HomeMy WebLinkAboutTavarua Senior Apartments LP; 2011-12-12; (2)IO I 0\20\40681 9. l
LOAN AGREEMENT
by and between
CARLSBAD REDEVELOPMENT AGENCY,
a public body, corporate, and politic
and
Tavarua Senior Apartments L.P.
a California limited partnership (Tavarua Senior Apartments)
TABLE OF CONTENTS
Page
ARTICLE I DEFINITJONS AND EXHIBITS 2
Section I. I Definitions ...................................................................................................... 2
Section I .2 Exhibits ........................................................................................................... 5
ARTICLE 2 LOAN PROVISIONS 5
Section 2.1 Loan; Excess Proceeds of Permanent Financing ............................................ 5
Section 2.2 Interest. ........................................................................................................... 6
Section 2.3 Use ofFunds ................................................................................................... 6
Section 2.4 Security ........................................................................................................... 6
Section 2.5 Loan Disbursement. ....................................................................................... 6
Section 2.6 Repayment of the Loan .................................................................................. 7
Section 2.7 Reports and Accounting of Residual Receipts ............................................ .10
Section 2.8 Non-Recourse ............................................................................................... } I
Section 2.9 Subordination ............................................................................................... 11
ARTICLE 3 CONSTRUCTION AND OPERATION OF THE DEVELOPMENT 12
Section 3.1 Permits and Approvals ................................................................................ .12
Section 3.2 Plans and Specifications ............................................................................... 12
Section 3 .3 Commencement of Construction .................................................................. 13
Section 3.4 Completion of Construction ......................................................................... 13
Section 3.5 Construction Pursuant to Plans and Laws; Prevailing Wages ..................... .l 3
Section 3.6 Marketing Plan ............................................................................................. I 4
Section 3. 7 Relocation ..................................................................................................... I 4
Section 3.8 Equal Opportunity ........................................................................................ 15
Section 3.9 Progress Reports ......................................•................................................... ] 5
Section 3.10 Construction Responsibilities ....................................................................... 15
Section 3 .11 Inspections .................................................................................................... 15
Section 3.12 Approved Development Budget; Revisions to Budget. .............................. .16
Section 3 .13 Information ................................................................................................... 16
Section 3 .14 Records ......................................................................................................... 16
Section 3 .15 Audits ........................................................................................................... 16
Section 3.16 Hazardous Materials ..................................................................................... 16
Section 3.17 Fees and Taxes ............................................................................................. 19
Section 3.18 Notice of Litigation ...................................................................................... 19
Section 3.19 Operation of Development as Affordable Housing ...................................... 19
Section 3.20 Non-Discrimination ...................................................................................... 19
Section 3.21 Mandatory Language in All Subsequent Deeds, Leases and
Contracts ....................................................................................................... 20
Section 3.22 Insurance Requirements ............................................................................... 21
Section 3.23 Developer Fee .............................................................................................. 22
ARTICLE 4 ASSIGNMENT AND TRANSFERS 22
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TABLE OF CONTENTS
(continued)
Section 4.1 Definitions .................................................................................................... 22
Section 4.2 Purpose of Restrictions on Transfer. ............................................................ 22
Section 4.3 Prohibited Transfers ..................................................................................... 23
Section 4.4 Permitted Transfers Without Prior Agency Approval... ............................... 23
Section 4.5 Permitted Transfers With Prior Approval; Agency Pre-Approved
Transfers ....................................................................................................... 23
Section 4.6 Release of the Borrower. .............................................................................. 24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE
BORROWER 24
Section 5.1 Representations and Warranties ................................................................... 24
ARTICLE 6 DEFAULT AND REMEDIES 26
Section 6.1 Events of Default. ......................................................................................... 26
Section 6.2 Remedies ...................................................................................................... 28
Section 6.3 Assignment of Plans, Data and Approvals ................................................... 29
Section 6.4 Remedies Cumulative .................................................................................. 29
ARTICLE 7 GENERAL PROVISIONS 29
Section 7 .1 Relationship of Parties ................................................................................. 29
Section 7.2 No Claims ..................................................................................................... 30
Section 7.3 Amendments ................................................................................................. 30
Section 7.4 Entire Understanding of the Parties ............................................................. 30
Section 7 .5 Indemnification ............................................................................................ 30
Section 7.6 Non-Liability of Agency and City Officials, Employees and Agents .......... 30
Section 7.7 No Third Party Beneficiaries ........................................................................ 30
Section 7.8 Action by the Agency ................................................................................... 31
Section 7.9 Waivers ......................................................................................................... 31
Section 7 .10 Notices, Demands and Communications ..................................................... 31
Section 7.11 Applicable Law and Venue .......................................................................... 32
Section 7.12 Parties Bound ............................................................................................... 32
Section 7.1 3 Severability ................................................................................................... 33
Section 7.14 Force Majeure .............................................................................................. 33
Section 7.15 Attorneys Fees .............................................................................................. 33
Section 7.16 Title of Parts and Sections ............................................................................ 3 3
Section 7.17 Multiple Originals; Counterpart ................................................................... 33
Exhibit A
Exhibit B
1010\20\406819.1
Legal Description
Development Budget
II
LOAN AGREEMENT
(Tavarua Apartments)
This Loan Agreement (the "Agreement") is entered into as of DeCc:t---1&tZ_l2._, 2011,
by and between the Carlsbad Redevelopment Agency, a public body, corporate, and politic (the
"Agency") and Tavarua Senior Apartments, L.P., a California limited partnership (the
"Borrower"), with reference to the following facts, purposes and intentions.
RECITALS
A. These Recitals refer to and utilize certain capitalized terms which are defined in
Article l of this Agreement. The Parties intend to refer to those definitions in connection with
the use of capitalized terms in these Recitals.
B. The Agency has established a Low and Moderate Income Housing Fund pursuant
to Health and Safety Code Sections 33334.6 and 33334.2, which must be utilized in accordance
with the requirements of the Community Redevelopment Law (Health and Safety Code Section
33000 et~.). Proceeds are available within said Fund to disburse to Borrower as set forth
within this Agreement, and per the written commitment to Borrower set forth in Housing and
Redevelopment Commission Resolution Number 475.
C. Pursuant to Resolution Number 475 , adopted by the Agency on A ugust 11 , 2009,
the Agency committed to make a loan of Agency Low and Moderate Income Housing Funds to
the Borrower in an amount not to exceed Three Million Seven Hundred Fifty T housand Dollars
($3,750,000) initially for predevelopment and construction financing and ultimately for
permanent financing of the Development. The loan will be funded solel y from non-federal
sources and will not be funded with tax exempt bonds.
D. As a condition to providing the Loan, the Agency is imposing occupancy and
affordability restrictions on the Development, pursuant to the Regulatory Agreement, ensuring
that certain units remain affordable to specified income categories of occupants for a specified
period of time.
E. The Agency intends to utilize the Development to obtain affordable housing
production credit pursuant to Health and Safety Code Section 334 l 3(b )(2)(A) as newly
constructed dwelling units located outside of the Project Area and available at affordable housing
cost to very low, lower, and moderate income households. Such units are required to remain
affordable to such households for fifty-five (55) years. This Agreement and the accompanying
Regulatory Agreement are also intended to implement this requirement.
F. The Property is located o utside of the Project Area. In accordance with Health
and Safety Code Section 33334.2(g), the Agency Board, by resolution 475, made findings that
the expenditure of monies deposited in the Housing Fund to fund the Loan will serve the
purposes of Health and Safety Code Section 33334.2, as well as the goals and objectives of the
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redevelopment plan for the Project Area, by improving and increasing the supply of affordable
housing in the community surrounding the Project Area.
G. The noted senior residential development was reviewed pursuant to the California
Environmental Quality Act (CEQA). Staff conducted an environmental impact assessment to
determine if the project could have a potentially significant impact on the environment pursuant
to CEQA Guidelines and the Environmental Protection Ordinance (Title 19) of the Carlsbad
Municipal Code. As a result of said review, the initial study (ElA Part 2) identified potentially
significant effects on the environment, but mitigation measures agreed to by the applicant would
avoid or mitigate the effects to the po int where clearly no significant effect on the environment
would occur, and there is no substantial evidence in light of the whole record that the project as
conditioned may have a significant impact on the environment. A M itigated Negative
Declaration (MND) was approved by the Planning Commission on June 4, 2008
NOW, THEREFORE, in consideration of the recitals hereof and the mutual promises and
covenants set forth in this Agreement, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section I.I Definitions.
The following capitalized terms have the meanings set forth in this Section 1.1 wherever
used in this Agreement, unless otherwise provided:
(a) "Agency" means the Carlsbad Redevelopment Agency, a public body,
corporate and politic.
(b) "Agency Board" means the Housing and Redevelop!llent Commission,
which serves as the Board of Directors of the Agency.
(c) "Agreement" means this Loan Agreement.
(d) "Approved Development Budget" means the proforma development
budget, including sources and uses of funds, as approved by the Agency, and attached hereto and
incorporated herein as Exhibit B, but which may be amended with the approval of the Agency as
set forth in this Agreement.
(e) "Approved Financing" means all of the following funds acquired by the
Borrower, or intended to be acquired by the Borrower, and approved by the Agency for the
purpose of financing (permanent) the Development, in addition to the Loan:
(1) Tax credit equity contribution from the Tax Credit Investor in the
approximate amount of Eight Million Six Hundred Thirty Two Thousand Dollars ($8,632,000)
(the "Tax Credit Equity Funds");
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(2) Mental Health Services Act Housing Program ("MHSA ") funds in
the approximate amount of One Million Eighty-One Thousand Six Hundred Dollars
($1,081,600) from the State of California via the County of San Diego Health and Human
Services Agency ;
(3) Permanent Loan from California Community Reinvestment Corp.
in the approximate amount of Two Million Dollars ($2,000,000) (the "Private Financing");
(4) Deferred payment of developer fee to Borrower or its affiliate in
the approximate amount of One Hundred Eighty Thousand Dollars ($ I 80,000) (the "Deferred
Developer Fee Funds"); and
(5) Affordable Housing Program (AHP) Loan in the approximate
amount of Five Hundred Thousand Dollars ($500,000).
