HomeMy WebLinkAboutCarlsbad Laurel Tree Apartments LP; 1998-07-30;I
CITY LOAN AGREEMENT
by and between
THE CITY OF CARLSBAD
and
METROPOLITAN AREA ADVISORY COMMITTEE ON ANTI-POVERTY OF SAN DIEGO,
a California nonprofit public benefit corporation
Laurel Tree Apartments
. . . m
DEFINITIONS AND EXHIBITS ............................................................................ 2
Definitions 2
Exhibits 4
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LOAN ....................................................................................................................... 4
Amount ................................................................................................................... 4
Interest ...................................................................................................................... 4
Repayment .............................................................................................................. 4
Prepayment ............................................................................................................. 6
Assumption ............................................................................................................. 6
Loan Disbursement ................................................................................................. 6
Use ofLoan Proceeds ............................................................................................. 6
Security for Loan .................................................................................................... 7
Approval of Additional Financing .......................................................................... 7
Subordination of Deed of Trust .............................................................................. 7
Subordination of the City Regulatory Agreement .................................................. 7
Reports and Accounting of Surplus Cash ............................................................... 7
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DISBURSEMENT OF LO AN ................................................................................. 8
Conditions Precedent to Disbursement of Loan Proceeds ...................................... 8
Procedure for Disbursement ofLoan Proceeds ...................................................... 9
DEVELOPMENT OF THE IMPROVEMENTS ................................................... 10
Commencement of Construction .......................................................................... 10
Completion of Construction .................................................................................. 10
Construction Pursuant to Plans ............................................................................. 10
Construction in Compliance with Law ................................................................. 10
ARTICLE 1
1.1
1.2
ARTICLE 2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.1 1
2.12
ARTICLE 3
3.1
3.2
ARTICLE 4
4.1
4.2
4.3
4.4
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4.5
4.6
4.7
4.8
ARTICLE 5
5.1
ARTICLE 6
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.1 1
6.12
6.13
6.14
6.15
6.16
ARTICLE 7
7.1
Entry by the City ................................................................................................... 10
Equal Opportunity ................................................................................................. 11
Mechanics Liens, Stop Notices, and Notices of Completion ................................ 11
Estoppel Certificate of Completion ...................................................................... 11
REPRESENTATIONS AND WARRANTIES OF BORROWER ........................ 12
Representations and Warranties ............................................................................ 12
CONTINUING OBLIGATIONS ........................................................................... 13
Apphcablhty ......................................................................................................... 13
Compliance with Loan Documents ....................................................................... 13
Rental of Units ...................................................................................................... 13
Required Insurance Coverage ............................................................................... 13
Insurance Pollcles and Premiums ......................................................................... 14
Proceeds ofhsurance ........................................................................................... 14
Taxes and Assessments ......................................................................................... 14
Compliance with Laws ......................................................................................... 14
Changes ................................................................................................................. 14
Notification of Llhgatlon ...................................................................................... 14
Indemnity .............................................................................................................. 15
Hazardous Materials ............................................................................................. 15
Non-Dlscnmmnatlon .............................................................................................. 16
Mandatory Language in All Subsequent Deeds, Leases and
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Contracts ............................................................................................................... 16
Records ................................................................................................................. 17
Transfers ............................................................................................................... 18
DEFAULT AND REMEDIES ............................................................................... 19
Events of Default .................................................................................................. 19
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7.2
7.3
7.4
7.5
ARTICLE 8
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.1 1
8.12
8.13
8.14
Remedies ............................................................................................................... 20
Right of Contest .................................................................................................... 21
Remedies Cumulative ........................................................................................... 21
Waiver of Terms and Condltlons 21
MISCELLANEOUS .............................................................................................. 22
Time ...................................................................................................................... 22
Force Majeure ....................................................................................................... 22
Notices ........................................................ : ......................................................... 22
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Attorneys' Fees ...................................................................................................... 23
No Third Parties Benefited ................................................................................... 23
Actions .................................................................................................................. 23
Signs ...................................................................................................................... 23
Successors and Assigns ......................................................................................... 23
Construction of Words .......................................................................................... 23
Partial Invalidity .................................................................................................... 23
Governing Law ..................................................................................................... 23
Amendment ........................................................................................................... 23
Captions and Headings ......................... : ............................................................... 23
Action by the City ................................................................................................. 24
Exhibit A . Legal Description of the Land
Exhibit B . City Note
Exhibit C . City Regulatory Agreement
Exhibit D . City Deed of Trust
Exhibit E . Permitted Uses of Loan Proceeds
Exhibit F . Form of Estoppel Certificate of Completion
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CITY LOAN AGREEMENT
This City Loan Agreement ("the Agreement") is entered into as of this
1998, by and between the City of Carlsbad (the "City") and Carlsbad Laurel Tree Apartments,
L.P., a California limited partnership (the "Borrower").
RECITALS
2
WHEREAS:
1. The Carlsbad City Council adopted the Redevelopment Plan (the "Redevelopment
Plan") by Ordinance No. 95-91 on July 21, 1981. The Redevelopment Plan established the
Carlsbad Village Redevelopment Project Area ("Redevelopment Area") and set forth goals,
objectives, and proposed activities for redevelopment of the Redevelopment Area, including the
production of housing affordable to low and moderate income households. The land on which
the units will be developed is located outside of the Redevelopment Area. By Resolution No. -, the Carlsbad Housing and Redevelopment Commission made findings that the
development of the housing units by the Borrower will be of benefit to the Project Area.
2. The City and the Carlsbad Redevelopment Agency, Carlsbad, California (the
"Agency") entered into an Agreement dated , 1997 pursuant to which the Agency
transferred to the City certain funds hm the Agency's Low and Moderate Income Housing Fund
created pursuant to Health and Safety Code Section 33334.2 ("Redevelopment Housing Funds")
and the City agreed to utilize such funds in accordance with the requirements of the Community
Redevelopment Law (Health and Safety Code Section 33000 et seq.).
3. Borrower desires to construct one hundred and thuty-eight (138) residential units
in the City of Carlsbad, of which at least sixty-seven (67) shall be rented to low income
households at affordable housing cost and the remainder, excluding managers' units, shall be
rented to moderate income households at affordable housing cost.
4. The City desires to provide financial assistance to Borrower for development
costs in the form of a loan for a total amount not to exceed Seven Hundred Thousand Dollars
($700,000) (the "City Loan"). The City intends to fund the City Loan with Five Hundred
Thousand Dollars ($500,000) of Redevelopment Housing Funds and Two Hundred Thousand
Dollars ($200,000) of City Housing Trust Fund monies. The funds utilized to fund the City Loan
are not federal funds or the proceeds of a tax-exempt bond issue. The City is required by law to
place restrictions on developments assisted with Redevelopment Housing Funds and City
Housing Trust Funds, ensuring that such developments remain affordable to low and moderate
income households for the longest feasible time.
5. The City intends to utilize the development to obtain affordable housing
production credits for the Agency pursuant to Health and Safety Code Section 33413(b)(2)(A)(ii)
as newly constructed housing units located outside of the Redevelopment Area and available at
1010\07\110009.5 1
affordable housing cost to low and moderate income households. Such units are required to
remain affordable to such households for not less than the period of the land use controls
established in the Redevelopment Plan. This Agreement and the accompanying City Regulatory
Agreement are also intended to implement this requirement.
ARTICLE 1
DEFINITIONS AND EXHIBITS
1.1 Definitions. The following terms shall have the following meanings in this
Agreement:
(a) "Agency" shall mean the Carlsbad Redevelopment Agency, Carlsbad,
California, a public body corporate and politic.
(b) "Agreement" shall mean this City Loan Agreement.
(c) "Borrower" shall mean Carlsbad Laurel Tree Apartments, L.P., a
California limited partnership.
(d) "City Deed of Trust" used in this Agreement shall mean the deed of trust
to be placed on the Development, in substantially the form shown in Exhibit D attached hereto
and incorporated herein, securing the City Note and naming the City as beneficiary.
(e) "City Loan" shall mean the loan for an amount not to exceed Seven
Hundred Thousand Dollars ($700,000) by the City to Borrower, which loan is the subject of this
Agreement.
shown in Exhibit B attached hereto and incorporated herein, in the principal amount of Seven
Hundred Thousand Dollars ($700,000), evidencing the City Loan.
(f) "City Note" shall mean the promissory note, in substantially the form
(9) "City Regulatory Agreement" shall mean the City Regulatory Agreement
in the form attached as Exhibit C to this Agreement to be recorded against the Land pursuant to
Section 3.1 below.
(h) "Construction and Permanent Financing" shall mean any of the following
loans acquired by the Borrower for the purpose of financing the Improvements, in addition to the
City Loan:
(i) Bank of America Community Development Bank construction loan in
an approximate amount of Twelve Million Two Hundred Seventy
Thousand Dollars ($12,270,000);
2
(ii)
(iii)
(9 on the Land.
State of California Home Investments Partnership Program ("HOME")
construction and permanent loan in the amount of Five Hundred Forty-
Eight Thousand Two Hundred Forty-Eight Dollars ($548,248);
Bank of America Community Development Bank permanent loan in the
approximate amount of Three Million Seven Hundred Twenty-Eight
Thousand Dollars ($3,728,000);
FHLB-AHP loan (through Bank of America) in the amount of $552,000.
Developer Participation funds granted to IvlAAC will be granted and
loaned to the Partnership in the total amount of $3,427,500.
"Development" shall mean the Land and Improvements to be constructed
(i) "Improvements" shall mean the buildings and improvements to be
constructed on the Land, including the Units, and the parking spaces and landscaping
appurtenant to such buildings and improvements.
(k) "Land" shall mean the property on which the Borrower shall construct the
Improvements, which property is more particularly described in Exhibit A attached hereto and
incorporated herein.
(1) "Loan Amount" shall mean the amount loaned to Borrower pursuant to
Section 2.1 below.
(m) "Loan Documents" shall mean the following documents evidencing the
City Loan: (i) the City Note; (ii) the City Regulatory Agreement; (iii) the City Deed of Trust;
(iv) this Agreement.
(4 "Parties" shall mean the City and the Borrower.
(0) "Permanent Loan" shall mean the loan from Bank of America Community Development Bank described in Section l.l(h)(iii).
(p) "State HOME Loan" shall mean the loan described in Section l.l(h)(ii)
above.
(q) "Term" shall mean the term of the City Loan commencing on the date of
disbursement of the Loan Amount and ending thirty (30) years following the date of issuance of
a certificate of occupancy for all Units in the Development, but in no event later than June 30,
2029.
1010\07\110009.5 3
(4 "Unit" shall mean one of the one hundred thirty-eight (138) dwelling units located within the Development.
1.2 Exhibits The following Exhibits are attached to this Agreement and
incorporated herein:
- Legal Description of the Land
- City Note
- City Regulatory Agreement
- City Deed of Trust
- Permitted Uses of Loan Proceeds
- Form of Estoppel Certificate of Completion
ARTICLE 2
LOAN
2.1 Bmplmt. The City hereby agrees to loan, and the Borrower hereby agrees to
borrow, an amount not to exceed Seven Hundred Thousand Dollars ($700,000), subject to the
terms and conditions set forth in this Agreement, and subject further to the terms and conditions
set forth within the documents and instruments executed by the Borrower in connection with this
transaction, including:
(a) The City Note;
(b) The City Regulatory Agreement; and
(c) The City Loan Deed of Trust.
2.2 M. The outstanding principal amount of the Loan shall accrue interest at
three percent (3%) per annum, compounded annually.
2.3 &paymal.
(a) Repayment of the Loan shall be deferred during construction of the
Improvements. Commencing on the date of issuance by the City of a certificate of occupancy
for all Units in the Development, the outstanding principal and accrued interest on the City Loan
shall be amortized over the next thirty (30) years of the Term such that equal payments of
principal and interest (the "Amortized Payments") shall be due and payable on May 1 of each
calendar year, commencing on the first May 1 following recordation of the deed of trust securing
the Permanent Loan; provided however, that the Amortized Payments shall be due and payable
1010\07\11OOO9.5 4
only to the extent of Surplus Cash (as defined below) generated by the Development in the
previous calendar year.
(b) "Surplus Cash" means, in a particular calendar year, the amount by which
Gross Revenue (as defined below) exceeds Annual Operating Expenses (as defined below).
(i) Gross Revenue. "Gross Revenue," with respect to a particular
calendar year, shall mean all revenue, income, receipts, and other
consideration actually received from operation and leasing of the
Development. "Gross Revenue" shall include, but not be limited to: all
rents, fees and charges paid by tenants, Section 8 payments or other rental
subsidy payments received for the dwelling units, deposits forfeited by
tenants, all cancellation fees, price index adjustments and any other rental
adjustments to leases or rental agreements; proceeds from vending and
laundry room machines; the proceeds of business interruption or similar
insurance; the proceeds of casualty insurance to the extent not utilized to
repair or rebuild the Development; and condemnation awards for a taking
of part or all of the Development for a temporary period. "Gross
Revenue" shall also include the fair market value of any goods or services
provided in consideration for the leasing or other use of any portion of the
Development. "Gross Revenue" shall not include tenants' security
deposits, loan proceeds, capital contributions or similar advances.
(ii) Annual Operating Expenses. "Annual Operating Expenses," with
respect to a particular calendar year shall mean the following costs
reasonably and actually incurred for operation and maintenance of the
Development to the extent that they are consistent with an annual
independent audit performed by a certified public accountant using
generally accepted accounting principles: property and other taxes and
assessments imposed on the Development; premiums for property
damage and liability insurance; utility services not paid for directly by
tenants, including but not limited to water, sewer, trash collection, gas
and electricity; maintenance and repair including but not limited to pest
control, landscaping and grounds maintenance, painting and decorating,
cleaning, common systems repairs, general repairs, janitorial, supplies,
and others; any annual license or certificate of occupancy fees required
for operation of the Development; general administrative expenses
including but not limited to advertising and marketing, security services
and systems, and professional fees for legal, audit and accounting;
property management fees and reimbursements including on-site
manager expenses, not to exceed fees and reimbursements which are
standard in the industry; asset management/partnership management fees
in an annual amount approved by the City; social service coordinator fees
in an amount approved by the City; deferred developer fees in an amount
approved by the City; cash deposited into a reserve for capital
replacements of Development improvements and an operating reserve in
1010\07\110009.5 5
such reasonable amounts as are required by Development lenders andor
equity investors, and approved by the City; and debt service payments on
financing for the Development approved by the City, including the
financing described above in Section l.l(h) (excluding debt service due
from residual receipts or surplus cash of the Development, except debt
service on the State HOME Loan due from surplus cash shall not be
excluded). "Annual Operating Expenses" shall not include the following:
depreciation, amortization, depletion or other non-cash expenses or any
amount expended from a reserve account.
(c) In the event that Surplus Cash in any year is less than the amount of the
Amortized Payment due on May 1 of the following year, the difference between the amount of
Surplus Cash and the Amortized Payment shall accrue with simple interest at three percent (3%)
per annum, and shall be paid on the next May 1 when and to the extent Surplus Cash becomes
available. All payments on the City Loan shall be applied first to accrued, but unpaid, amounts
for prior years and then to the current Amortized Payment due, beginning with the earliest year
for which an Amortized Payment accrued.
(d) In the event that Surplus Cash in any year exceeds the amount necessary
to make the Amortized Payment due on May 1 of the following calendar year, plus any amounts
due pursuant to subsection (c) above, such excess amount shall be paid to the City as prepayment
of the City Loan, subject to any requirements of the lender in connection with the State HOME
Loan. Such prepayment shall not reduce the amounts of subsequent Amortized Payments due,
except to the extent that the City Loan is fully repaid.
(e) Any portion of the principal and interest on the City Loan not sooner paid
shall be due and payable upon the earlier of: (i) the occurrence of an Event of Default hereunder;
(ii) expiration of the Term; or (iii) sale or transfer of the Development other than a transfer
described in Section 2.5 below.
2.4 preoavment. Borrower may prepay the principal and any interest due the City
under the City Note prior to or in advance of the time for payment thereof as provided in the City
Note, without penalty; provided, however, that Borrower acknowledges that the provisions of the
City Regulatory Agreement will be applicable to the Development throughout the term of the
City Regulatory Agreement even though Borrower may have prepaid the City Note.
2.5 -. The Loan shall not be assumable by any transferee, except a
transferee meeting the requirements of Section 6.16(c) below.
2.6 Loan D-. Upon satisfaction of the preconditions to disbursement set
forth in Sections 3.1 below and pursuant to the disbursement procedures set forth in Sections 3.1
and 3.2 below, the City will disburse to Borrower the Loan Amount.
2.7 Use of mroceeds. Borrower shall use Loan Proceeds only to pay the costs of
the items set forth in Exhibit E.
6
c
2.8 Security for Loa. The Loan shall be secured by the City Deed of Trust on
Borrower's interest in the Development. The Borrower shall provide the City with an ALTA
lenders policy of title insurance insuring the City Deed of Trust as a lien against the
Development, subject only to the lien or liens of the Mortgages recorded in connection with the
Construction and Permanent Financing described above in Section l.l(h)(i) through (iv).
