HomeMy WebLinkAboutStaff Report 3.A 04/18/2016DATE: April 18, 2016
Agenda Item #3.A
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Sue Castellucci, Housing Administrator 50
SUBJECT: Resolution Approving an Amended Loan Agreement with CRWC LLC, an
Affiliate of Eden Housing Incorporated, in Connection with the Acquisition and
Rehabilitation of the Corona Ranch and Washington Creek Apartments, and
Authorizing the City Manager to Sign Documents Related to the Rehabilitation
and Financing of the Project.
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution Approving an Amended
Loan Agreement with CRWC LLC' an Affiliate of Eden Housing Incorporated in Connection
with the Acquisition and Rehabilitation of the Corona Ranch and Washington Creek Apartments,
and Authorizing the City Manager to Sign Documents Related to the Rehabilitation and
Financing of the Project.
BACKGROUND
The Washington Creek Apartment project is an existing 32 -unit affordable housing rental
apartment facility, located at 909 Martin Circle. The project was built in 1993. The property has
sixteen two - bedroom townhouses located above sixteen three bedroom flats. The project will
include substantial rehabilitation to address replacement of major building systems and will
increase energy and water efficiency. Also the rehabilitation will target a site -wide 40%
reduction in potable water use and a 50% reduction in onsite gas and electricity consumption.
This project was originally financed with a State program called Rental Housing Construction
Program (RHCP), a program no longer funding affordable housing and has a compliance period
to 2021. With the rehabilitation of the project, the City's Regulatory Agreement will be extended
for another 55 years at the same level of affordability. Rents will be restricted by the RHCP
regulatory agreement to households with incomes no greater than 60% of the area median
income.
The Corona Ranch Apartment project is an existing 74 -unit affordable housing rental apartment
facility, located at 990 Ely Road. The project was built in 1994. The property has 32 two
bedroom townhouse units, 32 three bedroom flats, and 10 four bedroom flats. All ground floor
units are accessible to the disabled with 2 three bedroom units and 2 four bedroom units
customized for residents with an immobility disability. The project will include substantial
rehabilitation to address replacement of major building systems and will increase energy and
water efficiency. Also the rehabilitation will target a site -wide 40% reduction in potable water
use and a 50% reduction in onsite gas and electricity consumption. This project was originally
financed with a State program called Rental Housing Construction Program (RHCP), a program
no longer funding affordable housing. The City of Petaluma's Regulatory Agreement has a
compliance period to 2023. With the rehabilitation of the project, the City's Regulatory
Agreement will be extended for another 55 years at the same level of affordability. Rents will be
restricted by the RHCP regulatory agreement to households with incomes between 35% to 60%
of the area median income for Sonoma County.
DISCUSSION
Affiliates of Eden Housing will serve as the developer and the General Partner of the limited
partnership that will acquire, refinance and rehabilitate the Washington Creek Apartments and
Corona Ranch Apartments. Both properties are over 20 years old and are in need of
rehabilitation to address deferred maintenance issues. Funding for the rehabilitation will be with
4% tax credits and bonds. Through the Tax Credit application process, the two properties were
combined as one application. All of the amended documents will use the same limited
partnership, CRWC, LLC. All documents will reflect this change and be inclusive of both
properties. Currently, the City's Regulatory Agreement has restricted 49% of the units to be
affordable at 80% area median income. However, the other funding sources, such as TCAC,
restrict all of the units for persons with incomes between 35% to 60 %.
The City of Petaluma currently has a loan with Eden Housing for the Washington Creek
Apartments with an outstanding principal balance in the amount of approximately $320,000
which will need to be amended and assigned to the new partnership that will be created. The
term of the amended loan will be 55 years and the interest rate will be approximately 2.3 %,
depending upon the applicable federal rate at the time of closing. The financial projections and
figures will be refined and finalized prior to the closing date. Corona Ranch Apartments does
not have a city loan to be amended but there will be an amended Regulatory Agreement with an
extended tern of 55 years that includes both properties.
There are several documents that need to be included in this transaction which include the
following:
• Agreement Amending Loan Documents
• Amended Promissory Note
• Amendment to Existing Deed of Trust
• Amended City Regulatory Agreement
• Subordination Agreement with the first mortgage lender and other state funding
agencies
FINANCIAL IMPACTS
This project fulfills the City Council's goals and priorities of the 2015 -2023 Housing Element
and the 2015 -2020 Consolidated Plan in preserving affordable housing in Petaluma.
ATTACHMENTS
0)
1. Resolution
2. Agreement Amending Loan Documents
3. Amended Promissory Note
4. Amendment to Existing Deed of Trust
5. Amended City Regulatory Agreement
ATTACHMENT #1
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA
APPROVING AN AMENDED LOAN AGREEMENT WITH CRWC LLC AN
AFFILIATE OF EDEN HOUSING INCORPORATED IN CONNECTION WITH THE
ACQUISITION AND REHABILITATION OF CORONA RANCH AND WASHINGTON
CREEK APARTMENTS, AND AUTHORIZING THE CITY MANAGER TO SIGN
DOCUMENTS RELATED TO THE REHABILITATION AND FINANCING OF THE
PROJECT
WHEREAS, the City previously provided financing to Eden Housing Inc, a California
nonprofit public benefit corporation ( "Eden ") to assist in the development of Washington Creek
Apartments, an affordable housing project consisting of 32 units of multifamily housing located
at 909 Martin Circle; and
WHEREAS, Corona/Ely Ranch Associates, an affiliate of Eden and City executed a
Regulatory Agreement for the Corona Ranch Apartments, an affordable housing project
consisting of 74 units of multi - family housing, dated as of June 10, 1993 and recorded in the
Official Records against a portion of the Property on June 10, 1993 as Instrument No. 1993-
0071800; and
WHEREAS, Eden or an affiliate of Eden will serve as the general partner in CRWC,
L.P., a California limited partnership ( "Developer ") that intends to acquire, refinance and
rehabilitate Washington Creek Apartments and Corona Ranch Apartments (the "Project "); and
WHEREAS, in connection with the refinancing of the Project, the term of affordability
will be extended for a term of 55 years commencing upon completion of the rehabilitation; and
WHEREAS, to ensure the financial feasibility of the Project, Eden has requested that the
City amend the existing note payable to the City to provide for an extension of the term, a
reduction of the interest rate, and an assignment to the Developer; and
WHEREAS, proposed forms of the following documents (collectively, the "Loan
Documents ") have been provided to the City Council: a loan agreement; an amended version of
the existing City note; an amendment to the existing City deed of trust; and an Affordable
Housing Regulatory Agreement and Declaration of Restrictive Covenants ( "Regulatory
Agreement ") that will restrict the Project for occupancy at affordable rents; and
rd
WHEREAS, in connection with the rehabilitation of the Project, conventional lenders
will provide construction and permanent financing, and may require the subordination of certain
loan documents.
NOW THEREFORE BE IT RESOLVED that the City Council of the City of Petaluma
hereby:
1. Finds that the modification of the existing City loan are necessary to make the Project
financially feasible and affordable to lower income households.
2. Approves the modification of the existing City Loan.
3. Approves the Loan Documents, and authorizes the City Manager or his designee to
execute and deliver each Loan Document to which the City is a party substantially in the form
provided for City Council review, with such modifications as may be approved by the City
Manager in consultation with the City Attorney, provided that such modifications are consistent
with the intent of this Resolution and do not substantially increase the obligations or impair the
rights of the City.
4. Agrees to subordinate the Regulatory Agreement and the deed of trust executed or to be
executed in connection with the financing of the Project to the deeds of trust and the regulatory
agreements to be executed by Developer for the benefit of the Project construction and
permanent lenders, provided that the City is provided reasonable protections including
reasonable notice and cure rights in the event of a default under the senior documents.
5. Authorizes and directs the City Manager and his designees to execute all documents and
to take all actions reasonably necessary to implement this Resolution and the transactions
described herein.
PASSED AND ADOPTED AT A REGULAR MEETING OF THE CITY COUNCIL OF
THE CITY OF PETALUMA ON , 2016 BY THE FOLLOWING
VOTE:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
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ATTACHMENT #2
AGREEMENT AMENDING LOAN DOCUMENTS
This Agreement Amending Loan Documents (this "Agreement ") is entered into effective as of
, 2016 ( "Effective Date ") by and between the City of Petaluma, a municipal
corporation ( "City ") and CRWC, L.P., a California limited partnership ( "Developer "). The
City and the Developer are collectively referred to herein as the "Parties."
RECITALS
A. Developer is the owner of, or has the contractual right to acquire, the real property
located at 990 Ely Road and 909 Martin Circle in the City of Petaluma, Sonoma County,
California, known as Sonoma County Assessor's Parcel Nos. 007 - 361- 034 -000 and 137 -280-
017 -000, and more particularly described in Exhibit A attached hereto (the "Property ").
B. Developer intends to rehabilitate, own and operate an affordable housing
development on the Property consisting of 106 apartments and related improvements
(collectively, the "Project ").
C. Using funds from the City's In Lieu Housing Fund, the City previously provided a
loan to Eden Housing Inc., a California nonprofit public benefit corporation ( "Eden ") in the
original principal amount of $320,000 (the "Loan "). Eden's obligation to repay the Loan is
evidenced by a promissory note dated July 24, 1990 (the "Original Note "). The Original Note
is secured by a Deed of Trust with Assignment of Rents dated July 24,1990, executed by Eden as
Trustor for the benefit of City, and recorded in the Official Records of Sonoma County
( "Official Records ") against a portion of the Property on August 6, 1990 as Instrument No.
1990 - 0078382 (the "Original Deed of Trust ").
D. Corona/Ely Ranch Associates, a California Limited Partnership ( "Corona
Partnership ") and City executed a Regulatory Agreement dated as of June 10, 1993 and
recorded in the Official Records against a portion of the Property on June 10, 1993 as Instrument
No. 1993 - 0071800 (the "Original Regulatory Agreement ").
E. Pursuant to that certain unrecorded Assignment and Assumption Agreement,
executed by and among Eden, Corona Partnership and Developer, and consented to by City,
Eden has assigned to Developer and Developer has assumed, the obligations of Eden under the
Original Note and the Original Deed of Trust, and Corona Partnership has assigned to Developer
and Developer has assumed, the obligations of Corona Partnership under the Original Regulatory
Agreement. The Original Note, the Original Deed of Trust and the Original Regulatory
Agreement are collectively referred to herein as the "Original City Documents ").
,:
F. The Parties desire to amend the Original City Documents as set forth herein.
NOW THEREFORE, in consideration of the foregoing, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows.
1. Modification of Original Note. The Parties agree that the terms of the Original Note shall
be modified to extend the maturity date to a 55 -year term and modify the interest rate to equal
the Applicable Federal Rate as set forth in the Amended and Restated Secured Promissory Note
attached hereto as Exhibit A (the "Amended Note "). As of the date of the closing for
Developer's construction loan for the Project (the "Closing Date "), Developer shall execute and
deliver to City the Amended Note substantially in the form attached hereto as Exhibit A. The
Amended Note shall amend, restate and supersede the Original Note. Upon Developer's
execution and delivery of the Amended Note, the City will cancel the Original Note. The
Parties acknowledge and agree that (i) as of the Effective Date, the interest accrued under the
Original Note is [Two Hundred Forty -Five Thousand, Seven Hundred and Sixty -Nine Dollars
($245,769)], and (ii) the City has disbursed the entire amount of the proceeds of the Loan and
has no obligation to disburse additional funds.
2. Modification of Original Deed of Trust. On the Closing Date, Developer shall execute
and cause to be recorded in the Official Records, an Amended and Restated Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing substantially in the form attached
hereto as Exhibit B (the "Amended Deed of Trust "). The Amended Deed of Trust will be
recorded against the Property on the Closing Date and will secure Developer's obligation to
repay the Amended Note. The Amended Deed of Trust shall amend, restate and supersede the
Original Deed of Trust. Concurrently with the recordation of the Amended Deed of Trust, City
will reconvey the Original Deed of Trust.
3. Modification of Regulatory Agreement. The Parties agree to execute an Amended and
Restated Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants
substantially in the form attached hereto as Exhibit C (the "Amended Regulatory
Agreement "). The Amended Regulatory Agreement will have a 55 -year term and will be
recorded against the Property on the Closing Date. The Amended and Restated Regulatory
Agreement shall amend, restate and supersede the Original Regulatory Agreement.
4. Miscellaneous.
4.1 Amendments. This Agreement may be amended or modified only by a written
instrument signed by both Parties.
4.2 Exhibits, Exhibits A through C attached hereto are hereby incoiporated herein by
reference.
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4.3 Severability. If any provision of this Agreement is held invalid, illegal, or
unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of
the remaining provisions shall not be affected or impaired thereby.
4.4 Further Assurances. The Parties each agree to execute, acknowledge and deliver
to the other such other documents and instruments, and to take such other actions, as either shall
reasonably request as may be necessary to carry out the intent of this Agreement.
4.5 Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be an original and all of which together shall constitute one agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement Amending Loan
Documents as of the date first written above.
CITY:
CITY OF PETALUMA, a municipal corporation
By:
John C. Brown, City Manager
Attest:
By:
City Clerk
Approved as to form:
By:
City Attorney
DEVELOPER:
CRCW, L.P., a California limited partnership
By: CRCW LLC, a California limited liability company
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Its: General Partner
By: Eden Housing, Inc., a California nonprofit public benefit corporation,
Its: Manager
By:
Linda Mandolini, President
Exhibit A
AMENDED NOTE
(Attach form of Amended and Restated Note.)
Exhibit B
AMENDED DEED OF TRUST
(Attach form of Amended and Restated Deed of Trust.)
Exhibit C
AMENDED REGULATORY AGREEMENT
(Attach form of Amended and Restated Regulatory Agreement.)
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ATTACHMENT #3
AMENDED AND RESTATED SECURED PROMISSORY NOTE
(Corona Ranch/Washington Creek)
$320,000
Plus accrued interest
Petaluma, California
, 2016
FOR VALUE RECEIVED, CRWC, L.P., a California limited partnership
( "Borrower "), promises to pay to the City of Petaluma, a municipal corporation (the "City "), in
lawful money of the United States of America: (a) the principal sum of Three Hundred Twenty
Thousand Dollars ($320,000) together with interest on the outstanding principal balance in
accordance with the terms and conditions described herein, and (b) the sum of [Two Hundred
Forty -Five Thousand, Seven Hundred and Sixty -Nine Dollars ($245,769)] which is equal to the
interest accrued under the Prior Note (defined below) as of the date of this Note (the "Accrued
Prior Interest "). Interest shall accrue on the principal balance of this Note outstanding from time
to time at the rate of [ and /100 percent L___%)] (the Applicable Federal Rate)
compounded annually. Interest shall be calculated on the basis of a year of 365 days, and charged
for the actual number of days elapsed.
This Note amends and restates in its entirety that certain Promissory Note in the original
principal amount of Three Hundred Twenty Thousand Dollars ($320,000) dated as of July 24,
1990 and executed by Borrower's predecessor in interest, Eden Housing, Inc., a California
nonprofit public benefit corporation ( "Eden "), for the benefit of City (the "Prior Note ").
Pursuant to an Assignment and Assumption Agreement executed by and among Eden, Borrower,
and certain other parties, Borrower assumed Eden's obligation to repay the Prior Note and the
interest accrued thereon.
