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HomeMy WebLinkAbout1994-09-06; Housing & Redevelopment Commission; 258 Exhibit 5; Family Housing Revenue Refunding BondsEXHIBIT 5 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: KAREN A. ELLIS, ESQ. STRADLING, YOCCA, CARLSON & RAUTH 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 REDLINED 8/H/94 AMENDED AND RESTATED REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS By and Among CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee and SEASCAPE APARTMENTS, INC., an Illinois corporation DATED AS OF SEPTEMBER 1, 1994 Relating to ^ $15.115.000 CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION 2. MULTIFAMILY HOUSING REVENUE REFUNDING BONDS SERIES A OF 1994 (SEASCAPE VILLAGE PROJECT) TABLE OF CONTENTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 14. 16. 17. 18. 19. 20. 21. 22. 23. Page DEFINITIONS AND INTERPRETATION .......................... 2 ACQUISITION, CONSTRUCTION, EQUIPPING AND COMPLETION OF THEPROJECT ........................................... 5 RESIDENTIAL RENTAL PROPERTY ............................. 6 LOWER-INCOME TENANTS .................................. 7 TAX EXEMPT STATUS OF THE BONDS .......................... 9 MODIFICATION OF SPECIAL TAX COVENANTS ................... 10 INDEMNIFICATION ...................................... 10 CONSIDERATION ....................................... 2a RELIANCE ............................................. 12 PROJECT LOCATION ...................................... 12 SALE OR TRANSFER OF THE PROJECT ......................... 12 TERM ................................................ 13 BURDEN AND BENEFIT ................................... 14 ENFORCEMENT ......................................... 14 RECORDING AND FILING .................................. 15 PAYMENTOFFEES ...................................... 15 GOVERNINGLAW ....................................... 15 AMENDMENTS .......................................... 15 NOTICE .............................................. 116 SEVERABILITY .......................................... 16 MULTIPLE COUNTERPARTS ................................ 16 24. TRUSTEE LIABILITY ..................................... 16 25. LIMITED RECOURSE PROVISIONS ........................... 17 Exhibit A LEGAL DESCRIPTION Exhibit B CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE Exhibit C INCOME COMPUTATION AND CERTIFICATION PUBL:l7495~1(RED:17477~2~~o:~l7477~1)109~ B2062.14 i OS/ 11 I94 AMENDED AND RESTATED REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS AMENDED AND RESTATED REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (the “Regulatory Agreement”) is made and entered into as of September 1, 1994, by and among CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION, a public body corporate and politic organized and existing under the Constitution and laws of the State of California (together with any successor to its rights, duties and obligations, the “Commission”), FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States authorized to accept and execute trusts of the type contemplated by the Indenture (as hereinafter defined), with its principal corporate trust office in San Francisco, California, as Trustee (the “Trustee”), and SEASCAPE APARTMENTS, INC., an Illinois corporation (the “Owner”). WHEREAS, the Commission has adopted a program to finance the construction of multifamily rental housing pursuant to Chapter 1 of Part 2 of Division 24 of the Health and Safety Code of the State of California (the “Act”); and WHEREAS, the Commission is a political subdivision (within the meaning of that term in the Regulations of the Department of Treasury and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to the Internal Revenue Code of 1986, as amended (the “Code”); and WHEREAS, on May 7, 1985, the Board of the Commission adopted a resolution (the “Resolution”) authorizing the issuance of revenue bonds in connection with the 20%unit multifamily rental housing project 2 known as “Seawme Village” (the “Proiect”); and WHEREAS, in furtherance of the purposes of the Act and the Resolution and as a part of the Commission’s plan of financing residential rental housing, the Commission issued $16,215,0 aggregate principal amount of its revenue bonds designated “Carlsbad Housing and Redevelopment Commission Multifamily Housing Revenue Bonds, Series 1985 B (Seascape Village Project)” (the “Prior Bonds”), secured by an Indenture of Trust dated as of April 1, 1985, between the Commission and The Bank of California, N.A., the predecessor in interest to First Trust of California, National Association, as trustee for the Prior Bonds (the “Prior Trustee”), the proceeds of which were loaned to Lincoln Seascape, A California Limited Partnership (the “Developer”), the predecessor in interest to the Owner (the “Prior Loan”) to finance the cost of 2 the Proiect for the public purpose of providing decent, safe and sanitary housing; and WHEREAS, the Owner has prepaid the Prior Loan, and the Commission has issued fi its $15.115.000 Multifamilv Housiw Revenue Refunding Bonds, Series A of 1994 (Seascane Village Proiectl (the “Bonds”) to refund the Prior Bonds and make a mortgage loan (the “Loan”) to the Owner to fi restructure the financing: for the Project; and WHEREAS, the Commission has determined that the issuance of the Bonds 2 will accomplish a valid public purpose of the Commission by assuring that housing continues to be available to lower income persons and families within the meaning of the Act; and WHEREAS, the Commission has determined that, in order to ensure continued availability to lower income persons of at least 20% of the units in the Project, it is necessary to enter into this Regulatory Agreement which amends and restates in its entirety