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HomeMy WebLinkAbout2003-03-13; Housing Commission; MinutesThe City of Carlsbad Housing and Redevelopment Department HOUSING COMMISSION AGENDA THURSDAY, MARCH 13,2003 HOUSING AND REDEVELOPMENT OFFICE 2965 Roosevelt Street, Ste. B NOTICE TO THE PUBLIC: 1. Meetings are divided into categories shown below. 2. When you are called to speak, please come forward and state your name and address. 3. All persons requiring assistance or auxiliary aids in order to effectively participate may contact the Housing & Redevelopment Office (434-2811) at least 24 hours prior to the meeting to arrange for reasonable accommodations. CONSENT AGENDA: If you desire to talk about Consent Items a written "Request to Speak" form must be filed with the Minutes Clerk prior to the time the Consent Agenda is called. The items listed under Consent Agenda are considered routine and will be enacted by one motion as listed. There will be no separate discussion on these items prior to the time the Commission votes, unless an item is removed. PUBLIC COMMENT: If you desire to speak about an item Et listed on the agenda, a "Time Resentation Request" form should be filed with the Minutes Clerk. A total of 15 minutes is provided for the Public Comment portion of the Agenda. Speakers are limited to three (3) minutes each. In conformance with the Brown Act, no action can occur on items presented during Public Comment. PUBLIC HEARINGS: It is not necessary to file a written request to speak on items listed on this agenda as Public Hearings. ALL OTHER CATEGORIES: For all other agenda items a "Request to Speak" form must be filed with the Minutes Clerk before the item is announced. There is a five (5) minute time limit for individual meakers. ~ ~ CALLTOORDER ~ ABSENT: PLEDGE OF ALLEGIANCE ROLL CALL APPROVAL OF MINUTES NOVEMBER 14,2002 ACTION: VOTE: COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED IN THE AGENDA Please limit your comments to three minutes. (A total of five speakers may be heard.) - HOUSING COMMISSION AGENDP MARCH 13,2003 PAGE 2 NEW BUSINESS: 1. NOMINATIONS AND VOTING FOR CHAIRMAN AND VICE-CHAIRMAN. 2. ADOPTION OF A RESOLUTION RECOMMENDING APPROVAL OF THE PUBLIC HOUSING AGENCY (PHA) PLAN FOR SUBMITTAL TO THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. STAFF RECOMMENDATION: APPROVAL STAFF: ROBERTA "BOBBY NUNN HOUSING PROGRAM MANAGER 2. RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL TO PROVIDE $105,000 IN FINANCIAL ASSISTANCE AND APPROVAL OF THE LOAN AGREEMENT AND RELATED DOCUMENTS FOR CONSTRUCTION OF THREE AFFORDABLE CONDOMINIUM UNITS TO SATISFY THE REQUIREMENTS OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE LAGUNA POINT PROJECT. STAFF RECOMMENDATION RECEIVE REPORT (NO ACTION REQUIRED) STAFF: CRAIG RUIZ, MANAGEMENT ANALYST ANNOUNCEMENTS CHAIRPERSON REPORT HC RESO NO: 2003-001 VOTE: ACTION: HC RESO NO: 2003-002 VOTE: ACTION: DIRECTOR REPORT TIME: ADTOURNMENT - - -. Citv of urlsbad Housina and RedeveloPment Delrdftment ins Commission I Staff: Roberta "Bobbi" Nunn Housinq Prwram Manager ITEM NO. 2 DATE: MARCH 13,2003 SUBJECT: CARLSBAD PUBLIC HOUSING AGENCY ANNUAL PLAN That the Housing Commission BDOPT Resolution No. 2003-007, RFCO- that the Housing and Redevelopment Commission APPROVE, the Carlsbad Public Housing Agency (PHA) Annual Plan for Fiscal Year 2003 for submission to the U.S. Department of Housing and Urban Development. The Housing and Redevelopment Department administers the federally funded Section 8 Tenant-Based Rental Assistance Program for the Public Housing Agency in Carlsbad, which is more specifically known as the Carlsbad Housing Agency. Pursuant to federal regulations, Public Housing Agencies (PHA) are required to submit a 5-Year Plan which describes the PHAs mission, long term goals, and strategy for accomplishing the goals. In addition, an Annual Plan is required that provides comprehensive and specific information about the PHAs operations, policies, strategies, and resources. The Housing and Redevelopment Commission approved the 2000-2004 5-Year Plan on January 9, 2001. 111. The Annual Plan for a PHA that administers the Section 8 Tenant-Based Rental Assistance Program must address the following: e e e e e e e e e e Housing Needs of Families and Strategies for Addressing Needs Financial Resources PHA Policies Governing Eligibility, Selection and Admissions PHA Rent Determination Policies Operations and Management Policies PHA Grievance Procedures Homeownership Programs Administered by the PHA PHA Community Service and Self-Sufficiency Programs Civil Rights Certifications Fiscal Audit CARLSBAD PUBLIC HOUSING AGENCY PLAN March 13, 2003 Page 2 The Annual Plan also requires a “STATEMENT OF PROGRESS IN MEETING THE 5- YEAR PLAN GOALS. This statement is to provide a brief update on the PHAs progress in meeting its goals as described in the Five-Year Plan. The goals addressed are: Expand the supply of assisted housing. Leverage private or other public funds to create additional housing opportunities. Improve the quality of assisted housing. Increase assisted housing choices. Promote self-sufficiency and asset development of assisted households. Ensure Equal Opportunity in Housing for all Americans. For general information, the following documents are referenced in the Plan and are incorporated as exhibits to the Plan: Document A - PHA Certifications of Compliance with the PHA Plans and Related Regulations Board Resolution Document B - Certification of PHA Plans Consistency with the Consolidated Plan. Document C - Regional Analysis of Impediments to Fair Housing Choice in the San Diego Area, October 2000 Document D - City of Carlsbad Consolidated Plan, July I, 2000 to June 30, 2005 Document E - Administrative Plan for Section 8 Tenant-Based Rental Assistance under the Certificate and Voucher Programs, Revised March I999 Document F - City of Carlsbad Family Self-Sufficiency Action Plan, December 1993 Document G - City of Carlsbad Single Audit Report on Federal Award Programs, Year ended June 30,2002 The PHA Annual Plan is required to be available for public review and comment for 45 days prior to adoption by the Housing and Redevelopment Commission. The public review period commenced on March 1,2003 and will end on April 14,2003. IV. RECOMME” Staff recommends that the Housing Commission adopt Resolution No. 2003-001, recommending that the Housing and Redevelopment Commission approve the PHA Annual Plan for Fiscal Year 2003 for submission to the U.S. Department of Housing and Urban Development. EXHlBlTS 1. Housing Commission Resolution No. 2003-001 2. Annual PHA Plan for Fiscal Year 2003 3. Exhibits A-G to PHA Plans (on file at City Hall, Cole Library, Community Development Department, Dove Library, Housing and Redevelopment Department, and at the Senior Center) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 HOUSING COMMISSION RESOLUTION NO. 20031001 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA, RECOMMENDING APPROVAL OF THE CARLSBAD ANNUAL PUBLIC HOUSING AGENCY (PHA) PLAN FOR FISCAL YEAR 2003 AND AUTHORIZATION TO SUBMIT TO THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WHEREAS, the Housing and Redevelopment Department administers the Section 8 Tenant-Based Rental Assistance Program for the City of Carlsbad’s Public Housing Agency (PHA); and WHEREAS, the U.S. Department of Housing and Urban Development (HUD) has issued regulations requiring PHAs to submit 5-Year and Annual Plans consistent with the City of Carlsbad’s Consolidated Plan and local objectives; and WHEREAS, federal regulations provide that the 5-Year and Annual Plans must be adopted by the Board of Commissioners of the Housing Agency and submitted to the U.S. Department of Housing and Urban Development. NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1. The above recitations are true and correct. 2. That based on the information provided within the Housing Commission Staff Report, the Housing Commission ADOPTS Resolution No. 2003-007, recommending to the Housing and Redevelopment Commission APPROVAL of the Carlsbad Annual PHA Plan for Fiscal Year 2003 and authorization to submit to the U.S. Department of Housing and Urban Development. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3. The Housing Commission hereby recommends that the Housing and Redevelopment Director be authorized to execute all appropriate documents required for the submittal of said Annual PHA Plan. PASSED, APPROVED, AND ADOPTED, at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 13th day of March, 2003, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAl N: EDWARD SCARPELLI, VICE CHAIRPERSON CARLSBAD HOUSING COMMISSION DEBORAH K. FOUNTAIN HOUSING AND REDEVELOPMENT DIRECTOR HC RESO. NO. 2003-001 PAGE 2 The U.S. Department of Housing and Urban Development Office of Public and Indian Housing PHA Plan DRAFT Annual Plan for Fiscal Year 2003 NOTE: THIS YHA PLANS TEMPLATE (HUD 50075) IS TO BE COMPLETED IN ACCORDANCE WITH INSTRUCTIONS LOCATED IN APPLICABLE PIH NOTICES HUD 50075 OMB Approval No: 2577-0226 Expires: 03/3 1 /2002 PHA Plan Agency Identification PHA Name: Carlsbad Housing Agency PHA Number: CA077 PHA Fiscal Year Beginning: (mdyyyy) 07/2003 Public Access to Information Information regarding any activities outlined in this plan can be obtained by contacting: (select all that apply) Main administrative office of the PHA [7 PHA development management offices PHA local offices Display Locations For PHA Plans and Supporting Documents The PHA Plans (including attachments) are available for public inspection at: (select all that apply) Main administrative office of the PHA 0 PHA development management offices 0 PHA local offices 0 0 [XI PHA website [XI Other (list below) Main administrative office of the local government Main administrative office of the County government Main administrative office of the State government Public library - Dove and Cole Library Carlsbad Senior Center Community Development Department - Faraday Building PHA Plan Supporting Documents are available for inspection at: (select all that apply) Main business office of the PHA 0 PHA development management offices 0 Other (list below) PHA Identification Section, Page 1 HUD 50075 OMB Approval No: 2577-0226 Expires: 03/3 112002 Annual PHA Plan PHA Fiscal Year 2003 [24 CFR Part 903.71 - i. Annual Plan Type: Select which type of Annual Plan the PHA will submit. Standard Plan Streamlined Plan: 0 High Performing PHA 0 Small Agency (<250 Public Housing Units) Administering Section 8 Only Troubled Agency Plan - ii. Executive Summary of the Annual PHA Plan . [24 CFR Part 903.7 9 (r)] Provide a brief overview of the information in the Annual Plan, including highlights of major initiatives and discretionary policies the PHA has included in the Annual Plan. Not required per PIH 99-51. Carlsbad P.HA Annual Plan - FY 2003 1 Annual Plan Table of Contents [24 CFR Part 903.7 9 (r)] Provide a table of contents for the Annual Plan, including attachments, and a list of supporting documents available for public inspection Table of Contents Page # Annual Plan i. Executive Summary N/A ii. Table of Contents 1. Housing Needs 6 2. Financial Resources 11 3. Policies on Eligibility, Selection and Admissions 13 4. Rent Determination Policies 24 5. Operations and Management Policies 28 6. Grievance Procedures 30 7. Capital Improvement Needs NIA 8. Demolition and Disposition NIA 9. Designation of Housing NIA 10. Conversions of Public Housing NIA 1 1. Homeownership 37 12. Community Service Programs 39 13. Crime and Safety N/A 14. Pets (Inactive for January 1 PHAs) N/A 15. Civil Rights Certifications (included with PHA Plan Certifications)44 16. Audit 44 17. Asset Management N/A 18. Other Information N/A Attachments Indicate which attachments are provided by selecting all that apply. Provide the attachment’s name (A, B, etc.) in the space to the left of the name of the attachment. Note: If the attachment is provided as a SEPARATE file submission from the PHA Plans file, provide the file name in parentheses in the space to the right of the title. Required Attachments: Ix] Ix] Ix] Progress in Meeting the 5-Year Plan Mission and Goals Resident Membership of the PHA Governing Board Membership of the Resident Advisory Board Optional Attachments: IXI PHA Management Organizational Chart FY 2000 Capital Fund Program 5-Year Action Plan 0 Public Housing Drug Elimination Program (PHDEP) Plan 0 Comments of Resident Advisory Board or Boards (must be attached if not IXI Other (List below, providing each attachment name) included in PHA Plan text) 0 City of Carlsbad Housing and Redevelopment Department Mission Statement Carlsbad PHA Annual Plan - FY 2003 2 Supporting Documents Available for Review Indicate which documents are available for public review by placing a mark in the “Applicable & On Display” column in the appropriate rows. All listed documents must be on display if applicable to the program activities conducted by the PHA. List of Supporting Documents Available for Review Applicable & On Display A B C D E Supporting Document PHA Plan Certifications of Compliance with the PHA Plans and Related Redations StateLocal Government Certification of Consistency with the Consolidated Plan Fair Housing Documentation: Records reflecting that the PHA has examined its programs or proposed programs, identified any impediments to fair housing choice in those programs, addressed or is addressing those impediments in a reasonable fashion in view of the resources available, and worked or is working with local jurisdictions to implement any of the jurisdictions’ initiatives to affitively further fair housing that require the PHA’s involvement. Consolidated Plan for the jurisdictiods in which the PHA is located (which includes the Analysis of Impediments to Fair Housing Choice (AI))) and any additional backup data to support statement of housing needs in the jurisdiction Most recent board-approved operating budget for the public housing program Public Housing Admissions and (Continued) Occupancy Policy (A&O), wbich includes the Tenant Selection and Assignment Plan [TSAP] Section 8 Administrative Plan Public Housing Deconcentration and Income Mixing Documentation: 1. PHA board certifications of compliance with deconcentration requirements (section 16(a) of the US Housing Act of 1937, as implemented in the 2/18/99 Quality Housing and Work Responsibility Act Initial Guidance; Notice and any further HUD guidance) and 2. Documentation of the required deconcentration and income mixing analysis Public housing rent determination policies, including the methodology for setting public housing flat rents 0 check here if included in the public housing A & 0 Policy Schedule of flat rents offered at each public housing development 0 check here if included in the public housing Applicable Plan Component 5 Year and Annual Plans 5 Year and Annual Plans 5 Year and Annual Plans Annual Plan: Housing Needs Annual Plan: Financial Resources; Annual Plan: Eligibility, Selection, and Admwions Policies Annual Plan: Eligibility, Selection, and Admissions Policies Annual Plan: Eligibility, Selection, and Admissions Policies Annual Plan: Rent Determination Annual Plan: Rent Determination Carlsbad PHA Annual Plan - FY 2003 3 Applicable & On Display E Supporting Document Applicable Plan Component E attachment- (provided at PHA option) Approved HOPE VI applications or, if more recent, A & 0 Policy (XI check here if included in Section 8 Administrative Plan Public housing management and maintenance policy documents, including policies for the prevention or eradication of pest infestation (including cockroach Section 8 rent determination (payment standard) policies Annual Plan: Capital Needs infestation) Public housing - grievance procedures F I ~ u check here if included in the public housing A & 0 Policy [XI check here if included in Section 8 ! Section 8 informal review and hearing procedures agency FSS Action Plads for public housing andor Section 8 Administrative Plan The HUD-approved Capital FundKomprehensive Grant Program Annual Statement (HUD 52837) for the active grant vear Most recent CIAP Budgeflrogress Report (HUD 52825) for any active CIAP grant Most recent, approved 5 Year Action Plan for the Capital FundKomprehensive Grant Program, if not included as an Annual Plan: Rent Determination Annual Plan: Operations and Maintenance Annual Plan: Grievance Procedures Annual Plan: Grievance Procedures Annual Plan: Capital Needs Annual Plan: Capital Needs Annual Plan: Capital Needs approved or submitted HOPE VI Revitalization Plans or any other approved proposal for development of public housing Approved or submitted applications for demolition andor disposition of public housing Approved or submitted applications for designation of public ~~ Annual Plan: Demolition and Disnosition Annual Plan: Designation of I housing (Designated Housing Plans) I Approved or submitted assessments of reasonable I Annual Plan: Conversion of I Public Housing revitalization of public housing and approved or submitted conversion plans prepared pursuant to section 202 of the 1996 HUD Annromiations Act Approved or submitted public housing homeownership programdplans Policies governing any Section 8 Homeownership program 0 check here if included in the Section 8 Adrmnistrative Plan Any cooperative agreement between the PHA and the TANF Most recent self-sufficiency (ED/SS, TOP or ROSS or other resident services grant) grant program reports The most recent Public Housing Drug Elimination Program (PHEDEP) semi-annual performance report for any open grant and most recently submitted PHDEP application (PHDEP Plan) Public Housing Annual Plan: Homeownership Annual Plan: Homeownershp Annual Plan: Community Service & Self-Sufficiencv Annual Plan: Community Service & Self-Sufficiency Annual Plan: Community Service & Self-Sufficiency Annual Plan: Safety and Crime Prevention Carlsbad PHA Annual Plan - FY 2003 4 -- I List of Supporting Documents Available for Applicable & On Display G Supporting Document The most recent fiscal year audit of the PHA conducted under section 5(h)(2) of the U.S. Housing Act of 1937 (42 U. S.C. 1437c(h)), the results of that audit and the PHA’s response to any findings Troubled PHAs: MOARecovery Plan Other supporting documents (optional) (list individually; use as many lines as necessary) teview Applicable Plan Component Annual Plan: Annual Audit Troubled PHAs Carlsbad PHA Annual Plan - FY 2003 5 1. Statement of Housing Needs [24 CFR Part 903.7 9 (a)] A. Housing Needs of Families in the Jurisdictionh Served by the PHA Based upon the information contained in the Consolidated Plds applicable to the jurisdiction, and/or other data available to the PHA, provide a statement of the housing needs in the jurisdiction by completing the following table. In the “Overall” Needs column, provide the estimated number of renter families that have housing needs. For the remaining characteristics, rate the impact of that factor on the housing needs for each family type, from 1 to 5, with 1 being “no impact” and 5 being “severe impact.” Use N/A to indicate that no information is available upon which the PHA can make this assessment. Family Type Income <= 30% of AMI Income >30% but <=50%ofAMI ’ Income >50% but 40% of AMI Elderlv Families with Disabilities Black-Non Hi s~ anic Asidacific Islanderlother Hismmic RaceEthnicity Housing Needs of Families in the Jurisdiction 90 NIA NIA NIA NIA NIA NIA NIA NIA NIA NIA NIA NIA NIA 1,264 NIA NIA NIA NIA NIA NIA What sources of information did the PHA use to conduct this analysis? (Check all that apply; all materials must be made available for public inspection.) Consolidated Plan of the Jurisdictiods Indicate year: 2000-2005 U. S. Census data: the Comprehensive Housing Affordability Strategy (“CHAS”) dataset c] American Housing Survey data 0 Other housing market study Indicate year: Indicate year: Other sources: (list and indicate year of information) Carlsbad PHA Annual Plan - FY 2003 6 B. Housing Needs of Families on the Public Housing and Section 8 Tenant- Based Assistance Waiting Lists State the housing needs of the families on the PHA’s waiting list/s. Complete one table for each type of PHA-wide waiting list administered by the PHA. PHAs may provide separate tables for site-based or % of total families sub-jurisdictional public housing waiting lists at their option. Annual Turnover Housing Needs of Families on the Waiting List Extremely low income <=30% AMI Very low income (>30% but <=50% AMI) Low income (>50% but ~80% AMI) Waiting list type: (select one) 0 Public Housing 0 Section 8 tenant-based assistance Combined Section 8 and Public Housing Public Housing Site-Based or sub-jurisdictional waiting list (optional) If used, identify which development/ # of families 815 536 0 I Waiting list total I 1,354 Families with children Elderlv families 1,120 439 Families with Disabilities White 746 1.093 Black IndidAlaskan Asian/Pacific 166 12 53 40% I 82.7% I 32.4% I 55.1% 80.7% 12.3% .9% 3.9% I Hispanic 269 19.9% Characteristics by Bedroom Size (Public Housing Only) 1BR 2 BR 3 BR 4 BR Carlsbad PHA Annual Plan - FY 2003 7 Housing Needs of Families on the Waiting List 5 BR 5+ BR I Is the waiting list closed (select one)? If yes: No 0 Yes How long has it been closed (# of months)? Does the PHA expect to reopen the list in the PHA Plan year? 0 No 0 Yes Does the PHA permit specific categories of families onto the waiting list, even if generally closed? 0 No 0 Yes C. Strategy for Addressing Needs Provide a brief description of the PHA’s strategy for addressing the housing needs of families in the jurisdiction and on the waiting list IN THE UPCOMING YEAR, and the Agency’s reasons for choosing this strategy. (1) Stratepies Need: Shortage of affordable housing for all eligible populations Strategy 1. Maximize the number of affordable units available to the PHA within its current resources by: Select all that apply 0 0 0 0 0 Ixl Ixl €4 Ixl Ixl 0 Employ effective maintenance and management policies to minimize the number of public housing units off-line Reduce turnover time for vacated public housing units Reduce time to renovate public housing units Seek replacement of public housing units lost to the inventory through mixed finance development Seek replacement of public housing units lost to the inventory through section 8 replacement housing resources Maintain or increase section 8 lease-up rates by establishing payment standards that will enable families to rent throughout the jurisdiction Undertake measures to ensure access to affordable housing among families assisted by the PHA, regardless of unit size required Maintain or increase section 8 lease-up rates by marketing the program to owners, particularly those outside of areas of minority and poverty concentration Maintain or increase section 8 lease-up rates by effectively screening Section 8 applicants to increase owner acceptance of program Participate in the Consolidated Plan development process to ensure coordination with broader community strategies Other (list below) Carlsbad PHA Annual Plan - FY 2003 8 Strategy 2: Increase the number of affordable housing units by: Select all that apply IXI Apply for additional section 8 units should they become available Leverage affordable housing resources in the community through the creation of mixed - finance housing IXI Pursue housing resources other than public housing or Section 8 tenant-based assistance. Other: (list below) Need: Specific Family Types: Families at or below 30% of median Strategy 1: Target available assistance to families at or below 30 % of AMI Select all that apply c] IXI 0 Other: (list below) Exceed HUD federal targeting requirements for families at or below 30% of AMI in public housing Exceed HUD federal targeting requirements for families at or below 30% of AMI in tenant-based section 8 assistance Employ admissions preferences aimed at families with economic hardships Adopt rent policies to support and encourage work The Carlsbad Housing Agency has established an admissions preference for applicants who are at or below 30% of AMI. Need: Specific Family Types: Families at or below 50% of median Strategy 1: Target available assistance to families at or below 50% of AMI Select all that apply 0 0 c] Other: (list below) Employ admissions preferences aimed at families who are working Adopt rent policies to support and encourage work Carlsbad PHA Annual Plan - FY 2003 9 Need: Specific Family Types: The Elderly Strategy 1: Target available assistance to the elderly: Select all that apply Ix] Ix] Other: (list below) Seek designation of public housing for the elderly Apply for special-purpose vouchers targeted to the elderly, should they become available 0 0 Affirmatively market to local non-profit and social agencies that assist the elderly. Advertise Housing Choice Voucher Rental Assistance program at the four Senior apartment complexes and at the Senior Center Need: Specific Family Types: Families with Disabilities Strategy 1 : Target available assistance to Families with Disabilities: Select all that apply Seek designation of public housing for families with disabilities Carry out the modifications needed in public housing based on the section 504 Needs Assessment for Public Housing Apply for special-purpose vouchers targeted to families with disabilities, should they become available Ix] Affirmatively market to local non-profit agencies that assist families with disabilities Ix] Other: (list below) 0 Affirmatively market to local social agencies that assist families with disabilities. Need: Specific Family Types: Races or ethnicities with disproportionate housing needs Strategy 1: Increase awareness of PHA resources among families of races and Select if applicable ethnicities with disproportionate needs: Affirmatively market to racedethnicities shown to have disproportionate housing needs Conduct Educational Seminars in Spanish at the Centro de Informacion Attend Latino Network meetings on a quarterly basis Ix] Other: (list below) 0 0 Carlsbad PHA Annual Plan - FY 2003 10 Strategy 2: Conduct activities to affirmatively further fair housing Select all that apply Counsel section 8 tenants as to location of units outside of areas of poverty or minority concentration and assist them to locate those units Market the section 8 program to owners outside of areas of poverty /minority concentrations 0 Other: (list below) Contract with Heartland Human Relations and Fair Housing Association to provide assistance in filing discrimination complaints and train staff, owners/managers and participants on Fair Housing laws and issues. Other Housing Needs & Strategies: (list needs and strategies below) j2) Reasons for Selectinp Stratepies Of the factors listed below, select all that influenced the PHA’s selection of the strategies it will pursue: w w w 0 w w w I7 0 €4 w Funding constraints Staffing constraints Limited availability of sites for assisted housing Extent to which particular housing needs are met by other organizations in the community Evidence of housing needs as demonstrated in the Consolidated Plan and other information available to the PHA Influence of the housing market on PHA programs Community priorities regarding housing assistance Results of consultation with local or state government Results of consultation with residents and the Resident Advisory Board Results of consultation with advocacy groups Other: (list below) 0 Legislation and HUD Regulations - 2. Statement of Financial Resources [24 CFR Part 903.7 9 (b)] List the financial resources that are anticipated to be available to the PHA for the support of Federal public housing and tenant-based Section 8 assistance programs administered by the PHA during the Plan year. Note: the table assumes that Federal public housing or tenant based Section 8 assistance grant funds are expended on eligible purposes; therefore, uses of these funds need not be stated. For other funds, indicate the use for those funds as one of the following categories: public housing operations, public housing capital improvements, public housing safetyhecurity, public housing supportive services, Section 8 tenant-based assistance, Section 8 supportive services or other. Carlsbad PHA Annual Plan - FY 2003 11 Financial Resources: Planned Sources and Uses Sources I Planned$ I Planned Uses 1. Federal Grants (FY 2003 grants) a) Public Housing Operating Fund b) Public Housing Capital Fund c) HOPE VI Revitalization N/A N/A N/A N/A d) HOPE VI Demolition e) Annual Contributions for Section 8 Tenant-Based Assistance f) Public Housing Drug Elimination Program (including any Technical Assistance funds) NIA $5,544,729. N/A g) Resident Opportunity and Self- h) Community Development Block i) HOME Other Federal Grants (list below) Sufficiency Grants Grant Will apply for additional funding N/A N/A N/A 2. Prior Year Federal Grants (unobligated funds only) (list below) N/A 3. Public Housing Dwelling Rental Income Carlsbad PHA Annual Plan - FY 2003 N/A 12 4. Other income (list below) N/A 4. Non-federal sources (list below) N/A Total resources $5,544,729. 