This Note is secured by an Amended and Restated Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing ( "Deed of Trust ") dated as of the date hereof, executed by
Borrower for the benefit of City and encumbering the property described therein. City shall be
entitled to the benefits of the security provided by the Deed of Trust and shall have the right to
enforce the covenants and agreements contained herein, in the Deed of Trust, and that certain
Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants dated as of
the date hereof, executed by and between City and Borrower and recorded in the Official Records
of Sonoma County (the "Regulatory Agreement "). The rent restrictions and other requirements
set forth in the Regulatory Agreement shall remain effective for the full term of the Regulatory
Agreement and shall survive the repayment of this Note. This Note, the Regulatory Agreement,
and the Deed of Trust are collectively referred to herein as the "City Documents."
1. PAYMENTS.
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1.1 PAYMENT DATES; MATURITY DATE. The entire principal balance of this
Note together with all interest accrued thereon, Accrued Prior Interest, and all other sums payable
hereunder shall be due and payable in full in one lump sum on the date (the "Maturity Date ")
which is the earlier of (i) the fifty -fifth (55th) anniversary of the date upon which the City issues a
final certificate of occupancy or equivalent for the Project, or (ii) the fifty- seventh (57th)
anniversary of the date hereof, provided however, the Maturity Date shall not be earlier than the
date of expiration or termination of any Regulatory Agreement recorded by the California Tax
Credit Allocation Committee (TCAC) against the Property in connection with an allocation of
federal Low - Income Housing Tax Credits for the Project.
1.2 DUE ON SALE. The entire unpaid principal balance and all interest and other
sums accrued hereunder shall be due and payable upon the Transfer (as defined in Section 8.1 of
the Regulatory Agreement) absent City consent, of all or any part of the Project or the Property
or any interest therein other than a Transfer permitted without City consent pursuant to the
Regulatory Agreement. Without limiting the generality of the foregoing, this Note shall not be
assumable without City's prior written consent, which consent may be granted or denied in
City's sole discretion.
1.3 PREPAYMENT. Borrower may, without premium or penalty, at any time and
from time to time, prepay all or any portion of the outstanding principal balance due under this
Note, provided that each such prepayment is accompanied by accrued interest on the amount of
principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to
any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest,
and then to principal. The Regulatory Agreement shall remain in full force for the entire term
thereof regardless of any prepayment of this Note.
1.4 MANNER OF PAYMENT. All payments of principal and interest on this Note
shall be made to City at 11 English Street, Petaluma, CA 94952 or such other place as City shall
designate to Borrower in writing, or by wire transfer of immediately available funds to an
account designated by City in writing.
2. DEFAULTS AND REMEDIES.
2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder ( "Event of Default "):
(A) Borrower fails to pay when due the principal and interest payable hereunder and
such failure continues for ten (10) days after City notifies Borrower thereof in writing.
(B) Pursuant to or within the meaning of the United States Bankruptcy Code or any
other federal or state law relating to insolvency or relief of debtors ( "Bankruptcy Law "),
Borrower or any general partner thereof (i) commences a voluntary case or proceeding; (ii)
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consents to the entry of an order for relief against Borrower, or any general partner thereof, in an
involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or
similar official for Borrower or any general partner thereof, (iv) makes an assignment for the
benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due.
(C) A court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (i) is for relief against Borrower or any general partner thereof in an involuntary case,
(ii) appoints a trustee, receiver, assignee, liquidator or similar official for Borrower, or any
general partner thereof, or substantially all of such entity's assets, (iii) orders the liquidation of
Borrower or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of
attachment or similar process against the Property or the Project, and in each case the order or
decree is not released, vacated, dismissed or fully bonded within ninety (90) days after its
issuance.
(D) The occurrence of a Transfer in violation of the Regulatory Agreement.
(E) A default arises under any debt instrument secured by a mortgage or deed of trust
on the Project or the Property and remains uncured beyond any applicable cure period such that
the holder of such instrument has the right to accelerate payment thereunder.
(F) Borrower fails to maintain insurance on the Property and the Project as required
pursuant to the City Documents and Borrower fails to cure such default within five (5) days.
(G) Subject to Borrower's right to contest the following charges pursuant to the City
Documents, if Borrower fails to pay taxes or assessments due on the Property or the Project or
fails to pay any other charge that may result in a lien on the Property or the Project, and
Borrower fails to cure such default within twenty (20) days, but in all events before the
imposition of any such tax or other lien.
(H) If any representation or warranty contained in any City Document, or any
certificate furnished in connection therewith, or in connection with any request for disbursement
of the proceeds of the Loan proves to have been false or misleading in any material adverse
respect when made and continues to be materially adverse to the City.
(I) An Event of Default shall have been declared under any City Document,
including without limitation, the Regulatory Agreement, and remains uncured beyond the
expiration of the applicable cure period.
2.2 REMEDIES. Upon the occurrence of an Event of Default hereunder, City may, at
its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon and all sums due hereunder, immediately due and
payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies
available to it under applicable law, and (iii) exercise any and all rights and remedies available to
City under this Note and the other City Documents, including without limitation the right to
pursue foreclosure under the Deed of Trust. Borrower shall pay all reasonable costs and
expenses incurred by or on behalf of City including, without limitation, reasonable attorneys'
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fees, incurred in connection with City's enforcement of this Note and the exercise of any or all of
its rights and remedies hereunder and all such sums shall be a part of the indebtedness secured by
the Deed of Trust. The rights and remedies of City under this Note shall be cumulative and not
alternative.
2.3 DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall
automatically be increased without notice to the rate of the lesser of ten percent (10 %) per annum
or the maximum rate permitted by law (the "Default Rate "); provided however, if any payment
due hereunder is not paid when due, the Default Rate shall apply commencing upon the due date
for such payment. When Borrower is no longer in default, the Default Rate shall no longer
apply, and the interest rate shall once again be the rate specified in the first paragraph of this
Note. Notwithstanding the foregoing provisions, if the interest rate charged exceeds the
maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The
imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default
under this Note or prevent City from exercising any of its other rights or remedies.
2.4 LIMITED PARTNERS RIGHT TO CURE. Borrower's limited partners shall
have the right to cure any default of Borrower hereunder upon the same terms and conditions
afforded to Borrower. Any cure tendered by a limited partner shall be deemed to be a cure by
Borrower and shall be accepted or rejected on the same basis as if tendered by Borrower.
3. MISCELLANEOUS.
3.1 WAIVERS• AMENDMENTS; BORROWER'S WAIVERS. No waiver by City
of any right or remedy under this Note shall be effective unless in a writing signed by City.
Neither the failure nor any delay in exercising any right, power or privilege under this Note will
operate as a waiver of such right, power or privilege, and no single or partial exercise of any such
right, power or privilege by City will preclude any other or further exercise of such right, power
or privilege or the exercise of any other right, power or privilege. No waiver that may be given
by City will be applicable except in the specific instance for which it is given. No notice to or
demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of the right
of City to take further action without notice or demand as provided in this Note. There shall be
no amendment to or modification of this Note except by written instrument executed by
Borrower and City.
To the maximum extent permitted by applicable law Borrower hereby waives
presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on
the grounds of any extension or extensions of the time of payment or of any due date under this
Note, in whole or in part, whether before or after maturity and with or without notice.
3.2 NOTICES. Any notice required or permitted to be given hereunder shall be given
in accordance with Section 11.3 of the Regulatory Agreement.
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3.3 SEVERABILITY. If any provision in this Note is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Note will remain in full force
and effect. Any provision of this Note held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
3.4 GOVERNING LAW; VENUE. This Note shall be governed by the laws of the
State of California without regard to principles of conflicts of laws. Any legal action filed in
connection with this Note shall be filed in the Superior Court of Sonoma County, California, or
in the Federal District Court for the Northern District of California.
3.5 PARTIES IN INTEREST. This Note shall bind Borrower and its successors and
assigns and shall accrue to the benefit of City and its successors and assigns.
3.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Note are provided for convenience only and will not affect its construction or interpretation.
3.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and City
under this Note is solely that of borrower and lender, and the loan evidenced by this Note and
secured by the Deed of Trust will in no manner make City the partner or joint venturer of
Borrower.
3.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every
provision of this Note.
3.9 NONRECOURSE. Except as expressly provided in this Section 3.9, neither
Borrower nor the general or limited partners of Borrower shall have personal liability for
payment of the principal of, or interest on, this Note, and the sole recourse of City with respect to
the payment of the principal of, and interest on, this Note shall be to the Project, the Property and
any other collateral held by City as security for this Note; provided however, nothing contained
in the foregoing limitation of liability shall:
(A) impair the enforcement against all such security for the Loan of all the rights and
remedies of the City under the Deed of Trust and any financing statements City files in connection
with the Loan as each of the foregoing may be amended, modified, or restated from time to time;
(B) impair the right of City to bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable City to enforce and realize upon
the Deed of Trust, the interest in the Project and the Property created thereby and any other
collateral given to City in connection with the indebtedness evidenced hereby and to name the
Borrower as party defendant in any such action;
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(C) be deemed in any way to impair the right of the City to assert the unpaid principal
amount of the Loan as a demand for money within the meaning of Section 431.70 of the
California Code of Civil Procedure or any successor provision thereto;
(D) constitute a waiver of any right which City may have under any bankruptcy law to
file a claim for the full amount of the indebtedness owed to City hereunder or to require that the
Project and the Property shall continue to secure all of the indebtedness owed to City hereunder
in accordance with this Note and the Deed of Trust; or
(E) limit or restrict the ability of City to seek or obtain a judgment against Borrower
to enforce against Borrower and its general partners to:
(1) recover under any provision of the City Documents that obligates Borrower to
indemnify City, or
(2) recover from Borrower and its general partners compensatory damages as well
as other costs and expenses incurred by City (including without limitation reasonable
attorneys' fees and expenses) arising as a result of the occurrence of any of the following:
(a) any fraud or intentional misrepresentation on the part of the Borrower,
or its general partners, or any officer, director or authorized representative of
Borrower or its general partners in connection with the request for or creation of
the Loan, or in any City Document, or in connection with any request for any
action or consent by City in connection with the Loan;
(b) any failure to maintain insurance on the Property and the Project as
required pursuant to the City Documents;
(c) failure to pay taxes, assessments or other charges which may become
liens on the Property or the Project;
(d) the presence of Hazardous Materials on the Property or other violation
of the Borrower's obligations under Section 7.11 of the Deed of Trust (pertaining
to environmental matters);
(e) the occurrence of any act or omission of Borrower that results in waste
to or of the Project or the Property and which has a material adverse effect on the
value of the Project or the Property;
(f) the material misapplication of the Loan proceeds;
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(g) the removal or disposal of any personal property or fixtures or the
retention of rents, insurance proceeds, or condemnation awards in violation of the
Deed of Trust;
(h) the material misapplication of the proceeds of any insurance policy or
award resulting fiom condemnation or the exercise of the power of eminent
domain or by reason of damage, loss or destruction to any portion of the Project
or the Property; and
(i) the failure of Borrower to pay all amounts payable under this Note in
full if Borrower Transfers the Property in violation of the Regulatory Agreement.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written above.
BORROWER:
CRCW, L.P., a California limited partnership
By: CRCW LLC, a California limited liability company
Its: General Partner
By: Eden Housing, Inc., a California nonprofit public benefit corporation,
Its: Manager
C
Linda Mandolini, President
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Petaluma
11 English Street
Petaluma, CA 94952
Attn: City Manager
ATTACHMENT #4
(SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE)
AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING ( "Deed of Trust ") is made as of
, 2016, by CRWC, L.P., a California limited partnership ( "Trustor ") to North
American Title Company as trustee ( "Trustee "), for the benefit of the City of Petaluma, a
municipal corporation (`Beneficiary ").
RECITALS
A. Trustor owns fee simple title to the land described in Exhibit A attached hereto
and incorporated herein by this reference (the "Land "). The Land is located in the City of
Petaluma, Sonoma County, California. Trustor intends to rehabilitate, own and operate an
affordable multifamily residential development on the Land (the "Project ")
B. Beneficiary and Trustor have entered into an unrecorded Agreement Amending
Loan Documents dated as of the date hereof (the "Agreement ") which documents Trustor's
obligation to repay to Beneficiary certain financing provided by Beneficiary in connection with
the original construction of the improvements located on the Land. Trustor's obligation to repay
such financing is evidenced by an Amended and Restated Secured Promissory Note dated as of
the date hereof, in the original principal amount of Three Hundred Twenty Thousand Dollars
($320,000) plus accrued interest (the "Note ").
C. Trustor and Beneficiary have also executed an Amended and Restated Affordable
Housing Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory
Agreement "), dated as of the date hereof, and which will be recorded in the Official Records of
Sonoma County substantially concurrently herewith. Among other provisions, the Regulatory
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Agreement requires the residential units in the Project to be rented to Eligible Households at
Affordable Rents (as defined in the Regulatory Agreement).
D. As a condition precedent to Beneficiary's agreement to modify certain terms of
the original financing, Beneficiary has required that Trustor enter into this Deed of Trust and
grant to Trustee for the benefit of Beneficiary, a lien and security interest in the Property
(defined below) to secure repayment of the Note and performance of Trustor's obligations under
the Loan Documents (defined below).
E. This Deed of Trust is intended to amend and restate in its entirety that certain
Deed of Trust with Assignment of Rents dated July 24,1990, executed by Eden Housing, Inc., a
California nonprofit public benefit corporation as Trustor for the benefit of City, and recorded in
the Official Records of Sonoma County ( "Official Records ") against a portion of the Land on
August 6, 1990 as Instrument No. 1990- 0078382 (the "Original Deed of Trust ").
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is agreed as follows.
1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment
and performance of the Secured Obligations defined and described in Section 2, Trustor hereby
irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title
and interest which Trustor now has or may later acquire in and to the Land, and all of the
following, whether presently owned or hereafter acquired:
a. All, buildings, structures, and improvements, now or hereafter located or
constructed on the Land ( "Improvements ");
b. All appurtenances, easements, rights of way, pipes, transmission lines or wires
and other rights used in connection with the Land or the Improvements or as a means of access
thereto, whether now or hereafter owned or constructed or placed upon or in the Land or
Improvements and all existing and future privileges, rights, franchises and tenements of the
Land, including all minerals, oils, gas and other commercially valuable substances which may be
in, under or produced from any part of the Land, and all water rights, rights of way, gores or
strips of land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or
adjoining the Land and Improvements (collectively, "Appurtenances ");
C. All machinery, equipment, fixtures, goods and other personal property of the
Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or
hereafter located at or used in connection with the Land, the Improvements or Appurtenances,
and all improvements, restorations, replacements, repairs, additions or substitutions thereto
(collectively, "Equipment ");
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d. All existing and future leases, subleases, licenses, and other agreements relating to
the use or occupancy of all or any portion of the Land or Improvements (collectively, "Leases "),
all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other
payments which may now or hereafter accrue or otherwise become payable thereunder to or for
the benefit of Trustor, including but not limited to security deposits (collectively, "Rents ");
e. All insurance proceeds and any other proceeds from the Land, Improvements,
Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made
with or other security deposits given to utility companies, all claims or demands relating to
insurance awards which the Trustor now has or may hereafter acquire, including all advance
payments of insurance premiums made by Trustor, and all condemnation awards or payments
now or later made in connection with any condemnation or eminent domain proceeding
( "Proceeds ");
f. All revenues, income, rents, royalties, payments and profits produced by the
Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired
by Trustor ( "Gross Revenues ");
g. All architectural, structural and mechanical plans, specifications, design
documents and studies produced in connection with development of the Land and rehabilitation
of the Improvements (collectively, "Plans "); and
h. All interests and rights in any private or governmental grants, subsidies, loans or
other financing provided in connection with development of the Land and rehabilitation of the
Improvements (collectively, "Financing ").
