HomeMy WebLinkAbout1999-05-18; City Council; 15209 Exhibit 3; Poinsettia Station Affordable Apartment ProjectREGULATORY AGREEMENT AND DECLARATION OF RESTRIC~COVENANTS
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THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS (the “Regulatory Agreement”), made and entered into as of June 1, 1999, by and between the City of Carlsbad, a municipal corporation organized and existing under the laws of the State of California (together with any successor to its rights, duties and obligations, the “Issuer”), Bank One Trust Company, N.A., a (the “Trustee”), and Poinsettia Housing Associates, a limited partnership organized and existing under the laws of the State of California (the “Borrower”), ground lessee of the land described in Exhibit A attached hereto.
WITNESSETH:
WHEREAS, the Issuer is authorized pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the “Act”) (a) to issue revenue bonds for the purpose of financing the acquisition, construction, rehabilitation or development of multifamily rental housing, including making or acquiring loans to finance or refinance all or part of the project costs of qualified facilities; (b) to enter into agreements for the purpose of providing revenues to pay such revenue bonds upon such terms and conditions as the Issuer may deem advisable, and (c) to secure the payment of such revenue bonds; and
WHEREAS, the Issuer is a public body corporate and politic (within the meaning of that
term in the Regulations of the Department of Treasury and the rulings of the Internal Revenue
Service prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”)): and
WHEREAS, on January 12, 1999, the Issuer adopted a Resolution No. 99-20 (the “Inducement Resolution”) authorizing the issuance of revenue bonds under the Act in connection with the financing of the acquisition, construction and development of multifamily residential rental housing facilities located in the City of Carlsbad on the site described in Exhibit A hereto (the “Project”) which housing facilities shall be subject to the terms and provisions hereof; and
WHEREAS, in furtherance of the purposes of the Act and the Inducement Resolution
and as a part of the Issuer’s plan of financing residential housing, the Issuer has issued
$ aggregate principal amount of its revenue bonds designated “City of Carlsbad Multifamily Housing Mortgage Revenue Bonds (Poinsettia Station Apartments) Series1999A,”
$ aggregate principal amount of its revenue bonds designated “City of Carlsbad Multifamily Housing Mortgage Revenue Bonds (Poinsettia Station Apartments) Series 1999B,” and $ aggregate principal amount of its revenue bonds designated “City of Carlsbad Taxable Multifamily Housing Mortgage Revenue Bonds (Poinsettia Station Apartments) Series 1999B-T” (collectively, the “Bonds”) pursuant to an Indenture of Trust (the “Indenture”) of even date herewith by and between the Issuer and the Trustee, and loaned the
proceeds thereof to the Borrower (the “Loan”) pursuant to a Loan Agreement of even date herewith (the “Loan Agreement”) among the Issuer, the Borrower, and Bank of America, FSB, as bondowner representative (the “Bondowner Representative”): and
WHEREAS, the Issuer hereby certifies that all things necessary to make the Bonds, when issued as provided in the Indenture, the valid, binding and limited obligations of the Issuer according to the import thereof, and to constitute the Indenture valid assignments of the amounts pledged to the payment of the principal and purchase price of, and premium, if any,
and interest on the Bonds, have been done and performed, and the creation, execution and delivery of the Indenture and the execution and issuance of the Bonds, subject to the terms thereof, in all respects have been duly authorized; and
WHEREAS, the Code and the regulations and rulings promulgated with respect thereto
and the Act prescribe that the use and operation of the Project be restricted in certain respects
and in order to ensure that the Project will be constructed, used and operated in accordance with the Code and the Act, the Issuer, the Trustee and the Borrower have determined to enter into this Regulatory Agreement in order to set forth certain terms and conditions relating to the development and operation of the Project (as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and for other good and valuable consideration the receipt and sufficiency of which hereby are acknowledged, the Issuer, the Trustee and the Borrower hereby agree as follows:
Section 1. Definitions and Interoretation. Capitalized terms used herein shall have the
respective meanings assigned to them in this Section 1 unless the context in which they are used
clearly requires otherwise:
“Act”: Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California as now in effect and as it may from time to time hereafter be amended or supplemented.
“Adjusted Income”: The adjusted income of a person (together with the adjusted income of all persons of the age of 18 years or older who intend to reside with such person in one residential unit) as calculated in the manner prescribed pursuant to Section 8 of the United States Housing Act of 1937, or, if said Section 8 is terminated, as prescribed pursuant to said
Section 8 immediately prior to its termination or as otherwise required under Section 142 of the
Code and the Act.
“Affiliated Party”: (a) a person or entity whose relationship with the Borrower would
result in a disallowance of losses under Section 267 or 707(b) of the Code, (b) a person or entity who together with the Borrower are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that “more than 50 percent” shall be substituted for “at least 80 percent” each place it appears therein), (c) a partnership and each of its partners (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code, and (d) an S corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or
707(b) of the Code.
“Affordable Rent” or “Rents”: Monthly rent not to exceed thirty percent (30%) of one-
twelfth of sixty percent (60%) or less of the annual Median Income for the Area, based upon the
following assumed household sizes for the following sizes of residential units in the Project:
Assumed Number of Persons in Household
Size of Units for Affordable Units
Studio 1
One bedroom 2
Two bedroom 3
Three bedroom 4
“Area”: The Primary Metropolitan Statistical Area in which the Project is located, as promulgated by HUD.
“Authorized Borrower Representative”: Any person whom the Borrower may designate as such at the time and from time to time, by written certificate furnished to the Issuer, the Trustee and the Bondowner Representative containing the specimen signature of such person and signed on behalf of the Borrower by an authorized member of the Borrower, which certificate may designate an alternate or alternates.
“Bond Counsel”: An attorney or a firm of attorneys of nationally recognized standing in matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, who is selected by the Issuer and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.
“Bond Issuance Date”: The date of the delivery of the Bonds, being June -, 1999.
“Bondowner Representative”: Bank of America, FSB, a Federal Savings Bank, the
successors and assigns of its business, any surviving, resulting or transferee banking association
or corporation with or into which it may be consolidated or merged or to which it may transfer
all of its banking business, and any successor bondowner representative appointed pursuant to
the Loan Agreement.
“Bonds”: collectively, the City of Carlsbad Multifamily Housing Mortgage Revenue Bonds (Poinsettia Station Apartments) Series 1999A, City of Carlsbad Multifamily Housing Mortgage Revenue Bonds (Poinsettia Station Apartments) Series 1999B and City of Carlsbad Taxable Multifamily Housing Mortgage Revenue Bonds (Poinsettia Station Apartments) Series
1999B-T, all as issued and as otherwise defined in the Indenture.
“Borrower”: Poinsettia Housing Associates, a California limited partnership, its successors and assigns.
“Certificate of Continuing Program Compliance”: The certificate with respect to the
Project to be filed by the Borrower with the Issuer, the Trustee and the Bondowner
Representative which shall be substantially in the form attached to this Regulatory Agreement as Exhibit D.
“Code”: The Internal Revenue Code of 1986, as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations
issued on the date of issuance of the Bonds, together with applicable temporary and final
regulations promulgated, and applicable official public guidance published, under the Code.
