HomeMy WebLinkAbout1994-07-19; Housing & Redevelopment Commission; 254; Villas at El Camino Real Affordable Housing Proj., j/r>; @c’:.-). J HOUSING ANC-QEDEVELOPMENT COMWFON - AGENDA BILL Arb 0 oz.
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AB#-&&.k- JITLE
MTG.7/19/94 AGREEMENTS/DOCUMENTS RELATED TO CONSTRUCTION
OF THE VILLAS AT EL CAMINO REAL AFFORDABLE
DEPT. RED. HOUSING PROJECT WITHIN THE CITY LIMITS
OF CARLSBAD.
RECOMMENDED ACTION:
ADOPT Housing and Redevelopment Commission Resolution No. 2’5 I to APPROVE
“First and Sedond Agency Loan Agreements”, “First and Second Agency Notes”, “First
and Second Agency Loan Deed of Trust and Security Agreements” and “Agency
Regulatory Agreement” between the Carlsbad Redevelopment Agency and the El Camino
Villas Associates and an Operating Deficit Guarantee Agreement between the Agency,
Bridge Housing Corporation and a partnership of Patrick Development and Picerne
Associates for the Villas at El Camino Real Affordable Housing Project.
ITEM EXPLANATION:
Proiect Backaround
On October 26, 1993, the City Council approved development of the Villas at El Camino
Real Affordable Housing Project. The project is located west of El Camino Real, between
Camino Vida Roble and Alga Road, in the southwest quadrant of the City. It consists of
344 affordable rental apartments. The project will assist Aviara Land Associates in meeting
their inclusionary housing requirement for the Aviara Master Plan as well as provide
additional units which could be used to satisfy the affordable housing requirements of
other offsite developers.
On October 26, 1993 and March 22, 1994, the Housing and Redevelopment Commission,
together with the City Council, also considered financial assistance for the Villas at El
Camino Real. The Council and Commission authorized 1) acquisition of property by the
City for the project; 2) guarantee of grading deposit with Redevelopment Set-Aside Funds;
3) fee deferrals to Certificate of Occupancy for all city-controlled fees; 4) construction and
permanent financing loans not to exceed $2.9 million from the Redevelopment Agency,
5) the. use of $500,000 of project cash flow and/or proceeds from the sale of Affordable
Housing Credits for reserves and guarantees as required by other financing sources, and
6) declared that the Park In-Lieu Fee was not applicable to the project based on existing
surplus park dedication within the Southwest Quadrant by the Aviara Master Plan.
I Proiect Agreements
As a result of the previous actions taken by the Housing and Redevelopment Commission
to approve financial assistance for the Villas at El Camino Real Affordable Housing Project,
the Agency must now enter into agreements with the El Camino Villas Associates, a
California Limited Partnership, (in which Bridge Housing Corporation is the General
Managing Partner) to formalize the previously approved actions. Attached as exhibits for
Housing and Redevelopment Commission review are the following agreement(s) and/or
documents and instruments to be executed in connection with the construction and
permanent financing loans and an operating deficit guarantee of up to $500,000 (using
project-generated income) from the Carlsbad Redevelopment Agency for the Villas at El
Camino Real Affordable Housing Project:
PAGE 2 OF AGENDA BILL NO. 25 4
0 Agency First Loan Agreement - this agreement outlines the terms of the loan to be
provided by the Carlsbad Redevelopment Agency to the El Camino Villas Associates
during construction of the Villas at El Camino Real Affordable Housing Project. The
maximum amount of the loan shall be $ I,71 2,000. Repayment of this loan shall
be deferred during construction of the project. On the date of recordation of the
deed of trust securing the Permanent Loan for the project, the outstanding principal
and accrued interest on the Agency First Loan (construction) shall be amortized
over a fifteen (15) year loan period. The annual payment on the loan shall be made
from 70% of the surplus cash from project. If 70% of the surplus cash is
inadequate to make the full payment on loan principal and interest, the Agency
agrees to allow the payment to accrue with simple interest of 3% per annum and
payment to occur when adequate surplus cash becomes available.
0 Agency First Promissory Note - this document is an instrument of implementation
related to the Agency First Loan Agreement described above. It is a “promise to
pay” the Agency for the total amount of the construction loan advanced to the El
Camino Villas Associates for the subject project. The note is secured by a Deed of
Trust.
0 Agency First Loan Deed of Trust and Security Agreement - this document outlines
the security for the construction loan to be made by the Carlsbad Redevelopment
Agency to the El Camino Villas Associates. The security provided for the loan
includes: 1) the Associates’ leasehold interest in the property, 2) rent proceeds, 3)
interest in all easements, right-of-ways and other rights used for access purposes,
4) all buildings and improvements of every kind and description on the property, 5)
interest in all building materials and equipment on property, and 6) interest in all
personal property or fixtures on the property.
0 Agency Second Loan Agreement -this agreement outlines the terms of the second
loan to be provided by the Carlsbad Redevelopment Agency to the El Camino Villas
Associates which are slightly different from the First Loan. The loan amount is
$500,000. Payments are deferred until the Agency First Loan is paid in full,
including all interest due. The term of the loan will be approximately 55 years from
the date of recordation of the deed of trust securing the permanent (private) loan.
Outstanding principal amounts shall accrue interest at 3% per annum.
0 Agency Second Promissory Note -the purpose for this document is the same as
outlined above for the Agency First Promissory Note.
0 Agency Second Loan Deed of Trust and Security Agreement - this document offers
the same security for the second loan as outlined above for the Agency First Loan
Deed of Trust and Security Agreement.
0 Agency Regulatory Agreement - this agreement regulates and restricts the
occupancy and rents of the Villas at El Camino Real Affordable Housing Project.
The agreement states that no fewer than 160 of the units within the project shall
be affordable to low income households for no less than thirty (30) years. The
restrictions will run with the land and be binding on the El Camino Villas Associates
and its successors and assigns. The regulatory requirements of the Low Income
Housing Tax Credit Program will restrict all of the units to rent levels affordable to
PAGE 3 OF AGEND, _ rflLL NO. CT% 7
low and very low income households for at least 55 years.
l Operating Deficit Guarantee Agreement - this agreement states that, in addition to
an “Initial Operating Reserve” of $500,000 provided by the El Camino Villas
Associates for the project, the Carlsbad Redevelopment Agency, Bridge Housing
Corporation and the partnership of Patrick Development/Picerne Associates will
each provide “individual operating deficit guarantees” totaling $1 million as required
by other financing sources. The Carlsbad Redevelopment Agency will provide a
$500,00Oindividual operating reserve/guarantee through project-generated income
which includes cash flow and proceeds from the sale of the affordable housing
credits to other private housing developers.
The agreement includes the requirement that no individual guarantee, including the
Redevelopment Agency’s, may be drawn until the “Initial Operating Reserve” of
$500,000 (provided by the El Camino Villas Associates) has been utilized in its
entirety.
The structure established for repayment of Agency loans is based on cash flow projected
to be generated from project operations. The Agency and City will ultimately receive 100%
of the project cash flow through payments on a Ground Lease and the loans described
within this report; 30% of the cash flow is designated for ground lease payments to the
City and 70% of the cash flow is for loan payments to the Agency.
Subordination of Aqency’s Aareements
It is important to note that by approving the subject agreements the Redevelopment
Agency also subordinates the Agency’s first and second loan as well at the Agency
Regulatory Agreement to the lien of deeds of trust securing the Construction and
Permanent Financing provide by a private lender.
The Community Redevelopment Law provides that a redevelopment agency may
subordinate affordable housing restrictions to lender deeds of trust only if the agency
makes findings that an economically feasible alternative method of financing the
development on substantially comparable terms and conditions, but without subordination,
is not reasonable available. The agency is also required to obtain written commitments
reasonably designed to protect the agency’s investment in the event of default, such as
notice of default to the agency and a right of the agency to cure the default. (Health and
Safety Code Section 33334.14(a)(4)).
The project developer has obtained loan commitmentsfrom Wells Fargo Bank (construction
loan) and Great Western Savings (permanent loan) for the El Camino Villas affordable
housing development. Both of these private lenders require subordination of the Agency’s
regulatory agreement to the deeds of trust securing their loans. The Agency has received
a letter from BRIDGE Housing Corporation describing BRIDGE’s contacts with lenders’for
this and other affordable housing projects, and stating that all such lenders require the
subordination of affordability restriction such as those contained in the Agency’s
Regulatory Agreement.
PAGE 4 OF AGEND. _ dILL NO. &!+j
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It is therefore staff’s recommendation that the Housing and Redevelopment Commission
make the required findings and approve subordination of the Agency’s Regulatory
Agreement to the Wells Fargo Bank and Great Western Savings deeds of trust.
Since the property for the subject project is owned by the City and other financial
assistance is being provided by the City of Carlsbad in addition to the Redevelopment
Agency’s assistance, a “Ground Lease” and “Affordable Housing and Financial Assistance
Agreement” shall be submitted to the City Council for action under a separate agenda bill.
It is staff’s recommendation that the Housing and Redevelopment Commission approve the
Loan and related documents, the Agency Regulatory Agreement and the Operating Deficit
Guarantee Agreement as described above for the Villas at El Camino Real Affordable
Housing Rental Project.
FISCAL IMPACT:
By approving the agreements described within this report, the Agency agrees to make a
construction loan of $I,71 2,000 and a permanent financing loan in the amount of
$500,000 to the El Camino Villas Associates for construction of the Villas at El Camino
Real Affordable Housing Project. Adequate funds are available within the Agency’s Low
and Moderate Income Housing Set-Aside and Tax Increment Funds to provide the cash
loans for the subject project and all appropriate findings have been made to expend the
Redevelopment Agency funds on the subject project which is located outside the Village
Redevelopment Project Area.
The Agency also agrees to provide a $500,00Ooperating deficit guarantee from income
to be generated by the project (i.e, surplus cash flow and/or proceeds from affordable
housing credit sales).
EXHIBITS:
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Housing and Redevelopment Commission Resolution No. 2 5 1 approving the
Agency First and Second Loan Agreements, with related Promissory Notes and
Deed of Trust and Security Agreements as well as an Agency Regulatory
Agreement and an Operating Deficit Guarantee Agreement for construction and
operation of the Villas at El Camino Real Affordable Housing Project.
First Agency Loan Agreement, Note, and Deed of Trust between Carlsbad
Redevelopment Agency and El Camino Villas Associates (on file in the City Clerk’s
Office).
Second Agency Loan Agreement, Note, and Deed of Trust between Carlsbad
Redevelopment Agency and El Camino Villas Associates (on file in the City Clerk’s
Office).
Agency Regulatory Agreement between Carlsbad Redevelopment Agency and El
Camino Villas Associates (on file in the City Clerk’s Office).
Operating Deficit Guarantee Agreement between Carlsbad Redevelopment Agency,
Bridge Housing Corporation and the partnership of Patrick Development/Picerne
Associates (on file in the City Clerk’s Office).
HOUSING 81 REDEVELOPMENT COMMISSION RESOLUTION NO. 251
A RESOLUTION OF THE HOUSING AND REDEVELOPMENT
COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA TO
APPROVE AGREEMENTS FOR A CONSTRUCTION LOAN IN THE
AMOUNT OF $1,712,000 AND A PERMANENT LOAN OF
$500,000 WITH RELATED LOAN DOCUMENTS, A PROJECT
OPERATING DEFICIT GUARANTEE AGREEMENT AND THE
AGENCY REGULATORY AGREEMENT FOR THE AFFORDABLE
HOUSING PROJECT KNOWN AS THE VILLAS AT EL CAMINO
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WHEREAS, the Redevelopment Agency of the City of Carlsbad, hereinafter
referred to as “Agency”, is a Community Redevelopment Agency organized and existing under
the Community Redevelopment Law, Health and Safetv Code Section 33000, et.seq.,
hereinafter referred to as the “Act”; and
WHEREAS, the Agency is authorized to implement the Redevelopment Plan for
the Carlsbad Village Redevelopment Project Area; and
WHEREAS, the Agency is authorized to make and execute contracts and other
instruments necessary or convenient to the exercise of its powers; and
WHEREAS, the Housing and Redevelopment Commission APPROVED a
construction loan in the amount of $ 1,712,000, a permanent loan of $500,000 from the
Carlsbad Redevelopment Agency’s Low and Moderate Income Housing Set-aside Fund and an
operating deficit guarantee of up to $500,00Ofrom project-generated income for the Villas at
El Camino Real Affordable Housing Project which is to be constructed outside the
Redevelopment Project Area and approved all appropriate findings to expend such funds.
WHEREAS, El Camino Villas Associates, A California Limited Partnership, the
project developer has received commitments for construction loan financing from Wells Fargo
Bank in the approximate amount of $26,500,000 (the “Wells Fargo Loan”) and from Great
Western Savings in the approximate amount of $9,500,00O(the “Great Western Loan”), both
of which loans require subordination of the Agency’s Regulatory Agreement to the deeds of
trust securing the loans; and
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WHEREAS, Section 33334.14of the Health and Safety Code require that certain
findings be made by the Agency prior to the subordination of the Regulatory Agreement; and
WHEREAS, the Agency has determined that there is no economically feasible
alternative method of financing- the development of the Villas at El Camino Real affordable
housing project on terms substantially comparable to the Wells Fargo Loan and the Great
Western Loan, but without subordination of the Agency’s Regulatory Agreement.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing and
Redevelopment Commission of the City of Carlsbad, California, as follows:
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The above recitations are true and correct.
That the Housing and Redevelopment Commission approves the First Agency
Loan Agreement, First Agency Note, and First Agency Loan Deed of Trust and
Security Agreement between the Carlsbad Redevelopment Agency and the El
Camino Villas Associates for construction of the Villas at El Camino Real
Affordable Housing Project.
That the Housing and Redevelopment Commission approves the Second Agency
Loan Agreement, Second Agency Note, and Second Agency Loan Deed of Trust
and Security Agreement between the Carlsbad Redevelopment Agency and the
El Camino Villas Associates for construction of the Villas at El Camino Real
Affordable Housing Project.
The Housing and Redevelopment Commission approves the Agency Regulatory
Agreement between the Carlsbad Redevelopment Agency and El Camino Villas
Associates as related to the First Loan Agreement and the Second Loan
Agreement for construction of the Villas at El Camino Real Affordable Housing
Project.
That the Housing and Redevelopment Commission agrees to subordinate the
Agency First Loan and Second Loan Deed of Trust as well as the Agency
Regulatory Agreement to the liens of the deeds of trust securing the
Construction and Permanent Financing provided by a private lender.
The Housing and Redevelopment Commission hereby finds that Wells Fargo
Bank and Great Western Savings will not consent to subordinate their deeds of
trust to the Agency’s Regulatory Agreement, and that there is no economically
feasible alternative method of financing the development of the Villas at El
Camino Real affordable housing project on terms substantially similar to the
terms of the Wells Fargo Loan and the Great Western Loan, but without
subordination of the Agency’s Regulatory Agreement.
The Agency’s Executive Director is instructed to obtain written commitments
to the Agency from Wells Fargo Bank and Great Western Savings reasonably
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designed to protect the Agency’s investment in the event of default under the
Wells Fargo Loan and the Great Western Loan, including notice of default and
an opportunity to cure. Provided that such written commitments are obtained,
in accordance with Health and Safety Code Section 33334,14(a), the Agency
may cause its Regulatory Agreement to be subordinated to the deed of trust
securing the Wells Fargo Loan and the deed of trust securing the Great Western
Loan, and hereby authorizes the Agency’s Executive Director to execute
subordination agreements as necessaryh to implement such subordination.
That the Housing and Redevelopment Commission approves the Operating
Deficit Guarantee Agreement between the Carlsbad Redevelopment Agency,
Bridge Housing Corporation and the partnership of Patrick Development/Picerne
Associates for operation of the Villas at El Camino Real Affordable Housing
Project.
That the Executive Director of the Carlsbad Redevelopment. Agency is
authorized to execute said agreements in substantially the form presented to the
Housing and Redevelopment Commission and with such modifications as City
Attorney deems necessary and appropriate.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing and
Redevelopment Commission of the City of Carlsbad, California, held on the 19th day of
‘JULY , 1994, by the following vote, to wit:
AYES: Commissioners Lewis, Stanton, Kulchin, Nygaard, Finnila
ATTEST
NOES: None
ABSENT: None
ABSTAIN: None
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July 29, 1994
TO: RON BALL, CITY A’ITORNEY
FROM: city Clerk
THE VILLA!3 AT EL CAMINO REAL AGREEMENTS - July 19,1994 meeting
Just a reminder. The City Council, at their meeting of July 19, 1994, adopted Resolution
No. 94-209, approving a ground lease with El Camino Villas Associates, and an affordable
housing and financial reimbursement agreement with Aviara Land Associates and El
Camino Villas Associates. That same night, the Housing & Redevelopment Commission
adopted Resolution NO. 251, approving agreements for a construction loan and a
permanent loan (also in connection with The Villas project). Copies of all documents were
on file in the City Clerk’s Office.
Following the Council meeting, I inquired whether the documents we had were correct and
whether we should process them for signatures. You responded that you didn’t know if
our documents were correct or not, and therefore, we should not process them for
signatures. At that time, we agreed th,at my office would take no action with those
agreements until we heard from you and/or your office.
To date, I’ve heard nothing, and I just wanted to let you know I am still holding those
documents and will do nothing until we hear from you.
City Clerk
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EXHIBIT 2
FIRST AGENCY LOAN AGREEMENT
FIRST AGENCY LOAN NOTE
FIRST AGENCY LOAN DEED OF TRUST AND SECURITY AGREEMENT
VILLAS AT EL CAMINO REAL
AFFORDABLE HOUSING PROJECT
AGENCY FIRST LOAN AGREEMENT
by and between
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
and
LA TERRAZA ASSOCIATES,
a California Limited Partnership
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS AND EXHIBITS . 1.1 Definitions ........... 1.2 Exhibits ............
ARTICLE 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12
LOAN ........... Amount Interest' ........................ Repayment ............ Prepayment ........... Assumption Loan Disbur&m% ........
Use of Loan Proceeds' ............ Security for Loan ........ Approval of Additional Financing Subordination of Deed of Trust .
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. . Subordination of the Agency Regulatory Agreement Admission of Investor Limited Partner . . . . . .
ARTICLE 3 3.1 3.2
DISBURSEMENT OF LOAN . . . . . . . . . . . Initial Disbursement
3.3
Conditions Precedent to DiAb&ement'of Remakng Loan Proceeds . . . . . . . . . . . . . . . . . . Procedure for Disbursement of Remaining Loan Proceeds . . . . . . . . . . . . . . . . . . . .
ARTICLE 4 4.1 4.2 4.3 4.4 4.5
DEVELOPMENT OF THE IMPROVEMENTS ...... Commencement of Construction .......... Completion of Construction . Construction in Compliance with ia; .............. Entry by the Agency ............... Estoppel Certificate of Completion .......
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER 5.1 Representations and Warranties . . . . . . . . .
ARTICLE 6 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8
CONTINUING OBLIGATIONS . Applicability . . . . . . . . . Compliance with Loan Documents Rental of Units . . . . . . . . Required Insurance Coverage . . Insurance Policies and Premiums Proceeds of Insurance . . . . . Taxes and Assessments . . . . .
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TABLE OF CONTENTS (continued)
Paae
6.9 6.10 6.11 6.12 6.13
ARTICLE 7 7.1 7.2 7.3 7.4 7.5 7.6
ARTICLE 8 8.1 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
Changes .................. Notification of Litigation ........ Indemnity ................. Hazardous Materials ............ Mandatory Language in All Subsequent Deeds, and Contracts ...............