(f) "Borrower" means Tavarua Senior Apartments, L.P., a California limited
partnership.
(g) "Certificate of Occupancy" means the final certificate of occupancy for the
Improvements issued by the City.
(h) "City" means the City of Carlsbad, a municipal corporation.
(i) "City Council" means the City Council of the City.
U) "Control" means (i) direct or indirect management or control of the
managing member or members in the case of a limited liability company; (ii) direct or indirect
management or control of the managing general partner or general partners in the case of a
partnership and (iii) (a) boards of directors that overlap by fifty percent (50%) or more of their
directors, or (b) direct or indirect control of a majority of the directors in the case of a
corporation.
(k) "Deed of Trust" means the deed of trust that will encumber the
Development to secure repayment of the Loan. The form of the Deed of Trust shall be provided
by the Agency.
(I) "Default" has the meaning set forth in Section 6.1 below.
(m) "Development" means the Property and the Improvements.
(n) "Excess Proceeds of Permanent Financing" shall mean the portion of the
Approved Financing funds that are not required to pay the costs of acquisition and development
of the Development (including but not limited to the funding of reserves). Excess Proceeds of
Permanent F inancing, if any, shall be determined pursuant to the procedure set forth in Section
2.1(6).
(o) "Hazardous Materials" has the meaning set forth in Section 3 .16 below.
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(p) "Hazardous Materials Claim" has the meaning set forth in Section 3. I 6
below.
(q) "Hazardous Materials Law" has the meaning set forth in Section 3.16
below.
(r) "HCD" means the State of California Department of Housing and
Community Development.
(s) "Improvements" means the approximately fifty (50)-unit residential rental
facility, to be constructed on the Property, plus appurtenant landscaping and improvements.
(t) "Loan" means the amount not to exceed Three Million Seven Hundred
Fifty Thousand Dollars ($3,750,000) to be provided by the Agency to the Borrower pursuant to
the Loan Documents. The Loan is more particularly described in Section 2.1.
(u) "Loan Documents" means this Agreement, the Note, the Regulatory
Agreement, and the Deed of Trust.
(v) "Note" means the promissory note that will evidence the Borrower's
obligation to repay the Loan. The form of the Note shall be provided by the Agency.
(w) "Parties" means the Agency and the Borrower.
(x) "Project Area" means, collectively, the Carlsbad Village Redevelopment
Project Area, as amended from time to time, and the South Carlsbad Coastal Redevelopment
Project Area, as amended from time to time.
(y) "Property" means the real property located in the City of Carlsbad, County
of San Diego, State of California, more particularly described in the attached Exhibit A.
(z) "Regulatory Agreement" means the Regulatory Agreement and
Declaration of Restrictive Covenants between the Agency and the Borrower associated with the
Loan and recorded against the Property.
(aa) "Regulatory Term" means the term of the Regulatory Agreement.
(bb) "Tax Credits" means the low income housing tax credits established
pursuant to Section 42 of the Internal Revenue Code of 1986, as amended, and allocated by
TCAC to be obtained by the Borrower to finance the development of the Development.
(cc) "Tax Credit Investor" means Wells Fargo Affordable Housing Community
Development Corporation, or an entity under the Control of Wells Fargo Bank, to be admitted to
the Borrower as a limited partner, and which shall provide the Tax Credit Equity Funds.
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(dd) "TCAC" means the California Tax Credit Allocation Committee.
(ee) "Term" means the term of the Loan, which commences on the date of this
Agreement and terminates fifty-five (55) years thereafter.
(ft) "Transfer" has the meaning set forth in Section 4.1 below.
(gg) "Unit" means one of the approximately fifty (50) apartment units to be
constructed on the Property.
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference:
EXHIBIT A: Legal Description of the Property
EXHIBIT B: Approved Development Budget
ARTICLE2
LOAN PROVISIONS
Section 2.1 Loan; Excess Proceeds of Permanent Financing.
(a) Subject to satisfaction of the conditions set forth in Section 2.5, the
Agency shall lend to the Borrower the Loan in the principal sum not to exceed Three Million
Seven Hundred Fifty Thousand Dollars ($3,750, 000); provided, however in the event the
Agency reasonably determines that the funding of the full amount of Three Million Seven
Hundred Fifty Thousand Dollars ($3,750,000) will result in Excess Proceeds of Permanent
Financing, the Agency shall reduce the amount of the Loan to the extent necessary to eliminate
any Excess Proceeds of Permanent Financing. The Borrower's obligation to repay the Loan shall
be evidenced by the Note.
(b) Excess Proceeds of Permanent Financing. The amount of the Excess
Proceeds of Permanent Financing, if any, shall be determined by the Borrower and submitted to
the Agency for approval on the date the Borrower submits the final cost audit for the
Development to TCAC. The amount of the Excess Proceeds of Permanent Financing shall be
calculated assuming the full funding of all of the Approved Financing set forth in Section I. I (e).
In the event that any Approved Financing lender reduces the amount of the Approved Financing
to eliminate Excess Proceeds of Permanent Financing, then the Agency shall cooperate, in good
faith, with the Borrower and such Approved F inancing lender(s) to determine the amount of the
Loan and the Approved Financing to eliminate any Excess Proceeds of Permanent Financing.
The Borrower shall also submit to the Agency any additional documentation sufficient to verify
the amount of the Excess Proceeds of Permanent Financing. The Agency shall approve or
disapprove Borrower's determination of the amount of the Excess Proceeds of Permanent
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Financing in writing within thirty (30) days of the receipt of Borrower's cost audit and
supplemental documentation. If Borrower's determination is disapproved by the Agency,
Borrower shall re-submit documentation to the Agency until Agency approval is obtained.
Section 2.2 Interest.
(a) Subject to the provisions of Section 2.2(b) below, the outstanding
principal balance of the Loan shall accrue simple interest at the rate of three percent (3%).
(b) In the event of a Default, interest on the Loan shal I begin to accrue, as of
the date of Default and continue until such time as the Loan funds are repaid in full or the
Default is cured, at the default rate of the lesser of ten percent (10%), compounded annually, or
the highest rate permitted by law.
Section 2.3 Use of Funds.
(a) The Loan shall be used for construction, including predevelopment
expenses with the exception that no funds shall be used for acquisition of property, and
subsequently for permanent financing for the development of the Property.
(b) The Borrower shall not use the Loan for any other purpose without the
prior written consent of the Agency.
Section 2.4 Security.
The Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by
executing the Deed of Trust, and recording it as a lien against the Borrower's fee interest in the
Property in a lien position reasonably acceptable to the Agency.
Section 2.5 Loan Disbursement.
The Agency shall not be obligated to fund any portion of the Loan or take any other
action under the Loan Documents unless all of the following conditions precedent are satisfied.
Upon satisfaction of the conditions set forth below, the Agency shall promptly disburse the Loan
Amount to Borrower from time to time upon receipt of written requests from the Borrower
setting forth the proposed uses of funds consistent with the approved development budget, the
amount of funds needed, and where applicable, a copy of the bill or invoice covering a cost
incurred or to be incurred. When a disbursement is requested to pay any contractor in connection
with construction of the Improvements, the written request must be accompanied by a
certification by the architect for the Developer that the work for which disbursement is requested
has been completed.
(a) There exists no Default nor any act, failure, omission or condition that
would constitute or cause a Default;
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(b) The Borrower has delivered to the Agency a copy of a duly adopted
resolution authorizing the Borrower's execution of the Loan Documents and the transactions
contemplated by the Loan Documents;
(c) The Borrower has furnished the Agency with evidence of the insurance
coverage meeting the requirements of Section 3.22 below;
(d) The Borrower holds fee interest to the Property;
(e) The Borrower has executed and delivered to the Agency this Agreement,
the Note, the Deed of Trust and the Regulatory Agreement, and the Deed of Trust and the
Regulatory Agreement have been recorded against the Property in the Office of the Recorder of
the County of San Diego in a lien position acceptable to the Agency;
(f) The Borrower has executed and delivered to the Agency all documents,
instruments, and policies required under the Loan Documents;
(g) A title insurer reasonably acceptable to the Agency is unconditionally and
irrevocably committed to issuing an ALTA Lender's Policy of insurance insuring the priority of
the Deed of Trust in the amount of the Loan, subject only to such exceptions and exclusions as
may be reasonably acceptable to the Agency, and containing such endorsements as the Agency
may reasonably require;
(h) The Agency has received and approved the final plans and specifications
for construction of the Development pursuant to Section 3.2, below;
(i) The Borrower has obtained lien releases and/or mechanics' lien
title insurance endorsements, reasonably acceptable to the Agency, insuring the Agency that
there are no liens against the Property (other than the liens for the Approved Financing and other
easements and encumbrances necessary for the development and operation of the Development
as reasonably acceptable to the Agency);
U) The Borrower shall have submitted to the Agency and obtained Agency
approval of a development budget for the Development.
(k) The process to determine if the Agency funding the amount of Three
Million Seven Hundred Fifty Thousand Dollars ($3,750,000) will result in Excess Proceeds of
Permanent Financing (as more particularly described in Section 2.l(b), above) has been
completed, and the Agency has determined the exact amount of the Loan to be disbursed to the
Borrower; and
(I) The Borrower has closed all construction financing, except for the
AHP loan, for said Development.
Section 2.6 Repayment of the Loan.