“Completion Certificate”: The certificate with respect to the completion of the Project to
be filed by the Borrower with the Issuer, the Trustee and the Bondowner Representative which
shall be substantially in the form attached to this Regulatory Agreement as Exhibit C.
“Completion Date”: The date shown as the Completion Date in Schedule E to the Loan Agreement, or such later date as the Bondowner Representative approves.
“Costs of Issuance”: The items of expense payable directly or indirectly by or reimbursable to the Issuer and related to the authorization, sale and issuance of the Bonds,
including, without limitation, printing costs, costs of reproducing documents, filing and
recording fees, fees and charges of the Bondowner Representative, fees and expenses of counsel to the Bondowner Representative, fees and expenses of the Trustee and of counsel to the Trustee, fees and expenses of the Issuer, fees and expenses of counsel to any present or future
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credit enhancement provider for the Bonds, fees and expenses of the Issuer’s financial advisor,
Bond’Counsel, counsel to the Borrower, and counsel to the Issuer, legal and accounting fees and
charges, fees of the California Debt Limit Allocation Committee and the California Debt and
Investment Advisory Commission, fees and charges for execution, transportation and safekeeping of Bonds, initial fees of the Issuer and other costs, charges and fees in connection with the foregoing.
“County”: The County of San Diego, California.
“Deed of Trust”: The Construction and Permanent Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing, dated as of June 1, 1999, executed by the Borrower for the benefit of the Issuer, which secures the Borrower’s obligation to repay the Loan as described therein.
“Facilities”: The buildings, structures and other improvements to be acquired,
constructed and developed on the Site, and all furtures and other property owned by the
Borrower and located on, or used in connection with, such buildings, structures and other
improvements.
“HUD”: The United States Department of Housing and Urban Development.
“Indenture”: The Indenture of Trust, of even date herewith, by and between the Issuer and the Trustee.
“Inducement Date”: Sixty days prior to January 12, 1999, the date of adoption of the
Inducement Resolution.
“Inducement Resolution”: Resolution No. 99-20 adopted by the Issuer on January, 12, 1999, indicating its intention to issue tax-exempt obligations to finance the Project.
“Issuer”: The City of Carlsbad.
“Loan”: The loan made by the Issuer to the Borrower pursuant to the Loan Agreement to provide financing for the construction and development of the Project.
“Loan Agreement”: The Loan Agreement, of even date herewith, among the Issuer, the Borrower, and Bank of America, FSB, as bondowner representative.
“Low Income Tenants”: Individuals or families with an Adjusted Income which does not exceed sixty percent (60%) of the Median Income for the Area, adjusted for household size. In no event, however, will the occupants of a residential unit be considered to be Low Income Tenants if all the occupants are students, as defined in Section 151 (c) (4) of the Code, as such
may be amended, no one of which is entitled to file a joint federal income tax return.
“Low Income Units”: The dwelling units in the Project designated for occupancy by Low Income Tenants pursuant to Section 4(a) of this Regulatory Agreement.
“Median Income for the Area”: The median income for the Area as most recently determined by the Secretary of the Treasury (which determination is required by Code Section 142 (d) (2) (B) to be consistent with determinations of area median gross income under Section 8 of the United States Housing Act of 1937, or, if such program is terminated, under such program as in effect immediately before such termination).
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“Program Administrator”: A governmental agency, a financial institution, a certified public accountant, an apartment management firm, a mortgage insurance company or other business entity performing similar duties or otherwise experienced in the administration of restrictions on bond financed multifamily housing projects, which shall initially be the Issuer and, at the Issuer’s election, any other person or entity appointed by the Issuer who shall enter into an administration agreement in a form acceptable to the Issuer and the Program Administrator.
“Project”: The Facilities.
“Project Costs”: To the extent authorized by the Code, the Regulations and the Act, any and all costs incurred by the Borrower with respect to the lease of the Project Premises and the construction and development of the Project, whether paid or incurred prior to or after the Inducement Date, including, without limitation, costs for site preparation, the planning of housing and related facilities and improvements, the acquisition and lease of property, the removal or demolition of existing structures, the construction or rehabilitation of housing and related facilities and improvements, and all other work in connection therewith, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, contractors’ and Borrower’s overhead and supervisors’ fees and costs directly allocable to the Project,
administrative and other expenses necessary or incident to the Project and the financing thereof
(including reimbursement to any municipality, county or entity for expenditures made for the
Project), and interest accrued during construction and prior to the Completion Date.
“Qualified Project Costs”: Project Costs (excluding Costs of Issuance) incurred after the Inducement Date which either constitute land or property of a character subject to the
allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts within the meaning of Regulation 1.103-8(a) (1) (i); provided, however, that only such portion of interest accrued during construction of the Project shall constitute a Qualified Project Cost as bears the same ratio to all such interest as the
Qualified Project Costs bear to all Project Costs: and provided further that interest accruing
after the Completion Date shall not be a Qualified Project Cost; and provided still further that
if any portion of the Project is being rehabilitated by an Affiliated Party (whether as a general
contractor or a subcontractor), “Qualified Project Costs” shall include only (a) the actual out-of-
pocket costs incurred by such Affiliated Party in constructing the Project (or any portion
thereof), (b) any reasonable fees for supervisory services actually rendered by the Affiliated
Party, and (c) any overhead expenses incurred by the Affiliated Party which are directly
attributable to the work performed on the Project, and shall not include, for example,
intercompany profits resulting from members of an affiliated group (within the meaning of
Section 1504 of the Code) participating in the construction of the Project or payments received by such Affiliated Party due to early completion of the Project (or any portion thereof).
“Qualified Project Period”: The period beginning on the first day on which 10% of the residential units in the Project are occupied, and ending on the later of (a) the date which is 30 years after the date on which at least fifty percent (50%) of the residential units in the Project
are first occupied, (b) the first day on which no tax exempt private activity bond issued with
respect to the Project is outstanding, or (c) the date on which any assistance provided with respect to the Project under Section 8 of the United States Housing Act of 1937 terminates. For purposes of clause (b), the term “private activity bond” has the meaning contemplated in Section 142(d) (2) (A) (ii) of the Code.
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“Registered Owner” or “Bondowner” or “owner”: When used with respect to the Bonds, the owner of a Bond then outstanding under the Indenture, as shown on the registration books maintained by the Trustee pursuant to the Indenture.
“Regulations”: The income tax regulations promulgated by the United States Department of the Treasury pursuant to the Code from time to time.
“Regulatory Agreement”: This Regulatory Agreement and Declaration of Restrictive Covenants, together with any amendments hereto or supplements hereof.
“Site”: The parcel or parcels of real property described in Exhibit “A”, which is attached
hereto and by this reference incorporated herein, and all rights and appurtenances thereunto
appertaining.
“State”: The State of California.
“Tax Certificate”: The Certificate As To Arbitrage, dated the date of issuance of the
Bonds, executed and delivered by the Issuer, as amended or supplemented from time to time.
“Tax-Exempt Bonds”: collectively, the Series A Bonds and the Series B Bonds.
“Trustee”: Bank One Trust Company, N.A., a - bank, and any co-trustee or successor trustee appointed, qualified and then acting as such under the Indenture.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number, and vice versa, when appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to
sustain the validity hereof.
