HomeMy WebLinkAbout1998-02-17; City Council; 14565; Financial Assistance For Affordable ApartmentsI!# ly; 5(PLs
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CITY OF CARLSBAD - AGEhuA BILL
REQUEST TO PROVIDE UP TO A MAXIMUM OF TITLE:
$1 ,I 60,000 IN FINANCIAL ASSISTANCE FOR
CONSTRUCTION OF 116 AFFORDABLE APARTMENT
UNITS WITHIN THE RANCH0 CARRILLO MASTER
PLAN.
CITY ATTY. GE .
RECOMMENDED ACTION:
That the City Council ADOPT Resolution No. ‘?8- Y< and Resolution No. 98-47 , to APPROVE a request to provide up to a
maximum of $1,160,000 in financial assistance from the Housing Trust Fund to Carlsbad Family Housing
Partnership for construction of one hundred sixteen (116) affordable apartment units within the Ranch0
Carrillo Master Plan.
ITEM EXPLANATION:
The proposed affordable housing project is located at the southeast corner of Palomar Airport Road and
the future Melrose Drive, in Village B of the Ranch0 Carrillo Master Plan. The developer of the affordable
project will be the Carlsbad Family Housing Partnership (“Developer”). The proposed project will satisfy a
portion of the affordable housing requirement for the Ranch0 Carrillo Master Plan. The City Council will be
reviewing the site development plan for the affordable housing project as a separate action.
Carlsbad Family Housing Partnership is applying for two separate and distinct financing sources - the 4%
tax credit bond allocation and the 9% tax credit allocation - to support the cost of constructing the subject
affordable project. As such, the exact amount of financial assistance from the City will not be known until
such time as the permanent financing source is determined. Thus, staff is recommending that the City
commit to provide up to a maximum of $1 .I60 million in assistance based on staff’s analysis of the
project. The two financing sources are summarized in the chart below and discussed in further detail in
the attached Housing Commission Staff Report (Exhibit 2).
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Option B
PROJECT COST*:
PERMANENT LOAN
TAX CREDIT EQUITY
Financing Gap
MASTER DEVELOPER
SUBSIDY
Land
Credit
$12,900,000
$5,790,000
$1,520,000
$5,590,000
$3,132,000
9% Tax Credit
$12,700,000
$1,190,000
$7,520,000
$3,990,000
$3,132,000
Cash $1,300,000 $440,000 ,‘_i cm~qqqIqy( ’ “’ : *’ (Cm, fgJ&$lD~ pg$# UfqW? I -_: _:>, :I .:
$“~g~@~iooo $ I,‘% ;;f
‘_ ; ‘@@q.o;@ii&t) I <,y 1, :,
AFFORDABILITY LEVELS 20% @ 50% Of AMI** 40% of AMI
40% @ 60% of AMI
40% @ 80% of AMI : Q@i”i;EVE&$GE : _L : ,‘, , ,, $ 1 1 ji!$k%J$j ,” ;1$:135;2t $1, ‘,
* Due to the varying reserve account requirements, the project cost will vary.
** Area Median income (AMI)
The Housing Commission Staff Report which is attached as Exhibit 2 provides a summary of the financial
details of the proposed affordable housing project with copies of related documents. Drafts of the financial
assistance agreements/documents are included as a part of the Housing Commission Staff Report. These
documents are provided for Council review as well.
HOUSING COMMISSION/STAFF RECOMMENDATIONS:
At their meeting on February 12, 1998, the Housing Commission reviewed the request from Carlsbad
Family Housing Partnership for financial assistance related to the affordable housing project to be located
within the Ranch0 Carrillo Master Plan. The Housing Commission also reviewed the draft financial
assistance agreements/documents for the subject assistance. The action of the Housing Commission will
be presented within a verbal report to the City Council on February 17, 1998.
The Affordable Housing Policy Team recommended approval of the requested assistance of $1,160,000
to the Housing Commission and City Council with the understanding that the assistance amount would be
reduced if the affordable housing developer is successful in obtaining the 9% tax credit allocation for the
subject project within the Ranch0 Carrillo Master Plan. The Affordable Housing Policy Team consists of
City Staff with the membership of Community Development Director, Administrative Services Director,
Planning Director, Housing and Redevelopment Director, Deputy City Attorney, Finance Director,
Management Analyst (Housing and Redevelopment) and Special Legal Counsel (Polly Marshall, Goldfarb
and Lipman).
FISCAL IMPACT:
City assistance will be in the form of a residual receipts loan secured by a note and deed of trust.
Repayment of the loan will be deferred during construction of the Improvements. The outstanding
principal and accrued interest on the City loan will be amortized over thirty years and repaid from cash
surplus in equal annual installments of principal and interest. In the event that there is not adequate cash
surplus to repay the City loan, the outstanding balance shall accrue with simple interest at 3% per annum.
The terms of the City assistance is similar to the loans provided on the Villa Loma and Laurel Tree
projects.
The financial assistance will be provided from the City of Carlsbad’s Housing Trust Fund which has a
current undesignated fund balance of approximately $2.65 million.
EXHIBITS:
1. CcwnclL e.sL&mLw KM. 98-45
2. February 12, 1998 Housing Commission Staff Report
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CITY COUNCIL RESOLUTION NO. 97-45
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, TO APPROVE A REQUEST TO
PROVIDE UP TO A MAXIMUM OF $1,160,000 IN FINANCIAL
ASSISTANCE FROM THE HOUSING TRUST FUND TO
CARLSBAD FAMILY HOUSING PARTNERSHIP FOR
CONSTRUCTION OF ONE HUNDRED SIXTEEN (116)
AFFORDABLE APARTMENT UNITS WITHIN THE RANCH0
CARRILLO MASTER PLAN.
APPLICANT: CARLSBAD FAMILY HOUSING
PARTNERSHIP
CASE NO: SDP 97-15
WHEREAS, the master developer of the Ranch0 Carrillo Master Plan, Continental Homes has
proposed to construct 116 apartment units affordable to lower income households as a means to satisfy a
portion of their affordable housing obligation as permitted by Carlsbad Municipal Code Section 21.85 of
the City’s Inclusionary Housing Ordinance; and
WHEREAS, said Housing Commission did, on the 12 th day of February, 1998, hold a public
meeting to consider the request for City financial assistance for the construction of said 116 affordable
housing apartment units by the affordable housing developer, Carlsbad Family Housing Partners; and
WHEREAS, the City Council did hold a public meeting to consider said request for City financial
assistance for the construction of said 116 affordable housing apartment units by the affordable housing
developer, Carlsbad Family Housing Partners; and;
WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all
persons designing to be heard, said Council considered all factors relating to the application and request
for financial assistance:
NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of Carlsbad,
California, as follows:
1.
2.
The above recitations are true and correct.
The request for City fmancial assistance is consistent with the goals and objectives of the
City of Carlsbad’s Housing Element and Comprehensive Housing Affordability Strategy,
the Inclusionary Housing Ordinance, and the Carlsbad General Plan.
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CC Resolution # 97-45
Page 2
3. The request for City financial assistance will assist the affordable housing developer to
construct a total of 116, one, two and three bedroom affordable apartment units. The
project, therefore, has the ability to effectively serve the City’s housing needs and
priorities as expressed in the Housing Element and the Consolidated Plan.
4. That based on the information provided within the City Council and Housing
Commission Staff Reports, the testimony presented during the public meeting of the City
Council and Housing Commission and the Conditions of Approval contained herein, the
City Council hereby APPROVES the request to provide up to a maximum of $1,160,000
in financial assistance from the Housing Trust Fund to Carlsbad Family Housing
Partnership for construction of one hundred sixteen (116) affordable apartment units
within the Ranch0 Carrillo Master Plan, contingent upon approval of a California
Housing Finance Agency (CHFA) Loan and 4% tax credit allocation.
5. That the City Council recommends that the City Manager or his designee be authorized
to execute all documents related to provision of the City assistance, including but not
limited to a Loan Agreement, Note, Deed of Trust and Regulatory Agreement, in
substantially the form presented to the Housing Commission on February 12, 1998 and
subject to review and approval by the City Attorney.
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CC Resolution # 97-45
PAGE 3
Condition(s):
1. Carlsbad Family Housing Partnership shall be required to apply for and obtain a loan through
the California Housing Finance Agency (CHFA) and a 4% tax credit allocation from the State
of California Tax Credit Allocation Committee and also obtain all other financing
commitments necessary to fund the construction of the subject project prior to any release of
City of Carlsbad funds for the subject project. Prior City Council approval shall be required
for any alternate financing source for the subject project. The City of Carlsbad’s financial
assistance shall not exceed the amount indicated without prior approval of the City Council.
2. Carlsbad Family Housing Partnership shall be required to enter into appropriate agreements
for the provision of the financial assistance from the City of Carlsbad. These agreements must
be executed and recorded prior to any release of funds by the City of Carlsbad.
This resolution shall be automatically repealed if applicant receives an alternative
form of assistance, other than CEIFA and 4% tax credit, to finance the subject project
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of
the City of Carlsbad, California, held on the 17th day of February, 1998 by the following vote, to wit:
AYES: Council Members Lewis, Finnila, Nygaard, Kulchin and Hall
NOES: None
ABSENT: None
ABSTAIN: None
*LAUDE A. LEWIS, Mayor
ATTEST:
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CITY COUNCIL RESOLUTION NO. 98-47
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, TO APPROVE A REQUEST TO
PROVIDE UP TO A MAXIMUM OF $360,320 IN FINANCIAL
ASSISTANCE FROM THE HOUSING TRUST FUND TO
CARLSBAD FAMILY HOUSING PARTNERSHIP FOR
CONSTRUCTION OF ONE HUNDRED SIXTEEN (116)
AFFORDABLE APARTMENT UNITS WITHIN THE RANCH0
CARRILLO MASTER PLAN.
APPLICANT: CARLSBAD FAMILY HOUSING
PARTNERSHXP
CASE NO: SDP 97-15
WHEREAS, the master developer of the Pancho Carrillo Master Plan, Continental Homes has
proposed to construct 116 apartment units affordable to lower income households as a means to satisfy a
portion of their affordable housing obligation as permitted by Carlsbad Municipal Code Section 2 1.85 of
the City’s Inclusionary Housing Ordinance; and
WHEREAS, said Housing Commission did, on the 12 th day of February, 1998, hold a public
meeting to consider the request for City financial assistance for the construction of said 116 affordable
housing apartment units by the affordable housing developer, Carlsbad Family Housing Partners; and
WHEREAS, the City Council did hold a public meeting to consider said request for City fmancial
assistance for the construction of said 116 affordable housing apartment units by the affordable housing
developer, Carlsbad Family Housing Partners; and;
WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all
persons designing to be heard, said Council considered all factors relating to the application and request
for financial assistance:
NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of Carlsbad,
California, as follows:
1. The above recitations are true and correct.
2. The request for City financial assistance is consistent with the goals and objectives of the
City of Carlsbad’s Housing Element and Comprehensive Housing Affordability Strategy,
the Inclusionary Housing Ordinance, and the Carlsbad General Plan.
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CC Resolution # 98-47
Page 2
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The request for City financial assistance will assist the affordable housing developer to
construct a total of 116, one, two and three bedroom affordable apartment units. The
project, therefore, has the ability to effectively serve the City’s housing needs and
priorities as expressed in the Housing Element and the Consolidated Plan.
That based on the information provided within the City Council and Housing
Commission Staff Reports, the testimony presented during the public meeting of the City
Council and Housing Commission and the Conditions of Approval contained herein, the
City Council hereby APPROVES the request to provide $360,320 in financial
assistance from the Housing Trust Fund to Carlsbad Family Housing Partnership for
construction of one hundred sixteen (116) affordable apartment units within the Ranch0
Carrillo Master Plan, contingent upon approval of a 9% tax credit allocation from the
State of California Tax Credit Allocation Committee.
That the City Council recommends that the City Manager or his designee be authorized
to execute all documents related to provision of the City assistance, including but not
limited to a Loan Agreement, Note, Deed of Trust and Regulatory Agreement, in
substantially the form presented to the Housing Commission on February 12, 1998 and
subject to review and approval by the City Attorney.
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CC Resolution # 98-47
PAGE 3
Condition(s):
1. Carlsbad Family Housing Partnership shall be required to apply for and obtain a 9% tax credit
allocation from the State of California Tax Credit Allocation Committee and also obtain all
other financing commitments necessary to fund the construction of the subject project prior to
any release of City of Carlsbad funds for the subject project. Prior City Council approval shall
be required for any alternate financing source for the subject project. The City of Carlsbad’s
financial assistance shall not exceed the amount indicated without prior approval of the City
Council.
2. Carlsbad Family Housing Partnership shall be required to enter into appropriate agreements
for the provision of the financial assistance from the City of Carlsbad. These agreements must
be executed and recorded prior to any release of funds by the City of Carlsbad.
This resolution shall be automatically repealed if applicant receives an alternative
form of assistance, other than a 9% tax credit allocation, to finance the subject project.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of
the City of Carlsbad, California, held on the 17th day of February, 1998 by the following vote, to wit:
AYES: Council Members Lewis, Finnila, Nygaard, Kulchin and Hall
NOES: None
ABSENT: None
ABSTAIN: None
CLAUDE A. LEF#B , Mayor
ATTEST:
ALETHA L. RAUTENKRANZ, City Clerk)
CC e=.XHIBIT 2 m
The City of Ca~Isbad Wousing & Redevelopment Department
AREPORT TO THE
HOUSXNa aOMMXSSXON
Staff: Craig Rxaiz
Management Analymt
Item No. 1
DATE: FEBRUARY 12,199s
SUBJECT: RANCH0 CARRILLO AFFORDABLE HOUSING PROJECT -
RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL TO PROVIDE
UP TO A MAXIMUM OF $1,16$000 IN FINANCIAL ASSISTANCE FOR
CONSTRUCTION OF ONE HUNDRED SIXTEEN AFFORDABLE
APARTMENT UNITS TO SATISFY A PORTION OF THE REQUIREMENTS OF
THE INCLUSIONARY HOUSING ORDINANCE FOR THE RANCH0
CARRILLO MASTER PLAN.
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 98-002, recommending
APPROVAL to the City Council to provide up to a maximum of $l,l@,OOO in financial
assistance from the Housing Trust Fund to Carlsbad Family Housing Partnership for
construction of one hundred sixteen (116) affordable apartment units to satisfy a portion
of requirement of the inclusionary housing ordinance for the Ranch0 Carrillo Master
Plan.
II. PROJECT BACKGROUND
On January 14, 1998, the Housing Commission recommended approval of the Site
Development Plan for the construction of a 116 unit affordable apartment project and
related Affordable Housing Agreement ordinance for the Ranch0 Carrillo Master Plan.
At the January meeting, the issue of financial assistance was not discussed.
III. PROJECT DESCRIPTION
The project is located at the southeast corner of Palomar Airport Road and the future
Melrose Drive in the Ranch0 Carrillo Master Plan. The affordable units will be located
within Village B of the Master Plan. The developer of the affordable project will be the
Carlsbad Family Housing Partnership (“Developer”).
The proposed development includes twelve 723 square foot one bedroom units (lo%),
forty eight 908 square foot two bedroom units (41%) and fifty six 1,127 square foot three
bedroom units (49%). The project will feature a 2,235 square foot recreation building,
laundry facilities; a “tot-lot” with playground equipment; a swimming p 001; a 286
square foot maintenance building; and 267 parking spaces.
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RANCH0 CARRILLO AFFORDABLE HOUSING PROJECT
’ FEBRUARY 12,1998
PAGE 2
The developer of the Master Plan, Continental Homes (Master Developer), shall be
required to begin construction of the affordable units prior to construction of the 223
market rate unit. After construction begins on the affordable housing units, builders will
be permitted to obtain building permits for an additional 275 market rate housing units
before construction must becomplete on the affordable housing project. The total
number of building permits that may be pulled before construction must be complete on
the affordable housing project (116 units) is 500.
IV. FINANCIAL ASSISTANCE
The Developer is exploring two distinct financing sources - the 4% tax credit bond
allocation and the 9% tax credit allocation, to support the cost of constructing the subject
affordable project. As such, the exact amount of financial assistance from the City will
not be known until such time as the permanent financing source is determined. Thus,
staff is recommending that the City commit to provide up to a maximum of $1.16
million in assistance based on analysis of the current project proformas. The two
financing sources are discussed in further detail in Section D below.
A. Development Team
It is important that the developer have the capacity to successfully implement the
proposed project. The development team is very experienced in the development
and management of affordable multi-family developments. Further, the team is also
very experienced in the area of tax credit financing.
The affordable housing developer is Carlsbad Family Housing Partnership. The
Partnership consists of Barone Galasso and Associates, a for-profit affordable
housing developer and Housing Opportunities Inc. (HOI), a non-profit affordable
housing developer. The Partnership developed and operates a 60 unit affordable
project in La Mesa which is similar in nature to the proposed project in terms of
affordability financing sources. The developers have experience in developing and
managing affordable projects throughout California. The Architect for the project is
Rodriguez Design Associates. This architect designed the Laurel Tree Affordable
Apartment Project as well as numerous other affordable housing projects.
B. Cost Reasonableness
The developer has provided two detailed development proformas for review by
staff and the Housing Commission (See Attachments 2 & 3). Since development
costs are one of the key variables determinin g the need for subsidies, it is important
that those costs be reasonable. At approximately $12.9 million, including land, the
average unit cost of $111,000 is consistent with typical affordable multi-family
development within the City.
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RANCH0 CARRILLO AFFORDABLE HOUSING PROJECT
FEBRUARY 12,199s
PAGE 3
C. Undue Gain
It is important that any financial assistance have the effect of making the units more
affordable and not creating undue gain for any party. Under both financing options,
the Developer will receive a “Developer Fee” of $903,000, or approximately 7% of
total project costs. The Developer will receive 75% of the developer fee ($677,250) at
time of permanent financing. The remainder of the fee, $225,750, will be repaid over
the first ten years of the project from the Cash Balance after the City Loan has been
repaid. Staff feels that the developer fee is within acceptable limits for a project of
this size and affordability.
D. Subsidy Analysis
As stated above, the Developer has proposed to separate financing sources, the 4%
and 9% tax credit allocations, for the subject project. The two financing options are
summarized below:
Option A - Under Option A, the Developer will apply to the California Housing
Finance Agency (“CHFA”), f or a 4% tax credit, bond allocation. Under this scenario,
the developer would receive an approximately $5.8 million loan from CHFA, and
will raise $1.5 million through the sale of the tax credits, resulting in an approximate
$5.6 million financing gap. Under this scenario, staff is recommending the City
provide the full $1.16 million assistance while the Master Developer would provide
$1.2 million in financial assistance and $3.2 million in land contribution. Under this
option, the City’s $1.16 million assistance equates to $10,000 per affordable unit.
The 4% credit program is considered to be a “relatively certain” financing source.
Generally speaking, qualified projects receive CHFA assistance on a first-come, first-
serve basis, as long as funds are available. Thus, should the Developer submit their
application to CHFA in a timely matter, the 4% financing will most likely be
attained.
The City’s Inclusionary Housing Ordinance requires that affordable units be
affordable to families earning less than 80% of the Area Median Income (AMI).
Under Option A, the Developer has indicated that 20% of the units will be restricted
to 50% of AMI, 40% at 60% of AM1 and 40% at 80% of AMI. Thus, the project will be
more affordable than the requirements of the City’s Ordinance.
Option B - Under Option B, the Developer will apply to the California Tax Credit
Allocation Committee (“TCAC”), for a 9% tax credit allocation. Under this scenario,
the developer would receive an approximately $1.2 million private loan, and will
raise $7.5 million through the sale of the tax credits, resulting in an approximate $4
million financing gap. Under this scenario, staff is recommending the City provide
$360,000 assistance while the Master Developer would provide $440,000 in financial
assistance and $3.2 million in land contribution. With this option, the City’s
$360,000 assistance equates to $3,100 per affordable unit.
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RANCH0 CARRILLO AFFORDABLE HOUSING PROJECT
FEBRUARY 12,199s
PAGE 4
The 9% tax credit provides for much deeper subsidies than the 4% program.
However, the 9% allocation is awarded through a much more complex and highly
competitive lottery process. Based upon the City’s experience with the 9% program,
the likelihood of receiving an allocation is much less than in the 4% program. With
recent changes in the 9% allocation process it is anticipated that there may be fewer
applications for the 9% credit. Thus, the developer believes the chances of receiving
an allocation will be better than in previous years.
Under Option B, the Developer has indicated that all of the units, on average, will be
restricted to 40% of AMI. Thus, the project will be much more affordable than the
requirements of the City’s Ordinance.
The following chart provides a proforma subsidy analysis for the two financing
options noted above:
PROFORMA‘SUBSIDY~ANALYSIS : ,.
RqNCHO CARRILLO .’
PROJECT COST*:
Option A Option B
4% Tax Credit 9% Tax Credit
$12,900,000 $12,700,000
I I I I I
PERMANENT LOAN $5,790,000 $1,190,000
TAX CREDIT EQUITY I $1,520,000 I $7,520,000
Financing Gap $5,590,000 $3,990,000
MASTER DEVELOPER
SUBSIDY
Land $3,132,000 $3,132,000
Cash $1,300,000 $440,000
CITY SUBSIDY/ $1,160,000 * 1 !§ 360,000
(CITY SUBSIDY, PER UNIT) ($1 O,Odb/Unit) ($3;1 OOjUnit) ._
CITY LEVERAGE $11.5: $1 $ 35.2: $1
Due to the varying reserve account requirements, the project cost will vary.