All of the above - referenced interests of Trustor in the Land, Improvements, Appurtenances,
Equipment, Leases, Rents, Proceeds, Gross Revenues, Plans and Financing as hereby conveyed
to Trustee or made subject to the security interest herein described are collectively referred to
herein as the "Property."
2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment
and performance of the following (collectively, the "Secured Obligations "): (i) all present and
future indebtedness evidenced by the Note and any amendment thereof, including principal,
interest and all other amounts payable under the terms of the Note; (ii) all present and future
obligations of Trustor to Beneficiary under the Loan Documents (defined below); (iii) all
additional present and future obligations of Trustor to Beneficiary under any other agreement or
instrument acknowledged by Trustor (whether existing now or in the future) which states that it
is or such obligations are, secured by this Deed of Trust; (iv) all obligations of Trustor to
Beneficiary under all modifications, supplements, amendments, renewals, or extensions of any of
the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all
amounts advanced by or on behalf of Beneficiary to protect Beneficiary's interests under this
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Deed of Trust or any other Loan Document as such may be modified, supplemented, amended,
renewed or extended. The Note, the Regulatory Agreement, and this Deed of Trust are
hereinafter collectively referred to as the "Loan Documents."
3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely,
presently and unconditionally assigns to Beneficiary the Rents, royalties, issues, profits, revenue,
income and proceeds of the Property. This is an absolute assignment and not an assignment for
security only. Beneficiary hereby confers upon Trustor a license to collect and retain such Rents,
royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to
any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary
may terminate such license without notice to or demand upon Trustor and without regard to the
adequacy of any security for the indebtedness hereby secured, and may either in person, by
agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property
or any part thereof, and 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 attorneys' fees, to any indebtedness secured hereby, and in such
order as Beneficiary may determine. Beneficiary's right to the rents, royalties, issues, profits,
revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary
takes possession of the Property. The entering upon and taking possession of the Property, the
collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not
cure or waive any default or notice of default hereunder or invalidate any act done pursuant to
such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the
Property and/or is collecting and applying Rents as permitted under this Deed of Trust,
Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every
right and remedy afforded any of them under this Deed of Trust and at law or in equity,
including the right to exercise the power of sale granted hereunder. Regardless of whether or not
Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements,
Beneficiary shall not be deemed to be a "mortgagee in possession," shall not be responsible for
performing any obligation of Trustor under any Lease, shall not be liable in any manner for the
Property, or the use, occupancy, enjoyment or operation of any part of it, and shall not be
responsible for any waste committed by Trustor, lessees or any third parties, or for dangerous or
defective condition of the Property or any negligence in the management, repair or control of the
Property. Absent Beneficiary's written consent, Trustor shall not accept prepayment of Rents for
any rental period exceeding one month.
4. Security Agreement. Trustor intends this Deed of Trust to create a lien on the Property,
and an absolute assignment of the Rents and Leases, all in favor of Beneficiary. To the extent
that any Property may be or be determined to be personal property, Trustor as debtor hereby
grants to Beneficiary as secured party a security interest in all such Property to secure payment
and performance of the Secured Obligations. This Deed of Trust constitutes a security
agreement under the California Uniform Commercial Code, as amended or recodified from time
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to time (the "UCC "), covering all such Property. To the extent such Property is not real property
encumbered by the lien granted above, and is not absolutely assigned by the assignment set forth
above, Trustor intends that such Property shall constitute "proceeds, products, offspring, rents, or
profits" (as defined in and for the purposes of Section 552(b) of the United States Bankruptcy
Code, as such section may be modified or supplemented) of the Land and Improvements.
5. Financing Statements. Pursuant to the UCC, Trustor, as debtor, hereby authorizes
Beneficiary, as secured party, to file such financing statements and amendments thereof and such
continuation statements with respect thereto as Beneficiary may deem appropriate to perfect and
preserve Beneficiary's security interest in the Property and Rents, without requiring any signature
or further authorization by Trustor. If requested by Beneficiary, Trustor shall pay all fees and
costs that Beneficiary may incur in filing such documents in public offices and in obtaining such
record searches as Beneficiary may reasonably require. If any financing statement or other
document is filed in the records normally pertaining to personal property, that filing shall not be
construed as in any way derogating from or impairing this Deed of Trust or the rights or
obligations of the parties under it.
Everything used in connection with the Property and /or adapted for use therein and /or which is
described or reflected in this Deed of Trust is, and at all times and for all purposes and in all
proceedings both legal or equitable shall be regarded as part of the estate encumbered by this
Deed of Trust irrespective of whether (i) any such item is physically attached to the
Improvements, (ii) serial numbers are used for the better identification of certain equipment
items capable of being thus identified in a recital contained herein or in any list filed with
Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so
filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the
proceeds of any fire and /or hazard insurance policy, or (2) any award in eminent domain
proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present
or future lease or rights to income growing out of the use and /or occupancy of the property
conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way
altering any of the rights of Beneficiary as determined by this instrument or impugning the
priority of Beneficiary's lien granted hereby or by any other recorded document. Such mention
in any financing statement is declared to be solely for the protection of Beneficiary in the event
any court or judge shall at any time hold, with respect to the matters set forth in the foregoing
clauses (1), (2), and (3), that notice of Beneficiary's priority of interest is required in order to be
effective against a particular class of persons, including but not limited to the federal government
and any subdivisions or entity of the federal government.
6. Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing
pursuant to the provisions of the UCC with respect to all of the Property constituting fixtures, is
being recorded as a fixture financing statement and filing under the UCC, and covers property,
goods and equipment which are or are to become fixtures related to the Land and the
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Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real
estate records of Sonoma County and shall also operate from the date of such filing as a fixture
filing in accordance with Section 9502 and other applicable provisions of the UCC. This Deed
of Trust shall also be effective as a financing statement covering minerals or the like (including
oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the
"debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the
UCC.
7. Trustor's Representations, Warranties and Covenants; Rights and Duties of the Parties.
7.1 Representations and Warranties. Trustor represents and warrants that: (i) Trustor
lawfully possesses and holds a fee simple interest in the Land and the Improvements, (ii) Trustor
has good and marketable title to all of the Property; (iii) other than as limited by the Loan
Documents, Trustor has the full and unlimited power, right and authority to encumber the
Property and assign the Rents; (iv) subject only to encumbrances of record and senior liens
permitted pursuant to the Loan Documents or otherwise approved in writing by Beneficiary
( "Permitted Encumbrances "), this Deed of Trust creates a valid lien on Trustor's entire interest
in the Property; (v) except with respect to Permitted Encumbrances, Trustor owns the Property
free and clear of all deeds of trust, mortgages, security agreements, reservations of title or
conditional sales contracts, (vi) there is no financing statement affecting the Property or any part
thereof on file in any public office other than as disclosed in writing to Beneficiary; and (vii) the
correct address of Trustor's chief executive office is specified in Section 10.2.
7.2 Condition of Property. Trustor represents and warrants that except as disclosed to
Beneficiary in writing, as of the date hereof. (i) Trustor has not received any notice from any
governmental authority of any threatened or pending zoning, building, fire, or health code
violation or violation of other governmental regulations concerning the Property that has not
previously been corrected, and except as disclosed to Beneficiary in writing, no condition on the
Land violates any health, safety, fire, environmental, sewage, building, or other federal, state or
local law, ordinance or regulation; (ii) except as disclosed to Beneficiary in writing, no contracts,
licenses, leases or commitments regarding the maintenance or use of the Property or allowing
any third party rights to use'the Property are in force; (iii) except as disclosed to Beneficiary in
writing, there are no threatened or pending actions, suits, or administrative proceedings against
or affecting the Property or any portion thereof or the interest of Trustor in the Property; (iv)
there are no threatened or pending condemnation, eminent domain, or similar proceedings
affecting the Property or any portion thereof; (v) Trustor has not received any notice from any
insurer of defects of the Property which have not been corrected; (vi) there are no natural or
artificial conditions upon the Land or any part thereof that could result in a material and adverse
change in the condition of the Land; (vii) all information that Trustor has delivered to
Beneficiary, either directly or through Trustor's agents, is accurate and complete; and (viii)
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Trustor or Trustor's agents have disclosed to Beneficiary all material facts concerning the
Property.
7.3 Authority. Trustor represents and warrants that this Deed of Trust and all other
documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly
authorized, executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do
not violate the provisions of any agreement to which Trustor is a party or which affects the
Property. Trustor further represents and warrants that there are no pending, or to Trustor's
current actual knowledge, threatened actions or proceedings before any court or administrative
agency which may adversely affect Trustor's ownership of the Property.
7.4 Payment and Performance of Secured Obligations. Trustor shall promptly pay
when due the principal and all interest due on the indebtedness evidenced by the Note, and shall
promptly pay and perform all other obligations of Trustor arising in connection with the Secured
Obligations or the Loan Documents in accordance with the respective terms thereof.
7.5 Use of Loan Proceeds; Preservation and Maintenance of Property; Compliance
with Laws. Trustor covenants that it shall use the proceeds of the Loan (the "Loan Proceeds ")
solely for purposes authorized by the Loan Documents. Trustor covenants that it shall keep the
Land and Improvements in good repair and condition, and from time to time shall make
necessary repairs, renewals and replacements thereto so that the Property shall be preserved and
maintained. Trustor covenants to comply with all federal, state and local laws, regulations,
ordinances and rules applicable to the Property and the Project, including without limitation all
applicable requirements of state and local building codes and regulations, all applicable
prevailing wage laws, and all applicable statutes and regulations relating to accessibility for the
disabled. Trustor shall not remove, demolish or materially alter any Improvement without
Beneficiary's consent, shall complete or restore promptly and in good and workmanlike manner
any building, fixture or other improvement which may be constructed, damaged, or destroyed
thereon, and shall pay when due all claims for labor performed and materials furnished therefor.
Trustor shall use the Land and the Improvements solely for purposes authorized by the Loan
Documents, shall not commit or allow waste of the Property, and shall not commit or allow any
act upon or use of the Property which would violate any applicable law or order of any
governmental authority, nor shall Trustor bring on or keep any at on the Property or cause or
allow any condition to exist thereon which could invalidate or which would be prohibited by any
insurance coverage required to be maintained on the Property pursuant to the Loan Documents.
7.6 Restrictions on Conveyance and Encumbrance; Acceleration. It shall be an Event
of Default hereunder if the Property, any part thereof, or interest therein is sold, assigned,
conveyed, transferred, hypothecated, leased, licensed, or encumbered in violation of the Loan
Documents or if any other Transfer (as defined in the Loan Documents) occurs in violation of the
Loan Documents. If any such Transfer shall occur in violation of such requirements, without
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limiting the provisions of Section 8 hereof, all obligations secured by this Deed of Trust,
irrespective of the maturity dates of such obligations, shall at the option of Beneficiary, and
without demand, immediately become due and payable, subject to any applicable cure period.
7.7 Inspections; Books and Records. Beneficiary and its agents and representatives
shall have the right at any reasonable time upon reasonable notice to enter upon the Land and
inspect the Property to ensure compliance with the Loan Documents. Trustor shall maintain
complete and accurate books of account and other records (including copies of supporting bills
and invoices) adequate to document the use of the Loan Proceeds and the operation of the
Property, together with copies of all written contracts, Leases and other instruments which affect
the Property. The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection by Beneficiary at any reasonable time following two business days
prior notice.
7.8 Charges, Liens, Taxes and Assessments. Trustor shall pay before delinquency all
taxes, levies, assessments and other charges affecting the Property that are (or if not paid may
become) a lien on all or part of the Property. Trustor may, at Trustor's expense, contest the
validity or application of any tax, levy, assessment or charge affecting the Property by
appropriate legal proceedings promptly initiated and conducted in good faith and with due
diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any
part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such
contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably
be required from time to time by Beneficiary; and provided further that Trustor shall timely
make any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.
7.9 Subrogation. Beneficiary shall be subrogated to the liens of all encumbrances,
whether released of record or not, which are discharged in whole or in part by Beneficiary in
accordance with this Deed of Trust.
7.10 Hazard, Liability and Workers' Compensation Insurance. At all times during the
term hereof, at Trustor's expense, Trustor shall keep the Improvements and personal property
now existing or hereafter located on the Property insured against loss by fire, vandalism and
malicious mischief by a policy of standard fire and extended all -risk insurance. The policy shall
be written on a full replacement value basis and shall name Beneficiary as loss payee as its
interest may appear. The full replacement value of the improvements to be insured shall be
determined by the company issuing the policy at the time the policy is initially obtained. Not
more fiequently than once every two (2) years, either the Trustor or the Beneficiary shall have
the right to notify the other party that it elects to have the replacement value redetermined by the
insurance company. Subject to the rights of any senior lienholder, the proceeds collected under
any insurance policy may be applied by Beneficiary to any indebtedness secured hereby and in
such order as Beneficiary may determine, or at the option of Beneficiary, the entire amount so
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collected or any part thereof may be released to Trustor; provided however, if Trustor is not in
default under the Loan Documents, the proceeds shall be released to Trustor to repair or rebuild
the Project. 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. Notwithstanding anything to the
contrary set forth herein, provided that Trustor is not in default under any Loan Document,
Trustor shall be permitted to use the proceeds of insurance to rebuild the Improvements.
7.10.1 Trustor shall at all times during the term hereof, maintain insurance
coverage in the amounts and in accordance with the requirements specified in the Loan
Documents, and shall otherwise comply with all requirements pertaining to insurance specified
in the Regulatory Agreement, or this Deed of Tiust.
7.10.2 Trustor shall file with Beneficiary prior to the commencement of the term
hereof, certificates (or such other proof as Beneficiary may require, including without limitation,
copies of the required insurance policies) evidencing each of the insurance policies and
endorsements thereto as required by this Section, and such certificates (or policies) shall provide
that at least thirty (3 0) days' prior written notice shall be provided to Beneficiary prior to the
expiration, cancellation or change in coverage under each such policy.
7.10.3 If any insurance policy required hereunder is canceled or the coverage
provided thereunder is reduced, Trustor shall, within five (5) days after receipt of written notice
of such cancellation or reduction in coverage, but in no event later than the effective date of
cancellation or reduction, file with Beneficiary a certificate showing that the required insurance
has been reinstated or provided through another insurance company or companies. Upon failure
to so file such certificate, Beneficiary may, without further notice and at its option, procure such
insurance coverage at Trustor's expense, and Trustor shall promptly reimburse Beneficiary for
such expense upon receipt of billing from Beneficiary.