The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all defined terms shall be determined by reference to this Section 1 notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only, and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question of intent shall arise.
Section 2. Lease of Proiect Premises and Construction and Develooment of the Project. The Borrower hereby represents, as of the date hereof, and covenants, warrants and agrees as
follows:
(a) The Borrower has incurred a substantial binding obligation to lease the Project Premises and commence the construction and development of the Project, pursuant to which the Borrower is or will be obligated to expend at least the lesser of (i) 2-l /2 percent of the aggregate principal amount of the Bonds, or (ii) $100,000.
(b) The Borrower’s reasonable expectations respecting the total cost of the lease
of the Project Premises, construction and development of the Project and the
disbursement of Bond proceeds are accurately set forth in the Borrower’s Certificate
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Regarding Use of Proceeds, which has been delivered to the Issuer on the Bond Issuance Date.
(c) The Borrower expects to expend the full amount of the proceeds of the Loan for Project Costs prior to May 2001.
(d) The statements made in the various certificates delivered by the Borrower to the Issuer or the Trustee on the Bond Issuance Date are true and correct.
(e) On the Completion Date, the Borrower will submit to the Issuer, the Trustee
and the Bondowner Representative a duly executed and completed Completion
Certificate.
(f) Money on deposit in any fund or account in connection with the Tax-Exempt Bonds, whether or not such money was derived from other sources, shall not be used by
or under the direction of the Borrower, in a manner which would cause the Tax-Exempt
Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code, and the
Borrower specifically agrees that the investment of money in any such fund shall be
restricted as may be necessary to prevent the Tax-Exempt Bonds from being “arbitrage
bonds” under the Code.
(g) The Borrower (and any person related to it within the meaning of Section 147(a) (2) of the Code) will not take or omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Tax- Exempt Bonds to be applied in a manner contrary to the requirements of the Indenture,
the Loan Agreement or this Regulatory Agreement, as applicable.
(h) On or concurrently with the final draw by the Borrower of amounts in the
Project Fund established under the Indenture (the “Project Fund”), the expenditure of
such draw when added to all previous disbursements from the Project Fund will result
in not less than 95 percent of all disbursements from the Project Fund having been used
to pay or reimburse the Borrower for Qualified Project Costs and not more than 25
percent of all disbursements from the Project Fund having been used to pay for the
acquisition of land or any interest therein.
Section 3. Residential Rental Prooertv. The Borrower hereby acknowledges and agrees that the Project is owned and will be managed and operated as a “qualified residential rental project” (within the meaning of Section 142(d) of the Code) until the expiration of the Qualified Project Period. To that end, and for the term of this Regulatory Agreement, the Borrower hereby represents, as of the date hereof, and covenants, warrants and agrees as follows:
(a) The Project shall be constructed and developed, and the Project Premises shall be leased, for the purpose of providing multifamily residential rental property, and the Borrower shall own, manage and operate the Project as a project to provide multifamily residential rental property comprising a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities, in accordance with applicable provisions of Section 142(d) of the Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time.
(b) All of the dwelling units in the Project will be similarly constructed units, and, to the extent required by the Code and the Regulations, each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, cooking
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and sanitation for a single person or a family, including a sleeping area, bathing and
sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink.
(c) None of the dwelling units in the Project will at any time be utilized on a transient basis, or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home, retirement house or trailer court or park.
(d) No part of the Project will at any time be owned by a cooperative housing corporation, nor shall the Borrower take any steps in connection with a conversion to such ownership or uses. Other than obtaining a final subdivision map on the Project and a Final Subdivision Public Report from the California Department of Real Estate, if necessary, the Borrower shall not take any steps in connection with a conversion of the
Project to a condominium ownership except with the prior written approving opinion of
Bond Counsel that the interest on the Tax-Exempt Bonds will not become includable in
gross income under Section 103 of the Code.
(e) All of the dwelling units in the Project will be available for rental on a continuous basis to members of the general public and the Borrower will not give preference to any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling units are required to be leased or rented to Low
Income Tenants.
(f) The Site consists of a parcel or parcels that are contiguous except for the
interposition of a road, street or stream, and all of the Facilities will comprise a single
geographically and functionally integrated project for residential rental property, as
evidenced by the ownership, management, accounting and operation of the Project.
(g) No dwelling unit in the Project shall be occupied by the Borrower.
Notwithstanding the foregoing, if the Project contains five or more dwelling units, this
subsection shall not be construed to prohibit occupancy of dwelling units by one or more
resident managers or maintenance personnel any of whom may be the Borrower;
provided that the number of such managers or maintenance personnel is not unreasonable given industry standards in the area for the number of dwelling units in the
Project.
(h) Should involuntary noncompliance with the provisions of Section 1.103-8(b)
of the Regulations be caused by fire, seizure, requisition, foreclosure, transfer of title by
deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Bond Issuance Date which prevents the Issuer from enforcing the requirements of the Regulations, or condemnation or similar event, the Borrower covenants that, within a “reasonable period” determined in accordance with the Regulations, it will either prepay the Loan or apply any proceeds received as a result of any of the preceding events to reconstruct the Project to meet the requirements of Section 142 (d) of the Code and the Regulations and the requirements of the Loan Agreement.
(i) The Borrower shall not discriminate on the basis of race, creed, religion, color,
sex, source of income (e.g. AFDC, SSI), physical disability, age, national origin or marital
status in the rental, lease, use or occupancy of the Project or in connection with the employment or application for employment of persons for the construction, operation
and management of the Project.
(j) The Borrower agrees to maintain the Project, or cause the Project to be maintained, during the term of this Agreement (i) in a reasonably safe condition and (ii) in good repair and in good operating condition, ordinary wear and tear excepted, making from time to time all necessary repairs thereto and renewals and replacements thereof such that the Project shall be in substantially the same condition at all times as
the condition it is in at the time of the completion of the construction and rehabilitation
of the Project with the proceeds of the Bonds.
The Issuer hereby elects to have the Project meet the requirements of section 142 (d) (1) (B) of the Code and Section 52080(a) (1) (B) of the Act.
Section 4. Low Income Tenants. Pursuant to the requirements of the Issuer and Section 142(d) of the Code and applicable provisions of the Act, the Borrower hereby represents, as of
the date hereof, and warrants, covenants and agrees as follows:
(a) During the Qualified Project Period or as otherwise required by subsection
4 (a) (iv) below:
(i) Not less than forty percent (40%) of the completed units in the Project shall be designated as Low Income Units which are occupied, or held vacant for occupancy, and shall be continuously occupied by Low Income Tenants. All of the Low Income Units shall be generally distributed in terms of location and
number of bedrooms throughout the Project. The Low Income Units shall be of
comparable quality and offer a range of sizes and number of bedrooms comparable to those units which are available to other tenants. Tenants in the Low Income Units shall have equal access and enjoyment to all common facilities
of the Project.
(ii) The monthly rent paid by the persons occupying the Low Income
Units shall be Affordable Rents.