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FEBRUARY 12,199s
PAGE 5
E. Form of Assistance
City assistance will be in the form of a residual receipts loan secured by a note and
deed of trust. Repayment of the loan will be deferred during construction of the
Improvements. Once the City has issued a certificate of occupancy for all the
affordable units, the outstanding principal and accrued interest on the City loan will
be amortized over thirty years and repaid from cash surplus in equal annual
installments of principal and interest. In the event that there is not adequate cash
surplus to repay the City loan, the outstanding balance shall accrue with simple
interest at 3% per annum. The financial assistance will be provided from the City of
Carlsbad’s Housing Trust Fund. The Fund currently has a balance of approximately
$2.4 million.
F. Securitv
As indicated, the City takes a security interest in the property for the affordable
housing project. In addition, the Developer will be required to provide Completion
Bonds to both the City and the permanent lender to insure that construction is
completed.
G. Risks
In its role as a lender to the project, the City is exposed to three risks inherent to real
estate development. These risks generally include 1) predevelopment (project does
not get to construction, 2) construction (project cannot be completed, cost overruns,
contractor problems), and 3) operation (revenues do not cover expenses). Adding to
this risk, any City financial assistance will be subordinated to conventional
financing.
A number of factors mitigate the risks. First, the development team has a strong
track record with similar affordable housing projects. The presence of other major
financial commitments, such as a tax credit investment, is also key as this means that
other stakeholders depend on the success of the project both short and long term.
By its nature, affordable housing presents some, but very limited market risk
because of deeply discounted rents. Finally, the vulnerable position of City and
other subordinated financing is a feature which helps attract the necessary private
financing.
V. AFFORDABLE HOUSING AGREEMENT
The Housing Commission has previously reviewed and recommended approval the
Affordable Housing Agreement for this project. Prior to final map the developer will be
required to execute the agreement. The Agreement with the City will bind the Developer and
subsequent owners to the specifics of the affordable housing project
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FEBRUARY 12,1998
PAGE 6
including affordable rental rates, household income limits; a construction schedule; amount
and form of City assistance; compliance reporting requirements and implementation
agreements (e.g. loan agreements, regulatory agreements, trust deed, etc.).
VI. FINANCIAL ASSISTANCE AGREEMENT
A copy of the draft Financial Assistance Agreement and related documents are
provided as the exhibits (Exhibit 4) to this report for review by the Housing
Commission. The Commission is being requested to review and recommend approval
of this agreement and related documents in substantially the for presented and subject
to approval by the City Attorney.
VII SUMMARY
It is the role of the Housing Commission to make recommendations to the City Council
based on several considerations with respect to affordable housing projects. These are:
The proposal’s effectiveness in serving the City’s needs and priorities as
expressed in the Housing Element of the General Plan and the HUD
Consolidated Plan.
The proposal’s consistency with the City’s affordable housing policies and
ordinances as expressed in the Housing Element, Inclusionary Housing
Ordinance, Density Bonus Ordinance, etc.
The proposal’s development and operating feasibility, emphasizing the
development team capacity, financing sources and the role of the City in
providing financial assistance or incentives.
The Ranch0 Carrillo Apartments is proposed by a capable development team led by a
credible for-profit developer that is committed to affordable housing. The financing
structure of the project is creative and sound. The proposed City assistance under both
Option A and 8, meet the City’s three key underwriting goals of a strong borrower,
reasonable project costs and a high degree of leveraging. The project quality includes
good design and location. City housing goals are supported by the project’s unit mix
and affordability.
It is the Affordable Housing Policy Teams (staff) recommendation that the Housing
Commission approve the resolution of support recommending that the proposed
financial assistance be approved by the City Council, under both financing and
affordability scenarios. Also, the Staff Team recommends that the Commission
recommend approval of the Financial Assistance Agreement and related documents in
substantially the for presented and subject to approval by the City Attorney.
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RANCH0 CARRILLO AFFORDABLE HOUSING PROJECT
FEBRUARY 12,1998
VIII. EXHIBITS
1. Housing Commission Resolution No. 98-002
2. Proforma - Option A
3. Proforrna - Option B
4. Draft Financial Assistance Agreement, Loan Agreement, Deed of Trust, and Regulatory
Agreement.
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HOUSING COMMISSION RESOLUTION NO. 98-002
THAT THE HOUSING RECOMMEND APPROVAL TO THE CITY
COUNCIL TO PROVIDE UP TO A MAXIMUM OF $1,160,000 IN
FINANCIAL ASSISTANCE FOR THE CONSTRUCTION OF ONE
HUNDRED SIXTEEN AFFORDABLE APARTMENT UNITS TO
HELP SATISFY A PORTION OF THE REQUIREMENTS OF THE
INCLUSIONARY HOUSING ORDINANCE FOR THE RANCH0
CARRILLO MASTER PLAN.
APPLICANT: CARLSBAD FAMILY HOUSING
PARTNERSHIP
CASE NO: SDP 97- 15
WHEREAS, the master developer of the Ranch0 Carrillo Master Plan, Continental Homes has
proposed to construct 116 apartment units affordable to lower income households as a means to satisfy a
portion of their affordable housing obligation as permitted by Carlsbad Municipal Code Section 2 1.85 of
the City’s Inclusionary Housing Ordinance; and
WHEREAS, the master developer’s proposal to construct said units has been submitted to the
City of Carlsbad’s Housing Commission for review and consideration; and
WHEREAS, said Housing Commission did, on the 14 th day of January, 1998, hold a special
public meeting to consider said proposal to construct 116 affordable housing apartment units; and
WHEREAS, at the conclusion of said special public meeting, the Housing Commission
recommended approval of the proposal to the Planning Commission; and
WHEREAS, said Housing Commission did, on the 12th day of February, 1998, hold a public
meeting to consider the request for City financial assistance for the construction of said 116 affordable
housing apartment units by of the affordable housing developer, Carlsbad Family Housing Partners; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons desiring to be
heard, said Commission considered all factors relating to the proposal to construct said affordable
housing units.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of
Carlsbad, California, as follows:
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1.
2.
3.
4.
5.
The above recitations are true and correct.
The request for City financial assistance is consistent with the goals and objectives of
the City of Carlsbad’s Housing Element and Comprehensive Housing Affordability
Strategy, the Inclusionary Housing Ordinance, and the Carlsbad General Plan.
The request for City financial assistance will assist the affordable housing developer to
construct a total of 116, one, two and three bedroom affordable apartment units. The
project, therefore, has the ability to effectively serve the City’s housing needs and
priorities as expressed in the Housing Element and the Consolidated Plan,
That based on the information provided within the Housing Commission Staff Report
and testimony presented during the public meeting of the Housing Commission on
February 12, 1998, the Housing Commission hereby ADOPTS Resolution No. 98002,
recommending APPROVAL to the City Council to provide up to a maximum of
$1,160,000 in financial assistance from the City of Carlsbad’s Housing Trust Fund to
Carlsbad Family Housing Partnership for the construction of one hundred sixteen (116)
affordable apartment units to help satisfy a portion the requirement of the Inclusionary
Housing Ordinance for the Ranch0 Carrillo Master Plan.
That the Housing Commission recommends that the City Manager or his designee be
authorized by the City Council to execute all documents related to provision of the City
assistance, including but not limited to a Loan Agreement, Note, Deed of Trust and
Regulatory Agreement, in substantially the form presented to the Housing Commission
on February 12, 1998 and subject to review and approval by the City Attorney.
PASSED, APPROVED, AND ADOPTED at a meeting of the Housing Commission of the City
of Carlsbad, California, held on the 12th of February, 1998, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN
KATHLEEN WELLMAN, CHAIRPERSON
CARLSBAD HOUSING COMMISSION
DEBORAH K. FOUNTAIN
HOUSING & REDEVELOPMENT DIRECTOR
HC RESO NO. 98-002
OP-r\O~ f3 - F RANCH0 CARRlLLo APARThiiNT! qqo TFW aElm- /
SOURCES AND USES SUMMARY AuOCA7-lO~ ’
I Exhi.bit : 2 ..- _e--- _._.-._----
SOURCE OF FUNDS:
PERMANENT LOAN(S) $7,050,000
TAX CREDIT EQUITY - FEDERAL AND STATE 7,516,093
DEFERREDDEVELOPERFEE 227,500
LAND LOAN (CONTINENTAL) 3,132,OOO
CONTINENTAL CASH CONTRIBUTION 403,172
CITY LOAN 360,320
TOTAL SOURCES: $i2,689,085
USES OF FUNDS:
ACQUISITION:
PROJECT CONSULTANTS:
PERMITS AND FEES:
CONSTRUCTION:
DEVELOPMENT EXPENSES:
FINANCING:
TOTAL USES OF FUNDS:
FUNDING OVERAGEI(SHORTFALL)
$3,139,500
353,500
1,13i;185
6,180,000
1,192,ooo
692,900
$12,689,085
$0
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RANCH0 CARRILLO APARTMENTS
DEVELOPMENT BUDGET
Number of Dwelling Units:
Gross Land Area:
Gross Building Area:
Commercial Area:
Eligible Basis
Commercial Cost
I. ACQUISITION:
100 LAND AND IMPROVEMENTS
101 CLOSING COSTS
TOTAL ACQUlSlTlON
II. PROJECT CONSULTANTS:
200 ARCHITECT
201 CIVIL ENGINEER
202 SOILS ENGINEER
203 UTILITIES CONSULTANT
204 LEGAL
205 ACCOUNTING
206 APPRAISAL
207 ACOUSTICAL ENGINEER
208 CONSTRUCTION TESTING
209 LANDSCAPING ARCHITECT
210 MARKET STUDY
211 CONTINGENCY
TOTAL CONSULTANTS
Ill. PERMITS AND FEES:
300
301
302
303
304
305
306
307
308
309
310
311
312
313
314
315
316
SCHOOL FEES $0 $0 $0 $0.00 $0
PLAN CHECK FEE 7,000 0 7,000 60.34 7,000
BUILDING PERMIT 10,650 0 10,650 91 .ai 10,650
HOUSING TRUST FUND 0 0 0 0.00 0
WATER CONNECTION FEE 51,300 0 51.300 442.24 51,3oo
SEWER CAPACITY FEE 208,800 0 208,600 I ,aoo.oo 208,800
COUNTY WATER FEES 175,856 0 175,856 1.516.00 175,856
PLANNING DEPARTMENT 15.000 0 15,000 129.31 15,000
TRAFFIC IMPACT FEE 62,640 0 62,640 540.00 62,640
IMPROVEMENT CONST. INSPECTION il,aoo
CFD #l 362,600
UTILITY PLAN REVIEW 0
BRIDGE AND THOROUGHFARE 37,000
LANDSCAPE PL4N CHECK 3.000
SDG&E 75,ooo
TCAC FEES 60,539
CONTINGENCY =wJ
116
0
115,375
0
100.00%
0.00%
TOTAL COMMERCIAL RESIDENTIAL t PER ELIGIBLE
COST COST COST UNIT BASIS
$3,132,OO0 $0 $3,132.000 $27,000.00 $0
7,500 0 7,500 64.66 7,500
53,139,500 to $3,139,500 $27,065 $7,500
$200,000 $0 $200,000 $1,724.14 $2OO,Ooo
30,000 0 30,000 258.62 30,000
20,ooo 0 20,000 172.41 20,000
10,000 0 10,000 86.21 10,000
20,ooo 0 20,ooo 172.41 20,000
8,500 0 8,500 73.28 8,500
10,ooo 0 10,000 86.21 10,000
7,500 0 7,500 64.66 7,500
15,000 0 15,000 129.31 15.000
15,000 0 15,000 129.31 15,000
7,500 0 7,500 64.66 7,500
10.000 0 10,000 86.21 10.oo0
5353,500 SO $353,500 $3,047.42 $353,500
11,800
362.600
0
37,000
3,000
75,ooo
60,539
50,000 -
101.72 11,800
3,125.86 362,600
0.00 0
318.97 37,000
25.88 3,000
646.55 75,000
521.89 0
431.03 50,000
TOTAL PERMITS AND FEES $1,131,f85 $0 $1,131,186 $9,751.59 $1,070,646
IV. CONSTRUCTION:
400 SITE IMPROVEMENTS
401 UNDERGROUNDGARAGE
402 STRUCTURES
403 RETAIL SHELL CONSTRU&lON
404 GENERAL REQUIREMENTS
405 CONTRACTOR’S LIABILIN INS.
406 CONTRACTOR’S FEE
407 CONTINGENCY
408 RETAIL TENANT IMPROVEMENTS
s750,ooo
0
4,700,000
0
225.000
30,000
275,000
200.000
0
$75o,Ooo $6,465.52 $750,000
0 0.00 0
4,700,ooo 4OB517.24 4,7oo,ooo
0 0.00 0
225,000 1,939.66 225,000
30,000 258.62 30,000
275,000 2,370.69 275,000
200,000 1.724.14 200,000
0 0.00 0
TOTAL CONSTRUCTION $6,160,000 $0 $6,180,000 $53,276.86 $6,180,000
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V. DEVELOPMENT EXPENSES:
500 REAL ESTATE TAXES
501 CONSTRUCTION INSURANCE
502 BOND PREMIUMS
503 BLUEPRINTS I REIMBURSABLES
504 LOBBY FURNITURE
508 MARKETING (CHFA)
509 OPERATING EXPENSES RESERVE
510 DEVELOPER FEE AND ADMIN. COSTS -
TOTAL DEVELOPMENT EXPENSES
VI. FINANCING:
$30,000
42,000
10,000
25,000
25,Om
50,000
100,000
910,ooo
$1,192,000
$30,000 $258.62
42,000 362.07
10,000 88.21
25,000 215.52
25,000 215.52
50,000 431.03
100,000 862.07
910,000 7g844.83 -
$30,000
42,000
10,000
25,OOil
25,000
0
0
910,000
$1,192,000 $10,276 $1,042,000
600 CONSTRUCTION LOAN POINTS $?‘.7oo,ooo $77,000 0 $77,000 $663.79 $77,000
601 INTEREST RESERVE ACCOUNT 9.50% 438,900 0 438,900 3,783.62 438,900
602 CONSTRUCTION LOAN TITLE & RECORD 10,000 0 10,000 86.21 10,000
603 FUND CONTROL 8 INSPECTION 12,000 0 12,000 103.45 12,000
604 PERM LOAN POINTS 30,000 0 30,000 258.62 0
605 CHFA APPLICATION FEES 0 0 0 0.00 0
606 CONSTRUCTION LENDER COST (LACE) 25,000 0 25,000 215.52 25,000
607 RENT-UP ACCOUNT (CHFA) 100,000 0 100,000 862.07 0
TOTAL FINANCING $692,900 SO $692,900 55,973 $562,900
TOTAL DEVELOPMENT COSTS $12,689,085 SO Sl2,689,085 $109,389 $9,216,546
SOURCE OF FUNDS:
PERMANENT LOAN(S) $1,050,ooo
TAX CREDIT EQUITY - FEDERAL AND STATE 7,516,093
DEFERRED DEVELOPER FEE 25.0% 227,500
LAND LOAN (CONTINENTAL) 3,132,OOO
CONTINENTAL CASH CONTRIBUTION 403,172
CITY LOAN 360,320
TOTAL SOURCES: $12,689,085
TOTAL DEVELOPMENT COSTS 12,689,085
BALANCE (DEVELOPER’S CASH EQUITY) so
TAX CREDIT CALCULATION:
FEDERAL
TOTAL ELIGIBLE BASIS
LESS: GRANT PROCEEDS
QUALIFIED BASIS
HIGH COST AREA ADJUSTMENT (30%)?
TOTAL ADJUSTED ELIGIBLE BASIS
APPLICABLE PERCENTAGE
ANNUAL CREDIT
TEN YEARS
TOTAL CREDIT
ESTIMATED NET PROCEEDS @
‘123/carlsbad/rchocrlo/feasibi2.wk4
STATE
$9,218,548 TOTAL ELIGIBLE BASIS
0 LESS: GRANT PROCEEDS
$9,216,546 QUALIFIED BASIS
N 0.00% HIGH COST AREA ADJUSTMENT (30%)?
$9,216,546 TOTAL ADJUSTED ELIGIBLE BASIS
8.6500% APPLICABLE PERCENTAGE
$797,231 (a) TOTAL STATE CREDIT
10 FUNDING GAP
$7,972,312 (b) STATE CREDIT NEEDED SO.70
$0.70 $5,580,619 LESSER OF (a) and (b)
ESTIMATED NET PROCEEDS
S9,216,546
0
$9,216,546
0.00%
9,216,546
30.00%
2,764,964
5,830,966
8.329.952
$2,764,964
$1,935,475
02/03/98.05:10 PM Barone Galasso and Associates, Inc. 17
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- Exhibit 4 - - --
AFFORDABLE HOUSING DEVELOPMENT AGREEMENT DRAFT
(FINANCING AGREEMENT)
THIS AFFORDABLE HOUSING DEVELOPMENT AGREEMENT (“Agreement”) is entered
into as of , 1998, among CARLSBAD FAMILY HOUSING PARTNERSHIP, a
California limited partnership (“BOrrOWef”), the CITY OF CARLSBAD, a municipal corporation
(“City”), and CONTINENTAL RANCH, INC., a Delaware corporation (“Master Developer”).
ARTICLE 1
Recitals
1.1 The Property. Master Developer owns that certain real property in the City of
Carlsbad, County of San Diego, which is depicted as a portion of Village B on Exhibit A (“Land”).
Village B is part of Master Developer’s master-planned community known as “Ranch0 Carrillo”,
being fune of the villages] encompassed within Carlsbad Tract _L_ (“CT - ‘I), as reflected -- on the approved tentative map therefor (“Tentative Map”). The Land does not now exist as
one or more legally conveyable parcels, and will not be legally conveyable until recordation of
the New Map (defined below).
1.2 Development Plan. The Land, as well as other real property owned by Master
Developer adjacent thereto, has been and will be subjected to and developed in accordance
with City zoning and use regulations designed to produce a plar;lned community for the entire
project known as “Ranch0 Carrillo”.
1.3 Borrower Intends To Build Affordable Multi-Family Housing. The following additional
agreements are being entered into:
(al Affordable Housing Agreement. An Affordable Housing Agreement is being
entered into concurrently herewith between Master Developer and the City to fulfil1 the
City’s affordable housing requirements as those requirements are further described in
the Affordable Housing Agreement.
- (b) Purchase Aareement and Escrow Instructions. A Purchase Agreement
and Escrow Instructions between Master Developer and Borrower is being entered into
concurrently herewith which, among other matters provides for Borrower to acquire the
Land from Master Developer to permit Borrower to construct the first phase of the
affordable housing units required by the Affordable Housing Agreement (the first phase
of affordable housing requirements are referred to in this Agreement as the “Develop-
ment”), with Master Developer providing Borrower with purchase money financing to
Borrower for its purchase of the Land. The Development improvements will consist of
one hundred sixteen (116) affordable multi-family housing units, which shall be rented
to low income households at affordable housing cost,
1.4 Reliance On Borrower. The development of the Rancho Carrillo master planned
community is dependent upon fulfilling the City’s affordable housing requirements pursuant
to the Affordable Housing Agreement. Master Developer is relying on Borrower’s strict compliance
Ranch0 Cardlo
Affordable Housing f%‘olOpment Agreement
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with each requirement of this Agreement and Borrower’s performance under the Purchase
Agreement and Escrow Instructions, and should Borrower default in its performance, Master
Developer would suffer substantial damages. Therefore, Master Developer carefully screened
potential builders of affordable housing to whom Master Developer would be willing to sell the
Land, and selected Borrower based on its reputation for honoring its contractual obligations
and the express representations regarding its ability to perform under this Agreement and under
the Purchase Agreement and Escrow Instructions.
1.5 Master Developer Financial Assistance to Borrower. The Master Developer desires
to provide financial assistance to Borrower for development costs in the form of a loan for a
total amount not to exceed One Million Two Hundred Ninety-Seven Thousand Nine Hundred
Sixty-Seven Dollars ($1,297,967) (the “Master Developer Loan”).
1.6 City Financial Assistance to Borrower. The City desires to provide financial
assistance to Borrower for development costs in the form of a loan for a total amount not to
exceed One Million One Hundred Sixty Thousand Dollars ($1 ,160,OOO) (the “City Loan”). The
City intends to fund the City Loan with City Housing Trust Fund monies. The funds utilized to
fund the City Loan are not federal funds or the proceeds of a tax-exempt bond issue. The City
is required by law to place restrictions on developments assisted with City Housing Trust Funds,
ensuring that such developments remain affordable to low and moderate income households
for the longest feasible time.
ARTICLE 2
Definitions
Unless the context otherwise indicates, the following shall have the meanings as set
forth in this Article:
2.1 “Agency” means the Carlsbad Redevelopment Agency, Carlsbad, California, a
public body corporate and politic.
2.2 “Agreement” means this Affordable Housing Development Agreement.
2.3 “Borrower” means Carlsbad Family Housing Partnership, a California limited
partnership.
2.4 “Cash” means (i) currency, (ii) a check or checks currently dated, payable to Escrow
Holder or order and honored upon presentation for payment, or (iii) funds wire-transferred or
otherwise deposited into Escrow Holder’s account at Escrow Holder’s direction.
2.5 “City” means the City of Carlsbad, California, a municipal corporation.
