HomeMy WebLinkAboutResolution 91-211 07/15/19911
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Resolution No. 91-211 N.C.S.
of the City of Petaluma, California
RESOLUTION APPROVING A TRUST AGREEMENT WITH BURBANK
HOUSING AND DEVELOPMENT CORPORATION
WHEREAS on July 20, 1987 the City Council approved a $200,000 loan to Burbank
Housing Development Corporation for acquisition of the Cherry Hills Housing site; and
WHEREAS Burbank Housing Development Corporation has received approval for
permanent financing for the project; and
WHEREAS the 29 housing units will be sold to low and moderate income .families; and
WHEREAS Burbank has requested that upon project completion the City's loan be
reconveyed with the loan proceeds converting to a secondary lien in favor of Burbank to be
secured against each housing unit; and
WHEREAS a Trust Agreement between Burbank and the City of Petaluma will establish
mechanisms to recapture the City's funds to ensure the continued affordability of the units,
establish a trust for the subsidies recaptured and provide for the reconveyance of the City
note;
NOW, THEREFORE, BE. IT RESOLVED that the City of Petaluma approves the Trust
Agreement (Exhibit A), the terms of which will be carried out upon construction of the
units, and
BE IT FURTHER RESOLVED that the City Manager is hereby authorized to execute on
behalf of the City Council the following documents:
1. Trust Agreement
2. Deed of Reconveyance and related documents.
30
31 C11111reSO~b~der the power and authority conferred upon this Council by the Charter of said City
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Approved as to
rte.
Council of the City of Petaluma at a (Regular) ~1X~~ meeting rm
on the ..~.-`J.~11 .............. day of _............-..c~Ul.~...........................-...-.-., 19-.~ ~., by the ~ -
following vote:
it Attorney
AYES: Read, Davis, Cavanagh, Sobel, Nelson, Vice iVlayor Woolsey, Mayor Hilligoss
NOES: ~
.-
ABSENT: ~ .,,>s.~r
ATTEST: ..-~-.~.,.,~.~:~... .... ~ .............~~.P.- ........
City Clerk
CA 10-85
Council File..._ ...............................
Res. No..........91-21.1... N.C.S.
~~
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TRUST AGREEMENT
RECElVEI~
SEP 5 1991
COMMUNITY DEVELOPMENT
~,
This Trust Agreement is made as of ~~~~5°~«~ ~ , 1991
among the Burbank Housing Development Corporation, a nonprofit
corporation ("Burbank"); the. City of. Petaluma, a municipal
corporation ("City"), and the Sonoma 'County Community Development
Commission, a subdivision of the State of California
(1°Commission")
RECITALS.
A. Burbank is developing within the City a 29-unit
residential development to be known as Cherry Hill ("Cherry Hill").
B. The homes in Cherry Hill will be sold to eligible lower-
.income, purchasers on a partially subsidized basis. This is
possible. because the City and the Commission have provided cash
subsidies, and Burbank is providing in-k'ind subsidies, to Cherry
Hill..
C. The subsidy provided by the City to Cherry Hill is
reflected in a promissory note executed by Burbank in favor of the
City (the "City Note"). The City Note is secured by a deed of
trust on the Cherry Hill site (the "City Deed of Trust"). In
addition, the City presently holds an option, to purchase the Cherry
Hill site °(the 1/City Option") .
D. The.subs,idy provided by the Commission to Cherry Hill is
reflected in a promissory note executed by Burbank in favor of the
Commission (the "Commission Note"). The Commission Note is secured
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by a deed of trust on the Cherry Hill.ste (the "Commission Deed
of Trust").
E. Burbank, the City, and the Commission all wish, to the
maximum• extent feasible, to recapture the subsidies provided to
Cherry Hill and to ensure the continued affordability of the units
in Cherry Hill.
F. Thee purposes of this Trust Agreement are: (a) to
•establish the mechanisms that will. be used to. recapture the
subsidies provided to Cherry Hill and ensure the continued
affordability of the units in Cherry H`11; (b) to establish a
trust for the subsidies recaptured and rights held with respect to
Cherry Hill, and (c) to provide for release of the City Note, the.
City Deed of Trust., the City Option, the Commission Note, and the
Commission Deed-of Trust.
THEREFORE, THE PARThES AGREE AS FOLLOWB~: `
1. SALE TO LOWER-IATCOME HOUSEHOLDS'.. Burbank shall sell not
less than fifty-one percent (51%) of the homes in Cher-ry Hill to .
lower-income households a"s hereafter defined.
2. EXHIBIT A NOTE. Burbank shall require each purchaser of
a home in Cherry Hi11 to execute and deliver a promissory. note, in
the forms attached hereto as Exhibit A ("Exhibit A~.None"). The
principal. amount of each Exhibit ANote will be the difference
between. .(a) the fair market. value of the home at the time of the
original sale, and (b) the sum of the purchase money loan and the
purchaser's down payment applied to the home. Burbank shall ensure
that each Exhibit A Note is secured by a deed of trust to the home
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being purchased.
3. EXHIBIT. B OPTION. Burbank also shall require each
purchaser of~a home in Cherry Hill to execute and deliver an option
agreement and grant of right of first refusal in the form attached
hereto as Exhibit. B ("Exhibit B Option"). Burbank shall ensure
that a memorandum of each Exhibit B Option is recorded.
4. PROCEEDS FROM REPAYMENT OF EXHIBIT A NOTE. Burbank shall
use the proceeds from any repayment of any Exhibit A Note ("Exhibit
A Note Proceeds") solely for:
4.1 The purpose of making additional loans to enable
qualified lower-income households to purchase homes, or
4.2 Any other purpose approved in writing by both the
City and the Commission, provided, however, that in making any loan
to enable a qualified lower-income household to purchase a home,
Burbank may charge a loan origination fee of not more than three
percent (3%)~of the loan value to defray its actual and necessary
administrative costs in making the loan.
