall remain in effect for perpetuity. This
Regulatory Agreement shall not be subordinate to the lien of any financing obtained by
Developer with respect to the Site.
Section 4. Construction. The provisions of this Regulatory Agreement shall be liberally
construed to effectuate its purpose of creating a uniform plan for the development and operation
of the Required Affordable Units available at Affordable Rent for Very Low Income
Households, and, to the extent provided herein, Low Income Households in conformity with the
Prescribed Income Levels. The article and section headings have been inserted for convenience
only, and shall not be considered or referred to in resolving questions of interpretation or
construction.
Section 5. Amendments. This Regulatory Agreement may be amended only by the written
agreement of Developer and City.
Section 6. Encroachments. None of the rights and obligations of Developer created herein
shall be altered in any way by encroachments due to settlement or shifting of structures or any
other cause. There shall be valid easements for the maintenance of said encroachments so long
as they shall exist; provided, however, that in no event shall a valid easement for encroachment
be created in favor of Developer if said encroachment occurs due to the willful conduct of said
Developer.
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Section 7. Notices. Any notice permitted or required to be delivered as provided herein to
Developer shall be in writing and may be delivered either by reputable overnight service or
certified mail to its address on the first page hereof, and shall be effective as of one business day
after delivery to the messenger service for overnight delivery, or the date of delivery or
attempted delivery shown on the return receipt. Such address may be changed from time to time
by notice in writing.
Section 8. Notice of Transfer of Title; Notice of Property Manager. Developer shall
promptly notify City in writing of the identity and address for notices for the initial Property
Manager and any replacement thereof, and Developer shall also promptly notify the City in
writing of any conveyance of the Approved Housing Development, including the name of any
buyer and the address for notices of the buyer.
DEVELOPER:
______________________________
CITY:
CITY OF TEMECULA,
a municipal corporation
By:
Print Name:
Title:
ATTEST:
Randi Johl, City Clerk
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EXHIBIT A
LEGAL DESCRIPTION OF THE SITE
Real property in the City of Temecula, County of Riverside, State of California, described as
follows:
G-19
State of California )
County of ________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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 )
County of ________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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 )
County of ________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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.
H-1
EXHIBIT “H”
SCHEDULE OF PERFORMANCE
Action Date / Deadline
Items 1 – 9 Relate to Developer Actions and Requirements Prior to the Closing
1. Project Budget. The Developer shall
submit a comprehensive Project Budget
for the Improvements.
Prior and as a condition to Closing.
2. Final Plans and Specifications. The
Developer shall submit the Final Plans
and Specifications for City approval.
Prior and as a condition to Closing.
3. Building Permits. The Developer shall
obtain the Building Permit for the
construction of the Improvements.
Prior and as a condition to the Closing.
4. Construction Contract. The Developer
shall submit the Stipulated Sum
construction contract for the
construction of the Improvements to the
City for approval.
Prior and as a condition to the Closing.
5. Performance and Payment Bonds. The
Developer shall deliver to the City
copies of the required performance and
payment bonds, or security in lieu
thereof.
Prior and as a condition to the Closing.
6. Insurance. The Developer shall submit
evidence of insurance to the City.
Prior and as a condition to the Closing.
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Action Date / Deadline
7. Tax Credit Applications/Award. Developer must apply for 9% tax credits in the
second round for 2020, both rounds in 2021 and
both round in 2022 (until awarded) and must
provide evidence thereof to City, and form a
limited partnership to provide for investment of
tax credit-based equity, and deliver a copy of the
partnership agreement to City for approval.
Developer must be awarded tax credits and must
provide evidence thereof to City prior (and as a
condition) to Closing. In addition, in the event
Developer is unsuccessful at securing 9% tax
credits, the Developer shall have the option to
pursue 4% tax credits during 2020, 2021 and
2022 as an alternative.
8. Tax Credit Equity. All tax credit equity
must have been committed and
available to pay the initial Project costs,
as shown by reasonable evidence
delivered to City.
Prior and as a condition to Closing.
Items 10 – 14 Relate to Requirements After the Closing
9. Closing. The Developer shall close the
City Loan.
Within one (1) month after award of tax credits,
but not later than December 31, 2022.
10. Commencement of Construction.
Developer shall substantially
commence the Improvements.
No later than 30 days after the Closing.
11. Completion of Grading. Developer
shall substantially complete the grading
for the Project.
Not later than six (6) months following the
commencement of construction.
12. Commencement of Vertical
Construction. Developer shall
commence vertical construction.
Not later than eight (8) month after the
commencement of construction.
13. Completion; Qualification for
Certificate of Completion. The Project
shall be completed and shall qualify for
a Certificate of Completion.
No later than eighteen (18) months after the
commencement of construction.