7.10.4 The insurance policies required hereunder shall be issued by insurance
companies authorized to do business in the State of California with a financial rating of at least A
VII status as rated in the most recent edition of Best's Key Rating Guide. Each policy of
insurance shall contain an endorsement requiring the insurer to provide at least thirty (3 0) days
written notice to Beneficiary prior to change in coverage, cancellation or expiration thereof.
7.11 Hazardous Materials. Trustor represents and warrants that except as disclosed to
Beneficiary in writing, as of the date hereof to the current actual knowledge of Trustor: (i) the
Land is free and has always been flee of Hazardous Materials (as defined below) and is not and
has never been in violation of any Environmental Law (as defined below); (ii) there are no buried
or partially buried storage tanks located on the Land; (iii) Trustor has received no notice,
warning, notice of violation, administrative complaint, judicial complaint, or other formal or
informal notice alleging that conditions on the Land are or have ever been in violation of any
Environmental Law or informing Trustor that the Land is subject to investigation or inquiry
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regarding Hazardous Materials on the Land or the potential violation of any Environmental Law;
(iv) there is no monitoring program required by the Environmental Protection Agency or any
other governmental agency concerning the Land; (v) no toxic or hazardous chemicals, waste, or
substances of any kind have ever been spilled, disposed of, or stored on, under or at the Land,
whether by accident, burying, drainage, or storage in containers, tanks, holding areas, or any
other means; (vi) the Land has never been used as a dump or landfill; and (vii) Trustor has
disclosed to Beneficiary all information, records, and studies in Trustor's possession or
reasonably available to Trustor relating to the Land concerning Hazardous Materials.
Trustor shall not cause or permit any Hazardous Material (as defined below) to be brought
upon, kept, stored or used in, on, under, or about the Land by Trustor, its agents, employees,
contractors or invitees except for incidental supplies ordinarily used in connection with the
construction, rehabilitation, repair, and operation of residential developments and in compliance
with all applicable laws, and shall not cause any release of Hazardous Materials into, onto, under
or through the Land. If any Hazardous Material is discharged, released, dumped, or spilled in, on,
under, or about the Land and results in any contamination of the Land or adjacent property, or
otherwise results in the release or discharge of Hazardous Materials in, on, under or from the
Land, Trustor shall promptly take all actions at its sole expense as are necessary to comply with
all Environmental Laws (as defined below).
To the greatest extent permitted by law, Trustor shall indemnify, defend (with counsel
reasonably acceptable to Beneficiary), and hold Beneficiary and its elected and appointed
officials, officers, agents and employees (collectively, "Indemnitees ") harmless from and against
any and all loss, claim, liability, damage, demand, judgment, order, penalty, fine, injunctive or
other relief, cost, expense (including reasonable fees and expenses of attorneys, expert witnesses,
and other professionals advising or assisting Beneficiary), action, or cause of action (all of the
foregoing, hereafter individually "Claim" and collectively "Claims ") arising in connection with
the breach of Trustor's covenants and obligations set forth in this Section 7.11 or otherwise
arising in connection with the presence or release of Hazardous Materials in, on, under, or from
the Property, except to the extent arising from the gross negligence or willful misconduct of the
Indemnitees. The foregoing indemnity includes, without limitation, all costs of investigation,
assessment, containment, removal, remediation of any kind, and disposal of Hazardous Materials,
all costs of determining whether the Land is in compliance with Environmental Laws, all costs
associated with bringing the Land into compliance with all applicable Environmental Laws, and
all costs associated with claims for damages or injury to persons, property, or natural resources.
Without limiting the generality of the foregoing, Trustor shall, at Trustor's own cost and
expense, do all of the following:
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a. pay or satisfy any judgment or decree that may be entered against any Indemnitee
or Indemnitees in any legal or administrative proceeding incident to any matters against which
Indemnitees are entitled to be indemnified under this Deed of Trust;
b. reimburse Indemnitees for any expenses paid or incurred in connection with any
matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and
C. reimburse Indemnitees for any and all expenses, including without limitation out -
of- pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection
with the enforcement by Indemnitees of their rights under this Deed of Trust, or in monitoring
and participating in any legal or administrative proceeding.
Trustor's obligation to indemnify the Indemnitees shall not be limited or impaired by any
of the following, or by any failure of Trustor to receive notice of or consideration for any of the
following: (i) any amendment or modification of any Loan Document; (ii) any extensions of
time for performance required by any Loan Document; (iii) any provision in any of the Loan
Documents limiting Beneficiary's recourse to property securing the Secured Obligations, or
limiting the personal liability of Trustor, or any other party for payment of all or any part of the
Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made by
Trustor under this Deed of Trust or by Trustor or any other party under any Loan Document, (v)
the release of Trustor or any other person, by Beneficiary or by operation of law, from
performance of any obligation under any Loan Document; (vi) the release or substitution in
whole or in part of any security for the Secured Obligations; and (vii) Beneficiary's failure to
properly perfect any lien or security interest given as security for the Secured Obligations.
The provisions of this Section 7.11 shall be in addition to any and all other obligations
and liabilities that Trustor may have under applicable law, and each Indemnitee shall be entitled
to indemnification under this Section without regard to whether Beneficiary or that Indemnitee
has exercised any rights against the Property or any other security, pursued any rights against any
guarantor or other party, or pursued any other rights available under the Loan Documents or
applicable law. The obligations of Trustor to indemnify the Indemnitees under this Section shall
survive any repayment or discharge of the Secured Obligations, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the
lien of this Deed of Trust.
Without limiting any of the remedies provided in this Deed of Trust, Trustor
acknowledges and agrees that each of the provisions in this Section 7.11 is an environmental
provision (as defined in Section 736(f)(2) of the California Code of Civil Procedure) made by
Trustor relating to real property security (the "Environmental Provisions "), and that Trustor's
failure to comply with any of the Environmental Provisions will be a breach of contract that will
entitle Beneficiary to pursue the remedies provided by Section 736 of the California Code of
Civil Procedure ( "Section 736 ") for the recovery of damages and for the enforcement of the
Environmental Provisions. Pursuant to Section 736, Beneficiary's action for recovery of
damages or enforcement of the Environmental Provisions shall not constitute an action within
the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money
judgment for a deficiency or a deficiency judgment within the meaning of Sections 580a, 580b,
580d, or 726(b) of the California Code of Civil Procedure.
"Hazardous Materials" means any substance, material or waste which is or becomes
regulated by any federal, state or local governmental authority, and includes without limitation
(i) petroleum or oil or gas or any direct or indirect product or by- product thereof, (ii) asbestos
and any material containing asbestos; (iii) any substance, material or waste regulated by or listed
(directly or by reference) as a "hazardous substance ", "hazardous material ", "hazardous waste ",
"toxic waste ", "toxic pollutant ", "toxic substance ", "solid waste" or "pollutant or contaminant"
in or pursuant to, or similarly identified as hazardous to human health or the environment in or
pursuant to, the Toxic Substances Control Act [15 U.S.C. Section 2601, et seq.]; the
Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section
9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section
5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.],
the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C.
Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act
[California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances
Account Act [California Health and Safety Code Section 25300, et seq.], the California
Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California
Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section
25249.5, et seq.], and the Porter - Cologne Water Quality Control Act [California Water Code
Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations
promulgated thereunder; (iv) any substance, material or waste which is defined as such or
regulated by any "Superfund" or "Superlien" law, or any Environmental Law; or (v) any other
substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated
under any other federal, state or local environmental law, including without limitation, asbestos,
polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by- products.
"Environmental Law" means all federal, state or local statutes, ordinances, rules,
regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions
of permits, licenses and other operating authorizations regulating, or relating to, or imposing
liability or standards of conduct concerning (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including employees and agents, to any
Hazardous Material (as defined above) or other products, raw materials, chemicals or other
substances; (iii) protection of the public health or welfare from the effects of by- products,
wastes, emissions, discharges or releases of chemical substances from industrial or commercial
activities; (iv) the manufacture, use or introduction into commerce of chemical substances,
including without limitation, their manufacture, formulation, labeling, distribution,
N
transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or
hazardous substances or Hazardous Materials or the remediation of air, surface waters,
groundwaters or soil, as now or may at any later time be in effect, including but not limited to the
Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental
Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous
Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource
Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control
Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California
Underground Storage of Hazardous Substances Act [California Health and Safety Code Section
25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety
Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety
Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act
[California Health and Safety Code Section 25249.5, et seq.], and the Porter- Cologne Water
Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are
hereafter amended, together with any regulations promulgated thereunder.
7.12 Notice of Claims; Defense of Security; Reimbursement of Costs.
a. Notice of Claims. Trustor shall provide written notice to Beneficiary of any
uninsured or partially uninsured loss affecting the Property through fire, theft, liability, or
property damage in excess of an aggregate of Fifty Thousand Dollars ($50,000) within three
business days of the occurrence of such loss. Trustor shall ensure that Beneficiary shall receive
timely notice of, and shall have a right to cure, any default under any other financing document
or other lien affecting the Property and shall use best efforts to ensure that provisions mandating
such notice and allowing such right to cure shall be included in all such documents. Within three
(3) business days of Trustor's receipt thereof, Trustor shall provide Beneficiary with a copy of
any notice of default Trustor receives in connection with any financing document secured by the
Property or any part thereof.
b. Defense of Security. At Trustor's sole expense, Trustor shall protect, preserve
and defend the Property and title to and right of possession of the Property, the security of this
Deed of Trust and the rights and powers of Beneficiary and Trustee created under it, against all
adverse claims.
Compensation; Reimbursement of Costs. Trustor agrees to pay all reasonable
fees, costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or
Trustee may render in connection with this Deed of Trust, including without limitation, fees and
expenses related to provision of a statement of obligations or related to a reconveyance. Trustor
further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances which
may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terms of this
Deed of Trust, including without limitation any rights or remedies afforded to Beneficiary or
30
Trustee or both of them under Sections 7.18 and 8.2, whether or not any lawsuit is filed, or in
defending any action or proceeding arising under or relating to this Deed of Trust, including
reasonable attorneys' fees and other legal costs, costs of any disposition of the Property under the
power of sale granted hereunder or any judicial foreclosure, and any cost of evidence of title.
d. Notice of Changes. Trustor shall give Beneficiary prior written notice of any
change in the address of Trustor and the location of any Property, including books and records
pertaining to the Property.
7.13 Indemnification. To the greatest extent permitted by law, Trustor shall indemnify,
defend (with counsel reasonably acceptable to Beneficiary), and hold harmless the Trustee and
the Indemnitees (as defined in Section 7.11) from and against all Claims arising directly or
indirectly in any manner in connection with or as a result of (a) any breach of Trustor's
covenants under any Loan Document, (b) any representation by Trustor in any Loan Document
which proves to be false or misleading in any material respect when made, (c) injury or death to
persons or damage to property or other loss occurring on the Land or in any improvement located
thereon, whether caused by the negligence or any other act or omission of Trustor or any other
person or by negligent, faulty, inadequate or defective design, building, construction or
maintenance or any other condition or otherwise, (d) any claim, demand or cause of action, or
any action or other proceeding, whether meritorious or not, brought or asserted against any
Indemnitee which relates to or arises out of the Property, or any Loan Document or any
transaction contemplated thereby, or any failure of Trustor to comply with all applicable state,
federal and local laws and regulations applicable to the Property, except to the extent arising
from the gross negligence or willful misconduct of the Indemnitees. The obligations of Trustor
under this Section shall survive the repayment of the Loan and shall be secured by this Deed of
Trust. Notwithstanding any contrary provision contained herein, the obligations of Trustor under
this Section shall survive any foreclosure proceeding, any foreclosure sale, any delivery of a
deed in lieu of foreclosure, and any release or reconveyance of this Deed of Trust.
7.14. Limitation of Liability. Beneficiary shall not be directly or indirectly liable to
Trustor or any other person as a consequence of any of the following: (i) Beneficiary's exercise
of or failure to exercise any rights, remedies or powers granted to Beneficiary in this Deed of
Trust; (ii) Beneficiary's failure or refusal to perform or discharge any obligation or liability of
Trustor under any agreement related to the Property or under this Deed of Trust; (iii) any waste
committed by Trustor, the lessees of the Property or any third parties, or any dangerous or
defective condition of the Property; or (iv) any loss sustained by Trustor or any third party
resulting from any act or omission of Beneficiary in managing the Property after an Event of
Default, except to the extent the loss is caused by the willful misconduct or gross negligence of
Beneficiary. Trustor hereby expressly waives and releases all liability of the types described in
this Section 7.14 and agrees that Trustor shall assert no claim related to any of the foregoing
against Beneficiary.
31
7.15 Insurance and Condemnation Proceeds. Subject to the rights of any senior
lienholders, any award of damages in connection with any condemnation for public use of, or
injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary who
may apply such moneys to any indebtedness secured hereby in such order as Beneficiary may
determine, or at the 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. Notwithstanding the
foregoing, so long as the value of Beneficiary's lien is not impaired, insurance and /or
condemnation proceeds may be used to repair and /or restore the Project.
7.16 Release, Extension, Modification. At any time and from time to time, without
liability therefor and without notice, upon written request of Beneficiary and presentation of this
Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of
the Property, consent to the making of any map or plat of the Land or part thereof, join in
granting any easement or creating any restriction affecting the Property, or join in any extension
agreement or other agreement affecting the lien or charge hereof. At any time and from time to
time, without liability therefor and without notice, Beneficiary may (i) release any person liable
for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the
terms of payment of any Secured Obligation; (iii) accept additional real or personal property of
any kind as security for any Secured Obligation, or (iv) substitute or release any property
securing the Secured Obligations.
7.17 Reconveyance. Upon written request of Beneficiary stating that all of the Secured
Obligations have been paid in full, and upon surrender of this Deed of Trust, and the Note,
Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this
Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any
matters or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of
Trustee and all recordation fees related to such reconveyance.
7.18 Cure; Protection of Security. Either Beneficiary or Trustee may cure any breach
or default of Trustor if Trustor fails to do so in the time provided for cure, and if it chooses to do
so in connection with any such cure, Beneficiary or Trustee may also enter the Property and /or
do any and all other things which it may in its sole discretion consider necessary and appropriate
to protect the security of this Deed of Trust. Such other things may include: appearing in and /or
defending any action or proceeding which purports to affect the security of, or the rights or
powers of Beneficiary or Trustee under, this Deed of Trust; paying, purchasing, contesting or
compromising any encumbrance, charge, lien or claim of lien which in Beneficiary's or
Trustee's sole judgment is or may be senior in priority to this Deed of Trust, such judgment of
Beneficiary or Trustee to be conclusive as among Beneficiary, Trustee and Trustor; obtaining
insurance and /or paying any premiums or charges for insurance required to be carried hereunder;
otherwise caring for and protecting any and all of the Property; and /or employing counsel,
32
accountants, contractors and other appropriate persons to assist Beneficiary or Trustee.
Beneficiary and Trustee may take any of the actions permitted under this Section 7.18 either with
or without giving notice, except for notices required under applicable law. Any amounts
disbursed by Beneficiary pursuant to this paragraph shall become additional indebtedness
secured by this Deed of Trust.
7.19 Limited Partners Right to Cure. Trustor's limited partners shall have the right to
cure any default of Trustor hereunder upon the same terms and conditions afforded to Trustor.
Beneficiary shall provide any notice of default hereunder to the limited partners at the address set
forth in Section 10.2 below concurrently with the provision of such notice to Trustor.