(iii) Low Income Units shall remain available on a priority basis for occupancy by Low Income Tenants. A unit occupied by a Low Income Tenant who at the commencement of the occupancy is a Low Income Tenant shall be treated as occupied by a Low Income Tenant until a recertification of such tenant’s income in accordance with Section 4(c) below demonstrates that (A) such tenant no longer qualifies as a Low Income Tenant and (B) the residential unit in the Project occupied by such Low Income Tenant is thereafter occupied by a new resident other than a Low Income Tenant. Moreover, a unit previously occupied by a Low Income Tenant and then vacated shall be considered
occupied by a Low Income Tenant until reoccupied, other than for a temporary
period, at which time the character of the unit shall be redetermined. In no event
shall such temporary period exceed thirty-one (31) days.
(iv) Following the expiration or termination of the Qualified Project Period, except in the event of foreclosure and redemption of the Bonds, deed in lieu of foreclosure, eminent domain, or action of a federal agency preventing enforcement, Low Income Units required to be reserved for occupancy pursuant to subparagraph (a) above shall remain available to the Low Income Tenant occupying a Low Income Unit at the date of expiration or termination of the Qualified Project Period, at a rent not greater than the amount set forth by subparagraph (a) (“) b 11 a ove, until the earliest of any of the following occur:
(A) The Low Income Tenant’s household income exceeds 140
percent of the maximum eligible income specified in the definition of Low Income Tenant.
(B) The Low Income Tenant voluntarily moves or is evicted for “good cause”. “Good cause” for the purposes of this section means the nonpayment of rent or allegation of facts necessary to prove major, or repeated minor, violations of material provisions of the occupancy agreement which detrimentally affect the health and safety of other persons or the structure, the fiscal integrity of the Project, the purposes or special programs of the Project, or the Borrower’s ability to conform to
the provisions hereof.
(C) Thirty years after the date of commencement of the Qualified Project Period.
(D) The Borrower pays the relocation assistance and benefits to Low Income Tenants as provided in subdivision (b) of Section 7264 of the Government Code of the State of California.
(b) Immediately prior to a Low Income Tenant’s occupancy of a Low Income Unit the Borrower will obtain and maintain on file an Income Computation and Certification form, in the form of Exhibit B hereto, from each Low Income Tenant occupying a Low
Income Unit dated immediately prior to the initial occupancy of such Low Income
Tenant in the Project. The Borrower shall provide to the Program Administrator copies
of any Income Computation and Certification for such Low Income Tenant five (5)
business days prior to renting any such Unit to such Low Income Tenant. In addition, the Borrower will provide with respect to the Project such further information as may be required in the future by the State of California, the Issuer, any by the Act, Section 142(d) of the Code and the Regulations as may be amended from time to time, or in such other form and manner as may be required by applicable rules, rulings, policies, procedures or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to obligations issued under Section 142(d) of the Code. The Borrower shall verify that the income provided by an applicant is accurate by taking the following steps as a part of the verification process: (1) obtain a federal income tax return for the most recent tax year, (2) obtain a written verification of income and employment from applicant’s current employer, (3) if an applicant is unemployed or did not file a tax return for the
previous calendar year, obtain other verification of such applicant’s income satisfactory
to the Program Administrator or (4) such other information as may be requested by the
Program Administrator.
Copies of the most recent Income Computation and Certifications for Low
Income Tenants commencing or continuing occupancy of a Low Income Unit shall be
attached to the Certificate of Continuing Program Compliance to be filed with the
Program Administrator within 10 days after the last day of each quarter during the term of this Regulatory Agreement, as set forth in subsection (d) below.
(c) Immediately prior to the first anniversary date of the occupancy of a Low Income Unit by one or more Low Income Tenants, and on each anniversary date thereafter, the Borrower shall recertify the income of the occupants of such Low Income Unit by obtaining a completed Income Computation and Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household’s income exceeds 140% of the income at which such household
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would qualify as a Low Income Tenant, such household will no longer qualify as a Low Income Tenant and the Borrower will rent the next available unit of comparable or
smaller size to one or more Low Income Tenants, and will not rent any unit to tenants
who are not Low Income Tenants until at least forty percent (40%) of the units are again
occupied by Low Income Tenants. No tenant in the Project shall be denied continued occupancy in the Project because, after occupancy, such tenant’s household income
increases such that the income for such household will no longer qualify such household as Low Income Tenants. The Borrower shall notify any Low Income Tenant of any determination that they no longer qualify and of any rent increase as a result thereof thirty (30) days prior to any such rent increase. An “available” unit is one that is unoccupied by a tenant.
(d) Upon the commencement of the Qualified Project Period, and within ten days after each June 30 and December 31 thereafter during the term of this Regulatory Agreement, the Borrower shall advise the Issuer and the Program Administrator of the status of the occupancy of the Project by delivering to such parties a Certificate of Continuing Program Compliance stating (i) the percentage of the dwelling units of the
Project which were occupied or deemed occupied, pursuant to subsection (a) hereof, by
Low Income Tenants during such period, and (ii) that either (A) no unremedied default
has occurred under this Regulatory Agreement or (B) a default has occurred, in which
event the certificate shall describe the nature of the default and set forth the measures
being taken by the Borrower to remedy such default.
(e) The Borrower will maintain complete and accurate records pertaining to the
Low Income Units, and will permit during normal business hours and with reasonable
notice any duly authorized representative of the Issuer, the Trustee, the Bondowner
Representative, the Program Administrator, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the Project, including those records pertaining to the occupancy of the Low Income
Units.
(f) The Borrower shall submit to the Secretary of the Treasury annualry on the
anniversary date of the start of the Qualified Project Period, or such other date as is
required by the Secretary, the Annual Certification of a Residential Rental Project (or
such other form as required by the Secretary of the Treasury) and shall provide a copy
of such certification to the Issuer and the Program Administrator, so as to comply with
Section 142(d)(7) of the Code.
(9) The Borrower shall accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective tenants and the Borrower shall not refuse to rent to any Low Income Tenant with children under 18 years of age on the basis of household size as long
as such household size does not exceed two persons in a studio and three persons in a
one bedroom unit. The Borrower shall not collect any additional fees or payments from a Low Income Tenant with respect to the rent charged for rental of a Low Income Unit, as applicable, except security deposits or other deposits required of all tenants. The Borrower shall not collect security deposits or other deposits from Section 8 certificate or voucher holders in excess of that allowed under the Section 8 program. The Borrower shall not discriminate against Low Income Tenant applicants on the basis of source of income (i.e., AFDC or SSI), and the Borrower shall consider a prospective tenant’s
previous rent history of at least one year as evidence of the ability to pay the applicable
11
rent (ability to pay shall be demonstrated if a Low Income Tenant can show that the same percentage or more of the tenant’s income has been paid for rent in the past as will be required to be paid for the rent applicable to the applicable Unit to be occupied
provided that such tenant’s expenses have not materially increased).
(h) Each lease pertaining to a Low Income Unit shall contain a provision to the effect that the Borrower has relied on the income certification and supporting information supplied by the Low Income Tenant in determining qualification for occupancy of the Low Income Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. Each lease may also contain a provision that failure to cooperate with the annual recertification process reasonably instituted by the Borrower pursuant to Section 4(c) above may, at the option of the Borrower, disqualify the unit as a Low Income Unit or provide grounds for termination of the lease.