1010\20\406819.I 7
The Loan shall be repaid as follows:
(a) Term. The Term of the Loan shall commence as of the date of this
Agreement and shall expire on the date that is fifty-five (55) years after the date of this
Agreement.
(b) Annual Repayments. Commencing on May 1st which first occurs after the
fiscal year in which the Improvements are completed pursuant to this Agreement, and on each
May 1st thereafter throughout the Term of the Loan, the Borrower shall make repayments of the
Loan to the Agency equal to the Agency's Prorata Percentage of the Lenders' Share of Residual
Receipts calculated for the previous year. The Borrower shall provide the Agency, by each May
1st following each fiscal year, a report showing the actual income and expenditures with respect
to the Development for the immediately preceding fiscal year, the calculation of Annual
Operating Expenses, Gross Revenue, and Residual Receipts (including, the Borrower's Share of
Residual Receipts, the total Lender's Share of Residual Receipts, the Agency Prorata Percentage,
and the MHSA Prorata Percentage), the status of all reserve funds, including without limitation,
an annual audited financial statement for the Development prepared by a certified public
accountant approved by the Agency. Payments made to the Agency shall be credited first
against accrued interest and then against outstanding principal.
(c) Payment in Full. All principal and interest, if any, on the Loan shall, at
the option of the Agency, be due and payable upon the earliest of: (i) a Transfer other than a
Transfer permitted or approved by the Agency as provided in Article 4 below; (ii) the occurrence
of a Default for which the Agency exercises its right to cause the Loan indebtedness to become
immediately due and payable; or (iii) the expiration of the Term specified in (a) above.
(d) Prepayment. The Borrower shall have the right to prepay the Loan at any
time without premium or penalty. However, this Agreement, the Deed of Trust, and the
Regulatory Agreement shall remain in effect for the entire Term, regardless of any prepayment.
(e)
this Section 2.6:
Special Definitions. The following definitions shall apply for purposes of
(I )"Annual Operating Expenses" with respect to a particular fiscal 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 the annual budget for the
Development, approved by the Agency pursuant to the Regulatory Agreement and with an
annual independent audit performed by a certified public accountant, reasonably acceptable to
the Agency, using generally accepted accounting principles: property taxes and assessments
imposed on the Development; debt service (including required escrow and reserve deposits and
trustee and servicing fees) currently due on a non-optional basis (excluding debt service due
from residual receipts or surplus cash of the Development) on loans associated with development
of the Development and approved by the Agency in the Financing Plan pursuant to Section 2.5;
an annual investor asset management fee in the amount of five thousand dollars($5,000 ) paid to
the Tax Credit Investor and general partner management fee in the amount of seven thousand
five hundred dollars ($7,500) which amount shall be adjusted for inflation as provided in the
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Borrower's partnership agreement, and as reasonably acceptable to the Agency; property
management fees and reimbursements, not to exceed fees and reimbursements which are
standard in the industry and pursuant to a management contract approved by the Agency as set
forth in the Regulatory Agreement; premiums for property damage and liability insurance; utility
services not paid for directly by tenants, including water, sewer, and trash collection;
maintenance and repair; any annual license or certificate of occupancy fees required for
operation of the Development; security services; advertising and marketing; cash deposited into
reserves for capital replacements of the Development in an amount not to exceed the amount
required in connection with the permanent financing approved by the Agency pursuant to
Section 2 .1 or by the Agency if no other lender or investor requires approvals of such amount;
payment of any previously unpaid portion of the Developer Fee due (with interest) not exceeding
a cumulative amount of the Developer Fee as set forth in Section 3.23; extraordinary operating
costs specifically approved in writing by the Agency as part of the annual budget approval
process pursuant to the Regulatory Agreement; payments of deductibles in connection with
casualty insurance claims not normally paid from reserves; the amount of uninsured losses
actually replaced, repaired or restored, and not normally paid from reserves; credit adjusters from
cash flow; operating deficit loans; and other ordinary and reasonable operating expenses
approved in writing by the Agency and not listed above. Annual Operating Expenses shall not
include the following: depreciation, amortization, depletion or other non-cash expenses; any
amount expended from a reserve account; and any capital cost with respect to the Development,
as determined by the accountant for the Development.
(2) "Borrower's Share of Residual Receipts" shall mean twenty-five percent
(25%) of Residual Receipts.
(3)"Gross Revenue" with respect to a particular fiscal 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; net proceeds from vending and laundry room
machines; the proceeds of business interruption or similar insurance and not paid to senior
lenders; the proceeds of casualty insurance not used to rebuild the Development and not paid to
senior lenders; and condemnation awards for a taking of part or all of the Development for a
temporary period not paid to senior lenders. Gross Revenue shall not include tenants' security
deposits, loan proceeds, capital contributions or similar advances.
(4) "Lenders' Share of Residual Receipts" shall mean seventy-five (75%) of Residual Receipts,
which shall be shared among MHSA and the Agency to repay the MHSA loan and the Loan,
respectively, according to each prorata percentage as set forth in 2.6(e)(5).
(5) "Prorata Percentage" shall mean, for the Agency, the proportion of Loan funds ($3,750,000)
to be disbursed to the Borrower in accordance with this Agreement over the sum of the Loan
funds and the MHSA Loan funds ($4,831,600 total), disbursed to the Borrower. The term
"Prorata Percentage" shall mean, for the MHSA loan, the proportion of the MHSA loan funds
($1 ,081 ,600) disbursed to the Borrower in accordance with the MHSA Loan Agreement, over the
sum of the Loan funds and MHSA Loan funds ($4,831,600). If all anticipated Loan and MHSA
I 010\20\406819. I 9
Loan funds are disbursed the Prorata Percentages will be twenty-two percent (22%) to MHSA
(the "MHSA Prorata Percentage") and seventy-eight percent (78%) to the Agency (the "Agency
Prorata Percentage").
(6)"Residual Receipts" in a particular calendar year shall mean the amount
by which Gross Revenue (as defined above) exceeds Annual Operating Expenses (as defined
above).
Section 2.7 Reports and Accounting of Residual Receipts.
(a) Audited Financial Statement. In connection with the annual payments set
forth in Section 2.6(b), within sixty (60) days of the end of the Borrower's fiscal year, the
Borrower shall furnish to the Agency an audited statement duly certified by an independent firm
of certified public accountants approved by the Agency, setting forth in reasonable detail the
computation and amount of Residual Receipts during the preceding calendar year.
(b) Books and Records. The Borrower shall keep and maintain on the
Property, or at its principal place of business, or elsewhere with the Agency's written consent,
full, complete and appropriate books, records and accounts relating to the Development,
including all such books, records and accounts necessary or prudent to evidence and substantiate
in full detail the Borrower's calculation of Residual Receipts. Books, records and accounts
relating to the 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 Residual Receipts on a cash basis. All such books, records,
and accounts shall be open to and available for inspection by the Agency, its auditors or other
Agency authorized representatives at reasonable intervals during normal business hours. Copies
of all tax returns and other reports that the Borrower may be required to furnish any
governmental agency shall at all reasonable times be open for inspection by the Agency at the
place that the books, records and accounts of the Borrower are kept. The Borrower shall
preserve records on which any statement of Residual Receipts is based for a period of not less
than five (5) years after such statement is rendered, and for any period during which there is an
audit undertaken pursuant to subsection (c) below then pending.
(c) Audits. The receipt by the Agency of any statement pursuant to
subsection (a) above or any payment by the Borrower or acceptance by the Agency of any Loan
repayment shall not bind the Agency as to the correctness of such statement or such payment.
Within three (3) years after the receipt of any such statement, the Agency or any designated
agent or employee of the Agency at any time shall be entitled to audit the Residual Receipts and
all books, records, and accounts pertaining thereto. Such audit shall be conducted during normal
business hours at the principal p lace of business of the Borrower and other places where records
are kept. Immediately after the completion of an audit, the Agency shall deliver a copy of the
results of such audit to the Borrower and the Tax Credit Investor. If it shall be determined as a
result of such audit that there has been a deficiency in a Loan repayment to the Agency, then
such deficiency shall become immediately due and payable with interest at the default rate set
forth in this Agreement, determined as of and accruing from the date that said payment should
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have been made. In addition, if the Borrower's auditor's statement for any Development fiscal
year shall be found to have understated Residual Receipts by more than five percent (5%) and at
least Five Thousand Dollars ($5,000), and the Agency is entitled to any additional Loan
repayment as a result of said understatement, then the Borrower shall pay, in addition to the
interest charges referenced hereinabove, all of the Agency's reasonable costs and expenses
connected with any audit or review of the Borrower's accounts and records.
( d) Maximization of Residual Receipts. The Borrower agrees at all times
during the Term to continue its operations of the Development and to use its skills and diligence
to produce the maximum Residual Receipts, subject to the rent and occupancy requirements of
the Regulatory Agreement and the MHSA regulatory agreement.
Section 2.8 Non-Recourse.
Except as provided below, the Borrower shall not have any direct or indirect personal
liability for payment of the principal of, or interest on, the Loan or the performance of the
covenants of the Borrower under the Deed of Trust. The sole recourse of the Agency with
respect to the principal of, or interest on, the Note and defaults by the Borrower in the
performance of its covenants under the Deed of Trust shall be to the Property described in the
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 Note of all the rights and
remedies of the Agency thereunder, or (b) be deemed in any way to impair the right of the
Agency 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 the Borrower's obligations under the Deed of Trust, except as hereafter set forth;
nothing contained herein is intended to relieve the Borrower of its obligation to indemnify the
Agency under Sections 3.5, 3.7, 3.16, and 7.5 of this Agreement; or liability for (i) fraud 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 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 the Borrower other than in
accordance with the Deed of Trust; and (iv) the misappropriation 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.
Section 2.9 Subordination.