DEFAULT AND REMEDIES ........ Events of Default ............. Limited Partner Cure Periods ....... Remedies RightofC%ek' .............
Remedies Cumulativi ............
Waiver of Terms and Conditions' ............
MISCELLANEOUS ............ Time Notice; ..................
Financiai &~t~rnk&~ kgh;s'of In~pk~ion' Attorneys@ Fees .............. No Third Parties Benefited ........ Actions .................. Signs ................... Successors and Assigns .......... Construction of Words ........... Partial Invalidity ............ Governing Law ............... Amendment. ................ Captions and Headings ........... Action by the Agency Nonrecourse Obligation; ....................
Legal Description of the Land
Agency First Note
Agency Regulatory Agreement
Agency First Loan Deed of Trust
Permitted Uses of Loan Proceeds
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AGENCY FIRST LOAN AGREEMENT
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This Agency First Loan Agreement ("the Agreement") is entered into as of this 1994 by and between the Carlsbad Housing and Redevelopment'Commission, in its capacity as governing body of, and by and on behalf of, the Redevelopment Agency of the City of Carlsbad (the "Agency") and La Terraza Associates, a California Limited Partnership ("Borrowerfil).
RECITALS
WHEREAS:
1. Borrower desires to construct three hundred and forty- four (344) residential units in the City of Carlsbad, of which at least one hundred and sixty (160) shall be rented to low income households at affordable housing cost and the remainder, excluding managers' units, shall be rented to moderate income households at affordable housing cost.
2. The Agency desires to provide financial assistance to Borrower for development costs in the form of a loan for a total amount not to exceed One Million Seven Hundred and Twelve Thousand Dollars ($1,712,000) (the "Agency First Loan"). The Agency intends to fund the Loan with tax increment funds, including moneys from the Agency's Low and Moderate Income Housing Fund created pursuant to Health and Safety Code Sections 33334.2 and 33334.3, which funds are not federal funds or the proceeds of a tax-exempt bond issue. The Agency is required by law to place restrictions on developments assisted with the Low and Moderate Income Housing Fund ensuring that such developments remain affordable to low and moderate income households for the longest feasible time.
3. The Carlsbad City Council adopted the Redevelopment Plan (the "Redevelopment Plan") by Ordinance No. on
I 19 The Redevelopment Plan established the Carlsbad Village'Redevelopment Project Area ("Redevelopment Area") and set forth goals, objectives, and proposed activities for redevelopment of the Redevelopment Area, including the production of housing affordable to low and moderate income households. The land on which the units will be developed is located outside of the Redevelopment Area. By Resolution Nos. and the City Council and the Agency Board, respectively, made'findings that the development of the housing units by the Borrower will be of benefit to the Project Area.
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ARTICLE 1
DEFINITIONS AND EXHIBITS
1.1 Definitions. The following terms shall have the following meanings in this Agreement:
(a) ftAgencyff shall mean the Redevelopment Agency of the City of Carlsbad, a public body corporate and politic.
(b) "Agency First Loan" shall mean the loan for an amount not to exceed One Million Seven Hundred and Twelve Thousand Dollars ($1,712,000) by the Agency to Borrower, which loan is the subject of this Agreement.
(cl "Agency First Loan Deed of Trust" shall mean the deed of trust to be placed on the Development, in substantially the form shown in Exhibit D attached hereto and incorporated herein, securing the Agency First Note and naming the Agency as beneficiary.
(d) "Agency First Note" shall mean the promissory note, in substantially the form shown in Exhibit B attached hereto and incorporated herein, in the principal amount of One Million Seven Hundred and Twelve Thousand Dollars ($1,712,000), evidencing the Agency First Loan.
(e) "Agency Regulatory Agreement" shall mean the Agency Regulatory Agreement in the form attached as Exhibit C to this Agreement to be recorded against the Land pursuant to Section 3.1 below.
(f) "AgreementIf shall mean this Agency First Loan Agreement.
(9) ttBorrowerft shall mean La Terraza Associates, a California Limited Partnership.
(h) Vonstruction and Permanent Financing" shall mean any of the following loans acquired by the Borrower for the purpose of financing the Improvements, in addition to the Agency First Loan:
(i) Wells Fargo Bank construction loan in an amount not to exceed Twenty-Six Million Five Hundred Thousand Dollars ($26,500,000);
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(ii) Agency construction and permanent loan in the amount of Five Hundred Thousand Dollars ($500,000);
(iii) Great Western permanent loan(s) in the approximate total amount of Nine Million Five Hundred Thousand Dollars ($9,500,000);
(iv) Additional loans in an amount not to exceed One Million Dollars ($l,OOO,OOO); and
(VI Any loans refinancing the above-described loans.
0) @@Developmentff shall mean the Borrower's leasehold interest in the Land and the Borrower's fee interest Improvements to be constructed on the Land.
Cj> IfImprovementsff shall mean the buildings and improvements to be constructed on the Land, including the Units, and the parking spaces and landscaping appurtenant to such buildings and improvements.
PI IfLandtt shall mean the property on which the Borrower shall construct the Improvements, which property is more particularly described in Exhibit A attached hereto and incorporated herein.
(1) "Loan Amount'I shall mean the amount loaned to Borrower pursuant to Section 2.1 below.
(m) "Loan Documentstf shall mean the following documents evidencing the Agency First Loan: (i) the Agency First Note; (ii) the Agency Regulatory Agreement; (iii) the Agency First Loan Deed of Trust; (iv) this Agreement.
(n) "PartiesIf shall mean the Agency and the Borrower.
(0) "Permanent Loan" shall mean the loan(s) from Great Western Bank described in Section l.l(h)(iii).
(P) ttTermtf shall mean the term of the Agency First Loan commencing on the date of disbursement of the Loan Amount and ending fifteen (15) years following the date of recordation of the deed of trust securing the Permanent Loan.
(9) Vnittf shall mean one of the three hundred forty- four (344) dwelling units located within the Development.
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1.2 Exhibits. The following Exhibits are attached to this Agreement and incorporated herein:
exhibit - Legal Description of the Land
Exhibit B - Agency First Note
Exhibit - Agency Regulatory Agreement
Exhibit D - Agency First Loan Deed of Trust
exhibit - Permitted Uses of Loan Proceeds
ARTICLE 2
LOAN
2.1 Amount. The Agency hereby agrees to loan, and the Borrower hereby agrees to borrow, an amount not to exceed One Million Seven Hundred Twelve Thousand Dollars ($1,712,000), subject to the terms and conditions set forth in this Agreement, and subject further to the terms and conditions set forth within the documents and instruments executed by the Borrower in connection with this transaction, including:
(a) The Agency First Note;
(b) The Agency Regulatory Agreement; and
(c) The Agency First Loan Deed of Trust.
2.2 Interest. The outstanding principal amount of the Loan shall accrue simple interest at three percent (3%) per annum.
2.3 Reoavment. (a) Repayment of the Loan shall be deferred during construction of the Improvements. Commencing on the date of recordation of the deed of trust securing the Permanent Loan, the outstanding principal and accrued interest on the Agency First Loan shall be amortized over the remaining fifteen (15) years of the Term such that equal payments of principal and interest (the "Amortized Payments") shall be due and payable on May 1 of each calendar year, commencing on the first May 1 following recordation of the deed of trust securing the Permanent Loan; provided however, that the Amortized Payments shall be due and payable only to the extent of seventy percent (70%) of Surplus Cash (as defined below) generated by the Development in the previous calendar year.
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(b) llSurplus Cash" shall mean operating income of the Development in the calendar year immediately prior to the due date of an Amortized Payment (excluding interest income earned on tenant security deposits and Development reserve accounts) less reasonable operating expenses in that same calendar year. For this purpose, operating expenses shall include all costs and expenses related to ownership and operation of the Development including, but not limited to, deposits into reserves (such that the operating reserve is initially funded at $500,000 and replenished up to that amount thereafter and the replacement reserve is funded at $96,000 per year), taxes and other similar charges, the partnership management fee in an amount not to exceed twenty thousand dollars ($ZO,OOO), debt service currently due on the Construction and Permanent Financing (excluding the loans from the Agency), the property management fee and other expenses of a property manager in amounts reasonable and customary in the industry, but shall not include any allowance for depreciation.
(c) In the event the seventy percent (70%) of Surplus Cash available to pay the Amortized Payment is less than the amount of the Amortized Payment due under this Section in any year, the difference between seventy percent (70%) of Surplus Cash and the Amortized Payment shall accrue with simple interest at three percent (3%) per annum, and shall be paid when and to the extent Surplus Cash becomes available. All payments on the Agency First Loan shall be applied first to accrued, but unpaid, amounts for prior years and then to the current Amortized Payment due, beginning with the earliest year for which an Amortized Payment accrued. Any portion of the principal and interest on the Agency First Loan not sooner paid shall be due and payable upon the earlier of: (i) expiration of the Term or (ii) sale or transfer of the Development other than a transfer described in Section 2.5 below.
2.4 Preoavment. Borrower may prepay the principal and any 1 interest due the Agency under the Agency First Note prior to or in advance of the time for payment thereof as provided in the Agency First Note, without penalty; provided, however, that Borrower acknowledges that the provisions of the Agency Regulatory Agreement will be applicable to the Development even though Borrower may have prepaid the Agency First Note.
2.5 Assumotion. In the event the Development is sold or transferred to BRIDGE Housing Corporation or a nonprofit affiliate of BRIDGE Housing Corporation, the Loan shall be fully assumable by such transferee, subject to Section 8.16 below. The Loan shall not be assumable by any other transferee.
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2.6 Loan Disbursement. Upon satisfaction of the preconditions to disbursement set forth in Sections 3.1 and 3.2 below and pursuant to the disbursement procedures set forth in Sections 3.1 and 3.3 below, the Agency will disburse to Borrower the Loan Amount.
2.7 Use of Loan Proceeds. Borrower shall use Loan Proceeds only to pay the costs set forth in Exhibit E.
P 2.8 Securitv for Loan. The Loan shall initially be secured by the Tax Credit Reservation Assignment (as defined in Section 3.1 below). Following the close of the Ground Lease, the Loan shall be secured by the Agency First Loan Deed of Trust on Borrower's leasehold interest in the Land. The Borrower shall provide the Agency with an CLTA policy of title insurance insuring the Agency First Loan Deed of Trust as a lien against the Borrower's leasehold interest in the Land, subject only to the lien or liens of the Construction and Permanent Financing mortgages.
2.9 Bporoval of Additional Financinq. The Borrower shall not place any encumbrances on the Land other than the Construction and Permanent Financing without the prior written consent of the Agency, which consent shall not be withheld unreasonably.
2.10 Subordination of Deed of Trust. The Agency agrees to subordinate the Agency First Loan Deed of Trust to the liens of the deeds of trust securing the Construction and Permanent Financing, excluding the Agency Five Hundred Thousand Dollar ($500,000) construction and permanent loan.
2.11 Subordination of the Aqencv Resulatorv Aareement. The Agency agrees that the Agency Executive Director shall subordinate the Agency Regulatory Agreement to the lien or encumbrance of any private construction or permanent financing provided for the Development upon the finding of the Agency's Executive Director that (i) an economically feasible loan is not reasonably available on comparable terms and conditions without subordination, and (ii) the mortgage to which the Agency Regulatory Agreement is being subordinated contains provisions meeting the requirements of Health and Safety Code Section 33334,14(a) reasonably designed to protect the Agency's interest in the event of default under such mortgage. The Agency agrees that the Agency Regulatory Agreement shall be subordinated to any federal or state governmental agency regulating the Development which requires that the Agency Regulatory Agreement be subordinate to such government agency's documents and liens. The Agency will execute subordination agreements in a form reasonably
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acceptable to the lending entity or government agency to subordinate the Agency Regulatory Agreement as provided in this Section.
2.12 Admission of Investor Limited Partner. Borrower shall inform the Agency of the identity of its investor limited partner prior to the admission of the investor limited partner to Borrower's partnership and Borrower shall obtain Agency consent to the admission of such investor limited partner, which consent shall not be withheld unreasonably.
ARTICLE 3
DISBURSEMENT OF LOAN
3.1 Initial Disbursement. The Agency shall make an initial disbursement to Borrower of Two Hundred Thousand Dollars ($200,000) of Loan proceeds prior to closing of the Ground Lease and recordation of the First Agency Deed of Trust, to be used by Borrower to pay (or to reimburse Borrower for prior payment of) the tax credit reservation fee due the California Tax Credit Allocation Committee, and to pay other costs associated with the Development. Such disbursement shall be made to Borrower upon receipt of Borrower's written request for such funds, provided Borrower executes the First Agency Note and provides to the Agency as initial security for the Loan an assignment of the tax credit reservation for the Development, in a form to be approved by the Agency (the "Tax Credit Reservation Assignment"). The Tax Credit Reservation Assignment shall be cancelled by the Agency and the Borrower upon recordation of the First Agency Deed of Trust.
3.2 Conditions Precedent to Disbursement of Remainina Loan Proceeds. Except for the initial disbursement pursuant to Section 3.1 above, the Agency shall not disburse Loan proceeds to the Borrower until all of the following conditions precedent are satisfied.
(a) Budaet. Borrower shall have submitted to the Agency and obtained Agency approval of a development budget for the Development.
(b) Corporate Authorization. Borrower shall provide the Agency with a certified copy of a corporate authorizing resolution, approving the Loan and the Borrower's execution of all Loan Documents.
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(c) Close of Ground Lease. Borrower shall hold leasehold title to the Land pursuant to a Ground Lease by and between the City of Carlsbad, as lessor, and Borrower as lessee.
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(d) Execution, Delivery and Recordation of Documents. Borrower shall have executed and delivered to the Agency the Agency First Note, the Agency First Deed of Trust, and the Agency Regulatory Agreement, and any other documents and instruments required to be executed and delivered, all in form and substance satisfactory to the Agency, and the Agency First Deed of Trust and the Agency Regulatory Agreement shall have been recorded against Borrower's leasehold interest in the Land.
(e) Insurance. Borrower shall have furnished the Agency with evidence of the insurance coverage required pursuant to Sections 6.4 and 6.5 below.
(f) No Default. There shall exist no condition, event or act constituting an Event of Default (as hereinafter defined) hereunder or which, upon the giving of notice or the passage of time, or both, would constitute an Event of Default.
3.3 Procedure for Disbursement of Remainina Loan Proceeds. Upon satisfaction of the conditions set forth in Section 3.2 above, the Agency shall disburse the entire remaining Loan Amount to Wells Fargo Bank to be disbursed pursuant to the Wells Fargo Bank Building Loan Agreement.
ARTICLE 4
DEVELOPMENT OF THE IMPROVEMENTS
4.1 0 c. Subject to Section 8.2
below, the Borrower hereby covenants and agrees to commence construction of the Development no later than ninety (90) days following the date Borrower obtains leasehold title to the Land.
4.2 Comoletion of Construction. The Borrower hereby covenants and agrees to diligently prosecute to completion the construction of the Development within twenty-two (22) months from the date of commencement of construction, subject to Section 8.2 below.
4.3 Construction in Comoliance with Law. Borrower shall construct the Improvements in compliance with all applicable laws, ordinances, rules, and regulations of federal, state, and local governments and agencies and with all applicable directions, rules, and regulations of the fire marshal, health
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officer, building inspector, and other officers of any such government or agency.
4.4 Entrv bv the Asencv. Borrower shall permit the Agency, through its officers, agents, or employees, at all reasonable times to enter into the Development and inspect the work of construction to determine that the same is in conformity with the construction plans approved by the City of Carlsbad. Borrower acknowledges that the Agency is under no obligation to supervise, inspect, or inform Borrower of the progress of construction, and Borrower shall not rely upon the Agency therefor. Any inspection by the Agency is entirely for its purposes in determining whether Borrower is in default under this Agreement and is not for the purpose of determining or informing Borrower of the quality or suitability of construction. Borrower shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers.
4.5 Estopoel Certificate of Completion. When the Borrower has determined it has met its obligations under this Article 4, the Borrower may request that the Agency issue an Estoppel Certificate of Completion. Within ten (10) days of such a request, the Agency shall issue an Estoppel Certificate of Completion or shall provide the Borrower with a written explanation of its refusal to issue the Estoppel Certificate of Completion. If and when the Borrower has taken the specified measures or met the specified standards the Agency shall issue an Estoppel Certificate of Completion.
The Estoppel Certificate of Completion shall not be deemed a notice of completion under the California Civil Code, nor shall it constitute evidence of compliance with or satisfaction of any obligation of the Borrower to any holder of a deed of trust securing money loaned to finance the Development.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
5.1 Reoresentations and Warranties. Borrower hereby represents and warrants to the Agency as follows:
(a) Oraanization. Borrower is duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted.
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(b) Authoritv of Borrower. Borrower has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above.
(c) Authoritv of Persons Executins 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 Borrower, and all actions required under 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.
(d) Valid Bindins Aareements. This Agreement and the Loan Documents and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Borrower enforceable against it in accordance with their respective terms, subject to: (1) bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or affecting the rights of creditors generally, and (ii) general equity principles and the effect of Code of Civil Procedure Sections 580a, 580d and 726, and any other statutory provisions limiting proceedings for recovery of a debt.
(e) P ndin e. Except for the case of Carlsbad
; l si Eede e o en * Commission- and Does 1 throush 25, inclusive and Aviara Land Associates Limited Partnershio, a Delaware limited oartnershio: BRIDGE Housin a or oration 1 or orat'on- Pat ick Picerne Bank of America, NT&SA, a California corooration: and Does 26 throuah 30, inclusive, there are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the Development, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Borrower,
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materially affect Borrower's ability to repay the Agency.Loan or impair the security to be given to the Agency pursuant hereto.
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(f) Financial Statements. The financial statements of Borrower and Borrower's general partners and other financial data and information furnished by 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 Borrower and Borrower's general partners from that shown by such financial statements and other data and information.
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ARTICLE 6
CONTINUING OBLIGATIONS
6.1 Aonlicabilitv. For the longer of the entire Term, or so long as the Agency First Note remains outstanding, the Borrower shall comply with the provisions of this Article 6.
6.2 Comnliance with Loan Documents. Borrower shall comply with all the terms and provisions of the Loan Documents.
6.3 Rental of Units. The Borrower shall comply with the occupancy and affordability restrictions for the rental of the Units as set forth in the Agency Regulatory Agreement.
6.4 Recuired Insurance Coveraae
(a) Fire and Extended Coverage Endorsement. The Borrower shall during the Term keep the Development insured against loss or damage by a standard all risk policy in amounts not less than the replacement value of the Development, or should insurance in such amount not be reasonably and commercially available, such lesser amount as may be acceptable to the Agency. The amount of such insurance shall be adjusted by reappraisal of the Improvements by the insurer or its designee at least once every five (5) years during the Term, if requested by the Agency. If an all risk policy insuring the full replacement value of the Development is not reasonably and commercially available, the Borrower shall use best efforts to obtain and maintain an extended coverage endorsement that ensures the full replacement value of the Development as soon as such coverage becomes commercially and reasonably available.
(b) Liabilitv and Prowertv Damase Insurance. During the Term, the Borrower shall keep in full force and effect a policy or policies of comprehensive general liability and property damage insurance against liability for bodily injury to
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or death of any person or property damage arising out of an occurrence on or about the Development. The limits of such insurance shall be not less than one million dollars ($l,OOO,OOO) combined single limit for bodily injury and property damage. The limits of the insurance shall be adjusted once every five (5) years if and as reasonably required by the Agency.