5.. EXERCISE OF EXHIBIT B OPTION.
5.1 Burbank shall exercise any Exhibit B Option solely
for the purpose of facilitating the sale of the home in question
to a qualified lower-income household.
5.2 In the event Burbank does not intend to exercise a
particular Exhibit B Option when it has the opportunity to do so,
Burbank shall notify the City and the Commission of its intent not
to exercise (a) in the case of an opportunity to exercise the
option to purchase set forth in Article One of the Exhibit B
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Option, no later than 30 days before the opportunity to exercise
expires, and (b) in the case of an opportunity to exercise the
right of first refusal set forth in Article Two of the Exhibit B
Option, not later than 15 days before the opportunity to exercise
expires. Thereafter, the City and the Commission may jointly
request in writing that Burbank assign all of its rights under the
Exhibit B Option in question to either the City or the Commission,
and immediately upon receipt of such a request, Burbank shall so
assign.
5.3 If an Exhibit B Option is not exercised by any
party, and the unit in question is-sold on the open market,-the
Exhibit A Note Proceeds arising out of the sale shall be
distributed eighty-seven percent (87%) to the City and thirteen
percent (13%) to the Commission, provided that the City and the
Commission shall each have the separate right to waive distribution
of its -share and allow Burbank to use the same for any eligible
purpose. An election by one governmental entity to so waive shall
not bind the other to do so.
5.4 Under no circumstances shall Burbank be liable to
either the City or the Commission for any failure to exercise any
Exhibit B Option. The parties acknowledge and agree that exercise
of any givern Exhibit B Option may not always be possible.
6. OTHER NOTIFICATION REQIIIREMENTB. Burbank shall notify
both the City and the Commission in writing, within ten (10) days
after the event in question:
6.1 Each time it receives any Exhibit A Note Proceeds,
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6.2 `-Each time it uses any Exhibit A'Note Proceeds for-
e any purpose,. and
6.3 Each time it exerc'is'es any Exhibit B Option.
7. RELEASE OF EXISTING LEGAL OBLIGATIONS. '
7.1 Upon request by Burbank., the City shall release the
• Cherry Hill common area from the lien• of the: City Deed of Trust and
the encumbrance of the~Cty Option.
7.2<~• Upon request by Burbank, the Commission shall
release the Cherry Hill common area from-the lien of the Commission
Deed. of Trust.
7.3 Upon request by Burbank, the City shall release. any
individual residential Tot within Cherry.Hih .from the lien, of the
City Deed of "Trust and. the" encumbrance of the "City Option, °pr-ovided
that .(a)" with .respect to such residential lot, Burbank h`as comp"lied
with sections 2 and,3,of this Trust Agreement, and (b)~with respect
to Cherry Hi1T as a whole, Burbank is,complying with section i of
this Trust Agreement,:
7.4 ~ Upon request by Burbank, the Commission shall
release any individual residential lot within Cherry Hill from the
`lien of the Commission Deed of Trust, provided .that (a) with
respect to "such residential .lot, Burbank has complied with sections
2 and 3 of this 'Trust Agreement, •and (b) with.. respect to. Cherry
H°ill as a whole, Burbank is complying with section 1 of this Trust
Agreement.", •
7.;5 'Upon the sale of all residential, lots within Cherry
-Hill inconformity with sections 1, 2, and 3 of this Trust
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.Agreement, the City shall return to Burbank the City~Note marked
"paid in full."
7.6 Upon the sale of all residential lots within Cherry
Hill in conformity with sections 1, 2, and 3 of this Trust
Agreement, the Commission shall return to Burbank the Commission
Note marked "paid in full."
7.7 As used in this section 7, the term "release" means
to execute all legal documents required by Burbank's title company
to verify that the lien or encumbrance ' in question is no longer
applicable to the portion of Cherry Hill in question.
8. DEFINITION OF "LOWER-INCOME." For all purposes related
to this Trust Agreement, a household shall be deemed "lower-
income" if its income is equal to or less than 80 percent of the
median income of households of the same size residing in the Santa
Rosa=Petaluma PMSA according to the income schedule most recently
published by the United States Department of Housing and Urban
Development.
9. ASSIGNMENT LIMITED. Burbank may not assign any of its
rights under this agreement or under any Exhibit A Note or Exhibit
B Option without the express written consent of both the City and
the~Commission.
10. DISSOLUTION OF BURBANR. In the event Burbank dissolves
or otherwise ceases to exist:
10.1 Burbanlc's interest in all outstanding Exhibit A
Notes ..shall be deemed automatically assigned eighty-seven percent
(,87%) to the City and thirteen .percent (13%) to the Commission;
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°10.2 . Burba k~''s rights under all outstanding Exhibit B
Options shall..be deemed automatically assigned to the City and the
Commission as tenants in common each with an undivided one-half
interest.; and
10.3 Any' ,Exhibit A Note Proceeds in Burbank's possession
shall be. distributed eighty-seven percent (87%) to the City and
thirteen percent (13%) to the Commission.
BURBANK HOUSI DEVELOPMENT CORPORATION,.
a nonprof;i~ porata~n, by
Name;:. A,C. Sternberg, Executive Director
Title: ,Burbank Housi
ng Development ~Cor~
CITY OF PETALUM;A, a municipal corporation,, by
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Finance Direc r, David Spilman
ATTEST:
/,..
i
Deputy City Cler
. - SONOMA COUNTY ,COMMUNITY DEVELOPMENT COMMISSION,
a subdivision of the State of California, by
. .