2.9 AProvaI of A- ' . The Borrower shall not place any ..
encumbrances on the Development other than the Construction and Permanent Financing
without the prior written consent of the City, which consent shall not be withheld unreasonably.
2.10 of Deed of Trust . The City agrees to subordinate the City Deed of
Trust to the liens of the deeds of trust securing the Construction and Permanent Financing,
except to the lien securing the loan from the general partner of Borrower to Borrower described
in Section l.l(h)(v) above.
..
2.11 -ofthe- . The City agrees that the City's ..
Housing and Redevelopment Manager shall subordinate the City Regulatory Agreement to the
lien or encumbrance of any private construction or permanent financing provided for the
Development upon the finding of the City's Housing and Redevelopment Manager that (i) an
economically feasible loan is not reasonably available on comparable terms and conditions
without subordination, and (ii) the mortgage to which the City Regulatory Agreement is being
subordinated contains provisions meeting the requirements of Health and Safety Code Section
33334.14(a) reasonably designed to protect the City's interest in the event of default under such
mortgage. The City agrees that the City Regulatory Agreement shall be subordinated to any
federal or state governmental agency regulating the Development which requires that the City
Regulatory Agreement be subordinate to such government agency's documents and liens. The
City will execute subordination agreements in a form reasonably acceptable to the lending entity
or government agency requesting subordination of the City Regulatory Agreement as provided in
this Section.
2.12 p.
(a) -. In connection with the annual repayment of the City Loan, the Borrower shall furnish to the City within one hundred and twenty (120) days after
the end of the calendar year an audited statement duly certified by an independent firm of
certified public accountants approved by the City, setting forth in reasonable detail the
computation and amount of Surplus Cash during the preceding calendar year.
(b) -d Records. The Borrower shall keep and maintain at the location of the
Development, or elsewhere with the City's written consent, MI, complete and appropriate books,
records and accounts relating to the Development, including all such books, records and accounts
necessary or prudent to evidence and substantiate in full detail Borrower's calculation of Surplus
Cash. Books, records and accounts relating to Borrower's compliance with the terms, provisions,
covenants and conditions of this Agreement shall be kept and maintained in accordance with
generally accepted accounting principles consistently applied, and shall be consistent with
requirements of this Agreement which provide for the calculation of Surplus Cash on a cash
1010\07\110009.5 7
basis. All such books, records, and accounts shall be open to and available for inspection by the
City, its auditors or other authorized representatives at reasonable intervals during normal
business hours and upon five (5) days prior written notice to Borrower. Copies of all tax returns
and other reports that Borrower may be required to furnish any governmental agency shall at all
reasonable times be open for inspection by the City at the place that the books, records and
accounts of the Borrower are kept and upon 5 days prior written notice to Borrower. The
Borrower shall preserve records on which any statement of Surplus Cash is based for a period of
not less than five (5) years after such statement is rendered.
ARTICLE 3
DISBURSEMENT OF LOAN
3.1 F’recp. The City shall not
disburse Loan proceeds to the Borrower until all of the following conditions precedent are
satisfied.
(a) Borrower shall have submitted to the City and obtained City
approval of a development budget for the Development, and the City has determined that the
undisbursed proceeds of the City Loan, together with other funds or firm commitments for funds
that the Borrower has obtained in connection with the Development, are not less than the amount
that the City determines is necessary to pay for the construction of the Development and to
satisfy all of the covenants contained in this Agreement.
(b) Good St-. Borrower shall have provided the City with a certified copy of a corporate authorizing resolution of the general partner of
Bomwer, approving the Loan and the Borrower’s execution of all Loan Documents, and with
evidence reasonably satisfactory to the City that the Borrower exists in good standing at the time
of the proposed disbursement.
(c) PurchaseofLand. Borrower shall hold title to the Land.
(4 ase of C-. Borrower shall have closed the Construction and Permanent Financing Loans for the Development described in Section l.l(h)(i) and (ii)
above. The City hereby acknowledges that the lender of the State HOME Loan requires that all
other sources of financing in connection with the Development be disbursed before its monies.
The City hereby agrees to cooperate to fulfill the foregoing requirement.
(e) elwerv of Documents. Borrower shall have executed and delivered to the City the City Note, the City Deed of Trust, and the City Regulatory
Agreement, and any other documents and instruments required to be executed and delivered, all
in form and substance satisfactory to the City, and the City Deed of Trust and the City
Regulatory Agreement shall have been recorded against the Development.
1010\07\110009.5 8
(0 Insurance. Borrower shall have furnished the City with evidence of the
insurance coverage required pursuant to Sections 6.4 and 6.5 below.
(g) Bpnds. Prior to any disbursement for hard construction costs, the City has
received copies of labor and material (payment) bonds and performance bonds, or a dual bond
which covers both payment and performance obligations, with respect to the construction of the
Development in a penal sum each of not less than one hundred percent (100%) of the scheduled
cost of construction. Such bonds must be issued by an insurance company reasonable acceptable
to the City and must name the City as a co-obligee.
01) Construction. Prior to any disbursement for hard construction costs, the City has received and approved all contracts that the Borrower has entered or proposed
to enter into for construction of the Development. All construction work and professional
services shall be performed by persons or entities licensed or otherwise authorized to perform the
applicable construction work or service in the State of California. Each contract that the
Borrower enters for construction of the Development shall provide that at least ten percent (10%)
of the costs incurred shall be payable only upon completion of said contractor's construction and
shall include the nondiscrimination language set forth in Section 6.14 below.
(i) No Dew. There shall exist no condition, event or act constituting an
Event of Default (as hereinafter defined) hereunder or which, upon the giving of notice or the
passage of time, or both, would constitute an Event of Default.
3.2 fi. Upon satisfaction of the
conditions set forth in Section 3.1 above, the City shall promptly, but in no event later than five
(5) business days after receiving Borrower's written request and any required documentation
disburse the Loan Amount to Borrower from time to time, but in no event more than monthly (if
Borrower requests), upon receipt of written requests from the Borrower: reaffirming the
accuracy as of the date of the disbursement request of Borrower's representation, and warranties
set forth in Article 5 below; (b) certifying that Borrower is not in default under the City Loan
Documents or loan documents for other Construction and Permanent Financing; and (c) setting
forth the proposed uses of funds consistent with Section 2.7 above, the amount of funds needed,
and, where applicable, a copy of the bill or invoice covering a cost incurred or to be incurred.
When a disbursement is requested to pay any contractor in connection with the Development, the
written request must be accompanied by certification by Borrower that the work for which
disbursement is requested has been completed (although the City reserves the right to inspect the
Development and make an independent evaluation), and lien releases andor mechanics lien title
insurance endorsements reasonably acceptable to the City.
101O\OAI 10009.5 9
ARTICLE 4
DEVELOPMENT OF THE IMPROVEMENTS
4.1 t of ConsQWixl. Subject to Section 8.2 below, the Borrower
hereby covenants and agrees to commence construction of the Development no later than thirty
(30) days following the recordation of the City Deed of Trust.
4.2 ”. The Borrower hereby covenants and agrees to
diligently prosecute to completion the construction of the Development within eighteen (18)
months from the date of commencement of construction, subject to Section 8.2 below.
4.3 p. The Borrower shall construct the Improvements
in accordance with the plans approved by the City in connection with issuance of the building
permit, and with the terms and conditions of all land use permits and approvals required by the
City.
4.4 p. The Borrower shall cause all work ..
performed in connection with the Development, including construction of the Improvements, to
be performed in compliance with all governmental requirements, including (without limitation
and where applicable) the following:
(a) The prevailing wage provisions of Sections 1770 et seq. of the California
Labor Code and implementing rules and regulations, if applicable.
(b) All directions, rules, and regulations of any fire marshal, health officer,
building inspector, or other officer of any governmental agency having jurisdiction.
The work shall proceed only after procurement of each permit, license, or other authorization
that may be required by any governmental agency having jurisdiction, and the Borrower shall be
responsible to the City for the procurement and maintenance thereof, as may be required of the
Borrower and all entities engaged in work on the Development.
4.5 by the CiQ. Borrower shall permit the City, through its officers, agents, or
employees, at all reasonable times and upon three (3) business days prior written notice to enter
into the Development and inspect the work of construction to determine that the same is in
conformity with the construction plans approved by the City. Borrower acknowledges that the
City is under no obligation to supervise, inspect, or inform Borrower of the progress of
construction, and Borrower shall not rely upon the City therefor. Any inspection by the City is
entirely for its purposes in determining whether Borrower is in default under this Agreement and
is not for the purpose of determining or informing Borrower of the quality or suitability of
construction. Borrower shall rely entirely upon its own supervision and inspection in
determining the quality and suitability of the materials and work, and the performance of
architects, subcontractors, and material suppliers.
1010\07\110009.5 10
4.6 -. During the construction of the Improvements there shall be
no discrimination on the basis of race, color, creed, religion, sex, sexual orientation, marital
status, national origin, ancestry, or handicap in the hiring, firing, promoting, or demoting of any
person engaged in the construction work.
4.7 ICS Llens. Stoo Notlces. and Notlces of Co-
(a) If any claim of lien is filed against the Land or a stop notice affecting the
City Loan is served on the City or any other lender or other third party in connection with the
Development, then the Borrower 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 City a surety bond in sufficient form and amount, or provide the City with other
assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
(b) If the Borrower fails to discharge any lien, encumbrance, charge, or claim
in the manner required in Section 4.7(a), then in addition to any other right or remedy, the City
may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at
the Borrower's expense. Alternately, the City may require the Borrower to immediately deposit
with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution
thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined
against the Borrower.
(c) The Borrower shall file a valid notice of cessation or notice of completion
upon cessation of construction on the Development for a continuous period of thirty (30) days or
more, and take all other reasonable steps to forestall the assertion of claims of lien against the
Land. The Borrower authorizes the City, but without any obligation, to record any notices of
completion or cessation of labor, or any other notice that the City deems necessary or desirable
to protect its interest in the Development.
4.8 te of Coe. When the Borrower has determined it has
met its obligations under this Article 4, the Borrower may request that the City issue an Estoppel
Certificate of Completion, in the form shown in Exhibit F. Within ten (10) days of such a
request, the City shall issue an Estoppel Certificate of Completion or shall provide the Borrower
with a written explanation of its refusal to issue the Estoppel Certificate of Completion. If and
when the Borrower has taken the specified measures or met the specified standards, the City
shall issue an Estoppel Certificate of Completion.
The Estoppel Certificate of Completion shall not be deemed a notice of completion under
the California Civil Code, nor shall it constitute evidence of compliance with or satisfaction of
any obligation of the Borrower to any holder of a deed of trust securing money loaned to finance
the Development.
1010WAllW09.5 11
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
5.1 -. Borrower hereby represents and wanants to the
City as follows:
(a) -. Borrower is duly formed, validly existing and in good standing under the laws of the State of California and has the partnership power and partnership
authority to own its property and cany on its business as now being conducted.
(b) of Bo-. Borrower has full partnership power and partnership authority to execute and deliver this Agreement and to make and accept the
borrowings contemplated hereunder, to execute and deliver the 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.
(4 p. 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 Borrower, and all
actions required under Borrower's organizational documents and applicable goveming 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.
(4 . .. Id B-. 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 Borrower.
(e) oceew. There are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the
Development, at law or in equity, before or by any court, board, commission or agency
whatsoever which might, if determined adversely to Borrower, materially affect Borrower's
ability to repay the City Loan or impair the security to be given to the City pursuant hereto.
(f) -. The financial statements of Borrower and other financial data and information furnished by Borrower to the City fairly present the information
contained therein. As of the date of this Agreement, there has not been any adverse, material
change in the financial condition of Borrower hm that shown by such financial statements and
other data and information.
12
ARTICLE 6
CONTINUING OBLIGATIONS
6.1 &&&&y. The Borrower shall comply with the provisions of this Article 6
throughout the Term.
6.2 oan Docum.a&. Borrower shall comply with all the terms and
provisions of the Loan Documents.
6.3 Uta1 of l.hi.ts. The Borrower shall comply with the occupancy and affordability
restrictions for the rental of the Units as set forth in the City Regulatory Agreement.
6.4
(a) d Cov-. The Borrower shall during the Term keep the Development insured against loss or damage by a standard all risk policy in
amounts not less than the replacement value of the Development, or should insurance in such
amount not be reasonably and commercially available, such lesser amount as may be acceptable
to the City. The amount of such insurance shall be adjusted by reappraisal of the Improvements
by the insurer or its designee at least once every five (5) years during the Term, if requested by
the City. If an all risk policy insuring the full replacement value of the Development is not
reasonably and commercially available, the Borrower shall use best efforts to obtain and
maintain an extended coverage endorsement that ensures the full replacement value of the
Development as soon as such coverage becomes commercially and reasonably available.
(b) . .. p. During the Term, the Borrower
shall keep in full force and effect a policy or policies of comprehensive general liability and
property damage insurance against liability for bodily injury to or death of any person or
property damage arising out of an occurrence on or about the Development. The limits of such
insurance shall be not less than one million dollars ($1,000,000) combined single limit for bodily
injury and property damage. The limits of the insurance shall be adjusted once every five (5)
years if and as reasonably required by the City.
(c) p. The Borrower shall carry or cause to be carried workers' compensation insurance covering all persons employed by the Borrower in
connection with the Development and with respect to whom death, bodily injury, or sickness
insurance claims could be asserted against the Borrower or the City.
(4 9' -. ~ During the course of any alteration, construction
or reconstruction, the cost of which exceeds one hundred thousand dollars ($lOO,OOO), the
Borrower shall provide or require any contractor to provide builders' risk insurance for not less
than, in the event of new construction, the full insurable value of the Development or, in the
event of alteration or reconstruction, the insurable value of the alteration or reconstruction,
insuring the interests of the City, the Borrower and any contractors and subcontractors.
101ou)7\11OOOQ.5 13
6.5 and Premum.
(a) All liability policies required by this Agreement shall name the City as an
additional insured. Duplicate copies of such policies or certificates of such insurance shall be
promptly furnished to the City.
(b) To the extent obtainable, any policy of insurance shall provide that any
change or cancellation of said policy must be made in writing and sent to the Borrower and the
City at their respective principal offices at least thirty (30) days before the effective date of any
change or cancellation.
6.6 Proceeds of Insurance.
All fire and standard risk or extended coverage (casualty) insurance proceeds shall be
applied to the payment of the costs of repairing or rebuilding that part of the Development
damaged or destroyed if (i) the Borrower agrees in writing within ninety (90) days after payment
of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii)each
lender of an outstanding Construction and Permanent Loan permits such repairing or rebuilding,
provided that the extent of Borrower's obligation to restore the Development shall be limited to
the amount of the insurance proceeds. If the Development is not repaired or rebuilt as provided
in this Section 6.6, all such proceeds shall be applied to repayment of outstanding loans
including this City Loan, in the order of lien priority.
6.7 -. So long as Borrower owns the Development, Borrower
shall pay all real and personal property taxes, assessments and charges and all franchise, income,
unemployment, old age benefit, withholding, sales, and other taxes assessed against it, or
payable by it, at such times and in such manner as to prevent any penalty from accruing, or any
lien or charge f?om attaching to the Development; provided, however, that Borrower shall have
the right to contest in good faith any such taxes, assessments, or charges. In the event Borrower
exercises its right to contest any tax, assessment, or charge against it, Borrower, on final
determination of the proceeding or contest, shall immediately pay or discharge any judgment
rendered against it, together with all costs, charges, and interest.
6.8 -. Borrower shall comply with all laws and regulations of
the United States and of California and of any political subdivision thereof, or of any
governmental authority which may be applicable to it or to its business, subject to Borrower's
right to contest the validity or applicability of laws or regulations.
6.9 w. Borrower shall promptly notify the City in writing of any changes in
the location of any place of business or material assets of the Borrower.
6.10 .. . . Borrower shall promptly notify the City in writing of
any litigation affecting the Borrower or the Development and of any claims or disputes that
involve a material risk of litigation, which may materially adversely affect the City Loan.
1010\07\110009.5 14
, 6.1 1 -. Borrower shall defend, indemnify, save and hold the City and the
Agency, their councilmembers, boardmembers, officers, employees, agents, and contractors,
utilizing attorneys approved by the City, harmless from any and all claims, actions, demands,
costs, expenses, and reasonable attorneys' fees, arising out of, attributable to, or otherwise
occasioned, in whole or in part, by any act or omission of Borrower arising from or related to the
Development, except as such claim may arise from the negligence or willful misconduct of an
indemnified party. This Section 6.11 shall not operate to impose personal liability on Borrower
or its partners for nonpayment of principal and interest under the City Note.
6.12 "aterials.
(a) The Borrower shall keep and maintain the Development in compliance
with, and shall not cause or permit the Development to be in violation of, any federal, state, or
local laws, ordinances, or regulations relating to industrial hygiene or to the environmental
conditions on or under the Development, including (but not limited to) soil and ground water
conditions. The Borrower shall not use, generate, manufacture, store, or dispose of, on, under, or
about the Development, or transport to or from the Development, any flammable explosives,
radioactive materials, hazardous wastes, toxic substances, or related materials, including (without
limitation) any substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or
state laws or regulations (collectively referred to as "Hazardous Materials") except such of the
foregoing as may be customarily and lawfully kept and used in and about multifamily residential
property.