that certain Regulatory Agreement and Declaration of Restrictive Covenants dated as of April 1, 1985, among the Commission, the Prior Trustee and the Developer recorded on May 21, 1985, as Instrument No. 85-178037 in the Official Records of San Diego County, California (the “Prior Regulatory Agreement”); and WHEREAS, all things necessary to make the Bonds the valid, binding, and legal special obligations of the Commission according to the import thereof, and to constitute the Indenture as a valid assignment of the amounts pledged to the payment of the principal of, premium, if any, and interest on the Bonds have been done and performed, and the creation, execution, and delivery of the Indenture and the execution and issuance of the Bonds, subject to the terms thereof, in all respects have been duly author&d; and WHEREAS, the Code and the Internal Revenue Code of 1954, as amended (the “Prior Code”) and the regulations and rulings promulgated with respect thereto and the Act prescribe that the use and operation of the Project be restricted in certain respects and in order to ensure that the Project will continue to be owned and operated in accordance with the Code, the Prior Code and the Act, the Commission, the Trustee and the Owner have determined to enter into this Regulatory Agreement in order to set forth certain terms and conditions relating to the operation of the Project. NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Commission, the Trustee and the Owner hereby agree to amend the Prior Rewlatorv Aereement in its entiretv and restate the terms and Drovisions of the Prior Regulatorv breement in its entirety as follows: 1. DEFINITIONS AND INTERPRETATION. The following terms shall have the respective meanings assigned to them in this Section 1 unless the context in which they are used clearly requires otherwise: “Adjusted Income” - The adjusted income of a person (together with the adjusted income of all persons of the age of 18 years or older who intend to reside with such person in one residential unit) as calculated in the manner prescribed in Regulation Section 1.167(k)-3(b)(3) in effect as of the 1 Closing Date. “Affordable Rent” - A monthly rent which does not exceed 30 percent of one-twelfth of 80% of Median Income for the Area, as adjusted for household size, and assuming the following household sizes for the two types of residential units in the Project: PUBL:17495~1(RKD:17477~2~~o:~17477_1)109~B2062.14 2 OS/l l/94 Residential Unit Number of Persons in Familv One Bedroom Two Bedroom 2 4 Such amount shall be further reduced by deducting tenant-paid utilities based on the “Utility Rate Schedule” established for the Carlsbad Housing Authority’s Section 8 Rental Assistance Program. Commencing September 113, 1995, in no event shall the monthly rent so determined exceed 90% of the 2 rent charged for a comparable market-rate unit in the Project. “Area” - The San Diego, California Metropolitan Statistical Area. “Certificate of Continuing Program Compliance” - The Certificate to be filed by the Owner or the Proiect Manner on behalf of the Owner with the Commission, the Program Administrator and the Trustee which shall be substantially in the form attached hereto as Exhibit B. “City” - The City of Carlsbad, California. “Commission” - The Carlsbad Housing and Redevelopment Commission, and its successors and assigns. “Income Certification” - The Income Computation and Certification-attached hereto as Exhibit C. “Lower Income Units” - The dwelling units in the Project designated for occupancy by Lower-Income Tenants pursuant to Section 4(a) of this Regulatory Agreement. “Lower-Income Tenants” - Persons or families with an Adjusted Income which does not exceed 80 percent of the Median Income for the Area, as adjusted for household size. In no event will the occupants of a dwelling unit be considered to be Lower-Income Tenants if all of such occupants are students (as defined in Section 151(e)(4) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code. “Median Income for the Area” - The median income for the Area as most recently determined by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or, if programs under Section 8 are terminated, Median Income for the Area determined under the method used by the Secretary prior to such termination. “Owner’s Use of Proceeds Certificate” - The certificate of the Owner, dated as of the Closing Date, with respect to certain Project Costs delivered to the Commission by the Owner. “Project Costs” - To the extent authorized by the Prior Code, the Regulations and the Act, any and all costs incurred with respect to the acquisition of land and the construction and equipping, as the case may be, of the Project, including, without limitation, costs for site preparation, the planning of housing and improvements, the acquisition of property, the removal PUBL:1749~~1(RED:17477~2~T0:~17477_1)10962.14 3 08/11/94 or demolition of existing structures, the construction and purchase of housing, related facilities and improvements, and all other work in connection therewith, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, contractors’ and developers’ overhead and supervisory fees and costs directly allocable to the Project, administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement to any municipality, county or entity for expenditures made, with the approval of the Commission, for the Project), interest allocable to the financing of the Project paid or incurred prior to the Completion Date and all other costs approved by Bond Counsel. “Project Facilities” - The buildings, structures and other improvements located on the Project Site, and all fixtures and other property owned, leased or licensed by the Owner and located on, or used in connection with, such