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Name:
Tittle:
i
D-V , 7
Nam John L. Scharer
Tit • . City Manager
ERHIBIT A
PROMhSSORY NOTE SECIIRED
BY DEED OF TRIIST
$ ~ (Principal Amount) California
plus other amounts determined in ~ 199_
accordance with this note
FOR VALUE RECEIVED, the undersigned,
("Borrower") promises to pay to Burbank Housing Development
Corporation, a California nonprofit corporation., and its successors
and assigns, as trustee for itself, the City of Petaluma, and the
Sonoma County Community Development Commission ("Lender"), lawful
money of the United States of America as hereafter set forth.
1. RECIT1~iL3. The Property (as hereafter defined) has been
developed as part of a program funded by the City of Petaluma and
the Sonoma County-Community Development Commission (the "Funding
Agencies") and administered by Burbank Housing Development
Corporation to create owner-occupied housing affordable to low and
moderate income households. As part of this program, the Funding
Agencies have provided financial subsidies for (1) the acquisition
of the Property and. (2) construction of improvements on the
Property. Borrower has received the benefits of the Funding
Agencies° financial assistance because Borrower is a member of a
low or moderate income household. Without this assistance,
Borrower would 'not have been able to purchase the Property.
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Borrower's delivery to Lender of this note, including the agreement
to spay a percentage of the Property's net appreciated value, is
necessary to permit the Funding Agencies to~fulfill the goals of
their low and moderate income owner-occupied housing programs.
To fulfill the goals of the Funding Agencies' low and moderate
income housing programs, Borrower agrees to occupy the Property so
long as~Borrower owns the Property. Upon, Borrower's failure to
occupy the Property as Borrower's exclusive residence, or upon
transfer of the 'Property or any interest therein, this promissory
note shall be .immediately due and payable.
This promissory note is intended by Borrower and Lender to
create a debtor-creditor relationship with respect to the Property.
2. DEFINITIONS. For purposes of this promissory note, the
following terms shall have the meanings set forth in this section
2.
2,1 Borrower-Borne'Costs of Sale.: All costs, including
a real estate 'commission and closing costs, reasonably incurred by
Borrower in connection with a Sale.
2.2 Capital Improvements. All permanent. additions to
the Property., such as floors, rooms, decks, closets, and built-in
appliances or cabinets, made by Borrower and constructed pursuant.
to permits and in accordance with applicable codes, regulations,
covenants, conditions, and restrictions.
2:3 Compliance Costs. The costs of repairs or additions
to thee. Property that are necessary to bring the Property into
compliance with all applicable codes, regulations, covenants,
Cherry Hi11 D-4 2
conditions, and restrictions.
2.4 Due Date.. The earlier of (a) the date on which a
Transfer occurs, or (b) the date on which Borrower no longer
occupies the Property as his or her exclusive residence.
2.5 Fair Market Value at Repayment. The fair market
value of the Property at the time this promissory note becomes due
and payable, determined pursuant to section 4 below.
2.6 Lender's Share. percent
( ~), which is the .ratio of the Principal Amount to the sum of
the Purchase Price and the Principal Amount.
2.7 Median Income. The median income for a household
of four persons in the Santa Rosa-Petaluma Metropolitan Statistical
Area according to the income schedule most recently published by
the United States Department of Housing and Urban Development
("HUD"). In the event HUD .ceases to publish a median income
schedule, Lender shall identify an equivalent measure for
determining.~Median Income.
2.8 Net Appreciation. The Fair Market Value at
Repayment minus the sum of (a) the Original Fair Market Value, (b)
Borrower-Borne Costs of Sale, and (c) the Value of Capital
Improvements:
2.9 Option Agreement. That certain Option Agreement
and Grant of Right of First Refusal entered into on
199_ between Borrower and Lender.
2.10 Original Fair Market Value.
_~ dollars ($ ), which is the
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appraised fair market value. of: the Property at the time of purchase
by Borrower, determined without regard to,any income .or sale price
restrictions that~may be applicable.
2.11 Principal Amount.
dollars ($ ), which is the difference
between the Original Fair Market Value and the. Purchase Price;
provided, however, that the Principal Amount has been. calculated.
so that the Principal Amount, when added to. the Purchase Price,
does not exceed the acquisition cost `safe harbor limitations for
the Santa Rosa-Petaluma. Metropolitan Statistical Area established
by the Internal Revenue Service under Section 143 of the Internal
Revenue Code of` 1986..
2.12 Property. The real property described in Exhibit
A attached hereto.
2.13 Purchase~Price.
dollars ($ ), which is the sum of all amounts
paid, either in cash or in kind, by the Borrower (or a related
party or for the benefit of the Borrower) to the seller (or a
related party or .for the benefit of the seller) of the Property,
but not including the Principal Amount.
2..14 Rental. Any lease or rental of the Property or any
portion of the Property.
2.15 Sale. Any sale of the Property, including entering
into any installment sale contract giving the purchaser or a third
party a right to possess the~Property or any portion of the
Proper-ty befor.e transfer of title.
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2.16 Transfer. Any trlansfer of title to the Property;
or Rental Sale or refinancing Of the Property; or judicial sale
~on execution, trustee's sale, or other legal process of foreclosure
of the Pro ert re ardless ofl whether initiated by Lender);
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provided, however, that none of the following shall be considered
a Transfer: (a) a transfer resulting from death of a Borrower
where the transfer is to a co-Borrower or a spouse or child of the
Borrower; (b) a transfer by a Borrower to any person who becomes
a co-owner and occupant of the Property, ,provided Borrower retains
at least a thirty-three percent (33%,) interest in the Property, and
the.co-owner agrees to become a co-Borrower under this promissory
note; (c) a transfer resulting from a decree of dissolution of
marriage or legal separation or from a property settlement
agreement incidental to such a decree in which one of the Borrowers
becomes the sole owner of the Property; (d) a transfer between co-
Borrowers; or (e) a transfer by Borrower into an inter vivos trust
in which Borrower is a beneficiary and Borrower continues to occupy
the Property.