2.6 “City Loan” means the loan for an amount not to exceed One Million One Hundred
Sixty Thousand Dollars ($1,160,000) by the City to Borrower, which loan is the subject of this
Agreement.
Rancha Carrillo
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2.7 “City Loan Deed of Trust” means the deed of trust to be placed on the
Development, in substantially the form shown in Exhibit D attached hereto and incorporated
herein, securing the City Note and naming the City as beneficiary.
2.8 “City Loan Documents” means the following documents evidencing the City Loan:
(i) the City Note; (ii) the City Regulatory Agreement; (iii) the City Loan Deed of Trust; (iv) this
Agreement.
2.9 “City Note” means the promissory note, in substantially the form shown in Exhibit
C attached hereto and incorporated herein, in the principal amount of One Million One Hundred
Sixty Thousand Dollars ($1,160,000), evidencing the City Loan.
2.10 “City Regulatory Agreement” means the City Regulatory Agreement in the form
attached as Exhibit E to this Agreement to be recorded against the Land pursuant to Section
5.2 below.
2.11 “Close of Escrow” means the date that Master Developer’s Grant Deed to Borrower
for the Land is filed for record.
2.12 “Construction and Permanent Financing” means any of the following loans acquired
by the Borrower for the purpose of financing the Improvements, in addition to the City Loan
and the Master Developer Loan:
2.12.1 Bank construction loan in an amount not
to exceed Seven Million Seven Hundred Thousand Dollars ($7,700,000;
2.12.2 California Housing Finance Agency or other permanent loan(s) in
the approximate total amount of Five Million Seven Hundred Ninety Thousand
Dollars ($5,790,000); and
2.12.3 Any loans refinancing the above-described loans.
2.13 “County” means the County of San Diego, State of California.
2.14 .” Development” means the Land and the Improvements to be constructed on the
Land.
2.15 “Escrow Holder” means FIRST AMERICAN TITLE INSURANCE COMPANY, whose
address is 411 Ivy Street, San Diego, California 92101.
2.16 “General and special real estate taxes” means all charges evidenced by the secured
tax bill issued by the Tax Collector of the County, including, but not limited to, amounts allocated
to (i) County or City general governmental purposes, (ii) bonded indebtedness of the County
or City, (iii) bonded or other indebtedness and operating expenses of any school, college, sewer,
water, irrigation, hospital, library, utility, county service, community facilities district or other
district, and (iv) any other lawful purpose.
Rancho Carrillo
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27
2.17 “Improvements” means the grading of the Land, the buildings and improvements
to be constructed on the Land, including the Units, and the parking spaces and landscaping
appurtenant to such buildings and improvements, in accordance with City Site Development
Plan SDP 97-l 5, Ranch0 Carrillo Village B, Phase 1.
2.18 “Land” means the real property on which the Borrower shall construct the
Improvements, which real property is more particularly described in Exhibit A attached hereto
and incorporated herein.
2.19 “Master Developer Loan” means a loan for an amount not to exceed One Million
Two Hundred Ninety-Seven Thousand Nine Hundred Sixty-Seven Dollars (s 1,297,967) by the
Master Developer to Borrower, which loan is the subject of this Agreement.
2.20 “Master Developer Loan Deed of Trust” means the deed of trust to be placed
on the Development, in substantially the form shown in Exhibit G attached hereto and
incorporated herein, securing the Master Developer Note and naming the Master Developer as
beneficiary.
2.21 “Master Developer Loan Documents” means the following documents evidencing
the Master Developer Loan: (i) the Master Developer Note; (ii) the Master Developer Loan Deed
of Trust; (iii) this Agreement.
2.22 “Master Developer Note” means the promissory note, in substantially the form
shown in Exhibit F attached hereto and incorporated herein, in the principal amount of One Million
Two Hundred Ninety-Seven Thousand Nine Hundred Sixty-Seven Dollars ($1,297,967), evidencing
the Master Developer Loan.
2.23 “Master Developer Purchase Money Loan” means the loan for an amount equal
to Three Million One Hundred Thirty-Two Thousand Dollars ($3,132,000) by the Master Developer
to Borrower, for Borrower’s purchase of the Land, which loan is the subject of the Purchase
Agreement and Escrow Instructions between Master Developer as seller and Borrower as buyer.
2.24 “Master Developer Purchase Money Loan Deed of Trust” means the deed of trust
to be placed on the Development, in the form provided for in the Purchase Agreement and Escrow
Instructions, -securing the Master Developer Purchase Money Note and naming the Master
Developer as beneficiary.
2.25 “Master Developer Purchase Money Loan Documents” means the following
documents evidencing the Master Developer Purchase Money Loan: (i) the Master Developer
Purchase Money Note; (ii) the Master Developer Purchase Money Loan Deed of Trust; (iii) the
Purchase Agreement and Escrow Instructions between Master Developer as seller and Borrower
as buyer.
2.26 “Master Developer Purchase Money Note” means the promissory note, in
substantially the form shown in Exhibit B-l attached to the Purchase Agreement and Escrow
Instructions, in the principal amount of Three Million One Hundred Thirty-Two Thousand Dollars
($3,132,000), evidencing the Master Developer Purchase Money Loan.
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2.27 “New Map” refers to the final subdivision map which will show the Property
consisting of a separate legal lot or lots (additional property within Village B may also, at Master
Developer’s discretion, be shown on the New Map). The New Map is being prepared by Master
Developer, at Master Developer’s sole cost and expense, and shall be submitted to City for
signature and recording, at Master Developer’s sole cost and expense,
2.28 “Parties” means the City, the Master Developer and the Borrower collectively;
“Party” means one of the City, the Master Developer or the Borrower as the context indicates.
2.29 “Permanent Loan” means the loan(s) obtained by Borrower through programs
administered by the California Housing Finance Ayency (“CHFA”) or other lender, described
in Section 2.12.2 above.
2.30 “Term” means the term of the City Loan commencing on the date of disbursement
of the City Loan and ending fifty-five (55) years following the date of issuance of a certificate
of occupancy for all Units in the Development, but in no event later than I
2056.
2.31 “Title Insurer” means FIRST AMERICAN TITLE INSURANCE COMPANY, whose
address is 41 1 Ivy Street, San Diego, California 92101.
2.32 “Unit” means one of the one hundred sixteen (1 16) dwelling units located within
the Development.
ARTlCLE 3
Summary of Financing and Borrower’s Financing and Acquisition Obligations
3.1 Summary of Development Financing. Borrower’s current sources and uses of
funds summary for the Development is attached hereto as Exhibit B. Borrower contemplates
a total project budget of $12,900,000. Master Developer is providing financing for Borrower’s
acquisition of the Land with the Master Developer Purchase Money Note for $3,132,000 secured
by the Master Developer Purchase Money Loan Deed of Trust as provided in the Purchase
Agreement and Escrow Instructions. The Master Developer Purchase Money Loam Deed of Trust
shall be subordinate to Borrower’s Construction ($7,700,000) and Permanent Financing
($5,790,000) and to the City Loan Deed of Trust securing the City Loan to the Borrower. City
shall loan to Borrower an amount equal to $10,000 for each Unit of multi-family housing in the
Development, or a total of $1,160,000, secured by the City Loan Deed of Trust which shall
be subordinate to Borrower’s Construction and Permanent Financing. Master Developer shall
provide additional financing to Borrower, either by means of an equity contribution to Borrower
or by the Master Developer Loan to Borrower which shall be subordinate to Borrower’s
Construction and Permanent Financing, to the City Loan to Borrower, and to the Master Developer
Purchase Money Loan to Borrower for the Land. Borrower may apply for a Permanent Loan funded
by bonds issued by the California Housing Finance Agency (“CHFA”) in the approximate amount
of $5,790,000. Construction financing in the amount of $7,700,000 will be obtained by Borrower
from . Borrower will also apply for an allocation of tax credits
for the Development from the California Tax Credit Allocation Committee (“TCAC”) which will
support an equity investment in Borrower by an investor limited partner in the amount of
approximately $1,520,000.
Aancho Carrillo
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3.2 Borrower’s Obligation to Apply For A Permanent Loan. Borrower shall prepare
and file, as soon as possible following the City’s approval of, and the Parties’ execution of, this
Agreement, ‘an application with CHFA or other permanent lender for a Permanent Loan
contemplated by Borrower’s budget for the Development, and shall exercise its best efforts
to diligently pursue such application, including, but not limited to, any necessary supplements
or amendments thereto, to a final determination resulting in a commitment for the Permanent
Loan. The City and Master Developer shall cooperate with Borrower to the extent reasonably
necessary by each in Borrower’s pursuit of a Permanent Loan.
3.3 Borrower’s Obligation to Apply For Tax Credit Allocation through TCAC. Borrower
shall prepare and file, as soon as possible following the City’s approval of this Agreement, an
application with TCAC for the allocation of tax credits to the Development contemplated by
Borrower’s budget for the Development, and shall exercise its best efforts to diligently pursue
such application, including, but not limited to, any necessary supplements or amendments thereto,
to a final determination by TCAC resulting in an allocation of tax credits to the Development
as evidenced by a tax credit reservation letter. The City and Master Developer shall cooperate
with Borrower to the extent reasonably necessary by each in Borrower’s pursuit of an allocation
of tax credits to the Development through TCAC.
3.4 Borrower’s Obligation to Satisfy Conditions of the Purchase Agreement and Escrow
Instructions with Master Developer. Borrower shall exercise its best efforts to diligently pursue
satisfaction of all conditions benefitting Borrower as Buyer under the Purchase Agreement and
Escrow Instructions with Master Developer as Seller and to acquire fee title to the Land from
Master Developer.
ARTICLE 4
City Loan
4.1 Amount. The City hereby agrees to loan, and the Borrower hereby agrees to
borrow, an amount not to exceed One Million One Hundred Sixty Thousand Dollars ($1 ,1 SO,OOO),
subject to the terms and conditions set forth in this Agreement, and subject further to the terms
and conditions set forth within the documents and instruments executed by the Borrower in
connection with this transaction, including:
ia) The City Note;
04 The City Regulatory Agreement; and
(cl The City Loan Deed of Trust.
4.2 Interest. The outstanding principal amount of the City Loan shall accrue interest
at three percent (3%) per annum, compounded annually.
4.3 Repayment. (a) Repayment of the City Loan shall be deferred during construction
of the Improvements. Commencing on the date of recordation of the deed of trust securing
the Permanent Loan, the outstanding principal and accrued interest on the City Loan shall be
amortized over the next fifty-five (55) years of the Term such that equal payments of principal
and interest (the “Amortized Payments”) shall be due and payable on May 1 of each calendar
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year, commencing on the first May 1 following recordation of the deed of trust securing the
Permanent Loan; provided however, that the Amortized Payments shall be due and payable only
to the extent of seventy percent (70%) of Surplus Cash (as defined below) generated by the
Development in the previous calendar year.
(b) “Surplus Cash” means, in a particular calendar year, the amount by which
Gross Revenue (as defined below) exceeds Annual Operating Expenses (as defined below).
ii) Gross Revenue. “Gross Revenue,” with respect to a particular
calendar year, shall mean all revenue, income, receipts, and other consideration actually
received from operation and leasing of the Development. “Gross Revenue” shall include,
but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments
or other rental subsidy payments received for the dwelling units, all cancellation fees,
price index adjustments and any other rental adjustments to leases or rental agreements;
proceeds from vending and laundry room machines; the proceeds of business interruption
or similar insurance; the proceeds of casualty insurance to the extent not utilized to repair
or rebuild the Development; and condemnation awards for a taking of part or all of the
Development for a temporary period. “Gross Revenue” shall also include the fair market
value of any goods or services provided in consideration for the leasing or other use of
any portion of the Development. “Gross Revenues” shall not include tenants’ security
deposits, loan proceeds, capital contributions or similar advances.
(ii) Annual Operating Expenses. “Annual Operating Expenses,” with
respect to a particular calendar year, shall mean the following costs reasonably and
actually incurred for operation and maintenance of the Development to the extent that
they are consistent with an annual independent audit performed by a certified public
accountant using generally accepted accounting principles: property and other taxes
and assessments imposed on the Development; premiums for property damage and liability
insurance; utility services not paid for directly by tenants, including but not limited to
water, sewer, trash collection, gas and electricity; maintenance and repair including but
not limited to pest control, landscaping and grounds maintenance, painting and decorating,
cleaning, common systems repairs, general repairs, janitorial, supplies, and others; fees
and assessments of the Ranch0 Carrillo Master Association; any annual license or
certificate of occupancy fees required for operation of the Development; general
administrative expenses including but not limited to advertising and marketing, security
services and systems, and professional fees for legal, audit and accounting; property
management fees and reimbursements including on-site manager and assistant manager
expenses, not to exceed fees and reimbursements which are standard in the industry;
partnership management fees in an annual amount not to exceed $8,500; asset
management fees in an annual amount not to exceed $5,000; cash deposited into a
reserve for capital replacements of Development improvements and an operating reserve
in such reasonable amounts as are required by Development lenders and investors; and
debt service payments (excluding debt service due from residual receipts or surplus cash
of the Development) on financing for the Development approved by the City. “Annual
Operating Expenses” shall not include the following: depreciation, amortization, depletion
or other non-cash expenses or any amount expended from a reserve account.
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(c) If seventy percent (70%) of Surplus Cash in any year is less than the amount
of the Amortized Payment due on May 1 of the following year, the difference between seventy
percent (70%) of Surplus Cash and the Amortized Payment shall accrue with simple interest
at three percent (3%) per annum, and shall be paid on the next May 1 when and to the extent
Surplus Cash becomes available. All payments on the City Loan shall be applied first to accrued,
but unpaid, amounts for prior years and then to the current Amortized Payment due, beginning
with the earliest year for which an Amortized Payment accrued.
id) If seventy percent (70%) of Surplus Cash in any year exceeds the amount
necessary to make the Amortized Payment due on May 1 of the following calendar year, plus
any amounts due pursuant to subsection (c) above, such excess amount shall be paid to the
City as prepayment of the City Loan. Such prepayment shall not reduce the amounts of
subsequent Amortized Payments due, except to the extent that the City Loan is fully repaid.
kl Prepayment of the City Loan may also occur pursuant to Section 4.13
below. Such prepayment shall not reduce the amounts of subsequent Amortized Payments
due, except to the extent the City Loan is fully repaid.
(f) Any portion of the principal and interest on the City Loan not sooner paid
shall be due and payable upon the earlier of: (i) the occurrence of an Event of Default hereunder;
(ii) expiration of the Term; or (iii) sale or transfer of the Development other than a transfer
described in Section 4.5 below.
4.4 Prepayment. Borrower may prepay the principal and any interest due the City
under the City Note prior to or in advance of the time for payment thereof as provided in the
City Note, without penalty; provided, however, that Borrower acknowledges that the provisions
of the City Regulatory Agreement will be applicable to the Development even though Borrower
may have prepaid the City Note.
4.5 Assumption. In the event the Development is sold or transferred to the General
Partners of Borrower or a nonprofit affiliate of the General Partners of Borrower, the City Loan
shall be fully assumable by such transferee, subject to Section 11.16 below. The City Loan
shall not be assumable by any other transferee.
4.6 Loan Disbursement. Upon satisfaction of the preconditions to disbursement set
forth in Sections 5.1 and 5.2 below and pursuant to the disbursement procedures set forth in
Sections 5.1 and 5.3 below, the City will disburse to Borrower the City Loan Amount.
4.7 Use of Loan Proceeds. Borrower shall use City Loan Proceeds only to pay the
costs of the items set forth in Exhibit 8.
4.8 Security for Loan. The City Loan shall initially be unsecured and shall be secured
when it is available by the Tax Credit Reservation Assignment (as defined in Section 5.1 below).
Following Borrower’s acquisition of the fee interest in the Land from Master Developer on the
Close of Escrow, the City Loan shall be secured by the City Loan Deed of Trust on Borrower’s
fee interest in the Land. The Borrower shall provide the City with an ALTA policy of title
insurance, issued by Title Insurer, insuring the City Loan Deed of Trust as a lien against the
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Borrower’s fee interest in the Land, subject only to the lien or liens of the Construction and
Permanent Financing mortgages.
4.9 Approval of Additional Financing. The Borrower shall not place any encumbrances
on the Land other than the Construction and Permanent Financing, the Master Developer Purchase
Money Loan, and the Master Developer.Loan, without the prior written consent of the City,
which consent shall not be withheld unreasonably.
4.10 Subordination of City Loan Deed of Trust. The City agrees to subordinate the
City Loan Deed of Trust to the liens of the deeds of trust securing the Construction and Permanent
Financing.
4.11 Subordination of the City Regulatory Agreement. The City agrees that the City
Manager shall subordinate the City Regulatory Agreement to the lien or encumbrance of any
construction or permanent financing provided for the Development upon the finding of the City
Manager that (i) an economically feasible loan is not reasonably available on comparable terms
and conditions without subordination, and (ii) the mortgage to which the City Regulatory
Agreement is being subordinated contains provisions meeting the requirements of Health and
Safety Code Section 33334.14(a) reasonably designed to protect the City’s interest in the event
of default under such mortgage. The City agrees that the City Regulatory Agreement shall be
subordinated to any federal or state governmental agency regulating the Development which
requires that the City Regulatory Agreement be subordinate to such government agency’s
documents and liens. The City will execute subordination agreements in a form reasonably
acceptable to the lending entity or government agency to subordinate the City Regulatory
Agreement as provided in this Section.
4.12 Admission of Investor Limited Partner. Borrower shall inform the City of the identity
of its investor limited partner prior to the admission of the investor limited partner to Borrower’s
partnership. The City hereby consents to the admission as investor limited partner of Boston
Capital or any limited partnership in which Boston Capital is a limited partner.
4.13 Developer Fee: Use of Net Proceeds of Permanent Financing.
(a) For purposes of this Section 4.13, the term “Net Proceeds of Permanent
Financing” shall mean the portion of the capital contributions of the investor limited partner
of the Borrower and the proceeds of the Permanent Loan that is not required to repay the _
Bank construction loan and pay other costs of the Development
(including but not limited to the funding of reserves), other than the Borrower’s development
fee. Borrower shall be entitled to a developer fee of Nine Hundred Three Thousand Dollars
($903,000). Borrower shall be eligible to receive seventy-five percent (75%) of the developer
fee ($677,250) payable in equal monthly installments during the construction of the Development.
The balance of the developer fee ($225,750) may be paid from Net Proceeds of Permanent
Financing (as provided below), cash reserves, or Borrower’s thirty percent (30%) share of Surplus
Cash.
M The Net Proceeds of Permanent Financing shall be utilized as follows:
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(9 to pay the balance of developer fees ($225,750) until Borrower
has received total developer fees in the amount of Nine Hundred Three Thousand Dollars
($903,000) including any amounts previously paid to the Borrower as developer fees
from other sources;
(ii) the remainder, if any, of Net Proceeds of Permanent Financing shall
be paid one-half to the Borrower for its uses and purposes and one-half to the City as
partial repayment of the City Loan.
4.14 Reports and Accounting of Surplus Cash.
(4 Audited Financial Statement. In connection with the annual repayment
of the City Loan, the Borrower shall furnish to the City an audited statement duly certified by
an independent firm of certified public accountants approved by the City, setting forth in
reasonable detail the computation and amount of Surplus Cash during the preceding calendar
year.
(b) Books and Records. The Borrower shall keep and maintain at the
Development, or elsewhere with the City’s written consent, full, complete and appropriate books,
records and accounts relating to the Development, including all such books, records and accounts
necessary or prudent to evidence and substantiate in full detail Borrower’s calculation of Surplus
Cash. Books, records and accounts relating to Borrower’s compliance with the terms, provisions,
covenants and conditions of this Agreement shall be kept and maintained in accordance with
generally accepted accounting principles consistently applied, and shall be consistent with
requirements of this Agreement which provide for the calculation of Surplus Cash on a cash
basis. All such books, records, and accounts shall be open to and available for inspection by
the City, its auditors or other authorized representatives at reasonable intervals during normal
business hours. Copies of all tax returns and other reports that Borrower may be required to
furnish any governmental agency shall at all reasonable times be open for inspection by the
City at the place that the books, records a?d accounts of the Borrower are kept. The Borrower
shall preserve records on which any statement of Surplus Cash is based for a period of not less
than five (5) years after such statement is rendered.
ARTICLE 5
Disbursement of City Loan
5.1 Initial Disbursement. The City shall make an initial disbursement to Borrower
of Two Hundred Thousand Dollars ($250,000) of City Loan proceeds prior to the Close of Escrow
for Borrower’s acquisition of the Land and recordation of the City Loan Deed of Trust, to be
used by Borrower to pay (or to reimburse Borrower for prior payment of) tax credit application
and reservation fees due the California Tax Credit Allocation Committee, application costs and
fees associated with obtaining Permanent Financing, and other costs associated with the
Development. Such disbursement shall be made to Borrower upon receipt of Borrower’s written
request for such funds, provided Borrower executes the City Note. If and when it is available,
Borrower shall provide to the City as initial security for the Loan an assignment of the tax credit
reservation for the Development, in a form to be approved by the City (the “Tax Credit
Reservation Assignment”). The Tax Credit Reservation Assignment shall be cancelled by the
City and the Borrower upon recordation of the City Loan Deed of Trust.
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5.2 Conditions Precedent to Disbursement of Remaining City Loan Proceeds. Except
for the initial disbursement pursuant to Section 5.1 above, the City shall not disburse City Loan
proceeds to the Borrower until all of the following conditions precedent are satisfied.