(a) Deed of Trust. The Agency agrees to subordinate the Deed of Trust to the
liens of the deeds of trust securing the private and other primary financing, as appropriate,
provided the subordination documents provide the Agency with reasonably adequate notice and
cure rights to enable the Agency to avoid foreclosure of the deeds of trust securing the private or
other primary financing.
IO I 0\20\406819.1 11
(b) Regulatory Agreement. The Agency agrees that the Agency's Executive
Director shall have the authority to agree to the subordination of the Regulatory Agreement to
the lien of the deeds of trust securi ng the private and other primary financing upon the finding
that (i) an economically feasible loan is not reasonably available on comparable terms and
conditions without subordination, and (ii) the lien to which the Regulatory Agreement is being
subordinated contains provisions meeting the requirements of Health and Safety Code Section
33334. l 4(a) reasonably designed to protect the Agency's interests in the event of default under
such lien. The Agency agrees that the Regulatory Agreement shall be subordinated to any
federal or state governmental agency regulating the Development which requires that the
Regu latory Agreement be subordinate to such government agency's documents and liens. The
Agency will execute subordination agreements in a form reasonably acceptable to the Agency
and the lending entity or government agency requesting subordination of the Regulatory
Agreement as provided in this Section.
ARTICLE 3
CONSTRUCTION AND OPERATJON OF THE DEVELOPMENT
Section 3.1 Permits and Approvals.
(a) As of the date of this Agreement, the Borrower has obtained all permits
and approvals necessary for the development of the Development on the Property, other than the
building permit for the construction of the Improvements.
(b) No later than December 19, 2011, the Borrower shall obtain the building
permit for the construction of the Improvements on the Property, or the Agency, at its option,
and with thirty (30) days' prior written notice to the Borrower and opportunity to cure, may
declare the Borrower in default hereunder.
Section 3.2 Plans and Specifications.
(a) Simultaneously with submission to the City building department, the
Borrower shall submit to the Agency a copy of the Construction Plans fo r the Development. As
used in this Agreement, "Construction Plans" shall mean all construction documentation upon
which the Borrower and the Borrower's contractor shall rely in constructing all the improvements
on the Property (including the Units, landscaping, parking, and common areas) and shall include,
but not necessarily be limited to, final architectural drawings, landscaping plans and
specifications, final elevations, building plans and specifications (also known as "working
drawings").
(b) The Agency shall, if the Construction Plans submitted conform to the
provisions of this Agreement, approve in writing such Construction Plans. Unless rejected by
the Agency for their failure to comply with the foregoing requirements within fifteen (15) days
following submission by the Borrower, said Construction Plans shall be deemed accepted. Such
approval of the Agency shall not relieve Borrower's obligation to obtain any and all approvals
required by the City building department.
IO 10\20\40681 9. I 12
(c) If rejected by the Agency in whole or in part, the Borrower shall submit
new or corrected Construction Plans within thirty (30) days after notification of the Agency's
rejection and the reasons therefore. The Agency shall then have fifteen (15) days to review and
approve the Borrower's new or corrected Construction Plans. The provisions of this Section
relating to time periods for approval, rejection, or resubmission of new or corrected Construction
Plans shall continue to apply until the Construction Plans have been approved by the Agency.
Section 3.3 Commencement of Construction.
The Borrower shall cause the commencement of construction of the Development no
later than January 30, 2012. For the purposes of this Agreement, the term "commencement of
construction" shall mean the date the Borrower commences, or causes the commencement of,
physical work on the Property pursuant to a building permit.
Section 3.4 Completion of Construction.
The Borrower shall diligently prosecute construction of the Development to completion,
and shall cause the completion of the construction of the Development no later than June 30,
2013. For the purposes of this Agreement, the term "completion of construction" shall mean the
date the City issues the Certificate of Occupancy for the lmprovements.
Section 3.5 Construction Pursuant to Plans and Laws: Prevailing Wages.
(a) The Borrower shall construct the Development in conformance with the
Construction Plans approved by the Agency. The Borrower shall notify the Agency in a timely
manner of any changes in the work required to be performed under this Agreement, including
any additions, changes, or deletions to the Construction Plans approved by the Agency. A
written change order authorized by the Agency must be obtained before any of the following
changes, additions, or deletions in work for the Development may be performed: (1) any change
in the work the cost of which exceeds Ten Thousand Dollars ($10,000); or (2) any set of changes
in the work the cost of which cumulatively exceeds Twenty-Five Thousand Dollars ($25,000); or
(3) any material change in building materials or equipment, specifications, or the structural or
architectural design or appearance of the Development as provided for in the Construction Plans
approved by the Agency. Consent to any additions, changes, or deletions to the work shall not
relieve or release the Borrower from any other obligations under this Agreement, or relieve or
release the Borrower or its surety from any surety bond. The Agency shall utilize best efforts to
approve or disapprove change orders within ten ( 10) working days of receipt of a request for
approval.
(b) The Borrower shall cause all work performed in connection with the
Development to be performed in compliance with (i) all applicable laws, ordinances, rules and
regulations offederal, state, county or municipal governments or agencies now in force or that
may be enacted hereafter, and (ii) all directions, rules and regulations of any fire marshal, health
officer, building inspector, or other officer of every governmental agency now having or
hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit,
license, or other authorization that may be required by any governmental agency having
IO I 0\20\406819.1 13
jurisdiction, and the Borrower shall be responsible to the Agency for the procurement and
maintenance thereof, as may be required of the Borrower and all entities engaged in work on the
Development.
(c) Borrower shall and shall cause the contractor and subcontractors to pay
prevailing wages in the construction of the Improvements as those wages are determined
pursuant to Labor Code Sections l 720 et seq., and the implementing regulations of the
Department oflndustrial Relations (the "DIR") and comply with the other applicable provisions
of Labor Code Sections I 720 et~-, including but not limited to the hiring of apprentices as
required by Labor Code Sections 1775 et~-, and the implementing regulations of the DIR.
The Borrower shall and shall cause the contractor and subcontractors to keep and retain such
records as are necessary to determine if such prevailing wages have been paid as required
pursuant to Labor Code Sections 1720 et~-The Borrower shall indemnify, hold harmless and
defend (with counsel reasonably selected by the Agency) the Agency, the City of Carlsbad, and
their agents, official, and employees, and members of the Agency Board and City Council
against any claim for damages, compensation, fines, penalties or other amounts arising out of the
failure or alleged failure of any person or entity (including Borrower, its contractor and
subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 et
~-, to hire apprentices in accordance with Labor Code Sections 1777.5 et seq .. and the
implementing regulations of the DIR or comply with the other applicable provisions of Labor
Code Sections I 720 et~-, and the implementing regulations of the DIR in connection with
construction of the Improvements or any other work undertaken or in connection with the
Property.
Section 3.6 Marketing Plan.
(a) No later than six (6) months prior to the projected date of the completion
of the construction of the Development, the Borrower shall submit to the Agency for approval its
plan for marketing the Development to income-eligible households as required pursuant to the
Regulatory Agreement, including infonnation on affirmative marketing efforts and compliance
with fair housing laws (the "Marketing Plan").
(b) Upon receipt of the Marketing Plan, the Agency shall promptly review the
Marketing Plan and shall approve or disapprove it within thirty (30) days after submission. If the
Marketing Plan is not approved, the Borrower shall submit a revised Marketing Plan within
thirty (30) days following the Borrower's receipt of the Agency's written disapproval. If the
Agency does not approve the revised Marketing Plan because the Borrower fails to make specific
revisions requested by the Agency, the Borrower shall be in default hereunder.
Section 3.7 Relocation.
lf and to the extent that acquisition of the Property or construction of the Development
results in the permanent or temporary displacement of residential tenants, homeowners, or
businesses, then the Borrower shall comply with all applicable local, state, and federal statutes
and regulations, (including without limitation the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970, as amended, California Government Code Section
IO I 0\20\406819.1 14
7260 et seq., and accompanying regulations, as amended) with respect to relocation planning,
advisory assistance, and payment of monetary benefits. The Borrower shall be solely
responsible for payment of any relocation benefits to any displaced persons and any other
obligations associated with complying with such relocation laws. The Borrower shall defend
(with counsel reasonably acceptable to the Agency), the Agency against any claim for damages,
compensation, fines, penalties, relocation payments or other amounts arising out of the failure or
alleged failure of any person or entity (including the Borrower or the Agency) to satisfy
relocation obligations related to the development of the Development. This obli gation to
indemnify shall survive termination of this Agreement.
Section 3.8 Equal Opportunity.
During the construction of the Development there shall be no discrimination on the basis
of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin,
ancestry, or disability in the hiring, firing, promoting, or demoting of any person engaged in the
construction work.
Section 3.9 Progress Reports.
Until such time as the Borrower has completed construction of the Property, as evidenced
by a certificate of occupancy issued by the City, the Borrower shall provide the Agency with
quarterly progress reports regarding the status of the construction of the Development, including
a certification that the actual construction costs to date conform to the Approved Development
Budget, as it may be amended from time to time pursuant to Section 3 .15 below.
Section 3.l O Construction Responsibilities.
(a) It shall be the responsibility of the Borrower to coordinate and schedule
the work to be performed so that commencement and completion of construction will take place
in accordance with this Agreement.
(b) The Borrower shall be solely responsible for all aspects of the Borrower's
conduct in connection with the Development, including (but not limited to) the quality and
suitability of the Construction Plans, the supervision of construction work, and the qualifications,
financial condition, and performance of all architects, engineers, contractors, subcontractors,
suppliers, consultants, and property managers. Any review or inspection undertaken by the
Agency with reference to the Development is solely for the purpose of determining whether the
Borrower is properly discharging its obligations to the Agency, and should not be relied upon by
the Borrower or by any third parties as a warranty or representation by the Agency as to the
quality of the design or construction of the Development.