Section 5. Tax Status of the Bonds. The Borrower and the Issuer each hereby represents, as of the date hereof, and warrants, covenants and agrees that:
(a) It will not knowingly take or permit, or omit to take or cause to be taken, as is
appropriate, any action that would adversely affect the exclusion from gross income for
federal income tax purposes or the exemption from California personal income taxation
of the interest on the Tax-Exempt Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof;
(b) It will take such action or actions as may be necessary, in the written opinion of Bond Counsel filed with the Issuer, the Bondholders Agent, the Trustee and the
Borrower, to comply fully with the Act and all applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 142(d) of the Code to the extent necessary to maintain the exclusion from gross income for federal income tax purposes of interest on the Tax-
Exempt Bonds; and
(c) It will file of record such documents and take such other steps as are
necessary, in the written opinion of Bond Counsel filed with the Issuer, the Trustee and
the Borrower, in order to insure that the requirements and restrictions of this Regulatory
Agreement will be binding upon all owners of the Project, including, but not limited to,
the execution and recordation of this Regulatory Agreement in the real property records
of the County.
The Borrower hereby covenants to include the requirements and restrictions contained in this Regulatory Agreement in any document transferring any interest in the Project to another person (other than leases to Project tenants) to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of this Regulatory Agreement.
Section 6. Modification of Snecial Tax Covenants. The Borrower, the Trustee and the Issuer hereby agree as follows:
(a) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, impose requirements upon the ownership or operation of the Project more restrictive than those imposed by this Regulatory Agreement which must be complied
12
with in order to maintain the exclusion from gross income for federal income tax purposes of interest on the Tax-Exempt Bonds, this Regulatory Agreement shall be deemed to be automatically amended to impose such additional or more restrictive requirements.
(b) The Borrower, the Trustee and the Issuer shall execute, deliver and, if applicable, file of record any and all documents and instruments, necessary to effectuate the intent of this Section 6, and each of the Borrower and the Issuer hereby appoints the other as its true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf of the Borrower or the Issuer, as is applicable, any such document or
instrument (in such form as may be approved in writing by Bond Counsel) if either the
Borrower or the Issuer defaults in the performance of its obligations under this subsection (b).
Section 7. Indemnification. The Borrower shall indemnify, hold harmless and defend the Issuer, the Trustee, the Program Administrator, and their respective officers, members, directors, officials and employees (each an “Indemnified Party”), against all losses, costs, damages, expenses, suits, judgments, actions and liabilities of whatever nature (including, without limitation, reasonable attorneys’ fees, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting from or arising out of or related to (a) the design, rehabilitation, construction, installation, operation, use, occupancy, maintenance, or ownership of the Project (including compliance with laws, ordinances and rules
and regulations of public authorities relating thereto), and (b) any written statements or
representations with respect to the Borrower, the Project or the Bonds made or given to the Issuer or any purchasers of any of the Bonds by the Borrower or any Authorized Borrower Representative (with respect to the Trustee, indemnification shall be given as to written statements or representations of the Borrower or any Authorized Borrower Representative including, but not limited to, statements or representations of facts or financial information); provided, however, that (i) the Borrower shall not be required to provide the foregoing indemnification of the Trustee, the Program Administrator or any of their respective officers, members, directors, officials and employees, to the extent such damages are caused by the negligence or willful misconduct of such Indemnified Party, and (ii) the Borrower shall not be required to provide the foregoing indemnification of the Issuer or any of its officers, members, directors, officials and employees to the extent such damages are caused by the willful
misconduct of such Indemnified Party. The Borrower also shall pay and discharge and shall
indemnify and hold harmless the Issuer and the Trustee from (x) any lien or charge upon
payments by the Borrower to the Issuer or the Trustee hereunder and (y) any taxes (including,
without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other
charges in respect of any portion of the Project.
If any such claim is asserted, or any such lien or charge upon payments, or any such
taxes, assessments, impositions or other charges, are sought to be imposed, the Indemnified Party shall give prompt notice to the Borrower, and the Borrower shall have the sole right and duty to assume, and will assume, the defense thereof, including the employment of counsel approved by the Indemnified Party in its sole discretion, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole
discretion; provided that the Indemnified Party shall have the right to review and approve or
disapprove any such compromise or settlement. Each Indemnified Party shall have the right to
employ separate counsel in any such action or proceeding and participate in the investigation
and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel: provided, however, an Indemnified Party may only employ separate counsel at the expense of the Borrower if in the judgment of the Indemnified Party a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel.
13
In addition thereto, the Borrower will pay upon demand all of the fees and expenses
paid or incurred by the Issuer in enforcing the provisions hereof.
Section 8. Consideration. The Issuer has issued the Bonds to provide funds to make the
Loan to finance the Project, all for the purpose, among others, of inducing the Borrower to lease
the Project Premises and construct, develop, equip and operate the Project. In consideration of the issuance of the Bonds by the Issuer, the Borrower has entered into this Regulatory Agreement and has agreed to restrict the uses to which the Project can be put on the terms and conditions set forth herein.
Section 9. Reliance. The Issuer and the Borrower hereby recognize and agree that the representations, warranties, covenants and agreements set forth herein may be relied upon by all persons interested in the legality and validity of the Bonds, and in the exclusion from gross
income for federal income tax purposes of the interest on the Tax-Exempt Bonds and the
exemption from California personal income taxation of the interest on the Bonds. In performing
their duties and obligations hereunder, the Issuer and the Trustee may rely upon statements and
certificates of the Borrower and the Low Income Tenants, and upon audits of the books and
records of the Borrower pertaining to the Project. In addition, the Issuer and the Trustee may
consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Issuer or the Trustee hereunder in good faith and in conformity with such opinion.
Section 10. Sale or Transfer of the Proiect. The Borrower intends to hold the Project for its own account, has no current plans to sell, transfer or otherwise dispose of the Project, and hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project, or any
portion thereof (other than for individual tenant use as contemplated hereunder), unless the
following conditions are met:
(a) The Borrower shall provide the Issuer and the Trustee with
(I) evidence satisfactory to the Issuer that the Borrower’s purchaser or transferee has assumed in writing, and in full, the Borrower’s duties and obligations under this Regulatory Agreement,
(II) an opinion of counsel of the transferee that the transferee has duly assumed the obligations of the Borrower under this Regulatory Agreement and that such obligations and this Regulatory Agreement are binding on the transferee,
(III) evidence reasonably acceptable to the Issuer that (A) the transferee
has experience in the ownership, operation and management of rental housing
projects such as the Project without any record of material violations state or
federal laws or regulations applicable to such projects (including without
limitation discrimination restrictions), or (B) if the transferee does not have
management experience, the Borrower and the transferee agree that the Issuer will or will cause the Program Administrator to provide, at the expense of the Borrower, an on-site training program for the operation and management of rental housing for the transferee if the Issuer determines such training is
necessary, or (C) the transferee agrees to retain a property management firm with
the experience and record described in subparagraph (A) above,
(IV) evidence that no event of default exists under this Regulatory
Agreement, the Loan Agreement, or any document related to the Loan (unless
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02
C
any such event of default is otherwise waived in writing by the Issuer), and that payment of all fees and expenses of the Issuer, the Trustee and the Bondowner Representative due under any of such documents are current,
(V) an opinion of Bond Counsel to the effect that such transfer will not, in itself, cause interest on any Bond to become includable in the gross income of the recipients thereof for federal income tax purposes, and
(VI) evidence of compliance with the Deed of Trust.