2.17 Value of Capital Improvements. The. amount
determined pursuant to section 5.below, but not including any
Compliance Costs.
3. PROMISE TO PAY. Borrower hereby promises to pay to
Lender, or to Lender's order, on the Due Date, at 3432-A Mendocino
Avenue, Santa Rosa, California 95403, or at such other place as
Lender may from time to time designate by written notice to
Borrower, the least of :.
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3.1. The Principal Amount, with interest from the date
of this note at the rate of ten and seven-eights percent (10.875%)
per annum,. compounded annually, lus fifty percent (50%) of
Lender's Share of the Net Appreciation, if any; or
3.2 The Principal Amount plus one hundred percent (100%)
of Lender's Share of the Net Appreciation, if any; or
3.3 The Principal Amount plus the. amount, if any, by
which the Fair Market Value at Repayment exceeds the sum of (a) the
outstanding amount of all loans secured by deeds of trust to the
Property superior to the deed of trust securing this note, (b~) the
Principal Amount, and (c) Borrower's recapture liability,~if any,
under Section 143(m) of the Internal Revenue Code. For purposes
of this section 3.4,~Borrower's recapture liability shall not be
reduced pursuant to Section 143(m)(5), and if this note is being
repaid but no "disposition" is occurring within the meaning of
Section 143(m), gain shall be determined as if the Property were
being sold for its fair market value.
4. DETERMINATION OF FAIR MARKET VALIIE AT REPAYMENT. The Fair
Market Value at Repayment shall be determined in' accordance with
the following provisions:
4.1 Sale Except Under Option Agreement. In the case of
a Sale, except a Sale under. the Option Agreement, Borrower shall,
prior to the Sale and in sufficient time to permit appraisal
pursuant to section 4.4, give to Lender written notice of the Sale,
together with an executed copy of the sales contract. The Fair
Market Value at Repayment shall be the. gross sale price, unless
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Lender contests in writing the reasonableness of the gross sale
price with°n ten (10) working days of the Lender's receipt of
•~Borrower's,noti:ce of the gross sale price. If Lender contests the
reasonableness of the gross sale price, the Fair Market Value at
Repayment shall be determined pursuant to section 4.4. If Lender
does not contest the reasonableness of the gross sal-e price,
Borrower shall, following the Sale, furnish to Lender a closing
statement and any other evidence of tfie gross sale price that
Lender may reasonably request.
4.2 Sale IInder Option Agreement. In the case of any
Sale under the Option .Agreement, the Fair Market Value at' Repayment
shall be determined pursuant to section 4.4.
' 4.3 Transfer Other Than Sale. Iri the caste of a ,Transfer
other than a Sale, the Fair Market Value at Repayment shall be
defiermiried pursuant to section 4.4,
4.4 Appraisal Procedure. When application of this
section 4.4 is required, the Fair. Market Value at Repayment shall
be the average of two (2) appraisals of the Property performed as
described herein. The appraisals shall be made by two (2)
independent MAI appraisers, one selected by Lender and one by
Bor-rower. Each party shall bear the ,cost of the appraiser .that
such-party selects,. unless, in the case of a Sale, the average of
the two (2';) appraisals equals or is.less:-than the gross sale price
of the Property,. in which case Lender shall also pay the fee for
the Borrower's appraiser up to three .hundred dollars ($300). If
Borrower fails to select a qualified appraiser within fifteen (15)
Cherry Hill-D-4 7
• days after Lender ha's notified the Borrower in writing of the
• Lender's selection of an appraiser for the Property and of
Borrower''s option to select an independent appraiser, Lender may
designate: 'the second appraiser, provided that the Lender's
notification informed Borrower of the 15-day time limit and that
Lender would select an .appraiser on behalf of Borrower if Borrower
failed to designate .an appraiser within the time period set forth
with consequent cost to the Borrower.. If Lender designates the
second appraiser, the cost of both appraisals shall be borne
equally by Borrower and Lender. If. possible, the two appraisals
shall be based upon the sale prices of comparable properties in the
area that have occurred in the preceding three (3) month period.
The appraisals shall assume that Borrower has taken all steps
needed to bring the Property in compliance with all applicable
codes, regulations, covenants, conditions, and restrictions.
Nothing in this section 4.4 shall preclude Borrower and Lender from
establishing the Fair Market Value at Repayment by mutual agreement
in lieu of appraisals.
5. DETERMIYdATION OF VALUE OF CAPITAL IMPROVEMEPTTS. Lender
and Borrower may establish the Value of the Capital Improvements
by mutual agreement, or either, party may require appraisal.. If
either party requires appraisal, two {2:) .appraisers shall be
selected in the manner specified in section 4.4, and the average
increase determined by the two (2) appraisers shall be deemed the
Value of the Capital Improvements. The cost of the appraisal shall
be divided between the parties.in the manner specified in section
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4.4 . To the .maximum extent f'easibl'e, appraisal of the Value of
the Capital Improvements shall be combined with appraisal of 'the
Fair Market. Value at Repayment. .
6. DEED OF TRIIST. The indebtedness set- forth above is
secured by a deed of trust to the Property of even date herewith
(the "Deed of Trust");. A11 covenants, conditions-and agreements
contained in the Deed of Trust are hereby made. a part of this
promissory note to the same extent and' with the same force. and
effect as if they were fully set forth her-en.