3. PHA Policies Governing Eligibility, Selection, and Admissions [24 CFR Part 903.7 9 (c)] A. Public Housing - The PHA does not administer public housing. Exemptions: PHAs that do not administer public housing are not required to complete subcomponent 3A. (1) Elipibilitv a. When does the PHA verifl eligibility for admission to public housing? (select all that 0 0 0 Other: (describe) apply) When families are within a certain number of being offered a unit: (state number) When families are within a certain time of being offered a unit: (state time) b. Which non-income (screening) factors does the PHA use to establish eligibility for 0 Criminal or Drug-related activity 0 Rental history 0 Housekeeping 0 Other (describe) admission to public housing (select all that apply)? c. 0 Yes 0 No: Does the PHA request criminal records from local law enforcement agencies for screening purposes? d. 0 Yes 0 No: Does the PHA request criminal records from State law enforcement agencies for screening purposes? e. 0 Yes 0 No: Does the PHA access FBI criminal records from the FBI for screening purposes? (either directly or through an NCIC- authorized source) J2)Waiting List Owanhation a. Which methods does the PHA plan to use to organize its public housing waiting list 0 Community-wide list 0 Sub-jurisdictional lists 0 Site-based waiting lists 0 Other (describe) b. Where may interested persons apply for admission to public housing? 0 PHA main administrative office 0 0 Other (list below) (select all that apply) PHA development site management office c. If the PHA plans to operate one or more site-based waiting lists in the coming year, answer each of the following questions; if not, skip to subsection (3) Assignment Carlsbad PHA Annual Plan - FY 2003 13 1. How many site-based waiting lists will the PHA operate in the coming year? 2. 0 Yes 0 No: Are any or all of the PHA’s site-based waiting lists new for the upcoming year (that is, they are not part of a previously-HUD- approved site based waiting list plan)? If yes, how many lists? 3. 0 Yes No: May families be on more than one list simultaneously If yes, how many lists? 4. Where can interested persons obtain more information about and sign up to be on the site-based waiting lists (select all that apply)? PHA main administrative office All PHA development management offices Management offices at developments with site-based waiting lists At the development to which they would like to apply Other (list below) 0 0 0 (3) Assignment a. How many vacant unit choices are applicants ordinarily given before they fall to the One 0 ThreeorMore bottom of or are removed from the waiting list? (select one) ~~0 b. c] Yes 0 No: Is this policy consistent across all waiting list types? c. If answer to b is no, list variations for any other than the primary public housing waiting list/s for the PHA: Carlsbad PHA Annual Plan - FY 2003 14 (4) Admissions Preferences a. Income targeting: 0 Yes 0 No: Does the PHA plan to exceed the federal targeting requirements by targeting more than 40% of all new admissions to public housing to families at or below 30% of median area income? b. Transfer policies: In what circumstances will transfers take precedence over new admissions? (list below) 0 Emergencies Overhoused Underhoused 0 Medical justification 0 0 0 Other: (list below) Administrative reasons determined by the PHA (e.g., to permit modernization work) Resident choice: (state circumstances below) c. Preferences 1. 0 Yes 0 No: Has the PHA established preferences for admission to public housing (other than date and time of application)? (If “no” is selected, skip to subsection (5) Occupancy) 2. Which of the following admission preferences does the PHA plan to employ in the coming year? (select all that apply from either former Federal preferences or other preferences) Former Federal preferences: 0 0 Victims of domestic violence 0 Substandard housing 0 Homelessness Involuntary Displacement (Disaster, Government Action, Action of Housing Owner, Inaccessibility, Property Disposition) High rent burden (rent is > 50 percent of income) Carlsbad PHA Annual Plan - FY 2003 15 Other preferences: (select below) 0 0 Veterans and veterans’ families 0 0 0 0 0 Those previously enrolled in educational, training, or upward mobility 0 [7 Other preference(s) (list below) Working families and those unable to work because of age or disability Residents who live and/or work in the jurisdiction Those enrolled currently in educational, training, or upward mobility programs Households that contribute to meeting income goals (broad range of incomes) Households that contribute to meeting income requirements (targeting) programs Victims of reprisals or hate crimes 3. If the PHA will employ admissions preferences, please prioritize by placing a “1” in the space that represents your first priority, a “2” in the box representing your second priority, and so on. If you give equal weight to one or more of these choices (either through an absolute hierarchy or through a point system), place the same number next to each. That means you can use “1” more than once, “2” more than once, etc. Date and Time Former Federal preferences: Involuntary Displacement (Disaster, Government Action, Action of Housing Owner, Inaccessibility, Property Disposition) Victims of domestic violence Substandard housing Homelessness High rent burden Other preferences (select all that apply) 0 0 Veterans and veterans’ families 0 0 0 Those previously enrolled in educational, training, or upward mobility [7 0 Other preference(s) (list below) Working families and those unable to work because of age or disability Residents who live and/or work in the jurisdiction Those enrolled currently in educational, training, or upward mobility programs Households that contribute to meeting income goals (broad range of incomes) Households that contribute to meeting income requirements (targeting) programs Victims of reprisals or hate crimes 4. Relationship of preferences to income targeting requirements: The PHA applies preferences within income tiers 0 Not applicable: the pool of applicant families ensures that the PHA will meet income-targeting requirements Carlsbad PHA Annual Plan - FY 2003 16 IS) Occupancy a. What reference materials can applicants and residents use to obtain information about 0 The PHA-resident lease 0 0 Other source (list) the rules of occupancy of public housing (select all that apply) The PHA’s Admissions and (Continued) Occupancy policy PHA briefing seminars or written materials b. How often must residents notify the PHA of changes in family composition? all that apply) 0 0 0 Other (list) (select At an annual reexamination and lease renewal Any time family composition changes At family request for revision J6) Deconcentration and Income Mixing a. 0 Yes a No: Did the PHA’s analysis of its family (general occupancy) developments to determine concentrations of poverty indicate the need for measures to promote deconcentration of poverty or income mixing? b. 0 Yes 0 No: Did the PHA adopt any changes to its admissions policies based on the results of the required analysis of the need to promote deconcentration of poverty or to assure income mixing? c. If the answer to b was yes, what changes were adopted? (select all that apply) 0 Adoption of site-based waiting lists If selected, list targeted developments below: 0 Employing waiting list “skipping” to achieve deconcentration of poverty or income mixing goals at targeted developments If selected, list targeted developments below: c] Employing new admission preferences at targeted developments If selected, list targeted developments below: c] Other (list policies and developments targeted below) Carlsbad PHA Annual Plan - FY 2003 17 d. 0 Yes 0 No: Did the PHA adopt any changes to other policies based on the results of the required analysis of the need for deconcentration of poverty and income mixing? e. If the answer to d was yes, how would you describe these changes? (select all that apply) c] Additional affirmative marketing 0 0 0 Other (list below) Actions to improve the marketability of certain developments Adoption or adjustment of ceiling rents for certain developments Adoption of rent incentives to encourage deconcentration of poverty and income- mixing f. Based on the results of the required analysis, in which developments will the PHA make special efforts to attract or retain higher-income families? (select all that apply) 0 0 Not applicable: results of analysis did not indicate a need for such efforts List (any applicable) developments below: g. Based on the results of the required analysis, in which developments will the PHA make special efforts to assure access for lower-income families? (select all that apply) 0 c] Not applicable: results of analysis did not indicate a need for such efforts List (any applicable) developments below: B. Section 8 Exemptions: PHAs that do not administer section 8 are not required to complete sub-component 3B. Unless otherwise specified, all questions in this section apply only to the tenant-based section 8 assistance program (vouchers, and until completely merged into the voucher program, certificates). J1) Elbibilitv a. IXI 0 What is the extent of screening conducted by the PHA? (select all that apply) Criminal or drug-related activity only to the extent required by law or regulation Criminal and drug-related activity, more extensively than required by law or regulation 0 More general screening than criminal and drug-related activity (list factors below) Ix] Other (list below): 0 The Housing Agency screens criminal or drug-related activity only to the extent required by law or regulation. The Housing Agency may waive the requirement prohibiting admission of persons evicted from the Section 8 program due to drug-related criminal activity for a three-year period, if the person demonstrates successful completion of a rehabilitation program approved by the Housing Agency. In addition, the Housing Agency will on a case-by-case basis determine if persons previously involved in violent Carlsbad PHA Annual Plan - FY 2003 18 criminal activity will be admitted to the Section 8 program. The Housing Agency may require a person who has previously been involved in violent criminal activity to document that rehabilitative efforts have been made. b. Ix] Yes 0 No: Does the PHA request criminal records from local law enforcement o NOTE: The PHA will request copies of criminal records from local law enforcement if a family member indicates that they have engaged in drug-related or violent criminal activity. agencies for screening purposes? c. 0 Yes No: Does the PHA request criminal records from State law enforcement agencies for screening purposes? d. 0 Yes No: Does the PHA access FBI criminal records from the FBI for screening purposes? (either directly or through an NCIC- authorized source) e. Indicate what kinds of information you share with prospective landlords? (select all that apply) 0 Criminal or drug-related activity (XI Other (describe below): Upon written authorization from an applicant or participant, the HA will provide a written response to a prospective owner divulging the following information, if available: o Name, address and telephone number of the current and three most recent landlords. o Date of occupancy and the address of the three most recent units occupied. o The dollar amount of Section 8 damage claims paid in the last three years. o The number of people in the household. J2) Waitinp List Orpanhation a. [XI None 0 Federal public housing c] Federal moderate rehabilitation c] Federal project-based certificate program 0 With which of the following program waiting lists is the section 8 tenant-based assistance waiting list merged? (select all that apply) Other federal or local program (list below) b. Where may interested persons apply for admission to section 8 tenant-based assistance? (select all that apply) Carlsbad PHA Annual Plan - FY 2003 19 PHA main administrative office Other (list below) 0 0 Via a voice mail system. Via the City of Carlsbad’s web-site Carlsbad PHA Annual Plan - FY 2003 20 /3) Search Time a. [XI Yes 0 No: Does the PHA give extensions on standard 60-day period to search for a unit? If yes, state circumstances below: The applicant/participant will initially be issued a Voucher for the term of 120 days. An extension beyond 120 days may be granted as a "reasonable accommodation" for a person with disabilities. Only one extension will be granted for an additional term of 60 days. The request for extension must be in writing. Extensions beyond 120 days, other than those for "reasonable accommodation", will only be considered for extenuating circumstances in which the applicantlparticipant was not able to search for housing. Third-party documentation will be required for extensions beyond 120 days. The extension granted would only be for the amount of time that the applicantlparticipant was not able to search for housing. Examples of requests for extensions that prevented the applicantlparticipant from searching for housing include hospitalization and/or serious illness. In most cases, 120 days is adequate time to locate a suitable unit. Extensions will not be granted because of credit problems or financial inability to relocate to another unit. J4) Admissions Preferences a. Income targeting [XI Yes 0 No: Does the PHA plan to exceed the federal targeting requirements by targeting more than 75% of all new admissions to the section 8 program to families at or below 30% of median area income? b. Preferences 1. Yes [7 No: Has the PHA established preferences for admission to section 8 tenant-based assistance? (other than date and time of application) (if no, skip to subcomponent (5) Special purpose section 8 assistance programs) 2. Which of the following admission preferences does the PHA plan to employ in the coming year? (select all that apply from either former Federal preferences or other preferences) Former Federal preferences 0 Victims of domestic violence 0 Substandard housing 0 Homelessness 0 Involuntary Displacement (Disaster, Government Action, Action of Housing Owner, Inaccessibility, Property Disposition) High rent burden (rent is > 50 percent of income) Carlsbad PHA Annual Plan - FY 2003 21 Other preferences (select all that apply) 0 IXI Veterans and veterans’ families (7 (7 (7 (7 (7 Working families and those unable to work because of age or disability Residents who live and/or work in your jurisdiction Those enrolled currently in educational, training, or upward mobility programs Households that contribute to meeting income goals (broad range of incomes) Households that contribute to meeting income requirements (targeting) Those previously enrolled in educational, training, or upward mobility programs Victims of reprisals or hate crimes Other preference(s) (list below) 0 Displaced by Government Action 0 0 A single person who is elderly, disabled or displaced is selected before a single person who is not elderly, disabled, or displaced. Applicants who are at or below 30% of AMI. 3. If the PHA will employ admissions preferences, please prioritize by placing a “1” in the space that represents your first priority, a “2” in the box representing your second priority, and so on. If you give equal weight to one or more of these choices (either through an absolute hierarchy or through a point system), place the same number next to each. That means you can use “1” more than once, “2” more than once, etc. 1 Date and Time Former Federal preferences Involuntary Displacement (Disaster, Government Action, Action of Housing Owner, Inaccessibility, Property Disposition) Victims of domestic violence Substandard housing Homelessness High rent burden Other preferences (select all that apply) 2 Veterans and veterans’ families: Working families and those unable to work because of age or disability 0 A head of household or spouse who has been discharged from military service under honorable or general (except dishonorable) conditions, or a spouse of a deceased veteran will have preference over non-veterans. 1 Residents who live and/or work in your jurisdiction Those enrolled currently in educational, training, or upward mobility programs Households that contribute to meeting income goals (broad range of incomes) Households that contribute to meeting income requirements (targeting) Those previously enrolled in educational, training, or upward mobility programs Victims of reprisals or hate crimes Other preference(s) (list below) Carlsbad PHA Annual Plan - FY 2003 22 0 Displaced by government action 0 1 A single person who is elderly, disabled or displaced is selected before a single person who is not elderly, disabled or displaced. Applicant who is at or below 30% of AMI 4. [XI 0 Among applicants on the waiting list with equal preference status, how are applicants selected? (select one) Date and time of application Drawing (lottery) or other random choice technique 5. If the PHA plans to employ preferences for “residents who live and/or work in the jurisdiction” (select one) This preference has previously been reviewed and approved by HUD The PHA requests approval for this preference through this PHA Plan 0 6. Relationship of preferences to income targeting requirements: (select one) 0 The PHA applies preferences within income tiers Not applicable: the pool of applicant families ensures that the PHA will meet income-targeting requirements (5) Special Puruose Section 8 Assistance Proprams a. In which documents or other reference materials are the policies governing eligibility, selection, and admissions to any special-purpose section 8 program administered by the PHA contained? (select all that apply) 0 Other (list below) The Section 8 Administrative Plan Briefing sessions and written materials b. How does the PHA announce the availability of any special-purpose section 8 programs to the public? 0 Through published notices [XI Other (list below): 0 Mainstream Program - notifications and workshops to agencies that assist persons with disabilities. Carlsbad PHA Annual Plan - FY 2003 23 4. PHA Rent Determination Policies [24 CFR Part 903.7 9 (d)] A. Public Housing: The PHA does not administer public housing. Exemptions: PHAs that do not administer public housing are not required to complete sub-component 4A. (1) Income Based Rent Policies Describe the PHA’s income based rent setting policyhes for public housing using, including discretionary (that is, not required by statute or regulation) income disregards and exclusions, in the appropriate spaces below. a. Use of discretionary policies: (select one) 0 The PHA will not employ any discretionary rent-setting policies for income based rent in public housing. Income-based rents are set at the higher of 30% of adjusted monthly income, 10% of unadjusted monthly income, the welfare rent, or minimum rent (less HUD mandatory deductions and exclusions). (If selected, skip to sub-component (2)) 0 The PHA employs discretionary policies for determining income based rent (If selected, continue to question b.) b. Minimum Rent 1. What amount best reflects the PHA’s minimum rent? (select one) 0 $1425 0 $26-$50 0 $0 2. Yes 0 No: Has the PHA adopted any discretionary minimum rent hardship exemption policies? 3. If yes to question 2, list these policies below: c. Rents set at less than 30% than adjusted income 1. 0 Yes 0 No: Does the PHA plan to charge rents at a fixed amount or percentage less than 30% of adjusted income? 2. If yes to above, list the amounts or percentages charged and the circumstances under which these will be used below: Carlsbad PHA Annual Plan - FY 2003 24 d. Which of the discretionary (optional) deductions andor exclusions policies does the PHA plan to employ (select all that apply) 0 0 For the earned income of a previously unemployed household member For increases in earned income Fixed amount (other than general rent-setting policy) If yes, state amounth and circumstances below: 0 0 0 0 0 Fixed percentage’ (other than general rent-setting policy) If yes, state percentageh and circumstances below: For household heads For other family members For transportation expenses For the non-reimbursed medical expenses of non-disabled or non-elderly families Other (describe below) e. Ceiling rents 1. Do you have ceiling rents? (rents set at a level lower than 30% of adjusted income) (select one) Yes for all developments Yes but only for some developments 0 No 2. For which kinds of developments are ceiling rents in place? (select all that apply) 0 For all developments 0 0 Other (list below) For all general occupancy developments (not elderly or disabled or elderly only) For specified general occupancy developments For certain parts of developments; e.g., the high-rise portion For certain size units; e.g., larger bedroom sizes Carlsbad PHA Annual Plan - FY 2003 25 3. Select the space or spaces that best describe how you arrive at ceiling rents (select all that apply) cl 0 0 0 [I] 0 0 Market comparability study Fair market rents (FMR) 95th percentile rents 75 percent of operating costs 100 percent of operating costs for general occupancy (family) developments Operating costs plus debt service The “rental value” of the unit Other (list below) f. Rent re-determinations: 1. 0 0 0 0 Between income reexaminations, how often must tenants report changes in income or family composition,to the PHA such that the changes result in an adjustment to rent? (select all that apply) Never At family option Any time the family experiences an income increase Any time a family experiences an income increase above a threshold amount or percentage: (if selected, specie threshold) Other (list below) g. Yes No: Does the PHA plan to implement individual savings accounts for residents (ISAs) as an alternative to the required 12 month disallowance of earned income and phasing in of rent increases in the next year? J2) Flat Rents 1. In setting the market-based flat rents, what sources of information did the PHA use to establish comparability? (select all that apply.) 0 The section 8 rent reasonableness study of comparable housing 0 Survey of rents listed in local newspaper 0 Survey of similar unassisted units in the neighborhood [I] Other (listldescribe below) Carlsbad PHA Annual Plan - FY 2003 26 _- B. Section 8 Tenant-Based Assistance Exemptions: PHAs that do not administer Section 8 tenant-based assistance are not required to complete sub-component 4B. Unless otherwise specified, all questions in this section apply only to the tenant- based section 8 assistance program (vouchers, and until completely merged into the voucher program, certificates). fl) Payment Standards Describe the voucher payment standards and policies. a. What is the PHA’s payment standard? (select the category that best describes your standard) 0 100%ofFMR Ix] 0 At or above 90% but below1 00% of FMR Above 100% but at or below 110% of FMR Above 1 10% of FMR (if HUD approved; describe circumstances below) b. If the payment standard is lower than FMR, why has the PHA selected this standard? (select all that apply) 0 FMRs are adequate to ensure success among assisted families in the PHA’s segment of the FMR area 0 The PHA has chosen to serve additional families by lowering the payment standard 0 Reflects market or submarket 0 Other (list below) c. If the payment standard is higher than FMR, why has the PHA chosen this level? (XI FMRs are not adequate to ensure success among assisted families in the PHA’s segment of the FMR area (XI Reflects market or submarket Ix] To increase housing options for families Ix] Other (list below) 0 (select all that apply) FMRs are not adequate throughout the entire FMR area (San Diego County) for families to find appropriate housing at less than 40% of their Adjusted Monthly Income. d. How often are payment standards reevaluated for adequacy? (select one) 0 Annually Other (list below): 0 Annually or when new Fair Market Rents are published. Carlsbad PHA Annual Plan - FY 2003 27 e. What factors will the PHA consider in its assessment of the adequacy of its payment IXI standard? (select all that apply) Success rates of assisted families Rent burdens of assisted families Other (list below) Rental Market conditions and vacancy rate 0 J2) Minimum Rent a. What amount best reflects the PHA’s minimum rent? (select one) 0 $1425 0 $26-$50 IXI $0 b. IXI Yes No: Has the PHA adopted any discretionary minimum rent hardship 0 The HA, upon request from the participant, may provide an exception to the minimum rent requirement for hardship circumstances. Exceptions for financial hardship may be granted for the following situations: o The family has lost eligibility for or is awaiting an eligibility determination for a Federal, State, or local assistance program; o The family would be evicted as a result of the imposition of the minimum rent requirement; o The income of the family has decreased because of changed circumstance, including loss of employment; o A death in the family has occurred; and o Other circumstances determined by the HA or HUD. exemption policies? (if yes, list below) 5. Operations and ManaPement [24 CFR Part 903.7 9 (e)] Exemptions from Component 5: High performing and small PHAs are not required to complete this section. Section 8 only PHAs must complete parts A, B, and C(2) A. PHA Management Structure Describe the PHA’s management structure and organization. (select one) An organization chart showing the PHA’s management structure and organization is attached. A brief description of the management structure and organization of the PHA follows: 0 Carlsbad PHA Annual Plan - FY 2003 28 4. Program Name Units or Families Expected Served at Year Turnover Public Housing I Section 8 Vouchers I 703 I 50 I Beginning NIA Section 8 Certificates Section 8 Mod Rehab Special Purpose Section 8 CertificatesNouchers (list individually) Public Housing Drug Elimination Program (PHDEP) I N/A N/A Other Federal Programs(1ist individually) C. Management and Maintenance Policies List the PHA’s public housing management and maintenance policy documents, manuals and handbooks that contain the Agency’s rules, standards, and policies that govern maintenance and management of public housing, including a description of any measures necessary for the prevention or eradication of pest infestation (which includes cockroach infestation) and the policies governing Section 8 management. (1) Public Housing Maintenance and Management: (list below) The PHA does not administer public housing. (2) Section 8 Management: (list below) o Section 8 Administrative Plan Carlsbad PHA Annual Plan - FY 2003 29 c 6. PHA Grievance Procedures [24 CFR Part 903.7 9 (01 Exemptions from component 6: High performing PHAs are not required to complete component 6. Section 8-Only PHAs are exempt from sub-component 6A. A. Public Housing 1. 0 Yes 0 No: Has the PHA established any written grievance procedures in addition to federal requirements found at 24 CFR Part 966, Subpart B, for residents of public housing? If yes, list additions to federal requirements below: 2. Which PHA office should residents or applicants to public housing contact to initiate the PHA grievance process? (select all that apply) 0 PHA main administrative office 0 PHA development management offices 0 Other (list below) B. Section 8 Tenant-Based Assistance 1. [XI Yes 0 No: Has the PHA established informal review procedures for applicants to the Section 8 tenant-based assistance program and informal hearing procedures for families assisted by the Section 8 tenant-based assistance program in addition to federal requirements found at 24 CFR 982? If yes, list additions to federal requirements below: After a hearing date is agreed to, the family may request to reschedule only upon showing “good cause”, which is defined as an unavoidable conflict which affects the health, safety or welfare of the family. If a family does not appear at a scheduled hearing and has not rescheduled the hearing in advance, the family must contact the HA within 24 hours, excluding weekends and holidays. The HA will reschedule the hearing only if the family can show good cause for the failure to appear. The family has the right to present written or oral objections to the HA’s determination; examine the documents in the file which are the basis for the HA’s action, and all documents submitted to the Hearing Officer; copy any relevant documents at the HA expense; present any information of witnesses pertinent to the issue of the hearing; request the HA staff be available or present at the hearing to answer questions pertinent to the case; and be represented by legal counsel, advocate, or other designated representative at their own expense. In no case will the family be allowed to remove the file from the HA’s office. Carlsbad PHA Annual Plan - FY 2003 30 The HA has a right to present evidence and any information pertinent to the issue of the hearing; be notified if the family intends to be represented by legal counsel, advocate, or another party; examine and copy any documents to be used by the family prior to the hearing; have its attorney present; and have staff persons and other witnesses familiar with the case present. The Hearing Office will be a program manager from another HA or a professional mediator/arbitrator. The Hearing Officer may ask the family for additional information and/or might adjourn the Hearing in order to reconvene at a later date, before reaching a decision. The Informal Hearing will be recorded and the family may request a copy of the audio recording. This section does not apply to Informal Reviews for applicants, as no hearing packets are prepared by the HA and applicants may provide any relevant information at the Informal Review. 