(4 Budget. Borrower shall have submitted to the City and obtained City
approval of a development budget for the Development, in the form attached as Exhibit B, and
the City has determined that the undisbursed proceeds of the City Loan, together with other
funds or firm commitments for funds that the Borrower has obtained in connection with the
Development, are not less than the amount that the City determines is necessary to pay for
the construction of the Development and to satisfy all of the covenants contained in this
Agreement.
V-4 Partnership and General Partners’ Authorizations; Good Standing. Borrower
shall provide the City (i) with a certified copy of a partnership authorizing resolution, approving
the City Loan and the Borrower’s execution of all City Loan Documents, (ii) with certified copies
of corporate authorizing resolutions of Borrower’s corporate general partners, approving the
City Loan and the general partner’s execution on behalf of the Borrower of all City Loan
Documents, and (iii) with evidence reasonably satisfactory to the City that the Borrower and
each of its corporate general partners exist in good standing at the time of the proposed
disbursement.
(cl Purchase of Land. Borrower shall hold fee title to the Land pursuant to
a Grant Deed from Master Developer which has been duly recorded in the Official Records of
the County, or a Grant Deed is signed and deposited into escrow.
(4 Close of Construction Loan. Borrower shall have closed the Construction
Loan for the Development described in Section 2.12.1 above.
bl Execution, Delivery and Recordation of City Loan Documents. Borrower
shall have executed and delivered to the City the City Note, the City Deed of Trust, and the
City Regulatory Agreement, and any other documents and instruments required to be executed
and delivered, all in form and substance satisfactory to the City, and the City Deed of Trust
and the City Regulatory Agreement shall have been recorded against Borrower’s fee interest
in the Land.
if) Insurance. Borrower shall have furnished the City with evidence of the
insurance coverage required pursuant to Sections 9.4 and 9.5 below.
(9) Construction Contracts. Prior to any disbursement for hard construction
costs, the City has received and approved all contracts that the Borrower has entered or proposed
to enter for construction of the Development. The City shall have seven (7) days from its receipt
of a contract in which to give Borrower written notice of its approval or disapproval of a contract
that Borrower has entered or proposes to enter for construction of the Development; if the City
has not given written notice of disapproval of a contract within the seven (71 day period, the
contract shall be deemed approved. All construction work and professional services shall be
performed by persons or entities licensed or otherwise authorized to perform the applicable
construction work or service in the State of California. Each construction contract that the
Borrower enters for construction of the Development shall provide that at least ten percent (10%)
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of the costs incurred shall be payable only upon completion of said contractor’s construction
and shall include the nondiscrimination language set forth in Section 9.14 below.
U-4 No Default. There shall exist no condition, event or act constituting an
Event of Default (as hereinafter defined) hereunder or which, upon the giving of notice or the
passage of time, or both, would constitute an Event of Default,
5.3 Procedure for Disbursement of Remaining Loan Proceeds. Upon satisfaction of
the conditions set forth in Section 5.2 above, the City shall promptly disburse the remaining
City Loan Amount to Borrower from time to time upon receipt of written requests from the
Borrower: (a) reaffirming the accuracy as of the date of the disbursement request of Borrower’s
representations and warranties set forth in Article 8 below; (b) certifying that Borrower is not
in default under the City Loan Documents or loan documents for other Approved Financing;
and (c) setting forth the proposed uses of funds consistent with Section 4.7 above, the amount
of funds needed, and, where applicable, a copy of the bill or invoice covering a cost incurred
or to be incurred. When a disbursement is requested to pay any contractor in connection with
construction of the Improvements, the written request must be accompanied by a certification
by the architect for the Borrower that the work for which disbursement is requested has been
completed (although the City reserves the right to inspect the Development and make an
independent evaluation within five (5) days from receipt of the written request), and lien releases
or mechanics’ lien title insurance endorsements reasonably acceptable to the City. All of the
City Loan Amount shall be disbursed before any of the Master Developer Loan Amount is required
to be disbursed.
ARTICLE 6
Master Developer Loan
6.1 Amount. The Master Developer hereby agrees to loan, and the Borrower hereby
agrees to borrow, an amount not to exceed One Million Two Hundred Ninety-Seven Thousand
Nine Hundred Sixty-Seven Dollars ($1,297,967), subject to the terms and conditions set forth
in this Agreement, and subject further to the terms and conditions set forth within the documents
and instruments executed by the Borrower in connection with this transaction, including:
(a) The Master Developer Note; and
(b) The Master Developer Loan Deed of Trust.
6.2 Interest. The outstanding principal amount of the Master Developer Loan shall
accrue interest at the rate agreed upon by Borrower and Master Developer for the Master
Developer Purchase Money Loan under the Purchase Agreement and Escrow Instructions between
Borrower and Master Developer.
6.3 Repayment. (a) Repayment of the Master Developer Loan shall be deferred during
construction of the Improvements. Commencing on the date of recordation of the deed of trust
securing the Permanent Loan, the outstanding principal and accrued interest on the Master
Developer Loan shall be amortized over the period and by such payments as are agreed upon
by Borrower and Master Developer for the Master Developer Purchase Money Loan under the
Purchase Agreement and Escrow Instructions between Borrower and Master Developer.
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lb) Prepayment of the Master Developer Loan may also occur pursuant to
Section 4.13 above. Such prepayment shall not reduce the amounts of subsequent payments
due, except to the extent the Master Developer Loan is fully repaid.
(c) Any portion of the principal and interest on the Master Developer Loan
not sooner paid shall be due and payable upon the earlier of: (i) the occurrence of an Event of
Default hereunder; (ii) expiration of the Term; or (iii) sale or transfer of the Development other
than a transfer described in Section 6.5 below.
6.4 Prepayment. Borrower may prepay the principal and any interest due the Master
Developer under the Master Developer Note prior to or in advance of the time for payment thereof
as provided in the Master Developer Note, without penalty.
6.5 Assumption. In the event the Development is sold or transferred to the General
Partners of the Borrower or a nonprofit affiliate of the General Partners of the Borrower, the
Master Developer Loan shall be fully assumable by such transferee. The Loan shall not be
assumable by any other transferee.
6.6 Loan Disbursement. After disbursement of the entire City Loan Amount, and upon
satisfaction of the preconditions to disbursement set forth in Sections 5.1 and 5.2 above and
pursuant to the disbursement procedures set forth in Sections 5.1 and 5.3 above, the Master
Developer will disburse to Borrower the Master Developer Loan Amount.
6.7 Use of Loan Proceeds. Borrower shall use Master Developer Loan Proceeds only
to pay the costs of the items set forth in Exhibit B.
6.8 Security for Loan. The Master Developer Loan shall be secured by the Master
Developer Loan Deed of Trust on Borrower’s fee interest in the Land. The Borrower shall provide
the Master Developer with an ALTA policy of title insurance, issued by Title Insurer, insuring
the Master Developer Loan Deed of Trust as a lien against the Borrower’s fee interest in the
Land, subject only to the lien or liens of the Construction and Permanent Financing mortgages,
the City Loan Deed of Trust, and the Master Developer Purchase Money Loan Deed of Trust.
6.9 Approval of Additional Financing. The Borrower shall not place any encumbrances
on the Land other than the Construction and Permanent Financing, the City Loan, the Master
Developer Purchase Money Loan, and the Master Developer Loan, without the prior written
consent of the Master Developer, which consent shall not be withheld unreasonably.
6.10 Subordination of Master Developer Loan Deed of Trust. The Master Developer
agrees to subordinate the Master Developer Loan Deed of Trust only to the liens of the deeds
of trust securing the Construction and Permanent Financing, the City Loan Deed of Trust, and
the Master Developer Purchase Money Loan Deed of Trust.
6.11 Reports and Accounting of Surplus Cash.
(a) Audited Financial Statement. In connection with the annual repayment
of the Master Developer Loan, or annually on the due date if no payment is due under the terms
of the Master Developer Note, the Borrower shall furnish to the Master Developer a copy of
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the audited statement duly certified by an independent firm of certified public accountants
furnished to the City pursuant to Section 4.14(a) above.
(b) Books and Records. The Borrower shall keep and maintain the books, records
and accounts relating to the Development required under Section 4.14(b) above. All such books,
records, and accounts shall be open to and available for inspection by the Master Developer,
its auditors or other authorized representatives at reasonable intervals during normal business
hours. Copies of all tax returns and other reports that Borrower may be required to furnish any
governmental agency shall at all reasonable times be open for inspection by the Master Developer
at the place that the books, records and accounts of the Borrower are kept, The Borrower shall
preserve records on which any statement of Surplus Cash is based for a period of not less than
five (5) years after such statement is rendered.
ARTICLE 7
Development of the Improvements
7.1 Commencement of Construction. Subject to Section 11.2 below, the Borrower
hereby covenants and agrees to commence construction of the Development no later than sixty
(60) days following the later of: (i) the date Borrower obtains fee title to the Land; or (ii) the
date Borrower obtains the first building permit required for construction of the Development.
7.2 Completion of Construction. The Borrower hereby covenants and agrees to
diligently prosecute to completion the construction of the Development within twelve (12) months
from the date of commencement of construction, subject to Section 11.2 below.
7.3 Construction Pursuant to Plans. The Borrower shall construct the Improvements
in accordance with the plans approved by the City in connection with issuance of the building
permit(s), and with the terms and conditions of all land use permits and approvals required by
the City, including, but not limited to, Site Development Plan SDP 97-l 5.
7.4 Construction in Compliance with Law. Borrower shall cause all work performed
in connection with the Development, including construction of the Improvements, to be performed
in compliance with all governmental requirements, including (without limitation and where
applicable) the following:
(a) All directions, rules, and regulations of any fire marshal, health officer,
building inspector, or other officer of any governmental agency having jurisdiction.
The work shall proceed only after procurement of each permit, license, or other authorization
that may be required by any governmental agency having jurisdiction, and the Borrower shall
be responsible to the City and the Master Developer for the procurement and maintenance thereof,
as may be required of the Borrower and all entities engaged in work on the Development.
7.5 Entry by the Cii or Master Developer. Borrower shall permit the City or the Master
Developer, through their respective officers, agents, or employees, at all reasonable times to
enter into the Development and inspect the work of construction to determine that the same
is in conformity with the construction plans approved by the City. Borrower acknowledges
that neither the City nor the Master Developer is under no obligation to supervise, inspect, or
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inform Borrower of the progress of construction, and Borrower shall not rely upon the City or
the Master Developer therefor. Any inspection by the City or the Master Developer is entirely
for its purposes in determining whether Borrower is in default under this Agreement and is not
for the purpose of determining or informing Borrower of the quality or suitability of construction.
Borrower shall rely entirely upon its own supervision and inspection in determining the quality
and suitability of the materials and work, and the performance of architects, subcontractors,
and material suppliers.
7.6 Equal Opportunity. During the construction of the Improvements there shall be
no discrimination on the basis of race, color, creed, religion, sex, sexual orientation, marital
status, national origin, ancestry, or handicap in the hiring, firing, promoting, or demoting of any
person engaged in the construction work.
7.7 Mechanics Liens, Stop Notices, and Notices of Completion.
(4 If any claim of lien is filed against the Development or a stop notice affecting
the City Loan or the Master Developer Loan is served on the City, the Master Developer, or
any other lender or other third party in connection with the Development, then the Borrower
shall, within thirty (30) days after such filing or service, either pay and fully discharge the lien
or stop notice, effect the release of such lien or stop notice by delivering to the City and the
Master Developer a surety bond in sufficient form and amount, or provide the City and the Master
Developer with other assurance satisfactory to the City and the Master Developer that the claim
of lien or stop notice will be paid or discharged.
b) If the Borrower fails to discharge any lien, encumbrance, charge, or claim
in the manner required in Section 7.7(a), then in addition to any other right or remedy, the City
or the Master Developer may (but shall be under no obligation to) discharge such lien,
encumbrance, charge, or claim at the Borrower’s expense:Alternately, the City or the Master
Developer may require the Borrower to immediately deposit with the City the amount necessary
to satisfy such lien or claim and any costs,. pending resolution thereof. The City shall use such
deposit to satisfy any claim or lien tha’t is adversely determined against the Borrower.
(cl The Borrower shall file a valid notice of cessation or notice of completion
upon cessation of construction on the Development for a continuous period of thirty (30) days
or more, and take all other reasonable steps to forestall the assertion of claims of lien against
the Development. The Borrower authorizes the City or the Master Developer, but without any
obligation, to record any notices of completion or cessation of labor, or any other notice that
the City or the Master Developer deems necessary or desirable to protect its respective interest
in the Development.
7.8 Estoppel Certificate of Completion. When the Borrower has determined it has
met its obligations under this Article 7, the Borrower may request that the City issue an Estoppel
Certificate of Completion, in the form shown in Exhibit H. Within ten (IO) days of such a request,
the City shall issue an Estoppel Certificate of Completion or shall provide the Borrower with
a written explanation of its refusal to issue the Estoppel Certificate of Completion. If and when
the Borrower has taken the specified measures or met the specified standards the City shall
issue an Estoppel Certificate of Completion.
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The Estoppel Certificate of Completion shall not be deemed a notice of completion under
the California Civil Code, nor shall it constitute evidence of compliance with or satisfaction of
any obligation of the Borrower to any holder of a deed of trust securing money loaned to finance
the Development.
ARTICLE 8
Representations and Warranties of Borrower
8.1 Representations and Warranties. Borrower hereby represents and warrants to
the City and the Master Developer as follows:
(a) Organization. Borrower is duly organized, validly existing and in good
standing under the laws of the State of California and has the power and authority to own its
property and carry on its business as now being conducted.
(b) Authority of Borrower. Borrower has full power and authority to execute
and deliver this Agreement and to make and accept the borrowings contemplated hereunder,
to execute and deliver the City Loan Documents, the Master Developer Loan Documents, and
all other documents or instruments executed and delivered, or to be executed and delivered,
pursuant to this Agreement, and to perform and observe the terms and provisions of all of the.
above.
(c) Authority of Persons Executing Documents. This Agreement, the City
Loan Documents, the Master Developer Loan Documents, and all other documents or instruments
executed and delivered, or to be executed and delivered, pursuant to this Agreement have been
executed and delivered by persons who are duly authorized to execute and deliver the same
‘for and on behalf of Borrower, and all actions required under Borrower’s organizational documents
and applicable governing law for the authorization, execution, delivery and performance of this
Agreement, the City Loan Documents, the Master Developer Loan Documents, and all other
documents or instruments executed and delivered, or to be executed and delivered, pursuant
to this Agreement, have been duly taken.
(4 Valid Binding Agreements. This Agreement, the City Loan Documents,
the Master Developer Loan Documents, and all other documents or instruments which have
been executed and delivered pursuant to or in connection with this Agreement constitute or,
if not yet executed or delivered, will when so executed and delivered constitute, legal, valid
and binding obligations of Borrower enforceable against it in accordance with their respective
terms, subject to: (i) bankruptcy, insolvency, reorganization, moratorium, and other similar laws
relating to or affecting the rights of creditors generally, and (ii) general equity principles and
the effect of Code of Civil Procedure Sections 580a, 580d and 726, and any other statutory
provisions limiting proceedings for recovery of a debt.
(4 Pending Proceedings. There are no claims, actions, suits or proceedings
pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the
Development, at law or in equity, before or by any court, board, commission or agency
whatsoever which might, if determined adversely to Borrower, materially affect Borrower’s ability
to repay the City Loan or the Master Developer Loan, or impair the security to be given to the
City or the Master Developer pursuant hereto.
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(0 Financial Statements. The financial statements of Borrower and Borrower’s
general partners and other financial data and information furnished by Borrower to the City and
the Master Developer fairly present the information contained therein. As of the date of this
Agreement, there has not been any adverse, material change in the financial condition of Borrower
and Borrower’s general partners from that shown by such financial statements and other data
and information.
ARTICLE 9
Continuing Obligations of Borrower
9.1 Applicability. For the longer of the entire Term, or so long as the City Note or
the Master Developer Note remains outstanding, the Borrower shall comply with the provisions
of this Article 9.
9.2 Compliance with Loan Documents. Borrower shall comply with all the terms and
provisions of the City Loan Documents and the Master Developer Loan Documents.
9.3 Rental of Units. The Borrower shall comply with the occupancy and affordability
restrictions for the rental of the Units as set forth in the City Regulatory Agreement and in any
other regulatory agreement(s) required by Borrower’s lenders.
9.4 Required Insurance Coverage.
(4 Fire and Extended Coverage Endorsement. The Borrower shall during the
Term keep the Development insured against loss or damage by a standard all risk policy in
amounts not less than the replacement value of the Development, or should insurance in such
amount not be reasonably and commercially available, such lesser amount as may be acceptable
to the City and the Master Developer. The amount of such insurance shall be adjusted by
reappraisal of the Improvements by the insurer or its designee at least once every five (5) years
during the Term, if requested by the City or the Master Developer. If an all risk policy insuring
the full replacement value of the Development is not reasonably and commercially available,
the Borrower shall use best efforts to obtain and maintain an extended coverage endorsement
that ensures the full replacement value of the Development as soon as such coverage becomes
commercially and reasonably available.
M Liability and Property Damage Insurance. During the Term, the Borrower
shall keep in full force and effect a policy or policies of comprehensive general liability and
property damage insurance against liability for bodily injury to or death of any person or property
damage arising out of an occurrence on or about the Development, The limits of such insurance
shall be not less than one million dollars ($1 ,OOO,OOO) combined single limit for bodily injury
and property damage. The limits of the insurance shall be adjusted once every five (5) years
if and as reasonably required by the City or the Master Developer.
(cl Workers’ Compensation Insurance. The Borrower shall carry or cause to
be carried workers’ compensation insurance covering all persons employed by the Borrower
in connection with the Development and with respect to whom death, bodily injury, or sickness
insurance claims could be asserted against the Borrower, the City or the Master Developer.
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(d) Builders’ Risk Insurance. During the course of any alteration, construction
or reconstruction, the cost of which exceeds one hundred thousand dollars ($lOO,OOO), the
Borrower shall provide or require any contractor to provide builders’ risk insurance for not less
than, in the event of new construction, the full insurable value of the Development or, in the
event of alteration or reconstruction, the insurable value of the alteration or reconstruction,
insuring the interests of the City, the Master Developer, the Borrower and any contractors and
subcontractors.
9.5 Insurance Policies and Premiums
(4 All liability policies required by this Agreement shall name the City and
the Master Developer as additional insureds. Duplicate copies of such policies or certificates
of such insurance shall be promptly furnished to the City and the Master Developer.
(b) To the extent obtainable, any policy of insurance shall provide that any
change or cancellation of said policy must be made in writing and sent to the Borrower, the
City and the Master Developer at their respective principal offices at least thirty (30) days before
the effective date of change or cancellation.
9.6 Proceeds of Insurance. All fire and standard risk or extended coverage (casualty)
insurance proceeds shall be applied to the payment of the costs of repairing or rebuilding that
part of the Development damaged or destroyed if (i) the Borrower agrees in writing within ninety
(90) days after payment of the proceeds of insurance that such repair or rebuilding is economically
feasible, and (ii) each lender of an outstanding Construction and Permanent Loan permits such
repairing or rebuilding, provided that the extent of Borrower’s obligation to restore the
Development shall be limited to, the amount of the insurance proceeds. If the Development is
not repaired or rebuilt as provided in this Section 6.6, all such proceeds shall be applied to
repayment of outstanding loans including the City Loan, the Master Developer Purchase Money
Loan and the Master Developer Loan, in the order of lien priority.
9.7 Taxes and Assessments. So long as Borrower owns the Development, Borrower
shall pay all real and personal property taxes, assessments and charges and all franchise, income,
unemployment, old age benefit, withholding, sales, and other taxes assessed against it, or payable
by it, at such times and in such manner as to prevent any penalty from accruing, or any lien
or charge from attaching to the Development; provided, however, that Borrower shall have the
right to contest in good faith any such taxes, assessments, or charges. In the event Borrower
exercises its right to contest any tax, assessment, or charge against it, Borrower, on final
determination of the proceeding or contest, shall immediately pay or discharge any judgment
rendered against it, together with all costs, charges, and interest.
9.8 Compliance with Laws. Borrower shall comply with all laws and regulations of
the United States and of California and of any political subdivision thereof, or of any governmental
authority which may be applicable to it or to its business, subject to Borrower’s right to contest
the validity or applicability of laws or regulations.
9.9 Changes. Borrower shall promptly notify the City and the Master Developer in
writing of any changes in the location of any place of business or material assets of the Borrower.
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9.10 Notification of Litigation. Borrower shall promptly notify the City and the Master
Developer in writing of any litigation affecting the Borrower or the Development and of any claims
or disputes that involve a material risk of litigation, which may materially adversely affect the
City Loan or the Master Developer Loan.
9.1 1 Indemnity. Borrower shall.defend, indemnify, save and hold the City, its council
members, officers, employees, agents, and contractors, and the Master Developer, its directors,
officers, employees, agents, and contractors, utilizing attorneys approved by the City and the
Master Developer, harmless from any and all claims, actions, demands, costs, expenses, and
attorneys’ fees, arising out of, attributable to, or otherwise occasioned, in whole or in part, by
any act or omission of Borrower arising from or related to the Development after the date of
Borrower’s acquisition of fee title to the Land, except as such claim may arise from the negligence
or wilful misconduct of an indemnified party.