7. WAIVER, JOIId'P AND SEVERAL OBLIGATIOYIB. Presentment,
notice of dishonor-,, demand, protest, any release. or discharge
arising from any extension of time, discharge of a prior party,
release of .any or all of the security for this promissory note.,'or
other cause of ,release or discharge other than actual payment in'
full hereof are hereby waived by all `makers,. sureties; guarantors,
and endorsers hereof. This promissory note'shall be the joint and
several. obligation of all makers, sureties, guarantors, and
endorsers, and shall be 1?nding upon them and their successors and
assigns.-
8. NOTICES. Any notice to Borrower provided for in this note
shall be; given by mailing such notice by certified-mail addres's:ed
to Borrower~at~the~Property'address•stated,below, or to such other
address as Borrower may designate by notice to Lender. Any notice
to Lender shall be given by mailing such notice by certified mail,
return receipt requested, to Lender at:
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~~ Burbank. Housing Development Corporation
- 3432-A Mendocino Avenue
Santa Ro a, CA 95403
' or at such other address as Lender may designate by notice to
Borrower.
9. ATTORNEYS' FEES AND COSTS. If .this promissory note is
referred to an .attorney, or if suit is brought to collect this
promissory note or any part hereof or to enforce or protect any
rights conferred upon Lender under the provisions of this
promissory note or the Deed of Trust, Lender shall be entitled to
collect from Borrower all costs and expenses of suit, including,
but not limited to, ali attorneys' fees.
10. SEVERABILITY. If any provision of this promissory note
is invalid or unenforceable under any federal law, regulation, or
order.., or under any state law which is not preempted by federal
law, regulation, or order, such provision shall have no effect
except to the extent permitted by such law, regulation, or order,
but all other provisions of this instrument shall remain in full
force and effect.
11. GOVERNING' LAS. This note shall be construed in
accordance with and ~be governed .by the laws of the State of
California.
12. ACQIIISITLON COST. The .Principal Amount constitutes a
portion of the unpaid balance of the Borrower's acquisition cost
.for the Property securing this promissory note.
13. PREPAYMENT PENALTY. Payment prior to the Due Date of the
Principal Amount and accrued interest thereon is permitted in the
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.' following circumstances, subject to the following conditions. All
payments on this note will first be applied to accrued interest.
If any portion of the loan; is prepaid within five years of the date
of this note, a prepayment charge will be due on the sum prepaid
in the following amounts, but in no event greater than the maximum
permitted by law: (a) in any year, an amount not exceeding twenty
percent_(20%) of the Principal Amount may be prepaid without
charge; (b) a prepayment charge equal to six month's accrued
interest at the rate of twelve percent (12%) per annum shall be due
on any amount prepaid in any year in excess. of twenty percent (20%)
of the Principal Amount. To permit the Lender to 'fulfill the goals
of the .low and moderate income housing program through which. the
Borrower's purchase of the Property was financed, Borrower agrees
that no portion of the Lender's Share of Net Appreciation may be
paid prior to the Due Date.
14. COOPERATION. Borrower will comply with reasonable
requests from. Lender to provide documentary proof that Borrower is
using the Property .as Borrower's sole residence and that no
Transfer of the Property has occurred. Borrower's. failure to
comply with Lender's reasonable requests for documentary proof
shall constitute a presumption that either Borrower is not using
the Property as Borrower's sole residence or a Transfer has
occurred. '
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"Borrower"
Property Address
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E%HIBIT B
l
OPTION AGREEMENT AND GRANT OF RIGHT
OF FIR8T`.REFIISAL
This Option Agreement and Grant of Right of First Refusal (the ~~
"Agreement") is made as of this day- of
19 , by and between
("Owner"), and Burbank Housing Development Corporation, a
California nonprofit corporation., as trustee for itself,, the City
of Petaluma, and the Sonoma County Community Development Commission
("Burbank").
RECITALS
A. Owner is the owner of ~ cert'ain real property- located in
the- City of Petaluma; State of California (the "Property")
consisting of a fee interest in a residence, and residential lot.
The Property is more particularly described in Exhibit A attached
her-eto and incorporated herein.
B. Burbank hglds a promissory note secured by deed of trust
to the Property executed by. Owner and of even date herewith (.the
"Burbank.Note").
C. The° Property has been developed~as part of a program
~~
funded by the City of Petaluma and the Sonoma County. Community
.Development Commission (,the "Funding Agencies") and administered
by Burbank Housing Development Corporation to create owner-
occuped housing affordable to low and moderate income Households.
Cherry Hi11 D-4 1
s As part of this program, the Funding~Agencies have provided
fnancial,subsides for: (1) the acquisition of the Property and
(2) construction of improvements on the Property. Owner has
received the benefits of the Funding Agencies' financial assistance
because Owner is a member of a low or moderate income household.
Without this assistance, Owner would not have been able to purchase
the Property. Owner's grant to Burbank of an option to purchase
the Property and a right of first refusal to purchase the Property
under the terms and conditions of this Agreement is necessary~to
permit the Funding Agencies to fulfill the goals of their low and
moderate income housing programs.
THEREFORE, for and in consideration of the mutual covenants
contained in this Agreement, Owner and Burbank agree. as follows:
ARTICLE ONE
OPTION TO PURCHASE
1.1 Grant of Option. Owner grants to Burbank the exclusive
right to purchase the Property at the price and under the terms and
conditions set forth in this article one (the 11Option").
1.2 Conditions Precedent to the Exercise of Option. The
Option may be=exercised by Burbank upon occurrence of any of the
following events (a "Condition Precedent"):
1.2.1 Owner enters .into an agreement for Sale or
Transfer of the `Property. For purposes of this Agreement,. "Sale"
and. "Transfer". shall have the meanings set forth in the Burbank
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1..2.2 A Transfer of the Property occurs.
1..2.3 Owner ceases to occupy the Property as Owner's
sole residence.