2. Which PHA office should applicants or assisted families contact to initiate the informal review and informal hearing processes? (select all that apply) PHA main administrative office 0 Other (list below) 7. Capital Improvement Needs [24 CFR Part 903.7 9 (g)] Exemptions from Component 7: Section 8 only PHAs are not required to complete this component and may skip to Component 8. A. Capital Fund Activities Exemptions from sub-component 7A: PHAs that will not participate in the Capital Fund Program may skip to component 7B. All other PHAs must complete 7A as instructed. fl) Capital Fund Promam Annual Statement Using parts I, 11, and 111 of the Annual Statement for the Capital Fund Program (CFP), identify capital activities the PHA is proposing for the upcoming year to ensure long-term physical and social viability of its public housing developments. This statement can be completed by using the CFP Annual Statement tables provided in the table library at the end of the PHA Plan template OR, at the PHA’s option, by completing and attaching a properly updated HUD-52837. Select one: -or- The Capital Fund Program Annual Statement is provided as an attachment to the PHA Plan at Attachment (state name) a The Capital Fund Program Annual Statement is provided below: (if selected, copy the CFP Annual Statement fiom the Table Library and insert here) Carlsbad PHA Annual Plan - FY 2003 31 2) Optional 5-Year Action Plan kgencies are encouraged to include a 5-Year Action Plan covering capital work items. This statement can be completed by using the 5 Year Action Plan table provided in the table library at the end of the PHA Plan template OR by completing and attaching a properly updated HUD-52834. a. 0 Yes 0 No: Is the PHA providing an optional 5-Year Action Plan for the Capital Fund? (if no, skip to sub-component 7B) b. If yes to question a, select one: 0 -or- The Capital Fund Program 5-Year Action Plan is provided as an attachment to the PHA Plan at Attachment (state name 0 The Capital Fund Program 5-Year Action Plan is provided below: (if selected, copy the CFP optional 5 Year Action Plan from the Table Library and insert here) B. HOPE VI and Public Housing Development and Replacement Activities (Non-Capital Fund) Applicability of sub-component 7B: All PHAs administering public housing. Identify any approved HOPE VI and/or public housing development or replacement activities not described in the Capital Fund Program Annual Statement. Yes 0 No: a) Has the PHA received a HOPE VI revitalization grant? (if no, skip to question c; if yes, provide responses to question b for each grant, copying and completing as many times as necessary) b) Status of HOPE VI revitalization grant (complete one set of questions for each grant) 1. Development name: 2. Development (project) number: 3. Status of grant: (select the statement that best describes the current status) 0 Revitalization Plan under development 0 Revitalization Plan approved 0 Revitalization Plan submitted, pending approval Activities pursuant to an approved Revitalization Plan underway 0 Yes 0 No: c) Does the PHA plan to apply for a HOPE VI Revitalization grant in the Plan year? If yes, list development name/s below: Carlsbad PHA Annual Plan - FY 2003 32 0 Yes 0 No: d) Will the PHA be engaging in any mixed-finance development activities for public housing in the Plan year? If yes, list developments or activities below: 0 Yes 0 No: e) Will the PHA be conducting any other public housing development or replacement activities not discussed in the Capital Fund Program Annual Statement? If yes, list developments or activities below: - 8. Demolition and Disposition [24 CFR Part 903.7 9 (h)] Applicability of component 8: Section 8 only PHAs are not required to complete this section. 1. Yes No: Does the PHA plan to conduct any demolition or disposition activities (pursuant to section 18 of the U.S. Housing Act of 1937 (42 U.S.C. 1437~)) in the plan Fiscal Year? (If “No”, skip to component 9; if “yes”, complete one activity description for each development .) 2. Activity Description 0 Yes 0 No: Has the PHA provided the activities description information in the optional Public Housing Asset Management Table? (If “yes”, skip to component 9. If “No”, complete the Activity Description table below.) DemolitionDIisposition Activity Description 1 a. Development name: lb. Development (project) number: 2. Activity type: Demolition 0 3. Application status (select one) Disposition 0 Approved 0 Submitted, pending approval 0 Planned application 4. Date application approved, submitted, or planned for submission: JDD/MM/YY) 5. Number of units affected: 6. Coverage of action (select one) c] Part of the development n Total develoDment 7. Timeline for activity: a. Actual or projected start date of activity: Carlssad PHA Annual Plan - FY 2003 33 b. Projected end date of activity: Carlsbad PHA Annual Plan - FY 2003 34 - 8. Desimation of Public HousinP for Occupancy by Elderly Families or Families with Disabilities or Elderly Families and Families with Disabilities r24 CFR Part 903.7 9 (ill Exemptions from Component 9; Section 8 only PHAs are not required to complete this section. 1. 0 Yes 0 No: Has the PHA designated or applied for approval to designate or does the PHA plan to apply to designate any public housing for occupancy only by the elderly families or only by families with disabilities, or by elderly families and families with disabilities or will apply for designation for occupancy by only elderly families or only families with disabilities, or by elderly families and families with disabilities as provided by section 7 of the U.S. Housing Act of 1937 (42 U.S.C. 1437e) in the upcoming fiscal year? (If “No”, skip to component 10. If “yes”, complete one activity description for each development, unless the PHA is eligible to complete a streamlined submission; PHAs completing streamlined submissions may skip to component 10.) Has the PHA provided all required activity description information for this component in the optional Public Housing Asset Management Table? If “yes”, skip to component 10. If “No”, complete the Activity Description table below. 2. Activity Description 0 Yes 0 No: Designation of Public Housing Activity Description 1 a. Development name: 1 b. Development (project) number: 2. Designation type: Occupancy by only the elderly 0 Occupancy by families with disabilities 0 Occupancy by only elderly families and families with disabilities 0 Approved; included in the PHA’s Designation Plan 0 Submitted, pending approval 0 Planned application 0 3. Application status (select one) 4. Date this designation approved, submitted, or planned for submission: JDDNM/YY) 5. If approved, will this designation constitute a (select one) 0 New Designation Plan 0 Revision of a previously-approved Designation Plan? 6. Number of units affected: 7. Coverage of action (select one) 0 Part of the development n Total develoument Carlsbad PHA Annual Plan - FY 2003 35 10. Conversion of Public HousinE to Tenant-Based Assistance [24 CFR Part 903.7 9 ($1 Exemptions from Component 10; Section 8 only PHAs are not required to complete this section. A. Assessments of Reasonable Revitalization Pursuant to section 202 of the HUD FY 1996 HUD Appropriations Act 1.0 Yes 0 No: Have any of the PHA’s developments or portions of developments been identified by HUD or the PHA as covered under section 202 of the HUD FY 1996 HUD Appropriations Act? (If “No”, skip to component 11; if “yes”, complete one activity description for each identified development, unless eligible to complete a streamlined submission. PHAs completing streamlined submissions may skip to component 1 1 .) 2. Activity Description 0 Yeso No: Has the PHA provided all required activity description information for this component in the optional Public Housing Asset Management Table? If “yes”, skip to component 11. If “No”, complete the Activity Description table below. Conversion of Public Housing Activity Description 1 a. Development name: 1 b. Development (project) number: 2. What is the status of the required assessment? 0 Assessment underway 0 Assessment results submitted to HUD 0 Other (explain below) Assessment results approved by HUD (if marked, proceed to next question) 3. 0 Yes 0 No: Is a Conversion Plan required? (If yes, go to block 4; if no, go to block 5.) 4. Status of Conversion Plan (select the statement that best describes the current status) Conversion Plan in development 0 Conversion Plan submitted to HUD on: (DDMMKYYY) 0 Conversion Plan approved by HUD on: (DDMMNYYY) 0 Activities pursuant to HUD-approved Conversion Plan underway 5. Description of how requirements of Section 202 are being satisfied by means other than conversion (select one) 0 Units addressed in a pending or approved demolition application (date 0 Units addressed in a pending or approved HOPE VI demolition application submitted or approved: Carlsbad PHA Annual Plan - FY 2003 36 (date submitted or approved: ) (date submitted or approved: ) 0 Units addressed in a pending or approved HOPE VI Revitalization Plan 0 Requirements no longer applicable: vacancy rates are less than 10 percent Requirements no longer applicable: site now has less than 300 units 0 Other: (describe below) I B. Reserved for Conversions Dursuant to Section 22 of the U.S. Housing Act of 1937 I C. Reserved for Conversions pursuant to Section 33 of the U.S. Housing Act of 1937 11. Homeownership Proprams Administered bv the PHA [24 CFR Part 903.7 9 (k)] A. Public Housing Exemptions from Component 11A: Section 8 only PHAs are not required to complete 11A. 1. 0 Yes 0 No: Does the PHA administer any homeownership programs administered by the PHA under an approved section 5(h) homeownership program (42 U.S.C. 1437c(h)), or an approved HOPE I program (42 U.S.C. 1437aaa) or has the PHA applied or plan to apply to administer any homeownership programs under section 5(h), the HOPE I program, or section 32 of the U.S. Housing Act of 1937 (42 U.S.C. 14372-4). (If “No”, skip to component 11B; if “yes”, complete one activity description for each applicable progrdplan, unless eligible to complete a streamlined submission due to small PHA or high performing PHA status. PHAs completing streamlined submissions may skip to component 11B.) 2. Activity Description c] Yes 0 No: Has the PHA provided all required activity description information for this component in the optional Public Housing Asset Management Table? (If “yes”, skip to component 12. If “No”, complete the Activity Description table below.) Carlsbad PHA Annual Plan - FY 2003 37 Public Housing Homeownership Activity Description (Complete one for each development affected) 1 a. Development name: lb. Development (project) number: 2. Federal Program Agency: 0 HOPE1 0 TurnkeyIII 0 Section 32 of the USHA of 1937 (effective 10/1/99) Approved; included in the PHA’s Homeownership PladProgram 0 Submitted, pending approval 0 Planned application 0 Xh) 3. Application status: (select one) 4. Date Homeownership Plan/Program approved, submitted, or planned for submission: (DDMMNYYY) 5. Number of units affected: 6. Coverage of action: (select one) 0 Part of the development 0 Total development / B. Section 8 Tenant Based Assistance 1. 0 Yes [x1 No: Does the PHA plan to administer a Section 8 Homeownership program pursuant to Section 8(y) of the U.S.H.A. of 1937, as implemented by 24 CFR part 982 ? (If “No”, skip to component 12; if “yes”, describe each program using the table below (copy and complete questions for each program identified), unless the PHA is eligible to complete a streamlined submission due to high performer status. High performing PHAs may skip to component 12.) Note: The PHA will, at a minimum, offer homeownership assistance if needed as a reasonable accommodation for a family member who is a person with disabilities. The PHA has analyzed implementing a Section 8 Homeownership Program and made the determination that at this time it would not be viable due to lack of funding and the high cost of housing. Carlsbad PHA Annual Plan - FY 2003 38 2. Program Description: a. Size of Program Yes 0 No: Will the PHA limit the number of families participating in the section 8 homeownership option? If the answer to the question above was yes, which statement best describes the number of participants? (select one) c] 25 or fewer participants 26 - 50 participants 0 0 more than 100 participants 5 1 to 100 participants b. PHA-established eligibility criteria 0 Yes 0 No: Will the PHA's program have eligibility criteria for participation in its. Section 8 Homeownership Option program in addition to "D criteria? If yes, list criteria below: 12. PHA Communitv Service and Self-sufficiency Programs [24 CFR Part 903.7 9 (l)] Exemptions from Component 12: High performing and small PHAs are not required to complete this component. Section &Only PHAs are not required to complete sub-component C. A. PHA Coordination with the Welfare (TANF) Agency 1. Cooperative agreements: 0 Yes No: Has the PHA has entered into a cooperative agreement with the TANF Agency, to share information andor target supportive services (as contemplated by section 12(d)(7) of the Housing Act of 1937)? If yes, what was the date that agreement was signed? DD/MM/YY 2. Other coordination efforts between the PHA and TAW agency (select all that apply) Client referrals Information sharing regarding mutual clients (for rent determinations and otherwise) [XI Coordinate the provision of specific social and self-sufficiency services and programs to eligible families 0 Jointly administer programs 0 Partner to adrmnister a HUD Welfare-to-Work voucher program c] Joint administration of other demonstration program [XI Other (describe) Quarterly Community Agency Interchange meetings Carlsbad PHA Annual Plan - FY 2003 39 B. Services and programs offered to residents and participants Estimated Size 500 (for entire county) ll) General Allocation Method (waiting listhandom selectiodspecific criteridother) Specific criteria related to suitability for the progam a. Self-sufficiency Policies Which, if any of the following discretionary policies will the PHA employ to enhance the economic and social self-sufficiency of assisted families in the following areas? (select all that apply) 0 0 Public housing admissions policies 0 Section 8 admissions policies 0 Preference in admission to section 8 for certain public housing families 0 Preferences for families working or engaging in training or education programs for non-housing programs operated or coordinated by the PHA 0 Preferenceleligibility for public housing homeownership option participation 0 Preference/eligibility for section 8 homeownership option participation 0 Other policies (list below) Public housing rent determination policies b. Economic and Social self-sufficiency programs Ix] Yes No: Does the PHA coordinate, promote or provide any programs to enhance the economic and social self-sufficiency of residents? (If “yes”, complete the following table; if “no” skip to sub-component 2, Family Self Sufficiency Programs. The position of the table may be altered to facilitate its use. ) Services and Programs Program Name & Description (including location, if appropriate) Community Opportunities Program (Regional Opportunity Counseling Program) Access (development office I PHA main office I other provider name) Fair Housing Council Eligibility 1 (public housing or both) Both Section 8 and public housing participants are eli ible Carlsbad PHA Annual Plan - FY 2003 40 .- Program Required Number of Participants Public Housing Not Applicable (start of FY 2000 Estimate) J2) Family Self Sufficiencv proprads Actual Number of Participants (As of: DDMMIYY) Section 8 30 32 As of: 02/01/03 b. Ix] Yes 0 No: If the PHA is not maintaining the minimum program size required by HUD, does the most recent FSS Action Plan address the steps the PHA plans to take to achieve at least the minimum program size? If no, list steps the PHA will take below: C. Welfare Benefit Reductions 1. The PHA is complying with the statutory requirements of section 12(d) of the U.S. Housing Act of 1937 (relating to the treatment of income changes resulting from welfare program requirements) by: (select all that apply) Adopting appropriate changes to the PHA’s public housing rent determination policies and train staff to carry out those policies Informing residents of new policy on admission and reexamination Actively notifying residents of new policy at times in addition to admission and reexamination. Establishing or pursuing a cooperative agreement with all appropriate TAW agencies regarding the exchange of information and coordination of services Establishing a protocol for exchange of information with all appropriate TANF agencies 0 Ix] Ix] 0 0 Other: (list below) D. Reserved for Community Service Requirement pursuant to section 12(c) of the U.S. Housing Act of 1937 Carlsbad PHA Annual Plan - FY 2003 41 13. PHA Safety and Crime Prevention Measures [24 CFR Part 903.7 9 (m)] Exemptions fiom Component 13: High performing and small PHAs not participating in PHDEP and Section 8 Only PHAs may skip to component 15. High Performing and small PHAs that are participating in PHDEP and are submitting a PHDEP Plan with this PHA Plan may skip to sub-component D. A. Need for measures to ensure the safety of public housing residents 1. Describe the need for measures to ensure the safety of public housing residents (select 0 High incidence of violent and/or drug-related crime in some or all of the PHA’s developments 0 High incidence of violent and/or drug-related crime in the areas surrounding or adjacent to the PHA’s developments Residents fearful for their safety and/or the safety of their children 0 Observed lower-level crime, vandalism and/or graffiti People on waiting list unwilling to move into one or more developments due to perceived and/or actual levels of violent and/or drug-related crime 0 Other (describe below) all that apply) 2. What information or data did the PHA used to determine the need for PHA actions to improve safety of residents (select all that apply). 0 0 Resident reports PHA employee reports 0 Police reports 0 0 Other (describe below) Safety and security survey of residents Analysis of crime statistics over time for crimes committed “in and around” public housing Agency Analysis of cost trends over time for repair of vandalism and removal of graffiti Demonstrable, quantifiable success with previous or ongoing anticrime/anti drug programs 3. Which developments are most affected? (list below) Carlsbad PHA Annual Plan - FY 2003 42 B. Crime and Drug Prevention activities the PHA has undertaken or plans to undertake in the next PHA fiscal year 1. List the crime prevention activities the PHA has undertaken or plans to undertake: (select all that apply) Contracting with outside and/or resident organizations for the provision of crime- and/or drug-prevention activities 0 Crime Prevention Through Environmental Design 0 Activities targeted to at-risk youth, adults, or seniors 0 Volunteer Resident PatroVBlock Watchers Program 0 Other (describe below) 2. Which developments are most affected? (list below) C. Coordination between PHA and the police 1. Describe the coordination between the PHA and the appropriate police precincts for carrying out crime prevention measures and activities: (select all that apply) 0 Police involvement in development, implementation, and/or ongoing evaluation of drug-elimination plan 0 Police provide crime data to housing Agency staff for analysis and action 0 Police have established a physical presence on housing Agency property (e.g., community policing office, officer in residence) 0 Police regularly testify in and otherwise support eviction cases 0 Police regularly meet with the PHA management and residents c] Agreement between PHA and local law enforcement agency for provision of above-baseline law enforcement services 0 Other activities (list below) 2. Which developments are most affected? (list below) D. Additional information as required by PHDEP/PHDEP Plan PHAs eligible for FY 2000 PHDEP funds must provide a PHDEP Plan meeting specified requirements prior to receipt of PHDEP funds. 0 Yes 0 No: Is the PHA eligible to participate in the PHDEP in the fiscal year 0 Yes No: Has the PHA included the PHDEP Plan for FY 2000 in this PHA Plan? c] Yes 0 No: This PHDEP Plan is an Attachment. (Attachment Filename: 2 covered by this PHA Plan? Carlsbad PHA Annual Plan - FY 2003 43 L 114. RESERVED FOR PET POLICY [24 CFR Part 903.7 9 (n)] 15. Civil Rights Certifications [24 CFR Part 903.7 9 (o)] Civil rights certifications are included in the PHA Plan Certifications of Compliance with the PHA Plans and Related Regulations. 16. Fiscal Audit [24 CFR Part 903.7 9 (p)] 1. Yes 0 No: Is the PHA required to have an audit conducted under section 5(h)(2) of the U.S. Housing Act of 1937 (42 U S.C. 1437c(h))? (If no, skip to component 17.) No: Were there any findings as the result of that audit? 2. Yes 0 No: Was the most recent fiscal audit submitted to HUD? 3. 0 Yes 4. c] Yes c] No: 5. c] Yes c] No: If there were any findings, do any remain unresolved? If yes, how many unresolved findings remain? Have responses to any unresolved findings been submitted to HUD? If not, when are they due (state below)? 17. PHA Asset Management [24 CFR Part 903.7 9 (43 Exemptions from component 17: Section 8 Only PHAs are not required to complete this component. High performing and small PHAs are not required to complete this component. 1. Yes c] No: Is the PHA engaging in any activities that will contribute to the long- term asset management of its public housing stock , including how the Agency will plan for long-term operating, capital investment, rehabilitation, modernization, disposition, and other needs that have not been addressed elsewhere in this PHA Plan? 2. What types of asset management activities will the PHA undertake? (select all that [7 Not applicable c] Private management [7 Development-based accounting 0 Comprehensive stock assessment Other: (list below) apply) Carlsbad PHA Annual Plan - FY 2003 44 3. [7 Yes [7 No: Has the PHA included descriptions of asset management activities in the optional Public Housing Asset Management Table? 18. Other Information [24 CFR Part 903.7 9 (r)] A. Resident Advisory Board Recommendations 1. Yes 0 No: Did the PHA receive any comments on the PHA Plan from the Resident Advisory Boards? 2. If yes, the comments are: (if comments were received, the PHA MUST select one) 0 0 Provided below: Attached at Attachment (File name) 3. In what manner did the PHA address those comments? (select all that apply) 0 [7 Other: (list below) Considered comments, but determined that no changes to the PHA Plan were necessary. The PHA changed portions of the PHA Plan in response to comments List changes below: Resident Advisow Board Recommendations Carlsbad PHA Annual Plan - FY 2003 45 B. Description of Election process for Residents on the PHA Board 1. 0 Yes No: Does the PHA meet the exemption criteria provided section 2(b)(2) of the U.S. Housing Act of 1937? (If no, continue to question 2; if yes, skip to sub-component C.) 2. Yes No: Was the resident who serves on the PHA Board elected by the residents? (If yes, continue to question 3; if no, skip to sub- component C.) 3. Description of Resident Election Process a. Nomination of candidates for place on the ballot: (select all that apply) Candidates were nominated by resident and assisted family organizations 0 Candidates could be nominated by any adult recipient of PHA assistance 0 Self-nomination: Candidates registered with the PHA and requested a place on ballot c] Other: (describe) b. Eligible candidates: (select one) 0 0 0 0 Other (list) Any recipient of PHA assistance Any head of household receiving PHA assistance Any adult recipient of PHA assistance Any adult member of a resident or assisted family organization c. Eligible voters: (select all that apply) 0 All adult recipients of PHA assistance (public housing and section 8 tenant-based assistance) 0 Representatives of all PHA resident and assisted family organizations Other (list) Carlsbad PHA Annual Plan - FY 2003 46 C. Statement of Consistency with the Consolidated Plan For each applicable Consolidated Plan, make the following statement (copy questions as many times as necessary). 1. Consolidated Plan jurisdiction: (provide name here) CITY OF CARLSBAD 2. The PHA has taken the following steps to ensure consistency of this PHA Plan with the Consolidated Plan for the jurisdiction: (select all that apply) IXI Ix1 Ix1 IXI 0 The PHA has based its statement of needs of families in the jurisdiction on the needs expressed in the Consolidated Plds. The PHA has participated in any consultation process organized and offered by the Consolidated Plan agency in the development of the Consolidated Plan. The PHA has consulted with the Consolidated Plan agency during the development of this PHA Plan. Activities to be undertaken by the PHA in the coming year are consistent with the initiatives contained in the Consolidated Plan. (list below) 0 Provide direct benefit to lower income persons through the provision or retention of affordable housing units within Carlsbad - PHA has established a local priority to assist applicants who are at or below 30% of the AMI. Other: (list below) 2. The Consolidated Plan of the jurisdiction supports the PHA Plan with the following actions and commitments: (describe below) Providing HOME funds to develop an affordable housing project that will increase the available housing in the jurisdiction. 0 D. Other Information Required by HUD Use this section to provide any additional information requested by HUD. Carlsbad PHA Annual Plan - FY 2003 47 Attachments STATEMENT OF PROGRESS IN MEETING THE 5-YEAR PLAN AND GOALS PHA Goal: Expand the supply of assisted housing: The Carlsbad Housing Agency submitted an application for the Section 8 Housing Choice Voucher Incremental Funding Program and will continue to submit applications in response to Notices of Funding Available (NOFA). The Housing Agency has received 125 additional Vouchers since FY 2000. Through the City’s Inclusionary Housing requirement approximately 140 units have been developed, since FY 2000, providing additional opportunities for Section 8 participants especially in a tight rental market. PHA Goal: Leverage private or other public funds to create additional housing opportunities: The Carlsbad Housing Agency has utilized the Inclusionary Housing Ordinance, Housing Trust funds, Redevelopment funds, CDBG funds and HOME funds to assist development of additional affordable housing opportunities. The following are in the process of development or approval: 0 SunnyCreek 50 rental units - completed November 2002 0 Calavera Hills 106 rental units 0 Villages of La Costa 180 rental units 0 KellyRanch 122 rental units Also, the agency is in the process of purchasing approximately .5 acre of land within the Redevelopment area to potentially provide another 10 rental units. In addition, the following for-sale affordable units are in the process of development or approval: 0 Jefferson Senior Condos Village by the Sea Condos 10 units 0 Rose Bay Townhomes 24 units 0 Laguna Point Condos 3 units 0 BressiRanch 100 units 26 units (8 low-income, 18 moderate income) PHA Goal: Improve the quality of assisted housing: 0 The Carlsbad Housing Agency received a “High Performer” ranking on the SEMAP Certification for FY 2001. The PHA has submitted the SEMAP Certification for FY 2002 and is awaiting notification from HUD of the final ranking. Carlsbad PHA Annual Plan - FY 2003 48 0 Applicants, participants, property owners and members of the community continually recognize the Housing Agency as providing excellent customer service. The Housing Agency is in the process of developing a rental property owner survey to: . Measure the overall satisfaction of the Housing Agency’s customer service; . Identi@ areas of service that need improvement; Determine interest in an “Electronic Deposit” system for Housing Assistance Payments; . Evaluate the level of interest for Owner educational workshops; and = Identie rental owner’s reservations and/or objections to participation in the Rental Assistance Program. 0 The Housing Agency is continually looking at areas to streamline the lease process; the majority of initial HAP checks to owners are mailed within two weeks of the effective lease date. The Housing Agency is aggressively working towards increasing the utilization rate. The waiting time for a resident, whose income is less than 30% of the AMI, has been reduced to approximately 6 months to 1 year. The Housing Agency developed a Rental Assistance Participant Education Enhancement Program and the following informational workshops have been conducted or will be conducted prior to June 30,2003: o Fair Housing and Tenant’s Rights and Housing Education and Eviction Prevention. o A Fair Housing and Tenant/LandZord Seminar - conducted in English and Spanish. o Section 8 RentaZ Assistance Program - conducted in Spanish. 0 0 The Housing Agency is in the process of developing a survey to determine the educational interests and/or needs of the participants. PHA Goal: Increase assisted housing choices: The Carlsbad Housing Agency continues to provide voucher mobility counseling at all briefings, intakes and move appointments. The Housing Agency conducted one Rental Property Owner informational workshop in April 2003 in collaboration with the other housing agencies in San Diego County. The payment standards were increased October 1, 2002 to 110% of the HUD Fair Market Rents to increase housing opportunities for Section 8 participants. A large number of contacts have been made with potential property owners who are interested in participating in the Section 8 program and the agency has recruited 36 new owners to date. Carlsbad PHA Annual Plan - FY 2003 49 PHA Goal: Promote self-sufficiency and asset development of assisted households: 0 0 The Carlsbad Housing Agency continues to administer a Family self-sufficiency Program. Housing staff meets at least bi-annually and communicates on a regular basis with agencies that assist persons with disabilities to assist mutual clients and to obtain information about supportive services available for persons with disabilities. 