buildings, structures and other improvements. “Project Site” - The parcel or parcels of real property described in Exhibit “A”, which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining. “Qualified Project Costs” - The Project Costs (i) incurred after December 18, 1984, the date of the first official action by the Commission declaring its intent to issue Bonds for the Project, (ii) which are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Owner or but for the proper election by the Owner to deduct those amounts within the meaning of Regulation 1.103-8(a)(l)(i); provided, however, that only such portion of the interest accrued prior to the Completion Date shall constitute a Qualified Project Cost as bears the same ratio to all such interest as the Qualified Project Costs bear to all Project Costs; and, provided further, that such interest shall cease to be a Qualified Project Cost on the Completion Date; and, provided further, that if any portion of the Project has been constructed by an Affiliated Party (whether as a general contractor or a subcontractor), “Qualified Project Costs” shall include only the actual out-of-pocket costs incurred by such Affiliated Party in constructing the Project (or any portion thereof). “Qualified Project Period” - The period beginning on May 11, 1986, and ending on the latest of (a) the date which is 10 years after the date on which at least 50 percent of the dwelling units in the Project were first occupied (June 22, 1996), (b) the date which is a Qualified Number of Days after the date on which any of the dwelling units in the Project was first occupied (August 2 18. 1996), (c) the date on which any assistance provided with respect to the Project under Section 8 of the United States Housing Act of 1937 terminates or (d) the date on which no Bonds remain Outstanding. For purposes of clause (b), the term “Qualified Number of Days” means, 50 percent of the number of days comprising the term from the date of issuance of the Prior Bonds (May 21, 1985) until the final maturity of the Bonds (including any refunding bonds). “Regulatory Agreement” - This Amended and Restated Regulatory Agreement and Declaration of Restrictive Covenants, together with any amendments or supplements hereof. “Very Low Income Tenants” - Lower-Income Tenants whose Adjusted Income does not exceed 50 percent of Median Income for the Area. PUBL:17495~1(RED:17477_2_~0:_17477_1)1090fj2.14 4 OS/l 1194 Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number, and vice versa, when appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all defined terms shall be determined by reference to this Section 1 notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only, and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question of intent shall arise. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in Appendix A to the Indenture of Trust dated as of the date hereof between the Trustee and the Commission. 2. ACQUISITION, CONSTRUCTION, EQUIPPING AND COMPLETION OF THE PROJECT. The Owner hereby represents, covenants and agrees as follows: (a) 2 To the best of the Owner’s knowledge, within six months of the date of issuance of the Prior Bonds, a substantial binding obligation was incurred to commence the construction of the Project, pursuant to which the Developer was obligated to expend at least the lesser of (i) 2-l/2% of the principal amount of the Prior Bonds or (ii) $100,000. 0) The statements made in the Owner’s Use of Proceeds Certificate are true and correct. (cl At all times since the 1 Owner acauired title to the Proiect, the Project has been in compliance with the provisions of the Prior Regulatory Agreement. 60 Money on deposit in any fund or account in connection with the Prior Bonds, whether or not such money was derived from other sources, shall not be used by or under the direction of the Owner, in a manner which would cause the Prior Bonds or the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code, and the Owner specifically agrees that the investment of money in any such fund shall be restricted as may be necessary to prevent the Prior Bonds or the Bonds from being “arbitrage bonds” under the Code. (e) The Owner (and any person related to it within the meaning of Section 147(a) of the Code) will not take or omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture, the Loan Agreement or this Regulatory Agreement. PUBL:17495~1(RED:17477~2~~o:~l7477_1)1091 B2062.14 5 08/l 1 I94 3. RESIDENTIAL RENTAL PROPERTY. The Owner hereby acknowledges and agrees that the Project is currently and will continue to be owned, managed and operated as a project for “residential rental property” (within the meaning of Section 103(b)(4)(A) of the Prior Code) for a term equal to the Qualified Project Period. To that end, and for the term of this Regulatory Agreement, the Owner hereby represents, covenants, warrants and agrees as follows: (a) The Project has been acquiredt bv the Owner for the purpose of providing multifamily residential rental property, and the Owner shall own, manage and operate the Project as a project to provide multifamily residential rental property comprised of a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities, in accordance with Section 103(b)(4)(A) of the Prior Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time. 0) All of the dwelling units in the Project are and will remain similarly constructed units, and each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including a sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink. Cc) None of the dwelling units in the Project, from the date the Owner acauired the Proiect, have been or will at any time be utilized on a transient basis, or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, rest home or trailer court or park. Cd) No part of the Project, from the date the Owner acauired the Proiect, has been or will at any time be owned or used as a cooperative housing corporation or a community apartment project or a stock cooperative. Other than obtaining and recording a condominium plan and map on the Project, and obtaining a white report from the California Department of Real Estate, the Owner shall not take any steps in connection with a conversion to such ownership or uses except with the prior written approving opinion of Bond Counsel acceptable to the Commission and the Trustee, that the interest on the Bonds will not become taxable thereby. The final subdivision map to be recorded for the Project shall state the restriction against transferring individual condominium ownership interests in the Project during the term of the Regulatory Agreement. 