9.12 Hazardous Materials.
(a) The Borrower shall keep and maintain the Development in compliance with,
and shall not cause or permit the Development to be in violation of, any federal, state, or local
laws, ordinances, or regulations relating to industrial hygiene or to the environmental conditions
on or under the Development, including (but not limited to) soil and ground water conditions.
The Borrower shall not use, generate, manufacture, store, or dispose of, on, under, or about
the Development, or transport to or from the Development, any flammable explosives, radioactive
materials, hazardous wastes, toxic substances, or related materials, including (without limitation)
any substances defined as or included in the definition of “hazardous substances,” “hazardous
wastes, ” “hazardous materials,” or “toxic substances” under any applicable federal or state
laws or regulations (collectively referred to as “Hazardous Materials”) except such of the foregoing
as may be customarily and lawfully kept and used in and about multifamily residential property.
b) The Borrower shall immediately advise the City and the Master Developer
in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal,
or other governmental or regulatory actions instituted, completed, or threatened against the
Borrower or the Development pursuant to any applicable federal, state, or local laws, ordinances,
or regulations relating to any Hazardous Materials (“Hazardous Materials Law”); (ii) all claims
made or threatened by any third party against the Borrower or the Development relating to
damage, contribution, cost recovery compensation, loss, or injury resulting from any Hazardous
Materials (the matters set forth in clauses (i) and (ii) above are referred to as “Hazardous Materials
Claims”); and (iii) the Borrower’s discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Development that could cause the Development or any part
thereof to be classified as “border-zone property” under California Health and Safety Code
Sections 25220 & ZZSJ, or corresponding regulations, or to be otherwise subject to any restrictions
on the ownership, occupancy, transferability, or use of the Development under any Hazardous
Materials Law.
(cl The Borrower shall permit the City and the Master Developer to join and
participate in, as a party if either so elects, any legal proceedings or actions initiated in connection
with any Hazardous Materials. The Borrower shall indemnify, defend (with counsel reasonably
chosen by the City and the Master Developer, at the option of the City or the Master Developer),
and hold harmless the City, and the Agency, and their respective council members, board
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members, officers, agents, and employees, and the Master Developer and its directors, officers,
employees and agents, from and against any loss, damage, cost, expense, or liability directly
or indirectly arising out of or attributable to the use, generation, storage, release, threatened
release, discharge, disposal, or presence of Hazardous Materials on or under the Development,
including (without limitation): (i) all foreseeable consequential damages; (ii) the costs of any
required or necessary repair, cleanup, or detoxification of the Development and the preparation
and implementation of any closure, remedial, or other required plans; and (iii) all reasonable costs
and expenses incurred by the City or the Master Developer, or the City or the Master Developer
in connection with clauses (i) and (ii), including (but not limited to) reasonable attorneys’ fees.
This paragraph shall survive termination of this Agreement.
Id) Without the prior written consent of the City and the Master Developer,
which shall not be unreasonably withheld, the Borrower shall not take any remedial action in
response to the presence of any Hazardous Materials on, under or about the Development, nor
enter into any settlement agreement, consent decree, or other compromise in respect to any
Hazardous Material Claims, which remedial action, settlement, consent decree or compromise
might, in the City’s or the Master Developer’s reasonable judgment, impair the value of the City’s
or the Master Developer’s security hereunder; provided, however, that the City’s or the Master
Developer’s prior consent shall not be necessary in the event that the presence of Hazardous
Materials on, under, or about the Development either poses an immediate threat to the health,
safety, or welfare of any individual or is of such a nature that an immediate remedial response
is necessary and it is not reasonably possible to obtain the City’s or the Master Developer’s
consent before taking such action, provided that in such event the Borrower shall notify the
City and the Master Developer as soon as practicable of any action so taken. The City and the
Master Developer each agrees not to withhold its consent, where such consent is required
hereunder, if either (i) a particular remedial action is ordered by a court of competent jurisdiction,
(ii) the Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to
take a required action; (iii) the Borrower establishes to the reasonable satisfaction of the City
and the Master Developer that there is no reasonable alternative to such remedial action which
would result in less impairment of the Cityis or the Master Developer’s security hereunder; or
(iv) the action has been agreed to by the City and the Master Developer.
Id The Borrower hereby acknowledges and agrees that (i) this Section 9.12
is intended as the City’s and the Master Developer’s written request for information (and the
Borrower’s response) concerning the environmental condition of the Development as required
by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty
in this Agreement (together with any indemnity obligation applicable to a breach of any such
representation and warranty) with respect to the environmental condition of the Development
is intended by the Parties to be an “environmental provision” for purposes of California Code
of Civil Procedure Section 736.
9.13 Non-Discrimination. The Borrower covenants by and for itself and its successors
and assigns that there shall be no discrimination against or segregation of a person or of a group
of persons on account of race, color, religion, creed, sex, sexual orientation, marital status,
ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Development, nor shall the Borrower or any person claiming under or through
the Borrower 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,
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subtenants, sublessees or vendees in the Development. The foregoing covenant shall run with
the land and shall survive termination of this Agreement.
9.14 Mandatory Language in All Subsequent Deeds, Leases and Contracts. The Borrower
and its agents shall not, in the selection or approval of tenants or provision of services or in
any other matter, discriminate against any person or group of persons on the grounds of race,
color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry, age, or
disability. All deeds, contracts, or leases made or entered into by Borrower, its successors or
assigns, as to any portion of the Development shall contain the following language:
(a) In Deeds:
“Grantee herein covenants by and for itself, its successors and assigns that there
shall be no discrimination against or segregation of a person or of a group of
persons on account of race, color, creed, religion, sex, sexual orientation, marital
status, national origin or ancestry 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”.
(b) In Contracts:
“There shall be no discrimination against or segregation of any person or group
of persons on account of race, color, creed, religion, sex, sexual orientation, marital
status, national origin or ancestry in the sale, transfer or use of the property”.
(4 In Leases:
“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 or ancestry in the leasing, subleasing, transferring, use, occupancy,
tenure or enjoyment of the land 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 or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees
in the land herein leased”.
9.15 Records.
(4 The Borrower shall maintain complete, accurate, and current records
pertaining to the Development for a period of five (5) years after the creation of such records,
and shall permit any duty authorized representative of the City or the Master Developer to inspect
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and copy records, including records pertaining to income and household size of residents of
the Development. Such records shall include records regarding the occupancy and rent levels
of the residential units in the Development, as well as records that accurately and fully show
the date, amount, purpose, and payee of all expenditures drawn from City Loan funds and Master
Developer Loan funds. Such records shall also include all invoices, receipts, and other documents
related to expenditures from the City Loan funds and the Master Developer Loan funds. Records
must be kept accurate and current.
(b) The City or the Master Developer shall notify the Borrower of any records
it deems insufficient. The Borrower shall have fifteen (15) calendar days after the receipt of
such a notice to correct any deficiency in the records specified by the City or the Master
Developer in such notice, or if a period longer than fifteen (15) days is reasonably necessary
to correct the deficiency, then the Borrower shall begin to correct the deficiency within fifteen
(15) days and correct the deficiency as soon as reasonably possible.
(cl The Borrower shall promptly comply with all requirements or conditions
of the City Loan Documents and the Master Developer Loan Documents relating to notices,
extensions, and other events required to be reported or requested. The Borrower shall promptly
supply, upon the request of the City or the Master Developer, any and all information and
documentation involving the Development.
9.16 Transfers.
(al For purposes of this Agreement, “Transfer” shall mean any sale, assignment,
or transfer, whether voluntary or involuntary, of (i) any rights and/or duties under this Agreement,
and/or (ii) any interest in the Development, including (but not limited to) a fee simple interest,
a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security
interest, or an interest evidenced by a land contract by which possession of the Development
is transferred and the Borrower retains title. The term “Transfer” shall exclude the leasing of
any single Unit in the Development to an occupant in compliance with the City Regulatory
Agreement.
(b) No Transfer shall be permitted without the prior written consent of the
City and the Master Developer. Pursuant to Sections 4.3(f) and 6.3(e) above, the City Loan
or the Master Developer Loan shall automatically accelerate and be due in full upon any
unauthorized Transfer.
(cl The City and the Master Developer hereby approve any subsequent Transfer
of the Development from the Borrower to the nonprofit, managing general partner and co-general
partner of the Borrower, provided that the transferees expressly assume the obligations of the
Borrower under this Agreement, the City Loan Documents, the Master Developer Purchase Money
Loan Documents, and the Master Developer Loan Documents, utilizing a form of assignment
and assumption agreement approved by the City and the Master Developer for their respective
Loan Documents.
(d) The City approves the grant of the security interests in the Development
described in Section 2.12 [Construction and Permanent Financing] above and evidenced by the
Master Developer Purchase Money Deed of Trust and the Master Developer Loan Deed of Trust.
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b) The Master Developer approves the grant of the security interests in the
Development described in Section 2.12 [Construction and Permanent Financing] above and
evidenced by the City Loan Deed of Trust.
ARTICLE 10
Default and Remedies
10.1 Events of Default. Each of the following shall constitute an “Event of Default”
by Borrower under this Agreement:
(4 Failure to Construct. Subject to Section 1 1.2, failure of Borrower to
construct all of the Development within the time set forth in Article 7 above.
lb) Failure to Make Payment. Failure to make prompt payments of the principal
and interest on the City Note or the Master Developer Note when due and such failure having
continued uncured for thirty (30) days after receipt of written notice thereof by the Borrower
from the City or the Master Developer.
(cl Breach of Covenants. Failure by Borrower to duly perform, comply with,
or observe any of the conditions, terms, or covenants of any of the City Loan Documents or
the Master Developer Loan Documents, and such failure having continued uncured for thirty
(30) days after receipt of written notice thereof by the Borrower from the City or the Master
Developer or, if the breach cannot be cured within thirty (30) days, the Borrower shall not be
in breach so long as Borrower is diligently undertaking to cure such breach; provided, however,
that if a different period or notice requirement is specified under any other section of this Article
10, the specific provisions shal! control.
M Default Under Other Loans. Failure to make any payment or perform any
of Borrower’s covenants, agreements, or obligations under the Construction and Permanent
Financing loans, following expiration of all applicable notice and cure periods.
(e) Insolvency. A court having jurisdiction shall have made or entered any
decree or order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly
filed a petition seeking reorganization of Borrower or seeking any arrangement for Borrower
under the bankruptcy law or any other applicable debtor’s relief law or statute of the United
States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee
of Borrower in bankruptcy or insolvency or for any of their properties, or (iv) directing the winding
up or liquidation of Borrower, if any such decree or order described in clauses (i) to (iv), inclusive,
shall have continued unstayed or undischarged for a period of ninety (90) days; or Borrower
shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily
submitted to or filed a petition seeking any decree or order of the nature described in clauses
(i) to (iv), inclusive. The occurrence of any of the events of default in this paragraph shall act
to accelerate automatically, without the need for any action by the City or the Master Developer,
the indebtedness evidenced by the City Note or the Master Developer Note. The occurring of
any of the events described in this subsection with respect to a general partner of the Borrower
shall also constitute an Event of Default hereunder.
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(f) Assignment; Attachment. Borrower shall have assigned its assets for the
benefit of its creditors or suffered a sequestration or attachment of or execution on any
substantial part of its property, unless the property so assigned, sequestered, attached or
executed upon shall have been returned or released within ninety (90) days after such event
or prior to sooner sale pursuant to such sequestration, attachment, or execution. The occurrence
of any of the events of default in this paragraph shall act to accelerate automatically, without
the need for any action by the City or the Master Developer, the indebtedness evidenced by
the City Note or the Master Developer Note.
(cl) Suspension; Termination. Borrower shall have voluntarily suspended its
business or, if Borrower is a partnership, the partnership shall have been dissolved or terminated,
other than a technical termination of the partnership for tax purposes.
0-d Liens on Development. There shall be filed any claim of lien (other than
liens approved in writing by the City and the Master Developer) against the Development or
any part thereof, or any interest or right made appurtenant thereto, or the service of any notice
to withhold proceeds of the City Loan or the Master Developer Loan and the continued
maintenance of said claim of lien or notices to withhold for a period of twenty (20) days without
discharge or satisfaction thereof or provision therefor satisfactory to the City and the Master
Developer. In the event that Borrower is diligently working to remove a claim of lien or to remove
a notice to withhold proceeds and neither the City’s interests under the City Loan Documents
nor the Master Developer’s interests under the Master Developer Loan Documents are imminently
threatened, neither the City nor the Master Developer shall declare a default under this subsection.
(i) Condemnation. The condemnation, seizure, or appropriation of all or the
substantial part of the Land and the Development.
Cjl Unauthorized Transfer. Any Transfer other than as permitted by Article 8.
(k) Representation or Warranty Incorrect. Any Borrower representation or
warranty contained in this Agreement, or in any application, financial statement, certificate,
or report submitted to the City or the Master Developer in connection with any of the City Loan
Documents or the Master Developer Loan Documents, proving to have been incorrect in any
material respect when made.
10.2 Limited Partner Cure Periods. (a) Notwithstanding anything to the contrary contained
in this Agreement, the City Loan Documents, or the Master Developer Loan Documents, and
in addition to any other cure provisions contained in this Agreement, the limited partner of the
Borrower shall have the right but not the obligation to cure any defaults of the Borrower
hereunder, and the City and the Master Developer agrees to accept cures tendered by the limited
partner on behalf of the Borrower within the cure periods described below: the limited partner
of Borrower shall have the right to cure all monetary and non-monetary defaults within sixty
(60) days after receipt of notice thereof. However, if a default is non-monetary and is not
reasonably capable of being cured within sixty (60) days or if the limited partner notifies the
City and the Master Developer that it is in the process of removing the managing general partner
of the Borrower (as such process may be stayed by injunction, bankruptcy or similar proceedings),
the limited partner shall have such additional tine as is reasonably necessary to cure such default
or remove the managing general partner, provided the limited partner has commenced and is
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diligently proceeding to cure such default or remove the managing general partner, as applicable
(taking into account the effect of injunction, bankruptcy or similar proceedings). ’
04 If, after the time provided in Sections 10.1 and 10.2, Borrower or the limited
partner has not cured the default, the City or the Master Developer may apply to any court,
state or federal, for specific performance of this Agreement or an injunction against any violation
of this Agreement, or any other remedies at law or in equity or any such other actions as shall
be necessary or desirable so as to correct non-compliance with this Agreement.
10.3 Remedies. The occurrence of any Event of Default following the expiration of
all applicable notice and cure periods will, either at the option of the City or the Master Developer,
or automatically where so specified, relieve the City and the Master Developer of any obligation
to make or continue the City Loan or the Master Developer Loan and, subject to Section 11.16
below, shall give the City or the Master Developer the right to proceed with any and all remedies
set forth in this Agreement, the City Loan Documents or the Master Developer Loan Documents,
respectively, including but not limited to the following:
Ia) Acceleration of Note. The City and the Master Developer shall each have
the right to cause all indebtedness of the Borrower to each of the City or the Master Developer,
respectively, under this Agreement and their respective City Note or Master Developer Note,
together with any accrued interest thereon, to become immediately due and payable. The
Borrower waives all right to presentment, demand, protest or notice of protest or dishonor.
The City or the Master Developer may each proceed to enforce payment of the indebtedness
to each of them, respectively, and to exercise any or all rights afforded to the City or the Master
Developer as a creditor and secured party under the law including the Uniform Commercial Code,
including foreclosure under the City Loan Deed of Trust or the Master Developer Loan Deed
of Trust. The Borrower shall be liable to pay the City or the Master Developer on demand all
expenses, costs and fees (including, without limitation, attorney’s fees and expenses) paid or
incurred by the City or the Master Developer, respectively, in connection with the collection
of their respective Loan and the preservation, maintenance, protection, sale, or other disposition
of the security given for their respective Loan.
b) Specific Performance. The City and the Master Developer shall each have
the right to mandamus or other suit, action or proceeding at law or in equity to require Borrower
to perform its‘obligations and covenants under their respective City Loan Documents or Master
Developer Loan Documents, or to enjoin acts on things which may be unlawful or in violation
of the provisions of the City Loan Documents or the Master Developer Loan Documents,
respectively.
(4 Right to Cure at Borrower’s Expense. The City and the Master Developer
shall each have the right to cure any monetary default by Borrower under a loan other than their
respective Loan. The Borrower agrees to reimburse the City or the Master Developer for any
funds advanced by the City or the Master Developer to cure a monetary default by Borrower
upon demand therefor, together with interest thereon at the rate of three percent (3%) per annum
from the date of expenditure until the date of reimbursement.
10.4 Right of Contest. Borrower shall have the right to contest in good faith any claim,
demand, levy, or assessment the assertion of which would constitute an Event of Default
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hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to
the City and the Master Developer or the rights of the City or the Master Developer hereunder.
10.5 Remedies Cumulative. Subject to Section 11 .16 below, no right, power, or remedy
given to the City or the Master Developer by the terms of this Agreement, the City Loan
Documents, or the Master Developer Loan Documents, respectively, is intended to be exclusive
of any other right, power, or remedy; and each and every such right, power, or remedy shall
be cumulative and in addition to every other right, power, or remedy given to the City or the
Master Developer by the terms of any such instrument, or by any statute or otherwise against
Borrower and any other person. Neither the failure nor any delay on the part of the City or the
Master Developer to exercise any such rights and remedies shall operate as a waiver thereof,
nor shall any single or partial exercise by the City or the Master Developer of any such right
or remedy preclude any other or further exercise of such right or remedy, or any other right or
remedy.
10.6 Waiver of Terms and Conditions. The City Manager for the City or the Division
President for the Master Developer may at his or her discretion waive in writing any of the terms
and conditions of this Agreement for the benefit of the City or the Master Developer, respectively,
without the Borrower completing an amendment to this Agreement. No waiver of any default
or breach by Borrower hereunder shall be implied from any omission by the City or the Master
Developer to take action on account of such default if such default persists or is repeated, and
no express waiver shall affect any default other than the default specified in the waiver, and
such waiver shall be operative only for the time and to the extent therein stated. Waivers of
any covenant, term, or condition contained herein shall not be construed as a waiver of any
subsequent breach of the same covenant, term, or condition. The consent or approval by the
City or the Master Developer to or of any act by Borrower requiring further consent or approval
‘shall not be deemed to waive or render unnecessary the consent or approval to or of any
subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute
a cure or a waiver of any default under this Agreement or the respective Loan Documents of
the City or the Master Developer, nor shall it invalidate any act done pursuant to notice of default,
or prejudice the City or the Master Developer in the exercise of any right, power, or remedy
hereunder or under their respective Loan Documents, unless in the exercise of any such right,
power, or remedy all obligations of Borrower to City or the Master Developer, respectively, are
paid and discharged in full.
10.7 Removal of Managing General Partner by Limited Partner. The City and the Master
Developer agree that the removal of the managing general partner of the Borrower under this
Agreement by the limited partner of Borrower pursuant to the terms of the Borrower’s limited
partnership agreement will not constitute a default under any of the City Loan Documents or
the Master Developer Loan Documents or allow acceleration of the City Loan or the Master
Developer Loan. If any other entity becomes the managing general partner of Borrower, the
limited partner shall obtain the approval of the City and the Master Developer of such replacement
managing general partner within six (6) months thereafter, which approval shall not be
unreasonably withheld or delayed.
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ARTICLE 11
Miscellaneous
1 1.1 Time. Time is of the essence in this Agreement.
11.2 Force Majeure. Performance by any Party hereunder shall not be deemed to be
in default where defaults are due to war; insurrection; strikes; lock-outs; riots; floods;
earthquakes; fires; casualties; acts of God: acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits
filed by third parties concerning or arising out of this Agreement); weather or soils conditions
which, in the opinion of the Borrower’s contractor, will necessitate delays; inability to secure
necessary labor, materials or tools; delays of any contractor, sub-contractor or supplier; acts
of the other Party: acts or failure to act of any public or governmental agency or entity (other
than the acts or failure to act of the City or the Master Developer); or any other causes (other
than Borrower’s inability to obtain financing for the Development) beyond the control or without
the fault of the Party claiming an extension of time to perform. Times of performance under
this Agreement may also be extended in writing by the City, the Master Developer and the
Borrower.
1 1.3 Notices. All notices, demands and communications between the Borrower, the.
Master Developer and the City shall be sufficiently given and shall not be deemed given unless
dispatched by certified mail, postage prepaid, return receipt requested, or delivered by express
delivery service with a delivery receipt, to the principal officers of the Borrower, the Master
Developer and the City as follows:
Borrower: CARLSBAD FAMILY HOUSING PARTNERSHIP
% Barone Galasso and Associates, ‘Inc.
Attn: Michael B. Galasso
600 West Broadway, Suite 1070
San Diego, California 92101
City:
Master Developer:
CITY OF CARLSBAD
Housing and Redevelopment Department
Attn: Housing and Redevelopment Director
2965 Roosevelt Street, Suite B
Carlsbad, California 92008-2389
CONTINENTAL RANCH, ‘INC.
Attn: Dave Lother
12636 High Bluff Drive, Suite 300
San Diego, California 92130
Such addresses may be changed by notice to the other Party given in the same manner as
provided above.
Notice shall be deemed to have been effective on the date shown on the delivery receipt
as the date of delivery, the date delivery was refused, or the date the notice was returned as
undelivered.
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11.4 Financial Statements; Rights of Inspection. The Borrower shall deliver copies
of its audited financial statements to the City and the Master Developer annually promptly
following completion of preparation of such statements. The City and the Master Developer
shall each have the right, upon reasonable notice to Borrower, to inspect Borrower’s books and
records related to the Development.