(c) Workers' Comwensation Insurance. The Borrower shall carry or cause to be carried workers' compensation insurance covering all persons employed by the Borrower in connection with the Development and with respect to whom death, bodily injury, or sickness insurance claims could be asserted against the Borrower or the Agency.
(d) Builders' Risk Insurance. During the course of any alteration, construction or reconstruction, the cost of which exceeds one hundred thousand dollars ($lOO,OOO), the Borrower shall require any contractor to provide builders' risk insurance for not less than one million dollars ($l,OOO,OOO) combined single limit for bodily injury or property damage insuring the interests of the Agency, the Borrower and any contractors and subcontractors.
6.5 Insurance Policies and Premiums
(a) All liability policies required by this Agreement shall name the Agency as an additional insured. Duplicate copies of such policies or certificates of such insurance shall be promptly furnished to the Agency.
(b) To the extent obtainable, any policy of insurance shall provide that any change or cancellation of said policy must be made in writing and sent to the Borrower and the Agency at their respective principal offices at least thirty (30) days before the effective date of change or cancellation.
6.6 Proceeds of Insurance
All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment of the costs of repairing or rebuilding that part of the Development damaged or destroyed if (i) the Borrower agrees in writing within ninety (90) days after payment of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each lender of an outstanding Construction and Permanent Loan permits such repairing or rebuilding, provided that the extent of Borrower's obligation to restore the Development shall be limited to the amount of the insurance proceeds. If the Development is not repaired or rebuilt as provided in this Section 6.6, all such
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proceeds shall be applied to repayment of outstanding loans including this Agency First Loan, in the order of lien priority.
6.7 Taxes and Assessments. So long as -Borrower owns the Development, Borrower shall pay all real and personal property taxes, assessments and charges and all franchise, income, unemployment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Development; provided, however, that Borrower shall have the right to contest in good faith any such taxes, assessments, or charges. In the event Borrower exercises its right to contest any tax, assessment, or charge against it, Borrower, on final determination of the proceeding or contest, shall immediately pay or discharge any judgment rendered against it, together with all costs, charges, and interest.
6.8 Comwliance with Laws. Borrower shall comply with all laws and regulations of the United States and of California and of any political subdivision thereof, or of any governmental authority which may be applicable to it or to its business, subject to Borrower's right to contest the validity or applicability of laws or regulations.
6.9 Chanaes. Borrower shall promptly notify the Agency in writing of any changes in the location of any place of business or material assets of the Borrower.
6.10 Notification of Litiaation. Borrower shall promptly notify the Agency in writing of any litigation affecting the Borrower or the Development and of any claims or disputes that involve a material risk of litigation, which may materially adversely affect the Agency First Loan.
6.11 Indemnity. Borrower shall defend, indemnify, save and hold the Agency, its boardmembers, officers, employees, agents, and contractors, utilizing attorneys approved by the Agency, harmless from any and all claims, actions, demands, costs, expenses, and attorneys' fees, arising out of, attributable to, or otherwise occasioned, in whole or in part, by any act or omission of Borrower arising from or related to the Development after the date of Borrower's acquisition of leasehold title to the Land, except as such claim may arise from the negligence or wilful misconduct of an indemnified party.
6.12 H-Materials.
(a) Definitions. The following special definitions shall apply for the purposes of this Section 6.12:
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(i) "Hazardous Materials" shall mean:
(A) any "hazardous substance" as defined in Section lOl(14) of CERCLA (42 U.S.C. Section 9601(14)) or Section 25281(d) or 25316 of the California Health and Safety Code at such time;
(B) any "hazardous waste," "infectious waste" or "hazardous material" as defined in Section 25117, 25117.5 or 25501(j) of the California Health and Safety Code at such time;
(Cl any other waste, substance or material designated or regulated in any way as VoxicII or '@hazardous" in the RCRA (42 U.S.C. Section 6901 et
sea*) f CERCLA Federal Water Pollution Control Act (33 U.S.C. Section 1521 et sea.), Safe Drinking Water Act (42 U.S.C. Section 3000 (f) & sea.), Toxic Substances Control Act (15 U.S.C. Section 2601 & sea.), Clear Air Act (42 U.S.C. Section 7401 et sea.), California Health and Safety Code (Section 25100 & sea., Section 3900 & sea.), or California Water Code (Section 1300 & sea.) at such time; and
(D) any additional wastes, substances or material which at such time are classified, considered or regulated as hazardous or toxic under any other present or future environmental or other similar laws relating to the Development.
(ii) "Hazardous Materials Laws" means all federal, state, and local laws, ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under the Development or any portion thereof.
(b) Certain Covenants and Asreements. The Borrower hereby covenants and agrees that:
(i) The Borrower shall not knowingly permit the Development or any portion thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence of Hazardous Materials in, on or under the Development. For the purposes of this Section 6.12(b)(i) only, the term "Hazardous Materials" shall not include: (a) construction materials, gardening materials, household
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products, office supply products, or janitorial supply products customarily used in the construction, maintenance, rehabilitation, or management of residential housing or associated buildings and grounds, or typically used in household activities, in a manner typical of other residential housing developments which are comparable to the Improvements; or (b) certain substances which may contain chemicals listed by the State of California pursuant to Health and Safety Code Sections 25249.8 & sea., which substances are commonly used by a significant portion of the population living within the region of the Development, including, but not limited to, alcoholic beverages, aspirin, tobacco products, nutrasweet and saccharine.
(ii) The Borrower shall keep and maintain the Development and each portion thereof in compliance with, and shall not cause or permit the Development or any portion thereof to be in violation of, any Hazardous Materials Laws;
(iii) Upon receiving actual knowledge of the following the Borrower shall immediately advise the Agency in writing of: (A) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Borrower or the Development pursuant to any applicable Hazardous Materials Laws; (B) any and all claims made or threatened by any third party against the Borrower or the Development relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in the foregoing clause (A) and this clause (B) are hereinafter referred to as "Hazardous Materials Claims"); (C) the presence of any Hazardous Materials in, on or under the Development other than Excluded Hazardous Materials; or (D) the Borrower's discovery of any Hazardous Materials, except the discovery of any Excluded Hazardous Materials, on any real property adjoining or in the vicinity of the Development, which the Borrower reasonably believes may impact the Development. 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.
(iv) Without the Agency's prior written consent, which shall not be unreasonably withheld, the Borrower
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shall not take any remedial action in response to the presence of any Hazardous Materials on, under, or about the Development (other than in emergency situations or as required by governmental agencies having jurisdiction), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claims.
6.13 Mandatory Lanauaae in All Subsequent Deeds, Leases and . Contracts. The Borrower and its agents shall not, in the selection or approval of tenants or provision of services or in any other matter, discriminate against any person or group of persons on the grounds of race, color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry, age, or disability. All deeds, contracts, or leases made or entered into by Borrower, its successors or assigns, as to any portion of the Development shall contain the following language:
(a)
(b)
(cl
In Deeds:
"Grantee herein covenants by and for itself, its successors and assigns that there shall be no discrimination against or segregation of a person
or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed nor shall the grantee or any person claiming under or through the grantee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land".
In Contracts:
"There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, transfer or use of the property,*.
In Leases:
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"The lessee herein covenants by and for the lessee and lessee's heirs, personal representatives and assigns and all persons claiming under the lessee or through the lessee that this lease is made subject to the condition that there shall be no discrimination against or segregation of any person or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee or any person claiming under or through the lessee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased".
ARTICLE 7
DEFAULT AND REMEDIES
7.1 Events of Default. Each of the following shall constitute an "Event of Default" by Borrower under this Agreement:
(a) Failure to Construct. Subject to Section 8.2, failure of Borrower to construct all of the Development within the time set forth in Article 4 above;
(b) Failure to Make Payment. Failure to make prompt payments of the principal and interest on the Borrower Note when due and such failure having continued uncured for thirty (30) days after receipt of written notice thereof by the Borrower from the Agency;
(c) Breach of Covenants. Failure by Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents, and such failure having . continued uncured for thirty (30) days after receipt of written notice thereof by the Borrower from the Agency or, if the breach cannot be cured within thirty (30) days, the Borrower shall not be in breach so long as Borrower is diligently undertaking to cure such breach; provided, however, that if a different period or notice requirement is specified under any other section of this Article 7, the specific provisions shall control.
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(d) Default Under Other Loans. Failure to make any payment or perform any of Borrower's covenants, agreements, or obligations under the Construction and Permanent Financing loans, following expiration of all applicable notice and cure periods.
(e) Insolvencv. A court having jurisdiction shall have made or entered any decree or order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Borrower or seeking any arrangement for Borrower under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower in bankruptcy or insolvency or for any of their properties, or (iv) directing the winding up or liquidation of Borrower, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or Borrower shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the Agency, the indebtedness evidenced by the Note.
(f) Assianment; Attachment. Borrower shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event or prior to sooner sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the Agency, the indebtedness evidenced by the Note.
(g) Suswension: Termination. Borrower shall have voluntarily suspended its business or, if Borrower is a partnership, the partnership shall have been dissolved or terminated, other than a technical termination of the partnership for tax purposes.
(h) Liens on Prowertv and the Proiect. There shall be filed any claim of lien (other than liens approved in writing by the Agency) against the Development or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the Agency First Loan and the continued maintenance of said claim of lien or notices to
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withhold for a period of thirty (30) days without discharge or satisfaction thereof or provision therefor satisfactory to the Agency. In the event that Borrower is diligently working to remove a claim of lien or to remove a notice to withhold proceeds and the Agency's interests under the Loan Documents are not imminently threatened, the Agency shall not declare a default under this subsection.
(i) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Land and the Development.
7.2 Limited Partner Cure Periods. (a) Notwithstanding anything to the contrary contained in this Agreement or the Agency First Note, the Agency First Loan Deed of Trust or the Agency Regulatory Agreement, and in addition to any other cure provisions contained in this Agreement, the limited partner of the Borrower shall have the right but not the obligation to cure any defaults of the Borrower hereunder, and the Agency agrees to accept cures tendered by the limited partner on behalf of the Borrower within the cure periods described below: the limited partner of Borrower shall have the right to cure all monetary and nonmonetary defaults within sixty (60) days after receipt of notice thereof. However, if a default is nonmonetary and is not reasonably capable of being cured within sixty (60) days or if the limited partner notifies the Agency that it is in the process of removing the managing general partner of the Borrower (as such process may be stayed by injunction, bankruptcy or similar proceedings), the limited partner shall have such additional time as is reasonably necessary to cure such default or remove the managing general partner, provided the limited partner has commenced and is diligently proceeding to cure such default or remove the managing general partner, as applicable (taking into account the effect of injunction, bankruptcy or similar proceedings).
(b) If, after the time provided in Sections 7.1 and 7.2, Borrower or the limited partner has not cured the default, the Agency may apply to any court, state or federal, for specific performance of this Agreement or an injunction against any violation of this Agreement, or any other remedies at law or in equity or any such other actions as shall be necessary or desirable so as to correct non-compliance with this Agreement.
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7.3 Remedies. The occurrence of any Event of Default following the expiration of all applicable notice and cure periods will, either at the option of the Agency or automatically where so specified, relieve the Agency of any obligation to make or continue the First Agency Loan and, subject to Section 8.15
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below, 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. The Agency shall have the right to cause all indebtedness of the Borrower to the Agency under this Agreement and the Agency First 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, including foreclosure under the Agency First Loan Deed of Trust. The Borrower shall be liable to pay the Agency on demand all expenses, costs and fees (including, without limitation, attorney's fees and expenses) paid or incurred by the Agency in connection with the collection of the Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Loan.
(b) Suecific Performance. The Agency shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Borrower to perform its obligations and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Loan Documents.
(c) Riaht to Cure at Borrower's Expense. The Agency shall have the right to cure any monetary default by Borrower under a loan other than the First Agency Loan. The Borrower agrees to reimburse the Agency for any funds advanced by the Agency to cure a monetary default by Borrower upon demand therefor, together with interest thereon at the rate of three percent (3%) per annum from the date of expenditure until the date of reimbursement.
7.4 Riaht of Contest. Borrower shall have the right to contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute an Event of Default hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the Agency or the rights of the Agency hereunder.
7.5 Remedies Cumulative. Subject to Section 8.15 below, 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
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any such instrument, or by any statute or otherwise against Borrower and any other person. Neither the failure nor any delay on the part of the 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.
7.6 Waiver of Terms and Conditions. The Agency Executive Director may at his or her discretion waive in writing any of the terms and conditions of this Agreement, without the Borrower completing an amendment to this Agreement. No waiver of any default or breach by Borrower hereunder shall be implied from any omission by the Agency to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the Agency to or of any act by Borrower requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under this Agreement or the Loan Documents, nor shall it invalidate any act done pursuant to notice of default, or prejudice the Agency in the exercise of any right, power, or remedy hereunder or under the Loan Documents, unless in the exercise of any such right, power, or remedy all obligations of Borrower to Agency are paid and discharged in full.
7.7 Removal of Manaaina General Partner bv Limited Partner. The Agency agrees that the removal of the managing general partner of the Borrower under this Agreement by the limited partner of Borrower pursuant to the terms of the Borrower's limited partnership agreement will not constitute a default under any of the Agency Loan Documents or allow acceleration of the Loan. If any other entity becomes the managing general partner of Borrower, the limited partner shall obtain the approval of the Agency of such replacement managing general partner within six months thereafter, which approval shall not be unreasonably withheld or delayed.
ARTICLE 8
MISCELLANEOUS
8.1 Time. Time is of the essence in this Agreement.
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. .
8.2 Force Maieure. Performance by either party hereunder shall not be deemed to be in default where defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits filed by third parties concerning or arising out of this Agreement); weather or soils conditions which, in the opinion of the Borrower's contractor, will necessitate delays; inability to secure necessary labor, materials or tools; delays of any contractor, sub-contractor or supplier; acts of the other party; acts or failure to act of any public or governmental agency or entity (other than the acts or failure to act of the Agency); or any other causes (other than BorrowerIs inability to obtain financing for the Development) beyond the control or without the fault of the party claiming an extension of time to perform. Times of performance under this Agreement may also be extended in writing by the Agency and the Borrower.
8.3 potices. All notices, demands and communications between the Borrower and the Agency shall be sufficiently given and shall not be deemed given unless dispatched by certified mail, postage prepaid, return receipt requested, or delivered by express delivery service with a delivery receipt, to the principal officers of the Borrower and the Agency as follows:
Borrower: La Terraza Associates, a California Limited Partnership One Hawthorne, 4th Floor San Francisco, CA 94105 Attention: Managing General Partner
Following notice by Borrower to the Agency that Mission Housing (or its affiliate) has been admitted as a limited partner of Borrower, with a copy to:
Mission Housing 18101 Von Karman Ave., Suite 1700 Irvine, CA 92715 Attention: Asset Manager
Agency: Redevelopment Agency of the City of Carlsbad 2965 Roosevelt Drive, Suite B Carlsbad, California 92008 Attention: Executive Director
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Such addresses may be changed by notice to the other party given in the same manner as provided above.
Notice shall be deemed to have been effective on the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was returned as undelivered.
. 8.4 Financial Statements: Ricrhts of Inspection. The Borrower shall deliver copies of its audited financial statements to the Agency annually promptly following completion of preparation of such statements. The Agency shall have the right, upon reasonable notice to Borrower, to inspect Borrower's books and records related to the Development.
8.5 Attornevs' Fees. If either party brings a legal or administrative action or proceeding to enforce, protect or establish any right or remedy hereunder or under any of the Loan Documents, the prevailing party shall be entitled to recover from the other party its costs of suit and reasonable attorneys' fees which shall be fixed by the court.
8.6 No Third Parties Benefited. Mission Housing is the sole third party beneficiary of this Agreement, and no person or persons other than the Borrower, the Agency and Mission Housing shall have any right of action hereon.
8.7 Actions. The Agency shall have the right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties hereunder, or the disbursement of any proceeds of the Loan.
8.8 Sians. Borrower agrees that the Agency may place signs mutually satisfactory to Borrower and the Agency upon the Development at locations selected by Borrower and the Agency advising of the financing of the Development by the Agency. The Agency may also announce such placement through press releases to newspapers and trade publications.
8.9 Successors and Assiuns. The terms hereof shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; provided, however, that no assignment of Borrower's rights hereunder shall be made, voluntarily or by operation of law, without the prior written consent of the Agency and that any such assignment without said consent shall be void.
8.10 Construction of Words. Except where the context otherwise requires, words imparting the singular number shall
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include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words of either gender shall include the other gender.
8.11 Partial Invalidity. If any provision of this Agreement shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
8.12 Governinu Law. This Agreement and the Loan Documents and other instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California.
8.13 Amendment. This Agreement may not be changed orally, but only by agreement in writing signed by Borrower and Agency.
8.14 Captions and Headinus. Captions and headings in this Agreement are for convenience of reference only, and are not to be considered in construing the Agreement.
8.15 Action bv the Auencv. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent, request, 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, or by any person who shall have been designated in writing to the Borrower by the Agency Executive Director, without further approval by the Agency Board, and any such action shall be in writing. The Agency Executive Director is also hereby authorized to approve, on behalf of the Agency, requests by Borrower for reasonable extensions of time deadlines set forth in this Agreement.
8.16 Nonrecourse Obliuations. The Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Agency First Note or the performance of the covenants of Borrower under this Agreement, the Agency Regulatory Agreement, or the Agency First Loan Deed of Trust. The sole recourse the Agency with respect to the principal of, or interest on, the Agency First Note and defaults by Borrower in the performance of its covenants under this Agreement, the Agency Regulatory Agreement, or the Agency First Loan Deed of Trust shall be to the property described in the Agency First Loan Deed of Trust. No judgment, or execution thereon, entered in any action, legal or equitable, on the Agency First Note, this Agreement, the Agency Regulatory Agreement or the Agency First Loan Deed of Trust shall be enforced personally against the Borrower but shall be enforced only against the property described in the Agency First Loan Deed of Trust.
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i
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
BORROWER:
LA TERRAZA ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
BY: BRIDGE HOUSING, INC., its managing general partner
By: Its:
AGENCY:
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION, IN ITS CAPACITY AS GOVERNING BODY OF, AND BY AND ON BEHALF OF, THE REDEVELOPMENT AGENCY OF THE CITY OF CARLSBAD
By: Its:
APPROVED AS TO FORM:
By: Ron Ball Agency Counsel
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1.
EXHIBIT A
Legal Description of the Land
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.
-
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EXHIBIT B
Agency First Note
-27-
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EXHIBIT C
Agency Regulatory Agreement
-28-
EXHIBIT D
Agency First Loan Deed of Trust
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,
c
EXHIBIT E
Permitted Uses of Loan Proceeds
.
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EXHIBIT B
Agency First Note
$1,712,000 , 1994 Carlsbad, California
.
FOR VALUE RECEIVED, La Terraza Associates, a California Limited Partnership (llBorrowerll), promises to pay to the Redevelopment Agency of the City of Carlsbad (llAgencyll), or order, the principal sum of One Million Seven Hundred Twelve Thousand Dollars ($1,712,000), or so much thereof as is advanced to Borrower by the Agency pursuant to Section 2.6 of the Loan Agreement (defined below), plus simple interest accruing at the rate of three percent (3%) per annum.
1. Loan Aureement. This Agency First Note is made pursuant to an Agency First Loan Agreement dated as of I 1994 by and between the Borrower and the Agency (the "Agency First Loan AgreementW), and as contemplated by a Regulatory Agreement dated as of 1994 by and between the Borrower and the Agency (the "Agency RLgulatory Agreement").