(b) . The Borrower shall immediately advise the City in writing if at any time
it receives written notice of (i) any and all enforcement, cleanup, removal, or other governmental
or regulatory actions instituted, completed, or threatened against the Borrower or the
Development pursuant to any applicable federal, state, or local laws, ordinances, or regulations
relating to any Hazardous Materials ("Hazardous Materials Law"); (ii) all claims made or
threatened by any third party against the Borrower or the Development relating to damage,
contribution, cost recovery compensation, loss, or injury resulting ftom any Hazardous Materials
(the matters set forth in clauses (i) and (ii) above are referred to as "Hazardous Materials
Claims"); and (iii) the Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Development that could cause the Development or any part
thereof to be classified as "border-zone property" under California Health and Safety Code
Sections 25220 et seq. or corresponding regulations, or to be otherwise subject to any restrictions
on the ownership, occupancy, transferability, or use of the Development under any Hazardous
Materials Law.
(c) The Borrower shall permit the City to join and participate in, as a party if
it so elects, any legal proceedings or actions initiated in connection with any Hazardous
Materials. The Borrower shall indemnify, defend (with counsel reasonably chosen by the City,
at the City's option), and hold harmless the City, and the Agency, and their respective
councilmembers, boardmembers, officers, agents, and employees 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
1010WA11W09.5 15
Materials on or under the Development, including (without limitation): (i) all foreseeable
consequential damages; (ii) the costs of any required or necessary repair, cleanup, or
detoxification of the Development and the preparation and implementation of any closure,
remedial, or other required plans; and (iii) all reasonable costs and expenses incurred by the City
or the City 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 City's prior written consent, which shall not be unreasonably
withheld, the Borrower shall not take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Development, nor enter into any settlement
agreement, consent decree, or other compromise in respect to any Hazardous Material Claims,
which remedial action settlement, consent decree or compromise might, in the City's reasonable
judgement, impair the value of the City's security hereunder; provided, however, that the City's
prior consent shall not be necessary in the event that the presence of Hazardous Materials on,
under, or about the Development either poses an immediate threat to the health, safety, or
welfare of any individual or is of such a nature that an immediate remedial response is necessary
and it is not reasonably possible to obtain the City's consent before taking such action, provided
that in such event the Borrower shall notify the City as soon as practicable of any action so
taken. The City agrees not to withhold its consent, where such consent is required hereunder, if
either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) the
Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a
required action; (iii) the Borrower establishes to the reasonable satisfaction of the City that there
is no reasonable alternative to such remedial action which would result in less impairment of the
City's security hereunder; or (iv) the action has been agreed to by the City.
(e) The Borrower hereby acknowledges and agrees that (i) this Section 6.12
is intended as the City's written request for information (and the Borrower's response) concerning
the environmental condition of the Development as required by California Code of Civil
Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together
with any indemnity obligation applicable to a breach of any such representation and warranty)
with respect to the environmental condition of the Development is intended by the Parties to be
an "environmental provision" for purposes of California Code of Civil Procedure Section 736.
6.13 Non-Dlscnmmatlon ' . The Borrower covenants by and for itself and its successors
and assigns that there shall be no discrimination against or segregation of a person or of a group
of persons on account of race, color, religion, creed, sex, sexual orientation, marital status,
ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Development, nor shall the Borrower or any person claiming under or through
the Borrower establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees in the Development. Pursuant to the terms of the City
Regulatory Agreement, the foregoing covenant shall run with the land and shall survive
termination of this Agreement.
. ..
6.14 pt Deeds&aw and Contracts. The
Borrower and its agents shall not, in the selection or approval of tenants or provision of services
1010\07\110009.5 16
or in any other matter, discriminate against any person or group of persons on the grounds of
race, color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry, age,
or disability. All deeds, contracts, or leases made or entered into by Borrower, its successors or
assigns, as to any portion of the Development shall contain the following language:
(a) In Deeds:
Grantee herein covenants by and for itself, its successors and assigns that
there shall be no discrimination against or segregation of a person or of a
group of persons on account of race, color, creed, religion, sex, sexual
orientation, marital status, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the property
herein conveyed nor shall the grantee or any person claiming under or
through the grantee establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the property herein conveyed. The foregoing covenant shall
run with the land".
(b) In Contracts:
"There shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, sexual
orientation, marital status, national origin or ancestry in the sale, transfer
or use of the property".
(c) In Leases:
"The lessee herein covenants by and for the lessee and lessee's heirs,
personal representatives and assigns and all persons claiming under the
' lessee or through the lessee that this lease is made subject to the condition
that there shall be no discrimination against or segregation of any person
or of a group of persons on account of race, color, creed, religion, sex,
sexual orientation, marital status, national origin or ancestry in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of the land
herein leased nor shall the lessee or any person claiming under or through
the lessee establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sublessees, subtenants, or
vendees in the land herein leased".
6.15 Iis2Quk.
(a) The Borrower shall maintain complete, accurate, and current records
pertaining to the Development for a period of five (5) years after the creation of such records,
and shall permit any duly authorized representative of the City to inspect and copy records,
1010!07\110009.5 17
including records pertaining to income and household size of residents of the Development.
Such records shall include records regarding the occupancy and rent levels of the residential
units in the Development, as well as records that accurately and fully show the date, amount,
purpose, and payee of all expenditures drawn from Loan funds. Such records shall also include
all invoices, receipts, and other documents related to expenditures from the City Loan funds.
Records must be kept accurate and current.
(b) The City shall notify the Borrower of any records it deems insufficient.
The Borrower shall have fifteen (15) calendar days after the receipt of such a notice to correct
any deficiency in the records specified by the City in such notice, or if a period longer than
fifteen (15) days is reasonably necessary to correct the deficiency, then the Borrower shall begin
to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably
possible.
(c) The Borrower shall promptly comply with all requirements or conditions
of the City Loan Documents relating to notices, extensions, and other events required to be
reported or requested. The Borrower shall promptly supply, upon the request of the City, any
and all information and documentation involving the Development.
6.16 Transfers.
(a) For purposes of this Agreement, "Transfer" shall mean any sale,
assignment, or transfer, whether voluntary of involuntary, of (i) any rights and/or duties under
this Agreement, and/or (ii) any interest in the Development, including (but not liited to) a fee
simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a
security interest, or an interest evidenced by a land contract by which possession of the
Development is transferred and the Borrower retains title. The term "Transfer" shall exclude the
leasing of any single unit in the Development to an occupant in compliance with the City
Regulatory Agreement.
(b) No Transfer shall be permitted without the prior written consent of the
City, which the City shall not unreasonably withhold, provided that construction of the
Development has been completed, the proposed transferee meets the City's reasonable standards
regarding creditworthiness, and the proposed transferee has at least five (5) years experience in
the ownership, management, and operation of large affordable housing developments, without
any record of material violations of discrimination laws, housing codes, or other federal, state, or
local laws or regulations applicable to such developments. Pursuant to Section 2.3(e) above, the
City Loan shall automatically accelerate and be due in full upon any unauthorized Transfer.
(c) The City hereby approves any transfer of the Development from the
Borrower to the current general partner of Borrower or to a nonprofit affiliate of the current
general partner of Borrower, provided that the transferee expressly assumes the obligations of the
Borrower under this Agreement, the City Note, the City Deed of Trust and the City Regulatory
Agreement, utilizing a form of assignment and assumption agreement approved by the City.
18
(d) The City approves the grant of the security interests in the Development
in connection with the financing described in Section 1.101) above.
ARTICLE 7
DEFAULT AND REMEDIES
7.1 F.vents of DeM. Each of the following shall constitute an "Event of Default" by
Borrower under this Agreement:
(4 to ConsW. Subject to Section 8.2, failure of Borrower to
(b) -. Failure to make prompt payments of the
construct all of the Development within the time set forth in Section 4.2 above;
principal and interest on the City Note when due and such failure having continued uncured for
thirty (30) days after receipt of written notice thereof to the Borrower from the City;
(c) EUZGLI of Cov-. Failure by Borrower to duly perform, comply with,
or observe any of the conditions, terms, or covenants of any of the Loan Documents, and such
failure having continued uncured for thirty (30) days after receipt of written notice thereof by the
Borrower hm the City or, if the breach cannot be cured within thirty (30) days, the Borrower
shall not be in breach so long as Borrower is diligently undertaking to cure such breach and such
breach is cured within ninety (90) days; provided, however, that if a different period or notice
requirement is specified under any other section of this Article 7, the specific provisions shall
control.
(d) IM&Jbia Other h. Failure to make any payment or perform any
of Borrower's covenants, agreements, or obligations under the documents evidencing and
securing the Construction and Permanent Financing following expiration of all applicable notice
and cure periods.
(e) h,&m.cy. A court having jurisdiction shall have made or entered any
decree or order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly
filed a petition seeking reorganization of Borrower or seeking any arrangement for Borrower
under the bankruptcy law or any other applicable debtor's relief law or statute of the Uxiited
States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee
of Borrower in bankruptcy or insolvency or for any of their properties, or (iv) directing the
winding up or liquidation of Borrower, if any such decree or order described in clauses (i) to (iv),
inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or
Borrower shall have admitted in writing its inability to pay its debts as they fall due or shall have
voluntarily submitted to or filed a petition seeking any decree or order of the nature described in
clauses (i) to (iv), inclusive. The occurrence of any of the Events of Default in this paragraph
shall act to accelerate automatically, without the need for any action by the City, the
indebtedness evidenced by the Note. The occurrence of any of the events described in this
subsection with respect to a general partner of Borrower shall also constitute an Event of Default
hereunder.
1010!07\1100G9.5 19
(fl -. Borrower (or a general partner of Borrower) shall have assigned its assets for the benefit of its creditors or suffered a sequestration or
attachment of or execution on any substantial part of its property, unless the property so
assigned, sequestered, attached or executed upon shall have been returned or released within
ninety (90) days after such event or prior to sooner sale pursuant to such sequestration,
attachment, or execution. The occurrence of any of the events of default in this paragraph shall
act to accelerate automatically, without the need for any action by the City, the indebtedness
evidenced by the Note.
(g) .. -. Borrower (or a general partner of Borrower)
shall have voluntarily suspended its business or, if Borrower is a partnership, the partnership
shall have been dissolved or terminated, other than a technical termination of the partnership for
tax purposes.
01) p. There shall be filed any claim of lien (other than liens approved in writing by the City) against the Development or any part thereof, or
any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds
of the City Loan and the continued maintenance of said claim of lien or notices to withhold for a
period of twenty (20) days without discharge or satisfaction thereof or provision therefor
satisfactory to the City. In the event that Borrower is diligently working to remove a claim of
lien or to remove a notice to withhold proceeds and the City's interests under the Loan
Documents are not imminently threatened, the City shall not declare a default under this
subsection.
(9 -. The condemnation, seizure, or appropriation of all or the
6) UnauthorizedTransfer. Any Transfer other than as permitted by Article
(k) p. Any Borrower representation or
substantial part of the Land and the Development.
Six.
warranty contained in this Agreement, or in any application, financial statement, certificate, or
report submitted to the City in connection with any of the City Loan Documents, proving to have
been incorrect in any material respect when made.
7.2 &m.&ks. The occurrence of any Event of Default following the expiration of all
applicable notice and cure periods will, either at the option of the City or automatically where so
specified, relieve the City of any obligation to make or continue the City Loan and shall give the
City 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:
(4 AccelerationofNote. The City shall have the right to cause all indebtedness of the Borrower to the City under this Agreement and the City Note, together with
any accrued interest thereon, to become immediately due and payable. The Borrower waives all
right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to
1010\07\11wO9.5 20
enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a
creditor and secured party under the law including the Uniform Commercial Code, including
foreclosure under the City Deed of Trust. The Borrower shall be liable to pay the City on
demand all reasonable expenses, costs and fees (including, without limitation, reasonable
attorney's fees and expenses) paid or incurred by the City in connection with the collection of the
Loan and the preservation, maintenance, protection, sale, or other disposition of the security
given for the Loan.
(b) Soecific. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Borrower to perform its obligations 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) Cure &€!mower's Exgm~. The City shall have the right (but not the obligation) to cure any monetary default by Borrower under a loan other than the City
Loan. The Borrower agrees to reimburse the City for any funds advanced by the City to cure a
monetary default by Borrower upon demand therefor, together with interest thereon at the rate of
three percent (3%) per annum from the date of expenditure until the date of reimbursement.
7.3 t of Ca. Borrower shall have the right to contest in good faith any claim,
demand, levy, or assessment the assertion of which would constitute an Event of Default
hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the
City or the rights of the City hereunder.
7.4 Remedies. No right, power, or remedy given to the City 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 City by the terms of any such instrument, or
by any statute or otherwise against Borrower and any other person. Neither the failure nor any
delay on the part of the City to exercise any such rights and remedies shall operate as a waiver
thereof, nor shall any single or partial exercise by the City of any such right or remedy preclude
any other or further exercise of such right or remedy, or any other right or remedy.
7.5 p. The City Manager may at his or her discretion
waive in writing any of the terms and conditions of this Agreement, without the Borrower
completing an amendment to this Agreement. No waiver of any default or breach by Borrower
hereunder shall be implied from any omission by the City to take action on account of such
default if such default persists or is repeated, and no express waiver shall affect any default other
than the default specified in the waiver, and such waiver shall be operative only for the time and
to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall
not be construed as a waiver of any subsequent breach of the same covenant, term, or condition.
The consent or approval by the City to or of any act by Borrower requiring further consent or
approval shall not be deemed to waive or render unnecessary the consent or approval to or of any
subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a
cure or a waiver of any default under this Agreement or the Loan Documents, nor shall it
101OW7\11Mx)o.5 21
invalidate any act done pursuant to notice of default, or prejudice the City in the exercise of any
right, power, or remedy hereunder or under the Loan Documents.
ARTICLE 8
MISCELLANEOUS
8.1 Time is of the essence in this Agreement.
8.2 Force m. Performance by either party hereunder shall not be deemed to be
in default where defaults are due to war; insurrection; strikes; lock-outs; riots; floods;
earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits
filed by third parties concerning or arising out of this Agreement); weather or soils conditions
which, in the opinion of the Borrower's contractor, will necessitate delays; inability to secure
necessary labor, materials or tools; delays of any contractor, sub-contractor or supplier; acts of
the other party; acts or failure to act of any public or governmental agency or entity (other than
the acts or failure to act of the City); or any other causes (other than Borrower's inability to
obtain financing for the Development) beyond the control or without the fault of the party
claiming an extension of time to perform. Times of performance under this Agreement may also
be extended in writing by the City and the Borrower.
8.3 m. All notices, demands and communications between the Borrower and
the City shall be sufficiently given and shall not be deemed given unless dispatched by certified
mail, postage prepaid, return receipt requested, or delivered by express delivery service with a
delivery receipt, to the principal officers of the Borrower and the City as follows:
Borrower:
City:
Carlsbad Laurel Tree Apartments, L.P.,
a California Limited Partnership
c/o Metropolitan Area Advisory Committee on
22 W. 35" Street
National City, California 91950
Attn: Executive Director
Anti-Poverty of San Diego County, Inc.
City of Carlsbad Housing and
Redevelopment Department
2965 Roosevelt Drive, Suite B
Carlsbad, California 92008
Attn: Housing and Redevelopment Director
Such addresses may be changed by notice to the other party given in the same manner as
provided above.
22
Notice shall be deemed to have been effective on the date shown on the delivery receipt
as the date of delivery, the date delivery was refused, or the date the notice was returned as
undelivered.
proceeding to enforce, protect or establish any right or remedy hereunder or under any of the
Loan Documents, the prevailing party shall be entitled to recover from the other party its costs of
suit and reasonable attorneys' fees which shall be fixed by the court.
8.4 vs' Fees. If either party brings a legal or administrative action or
8.5 -. There are no third party beneficiaries of this
Agreement, and no person or persons other than the Borrower and the City shall have any right
of action hereon.
8.6 a. The City shall have the right to commence, appear in, or defend any
action or proceeding purporting to affect the rights, duties, or liabilities of the parties hereunder,
or the disbursement of any proceeds of the Loan.
8.7 m. Borrower agrees that the City may place signs mutually satisfactory to
Borrower and the City upon the Development at locations selected by Borrower and the City
advising of the financing of the Development by the City. The City may also announce such
placement through press releases to newspapers and trade publications.
8.8 SuccessasmUmgm. The terms hereof shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto; provided, however, that no assignment
of Borrower's rights hereunder shall be made, voluntarily or by operation of law, without the
prior written consent of the City and that any such assignment without said consent shall be void.
8.9 of Words. Except where the context otherwise requires, words
imparting the singular number shall include the plural number and vice versa, words imparting
persons shall include firms, associations, partnerships and corporations, and words of either
gender shall include the other gender.
8.10 .. . If any provision of this Agreement shall be declared invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired.
8.1 1 -. This Agreement and the Loan Documents and other instruments
given pursuant hereto shall be construed in accordance with and be governed by the laws of the
State of California.