1.2.4 A notice of default under any deed of trust
encumbering the Property is recorded, and Owner fails to cure the
default within sixty (60) days.
1.3 ~ Time for Exercise of Option.
1.3.1 Burbank may exercise the Option only if a
Condition Precedent occurs on or before the fourth anniversary of
recordation of the deed conveying title to the Property to Owner
(the "Option Termination Date").
1..3'.2 Owner shall have an affirmative obligation to
inform Burbank in writing of the occurrence of any Condition
Precedent within ten (10) days of the occurrence of such Condition
Precedent.
1.3.3 Burbank shall have sixty (60) days following
actual receipt of not-ice from Owner to notify Owner in writing of
Burbank's election to exercise the Option (the "Option Exercise
Notice"). If Burbank fails to notify the Owner of its intent to
exercise the Option before expiration of the sixty-day period and
there is a Sale or Transfer of the property within six. (6) months
after expiration of the sixty-day period, Burbank's Option to
purchase shall no longer be exercisable.
1.3.4 hf Owner fails to give Burbank written notice of
the occurrence of a. Condition Precedent, Burbank's Option shall be
Cherry Hi11 D-4 3
- ~_ exercisable if Burbank, within sixty (.60) days of .learning of the
occurrence of the Condition Precedent, delivers an Dption Exercise
Notice to the then-record owner of .the. Property..
1.3.5 Burbank's Option Exercise Notice shall propose a
date for purchase of the Property not more than sixty (60) days
following the .date of-the Option Exercise Notice.
1.4 Agreement to Purchase the Property. Thee notice by
Burbank to Owner or Owner's successor in interest of Burbank's
election to exercise the Option shall constitute an agreement by
Burbank to purchase=, and, an agreement by Owner or Owner's successor
in interest to sell to Burbank, the Property upon the terms and
conditions set forth in this article one and. article three below.
1.5 Option .Purchase-Price.. The. purchase price of the
Property to be paid by Burbank if the Option is exercised (the
"Option Purchase -'Pri'ce") .shall be the ctreater of
1.5.1 The•Original Fair Market Value (as defined in the
Burbank Note) adjusted to reflect the change in the consumer price
index for all urban consumers-for the :San Francisco-Oakland region
between the date of Owner's purchase~of'the Property and the date
of Burbank's exercise of the Option; or~ -
1.5.2 The sum of .the following:
(a) The original principal amount-of all loans
secured ;by deeds' of trust to the. Property superior to .the
deed of trust securing the Burbank Note;.
(b) The amount necessary to repay the Burbank
Note ;•
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(c) Owner's down payment at the time of
Owner''s purchase of the Property, plus interest thereon.
at the rate of ten percent. (10%) per annum compounded
annually from the date of Owner's purchase of the'
P--roperty;
(d) The Value of Capital Improvements as
defined in the Burbank Note; and
(e) Owner's costs pursuant to section 3.5.3
below.
Owner's costs arising from section 3.7 below, if any, shall not be
included. in calculating the Option Purchase Price pursuant to this
section 1.5.2.
1.6 Basis for Option Purchase Price. Owner and Burbank agree
that the method of calculating the Option Purchase Price as set
forth in section 1.5 above reflects a reasonable projection of the
fair market value of the Property at the time of exercise of the
.Option.
1.7 Insurance and Foreclosure~Sale Proceeds. If, prior to
the Option Termination Date, (a) the Property is substantially
destroyed, and insurance proceeds are distributed, directly or
indirectly, to 'Owner and not used to rebuild. the improvements.; or
(b) the Property is condemned; or (c) the Property is sold in a
trustee's sale. or foreclosure sale, Owner shall be entitled to
retain only that amount of the insurance, condemnation, or sale
proceeds., after payment of foreclosure costs due to the foreclosing
party,. which equals the net amount that the Owner. would have
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rece'ved under.s'eetion 1.5 above.. .Any surplus amount ordinarily
payable to the Owner (for. example, the difference .between the
amount'' of insurance proceeds or foreclosure sale 'proceeds and the
Option Purchase Price) shall be~pad to .Burbarik. Owner shall hold
in trust for the benefit of Burbank and promptly pay to Burbank any
of that surplus amount that Owner receives.
ARTICLE TWO
RIGHT 'OF FIRST REFII$AL
2.1 Grant. of Right of First Refusal. Beginning °on "the.
Option Termination Date, and continung,unt the sixtieth (60th)
anniversary of the date of recordation of: the deed conveying title
to the Property to Owner; Burbank shall 'have a right of first
refusal to purchase the Property under the terms and conditions. of
this article two (the "Right of First Refusal").
2.2 Notice to ~ Bur.-bank. If Owner` desires to. ~~aell the
Property, and receives from a third par-ty~ a. bona fide offer for the
purchase thereof, Owner shall disclose the terms of such offer to
Burbank, in writing, within ten (10) days fo lowing Owner's receipt
of the offer (the "Notice of Offer"'): Receipt by Burbank of a
recorded nofce of default under any deed of-trust encumbering the
Property, followed by a sixty (60)-day period in which Owner fails
to cure the default, shall also be deemed a Notice of Offer.
2.. 3 Election to Purchase by :Buurbank. Burbarik 'shall have
thirty, ('30',) days after receiving the Notice of Offer (or thirty
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(30) days-after receiving actual notice of an offer if Owner fails
to give a Notice of Offer) within which to elect to purchase the
Property. Burbank may elect to purchase the Property for either
the purchase price offered by the third party or the fair market
value of the Property established pursuant to section 4.4 of the
Burbank Note (the:"Right of First Refusal Purchase Price1t). Such
election shall be made by written notice to Owner (the "Right of
First Refusal Exercise Notice"). If the Notice of Offer was a
notice of default under any deed of trust, encumbering the Property,
the Right of First Refusal Purchase Price shall be the greater of
the amount due under the note in default or the fair market value
of the Property established pursuant to section 4.4 of the Burbank
Note.