2. Term. The term of this Agency First Note (the "Term") shall commence on the date of this Agency First Note and shall end fifteen (15) years from the date of recordation of the deed of trust securing the Permanent Loan (as defined in the Agency
First Loan Agreement) (the "Due Date").
3. Amount and Time of Pavments. All amounts due under this Agency First Note shall be due and payable as set forth in Section 2.3 of the Agency First Loan Agreement.
4. Prepavment. Borrower shall have the right to prepay all or a portion of the principal and interest due under this Agency First Note without any charge or penalty being made therefor.
5. Deed of Trust. This Agency First Note is secured by a deed of trust of even date herewith (the "Agency First Loan Deed of TrustW1).
6. Acceleration. Upon the occurrence of a default under the Agency First Loan Agreement, Agency Regulatory Agreement, or Agency First Loan Deed of Trust, and expiration of all applicable
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notice and cure periods (an "Event of Default"), the Agency shall have the right to accelerate the Due Date of this Agency First Note and declare all of the unpaid principal and accrued interest immediately due and payable. Any failure by the Agency to pursue its legal and equitable remedies upon an Event of Default shall not constitute a waiver of the Agency's right to declare an Event of Default and exercise all of its rights under this Agency First Note, the Agency Regulatory Agreement, the Agency First Loan Deed of Trust, and the Agency First Loan Agreement. Nor shall acceptance by the Agency of any payment provided for herein constitute a waiver of the Agency's right to require prompt payment of any remaining principal and interest owed.
7. 80 Offset. Borrower hereby waives any rights of offset it now has or may hereafter have against the Agency, its successors and assigns.
8. Waiver: Attorneys' Fees. Borrower and any endorsers or guarantors of this Agency First Note, for themselves, their heirs, legal representatives, successors and assigns, respectively, severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor and non-payment of this Agency First Note, and expressly waive any rights to be released by reason of any extension of time or change in terms of
payment, or change, alteration or release of any security given for the payments hereof, and expressly waive the right to plead any and all statutes of limitations as a defense to any demand on this Agency First Note or agreement to pay the same, and jointly and severally agree to pay all costs of collection when incurred, including reasonable attorneys' fees. If an action is instituted on this Agency First Note, the undersigned promises to pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge reasonable as attorneys' fees in such action.
9. Manner and Place of Pavment. All payments of principal and interest due under this Agency First Note, as well as any additional payments set forth in the Agency First Loan Deed of Trust, shall be payable in lawful money of the United States of America at the office of the Redevelopment Agency of the City of Carlsbad, 2965 Roosevelt Drive, Suite B, Carlsbad, California 92008, or such other address as the Agency hereof may designate in writing.
10. Ronrecourse Obliuation. The Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, this Agency First Note, or the performance of the covenants of the Borrower under the Agency First Loan Agreement, the Agency Regulatory Agreement or the
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Agency First Loan Deed of Trust securing this Agency First Note. The sole recourse of the Agency with respect to the principal of, or interest on, the Agency First Note and defaults by Borrower in the performance of its covenants under the Agency First Loan Agreement, the Agency Regulatory Agreement, or the Agency First Loan Deed of Trust shall be to the property described in the Agency First Loan Deed of Trust. No judgment, or execution thereon, entered in any action, legal or equitable, on this Agency First Note, the Agency First Loan Agreement, the Agency Regulatory Agreement, or the Agency First Loan Deed of Trust shall be enforced personally against the Borrower, but shall be enforced only against the property described in the Agency First Loan Deed of Trust.
La Terraza Associates, a California Limited Partnership
By: BRIDGE Housing Corporation, its managing general partner
By: Its:
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EXHIBIT D
FORM OF AGENCY DEED OF TRUST
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of Carlsbad 2965 Roosevelt Drive, Suite B Carlsbad, CA 92008 Attention: Executive Director
No fee for recording pursuant to Government Code Section 27383
AGENCY FIRST LOAN DEED OF TRUST AND SECURITY AGREEMENT
THIS AGENCY FIRST LOAN DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") is made as of this day of 199 by and among La Terraza Associates, a California Limited bartn&hip ("Trustor"), , a ("Trusteel'), and the Redevelopment Agency of the City of Carlsbad, a public body politic and corporate (ltBeneficiaryll).
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor's leasehold interest in the property located in the County of San Diego, State of California, that is described in the attached Exhibit A, incorporated herein by this reference (the "Property").
TOGETHER WITH all interest, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH Trustor's interest in all easements, rights- of-way and rights used in connection therewith or as a means of access thereto, including (without limiting the generality of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH Trustor's interest in any and all buildings and improvements of every kind and description now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Property;
TOGETHER WITH Trustor's interest in all building materials and equipment now or hereafter delivered to said property and intended to be installed therein;
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the Property;
TOGETHER WITH Trustor's estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages to the extent Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner.
All of the foregoing, together with the Property, is herein referred to as the "Security." To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever.
FOR THE PURPOSE OF SECURING:
(a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note and the Loan Agreement (both as defined in Article 1 below) until paid or cancelled. Said principal and other payments shall be due and payable as provided in the Note and the Loan Agreement. The Note, the Loan Agreement, and the Regulatory Agreement (defined below), and all their terms are
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b l
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incorporated herein by reference, and this conveyance shall secure any and all extensions thereof, however evidenced; and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein; and
(c) Performance of every obligation, covenant or agreement of Trustor contained herein and in the Loan Documents (defined in Section 1.2 below).
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:
ARTICLE 1 DEFINITIONS
In addition to the terms defined elsewhere in this Deed Trust, the following terms shall have the following meanings this Deed of Trust:
of in
Section 1.1 The term "Loan Agreement" means that certain Agency First Loan Agreement between Trustor and Beneficiary dated as of 1994, providing for the Beneficiary to loan to the Trustor One Million Seven Hundred Twelve Thousand Dollars ($1,712,000) for the development on the Property of improvements.
Section 1.2 The term mBank Deed of Trust" means the Deed of Trust to Wells Fargo Bank, NA, securing a loan from Wells Fargo Bank, NA, to Trustor in the amount of Dollars
($ 1.
Section 1.3 The term "Loan Documentsw means this Deed of Trust, the Note, the Loan Agreement, and the Regulatory Agreement.
Section 1.4 The term "Notew means the Agency First Note in the principal amount of One Million Seven Hundred Twelve Thousand Dollars ($1,712,000) of even date herewith executed by the Trustor in favor of the Beneficiary, the payment of which is secured by this Deed of Trust. (A copy of the Note is on file with the Beneficiary and terms and provisions of the Note are incorporated herein by reference.)
Section 1.5 The term nPrincipaln means the aggregate of the amounts required to be paid under the Note.
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Section 1.6 The term "Regulatory AgreementW means the Regulatory Agreement by and between the Trustor and the Beneficiary of even date herewith.
ARTICLE 2 MAINTENANCE AND MODIFICATION OF THE PROPERTY AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note, the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause the Security to be maintained and preserved in good condition, subject to Article 4 below. The Trustor will from time to time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these matters or for the making of improvements or additions to the Security.
Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for'labor done and for material and services furnished in connection with the Security, diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation of labor on the work or construction on the Security for a continuous period of thirty (30) days or more, and to take all other reasonable steps to forestall the assertion of claims of lien against the Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file for record any notices of completion or cessation of labor or any other notice that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those actions as hereinbefore provided, after notice and expiration of all applicable cure periods.
Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor shall, at Beneficiary's written request, within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of San Diego County, a surety bond in an amount 1
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b .
and l/2 times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary.
Section 2.2 Granting of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in the nature of easements with respect to any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities including, without limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. As to these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements.
ARTICLE 3 TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior to delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility company which are or may become a lien affecting the Security or any part thereof; provided, however, if such taxes, assessments or charges may be paid in installments, Trustor may pay in such installments; and provided further, that Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 3.1. The provisions of this Section 3.1 shall not be construed to require that Trustor maintain a reserve account, escrow account, impound account or other similar account for the payment of future taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay such items within seven (7) business days after receipt of such notice or, alternatively, provides Beneficiary with evidence Trustor is contesting such items in accordance with this Section. Any amount so advanced therefor by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted by law, shall become an additional obligation of
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Trustor to the Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the Loan Documents during the course of construction and following completion, and at all times until all amounts secured bv this Deed of Trust have been Paid and all other obligations secured hereunder fulfilled, and-this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost and expense. Certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of Trust.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust, the Beneficiary, after at least seven (7) days prior notice to Beneficiary, may (but shall be under no obligation to) take out the required policies of insurance and pay the premiums on the same; and all amounts so advanced therefor by the Beneficiary shall become an additional obligation of the Trustor to the Beneficiary (together with interest as set forth below) and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the rate of six percent (6%) per annum.
ARTICLE 4 DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (1) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (2) any damage to or destruction of the Property or any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property ("Funds") are hereby assigned to and shall be paid to the Beneficiary by a check made payable to the Beneficiary. Upon the occurrence of an Event of Default (as
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defined in the Loan Agreement), the Beneficiary shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment of the costs of repairing or rebuilding that part of the improvements on the Property damaged or destroyed if (i) the Trustor agrees in writing within ninety (90) days after payment of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each lender of an outstanding Construction and Permanent Loan (as defined in the Loan Agreement) permits such repairing or rebuilding, provided that the extent of Trustor's obligation to restore the improvements shall be limited to the amount of the insurance proceeds. If the improvements are not repaired or rebuilt as provided in this Section 4.1, all such proceeds shall be applied to repayment of outstanding loans . . including the loan secured by this Deed of Trust, in the order of lien priority. Application of all or any part of the Funds collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior mortgage lender.
ARTICLE 5 AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Loan Documents and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary should employ attorneys or incur other expenses for the collection of amounts due or the enforcement of performance or observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such
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amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such expenses are incurred at the six percent (6%) per annum.
Section 5.3 Payment of the Principal.
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Note in the amounts and at the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall constitute a fixtures filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements pursuant to the appropriate statutes, and any other documents or instruments as are reasonably required to convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary to maintain such valid perfected security interest in the Security in order to secure the payment of the Note in accordance with its terms. The Beneficiary is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
The Trustor shall operate the Security (and, in case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in full compliance with the Loan Documents.
Section 5.7 Inspection of the Security.
At any and all reasonable times upon seventy-two (72) hours' notice, subject to the rights of tenants, the Beneficiary and its duly authorized agents, attorneys, experts, engineers,
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accountants and representatives shall have the right, without payment of charges or fees, to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, age, disability, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants shall run with the land.
Section 5.9 Subordination.
The lien of this Deed of Trust shall be subordinate to the lien of the Bank Deed of Trust, recorded concurrently herewith, and the lien of the deed(s) of trust to Great Western Savings, securing the permanent loan(s) for the improvements on the Property.
ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Acceleration of Maturity.
If an Event of Default, (as defined in the Loan Agreement), shall have occurred and be continuing, then at the option of the Beneficiary, the amount of any payment related to the Event of Default and the unpaid Principal of the Note shall immediately become due and payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified in the Loan Documents), and no omission on the part of the Beneficiary to exercise such option when entitled to do so shall be construed as a waiver of such right.
Section 6.2 The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
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(a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereof), in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any Event of Default or Notice of Default (as defined below) hereunder or invalidate any act done in response to such Event of Default or pursuant to such Notice of Default and, notwithstanding the continuance in possession of the Security, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof;
(c) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor's interest in the Security to be sold ("Notice of Default and Election to Sell"), which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of San Diego County; or
(d) Exercise all other rights and remedies provided herein, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law.
Section 6.3 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained following an Event of Default, the Beneficiary shall give notice to the Trustee (the "Notice of Sale") and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the unpaid principal amount of the Note is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then
1442BF.PSO 07/06/94 -lO-
required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and Election to Sell and after Notice of Sale having been given as required by law, sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it may determine unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such purchaser purchasers. or
(b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if any, to Trustor.
(c) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale.
Section 6.4 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under the Security, and without regard to the then value of the Security or the interest of Trustor therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided herein, and shall continue as such and exercise
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all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 6.5 Remedies Cumulative.
Subject to Section 7.13 below, no right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 6.6 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from time to time and as often as may be deemed expeditious by the Beneficiary. No consent or waiver, expressed or implied, by the Beneficiary to any breach by the Trustor in the performance of the obligations hereunder shall be deemed or construed to be a consent to or waiver of obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any Event of Default by the Trustor.
(b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of any sums secured hereby, (ii) takes other or additional security or the payment of any sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the granting of any easement or other right affecting the Security, or (iv) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the obligations under this Deed of Trust, or any other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or omission preclude the Beneficiary from exercising any right,
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power or privilege herein granted or intended to be granted in any Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by the Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 6.7 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of the Beneficiary.
Section 6.8 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Trustor, its creditors or its property, the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date.
Section 6.9 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in taking any action to collect any sums owing under the Note or in proceedings against the Security, in connection with the delivery, acceptance, performance, default, endorsement or guaranty of this Deed of Trust.
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ARTICLE 7 MISCELLANEOUS
Section 7.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor.
Section 7.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons legally entitled thereto.
Section 7.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or convenient for one of the parties hereto to serve any notice, demand or communication upon the other party, such notice, demand or communication shall be in writing and shall be served personally or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and (1) if intended for Beneficiary shall be addressed to:
Redevelopment Agency of the City of Carlsbad 2965 Roosevelt Drive, Suite B Carlsbad, CA 92008 Attention: Executive Director
and (2) if intended for Trustor shall be addressed to:
La Terraza Associates, a California Limited Partnership One Hawthorne, 4th Floor San Francisco, CA 94105 Attn: Managing General Partner
and, following notice to Beneficiary that Mission Housing (or its affiliate) has become a limited partner of the Trustor, with a copy to:
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Mission Housing 18101 Von Karman Ave., Suite 1700 Irvine, CA 92715 Attention: Asset Manager
Any notice, demand or communication shall be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either party may change its address at any time by giving written notice of such change to Beneficiary or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective.
Section 7.4 Captions.
The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust.
Section 7.5 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust.
Section 7.6 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California.
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Section 7.7 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires.
Section 7.8 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and any reference to a deed of trust shall also refer to a mortgage.
Section 7.9 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security.
Section 7.10 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the Property is situated, shall be conclusive proof of proper appointment of the successor trustee.
Section 7.11 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 7.12 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
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Section 7.13 Nonrecourse Obligations
The Trustor shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Note or the performance of the covenants of the Trustor under the Loan Documents. The sole recourse of the Beneficiary with respect to the principal of, or interest on, the Note and defaults by Trustor in the performance of its covenants under the Loan Documents shall be to the Security. No judgment, or execution thereon, entered in any action, legal or equitable, on the Loan Documents shall be enforced personally against the Trustor but shall be enforced only against the Security.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written.
TRUSTOR:
La Terraza Associates, a California Limited Partnership
By: BRIDGE Housing Corporation, its managing general partner
Its:
STATE OF CALIFORNIA 1 ) ss COUNTY OF 1
On 199 before me, the undersigned, a Notary Public, personall; app&red personally known to me (or proved to me on the basis of satisfabtory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
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EXHIBIT A (Legal Description of Leasehold Estate)
The land is situated in the State of California, County of San Diego, and is described as follows:
The leasehold estate in Parcel A below created by that certain Ground Lease by and between the City of Carlsbad, as lessor, and La Terraza Associates, a California Limited Partnership, as lessee, a memorandum of which was filed in the Official Records of San Diego County as Record No. on , 1994.
Parcel A:
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EXHIBIT 3
SECOND AGENCY LOAN AGREEMENT
SECOND AGENCY LOAN NOTE
SECOND AGENCY LOAN DEED OF TRUST AND SECURITY AGREEMENT
VILLAS AT EL CAMINO REAL
AFFORDABLE HOUSING PROJECT
AGENCY SECOND LOAN AGREEMENT
by and between
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
and
LA TERRAZA ASSOCIATES,
a California Limited Partnership
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND EXHIBITS .......... 2 1.1 Definitions .................... 2 1.2 Exhibits ..................... 4
. ARTICLE 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12
ARTICLE 3 3.1
3.2
DISBURSEMENT OF LOAN ............. Conditions Precedent to Disbursement of Loan Proceeds . . Procedure ;or Diib&eme&'o; Lok'ProceidH .......... 7 7
ARTICLE 4 DEVELOPMENT OF THE IMPROVEMENTS ....... 8 4.1 Commencement of Construction ........... 8 4.2 Completion of Construction ............ 8 4.3 Construction in Compliance with Law ........ 8 4.4 Entry by the Agency ................ 8 4.5 Estoppel Certificate of Completion ........ 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER . 5.1 Representations and Warranties ..........
ARTICLE 6 CONTINUING OBLIGATIONS ........... 6.1 Applicability ................... 6.2 Compliance with Loan Documents .......... 6.3 Rental of Units .................. 6.4 Required Insurance Coverage ............ 6.5 Insurance Policies and Premiums .......... 6.6 Proceeds of Insurance ............... 6.7 Taxes and Assessments ............... 6.8 Compliance with Laws ............... 6.9 Changes ...................... 6.10 Notification of Litigation ............
LOAN .................... Amount ...................... Interest ..................... Repayment ..................... Prepayment .................... Assumption Loan Disbursim& Use of Loan Proceeds'
................................................
Security for Loan ................. Approval of Additional Financing ......... Subordination of Deed of Trust .......... Subordination of the Agency Regulatory Agreement . Admission of Investor Limited Partner .......
Page
4 4 4 4 5 5 5 5 5 6 6 6 6
7
9 9
10 10 10 10 11 11 12 12 12 12 13
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TABLE OF CONTENTS (continued)
6.11 Indemnity . . . . . . . . . . . . . . . . . . 6.12 Hazardous Materials . . . . . . . . . . . . . 6.13 Mandatory Language in All Subsequent Deeds, Leases and Contracts ..... .Y .....
ARTICLE 7 DEFAULT AND REMEDIES ........ 7.1 Events of Default ............. 7.2 Limited Partner Cure Periods ....... 7.3 Remedies ................. 7.4 Right of Contest 7.5 Remedies Cumulativ;! 7.6 Waiver of Terms and CoAditions' .........................
ARTICLE 8 MISCELLANEOUS ............ 8.1 Time 8.2 Force Majeure .................................
8.3 Notices . ... .... . ......
8.4 Financial Stkiments; Rights of Inspection 8.5 Attorneys' Fees .............. 8.6 No Third Parties Benefited ........ 8.7 Actions .................. 8.8 Signs ................... 8.9 Successors and Assigns .......... 8.10 Construction of Words ........... 8.11 Partial Invalidity ............ 8.12 Governing Law ............... 8.13 Amendment ................. 8.14 Captions and Headings ........... 8.15 Action by the Agency 8.16 Nonrecourse Obligations ....................
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EXHIBIT A Legal Description of the Land
EXHIBIT B Agency Second Note
EXHIBIT C Agency Regulatory Agreement
EXHIBIT D Agency Second Loan Deed of Trust
EXHIBIT E Permitted Uses of Loan Proceeds
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1442CK.PSO 07/14/94 -j-J-
AGENCY SECOND LCAN AGREEMENT
.
This Agency Second Loan Agreement ("the Agreement") is entered into as of this 1994 by and between the Carlsbad Housing and Redevelopment'Commission, in its capacity as giverning body of, and by and on behalf of, the Redevelopment Agency of the City of Carlsbad (the "Agency") and La Terraza Associates, a California Limited Partnership (@@Borrower").
RECITALS
WHEREAS:
1. Borrower desires to construct three hundred and forty- four (344) residential units in the City of Carlsbad, of which at least one hundred and sixty (160) shall be rented to low income households at affordable housing cost and the remainder, excluding managers' units, shall be rented to moderate income households at affordable housing cost.