8.12 m. This Agreement may not be changed orally, but only by agreement
in writing signed by Borrower and City.
8.13 -. Captions and headings in this Agreement are for
convenience of reference only, and are not to be considered in construing the Agreement.
1010\07\110009.5 23
8.14 by the w. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, consent, request, or other action by the City is required
or permitted under this Agreement, such action may be given, made, or taken by the City
Manager, or by any person who shall have been designated in writing to the Borrower by the
City Manager, without further approval by the City Council, and any such action shall be in
writing. The City Manager is also hereby authorized to approve, on behalf of the City, requests
by Borrower for reasonable extensions of time deadlines set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first above written.
BORROWER:
Carlsbad Laurel Tree Apartments, L.P.,
a California limited partnership
By: METROPOLITAN AREA ADVISORY
COMMITTEE ON ANTI-POVERTY OF
SAN DIEGO COUNTY, INC., a California
nonprofit public bengt corporation, its
APPROVED AS TO FORM:
By:
Ron Ball
%ity Attorney
24
STATE OF CALIFORMA )
COUNTY OF -GO)
On cd \\ , 1998, before me, the undersigned, a Notary Public, personally
appeared '' , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument, and acknowledged to me that he/she/they executed the same in
hishedtheir authorized capacity(ies), and that by hisherltheir signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
1 ss
WITNESS my hand andpfficial seal.
EXHIBIT A
Legal Description of the Land
25
LEGAL DESCRIPTION
ORDER NO. 1182362-20
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
PARCEL 1 OF PARCEL MAP NO. 15661, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, MAY 5, 1989 AS FILE NO. 89-239677 OF
OFFICIAL RECORDS TOGETHER WITH PORTION OF THAT PARCEL OF LAND
DESIGNATED AS "DESCRIPTION NO. 5", AS SHOWN AND DELINEATED OF RECORD
DIEGO COUNTY, DECEMBER 19, 1960 BEING A PORTION OF LOT "G" OF RANCHO
OF SURVEY MAP NO. 5715, FILED IN THE OFFICE OF COUNTY RECORDER OF SAN
AGUA HEDIONDA, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF NO. 823 FILED IN THE OFFICE OF
A WHOLE AS FOLLOWS:
COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896, DESCRIBED AS
BEGINNING AT THE MOST NORTHERLY CORNER OF SAID PARCEL 1 OF PARCEL MAP NO. 15661, SAID POINT BEING THE INTERSECTION OF THE CENTER LINE OF LAUREL TREE LANE AND THE NORTHERLY LINE OF SAID DESCRIPTION NO. 5;
THENCE ALONG SAID NORTHERLY LINE, NORTH 83O40'44" EAST, 31.91 FEET;
THENCE LEAVING SAID NORTHERLY LINE ALONG THE EASTERLY LINE OF LAUREL
TREE LANE, SOUTH 13'35'23'' WEST, 15.90 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 540.00 FEET; THENCE SOUTHWESTERLY AND SOUTHEASTERLY ALONG SAID CURVE 80 0.55 FEET THROUGH A CENTRAL ANGLE OF 84 56 ' 26 " ; THENCE TANGENT TO SAID CURVE
OF LAUREL TREE LANE, SOUTH 18O38'57" WEST, 30.00 TO A POINT ON THE
SOUTH 71°21'03" EAST, 301.37 FEET; THENCE LEAVING SAID EASTERLY LINE
MOST EASTERLY CORNER OF SAID PARCEL 1 OF PARCEL MAP NO. 15661 ALSO
OF 510.00 FEET, A RADIAL LINE TO SAID POINT BEARS NORTH 13O59'46"
EAST; THENCE WESTERLY ALONG SAID CURVE AND ALONG THE SOUTHERLY BOUNDARY LINE OF PARCEL 1 OF SAID PARCEL MAP NO. 15661, 436.76 FEET
THROUGH A CENT- ANGLE OF 49O04 ' 04 'I, THENCE TANGENT TO SAID CURVE
SOUTH 54O55'42" WEST, 364.43 FEET TO A POINT ON THE MOST SOUTHERLY
CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 1349.00 FEET, A RADIAL LINE
TO SAID POINT BEARS NORTH 54O54'52" EAST; THENCE NORTHWESTERLY ALONG SAID CURVE AND ALONG THE WESTERLY BOUNDARY LINE OF SAID PARCEL 1,
84 .63 FEET THROUGH A CENTRAL ANGLE OF 03 3 5 ' 40 " ; THENCE TANGENT TO
SAID CURVE NORTH 38°40'48" WEST, 199.98 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1451.00 FEET;
ANGLE OF 28 56 ' 36" TO THE MOST NORTHWESTERLY CORNER OF SAID PARCEL 1;
THENCE NORTHWESTERLY ALONG SAID CURVE 732.98 FEET THROUGH A CENTRAL
BEING A POINT ON A NON-TANGENT CURVE CONCAVE SOUTHERLY HAVING A RADIUS
CORNER OF SAID PARCEL 1, ALSO BEING A POINT ON A NON-TANGENT CURVE
T:05/06/98 11:17:34 V: / / : : woo PAGE 14
.
ORDER NO. 1182362-20
THENCE ALONG THE NORTHERLY BOUNDARY LINE OF SAID PARCEL 1 NORTH
71°35'51" EAST, 560.32 FEET TO THE POINT OF BEGINNING.
PARCEL E:
OF LAND DESIGNATED AS " 6 0.00 FOOT EASEMENT AND 66.00 FOOT EASEMENT
EASEMENTS FOR ROADWAY AND UTILITY PURPOSES OVER THOSE CERTAIN STRIPS
RESERVED FOR ROADWAY AND UTILITY PURPOSES", AS SHOWN ON RECORD OF
SURVEY MAP NO. 5715, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 19, 1960, BEING A PORTION OF LOT "G" OF THE RANCHO AGUA HEDIONDA, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 823, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896.
EXCEPTING FROM SAID 60.00 FOOT STRIP THAT PORTION WHICH LIES WITHIN
PARCEL A ABOVE.
PAGE 15
EXHIBIT B
City Note
26
$700,000
City Note
2ilf4€ 11 ,1998
Carlsbad, Califomia
FOR VALUE RECEIVED, Carlsbad Laurel Tree Apartments, L.P., a California limited
partnership ("Borrower"), promises to pay to the City of Carlsbad ("City"), or order, the principal
sum of Seven Hundred Thousand Dollars ($700,000), or so much thereof as is advanced to
Borrower by the City pursuant to Section 2.6 of the Loan Agreement (defined below), plus
simple interest accruing at the rate of three percent (3%) per annum, commencing upon
disbursement.
1. Loan. This City Note is made pursuant to a City Loan Agreement
dated as of>&€ L, 1998, by and between the Borrower and the City (the "City Loan
Agreement"), and as contemplated by a Regulatory Agreement executed by the Borrower and the
City (the City Regulatory Agreement").
2. m. The term of this City Note (the "Term") shall commence on the date of
this City Note and shall end on the earlier oE (i) thim (30) years from the date of issuance of a
certificate of occupancy for all units in the Development (as defined in the City Loan
Agreement); or (ii) June 30, 2029.
3. e of Pam. All amounts due under this City Note shall be
due and payable as set forth in Section 2.3 of the City Loan Agreement.
4. preDavment. Borrower shall have the right to prepay all or a portion of the
principal and interest due under this City Note without any charge or penalty being made
therefor.
5. Deed of w. This City Note is secured by a deed of trust of even date herewith
(the "City Deed of Trust).
6. Acceleration. Upon the occurrence of a default under the City Loan Agreement,
City Regulatory Agreement or City Deed of Trust, and expiration of all applicable notice and
cure periods (an "Event of Default"), the City shall have the right to accelerate the Term of this
City Note and declare all of the unpaid principal and accrued interest immediately due and
payable. Any failure by the City to pursue its legal and equitable remedies upon an Event of
Default shall not constitute a waiver of the City's right to declare an Event of Default and
exercise all of its rights under this City Note, the City Regulatory Agreement, the City Deed of
Trust, and the City Loan Agreement. Nor shall acceptance by the City of any payment provided
1010\07\110469.5 1
for herein constitute a waiver of the City's right to require prompt payment of any remaining
principal and interest owed.
7. No. Borrower hereby waives any rights of offset it now has or may
hereafter have against the City, its successors and assigns.
8. -. Borrower and any endorsers or guarantors of this City
Note, for themselves, their heirs, legal representatives, successors and assigns, respectively,
severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor and
non-payment of this City Note, and expressly waive any rights to be released by reason of any
extension of time or change in terms of payment, or change, alteration or release of any security
given for the payments hereof, and expressly waive the right to plead any and all statutes of
limitations as a defense to any demand on this City Note or agreement to pay the same, and
jointly and severally agree to pay all costs of collection when incurred, including reasonable
attorneys' fees. If an action is instituted on this City Note, the undersigned promises to pay, in
addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys' fees in such action.
9. Place of Payment. All payments of principal and interest due under
this City Note, as well as any additional payments set forth in the City Deed of Trust, shall be
payable in lawful money of the United States of America at the office of the Housing and
Redevelopment Department, City of Carlsbad, 2965 Roosevelt Drive, Suite B, Carlsbad,
California 92008, or such other address as the City may designate in writing.
10. course Ou. Except as provided below, neither the Borrower nor any ..
partner of the Borrower shall have any direct or indirect personal liability for payment of the
principal of, or interest on, this City Note, the City Loan Agreement, or the City Regulatory
Agreement or the performance of the covenants of the Borrower under the City Deed of Trust.
The sole recourse of the City with respect to the principal of, or interest on, the City Note and
defaults by Borrower in the performance of its covenants under the City Loan Agreement, City
Regulatory Agreement, and City Deed of Trust shall be to the property described in the City
Deed of Trust; provided, however, that nothing contained in the foregoing limitation of liability
shall (a) limit or impair the enforcement against all such security for the City Note of all the
rights and remedies of the City thereof, or (b) be deemed in any way to impair the right of the
City thereof to assert the unpaid principal amount of the Note as demand for money within the
meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any
successor provision thereto. The foregoing limitation of liability is intended to apply only to the
obligation for the repayment of the principal of, and payment of interest on the Note and the
performance of Trustor's obligations under the City Regulatory Agreement and the City Deed of
Trust, except as hereafter set forth, nothing contained therein is intended to relieve the Borrower
of its obligation to indemnify the City under Section 6.1 1 and 6.12(c) of the City Loan
Agreement, or liability for (i) fiaud or willful misrepresentation; (ii) the failure to pay taxes,
assessments or other charges which may create liens on the Property that are payable or
applicable prior to any foreclosure under the City Deed of Trust (to the full extent of such taxes,
assessments or other charges); (iii) the fair market value of any personal property or fixtures
removed or disposed of by Borrower other than in accordance with the City Deed of Trust; and
1010\07\110469.5 2
(iv) the misapplication of any proceeds under any insurance policies or awards resulting from
condemnation or the exercise of the power of eminent domain or by reason of damage, loss or
destruction to any portion of the Property.
Carlsbad Laurel Tree Apartments, L.P., a California
limited partnership
By: Metropolitan Area Advisory Committee on Anti-Poverty of
B"b-p-
7 // 3Q 9P The principal balance of this City Note has been increased to One Million One Hundred and Thirty Four Thousand Dollars ($1,134,000.00) pursuant to a Modification Agreement between the City and the Borrower dated: , 2000.
Carlsbad Laurel Tree Apartments, L.P., a California limited partnership.
By: Metropolitan Area Advisory Committee on Anti-Poverty of San Diego County,
Inc., a California nonprofit public benefit corporation as general partner.
STATE OF CALIFORNIA )
COUNTY OF SANG^
On (I , 1995 before me, the undersigned, a Notary Public, personally
appeared , personally known to me (or proved to me on 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.
WITNESS my hand and official seal.
1 ss
OAk
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
On .Ayi\ siaoo , before me,
personally appeared Name(3) of Signer@)
gpersonally known to me
0 proved to me on the basis of satisfactory
evidence
to be the person@ whose name@j-isla+e
subscribed to the within instrument and
acknowledged to me that Wshe/ttrey executed
the same in MlherlW authorized
capacity(!& and that by bklherltkeir
signaturwon the instrument the persono, or
the entity upon behalf of which the person&+
acted, executed the instrument.
Place Notary Seal Above
Though fhe information below is nof required by law it may prove valuable to persons relying on the documenf
and could prevent fraudulent removal and reaffachmenf of fhis form to anofher document.
Description of Attached Document
Title or Type of Document: ~
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer
0 Partner - 0 Limited 0 General
0 Corporate Officer - Title(s):
0 Attorney in Fact
0 Guardian or Conservator
Signer Is Representing:
B 1999 ~al~onsl NOD?^ Assw,af,an. 9%~ 08 soto AUB , Po. Box 2402. Chstswonh, CA 91313.2602. w.mt#onalnn~~.~rg Prod NO 5807 R~oder Call Toll-Free 1~Bw-81*6827
L
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
} ss.
1 #personally known to me
0 proved to me on the basis of satisfactory
evidence
i to be the person(s) whose name(s) islare
subscribed to the within instrument and
acknowledged to me that he/she/they executed
the same in hislherltheir authorized
caDacitv(ies), and that by hislherltheir
signatu;e'(s) on the instrument the person(s), or
the entity upon behalf of which the person(s)
acted, executed the instrument.
OPTIONAL
Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment Of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date: Number of Pages:
Signer($ Other Than Named Above:
Capacity(ies) Claimed by Signer
0 Individual
Signer's Name:
0 Corporate Officer - Title@):
U Partner - 0 Limited 0 General
0 Attorney in Fact
0 Trustee
0 Guardian or Conservator
U Other:
Signer Is Representing: -
L
EXHIBIT C
City Regulatory Agreement
27
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk's Office
1200 Carlsbad Village Drive
Carlsbad, CA 92008
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement")
is made and entered into as of this 1 ILh day of June, 1998, by and between the City of Carlsbad, a
municipal corporation (the "City") and Carlsbad Laurel Tree Apartments, L.P., a California
limited partnership ("Owner").
1. The City has entered into the Loan Agreement with Owner under which the City will
loan funds (the "Loan") to Owner which will be used, together with funds obtained from other
sources, for the development and construction of one hundred thirty-eight (138) residential units
known as Laurel Tree Apartments (the "Development"), located on the real property in the City
of Carlsbad, County of San Diego, more particularly described in Exhibit A attached hereto and
incorporated herein (the "Property").
2. The funds loaned to Owner pursuant to the Loan Agreement are City Housing Trust
Fund monies and Redevelopment Low and Moderate Income Housing Funds administered by
the City on behalf of the Redevelopment Agency of the City of Carlsbad (the "Agency")
pursuant to an Agreement between the City and the Agency dated , 199- (the
"Housing Fund Administration Agreement"). Pursuant to Health and Safety Code Section
33334.3 and the Housing Fund Administration Agreement, the City must restrict developments
assisted with funds from the Agency's Low and Moderate Income Housing Fund, so that the
developments remain affordable to low and moderate income households for the longest
feasible time. This Agreement is intended to implement this requirement of law.
3. The City intends to utilize the Development to obtain affordable housing
production credits for the Agency pursuant to Health and Safety Code Section 33413(b)(2)(A)(ii)
as newly constructed housing units located outside of the Carlsbad Village Redevelopmcnt
Project Area and available at affordable housing cost to low and moderate income households.
Such units are required to remain affordable to such households for not less than the period of
1010\07\110684.5 1
the land use controls established in the Redevelopment Plan for the Carlsbad Village
Redevelopment Project Area. This Agreement is also intended to implement this requirement.
4. The City has agreed to loan funds to Owner on the condition that the
Development be maintained and operated in accordance with Health and Safety Sections
33334.2 m. and 33413(b)(2)(A)(ii) and in accordance with additional restrictions concerning
affordability, operation, and maintenance of the Development, as specified in this Agreement.
5. In consideration of receipt of the Loan at an interest rate substantially below the
market rate, Owner has further agreed to observe all the terms and conditions set forth below.
6. In order to ensure that the entire Development will be used and operated in
accordance with these conditions and restrictions, the City and Owner wish to enter into this
Agreement.
THEREFORE, the City and Owner hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1
When used in this Agreement, the following terms shall have the respective meanings
assigned to them in this Article 1.
a. "Adjusted Income" shall mean the total anticipated annual income of all
persons in a household, as calculated in accordance with 25 California Code of Regulations
Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar
method of calculation of adjusted income. In the event that no such program exists, the City
shall provide the Owner with a reasonably similar method of calculation of adjusted income as
provided in said Section 6914.
b. "Agency" shall mean the Carlsbad Redevelopment Agency, Carlsbad,
California, a public body, corporate and politic.
C. "Agreement" shall mean this Regulatory Agreement and Declaration of
Restrictive Covenants.
d. "City" shall mean the City of Carlsbad, a municipal corporation.
e. "Deed of Trust" shall mean the deed of trust to the City on the Property
which secures repayment of the Loan and performance of this Agreement.
f. "Development" shall mean the Property and the one hundred thirty-eight
(138) units to be constructed on the Properly, as well as all landscaping, roads and parking
spaces existing thereon, as the same may from time to time exist.