0 The Carlsbad Housing Agency provides infomation to participants on homeownership opportunities and first-time homebuyers programs that the department offers. In fiscal year 2002, the programs offered were: Mortgage Credit Certificate Program (MCC) and Lease to Purchase Program. In addition, the agency provided information on the Rose Bay Town Homes and Jefferson Senior Condominiums, which are offering 50 affordable for-sale units. PHA Goal: Ensure Equal Opportunity in Housing for all Americans: The Housing Agency continues to provide information about equal opportunity and fair housing at all Section 8 Program briefings, and upon request from participants and the public. The Agency contracts with Heartland Human Relations and Fair Housing Association to provide staff and property owners fair housing training and provide fair housing assistance to Carlsbad residents. The Housing Agency provides information regarding reasonable accommodation to participants and applicants, and offers reasonable accommodation for persons with disabilities when appropriate. The Housing Agency has published a packet for persons with disabilities, including information on agencies that assist persons with disabilities, accessible units, and financial resources for making alterations to units. RESIDENT MEMBERSHIP OF THE PHA GOVERNING BOARD The Housing Commission consists of five members, two of which are participants of the Section 8 program. The Chair of the Housing and Redevelopment Commission appoints the members of the Housing Commission. The two participant members participants are: Bobbie Smith Currently vacant term expires: July 2003 term expires: July 2003 MEMBERSHIP OF THE RESIDENT ADVISORY BOARD Use this section to provide any additional attachments referenced in the Plans. PHA Plan Table Library Carlsbad PHA Annual Plan - FY 2003 50 Component 7 Capital Fund Program Annual Statement Parts I, 11, and I1 1 2 Annual Statement Capital Fund Program (CFP) Part I: Summary Total Non-CGP Funds 1406 Onerations Capital Fund Grant Number 0 Original Annual Statement FFY of Grant Approval: JMMNYYY) 3 4 5 I/ Line No. Summary by Development Account 1408 Management Improvements 141 0 Administration 1411 Audit Total Estimated 7 8 9 1430 Fees and Costs 1440 Site Acquisition 1450 Site Immovement 10 11 12 16 I 14 15 Liauidated Damages 1 1 1460 Dwelling Structures 1465.1 Dwelling Equipment-Nonexpendable 1470 Nondwelline Structures 13 14 15 1475 Nondwelling Equipment 1485 Demolition 1490 Redacement Reserve 17 18 19 116 I 1492 Moving; to Work Demonstration 1 1 1495.1 Relocation Costs 1498 Mod Used for Development 1502 Contineencv 20 21 22 Amount of Annual Grant (Sum of lines 2-19) Amount of line 20 Related to LBP Activities Amount of line 20 Related to Section 504 Comdiance 23 24 Annual Statement Capital Fund Program (CFP) Part 11: Supporting Table Amount of line 20 Related to Security Amount of line 20 Related to Energy Conservation Measures Carlsbad PHA Annual Plan - FY 2003 51 Development hmber/Name IA-Wide Activities 3eneral Description of Major WorE Zategories Ievelopment iccount hmber Annu a1 Statement Capital Fund Program (CFP) Part 111: Implementation Schedule levelopment Jumber/Name IA-Wide Activities rota1 3stimated Zost 211 Funds Obligated Quarter Ending Date) All Funds Expended (Quarter Ending Date) Carlsbad PHA Annual Plan - FY 2003 52 Carlsbad PHA Annual Plan - FY 2003 53 U A 2 r c t e b 2 C c : i i L - c1 c C - - z I 9 m m m 0 0 cu The CltyofCaz1~ba.d Housins & Redeuelopment Department A-PORTTO THE HOUSING- COXXXSSXONm XtemNo. 3 DATE: MARCH 13,200 SUBJECT: RF' 01-08 - LAGUNA POINT CONDOMINIUMS - RECOMMENDATION OF APPROVAL TO THE HOUSING AND REDEVELOPMENT COMMISSION TO PROVIDE $105,000 IN FINANCIAL ASSISTANCE AND APPROVAL OF THE LOAN AGREEMENT AND RELATED DOCUMENTS FOR CONSTRUCTION OF THREE AFFORDABLE CONDOMINIUM UNITS TO SATISFY THE REQUIREMENTS OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE LAGUNA POINT PROJECT. I. RECOMMENDATION That the Housing Commission ADOPT Resolution No. 2003-002 recommending APPROVAL to the Housing and Redevelopment Commission to provide $105,000 in financial assistance from the Redevelopment Low and Moderate Income Fund and approval of the Loan Agreement and related documents with Wave Crest Resorts 11 for construction of three (3) affordable condominium units to satisfy the inclusionary housing ordinance requirement for the Laguna Point project. 11. PROJECT BACKGROUND On April 9, 2002, the Housing and Redevelopment Commission approved the Laguna Point project. The approval allows for the development of 21 condominiums on property located on the southeast corner of Roosevelt Street and Laguna Drive. Three of units will be affordable to low income households. 111. PROJECT DESCRIPTION The 1.15 acre site is located on the south side of Laguna Drive between Roosevelt Street and State Street in Land Use District 4 of the Carlsbad Village Redevelopment Area. The proposed project consists of two levels of residential units over a fully enclosed garage. The three-story building is broken up into two separate components, each with its own security access garage, connected by a central lobby. Building A is located on the west side of the property, at the corner of State Street and Laguna Drive and consists of 10 stacked flats. Building B is located on the east side of the property at the comer of Roosevelt Street and Laguna Drive and consists of 9 two-story units. The project also includes extensive landscaping on all sides of the building, decorative walls along the street frontages, and a pool and spa. RP 01-08 - LAGUNA POINT MARCH 13,2003 PAGE 2 The project contains a wide range of units. There are 4 one-bedroom units ranging in size from 829 to 1,022 square feet, 8 two-bedroom units ranging from 1,442 to 1,657 square feet, and 9 three-bedroom units from 1,527 to 2,106 square feet. Each unit is equipped with a private deck. The affordable units will all be one-bedroom units, varying in size from 829 to 859 square feet. IV. DEVELOPMENT TEAM The Developer of the project is Wave Crest Resorts II. Over the past 30 years, the Developer has constructed several residential and commercial projects in coastal north San Diego County. The developer’s most recent project in the City of Carlsbad is the Hilton Gardens Hotel. The architectural firm for the project is McGeeBehun Architects. McGeeBehun Architects has extensive experience in designing multi-family residences. The General Contractor has not yet been determined. However, all of the firms the developer is currently interviewing have a great deal of experience in constructing multi-family housing developments. V. FINANCIAL ASSISTANCE A. Cost Reasonableness The Developer has provided a development pro forma for review by staff and the Housing Commission (See Attachment 2). Since development costs are one of the key variables determining the need for subsidies, it is important that those costs be reasonable. At approximately $9.1 million, including the cost of the land, the average unit cost of $431,000 is considered to be reasonable for a high-end, multi-family development within the City. B. Undue Gain The Developer is requesting $210,000 ($70,000 per affordable unit) in financial assistance for this project. The City’s Housing Policy Team (staff) is recommending that the developer receive $105,000 ($35,000 per affordable unit) in financial assistance It is important that any financial assistance have the effect of making the units more affordable and not creating undue gain for any party. The Developer is projecting that they will earn a profit of $893,239, or 10% of total project costs. Under Staff‘s proposed level of assistance, the Developer’s profit would be 8.7% of total project cost. Staff feels that the developer profit of 8.7% would be within acceptable limits for a project of this size and affordability. With past for-sale affordable housing projects, the Redevelopment Agency has provided a maximum financial assistant amount of $15,000 per affordable unit. Staff is supporting the higher assistance amount for several reasons. First, the Developer did not receive a density bonus or any reduction in development standards with the approval of this project. From time to time, the City will grant such incentives in lieu of providing financial assistance. Second, this is a small development, and there are few market rate units in which the developer can recapture the RP 01-08 - LAGUNA POINT MARCH 13,2003 PAGE 3 SUBSIDY REQUIREMENT (Including Land) SUBSIDY SOURCES City Assistance Developer Subsidy (Including Land) ClTY LEVERAGE costs of subsidizing the affordable units. Finally, the Redevelopment Agency is attempting to encourage residential development in the Redevelopment Area. This project will help meet the goals of malung the Redevelopment Area a place to work, live, shop and visit. The Policy Team agreed to recommend $15,000 per affordable unit for the housing value offered by the project, and to recommend the additional $20,000 per unit for the redevelopment value offered by the project . ($1 5 2,152) $ 35,000 $ 117,152 $3.3 : $1 C. Subsidy Analysis Within the chart noted below, staff has provided an example of the per unit cost and subsidy required for the proposed condominium product. HOMEBUYER INCOME 80% AMI* UNIT COST: $272,152 MAXIMUM PURCHASE PRICE* * $120,000 As described in the chart above, the amount of recommended Redevelopment Agency assistance effectively “leverages” the Agency’s Redevelopment Low and Moderate Income Funds. Leveraging is defined as the ratio of Agency subsidy to the subsidy provided from other sources. Although this is a lower level of leveraging than rental projects such as Villa Loma and Laurel Tree Apartments, staff believes it is acceptable for a homeownership project where there are no “deep subsidy” funding programs available to assist in production. RP 01-08 -LAGUNA POINT MARCH 13,2003 PAGE 4 D. Form of Assistance Agency, as well as developer assistance will be provided in the form of funds that are first used for construction and then for deferred financing (no payment for a specified period of time) for the actual homebuyer. This subsidy financing is structured as a loan that will ultimately be repaid to the Agency upon resale of the unit. Any real appreciation is shared between the Agency and the homebuyer based on the contribution to the initial purchase. No “windfall” comes to the subsidized buyer. The source of the Agency’s financial assistance will be provided from the Redevelopment Low and Moderate Income Fund. The Redevelopment Low and Moderate Income Fund currently has a balance of $1.4 million. E. Security As stated above, the Agency takes a security interest in the property for the affordable housing project. Because the amount of Agency assistance is only a portion of the total subsidy, the Agency will have a significant “cushion” of equity protecting its actual cash loan. F. Risk The two major types of risk in this for-sale development are construction risk (the units do not get built) and market risk (units do not sell). In addition, any Agency financial assistance will be subordinated to conventional bank financing. If a problem did arise, the bank’s interest would come ahead of the Agency’s. Although the Agency would be taking on some of the risk inherent with development, there are several factors that mitigate these risks. First, the Agency’s financial involvement would constitute a very small portion of the project, meaning that the other lender(s) and developer will be motivated to insure successful completion. Second, in terms of market risk, the Agency’s assistance will be fixed and additional subsidies required to insure the sale of all units will be the obligation of the developer. G. Subsidy Repayment The three affordable units will be sold at a price which is affordable to households earning 80% or less of the San Diego County Area Median Income (AMI). The AMI for a household with two people is $40,850. In similar previous developments, the initial buyer had the option of selling the property to a low income buyer. In that instance, any Agency and/or Developer subsidy would not be required to be repaid to the Agency. The obligation to repay the subsidy would be transferred (the loan RP 01-08 - LAGUNA POINT MARCH 13,2003 PAGE 5 would be assumed) by the subsequent buyer. The initial buyer also had the option to sell the property at a market price. In this situation, the Agency/developer subsidy, plus shared appreciation would be repaid to the Agency. With this project, if the property is sold within the first fifteen years of ownership, the seller will be required to sell the property to a low income household. The purchase price will be limited to the annual increase to the AMI. Starting in year 16, the property may be sold at a market price, and the seller would be required to repay the Agency/developer subsidy, plus shared appreciation. VI. AFFORDABLE HOUSING AGREEMENT Prior to the issuance of a final map or issuance of any building permits, the developer will be required to enter into an Affordable Housing Agreement with the Agency/City which binds the developer to the specifics of the affordable housing project, including, but not limited to the size, location and tenure of affordability of the project. VII. LOAN AGREEMENT A draft of the Developer Loan Agreement and related documents are provided as attachments (Attachment 3) 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 form presented and subject to final approval by the City Attorney. VIII. SUMMARY AND STAFF RECOMMENDATION It is the role of the Housing Commission to make financial assistance recommendations to the City Council and Housing and Redevelopment Commission based on several considerations with respect to affordable housing projects. These are: The proposal's effectiveness in serving the AgencyKity's needs and priorities as expressed in the Housing Element of the General Plan and the Consolidated Plan. The proposal's consistency with the AgencyKity's affordable housing policies and ordinances as expressed in the Housing Element and Inclusionary Housing Ordinance. The proposal's development and operating feasibility, emphasizing the development team capacity, financing sources and the role of the AgencyKity in providing financial assistance or incentives. RP 01-08 - LAGUNA POINT MARCH 13,2003 PAGE 6 Staff recognizes that affordable homeownership units of the size proposed are costly in comparison to other affordable housing alternatives. The financial information contained in the proforma demonstrates the need for financial assistance to assist in the development of this project. The project will meet an affordable housing need and is consistent with AgencyXity policies and ordinances on affordable housing. It is the Affordable Housing Policy Team’s (staff) recommendation that the Housing Commission approve the resolution of support recommending to the Housing and Redevelopment Commission the following: 1) financial assistance in the amount of $105,000; and 2) approval of the Loan Agreement and related documents in substantially the form presented and subject to approval by the City Attorney. IX. ATTACHMENTS 1. Housing Commission Resolution No. 2003-002 2. Proforma 3. Draft Loan Agreement, Deed of Trust, and Regulatory Agreement. 4. Vicinity Map 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 HOUSING COMMISSION RESOLUTION NO. 2003-002 THAT THE HOUSING COMMISSION RECOMMEND APPROVAL TO THE HOUSING AND REDEVELOPMENT COMMISSION OF $105,000 IN FINANCIAL ASSISTANCE FROM THE REDEVELOPMENT LOW AND MODERATE INCOME FUND AND APPROVAL OF THE LOAN AGREEMENT AND RELATED DOCUMENTS WITH WAVE CREST RESORTS 11 FOR CONSTRUCTION OF THREE (3) AFFORDABLE CONDOMINIUM UNITS TO SATISFY THE INCLUSIONARY HOUSING ORDINANCE REQUIREMENT FOR THE LAGUNA POINT PROJECT APPLICANT: WAVE CREST RESORTS I1 CASE NUMBER: m1-08 WHEREAS, the Wave Crest Resorts I1 is the developer of the twenty-one unit (21) Laguna Point condominium project; and WHEREAS, on April 9, 2002, the Housing and Redevelopment Commission of the City of Carlsbad approved the twenty-one unit (21) Laguna Point condominium project; and WHEREAS, as a requirement of the approval of the Laguna Point condominium project; the Developer is required to construct and sell three (3) units that will be affordable to low income households as a means to satisfy the affordable housing obligation as required by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance; and WHEREAS, the Developer has requested financial assistance from the Housing and Redevelopment Commission to assist with the development of the affordable housing units; and WHEREAS, the Housing Commission did, on the 13* day of March, 2003, hold a public meeting to consider the request for Redevelopment Agency financial assistance for the construction of said three (3) affordable condominium units; 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. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 _- HC RESOLUTION NO. 2003-002 PAGE 2 NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: The above recitations are true and correct. The request for Redevelopment Agency financial assistance is consistent with the goals and objectives of the City of Carlsbad’s Housing Element, Consolidated Plan, the Inclusionary Housing Ordinance, the Carlsbad General Plan and the Village Master Plan. The request for Redevelopment Agency financial assistance will assist the affordable housing developer to construct a total of three one-bedroom affordable condominium units which will be sold at prices which are affordable to low income households. The project, therefore, has the ability to effectively serve the AgencyICity ’s housing needs and priorities as expressed in the Housing Element, the Consolidated Plan and the Village Master 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 MARCH 13, 2003, the Housing Commission hereby ADOPTS Resolution No. 2002-003, recommending APPROVAL to the Housing and Redevelopment Commission to provide up to $105,000 in financial assistance from the Carlsbad Redevelopment Agency’s Low and Moderate Income Housing Fund to Wave Crest Resorts I1 for the Laguna Point condominium project. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5. That the Housing Commission recommends that the Redevelopment Agency Executive Director or his or her designee be authorized by the Housing and Redevelopment Commission to execute all documents related to provision of the Agency 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 March 13, 2003, and subject to review and final approval by the City Attorney. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 13* day of March, 2003, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ~ ED WARD S C ARPELLI, VICE-CHAIRPERS ON CARLSBAD HOUSING COMMISSION DEBORAH K. FOUNTAIN HOUSING AND REDEVELOPMENT DIRECTOR HC RESOLUTIO PAGE 3 r 0.2003-002 ATTACHMENT 2 02/21/2003 Sales Revenue 18 units-base price View premiums 3 affordable units Requested City subsidy Total Sales Revenue costs Land acquisition cost SoiIslGeology Civil Eng. Bonds & Fees Property Taxes Architecture Landscape Arch. Legal & Accounting Structural Engineering Mech. Engineering Elect. Engineering Prints Insurance Permits School Fees Marketing Sales Comm. Closing Costs General 8 Admin. Finance Costs Contractor est.* Total Less Contractor Contingency Total Profit Laguna Point Prof orma $ 8,595,000.00 $ 800,000.00 $ 360,000.00 $ 21 0,000.00 $ 9,965,000.00 $ 1,725,000.00 $ 25,200.00 $ 46,700.00 $ 36,141 .OO $ 27,838.00 $ 231,950.00 $ 24,990.00 $ 21,000.00 8 68,000.00 $ 32,300.00 $ 12,500.00 $ 6,090.00 $ 250,000.00 $ 495,371 .OO $ 70,205.00 $ 162,100.00 $ 300,000.00 $ 125,000.00 $ 420,000.00 $ 5,167,309.00 $ 100,000.00 $ 9,347,694.00 $ (275,933.00) $ 9,071,761 .OO $ 893,239.00 *See Taylor Frager estimate dated 211 4/03 Laguna Point 03/04/2003 Affordable Unit Proforma Sales Revenue 3 Affordable Units Requested City Subsidy Total Sales Revenue Total Cost* $360,000 $21 0,000 $570,000 $81 6,458 Developer Contribution $246,458 *The affordable units comprise approximately 7.71% of the project's living area and 14.26% of its parking requirement. This proforma assumes a 9% weighted cost of the entire project which has been estimated to be $9,071,761 as of 2/21/03. ATTACHMENT 3 LOAN AGREEMENT BY AND BETWEEN The Agency Of Carlsbad and Wave Crest Resorts 11, Inc., a California corporation, LOAN AGREEMENT This Loan Agreement (the "Agreement") is entered into as of ,2003, by and between the Carlsbad Redevelopment Agency, a body corporate and politic (the "Agency"), and Wave Crest Resorts 11, Inc., a California corporation, (the "Developer"), with reference to the following facts: A. Developer is the owner of certain real property in the City of Carlsbad, in the County of San Diego, California ("Development Property") described in "Attachment A," which is attached hereto and incorporated herein by this reference. B. The Developer seeks to construct a total of 21 residential housing units in the City of Carlsbad, in a development known as Laguna Point (the "Development"). In satisfaction of certain conditions of approval in connection with the Agency Is approvals of the Development, the Agency and the Developer executed an Affordable Housing Agreement Imposing Restrictions on Real Property dated ,2003 (the "Affordable Housing Agreement") and recorded as Document No. C. Pursuant to the Affordable Housing Agreement Imposing Restrictions the Developer agreed to sell three (3) of the housing units to be built in the Development in the Development at affordable housing cost to lower income households (the "Affordable Units"). Pursuant to the terms of this Loan Agreement, $he Developer further agrees to carry back second mortgage financing on the Affordable Units in an amount equal to the difference between the market rate purchase price of the Affordable Unit and the affordable price of such unit, and to assign such second mortgage financing to the Agency. D. Pursuant to Housing and Redevelopment Commission Resolution No. 9 the Redevelopment Agency agreed to provide financial assistance to the Developer for the Affordable Units in the form of a $105,000 loan (the "Agency Loan"), which represents a direct Agency subsidy amount of $35,000 per Affordable Unit. As more fully set forth herein, upon sale of each Affordable Unit to an eligible lower income household in compliance with the Affordable Housing Agreement, and execution of second mortgage loan documents by the homebuyer to the Agency in compliance with the Affordable Housing Agreement, the Agency will credit the Developer with repayment of $35,000 of the Agency Loan. F. The Agency intends to fund the Agency Loan with moneys from the Redevelopment Agency's Low and Moderate Income Housing Fund. NOW, THEREFORE, the Parties agree as follows: ARTICLE 1. DEFINITIONS AND EXHTBITS Section 1.1 Definitions. The following capitalized terms shall have the following meanings in this Agreement: (a) Affordable Housing Agreement'' shall mean the Affordable Housing Agreement Imposing Restrictions on Real Property dated Document No. Housing Agreement"). , 2003 and recorded as in the Official Records of San Diego County,(the "Affordable (b) "Affordable Unit" shall mean a Unit sold to an Eligible Purchaser in compliance with the Affordable Housing Agreement. (c) "Agency" shall mean the Carlsbad Redevelopment Agency, a body corporate and politic. (d) "Agency Loan" shall mean the construction loan in the amount One Hundred Five Thousand Dollars ($105,000) made by the Agency to the Developer pursuant to this Agreement. (e) "Agency/Homebuyer Second Mortgage Loan" shall mean the carryback financing provided by the Developer to Eligible purchasers and assigned by the Developer to the Agency. Each Agency /Homebuyer Second Mortgage Loan shall be evidenced by an Eligible Buyer Note and secured by an Eligible Buyer Deed of Trust. (f) "Agency Second Mortgage Loan Documents" shall mean an Eligible Buyer Note secured by an Eligible Buyer Deed of Trust evidencing each Agency /Homebuyer Second Mortgage Loan. (g) "Agreement" shall mean this Loan Agreement. (h) "Bank" shall mean the maker of the Bank Loan. (i) "Bank Loan" shall mean the construction loan obtained by the Developer from a private institutional lender, to pay for costs of construction of the Affordable Units not paid from the Agency Loan. (j) "Borrower Disclosure Statement" shall mean the borrower disclosure statement to be signed by Eligible Buyers purchasing Units. (k) "City" shall mean the City of Carlsbad. (1) "Default" shall have the meaning set forth in Section 5.1 below. (m) "Developer Deed of Trust" shall mean the deed of trust to be placed on the Development Property, in substantially the form shown in the attached "Exhibit Cy', securing the Developer Note and naming the Agency as beneficiary. (n) "Developer Note" shall mean the promissory note, in substantially the form shown in the attached Exhibit By in the principal amount of One Hundred Five Thousand Dollars ($105,000), evidencing the Agency Loan. 2 (0) "Development 'I shall mean the Development Property, the Affordable Units, and all landscaping, roads, parking spaces, and common area appurtenant to such units. (p) "Direct Agency Subsidy Amount" shall mean the $35,000 increment of the Agency Loan attributable to each Affordable Unit. (9) "Eligible Buyer" shall mean a Lower Income Household purchasing an Affordable Unit. (r) "Eligible Buyer Deed of Trust" shall mean the deed of trust held by the Agency to secure payment of an Eligible Buyer Note executed and delivered to the Agency by the Eligible Buyer of an Affordable Unit, in the form attached hereto as "Exhibit E'. (s) "Eligible Buyer Note" shall mean the promissory note, in the form attached hereto as "Exhibit D", executed and delivered to the Agency by an Eligible Buyer of a Affordable Unit. (t) "Hazardous Materials" shall have the meaning set forth in Section 4.5 below. (u) "Hazardous Materials Claim" shall have the meaning set forth in Section 4.5 below. (v) "Hazardous Materials Law" shall have the meaning set forth in Section 4.5 below. (w) "Loan Documents" shall mean the following documents: (i) the Developer Note; (ii) the Developer Deed of Trust; (iii) the Affordable Housing Agreement and (iv) this Agreement . (x) "Lower Income Household" shall mean a household with an annual income, adjusted for actual household size, which is no greater than eighty percent (80%) of Median Income. (y) "Median Income" shall mean the median gross yearly income for households in San Diego County, California, as adjusted for household size, as published periodically by the United States Department of Housing and Urban Development ("HUD"). In the event such income determinations are no longer published by HUD, or are not updated for a period of at least eighteen (18) months, the Agency shall provide the Developer with other income determinations which are reasonably similar with respect to method of calculation to those previously published by HUD. (z) "Parties" shall mean the Agency and the Developer. (aa) "Primary Affordability Subsidy" shall mean the difference between the appraised value of the property and the purchase price affordable to the particular Eligible Buyer. 3 (bb) "Property" shall mean the property on which the Developer shall construct the Improvements, as more particularly described in the attached Exhibit A. (cc) "Schedule of Performance" shall mean the schedule of performance set forth in Section 4.6 of the Second Amended Affordable Housing Agreement. (dd) "Term" shall mean the thirty-six (36) month term of the Loan, commencing on the date of recordation of the Deed of Trust and continuing for thirty-six (36) months thereafter. (ee) "Transfer" shall have the meaning set forth in Section 4.9 below. (fQ "Unit" shall mean a housing unit located within the Development. Section 1.2 Exhibits. The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference: EXHIBIT A: Legal Description of the Development Property EXHIBIT B: Form of the Developer Note EXHIBIT C: Form of the Developer Deed of Trust EXHIBIT D: Form of Eligible Buyer Note EXHIBIT E: Form of Eligible Buyer Deed of Trust EXHIBIT F: Form of Borrower Disclosure Statement EXHIBIT G: Development Budget ARTICLE 2. LOAN PROVISIONS Section 2.1 Loan. The Agency shall loan to the Developer the Loan in the principal amount of One Hundred Five Thousand Dollars ($105,000) for the purposes set forth in Section 2.3 of this Agreement. The obligation of the Developer to repay the Loan shall be evidenced by the Developer Note in substantially the form attached to this Agreement as "Exhibit B". Section 2.2 Interest. The Loan shall not bear interest; provided, however, if a Default is declared by the Agency, the Loan shall bear interest, commencing on the date of declaration of the Default 4 The Loan shall not bear interest; provided, however, if a Default is declared by the Agency , the Loan shall bear interest, commencing on the date of declaration of the Default (subject to applicable cure periods), at the default rate equal to the lesser of ten percent (lo%), compounded annually or the maximum rate permitted by law. Section 2.3 Use of Loan Funds. The Developer shall use the Agency Loan to pay for a portion of costs associated with development of the Affordable Units, identified as Agency -funded costs in the budget attached hereto as “Exhibit G’. The Developer shall not use the Agency Loan funds for any other purpose without the prior written consent of the Agency. Section 2.4 Security. The Developer shall secure its obligation to repay the Agency Loan, as evidenced by the Developer Note, by signing and delivering to the Agency the Developer Deed of Trust in substantially the form attached to this Agreement as “Exhibit C”. Section 2.5 Disbursement of Loan Proceeds. (a) The Agency shall have no obligation to disburse any portion of the Agency Loan unless the following conditions have been satisfied and continue to be satisfied: (i) The Developer has signed and delivered to the Agency the Developer Note in substantially the form attached to this Agreement as “Exhibit B” and the Developer Deed of Trust in substantially the form attached to this Agreement as “Exhibit C”. (ii) The Developer Deed of Trust has been recorded against the Development Property in the Office of the Recorder of the County of San Diego. (iii) A title insurer reasonably acceptable to the Agency is unconditionally and irrevocably committed to issuing a CLTA Lender’s Policy of insurance insuring the priority of the Agency Deed of Trust in the amount of the Agency Loan, subject only to such exceptions and exclusions as may be reasonably acceptable to the Agency and containing such endorsements as the Agency may reasonably require. The Agency agrees to accept the deed of trust securing the Bank Loan as a prior exception to title. (iv) The Developer has furnished the Agency with evidence of the insurance coverage required pursuant to Section 4.4 below. (v) The Agency has received a good standing certificate issued by the California Secretary of State’s office indicating that the Developer exists in good standing at the time of the proposed disbursement, as well as a copy of a resolution of the Developer indicating that Developer has duly authorized entry into and performance under this Agreement. 