2. The Agency desires to provide financial assistance to Borrower for development costs in the form of a loan for a total amount not to exceed Five Hundred Thousand Dollars ($500,000) (the "Agency Second Loan"). The Agency intends to fund the Loan with tax increment funds, including moneys from the Agency's Low and Moderate Income Housing Fund created pursuant to Health and Safety Code Sections 33334.2 and 33334.3, which funds are not federal funds or the proceeds of a tax-exempt bond issue. The Agency is required by law to place restrictions on developments assisted with the Low and Moderate Income Housing Fund ensuring that such developments remain affordable to low and moderate income households for the longest feasible time.
3. The Carlsbad City Council adopted the Redevelopment Plan (the @*Redevelopment Plan") by Ordinance No. on
I 19 The Redevelopment Plan established the Carlsbad Village'Redevelopment Project Area (18Redevelopment Area") and set forth goals, objectives, and proposed activities for redevelopment of the Redevelopment Area, including the production of housing affordable to low and moderate income households. The land on which the units will be developed is located outside of the Redevelopment Area. By Resolution Nos. and the City Council and the Agency Board, respectively, made'findings that the development of the housing units by the Borrower will be of benefit to the Project Area.
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ARTICLE 1
DEFINITIONS AND EXHIBITS
1.1 Definitions. The following terms shall have the following meanings in this Agreement:
.
(a) tlAgencytV shall mean the Redevelopment Agency of the City of Carlsbad, a public body corporate and politic.
(b) "Agency First Loan" shall mean the loan for an amount not to exceed One Million Seven Hundred and Twelve Thousand Dollars ($1,712,000), which loan is the subject of the Agency First Loan Agreement of even date herewith.
(cl "Agency Second Loan" shall mean the loan for an amount not to exceed Five Hundred Thousand Dollars ($500,000) by the Agency to Borrower, which loan is the subject of this Agreement.
(d) "Agency Second Loan Deed of Trust" shall mean the deed of trust to be placed on the Development, in substantially the form shown in Exhibit D attached hereto and incorporated herein, securing the Agency Second Note and naming the Agency as beneficiary.
(e) "Agency Second Note" shall mean the promissory note, in substantially the form shown in Exhibit B attached hereto and incorporated herein, in the principal amount of Five -: . Hundred Thousand Dollars ($500,000), evidencing the Agency Second ? . Loan.
(f) "Agency Reg ulatory Agreement" shall mean the Agency Regulatory Agreement in the form attached as Exhibit C to this Agreement to be recorded against the Land pursuant to Section 3.1 below.
(9) tlAgreementll shall mean this Agency Second Loan Agreement.
(h) @'Borrowertl shall mean La Terraza Associates, a California Limited Partnership.
W nConstruction and Permanent Financing" shall mean any of the following loans acquired by the Borrower for the purpose of financing the Improvements, in addition to the Agency Second Loan:
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(i)
(ii)
(iii)
(iv)
(VI
(j)
Wells Fargo Bank construction loan in an amount not to exceed Twenty-Six Million Five Hundred Thousand Dollars ($26,500,000);
Agency First Loan (construction and permanent) in the amount of One Million Seven Hundred Twelve Thousand Dollars ($1,712,000);
Great Western permanent loan(s) in the approximate total amount of Nine Million Five Hundred Thousand Dollars ($9,500,000);
Additional loans in an amount not to exceed One Million Dollars ($l,OOO,OOO); and
Any loans refinancing the above-described loans.
"Developmenttl shall mean the Borrower's leasehold interest in the Land and the Borrower's fee interest Improvements to be constructed on the Land.
(k) tlImprovementsll shall mean the buildings and improvements to be constructed on the Land, including the Units, and the parking spaces and landscaping appurtenant to such buildings and improvements.
(1) "Land" shall mean the property on which the Borrower shall construct the Improvements, which property is more particularly described in Exhibit A attached hereto and incorporated herein.
ON "Loan Amount" shall mean the amount loaned to Borrower pursuant to Section 2.1 below.
(n) "Loan Documents** shall mean the following documents evidencing the Agency Second Loan: (i) the Agency Second Note; (ii) the Agency Regulatory Agreement; (iii) the Agency Second Loan Deed of Trust; (iv) this Agreement.
(0) "Partiestl shall mean the Agency and the Borrower.
(P) "Permanent Loan" shall mean the loan(s) from Great Western Bank described in Section l.l(h)(iii).
(9) @@Term" shall mean the term of the Agency Second Loan commencing on the date of disbursement of the Loan Amount and ending fifty-five (55) years following the date of recordation of the deed of trust securing the Permanent Loan.
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03 Wnit" shall mean one of the three hundred forty- four (344) dwelling units located within the Development.
1.2 Exhibits. The following Exhibits are attached to this Agreement and incorporated herein:
Exhibit A - Legal Description of the Land
Exhibit B - Agency Second Note
Exhibit C - Agency Regulatory Agreement
Exhibit - Agency Second Loan Deed of Trust
Exhibit - Permitted Uses of Loan Proceeds
ARTICLE 2
LOAN
2.1 Amount. The Agency hereby agrees to loan, and the Borrower hereby agrees to borrow, an amount not to exceed Five Hundred Thousand Dollars ($500,000), subject to the terms and conditions set forth in this Agreement, and subject further to the terms and conditions set forth within the documents and instruments executed by the Borrower in connection with this transaction, including:
(a) The Agency Second Note;
(b) The Agency Regulatory Agreement; and
(c) The Agency Second Loan Deed of Trust.
2.2 Interest. The outstanding principal amount of the Loan shall accrue simple interest at three percent (3%) per annum.
2.3 Renavment. (a) Repayment of principal and interest on the Agency Second Loan shall be deferred until repayment in full of the Agency First Loan. Following repayment in full of the Agency First Loan, the Borrower shall utilize seventy percent (70%) of Surplus Cash (as defined below) each year thereafter to make repayment of this Agency Second Loan. In the event seventy percent (70%) of Surplus Cash in any year is insufficient to pay the interest due in that year, interest shall accrue. Payments received shall be credited first to accrued, but unpaid, interest from prior years, then to current year interest, and then as repayment of principal. Any amount of principal and interest remaining unpaid shall be due in full upon: (i) expiration of the
1442cxP50 07/14/94 -4-
Term; or (ii) sale of transfer of the Development other than a transfer described in Section 2.5 below.
(b) "Surplus Cash" shall mean operating income of the Development in the calendar year immediately prior to the due date of an Amortized Payment (excluding interest income earned on tenant security deposits and Development reserve accounts) less reasonable operating expenses in that same calendar year. For this purpose, operating expenses shall include all costs and expenses related to ownership and operation of the Development including, but not limited to, deposits into reserves (such that the operating reserve is initially funded at $500,000 and replenished up to that amount thereafter and the replacement reserve is funded at $96,000 per year), taxes and other similar charges, the partnership management fee in an amount not to exceed twenty thousand dollars ($20,000), debt service currently due on the Construction and Permanent Financing (excluding the loans from the Agency), the property management fee and other expenses of a property manager in amounts reasonable and customary in the industry, but shall not include any allowance for depreciation.
2.4 Prenavment. Borrower may prepay the principal and any interest due the Agency under the Agency Second Note prior to or in advance of the time for payment thereof as provided in the Agency Second Note, without penalty; provided, however, that Borrower acknowledges that the provisions of the Agency Regulatory Agreement will be applicable to the Development even though Borrower may have prepaid the Agency Second Note.
2.5 Assumvtion. In the event the Development is sold or transferred to BRIDGE Housing Corporation or a nonprofit affiliate of BRIDGE Housing Corporation, the Loan shall be fully assumable by such transferee, subject to Section 8.16 below. The Loan shall not be assumable by any other transferee.
2.6 Loan Disbursement. Upon satisfaction of the preconditions to disbursement set forth in Sections 3.1 below and pursuant to the disbursement procedures set forth in Section 3.2 below, the Agency will disburse to Borrower the Loan Amount.
2.7 Use of Loan Proceeds. Borrower shall use Loan Proceeds only to pay the costs set forth in Exhibit E.
2.8 Security for Loan. The Loan shall be secured by the Agency Second Loan Deed of Trust on Borrower's leasehold interest in the Land. The Borrower shall provide the Agency with an CLTA policy of title insurance insuring the Agency Second Loan Deed of Trust as a lien against the Borrower's leasehold interest in the
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Land, subject only to the lien or liens of the Construction and Permanent Financing mortgages.
2.9 Avvroval of Additional Financinq. The Borrower shall not place any encumbrances on the Land other than the Construction and Permanent Financing without the prior written consent of the Agency, which consent shall not be withheld unreasonably.
. 2.10 5. The Agency agrees to subordinate the Agency Second Loan Deed of Trust to the liens of the deeds of trust securing the Construction and Permanent Financing.
2.11 Subordination of the Aaencv Reaulatorv Aareement. The Agency agrees that the Agency Executive Director shall subordinate the Agency Regulatory Agreement to the lien or encumbrance of any private construction or permanent financing provided for the Development upon the finding of the Agency's Executive Director that (i) an economically feasible loan is not reasonably available on comparable terms and conditions without subordination, and (ii) the mortgage to which the Agency Regulatory Agreement is being subordinated contains provisions meeting the requirements of Health and Safety Code Section 33334.14(a) reasonably designed to protect the Agency's interest in the event of default under such mortgage. The Agency agrees that the Agency Regulatory Agreement shall be subordinated to any federal or state governmental agency regulating the Development which requires that the Agency Regulatory Agreement be subordinate to such government agency's documents and liens. The Agency will execute subordination agreements in a form reasonably acceptable to the lending entity or government agency to subordinate the Agency Regulatory Agreement as provided in this Section.
2.12 Admission of Investor Limited Partner. Borrower shall inform the Agency of the identity of its investor limited partner prior to the admission of the investor limited partner to Borrower's partnership and Borrower shall obtain Agency consent to the admission of such investor limited partner, which consent shall not be withheld unreasonably.
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ARTICLE 3
DISBURSEMENT OF LOAN
3.1 Conditions Precedent to Disbursement of Loan Proceeds. The Agency shall not disburse Loan proceeds to the Borrower until all of the following conditions precedent are satisfied.
(a) Budset. Borrower shall have submitted to the Agency and obtained Agency approval of a development budget for the Development.
(b) Corvorate Authorization. Borrower shall provide the Agency with a certified copy of a corporate authorizing resolution, approving the Loan and the Borrower's execution of all Loan Documents.
(c) Close of Ground Lease. Borrower shall hold leasehold title to the Land pursuant to a Ground Lease by and between the City of Carlsbad, as lessor, and Borrower as lessee.
(d) Execution. Delivery and Recordation of Documents. Borrower shall have executed and delivered to the Agency the Agency Second Note, the Agency Second Deed of Trust, and the Agency Regulatory Agreement, and any other documents and instruments required to be executed and delivered, all in form and substance satisfactory to the Agency, and the Agency Second Deed of Trust and the Agency Regulatory Agreement shall have been recorded against Borrower's leasehold interest in the Land.
W Insurance. Borrower shall have furnished the Agency with evidence of the insurance coverage required pursuant to Sections 6.4 and 6.5 below.
(f) No Default. There shall exist no condition, event or act constituting an Event of Default (as hereinafter defined) hereunder or which, upon the giving of notice or the passage of time, or both, would constitute an Event of Default.
3.2 Procedure for Disbursement of Loan Proceeds. Upon satisfaction of the conditions set forth in Section 3.1 above, the Agency shall disburse the entire Loan Amount to Wells Fargo Bank to be,disbursed pursuant to the Wells Fargo Bank Building Loan Agreement.
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ARTICLE 4
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DEVELOPMENT OF THE IMPROVEMENTS
4.1 Commencement of Construction. Subject to Section 8.2 below, the Borrower hereby covenants and agrees to commence construction of the Development no later than ninety (90) days following the date Borrower obtains leasehold title to the Land.
4.2 Comvletion of Construction. The Borrower hereby covenants and agrees to diligently prosecute to completion the construction of the Development within twenty-two (22) months from the date of commencement of construction, subject to Section 8.2 below.
4.3 c. Borrower shall construct the Improvements in compliance with all applicable laws, ordinances, rules, and regulations of federal, state, and local governments and agencies and with all applicable directions, rules, and regulations of the fire marshal, health officer, building inspector, and other officers of any such government or agency.
4.4 Entry bv the Agency. Borrower shall permit the Agency, through its officers, agents, or employees, at all reasonable times to enter into the Development and inspect the work of construction to determine that the same is in conformity with the construction plans approved by the City of Carlsbad. Borrower acknowledges that the Agency is under no obligation to supervise, inspect, or inform Borrower of the progress of construction, and Borrower shall not rely upon the Agency therefor. Any inspection by the Agency is entirely for its purposes in determining whether Borrower is in default under this Agreement and is not for the purpose of determining or informing Borrower of the quality or suitability of construction. Borrower shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers.
4.5 Estovvel Certificate of Completion. When the Borrower has determined it has met its obligations under this Article 4, the Borrower may request that the Agency issue an Estoppel Certificate of Completion. Within ten (10) days of such a request, the Agency shall issue an Estoppel Certificate of Completion or shall provide the Borrower with a written explanation of its refusal to issue the Estoppel Certificate of Completion. If and when the Borrower has taken the specified measures or met the specified standards the Agency shall issue an Estoppel Certificate of Completion.
.j-
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.
The Estoppel Certificate of Completion shall not be deemed a notice of completion under the California Civil Code, nor shall it constitute evidence of compliance with or satisfaction of any obligation of the Borrower to any holder of a deed of trust securing money loaned to finance the Development.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
5.1 Renresentations and Warranties. Borrower hereby represents and warrants to the Agency as follows:
(a) Oruanization. Borrower is duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted.
(b) Authoritv of Borrower. Borrower has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above.
(c) Authority of Persons Executina 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 Borrower, and all actions required under 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.
(d) Valid Bindina Aareements. This Agreement and the Loan Documents and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Borrower enforceable against it in accordance with their respective terms, subject to: (1) bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or affecting the rights of creditors
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generally, and (ii) general equity principles and the effect of Code of Civil Procedure Sections 580a, 580d and 726, and any other statutory provisions limiting proceedings for recovery of a debt.
(e) Pendina Proceedinas. Except for the case of Cq a Commis io g Redevelopment Commission: City Council of the City of Carlsbad: . and Does 1 throuah 25, inclusive and Aviara Land Associates . Limited Partnershin. a Delaware limited nartnershin: BRIDGE Housina Corooration, a California non-nrofit nublic benefit 1 or oration. Patrick Picerne Bank of America, NTtSA, a California cornoration: and Does 26 throuah 30, inclusive, there are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the Development, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Borrower, materially affect Borrower's ability to repay the Agency Loan or impair the security to be given to the Agency pursuant hereto.
(f) :. The financial statements of Borrower and Borrower's general partners and other financial data and information furnished by 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 Borrower and Borrower's general partners from that shown by such financial statements and other data and information.
ARTICLE 6
CONTINUING OBLIGATIONS
6.1 Anplicabilitv. For the longer of the entire Term, or so long as the Agency Second Note remains outstanding, the Borrower shall comply with the provisions of this Article 6.
6.2 Compliance with Loan Documents. Borrower shall comply with all the terms and provisions of the Loan Documents.
6.3 Rental of Units. The Borrower shall comply with the occupancy and affordability restrictions for the rental of the Units as set forth in the Agency Regulatory Agreement.
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6.4 Reouired Insurance Coveraae
(a) Fire and Extended Coveraae Endorsement. The Borrower shall during the Term keep the Development insured against loss or damage by a standard all risk policy in amounts not less than the replacement value of the Development, or should insurance in such amount not be reasonably and commercially available, such lesser amount as may be acceptable to the Agency. The amount of such insurance shall be adjusted by reappraisal of . the Improvements by the insurer or its designee at least once every five (5) years during the Term, if requested by the Agency. If an all risk policy insuring the full replacement value of the Development is not reasonably and commercially available, the Borrower shall use best efforts to obtain and maintain an extended coverage endorsement that ensures the full replacement value of the Development as soon as such coverage becomes commercially and reasonably available.
(b) Liability and Property Damaae Insurance. During the Term, the Borrower shall keep in full force and effect a policy or policies of comprehensive general liability and property damage insurance against liability for bodily injury to or death of any person or property damage arising out of an occurrence on or about the Development. The limits of such insurance shall be not less than one million dollars ($l,OOO,OOO) combined single limit for bodily injury and property damage. The limits of the insurance shall be adjusted once every five (5) years if and as reasonably required by the Agency.
(c) Workers ) Comnensation Insurance. The Borrower shall carry or cause to be carried workers' compensation insurance covering all persons employed by the Borrower in connection with the Development and with respect to whom death, bodily injury, or sickness insurance claims could be asserted against the Borrower or the Agency.
(d) Builders I Risk Insurance. During the course of any alteration, construction or reconstruction, the cost of which exceeds one hundred thousand dollars ($lOO,OOO), the Borrower shall require any contractor to provide builders' risk insurance for not less than one million dollars ($l,OOO,OOO) combined single limit for bodily injury or property damage insuring the interests of the Agency, the Borrower and any contractors and subcontractors.
6.5 Insurance Policies and Premiums
(a) All liability policies required by this Agreement shall name the Agency as an additional insured. Duplicate copies
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of such policies or certificates of such insurance shall be promptly furnished to the Agency.
(b) To the extent obtainable, any policy of insurance shall provide that any change or cancellation of said policy must be made in writing and sent to the Borrower and the Agency at their respective principal offices at least thirty (30) days before the effective date of change or cancellation.
. 6.6 Proceeds of Insurance
All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment of the costs of repairing or rebuilding that part of the Development damaged or destroyed if (i) the Borrower agrees in writing within ninety (90) days after payment of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each lender of an outstanding Construction and Permanent Loan permits such repairing or rebuilding, provided that the extent of Borrower's obligation to restore the Development shall be limited to the amount of the insurance proceeds. If the Development is not repaired or rebuilt as provided in this Section 6.6, all such proceeds shall be applied to repayment of outstanding loans including this Agency Second Loan, in the order of lien priority.
6.7 Taxes and Assessments. So long as Borrower owns the Development, Borrower shall pay all real and personal property taxes, assessments and charges and all franchise, income, unemployment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Development; provided, however, that Borrower shall have the right to contest in good faith any such taxes, assessments, or charges. In the event Borrower exercises its right to contest any tax, assessment, or charge against it, Borrower, on final determination of the proceeding or contest, shall immediately pay or discharge any judgment rendered against it, together with all costs, charges, and interest.
6.8 Compliance with Laws. Borrower shall comply with all laws and regulations of the United States and of California and of any political subdivision thereof, or of any governmental authority which may be applicable to it or to its business, subject to Borrower's right to contest the validity or applicability of laws or regulations.
6.9 Chanaes. Borrower shall promptly notify the Agency in writing of any changes in the location of any place of business or material assets of the Borrower.
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6.10 Wotification of Litiaation. Borrower shall promptly notify the Agency in writing of any litigation affecting the Borrower or the Development and of any claims or disputes that involve a material risk of litigation, which may materially adversely affect the Agency Second Loan.
6.11 Indemnity. Borrower shall defend, indemnify, save and hold the Agency, its boardmembers, officers, employees, agents, . and contractors, utilizing attorneys approved by the Agency, harmless from any and all claims, actions, demands, costs, expenses, and attorneys' fees, arising out of, attributable to, or otherwise occasioned, in whole or in part, by any act or omission of Borrower arising from or related to the Development after the date of Borrower's acquisition of leasehold title to the Land, except as such claim may arise from the negligence or wilful misconduct of an indemnified party.