63 All of the dwelling units in the Project, from the date the Owner acauired the Proiect, have been and will be available for rental on a continuous basis to members of the general public. The Owner shall not discriminate on the basis of race, creed, color, sex, age or national origin in the lease, use or occupancy of the Project or in connection with the employment or the application for employment of persons for the operation and management of the Project. The Owner will not give preference to any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling units are required to be leased or rented to Lower-Income Tenants or to be available for occupancy on a priority basis by Very Low Income Tenants as set forth in Section 4 below. (0 The Lower Income Units will be intermingled with all other dwelling units in the Project and shall be of comparable quality and offer a range of sizes and number of PUBL:l7495~1(RED:l7477~2~~0:~17477~1)109~ B2062.14 6 OS/l 1194 bedrooms comparable to the other units in the Project. Tenants in the Lower Income Units will continue to have equal access to and enjoyment of all common facilities of the Project. (fit) The Project Site consists of a parcel or parcels that are contiguous except for the interposition of a road, street or stream, and all of the Project Facilities comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership, management, accounting and operation of the Project. 0-d No unit in any building or structure in the Project which contains fewer than 5 units shall be occupied by the Owner or any person related to or affiliated with the Owner, such as a resident manager or maintenance personnel. (0 2 Based on records obtained bv the Owner. (i) the Project was completed on May 19, 1986fL, (ii) the date on which any of the units in the Project was first occupied was May 11, 19861, (iii) the date on which 10 percent of the units in the Project was first occupied was May 11, 1986r, and (iv) the date on which 50 percent of the units in the Project was first occupied was June 22, 1986. 4. LOWER-INCOME TENANTS. Pursuant to the requirements of Section 103(b)(4)(A) of the Prior Code, Section 34312.3 of the Act and the requirements of the City and the Commission, the Owner hereby represents, warrants and covenants that 1 from the date hereof and for the remainder of the Qualified Project Period: (a> Not less than twenty percent (20%) of the units in the Project shall be continuously occupied by or held available for occupancy by Lower Income Tenants at an Affordable Rent. For this purpose, a unit occupied by a Lower-Income Tenant who at the commencement of the occupancy is a Lower-Income Tenant shall be treated as occupied by such individual or family during their tenancy in such unit, until such time as a recertification of such individual’s or family’s income in accordance with subparagraph (c) below demonstrates that such individual or family no longer qualifies as a Lower-Income Tenant. Moreover, a unit previously occupied by a Lower-Income Tenant and then vacated shall be considered occupied by a Lower-Income Tenant until reoccupied, other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (31) days. @I On the first day of each month during the term of this Regulatory Agreement, the Owner shall advise the Commission, the Trustee and the Program Administrator of the status of the occupancy of the Project by delivering to such parties a Certificate of Continuing Program Compliance. (‘3 The Owner will obtain and maintain on file an Income Certification from each Lower-Income Tenant, dated immediately prior to the initial occupancy of such Lower-Income Tenant in the Project. The Owner agrees to provide such additional information as may be required in the future by the State of California, the Commission, the Program Administrator and by Section 103(b)(4)(A) of the Prior Code and the Regulations, as the same may be amended from time to time, or in such other form and manner as may be required by applicable rules, rulings, policies, procedures or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue PUBL:17495~1(RED:17477~2~~0:~17477_1)109~~062.14 7 OS/l l/94 Service with respect to obligations transitioned under Section 1313(a) of the Tax Reform Act of 1986. A copy of each such Income Certification and a copy of the rent roll for the Lower Income Units shall be attached to the monthly Certificate of Continuing Program Compliance filed with the Commission, the Trustee and the Program Administrator pursuant to subsection (b). The Owner shall verify that the income provided by an applicant in an Income Certification is accurate by taking one or more of the following steps as a part of the verification process: (i) obtaining a copy of a Lower-Income Tenant’s federal income tax return for the tax year immediately prior to the commencement of such Lower-Income Tenant’s occupancy, (ii) obtaining an employer’s verification of such Lower-Income