1010\07\110684.5 2
g. "HCD" shall mean the California Department of Housing and Community Development.
h. "Loan" shall mean all funds loaned to Owner pursuant to the Loan
Agreement.
i. "Loan Agreement" shall mean the City Loan Agreement entered into by
and between the City and Owner and dated of even date herewith.
J. "Median Income" shall mean the median gross yearly income adjusted for actual household size, in the County of San Diego, California, as published from time to time by
HCD. 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 HCD.
k. "Moderate Income Household" shall mean a household whose annual
gross income does not exceed one hundred and twenty percent (120%) of Median Income,
adjusted for household size.
I. "Moderate Income Units" shall mean the Units limited to occupancy by
Moderate Income Households pursuant to Section 2.1 below.
m. "Note" shall mean the promissory note from the Owner to the City
evidencing all or any part of the Loan.
n. "Owner" shall mean Carlsbad Laurel Tree Apartments, L.P., a California
limited partnership, and its successors and assigns to the Development.
0. "Property" shall mean the real property described in Exhibit A attached
hereto and incorporated herein.
P. "Rent" shall mean the total of monthly payments by the tenants of a Unit for the following: use and occupancy of the Unit and land and associated facilities, including
parking; any separately charged fees or service charges assessed by Owner which are required of
all tenants, other than security deposits; the cost of an adequate level of service for utilities paid
by the tenant, including garbage collection, sewer, water, electricity, gas and other heating,
cooking and refiigeration hel, but not telephone service; any other interest, taxes, fees or
charges for use of the land or associated facilities and assessed by a public or private entity other
than Owner, and paid by the tenant.
4. "Term" shall mean the period of time beginning on the date of recordation of this Agreement and ending fifty-five (55) years after a Certificate of Occupancy is issued by
the City for all Units.
3
r. "Units" shall mean the one hundred thirty-eight (138) rental units to be
constructed on the Property by the Owner, but excluding therefrom two (2) resident manager
units.
S. "Very Low Income Household" shall mean a household with an Adjusted
Income that does not exceed the qualifying limits for very low income households as established
and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937,
and as published by HCD.
t. "Very Low Income Units" shall mean the Units which, pursuant to Section
2.2 below, are required to be occupied by Very Low Income Households.
ARTICLE 2
AFFORDABILITY COVENANTS
2.1
a. Sixty-seven (67) of the Units shall be rented and occupied by or, if vacant,
available for rental and occupancy by Very Low Income Households. The remainder of the
Units shall be occupied by Moderate Income Households.
2.2 U".
a. Subject to Section 2.3 below, the Rent charged the occupants of the Very
Low Income Units shall not exceed one-twelfth of thuty percent (30%) of fifty percent (50%) of
Median Income, adjusted for household size. The Rent charged the occupants of the Moderate
Income Units shall not exceed one-twelfth of thirty percent (30%) of one hundred ten percent
(1 10%) of Median Income, adjusted for household size.
b. Subject to Section 2.3.b. below, in calculating the allowable Rent for the
Very Low Income Units and the Moderate Income Units, the following assumed household sizes
shall be utilized: -
studio
One
Two
Three
Four
4
1
1.5
3
4.5
6
2.3
a. In the event, upon recertification of an occupant household's income, the Owner
discovers that a Very Low Income Household no longer qualifies as a Very Low Income
Household (but does qualify as a Moderate Income Household), such household's Unit shall be
considered a Moderate Income Unit (and the Rent may be increased to one-twelfth of thirty
percent of one hundred ten percent (1 10%) of Median Income upon sixty (60) days written
notice to the household) and the Owner shall rent the next available Very Low Income Unit to a
Very Low Income Household to comply with the requirements of Section 2.1 above. In the
event that the income of a Very Low Income Household or a Moderate Income Household
increases above the qualifying limit for a Moderate Income Household, the rent shall remain at
the level required for a Moderate Income Unit and the Unit shall be deemed to be a Moderate
Income Unit until the occupying household vacates the Unit, and the next available Unit shall be
rented to a Very Low Income Household or an Moderate Income Household as necessary to
meet the requirements of Section 2.1 above. Moreover, a Unit occupied by a Very Low Income
Household or Moderate Income Household shall be deemed, upon the termination of such Very
Low Income Household's or Moderate Income Household's occupancy, to be continuously
occupied by a Very Low Income Household or a Moderate Income Household, as applicable,
until reoccupied, at which time the character of the Unit shall be redetermined.
b. If the Development is subject to federal HOME Investment Partnerships Program
requirements, the provisions of those requirements regarding assumed household size and
continued occupancy by households whose incomes exceed the eligible income limitations and
rents to be charged to those households shall apply in place of the provisions set forth in
subsections 2.2(b) and 2.3(a) above.
2.4 We Provlslnns . Owner shall include in leases for all Units provisions which ..
authorize Owner to immediately terminate the tenancy of any household one or more of whose
members misrepresented any fact material to the household's qualification as a Very Low
Income Household or a Moderate Income Household. Each lease or rental agreement shall also
provide that the household is subject to annual certification in accordance with Section 3.1
below, and that, if the household's income increases above the applicable limits for a Very Low
Income Household or a Moderate Income Household, as applicable, such household's Rent may
be subject to increase.
2.5 -. The Owner will accept as tenants, on the same
basis as all other prospective tenants, persons who are recipients of federal certificates for rent
subsidies pursuant to the existing housing program under Section 8 of the United States Housing
Act, or its successor. The Owner shall not apply selection criteria to Section 8 certificate or
voucher holders that is more burdensome than criteria applied to all other prospective tenants,
nor shall the Owner apply or permit the application of management policies or lease provisions
with respect to the Development which have the effect of precluding occupancy of units by such
prospective tenants.
2.6 Conversiw. The Owner shall not convert Development units to
condominium or cooperative ownership or sell condominium or cooperative conversion rights to
the Property during the Term of this Agreement.
ARTICLE 3
INCOME CERTIFICATION AND REPORTING
3.1 home Certificatiw. The Owner will obtain, complete and maintain on file,
immediately prior to initial occupancy and annually thereafter, income certifications from each
Very Low Income Household and each Moderate Income Household renting any of the Units.
The Owner shall make a good faith effort to verify that the income provided by an applicant or
occupying household in an income certification is accurate by taking one or more of the
following steps as a part of the verification process: (1) obtain a pay stub for the most recent pay
period; (2) obtain an income tax return for the most recent tax year; (3) conduct a credit agency
or similar search; (4) obtain an income verification form from the applicant's current employer;
(5) obtain an income verification form from the Social Security Administration andor the
California Department of Social Services if the applicant receives assistance from either of such
agencies; or (6) if the applicant is unemployed and has no such tax return, obtain another form of
independent verification. Copies of tenant income certifications shall be available to the City
upon written request.
3.2 -. Each year Owner shall submit an annual report to the
City, in a form approved by the City. The annual report shall include for each Unit covered by
this Agreement, the Rent and the income and household size of the household occupying the
Unit. The report shall also state the date the tenancy commenced for each rental Unit and such
other information as the City may be required by law to obtain.
3.3 -. Owner shall provide any additional information ..
reasonably requested by the City. Upon 5 days prior written request and during regular business
hours, the City shall have the right to examine and make copies of all books, records or other
documents of Owner which pertain to any Unit.
3.4 M. Owner shall maintain complete, accurate and current records pertaining
to the Units, and, upon 5 days prior written request by City, shall permit any duly authorized
representative of the City to inspect records, including records pertaining to income and
household size of tenant households.
3.5 p. Unless Owner is otherwise exempt fiom the
following requirement under applicable law, Owner shall comply with the requirements of the
Public Responsibility and Work Opportunity Reform Act of 1996, as amended, including,
without limitation, verifying the citizenship or immigration status of prospective tenants in
accordance with the verification procedures established under such Act.
6
ARTICLE 4
OPERATION OF THE DEVELOPMENT
4.1 Residential. The Development shall be operated only for residential use. No
part of the Development shall be operated as transient housing.
4.2 wliance with T.oan APrea. Owner shall comply with all the terms and
provisions of the Loan Agreement.
4.3 Propertv Tax -. Owner shall not apply for a property tax exemption for
the Property under any provision of law other than Revenue and Taxation Section. 214(g) without
the City's prior written consent which consent shall not be unreasonably withheld.
4.4 Taxes and Asses-. Owner shall pay all real and personal property taxes,
assessments and charges and all franchise, income, employment, old age benefit, withholding,
sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to
prevent any penalty from accruing, or any lien or charge from attaching to the Property;
provided, however, that Owner shall have the right to contest in good faith, any such taxes,
assessments, or charges. In the event Owner exercises its right to contest any tax, assessment, or
charge against it, Owner, on final determination of the proceeding or contest, shall immediately
pay or discharge any decision or judgment rendered against it, together with all costs, charges
and interest.
4.5 -. All of the Units shall be available for occupancy on a . ..
continuous basis to members of the general public who are income eligible. Owner shall not
give preference to any particular class or group of persons in renting or selling the Units, except
to the extent that the Units are required to be leased to Very Low Income Households and
Moderate Income Households or to Agency or City displacees pursuant to Section 4.6 below.
There shall be no discrimination against or segregation of any person or group of persons, on
account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, or
ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any
Unit nor shall Owner or any person claiming under or through the Owner, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection,
location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of
any Unit or in connection with the employment of persons for the operation and management of
the Development. All deeds, leases or contracts made or entered into by Owner as to the Units
or the Development or portion thereof, shall contain covenants concerning discrimination as
prescribed by the Loan Agreement.
4.6 to DW. Owner shall give a preference in the rental of any Units
to eligible households displaced by activity of the Agency or the City upon receiving a written
request of the Agency or the City regarding such displacement.
7
ARTICLE 5
PROPERTY MANAGEMENT AND MAINTENANCE
Responslbllltles . ... 5.1 . The Owner is responsible for all management
functions with respect to the Development, including without limitation the selection of tenants,
certification and recertification of household size and income, evictions, collection of rents and
deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital
items, and security. The City shall have no responsibility over management of the Development.
The Owner shall retain a professional property management company approved by the City in its
reasonable discretion to perform its management duties hereunder, unless the Owner
demonstrates to the City that it has the capacity to self-manage the Development and receives
written City approval for self-management. A resident manager shall also be required, selection
of whom shall be at the discretion of the Owner.
5.2 p. The Development shall at all times be ..
managed by an experienced management agent reasonably acceptable to the City, with
demonstrated ability to operate residential facilities like the Development in a manner that will
provide decent, safe, and sanitary housing (as approved, the "Management Agent"). The Owner
shall submit for the City's approval the identity of any proposed Management Agent. The Owner
shall also submit such additional information about the background, experience and financial
condition of any proposed Management Agent as is reasonably necessq for the City to
determine whether the proposed Management Agent meets the standard for a qualified
Management Agent set forth above. If the proposed Management Agent meets the standard for a
qualified Management Agent set forth above, the City shall approve the proposed Management
Agent by notifylng the Owner in writing. Unless the proposed Management Agent is
disapproved by the City within thirty (30) days, which disapproval shall state with reasonable
specificity the basis for disapproval, it shall be deemed approved.
5.3 Review. The City reserves the right to conduct an annual (or more
frequently, if deemed necessary by the City) review of the management practices and financial
status of the Development. The purpose of each periodic review will be to enable the City to
determine if the Development is being operated and managed in accordance with the
requirements and standards of this Agreement. The Owner shall cooperate with the City in such
reviews.
5.4 p. If, as a result of a periodic review, the City
determines in its reasonable judgement that the Development is not being operated and managed
in accordance with any of the material requirements and standards of this Agreement, the City
shall deliver notice to Owner of its intention to cause replacement of the Management Agent,
including the reasons therefor. Within fifteen (15) days of receipt by Owner of such written
notice, City staff and the Owner shall meet in good faith to consider methods for improving the
financial and operating status of the Development, including, without limitation, replacement of
the Management Agent.
If, after such meeting, City staff recommends in writing the replacement of the
Management Agent, Owner shall promptly dismiss the then Management Agent, and shall
1010\07\1106&(.5 8
appoint as the Management Agent a person or entity meeting the standards for a Management
Agent set forth in Section 5.2 above and approved by the City pursuant to Section 5.2 above.
Any contract for the operation or management of the Development entered into by Owner
shall provide that the contract can be terminated as set forth above. Failure to remove the
Management Agent in accordance with the provisions of this Section shall constitute default
under this Agreement, and the City may enforce this provision through legal proceedings as
specified in Section 6.3.
5.5 &PI2 .. . The Owner shall submit its written
management policies with respect to the Development to the City for its review, and shall amend
such policies in any way necessary to ensure that such policies comply with the provisions of this
Agreement.
5.6 -. The Owner agrees, for the entire Term of this Agreement,
to maintain all interior and exterior improvements, including landscaping, on the Property in
good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with
all applicable laws, rules, ordinances, orders and regulations of all federal, state, county,
municipal, and other governmental agencies and bodies having or claiming jurisdiction and all
their respective departments, bureaus, and officials.
The City places prime importance on quality maintenance to protect its investment and to
ensure that all Agency and City-assisted affordable housing projects within the City are not
allowed to deteriorate due to below-average maintenance. Normal wear and tear of the
Development will be acceptable to the City assuming the Owner agrees to provide all necessary
improvements to assure the Development is maintained in good condition. The Owner shall
make all repairs and replacements necessary to keep the improvements in good condition and
repair.
In the event that the Owner breaches any of the covenants contained in this section and
such default continues for a period of five (5) days after written notice fiom the City with respect
to graffiti, debris, waste material, general maintenance, landscaping and building improvements,
(and subject to any stricter requirements included in any applicable City ordinance) then the
City, in addition to whatever other remedy it may have at law or in equity, shall have the right to
enter upon the Property and perform or cause to be performed all such acts and work necessary
to cure the default. Pursuant to such right of entry, the City shall be permitted (but is not
required) to enter upon the Property and perform all acts and work necessary to protect,
maintain, and preserve the improvements and landscaped areas on the Property, and to attach a
lien on the Property, or to assess the Property, in the amount of the reasonable expenditures
arising from such acts and work of protection, maintenance, and preservation by the City andor
costs of such cure, including an administrative charge equal to fifteen percent (15%) of such
expenditures, which amount shall be promptly paid by the Owner to the City upon demand.
9
ARTICLE 6
MISCELLANEOUS
6.1 Tam. The provisions of this Agreement shall apply to the Property for the entire
Term even if the entire Loan is paid in full prior to the end of the Term. This Agreement shall
bind any successor, heir or assign of Owner, whether a change in interest occurs voluntarily or
involuntarily, by operation of law or otherwise, except as expressly released by the City. The
City makes the Loan on the condition, and in consideration of, this provision, and would not do
so otherwise.
6.2 Covenants to Run With tu. The City and Owner hereby declare their
express intent that the covenants and restrictions set forth in this Agreement shall run with the
land, and shall bind all successors in title to the Property, provided, however, that on the
expiration of the Term of this Agreement said covenants and restrictions shall expire. Each and
every contract, deed or other instrument hereafter executed covering or conveying the Property
or any portion thereof shall be held conclusively to have been executed, delivered and accepted
subject to such covenants and restrictions, regardless of whether such covenants or restrictions
are set forth in such contract, deed or other instrument, unless the City expressly releases such
conveyed portion of the Property from the requirements of this Agreement.
6.3 by the City. If Owner fails to perform any obligation under this
Agreement, and fails to cure the default within 30 days after the City has notified the Owner in
writing of the default or, if the default cannot be cured within 30 days, failed to commence to
cure within 30 days and thereafter diligently pursue such cure, the City shall have the right to
enforce this Agreement by any or all of the following actions, or any other remedy provided by
law:
a. iXh&dam. The City may declare a default under the Note,
accelerate the indebtedness evidenced by the Note, and proceed with foreclosure under the Deed
of Trust.
b. to Cop. The City may bring an
action at law or in equity to compel Owner's performance of its obligations under this
Agreement, and/or for damages.
C. . The City may exercise any
other remedy provided under the Loan Agreement.
6.4 -. Pursuant to the Housing Fund Administration
Agreement, the Agency is a third party beneficiary of this Agreement. The City and the Owner
agree that this Agreement shall be hlly enforceable by the Agency.
6.5 a Fees and CQ&. In any action brought to enforce this Agreement, the
prevailing party shall be entitled to all reasonable costs and expenses of suit, including
reasonable attorneys' fees. This section shall be interpreted in accordance with California Civil
Code Section 1717 and judicial decisions interpreting that statute.
1010\07\110684.5 10
6.6 -. The City and Owner shall cause this Agreement, and all
amendments and supplements to it, to be recorded against the Property in the Official Records of
the County of San Diego.
6.7 -w. V This Agreement shall be governed by the laws of the State of
California.
6.8 Amendments. This Agreement may be amended only by a written instrument
executed by all the parties hereto or their successors in title, and duly recorded in the real
property records of the County of San Diego, California.
6.9 w. All notices given or certificates delivered under this Agreement shall be
deemed received on the delivery or refusal date shown on the delivery receipt, if: (i) personally
delivered by a commercial service which furnishes signed receipts of delivery or (ii) mailed by
certified mail, return receipt requested, postage prepaid, addressed as shown on the signature
page. Any of the parties may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or communications shall be sent.