Section 3.11 Inspections.
The Borrower shall permit and facilitate, and shall require its contractors to permit and
facilitate, observation and inspection at the Development by the Agency and by public
IO I 0\20\4068 I 9.1 15
authorities during reasonable business hours for the purposes of determining compliance with
this Agreement.
Section 3 .12 Approved Development Budget; Revisions to Budget.
As of the date of this Agreement, the Agency has approved the Approved Development
Budget set forth in Exhibit B. The Borrower shall submit any required amendments to the
Approved Development Budget to the Agency for approval within fifteen (15) days of the date
the Borrower receives information indicating that actual costs of the Development vary or will
vary from the costs shown on the Approved Development Budget. Written consent of the
Agency shall be required to amend the Approved Development Budget. The Agency shall
utilize best efforts to approve or disapprove requested amendments to the Development Budget
within five (5) working days of receipt of a request for approval.
Section 3.13 Information.
The Borrower shall provide any information reasonably requested by the Agency in
connection with the Development.
Section 3 .14 Records.
(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 Agency to inspect and copy records.
Such records shall include all invoices, receipts, and other documents related to expenditures
from the Loan funds. Records must be kept accurate and current.
(b) The Agency shall notify the Borrower of any records it deems insufficient.
The Borrower shall have twenty-one (21) calendar days after the receipt of such a notice to
correct any deficiency in the records specified by the Agency in such notice, or if a period longer
than twenty-one (21) days is reasonably necessary to correct the deficiency, then the Borrower
shall begin to correct the deficiency within twenty-one (21) days and correct the deficiency as
soon as reasonably possible.
Section 3. 15 Aud its.
The Borrower shall make available for examination at reasonable intervals and during
normal business hours to Agency all books, accounts, reports, files, and other papers or property
with respect to all matters covered by this Agreement, and shall permit Agency to audit,
examine, and make excerpts or transcripts from such records. Agency may make audits of any
conditions relating to this Agreement.
Section 3 .16 Hazardous Materials.
(a) The Borrower shall keep and maintain the Property in compliance with,
and shall not cause or permit the Property to be in violation of any federal, state or local laws,
IO I 0\20\406819.1 16
ordinances or regulations relating to industrial hygiene or to the environmental conditions on,
under or about the Property including, but not limited to, soil and ground water conditions. The
Borrower shall not use, generate, manufacture, store or dispose of on, under, or about the
Property or transport to or from the Property any flammable explosives, radioactive materials,
hazardous wastes, toxic substances or related materials, including without limitation, any
substances defined as or included in the definition of "hazardous substances," hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or state laws or
regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the
foregoing as may be used in construction of the Development or customarily kept and used in
and about residential property of this type.
(b) The Borrower shall immediately advise the Agency in writing if at any
time it receives written notice of (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against the Borrower or
the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations
relating to any Hazardous Materials, ("Hazardous Materials Law"); (ii) all claims made or
threatened by any third party against the Borrower or the Property relating to damage,
contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials
(the matters set forth in clauses (i) and (ii) above are hereinafter 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 Property that could cause the Property or any part
thereof to be classified as "border-zone property" under the provision of California Health and
Safety Code, Sections 25220 et~-, or any regulation adopted in accordance therewith, or to be
otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the
Property under any Hazardous Materials Law.
( c) The Agency shall have the right to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated in connection with any Hazardous Materials
Claims and to have its reasonable attorneys' fees in connection therewith paid by the Borrower.
The Borrower shall indemnify and hold harmless the Agency and the City, and their council
members, board members, directors, officers, employees, agents, successors and assigns from
and against any loss, damage, cost, expense or liability directly or indirectly arising out of or
attributable to the use, generation, storage, release, threatened release, discharge, disposal, or
presence of Hazardous Materials on, under, or about the Property including without limitation:
(a) all foreseeable consequential damages; (b) the costs of any required or necessary repair,
cleanup or detoxification of the Property and the preparation and implementation of any closure,
remedial or other required plans; and (c) all reasonable costs and expenses incurred by the
Agency in connection with clauses (a) and (b ), including but not limited to reasonable attorneys'
fees. This obligation to indemnify shall survive termination of this Agreement, but shall not
apply to the extent of the Agency's gross negligence or willful misconduct.
(d) Without the Agency'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 Property, nor enter into any
settlement agreement, consent decree, or other compromise in respect to any Hazardous Material
Claims, which remedial action, settlement, consent decree or compromise might, in the Agency's
I 010\20\406819.l 17
reasonable judgment, impair the value of the Agency's security hereunder; provided, however,
that the Agency's prior consent shall not be necessary in the event that the presence of Hazardous
Materials on, under, or about the Property either poses an immediate threat to the health, safety
or welfare of any individual or is of such a nature that an immediate remedial response is
necessary and it is not reasonably possible to obtain the Agency's consent before taking such
action, provided that in such event the Borrower shall notify the Agency as soon as practicable of
any action so taken. The Agency 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 Agency that there is no reasonable alternative to such remedial action which would result in
less impairment of the Agency's security hereunder; or (iv) the action has been agreed to by the
Agency.
(e) The Borrower hereby acknowledges and agrees that (i) this Section is
intended as the Agency's written request for information (and the Borrower's response)
concerning the environmental condition of the Property as required by California Code of Civil
Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together
with any indemnity obligation applicable to a breach of any such representation and warranty)
with respect to the environmental condition of the Property is intended by the Parties to be an
"environmental provision" for purposes of California Code of Civil Procedure Section 736.
(t) In the event that any portion of the Property is determined to be
"environmentally impaired" (as that term is defined in California Code of Civil Procedure
Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of
Civil Procedure Section 726.5(e)(l )), then, without otherwise limiting or in any way affecting the
Agency's or the trustee's rights and remedies under the Deed of Trust, the Agency may elect to
exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien
on such environmentally impaired or affected portion of the Property and (2) exercise (a) the
rights and remedies of an unsecured creditor, including reduction of its claim against the
Borrower to judgment, and (b) any other rights and remedies permitted by law. For purposes of
determining the Agency's right to proceed as an unsecured creditor under California Code of
Civil Procedure Section 726.5(a), the Borrower shall be deemed to have willfully permitted or
acquiesced in a release or threatened release of hazardous materials, within the meaning of
California Code of Civil Procedure Section 726.5( d)(l ), if the release or threatened release of
Hazardous Materials was knowingly or negligently caused or contributed to by any lessee,
occupant, or user of any portion of the Property and the Borrower knew or should have known of
the activity by such lessee, occupant, or user which caused or contributed to the release or
threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred
by the Agency in connection with any action commenced under this paragraph, including any
action required by California Code of Civil Procedure Section 726.5(b) to determine the degree
to which the Property is environmentally impaired, plus interest thereon at the rate specified in
the Note until paid, shall be added to the indebtedness secured by the Deed of Trust and shall be
due and payable to the Agency upon its demand made at any time fo llowing the conclusion of
such action.
IO I 0\20\4068 I 9.1 18
Section 3.17 Fees and Taxes.
The Borrower shall be solely responsible for payment of all fees, assessments, taxes,
charges, and levies imposed by any public authority or utility company with respect to the
Property or the Development to the extent owned by the Borrower, and shall pay such charges
prior to delinquency. However, the Borrower shall not be required to pay and discharge any
such charge so long as (a) the legality thereof is being contested diligently and in good faith and
by appropriate proceedings, and (b) ifrequested by the Agency, the Borrower deposits with the
Agency any funds or other forms of assurance that the Agency in good faith from time to time
determines appropriate to protect the Agency from the consequences of the contest being
unsuccessful.
Section 3.18 Notice of Litigation.
The Borrower shall promptly notify the Agency in writing of any litigation affecting the
Borrower or the Property and of any claims or disputes that involve a material risk of litigation.
Section 3.19 Operation of Development as Affordable Housing.
(a) Promptly following the completion of construction of the Improvements,
the Borrower shall continuously operate and maintain the Development as multifamily housing
rented to eligible occupants at rent levels in conformity with the Regulatory Agreement and this
Agreement.
(b) Before leasing any Unit in the Development, the Borrower shall submit its
proposed form of lease agreement for the Agency's review and approval.
(c) Before leasing any Unit in the Development, the Borrower must provide
the Agency, for its review and approval, with the Borrower's written tenant selection plan.
(d) The Borrower must determine the income eligibility of each tenant
household occupying a Unit pursuant to the Agency's approved tenant certification procedures
no later than sixty (60) days before the household's expected occupancy. The Borrower shall
certify each tenant household's income on an annual basis.
(e) The maximum household income of a household occupying a Unit, and
the total charges for rent, utilities, and related services to each household occupying a Unit, shall
be maintained as provided in the Regulatory Agreement.
Section 3.20 Non-Discrimination.
The Borrower covenants by and for itself and its successors and assigns that there shall
be no discrimination against or segregation of a person or of a group of persons on account of
race, color, religion, creed, sex, sexual orientation, marital status, familial 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
I 010\20\406819.1 19
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the Development.
Section 3.21 Mandatory Language in All Subsequent Deeds, Leases and Contracts.
All deeds, leases or contracts made or entered into by the Borrower, its successors or
assigns, as to any portion of the Development shall contain therein the fo llowing language:
IO I0\20\406819.1
(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, familial 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 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, familial 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,
sub lessees, subtenants, or vendees in the land herein leased."
(c) 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, familial status, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
property nor shall the transferee or any person claiming under or through
the transferee establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
20
number, use or occupancy of tenants, lessees, subtenants, sub lessees or
vendees of the land."
Section 3.22 Insurance Requirements.
The Borrower shall maintain the following insurance coverage throughout the Loan
Term:
(a) Workers' Compensation insurance to the extent required by law, including
Employer's Liability coverage, with limits not less than One Million Dollars ($1 ,000,000) each
accident.