Tenant’s current income, orb (iii) if the Lower-Income Tenant is unemployed or if the tax return is unavailable, obtaining other satisfactory evidence of income for such year. On July 1, 1995 and on July 1 in each odd-numbered year thereafter, the Owner shall file with the Commission, the Trustee and the Program Administrator a complete and updated Income Certification form for each Lower-Income Tenant and Very Low Income Tenant residing in the Project. If, based upon the updated Income Certification, a tenant no longer qualifies as a Lower-Income Tenant 1, the Owner shall rent the next available unit and any necessary units thereafter to Lower-Income Tenants or Very Low Income Tenants such that, by no later than the January 1 immediately following such July 1, at least 20 percent of the units in the Project are actually occupied by Lower-Income Tenants or Very Low Income Tenants. In no event shall the rent of any tenant who has ceased to be a Lower-Income Tenant or a Very Low Income Tenant be raised above the Affordable Rent before such time as a new Lower-Income Tenant or a Very Low Income Tenant is qualified and commences occupancy of a unit in the Project at an Affordable Rent. In addition, no tenant shall be denied continued occupancy in a unit solely because such tenant no longer qualities as a Lower-Income Tenant or a Very Low Income Tenant because of an increase in household income subsequent to such tenant’s initial date of occupancy. W The Owner will: (a) maintain a list of persons who have notified the Owner of their desire to rent a unit in the Project and who have Adjusted Incomes which would qualify them as Very Low Income Tenants, and (b) offer to rent at least half of the Lower-Income Units (subject to the availability thereof at any time) on a priority basis to the persons on such list prior to offering to rent such units to any other persons and in choosing such Very Low Income Tenants shall use selection criteria no more burdensome than shall be applied to other prospective tenants. To fulfil1 its obligation under this subparagraph (d), the Owner shall place on its waiting list persons referred by the Commission. The Owner agrees to make the units coming vacant available, on a priority basis, first, to any Very Low Income Tenants who are Section 8 certificate or voucher holders or the recipients of another rent subsidy and, second, to other Very Low Income Tenants. Nothing contained in this Section shall require the Owner to offer to rent such units to such persons on terms and conditions which are more favorable than the terms and conditions on which such units will be offered to Lower Income Tenants generally. Provided that the Owner has complied with the foregoing to attract Very Low Income Tenants to the Project, nothing herein shall be construed as requiring the Owner to keep units vacant for occupancy by Very Low Income Tenants where no Very Low Income Tenants have applied for occupancy. Cd The Owner will maintain complete and accurate records pertaining to the Lower Income Units, and will permit any duly author&d representative of the Commission, the 8 08lllf94 Program Administrator, the Trustee, the Surety, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Owner pertaining to the Project, including those records pertaining to the occupancy of the Lower Income Units. (0 The Owner shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The Owner shall not apply selection criteria to Section 8 certificate holders which are more burdensome than criteria applied to any other prospective tenants. Cl!) The form of lease to be utilized by the Owner in renting any units in the Project to any person other than a Section 8 tenant who is intended to qualify as a Lower-Income Tenant shall provide for termination of the lease and consent by such person to immediate eviction for failure to qualify as a Lower-Income Tenant as a result of any material misrepresentation made by such person with respect to the Income Certification or for failure to cooperate with the Owner in recertification of income. 0-O On September 1 I3, 1996, and annually thereafter, the Owner will provide to the Commission a report demonstrating that the average rents of the Lower Income Units do not exceed 90 percent of the average rents for market rate units based on leases in effect for the Proiect on the date of the report. 5. TAX EXEMPT STATUS OF THE BONDS. The Owner and the-Commission each hereby represents, warrants and agrees that: 60 it will not take or permit, or omit to take or cause to be taken, as is appropriate, any action that would adversely affect the exclusion from gross income for federal income tax purposes or the exemption from California personal income taxes of interest on the Prior Bonds or the Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof; 0) it will take such action or actions as may be necessary, in the written opinion of Bond Counsel filed with the Commission and the Trustee, (i) to comply fully with all applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 103(b)(4)(A) of the Prior Code and transitioned under Section 1313(a) of the Tax Reform Act of 1986, and (ii) to comply with the Act; and (c) it will file and/or record such documents and take such other steps as are necessary, in the written opinion of Bond Counsel filed with the Commission and the Trustee, in order to insure that the requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the Project, including, but not limited to, the execution and recordation of this Regulatory Agreement in the real property records of the County of San Diego. PUBL:1749~~1(RKD:17477~2~T0:~17477_1)109~B2062.14 9 08/l 1194 The Owner hereby covenants to include the requirements and restrictions contained in this Regulatory Agreement in any documents transferring any interest (other than a leasehold interest) in the Project to another person to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of this Regulatory Agreement. 