2.4 Failure by Burbank to Exercise Rqht. If Burbank fails
to give the Right of First Refusal Exercise Notice pursuant to
section 2.3 (or fails. to tender payment pursuant to section 3.3
below), Owner shall be relieved of all liability to Burbank under
this article two, and at any time thereafter may dispose of the
Property as he or she sees fit and without contacting Burbank.
2.5 Failure by Owner to Notify Burbank. If Owner fails to
give a Notice of~ Offer to Burbank, and any Transfer of the Property
occurs, Burbank shall have an option to purchase the Property (the
"Second Option") '.for an amount equal to the lower of the purchase
price paid. in connection with the Transfer or the fair market value
of the Property established pursuant to-the procedure set forth in
section 4.4 of the Burbank Note (the "Second Option Purchase
Cherry Hi11 D-4 7
Price"). Burbank shall have sixty (60) days following actual
receipt of notice of the Transfer to~deliver an option exercise
notice to the then-record owner of the Property. If Burbank fails
to give an option exercise notice within this sixty (60) day
period, Burbank's Second Option shall no longer be exercisable.
Except as otherwise stated in this section 2.5, the terms and
conditions for exercise of the Second Option shall be the same as
the terms and conditions for exercise of the Option as set forth
in article one of this Agreement.
ARTICLE THREE
OTHER TERA~iB AND CONDITIONS OF SALE
3.1 Applicability. The provisions of this article three
shall apply to the purchase of the Property~by Burbank pursuant to'
either article one or article two above.
3.2 Condition of Title. Owner agrees to convey title to the
Property to Burbank at close of escrow subject only to the
following exceptions (the ":Permitted Exceptions"):
3.2.1 Nondelnquent real property taxes and assessments;
3.2:2 .Exceptions existing at the time of the original.
transfer from Burbank to Owner; and
3.2.3 Any other exceptions consented to in .writing by
Burbank.
3.3 T.tle_In'surance. Owner shall obtain from a title insurer
acceptable to_ Burbank a CLTA standard form policy of title
Cherry Hi11.D-4 8
.~ nsurance,nsuring free title vested in Burbank in.the amount of the
total Option Purchase Price, Right of First Refusal Purchase Price,
or Second Option' Purchase Price, as' applicable, and subject to only
' the Perm`tted:Exceptions. The policy of title insurance sh°all be
delivered to Burbank at close of escrow.
3.4 Payment of Purchase Price. Burbank shall pay the full
amount of the applicable purchase price to Owner at close of
escrow.
3.5 Escrow.
3.5.1 Escrow Holder. As soon as practicable following
delivery. by Burbank `of the Option Exercise Notice, Right of First
Refusal Exercise Notice, or Second Option exercise notice., as
applicable, Burbank shall open an escrow with a title company.
3.5.2 Close of Escrow. Close of escrow shall occur
within'nnety (90) days following Owner's receipt of Burbank's
Option Exercise Notice, Right of First Refusal Exercise Notice, or
Second Option exercise notice, unless the parties agree in writing
to extend this time.
3.5.3 Closing Costs. Owner shall pay the transfer tax
and all costs and expenses: associated with clearing title and with.
preparing'; acknowledging, and delivering the grant deed. Burbank
shall pay all recording costs., the escrow fee,, and the premium for
the title insur-ance policy.
3..:5..4:. Proration of Taxes. Real property taxes. on the
Property ..shall be prorated as of close of escrow.
Cherry Hill D-4 9
3.6 Inspection. Burbank shall have the right to make
reasonable inspections of the Property prior to close of escrow to
identify what repairs, if any, are necessary to bring the Property
into compliance with applicable codes and regulations and the
Declaration. Owner shall promptly notify Burbank of the need for
any such repairs of which Owner is aware.
3.7 Compliance~Costs. Owner shall be responsible for paying
all costs of repairs to the Property necessary to bring the
Property into compliance, at close of escrow, with all applicable
codes, regulations, covenants, conditions, and restrictions. If
the Property is not in. full compliance at the time scheduled for
close of escrow,. the escrow holder shall deduct from the amount
paid to Owner and pay instead to Burbank the cost of the necessary
repairs.
ARTICLE FOUR
MISCELLANEOUS PROVISIONS
4.1 Binding: Effect. This Agreement and its terms and
conditions shall be.binding upon and inure. to the benefit of the
parties to this Agreement, their heirs, assigns, executors,
administrators, successors, and Tegal~.representatives, including,
but not limited. to, any person. or entity who succeeds to Owner's
interest- in theProperty; provided, however, that this Agreement
shall. not be binding on an institutional or governmental lender
(including the California Housing Finance Agency) or private or
Cherry Hill D-4 10
government mortgage usurer.or-.guarantor who °holds~ttle to the
Property following foreclosure or recordation of a deed in lieu of
foreclosure, or. on any successor orbassign of such a lender,
insurer, or" guarantor. `
4.2 Time:. Time is of the essence :of this Agreement.
4.3 Further ~Do.cuments. Each party will, whenever and as
often as it ~sha1T be .requested by the_other party, execute,
acknowledge,, and deliver such further instruments and documents as
may be necessary in order to carry out the intent and purpose. of
this Agreement, inc udng, but not limited to escrow instructions.
If Burbank's rights under this Agreement have expired or will not
be exercised, Burbank,shall; upon written- request by Owner, execute
a certificate or' other .document confirming'-that it has ~ no further
right to exercise the Option or Right. of 'F`irst Refusal..