(b) Commercial General Liability insurance with limits not less than Two
Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverage for Contractual Liability, Personal Injury, Broadform
Property Damage, and Products and Completed Operations.
(c) Comprehensive Automobile Liability insurance with limits not less than
One Million Dollars ($1 ,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverage for owned, non-owned and hired vehicles, as applicable;
provided, however, that if the Borrower does not own or lease vehicles for purposes of this
Agreement, then no automobile insurance shall be required.
(d) Property insurance, including builder's risk insurance during the course of
construction, covering the Development, in form appropriate for the nature of such property,
covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the
replacement value, with deductible, if any, acceptable to the Agency, naming the Agency as a
Loss Payee, as its interests may appear. Flood insurance shall be obtained if required by
applicable federal regulations.
(e) The Borrower shall cause any general contractor or agent working on the
Development under direct contract with the Borrower to maintain insurance of the types and in at
least the minimum amounts described in subsections (a), (b), and (c) above, except that the limit
of liability for commercial general liability insurance for subcontractors shall be One Million
Dollars ($1,000,000), and shall require that such insurance shall meet all of the general
requirements of subsections ( e ), (f), and (g) below, including, without limitation, the requirement
of subsection (f). Subcontractors working on the Development under indirect contract with the
Borrower shall be required to maintain the insurance described in subsections (a), (b), and (c)
above. Liability and Comprehensive Automobile Liability insurance to be maintained by such
contractors and agents pursuant to this subsection shall name as additional insureds the City, the
Agency, their officers, agents, employees and board members, and members of the City Council.
(f) The required insurance shall be provided under an occurrence form, and
the Borrower shall maintain such coverage continuously so long as the Note is outstanding.
Should any of the required insurance be provided under a form of coverage that includes an
annual aggregate limit or provides that claims investigation or legal defense costs be included in
I OJ 0\20\406819.1 21
such annual aggregate limit, such annual aggregate limit shall be three times the occurrence
limits specified above.
(g) Commercial General Liability and Property insurance policies shall be
endorsed to name as an additional insured the City, the Agency, and their officers, agents,
employees and members of the City Council and Agency Board.
(h) All policies and bonds shall contain (a) the agreement of the insurer to
give the Agency at least thirty (30) days' notice prior to cancellation (including, without
limitation, for non payment of premium) or any material change in said policies; (b) an
agreement that such policies are primary and non contributing with any insurance that may be
carried by the Agency; (c) a provision that no act or omission of the Borrower shall affect or
limit the obligation of the insurance carrier to pay the amount of any loss sustained; and ( d) a
waiver by the insurer of all rights of subrogation against the Agency and its authorized parties in
connection with any loss or damage thereby insured against.
Section 3.23 Developer Fee.
The maximum cumulative developer fee that may be paid to any entity or entities
providing development services to the Development, whether paid up-front or on a deferred
basis, shall not exceed One Million Eight Hundred Seventy Thousand Dollars ($1 ,870,000).
ARTJCLE 4
ASSJGNMENT AND TRANSFERS
Section 4.1 Definitions.
As used in this Article Four, the term "Transfer" means:
(a) Any total or partial sale, lease, assignment, or other conveyance, or any
trust or power, or any transfer in any other mode or form, of or with respect to this Agreement or
of any part of or interest in the Development, or any agreement to do any of the foregoing; or
(b) Any total or partial sale, assignment, or other conveyance, or any trust or
power, or any transfer in any other mode or form, of or with respect to any ownership interest in
the Borrower or any agreement to do any of the foregoing.
Section 4.2 Purpose of Restrictions on Transfer.
This Agreement is entered into solely for the purpose of the Borrower's construction and
operation of the Development in accordance with the terms of this Agreement and the
Regulatory Agreement. The qualifications and identity of the Borrower are of particular concern
to the Agency, in view of:
(a) The importance of the development of the Property to the general welfare
of the community;
IO 10\20\40681 9.1 22
(b) The public aids that have been made available by law and by the
government for the purpose of making such development possible;
(c) The reliance by the Agency upon the unique qualifications and ability of
the Borrower to serve as the catalyst for development of the Property and upon the continuing
interest which the Borrower will have in the Property to assure the quality of the use, operation,
and maintenance deemed critical by the Agency in the development of the Property;
(d) The fact that a change in ownership or control of the owner of the
Property, or of a substantial part thereof, or any other act or transaction involving or resulting in
a significant change in ownership or with respect to the identity of the parties in control of the
Borrower or the degree thereof, is for practical purposes a transfer or disposition of the Property;
and
(e) The importance to the Agency of the standards of use, operation, and
maintenance of the Property.
It is because of the qualifications and identity of the Borrower that the Agency is entering
into this Agreement and that Transfers are permitted only as provided in this Agreement.
Section 4.3 Prohibited Transfers.
The limitations on Transfers set forth in this Article Four shall apply throughout the
Term. Except as expressly permitted in this Agreement, the Borrower represents that it has not
made or created, and agrees that it will not make or create or suffer to be made or created, any
Transfer, either voluntarily or by operation of law, without the prior written approval of the
Agency.
Any Transfer made in contravention of this Section 4.3 shall at the Agency's discretion be
void and shall be deemed to be a default under this Agreement, whether or not the Borrower
knew of or participated in such Transfer.
Section 4.4 Permitted Transfers Without Prior Agency Approval.
The only Transfer permitted at any time without the prior approval of the Agency is the
rental of a Unit by the Borrower in the ordinary course of business and in compliance with the
Regulatory Agreement.
Section 4.5 Permitted Transfers With Prior Approval; Agency Pre-Approved
Transfers.
(a) Except as permitted under Section 4.4, any Transfer shall be permitted
only after (a) the Agency, in its sole discretion, has delivered to the Borrower its prior written
approval of such Transfer, and (b) the transferee has assumed the Borrower's obligations under
this Agreement by signing an assignment and assumption agreement, in a form prepared by the
Agency, and such other reasonable documentation as the Agency may reasonably require to
IO I 0\20\406819.1 23
evidence such transferee's assumption of the Borrower's duties and obligations under the Loan
Documents.
(b) The Borrower anticipates syndicating the Tax Credits that will be
generated by the Development, which syndication will require the admission of the Tax Credit
Investor as a limited partner in the Borrower. The Agency hereby approves the admission of the
Tax Credit lnvestor to the Borrower, provided that: (i) the partnership agreement of the
Borrower provides for capital contributions consistent with Section 1.l(d) above and is first
approved by the Agency in its reasonable discretion; and (ii) all documents associated with the
Tax Credit syndication of the Development are submitted to the Agency for approval prior to
execution, which approval shall not be unreasonably withheld;
(c) The Agency hereby approves Transfer of the limited partner interest in the
Borrower by the Tax Credit lnvestor provided that: (i) such transfers do not affect the timing
and amount of the remaining limited partner capital contributions provided for in and subject to
the terms of the partnership agreement agreed to by the Agency; (ii) in subsequent transfers, an
entity under the Control of Meta Housing or Wells Fargo Bank retains a membership interest and
serves as a managing member or general partner of the successor limited partner; and (iii) in
subsequent transfers the Tax Credit Investor remains liable for all unpaid capital contributions
payable in accordance with the terms of the Borrower's partnership agreement.
(d) In the event the general partner of the Borrower is removed by the limited
partner of the Borrower following default under the Borrower's partnership agreement, the
Agency hereby approves the transfer of the general partner interest to an entity under the Control
of Meta Housing or Wells Fargo Bank.
Section 4.6 Release of the Borrower.
Upon all of the terms of this Article Four being satisfied for a permitted Transfer to be
effective, the Borrower or the successor transferor party, as applicable, shall be released from all
liability under this Agreement so transferred arising subsequent to the effectiveness of such
Transfer.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 5.1 Representations and Warranties.
(a) The Borrower hereby represents to the Agency as follows:
(]) Organization. The Borrower is a duly organized, validly existing
California limited partnership and is in good standing under the laws of the State of California
and has the power and authority to own its property and carry on its business as now being
conducted.
IO I 0\20\406819.1 24
(2) Authority of the Borrower. The Borrower has full power and
authority to execute and deliver this Agreement and to make and accept the borrowings
contemplated hereunder, to execute and deliver the 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.
(3) Authority of Persons Executing Documents. This Agreement and
the Loan Documents and all other documents or instruments executed and delivered, or to be
executed and delivered, pursuant to this Agreement have been executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of the Borrower, and
all actions required under the Borrower's organizational documents and applicable governing law
for the authorization, execution, delivery and performance of this Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Agreement, have been duly taken.
(4) Valid Binding Agreements. 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 the
Borrower enforceable against it in accordance with their respective terms.
(5) No Breach of Law or Agreement. Neither the execution nor
delivery of this Agreement and the Loan Documents or of any other documents or instruments
executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the
performance of any provision, condition, covenant or other term hereof or thereof, will conflict
with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of
any court, board, commission or agency whatsoever binding on the Borrower, or any provision
of the organizational documents of the Borrower, or will conflict with or constitute a breach of or
a default under any agreement to which the Borrower is a party, or will result in the creation or
imposition of any lien upon any assets or property of the Borrower, other than liens established
pursuant hereto.
(6) Pending Proceedings. The Borrower is not in default under any
law or regulation or under any order of any court, board, commission or agency whatsoever, and
there are no claims, actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or the Property, at law or in equity, before or by any
court, board, commission or agency whatsoever which might, if determined adversely to the
Borrower, materially affect the Borrower's ability to repay the Loan or impair the security to be
given to the Agency pursuant hereto.