(b) Except for a transfer to BRIDGE Housing Corporation or an affiliate thereof as set forth in subsection (c) below, the Borrower shall obtain the prior written consent of the Issuer and the Trustee, which consent shall not be unreasonably withheld (and in the sole discretion of the Issuer may be taken without further action by the governing body of the Issuer).
(c) Borrower may sell or transfer the Project or any portion thereof to BRIDGE Housing Corporation or an affiliate thereof (i) pursuant to and in accordance with the terms of that certain [Option Agreement] dated as of May _, 1999, by and between the
Borrower and BRIDGE Housing Corporation, and (ii) with 30 days’ prior notice to the
Issuer and the Trustee.
It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of this Section 10 shall be null, void and without effect, shall cause a reversion of title to the Borrower, and shall be ineffective to relieve the Borrower of its
obligations under this Regulatory Agreement. Nothing in this Section 10 shall affect any provision of any other document or instrument between the Borrower and any other party which requires the Borrower to obtain the prior written consent of such other party in order to sell, transfer or otherwise dispose of the Project.
Not less than 60 days prior to consummating any sale, transfer or disposition of any interest in the Project, the Borrower shall deliver to the Issuer, the Trustee and the Bondowner
Representative a notice in writing explaining the nature of the proposed transfer.
Any syndication by the Borrower of the Project shall be in compliance with any
applicable requirements of Section 52080(e) of the Act, and (i) the terms and conditions of the
syndication shall not reduce or limit any of the requirements of the Act or regulations adopted
or documents executed pursuant to the Act, (ii) no requirements of the Issuer shall be
subordinated to the syndication agreement, and (iii) the syndication shall not result in the
provision of fewer assisted units, or the reduction of any benefits or services, than were in
existence prior to the syndication agreement.
Section 11. Term. Subject to the following paragraph of this Section 11, this Regulatory
Agreement and all and several of the terms hereof shall become effective upon its execution and
delivery and shall remain in full force and effect during the Qualified Project Period, it beii
expressly agreed and understood that the provisions hereof are intended to survive the
retirement of the Bonds and expiration, termination or cancellation of the Loan Agreement.
Notwithstanding any other provisions of this Regulatory Agreement to the contrary, this entire Regulatory Agreement, or any of the provisions or sections hereof, may be terminated upon agreement by the Issuer and the Borrower subject to compliance with any of the provisions contained in this Regulatory Agreement only if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Tax-Exempt Bonds or the exemption from State personal income taxation of the interest on the Bonds. The Borrower shall provide notice
15
83
of any termination of this Regulatory Agreement to the Issuer, the Trustee and the Bondowner Representative.
The terms of this Regulatory Agreement to the contrary notwithstanding, this Regulatory Agreement, and all and several of the terms hereof, shall terminate and be of no further force and effect in the event of
(i)(a) involuntary noncompliance with the provisions of this Regulatory
Agreement caused by a foreclosure of the lien of a deed of trust on the Project or
delivery of a deed in lieu of foreclosure whereby a third party shall take possession of the Project, or
(i)(b) involuntary non-compliance with the provisions of this Regulatory Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal agency after the date hereof which prevents the Issuer and the Bondowner Representative from enforcing the provisions hereof or condemnation or a similar event,
and
(ii) in each case, the payment in full and retirement of the Bonds (or
extinguishment in accordance with the terms of the Indenture) each theretofore or within a reasonable period thereafter;
provided, however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained in this Regulatory Agreement shall be reinstated if, at any time subsequent to the termination of such provisions as the result of the foreclosure or the delivery of a deed in lieu of foreclosure or a similar event, the Borrower or any related person to it (within the meaning of Section 1.103-10(e) of the Regulations) obtains an ownership interest in the Project for Federal income tax purposes.
Upon the termination of the terms of this Regulatory Agreement, the parties hereto agree
to execute, deliver and record appropriate instruments of release and discharge of the terms
hereof; provided, however, that the execution and delivery of such instruments shall not be
necessary or a prerequisite to the termination of this Regulatory Agreement in accordance with
its terms.
Section 12. Covenants to Run With the Land. The Borrower hereby subjects the Project (including the Site) to the covenants, reservations and restrictions set forth in this Regulatory
Agreement. The Issuer and the Borrower hereby declare their express intent that the covenants,
reservations and restrictions set forth herein shall be deemed covenants running with the land
and shall pass to and be binding upon the Borrower’s successors in title to the Project:
provided, however, that on the termination of this Regulatory Agreement the covenants,
reservations and restrictions set forth herein shall expire. Each and every contract, deed or
other instrument hereafter executed covering or conveying the Project or any portion thereof
shall conclusively be held to have been executed, delivered and accepted subject to such
covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instruments. No breach of any of the provisions of this Regulatory Agreement shall defeat or render invalid the lien of a mortgage made in good faith and for value encumbering the Site or the Project.
Section 13. Burden and Benefit. The Issuer and the Borrower hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern
the land in that the Borrower’s legal interest in the Project is rendered less valuable thereby. The
Issuer and the Borrower hereby further declare their understanding and intent that the benefit of
such covenants touch and concern the land by enhancing and increasing the enjoyment and use
16
of the Project by Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes for which the Bonds were issued.
Section 14. Uniformity: Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common
plan for the use, development and improvement of the Site.
Section 15. Enforcement. If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement, and if such default remains uncured for a period of sixty (60) days after the Issuer gives written notice thereof to the Borrower (provided, however, that the Issuer may at its sole option extend such period if the Borrower provides the Issuer with an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Tax-Exempt Bonds), then the Issuer shall declare an “Event of Default” to have occurred hereunder, and, subject to the provisions of the Indenture and the
Loan Agreement, may take any one or more of the following steps:
(a) by mandamus or other suit, action or proceeding at law or in equity, require
the Borrower to perform its obligations and covenants hereunder or enjoin any acts or
things which may be unlawful or in violation of the rights of the Issuer or the Bondowner
Representative hereunder;
(b) have access to and inspect, examine and make copies of all of the books and records of the Borrower pertaining to the Project:
(c) take such other action at law or in equity as may appear necessary or
desirable to enforce the obligations, covenants and agreements of the Borrower
hereunder; or
(d) declare an event of default under the Loan Agreement to the extent
permitted therein.
Section 16. Recording and Filing. The Borrower shall cause this Regulatory Agreement, and all amendments and supplements hereto, to be recorded and filed, prior to the recording of the Deed of Trust and the disbursement of the Loan, in the real property records of the County and in such other places as the Issuer may reasonably request. The Borrower shall pay all fees
and charges incurred in connection with any such recording.
Section 17. Pavment of Fees.