Default and Remedies.
8.1 Events of Default. Trustor acknowledges and agrees that an Event of Default
shall occur under this Deed of Trust upon the occurrence of any one or more of the following
events.
a. Beneficiary's declaration of an Event of Default under any Loan
Document, subject to the expiration of any applicable cure period set forth in such document;
b. Trustor fails to perform any monetary obligation which arises under this
Deed of Trust or any other Loan Document, and does not cure that failure within ten (10) days
following written notice from Beneficiary or Trustee;
C. If Trustor's interest in the Property or any part thereof is voluntarily or
involuntarily sold, transferred, leased, encumbered, or otherwise conveyed in violation of
Section 7.6 hereof or if any other Transfer occurs in violation of the Loan Documents and
Trustor fails to rescind such conveyance or otherwise cure such breach within the time period
specified in paragraph j below;
d. Trustor fails to maintain the insurance coverage required hereunder or
under the other Loan Documents, or otherwise fails to comply with the requirements of Section
7.10 hereof and Trustor fails to cure such default within the applicable time specified in Section
7.10;
e. Subject to Trustor's right to contest such charges as provided herein,
Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay
when due any other charge that may result in a lien on the Land or the Improvements, and
Trustor fails to cure such default within twenty (20) days of the date of delinquency, but in all
events before the imposition of any such tax or other lien.
f. Any representation or warranty of Trustor contained in or made in
connection with the execution and delivery of this Deed of Trust or in any certificate or
33
statement furnished pursuant hereto or in any other Loan Document proves to have been false or
misleading in any material adverse respect when made;
g. If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of debtors ( "Bankruptcy
Law "), Trustor or any general partner thereof (i) commences a voluntary case or proceeding; (ii)
consents to the entry of an order for relief against Trustor or any general partner thereof in an
involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or
similar official for Trustor or any general partner thereof, (iv) makes an assignment for the
benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due.
h. If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Trustor or any general partner thereof in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for
Trustor or any general partner thereof or substantially all of such entity's assets, (iii) orders the
liquidation of Trustor or any general partner thereof, or (iv) issues or levies a judgment, writ,
warrant of attachment or similar process against the Property or the Project or any part thereof,
and in each case the order or decree is not released, vacated, dismissed or fully bonded within 60
days after its issuance.
i. The holder of any other debt instrument secured by a mortgage or deed of
trust on the Property or part thereof declares an event of default thereunder and exercises a right
to declare all amounts due under that debt instrument immediately due and payable, subject to
the expiration of any applicable cure period set forth in such holder's documents; or
Trustor fails to perform any obligation arising under this Deed of Trust
other than one enumerated in this Section 8. 1, and does not cure that failure either within ten (10)
days after written notice from Beneficiary or Trustee in the event of a monetary default, or
within thirty (3 0) days after such written notice in the event of a nonmonetary default, provided
that in the case of a nonmonetary default that in Beneficiary's reasonable judgment cannot
reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if
Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such
cure to completion with due diligence and in good faith and in no event later than sixty (60) days
following receipt of notice of default.
8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein, at
any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all
of the rights and remedies described below, and may exercise any one or more or all, of the
remedies set forth in any Loan Document, and any other remedy existing at law or in equity or
by statute. All of Beneficiary's rights and remedies shall be cumulative, and the exercise of any
one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to
34
collect all expenses incurred in pursuing the remedies provided hereunder, including without
limitation reasonable attorneys' fees and costs.
a. Acceleration. Beneficiary may declare any or all of the Secured
Obligations, including without limitation all sums payable under the Note and this Deed of Trust,
to be due and payable immediately.
b. Receiver. Beneficiary may apply to any court of competent jurisdiction
for, and obtain appointment of, a receiver for the Property.
C. Entry. Beneficiary, in person, by agent or by court- appointed receiver,
may enter, take possession of, manage and operate all or any part of the Property, and may also
do any and all other things in connection with those actions that Beneficiary may in its sole
discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such
other things may include: taking and possessing copies of all of Trustor's or the then owner's
books and records concerning the Property; entering into, enforcing, modifying, or canceling
Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting
tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to
Trustor; completing any unfinished construction; and /or contracting for and making repairs and
alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been
removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor
hereby irrevocably constitutes and appoints Beneficiary as Trustor's attorney -in -fact to perform
such acts and execute such documents as Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures, including endorsement of Trustor's name
on any instruments.
d. UCC Remedies. Beneficiary may exercise any or all of the remedies
granted to a secured parry under the UCC.
e. Judicial Action. Beneficiary may bring an action in any court of
competent jurisdiction to foreclose this Deed of Trust in the manner provided by law for
foreclosure of mortgages on real property and /or to obtain specific enforcement of any of the
covenants or agreements of this Deed of Trust.
f Power of Sale. Under the power of sale hereby granted, Beneficiary shall
have the discretionary right to cause some or all of the Property, including any Property which
constitutes personal property, to be sold or otherwise disposed of in any combination and in any
manner permitted by applicable law.
8.3 Power of Sale. If Beneficiary elects to involve the power of sale hereby granted,
Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of
its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause such
35
notice to be recorded in the office of the Recorder of each County wherein the Property or some
part thereof is situated as required by law and this Deed of Trust.
Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of
Trust and the Note or other evidence of indebtedness which is secured hereby, together with a
written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions
of law and this Deed of Trust.
Notice of sale having been given as then required by law, and not less than the time then
required by law having elapsed after recordation of such notice of default, Trustee, without
demand on Trustor, shall sell the Property at the time and place fixed by it in the 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, and at Beneficiary's request shall, postpone sale of all or any portion of the Property by
public announcement at such time and place of sale, and from time to time thereafter may
postpone such sale by public announcement at the time and place fixed by the preceding
postponement. Trustee shall deliver to the purchaser 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 at such sale.
After deducting all costs, fees, and expenses of Trustee and of the trust hereby created,
including reasonable attorneys' fees in connection with sale, Trustee shall apply the proceeds of
sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms
hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or
persons legally entitled thereto.
Without limiting the generality of the foregoing, Trustor acknowledges and agrees that
regardless of whether or not a default has occurred hereunder, if an Event of Default has
occurred under the Loan Documents, and if in connection with such Event of Default
Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled
to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of
any sale of the Property in connection with such foreclosure shall be used to pay all Secured
Obligations, including without limitation, the outstanding principal balance and all other
amounts due under the Note.
At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid
for and acquire the Property or any part of it to the extent permitted by then applicable law.
Instead of paying cash for such property, Beneficiary may settle for the purchase price by
crediting the sales price of the property against the following obligations:
.I
First, the portion of the Secured Obligations attributable to the expenses of
sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse
Beneficiary or Trustee under Section 7.12(c); and
b. Second, the remaining balance of all other Secured Obligations in any
order and proportions as Beneficiary in its sole discretion may choose.
8.4 Trustor's Right to Reinstate. Notwithstanding Beneficiary's acceleration of the
sums secured by this Deed of Trust, Trustor shall have the right to have any proceedings begun
by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five days before
sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time
prior to entry of a judgment enforcing this Deed of Trust if. (a) Trustor pays Beneficiary all sums
which would be then due under the Loan Documents if the Secured Obligations had no
acceleration provision; (b) Trustor cures all breaches of any other covenants or agreements of
Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by
Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this
Deed of Trust, and in enforcing Beneficiary's and Trustee's remedies as provided herein,
including, but not limited to, reasonable attorney's fees; and (d) Trustor takes such action as
Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary's
interest in the Property and Trustor's obligation to pay the sums secured by this Deed of Trust
shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the
obligations secured hereby shall remain in full force and effect as if no acceleration had
occurred.
9. Trustor's Waivers. To the fullest extent permitted by law, Trustor waives: (a) all statutes
of limitations as a defense to any action or proceeding brought against Trustor by Beneficiary;
(b) the benefit of all laws now existing or which may hereafter be enacted providing for any
appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of marshalling
in the event of foreclosure; and (d) all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this
Deed of Trust and of the existence, creation, or incurring of new or additional indebtedness, and
demands and notices of every kind.
10. Miscellaneous Provisions.
10.1 Additional Provisions. The Loan Documents grant further rights to Beneficiary
and contain further agreements and affirmative and negative covenants by Trustor which apply
to this Deed of Trust and the Property.
10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be
mailed to Trustor at the address set forth below. That address is also the mailing address of
37
Trustor as debtor under the UCC. Beneficiary's address set forth below is the address for
Beneficiary as secured party under the UCC. Except for any notice required under applicable
law to be given in another manner, all notices to be sent pursuant to this Deed of Trust shall be
made in writing, and sent to the parties at their respective addresses specified below or to such
other address as a party may designate by written notice delivered to the other parties in
accordance with this Section. All such notices shall be sent by: (a) personal delivery, in which
case notice shall be deemed delivered upon receipt; (b) certified or registered mail, return receipt
requested, in which case notice shall be deemed delivered two (2) business days after deposit,
postage prepaid in the United States mail; or (c) nationally recognized overnight courier, in
which case notice shall be deemed delivered one (1) day after deposit with such courier.
BENEFICIARY:
City of Petaluma
11 English Street
Petaluma, CA 94574
Attention: City Manager
With a copy to:
Burke, Williams & Sorensen LLP
1901 Harrison Street, Suite 900
Oakland, CA 94612
Attention: Susan Bloch
TRUSTOR: CRWC, L.P.
Attention:
With a copy to:
Gubb & Barshay LLP
505 14th Street, Suite 1050
Oakland, CA 94612
Attention: Natalie Gubb
And with a copy to:
38
And with a copy to:
10.3 Binding on Successors. The terms, covenants and conditions of this Deed of
Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors,
successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided
however this Section 10.3 does not waive the provisions of Section 7.6.
10.4 Substitution of Trustee. Beneficiary may from time to time or at any time
substitute a trustee or trustees to execute the trust hereby created, and when any such substitution
has been filed for record in the office of the Recorder of Sonoma County, it shall be conclusive
evidence of the appointment of such trustee or trustees, and such new trustee or trustees shall
succeed to all of the powers and duties of the Trustee named herein.
10.5 Attorneys' Fees and Costs. In any action or proceeding to foreclose this Deed of
Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and
Trustee all costs of such action or proceeding, including reasonable attorneys' fees.
10.6 Governing Law; Severability; Interpretation. This Deed of Trust shall be
governed by the laws of the State of California without regard to principles of conflicts of laws.
Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be
litigated exclusively in the jurisdiction where the Land is located (the "Property Jurisdiction ").
The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall
have exclusive jurisdiction over all controversies which shall arise under or in relation to the
Loan Documents. Trustor irrevocably consents to service, jurisdiction, and venue of such courts
for any such litigation, and waives any other venue to which it might be entitled by virtue of
domicile, habitual residence or otherwise. If any provision of this Deed of Trust is held
unenforceable or void, that provision shall be deemed severable from the remaining provisions,
and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of
Trust are for convenience only and are not intended to affect the interpretation or construction of
the provisions herein contained. In this Deed of Trust, whenever the context so requires, the
singular number includes the plural.
10.7 Waiver Modification and Amendment. Any waiver by Beneficiary of any
obligation of Trustor hereunder must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from any delay or failure by Beneficiary or
Trustee to take action on account of any default of Trustor. Consent by Beneficiary or Trustee to
any act or omission by Trustor shall not be construed as a consent to any other or subsequent act
or omission or to waive the requirement for Beneficiary's or Trustee's consent to be obtained in
any future or other instance. No amendment to or modification of this Deed of Trust shall be
39
effective unless and until such amendment or modification is in writing, executed by Trustor and
Beneficiary. Without limiting the generality of the foregoing, Beneficiary's acceptance of
payment of any sum secured hereby after its due date shall not constitute a waiver by Beneficiary
of its right either to require prompt payment when due of all other sums so secured or to declare
default for failure so to pay.
10.8 Action by Beneficiary. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted
under this Agreement, such action shall be in writing, and such action may be given, made or
taken by Beneficiary's City Manager or by any person who shall have been designated by
Beneficiary's City Manager, without further approval by the governing board of Beneficiary.
10.9 Joint and Several Liability. If Trustor consists of more than one person or entity,
each shall be jointly and severally liable for the faithful performance of all of Trustor's
obligations under this Deed of Trust.
10.10 Time is of the Essence. Time is of the essence for each provision of this Deed of
Trust.
10.11 Partial Subordination to Extended Use Agreement. Trustor and the California
Tax Credit Allocation Committee may enter into a Regulatory Agreement (the "TCAC
Regulatory Agreement "), which constitutes the extended low- income housing commitment
described in Section 42(h)(6)(B) of the Internal Revenue Code of 1986, as amended (the
"Code "). In the event of a foreclosure of Beneficiary's interest under this Deed of Trust or
delivery by the Trustor of a deed in lieu thereof (collectively, a "Foreclosure "), the following
rule shall apply pursuant to Section 42(h)(6)(E)(ii) of the Code:
With respect to dwelling units that had been regulated by the TCAC Regulatory
Agreement, for a period of three (3) years following a Foreclosure: none of the
tenants occupying such units at the time of the Foreclosure may be evicted or
have their tenancy terminated other than for good cause, nor may any rent be
increased except as otherwise permitted under Section 42 of the Code.
SIGNATURES ON FOLLOWING PAGE.
:U17
IN WITNESS WHEREOF, Trustor has executed this Amended and Restated Deed of
Trust as of the date first written above.
TRUSTOR:
CRCW, L.P., a California limited partnership
By: CRCW LLC, a California limited liability company
Its: General Partner
By: Eden Housing, Inc., a California nonprofit public benefit corporation,
Its: Manager
C
Linda Mandolini, President
SIGNATURES MUST BE NOTARIZED.
41
Exhibit A
LAND
The land situated in the County of Sonoma, City of Petaluma, State of California, described as
follows:
(Insert legal description.)
OAK #4830- 1823 -2111 v1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Petaluma
11 English Street
Petaluma, CA 94952
Attention: City Manager
EXEMPT FROM RECORDING FEES PER
e760A0-1
ATTACHMENT #5
Space above this line for Recorder's use.
AFFORDABLE HOUSING REGULATORY AGREEMENT
AND
DECLARATION OF RESTRICTIVE COVENANTS
by and between
THE CITY OF PETALUMA
and
CRWC, L.P.
(Corona Ranch/Washington Creek)
43
This Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (this
"Agreement ") is entered into effective as of , 2016 ( "Effective Date ") by and
between the City of Petaluma, a municipal corporation ( "City ") and CRWC, L.P., a California
limited partnership ( "Owner "). The City and the Owner are collectively referred to herein as the
"Parties."
RECITALS
A. Owner is the owner of the real property located at 990 Ely Road and 909 Martin
Circle in the City of Petaluma, Sonoma County, California, known as Sonoma County
Assessor's Parcel Nos. 007 - 361 - 034 -000 and 137 - 280 - 017 -000, and more particularly described
in Exhibit A attached hereto (the "Property ").
B. Owner intends to rehabilitate, own and operate an affordable housing
development on the Property consisting of 106 apartments and related improvements
(collectively, the "Project ").