(b) The Borrower hereby warrants to the Agency as follows:
(I) Compliance With Laws; Consents and Approvals. The
construction of the Development will comply with all applicable laws, ordinances, rules and
regulations offederal, state and local governments and agencies, including without limitation any
requirements imposed by the California Tax Credit Allocation Committee ("TCAC") and with
IO I 0\20\406819.1 25
all applicable directions, rules and regulations of the fire marshal, health officer, building
inspector and other officers of any such government or agency. The Development shall be
constructed substantially in accordance with the Construction Plans approved by the Agency
pursuant to Section 3.2.
(2) Title to Land. At the time of recordation of the Deed of Trust and
the Regulatory Agreement, the Borrower will have good and marketable fee title to the Property
and there will exist thereon or with respect thereto no mortgage, lien, pledge or other
encumbrance of any character whatsoever other than liens for current real property taxes and
assessments not yet due and payable, and liens in favor of the Agency or approved in writing by
the Agency.
(3) Financial Statements. The financial statements of the Borrower
and other financial data and information furnished by the Borrower to the Agency fairly present
the information contained therein. As of the date of this Agreement, there has not been any
adverse, material change in the financial condition of the Borrower from that shown by such
financial statements and other data and information.
( 4) Sufficient Funds. The Borrower holds sufficient funds and/or
binding commitments for sufficient funds to complete the acquisition of the Property and the
construction of the Development in accordance with the plans and specifications approved by the
Agency.
ARTICLE 6
DEF AULT AND REMEDIES
Section 6.1 Events of Default.
Each of the following shall constitute a "Default" by the Borrower under this Agreement:
(a) Failure to Obtain Approvals. Failure of the Borrower to obtain all
planning approvals and building permits necessary to construct the Development within the time
set forth in Article 3.
(b) Failure to Make Payment. Failure to repay the principal and any interest
on the Loan that is due and payable to the Agency pursuant to the Loan Documents following
written notice by the Agency to the Borrower and the Tax Credit Investor of such failure and
thirty (30) days opportunity to cure.
(c) Failure to Construct. Failure of the Borrower to commence and complete
construction of the Development within the time frames set forth in Article 3 above.
( d) Breach of Covenants. Failure by the 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
10 I 0\20\406819.1 26
by the Borrower and the Tax Credit Investor from Agency or, if the breach cannot be cured
within thirty (30) days, the Borrower shall not be in breach so long as the Borrower is diligently
undertaking to cure such breach and such breach is cured within ninety (90) days from the date
of the Agency's written notice to the Borrower and the Tax Credit Investor; provided, however,
that if a different period or notice requirement is specified under any other section of this Article
6, the specific provisions shall control.
(e) Default Under Other Loans. A default is declared under the Approved
Financing or any other financing secured against the Property by the lender of such financing,
following the expiration of any applicable grace or cure period.
(f) Insolvency. A court having jurisdiction shall have made or entered any
decree or order (i) adjudging the Borrower to be bankrupt or insolvent, (ii) approving as properly
filed a petition seeking reorganization of the Borrower or seeking any arrangement for the
Borrower under the bankruptcy law or any other applicable debtor's relief law or statute of the
United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or
assignee of the Borrower in bankruptcy or inso lvency or for any of their properties, (iv) directing
the winding up or liquidation of the 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 (v) the 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 Agency,
the indebtedness evidenced by the Note.
(g) Assignment; Attachment. The 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, if sooner,
prior to 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 Agency, the indebtedness evidenced by the Note.
(h) Suspension; Dissolution. The Borrower shall have voluntarily suspended
its business or the dissolution of the Borrower.
(i) Liens on Property and the Development. There shall be filed any claim of
lien (other than liens approved in writing by the Agency) against the Development, the Property,
or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice
to withhold proceeds of the Loan and the continued maintenance of said claim of lien or notice to
withhold for a period of twenty (20) days without discharge or satisfaction thereof or provision
therefore (including, without limitation, the posting of bonds) satisfactory to the Agency.
U) Condemnation. The condemnation, seizure, or appropriation of all or the
substantial part of the Property and the Development, except that condemnation by the Agency
shall cause the Loan to accelerate but shall not be a Default.
IO I 0\20\406819.1 27
(k) Unauthorized Transfer. Any Transfer other than as permitted by Article 4
or approved by the Agency in writing.
(1) Representation or Warranty lncorrect. Any representation or warranty of
the Borrower contained in this Agreement, or in any application, financial statement, certificate,
or report submitted to the Agency in connection with any of the Loan Documents, proves to have
been incorrect in any material and adverse respect when made.
(m) Insufficient Funds. The Borrower fails to obtain funds, or commitment of
funds, sufficient to acquire the Property and develop the Development, as determined by the
Agency in the Agency's reasonable discretion.
(n) Applicability to General Partner. In the event the Borrower is a
partnership, the occurrence of any of the events set forth in subsection (f), subsection (g), or
subsection (h) in relation to the general partner of Borrower. Occurrences under this subsection
will not constitute a default if, within thirty (30) days of notice of such event, the Investor
commences and diligently pursues the removal and replacement of the offending General Partner
pursuant to the permitted transfer provisions of Section 4.5( d).
Section 6.2 Remedies.
The Agency agrees that any cure of a Default by the Tax Credit Investor, or other limited
partners of the Borrower shall be deemed to be a cure by the Borrower, and shall be accepted or
rejected on the same basis as if made or tendered by the Borrower. The occurrence of any
Default hereunder following the expiration of all applicable notice and cure periods will, either at
the option of the Agency or automatically where so specified, relieve the Agency of any
obligation to make or continue the Loan and shall give the Agency the right to proceed with any
and all remedies set forth in this Agreement and the Loan Documents, including but not limited
to the following:
(a) Acceleration of Note. Subject to the provisions of Section 2.8, the Agency
shall have the right to cause all indebtedness of the Borrower to the Agency under this
Agreement and the 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 Agency may proceed to enforce payment of the indebtedness and to exercise
any or all rights afforded to the Agency as a creditor and secured party under the law including
the Uniform Commercial Code, and including foreclosure under the Deed of Trust. The
Borrower shall be liable to pay the Agency on demand all reasonable expenses, costs and fees
(including, without limitation, reasonable attorney's fees and expenses) paid or incurred by the
Agency 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) Specific Performance. The Agency shall have the right to mandamus or
other suit, action or proceeding at law or in equity to require the Borrower to perform its
I 010\20\406819.1 28
obligations and covenants under the Loan Documents or to enjoin acts on things which may be
unlawful or in violation of the provisions of the Loan Documents.
(c) Right to Cure at the Borrower's Expense. The Agency shall have the right
(but not the obligation) to cure any monetary default by the Borrower under a loan other than the
Loan. The Borrower agrees to reimburse the Agency for any funds advanced by the Agency to
cure a monetary default by the Borrower upon demand therefore, together with interest thereon
at the lesser of the maximum rate permitted by law or ten percent(] 0%) per annum from the date
of expenditure until the date of reimbursement.
Section 6.3 Assignment of Plans, Data and Approvals. If this Agreement is
terminated pursuant to Section 6.2, then the Borrower shall promptly assign and deliver to the
Agency, copies of all plans, studies, reports, data and specifications for the Development, all
permits and approvals obtained in connection with the Development, and all applications for
permits and approvals not yet obtained but needed in connection with the Improvements
(collectively, the "Planning Documents"). The Planning Documents shall be delivered by the
Borrower without any warranties or representations of any type or kind, express or implied,
including whether the Planning Documents have been completed in final form. The Agency
agrees and acknowledges that all such Planning Documents will be delivered subject to the rights
of any copyright holders.
Section 6.4 Remedies Cumulative.
Subject to the non-recourse provisions contained in the Note, no right, power, or remedy
given to the Agency by the terms of this Agreement or the Loan Documents is intended to be
exclusive of any other right, power, or remedy; and each and every such right, power, or remedy
shall be cumulative and in addition to every other right, power, or remedy given to the Agency
by the terms of any such instrument, or by any statute or otherwise against the Borrower and any
other person. Neither the failure nor any delay on the part of the Agency to exercise any such
rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by
the Agency of any such right or remedy preclude any other or further exercise of such right or
remedy, or any other right or remedy.
Section 7.1
ARTICLE 7
GENERAL PROVISIONS
Relationship of Parties.
Nothing contained in this Agreement shall be interpreted or understood by any of the
parties, o r by any third persons, as creating the relationship of employer and employee, principal
and agent, limited or general partnership, or joint venture between the Agency and the Borrower
or the Borrower's agents, employees or contractors, and the Borrower shall at all times be
deemed an independent contractor and shall be wholly responsible for the manner in which it or
its agents, or both, perform the services required of it by the terms of this Agreement for the
development of the Development. In regards to the development of the Development, the
IO 10\20\406819.1 29
Borrower shall be solely responsible for all matters relating to payment of its employees,
including compliance with Social Security, withholding and all other laws and regulations
governing such matters, and shall include requirements in each contract that contractors sha ll be
solely responsible for similar matters relating to their employees. The Borrower agrees to be
solely responsible for its own acts and those of its agents and employees.
Section 7.2 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the Agency,
by any person the Borrower may have employed or with whom the Borrower may have
contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the
performance of any work or services with respect to the development of the Development, and
the Borrower shall include similar requirements in any contracts entered into for the
development of the Development.
Section 7.3 Amendments.
No alteration or variation of the terms of this Agreement shall be valid unless made in
writing by the Parties.
Section 7.4 Entire Understanding of the Parties.
This Agreement constitutes the entire understanding and agreement of the Parties with
respect to the Loan.
Section 7.5 Indemnification.