5 _- (vi) The Developer has certified in writing to the Agency that the Agency Loan, together with the Bank Loan and any other financing obtained by the Developer, is projected to be sufficient to pay all development costs of the Affordable Units. (vii) The Developer (A) has received all general plan and zoning approvals necessary to construct the Affordable Units, (B) has submitted to the Agency a proposed final tract map for the Development which satisfies all tentative tract map conditions and is reasonably acceptable to the City Engineer, together with all fees required therefor, and (C) has submitted to the City all grading and improvement plans required for the Development, in a form which is reasonably acceptable to the City Engineer, together with all fees required therefore, and (D) has received from the City temporary or interim approval to commence grading of the Development, and (E) has received approval of building plans for the Development by the City Building and Safety Department, pending pad certification for permit issuance. (viii) If Developer obtains a bank loan, then the closing of the Bank Loan shall be completed and the Agency, the Bank, and the Developer shall have executed an Intercreditor Agreement as provided in Section 2.6 below. Prior to such closing, the Agency and the Developer shall cooperate in good faith with the Bank and shall make changes to the terms and conditions of this Agreement (including the exhibits hereto) as the Bank may require, and which the Developer and the Agency Housing and Community Development Director determine are reasonable. (b) Upon satisfaction of the conditions set forth in this Section 2.5(a) the Agency shall promptly, but in no event later than five (5) business days after receiving Developer's written request and any required documentation, disburse the Agency Loan proceeds to Developer from time to time, but in no event more often than monthly. Disbursement requests shall include a certified statement from Developer: (i) reaffirming the accuracy as of the date of the disbursement request of Developer's representations and warranties set forth in Article 6 below; (ii) certifying that Borrower is not in default under the Agency Loan Documents or loan documents for the Bank Loan; and (iii) setting forth the proposed uses of funds consistent with Section 2.3 and Exhibit G, 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 the Development , the written request must be accompanied by certification by Developer that the work for which disbursement is requested has been completed (although the Agency reserves the right to inspect the Development and make an independent evaluation), and lien releases and/or mechanics lien title insurance endorsements reasonably acceptable to the Agency. Agency Loan proceeds utilized for hard construction costs of on-site improvements shall be subject to a retention of ten percent (lo%), with retained proceeds to be released upon completion of the on-site improvements. Section 2.6 Subordination. The Agency shall execute such documents as may be necessary to subordinate the priority of the Agency Deed of Trust to the lien of the deed of trust securing the Bank Loan, if Developer obtains a 6 .- bank loan. The subordination documents shall provide the Agency with reasonably adequate notice and cure rights to enable the Agency to avoid foreclosure of a senior deed of trust. Section 2.7 Term and Repayment Schedule. The Loan shall be repaid as follows: (a) Upon sale of an Affordable Unit to an Eligible Buyer, the Developer shall carry back second mortgage financing to the Eligible Buyer in an amount equal to the Primary Affordability Subsidy for the Affordable Unit. The Developer shall assign its interest in such second mortgage financing to the Agency, and shall require that the Eligible Buyer sign, at close of escrow on the purchase of the Affordable Unit, the Borrower Disclosure Statement and the Eligible Buyer Note and the Eligible Buyer Deed of Trust for the benefit of the Agency. Upon the execution of the Borrower Disclosure Statement, the Eligible Buyer Note and the Eligible Buyer Deed of Trust, and the recordation of the Eligible Buyer Deed of Trust against the Affordable Unit, the Agency shall credit the Developer with repayment of Thirty-Five Thousand Dollars ($35,000) of the Agency Loan. The Agency and the Developer acknowledge that the principal amount of the Eligible Buyer Note to the Agency shall be equal to the Primary Affordability Subsidy, which includes the value to the Eligible Purchaser of the Agency Is inclusionary housing restrictions pursuant to the Affordable Housing Agreement and will therefore be greater in principal amount than the Direct Agency Subsidy Amount of Thirty-Five Thousand Dollars ($35,000), but nevertheless agree that only the Direct Agency Subsidy Amount of Thirty-Five Thousand Dollars ($35,000) shall be credited toward repayment of the Agency Loan . (b) Upon the sooner of the date of expiration of the Term, the date of an unauthorized Transfer of the Development, or Developer's Transfer of the last Affordable Unit still owned by the Developer, all principal remaining unpaid or uncredited shall be due and payable. (c) At the time of sale of an Affordable Unit to an Eligible Buyer, the Agency shall execute a partial reconveyance of the Developer Deed of Trust to release the Affordable Unit being sold from the lien of the Developer Deed of Trust. Upon the sale of all Affordable Units in compliance with the Affordable Housing Agreement, the Agency shall entirely reconvey the Developer Deed of Trust. (d) The Developer may pay the principal and any interest due the Agency under the Developer Note prior to or in advance of the time for payment thereof as provided in the Developer Note, without penalty. However, the provisions of this Agreement and the Affordable Housing Agreement will be applicable to the Development even though Developer may have prepaid the Developer Note, including the requirement that a minimum of ninety (90) of the Units shall be sold to Eligible Buyers who execute Agency Second Mortgage Loan documents. Section 2.8 Assumption. Subject to Section 4.9 below, the Developer Note shall not be assumable by successors and assigns of Developer without the prior written consent of the Agency, which consent shall not be withheld unreasonably. Section 2.9 Approval of Additional Financing. 7 The Developer shall not place any additional encumbrances on the Development Property without the prior written consent of the Agency, which consent shall not be withheld unreasonably. The Agency consents to encumbrances in connection with the Bank Loan, if Developer obtains a bank loan. ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT Section 3.1 Schedule of Performance. The Developer shall develop the Development in compliance with the Schedule of Performance. Section 3.2 Construction Pursuant to Plans and Laws. (a) The Developer shall construct the Development in conformance with the construction drawings approved by the City in connection with approval of the building permits for the Development . (b) The Developer shall cause all work performed in connection with the Development to be performed in compliance with (i) all applicable laws, ordinances, rules and regulations of federal, state, county or municipal governments or agencies now in force or that may be enacted hereafter, and (ii) all directions, rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring 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 Developer shall be responsible to the Agency for the procurement and maintenance thereof, as may be required of the Developer and all entities engaged in work on the Development. (c) 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. (d) The Developer shall be solely responsible for all aspects of the Developer's conduct in connection with the Development, including (but not limited to) the quality and suitability of the construction drawings, the supervision of construction work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the Agency with reference to the Development is solely for the purpose of determining whether the Developer is properly discharging its obligations to the Agency, and should not be relied upon by the Developer or by any third parties as a warranty or representation by the Agency as to the quality of the design or construction of the Development. Section 3.3 Eclual Omortunity. During the construction of the Development there shall be no discrimination on the basis of race, color, creed, religion, age, disability, sex, sexual orientation, marital status, national 8 _- origin, or ancestry, in the hiring, firing, promoting, or demoting of any person engaged in the construction work. Section 3.4 Mechanics Liens, Stop Notices, and Notices of Completion. (a) If any claim of lien is filed against the Development Property or the Development or a stop notice affecting the Agency Loan is served on the Agency or any other lender or other third party in connection with the Development, then the Developer shall, within twenty (20) 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 Agency a surety bond in sufficient form and amount, or provide the Agency with other assurance satisfactory to the Agency that the claim of lien or stop notice will be paid or discharged. (b) If the Developer fails to discharge any lien, encumbrance, charge, or claim in the manner required in Section 3.4(a), then in addition to any other right or remedy, the Agency may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Developer's expense. Alternately, the Agency may require the Developer to immediately deposit with the Agency the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The Agency may use such deposit to satisfy any claim or lien that is adversely determined against the Developer. (c) The Developer 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 or lien against the Development. The Agency may (but has no obligation to) record any notices of completion or cessation of labor, or any other notice that the Agency deems necessary or desirable to protect its interest in the Development. ARTICLE 4. REQUIREMENTS DURING AND AFTER CONSTRUCTION Section 4.1 Information. The Developer shall promptly provide any information reasonably requested by the Agency in connection with the Development. Section 4.2 Records. The Developer 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 duly authorized representative of the Agency to inspect and copy records, including records pertaining to income and household size of purchasers of the Affordable Units. Such records shall include records regarding the occupancy and sales price of the Affordable Units, as well as records that accurately and fully show the date, amount, purpose, and payee of all expenditures drawn from Loan funds. Such records shall also include all invoices, receipts, and other documents related to expenditures from the Loan funds. Records shall be maintained accurately and shall be kept current. 9 _- Section 4.3 Inspections. The Developer shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Development by the Agency and by public authorities during reasonable business hours and upon reasonable advance notice for the purposes of determining compliance with this Agreement. Section 4.4 Insurance. Throughout the period of Developer's ownership of any portion of the Development, Developer shall maintain the following insurance policies: (a) Worker's Compensation insurance, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident, if required by law or if the Developer has employees. (b) Comprehensive General Liability insurance with limits not less than Five Million Dollars ($5,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed Operations. (c) Comprehensive Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable. However, if the Developer does not own or lease vehicles for purposes of this Agreement, then no automobile insurance shall be required. (d) Property insurance covering all Development real and personal (non- expendable) property, in form appropriate for the nature of such property, covering all risks of loss, including flood (if the Development Property is located within a flood zone), for 100% of the replacement value, with deductible, if any, acceptable to the Agency, naming the Agency as a Loss Payee, as its interests may appear. (e) The Developer shall cause any general contractor or agent working on the Development under direct contract with the Developer to maintain insurance of the types and in at least the minimum amounts described in Sections 4.4(a), (b) and (c), and shall require that such insurance meet all of the general requirements of Sections 4.4(f), (g), and (h). Liability and Comprehensive Automobile Liability insurance to be maintained by such general contractor and agents pursuant to this subsection shall name as additional insureds the Agency, its officers, agents, employees, members of the Redevelopment Agency, the Housing and Redevelopment Commission and the City Council. The Developer shall cause the conditions in this Section 4.4(e) to continue to be satisfied at all times after the disbursement of any Agency Loan funds and before sale of all Affordable Units in compliance with the Affordable Housing Agreement. (f) The required insurance shall be provided under an occurrence form, and Developer shall maintain such coverage continuously until all Affordable Units are sold. 10 _- (g) Comprehensive General Liability, Comprehensive Automobile Liability and Property insurance policies shall be endorsed to name as additional insured the Agency and its officers, agents, and employees, as well members of the Redevelopment Agency, the Housing and Redevelopment Commission and the City Council. (h) All policies and bonds shall be endorsed to provide thirty (30) days prior written notice of cancellation, reduction in coverage, or intent not to renew to the address established for notices to the Agency. Section 4.5 Hazardous Materials. (a) The Developer 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, under or about the Development including, but not limited to, soil and ground water conditions. The Developer 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 hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily kept and used in and about single family residential property. (b) The Developer shall immediately advise the Agency 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 Developer 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 Developer 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 hereinafter referred to as "Hazardous Materials Claims"); and (iii) the Developer'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 et seq. or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Development Property under any Hazardous Materials Law. (c) The Agency shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by the Developer. The Developer shall indemnify, defend (with counsel reasonably chosen by the Agency, at the Agency 's option), and hold harmless the Agency and its officers, Housing and Redevelopment Commissioners, councilmembers, employees, and agents from and against any loss, damage, 11 -- 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, under, or about 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 Agency in connection with clauses (i) and (ii), including (but not limited to) reasonable attorneys' fees. This paragraph shall survive termination of this Agreement. (d) Without the Agency 's prior written consent, which shall not be unreasonably withheld, the Developer 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 Agency 's reasonable judgment, impair the value of the Agency 's security hereunder. However, the Agency 's prior consent shall not be necessary if 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 Agency Is consent before taking such action, provided that in such event the Developer shall notify the Agency as soon as practicable of any action so taken. The Agency shall not withhold its consent, where consent is required hereunder, if either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) the Developer will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; or (iii) the Developer establishes to the reasonable satisfaction of the Agency that there is no reasonable alternative to such remedial action which would result in less impairment of the Agency 's security hereunder. (e) The Developer acknowledges and agrees that (i) this Section 4.5 is intended as the Agency 's written request for information (and the Developer'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 or 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. Section 4.6 Fees and Taxes. During the period of ownership of the Development by the Developer, the Developer shall be solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public authority or utility company with respect to the Development. or portion thereof owned by the Developer, and shall pay such charges prior to delinquency. However, the Developer shall not be required to pay and discharge any such charge so long as (a) the legality thereof is being contested diligently and in good faith and by appropriate proceedings, and (b) if requested by the Agency, the Developer deposits with the Agency any funds or other forms of 12 assurance that the Agency in good faith from time to time determines appropriate to protect the Agency from the consequences of the contest being unsuccessful. Section 4.7 Nondiscrimination. The Developer covenants by and for itself and any person subject to legal contract by the Developer 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, age, disability, sex, sexual orientation, marital status, ancestry or national origin in the sale, transfer, use, occupancy, or enjoyment of any Affordable Unit, nor shall the Developer or any person claiming under or through the Developer establish or permit any such practice or practices of discrimination or segregation. The foregoing covenant shall run with the land. Section 4.8 Notice of Litigation. During the period of ownership of the Development by the Developer, the Developer shall promptly notify the Agency in writing of any litigation affecting the Developer or the Development and of any claims or disputes that involve a material risk of litigation. Section 4.9 Transfers. (a) The qualifications and identity of the Developer are of particular concern to the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Developer. The Agency shall have no obligation to perform hereunder if any voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. The Agency may terminate this Agreement upon the occurrence of a Transfer prohibited by subsection (b). The Agency shall approve a proposed Transfer if the Developer is transferring the entire Development Property to the transferee and the Agency reasonably determines that the proposed transferee possesses the qualifications, development experience and financial capability necessary and adequate to fulfill the obligations undertaken in this Agreement and the Affordable Housing Agreement by the Developer. (b) No Transfer shall be permitted prior to repayment of the Agency Loan in full or prior to sale of all Affordable Units in compliance with the Affordable Housing Agreement without the prior written consent of the Agency, which the Agency shall grant or withhold in accordance with the standard set forth in subsection (a) above. Pursuant to Section 2.8(b) above, the Agency Loan shall automatically accelerate and be due in full upon any Transfer for which prior written Agency approval has not been obtained. (c) For purposes of this Agreement, "Transfer" shall mean, except as excluded by the provisions of subsection (d), 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 13 land contract by which possession of the Development is transferred and the Developer retains title. (d) The term "Transfer" shall exclude the following transfers that would otherwise be Transfers under subsection (a): (i) the assignment of this Agreement (and the transfer of the Development ) to a corporation controlled by the Developer, or to a partnership or joint venture in which the Developer, or an entity controlled by the Developer, is a general partner and is in control thereof; (ii) the admission of additional new general or limited partners, or the substitution or deletion of partners to any partnership or joint venture set forth in (i) above so long as the Developer, or an entity controlled by the Developer, continues in control; (iii) the granting of easements, licenses or permits to facilitate the development of the Development ; (iv) financing arrangement for the purposes of securing the Bank Loan or other financing or the transfer of such security interests to another entity; the granting of any security interest in the Development or other (v) the transfer or conveyance of all or any portion of the Development by foreclosure of a mortgage or deed of trust or by transfer in-lieu-of foreclosure thereof, and a subsequent transfer or conveyance of all or any portion of the Development to a third party transferee. (vi) the sale or transfer of individual Units in the Development to homebuyers in compliance with the Affordable Housing Agreement. (e) In the absence of specific written agreement by the Agency, or except to a transferee otherwise authorized in this Agreement (whereupon the transferor-assignor shall be relieved of its obligations hereunder), no Transfer (whether authorized or unauthorized) shall be deemed to relieve the Developer or any other party of any obligations under this Agreement. Section 4.10 Sale of Units. All Units in the Development shall be sold to Eligible Buyers in compliance with the Affordable Housing Agreement. The Developer shall grant preference in the sale of Units to persons who have lived for sixty (60) days in the City of Carlsbad or who are employed in the City of Carlsbad. ARTICLE 5. DEFAULT Section 5.1 Events of Default. Each of the following shall constitute a "Default" by Developer under this Agreement: 14 L (a) Failure to Make Payment. Failure to make prompt payments of the principal on the Developer Note when due; (b) Breach of Covenants. Failure by the Developer to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents (other than a monetary default as described in paragraph (a) above). If such a non-monetary event of default occurs under the terms of the Loan Documents, unless automatic acceleration is provided for hereunder, prior to exercising any remedies thereunder, the Agency shall give the Developer written notice of such default and the Developer shall have thirty (30) days (unless an alternative time period is specified hereunder, in which event such alternate cure period shall apply) to effect a cure prior to exercise of remedies by the Agency. (c) Insolvencv. A court having jurisdiction shall have made or entered any decree or order (i) adjudging the Developer to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of the Developer or seeking any arrangement for the Developer 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 the Developer in bankruptcy or insolvency or for any of their properties, or (iv) directing the winding up or liquidation of the Developer, or the Developer 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 described in clauses (i) to (iv) with regard to Developer's managing member shall also be a Default hereunder. The occurrence of any of the events of Default in this Section 5.l(c) shall act to accelerate automatically, without the need for any notice or action by the Agency, the indebtedness evidenced by the Developer Note. (d) Assignment; Attachment. The Developer, by reason of a default under its obligations to creditors, has 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; provided that Developer shall have sixty (60) days to cure any sequestration, attachment, or execution not consented to by Developer. The occurrence of any of the events of Default in this Section 5.l(d) shall act to accelerate automatically, without the need for any notice or action by the Agency, the indebtedness evidenced by the Developer Note. (e) Suspension; Termination. The Developer shall have voluntarily suspended its business or, if Developer is a partnership, the partnership shall have been dissolved or terminated. (f) Liens on the Development. There shall be filed any claim of lien (other than the deed(s) of trust and other security instruments in connection with the Bank Loan lien approved in writing by the Agency) 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 Agency Loan, and such claim of lien or notices to withhold is maintained for a period of forty- five (45) days without discharge or satisfaction thereof or provision therefor satisfactory to the Agency. 15 .- (g) Condemnation. The condemnation, seizure, or appropriation of all or, in the opinion of the Agency, a substantial part of the Development. (h) Defaults Under Other Loans. Any default declared by the lender under any loan document related to the Bank Loan or other loan secured by the Development Property, which default is not cured by the Developer following the expiration of applicable notice and cure periods under the Bank Loan Documents or other loan document, shall act to accelerate automatically, without the need for any notice or action by the Agency, the indebtedness evidenced by the Developer Note. (i) Breach of Representation. Any representation or warranty of Developer to the Agency was materially incorrect when made. Section 5.2 Remedies. The occurrence of any Default will either at the option of the Agency, or automatically where so specified, relieve the Agency of any obligation to make or continue the Agency Loan and shall give the Agency the right to proceed with any and all remedies set forth in this Agreement and the Loan Documents, including but not limited to the following: (a) Acceleration of Developer Note. The Agency shall have the right to cause all indebtedness of the Developer to the Agency under this Agreement and the Developer Note to become immediately due and payable, with interest accruing on the principal amount from the date of acceleration to the date of repayment at an interest rate equal to the lesser of ten percent (10%) or the maximum rate permitted by law. The Developer waives all right to presentment, demand, protest or notice of protest or dishonor. The Agency may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the Agency as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Agency Deed of Trust. The Developer shall be liable to pay the Agency on demand all expenses, costs and fees (including, without limitation, attorney's fees and expenses) paid or incurred by the Agency in connection with the collection of the Agency Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Loan. (b) Specific Performance. The Agency shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the Developer to perform its obligations and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Loan Documents. (c) Right to Cure at the Developer's Expense. The Agency shall have the right to cure any monetary default by the Developer under a loan other than the Agency Loan. The Developer shall reimburse the Agency for any funds advanced by the Agency to cure a monetary default by Developer upon demand therefor, together with interest thereon at the rate of interest equal to the rate of interest on the Bank Loan from the date of expenditure until the date of reimbursement. 