1 1.5 Attorneys’ Fees. If any Party brings a legal or administrative action or proceeding
to enforce, protect or establish any right or remedy hereunder or under any of the City Loan
Documents or the Master Developer Loan Documents, the prevailing Party shall be entitled to
recover from the other Party its costs of suit and reasonable attorneys’ fees which shall be fixed
by the court.
1 1.6 No Third Parties Benefitted. Boston Capital is the sole third party beneficiary of
this Agreement, and no person or persons other than the Borrower, the City, the Master
Developer, and Boston Capital shall have any right of action hereon.
1 1.7 Actions. The City or the Master Developer shall each have the right to commence,
appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities
of the Parties hereunder, or the disbursement of any proceeds of the City Loan or the Master
Developer Loan.
11.8 Signs. The Borrower agrees that the City and the Master Developer may place
signs mutually satisfactory to the Borrower, the City and the Master Developer upon the
Development at locations selected by the Borrower, the City, and the Master Developer, advising
of the financing of the Development by the City and the Master Developer. The City and the
Master Developer may also announce such placement through press releases to newspapers
and trade publications.
11.9 Successors and Assigns. The terms hereof shall be binding upon and inure to
the benefit of the successors and assigns of the Parties hereto; provided, however, that no
assignment of Borrower’s rights hereunder shall be made, voluntarily or by operation of law,
without the prior written consent of the City and the Master Developer, and that any such
assignment without such consents shall be void.
1 1 .lO Construction of Words. Except where the context otherwise requires, words
imparting the singular number shall include the plural number and vice versa, words imparting
persons shall include firms, associations, partnerships and corporations, and words of either
gender shall include the other gender.
11.1 1 Partial Invalidity. If any provision of this Agreement shall be declared invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired.
1 1.12 Governing Law. This Agreement, the City Loan Documents, the Master Developer
Loan Documents, and other instruments given pursuant hereto shall be construed in accordance
with and be governed by the laws of the State of California.
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11.13 Amendment. This Agreement may not be changed orally, but only by agreement
in writing signed by the Borrower, the City and the Master Developer.
11.14 Captions and Headings. Captions and headings in this Agreement are for
convenience of reference only, and are not to be considered in construing the Agreement.
1 1.15 Action by the City. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, consent, request, or other action by the City is required
or permitted under this, Agreement, such action may be given, made, or taken by the City
Manager, or by any person who shall have been designated in writing to the Borrower by the
City Manager, without further approval by the City Council, and any such action shall be in
writing. The City Manager is also hereby authorized to approve, on behalf of the City, requests
by Borrower for reasonable extensions of time deadlines set forth in this Agreement.
1 1.16 Nonrecourse Obligations on City Loan. The Borrower shall not have any direct
or indirect personal liability for payment of the principal of, or interest on, the City Note or the
performance of the covenants of Borrower under this Agreement, the City Regulatory Agreement,
or the City Loan Deed of Trust. The sole recourse of the City with respect to the principal of,
or interest on, the City Note and defaults by Borrower in the performance of its covenants under
this Agreement, the City Regulatory Agreement, or the City Loan Deed of Trust shall be to the
property described in the City Loan Deed of Trust. No judgment, or execution thereon, entered
in any action, legal or equitable, on the City Note, this Agreement, the City Regulatory Agreement
or the City Loan Deed of Trust shall be enforced personally against the Borrower but shall be
enforced only against the property described in the City Loan Deed of Trust.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first written above.
BORROWER:
Rancho Carrillo
Affordable Housing Development Agreement
0 117.0/93
CARLSBAD FAMILY HOUSING PARTNERSHIP, a California
limited partnership
By: Housing Opportunities, Inc., a California nonprofit
public benefit corporation, Managing General Partner
By:
Title:
By: Barone Galasso and Associates, Inc., a Delaware
corporation, Co-General Partner
By:
Title:
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EXHIBIT A
Legal Description of the Land
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EXHIBIT B
Permitted Uses of Loan Proceeds
(Borrower’s Sources and Uses of Funds)
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EXHIBIT C
City Note
$1,160,000 , 1998
Carlsbad, California
FOR VALUE RECEIVED, CARLSBAD FAMILY HOUSING PARTNERSHIP, a California Limited
Partnership (“Borrower”), promises to pay to the City of Carlsbad (“City”), or order, the principal
sum of One Million One Hundred Sixty Thousand Dollars ($1 ,1 SO,OOO), or so much thereof as
is advanced to Borrower by the City pursuant to Section 4.6 of the Development Agreement
(defined below), plus simple interest accruing at the rate of three percent (3%) per annum.
1. Develooment Aareement. This City Note is made pursuant to an Affordable Housing ’
Development Agreement dated as of 1998 (the “Development Agreement”).
by and among the Borrower, the City, and Continen;al Ranch, Inc., a Delaware corporation
(“Master Developer”), and as contemplated by a Regulatory Agreement to be executed by the.
Borrower and the City (the “City Regulatory Agreement”).
2. Term. The term of this City Note (the “Term”) shall commence on the date of
this City Note and shall end fifty-five (55) years from the date of recordation of the deed of
trust securing the Permanent Loan (as defined in the Development Agreement) (the “Due Date”).
3. Amount and Time of Pavmenu. All amounts due under this City Note shall be
due and payable as set forth in Section 4.3 of the Development Agreement.
4. Preoayment . Borrower shall have the right to prepay all or a portion of the principal
and interest due under this City Note without any charge or penalty being made therefor.
5. Deed of Trust. This City Note is secured by a deed of trust of even date herewith
(the “City Loan Deed of Trust”).
6. Acceleration. Upon the occurrence of a default under the Development Agreement,
City Regulatory Agreement or City Loan Deed of Trust, and expiration of all applicable notice
and cure periods (an “Event of Default”), the City shall have the right to accelerate the Due
Date of this City Note and declare all of the unpaid principal and accrued interest immediately
due and payable. Any failure by the City to pursue its legal and equitable remedies upon an Event
of Default shall not constitute a waiver of the City’s right to declare an Event of Default and
exercise all of its rights under this City Note, the City Regulatory Agreement, the City Loan Deed
of Trust, and the Development Agreement. Nor shall acceptance by the City of any payment
provided for herein constitute a waiver of the City’s right to require prompt payment of any
remaining principal and interest owed.
7. No Offset. Borrower hereby waives any rights of offset it now has or may hereafter
have against the City, its successors and assigns.
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8. Waiver: Attornevs’ Fees. Borrower and any endorsers or guarantors of this City
Note, for themselves, their heirs, legal representatives, successors and assigns, respectively,
severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor
and non-payment of this City Note, and expressly waive any rights to be released by reason
of any extension of time or change in terms of payment, or change, alteration or release of any
security given for the payments hereof, and expressly waive the right to plead any and all statutes
of limitations as a defense to any demand on this City Note or agreement to pay the same,,and
jointly and severally agree to pay all costs of collection when incurred, including reasonable
attorneys’ fees. If an action is instituted on this City Note, the undersigned promises to pay,
in addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys’ fees in such action.
9. Manner and Place of Pavment. All payments of principal and interest due under
this City Note, as well as any additional payments set forth in the City Loan Deed of Trust, shall
be payable in lawful money of the United States of America at the office of the City of Carlsbad,
Housing and Redevelopment Department, 2965 Roosevelt Drive, Suite B, Carlsbad, California
92008, or such other address as the City may designate in writing.
10. Nonrecourse Obliaation. The Borrower shall not have any direct or indirect personal
liability for payment of the principal of, or interest on, this City Note, the Development Agreement,.
or the City Regulatory Agreement or the performance of the covenants of the Borrower under
the City Loan Deed of Trust securing this City Note. The sole recourse of the City with respect
to the principal of, or interest on, the City Note and defaults by Borrower in the performance
of its covenants under the City Loan Deed of Trust shall be to the property described in the
City Loan Deed of Trust. No judgment, or execution thereon, entered in any action, legal or
equitable, on the City Note or the City Loan Deed of Trust shall be enforced personally against
the Borrower, but shall be enforced only against the property described in the City Loan Deed
of Trust.
BORROWER:
Date.:
Rancho Cerrillo
Affordable Housing Development Agreement
01/20198
CARLSBAD FAMILY HOUSING PARTNERSHIP, a California
limited partnership
By: Housing Opportunities, Inc., a California nonprofit
public benefit corporation, Managing General Partner
By:
Title:
By: Barone Galasso and Associates, Inc., a Delaware
corporation, Co-General Partner
By:
Title:
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EXHIBIT D
FORM OF CITY LOAN DEED OF TRUST
RECORDING REQUESTED BY
’ AND WHEN RECORDED MAIL TO:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Drive, Suite B
Carlsbad, CA 92008
Attention: Housing and Redevelopment Director
No fee for recording pursuant to
Government Code Section 27383
CITY LOAN DEED OF TRUST AND SECURITY AGREEMENT
THIS CITY LOAN DEED OF TRUST AND SECURITY AGREEMENT (“Deed of Trust”) is
made as of this day of 1998, by and among Carlsbad Family Housing
Partnership, a California Limited Partnership (“Trustor”), First American Title Insurance Company,
a California corporation (“Trustee”), and the City of Carlsbad, a municipal corporation
(“Beneficiary”).
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited
and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor’s fee interest in the property located in the County of San Diego,
State of California, that is described in the attached Exhibit A, incorporated herein by this
reference (the “Property”).
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH Trustor’s interest in all easements, rights-of-way and rights used in
connection therewith or as a means of access thereto, including (without limiting the generality
of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH Trustor’s interest in any and all buildings and improvements of every
kind and description now or hereafter erected thereon, and all property of the Trustor now or
hereafter affixed to or placed upon the Property;
D-2
TOGETHER WITH Trustor’s interest in all building materials and equipment now or hereafter
delivered to said property and intended to be installed therein;
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired,
in and to any land lying within the right-of-way of any street, open or proposed, adjoining the
Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in
connection with the Property;
TOGETHER WITH Trustor’s estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property, both in law and in equity, including,
but not limited to, all deposits made with or other security given by Trustor to utility companies,
the proceeds from any or all of such property, including the Property, claims or demands with
respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or
may hereafter acquire, any and all awards made for the taking by eminent domain or purchase
in lieu thereof of the whole or any part of such property, including without limitation, any awards
resulting from a change of grade of streets and awards for severance damages to the extent
’ Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor’s interest in all articles of personal proper:y or fixtures
now or hereafter attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Property which are necessary to the complete and comfortable
use and occupancy of such building or buildings for the purposes for which they were or are
to be erected, and all renewals or replacements thereof or articles in substitution therefor, whether
or not the same are, or shall be attached to said building or buildings in any manner.
All of the foregoing, together with the Property, is herein referred to as the “Security.”
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING: .
(4 Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note
and the Development Agreement (both as defined in Article I below) until paid or cancelled.
Said principal and other payments shall be due and payable as provided in the Note and the
Loan Agreement. The Note, the Development Agreement, and the Regulatory Agreement (defined
below), and all their terms are incorporated herein by reference, and this conveyance shall secure
any and all extensions thereof, however evidenced; and
(b) ‘Payment of any sums advanced by Beneficiary to protect the Security pursuant
to the terms and provisions of this Deed of Trust following a breach of Trustor’s obligation to
advance said sums and the expiration of any applicable cure period, with interest thereon as
provided herein; and
(c) Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents (defined in Section 1.2 below).
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS
AND AGREES:
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ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms
shall have the following meanings in this Deed of Trust:
Section 1.1 The term “Development Agreement” means that certain Affordable Housing
Development Agreement by and among Trustor, Beneficiary, and Continental Ranch, Inc., a
Delaware corporation, dated as of 1998, providing for the Beneficiary to
loan to the Trustor One Million One Hundred Sixty Thousand Dollars ($1,160,000) for the
development on the Property of improvements.
Section 1.2 The term “Bank Deed of Trust” means the Construction Deed of Trust
with Assignment of Leases and Rents, Security Agreement and Fixture Filing to
I as beneficiary, from Trustor, as trustor, securing a loan from
, to Trustor in the amount of Seven Million Seven Hundred Thousand Dollars .
($7,700,000).
Section 1.3 The term “Loan Documents“ means this Deed of Trust, the Note, the
Development Agreement, and the Regulatory Agreement.
Section 1.4 The term “Note” means the City Note in the principal amount of One Million
One Hundred Sixty Thousand Dollars ($1 ,160,OOO) dated , 1998, executed
by the Trustor in favor of the Beneficiary, the payment of which is secured by this Deed of Trust.
(A copy of the Note is on file with the Beneficiary and terms and provisions of the Note are
incorporated herein by reference.)
Section.l.5 The term “Principal” means the aggregate of the amounts required to be
paid under the Note.
Section 1.6 The term “Regulatory Agreement” means the Regulatory Agreement by
and between the Trustor and the Beneficiary of even date herewith.
ARTICLE 2
MAINTENANCE AND MODIFICATION OF
THE PROPERTY AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note,
the Trustor will, at the Trustor’s own expense, maintain, preserve and keep the Security or cause
the Security to be maintained and preserved in good condition, subject to Article 4 below. The
Trustor will from time to time make or cause to be made all repairs, replacements and renewals
deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these
matters or for the making of improvements or additions to the Security.
Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
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diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty (30) days
or more, and to take all other reasonable steps to forestall the assertion of claims of lien against
the Security of any part thereof. Trustor irrevocably appoints, designates and authorizes
Beneficiary as its agent (said agency being coupled with an interest) with the authority, but
without any obligation, to file for record any notices of completion or cessation of labor or any
other notice that Beneficiary deems necessary or desirable to protect its interest in and to the
Security or the Loan Documents; provided, however, that Beneficiary shall exercise its rights
as agent of Trustor only in the event that Trustor shall fail to take, or shall fail to diligently
continue to take, those actions as hereinbefore provided, after notice and expiration of all
applicable cure periods.
Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall
not be obligated to pay any claims for labor, materials or services which Trustor in good faith
disputes and is diligently contesting provided that Trustor shall, at Beneficiary’s written request,
within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder I
of San Diego County, a surety bond in an amount 1 and % times the amount of such claim item
to protect against a claim of lien, or provide such other security reasonably satisfactory to
Beneficiary.
Section 2.2 Granting of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges
in the nature of easements with respect to any property or rights included in the Security except
those required or desirable for installation and maintenance of public utilities including, without
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law.
As to these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements.
ARTICLE 3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior to delinquency, all taxes, assessments, charges
and levies imposed by any public authority or utility company which are or may become a lien
affecting the Security or any part thereof; provided, however, if such taxes, assessments or
charges may be paid in installments, Trustor may pay in such installments; and provided further,
that Trustor shall not be required to pay and discharge any such tax, assessment, charge or
levy so long as Trustor is contesting the legality thereof in good faith and by appropriate
proceedings and Trustor has adequate funds to pay any liabilities contested pursuant to this
Section 3.1. The provisions of this Section 3.1 shall not be construed to require that Trustor
maintain a reserve account, escrow account, impound account or other similar account for the
payment of future taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this Section
to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after
the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay
such items within seven (7) business days after receipt of such notice or, alternatively, provides
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Beneficiary with evidence Trustor is contesting such items in accordance with this Section.
Any amount so advanced therefor by Beneficiary, together with interest thereon from the date
of such advance at the maximum rate permitted by law, shall become an additional obligation
of Trustor to the Beneficiary and shall be secured hereby, and Trustor agrees to pay all such
amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under
the Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid obligations secured hereunder
fulfilled, and this reconveyed.
All such insurance policies and coverages shall be Trustor’s sole cost and expense.
Certificates of all of the above insurance policies, showing the full force and effect, shall be
delivered to the Beneficiary upon demand therefor at any time prior to the Beneficiary’s receipt
of the entire Principal and all amounts secured by this Deed of Trust.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust, the Beneficiary, after at least seven (7) days prior notice to Beneficiary, may
(but shall be under no obligation to) take out the required policies of insurance and pay the
premiums on the same; and all amounts so advanced therefor by the Beneficiary shall become
an additional obligation of the Trustor to the Beneficiary (together with interest as set forth below)
and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the
Beneficiary, and if not so paid, shall bear interest from the date of the advance at the rate of
six percent (6%) per annum.
ARTICLE 4
DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection
with or in lieu of (1) taking of all or any part of or any interest in the Property by or under assertion
of the power of eminent domain, (2) any damage to or destruction of the Property or any part
thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property
(“Funds”) are hereby assigned to and shall be paid to the Beneficiary by a check made payable
to the Beneficiary. Upon the occurrence of an Event of Default (as defined in the Development
Agreement), the Beneficiary shall be entitled to settle and adjust all claims under insurance policies
provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance
the amount of all expenses incurred by it in connection with any such settlement or adjustment.
All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied
to the payment of the costs of repairing or rebuilding that part of the improvements on the
Property damaged or destroyed if (i) the Trustor agrees in writing within ninety (90) days after
payment of the proceeds of insurance that such repair or rebuilding is economically feasible,
and (ii) each lender of an outstanding Construction and Permanent Loan (as defined in the
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Development Agreement) permits such repairing or rebuilding, provided that the extent of
Trustor’s obligation to restore the improvements shall be limited to the amount of the insurance
proceeds. If the improvements are not repaired or rebuilt as provided in this Section 4.1, all
such proceeds shall be applied to repayment of outstanding loans including the loan secured
by this Deed of Trust, in the order of lien priority. Application of all or any part of the Funds
collected and received by the Beneficiary or the release thereof shall not cure or waive any default
under this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to
the rights of any senior mortgage lender.
ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES;
PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and *
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys’ Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred
by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date
such expenses are incurred at the six percent (6%) per annum,
Section 5.3 Payment of the Principal. .
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and at the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed
of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall
constitute a fixtures filing under the California Commercial Code, As to any personal property
not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement
under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements pursuant
to the appropriate statutes, and any other documents or instruments as are reasonably required
to convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees
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to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary
to maintain such valid perfected security interest in the Security in order to secure the payment
of the Note in accordance with its terms. The Beneficiary is authorized to file a copy of any
such financing statement in any jurisdictions) as it shall deem appropriate from time to time
in order to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
The Trustor shall operate the Security (and, in case of a transfer of a portion of the
Security subject to this Deed of Trust, the transferee shall operate such portion of the Security)
in full compliance with the Loan Documents.
Section 5.7 Inspection of the Security.
At any and ail reasonable times upon seventy-two (72) hours’ notice, subject to the rights
of tenants, the Beneficiary and its duly authorized agents, attorneys, experts, engineers, .
accountants and representatives shall have the right, without payment of charges or fees, to
inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, age, disability, sex, sexual orientation, marital status, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall
the Trustor itself or any person claiming under or through it establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The
foregoing covenants shall run with the la?d.
Section 5.9 Subordination.
The lien of this Deed of Trust shall be subordinate to the lien of the Bank Deed of Trust,
recorded concurrently herewith, and the lien of the deed(s) of trust to
I securing the permanent loan(s) for the improvements on the Property.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Acceleration of Maturity.
If an Event of Default, (as defined in the Development Agreement), shall have occurred
and be continuing, then at the option of the Beneficiary, the amount of any payment related
to the Event of Default and the unpaid Principal of the Note shall immediately become due and
payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified
in the Loan Documents), and no omission on the part of the Beneficiary to exercise such option
when entitled to do so shall be construed as a waiver of such right.
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Section 6.2 The Beneficiary’s Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or proceeding,
or by a receiver appointed by a court, and without regard to the adequacy of its security, enter
upon the Security and take possession thereof (or any part thereof), in its own name or in the
name of Trustee, and do any acts which it deems necessary or desirable to preserve the value
or marketability of the Property, or part thereof or interest therein, increase the income therefrom
or protect the security thereof. The entering upon and taking possession of the Security shall
not cure or waive any Event of Default or Notice of Default (as defined below) hereunder or
invalidate any act done in response to such Event of Default or pursuant to such Notice of Default
and, notwithstanding the continuance in possession of the Security, Beneficiary shall be entitled
to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any
Event of Default, including the right to exercise the power of sale;
(b) commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof;
(cl Deliver to Trustee a written declaration of default and demand for sale, and a
written notice of default and election to cause Trustor’s interest in the Security to be sold (“Notice
of Default and Election to Sell”), which notice Trustee or Beneficiary shall cause to be duly filed
for record in the official Records of San Diego County; or
(4 Exercise all other rights and remedies provided herein, or in any other document
or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations
‘secured hereby, or provided by law.
Section 6.3 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained
following an Event of Default, the Beneficiary shall give notice to the Trustee (the “Notice of
Sale”) and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit
of which shall be deemed to constitute evidence that the unpaid principal amount of the Note
is immediately due and payable), and such receipts and evidence of any expenditures made
that are additionally secured hereby as Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be
recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then
required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse
of such time as may then be required by law and after recordation of such Notice of Default
and Election to Sell and after Notice of Sale having been given as required by law, sell the
Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole
or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it
may determine unless specified otherwise by the Trustor according to California Civil Code Section
29249(b), at public auction to the highest bidder, for cash in lawful money of the United States
payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its
good and sufficient deed or deeds conveying the property so sold, but without any covenant
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or warranty, express or implied. The recitals in such deed or any matters of facts shall be
conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor,
Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants to warrant
and defend the title of such purchaser or purchasers.
fb) After deducting all reasonable costs, fees and expenses of Trustee, including costs
of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to
payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to Beneficiary
under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if
any, to Trustor.