6.12 Hazardous Materials.
(a) Definitions. The following special definitions shall apply for the purposes of this Section 6.12:
(i) "Hazardous Materials" shall mean:
(A) any "hazardous substance" as defined in Section lOl(14) of CERCLA (42 U.S.C. Section 9601(14)) or Section 25281(d) or 25316 of the California Health and Safety Code at such time;
(B) any "hazardous waste," Ninfectious waste" or Vhazardous material" as defined in Section 25117, 25117.5 or 25501(j) of the California Health and Safety Code at such time;
(C) any other waste, substance or material designated or regulated in any way as Yoxicl' or 1@hazardous11 in the RCRA (42 U.S.C. Section 6901 &
sea.) I CERCLA Federal Water Pollution Control Act (33 U.S.C. Section 1521 et a.), Safe Drinking Water Act (42 U.S.C. Section 3000 (f) & a.), Toxic Substances Control Act (15 U.S.C. Section 2601 & m.), Clear Air Act (42 U.S.C. Section 7401 * sea.), California Health and Safety Code (Section 25100 & sea., Section 3900 & m.), or California Water Code (Section 1300 & sea.) at such time; and
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(D) any additional wastes, substances or material which at such time are classified, considered or regulated as hazardous or toxic under any other present or future environmental or other similar laws relating to the Development.
(ii) ffHazardous Materials Laws" means all federal, state, and local laws, ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under the Development or any portion thereof.
(b) Certain Covenants and Asreements. The Borrower hereby covenants and agrees that:
(i) The Borrower shall not knowingly permit the Development or any portion thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence of Hazardous Materials in, on or under the Development. For the purposes of this Section 6.12(b)(i) only, the term ffHazardous Materials" shall not include: (a) construction materials, gardening materials, household products, office supply products, or janitorial supply products customarily used in the construction, maintenance, rehabilitation, or management of residential housing or associated buildings and grounds, or typically used in household activities, in a manner typical of other residential housing developments which are comparable to the Improvements; or (b) certain substances which may contain chemicals listed by the State of California pursuant to Health and Safety Code Sections 25249.8 & sea., which substances are commonly used by a significant portion of the population living within the region of the Development, including, but not limited to, alcoholic beverages, aspirin, tobacco products, nutrasweet and saccharine.
(ii) The Borrower shall keep and maintain the Development and each portion thereof in compliance with, and shall not cause or permit the Development or any portion thereof to be in violation of, any Hazardous Materials Laws;
(iii) Upon receiving actual knowledge of the following the Borrower shall immediately advise the Agency in writing of: (A) any and all enforcement, cleanup, removal or other governmental or regulatory
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actions instituted, completed or threatened against the Borrower or the Development pursuant to any applicable Hazardous Materials Laws; (B) any and all claims made or threatened by any third party against the Borrower or the Development relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in the foregoing clause (A) and this clause (B) are hereinafter referred to as ffHazardous Materials Claimsff) ; (C) the presence of any Hazardous Materials in, on or under the Development other than Excluded Hazardous Materials; or (D) the Borrower's discovery of any Hazardous Materials, except the discovery of any Excluded Hazardous Materials, on any real property adjoining or in the vicinity of the Development, which the Borrower reasonably believes may impact the Development. 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.
(iv) 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 Development (other than in emergency situations or as required by governmental agencies having jurisdiction), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claims.
6.13 Mandatory Lansuaae in All Subseauent Deeds, Leases and Cm. The Borrower and its agents shall not, in the selection or approval of tenants or provision of services or in any other matter, discriminate against any person or group of persons on the grounds of race, color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry, age, or disability. All deeds, contracts, or leases made or entered into by Borrower, its successors or assigns, as to any portion of the Development shall contain the following language:
(a) In Deeds:
"Grantee herein covenants by and for itself, its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the
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sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed nor shall the grantee or any person claiming under or through the grantee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land".
(b) In Contracts:
"There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, transfer or use of the property".
(cl In Leases:
"The lessee herein covenants by and for the lessee and lessee's heirs, personal representatives and assigns and all persons claiming under the lessee or through the lessee that this lease is made subject to the condition that there shall be no discrimination against or segregation of any person or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee or any person claiming under or through the lessee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased".
ARTICLE 7
DEFAULT AND REMEDIES
7.1 Events of Default. Each of the following shall constitute an "Event of Default If by Borrower under this Agreement:
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,
.
l .
(a) Failure to Construct. Subject to Section 8.2, failure of Borrower to construct all of the Development within the time set forth in Article 4 above;
.
(b) Failure to Make Pavment. Failure to make prompt payments of the principal and interest on the Borrower Note when due and such failure having continued uncured for thirty (30) days after receipt of written notice thereof by the Borrower from the Agency;
(c) Breach of Covenants. Failure by Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof by the Borrower from the Agency or, if the breach cannot be cured within thirty (30) days, the Borrower shall not be in breach so long as Borrower is diligently undertaking to cure such breach; provided, however, that if a different period or notice requirement is specified under any other section of this Article 7, the specific provisions shall control.
(d) Default Under Other Loans. Failure to make any payment or perform any of Borrower's covenants, agreements, or obligations under the Construction and Permanent Financing loans, following expiration of all applicable notice and cure periods.
(e) Insolvencv. A court having jurisdiction shall have made or entered any decree or order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Borrower or seeking any arrangement for Borrower under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower in bankruptcy or insolvency or for any of their properties, or (iv) directing the winding up or liquidation of Borrower, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or Borrower shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the Agency, the indebtedness evidenced by the Note.
(f) Assianment: Attachment. Borrower shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial
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part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event or prior to sooner sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the Agency, the indebtedness evidenced by the Note.
. (g) Susnension: Termination. Borrower shall have voluntarily suspended its business or, if Borrower is a partnership, the partnership shall have been dissolved or terminated, other than a technical termination of the partnership for tax purposes.
(h) Liens on Pronertv and the Proiect. There shall be filed any claim of lien (other than liens approved in writing by the Agency) against the Development or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the Agency Second Loan and the continued maintenance of said claim of lien or notices to withhold for a period of thirty (30) days without discharge or satisfaction thereof or provision therefor satisfactory to the Agency. In the event that Borrower is diligently working to remove a claim of lien or to remove a notice to withhold proceeds and the Agency's interests under the Loan Documents are not imminently threatened, the Agency shall not declare a default under this subsection.
(i) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Land and the Development.
7.2 Limited Partner Cure Periods. (a) Notwithstanding anything to the contrary contained in this Agreement or the Agency Second Note, the Agency Second Loan Deed of Trust or the Agency Regulatory Agreement, and in addition to any other cure L provisions contained in this Agreement, the limited partner of the Borrower shall have the right but not the obligation to cure any defaults of the Borrower hereunder, and the Agency agrees to accept cures tendered by the limited partner on behalf of the Borrower within the cure periods described below: the limited partner of Borrower shall have the right to cure all monetary and nonmonetary defaults within sixty (60) days after receipt of notice thereof. However, if a default is nonmonetary and is not reasonably capable of being cured within sixty (60) days or if the limited partner notifies the Agency that it is in the process of removing the managing general partner of the Borrower (as such process may be stayed by injunction, bankruptcy or similar
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proceedings), the limited partner shall have such additional time as is reasonably necessary to cure such default or remove the managing general partner, provided the limited partner has commenced and is diligently proceeding to cure such default or remove the managing general partner, as applicable (taking into account the effect of injunction, bankruptcy or similar proceedings).
(b) If, after the time provided in Sections 7.1 and 7.2, Borrower or the limited partner has not cured the default, the Agency may apply to any court, state or federal, for specific performance of this Agreement or an injunction against any violation of this Agreement, or any other remedies at law or in equity or any such other actions as shall be necessary or desirable so as to correct non-compliance with this Agreement.
7.3 Remedies. The occurrence of any Event of Default following the expiration of all applicable notice and cure periods will, either at the option of the Agency or automatically where so specified, relieve the Agency of any obligation to make or continue the Agency Second Loan and, subject to Section 8.15 below, 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. The Agency shall have the right to cause all indebtedness of the Borrower to the Agency under this Agreement and the Agency Second 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, including foreclosure under the Agency Second Loan Deed of Trust. The Borrower shall be liable to pay the Agency on demand all expenses, costs and fees (including, without limitation, attorney's fees and expenses) paid or incurred by the Agency in connection with the collection of the 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 Borrower to perform its obligations and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Loan Documents.
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(c) Riaht to Cure at Borrower's ExDense. The Agency shall have the right to cure any monetary default by Borrower under a loan other than the Agency Second Loan. The Borrower agrees to reimburse the Agency for any funds advanced by the Agency to cure a monetary default by Borrower upon demand therefor, together with interest thereon at the rate of three percent (3%) per annum from the date of expenditure until the date of reimbursement.
. 7.4 Risht of Contest. Borrower shall have the right to contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute an Event of Default hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the Agency or the rights of the Agency hereunder. 6
7.5 Remedies Cumulative. Subject to Section 8.15 below, 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 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.
7.6 Waiver of Terms and Conditions. The Agency Executive Director may at his or her discretion waive in writing any of the terms and conditions of this Agreement, without the Borrower completing an amendment to this Agreement. No waiver of any default or breach by Borrower hereunder shall be implied from any omission by the Agency to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the Agency to or of any act by Borrower requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under this Agreement or the Loan Documents, nor shall it invalidate any act done pursuant to notice of default,
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or prejudice the Agency in the exercise of any right, power, or remedy hereunder or under the Loan Documents, unless in the exercise of any such right, power, or remedy all obligations of Borrower to Agency are paid and discharged in full.
7.7 Removal of Manaains General Partner bv Limited Partner. The Agency agrees that the removal of the managing general partner of the Borrower under this Agreement by the limited partner of Borrower pursuant to the terms of the Borrower's limited partnership agreement will not constitute a default under any of the Agency Loan Documents or allow acceleration of the Loan. If any other entity becomes the managing general partner of Borrower, the limited partner shall obtain the approval of the Agency of such replacement managing general months thereafter, which approval shall not withheld or delayed.
ARTICLE 8
MISCELLANEOUS
partner within six be unreasonably
8.1 Time. Time is of the essence in this Agreement.
8.2 Force Maieure. Performance by either party hereunder shall not be deemed to be in default where defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits filed by third parties concerning or arising out of this Agreement); weather or soils conditions which, in the opinion of the Borrower's contractor, will necessitate delays; inability to secure necessary labor, materials or tools; delays of any contractor, sub-contractor or supplier; acts of the other party; acts or failure to act of any public or governmental agency or entity (other than the acts or failure to act of the Agency); or any other causes (other than Borrower's inability to obtain financing for the Development) beyond the control or without the fault of the party claiming an extension of time to perform. Times of performance under this Agreement may also be extended in writing by the Agency and the Borrower.
8.3 Hotices. All notices, demands and communications between the Borrower and the Agency shall be sufficiently given and shall not be deemed given unless dispatched by certified mail, postage prepaid, return receipt requested, or delivered by express delivery service with a delivery receipt, to the principal officers of the Borrower and the Agency as follows:
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Borrower: La Terraza Associates, a California Limited Partnership One Hawthorne, 4th Floor San Francisco, CA 94105 Attention: Managing General Partner
Following notice by Borrower to the Agency that Mission Housing (or its affiliate) has been admitted as a limited partner of Borrower, with a copy to:
Mission Housing 18101 Von Karman Ave., Suite 1700 Irvine, CA 92715 Attention: Asset Manager
Agency: Redevelopment Agency of the City of Carlsbad 2965 Roosevelt Drive, Suite B Carlsbad, California 92008 Attention: Executive Director
Such addresses may be changed by notice to the other party given in the same manner as provided above.
Notice shall be deemed to have been effective on the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was returned as undelivered.
8.4 Financial Statements: Rishts of Insnection. The Borrower shall deliver copies of its audited financial statements to the Agency annually promptly following completion of preparation of such statements. The Agency shall have the right, upon reasonable notice to Borrower, to inspect Borrower's books and records related to the Development.
8.5 Attornevs' Fees. If either party brings a legal or administrative action or proceeding to enforce, protect or establish any right or remedy hereunder or under any of the Loan Documents, the prevailing party shall be entitled to recover from the other party its costs of suit and reasonable attorneys' fees '. I
which shall be fixed by the court.
8.6 No Third Parties Benefited. Mission Housing is the sole third party beneficiary of this Agreement, and no person or persons other than the Borrower, the Agency and Mission Housing shall have any right of action hereon.
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8.7 Actions. The Agency shall have the right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties hereunder, or the disbursement of any proceeds of the Loan.
8.8 Sians. Borrower agrees that the Agency may place signs mutually satisfactory to Borrower and the Agency upon the Development at locations selected by Borrower and the Agency advising of the financing of the Development by the Agency. The . Agency may also announce such placement through press releases to newspapers and trade publications.
8.9 Successors and Assians. The terms hereof shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; provided, however, that no assignment of Borrower's rights hereunder shall be made, voluntarily or by operation of law, without the prior written consent of the Agency and that any such assignment without said consent shall be void.
8.10 Construction of Words. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words of either gender shall include the other gender.
8.11 Partial Invalidity. If any provision of this Agreement shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
8.12 Governina Law. This Agreement and the Loan Documents and other instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California.
8.13 Amendment. This Agreement may not be changed orally, but only by agreement in writing signed by Borrower and Agency.
8.14 Cantions and Headinas. Captions and headings in this Agreement are for convenience of reference only, and are not to be considered in construing the Agreement.
8.15 Action bv the Aaencv. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent, request, 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, or by any person who shall have been designated in writing to the Borrower
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by the Agency Executive Director, without further approval by the Agency Board, and any such action shall be in writing. The Agency Executive Director is also hereby authorized to approve, on behalf of the Agency, requests by Borrower for reasonable extensions of time deadlines set forth in this Agreement.
8.16 Nonrecourse Oblisations. The Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Agency Second Note or the I performance of the covenants of Borrower under this Agreement, the Agency Regulatory Agreement, or the Agency Second Loan Deed of Trust. The sole recourse the Agency with respect to the principal of, or interest on, the Agency Second Note and defaults by Borrower in the performance of its covenants under this Agreement, the Agency Regulatory Agreement, or the Agency Second Loan Deed of Trust shall be to the property described in the Agency Second Loan Deed of Trust. No judgment, or execution thereon, entered in any action, legal or equitable, on the Agency Second Note, this Agreement, the Agency Regulatory Agreement or the Agency Second Loan Deed of Trust shall be enforced personally against the Borrower but shall be enforced only against the property described in the Agency Second Loan Deed of Trust.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
BORROWER:
LA TERRAZA ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
BY: BRIDGE HOUSING, INC., its managing general partner
By: Its:
AGENCY:
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION, IN ITS CAPACITY AS GOVERNING BODY OF, AND BY AND ON BEHALF OF, THE REDEVELOPMENT AGENCY OF THE CITY OF CARLSBAD
By: Its:
APPROVED AS TO FORM:
By: Ron Ball Agency Counsel
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EXHIBIT A
Legal Description of the Land
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EXHIBIT B
Agency Second Note
. ..<
. . .
: : . ,-.’
;
-27-
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EXHIBIT C
Agency Regulatory Agreement
. i
t
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EXHIBIT D
Agency Second Loan Deed of Trust
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EXHIBIT E
Permitted Uses of Loan Proceeds
-3o-
$500,000
EXHIBIT B
Agency Second Note
, 1994 Carlsbad, California
FOR VALUE RECEIVED, La Terraza Associates, a California Limited Partnership (QIBorrowerll), promises to pay to the Redevelopment Agency of the City of Carlsbad ("Agency"), or order, the principal sum of Five Hundred Thousand Dollars
($500,000), or so much thereof as is advanced to Borrower by the Agency pursuant to Section 2.6 of the Loan Agreement (defined below), plus simple interest accruing at the rate of three percent (3%) per annum.
1. mAareement. This Agency Second Note is made pursuant to an Agency Second Loan Agreement dated as of I 1994 by and between the Borrower and the Agency (the "Agency Second Loan Agreement"), and as contemplated by a Regulatory Agreement dated as of 1994 by and between the Borrower and the Agency (the "Agency R6gulatory Agreement").
2. Term. The term of this Agency Second Note (the 1fTerm81) shall commence on the date of this Agency Second Note and shall end fifty-five (55) years from the date of recordation of the deed of trust securing the Permanent Loan (as defined in the Agency Second Loan Agreement) (the "Due Date").
3. Amount and Time of Payments. All amounts due under this Agency Second Note shall be due and payable as set forth in Section 2.3 of the Agency Second Loan Agreement.
4. Prenavment. Borrower shall have the right to prepay all or a portion of the principal and interest due under this Agency Second Note without any charge or penalty being made therefor.
5. Deed of Trust. This Agency Second Note is secured by a deed of trust of even date herewith (the "Agency Second Loan Deed of Trust").
6. Acceleration. Upon the occurrence of a default under the Agency Second Loan Agreement, Agency Regulatory Agreement or Agency Second Loan Deed of Trust, and expiration of all
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applicable notice and cure periods (an "Event of Default"), the Agency shall have the right to accelerate the Due Date of this Agency Second Note and declare all of the unpaid principal and accrued interest immediately due and payable. Any failure by the Agency to pursue its legal and equitable remedies upon an Event of Default shall not constitute a waiver of the Agency's right to declare an Event of Default and exercise all of its rights under this Agency Second Note, the Agency Regulatory Agreement, the Agency Second Loan Deed of Trust, and the Agency Second Loan Agreement. Nor shall acceptance by the Agency of any payment provided for herein constitute a waiver of the Agency's right to require prompt payment of any remaining principal and interest owed.
7. NoOffset. Borrower hereby waives any rights of offset it now has or may hereafter have against the Agency, its successors and assigns.
8. Waiver: Attornevs' Fees. Borrower and any endorsers or guarantors of this Agency Second Note, for themselves, their heirs, legal representatives, successors and assigns, respectively, severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor and non-payment of this Agency Second Note, and expressly waive any rights to be released by reason of any extension of time or change in terms of
payment, or change, alteration or release of any security given for the payments hereof, and expressly waive the right to plead any and all statutes of limitations as a defense to any demand on this Agency Second Note or agreement to pay the same, and jointly and severally agree to pay all costs of collection when incurred, including reasonable attorneys' fees. If an action is instituted on this Agency Second Note, the undersigned promises to pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge reasonable as attorneys' fees in such action.
9. J4anner and Place of Pavment. All payments of principal and interest due under this Agency Second Note, as well as any additional payments set forth in the Agency Second Loan Deed of Trust, shall be payable in lawful money of the United States of America at the office of the Redevelopment Agency of the City of Carlsbad, 2965 Roosevelt Drive, Suite B, Carlsbad, California 92008, or such other address as the Agency hereof may designate in writing.
10. Nonrecourse Oblisation. The Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, this Agency Second Note or the performance of the covenants of the Borrower under the Agency
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Second Loan Agreement, the Agency Regulatory Agreement, or the Agency Second Loan Deed of Trust securing this Agency Second Note. The sole recourse of the Agency with respect to the principal of, or interest on, the Agency Second Note and defaults by Borrower in the performance of its covenants under the Agency Second Loan Agreement, the Agency Regulatory Agreement, or the Agency Second Loan Deed of Trust shall be to the property described in the Agency Second Loan Deed of Trust. No judgment, or execution thereon, entered in any action, legal or equitable, on this Agency Second Note, the Agency Second Loan Agreement, the Agency Regulatory Agreement, or the Agency Second Loan Deed of Trust shall be enforced personally against the Borrower, but shall be enforced only against the property described in the Agency Second Loan Deed of Trust.