4.4 Notices. All. notices or other communications made
pursuant to this Agreement shall be in writing and shall be deemed
properly given or served when (a)~ personally delivered or (b)
mailed by certified or registered -mail.., .postage prepaid, return
receipt requested, to the .parties at the following .addresses:
Owner:
Burbank°:: Burbank Housing Development Corporation
343.2-A Mendocino Avenue `
Sanfa Rosa, CA 95403
All notices tb Burbank by~ Owner shall state Owner's€ull.name.(s)
and the address, including the unit number,, of the Property.
.Except as; otherwise expressly set forth.n this Agreement, all
_ Cherry Hill D=4 11
notices so mailed shall be deemed received forty-eight (48) hours
after deposit in the United States mail. Either party may change
its address for purposes of notice by giving prior written notice
of the change to the other party in the manner provided in this
section 4.4.
4.5 Exhibits. All exhibits attached hereto and referred to
in this Agreement are incorporated into this. Agreement by this
reference as though they were fully set forth in this Agreement.
4.6 Counterparts. This Agreement may be executed
simultaneously or in counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute one
and the same Agreement.
4.7 Attorneys' Fees. In any action between Burbank and
Owner to enforce or interpret any of the terms of this Agreement,
the prevailing party shall be entitled to.. ecover costs of suit and
reasonable attorneys' fees.
4.8 'Assignment. This Agreement and Burbank's rights and
obligations hereunder may be assigned or otherwise transferred by
Burbank to any person or entity, at any time, without notice to or
consent of Owner. As used in this Agreement, the term "Burbank"
includes any assignee or transferee of Burbank.
4.9. Memorandum of Option and. Right of First Refusal.
Contemporaneously with the execution of this Agreement, Burbank
and Owner shall execute and acknowledge a Memorandum of Option and
Right of First Refusal in the form attached to this Agreement as
Exhibit B. Burbank may record the executed and acknowledged
Cherry Hill D-4 12
Memorandum of Option and Right of First Refusal in the official
records of the County of Sonoma.
4.10 Amendment. No amendment to this Agreement, except an
amendment required by the applicable CaT_ifornia Housing Finance
Agency Subordinate Lender/CHFA Subordinate Financing & Resale
Control Agreement (R-2), if•any, shall be effective unless it is
in writing and signed by both Burbank and Owner.
4.11 Waiver. No waiver of any provision of this Agreement
shall be deemed effective unless contained in a writing signed by
the party against whom the waiver is sought to be enforced. A
waiver of one breach or failure to perform shall not be deemed a
waiver of any subsequent breach or failure to perform.
4.12 Severability: If any provision of this Agreement is
determined to be unenforceable for any reason, it shall, if
possible, be adjusted rather than voided to achieve the intent of
the parties. In any event, all the other provisions shall be
deemed valid and enforceable to the greatest extent possible.
IN .WITNESS WHEREOF,. Owner and Burbank have executed this
Agreement as of the date first written above.
OWNER:
Cherry Hill D-,4 13
y BURBANK:
Burbank Housing Development Corporation,
" a California nonprofit corporation, as
trustee "for itself ", " the City of
Petaluma, and the; 'Sonoma County Community
Development Commission-, by
Name'
Title:
Cherry H11 D-4 14
E%HIBIT A
PROPERTY DESCRIPTION
Cherry Hill D-4
E%HIBIT B
RECORDING REQUESTED BY, APTD
WHEN RECORDED MAIL. TO:
BURB'ANK HOUSING DEVELOPMENT
CORPORATION r'
3432-A~Mendocno Avenue
. Santa Rosa,. CA 954,03.
~.
MEMORANDUM OF OPTION AND RIGHT, OF FIRST REFUSAL
This Memorandum of Option and Right of First Refusal
("Memorandum" is entered .into as of. this day of
19_, by and -between.
("Owner"')-~ and Burbank Housing Development C'orporatiori, a California
• nonprofit corporation:, as. trustee for i.'tself, the City of Petaluma,
` and the Sonoma`County Community Development Commission.("Burbank"),
with respect to that .certain Option Agreement and Grant of .Right
of Fist '.-Refusal ~ • {the :"Agreement'") ;dated of even date herewith,
between Owner and Burbank. -'
Pursuant to the 'Agreement, Owner•has granted to Burbank an
option and a•~'right .of 'first refusal~'to purchase that certain real
property owned ,by Owner described in•Exh;bt Aattached hereto and
incorporated herein .by this reference,. located in the City of
Petaluma,. 'State of, California (the "Property")..
BtJRBANK'S _RIGHT TO PURCHASE! THE .PROPERTY PURSUANT TO THE.
AGREEMENT RUNS WITH TH'E' PROPERTY AND IS ENFORCEABLE AGAINST
SUBSEQUENT gWNERS OF THE PROPERTY.
This Memorandum shall incorporate herein all of the terms .and
provisons:of``.the Agreement as though fully, set forth .herein.
Th°s Memorandum, is so ely f'or. recording purposes and sha-11
not be ~eonstrued to alter, modify, amend or supplement the
Agreement, of which this is a memorandum.
Cherry Hill D-4 1
. •.
Executed: on
County of Sonoma,, California.
OWNER:
19 , at
BURBANK:
Burbank Housing Development Corporation,
a California nonprofit corporation, as
trustee for itself, the City of Petaluma,
and the Sonoma County Community
Development Commission, by
Name.:
Title:
STATE OF CALIFORNIA.. )
COUNTY OF SONOMA ~ )
On , 199_, before me, the undersigned,
a notary public in and for the State of California, personally
appeared and personally
know to me or proved to me on the basis of satisfactory evidence
to be the .individuals who executed the within instrument, and
- acknowledged to me that they executed the same.
WITNESS my hand and official seal.
Cherry Hill D-4 2