16 Section 5.3 Remedies Cumulative. No right, power, or remedy given to the Agency by the terms of this Agreement or the Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the Agency by the terms of any such instrument, or by any statute or otherwise against the Developer and any other person. Neither the failure nor any delay on the part of the Agency to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the Agency of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. Section 5.4 Waiver of Terms and Conditions. The Agency 's Housing and Redevelopment Director may at his or her discretion waive in writing any of the obligations of the Developer under this Agreement, without the Developer completing an amendment to this Agreement. No waiver of any default or breach by Developer hereunder shall be implied from any omission by the Agency 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 Agency to or of any act by the Developer 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 Loan Documents, nor shall it invalidate any act done pursuant to notice of default, or prejudice the Agency in the exercise of any right, power, or remedy hereunder or under the Loan Documents, unless in the exercise of any such right, power, or remedy all obligations of the Developer to Agency are paid and discharged in full. ARTICLE 6. REPRESENTATIONS AND WARRANTES OF DEVELOPER Section 6.1 Representations and Warranties. Developer hereby represents and warrants to the Agency as follows: (a) Organization. Developer 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 Developer. Developer 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 Agency 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. 17 _- (c) Authority of Persons Executing Documents. This Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Developer, and all actions required under Developer's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken. (d) Valid Bindinn Ameements. This Agreement and the 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 Developer enforceable against it in accordance with their respective terms. (e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Loan Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on Developer, or any provision of the organizational documents of Developer, or will conflict with or constitute a breach of or a default under any agreement to which Developer is a party, or will result in the creation or imposition of any lien upon any assets or property of Developer, other than liens established pursuant hereto. (f) Pending Proceedings. Developer is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Developer, threatened against or affecting Developer or the Development, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Developer, materially affect Developer's ability to repay the Agency Loan or impair the security to be given to the Agency pursuant hereto. (g) Financial Statements. The financial statements of Developer and other financial data and information furnished by Developer to the Agency 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 Developer from that shown by such financial statements and other data and information. (h) Sufficient Funds. Developer holds sufficient funds andor binding commitments for sufficient funds to complete the construction of Development in accordance with the plans and specifications approved by the Agency. ARTICLE 7. GENERAL PROVISIONS Section 7.1 Relationship of Parties. 18 Nothing contained in this Agreement shall be interpreted or understood by any of the Parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the Agency and the Developer or its agents, employees or contractors, and the Developer shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement. The Developer has and retains the right to exercise full control of employment, direction, compensation, and discharge of all persons assisting in the performance of services under the Agreement. In regards to the construction of the Improvements and sale of the Units, the Developer shall be solely responsible for all matters relating to payment of its employees, including compliance with Social Security, withholding, and all other laws and regulations governing such matters, and shall include requirements in each contract that contractors shall be solely responsible for similar matters relating to their employees. The Developer shall be solely responsible for its own acts and those of its agents and employees. Section 7.2 No Claims. Nothing contained in this Agreement shall create or justify any claim against the Agency by any person that the Developer may have employed or with whom the Developer may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the construction or sale of the Affordable Units, and the Developer shall include similar requirements in any contracts entered into for the construction or sale of the Affordable Units. Section 7.3 Amendments. No alteration or variation of the terms of this Agreement shall be valid unless made in writing by the Parties. Section 7.4 Indemnification. Developer shall indemnify, defend, and hold harmless (without limit as to amount) Agency and its elected officials, officers, employees and agents in their official capaAgency (hereinafter collectively referred to as "Indemnitees"), and any of them, from and against all loss, all risk of loss and all damage (including expense and attorneys fees) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgments and executions for damages of any and every kind and by whomever and whenever made of obtained, allegedly caused by, arising out of or relating in any manner to Developer's actions or defaults pursuant to this Agreement, or construction of the Development and sale of any Units, and shall protect and defend Indemnitees, and any of them with respect thereto. The provisions of this Section 7.4 shall survive the expiration of the Term or the termination of this Agreement. Section 7.5 Non-Liability of Agency Officials, Employees and Agents. 19 No member, official, employee or agent of the Agency shall be personally liable to the Developer in the event of any default or breach by the Agency or for any amount that may become due to the Developer or its successor or on any obligation under the terms of this Agreement. Section 7.6 No Third Party Beneficiaries. There shall be no third party beneficiaries to this Agreement. Section 7.7 Discretion Retained By Agency. The Agency 's execution of this Agreement in no way limits the discretion of the Agency in the permit and approval process in connection with the Development. Section 7.8 Notices, Demands and Communications. Formal notices, demands, and communications between the Parties shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered personally, to the principal office of the Parties as follows: Agency : Carlsbad Redevelopment Agency Housing and Community Development Department 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 Attention: Housing and Redevelopment Director Developer: Wave Crest Resorts II Attn: Bill Canepa 829 Second Street, #A Encinitas, CA 92024 Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected Party may from time to time designate by mail as provided in this Section 7.8. Receipt shall be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable). Section 7.9 Applicable Law. This Agreement shall be governed by California law. Section 7.10 Parties Bound: Covenants Running with the Land. 20 Except as otherwise limited herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their heirs, executors, administrators, legal representatives, successors, and assigns. This Agreement is intended to run with the land and shall bind the Developer and its successors and assigns in the Development Property and the Development for the entire Term, and the benefit hereof shall inure to the benefit of the Agency and its successors and assigns. Section 7.1 1 Severability. If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the Parties have been materially altered or abridged by such invalidation, voiding or unenforceability. Section 7.12 Force Maieure. In addition to specific provisions of this Agreement, performance by either Party shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock- outs; riots; floods; earthquakes; fires; quarantine restrictions; freight embargoes; lack of transportation; third party lawsuit; or court order; or any other similar causes beyond the control or without the fault of the Party claiming an extension of time to perform (but not including any inability by Developer to secure financing). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Section 7.13 Approvals. Whenever this Agreement calls for Agency approval, consent, or waiver, the written approval, consent, or waiver of the Agency 's Housing and Redevelopment Director shall constitute the approval, consent, or waiver of the Agency, without further authorization required from the Housing and Redevelopment Commission. The Agency hereby authorizes the Agency's Housing and Redevelopment Director to deliver such approvals or consents as are required by this Agreement, or to waive requirements under this Agreement, on behalf of the Agency. Section 7.14 Title of Parts and Sections. Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement's provisions. Section 7.15 Entire Understanding of the Parties. This Agreement constitutes the entire understanding and agreement of the Parties with respect to the Loan. 21 Section 7.16 Multiple Originals; Counterpart. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts. Section 7.17 Time of the Essence. Time is of the essence in this Agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. DEVELOPER: AGENCY : Wave Crest Resorts II, Inc., a California Carlsbad Redevelopment Agency, a body corporate and politic By: Name: Bill Canepa Its: President (print or type) By: RAYMOND R. PATCHETT Agency Manager Name: Its: (print or type) Approved as to form: By : RONALD R. BALL, Agency Attorney (Proper notarial acknowledgment of execution by Developer must be attached) Chairman, president or vice-president and secretary, assistant secretary, CFO or assistant treasurer must sign for corporations. Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation.) 22 STATE OF CALIFORNIA ) >ss COUNTY OF 1 On , 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 capaAgency (ies), and that by hishedtheir signature@) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ,2003, before me, the undersigned, a Notary Public, personally appeared WITNESS my hand and official seal. STATE OF CALIFORNIA ) )ss COUNTY OF 1 On , 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 hishedtheir authorized capaAgency (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. ,2000, before me, the undersigned, a Notary Public, personally appeared WITNESS my hand and official seal. 23 1010\03\111527.3 EXHIBIT A =GAL DESCRIPTION OF THE DEVELOPMENT PROPERTY A- 1 1010\03\111527.3 EXHIBIT B FORM OF THE DEVELOPER NOTE B- 1 1 01 0\03\111527.3 EXHIBIT C FORM OF THE DEVELOPER DEED OF TRUST c- 1 101 0\03\111527.3 EXHIBIT D FORM OF ELIGIBLE BUYER NOTE -1- EXHIBIT E FORM OF ELIGIBLE BUYER DEED OF TRUST 1010\03\111527.3 2 101 0\03\111527.3 EXHIBlT F FORM OF BORROWER DISCLOSURE STATEMENT 3 EXHIBIT G DEVELOPMENT BUDGET 1010\03\111527.3 4 . TABLE OF CONTENTS Paae ARTICLE 1 . DEF"1ONS AND EXHIBlTS ............................................................................ 1 Section 1.1 Definitions ................................................................................................... 1 Section 1.2 Exhibits ....................................................................................................... 4 LOAN PROVISIONS ............................................................................................. 4 ARTICLE 2 . Section 2.1 Section 2.2 Section 2.3 Section 2.4 Section 2.5 Section 2.6 Section 2.7 Section 2.8 Section 2.9 Section 2.10 Loan ............................................................................................................. 4 Interest ......................................................................................................... 4 Use of Loan Funds ...................................................................................... 5 Security ........................................................................................................ 5 Disbursement of Loan Proceeds .................................................................. 5 Intercreditor Agreement ............................ Error! Bookmark not defined . Subordination ............................................ Error! Bookmark not defined . Term and Repayment Schedule ................. Error! Bookmark not defined . Assumption ............................................... Error! Bookmark not defined . Approval of Additional Financing ............ Error! Bookmark not defined . .. ARTICLE 3 . CONSTRUCTION OF THE DEVELOPMENT ..................................................... 8 Schedule of Performance ............................................................................. 8 Construction Pursuant to Plans and Laws ................................................... 8 Equal Opportunity ....................................................................................... 8 Mechanics Liens, Stop Notices. and Notices of Completion ...................... 9 ARTICLE 4 . REQUIREMENTS DURING AND AFTER CONSTRUCTION ........................... 9 Section 4.1 Information .................................................................................................. 9 Section 3.1 Section 3.2 Section 3.3 Section 3.4 Section 4.2 Records ........................................................................................................ 9 Section 4.3 Inspections ................................................................................................. 10 Section 4.4 Insurance ................................................................................................... 10 101 0\03\111527.3 -1- . . TABLE OF CONTENTS (continued) Pag;e Section 4.5 Hazardous Materials .................................................................................. 11 Section 4.6 Fees and Taxes .......................................................................................... 12 ... Section 4.7 Nondiscnmination ..................................................................................... 13 Section 4.8 Notice of Litigation ................................................................................... 13 Section 4.9 Transfers .................................................................................................... 13 Section 4.10 Sale of Units .............................................................................................. 14 ARTICLE 5 . DEFAULT ............................................................................................................. 14 Section 5.1 Events of Default ....................................................................................... 14 Section 5.2 Remedies ................................................................................................... 16 Section 5.3 Remedies Cumulative ............................................................................... 17 Section 5.4 Waiver of Terms and Conditions .............................................................. 17 ARTICLE 6 . REPRESENTATIONS AND WARRANTIES OF DEVELOPER ....................... 17 Section 6.1 Representations and Warranties ................................................................ 17 ARTICLE 7 . GENERAL PROVISIONS .................................................................................... 18 Relationship of Parties .............................................................................. 18 Section 7.1 Section 7.2 No Claims .................................................................................................. 19 Section 7.3 Amendments .............................................................................................. 19 Section 7.4 Indemnification ......................................................................................... 19 Section 7.5 Non-Liability of Agency Officials. Employees and Agents ..................... 19 Section 7.6 Section 7.7 Section 7.8 No Third Party Beneficiaries ..................................................................... 20 Discretion Retained By Agency ............................................................... 20 Notices. Demands and Communications .................................................. 20 Section 7.9 Section 7.10 Applicable Law ......................................................................................... 20 Parties Bound; Covenants Running with the Land ................................... 20 .. 11 1010\03\111527.3 . See ion 7.11 Section 7.12 Section 7.13 Section 7.14 Section 7.15 Section 7.16 Section 7.17 Section 7.18 Attorne TABLE OF CONTENTS (continued) ‘st Fees .......................................................................................... 21 .. Severability ................................................................................................ 21 Force Majeure ............................................................................................ 21 Approvals .................................................................................................. 21 Title of Parts and Sections ......................................................................... 21 Entire Understanding of the Parties ........................................................... 21 Multiple Originals; Counterpart ................................................................ 22 Time of the Essence .................................................................................. 22 1010\03\111527.3 ... 111 PROMISSORY NOTE $105,000 Carlsbad, California ,2003 FOR VALUE RECEIVED, the undersigned Wave Crest Resorts II, Inc., a California corporation, (the "Developer"), hereby promises to pay to the order of the Carlsbad Redevelopment Agency, a body corporate and politic (the "Holder"), a principal amount equal to One Hundred Five Thousand Dollars ($105,000), or so much thereof as is advanced by the Holder to the Developer pursuant to the Loan Agreement between the Developer and the Holder dated as of defined in this Note shall have the meanings set forth in the Agreement. , 2003 (the "Agreement"). All capitalized terms not otherwise 1. Interest; Repayment Terms. The indebtedness evidenced by this Note shall not bear interest; provided, however, if a default occurs hereunder, the principal amount of this Note shall bear interest commencing on the date of default at the default rate equal to the lesser of (i) ten percent (10%) per annum, compounded annually, or (ii) the maximum interest rate permitted by law. The Note shall be due and payable at the times and in the manner set forth in Section 2.8 of the Agreement. 2. No Assumption. Except as provided in Section 4.9 of the Agreement, this Note shall not be assumable by the successors and assigns of Developer without the prior written consent of the City. 3. Terms of Payment. a. All payments due under this Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts. b. All payments on this Note shall be paid to Holder at the Housing and Community Development Department, City of Carlsbad, 2965 Roosevelt Street, Suite B, Carlsbad, CA 92008, Attn: Housing and Redevelopment Director, or to such other place as the Holder of this Note may from time to time designate. c. All payments .on this Note shall be without expense to the Holder, and the Developer agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney's fees of the Holder, incurred in connection with the payment of this Note and the release of any security hereof. 4. Acceleration. Upon the occurrence of a Default (as defined in the Loan Agreement), the City shall have the right to accelerate the debt evidenced by this Note and declare all of the unpaid principal and interest, if any, immediately due and payable. Upon the 1 t occurrence of a Default, the outstanding portion of the principal shall bear interest at the rate of the lesser of (i) ten percent (10%) per annum, compounded annually, or (ii) the maximum interest rate permitted by law. Any failure by the City to pursue its legal and equitable remedies upon Default shall not constitute a waiver of the City's right to declare a Default and exercise all of its rights under this Note, the Deed of Trust, and the Loan 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 balance owed. 5. No Offset. The Developer hereby waives any rights of offset it now has or may hereafter have against the City, its successors and assigns, and agrees to make the payments called for herein in accordance with the terms of this Note and the Loan Agreement. 6. Waiver; Attorneys' Fees. Developer, for itself, its heirs, legal representatives, successors and assigns, respectively, waives diligence, presentment, protest, and demand, and notice of protest, dishonor and non-payment of this Note, and expressly waives 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 waives the right to plead any and all statutes of limitations as a defense to any demand on this Note or agreement to pay the same, and agrees to pay all costs of collection when incurred, including reasonable attorneys' fees. If an action is instituted on this 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. 7. Security. This Note is secured by a Deed of Trust and Security Agreement (the "Developer Deed of Trust"), of even date herewith, wherein the Developer is the Trustor and the Holder is the Beneficiary, constituting a lien against the Affordable Development. 8. Miscellaneous Provisions. a. All notices to the Holder or the Developer shall be given in the manner and at the addresses set forth in the Agreement, or to such addresses as the Holder and the Developer may hereinafter designate. b. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. c. This Note shall be governed by and construed in accordance with the laws of the State of California. d. be strictly construed, time being of the essence. The times for the performance of any obligations hereunder shall 2 e. This document, together with the other Loan Documents, contains the entire agreement between the parties as to the City Loan. It may not be modified except upon written consent of the parties. Developer: Wave Crest Resorts II, Inc., a California corporation By: Name Bill Canepa (print or type) Title: President By: Name (print or type) Title: (Chairman, president or vice-president and secretary, assistant secretary, CFO or assistant treasurer must sign for corporations. Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer@) signing to bind the corporation.) 3 STATE OF CALIFORNIA ) 1 ss COUNTY OF .......... ) On , before me, , personally appeared 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. , personally known to me (or proved to me on the basis WITNESS my hand and official seal. 4 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Carlsbad City Clerk's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: City Clerk No fee for recording pursuant to Government Code Section 27383 (Space above for Recorder's Use) DEED OF TRUST AND SECURITY AGREEMENT THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") is made as ,2003, by and among Wave Crest Resorts 11, Inc., a of this day of California corporation, ("Trustor"), ,a ("Trustee"), and the Carlsbad Redevelopment Agency, a body corporate and politic ("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 City of Carlsbad, 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 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 any and all buildings and improvements of every lund 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 all building materials and equipment now or hereafter delivered to said property and intended to be installed therein; TOGETHER WITH all 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 1 now has or may hereafter acquire, any and all awards made for the talung by eminent domain or by any proceeding or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for 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, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, 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. TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment, work in process and other personal property to be incorporated into the Property; all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other personal property now or hereafter appropriated for use on the Property, whether stored on the Property or elsewhere, and used or to be used in connection with the Property; all rents, issues and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, trade names, trademarks and service marks arising from or related to the Property and any business conducted thereon by Trustor; all replacements, additions, accessions and proceeds; and all books, records and files relating to any of the foregoing. 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 the indebtedness of Trustor to Beneficiary as set forth in the Note (defined in Article 1 below) until paid or canceled. Said principal and other payments shall be due and payable as provided in the Note. Said Note and all its 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 2 (c) Performance of every obligation, covenant or agreement of Trustor contained herein and in the Loan Documents (defined in Section 1.3 below). 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 "Affordable Housing Agreement'' means that certain Affordable Housing Agreement Imposing Restrictions on Real Property between the City of Carlsbad and Wave Crest Resorts II., dated in the Official Records of San Diego County,. and recorded as Document No. Section 1.2 The term "Loan Agreement" means that certain Loan Agreement between Trustor and Beneficiary, dated Trustor One Hundred Five Thousand Dollars ($105,000) for the construction of improvements on the Property. , 2003 providing for the Beneficiary to loan to the Section 1.3 The term "Loan Documents" means this Deed of Trust, the Note, the Loan Agreement, and the Affordable Housing Agreement and any other debt, loan or security instruments between Trustor and the Beneficiary relating to the Property. Section 1.4 The term "Note" means the promissory note in the principal amount of One Hundred Five Thousand Dollars ($105,000) of even date herewith 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 this reference.) Section 1.5 The term "Principal" means all amounts (including interest) required to be paid under the Note. 3 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. 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 or 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. Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons who have furnished or claim to have furnished labor, services or materials in connection with the Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor shall, 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 1/2 times the amount of such claim item to protect against a claim of lien. 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. 4 ARTICLE 3 TAXES AND INSURANCE; ADVANCES Section 3.1 Taxes, Other Governmental Charges and Utility Charges. Trustor shall pay, or cause to be paid, at least fifteen (15) days prior to the date of 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, that Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien therefor on any part of the Security; provided, however, if such taxes, assessments or charges may be paid in installments, Trustor may pay in such installments. Except as provided in clause (b) of the first sentence of this paragraph, the provisions of this Section 3.1 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. advanced therefore by Beneficiary, together with interest thereon from the date at the maximum rate permitted by law, shall become an additional obligation Beneficiary and shall be secured hereby, and Trustor agrees to pay all such Section 3.2 Provisions Respecting Insurance. I Trustor agrees to provide insurance conforming in all respects to that re Loan Documents during the course of construction and following completion, until all amounts secured by this Deed of Trust have been paid and all other hereunder fulfilled, and this Deed of Trust reconveyed. All such insurance policies and coverages shall be maintained at Trusto expense. Certificates of insurance for all of the above insurance policies, in full force and effect, shall be delivered to the Beneficiary upon demand prior to the Beneficiary's receipt of the entire Principal and all amounts Trust. Section 3.3 Advances. I In the event the Trustor shall fail to maintain the full insurance coverag required by this Deed of Trust or shall fail to keep the Security in accordance with the Loan Do uments, the Beneficiary, after at least seven (7) days prior notice to Beneficiary, may (but s all be under no obligation to) take out the required policies of insurance and pay the premiums i n the same or 5 may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefore 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 lesser of (i) ten percent (10%) per annum or (ii) the maximum rate permitted by law. 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 in any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property (collectively "Funds") are hereby assigned to and shall be paid to the Beneficiary by a check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any Funds and is authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary shall determine at its sole option. 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 or any part of the amounts so collected and recovered by the Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for its disposition. Application of all or any part of the Funds collected and received by the Beneficiary or the release thereof 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 therefore, pay to the 6 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 lesser of ten percent (10%) per annum or the maximum rate permitted by law. 