C. Using funds from the City's In Lieu Housing Fund, the City previously provided a
loan to Eden Housing Inc., a California nonprofit public benefit corporation ( "Eden ") in the
original principal amount of $320,000 (the "Loan "). Eden's obligation to repay the Loan was
evidenced by a promissory note dated July 24, 1990 (the "Original Note "). The Original Note
was secured by a Deed of Trust with Assignment of Rents dated July 24,1990, executed by Eden
as Trustor for the benefit of City, and recorded in the Official Records of Sonoma County
( "Official Records ") against a portion of the Property on August 6, 1990 as Instrument No.
1990 - 0078382 (the "Original Deed of Trust ").
D. Corona/Ely Ranch Associates, a California Limited Partnership ( "Corona
Partnership ") and City executed a Regulatory Agreement dated as of June 10, 1993 and
recorded in the Official Records against a portion of the Property on June 10, 1993 as Instrument
No. 1993- 0071800 (the "Original Regulatory Agreement ").
E. Pursuant to that certain unrecorded Assignment and Assumption Agreement,
executed by and between Eden, Corona Partnership and Developer, and consented to by City,
Eden has assigned to Developer and Developer has assumed, the obligations of Eden under the
Original Note and the Original Deed of Trust, and Corona Partnership has assigned to Developer
and Developer has assumed, the obligations of Corona Partnership under the Original Regulatory
Agreement. The Original Note, the Original Deed of Trust and the Original Regulatory
Agreement are collectively referred to herein as the "Original City Documents ").
F. Pursuant to that certain unrecorded Agreement Amending Loan Documents dated
as of the date hereof and executed by and between City and Developer (the "Amendment
Agreement "), City has agreed to modify the terms of the Loan to, among other things, extend
M
the maturity date and modify the interest rate. As a condition to its agreement to make such
modifications, City requires the Property to be subject to the terns, conditions and restrictions
set forth herein. Pursuant to the Amendment Agreement, Owner shall execute and deliver to
City an Amended and Restated Secured Promissory Note dated as of the date hereof (the
"Amended Note ") that will supersede the Original Note and will evidence Owner's obligation to
repay the Loan. The Amended Note shall be secured by an Amended and Restated Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing that shall be dated as of the
date hereof and executed by Owner as Trustor for the benefit of City (the "A &R Deed of
Trust "). The A &R Deed of Trust will be recorded in the Official Records substantially
concurrently herewith.
G. The purpose of this Agreement is to satisfy the affordability requirements of the
City's affordable housing program and to regulate and restrict the occupancy and rents of the
Project's Restricted Units for the benefit of the Project occupants. The Parties intend the covenants set
forth in this Agreement to run with the land and to be binding upon Owner and Owner's successors
and assigns for the full term of this Agreement.
H. This Agreement amends and restates in its entirety the Original Regulatory
Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows.
Definitions. The following terms have the meanings set forth in this Section wherever
used in this Agreement or the attached exhibits.
"A &R Deed of Trust" is defined in Recital F.
"Actual Household Size" means the actual number of persons in the applicable
household.
"Adjusted for Family Size Appropriate for the Unit" shall be determined consistent
with Section 50052.5(h) of the California Health and Safety Code, subject to the application of
federal rules and regulations applicable to Project financing sources, including Section 42(g)(2)
of the Internal Revenue Code of 1986 as amended (or successor provision).
"Affordable Rent" means the following amounts, less a utility allowance and other fees
and charges required to be paid by tenants of the Project on a non - optional basis: for units that
are restricted for rental to households with incomes of not more than eighty percent (80 %) of
45
AMI ( "80% Units "), a monthly rent that does not exceed one - twelfth of thirty percent (30 %) of
eighty percent (80 %) of Area Median Income, Adjusted for Family Size Appropriate for the
Unit.
"Amended Note" is defined in Recital F.
"Area Median Income" or "AMI" means the median income for Sonoma County,
California, adjusted for Actual Household Size, as determined by the U.S. Department of
Housing and Urban Development ( "HUD ") pursuant to Section 8 of the United States Housing
Act of 1937 and as published from time to time by the State of California Department of
Housing and Community Development ( "HCD ") in Section 6932 of Title 25 of the California
Code of Regulations or successor provision published pursuant to California Health and
Safety Code Section 50093(c).
"City's Authorized Representative" means the City Manager of the City of
Petaluma.
"City Documents" means the Amended Note, the A &R Deed of Trust, and this
Agreement.
"Claims" is defined in Section 2.6.
"Eden" is defined in Recital C.
"Eligible Household" means a household for which gross household income upon initial
occupancy does not exceed the maximum income level for a Restricted Unit as specified in
Section 2.1 and Exhibit B.
"Indemnitees" is defined in Section 2.6.
"Marketing and Management Plan" is defined in Section 6.5.
"Maximum Qualifying Income" is defined in Section 2.2.
"Note" means the Amended Note.
"Loan" is defined in Recital C.
"Regulations" means Title 25 of the California Code of Regulations.
"Rent Restricted" is defined in Section 2.1.
.,
"Restricted Unit" means a dwelling unit which is reserved for occupancy at an
Affordable Rent by Eligible Households of specified household income levels as set forth in
Sections 2.1 and 2.2 and Exhibit B.
2. Use and Affordability Restrictions. Owner hereby covenants and agrees, for itself and its
successors and assigns, that the Property shall be used solely for the operation of a multifamily
rental housing development in compliance with the requirements set forth herein. Owner
represents and warrants that it has not entered into any agreement that would restrict or
compromise its ability to comply with the occupancy and affordability restrictions set forth in this
Agreement, and Owner covenants that it shall not enter into any agreement that is inconsistent
with such restrictions without the express written consent of City.
2.1 Affordability Requirements. For a term of fifty -five (55) years commencing upon
the date of City's issuance of a final certificate of occupancy or equivalent for the Project not
less 52 of the residential units in the Project (i.e., not less than forty -nine percent (49 %) of the
total) shall be both Rent Restricted and occupied (or if vacant, available for occupancy) by
Eligible Households whose income is less than or equal to eighty percent (80 %) of AMI. One
(1) of the residential units in the Project shall be a manager's unit for which rent will not be
restricted.
In the event that recertification of tenant incomes indicates that the number of Restricted
Units actually occupied by Eligible Households falls below the number reserved for each
income group as specified in this Section 2.1 and Exhibit B, Owner shall rectify the condition
by renting the next available dwelling unit(s) in the Project to Eligible Household(s) until the
required income mix is achieved. A dwelling unit shall qualify as "Rent Restricted" if the
gross rent charged for such unit does not exceed the Affordable Rent for the applicable
household income category as set forth in Exhibit B, subject to Section 2.2.
Notwithstanding anything to the contrary contained in this Agreement, if other Project
lenders, Project investors, or regulatory agencies restrict a greater number of units than
restricted by this Agreement or require stricter household income eligibility or affordability
requirements than those imposed hereby, the requirements of such other lenders, investors or
regulatory agencies shall prevail.
2.2 Rents for Restricted Units; Unit Sizes. Rents for Restricted Units shall be
limited to Affordable Rents for households of the applicable income limit in accordance with
Section 2.1 and Exhibit B. The Restricted Units shall be allocated among affordability
categories as set forth in Exhibit B. Notwithstanding the foregoing, no tenant qualifying for a
Restricted Unit shall be denied continued occupancy of a unit in the Project because, after
admission, such tenant's household income increases to exceed the qualifying limit for such
Restricted Unit. A household which at initial occupancy qualifies in a particular income
category shall be treated as continuing to be of such income category so long as the household's
gross income does not exceed one hundred forty percent (140 %) of the applicable income limit.
47
In the event the gross household income of a household that qualified at the applicable income
limit at initial occupancy exceeds the applicable income limit for a unit, that unit will continue
to be considered as satisfying the applicable income limit if the unit remains Rent - Restricted.
In the event a tenant's household income exceeds the limits specified in this Section, Owner
shall apply the rules applicable to the Project pursuant to Section 42 of the Internal Revenue
Code of 1986, as amended and the federal Regulations applicable thereto. In the event of
inconsistency between the provisions of this Section 2.2 and the rules applicable to the Project
in connection with low- income housing tax credits, the rules applicable pursuant to such
financing source shall prevail.
2.3 Manager's Unit. One (1) dwelling unit in the Project may be used as resident
manager's unit, and shall be exempt from the occupancy and rent restrictions set forth in this
Agreement.
2.4 No Condominium Conversion. Owner shall not convert the Project to condominium
or cooperative ownership or sell condominium or cooperative rights to the Project or any part
thereof during the term of this Agreement.
2.5 Non - Discrimination; Compliance with Fair Housing Laws.
2.5.1 Intentionally omitted.
2.5.2 Fair Housing. Owner shall comply with state and federal fair housing
laws in the marketing and rental of the units in the Project. Owner shall accept as tenants, on the
same basis as all other prospective tenants, persons who are recipients of federal certificates or
vouchers for rent subsidies pursuant to the existing Section 8 program or any successor thereto.
2.5.3 Non - Discrimination. Owner shall not restrict the rental, sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any portion thereof,
on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status,
ancestry, or national origin of any person. Owner covenants for itself and all persons claiming
under or through it, and this Agreement is made and accepted upon and subject to the condition
that there shall be no discrimination against or segregation of any person or group of persons on
account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as
those bases are defined in Sections 12926, 12926. 1, subdivision (ml and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor
shall Owner or any person claiming under or through Owner establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the
Property or part thereof. Owner shall include such provision in all deeds, leases, contracts and
other instruments executed by Owner, and shall enforce the same diligently and in good faith.
All deeds, leases, and contracts pertaining to management of the Project, made or
entered into by Owner, its successors or assigns, as to any portion of the Property or the
Improvements shall contain the following language:
a 1 In Deeds, the following language shall appear:
"Grantee herein covenants by and for itself, its successors and assigns, and all
persons claiming under or through it, that there shall be no discrimination against
or segregation of a person or of a group of persons on account of any basis listed
in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases
are defined in Sections 12926, 12926. 1, subdivision (ml and paragraph (11 of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
property herein conveyed nor shall the grantee or any person claiming under or
through the grantee establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the
property herein conveyed. The foregoing covenant shall run with the land."
(2) Notwithstanding paragraph (1), with respect to familial status, paragraph
1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing
in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10
5 1. 11 and 799.5 of the Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51 and Section 1360 of the Civil Code and
subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall
apply to paragraph (11.
(b) (1) In Leases, the following language shall appear:
"The lessee herein covenants by and for the lessee and lessee's heirs, personal
representatives and assigns, and all persons claiming under the lessee or through
the lessee, that this lease is made subject to the condition that there shall be no
discrimination against or segregation of any person or of a group of persons on
account of race, color, creed, religion, sex, sexual orientation, marital status,
national origin, ancestry or disability in the leasing, subleasing, transferring, use,
occupancy, tenure or enjoyment of the property herein leased nor shall the lessee
or any person claiming under or through the lessee establish or permit any such
practice or practices of discrimination of segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, sublessees,
subtenants, or vendees in the property herein leased."
2) Notwithstanding paragraph (1), with respect to familial status, paragraph
(1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing
in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10
..
5 1. 11 and 799.5 of the Civil Code, relating to housing for senior citizens._
Subdivision (d) of Section 51 and Section 1360 of the Civil Code and
subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall_
apply to paragraph (11.
(c) In Contracts pertaining to management of the Project, the following
language, or substantially similar language prohibiting discrimination and
segregation shall appear;
"There shall be no discrimination against or segregation of any person or group of
persons on account of any basis listed in subdivision (a) or (d) of Section 12955
of the Government Code as those bases are defined in Sections 12926 12926.1
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and
Section 12955.2 of the Government Code in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the property nor shall the transferee or
any person claiming under or through the transferee establish or permit any such
practice or practices of discrimination or segregation with reference to selection,
location, number, use or occupancy of tenants, lessee, subtenants, sublessees or
vendees of the land."
2.6 Relocation. Persons residing on the Property shall not be displaced before
suitable replacement housing is available. Owner shall ensure that all occupants of the Property
receive all notices, benefits and assistance to which they are entitled in accordance with
California Relocation Assistance Law (Government Code Section 7260 et seq.), all state and
local regulations implementing such law, and all other applicable local, state and federal laws,
regulations and policies, including but not limited to the Uniform Relocation Act (42 U.S.C.
§4601 et seq.) and implementing regulations (collectively "Relocation Laws ") relating to the
displacement and relocation of eligible persons as defined in such Relocation Laws. All costs
incurred in connection with the temporary and /or permanent displacement and/or relocation of
occupants of the Property, including without limitation payments to a relocation consultant,
moving expenses, and payments for temporary and permanent relocation benefits pursuant to
Relocation Laws shall be paid by Owner, and City shall have no responsibility for payment
therefor.
To the greatest extent permitted by law, Owner shall indemnify, defend (with counsel
approved by City) and hold the City and its elected and appointed officers, officials, employees,
agents, consultants, contractors and representatives (collectively, the "Indemnitees ") harmless
from and against all liability, loss, cost, expense (including without limitation attorneys' fees and
costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty,
deficiency, fine, order, and damage (all of the foregoing collectively "Claims ") arising from the
breach of Owner's obligations set forth in this Section whether or not any insurance policies
shall have been determined to be applicable to any such Claims. Owner's indemnification
obligations set forth in this Section (i) shall survive the expiration or earlier termination of this
50
Agreement, and (ii) shall not extend to Claims to the extent arising from the gross negligence or
willful misconduct of the Indemnitees. City does not and shall not waive any rights against
Owner that it may have by reason of any indemnity and hold harmless provision set forth in this
Agreement because of the acceptance by City, or the deposit with City by Owner, of any of the
insurance policies described in this Agreement.
Reporting Requirements; Access to Information; Inspections.
3.1 Tenant Certification. Owner or Owner's authorized agent shall obtain from each
household prior to initial occupancy of each Restricted Unit, and on every anniversary thereafter,
a written certificate containing all of the following in such format and with such supporting
documentation as City may reasonably require:
(i) The identity of each household member; and
(ii) The total gross household income;
Owner shall retain such certificates for not less than five (5) years, and upon City's request, shall
provide copies of such certificates to City and make the originals available for City inspection.
3.2 Annual Report; Inspections. Following completion of rehabilitation of the
Project, by not later than May 1 of each year during the term of this Agreement, Owner shall
submit an annual report ( "Annual Report ") to the City in form satisfactory to City, together
with a certification that the Project is in compliance with the requirements of this Agreement.
The Annual Report shall, at a minimum, include the following information for each dwelling unit
in the Project: (i) unit number; (ii) number of bedrooms; (iii) current rent and other charges; (iv)
dates of any vacancies during the previous year; (v) number of people residing in the unit; (vi)
total gross household income of residents; (vii) documentation of source of household income;
and (viii) the information required by Section 3.1.
Owner shall include with the Annual Report, an income recertification for each
household, documentation verifying tenant eligibility, and such additional information as City
may reasonably request from time to time in order to demonstrate compliance with this
Agreement. The Annual Report shall confoim to the format requested by City; provided
however, during such time that the Project is subject to a regulatory agreement restricting
occupancy and /or rents pursuant to requirements imposed in connection with the use of state or
federal low- income housing tax credits, Owner may satisfy the requirements of this Section that
pertain to tenant income certification and rents by providing City with a copy of compliance
reports required in connection with such financing.