6.10 m. If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining portions of this
Agreement shall not in any way be affected or impaired thereby.
6.11 .. Notwithstanding anything to the contrary
contained herein, the parties hereto acknowledge and agree that Section 42(h)(6)(e)(ii) of the
Internal Revenue Code provides that eviction or termination of tenancy (other than for good
cause) of an existing tenant of any low-income unit or any increase in the gross rent with respect
to such unit not otherwise permitted under Section 42 for a period of three (3) years after the date
the building is acquired by foreclosure or instrument in lieu of foreclosure will invalidate the
extended use agreement and cause the disallowance of the low income housing tax credits. The
City agees that, in the event the City acquires the Development through foreclosure or
instrument in lieu of foreclosure, it will refrain for three (3) years hm terminating tenancies
(other than for good cause) or increasing rents in a matter not permitted by Section 42.
11
IN WITNESS WHEREOF, the City and Owner have executed this Agreement by duly
authorized representatives, all on the date first written above.
CITY:
CITY OF CARLSBAD, a municipal
corporation
Address:
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008
Attn: Housing and Redevelopment Director
OWNER
Carlsbad Laurel Tree Apartments, L.P., a
California limited partnership
By: METROPOLITAN AREA
ADVISORY COMMITTEE ON
COUNTY, INC., a California
nonprofit public benefit corporation,
ANTI-POVERTY OF SAN DIEGO
Address:
22 W. 35”’ Street
National City, CA 91 950
Attention: Executive Director
APPROVED AS TO FORM
By:
12
STATE OF CALIFORNIA )
COUNTY OF D1EG9
On L\ i\ , 1998, before me, the undersigned, a Notary Public, personally
appeared ", personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument, and acknowledged to me that helshelthey executed the same in
hishedtheir authorized capacity(ies), and that by hishedtheir signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
) ss
-
WITNESS my hand and official seal.
.
EXHIBIT A
Property Description
13
ORDER NO. 1182362-20
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY PARCEL 1 OF PARCEL MAP NO. 15661, IN THE CITY OF CARLSBAD, COUNTY OF
RECORDER OF SAN DIEGO COUNTY, MAY 5, 1989 AS FILE NO. 89-239677 OF
OFFICIAL RECORDS TOGETHER WITH PORTION OF THAT PARCEL OF LAND
DESIGNATED AS "DESCRIPTION NO. SI', AS SHOWN AND DELINEATED OF RECORD
DIEGO COUNTY, DECEMBER 19, 1960 BEING A PORTION OF LOT "G" OF RANCHO
OF SURVEY MAP NO. 5715, FILED IN THE OFFICE OF COUNTY RECORDER OF SAN
AGUA HEDIONDA, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF NO. 823 FILED IN THE OFFICE OF
COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896, DESCRIBED AS
A WHOLE AS FOLLOWS:
BEGINNING AT THE MOST NORTHERLY CORNER OF SAID PARCEL 1 OF PARCEL MAP
NO. 15661, SAID POINT BEING THE INTERSECTION OF THE CENTER LINE OF
LAUREL TREE LANE AND THE NORTHERLY LINE OF SAID DESCRIPTION NO. 5 ; THENCE ALONG SAID NORTHERLY LINE, NORTH 83O40'44" EAST, 31.91 FEET; THENCE LEAVING SAID NORTHERLY LINE ALONG THE EASTERLY LINE OF LAUREL
TREE LANE, SOUTH 13"35'23" WEST, 15.90 FEET TO THE BEGINNING OF A
THENCE SOUTHWESTERLY AND SOUTHEASTERLY ALONG SAID CURVE 800.55 FEET TANGENT CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 540.00 FEET;
THROUGH A CENTRAL ANGLE OF 84 O 56 ' 2 6 " ; THENCE TANGENT TO SAID CURVE
OF LAUREL TREE LANE, SOUTH 18°38'57'8 WEST, 30.00 TO A POINT ON THE SOUTH 71O21'03" EAST, 301.37 FEET; THENCE LEAVING SAID EASTERLY LINE
MOST EASTERLY CORNER OF SAID PARCEL 1 OF PARCEL MAP NO. 15661 ALSO
OF 510.00 FEET, A RADIAL LINE TO SAID POINT BEARS NORTH 13O59'46"
EAST; THENCE WESTERLY ALONG SAID CURVE AND ALONG THE SOUTHERLY
BOUNDARY LINE OF PARCEL 1 OF SAID PARCEL MAP NO. 15661, 436.76 FEET THROUGH A CENTRAL ANGLE OF 49 O 04 ' 04 'I, THENCE TANGENT TO SAID CURVE
SOUTH 54O55'42" WEST, 364.43 FEET TO A POINT ON THE MOST SOUTHERLY
CORNER OF SAID PARCEL 1, ALSO BEING A POINT ON A NON-TANGENT CURVE
TO SAID POINT BEARS NORTH 54"54'52" EAST; THENCE NORTHWESTERLY ALONG CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 1349.00 FEET, A RADIAL LINE
SAID CURVE AND ALONG THE WESTERLY BOUNDARY LINE OF SAID PARCEL 1,
84.63 FEET THROUGH A CENTRAL ANGLE OF 03 O35 ' 40 " ; THENCE TANGENT TO
TANGENT CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1451.00 FEET;
SAID CURVE NORTH 38O40'48" WEST, 199.98 FEET TO THE BEGINNING OF A
ANGLE OF 28O56'36" TO THE MOST NORTHWESTERLY CORNER OF SAID PARCEL 1;
THENCE NORTHWESTERLY ALONG SAID CURVE 732.98 FEET THROUGH A CENTRAL
BEING A POINT ON A NON-TANGENT CURVE CONCAVE SOUTHERLY HAVING A RADIUS
T:OSIO6198 11:17:34 V: I I : : RS 00 PAGE 14
ORDER NO. 1182362-20
THENCE ALONG THE NORTHERLY BOUNDARY LINE OF SAID PARCEL 1 NORTH
71O35'51" EAST, 560.32 FEET TO THE POINT OF BEGINNING.
PARCEL B:
EASEMENTS FOR ROADWAY AND UTILITY PURPOSES OVER THOSE CERTAIN STRIPS OF LAND DESIGNATED AS "60.00 FOOT EASEMENT AND 66.00 FOOT EASEMENT RESERVED FOR ROADWAY AND UTILITY PURPOSES", AS SHOWN ON RECORD OF
DIEGO COUNTY, DECEMBER 19, 1960, BEING A PORTION OF LOT "G" OF THE
SURVEY MAP NO. 5715, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN
ACCORDING TO MAP THEREOF NO. 823, FILED IN THE OFFICE OF THE COUNTY
RANCHO AGUA HEDIONDA, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896.
EXCEPTING FROM SAID 60.00 FOOT STRIP THAT PORTION WHICH LIES WITHIN
PARCEL A ABOVE.
PAGE 15
EXHIBIT D
City Deed of Trust
28
CITY DEED OF TRUST
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk's Office
1200 Carlsbad Village Drive
Carlsbad, CA 92008
CITY DEED OF TRUST AND SECURITY AGREEMENT
THIS CITY DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") is
made as of this 11" day of June, 1998, by and among Carlsbad Laurel Tree Apartments, L.P., a
California limited partnership ("Trustor"), Fidelity National Title Company, a California
corporation ("Trustee"), and the City of Carlsbad, a municipal corporation ("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor's leasehold interest in the property located in the County of San
Diego, State of California, that is described in the attached Exhibit A, incorporated herein by this
reference (the "Property").
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH Trustor's interest in all easements, rights-of-way and rights used in
connection therewith or as a means of access thereto, including (without limiting the generality
of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH Trustor's interest in any and all buildings and improvements of every
kind and description now or hereafter erected thereon, and all property of the Trustor now or
hereafter affixed to or placed upon the Property;
TOGETHER WITH Trustor's interest in all building materials and equipment now or
hereafter delivered to said property and intended to be installed therein,
1010\07\110475.5 1
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter
acquired, in and to any land lying within the right-of-way of any street, open or proposed,
adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to
or used in connection with the Property;
TOGETHER WITH Trustor's estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property, both in law and in equity, including, but
not limited to, all deposits made with or other security given by Trustor to utility companies, the
proceeds from any or all of such property, including the Property, claims or demands with
respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may
hereafter acquire, any and all awards made for the taking by eminent domain or purchase in lieu
thereof of the whole or any part of such property, including without limitation, any awards
resulting from a change of grade of streets and awards for severance damages to the extent
Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures
now or hereafter attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Property which are necessary to the complete and comfortable use
and occupancy of such building or buildings for the purposes for which they were or are to be
erected, and all renewals or replacements thereof or articles in substitution therefor, whether or
not the same are, or shall be attached to said building or buildings in any manner.
All of the foregoing, together with the Property, is herein referred to as the "Security."
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING
(a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note and
the Loan Agreement (both as defined in Article 1 below) until paid or cancelled. Said principal
and other payments shall be due and payable as provided in the Note and the Loan Agreement.
The Note, the Loan Agreement, and the Regulatory Agreement (defined below), and all their
terms are incorporated herein by reference, and this conveyance shall secure any and all
extensions thereof, however evidenced; and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to
the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to
advance said sums and the expiration of any applicable cure period, with interest thereon as
provided herein; and
(c) Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents (defined in Section 1.2 below).
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
1010\07\110475.5 2
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 "Loan Agreement" means that certain City Loan Agreement
between Trustor and Beneficiary dated as of JG~~E IL, 1998, providing for the Beneficiary to
loan to the Trustor Seven Hundred Thousand Dollars ($700,000) for the development on the
Property of improvements.
Section 1.2 The term "Bank Deed of Trust" means the Construction Deed of Trust
with Assignment of Leases and Rents, Security Agreement and Fixture Filing to Bank of
America Community Development Bank, as beneficiary, from Trustor, as trustor, securing a loan
from Bank of America Community Development Bank to Trustor in the amount of Eleven
Million Six Hundred Sixty Thousand Five Hundred Ninety-One Dollars ($1 1,660,591).
Section 1.3 The term "Loan Documents" means this Deed of Trust, the Note, the Loan
Agreement, and the Regulatory Agreement.
Section 1.4 The term "Note" means the City Note in the principal amount of Seven
Hundred Thousand Dollars ($700,000) dated= 1998, executed by the Trustor in favor
of the Beneficiary, the payment of which is secured by this Deed of Trust. (A copy of the Note is
on file with the Beneficiary and terms and provisions of the Note are incorporated herein by
reference.)
Section 1.5 The term "Principal" means the aggregate of the amounts required to be
paid under the Note.
Section 1.6 The term "Regulatory Agreement" means the Regulatory Agreement by
and between the Trustor and the Beneficiary of even date herewith.
ARTICLE 2
MAINTENANCE AND MODIFICATION OF
THE PROPERTY AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note,
the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause
the Security to be maintained and preserved in good condition, subject to Article 4 below. The
Trustor will from time io 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.
1010\07\110475.5 3
Trustor agrees to pay fully and discharge (or cause to be paid filly and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty (30) days or
more, and to take all other reasonable steps to forestall the assertion of claims of lien against the
Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary
as its agent (said agency being coupled with an interest) with the authority, but without any
obligation, to file for record any notices of completion or cessation of labor or any other notice
that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the
Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor
only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those
actions as hereinbefore provided, after notice and expiration of all applicable cure periods.
Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall
not be obligated to pay any claims for labor, materials or services which Trustor in good faith
disputes and is diligently contesting provided that Trustor shall, at Beneficiary's written request,
within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of
San Diego County, a surety bond in an amount 1 and 1/2 times the amount of such claim item to
protect against a claim of lien, or provide such other security reasonably satisfactory to
Beneficiary.
Section 2.2 Granting of Easements,
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in
the nature of easements with respect to any property or rights included in the Security except
those required or desirable for installation and maintenance of public utilities including, without
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. As to
these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements.
ARTICLE 3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior to delinquency, all taxes, assessments,
charges and levies imposed by any public authority or utility company which are or may become
a lien affecting the Security or any part thereof; provided, however, if such taxes, assessments or
charges may be paid in installments, Trustor may pay in such installments; and provided further,
that Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy
so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings
and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 3.1. The
provisions of this Section 3.1 shall not be construed to require that Trustor maintain a reserve
account, escrow account, impound account or other similar account for the payment of fhre
taxes, assessments, charges and levies.
1010\07\110475.5 4
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 in writing of such failure to pay and the
Trustor fails to fully pay such items within seven (7) business days after receipt of such notice or,
alternatively, provides Beneficiary with evidence Trustor is contesting such items in accordance
with this Section. Any amount so advanced therefor by Beneficiary, together with interest
thereon from the date of such advance at the maximum rate permitted by law, shall become an
additional obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor
agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the
Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid and all other obligations secured
hereunder fulfilled, and this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost and
expense. Certificates of insurance for all of the above insurance policies, showing the same to be
in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time
prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of
Trust.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust, the Beneficiary, after at least seven (7) days prior written notice to Trustor, may
(but shall be under no obligation to) take out the required policies of insurance and pay the
premiums on the same; and all amounts so advanced therefor by the Beneficiary shall become an
additional obligation of the Trustor to the Beneficiary (together with interest as set forth below)
and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the
Beneficiary, and if not so paid, shall bear interest &om the date of the advance at the rate of six
percent (6%) per annum.
ARTICLE 4
DAMAGE. DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection
with or in lieu of (1) taking of all or any part of or any interest in the Property by or under
assertion of the power of eminent domain, (2) any damage to or destruction of the Property or
any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the
Property ("Funds") are hereby assigned to and shall be paid to, subject to the requirements of
lienholders senior to Beneficiary, the Beneficiary by a check made payable to the Beneficiary.
1010\07\110475.5 5
Upon the occurrence of an Event of Default (as defined in the Loan Agreement), the Beneficiary
shall be entitled to settle and adjust all claims under insurance policies provided under this Deed
of Trust and may deduct and retain from the proceeds of such insurance the amount of all
expenses incurred by it in connection with any such settlement or adjustment. All fire and
standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment
of the costs of repairing or rebuilding that part of the improvements on the Property damaged or
destroyed if (i) the Trustor agrees in writing within ninety (90) days after payment of the
proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each lender
in connection with outstanding Construction and Permanent Financing (as defined in the Loan
Agreement) permits such repairing or rebuilding, provided that the extent of Trustor's obligation
to restore the improvements shall be limited to the amount of the insurance proceeds. If the
improvements are not repaired or rebuilt as provided in this Section 4.1, all such proceeds shall
be applied to repayment of outstanding loans including the loan secured by this Deed of Trust, in
the order of lien priority. Application of all or any part of the Funds collected and received by
the Beneficiary or the release thereof shall not cure or waive any default under this Deed of
Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior
mortgage lender.
ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES;
PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred
by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such
expenses are incurred at the lesser of ten percent (10%) per annum or the maximum amount
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 at the times set out therein.
1010\07\110475.5 6
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed of
Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall
constitute a fixtures filing under the California Commercial Code. As to any personal property
not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement
under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements
pursuant to the appropriate statutes, and any other documents or instruments as are reasonably
required to convey to the Beneficiary a valid perfected security interest in the Security. The
Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable
the Beneficiary to maintain such valid perfected security interest in the Security in order to
secure the payment of the Note in accordance with its terms. The Beneficiary is authorized to
file a copy of any such financing statement in any 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 prior written notice, subject
to the rights of tenants, the Beneficiary and its duly authorized agents, attorneys, experts,
engineers, accountants and representatives shall have the right, without payment of charges or
fees, to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and
assigns, and all persons claimiig under or through them, that there shall be no discximination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, age, disability, sex, sexual orientation, marital status, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the
Trustor itself or any person claiming under or through it establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The
foregoing covenants shall run with the land.
1010\07\110475.5 7
4
Section 5.9 Subordination.
The lien of this Deed of Trust shall be subordinate to the lien of the Bank Deed of Trust,
recorded concurrently herewith.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Acceleration of Maturity.
If an Event of Default, (as defined in the Loan Agreement), shall have occurred and be
continuing, then at the option of the Beneficiary, the amount of any payment related to the Event
of Default and the unpaid Principal of the Note shall immediately become due and payable, upon
written notice by the Beneficiary to the Trustor (or automatically where so specified in the Loan
Documents), and no omission on the part of the Beneficiary to exercise such option when
entitled to do so shall be construed as a waiver of such right.
Section 6.2 The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or proceeding, or by
a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the
Security and take possession thereof (or any part thereof), in its own name or in the name of
Trustee, and do any acts which it deems necessary or desirable to preserve the value or
marketability of the Property, or part thereof or interest therein, increase the income therefrom or
protect the security thereof. The entering upon and taking possession of the Security shall not
cure or waive any Event of Default or Notice of Default (as defined below) hereunder or
invalidate any act done in response to such Event of Default or pmuant to such Notice of
Default and, notwithstanding the continuance in possession of the Security, Beneficiary shall be
entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of
any Event of Default, including the right to exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof;
(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 theSecurity 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, 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.