(a) The Borrower shall pay to the Issuer (i) on the date of the issuance of the
Bonds, an initial financing fee equal to 0.125% of the aggregate face amount (maximum
principal amount) of the Bonds, and (ii) an annual administrative fee in an amount
equal to 0.10% of the Outstanding principal amount of the Bonds, in advance, to or at
the direction of the Issuer in equal semiannual installments on the six-month anniversary and one-year anniversary of the later to occur of the Series A Conversion Date or the Series B Conversion Date (as those terms are defined in the Indenture). The fees of the Issuer referenced in this Section shall in no way limit any amounts payable by the Borrower under Section 7 or 15 hereof, or otherwise arising in connection with the
Issuer’s enforcement of the provisions of this Regulatory Agreement.
Any fee due and payable to the Program Administrator pursuant to the
Administration Agreement shall be paid by the Issuer from its annual administration fee.
17
In the event that the Bonds are redeemed in part or in full prior to the end of the
term of this Regulatory Agreement, the Issuer’s fee for the remainder of the term of this Regulatory Agreement, at the option of the Issuer, shall be paid by the Borrower at the time of the prepayment of the last of the Bonds and shall be a lump sum amount equal
to the present value (based on a discount rate equal to the yield on the Bonds, as
determined by the Issuer at the time of redemption) of the Issuer’s fee for the number of years remaining under the term of this Regulatory Agreement.
(b) Throughout the term of this Regulatory Agreement, notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Borrower’s obligations under the Loan Agreement, the Borrower shall pay (i) the administrative fee due to the Issuer described above as and when due, and (ii) upon the occurrence of an Event of Default hereunder, reasonable compensation to the Issuer and the Bondowner Representative for any services rendered by any of them hereunder and reimbursement for all expenses reasonably incurred by any of them in connection therewith.
(c) In case any action at law or in equity, including an action for declaratory
relief, is brought against the Borrower to enforce the provisions of this Regulatory
Agreement, the Borrower agrees to pay reasonable attorney’s fees and other reasonable
expenses incurred by the Issuer and the Program Administrator in connection with such
action.
Section 18. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California.
Section 19. Amendments: Third Partv Beneficiaries. Except as provided in Section 6 (a) hereof, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of
the County. The parties hereto acknowledge that for so long as the Bonds are outstanding the
owners of the Bonds are third party beneficiaries to this Regulatory Agreement.
Section 20. Notice. All notices, certificates or other communications shall be sufficiently given and (except for notices to the Bondowner Representative, which shall be deemed given only when actually received by the Bondowner Representative) shall be deemed given on the date personally delivered or on the second day following the date on which the same have been mailed by first class mail, postage prepaid, addressed as follows:
18
Issuer:
Borrower:
with a copy to:
Bondowner Representative:
Trustee:
City of Carlsbad
---------_-- Carlsbad, California 9- Attention:
Poinsettia Housing Associates
San Francisco, California 9-
Attention:
Edison Capital Housing Investments 18101 Von Karman Avenue, Suite 1700 Irvine, California 926121046 Attention: Asset Manager-Poinsettia
Gardens
Bank of America, FSB
----------I-- , California 9
Attention:
Bank One Trust Company, N.A. 20 North Central Avenue, 26th Floor Phoenix, AZ 85004 Attention:
Program Administrator:
---------------- , California 9
Attention:
Any of the foregoing parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, documents or other
communications shall be sent.
Section 2 1. Severabilitv. If any provision of this Regulatory Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof
shall not in any way be affected or impaired thereby.
Section 22. Multinle Counternarts. This Regulatory Agreement may be executed in
multiple counterparts, all of which shall constitute one and the same instrument, and each of
which shall be deemed to be an original.
Section 23. Comoliance bv Borrower. Neither the Trustee nor the Bondowner Representative shall be responsible for monitoring or verifying compliance by the Borrower with its obligations under this Regulatory Agreement.
Section 24. Limited Liabilitv. All obligations of the Issuer incurred hereunder shall be limited obligations, payable solely and only from Bond proceeds and other amounts derived by
the Issuer from the Loan or otherwise under the Loan Agreement.
19
IN WITNESS WHEREOF, the Issuer and the Borrower have executed this Regulatory Agreement by duly authorized representatives, all as of the date first written hereinabove.
City of Carlsbad, as Issuer
Poinsettia Housing Associates, a California limited partnership, as Borrower
Bank One Trust Company, N.A.
as Trustee
By:
20
-
STATE OF CALIFORNIA 1
COUNTY OF
On June -, 1999 before me, X Notary Public, personally appeared personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary (Seal)
STATE OF CALIFORNIA 1
COUNTY OF
On June -9 1999 before me, ~ Notary Public, personally
appeared personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary (Seal)
STATE OF CALIFORNIA 1
1 ss. COUNTY OF 1
On June -9 1999 before me, c Notary Public, personally
appeared personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature of Notary (Seal)
EXHIBITA
LEGAL DESCRIPTION OF THE SITE
All that certain real property situated in the City of Carlsbad, County of San Diego,
State of California, more particularly described as follows:
Assessors Parcel Numbers:
A-l
INCOME COMPUTATION AND CERTIFICATION
NOTE TO APARTMENT OWNER: This form is designed to assist you in computing
Annual Income in accordance with the method set forth in the Department of Housing and
Urban Development (“HUD”) Regulations (24 CFR 813). You should make certain that this
form is at all times up to date with the HUD Regulations.
Re: [Address of Apartment Building]
I/We, the undersigned state that I/we have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being
applied for in the above apartment project.
intend to reside in the unit:
1. 2.
Name of Members Relationship of the to Head of Household Household
HEAD
SPOUSE
Income Computation
Listed below are the names of all persons who
3.
As
4.
Social Security Number
5.
Place of Emolovment
6. The total anticipated income, calculated in accordance with the provisions of this Certification, of all persons over the age of 18 years listed above for the 12-month period beginning the date that I/we plan to move into a unit is $
Included in the total anticipated income listed above are:
(a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions;
(b) the net income from the operation of a business or profession or from the rental of
real or personal property (without deducting expenditures for business expansion or
amortization of capital indebtedness or any allowance for depreciation of capital assets);
(c) interest and dividends (including income from assets excluded below);
(d) the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts, including any lump sum payment for the delayed start of a periodic payment:
B-l
- -
(e) payments in lieu of earnings, such as unemployment and disability compensation,
workmen’s compensation and severance pay;
(f) the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities:
(g) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling;
(h) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and
(i) any earned income tax credit to the extent that it exceeds income tax liability.
Excluded from such anticipated income are:
(a) casual, sporadic or irregular gifts:
(b) amounts which are specifically for or in reimbursement of medical expenses;
(c) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen’s compensation), capital gains and settlement for personal or property losses:
(d) amounts of educational scholarships paid directly to the student or the educational
institution, and amounts paid by the government to a veteran for use in meeting the costs of
tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans
not used for the above purposes are to be included in income;
(e) special pay to a household member who is away from home and exposed to hostile
fire:
Q relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970;
(g) foster child care payments;
(h) the value of coupon allotments for the purchase of food pursuant to the Food Stamp
Act of 1977:
(i) payments to volunteers under the Domestic Volunteer Service Act of 1973;
(j) payments received under the Alaska Native Claims Settlement Act;
(k) income derived from certain submarginal land of the United States that is held in
trust for certain Indian tribes;
(1) payments or allowances made under the Department of Health and Human Services’
Low-Income Home Energy Assistance Program;
(m) payments received from the Job Training Partnership Act:
(n) income derived from the disposition of funds of the Grand River Band of Ottawa Indians; and
B-2
(0) the first $2,000.00 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims.