6. MODIFICATION OF SPECIAL TAX COVENANTS. The Owner, the Trustee and the Commission hereby agree as follows: (a) To the extent any amendments to the Act, the Regulations, the Prior Code or the Code shall, in the written opinion of Bond Counsel filed with the Commission, the Trustee and the Owner, impose requirements upon the ownership or operation of the Project more restrictive than those imposed by this Regulatory Agreement which must be complied with in order to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds, this Regulatory Agreement shall be deemed to be automatically amended to impose such additional or more restrictive requirements. (3) To the extent any amendments to the Act, the Regulations, the Prior Code or the Code shall, in the written opinion of Bond Counsel filed with the Commission, the Trustee and the Owner, impose requirements upon the ownership or operation of the Project less restrictive than imposed by this Regulatory Agreement, this Regulatory Agreement may be amended or modified to provide such less restrictive requirements should the Commission, in its sole discretion, decide that such requirements should be made applicable to the Project. Cc) The Owner, the Commission and, if applicable, the Trustee, upon the written direction of the Commission, shall execute, deliver and, if applicable, file of record any and all documents and instruments, necessary to effectuate the intent of this Section 6, and each of the Owner and the Commission hereby appoints the Trustee as its true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf of the Owner or the Commission, as is applicable, any such document or instrument (in such form as may be approved in writing by Bond Counsel) if either the Owner or the Commission defaults in the performance of its obligations under this subsection (c); provided, however, that the Trustee shall take no action under this subsection (c) without first notifying the Owner or the Commission, or each of them, as is applicable, unless directed in writing by the Commission or the Owner, and without first providing the Owner or the Commission, or each of them, as is applicable, an opportunity to comply with the requirements of this Section 6. 7. INDEMNIFICATION. The Owner shall indemnify, hold harmless and defend the City, the Commission, the Trustee and the Prior Trustee and the respective officers, members, councilmembers, directors, officials and employees of each of them (collectively, the “Indemnified Parties”) to the maximum extent permitted by law against any and all losses, costs, damages, claims, actions, expenses and liabilities of whatever nature, kind or character (including, without limitation, attorneys’ fees of counsel reasonably acceptable to the Indemnified Party, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly arising out of or related to any claim, suit, investigation, proceeding or action commenced or threatened, arising out of or related to (a) any default or alleged default under the Prior Loan Agreement or the Prior Reimbursement Agreement; (b) 2 the redemption of the Prior Bonds; (c) the issuance of the Bonds; or (d) any written statements or PUBL:17495~1(RKD:17477_2_TO:_17477_1)109~B2062.14 10 OS/ 11 t94 representations with respect to the Owner, the Project, the Prior Bonds or the Bonds made or given to the Commission, the Prior Trustee or the Trustee, or any underwriters or purchasers of any of the Bonds, by the Owner, or any of its agents or employees, including, but not limited to, statements or representations of fact, or financial information; provided, however, that this provision shall not require the Owner to indemnify the Prior Trustee or the Trustee from any claims, costs, fees, expenses or liabilities arising from the negligence or willful misconduct of the Prior Trustee or the Trustee. The indemnification provided herein shall apply whether any such claim, suit, investigation, proceeding or action complains of (a) any alleged interference with or breach of any existing contract between the Commission and the owners of the Prior Bonds, g (b) 2 any other alleged wrongful act of the Indemnified Parties related to any default or alleged default under the Prior Reimbursement Agreement: or the redemption of the Prior Bonds, and regardless of whether the Indemnified Parties, or any agent thereof, made any investigation with respect to the facts relating to the Project which was financed with the Prior Bonds or the Developer or any affiliate thereof or the Prior Loan or the Prior Bonds for the purpose of determining whether the proceedings described in the preceding paragraph were appropriate. Upon the sale or transfer of the Project, the acquiring person or entity shall indemnify and hold harmless the Indemnified Parties as provided herein, and upon such indemnification, and only upon such indemnification, by the acquiring party, the Owner shall thereafter have no further liability hereunder except for claims arising from any act or omission of the Owner occurring while the Project was owned by the Owner. In the event that any claim, suit, investigation, action or proceeding is brought against an Indemnified Party, with respect to which indemnity may be sought hereunder, the Owner, upon receipt of written notice from an Indemnifkd Party, shall assume and have the right to direct the investigation, defense and settlement thereof, including the employment of counsel acceptable to the Indemnified Party and the payment of all expenses; provided that the Indemnified Party shall have the right to review and approve or disapprove any compromise or settlement