In addition to the information described above, the Annual Report shall include the
following:
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(i) A Project income and expense statement for the reporting period;
(ii) Proposed annual budget for the next fiscal year which sets forth Owner's
estimate of operating income, operating expenses and debt service for the year, amounts payable
to reserves and proposed rent adjustments;
(iii) A report on maintenance and other issues anticipated to affect the current
budget needs of the Project as well as the amount in the Project's reserve accounts and the
amount expected to be needed for major repairs or other needs during the new fiscal year;
(iv) Information on the status of the waiting list for units, including the number
of households on the list; and
(v) A financial audit of the books and records of the Project prepared in
accordance with generally accepted auditing standards by an independent certified public
accountant. City may require the audit to be accompanied by a supplemental report prepared in
accordance with City's requirements.
(vi) City may, fiom time to time request additional or different information,
and Owner shall promptly supply such information in the reports required hereunder.
3.3. Maintenance of Records.
3.3.1 Owner shall maintain all records regarding the rehabilitation of the Project
for five (5) years after final payment and all other pending matters are closed. Owner shall also
maintain tenant leases, income certifications and other matters related to the leasing of the
affordable units for a period of five (5) years after the final date of occupancy by the tenant.
3.3.2 Records must be kept accurate and up -to -date. City shall notify Owner of
any records it deems insufficient. Owner shall have fifteen (t 5) calendar days from such notice
to correct any specified deficiency in the records, or, if more than fifteen (15) days shall be
reasonably necessary to correct the deficiency, Owner shall begin to correct the deficiency within
fifteen (15) days and diligently pursue the correction of the deficiency as soon as reasonably
possible.
3.4 Access to Records; Inspections.
3.4.1 Owner shall provide City and its authorized agents and representatives
access to any books, documents, papers and records of the Project for the purpose of making
audits, examinations, excerpts and transcriptions.
52
3.4.2 With 48- hours' notice, during normal business hours and as often as may
be deemed necessary, City and its authorized agents and representatives shall be permitted access
to and the right to examine the Project and the Property and to interview tenants and employees
of the Project, for the purpose of verifying compliance with applicable regulations and
compliance with the conditions of this Agreement and the other City Documents.
3.5 Intentionally omitted.
4. Term of Agreement.
4.1 Term of Restrictions. This Agreement shall remain in effect through the fifty -fifth
(55th) anniversary of the City's issuance of a final certificate of occupancy or equivalent for the
Project unless the term is extended by mutual agreement of the Parties.
4.2 Effectiveness Succeeds Conveyance of Property and Repayment of Loan. This
Agreement shall remain effective and fully binding for the full term hereof, as such may be
extended pursuant to Section 4. 1, regardless of (i) any sale, assignment, transfer, or conveyance of
the Property or the Project or any part thereof or interest therein, (ii) any payment, prepayment or
extinguishment of the Loan or the Amended Note, or (iii) any reconveyance of the A &R Deed of
Trust.
4.3 Reconveyance. Upon the termination of this Agreement, the Parties agree to
execute and record appropriate instruments to release and discharge this Agreement; provided,
however, the execution and recordation of such instruments shall not be necessary or a
prerequisite to the termination of this Agreement upon the expiration of the term as such may be
extended pursuant to Section 4.1.
5. Binding Upon Successors; Covenants to Run with the Land. Owner hereby subjects
its interest in the Property and the Project to the covenants and restrictions set forth in this
Agreement. The City and Owner hereby declare their express intent that the covenants and
restrictions set forth herein shall be deemed covenants running with the land and shall be binding
upon and inure to the benefit of the heirs, administrators, executors, successors in interest,
transferees, and assigns of Owner and City, regardless of any sale, assignment, conveyance or
transfer of the Property, the Project or any part thereof or interest therein. Any successor -in- interest
to Owner, including without limitation any purchaser, transferee or lessee of the Property or the
Project (other than the tenants of the individual dwelling units within the Project) shall be subject
to all of the duties and obligations imposed hereby for the full term of this Agreement. Each and
every contract, deed, ground lease or other instrument affecting or conveying the Property or the
Project or any part thereof, shall conclusively be held to have been executed, delivered and
accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of
whether such covenants, restrictions, duties and obligations are set forth in such contract, deed,
53
ground lease or other instrument. If any such contract, deed, ground lease or other instrument has
been executed prior to the date hereof, Owner hereby covenants to obtain and deliver to City an
instrument in recordable form signed by the parties to such contract, deed, ground lease or other
instrument pursuant to which such parties acknowledge and accept this Agreement and agree to
be bound hereby.
Owner agrees for itself and for its successors that in the event that a court of competent
jurisdiction determines that the covenants herein do not run with the land, such covenants shall
be enforced as equitable servitudes against the Property and the Project in favor of City.
6. Property Management-, Repair and Maintenance; Marketing.
6.1 Management Responsibilities. Owner shall be responsible for all management
functions with respect to the Property and the Project, including without limitation the
selection of tenants, certification and recertification of household income and eligibility,
evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary
repairs, replacement of capital items, and security. City shall have no responsibility for
management or maintenance of the Property or the Project.
6.2 Management Entity. City shall have the right to review and approve the
qualifications of the management entity proposed by Owner for the Project, and shall have the
right to review and approve any agreement executed between Owner and the management entity,
which approval shall not be unreasonably withheld. The contracting of management services to
a management entity shall not relieve Owner of its primary responsibility for proper
performance of management duties. City hereby approves Eden Housing Inc as the initial
management entity for the Project. Any subsequent management entity shall be subject to City
review and approval, which shall not be unreasonably withheld or delayed. Upon City
determination and delivery of written notice to Owner that Owner has failed to operate the
Project in accordance with this Agreement, City may, subject to any applicable cure period,
require Owner to contract with a qualified management agent selected by City and approved by
the Project lender and equity investor, to operate the Project, or to make such other arrangements
as City deems necessary to ensure performance of the required functions.
6.3 Repair, Maintenance and Security. Throughout the term of this Agreement,
Owner shall at its own expense, maintain the Property and the Project in good physical
condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in
conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations.
Without limiting the foregoing, Owner agrees to maintain the Project and the Property (including
without limitation, the residential units, common areas, meeting rooms, landscaping, driveways,
parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained
landscaping, graffiti, disrepair, abandoned vehicles /appliances, and illegal activity, and shall take
all reasonable steps to prevent the same from occurring on the Property or at the Project. Owner
54
shall prevent and /or rectify any physical deterioration of the Property and the Project and
shall make all repairs, renewals and replacements necessary to keep the Property and the
improvements located thereon in good condition and repair. Owner shall provide adequate
security measures for the Project, including without limitation, the installation of adequate
lighting and deadbolt locks.
6.3.1 Additional Requirements. All construction and rehabilitation work and
professional services for the Project shall be performed by persons or entities licensed or
otherwise authorized to perform the applicable work or service in the State of California and
shall have a current City of Petaluma business license if required under local law. To the extent
allowed by state and federal laws, Owner shall limit the installation of satellite dish, antenna and
other such equipment to screened locations on the Property as approved by the City. Owner
shall diligently work to resolve complaints related to noise, parking, litter or other neighborhood
concerns.
6.4 City's Right to Perform Maintenance. In the event that Owner breaches any of the
covenants contained in Section 6.3, and such default continues for a period of ten (10) days after
written notice from City (with respect to graffiti, debris, and waste material) or thirty (30) days
after written notice from City (with respect to landscaping, building improvements and general
maintenance), then City, in addition to any other remedy it may have under this Agreement or at
law or in equity, shall have the right, but not the obligation, to enter upon the Property and
perform all acts and work necessary to protect, maintain, and preserve the improvements and the
landscaped areas on the Property. All costs expended by City in connection with the foregoing,
shall constitute an indebtedness secured by the A &R Deed of Trust, and shall be paid by Owner to
City upon demand. All such sums remaining unpaid thirty (30) days following delivery of City's
invoice therefor shall bear interest at the lesser of 10% per annum or the highest rate permitted by
applicable law. City shall have a lien against the Property for the amount of such unpaid sums
and shall have the right to record a Notice of Claim of Lien against the Property.
6.5 Marketing and Management Plan. Not later than ninety (90) days following
commencement of rehabilitation work on the Project, Owner shall submit for City review and
approval, a plan for marketing and managing the Property ( "Marketing and Management Plan"
or "Plan "). The Marketing and Management Plan shall address in detail how Owner plans to
market the Restricted Units to prospective Eligible Households in accordance with fair housing
laws and this Agreement, Owner's tenant selection criteria, and how Owner plans to certify the
eligibility of Eligible Households. The Plan shall also describe the management team and shall
address how the Owner and the management entity plan to manage and maintain the Property
and the Project. The Plan shall include the proposed management agreement and the form of
rental agreement that Owner proposes to enter into with Project tenants. Owner shall abide by
the terms of the Marketing and Management Plan in marketing, managing, and maintaining the
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Property and the Project, and throughout the term of this Agreement, shall submit proposed
modifications to City for review and approval.
In addition to the foregoing, the Marketing and Management Plan shall address the
following:
(a) The actions to be taken by Owner to affirmatively market units in
compliance with fair housing laws and in compliance with City's policies and
procedures, including the policies described in Section 2.5 above;
(b) Criteria for determining tenant eligibility, including certification of
household income and size, and establishing reasonable occupancy standards (which
shall not exceed standards established by state and federal fair housing laws and state
housing and building codes) and procedures for screening prospective tenants, including
obtaining credit reports, unlawful detainer reports, landlord references and criminal
background investigations;
(c) A requirement that eligible tenants be selected based on order of
application, lottery or other reasonable method approved by City;
(d) A requirement that eligible applicants be notified of eligibility and be
provided an estimate regarding when a unit may be available;
(e) A requirement that ineligible applicants be notified of the reason for their
ineligibility;
(f) Specific procedures through which applicants deemed to be ineligible may
appeal this determination;
(g) Maintenance of a waiting list of eligible applicants;
(h) Specific procedures for obtaining documentation regarding prospective
tenants' incomes, as necessary, to certify that such income does not exceed income
limits;
(i) Specific procedures for certification and recertification of household
incomes and procedures for handling over- income tenants;
0) A requirement that a written rental agreement (subject to City approval) be
executed with each eligible household selected to occupy a unit;
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(k) A detailed listing of reasonable rules of conduct and occupancy which
shall be in writing, shall be consistent with federal and state law, and shall be provided to
each tenant upon occupancy;
(1) A requirement that there be no storage on balconies and patios and that
tenants must keep all balconies, patios and other exterior areas neat, clean and clutter
free, including no clotheslines or laundry;
(m) A parking management plan which details, among other things, how
parking spaces will be assigned, how guest parking will be handled and how parking will
be managed to encourage tenants to use their assigned parking spaces;
(n) Procedures for maintenance and management of the Project;
(o) Procedures for dealing with tenant or neighborhood issues or concerns;
(p) Procedures for maintaining a reserve account, budgeting for maintenance
and repair needs as well as long -term rehabilitation needs and handling net cash flow; and
(q) Such other requirements and criteria/procedures as City may determine
appropriate.
6.6 Approval of Amendments. If City has not responded to any submission of the
Management and Marketing Plan, the proposed management entity, the proposed management
agreement, or a proposed amendment or change to any of the foregoing within sixty (60) days
following City's receipt of such plan, proposal, agreement or amendment, the plan, proposal,
agreement, or amendment shall be deemed approved by City.
6.7 Fees Taxes, and Other Levies. Owner shall be responsible for payment of all fees,
assessments, taxes, charges, liens and levies applicable to the Property or the Project, including
without limitation possessory interest taxes, if applicable, imposed by any public entity, and shall
pay such charges prior to delinquency. However, Owner shall not be required to pay any such
charge so long as (a) Owner is contesting such charge in good faith and by appropriate
proceedings, (b) Owner maintains reserves adequate to pay any contested liabilities, and (c) on
final determination of the proceeding or contest, Owner immediately pays or discharges any
decision or judgment rendered against it, together with all costs, charges and interest. The
foregoing is not intended to impair Owner's ability to apply for any applicable exemption from
property taxes or other assessments and fees.
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6.8 Insurance Coverage. Throughout the term of this Agreement Owner shall comply
with the insurance requirements set forth in Exhibit C, and shall, at Owner's expense, maintain in
fall force and effect insurance coverage as specified in Exhibit C.
6.9 Property Damage or Destruction. If any part of the Project is damaged or
destroyed, Owner shall repair or restore the same, consistent with the occupancy and rent
restriction requirements set forth in this Agreement. Such work shall be commenced as soon
as reasonably practicable after the damage or loss occurs and shall be completed within one
year thereafter or as soon as reasonably practicable, provided that insurance proceeds are
available to be applied to such repairs or restoration within such period and the repair or
restoration is financially feasible. During such time that lenders or low - income housing tax
credit investors providing financing for the Project impose requirements that differ from the
requirements of this Section the requirements of such lenders and investors shall prevail.
7. Recordation; Subordination. This Agreement shall be recorded in the Official Records of
Sonoma County. The City agrees that the City will not withhold consent to reasonable requests
for subordination of this Agreement to deeds of trust provided for the benefit of lenders
identified in the financing plan submitted to City for the Project, as such plan may be updated
with City approval, provided that the instruments effecting such subordination include
reasonable protections to the City in the event of default, including without limitation, extended
notice and cure rights.
8. Transfer and Encumbrance.
8.1 Restrictions on Transfer and Encumbrance. During the term of this Agreement,
except as permitted pursuant to this Agreement, Owner shall not directly or indirectly,
voluntarily, involuntarily or by operation of law make or attempt any total or partial sale,
transfer, conveyance, assignment or lease (collectively, "Transfer ") of the whole or any part of
the Property, the Project, or the improvements located on the Property, without the prior written
consent of the City, which approval shall not be unreasonably withheld. In addition, prior to the
expiration of the term of this Agreement, except as expressly permitted by this Agreement,
Owner shall not undergo any significant change of ownership without the prior written approval
of City. For purposes of this Agreement, a "significant change of ownership" shall mean a
transfer of the beneficial interest of more than twenty -five percent (25 %) in aggregate of the
present ownership and /or control of Owner, taking all transfers into account on a cumulative
basis; provided however, neither the admission of an investor limited partner, nor the transfer by
the investor limited partner to subsequent limited partners shall be restricted by this provision.
8.2 Permitted Transfers. Notwithstanding any contrary provision of the City
Documents, the prohibitions on Transfer set forth herein shall not be deemed to prevent: (i) the
granting of easements or permits to facilitate development of the Property; (ii) the lease of
individual dwelling units to tenants for occupancy as their principal residence in accordance with
this Agreement; (iii) assignments creating security interests for the purpose of financing the
acquisition, construction, or permanent financing of the Project or the Property in accordance
with the financing plan approved by City, or Transfers directly resulting from the foreclosure of,
or granting of a deed in lieu of foreclosure of, such a security interest; (iv) a Transfer to a tax -
exempt entity under the direct control of or under common control with Eden; (v) a Transfer to a
limited partnership in which a tax - exempt affiliate of Eden is the managing general partner
( "Approved Partnership "); (vi) the admission of limited partners and any transfer of limited
partnership interests in accordance with Owner's, or the Approved Partnership's, as applicable,
agreement of limited partnership (the "Partnership Agreement "); (vii) the removal of the
general partner by the investor limited partner for cause in accordance with the terms of the
Partnership Agreement, provided that the replacement general partner is an entity reasonably
satisfactory to City; or (viii) the transfer of the general partner's interest to a nonprofit entity that
is tax - exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended (or to
an entity wholly -owned thereby), provided such replacement general partner is reasonably
satisfactory to City.