La Terraza Associates, a California Limited Partnership
By: BRIDGE Housing Corporation, its managing general partner
By: Its:
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EXHIBIT D
FORM: OF AGENCY DEED OF TRUST
RECORDING REQUYJSTED ,BY AND WHEN RECORDED MAIL TO:
Redevelopment Agency of the City of Carlsbad 2965 koosevelt Drive, Suite B Carlsbad, CA 92008 Attention: Executive Director
No fee for recording pursuant to Government Code Section 27383
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AGmC!Y.SECONltI LOAN DEED OF TRUST AND SECURITY AGREEI$Em
THIS AGmCY SECOND LOAN DEED OF TRUST AND SECURITY AGREEMENT (qhed of Trust") is made as of this day of and among La Terraza Associates, _ 199 by
( "gusto;") , a California Limited &n&hip
r a ("Trustee") , and the Redevelopment Agency of the City of Carlsbad, a public body politic and corporate ("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, TN TRUST, WXTH POWER OF SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor's leasehold interest in the property located in the County of San Diego, State of California, that is described in the attached Exhibit A, incorporated herein by this reference (the "Property").
TOGETHER WITH all interest, estates or other claims, both in e'...- law and in equity which Trustor now has or may hereafter acquire >
in the Property and the rents;
TOGETHER WITH Trustor's interest in all easements, rights- of-way and rights used in connection therewith or as a means of access thereto, including (without limiting the generality of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto; I
TOGETHER WITH Trustor's interest in any and all buildings and improvements of every kind and description now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Property;
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TOGETHER WITH Trustox's interest in all building materials and equipment now or hereafter delivered to said property and intended to be installed therein;
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the. Property;
TOGETHER WITH Trustor's estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from,any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages to the extent Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; and
TcIGETHl3R WITH all of Trustorls intereSt in all articles of personal property or fixtures now or hereafter attached ta or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building cm buildings for the purposes for whioh they were or are to be erected, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any xuanner,
All of the foregoing, together with the Property, is herein
referred to as the "Security." To have and to hold the Security together with acquittances to the Trustee, its successors and aseigne forever,
FOR THE PURPOSE OF SECURING:
(a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note and the Loan Agreement (both as defined in Article 1 below) until paid or cancelled. Said principal and . other payments shall be due and payable as provided in the Note and the Loan Agreement- The Note, the Loan Agreement, and the Regulatory Agreement (defined below), and all their terms are . ,.'
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incorporated herein by reference, and this conveyance shall secure any and all extensions thereof, however evidenced; and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust following a breach of Trustorfs obligation to advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein; and
{c) Performance of every obligation, covenant or agreement o3 Trustor contained herein and in the Loan Documents (defined in Sectian 1.2 below),
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRWSTOR COVENANTS AND AGREES:
ARTICLE 1 DEFINITIONS
In additicm to the terms defined elsewhere in this Deed of Trust, the following terms shall have the fallowing meanings in this Deed of Trust:
Section 1.1 The term "Bank Deed of Trust11 means the Deed of Trust to Wells Fargo Bank, NA, securing a loan from Wells Fargo Bank, NA, to Trustor in the amount of Dollars
($ 1.
Section 1.2 The term "Agency First Deed of Trust', means the deed of trust to the Agency from the Trustor, securing a loan from the Agency to the Trustor in the amount of One Million Seven Hundred and Twelve Thousand Dollars ($1,712,000).
Section 1.3 The term "Loan AgreementI' means that certain Agency Second Loan Agreement between Trustor and Beneficiary dated as of 1994, providing for the Beneficiary to loan tCr the Trustor Five hundred Thousand Dollars ($500,000) for the development on the Property of improvements.
Sect ion 1.4 The term "ban Documents" means this Deed of Trust, the Note, the Loan Agreement, and the Regulatory Agreement.
Section 1.5 The term '@Note" means the Agency Second Note _ in the principal amount of Five Hundred Thousand Dollars ($500,000) of even date herewith exeouted by the Trustor in favor ' " of the Beneficiary, the payment of which is secured by this Deed - of' Trust. (A copy of the Note is on file with the Beneficiary and
. --
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terms and provisions of the Note are incorporated herein by reference.)
Section 1.6 The term nPrincipa1 I) means the aggregate af the amounts required to be paid under the Note.
Section 1.7 The term "Regulatory Agreement" means the Regulatory Agreement by and between the Trustor and the Beneficiary of even date herewith.
ARTICLE 2 MAINTENANCE AND MODIFICATION OF THE PROPERTY AND SECURITY
Section 2.1 Maintenance by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note, the TrUStOr will, at the Trustor's own expense, maintain, preserve and keep the security or cause the security to be maintained and preserved in good condition, subject to Article 4 below. The TrUStOr will from time to time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these matters or for the making of improvements or additions to the Security.
and Modification of the Property
Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for material and services furnished in connection with the security, diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation of labor on the wcrk or construction on the Security for a continuous period of thirty (30) days or more, md to take all other reasonable steps to forestall the assertion of claims of lien against the Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file for record any notices of completion or cessation of labor or any other notice that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those actions as hereinbefore provided, after notice and expiration of all applicable cure periods. .
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Notwithstanding anything to the contrary contained in this Deed of Trust, TrustOr shall not be obligated to pay any claims far labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor shall, at Beneficiary's written request, within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of San Diego County, a surety bond in an amount 1 and l/2 times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary.
section 2.2 Granting of Easements.
other Trustor may not grant easements, licenses, rights-of-way or rights or privileges in the nature of easements with respect ta any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities including, without limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. As to these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements.
ARTICLE 3 TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior ta delinquency, all taxes, assessments, charges and levies imposed by arsy public authority or utility company which are or may becam? a lien affecting the Security or any part thereof; provided, however, if such taxes, assessments or charges may be paid in installments, Trustor may pay in such installments; and provided further, that Trustor shall not be required to pay and .*
discharge any such tax, assessment, charge or levy so long ae Trustor is contesting the legality thereof in good faith and by appropriate proceedings and Trustor has adequate funds to pay any liabilities contested pursuant Lo this Section 3.1, The provisions of this Section 3.3. shall not be construed to require that Trustor maintain a reserve account, escrow account, impound account or other similar account for the payment of future taxes, assessments, charges and levies. '. In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such . *'
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failure to pay and the Trustar fails to fully pay such items within seven (7) business days after receipt of such notice or, alternatively, provides Beneficiary with evidence Trustor is contesting such items in accordance with this Section. Any amount so advanced therefar by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted by law, shall become an additional obligation of Trustor to the Beneficiary and shall be secured hereby, and TrUStor agrees to pay all such amounts.
section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in a11 respects to that required under the Loan Documents during the course of construction and following completion, and at all times until all amounts secured by this Deed of Trust have .been paid and all other obligations secured hereunder fulfilled, and this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustorls sole cost and expense. certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of Trust,
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust, the Beneficiary, Beneficiary, after at least seven (7) days prior notice to may (but shall be under no obligation to) take out the required policies of insurance and pay the premiums on the same; and all amounts so advanced therefor by the Beneficiary shall become an additional obligation of the Trustcr to the Beneficiary {together with interest as set forth below) and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the rate of six percent (6%) per annum
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ARTICLE 4 DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (1) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (2) any damage to or destruction of the Property or any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property (WIJ?undsn) are hereby assigned to and shall be paid to the Beneficiary by a check made payable to the Beneficiary. Upon the occurrence of an Event of Default (as defined in the Loan Agreement), the Beneficiary shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment of the costs of repairing or rebuilding that part of the improvements on the Property damaged or destroyed if (i) the Trustor agrees in writing within ninety (90) days after payment of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each lender of an outstanding Construction and Permanent Loan (as defined in the Loan Agreement) permits such repairing or rebuilding, provided that the extent of Trustor's obligation to restore the improvements shall be limited to the amount of the insurance proceeds. If the improvements are not repaired or rebuilt as provided in this Section 4.1, all such proceeds shall be applied to repayment of outstanding loans inoluding the loan secured by this Deed of Trust, in the order of ',. lien priority. Application of all or any part of the Funds collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior mortgage lender. 4_.,
ARTICLE 5 AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASGURAHCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Loan Documents and any other agreement of any nature whatsoever
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now or hereafter involving or affecting the Security or any part thereof.
section 5.2 Agreement to Pay Attorneys* Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary should employ attorneys or incur other expenses for the collection of amounts due or the enforcement of performance or observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such expenses are incurred at the six percent (6%) per annum.
Section 5.3 Paynrent of the Principal.
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Note in the amounts and at the times set out therein.
Section 5.4 Personal Property,
To the maximum extent permitted by law, the personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall constitute a fixtures filing under the California Commeroial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust shall oonstitute a security agreement under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver ta the Beneficiary such financing statements pursuant to the appropriate statutes, and any other documents or instruments as are reasonably required to convey to the Beneficiary a valid perfected security interest in trhe Gecurity. The Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary to maintain such valid perfected security interest in the Security in order to secure the payment of the Note in accordance with its terms. The Beneficiary is authorieed to file . a copy of any such financing statement in any jurisdiction(s) as :' it shall deem appropriate from time to time in order to protect the security interest established pursuant to this instrument.
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Section 5.6 Operation of the Security.
The Trustor shall operate the Security (and, in case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall operate such portion of the security) in full compliance with the Loan Damments,
section 5.7 Inspection of the Security.
At any and all reasonable times upon seventy-two (72) hours' notice, subject to the rights Of tenants, the Beneficiary and its duly autharized agents, attorneys, experts, engineers, accountants and representatives shall have the right, without payment of charges or fees, to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, eXeCUtOr5, administrators, and assigns, and all persons claiming unUer ar through them, that there shall be no discrimination agai.nst or segregation of, any person or group of persons on account of race, color, creed, religion, agel disability, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of.the Security, nor shall the Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtehants, sublessees or vendees in the Security. The foregoing covenants shall run with the land.
Section 5.9 Subordination.
The lien of this Deed of Trust shall be subordinate to the lien of the Bank Deed of Trust and the lien of the Agency First Deed of Trust, both recorded concurrently herewith, and the lien of the deed(s) of trust ta Great Western Savings, securing the permanent loan(s) for the improvements on the Property.
ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES
Sectian 6.1 Acceleration of Maturity.
If an Event of Default, (as defined in the Loan Agreement), shall have occurred and be continuing, Beneficiary, then at the option of the ",, the amount of any payment related to the Event of Default and the unpaid Principal of the Note shall immediately 1 ....-: ~ : ,:, Y'
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become due and payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified in the Loan Documents), and no omission on the part of the Beneficiary to exercise such option when entitled to do so shall be construed as , a waiver of such right.
Section 6.2 The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the udequacy of its security, enter upon the Security and take possession thereof (or any part thereof), in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof ar interest
therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any Event of Default or Notice of Default (as defined below) hereunder or invalidate any act done in response to such Event of Default or pursuant ta such Notice of Default and, notwithstanding the continuance in possession of the Security, Beneficiary shall be entitled to exorcise every right provided for in this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof;
(c) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to ,.
cause Trustor' interest in the Security to be sold (Wotice of Default and Election to SellVg), which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of San Diego County; or
(d) Exercise all other rights and remedies provided herein, + or in any other document or agreement now or hereafter .,
evidencing, creating or securing all or any portion of the . . 'I '
obligations secured hereby, or provided by law. _. .
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SeCtiOn 6.3 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained following an Event of Default, the Beneficiary shall give notice to the Trustee (the "Notice of Salen) and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the unpaid principal amount of the Note is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require.
(a) Upon receipt of such notice from the BenefiCiaIy, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and Election to sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and Election to%%11 and after Notice of Sale having been * given as required by law, sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate lots or parcels ox items as Trustee shall deem expedient and in such order as it may determine unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United State6 payable at the time of sale. Trustee shall deliver to such pUrCha66r or purchasers thereof its good and sufficient deed or deeds canveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such purchaser or purchasers.
(b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if any, to Trustor.
(c) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sal@, and front time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give g new Notice of Sale.
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Section 6.4 ReCQiVPr .
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under the Security, and without regard ta the then value of the Security or the interest of Trustor therein, shall have tie right to apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such appointment and waive6 further notice of any application therefar. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar ca5es, and all the powers and duties of Beneficiary in case of entry as provided herein, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 6.5 Remedies Cumulative.
Subject to Section 7.13 below, no right;power or remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law t3r in equity.
Section 6.6 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or shall be construed to bd a waiver of any such Event of Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from time ' to time and as often as may be deemed expeditious by the Beneficiary. No consent or waiver, expressed or implied, by the Beneficiary to any breach by the Trustfir in the performance of the obligations hereunder shall be deemed or construed to be a consent to or waiver of obligations of the Trustor hereunder. ,.
Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute B waiver by - the Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any Event of Default by the Trustor.
. :
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(b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of any sums secured hereby, (ii) takes other or additional security or the payment of any sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv) releases any part of the security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the granting of any easemeht or other right affecting the Security, or (iv) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the obligations under this Deed of Trust, or any other obligation of the Trustor or any subsequent purchaser of the Security or any part themof, or any maker, co-signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or omission preclude the Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in any Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by the Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 6.7 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of
Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may ke unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of the Beneficiary.
Section 6.8 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Trustor, its creditors or its property, the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date.
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Sectian 6.9 waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in taking any action to Collect any Sums awing under the Note. or in proceedings against the Security, in connection with the delivery, acceptance, psrformance, default, endorsement or guaranty of this Deed of Trust.
ARTICLE 7 MISCELLANEOUS
so&ion 7.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but anly by an instrument in writing signed by Beneficiary and Trustor.
Section 7.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums
secured hereby have been paid or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by TruStOr of TrUateeVs reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons legally entitled thereto.
section 7.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or convenient for one of the parties hereto to serv& any ntitice, r3emand or communication upon the other party, such ml&e, demand or communication shall be in writing and shall be served personally or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and (I) if intended for Beneficiary shall be addressed to:
Redevelopment Agency of the City of Carlsbad 2965 Roosevelt Drive, Suite B Carlsbad, CA 92408 Attentiwn: Executive Director
.1 . :
md [2) if intended for Trustor shall be addressed to:
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La Terraza Associates, a California Limited Partnership One Hawthorne, 4th Floor San Francisco, CA 94105 Attn: Managing General Partner
and, following notice to Beneficiary that Mission Housing (or its affiliate) has become a limited partner of the Trustor, with a copy to:
Mission HOUsing 18101 Von Karman Ave., Suite 1700 Irvine, CA 92715 Attention: Asset Manager
Any notice, demand or communication shall be deemed given,
r&CeiVed, made or communicated on the date personal delivery is effected cr, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either party may change its address at any time by giving written notice of such change to Beneficiary or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective.
Sectian 7.4 captions.
The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust.
Section 7.5 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is invalid'or unenforceable as to any part of the debt, cr if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured pcrtion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust.
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Section 7.6 Governing Law.
This Deed Of TrUSt shall be governed by and construed in accordance with the laws of the State of California.
section 7.7 Gender and Number.
1n this Deed of Trust the singular shall include the plural and the masculine shall include tne feminine and neuter and vice versa, if the context so requires.
Section 7.8 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed ef trust and any reference to a deed of trust shall also refer to a mortgage.
section 7.9 ACtiOnS.
TrUstOr agrees to appear in and defencl any action or proceeding purporting to affect the Security.
section 7.10 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, puwers, and duties conferred upan any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the Property is situated, shall be conclusive proof of proper appointment of the successor trustee.
Section 7.11 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent pemissible by law.
Section 7.12 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this
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Deed of Trust or of any action of proceeding in Beneficiary, or Trustee shall be a party unless Trustee.
Section 7.13 Nonrecourse Obligations
@lOtE
which Trustor, brought by
The Trustor shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Note or the performance of the covenants of the Trustor under the Loan Documents. The sole recourse of the Beneficiary with respect to the principal of, or interest on, the Note and defaults by Trustor in the performance of its covenants under the Loan Documents shall be to the Security. No judgment, or execution thereon, entered in any action, legal or equitable, on the Loan Documents shall be enforced personally against the Trustor but shall be enforced only against the Security.
IN WITNESS WEEREOF, Trustor has executed this Deed of Trust as of the day and year first above written.
TRUSTOR:
La Terraza Associates, a California Limited Partnership
By: BRIDGE Housing Corporation, its managing general partner
By:
Its:
STATE OF CALIFORNIA )
COUNTY OF
On I 199-r before me, the undersigned, a Notary Publio, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(e) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized oapaoity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
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EXHIBIT A (Legal Description of Leasehold Estate)
The land is situated in the State of California, County of San Diego, and is described as follows:
The leasehold estate in Parcel A below created by that certain Ground Lease by and between the City of Carlsbad, as lessor, and La Terraza Associates, a California Limited Partnership, as lessee, a memorandum of which was filed in the Official Records of San Diego County as Record No. on , 1994.
Parcel A:
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EXHIBIT 4
AGENCY REGULATORY AGREEMENT
VILLAS AT EL CAMINO REAL
AFFORDABLE HOUSING PROJECT
-\
EXHIBIT C
Recrording requested by and
when recorded, mail to: Redevelopment Agency of the City of Carlsbad 2965 Roosevelt Street Suite B Carlsbad, CA 92008 Attn: Executive Director
HO f8e for recording pursuant t0
GCV8rIUUent Code Section 27383.
AGENCY REGULATORY AGREEMENT
(La Terraza Development)
This Agency Regulatory Agreement is made this day of 1994, by and between the Carlsbad Housing and Redevelopment bornmission, in its capacity as governing body of, and by and on behalf of, the Redevelopment Agency of the City of Carlsbad, a public body corporate and politic (the "AgencyV1), and La Terraza Associates, a California Limited Partnership, (the "Borrower").
RECITALS
A. The Borrower has a leasehold interest in a parcel of real property located in the City of Carlsbad as more particularly described in Exhibit A attached to this Agreement. The Borrower's leasehold interest in the real property is referred to as the "PropertyW in this Agency Regulatory Agreement. The Borrower intends to develop three hundred forty four (344) units of multi-family housing (the "Development") on the Property.
B. To assist the Borrower in the development of the Development, the Agency has agreed to make a loan to the Borrower in the amount One Million Seven Hundred Twelve Thousand Dollars ($1,712,000) (the "Agency First Loan") and a loan to the Borrower in the amount of Five Hundred Thousand Dollars ($500,000) (the "Agency Second Loan"). The Agency First Loan and the Agency Second Loan are being made available in order to help achieve financial feasibility for the Development and to provide units in the Development which are affordable to Low Income Households and Moderate Income Households.
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C. As a condition of the Agency Loans, the Agency has required the Borrower to maintain one hundred sixty (160) Development units as affordable to Low-Income Households and the balance of the Development units as affordable to Moderate- Income Households, excluding (- ) units for resident managers.
D. The purpose of this Regulatory Agreement is to regulate I and restrict the occupancy and rents of the Development. The covenants in this Agency Regulatory Agreement are intended to run with the land and be binding on the Borrower and its successors and assigns.
In consideration of their mutual agreements, the Borrower and Agency agree as follows:
The following terms have the meanings and content set forth in this section wherever used in this Regulatory Agreement or attached exhibits.
1. "AGENCYfin is the Redevelopment Agency of the City of Carlsbad, a public body corporate and politic, and its officers, officials, directors, employees, agents and authorized representatives.