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 by 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 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 jurisdiction(s) 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 to Trustor, 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 7 against or segregation of, any person or group of persons on account of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin or ancestry in the sale, 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 transferees or vendees in the Security. The foregoing covenants shall run with the land. ARTICLE 6 HAZARDOUS WASTE Trustor shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property including, but not limited to, soil and ground water conditions. Trustor shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including 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 hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily kept and used in and about multifamily residential property. Trustor shall immediately advise Beneficiary 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 Trustor or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above hereinafter referred to as "Hazardous Materials Claims"); and (iii) Trustor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as "border-zone property" under the provision of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law. Beneficiary shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall indemnify and hold harmless Beneficiary and its councilmembers, supervisors, directors, officers, employees, agents, successors and assigns 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, under, or about the Property including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required 8 plans; and (c) all reasonable costs and expenses incurred by Beneficiary in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. Without Beneficiary's prior written consent, which shall not be unreasonably withheld, Trustor shall not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgement, impair the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain Beneficiary's consent before taking such action, provided that in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken. Beneficiary 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) Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial action which would result in less impairment of Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary. The Trustor hereby acknowledges and agrees that (i) this Article is intended as the Beneficiary's written request for information (and the Trustor's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other Loan Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by the Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726S(e)(l)), then, without otherwise limiting or in any way affecting the Beneficiary's or the Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against the Trustor to judgment, and (b) any other rights and remedies permitted by law. For purposes of determining the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Trustor shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)( l), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Trustor knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or 9 threatened release. All costs and expenses, including (but not limited to) reasonable attorneys' fees, incurred by the Beneficiary in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the rate specified in the Note until paid, shall be added to the indebtedness secured by this Deed of Trust and shall be due and payable to the Beneficiary upon its demand made at any time following the conclusion of such action. ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES Section 7.1 Events of Default. The following shall constitute Events of Default following the expiration of any applicable notice and cure periods: (1) failure to make any payment to be paid by Trustor under the Loan Documents; (2) failure to observe or perform any of Trustor's other covenants, agreements or obligations under the Loan Documents, including, without limitation, the provisions concerning discrimination; or (3) failure to make any payment or perform any of Trustor's other covenants, agreements, or obligations under any other debt instruments or regulatory agreement secured by the Property, which default shall not be cured within the times and in the manner provided therein. Section 7.2 Acceleration of Maturity. If an Event of Default 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 7.3 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) and of any of the Security, 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 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; 10 (b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (c) 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 (d) Exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. Section 7.4 Foreclosure By Power of Sale. Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, 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 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts 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. (b) 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. 11 (c) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale. Section 7.5 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 7.6 Remedies Cumulative. 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 7.7 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 or 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 (vi) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the original liability under this Deed of Trust, or any other obligation of 12 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 7.8 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 of or compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of the Beneficiary. Section 7.9 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 7.10 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 8 MISCELLANEOUS Section 8.1 Amendments . This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor. 13 Section 8.2 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 8.3 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 Community Development Department 2965 Roosevelt Street Carlsbad, CA 92008-2389 Attn: Housing and Redevelopment Director and (2) if intended for Trustor shall be addressed to: Wave Crest Resorts 11. Attn: Bill Canepa 829 Second Street #A Encinitas, CA 92024 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 8.4 Successors and Joint Trustors. Where an obligation is created herein binding upon Trustor, the obligation shall also apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be deemed to be a joint and several obligation of the Trustor and such transferee. Where Trustor is more than one entity or person, all obligations of Trustor shall be deemed to be a joint and several obligation of each and every entity and person comprising Trustor. 14 Section 8.5 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 8.6 Invalidity of Certain Provisions. Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or 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 8.7 Governing Law. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. Section 8.8 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 8.9 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 8.10 Actions. Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security. Section 8.11 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 15 county or counties in which the Property is situated, shall be conclusive proof of proper appointment of the successor trustee. Section 8.12 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 8.13 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 or 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: Wave Crest Resorts 11, Inc., a California corporation By : Name Title: By : Name Title: Bill Canepa (print or type) President (print or type) (Proper notarial acknowledgment of execution by Trustor must be attached) Chairman, president or vice-president and secretary, assistant secretary, CFO or assistant treasurer must sign for corporations. Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation.) STATE OF CALIFORNIA ) 16 COUNTY OF On , before me, , personally appeared the basis of satisfactory evidence) to be the person(s) whose name(s) idare 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. , personally known to me (or proved to me on WITNESS my hand and official seal. 17 EXHIBIT A (Legal Description) The land is situated in the State of California, City of Carlsbad, County of San Diego, and is described as follows: 18 NOTICE TO BORROWER: Laguna Point THIS NOTE CONTAINS PROVISIONS RESTRICTING ASSUMPTION PROMISSORY NOTE Secured by Deed of Trust Carlsbad, California 9 200- FOR VALUE RECEIVED, the undersigned (the "Borrower") promises to pay to the Carlsbad Redevelopment Agency, a body corporate and politic (the "Agency"), or order, at the Housing and Redevelopment Department, 2965 Roosevelt Street, Suite B, Carlsbad, California 92008, or such Contingent Interest calculated pursuant to Section 4 below. other place as the Agency may designate in writing, the principal sum of $ 7 plus 1. Purpose of Loan. Borrower is purchasing the Residence located at in the City of Carlsbad. This Note evidences a loan made by the Seller of the Residence (the "Seller") to the Borrower, utilizing subsidy funds provided by the Agency and the Seller, and assigned by the Seller to the Agency (the "Agency/Seller Loan"). The Agency/Seller Loan is in the amount determined by the Agency to be necessary for the Borrower to afford to purchase the Residence making a reasonable downpayment and using conventional first mortgage financing for the balance of the purchase price not financed by the AgencyEeller Loan. The Seller made the AgencyEeller Loan to the Borrower and assigned the AgencyISeller Loan to the Agency in fulfillment of certain inclusionary housing obligations pursuant to City of Carlsbad Municipal Code Chapter 21.85 and an Affordable Housing Agreement between the Seller and the Agency dated in the Official Records of San Diego County. and recorded as Document No. 2. Definitions. The terms set forth in this Section shall have the following a. meanings in this Note. subtracting the total original purchase price of the Residence paid by the Borrower, which was Dollars ($ ), from one of the following amounts, as applicable: (i) in the event of a sale of the Residence, the amount received by the Borrower as the sale price of the Residence, as certified by the Borrower pursuant to Section 13 below; or (ii) in the event of a prepayment of this Note, a Transfer other than sale of the Residence, or in the event of a default, the Fair Market Value of the Residence; or (iii) in the event a creditor acquires title to the Residence through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the amount paid for the Residence at a creditor's sale of the Residence. "Appreciation Amount" shall mean the amount calculated by b. "Contingent Interest" shall mean the percentage of the Appreciation Amount set out in Section 4. C. "Fair Market Value" shall be determined by a real estate appraisal made by an independent residential appraiser designated by the Agency. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three-month period. The cost of the appraisal shall be paid by the Borrower. Nothing in this subparagraph shall preclude the Borrower and the Agency from establishing the Fair Market Value of the Residence by mutual agreement in lieu of an appraisal. d. "First Mortgage" shall mean the promissory note and deed of trust evidencing and securing the first mortgage loan for the Residence. e. "Residence" shall mean the housing unit and land encumbered by the deed of trust executed in connection with this Note. f. "Transfer" shall mean any sale, assignment or transfer, voluntary or involuntary, of any interest in the Residence, including, but not limited to, a fee simple interest, a joint tenancy interest, tenancy in common interest, a life estate, a leasehold interest, or an interest evidenced by a land contract by which possession of the Residence is transferred and the Borrower retains title. Any Transfer without satisfaction of the provisions of this Note is prohibited. A transfer: (i) to an existing spouse who is also an obligor under the Note; (ii) by a Borrower to a spouse where the spouse becomes the co-owner of the Residence; (iii) between spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse or child of the Borrower by devise or inheritance following the death of the Borrower; (v) by the Borrower into an inter vivos trust in which the Borrower is the beneficiary; or (vi) by deed of trust or imposition of a lien subordinate to the Deed of Trust, shall not be considered a Transfer for the purposes of this Note; provided, however, that the Borrower shall continue to occupy the Residence as his or her principal place of residence and the Borrower shall provide written notice of such transfer to the Agency pursuant to Section 14 below. 3. Security. This Note is secured by a second deed of trust dated the same date as this Note (the "Deed of Trust"). 4. Contingent Interest. The Borrower shall pay contingent interest equal to percent ( %) ("Contingent Interest Percentage Amount") [seller to insert appropriate percentage which shall in no event exceed (50 %)] of the Appreciation Amount (the "Contingent Interest"). No interest other than Contingent Interest shall be due hereunder. The Contingent Interest shall be paid to the Agency at the time set forth in Section 7(a) below, unless forgiven by the Agency pursuant to Section 7(b) below. Borrower acknowledges that the Contingent Interest Percentage Amount is equal to the AgencyEeller Loan principal amount as a percentage of the total purchase price of the Residence paid by the Borrower at the time of purchase, multiplied by seventy-five one hundredths (.75). Borrower acknowledges that this calculation of the percentage of the Appreciation Amount due to the Agency as Contingent Interest includes a twenty-five percent (25%) discount to Borrower to account for any capital improvements Borrower may make to the Residence. 2 5. Term. The Term of this Note shall mean the period commencing on the date of this Note and expiring on the date thirty (30) years thereafter. 6. Owner-Occupancy Required; .Representations Regardinp Income. a. The Borrower is required to occupy the Residence as his or her principal place of residence, and failure by the Borrower to comply with this requirement shall be a default under this Note. The Borrower shall be considered as occupying the Residence if the Borrower is living in the Residence for at least ten (10) months out of each calendar year. The Borrower shall provide an annual written certification to the Agency that the Borrower is occupying the Residence as his or her principal place of residence. The Borrower shall not lease the Residence to another party. Any lease of the Residence shall be a default under this Note. b. Borrower hereby certifies that all income information previously submitted to the Seller and/or the Agency is true and correct. Misrepresentation by Borrower of income information provided to the Seller and/or the Agency shall be a default under this Note. 7. Resale Restriction The Agency and the Developer have provided financial assistance to the developer to assist in making the Laguna Point homes affordable. Your new home is affordable to you because the Agency and the developer are providing you with second mortgage financing through the Laguna Point Homebuyer Assistance Program (the "Program") so that you will be able to buy your home. As such, there are restrictions in your Deed of Trust and Promissory Note that limit your ability to sell your home, the sales price at which you are able to sell your home, and of the amount of income the purchaser of the home may earn in a year. Beginning on the date you purchase your home (close escrow) and for fifteen years thereafter, you may only sell your home to a qualified lower income household. A lower income household is one in witch the households gross annual income does not exceed 80% of the median income for San Diego County, adjusted for assumed household size. Further, the sales price can increase above the original sales price by an amount that is equal to the increase annual increase in the San Diego Area Median Income. Median income figures shall be those published annually by the United States Department of Housing and Urban Development. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months, the City shall provide the Owner with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by the Department of Housing and Urban Development. Assumed household size figures shall be provided by the Agency. Fifteen (15) business days prior to the completion of the sales transaction (close of escrow), the seller must provide documentation to the satisfaction of the Agency that the new home buyer is in fact a lower income household and the sales price is affordable to that lower income household. Beginning sixteen (16) years after the initial purchase of the home, the home units may be sold at a market price to non low income households provided that the sale shall result in the recapture by the City or its designee of a financial interest in the units equal to the amount of 3 _- subsidy necessary to make the unit affordable to the designated income group and a proportionate share of any appreciation. The repayment process of the Agency loan is explained below. 7. Repayment. a. The total amount of the principal and any Contingent Interest owed under this Note shall immediately become due and payable (i) in the event of a default by the Borrower under this Note, the Deed of Trust, or the First Mortgage, (ii) on the date Transfer is made whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence as his or her principal place of residence; or (iv) at the end of the Term of this Note as described above in Section 5. Failure to declare such amounts due shall not constitute a waiver on the part of the Agency to declare them due in the event of a subsequent Transfer. b. In the event, upon expiration of the Term, (i) no Transfer has occurred, (ii) Borrower has repaid all principal pursuant to subsection (a) above, (iii) Borrower continues to owner-occupy the Residence, and (iv) Borrower is not in default hereunder or under the Deed of Trust, the Agency shall forgive repayment of all Contingent Interest due hereunder. 8. Late Payment Fees. If any payment due hereunder is not paid within five (5) days from the date it is due, Borrower shall pay a reasonable late or collection charge equal to five percent (5%) of the amount so unpaid. The Agency and Borrower agree that the actual damages and costs sustained by the Agency due to the failure to make timely payments would be extremely difficult to measure and that the charges specified in this paragraph represent a reasonable estimate by Borrower and the Agency of a fair average compensation for such damages and costs. Such charges shall be paid by Borrower without prejudice to the right of the Agency to collect any other amounts provided to be paid under this Note or the Deed of Trust or, with respect to late payments, to declare a default. 9. Prepayments. The Borrower may prepay all or part of the balance due under this Note including principal and Contingent Interest. In the event the entire amount of principal due under this Note is prepaid, all Contingent Interest, calculated as of the date of prepayment, shall also be due at the time of prepayment. 10. No Assumption of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the Agency to assist in the purchase of homes by lower income persons. Consequently, this Note may be assumed or will be due in full upon Transfer per the requirements of Section 7. 11. Maintenance; Taxes; Insurance. Borrower shall maintain the Residence in good repair and in a neat, clean and orderly condition. Borrower shall promptly pay all property taxes due on the Residence prior to any delinquency and shall comply with the insurance requirements set forth in the Deed of Trust. 12. Refinance of First Mortgage Loan. The outstanding principal and interest on this Note shall not be due upon prepayment and refinance of the First Mortgage, and the Deed 4 of Trust shall be subordinated to the refinanced loan, provided that (i) such refinancing is approved by the Agency, (ii) the amount refinanced does not exceed the outstanding principal balance of the First Mortgage at the time of refinance plus reasonable costs of refinance, and (iii) the refinance does not result in higher monthly payments on the First Mortgage Loan than were due prior to the refinance. 13. Certification of Purchase Price on Transfer. Upon any sale of the Residence, the Borrower shall submit to the Agency at least fifteen (15) days prior to the close of escrow, a copy of the sales contract and a written declaration, under penalty of perjury, from the Borrower and the proposedpurchaser in a form acceptable to the Agency stating the gross sales price of the Residence. The certification shall also provide that the proposed purchaser or any other party has not paid and will not pay to the Borrower, and the Borrower has not received and will not receive from the proposed purchaser or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract. 14. Notice to Agency of Transfers. Borrower shall provide the Agency with written notice of any Transfer of the Residence or of any interest in the Residence (including, but not limited to, encumbrance of the Residence with a junior deed of trust or transfer of the Residence to a spouse or trust). Borrower shall provide this notice to the Agency no later than fifteen (15) days before the Transfer occurs, except where the Transfer is by devise or inheritance after death of the Borrower in which event notice shall be provided within thirty (30) days of the date of Transfer. 15. Default. a. The Borrower shall be in default under this Note if he or she is in default under the First Mortgage following the expiration of First Mortgage cure periods, or if, after the notice and cure period provided by the Agency to the Borrower pursuant to the notice and cure provisions of the Deed of Trust, the Borrower (i) fails to pay any money when due under this Note; (ii) breaches any representation or covenant made in this Note in any material respect; or (iii) breaches any provision of the Deed of Trust. b. Upon the Borrower's breach of any covenant or agreement of the Borrower in this Note or the Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by the Deed of Trust, the Agency, prior to acceleration, will send, in the manner set forth in Section 20 notice to the Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days from the date the notice is effective, by which such breach, if curable, is to be cured and (4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by the Deed of Trust and foreclosure by the Agency. The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of default or any other defense of the Borrower to acceleration and sale. 16. Acceleration. -Upon the occurrence of a default under this Note, the Deed of Trust, or the First Mortgage, the Agency shall have the right to declare the full amount of the 5 principal along with any Contingent Interest under this Note immediately due and payable. Any failure by the Agency to pursue its legal and equitable remedies upon default shall not constitute a waiver of the Agency's right to declare a default and exercise all of its rights under this Note and the Deed of Trust. Nor shall acceptance by the Agency of any payment provided for herein constitute a waiver of the Agency's right to require prompt payment of any remaining principal and interest owed. 17. No Offset. The Borrower hereby waives any rights of offset it now has or may later have against the Agency, its successors and assigns, and agrees to make the payments called for in this Note in accordance with the terms of this Note. 18. Waiver; Attorney Fees and Costs. The Borrower and any endorsers or guarantors of this 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 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 Note or agreement to pay the same, and jointly and severally agree to pay all costs of collection when incurred, including reasonable attorney fees. If an action is instituted on this Note, the Borrower 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. 19. No Waiver by the Agency. No waiver of any breach, default or failure of condition under the terms of this Note shall be implied from any failure of the Agency to take action with respect to such breach, default or failure or from any previous waiver of any similar or unrelated breach, default or failure. 20. Notices. All notices required in this Note shall be sent by certified mail, return receipt requested, or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained and shall be deemed to be effective as of 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 as follows: To the Borrower: At the address of the Residence. To the Agency: Carlsbad Redevelopment Agency Housing and Redevelopment Department Attention: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 6 The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section 20. 21. Joint and Several Obligations. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. 22. Nonliabilitv for Negligence. Loss, or Damage. Borrower acknowledges, understands and agrees that the relationship between Borrower and the Agency is solely that of borrower and lender, and that the Agency does not undertake or assume any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of the quality, adequacy or suitability of the Residence or any other matter. The Agency owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction or any condition of the Residence and Borrower agrees that neither Borrower, or Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against the Agency for any loss, damage or other matter arising out of or resulting from any condition of the Residence and will hold the Agency harmless from any liability, loss or damage for these things. 23. Indemnity. Borrower agrees to defend, indemnify, and hold the Agency harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees that the Agency may incur as a direct or indirect consequence of a. the making of the loan to Borrower; b. Borrower's failure to perform any obligations as and when required by the Note or the Deed of Trust; or c. the failure at any time of any of Borrower's representations to the Seller or the Agency to be true and correct. 24. Termination of Restrictions. Any legal restrictions on conveyance of the Residence (as defined in 24 CFR 203.41(a)(3)(u)) included in this Note shall terminate upon transfer of the Residence by foreclosure, deed in lieu of foreclosure, or assignment to the Secretary of the United States Department of Housing and Urban Development. 25. Controlling Law. This Note shall be construed in accordance with and be governed by the laws of the State of California. 26. Assignment by Agency. The Agency may assign its right to receive the proceeds under this Note to any person and upon notice to the Borrower by the Agency all payments shall be made to the assignee. 