8.3 Requirements for Proposed Transfers. The City may, in the exercise of its sole
discretion, consent to a proposed Transfer of this Agreement, the Property, the Improvements or
part thereof if all of the following requirements are met (provided however, the requirements of
this Section 8.3 shall not apply to Transfers described in clauses (i), (ii), (iii), and (vi) of Section
8.2 and solely with respect to the removal of the general partner by the investor limited partner
for a default under the Partnership Agreement, clause (vii) of Section 8.2, provided that the
provisions of this Section 8.3 shall apply to the selection of a replacement general partner in the
event of a removal of the general partner in accordance with clause (vii) of Section 8.2.
(i) The proposed transferee demonstrates to the City's satisfaction that it has
the qualifications, experience and financial resources necessary and adequate as may be
reasonably determined by the City to competently complete and manage the Project and to
otherwise fulfill the obligations undertaken by the Owner under this Agreement.
(ii) The Owner and the proposed transferee shall submit for City review and
approval all instruments and other legal documents proposed to effect any Transfer of all or any
part of or interest in the Property, the Improvements or this Agreement together with such
documentation of the proposed transferee's qualifications and development capacity as the City
may reasonably request.
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(iii) The proposed transferee shall expressly assume all of the rights and
obligations of the Owner under this Agreement and the other City Documents arising after the
effective date of the Transfer and all obligations of Owner arising prior to the effective date of
the Transfer (unless Owner expressly remains responsible for such obligations) and shall agree to
be subject to and assume all of Owner's obligations pursuant to the Conditions of Approval and
all other conditions, and restrictions set forth in this Agreement.
(iv) The Transfer shall be effectuated pursuant to a written instrument
satisfactory to the City in form recordable in the Official Records.
Consent to any proposed Transfer may be given by the City's Authorized Representative
unless the City's Authorized Representative, in his or her discretion, refers the matter of approval
to the City Council. If the City has not rejected a proposed Transfer or requested additional
information regarding a proposed Transfer in writing within forty -five (45) days following City's
receipt of written request by Owner, the proposed Transfer shall be deemed approved.
8.4 Effect of Transfer without City Consent. In the absence of specific written
agreement by the City, no Transfer of the Property or the Project shall be deemed to relieve the
Owner or any other party from any obligation under this Agreement. It shall be an Event of
Default hereunder entitling City to pursue remedies including without limitation, acceleration of
the Loan and /or foreclosure under the A &R Deed of Trust if without the prior written approval
of the City, Owner assigns or Transfers this Agreement, the Improvements, or the Property in
violation of Section 8.
8.5 Recovery of City Costs. Owner shall reimburse City for all City costs, including
but not limited to reasonable attorneys' fees, incurred in reviewing instruments and other legal
documents proposed to effect a Transfer under this Agreement and in reviewing the
qualifications and financial resources of a proposed successor, assignee, or transferee within ten
(10) days following City's delivery to Owner of an invoice detailing such costs.
8.6 Encumbrances. Owner agrees to use best efforts to ensure that all deeds of trust
or other security instruments and any applicable subordination agreement recorded against the
Property, the Project or part thereof for the benefit of a lender other than City ( "Third -Party
Lender ") shall contain each of the following provisions: (i) Third -Party Lender shall use its best
efforts to provide to City a copy of any notice of default issued to Owner concurrently with
provision of such notice to Owner; (ii) City shall have the reasonable right, but not the
obligation, to cure any default by Owner within the same period of time provided to Owner for
such cure extended by an additional ninety (90) days; (iii) provided that City has cured any
default under Third -Party Lender's deed of trust and other loan documents, City shall have the
right to foreclose the A &R Deed of Trust and take title to the Project without acceleration of
Third -Party Lender's debt; and (iv) City shall have the right to transfer the Project without
acceleration of Third -Party Lender's debt to a nonprofit corporation or other entity which shall
•1
own and operate the Project as an affordable rental housing Project, subject to the prior written
consent of the Third -Party Lender. Owner agrees to provide to City a copy of any notice of
default Owner receives from any Third -Party Lender within three (3) business days following
Owner's receipt thereof.
8.7 Mortgagee Protection. No violation of any provision contained herein shall defeat
or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon
all or any portion of the Project or the Property, and the purchaser at any trustee's sale or
foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the
acquisition of title by such purchaser. Such purchaser shall be bound by and subject to this
Agreement from and after such trustee's sale or foreclosure sale. Promptly upon determining
that a violation of this Agreement has occurred, City shall give written notice to the holders of
record of any mortgages or deeds of trust encumbering the Project or the Property that such
violation has occurred.
9. Default and Remedies.
9.1 Events of Default. The occurrence of any one or more of the following events
shall constitute an event of default hereunder ( "Event of Default "):
(i) The occurrence of a Transfer in violation of Section 8 hereof;
(ii) Owner's failure to maintain insurance on the Property and the Project as
required hereunder, and the failure of Owner to cure such default within five (5) days;
(iii) Subject to Owner's right to contest the following charges, Owner's failure
to pay taxes or assessments due on the Property or the Project or failure to pay any other charge
that may result in a lien on the Property or the Project, and Owner's failure to cure such default
within twenty (20) days of delinquency, but in all events before the imposition of any such tax or
other lien.
(iv) A default arises under any loan secured by a mortgage, deed of trust or
other security instrument recorded against the Property and remains uncured beyond any
applicable cure period such that the holder of such security instrument has the right to accelerate
repayment of such loan;
(v) A default arises under the Amended Note, or the A &R Deed of Trust, and
remains uncured beyond the expiration of any applicable cure period;
(vi) Owner's default in the performance of any term, provision or covenant
under this Agreement (other than an obligation enumerated in this Section 9. 1), and unless such
provision specifies a shorter cure period for such default, the continuation of such default for ten
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(10) days in the event of a monetary default or thirty (3 0) days in the event of a non - monetary
default following the date upon which City shall have given written notice of the default to
Owner, or if the nature of any such non - monetary default is such that it cannot be cured within
thirty (30) days, Owner's failure to commence to cure the default within thirty (30) days and
thereafter prosecute the curing of such default with due diligence and in good faith, but in no
event longer than ninety (90) days from receipt of the notice of default.
The limited partners of Owner shall have the right to cure any default of Owner
hereunder upon the same terms and conditions afforded to Owner. City shall provide a copy of
any notice of default hereunder to the limited partners at the address set forth in Section 11.3
hereof, or to such other address provided to the City in writing, concurrently with the provision
of such notice to Owner.
9.2 Remedies. Upon the occurrence of an Event of Default and its continuation
beyond any applicable cure period, City may proceed with any of the following remedies:
(i) Bring an action for equitable relief seeking the specific performance of the terms
and conditions of this Agreement, and/or enjoining, abating, or preventing any
violation of such terms and conditions, and /or seeking declaratory relief;
(ii) Accelerate and declare the balance of the Amended Note and interest accrued
thereon immediately due and payable and proceed with foreclosure under the
A &R Deed of Trust;
(iii) For violations of obligations with respect to rents for Restricted Units, impose as
liquidated damages a charge in an amount equal to the actual amount collected in
excess of the Affordable Rent;
(iv) Pursue any other remedy allowed under the City Documents or at law or in
equity.
Each of the remedies provided herein is cumulative and not exclusive. The City may
exercise from time to time any rights and remedies available to it under applicable law or in
equity, in addition to, and not in lieu of, any rights and remedies expressly provided in this
Agreement.
10. Indemnity. Owner shall indemnify, defend (with counsel approved by City) and hold the
Indemnitees harmless from and against all Claims arising directly or indirectly, in whole or in
part, as a result of or in connection with Owner's rehabilitation, construction, management, or
operation of the Property and the Project or any failure to perform any obligation as and when
required by this Agreement. Owner's indemnification obligations under this Section 10 shall not
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extend to Claims to the extent arising from the gross negligence or willful misconduct of
Indemnitees. The provisions of this Section 10 shall survive the expiration or earlier termination
of this Agreement. City does not and shall not waive any rights against Owner that it may have
by reason of any indemnity and hold harmless provision set forth in this Agreement because of
the acceptance by City, or the deposit with City by Owner, of any of the insurance policies
described in this Agreement.
10.1 Terms Applicable to Indemnity Provisions. The terms set forth in this Section
10.1 shall apply to all provisions of this Agreement that pertain to Owner's obligations to
indemnify City and the other Indemnitees, including without limitation, Sections 2.6 and 10. In
connection with each such provision, all of the following shall apply:
(a) City does not and shall not waive any rights against Owner that it may have by
reason of any indemnity and hold harmless provision set forth in this Agreement because of the
acceptance by City, or the deposit with City by Owner, of any of the insurance policies described
in this Agreement.
(b) Owner's obligation to indemnify the Indemnitees shall not be limited or impaired
by any of the following: (i) any amendment or modification of any City Document; (ii) any
extensions of time for performance required by any City Document; (iii) any provision in any of
the City Documents limiting City's recourse to property securing the Secured Obligations (as
defined in the A &R Deed of Trust), or limiting the personal liability of Owner, or any other party
for payment of all or any part of the indebtedness evidenced by the Amended Note; (iv) the
accuracy or inaccuracy of any representation and warranty made by Owner under this Agreement
or by Owner or any other party under any City Document, (v) the release of Owner or any other
person, by City or by operation of law, from performance of any obligation under any City
Document; (vi) the release or substitution in whole or in part of any security for repayment of the
indebtedness evidenced by the Amended Note; and (vii) City's failure to properly perfect any
lien or security interest given as security for repayment of the indebtedness evidenced by the
Amended Note.
(c) The obligations of Owner to indemnify the Indemnitees shall survive any
repayment or discharge of the indebtedness evidenced by the Amended Note, any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release
of record of the lien of the A &R Deed of Trust.
11. Miscellaneous.
11.1 Amendments. This Agreement may be amended or modified only by a written
instrument signed by both Parties.
:1N
11.2 No Waiver. Any waiver by City of any term or provision of this Agreement must
be in writing. No waiver shall be implied from any delay or failure by City to take action on
any breach or default hereunder or to pursue any remedy allowed under this Agreement or
applicable law. No failure or delay by City at any time to require strict performance by Owner of
any provision of this Agreement or to exercise any election contained herein or any right, power
or remedy hereunder shall be construed as a waiver of any other provision or any succeeding
breach of the same or any other provision hereof or a relinquishment for the future of such
election.
11.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant to
this Agreement shall be made in writing, and sent to the Parties at their respective addresses
specified below or to such other address as a Party may designate by written notice delivered to
the other parties in accordance with this Section. All such notices shall be sent by: (i) personal
delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return
receipt requested, in which case notice shall be deemed delivered upon receipt if delivery is
confirmed by a return receipt; or (iii) nationally recognized overnight courier, with charges
prepaid or charged to the sender's account, in which case notice is effective on delivery if
delivery is confirmed by the delivery service.
City: City of Petaluma
11 English Street
Petaluma, CA 94574
Attention: City Manager
With a copy to:
Burke, Williams & Sorensen LLP
1901 Harrison Street, Suite 900
Oakland, CA 94612
Attention: Susan Bloch
Owner: CRWC, L.P.
Attention:
With a copy to:
Gubb & Barshay LLP
505 14th Street, Suite 1050
Oakland, CA 94612
Attention: Natalie Gubb
•,
And with a copy to:
And with a copy to:
11.4 Further Assurances. The Parties shall execute, acknowledge and deliver to the
other such other documents and instruments, and take such other actions, as either shall
reasonably request as may be necessary to carry out the intent of this Agreement.
11.5 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship.
Nothing in this Agreement is intended to or shall establish the Parties as partners, co- venturers,
or principal and agent with one another. The relationship of Owner and City shall not be
construed as a joint venture, equity venture, partnership or any other relationship. City neither
undertakes nor assumes any responsibility or duty to Owner (except as expressly provided in this
Agreement) or to any third party with respect to the Project. Owner and its employees are not
employees of City but rather are, and shall always be considered independent contractors.
Furthermore, Owner and its employees shall at no time pretend to be or hold themselves out as
employees or agents of City. Except as City may specify in writing, Owner shall not have any
authority to act as an agent of City or to bind City to any obligation.
11.6 Action by the City. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, consent or request by the City is required or permitted
under this Agreement, such action shall be in writing, and such action may be given, made or
taken by the City's Authorized Representative or by any person who shall have been designated
by the City's Authorized Representative, without further approval by the City Council.
11.7 Non - Liability of City and City Officials, Employees and Agents. No member,
official, employee or agent of the City shall be personally liable to Owner or any successor in
interest, in the event of any default or breach by the City, or for any amount of money which
may become due to Owner or its successor or for any obligation of City under this Agreement.
11.8 Headings; Construction; Statutory References. The headings of the sections and
paragraphs of this Agreement are for convenience only and shall not be used to interpret this
Agreement. The language of this Agreement shall be construed as a whole according to its fair
meaning and not strictly for or against any Party. All references in this Agreement to particular
statutes, regulations, ordinances or resolutions of the United States, the State of California, or the
City of Petaluma shall be deemed to include the same statute, regulation, ordinance or resolution
as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter
govern the same subject.
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11.9 Time is of the Essence. Time is of the essence in the performance of this
Agreement.
11.10 Governing Law, Venue. This Agreement shall be construed in accordance with
the laws of the State of California without regard to principles of conflicts of law. Any action to
enforce or interpret this Agreement shall be filed and heard in the Superior Court of Sonoma
County, California or in the Federal District Court for the Northern District of California.
11.11 Attorneys' Fees and Costs. If any legal or administrative action is brought to
interpret or enforce the terms of this Agreement, the prevailing parry shall be entitled to recover all
reasonable attorneys' fees and costs incurred in such action.
11.12 Severability. If any provision of this Agreement is held invalid, illegal, or
unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of
the remaining provisions shall not be affected or impaired thereby.
11.13 Entire Agreement; Exhibits. This Agreement, together with the Amended Note
and the A &R Deed of Trust, contains the entire agreement of Parties with respect to the subject
matter hereof, and supersedes all prior oral or written agreements between the Parties with
respect thereto. Exhibits A through C, attached hereto are incorporated herein by this reference.
11.14 Counterparts. This Agreement maybe executed in multiple counterparts, each of
which shall be an original and all of which together shall constitute one agreement.
SIGNATURES ONFOLL OWING PA GEM -
..
IN WITNESS WHEREOF, the Parties have executed this Affordable Housing
Regulatory Agreement and Declaration of Restrictive Covenants as of the date first written
above.
CITY:
CITY OF PETALUMA, a municipal corporation
By:
Attest:
By:
John C. Brown, City Manager
City Clerk
Approved as to form:
By:
City Attorney
;11+J/►1 �1:�
CRCW, L.P., a California limited partnership
By: CRCW LLC, a California limited liability company
Its: General Partner
By: Eden Housing, Inc., a California nonprofit public benefit corporation,
Its: Manager
IN
Linda Mandolini, President
ATURES MUST BE NOTARIZED.
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