8
Section 6.3 Foreclosure By Power of Sale,
Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained following an Event of Default, the Beneficiary shall give notice to the Trustee (the
"Notice of Sale") and shall deposit with Trustee this Deed of Trust which is secured hereby (and
the deposit of which shall be deemed to constitute evidence that the unpaid principal amount of
the Note is immediately due and payable), and such receipts and evidence of any expenditures
made that are additionally secured hereby as Trustee may require.
(a) Upon receipt of such notice &om 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.
(c) Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and kom 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 6.4 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of
right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest of Trustor therein, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part
thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice
of any application therefor. Any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of
1010\07\110475.5 9
entry as provided herein, and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 6.5 Remedies Cumulative,
No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 6.6 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or remedy
accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or
shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every
right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from
time to time and as often as may be deemed expeditious by the Beneficiary. No consent or
waiver, expressed or implied, by the Beneficiary to any breach by the Trustor in the performance
of the obligations hereunder shall be deemed or construed to be a consent to or waiver of
obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any
act or failure to act or to declare an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any
rights, power or remedies consequent on any Event of Default by the Trustor.
(b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of
any sums secured hereby, (ii) takes other or additional security or the payment of any sums
secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv)
releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of
the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the
granting of any easement or other right affecting the Security, or (iv) makes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
modify, change or affect the obligations under this Deed of Trust, or any other obligation of the
Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-signer,
endorser, surety or guarantor (unless expressly released); nor shall any such act or omission
preclude the Beneficiary from exercising any right, power or privilege herein granted or intended
to be granted in any Event of Default then made or of any subsequent Event of Default, nor,
except as otherwise expressly provided in an instrument or instrumats executed by the
Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 6.7 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Security and the rights of the
Beneficiary as may be unlawfkl 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
1010\07\110475.5 10
unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
Section 6.8 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of the Beneficiary
allowed in such proceedings and for any additional amount which may become due and payable
by the Trustor hereunder after such date.
Section 6.9 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of
protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in
taking any action to collect any sums owing under the Note or in proceedings against the
Security, in connection with the delivery, acceptance, performance, default, endorsement or
guaranty of this Deed of Trust.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only by
an instrument in writing signed by Beneficiary and Trustor.
Section 7.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid
or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention,
and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to
Trustor, or to the person or persons legally entitled thereto.
Section 7.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or
convenient for one of the parties hereto to serve any notice, demand or communication upon the
other party, such notice, demand or communication shall be in writing and shall be served
personally or by depositing the same in the registered United States mail, return receipt
requested, postage prepaid and (1) if intended for Beneficiary shall be addressed to:
1010\07\110475.5 11
City of Carlsbad
2965 Roosevelt Drive, Suite B
Carlsbad, CA 92008
Attention: Housing and Redevelopment Director
and (2) if intended for Trustor shall be addressed to:
Carlsbad Laurel Tree Apartments, L.P.,
a California limited partnership
c/o Metropolitan Area Advisory Committee
On Anti-Poverty of San Diego
22 W. 35Ih Street
National City, CA 91950
Attn: Executive Director
Any notice, demand or communication shall be deemed given, received, made or communicated
on the date personal delivery is effected or, if mailed in the manner herein specified, on the
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either
party may change its address at any time by giving written notice of such change to Beneficiary
or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the
date such change is desired to be effective.
Section 7.4 Captions.
The captions or headings at the beginning of each Section hereof are forthe convenience
of the parties and are not a part of this Deed of Trust.
Section 7.5 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or
partially secured by the lien of this Deed of Trust.
Section 7.6 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of the
State of California.
1010\07\110475.5 12
Section 7.7 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
Section 7.8 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
Section 7.9 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect the
Security.
Section 7.10 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee here,in named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to
this Deed of Trust and its place of record, which, when duly recorded in the proper office of the
county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
Section 7.1 1 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured
by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 7.12 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is
made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
Section 7.13 Mortgage Loan Rider.
Attached hereto is a Mortgage Loan Rider which is incorporated herein by this reference.
Section 7.14 Section 42(h)(6)(e)(ii) of the IRC.
Notwithstanding anythmg to the contrary contained herein, the parties hereto
acknowledge and agree that Section 42(h)(6)(e)(ii) of thehtemal Revenue Code provides that
1010\07\110475.5 13
eviction or termination of tenancy (other than for good cause) of an existing tenant of any low-
income unit or any increase in the gross rent with respect to such unit not otherwise permitted
under Section 42 for a period of three (3) years after the date the building is acquired by
foreclosure or instrument in lieu of foreclosure will invalidate the extended use agreement and
cause the disallowance of the low income housing tax credits. Beneficiary agrees that, in the
event it acquires the Property through foreclosure or instrument in lieu of foreclosure it will
refrain for three (3) years from terminating tenancies (other then for good cause) or increasing
rents in a manner not permitted by Section 42.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and
year first above written.
STATE OF CALIFORNIA ) 1 ss
COUNTY OF -5&&&&p)
TRUSTOR:
Carlsbad Laurel Tree Apartments, L.P., a California
limited partnership
By: Metropolitan Area Advisory Committee on
Anti-Poverty of San Diego County, Inc., a
efit corporation, its
By:
Its: -a
"
". 4 -4
On Q)UA/C /I , 1998, before me, the undersigned, a Notary Public, personally appeared
RaarA CstaAes , personally known to me (or proved to me on the basis of satisfadory evidence) to be the person@) whose name(s) is/are subscribed to the within
instrument, and acknowledged to me that he/she/they executed the same in hisherheir
authorized capacity(ies), and that by hishedtheir signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
1010\07\110475.5 14
EXHIBIT A
(Legal Description of Leasehold Estate)
The land is situated in the State of California, County of San Diego, and is described as follows:
15
ORDER NO. 1182362-20
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY
PARCEL 1 OF PARCEL MAP NO. 15661, IN THE CITY OF CARLSBAD, COUNTY OF
OFFICIAL RECORDS TOGETHER WITH PORTION OF THAT PARCEL OF LAND
RECORDER OF SAN DIEGO COUNTY, MAY 5, 1989 AS FILE NO. 89-239677 OF
DESIGNATED AS "DESCRIPTION NO. SI', AS SHOWN AND DELINEATED OF RECORD
OF SURVEY MAP NO. 5715, FILED IN THE OFFICE OF COUNTY RECORDER OF SAN
AGUA HEDIONDA, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF DIEGO COUNTY, DECEMBER 19, 1960 BEING A PORTION OF LOT "G" OF RANCHO
COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896, DESCRIBED AS CALIFORNIA, ACCORDING TO MAP THEREOF NO. 823 FILED IN THE OFFICE OF
A WHOLE AS FOLLOWS:
BEGINNING AT THE MOST NORTHERLY CORNER OF SAID PARCEL 1 OF PARCEL MAP
NO. 15661, SAID POINT BEING THE INTERSECTION OF THE CENTER LINE OF LAUREL TREE LANE AND THE NORTHERLY LINE OF SAID DESCRIPTION NO. 5 ;
THENCE ALONG SAID NORTHERLY LINE, NORTH 83 O40 ' 44 " EAST, 31.91 FEET;
THENCE LEAVING SAID NORTHERLY LINE ALONG THE EASTERLY LINE OF LAUREL
TREE LANE, SOUTH 13O35'23" WEST, 15.90 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 540.00 FEET;
THROUGH A CENTRAL ANGLE OF 84 O 56 ' 26 " ; THENCE TANGENT TO SAID CURVE
OF LAUREL TREE LANE, SOUTH 18O38'57" WEST, 30.00 TO A POINT ON THE
SOUTH 71O21'03" EAST, 301.37 FEET; THENCE LEAVING SAID EASTERLY LINE
MOST EASTERLY CORNER OF SAID PARCEL 1 OF PARCEL MAP NO. 15661 ALSO
OF 510.00 FEET, A RADIAL LINE TO SAID POINT BEARS NORTH 13O59'46"
EAST; THENCE WESTERLY ALONG SAID CURVE AND ALONG THE SOUTHERLY
BOUNDARY LINE OF PARCEL 1 OF SAID PARCEL MAP NO. 15661, 436.76 FEET
THROUGH A CENTRAL ANGLE OF 49 O 04 ' 04 'I, THENCE TANGENT TO SAID CURVE
SOUTH 54O55'42" WEST, 364.43 FEET TO A POINT ON THE MOST SOUTHERLY CORNER OF SAID PARCEL 1, ALSO BEING A POINT ON A NON-TANGENT CURVE
TO SAID POINT BEARS NORTH 54O54'52" EAST; THENCE NORTHWESTERLY ALONG CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 1349 .OO FEET, A RADIAL LINE
SAID CURVE AND ALONG THE WESTERLY BOUNDARY LINE OF SAID PARCEL 1,
84.63 FEET THROUGH A CENTRAL ANGLE OF 03 O 35 ' 40 " ; THENCE TANGENT TO
TANGENT CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1451.00 FEET; SAID CURVE NORTH 38O40'48" WEST, 199.98 FEET TO THE BEGINNING OF A
ANGLE OF 28O56'36" TO THE MOST NORTHWESTERLY CORNER OF SAID PARCEL 1;
THENCE NORTHWESTERLY ALONG SAID CURVE 732.98 FEET THROUGH A CENTRAL
THENCE SOUTHWESTERLY AND SOUTHEASTERLY ALONG SAID CURVE 800.55 FEET
BEING A POINT ON A NON-TANGENT CURVE CONCAVE SOUTHERLY HAVING A RADIUS
~:05/06/98 11:17:34 V: 1 / I : Rsoo PAGE 14
ORDER NO. 1182362-20
THENCE ALONG THE NORTHERLY BOUNDARY LINE OF SAID PARCEL 1 NORTH
71°35'51" EAST, 560.32 FEET TO THE POINT OF BEGINNING.
PARCEL B:
OF LAND DESIGNATED AS "60.00 FOOT EASEMENT AND 66.00 FOOT EASEMENT EASEMENTS FOR ROADWAY AND UTILITY PURPOSES OVER THOSE CERTAIN STRIPS
RESERVED FOR ROADWAY AND UTILITY PURPOSES", AS SHOWN ON RECORD OF SURVEY MAP NO. 5715, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 19, 1960, BEING A PORTION OF LOT "G" OF THE RANCHO AGUA HEDIONDA, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 823, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896.
EXCEPTING FROM SAID 60.00 FOOT STRIP THAT PORTION WHICH LIES WITHIN
PARCEL A ABOVE.
PAGE 15
I
MORTGAGE LOAN RIDER
This Rider is attached to and made a part of the promissory note, the mortgage or trust
deed, the regulatory agreement, and loan agreement or other document(s) evidencing, securing,
and governing a loan in the original principal amount of Seven Hundred Thousand Dollars
($700,000) (the "Loan") made by the City of Carlsbad ("Lender") to Carlsbad Laurel Tree
Apartments, L.P., a California limited partnership ("Borrower"), for the construction of one
hundred and thirty-eight (1 38) units of affordable housing located as described in the attached
legal description. Borrower may sometimes be referred to herein as the "Partnership." The
Agreement of Limited Partnership forming or continuing the Partnership is referred to herein as
the "Partnership Agreement."
The parties hereto agree that the following covenants, terms, and conditions shall be part
of and shall modify or supplement each of the documents evidencing, securing, or governing the
disbursement of the Loan (the "Loan Documents"), and that in the event of any inconsistency or
conflict between the covenants, terms, and conditions of the Loan Documents and this Rider, the
following covenants, terms, and conditions shall control and prevail:
1. Nonrecourse Oblipation. The Loan is a nonrecourse obligation of Borrower, as
set forth in Section 10 of the promissory note evidencing the Loan.
2. General Partner Chanze. The withdrawal, removal, andor replacement of a
general partner of the Partnership pursuant to the terms of the Partnership Agreement shall not
constitute a default under any of the Loan Documents, and any such actions shall not accelerate
the maturity of the Loan, provided that any required substitute general partner is reasonably
acceptable to Lender and is selected with reasonable promptness.
3. Monetarv Default. If a monetary event of default occurs under the terms of any
of the Loan Documents, prior to exercising any remedies thereunder Lender shall give Borrower
and each of the general and limited partners of the Partnership, as identified in the Partnership
Agreement, simultaneous written notice of such default. Borrower shall have a period of seven
(7) days after such notice is given within which to cure the default prior to exercise of remedies
by Lender under the Loan Documents, or such longer period of time as may be specified in the
Loan Documents.
4. Non-Monetarv Default. If a non-monetary event of default occurs under the
terms of any of the Loan Documents, prior to exercising any remedies thereunder Lender shall
give Borrower and each of the general and limited partners of the Partnership, as identified in the
Partnership Agreement, simultaneous written notice of such default. If the default is reasonably
capable of being cured within thirty (30) days, Borrower shall have such period to effect a cure
prior to exercise of remedies by Lender under the Loan Documents, or such longer period of time
as may be specified in the Loan Documents. If the default is such that it is not reasonably
capable of being cured within thirty (30) days or such longer period if so specified, and if
Borrower (a) initiates corrective action within said period, and (b) diligently, continually, and in
1010\07\110567.6 1
good faith works to effect a cure as soon as possible, then Borrower shall have such additional
time as is reasonably necessary to cure the default prior to exercise of any remedies by Lender.
If Borrower fails to take corrective action or to cure the default within a reasonable time, Lender
shall give Borrower and each of the general and limited partners of the Partnership written notice
thereof, whereupon the limited partner may remove and replace the general partner with a
substitute general partner who shall effect a cure within a reasonable time thereafter in
accordance with the foregoing provisions. In no event shall Lender be precluded from exercising
remedies if its security becomes or is about to become materially jeopardized by any failure to
cure a default or the default is not cured within ninety (90) days after the first notice of default is
given, or such longer period of time as may be specified in the Loan Documents.
5. w. In the event of any fire or other casualty to the
Project or eminent domain proceedings resulting in condemnation of the Project, or any part
thereof, Borrower shall have the right to rebuild the Project, and to use all available insurance or
condemnation proceeds therefor, provided that (a) such proceeds are sufficient such that when
added to the other sources of Borrower‘s funds, there are sufficient funds to rebuild the Project in
a manner that provides adequate security to Lender for repayment of the Loan or if such
proceeds are insufficient then Borrower shall have funded any deficiency, (b) Lender shall have
the right to approve plans and specifications for any major rebuilding and the right to approve
disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow
or similar arrangement, and (c) no material default then exists under the Loan Documents. If the
casualty or condemnation affects only part of the Project and total rebuilding is infeasible, then
proceeds may be used for partial rebuilding and partial repayment of the Loan in a manner that
provides adequate security to Lender for repayment of the remaining balance of the Loan.
6. -. There shall be no default for construction or rehabilitation
delays beyond the reasonable control of Borrower, provided that such delays do not exceed one
hundred eighty (180) days, or such longer period of time as may be specified in the Loan
DOCUentS.
7. -. Lender acknowledges that Borrower and the California Tax
Credit Allocation Committee intend to enter into, or concurrently with the execution and delivery
of the Loan Documents are entering into, an extended use agreement, which constitutes the
extended low-income housing commitment described in Section 42@)(6)(B) of the Intemal
Revenue Code, as amended. Lender agrees to subordinate the Loan and Lender’s rights under
the Loan Documents executed in conjunction therewith to the relevant provisions of said
extended use agement, to the extent necessary to prevent the invalidation of the tax credits in
the event of foreclosure by Lender. This subordination is being made in consideration of the
allocation of tax credits to the Project, absent which the development of the Project would not
occur, and this mortgage loan would not be made.
8. v. Lender shall neither (a) sell, assign, transfer, or convey the
Loan (or any interest therein) to the Federal National Mortgage Association (“Faunie Mae”) nor
@) include such indebtedness (or any interest therein) in a pool of loans to be sold, assigned,
transferred, or conveyed to Fannie Mae, without the Borrower‘s prior written consent.
1010\07\110567.6 2
In Witness Whereof, the undersigned have caused this Rider to be executed this -J v3
dayofLA , 1998.
Borrower: Le.Iulw:
Carlsbad Laurel Tree Apartments,
L.P., a California limited partnership
City of Carlsbad,
a municipal corporation
By: Metropolitan Area Advisory
Committee on Anti-Poverty of
San Diego County, Inc., a nonprofit
public benefit corporation
its general partner
By:
Its: rn
Approved as to Form
By:
kon Ball I/ City Attorney
3
STATE OF CALIFORNIA )
) ss COLJh'TY OF DTEG~
On (.G ( \\ , 1998, before me, the undersigned, a Notary Public, personally
appeared , personally known to me (or proved to me on 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
hishedtheir authorized capacity(ies), and that by hishedtheir signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
2.; $- 7'
-
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT NO 5907
State of
County of Sm
On IaIQ/qV before me, c,
personally appeared Rumand R . +rL&ett
u
RATE ME. TITLE Of dFFlCER. E G , "JArrdDOE. NOTARY PUBLIC'
NAME@) OF SIGNERW
personally known to me - OR - 0 prov
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
SIGNA~RE OF NOTARY
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
0 INDIVIDUAL 0 CORPORATE OFFICER
TITLE(S)
0 PARTNER(S) 0 LIMITED
0 - AlTORNEY-IN-FACT
0 GENERAL 4
NUMBER OF PAGES u TRUSTEE@) 0 GUARDIAWCONSERVATOR c] OTHER:
DATE OF DOCUMENT
SIGNER IS REPRESENTING
NAMEOF PERSON(S)OREMIN(IES)
SIGNER(S) OTHER THAN NAMED ABOVE
01993 NATIONAL NOTARY ASSOCIATION 8238 Remmel Ave.. P.O. Box 7184 *Can- Park. CA 91309-71 84
EXHIBIT E
Permitted Uses of Loan Proceeds
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2
ESTOPPEL CERTIFICATE AND AMENDMENT TO
AFFORDABLE HOUSING AGREEMENT
THIS ESTOPPEL CERTIFICATE AND AMENDMENT TO AFFORDABLE
HOUSING AGREEMENT (hs “Certificate”) is entered into as of 1997 by and
between the CITY OF CARLSBAD, a municipal corporation (the “City”), and THE OLSON
COMPANY, a California corporation (“Olson”).