Except as directly caused by the Agency's gross negligence or willful misconduct, the
Borrower agrees to indemnify, protect, hold harmless and defend (by counsel reasonably
satisfactory to the Agency), the Agency and the City and their board members, council members,
officers and employees, from all suits, actions, claims, causes of action, costs, demands,
judgments and liens arising out of: (i) the Borrower's performance or non-performance of its
obligations under this Agreement; (ii) the Borrower's ownership of the Property; (iii) the
development, marketing, rental and operation of the Development, or (iv), or any documents
executed by the Borrower in connection with the Development. The provisions of this Section
7 .5 shall survive termination of this Agreement.
Section 7.6 Non-Liability of Agency and City Officials. Employees and Agents.
No member, official, employee or agent of the Agency or the City shall be personally
liable to the Borrower, or any successor in interest, in the event of any Default or breach by the
Agency, or for any amount which may become due to the Borrower or its successor or on any
obligation under the terms of this Agreement.
Section 7. 7 No Third Party Beneficiaries.
1010\201406819.1 30
Except for the City, there shall be no third party beneficiaries to this Agreement.
Section 7.8 Action by the Agency.
Except as may be otherwise specifically provided herein, whenever any approval, notice,
direction, consent, request, extension of time, waiver of condition, termination, or other action by
the Agency is required or permitted under this Agreement, such action may be given, made, or
taken by the Agency Executive Director without further approval by the Agency Board, and any
such action shall be in writing. The amount of the Loan may not be increased without approval
of the Agency Board.
Any consents or approvals required under this Agreement shall not be unreasonably
withheld or made, except where it is specifically provided that a sole discretion standard applies.
The Agency Executive Director is also hereby authorized to approve, on behalf of the Agency,
requests by the Borrower for reasonable extensions of time deadlines set forth in this Agreement.
The Agency shall not unreasonably delay in reviewing and approving or disapproving any
proposal by the Borrower made in connection with this Agreement.
Section 7 .9 Waivers.
Any waiver by the Agency of any obligation or condition in this Agreement must be in
writing. No waiver will be implied from any delay or failure by the Agency to take action on
any breach or default of the Borrower or to pursue any remedy allowed under this Agreement or
applicable law. Any extension oftime granted to the Borrower to perform any obligation under
this Agreement shall not operate as a waiver or release from any of its obligations under this
Agreement. Consent by the Agency to any act or omission by the Borrower shall not be
construed to be a consent to any other or subsequent act or omission or to waive the requirement
for the Agency's written consent to future waivers.
Section 7.10 Notices, Demands and Communications.
Formal notices, demands, and communications between the Agency and the Borrower
shall be sufficiently given if and shall not be deemed given unless dispatched by registered or
certified mail, postage prepaid, return receipt requested, or delivered by reputable overnight
delivery service, return receipt requested, or delivered personally, to the principal office of the
Agency and the Borrower as follows:
IO I 0\20\406819.1
Agency:
Carlsbad Redevelopment Agency
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008
Attn: Executive Director
31
Borrower:
Tavarua Senior Apartments, L.P
C/O Meta Housing
1640 Sepulveda Blvd., Ste 425
Los Angeles, Ca 90025
Attn: John Huskey
with a copy to:
Bocarsly Emden
633 W. Fifth Street, 70th Floor
Los Angeles, Ca. 90071
Attn: Lance Bocagly
With a copy to Tax Credit Investor:
Wells Fargo Affordable Housing Community Development Corporation
MAC D1053-l70
301 South College Street
Charlotte, NC 28288
Attention: Director of Tax Credit Asset Management
Such written notices, demands and communications may be sent in the same manner to such
other addresses as th~ affected party may from time to time designate by mail as provided in this
Section. Receipt shall be deemed to have occurred on the date shown on a written receipt for
delivery or refusal of delivery.
Section 7.11 Applicable Law and Venue.
This Agreement will be governed by California law. Any action brought claiming a
breach of this Agreement or interpreting this Agreement shall be brought and venued in San
Diego County, California.
Section 7 .12 Parties Bound.
Except as otherwise limited herein, the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties and their he irs, executors, administrators, legal
representatives, successors and assigns. This Agreement is intended to run with the land and
shall bind the Borrower and its successors and assigns in the Property and the Development for
the entire Term, and the benefit hereof shall inure to the benefit of the Agency and its successors
and assigns.
1010\20\406819.1 32
Section 7 .13 Severabi I ity.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions shall continue in full force and effect
unless the rights and obligations of the parties have been materially altered or abridged by such
invalidation, voiding or unenforceability.
Section 7 .14 Force Majeure.
ln addition to specific provisions of this Agreement, performance by either Party shall not
be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock-
outs; riots; fl oods; earthquakes; fires; quarantine restrictions; freight embargoes; lack of
transportation; or court order; or any other similar causes (other than lack of funds of the
Borrower or the Borrower's inability to finance the construction of the Development) beyond the
control or without the fault of the Party claiming an extension of time to perform. An extens ion
of time for any cause will be deemed granted if notice by the Party claiming such extension is
sent to the other within ten (10) days from the commencement of the cause and the Party
granting the extension agrees to the extension in writing. In no event shall the Agency be
required to agree to cumulative delays in excess of one hundred eighty (180) days.
Section 7.15 Attorneys Fees.
If any lawsuit is commenced to enforce any of the provisions of this Agreement, the
prevailing party may recover its reasonable attorneys fees and costs of the suit.
Section 7 .16 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and shall be disregarded in interpreting any part of the Agreement's provisions.
Section 7.17 Multiple Originals: Counterpart.
This Agreement may be executed in multiple originals, each of which is deemed to be an
orig inal, and may be signed in counterparts.
Remainder of Page Left Intentionally Blank
IO 10\20\406819.1 33
WHEREFORE, this Agreement has been entered into by the undersigned as of the date
first al;,ove written.
TAVARUA SENIOR APARTMENTS, L.P.,
A California limited partnership
By. WCH Affordable VII. LLC
Its: Managing General Partner
By: Western Community Housing, Inc.
Its: Sole Managing Member of the Managing General Partner
By~f~ Gra~. 'Esple~ "'--
Its: President
By. Tavarua Senior Apartments, LLC,
a California limited liability company
Its: Administrative General Partner
By:
John M. Hus key
Its: Member
IO I 0\20\4068 I 9.1
AGENCY:
CARLSBAD REDEVELOPMENT AGENCY,
a public body, corporate, and politic
By: _____________ _
Name: ----------------
Its: ________________ _
34
WHEREFORE, this Agreement has been entered into by the undersigned as of the date
first above written.
TAVARUA SENIOR APARTMENTS, L.P.,
A California limited partnership
By. WCH Affordable VII. LLC
Its: Managing General Partner
By: Western Community Housing, Inc.
Its: Sole Managing Member of the Managing General Partner
By: ___________ _
Graham P. Espley-Jones
Its: President
By. Tavarua Senior Apartments, LLC,
a California limited liability company
Its: Administrati eneral Partner
By:
IO I 0\20\406819.1
AGENCY:
CARLSBAD REDEVELOPMENT AGENCY,
a public body, corporate, and politic
Name: LI.SA \-\ILDABRAN D
lts: E)(eC..\JT\"1 E DI RECT6R
34
APPROVED AS TO FORM:
~-
,/R-onald Ball] ,k-: ef' /j r -7
Agency Counsel / 2✓ 1 :.z-//
l 0 I 0\20\406819.1 35
EXHIBIT A
LEGAL DESCRlPTION OF THE PROPERTY
LEGAL DESCRIPTION
Real property in the City of Carlsbad, County of San Diego, State of California, described as
follows:
"PARCEL A" AS SHOWN ON CERTIFICATE OF COMPLIANCE WITH CONDITIONS EVIDENCED BY
DOCUMENT RECORDED SEPTEMBER 7, 1993 AS INSTRUMENT NO. 93-0588928 OF OFFICIAL
RECORDS, DESCRIBED AS FOLLOWS:
ALL OF LOT 5 AND LOT 6 AND THE NORTHERLY 4.85 FEET OF LOT 4 IN BLOCK "B" OF THE
RESUBDIVISION OF A PORTION OF ALLES AVOCADO ACRES, IN THE CITY OF CARLSBAD,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 2027,
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MAY 17, 1927,
AND; THAT PART OF THAT PORTION OF LOTS 7 AND 8 IN BLOCK "B" OF THE RESUBDIVISION
OF A PORTION OF ALLES AVOCADO ACRES AS SHOWN ON MAP NO. 2027, FILED IN THE
OFFICE OF THE RECORDER OF SAN DIEGO COUNTY, MAY 17, 1927, AS SAID PORTION WAS
CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED JANUARY 6, 1967 AS
INSTRUMENT NO. 1884 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY. SAID PART HEREBY
CONVEYED LYING SOUTHWESTERLY OF THAT PORTION OF THE SOUTHWESTERLY LINE OF
THE STATE HIGHWAY 11-SD-5-48.8 DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT WHICH BEARS SOUTH 67 DEGREES 26' 53" WEST, 108.72 FEET FROM
ENGINEER'S STATION 178 + 10 OF THE "O" LINE OF THE 1964 SURVEY FOR SAID HIGHWAY
BETWEEN CANNON ROAD AND BUENA VISTA CREEK; THENCE ALONG SAID SOUTHWESTERLY
LINE NORTH 22 DEGREES 41' 17" WEST, 344.41 FEET TO NORTHERLY LINE OF PALM AVENUE
SHOWN AS ALLES AVENUE ON SAID MAP NO. 2027; THENCE CONTINUING NORTH 22 DEGREES
41 ' 17" WEST, 195.59 FEET TO A POINT WHICH BEARS SOUTH 67 DEGREES
26' 53" WEST, 110.00 FEET FROM ENGINEER'S STATION 183 + 50 OF SAID "O" LINE.
APN: 204-192-12-00
IO I 0\20\406819.1 A-1
EXHIBITB
APPROVED DEVELOPMENT BUDGET
B-1
IO I 0\20\4068 I 9.1