2. "AGENCY LOANW are the Agency's loans of funds to the Borrower for the Project, in the amounts of One Million Seven Hundred Twelve Thousand Dollars ($1,712,000) and Five Hundred Thousand Dollars ($500,000), respectively.
3. "AGENCY LOAN DOCUMENTSIW are collectively the Agency First Loan Agreement, the Agency First Loan Deed of Trust, the Agency First Note, the Agency Second Loan Agreement, the Agency Second Loan Deed of Trust, the Agency Second Note, all of even date herewith, and this Regulatory Agreement as they may be amended, modified, or restated from time to time, along with all ' I. exhibits and attachments to these documents.
4. "AREA MEDIAN INCOME" means the median income for the San Diego Primary Metropolitan Statistical Area (lPPMSA1q), with adjustments for household size, as determined from time to time by HUD pursuant to the United States Housing Act of 1937, as amended. If HUD no longer publishes such income determinations, the Agency shall use the median income for San Diego County as published by HCD. If HCD no longer publishes such income
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determinations, the Agency shall calculate median income in a manner consistent with the methods previously used by HUD.
5. @%ORROWER** means La Terraza Associates, a California Limited Partnership.
6. @@DEVELOPMENTgu means the development and operation of approximately three hundred forty four (344) units of multi- family housing on the Property according to the terms of this Agency Regulatory Agreement.
7. VCD" means the California Department of Housing and Community Development.
8. @*HUDR1 means the United States Department of Housing and Urban Development.
9. mmLOW-INCOME HOUSEHOLD~m means a household whose annual gross income does not exceed the qualifying limits, adjusted for household size and other factors, for a low income household for the San Diego PMSA, as determined from time to time by HUD pursuant to the United States Housing Act of 1937, as amended. If HUD no longer publishes such income determinations, the Agency shall use the low income determination for San Diego County as published by HCD. If HCD no longer publishes such income determinations, the Agency shall calculate low income in a manner consistent with the methods previously used by HUD.
10. @'LOW INCOME UNITS1@ shall mean the Units limited to occupancy by Low Income Households pursuant to Section 17 below.
11. WODERATE-INCOME HOUSEHOLDW1 means a household whose annual gross income does not exceed the qualifying limits, adjusted for household size and other factors, for a moderate income household as determined from time to time by HCD for San Diego County. If HCD no longer publishes such income determinations, the Agency shall calculate moderate income in a manner consistent with the methods previously used by HCD.
12. %ODERATE INCOME UNITS" shall mean the Units limited to occupancy by Moderate Income Households pursuant to Section 17 below.
13. V'PROPERTY@@ means the Borrower's leasehold interest in the real property described in the attached Exhibit, which is incorporated into this Agency Regulatory Agreement by this reference.
14. VJNIT" means a housing unit in the Development.
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BORROWER'S OBLIGATIONS
15. COMPLIANCE WITH LOAN DOCUMENTS. The Borrower's actions with respect to the Property and the use of Loan funds shall at all times be in full conformity with all of the requirements of the Agency Loan Documents until the repayment of the Agency First Loan and the Agency Second Loan.
16. TERM OF AGREEMENT. The term of this Agency Regulatory Agreement shall commence upon execution and shall remain in full force and effect for thirty (30) years.
17. OCCUPANCY OF PROJECT. The Borrower shall limit for the full term of this Regulatory Agreement the rental of one hundred sixty (160) Units to households whose incomes at initial occupancy do not exceed the income limits for Low Income Households. The Borrower shall limit for the full term of this Regulatory Agreement the rental of the remaining Units to households whose incomes at initial occupancy do not exceed the income limits for Moderate Income Households, excluding ( - ) units for resident managers.
18. 24AXIMUM RENTAL CEARGES. (a) The total charges for rent and utilities to Low Income Households occupying the Low Income Units shall not exceed the lesser of: (i) the applicable low income housing tax credit rent, or (ii) one-twelfth of thirty percent (30%) of sixty percent (60%) of Area Median Income, adjusted for household size pursuant to subsection (c) below; provided, however, for Low Income Households occupying the Low Income Units whose gross income, upon annual income recertification, exceeds sixty percent (60%) of Area Median Income, the Borrower may charge a rent equal to the lesser of: (i) the applicable low income housing tax credit rent, or (ii) thirty percent (30%) of the gross income of the household, adjusted for household size pursuant to subsection (c) below. In the event the gross income of a Low Income Household, upon annual income recertification, exceeds the maximum income for a Low Income Household, the Borrower shall rent the next available Unit to a Low Income Household and may charge the over-income household a rent comparable to the rent which may be charged for a Moderate Income Unit.
(b) The total charges for rent and utilities to Moderate - Income Households shall not exceed one-twelfth of thirty percent (30%) of one hundred ten percent (110%) of Area Median Income, adjusted for household size pursuant to subsection (c) below. For Moderate Income Households whose gross income, upon annual
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.
recertification, exceeds one hundred ten percent (110%) of Area Median Income, the Borrower may charge a rent equal to thirty percent (30%) of the gross income of the household. In the event a Moderate Income Householdls gross income, upon annual recertification, exceeds the maximum income for a Moderate Income Household, the Borrower shall not be required to terminate the tenancy of the over-income household and shall not be restricted in the rent charged to the over-income household so long as the over-income household otherwise remains a tenant in good standing in the Development.
(c) In calculating the allowable rent for the Units, the Borrower shall use the occupancy per unit assumptions used by the California Tax Credit Allocation Committee ('@TCACtV) for so long as the Project is subject to a TCAC regulatory agreement; and if the Project is no longer subject to a TCAC regulatory agreement, the Borrower shall use the occupancy per unit assumption of one more occupant per unit than the number of bedrooms in the unit. In no case, however, shall the Borrower be required by this Agency Regulatory Agreement to use occupancy per unit assumptions which would cause the Borrower to be in violation of any other regulatory agreement recorded against the Property by any other federal or state government agency or any lender.
19. CONDOBfINIUM CONVERSION. The Borrower shall not convert Units to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Property during the term of this Agency Regulatory Agreement.
20. NONDISCRIMINATION. The Borrower shall not discriminate or segregate in the use, enjoyment, occupancy, conveyance, lease, sublease, or rental of the Project on the basis of race, color, ancestry, national origin, religion, sex, sexual preference, age, marital status, family status, source of income, physical or mental disability, or any other arbitrary basis.
GENERAL PROVISIONS
21. SUBORDINATION. The Agency agrees that the Agency Executive Director shall subordinate this Agency Regulatory Agreement to the lien or encumbrance of any private construction or permanent lender providing financing for the Project upon the finding of the Agency Executive Director that: (i) an economically feasible loan is not reasonably available on comparable terms and conditions without subordination; and (ii) the mortgage to which the Agency Regulatory Agreement is being subordinated contains provisions meeting the requirements of Health and Safety Code Section 33334.14(a) reasonably designed to protect the Agency's interest in the event of default under such
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mortgage. The Agency agrees that this Agency Regulatory Agreement shall be subordinated to any federal or state government agency regulating the Project which requires that this Regulatory Agreement be subordinate to such government agency's documents or liens. The Agency will execute subordination agreements in a form reasonably acceptable to the lending entity or government agency to subordinate this Agency Regulatory Agreement as provided in this Section.
22. DEFAULT AND REMEDIES. In the event of any breach of any agreement or obligation under this Agency Regulatory Agreement by the Borrower, the Agency shall provide written notice to the Borrower of the breach. The Borrower shall have an opportunity to cure the breach within thirty (30) days from the Borrower's receipt of the written notice or, if the breach cannot
be cured within thirty (30) days, the Borrower shall not be in breach so long as the Borrower is diligently undertaking to cure such breach. If the Borrower fails to perform a timely cure of the specified breach, subject to Section 23, the Agency may proceed with any or all of the following remedies upon the Borrower's failure to cure or undertaking to cure:
A. Bring an action in equitable relief seeking the specific performance by the Borrower of the terms and conditions of this Agency Regulatory Agreement, or enjoining, abating, or preventing any violation of the terms and conditions, or seeking declaratory relief;
B. Pursue any other remedy allowed at law or in equity.
23. LIMITED PARTNER CURE PERIODS. (a) Notwithstanding anything to the contrary contained in this Agency Regulatory Agreement or the Agency Loan Documents and in addition to any other cure provisions contained in this Agency Regulatory Agreement, the limited partner of the Borrower shall have the right but not the obligation to cure any defaults of the Borrower hereunder, and the Agency agrees to accept cures tendered by the limited partner on behalf of the Borrower within the cure periods described below: the limited partner of Borrower shall have the right to cure all defaults within sixty (60) days after receipt of notice thereof. However, if a default is not reasonably capable of being cured within sixty (60) days or if the limited partner notifies the Agency that it is in the process of removing the managing general partner of the Borrower (as such process may be stayed by injunction, bankruptcy or similar proceedings), the limited partner shall have such additional time as is reasonably necessary to cure such default or remove the managing general
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partner, provided the limited partner has commenced and is diligently proceeding to cure such default or remove the managing general partner, as applicable (taking into account the effect of injunction, bankruptcy or similar proceedings).
(b) If, after the time provided in Sections 22 and 23, Borrower or the limited partner has not cured the default, the Agency may apply to any court, state or federal, for specific performance of this Agency Regulatory Agreement or an injunction against any violation of this Agency Regulatory Agreement, or any other remedies at law or in equity or any such other actions as shall be necessary or desirable so as to correct non-compliance with this Agency Regulatory Agreement.
24. GOVERNING LAW. This Agency Regulatory Agreement shall be interpreted under and be governed by the laws of the State of California.
25. ATTORNEYS' FEES AND COSTS. In the event that any legal or administrative action is commenced to enforce, protect, or establish any right or remedy under this Agency Regulatory Agreement, the prevailing party in any such action shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action.
26. TIME. Time is of the essence in this Agency Regulatory Agreement.
27. CONSENTS AND APPROVALS. Any consent or approval of the Agency required under this Agency Regulatory Agreement shall not be unreasonably withheld. Any approval must be in writing and executed by an authorized representative of the Agency.
28. NOTICES, DEMANDS AND COMMUNICATIONS. All notices, demands and communications between the Borrower and the Agency shall be sufficiently given and shall not be deemed given unless dispatched by certified mail, postage prepaid, return receipt requested, or delivered by express delivery service with a delivery receipt, to the principal offices of the Borrower and the Agency as follows:
Agency: City of Carlsbad Housing 61 Redevelopment Department 2965 Roosevelt Street, Suite B Carlsbad, California 92008 Attention: Agency Executive Director
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Borrower: La Terraza Associates, a California Limited Partnership One Hawthorne, 4th Floor San Francisco, California 94105 Attention: Managing General Partner
Following notice by Borrower to the Agency that Mission Housing (or its affiliate) has been admitted as a limited partner of Borrower, with a copy to:
Mission Housing 18101 Von Karman Ave., Suite 1700 Irvine, CA 92715-1046 Attention: Asset Manager
Notice shall be deemed to have been effective on the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was returned as undeliverable.
29. BINDING UPON SUCCESSORS. All provisions of this Agency Regulatory Agreement shall be binding upon and inure to the benefit of the successors, transferees and assigns of the Borrower and the Agency, and shall run with the land for the full term of this Agency Regulatory Agreement.
30. ANENDNENTS AND MODIFICATIONS. Any amendments or modifications to this Agency Regulatory Agreement must be in writing, and shall be effective only if executed by both the Borrower and the Agency.
31. SEVERABILITY. Every provision of this Agency Regulatory Agreement is intended to be severable. If any provision of this Agreement shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.
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The parties have executed this Regulatory Agreement as of the date first above written.
BORROWER:
La Terraza Associates, a California Limited Partnership
By: BRIDGE Housing, Inc., a California nonprofit public benefit corporation, its managing general partner
By:
Its:
AGENCY:
Carlsbad Housing and Redevelopment Commission, in its capacity as governing body of, and by and on behalf of, the Redevelopment Agency of the City of Carlsbad, a public body corporate and politic
By:
Its:
APPROVED AS TO FORE:
Ron Ball Agency Counsel
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EXHIBIT 5
OPERATING DEFICIT GUARANTEE AGREEMENT
VILLAS AT EL CAMINO REAL
AFFORDABLE HOUSING PROJECT
AGREEMENT REGARDING OPERATING DEFICIT GUARANTEES
This Agreement Regarding Operating Deficit Guarantees is entered into as of this day of by and among BRIDGE Housing Corporation, a California nonprofit public benefit corporation (ffBRIDGEff), the Carlsbad Housing and Redevelopment Commission, acting in its capacity as governing body of, and by and on behalf of, the Redevelopment Agency of the City of Carlsbad, a public agency corporate and politic (the ffAgencyf*), Picerne Carlsbad I, a California Limited Partnership (ffPicerneff), and Patrick Carlsbad I, a California Limited Partnership (ffPatrickff) (BRIDGE, the Agency, Patrick, and Picerne are collectively referred to herein as the ffPartiesff and are each individually referred to herein as a ffGuarantorff) with reference to the following facts:
La Terraza Associates a California Limited Partnership (the %artnershipff) intends to'construct a 344 unit housing development for low income households in the City of Carlsbad, which development is known as the La Terraza (the ffDevelopmentff).
B. The general partners of the Partnership consist of BRIDGE and PATPIC, a California general partnership. PATPIC is composed of Patrick and Picerne as general partners.
c. Mission Housing Investments, a California corporation has issued a commitment in which it or its affiliate (rrMHIrr) will enter the Partnership as an investor limited partner following completion of construction of the Development and satisfaction of the other conditions contained in the commitment. As a condition to its agreement to enter the Partnership and make a substantial capital contribution, MHI is requiring: (i) the Partnership to provide an initial operating reserve for the Development in the amount of Five Hundred Thousand Dollars ($500,000) (the ffInitial Operating Reserveff); and (ii) for the Parties to provide an operating deficit guarantee to MHI in the approximate amount of One Million Dollars (the "Operating Deficit Guarantee").
D. The Operating Deficit Guarantee requirement will be met by the parties providing a series of individual guarantees. The Parties desire to enter into this Agreement to set forth their agreements concerning the order in which Mission may make demand under these guarantees.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, BRIDGE, the Agency, Patrick, and Picerne agree as follows:
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1. Oneratina Reserve. The parties to this Agreement shall cause the Partnership to establish the Initial Operating Reserve at the time of funding of the permanent financing for the Development. The Initial Operating Reserve shall be utilized to fund any operating deficits prior to any enforcement of the Operating Deficit Guarantee.
c
2. Oneratina Deficit Guarantee. The Agency, BRIDGE, Picerne, and Patrick shall execute individual guarantees to MHI that together shall meet the Operating Deficit Guarantee requirement (collectively, the ffIndividual Guaranteesff). The Parties agree to utilize the Initial Operating Reserve to fund operating deficits prior to enforcement of any Individual Guarantees. The Parties agree that the Individual Guarantees shall be provided in the following order and from the following sources:
(a) Aaencv Guarantee ($500.000). The Agency shall provide a guarantee in the amount of Five Hundred Thousand Dollars ($500,000) (the "Agency Guaranteeff), which shall be the first guarantee that may be enforced by MHI to meet the Operating Deficit Guarantee requirement. The Parties agree to utilize the Initial Operating Reserve in its entirety prior to enforcement of the Agency Guarantee.
(b) Patrick and Picerne Guarantee 1$150,000). Patrick and Picerne shall together provide a joint and several guarantee in the amount of One Hundred and Fifty Thousand Dollars ($150,000) (the "Patrick and Picerne Guarantee"), which may be enforced by MHI to meet the Operating Deficit Guarantee requirement only after the Agency Guarantee has been fully enforced or MHI has: (i) not been paid Agency Guarantee funds by the Agency within thirty (30) days after demand therefor; or (ii) an Insolvency Event (as defined in Section 3 below) has occurred with respect to the Agency. Patrick shall fund fifty percent (50%) of any amount due under the Patrick and Picerne Guaranty and Picerne shall fund the remaining fifty percent (50%).
(c) BRIDGE, Patrick, and Picerne Guarantee fS350,OOO). BRIDGE, Patrick, and Picerne shall together provide a joint and several guarantee in the amount of Three Hundred and Fifty Thousand Dollars ($350,000) (the "BRIDGE, Patrick, and Picerne Guarantee"), which may be enforced by MHI to meet the Operating Deficit Guarantee requirement only after the Agency Guarantee and the Patrick and Picerne Guaranty have been fully enforced, or, with respect to one or more of such guarantees which has not been enforced, MHI has: (i) not been paid Agency Guarantee or Patrick and Picerne Guarantee funds, as applicable, within thirty (30) days after demand therefor; or (ii) an Insolvency Event has
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occurred with respect to the Guarantor. BRIDGE shall fund fifty percent (50%) of each draw on the BRIDGE, Patrick, and Picerne Guarantee, Patrick shall fund twenty-five percent (25%) of each such draw, and Picerne shall fund twenty-five percent (25%) of each such draw.
(d) The Parties acknowledge that MHI is entitled to recover from the applicable Guarantor its costs and expenses incurred in enforcing the Individual Guarantees in addition to amounts due w under the Individual Guarantees.
3. Insolvency Event. For purposes of Section 2 above, flInsolvency Eventff shall mean, with respect to any of the Guarantors, as applicable: (i) the Guarantor shall have commenced or instituted (by petition, application, answer, consent, or otherwise) any bankruptcy, insolvency, reorganization, arrangement, material readjustment of debts, dissolution, or similar proceeding; or (ii) a receiver, trustee, or similar officer shall be appointed for the Guarantor or any substantial portion of its property or assets as a result of any bankruptcy, insolvency, reorganization, arrangement, material readjustment of debts, dissolution, or similar proceeding, with or without the consent of the Guarantor.
4. Assianment. No party hereunder may assign its interests under this Agreement or any obligations under any of the guarantees without the written consent of the other parties.
5. Bindina Effect. This Agreement shall inure to and bind the parties hereto, their respective representatives, successors and assigns.
6. Leaal Actions. In the event any legal action is commenced to interpret or enforce the terms of this Agreement or to collect damages a result of any default, the party prevailing in any such action shall be entitled against the party not prevailing all reasonable attorney's fees and cost s incurred in such action. For purposes of this section, fflegal actionff includes any arbitration proceedings pursuant to this Agreement.
7. Counterparts. This Agreement may be executed in counterparts, all of which taken together shall be deemed one original agreement.
8. Cantions. Sections, titles, or captions in no way define, limit, extend or describe the scope of this Agreement nor the intent of any of its provisions, and are for convenience of reference only.
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9. Governinu Law. This Agreement shall be construed in accordance with and be governed by the provisions of the law of the State of California.
10. Waiver. No waiver of any right under this Agreement shall be deemed effective unless contained in a writing signed by the party charged with the waiver. No waiver of any breach or any failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.
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11. Entire Aureement. This Agreement sets forth the entire agreement of the parties hereunder and this Agreement may not be modified except in writing signed by authorized representatives of each party.
BRIDGE Housing Corporation
By: Its:
Carlsbad Housing and Redevelopment Commission, in its capacity as governing body of, and by and on behalf of, the Redevelopment Agency of the City of Carlsbad
By: Its:
Patrick Carlsbad I, a California Limited Partnership
By: Patrick Property Services, Inc., a California corporation, it managing general partner
By: William P. Kruer
By: George T. Kruer
Picerne Carlsbad I, a California Limited Partnership
By: Picerne Associates, a California corporation, general partner
By: Kenneth A. Picerne, President
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APPROVED AS TO FORM
By: Ron Ball City Attorney
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