RECITALS
A. The City and Sambi Seaside Heights, L.L.C. (the “Original Developer”) have entered
into an Affordable Housing Agreement Imposing Restrictions on Real Properly, dated November 11,
1996 (the “Affordable Housing Agreement”), which provides for 42 single family houses to be made
affordable to lower income households on certain land in the City of Carlsbad owned by the Original
Developer (the “Site”).
B. Olson desires to purchase a portion of the Site from the Original Developer, and to
assume all of the obligations of the Original Developer under the Affordable Housing Agreement.
C. In executing this Agreement, the City understands and acknowledges that Olson will be
relying upon the information and the representations and warranties contained herein in agreeing to
purchase a portion of the Site from the Original Developer and assume the Affordable Housing
Agreement.
NOW THEREFORE, in consideration of the foregoing recitals, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City certifies
and the parties hereto agree as of the date of th~s Certificate as follows:
1. Affordable Housing Agreement in Full Force and Effect. The Affordable Housing
Agreement is in full force and effect and, except to the extent amended or modified by this Certificate,
has not been amended or modified and remains in full force and effect. Other than the Affordable
Housing Agreement and this Certificate, to the City’s knowledge there are no other documents,
agreements or instruments evidencing the affordable housing requirements imposed by the City with
respect to the Site.
2. Approval of Olson. The City hereby approves the assignment of the Original
Developer’s rights and obligations pursuant to the Affordable Housing Agreement to Olson, or to a
limited liability company of which Olson is the managing member (the “Olson LLC). The City agrees
to accept the performance of the Original Developer’s obligations under the Affordable Housing
Agreement by Olson or the Olson LLC, and to perform all of its obligations under the Affordable
Housing Agreement for the benefit of Olson or the Olson LLC, as applicable.
529442.3VgoetL\22782.0009
12124197 1
3. No Defaults. The City has not given any notice of default to the Original Developer
and, to the best of City’s knowledge, no event or circumstance presently exists which, with giving of
notice or the passage of time, or both, would constitute a default by the Original Developer under the
Affordable Housing Agreement.
4. Affordable Housing Cost Schedule. The Schedule of Maximum Eligible Buyer
Incomes and Affordable Subsidized Purchase Prices attached hereto as Exhibit “B hereby replaces
and supercedes Exhibit “B to the Affordable Housing Agreement.
5. Market Purchase Price Determination. The “Market Purchase Price” of the
Affordable Units pursuant to Section 2.4.2 hereof shall be determined by the mutual agreement of the
parties, based upon an appraisal andor market study to be commissioned by Olson.
6. Subordination. The City has found, concurrently with its approval of thts Certificate,
that an economically feasible method of financing for the construction of the single family houses on
the Site, without the subordination of the affordable housing covenants as may be set forth in the
Affordable Housing Agreement, is not reasonably available. City agrees that the affordable housing
covenants set forth in the Affordable Housing shall be junior and subordinate to the deeds of trust and
other documents required in connection with the financing for the construction of the single family
houses on the Site. The City Housing and Redevelopment Director, or his or her designee, is hereby
authorized to execute such subordination agreements andor such other documents as may be
necessary to evidence such subordination without further authorization from the City, provided that
such subordination agreements contain written commitments which the City Housing and
Redevelopment Director, or his or her designee, finds are reasonably designed to protect the City’s
investment in the event of default, such as any of the following: (a) notice to the City of default by
Olson simultaneously with delivery of such notice to Olson, (b) a right of the City to cure a default on
the loan prior to foreclosure, (c) a right of the City to negotiate with the lender after notice of default
from the lender and prior to foreclosure, (d) an agreement that if prior to foreclosure of the loan, the
City takes title to the property and cures the default on the loan, the lender will not exercise any right it
may have to accelerate the loan by reason of the transfer of title to the City, and (e) a right of the City to
reacquire the Site from the Developer at any time after a material default on the loan.
7. City Second Mortgage Documents. The City Second Mortgage documents to be
provided by the City pursuant to Section 3.1.4 of the Affordable Housing Agreement may be modified
with the mutual agreement of the parties.
8. Address for Notices. Notices to Olson pursuant to Section 11 of the Affordable
Housing Agreement shall be sent to the following address:
The Olson Company
301 0 Old Ranch Parkway, Suite 400
Seal Beach, California 90740-2750
Attention: Mark Buckland, President
9. Counterparts. This Agreement may be executed in counterparts, and each shall
constitute an original and all taken together shall constitute one Agreement.
529442.3Vg&!22782.0009
LZR4197 2
CITY.
CITY OF CARLSBAD, a municipal corporation
ATEST:
By:
MARTIN ORENYAK I
Development Director
City Clerk \
APPROVED AS TO FORM:
OLSON:
THE OLSON COMPANY, a California corporation
By:
529442.3Ugoelz’22782.0009
I2124197 3
STATE OF CALIFORNIA )
COUNTY OF ORANGE )
) ss
On May 20, 1998, before me, Ruby A. Reynolds, personally appeared Kent Grover,
personally known to me (or proved to me on the basis of SatisfaCory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the insbument.
WfIhTESS my hand and official seal. R
No& Pubtic
State of CaHomia
(SEAL)
NOTARY PUBLIC.CALIF0RNIA
EXHIBIT “B”
SCHEDULE OF MAXIMUM ELIGIBLE BUYER INCOMES AND AFFORDABLE
SUBSIDIZED PURCHASE PRICES
“Affordable Purchase Price” for the purposes of the Affordable Housing Agreement is that
purchase price which would result in monthly housing costs which do not exceed the product of
one-twelfth (1112) of thirty percent (30%) times eighty percent (80%) of San Diego County median
income adjusted for family size appropriate for the house. Family size appropriate to the unit is
defined as 3.5 persons for a two bedroom house and 5.5 persons for a three bedroom house.
Median income for 3.5 persons shall be calculated by adding the median income for a family of
three and the median income for a family of four, and dividing that sum by two. Median income
for 5.5 persons shall be calculated by adding the median income for a family of five and the median
income for a family of six, and dividing that sum by two. Affordable Purchase Price shall be
calculated with the assumption that the purchaser will pay a down payment equal to five percent
(5 %) of the total purchase price of the house (inclusive of the City Second Loan amount).
Affordable Purchase Price shall be calculated based on the above formula, and will not vary based
on the actual household income of the purchasers of individual houses. The following is a
worksheet of how to calculate Affordable Purchase Price:
For a two bedroom house, monthly housing costs may not ex4 1/12 of 30% x 80% of
San Diego County Median Income for a family of 3.5 (currently $46,175), or $924.
For a three bedroom house, monthly housing costs may not exceed 1112 of 30% x 80% of
San Diego County Median Income for a family of 5.5 (currently $54,450), or $1,089.
Monthly Housing Costs include:
a. Mortgage Principal and Interest
b. Private Mortgage Insurance
C. Property Taxes
d. FirelCasualty Insurance
e. Property Maintenance
f. Utilities Allowance
g. Homeowner’s Association Fees
EXHIBIT “B”-1
Example No. 1: Two Bedroom House
For example, in the following situation, for a 2 bedroom House, assuming a 7% interest rate,
based on 1997 median income figures, the maximum loan amount would be $90,936:
a. Mortgage Principal and Interest $ 605
b. Private Mortgage Insurance $ 0
C. Property Taxes
(Mello-Roos)
$ 130
$ 54
d. Firelcasualty Insurance (included in HOA) $ 0
e. Property Maintenance (included in HOA) $ 0
f. Utilities Allowance $ 35
g. Homeowner’s Association u
TOTAL: $ 924
In the above situation, if the market purchase price was determined to be $130,000, and the buyer
made a 5% down payment, the purchase price would be payable as follows: (a) first mortgage loan
of $90,936, plus (b) down payment of $6,500, plus (c) City Second Loan of $32,564. The City
Second Loan will not result in cash to Olson. It will take the form of a seller carryback loan to the
homebuyer, which will be assigned to the City. $10,800 of the City Second Loan will be credited
against the balance of the “City Loan” amount payable by the Developer to the City. The amount
of the City Second Loan will be equal to the “Primary Affordability Subsidy” under Section 2.4.2
of the Affordable Housing Agreement and is not actually paid to the Developer or the buyer.
These figures are for illustration only, and are subject to change. The actual figures used and the
final calculations are subject to review and approval by the City Housing and Redevelopment
Director pursuant to Section 2.4.1 of the Affordable Housing Agreement.
529442.3Ugoelz~2782.0009
12/24/97 EXHIBlT “B-2
Example No. 2: Three Bedroom House
For example, in the following situation, for a 3 bedroom House, assuming a 7% interest rate,
based on 1997 median income figures, the maximum loan amount would be $112,731:
a. Mortgage Principal and Interest $ 750
b. Private Mortgage Insurance $ 0
C. Property Taxes
(Mello-Roos)
$ 150
$ 54
d. FirelCasualty Insurance (included in HOA) $ 0
e. Property Maintenance (included in HOA) $ 0
f. Utilities Allowance $ 35
g. Homeowner’s Association u
TOTAL: $ 1,089
In the above situation, if the market purchase price was determined to be $150,000, and the buyer
made a 5% down payment, the purchase price would be payable as follows: (a) first mortgage loan
of $1 12,731, plus (b) down payment of $7,500, plus (c) City Second Loan of $29,769. The City
Second Loan will not result in cash to Olson. It will take the form of a seller carryback loan to the
homebuyer, which will be assigned to the City. $10,800 of the City Second Loan will be credited
against the balance of the “City Loan” amount payable by the Developer to the City. The amount
of the City Second Loan will be equal to the “Primary Affordability Subsidy” under Section 2.4.2
of the Affordable Housing Agreement and is not actually paid to the Developer or the buyer.
These figures are for illustration only, and are subject to change. The actual figures used and the
final calculations are subject to review and approval by the City Housing and Redevelopment
Director pursuant to Section 2.4.1 of the Affordable Housing Agreement.
529442.3UgoetzV.2782.0009
12/24/97 EXHIBIT “B”-3
INDEX SYSTEM
TIME 11:58 AM INDEX LIST
PAGE 1
DATE 05/26/98
DATE ACTION TYPE
IDENT .
PRIMAFY FILE ID TOPICS DESCRIPTION
SECONDmY FILE ID
LOCATION
10-01-1996 AB 13,842
22253
99
ASSISTANCE
FIN mPT RES 96-332 APPROVING A COMMITMENT OF UP TO $453.600
SAMBI SEASIDE
AFFORDABLE
HSG
CT 92-2
SDP 92-6
FROM THE HSG TRUST FUND M ASSIST IN CONSTRUCTION OF LOW
INCOME AFFORDATLE HSG UNITS IN THE SAME1 SEASIDE HEIGHTS
PROJ AS RECOMMENDED BY HSG COMS. CT 92-2(A)/SDP 92-6(A).
REDEVELOPMENT HOUSING FUND ADMINISTFUTION AGREEMENT
(Laurel Tree Apartments)
made this k&day of 5~)h)g , 1998 by and between the Redevelopment Agency of
the City of Carlsbad ("Agency") and the City of Carlsbad ("City") with reference to the
following facts:
This Redevelopment Housing Fund Administration Agreement (the "Agreement") is
A. Pursuant to Health and Safety Code Section 33334.2, the Agency is required to
expend a portion of the tax increment revenue it receives to increase and improve the supply of
low and moderate income housing in the City of Carlsbad.
B. Carlsbad Laurel Tree Apartments, L.P., a Califomia limited partnership (the
"Borrower"), of which Metropolitan Advisory Committee on Anti-Poverty of San Diego County,
Inc. is general partner, intends to construct a 138 unit rental housing development in the City of
Carlsbad, known as the Laurel Tree Apartments ("Laurel Tree").
C. The City has approved a loan to the Borrower of $200,000 of City Housing Trust
Fund monies to assist in construction of Laurel Tree.
D. By Resolution No. approved onL* 28,1446 the Agency has
approved a loan to the Borrower in the amount of $500,000 to assist in financing construction of
Laurel Tree, including a finding by the Agency that the use of the Agency's Low and Moderate
Income Housing Funds outside of the Carlsbad Village Redevelopment Project Area (the
"Project Area") to assist Laurel Tree is of benefit to the Project Area. By Resolution No. Zq I , the City Council also made a finding that the use of the Agency Funds outside the
Project Area to assist Laurel Tree is of benefit to the Project Area. The Agency desires to
provide such funds to the City to be combined with the City Loan Funds into a single $700,000
loan to the Borrower (the "Combined Loan") to assist in construction of Laurel Tree.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:
1. mr of FU. From time to time, as and when requested by the City,
the Agency shall transfer to the City Five Hundred Thousand Dollars ($500,000) in Agency Low
and Moderate Income Housing Funds (the "Agency Funds") to be used by the City to fund the
Combined Loan. The City and Agency intend that the Agency Funds shall be transferred as
needed to fund loan draws by the Borrower and shall not be held by the City prior to funding
loan draw by Borrower. In the event the City earns any interest on the Agency Funds prior to
their disbursement, such interest shall be remitted to the Agency for deposit in the Agency's Low
and Moderate Income Housing Fund.
1
2. Loan. The City shall prepare and enter into a loan agreement
with the Borrower goveming the terms and conditions of the Combined Loan, which shall be
evidenced by a promissory note in the amount of $700,000 from the Borrower to the City, a
regulatory agreement imposing affordability restrictions on Laurel Tree, and secured by a deed
of trust on the Laurel Tree property (collectively, the "Loan Documents"). The City shall include
all applicable redevelopment low and moderate income housing fknd requirements in the Loan
Documents, including those set forth in Section 5 below.
3. Loan. The Combined Loan shall have a term of 20 years, shall bear
simple interest at 3% per annum, and shall be repaid from residual receipts of Laurel Tree.
4. . All Earnings received by the City by
reason of the Combined Loan shall be paid 28.59% to the City and 71.43% to the Agency,
reflecting the City's and Agency's pro-rata fknding of the Combined Loan. For the purposes of
this Agreement, the term "Earnings" shall mean any payment of interest or principal on the
Combined Loan or any penalties, fines, damages or other repayments made to the City because
of violation of or non-compliance with regulatory requirements imposed by the City on Laurel
Tree, and proceeds of the sale of Laurel Tree in the event of foreclosure by the City.
.. 5. m. In connection with the
Combined Loan, the City shall cause a regulatory agreement to be recorded against the Laurel
Tree property, in compliance with Health and Safety Code Section 33334.3(e), requiring that, for
a minimum term of 55 years, 67 of the units in Laurel Tree be occupied by and affordable to
Very Low Income Households, as defined in Health and Safety Code Section 50105, and the
remainder of the units be occupied by Persons and Families of Low or Moderate Income, as
defined in Health and Safety Code Section 50093, at Affordable Rent to those categories of
household, as defined in Health and Safety Code Section 50053(b). The regulatory agreement
shall specify that it is enforceable by the Agency. The City shall not subordinate the regulatory
agreement to deeds of trusts securing other financing for Laurel Tree except as permitted
pursuant to Health and Safety Code Section 33334.14(a). If subordination of the regulatory
agreement requires findings of the Agency under Health and Safety Code Section 33334.14(a)
before the subordination can be accomplished, the City shall not subordinate or agree to
subordinate unless the City's Housing and Redevelopment Director has made the required
findings under Health and Safety Code Section 33334.14(a).
6. J&mls. The City shall monitor Laurel Tree in the manner specified in
Health and Safety Code Section 33418, and shall require the owner to provide annual monitoring
reports to the City in compliance with Health and Safety Code Section 33418. The City shall
provide the Agency with copies of all monitoring reports it receives from the owner pursuant to
this Paragraph 6.
7. h.e&mnt. This Agreement may be amended, modified or changed by
the parties provided that said amendment, modification or change is in writing and approved by
both parties.
2
8. -. This Agreement contains the entire agreement between
the parties hereto. No promise, representation, warranty or covenant not included in the
Agreement has been or is relied on by any party hereto.
CITY OF CARLSBAD
REDEVELOPMENT AGENCY OF THE
APPROVED AS TO FORM:
dty Attorney
1010\07\111970.2 3