27. Invalid Provisions. If any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in 7 x this Note, and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Note. 28. Entire Agreement. This Note (along with the Deed of Trust) sets forth the entire understanding and agreement of the Agency and the Borrower and any amendment, alteration or interpretation of this Note must be in writing signed by both the Agency and the Borrower. Borrower (Print Name) Borrower (Print Name) 8 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Agency of Carlsbad Agency Clerk's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: Agency Clerk No fee for recording pursuant to Gnverrlnden 37383 (Space above for Recorder's Use) NOTE TO BORROWER: THIS DEED OF TRUST CONTAINS PROVISIONS PROHIBITING ASSUMPTIONS THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made as of ("Trustee"), and this day of , 2003, among ("Borrower") as trustor, and the Carlsbad Redevelopment Agency, a body corporate and politic (the "Agency"), as beneficiary. The Borrower, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to the Trustee, in trust, with power of sale, the property located in the Agency of Carlsbad, State of California, described in the attached Exhihlt LU (the "Property"). TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances, and all fixtures now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the property covered by this Deed of Trust; and TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefore, whether or not the same are, or shall be attached to said building or buildings in any manner; and all of the foregoing, together with the Property, is herein referred to as the "Security"; 1 To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever; TO SECURE to the Agency the repayment of the sums evidenced by a promissory note executed by the Borrower to the Agency dated ,2003, in the amount of Dollars ($ ) (the "Note"); TO SECURE to the Agency the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of the Borrower herein contained; and TO SECURE the performance of any obligations of Borrower in any other agreements with respect to the financing of the Property or the Security the failure of which would adversely affect Beneficiary, whether or not Beneficiary is a party to such agreements. BORROWER AND AGENCY COVENANT AND AGREE AS FOLLOWS: 1. nwer's Estak. That the Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security, that other than this Deed of Trust, the Security is encumbered only by that deed of trust executed by the Borrower in connection with a loan made to the Borrower by or its successors and assigns (the "First Lender"), dated Lender, and recorded in the County of San Diego on , 2003, and as Document No. (the "First Lender Deed of Trust"), securing a promissory note executed by the Borrower in favor of the First Lender ("First Lender Note"), to assist in the purchase of the Property. The Borrower agrees to warrant and defend generally the title to the Security against all claims and demands, subject to any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring the Agency's interest in the Security. (As used in this Deed of Trust, the term "First Lender" shall include all successors and assigns of the First Lender.) , 2003, executed by the Borrower in favor of First 2. Jhqqmmlnfloan. The Borrower will promptly repay, when due, the principal and interest required by the Note. The Note contains the following provisions concerning repayment of the loan under certain conditions: 3. nf the Astumpmn of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the Agency to assist in the purchase of homes by lower income persons. Consequently, this Note may be transferred under certain circumstances as permitted by the Note or due in full upon a Transfer as defined in the Note. 3. and agreements of the First Lender Note, First Lender Deed of Trust, and related First Lender loan documents. First TP,nderT.nan. The Borrower will observe and perform all of the covenants 2 c 4. ner-0 w. The Borrower shall occupy the Property as his or her principal place of residence. The Borrower shall be considered as occupying the Property if the Borrower is living in the unit for at least ten (10) months out of each calendar year. The Borrower shall provide an annual written certification to the Agency that the Borrower is occupying the Property as his or her principal place of residence. 5. Clharges:Tdens. The Borrower will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority senior to this Deed of Trust, by the Borrower making any payment, when due, directly to the payee thereof. The Borrower will promptly furnish to the Agency all notices of amounts due under this paragraph, and in the event the Borrower makes payment directly, the Borrower will promptly discharge any lien which has priority senior to this Deed of Trust; provided, that the Borrower will not be required to discharge the lien of the First Lender Deed of Trust or any other lien described in this paragraph so long as the Borrower will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the Agency, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof. 6. HRxard. The Borrower will keep the Security insured by a standard fire and extended coverage insurance policy in at least an amount equal to the replacement cost of the Security, but in no event less than the amount necessary to prevent the Borrower from becoming a co-insurer under the terms of the policy. The insurance carrier providing this insurance shall be licensed to do business in the State of California and be chosen by the Borrower subject to approval by the Agency; provided, that such approval will not be withheld if the insurer is also approved by the First Lender, the Federal Home Loan Mortgage Corporation, Fannie Mae, Freddie Mac, the United States Department of Housing and Urban Development, the United States Department of Veterans Affairs, or successors thereto. All insurance policies and renewals thereof wilI be in a form acceptable to the Agency and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of the First Lender Note and the Agency as their interests may appear and in a form acceptable to the Agency. The Agency shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and the Borrower shall promptly furnish to the Agency, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, the Borrower will give prompt notice to the insurance carrier and the Agency or its designated agent. The Agency, or its designated agent, may make proof of loss if not made promptly by the Borrower. The Agency shall receive thirty days advance notice of cancellation of any insurance policies required under this section. Unless the Agency and the Borrower otherwise agree in writing, insurance proceeds, subject to the rights of the First Lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the Security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used, 3 subject to the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with the excess, if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the Borrower fails to respond to the Agency, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to the Borrower that the insurance carrier offers to settle a claim for insurance benefits, the Agency, or its designated agent, is authorized, subject to the rights of the First Lender, to collect and apply the insurance proceeds at the Agency's option either to restoration or repair of the Security or to repay the Note and all sums secured by this Deed of Trust. If the Security is acquired by the Agency, all right, title and interest of the Borrower in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Agency to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of the First Lender. 7. nf ~CUKQ. The Borrower will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 8. . If the Borrower fails to perform the covenants and agreements contained in this Deed of Trust, the First Lender Note, the First Lender Deed of Trust, or if any action or proceeding is commenced which materially affects the Agency's interest in the Security, including, but not limited to, default under the First Lender Deed of Trust, the First Lender Note or any other deed of trust encumbering the Property, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the Agency, at the Agency's option, upon notice to the Borrower, may make such appearances, disburse such sums and take such action as it determines necessary to protect the Agency's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs. Any amounts disbursed by the Agency pursuant to this paragraph, with interest thereon, will become an indebtedness of the Borrower secured by this Deed of Trust. Unless the Borrower and Agency agree in writing to other terms of payment, such amount will be payable upon notice from the Agency to the Borrower requesting payment thereof, and will bear interest from the date of disbursement at the lesser of (1) ten percent (10%) per annum or (2) the highest interest rate permissible under applicable law. Nothing contained in this paragraph will require the Agency to incur any expense or take any action hereunder. 9. TnsnP,ctl. ,The Agency may make or cause to be made reasonable entries upon and inspections of the Security; provided that the Agency will give the Borrower reasonable notice of inspection. 10. hv the Avencv Nnt a Waiver. Any forbearance by the Agency in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by the Agency will not be a waiver of the Agency's right to accelerate the maturity of the indebtedness secured by this Deed of Trust. 4 11. Remedies. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 12. Y Pns Rnund. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the Agency and the Borrower subject to the provisions of this Deed of Trust. . .. 13. be joint and several. mb&y. All covenants and agreements of the Borrower shall 14. Nntice. Except for any notice required under applicable law to be given in another manner, all notices required in this Deed of Trust shall be senl by certified mail, return receipt requested or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained, and shall be deemed to be effective as of 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 as follows: To the Owner: At the address of the Borrower. To the Agency: Carlsbad Redevelopment Agency Housing and Redevelopment Department Attn: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this section. 15. " P T .aw. This Deed of Trust shall be construed in accordance with and be governed by the laws of the State of California. d Provisions . If any one or more of the provisions contained in this Deed of .. 16. Trust or the Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions, and this Deed of Trust and the Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Deed of Trust or the Note. 17. Capmus. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. 18. v. Upon the Borrower's breach of any covenant or agreement of the Borrower in this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the Agency, prior to acceleration, will send, in the manner set forth in Section 14 of this Deed of Trust, notice to the Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days from the date the notice is effective as set forth in Section 14 of this Deed of Trust, by which such breach, if curable, is to be cured; and (4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. Notice shall be effective as of 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. The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of default or any other defense of the Borrower to acceleration and sale. If the breach is not curable or is not cured on or before the date specified in the notice, the Agency, at the Agency's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; (b) 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) and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Security, 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 breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the Agency shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et q., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which the Borrower acquires title to any Security, 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. The Agency shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees. 19. Aaxhabn. Upon the occurrence of a default under the Note, this Deed of Trust, the First Lender Note, or the First Lender Deed of Trust, the Agency shall have the right to declare the full amount of the principal along with any interest under the Note immediately due and payable. Any failure by the Agency to pursue its legal and equitable remedies upon default shall not constitute a waiver of the Agency's right to declare a default and exercise all of its rights under the Note and this Deed of Trust. Nor shall acceptance by the Agency of any payment provided for in the Note constitute a waiver of the Agency's right to require prompt payment of any remaining principal and interest owed. 6 20. ” to kimtate. Notwithstanding the Agency’s acceleration of the sums secured by this Deed of Trust, the Borrower will have the right to have any proceedings begun by the Agency to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if (a) the Borrower pays Agency all sums, if any, which would be then due under this Deed of Trust as if acceleration under the Note has occurred; (b) the Borrower cures all breaches of any other covenants or agreements of the Borrower contained in this Deed of Trust; (c) the Borrower pays all reasonable expenses incurred by Agency and the Trustee in enforcing the covenants and agreements of the Borrower contained in this Deed of Trust, and in enforcing the Agency’s and the Trustee’s remedies, including, but not limited to, reasonable attorney’s fees; and (d) the Borrower takes such action as Agency may reasonably require to assure that the lien of this Deed of Trust, Agency’s interest in the Security and the Borrower’s obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by the Borrower, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 21. -. Upon payment or forgiveness of all sums secured by this Deed of Trust, the Agency will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the Note to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 22. e Tnl8tce.. The Agency, at the Agency’s option, may from time to time remove the Trustee and appoint a successor trustee to any trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 23. o First Mortgage. Notwithstanding any other provision hereof, the provisions of this Deed of Trust shall be subordinate to the lien of the First Lender Deed of Trust and shall not impair the rights of the First Lender, or the First Lender’s successor or assign, to exercise its remedies under the First Lender Deed of Trust in the event of default under the First Lender Deed of Trust by the Borrower. Such remedies under the First Lender Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed or assignment in lieu of foreclosure, or upon assignment of the First Lender Deed of Trust to the Secretary of the United States Department of Housing and Urban Development (the “Secretary”), this Deed of Trust shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of such First Lender Deed of Trust acquired title to the Property pursuant to a deed or assignment in lieu of foredosure, or if the First Lender’s Deed of Trust is assigned to the Secretary, this Deed of Trust shall automatically terminate upon such acquisition of title, or assignment to the Secretary provided that (i) the Agency has been given written notice of default under such First Lender Deed of Trust and (ii) the Agency shall not have cured or commenced to cure the default within such 30-day period and given its firm commitment to complete the cure in the form and substance acceptable to the First Lender. Borrower agrees to record any necessary documents to effect such termination, if applicable. 7 24. AttnmP,y'sFw . If any action or proceeding is brought to enforce this Deed of Trust or any provision of this Deed of Trust or the Note, the prevailing party shall be entitled to its attorney's fees and the cost of such action or proceeding. IN WITNESS WHEREOF, the Borrower has executed this Deed of Trust as of the date first written above. Borrower (Print Name) _______~ Borrower (Print Name) 8 EXHIBIT A Property Description L DEED OF TRUST AND SECURITY AGREEMENT AGENCY OF CARLSBAD ADMINISTRATIVE CHECKLIST (Remove Upon Completion) NKT,TNES: CHEC- Date of Document, p. 1, first paragraph Borrower's Name, p. 1, first paragraph Trustee's Name, p. 1, first paragraph Date and Amount of Promissory Note, p. 2, second full paragraph First Lender's Name, p. 2, Section 1 Date of First Lender's Deed of Trust, p. 2, Section 1 Recording Information for First Lender's Deed of Trust, p. 2, Section 1 ' Signatures, p. 9 Include Ezrhlhit A , Property Description Notary .. BORROWER DISCLOSURE STATEMENT LAGUNA POINT The Carlsbad Redevelopment Agency (the "Agency"), through the City of Carlsbad Inclusionary Housing Ordinance, has required the developer of the Laguna Point condominium development to sell the homes in the development to qualified households under terms that make the home affordable to you and the other new homebuyers. The Agency has also provided financial assistance to the developer to assist in making the Laguna Point homes affordable. Your new home is affordable to you because the Agency and the developer are providing you with second mortgage financing through the Laguna Point Homebuyer Assistance Program (the "Program") so that you will be able to buy your home. The Agency offers the Program in order to enable low income households to own their own homes in Carlsbad. As a condition of the financing, the Agency will require you to sign a Promissory Note and a Deed of Trust. The Deed of Trust will be recorded against your property. This Disclosure Statement explains the major provisions of the Promissory Note and the Deed of Trust to help you understand their requirements. You should, of course, read all of the Agency loan documents yourself and become completely familiar with them. A. PRIMARY RESIDENCE AND LEASING YOUR HOME Under the terms of the Promissory Note and Deed of Trust, the home you buy with the assistance of the Agency loan must be your main place of residence. This means you must live in the home no less than 10 months out of each calendar year. Each year, you must cedi@ in writing to the Agency that you are living in your home as your main place of residence. In addition, you cannot lease your home. If you fail to follow these provisions, you are considered to be in default, and the Agency may declare its loan immediately due and payable. B. RESALE RESTRICTIONS The Agency and the Developer have provided financial assistance to the developer to assist in making the Laguna Point homes affordable. Your new home is affordable to you because the Agency and the developer are providing you with second mortgage financing through the Laguna Point Homebuyer Assistance Program (the "Program") so that you will be able to buy your home. & such, there are restrictions in your Deed of Trust and Promissorv Note that limit your abilitv to sell your home, the sales price at which vou are able to sell your home, and of the amount of income the purchaser of the home may earn in a vear. Beginning on the date you purchase your home (close escrow) and for fifteen years thereafter, you may only sell your home to a qualified lower income household. A lower income household is one in witch the households gross annual income does not exceed 80% of the median income for San Diego County, adjusted for assumed household size. Further, the sales price can increase above the original sales price by an amount that is equal to the increase annual increase in the San Diego Area Median Income. Median income figures shall be those published annually by the United States -1- Department of Housing and Urban Development. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (1 8) months, the City shall provide the Owner with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by the Department of Housing and Urban Development. Assumed household size figures shall be provided by the Agency. Fifteen (15) business days prior to the completion of the sales transaction (close of escrow), the seller must provide documentation to the satisfaction of the Agency that the new home buyer is in fact a lower income household and the sales price is affordable to that lower income household. Beginning sixteen (1 6) years after the initial purchase of the home, the home units may be sold at a market price to non low income households provided that the sale shall result in the recapture by the City or its designee of a financial interest in the units equal to the amount of subsidy necessary to make the unit affordable to the designated income group and a proportionate share of any appreciation. The repayment process of the Agency loan is explained below. C. NOTICES TO AGENCY 1. Notice of Intent to Sell, Assign or Transfer. If you decide to sell, assign or transfer your home or any partial interest in your home, or if you record a mortgage or deed of trust against your home, you must let the Agency know in writing at least fifteen business (1 5) days prior to the sale, assignment, transfer, or the recording of a mortgage or deed of trust. 2. Notice and Certification of Purchase Price. If you go to sell your home, at least fifteen business (1 5) days before the sale closes (close of escrow), you must give the Agency a copy of the sales contract and a written statement that declares, under penalty of perjury, the gross sales price of the home. The written statement must be signed by both you (as seller) and the proposed buyer. The written statement must also certify that the proposed buyer, or any other party, has not paid and will not pay to you money or any other consideration that is not set out in the sales contract for the home. The statement must also certify that you (as the seller) have not received and will not receive from the proposed buyer, or anybody else, money or other consideration that is not included in the sales contract. 3. Deliverv of Required Notices. Any notice you must provide to the Agency under the terms of the Agency loan documents must be sent by certified mail, return receipt requested, or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained. D. INTEREST ON THE AGENCY LOAN: "CONTINGENT INTEREST" When the loan is eligible to be repaid under the terms and conditions listed in Section B above, the Agency loan charges "contingent interest". The contingent interest represents the benefit you received from the Agency loan, and may generally be described as the percentage of the sales price that the Agency loaned to you, with an adjustment or discount applied. The contingent interest on your loan is due immediately if: -2- $ $ $ You default under the Agency loan or the First Mortgage, or You sell or transfer title to your home, or The end of the term of your loan is reached, with exceptions (see section E. below) The contingent interest on your Agency loan has three (3) parts: (1) Appreciation Amount; (2) Contingent interest percentage; and (3) Automatic 25% discount to account for any improvements you may make to the home. An example is used to show each of the three (3) parts and how each would be calculated. Your loan from the Agency is $1 8,200. The original sales price you paid for your home was $140,000. When you sell, the sales price is $173,600. Example 1 1. Appreciation Amount. The appreciation amount is generally the difference between the original sales price you paid for the home and the price at which you sell it. For example: Price of Home When You Sell: Price of Home When You Bought: Appreciation Amount: $ 33,600 $1 73,600 - $140,000 Minus The appreciation amount is calculated differently under certain circumstances. If you (a) prepay your Agency loan, or (b) transfer your home by means other than selling it, or (c) are in default under the terms of the Agency loan, the appreciation amount will be figured by using the Fair Market Value of the home (instead of the price of the home when you sell, as above). Fair Market Value is the value of the home as determined by an independent appraiser chosen by the Agency. If such an appraisal is necessary, the cost of the appraisal will be paid by you. If a creditor takes title to your home, the appreciation amount will be figured by using the amount paid for the home at the creditor's sale. 2. Contingent Interest Percentage. The contingent interest percentage is the percentage of the sales price that the Agency loaned to you. This percentage is figured by dividing the amount of the Agency loan by the purchase price you paid for the home. Continuing with the example: Agency Loan Amount: Divided By $ 18,200 Price of Home When You Bought: + $140,000 Equals Contingent Interest Percentage - = 13.00% 3. Automatic Discount For Possible Capital Improvements. During the time that you -3- live in your home, you may make improvements to it that will increase its value. For example, you may put in a new central heating system or update the bathroom. To recognize the possibility that you have invested in improvements which have contributed to an increase in value beyond the increase due to a rise in the general real estate market, the contingent interest on the Agency loan provides for a 25% discount. This discount is given automatically, even if you have not made any improvements. Continuing with the example, the discount for capital improvements reduces the contingent interest owed the Agency as follows: Appreciation Amount: Contingent Interest Percentage Multiplied By Multiplied By Automatic Discount Total Dollar Amount of Discount Contingent Interest Amount Minus Discount Amount $ 33,600 X .13 $4,368.00 $4,368 X .25 $ 1,092.00 $ 4,368.00 - 1,092.00 Contingent Interest You Owe Agency $ 3,276.00 The automatic capital improvement discount shall be calculated by the Agency as set out in the Promissory Note under Section 4 "Contingent Interest". The result is the same as with the calculation above. A mathematical step has been eliminated. Appreciation Amount: $ 33,600 Contingent Interest Percentage x .13 $ 4,368 Contingent Interest You Owe Agency $ 3,276 Multiplied By Automatic Discount Applied x .75 E. PAYING BACK YOUR AGENCY LOAN 1. No Pavments Required for 30 Years Unless You Sell, Transfer, or Default. Your loan from the Agency is a "deferred" loan. This means that you do not have to make payments on your loan for the entire 30 year term. If, however, at any time you sell, assign or transfer the home or if you break the terms of the loan documents, both the principal and contingent interest owed on the loan may be immediately due and payable, per the terms and conditions of Section B above. The refinancing of your first mortgage loan does not trigger immediate payment of principal and contingent interest if the refinancing meets the terms of the Promissory Note (as described in section G. below). -4- .I 2. When You Sell Your Home. Per Section B above, when you sell, transfer, or assign your home or any interest in it, the principal and contingent interest owing is immediately due and payable. The only times when this is not the case is when a transfer is to an existing husband or wife who signed the Promissory Note, to a husband or wife who then becomes a co-owner of the home, to a husband or wife as part of a marriage or a divorce, to an inter vivos trust in which you are the beneficiary, or to a husband, wife, or child upon death of the borrower. Example 2 shows the repayment process for the Agency loan when the home is sold. Example 2 You have lived in your home for 8 full years and now must sell it because you received a promotion to a job in another state. You bought your home for $140,000. The Agency provided you with a loan of $18,200 to help you buy your house. The sales price of your home is $200,000. I (a) Amount of Principal Owed Upon Sale. Since the Agency Loan is a deferred loan, and you have made no payments during the time you have held the loan, the full amount of principal must be repaid to the Agency at the time of sale. In this example, the principal amount due is $18,200. (b) Amount of Continpent Interest Owed. To figure out the amount of contingent interest you owe the Agency, we need to calculate the appreciation amount and the contingent interest percentage, and then apply the automatic discount. Calculatinp the Appreciation Amount Sales Price of Your Home: Minus Price You Originally Paid: - $140,000.00 Appreciation Amount $ 60,000.00 $200,000.00 Calculating the Continpent Interest Percentape Your Agency Loan divided by the Price You Originally Paid: Contingent Interest Percentage = 13% $18,200 + $140,000 = 0.13 Calculating Contingent Interest Owed (With Discount Applied) Appreciation Amount: $ 60,000.00 Contingent Interest Percentage X .13 $ 7,800.00 Automatic Discount X .75 Multiplied By Multiplied By -5- Contingent Interest Owed Agency $5,850.00 Total You Owe Agency UDon Sale of the Home Principal Owed: $ 18,200.00 Plus Contingent Interest: + $ 5,850.00 Total Owed $24,050.00 F. POTENTIAL FORGIVENESS OF CONTINGENT INTEREST Under the terms of the Promissory Note, the contingent interest on your loan is due at the end of the 30-year loan term. However, you will not have to pay the contingent interest at the end of the loan term if you meet all of the following conditions: (1) term, and You live in your home and there has been no sale or transfer during the entire 30 year (2) You have repaid all of the principal you owe the Agency, and (3) You are not in default under the Agency loan. G. REFINANCING FIRST MORTGAGE LOAN The Promissory Note allows you to refinance your first mortgage loan without triggering repayment of your Agency loan if the following conditions are met. The refinancing must be approved by the Agency. The amount received from the refinancing can be no more than the remaining principal amount of your first mortgage plus reasonable closing costs of the refinancing. The refinance cannot result in higher monthly payments on the first mortgage loan than were due before the refinancing. If these conditions are not met, principal and contingent interest on your Agency loan may be required to be paid to the Agency when you refinance, per the terms and conditions listed in Section B above. G. DEFAULT PROVISIONS When you accept Agency loan assistance, you agree to meet all of the conditions of all of the Agency loan documents. If you violate any provisions of the documents, you are considered to be in default under your Agency loan. Also, if you default under the first mortgage loan, you would also be considered to be in default under the Agency loan. If you do not correct the violation, the Agency could require you to immediately repay the principal and contingent interest owing on the Agency loan. The Agency could also go to court and get a court order to enforce the provisions of the Agency loan documents, which may result in a foreclosure on your home. -6- Please sign the enclosed copy of this Borrower Disclosure Statement in the space provided below and return it to the Agency at 2965 Roosevelt Street, Suite B, Carlsbad, California, 92008-2389. I have read and understand the above Borrower Disclosure Statement. By: Signature of Borrower By: Signature of Borrower Print Name of Borrower Print Name of Borrower Dated: Dated: -7- z1 ATTACHMENT 4 LAGUNA POINT RP 01 -08/CT 01 -1 3 . cl- .- A- A I t- i