(cl Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and from time to time thereafter, and without
further notice make such sale at the time fixed by the last postponement, or ray, in its discretion,
give a new Notice of Sale.
Section 6.4 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter
of right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest of Trustor therein, shall have the right
to ‘apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or
a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further
notice of any application therefor. Any such receiver or receivers shall have all the usual powers
and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in
case of entry as provided herein, and shall continue as such and exercise all such powers until
the date of confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 6.5 Remedies Cumulative.
Subject to Section 7.13 below, no right, power or remedy conferred upon or reserved
to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power
or remedy, but each and every such right, power and remedy shall be cumulative and concurrent
and shall be in.addition to any other right, power and remedy given hereunder or now or hereafter
existing at law or in equity.
Section 6.6 No Waiver.
(4 No delay or omission of the Beneficiary to exercise any right, power or remedy
accruing upon any Event of Default shall exhaust or impair any such right, power or remedy,
or shall be construed to be a waiver of any such Event of Default or acquiescence therein; and
every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised
from time to time and as often as may be deemed expeditious by the Beneficiary. No consent
or waiver, expressed or implied, by the Beneficiary to any breach by the Trustor in the
performance of the obligations hereunder shall be deemed or construed to be a consent to or
waiver of obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain
of any act or failure to act or to declare an Event of Default, irrespective of how long such failure
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continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any
rights, power or remedies consequent on any Event of Default by the Trustor.
(b) If the Beneficiary (i) grants forbearance or an extension of time for the payment
of any sums secured hereby, (ii) takes other or additional security or the payment of any sums
secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv)
releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any
of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the
granting of any easement or other right affecting the Security, or (iv) makes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
modify, change or affect the obligations under this Deed of Trust, or any other obligation of
the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-
signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or
omission preclude the Beneficiary from exercising any right, power or privilege herein granted
or intended to be granted in any Event of Default then made or of any subsequent Event of
Default, nor, except as otherwise expressly provided in an instrument or instruments executed ’
by the Beneficiary shall the lien of this Deed of Trust be altered thereby,
Section 6.7 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Security and the rights of the
Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect
its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement
of or compliance with any legislation or other governmental enactment, rule or order that may
be unconstitutional or otherwise .invalid, if the enforcement for compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
Section 6.8 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim
and other documents as may be necessary or advisable in order to have the claims of the
Beneficiary allowed in such proceedings and for any additional amount which may become due
and payable by the Trustor hereunder after such date.
Section 6.9 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of
protest and nonpayment, protest, notice of interest on interest and late charges, and diligence
in taking any action to collect any sums owing under the Note or in proceedings against the
Security, in connection with the delivery, acceptance, performance, default, endorsement or
guaranty of this Deed of Trust.
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ARTICLE 7
MISCELLANEOUS
Section 7.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only
by an instrument in writing signed by Beneficiary and Trustor.
Section 7.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid
or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention,
and upon payment by Trustor of Trustee’s reasonable fees, Trustee shall reconvey the Security
to Trustor, or to the person or persons legally entitled thereto.
Section 7.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or
convenient for one of the parties hereto to serve any notice, demand or communication upon
the other party, such notice, demand or communication shall be in writing and shall be served,
personally or by depositing the same in the registered United States mail, return receipt requested,
postage prepaid and (1) if intended for Beneficiary shall be addressed to:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Drive, Suite 8
Carlsbad, CA 92008
Attention: Housing and Redevelopment Director ’
and (21 if intended for Trustor shall be addressed to:
Carlsbad Family Housing Partnershp, a
California Limited Partnership
c/o Barone Galasso and Associates, Inc.
Attn: Michael 8. Galasso
600 West Broadway, Suite 1070
San Diego, California 92101
and, following notice to Beneficiary that Boston Capital (or its affiliate) has become a limited
partner of the Trustor, with a copy to:
Boston Capital
Any notice, demand or communication shall be deemed given, received, made or communicated
on the date personal delivery is effected or, if mailed in the manner herein specified, on the
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either
party may change its address at any time by giving written notice of such change to Beneficiary
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or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to
the date such change is desired to be effective.
Section 7.4 Captions,
The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
Section 7.5 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance
of the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or s
partially secured portion of the debt, and all payments made on the debt, whether voluntary
or under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or partially
secured by the lien of this Deed of Trust.
Section 7.6 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of
the State of California.
Section 7.7 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
Section 7.8 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
Section 7.9 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect
the Security.
Section 7.10 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder, Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference
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to this Deed of Trust and its place of record, which, when duly recorded in the proper office
of the county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
Section 7.11 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured
by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 7.12 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged,
is made public record as provided by law. Except as otherwise provided by law the Trustee is
not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action
of proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
Section 7.13 Nonrecourse Obligations
The Trustor shall not have any direct or indirect personal liability for payment of the
principal of, or interest on, the Note or the performance of the covenants of the Trustor under.
the Loan Documents. The sole recourse of the Beneficiary with respect to the principal of, or
interest on, the Note and defaults by Trustor in the performance of its covenants under the Loan
Documents shall be to the Security. No judgment, or execution thereon, entered in any action,
legal or equitable, on the Loan Documents shall be enforced personally against the Trustor but
shall be enforced only against the Security.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year
first above written.
TRUSTOR:
CARLSBAD FAMILY HOUSING PARTNERSHIP, a California
limited partnership
By: Housing Opportunities, Inc., a California nonprofit
public benefit corporation, Managing General Partner
By:
Title:
By: Barone Galasso and Associates, Inc., a Delaware
corporation, Co-General Partner
By:
Title:
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STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO 1
On ,19-r before me,
Notary Public in and for said State, personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature
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C
EXHIBIT E
Redording requested by and
when recorded, mail to:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008
Attn: Housing and Redevelopment Director
No fee for recording pursuant to
Government Code Section 27383.
CITY REGULATORY AGREEMENT
(Ranch0 Carrillo Development - Phase 1)
This City Regulatory Agreement is made this day of , 1998,
by and between the City of Cartsbad, a municipal corporation (the “City”), and Carlsbad Family,
Housing Partnership, a California Limited Partnership, (the “Borrower”).
RECITALS
A. The Borrow er has a fee interest in a parcel of real property located in the City
of Carlsbad as more particularly described in Exhibit A attached to this Agreement. The Borrower’s
fee interest in the real property is referred to as the “Property” in this City Regulatory Agreement.
The Borrower intends to develop one hundred sixteen (116) units of multi-family housing (the
“Development”) on the Property.
B. To assist the Borrower in the development of the Development, the City has agreed
to make a loan to the Borrower in the amount One Million One Hundred Sixty Thousand Dollars
($1 ,160,OOO) (the “City Loan”). The City Loan is being made available in order to help achieve
financial feasibility for the Development and to provide units in the Development which are
affordable to Low Income Households.
C. As a condition of the City Loan, the City has required the Borrower to maintain
all one hundred sixteen (116) of the Development units as affordable to Low-Income Households,
excluding any units for resident managers.
D. The purpose of this Regulatory Agreement is to regulate and restrict the occupancy
and rents of the Development. The covenants in this City Regulatory Agreement are intended
to run with the land and be binding on the Borrower and its successors and assigns.
In consideration of their mutual agreements, the Borrower and City agree as follows:
E-2
DEFINITIONS
The following terms have the meanings and content set forth in this section wherever
used in this Regulatory Agreement or attached exhibits.
1. “CITY” is the City of Carlsbad, a municipal corporation, and its officers, officials,
directors, employees, agents and authorized representatives.
2. “CITY LOAN” is the City’s loan of funds to the Borrower for the Project, in the
amount of One Million One Hundred Sixty Thousand Dollars ($1,160,000),
3. “CITY LOAN DOCUMENTS” are collectively the Development Agreement, the
City Loan Deed of Trust, the City Note, all of even date herewith, and this Regulatory Agreement
as they may be amended, modified, or restated from time to time, along with all exhibits and
attachments to these documents.
4. “AREA MEDIAN INCOME” means the median income for the San Diego Primary
Metropolitan Statistical Area (“PMSA”), with adjustments for household size, as determined
from time to time by HUD pursuant to the United States Housing Act of 1937, as amended.
If HUD no longer publishes such income determinations, the City shall use the median income.
for San Diego County as published by HCD. If HCD no longer publishes such income
determinations, the City shall calculate median income in a manner consistent with the methods
previously used by HUD.
5. “BORROWER” means Carlsbad Family Housing Partnership, a California Limited
Partnership.
6. “DEVELOPMENT” means the development and operation of approximately one
hundred sixteen (116) units of multifamily housing on the Property according to the terms of
this City Regulatory Agreement. .
7. “HCD” means the California Department of Housing and Community Development.
8. “HUD” means the United States Department of Housing and Urban Development.
9. “LOW-INCOME HOUSEHOLD” means a household whose annual gross income
does not exceed the qualifying limits, adjusted for household size and other factors, for a low
income household for the San Diego PMSA, as determined from time to time by HUD pursuant
to the United States Housing Act of 1937, as amended, If HUD no longer publishes such income
determinations, the City shall use the low income determination for San Diego County as
published by HCD. If HCD no longer publishes such income determinations, the City shall calculate
low income in a manner consistent with the methods previously used by HUD.
10. “LOW INCOME UNITS” shall mean the Units limited io occupancy by Low Income
Households pursuant to Section 15 below.
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11. “PROPERTY” means the Borrower’s leasehold interest in the real property described
in the attached Exhibit A, wh’ich is incorporated into this City Regulatory Agreement by this
reference.
12. “UNIT” means a housing unit in the Development.
BORROWER’S OBLIGATIONS
13. COMPLIANCE WITH LOAN DOCUMENTS. The Borrower’s actions with respect
to the Property and the use of Loan funds shall at all times be in full conformity with all of the
requirements of the City Loan Documents until the repayment of the City Loan and the Agency
Second Loan.
14. TERM OF AGREEMENT. The term of this City Regulatory Agreement shall
commence upon execution and shall remain in full force and effect for fifty-five (55) years.
15. OCCUPANCY OF PROJECT. The Borrower shall limit for the full term of this City
Regulatory Agreement the rental of one hundred sixteen (116) Units to households whose incomes
at initial occupancy do not exceed the income limits for Low Income Households, excluding
any units for resident managers. Twenty percent (20%) of the Units shall be affordable to
households with incomes, at the time of initial occupancy, that do not exceed 50% of the Area
Median Income, adjusted for actual household size: forty percent (40%) of the Units shall be
affordable to households with incomes not exceeding 60% of the Area Median Income; and
forty percent (40%) of the Units shall be affordable to households with incomes not exceeding
80% of the Area Median Income.
16. MAXIMUM RENTAL CHARGES. (a) The total charges for rent and utilities to Low
Income Households occupying the Low Income Units shall not exceed the lesser of: (i) the
applicable low income housing tax credit rent, or, if lower, the rent permitted under the applicable
regulatory agreement of CHFA or TCAC or other public agency regulating affordable housing,
or (ii) one-twelfth of thirty percent (30%) of the designated percentage of Area Median Income,
adjusted for household size pursuant to subsection (c) below; provided, however, for Low Income
Households occupying the Low Income Units whose gross income, upon annual income
recertification, exceeds fifty percent (50%), sixty percent (60%), or eighty percent (80%) of
Area Median Income, the Borrower may charge a rent equal to the lesser of: (x) the applicable
low income housing tax credit rent, or, if lower, the rent permitted under the applicable regulatory
agreement of CHFA or TCAC or other public agency regulating affordable housing, or (y) thirty
percent (30%) of the gross income of the household, adjusted for household size pursuant to
subsection (b) below. In the event the gross income of a Low Income Household, upon annual
income recertification, exceeds the maximum income for a Low Income Household, the Borrower
shall rent the next available Unit to a Low income Household and shall not be required to terminate
the tenancy of the over-income household and shall not be restricted in the rent charged to the
over-income household so long as the over-income household otherwise remains a tenant in
good standing in the Development.
(b) In calculating the allowable rent for the Units, the Borrower shall use the occupancy
per unit assumptions used by the California Tax Credit Allocation Committee (“TCAC”) for so
long as the Project is subject to a TCAC regulatory agreement; and if the Project is no longer
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subject to a TCAC regulatory agreement, the Borrower shall use the occupancy per unit
assumption of one more occupant per unit than the number of bedrooms in the unit. In no case,
however, shall the Borrower be required by this City Regulatory Agreement to use occupancy
per unit assumptions which would cause the Borrower to be in violation of any other regulatory
agreement recorded against the Property by any other federal or state government agency or
any lender.
17. CONDOMINIUM CONVERSION. The Borrower shall not convert Units to
condominium or cooperative ownership or sell condominium or cooperative conversion rights
to the Property during the term of this City Regulatory Agreement.
18. NONDISCRIMINATION. The Borrower shall not discriminate or segregate in the
use, enjoyment, occupancy, conveyance, lease, sublease, or rental of the Project on the basis
of race, color, ancestry, national origin, religion, sex, sexual preference, age, marital status,
family status, source of income, physical or mental disability, or any other arbitrary basis.
GENERAL PROVISIONS
19. SUBORDINATION. The City agrees that the City Manager shall subordinate this
City Regulatory Agreement to the lien or encumbrance of any private construction or permanent
lender providing financing for the Project upon the finding of the City Manager that: (i) an
economically feasible loan is not reasonably available on comparable terms and conditions without
subordination; and (ii) the mortgage to which the City Regulatory Agreement is being subordinated
contains provisions meeting the requirements of Health and Safety Code Section 33334.14(a)
reasonably designed to protect the City’s interest in the event of default under such mortgage.
The City agrees that this City Regulatory Agreement shall be subordinated to any federal or
state government agency regulating the Project which requires that this City Regulatory
Agreement be subordinate to such government agency’s documents or liens. The City will execute
subordination agreements in a form reasonably acceptable to the lending entity or government
agency to subordinate this City Regulatory Agreement as provided in this Section.
20. DEFAULT AND REMEDIES. In the event of any breach of any agreement or
obligation under this City Regulatory Agreement by the Borrower, the City shall provide written
notice to the Borrower of the breach. The Borrower shall have an opportunity to cure the breach
within thirty (30) days from the Borrower’s receipt of the written notice or, if the breach cannot
be cured within thirty (30) days, the Borrower shall not be in breach so long as the Borrower
is diligently undertaking to cure such breach. If the Borrower fails to perform a timely cure of
the specified breach, subject to Section 21, the City may proceed with any or all of the following
remedies upon the Borrower’s failure to cure or undertaking to cure:
A. Bring an action in equitable relief seeking the specific performance by the
Borrower of the terms and conditions of this City Regulatory Agreement,
or enjoining, abating, or preventing any violation of the terms and
conditions, or seeking declaratory relief;
B. Pursue any other remedy allowed at law or in equity.
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21. LIMITED PARTNER CURE PERIODS. (a) Notwithstanding anything to the contrary
contained in this City Regulatory Agreement or the City Loan Documents and in addition to any
other cure provisions contained in this City Regulatory Agreement, the limited partner of the
Borrower shall have the right but not the obligation to cure any defaults of the Borrower
hereunder, and the City agrees to accept cures tendered by the limited partner on behalf of the
Borrower within the cure periods described below: the limited partner of Borrower shall have
the right to cure all defaults within sixty (60) days after receipt of notice thereof. However,
if a default is not reasonably capable of being cured within sixty (60) days or if the limited partner
notifies the City that it is in the process of removing the managing general partner of the Borrower
(as such process may be stayed by injunction, bankruptcy or similar proceedings), the limited
partner shall have such additional time as is reasonably necessary to cure such default or remove
the managing general partner, provided the limited partner has commenced and is diligently
proceeding to cure such default or remove the managing general partner, as applicable (taking
into account the effect of injunction, bankruptcy or similar proceedings).
(b) If, after the time provided in Sections 20 and 21, Borrower or the limited partner .
has not cured the default, the City may apply to any court, state or federal, for specific
performance of this City Regulatory Agreement or an injunction against any violation of this
City Regulatory Agreement, or any other remedies at law or in equity or any such other actions
as shall be necessary or desirable so as to correct non-compliance with this City Regulatory.
Agreement.
22. GOVERNING LAW. This City Regulatory Agreement shall be interpreted under
and be governed by the laws of the State of California.
23. ATTORNEYS’ FEES AND COSTS. In the event that any legal or administrative
action is commenced to enforce, protect, or establish any right or remedy under this City
Regulatory Agreement, the prevailing party in any such action shall be entitled to recover all
reasonable attorneys’ fees and costs incurred in such action.
24. TIME. Time is of the essence in this City Regulatory Agreement.
25. CONSENTS AND APPROVALS. Any consent or approval of the City required under
this City Regulatory Agreement shall not be unreasonably withheld. Any approval must be in
writing and executed by an authorized representative of the City.
26. NOTICES, DEMANDS AND COMMUNICATIONS. All notices, demands and
communications between the Borrower and the City shall be sufficiently given and shall not
be deemed given unless dispatched by certified mail, postage prepaid, return receipt requested,
or delivered by express delivery service with a delivery receipt, to the principal offices of the
Borrower and the City as follows:
City: City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, California 92008
Attention: Housing and Redevelopment Director
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Borrower: Carlsbad Family Housing Partnershp, a
California Limited Partnership
c/o Barone Galasso and Associates, Inc.
Attn: Michael B. Galasso
600 West Broadway, Suite 1070
San Diego,.California 92101
Following notice by Borrower to the City that Boston Capital (or its affiliate) has been admitted
as a limited partner of Borrower, with a copy to:
Boston Capital
Notice shall be deemed to have been effective on the date shown on the delivery receipt
as the date of delivery, the date delivery was refused, or the date the notice was returned as
undeliverable.
27. BINDING UPON SUCCESSORS. All provisions of this City Regulatory Agreement
shall be binding upon and inure to the benefit of the successors, transferees and assigns of the
Borrower and the City, and shall run with the land for the full term of this City Regulatory.
Agreement.
28. AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to this
City Regulatory Agreement must be in writing, and shall be effective only if executed by both
the Borrower and the City.
29. SEVERABILITY. Every provision of this City Regulatory Agreement is intended
to be severable. If any provision of this Agreement shall be held invalid, illegal, or unenforceable
by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired.
The parties have executed this Regulatory Agreement as of the date first written above.
BORROWER:
Date: CARLSBAD FAMILY HOUSING PARTNERSHIP, a California
limited partnership
By: Housing Opportunities, Inc., a California nonprofit
public benefit corporation, Managing General Partner
By:
Title:
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CITY:
Date:
APPROVED AS TO FORM:
Ronald R. Ball
City Counsel
Asncho Carrillo
Affordable Housing Development Agreement
Q1120190
By: Barone Galasso and Associates, Inc., a Delaware
corporation, Co-General Partner
By:
Title:
CITY OF CARLSBAD, a municipal corporation
By:
Its:
.
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EXHIBIT F
Master Developer Loan Note
$1,297,967 , 1998
Carlsbad, California
FOR VALUE RECEIVED, CARLSBAD FAMILY HOUSING PARTNERSHIP, a California Limited
Partnership (“Borrower”), promises to pay to Continental Ranch, Inc., a Delaware corporation
(“Master Developer”), or order, the principal sum of One Million Two Hundred Ninety-Seven
Thousand Nine Hundred Sixty-Seven Dollars ($1,297,967), or so much thereof as is advanced
to Borrower by the Master Developer pursuant to Section 6.6 of the Development Agreement
(defined below), plus simple interest accruing at the rate of percent (- %) per annum.
1. Development Agreement. This Master Developer Loan Note is made pursuant
to an Affordable Housing Development Agreement dated as of , 1998 (the
“Development Agreement”) by and among the Borrower, the City of Carlsbad, a municipal
corporation, and Master Developer.
2. Term. The term of this Master Developer Loan Note (the “Term”) shall commence
on the date of this Master Developer Loan Note and shall end fifty-five (55) years from the date
of recordation of the deed of trust securing the Permanent Loan (as defined in the Development
Agreement) (the “Due Date”).
3. Amount and Time of Pavments. All amounts due under this Master Developer
Loan Note shall be due and payable as set forth in Section 6.3 of the Development Agreement.
4. Preoavment. Borrower shall have the right to prepay all or a portion of the principal
and interest due under this Master Developer Loan Note without any charge or penalty being
made therefor.
5. Deed of Trust. This Master Developer Loan Note is secured by a deed of trust
of even date herewith (the “Master Developer Loan Deed of Trust”),
6. Acceleration. Upon the occurrence of a default under the Development Agreement
or Master Developer Loan Deed of Trust, and expiration of all applicable notice and cure periods
(an “Event of Default”), the Master Developer shall have the right to accelerate the Due Date
of this Master Developer Loan Note and declare all of the unpaid principal and accrued interest
immediately due and payable. Any failure by the Master Developer to pursue its legal and equitable
remedies upon an Event of Default shall not constitute a waiver of the Master Developer’s right
to declare an Event of Default and exercise all of its rights under this Master Developer Loan
Note, the Master Developer Loan Deed of Trust, and the Development Agreement. Nor shall
acceptance by the Master Developer of any payment provided for herein constitute a waiver
of the Master Developer’s right to require prompt payment of any remaining principal and interest
owed.
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7. No Offset. Borrower hereby waives any rights of offset it now has or may hereafter
have against the Master Developer, its successors and assigns.