7. Do the persons whose income or contributions are included in item 6 above:
(a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land)?
No -Yes -
(b) have they disposed of any assets (other than at a foreclosure or Credit Bankruptcy
sale) during the last two years at less than fair market value?
No -Yes -
(c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000?
No -Yes -
(d) If the answer to (c) above is yes, state:
(1) the amount of income expected to be derived from such assets in the 12-month
period beginning on the date of initial occupancy in the unit that you propose to rent:
$-.------------
(2) the amount of such income, if any, that was included in item 6 above:
8. (a) Are all of the individuals who propose to reside in the unit full-time students*?
No -Yes -
*A full-time student is an individual enrolled as a full-time student during each of 5
calendar months during the calendar year in which occupancy of the unit begins at an
educational organization which normally maintains a regular faculty and curriculum and
normally has a regularly enrolled body of students in attendance and is not an
individual pursuing a full-time course of institutional or farm training under the
supervision of an accredited agent of such an educational organization or of a state or
political subdivision thereof.
(b) If the answer to 8(a) is yes, is at least 1 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return?
No -Yes -
9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner
of the rental housing project in which the unit is located (hereinafter the “Owner”), has any
family relationship to the Owner; or owns directly or indirectly any interest in the Owner. For
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purposes of this paragraph, indirect ownership by an individual shall mean ownership by a
family member, ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trustee held by the individual or a family member; and ownership, direct or indirect, by a partner of the individual.
10. This certificate is made with the knowledge that it will be relied upon by the
Borrower to determine maximum income for eligibility to occupy the unit, and I/we declare that
all information set forth herein is true, correct and complete and based upon information I/we
deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary.
11. I/we will assist the Owner in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding calendar year.
12. I/we acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of
my/our agreement with the Owner to lease the unit and will entitle the Owner to prevent or
terminate my/our occupancy of the unit by institution of an action for ejection or other
appropriate proceedings.
I/we declare under penalty of perjury that the foregoing is true and correct.
Executed this day of in the City of , California.
Applicant
Applicant
[Signature of all persons over the age of 18 years listed in number 2 above required]
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FOR COMPLETION BY APARTMENT OWNER ONLY:
1. calculation of eligible income:
a. Enter amount entered for entire household in 6 above: $
b. (1) If answer to 7(c) above is yes, enter the total amount entered in 7(d) (l), subtract from that figure the amount entered in 7(d) (2) and enter
the remaining balance ($ );
(2) Multiply the amount entered in 7(c) times the current passbook
savings rate to determine what the total annual earnings on the amount in 7(c) would be if invested in passbook savings ($2, subtract from that figure the amount entered in 7(d) (2) and enter the remaining
balance (Is 1;
(3) Enter at right the greater of the amount calculated under (1) or (2)
above: $
C. TOTAL ELIGIBLE INCOME Line 1.a plus line l.b(3)): $-----
2. The amount entered in 1.~:
Qualifies the applicant(s) as a Low Income Tenant(s).
Does not qualify the applicant(s) as a Low Income Tenant(s).
3. Number of apartment unit assigned:
Bedroom Size: Rent: $
4. This apartment unit [was/was not] last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the apartment unit qualified them as Lower Income Tenants.
5. Method used to verify applicant(s) income:
Employer income verification.
Copies of tax returns.
Other ( )
Manager
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INCOME VERIFICATION (for employed persons)
The undersigned employee has applied for a rental unit located in a project financed under the City of Carlsbad Multifamily Housing Revenue Bond Program for persons of low income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee’s current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis.
Annual wages Commissions Overtime Bonuses
Total current income
I hereby certify that the statements above are true and complete to the best of my
knowledge.
Signature Date Title
I hereby grant you permission to disclose my income to in order that they
may determine my income eligibility for rental of an apartment located in their project which has been financed under the City of Carlsbad Multifamily Revenue Bonds.
Signature Date
Please send to:
B-6
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INCOME VERIFICATION (for self-employed persons)
I hereby attach copies of my individual federal and state income tax returns for the
immediately preceding calendar year and certify that the information shown in such income tax
returns is true and complete to the best of my knowledge.
Signature Date
B-7
-
E2iHIBIT C
COMPLETION CERTIFICATE
The undersigned hereby certifies that:
(a) all portions of the Project were substantially completed and available either for occupancy or use by tenants in the Project as of (b) the aggregate amount disbursed on the Loan to date is $ ’ ;
(c) all amounts disbursed on the Loan have been applied to pay or reimburse the undersigned for the payment of Project Costs and none of the amounts disbursed on the Loan have been applied to pay or reimburse any party for the payment of costs or expenses other
than Project Costs; and
(d) at least 95 percent of the amounts disbursed on the Loan have been applied to pay or reimburse the Borrower for the payment of Qualified Project Costs (as that term is used in the Regulatory Agreement) and less than 25 percent of the amounts disbursed on the Loan, exclusive of amounts applied to pay the costs of issuing the Bonds, have been applied to pay or reimburse the Borrower for the cost of acquiring land.
[BORROWER]
By:
Its:
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EXHIBITD
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being the of BRIDGE Housing-Southern California, the general partner of Poinsettia Housing Associates, a California limited partnership (the “Borrower”) has read and is thoroughly familiar with the provisions of the various documents associated with the Borrower’s participation in the multifamily housing program of the City of Carlsbad (the “Issuer”), including:
1. the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of June
1, 1999 (the “Regulatory Agreement”) among the Borrower and the Issuer: and
2. the Loan Agreement, dated as of June 1, 1999, among the Borrower, the Issuer and the Bondowner Representative.
As of the date of this Certificate, the following percentages of completed residential units in the Project (as defined in the Regulatory Agreement) (i) are occupied by Low Income
Tenants (as such term is defined in the Regulatory Agreement), or (ii) are currently vacant and
being held available for occupancy by Low Income Tenants and have been so held continuously
since the date a Low Income Tenant vacated such unit; as indicated:
Occupied by Low Income Tenants: %; Unit Nos.
Held vacant for occupancy continuously since last occupied by Low Income Tenant: %; Unit Nos.
Vacant Units: %; Unit Nos.
It hereby is confirmed that each Low Income Tenant currently residing in a unit in the Project has completed an Income Computation and Certification in the form approved by the Issuer and that since commencement of the Qualified Project Period at least 40% of the occupied units in the Project have been rented to Low Income Tenants (each of the foregoing
capitalized terms having the meaning assigned in the Regulatory Agreement).
The undersigned hereby certifies that the Borrower is not in default under any of the
terms and provisions of the above documents.
Poinsettia Housing Associates, a California limited partnership
By: BRIDGE Housing Corporation-- Southern California, a California nonprofit public benefit corporation Its: general partner
By: Its:
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