in connection with any such claim, suit, investigation, proceeding or action brought against such Indemnified Party or to which it is a party. The Indemnified Parties also agree to coouerate with the Owner in the Owner’s investiaation, defense and/or settlement of anv such claim. suit, uroceeding or action. Any Indemnified Party shall have the right to employ separate counsel in any suit, investigation, action or proceeding and to participate in the defense thereof; but unless such separate counsel is employed with the approval and consent of the Owner, or pursuant to a court order, the Owner shall not be required to pay the fees and expenses of such separate counsel. The Owner also shall pay and discharge and shall indemnify and hold harmless the Commission and the Trustee from (x) any lien or charge upon payments by the Owner to the Commission and the Trustee hereunder and (y) any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim is asserted, or any such lien or charge upon payments, or any such taxes, assessments, impositions or other charges, are sought to be imposed, the Commission or the Trustee shall give prompt notice to the Owner and the Owner shall have the sole right and duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion. PUBL:17495~1(RKD:17477~2~~0:~17477_1)109~B2062.14 11 OS/l 1194 8. CONSIDERATION. The Commission has issued the Bonds to provide funds to make the Loan to refund the Prior Bonds, the proceeds of which Prior Bonds have been used h parJ to construct and equip the Project. The Trustee has entered into the Indenture and assumed duties and obligations thereunder which facilitate the issuance of the Bonds. In consideration of the issuance of the Bonds by the Commission and the execution of the Indenture by the Trustee, the Owner has entered into this Regulatory Agreement and has agreed to continue to restrict the uses to which this Project can be put as originally restricted by the Prior Regulatory Agreement and on the terms and conditions set forth herein. 9. RELIANCE. The Commission, the Trustee and the Owner hereby recognize and agree that the representations and covenants set forth herein may be relied upon by all persons interested in the legality and validity of the Bonds, and in the exclusion from gross income for federal income tax purposes and the exemption from State of California personal income taxes of interest on the Bonds and the Prior Bonds. In performing their duties and obligations hereunder, the Commission and the Trustee may rely upon statements and certificates, or the absence thereof, of the Owner, iower-Income Tenants, Very Low Income Tenants and the Program Administrator, and upon audits of the books and records of the Owner pertaining to the Project. In addition, the Commission and the Trustee may consult with counsel, and the opinion of such counsel shall be full and complete author&&ion and protection in respect of any action taken or suffered by the Commission or the Trustee hereunder in good faith and in conformity with such opinion. In determining whether any default or lack of compliance by the Owner exists under this Regulatory Agreement, the Trustee shall not be required to conduct any investigation into or review of the operations or records of the Owner and may rely solely on any notice or certificate delivered to the Trustee by the Owner, the Program Administrator or the Commission with respect to the occurrence or absence of a default unless it actually knows, or in the exercise of reasonable care should have known, that the notice or certificate is erroneous or misleading. In accepting its obligations hereunder, the Trustee acts solely as trustee for the benefit of the Bondholders and not in its individual capacity, and all persons, including, without limitation, the Commission and the Owner, seeking payment from the Trustee for any liability arising by reason of the transactions contemplated hereby shall look only to such Trust Estate for payment, except where such liability arises from the negligence or willful misconduct of the Trustee. 10. PROJECT LOCATION. The Owner hereby represents and warrants that the Project is located entirely within the territorial boundaries served by the Commission. 11. SALE OR TRANSFER OF THE PROJECT. The Owner hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated hereunder), without obtaining the prior written consent of the Commission and the Trustee, which consent shall be deemed given upon receipt by the Commission and the Trustee of (i) evidence reasonably satisfactory to the Commission and the Trustee that the Owner’s purchaser or transferee has assumed in writing, and to the satisfaction of the Commission, the Owner’s duties and obligations under this Regulatory Agreement; (ii) an opinion of counsel & the transferee that the transferee has duly assumed the obligations of the Owner under this Regulatory Agreement and that such obligations and this Regulatory Agreement are binding on the transferee; and (iii) an opinion of Bond Counsel that such transfer will not adversely affect the exclusion from gross income for federal income tax purposes of interest on PUBL:17495~1(RKD:17477~2~~0:~17477_1)109~ B2062.14 12 OS/l 1194 the Bonds or the Prior Bonds. It is hereby expressly stipulated and agreed that any voluntary sale, transfer or other disposition of the Project in violation of this Section 11 shall be null, void and without effect, shall cause a reversion of title to the Owner, and shall be ineffective to relieve the Owner of its obligations under this Regulatory Agreement. Nothing contained in this Section 11 shall affect any provision of any other document or instrument which requires the Owner to obtain prior consent to a voluntary sale, transfer or other disposition of the Project. 