8. Waiver: Attornevs’ Fees . Borrower and any endorsers or guarantors of this Master
Developer Loan Note, for themselves, their heirs, legal representatives, successors and assigns,
respectively, severally waive diligence, presentment, protest, and demand, and notice of protest,
dishonor and non-payment of this Master Developer Loan Note, and expressly waive any rights
to be released by reason of any extension of time or change in terms of payment, or change,
alteration or release of any security given for the payments hereof, and expressly waive the
right to plead any and all statutes of limitations as a defense to any demand on this Master
Developer Loan Note or agreement to pay the same, and jointly and severally agree to pay all
costs of collection when incurred, including reasonable attorneys’ fees. If an action is instituted
on this Master Developer Loan Note, the undersigned promises to pay, in addition to the costs
and disbursements allowed by law, such sum as a court may adjudge reasonable as attorneys’
fees in such action.
9. Manner and Place of Pavmenf. All payments of principal and interest due under
this Master Developer Loan Note, as well as any additional payments set forth in the Master
Developer Loan Deed of Trust, shall be payable in lawful money of the United States of America
at the office of Continental Ranch, Inc., Attn: Dave Lother, 12636 High Bluff Drive, Suite 300,.
San Diego, California 92130, or such other address as the Master Developer may designate
in writing.
BORROWER:
Date: CARLSBAD FAMILY HOUSING PARTNERSHIP, a California
limited partnership
By: Housing Opportunities, Inc., a California nonprofit
public benefit corporation, Managing General Partner
Byi
Title:
By: Barone Galasso and Associates, Inc., a Delaware
corporation, Co-General Partner
By:
Title:
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EXHIBIT G
Master Developer Loan Deed of Trust
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EXHIBIT G
FORM OF MASTER DEVELOPER LOAN DEED OF TRUST
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Continental Ranch, Inc.
12636 High Bluff Drive, Suite 300
San Diego, CA 92130
Attention: Dave Lother
MASTER DEVELOPER LOAN DEED OF TRUST AND SECURITY AGREEMENT
THIS MASTER DEVELOPER LOAN DEED OF TRUST AND SECURITY AGREEMENT (“Deed,
of Trust”) is made as of this of day 1998, by and among Carlsbad Family
Housing Partnership, a California Limited Partnership (“Tr&tor”), First American Title Insurance
Company, a California corporation (“Trustee”), and Continental Ranch, Inc., a Delaware
corporation (“Beneficiary”).
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited
and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security. of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor’s fee interest in the property located in the County of San Diego,
State of California, that is described in the attached Exhibit A, incorporated herein by this
reference (the “Property”).
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH Trustor’s interest in all easements, rights-of-way and rights used in
connection therewith or as a means of access thereto, including (without limiting the generality
of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH Trustor’s interest in any and all buildings and improvements of every
kind and description now or hereafter erected thereon, and all property of the Trustor now or
hereafter affixed to or placed upon the Property;
TOGETHER WITH Trustor’s interest in all building materials and equipment now or hereafter
delivered to said property and intended to be installed therein;
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TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired,
in and to any land lying within the right-of-way of any street, open or proposed, adjoining the
Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in
connection with the Property;
TOGETHER WITH Trustor’s estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property, both in law and in equity, including,
but not limited to, all deposits made with or other security given by Trustor to utility companies,
the proceeds from any or all of such property, including the Property, claims or demands with
respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or
may hereafter acquire, any and all awards made for the taking by eminent domain or purchase
in lieu thereof of the whole or any part of such property, including without limitation, any awards
resulting from a change of grade of streets and awards for severance damages to the extent
Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor’s interest in all articles of personal property or fixtures ’
now or hereafter attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Property which are necessary to the complete and comfortable
use and occupancy of such building or buildings for the purposes for which’they were or are
to be erected, and all renewals or replacements thereof or articles in substitution therefor, whether,
or not the same are, or shall be attached to said building or buildings in any manner.
All of the foregoing, together with the Property, is herein referred to as the “Security,”
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING:
(a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note
and the Development Agreement (both as defined in Article I below) until paid or cancelled.
Said principal and other payments shall be due and payable as provided in the Note and the
Loan Agreement. The Note, the Development Agreement, and the Regulatory Agreement (defined
below), and all their terms are incorporated herein by reference, and this conveyance shall secure
any and all extensions thereof, however evidenced; and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant
to the terms and provisions of this Deed of Trust following a breach of Trustor’s obligation to
advance said sums and the expiration of any applicable cure period, with interest thereon as
provided herein; and
(cl Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents (defined in Section 1.2 below).
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AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS
AND AGREES:
ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms
shall have the following meanings in this Deed of Trust:
Section 1.1 The term “Development Agreement” means that certain Affordable Housing
Development Agreement by and among Trustor, Beneficiary, and the City of Carlsbad, a municipal
corporation, dated as of 1998, providing for the Beneficiary to loan to the
Trustor One Million Two Hundred Ninety-Seven Thousand Nine Hundred Sixty-Seven Dollars
($1,297,967) for the development on the Property of improvements.
Section 1.2 The term “Bank Deed of Trust” means the Construction Deed of Trust ’
with Assignment of Leases and Rents, Security Agreement and Fixture Filing to
, as beneficiary, from Trustor, as trustor, securing a loan from
($7,700,0001. ’
to Trustor in the amount of Seven Million Seven Hundred Thousand Dollars
Section 1.3 The term “City Loan Deed of Trust” means the City Loan Deed of Trust
and Security Agreement to the City of Carlsbad, a municipal corporation, as beneficiary, from
Trustor, as trustor, securing a loan from the City of Carlsbad to Trustor in the amount of One
Million One Hundred Sixty Thousand Dollars ($1,160,000).
Section 1.4 The term “Loan Documents” means this Deed of Trust, the Note, and the
Development Agreement.
Section 1.5 The term “Master Developer Purchase Money Loan Deed of Trust” means
the deed of trust to Beneficiary, as beneficiary, from Trustor, as trustor, securing a purchase
money loan from Beneficiary to Trustor in the amount of Three Million One Hundred Thirty-Two
Thousand Dollars ($3,132,000).
Section 1.6 The term “Note” means the Master Developer Loan Note in the principal
amount of One Million Two Hundred Ninety-Seven Thousand Nine Hundred Sixty-Seven Dollars
($1,297,967) dated 1998, executed by the Trustor in favor of the
Beneficiary, the payment of which is secured, by this Deed of Trust. (A copy of the Note is on
file with the Beneficiary and terms and provisions of the Note are incorporated herein by
reference.)
Section 1.7 The term “Principal” means the aggregate of the amounts required to be
paid under the Note.
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ARTICLE 2
MAINTENANCE AND MODIFICATION OF
THE PROPERTY AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note,
the Trustor will, at the Trustor’s own expense, maintain, preserve and keep the Security or cause
the Security to be maintained and preserved in good condition, subject to Article 4 betow. The
Trustor will from time to time make or cause to be made all repairs, replacements and renewals
deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these
matters or for the making of improvements or additions to the Security.
Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation .
of labor on the work or construction on the Security for a continuous period of thirty (30) days
or more, and to take all other reasonable steps to forestall the assertion of claims of lien against
the Security of any part thereof. Trustor irrevocably appoints, designates and authorizes
Beneficiary as.its agent (said agency being coupled with an interest) with the authority, but
without any obligation, to file for record any notices of completion or cessation of labor or any
other notice that Beneficiary deems necessary or desirable to protect its interest in and to the
Security or the Loan Documents; provided, however, that Beneficiary shall exercise its rights
as agent of Trustor only in the event that Trustor shall fail to take, or shall fail to diligently
continue to take, those actions as hereinbefore provided, after notice and expiration of all
applicable cure periods.
Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall
not be obligated to pay any claims for labor, materials or services which Trustor in good faith
disputes and is diligently contesting provided that Trustor shall, at Beneficiary’s written request,
within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder
of San Diego County, a surety bond in an amount 1 and 3/2 times the amount of such claim item
to protect against a claim of lien, or provide such other security reasonably satisfactory to
Beneficiary.
Section 2.2 Granting of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges
in the nature of easements with respect to any property or rights included in the Security except
those required or desirable for installation and maintenance of public utilities including, without
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law.
As to these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements.
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ARTICLE 3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior to delinquency, all taxes, assessments, charges
and levies imposed by any public authority or utility company which are or may become a lien
affecting the Security or any part thereof; provided, however, if such taxes, assessments or
charges may be paid in installments, Trustor may pay in such installments; and provided further,
that Trustor shall not be required to pay and discharge any such tax, assessment, charge or
levy so long as Trustor is contesting the legality thereof in good faith and by appropriate
proceedings and Trustor has adequate funds to pay any liabilities contested pursuant to this
Section 3.1. The provisions of this Section 3.1 shall not be construed to require that Trustor
maintain a reserve account, escrow account, impound account or other similar account for the
payment of future taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this Section
to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after
the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay
such items within seven (7) business days after receipt of such notice or, alternatively, provides
Beneficiary with evidence Trustor is contesting such items in accordance with this Section.
Any amount so advanced therefor by Beneficiary, together with interest thereon from the date
of such advance at the maximum rate permitted by law, shall become an additional obligation
of Trustor to the Beneficiary and shall be secured hereby, and Trustor agrees to pay all such
amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under
the Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid obligations secured hereunder
fulfilled, and this reconveyed.
All such insurance policies and coverages shall be Trustor’s sole cost and expense,
Certificates of all of the above insurance policies, showing the full force and effect, shall be
delivered to the Beneficiary upon demand therefor at any time prior to the Beneficiary’s receipt
of the entire Principal and all amounts secured by this Deed of Trust.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust, the Beneficiary, after at least seven (7) days prior notice to Beneficiary, may
(but shall be under no obligation to) take out the required policies of insurance and pay the
premiums on the same; and all amounts so advanced therefor by the Beneficiary shall become
an additional obligation of the Trustor to the Beneficiary (together with interest as set forth below)
and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the
Beneficiary, and if not so paid, shall bear interest from the date of the advance at the rate of
six percent (6%) per annum.
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ARTICLE 4
DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection
with or in lieu of (1) taking of all or any part of or any interest in the Property by or under assertion
of the power of eminent domain, (2) any damage to or destruction of the Property or any part
thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property
(“Funds”) are hereby assigned to and shall be paid to the Beneficiary by a check made payable
to the Beneficiary. Upon the occurrence of an Event of Default (as defined in the Development
Agreement), the Beneficiary shall be entitled to settle and adjust all claims under insurance policies
provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance
the amount of all expenses incurred by it in connection with any such settlement or adjustment.
All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied
to the payment of the costs of repairing or rebuilding that part of the improvements on the .
Property damaged or destroyed if (i) the Trustor agrees in writing within ninety (90) days after
payment of the proceeds of insurance that such repair or rebuilding is economically feasible,
and (ii) each lender of an outstanding Construction and Permanent Loan (as defined in the
Development Agreement) permits such repairing or rebuilding, provided that the extent of.
Trustor’s obligation to restore the improvements shall be limited to the amount of the insurance
proceeds. If the improvements are not repaired or rebuilt as provided in this Section 4.1, all
such proceeds shall be applied to repayment of outstanding loans including the loan secured
by this Deed of Trust, in the order of lien priority. Application of all or any part of the Funds
collected and received by the Beneficiary or the release thereof shall not cure or waive any default
under this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to
the rights of any senior mortgage lender.
ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES;
PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys’ Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred
by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date
such expenses are incurred at the six percent (6%) per annum.
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Section 5.3 Payment of the Principal.
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and at the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed
of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall
constitute a fixtures filing under the California Commercial Code. As to any personal property
not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement
under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements pursuant *
to the appropriate statutes, and any other documents or instruments as are reasonably required
to convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees
to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary
to,maintain such valid perfected security interest in the Security in order to secure the payment.
of the Note in accordance with its terms. The Beneficiary is authorized to file a copy of any
such financing statement in any jurisdictions) as it shall deem appropriate from time to time
in order to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
The Trustor shall operate the Security (and, in case of a transfer of a portion of the
Security subject to this Deed of Trust, the transferee shall operate such portion of the Security)
in full compliance with the Loan Documents.
Section 5.7 Inspection of the Security.
At any and all reasonable times upon seventy-two (72) hours’ notice, subject to the rights
of tenants, the Beneficiary and its duly authorized agents, attorneys, experts, engineers,
accountants and representatives shall have the right, without payment of charges or fees, to
inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on ,account of race, color, creed,
religion, age, disability, sex, sexual orientation, marital status, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall
the Trustor itself or any person claiming under or through it establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The
foregoing covenants shall run with the land.
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Section 5.9 Subordination.
The lien of this Deed of Trust shall be subordinate to the lien of the Bank Deed of Trust,
recorded concurrently herewith, the lien of the City Loan Deed of Trust, recorded concurrently
herewith, the lien of the Master Developer Purchase Money Loan Deed of Trust, recorded
concurrently herewith, and the lien of the deed(s) of trust to
, securing the permanent loan(s) for the improvements on the Property.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Acceleration of Maturity.
If an Event of Default, (as defined in the Development Agreement), shall have occurred
and be continuing, then at the option of the Beneficiary, the amount of any payment related
to the Event of Default and the unpaid Principal of the Note shall immediately become due and $
payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified
in the Loan Documents), and no omission on the part of the Beneficiary to exercise such option
when entitled to do so shall be construed as a waiver of such right.
Section 6.2 The Beneficiary’s Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(al Either in person or by agent, with or without bringing any action or proceeding,
or by a receiver appointed by a court, and without regard to the adequacy of its security, enter
upon the Security and take possession thereof (or any part thereof), in its own name or in the
name of Trustee, and do any acts which it deems necessary or desirable to preserve the value
or marketability of the Property, or part thereof or interest therein, increase the income therefrom
or protect the security thereof. The entering upon and taking possession of the Security shall
not cure or waive any Event of Default or Notice of Default (as defined below) hereunder or
invalidate any act done in response to such Event of Default or pursuant to such Notice of Default
and, notwithstanding the continuance in possession of the Security, Beneficiary shall be entitled
to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any
Event of Default, including the right to exercise the power of sale;
b) commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof;
(cl Deliver to Trustee a written declaration of default and demand for sale, and a
written notice of default and election to cause Trustor’s interest in the Security to be sold (“Notice
of Default and Election to Sell”), which notice Trustee or Beneficiary shall cause to be duly filed
for record in the official Records of San Diego County; or
(4 Exercise all other rights and remedies provided herein, or in any other document
or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations
secured hereby, or provided by law.
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Section 6.3 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained
following an Event of Default, the Beneficiary shall give notice to the Trustee (the “Notice of
Sale”) and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit
of which shall be deemed to constitute evidence that the unpaid principal amount of the Note
is immediately due and payable), and such receipts and evidence of any expenditures made
that are additionally secured hereby as Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be
recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then
required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse
of such time as may then be required by law and after recordation of such Notice of Default
and Election to Sell and after Notice of Sale having been given as required by law, sell the
Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole
or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it
may determine unless specified otherwise by the Trustor according to California Civil Code Section
29249(b), at public auction to the highest bidder, for cash in lawful money of the United States
payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its
good and sufficient deed or deeds conveying the property so sold, but without any covenant
or warranty, express or implied. The recitals in such deed or any matters of facts shalt be
conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor,
Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants to warrant
and defend the title of such purchaser or purchasers.
(b) After deducting ail reasonable costs, fees and expenses of Trustee, including costs
of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to
payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to Beneficiary
under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if
any, to Trustor.
hd Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and from time to time thereafter, and without
further notice .make such sale at the time fixed by the last postponement, or ray, in its discretion,
give a new Notice of Sale.
Section 6.4 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter
of right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest of Trustor therein, shall have the right
to ‘apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or
a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further
notice of any application therefor. Any such receiver or receivers shall have all the usual powers
and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in
case of entry as provided herein, and shall continue as such and exercise all such powers until
the date of confirmation of sale of the Security, unless such receivership is sooner terminated.
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Section 6.5 Remedies Cumulative.
Subject to Section 7.13 below, no right, power or remedy conferred upon or reserved
to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power
or remedy, but each and every such right, power and remedy shall be cumulative and concurrent
and shall be in addition to any other right,.power and remedy given hereunder or now or hereafter
existing at law or in equity.
Section 6.6 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or remedy
accruing upon any Event of Default shall exhaust or impair any such right, power or remedy,
or shall be construed to be a waiver of any such Event of Default or acquiescence therein; and
every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised
from time to time and as often as may be deemed expeditious by the Beneficiary. No consent
or waiver, expressed or implied, by the Beneficiary to any breach by the Trustor in the .
performance of the obligations hereunder shall be deemed or construed to be a consent to or
waiver of obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain
of any act or failure to act or to declare an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any.
rights, power or remedies consequent on any Event of Default by the Trustor.
(b) If the Beneficiary (i) grants forbearance or an extension of time for the payment
of any sums secured hereby, (ii) takes other or additional security or the payment of any sums
secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv)
releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any
of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the
granting of any easement or other right affecting the Security, or (iv) makes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
modify, change or affect the obligations under this Deed of Trust, or any other obligation of
the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-
signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or
omission preclude the Beneficiary from exercising any right, power or privilege herein granted
or intended to be granted in any Event of Default then made or of any subsequent Event of
Default, nor, except as otherwise expressly provided in an instrument or instruments executed
by the Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 6.7 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Security and the rights of the
Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect
its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement
of or compliance with any legislation or other governmental enactment, rule or order that may
be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
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Section 6.8 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim
and other documents as may be necessary or advisable in order to have the claims of the
Beneficiary allowed in such proceedings and for any additional amount which may become due
and payable by the Trustor hereunder after such date.
Section 6.9 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of
protest and nonpayment, protest, notice of interest on interest and late charges, and diligence
in taking any action to collect any sums owing under the Note or in proceedings against the
Security, in connection with the delivery, acceptance, performance, default, endorsement or
guaranty of this Deed of Trust.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only
by an instrument in writing signed by Beneficiary and Trustor.
Section 7.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid
or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention,
and upon payment by Trustor of Trustee’s.reasonable fees, Trustee shall reconvey the Security
to Trustor, or to the person or persons legally entitled thereto.
Section 7.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or
convenient for one of the parties hereto to serve any notice, demand or communication upon
the other party, such notice, demand or communication shall be in writing and shall be served
personally or by depositing the same in the registered United States mail, return receipt requested,
postage prepaid and (1) if intended for Beneficiary shall be addressed to:
Continental Ranch, Inc.
Attn: Dave Lother
12636 High Bluff Drive, Suite 300
San Diego, CA 92130
and (2) if intended for Trustor shall be addressed to:
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earlsbad Family Housing Partnershp, a
California Limited Partnership
c/o Barone Galasso and Associates, Inc.
Attn: Michael B. Galasso
600 West Broadway, Suite 1070
San Diego, California 92101
and, following notice to Beneficiary that Boston Capital (or its affiliate) has become a limited
partner of the Trustor, with a copy to:
Boston Capital
Any notice, demand or communication shall be deemed given, received, made or communicated
on the date personal delivery is effected or, if mailed in the manner herein specified, on the
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either ’
party may change its address at any time by giving written notice of such change to Beneficiary
or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to
the date such change is desired to be effective.
Section 7.4 Captions.
The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
Section 7.5 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance
of the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary
or under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or partially
secured by the lien of this Deed of Trust.
Section 7.6 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of
the State of California.
Section 7.7 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
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Section 7.8 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
Section 7.9 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect
the Security.
Section 7.10 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference
to this Deed of Trust and its place of record, which, when duly recorded in the proper office
of the county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
Section 7.11 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured
by this Deed of Trust is hereby waived to the full extent permissible by law. .
Section 7.12 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged,
is made public record as provided by law. Except as otherwise provided by law the Trustee is
not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action
of proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year
first above written.
TRUSTOR:
CARLSBAD FAMILY HOUSING PARTNERSHIP, a California
limited partnership
By: Housing Opportunities, Inc., a California nonprofit
public benefit corporation, Managing General Partner
By:
Title:
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By: Barone Galasso and Associates, Inc., a Delaware
corporation, Co-General Partner
By:
Title:
STATE OF CALIFORNIA 1
1 ss.
COUNTY OF SAN DIEGO )
On I19-, before me,
Notary Public in and for said State, personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s).
whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and,official seal.
Signature
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EXHIBIT H
Form of Estoppel Certificate of Completion
Recording Requested By
And When Recorded Mail To:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008
Attn: Housing and Redevelopment Director
No fee for recording pursuant to
Government Code Section 27383
ESTOPPEL CERTIFICATE OF COMPl FTION.
Pursuant to Section 7.8 of the Affordable Housing Development Agreement (the
“Agreement”) by and among the City of Carlsbad, a municipal corporation (the “City”), Carlsbad
Family Housing Partnership, a California limited partnership (the “Borrower”), and Continental
Ranch, Inc., a Delaware corporation (the “Master Developer”), the City certifies that the Borrower
has met its obligations under Article 7 of the Agreement. This Estoppel Certificate of Completion
shall not constitute evidence of compliance with or satisfaction of any obligation of the Borrower
to any holder of a deed of trust securing money loaned to finance the Development or any part
thereof and shall not be deemed either a notice of completion under the California Civil Code
or a certificate of occupancy.
City of Carlsbad, a municipal corporation
By:
Its:
[Notarize signature and attach
legal description]
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EXHIBIT H
Form of Estoppel Certificate of Completion
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