12. TERM. This Regulatory Agreement and all and several of the terms hereof shall become effective upon its execution and delivery and shall remain in full force and effect for the Qualified Project Period, it being expressly agreed and understood that the provisions hereof are intended to survive the retirement of the Bonds and expiration of the Indenture, the Loan Agreement, the Loan, the First Deed of Trust and the Note. Notwithstanding any other provisions of this Regulatory Agreement, this entire Regulatory Agreement, or any of the provisions or sections hereof, may be terminated upon agreement by the Commission, the Trustee and the Owner if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income for federal income tax purposes or the exemption from State of California personal income taxes of interest on the Bonds or the Prior Bonds. The Owner shall provide notice of any termination of this Regulatory Agreement to the Trustee. The terms of this Regulatory Agreement to the contrary notwithstanding, this Regulatory Agreement, and all and several of the terms hereof, shall terminate and be of no further force and effect in the event of (i) a foreclosure of the lien of the First Deed of Trust or delivery of a deed in lieu of foreclosure whereby a third party shall take possession of the Project or involuntary noncompliance with the provisions of this Regulatory Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal agency after the date of execution hereof or condemnation or a similar event which prevents the Commission and the Trustee from enforcing the provisions hereof and (ii) the payment in full and retirement of the Bonds within a reasonable period thereafter; provided, however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time subsequent to the termination of such provisions as the result of an event described in (i) above, the Owner or any related person to it (within the meaning of Section 1.103-10(e) of the Regulations) obtains an ownership interest in the Project for federal income tax purposes. Upon the termination of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate instruments of release and discharge of the terms hereof; provided, however, that the execution and delivery of such instruments shall not be necessary or a prerequisite to the termination of this Regulatory Agreement in accordance with its terms. 13. COVENANTS TO RUN WITH THE LAND. The Owner hereby subjects the Project (including the Project Site) to the covenants, reservations and restrictions set forth in this Regulatory Agreement. The Commission, the Trustee and the Owner hereby declare their express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon the Owner’s successors in title to the Project; provided, however, that on the termination of this Regulatory Agreement said covenants, reservations and restrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, PUBL:17495~1(RKD:17477_2_To:_17477_1)10962.14 13 OS/l 1194 reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instruments. 14. BURDEN AND BENEFIT. The Commission, the Trustee and the Owner hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Owner’s legal interest in the Project is rendered less valuable thereby. The Commission, the Trustee and the Owner hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Lower-Income Tenants and Very Low Income Tenants, and by furthering the public purposes for which the Bonds were issued. 15. UNIFORMITY; COMMON PLAN. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use, development and improvement of the Project Site. 16. ENFORCEMENT. If the Owner defaults in the performance or observance of any covenant, agreement or obligation of the Owner set forth in this Regulatory Agreement, and if such default remains uncured for a period of thirty days after notice thereof shall have been given by the Commission or the Trustee to the Owner with a CODY to the Surety (provided that said period may be extended if the Owner has commenced to cure such default and is diligently pursuing such cure and delivers to the Commission and the Trustee an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds), then the Commission or the-Trustee, acting on its own behalf or on behalf of the Commission, shall declare an “Event of Default” to have occurred hereunder, and, at its option, may take any one or more of the following steps: (0 by mandamus or other suit, action or proceeding at law or in equity, require the Owner to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of the rights of the Commission or the Trustee hereunder; (ii) have access to and inspect, examine and make copies of all of the books and records of the Owner pertaining to the Project; (iii) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Owner hereunder; or (iv) require the Commission to declare a default under the Loan and accelerate the indebtedness evidenced by the Note, and thereafter exercise all other rights and remedies under the Loan Agreement and the First Deed of Trust e Jother than foreclosure of the lien of the First Deed of Trust unless such foreclosure action does not imDair the lien and securitv interest of the Suretv The Trustee shall have the right, in accordance with this Section 16 and the provisions of the Indenture, without the consent, approval or knowledge of the Commission, to exercise any or all of the rights or remedies of the Commission hereunder; provided that prior to taking any such act PUBL:l7495~1(RKD:17477~2~~o:~17477~1)109~B2062.14 14 08/11/94 the Trustee shall give the Commission reasonable written notice, which shall not be less than 15 days in advance of its intended action. All fees, costs and expenses of the Trustee incurred in taking any action pursuant to this Section 16 shall be the sole responsibility of the Owner. After the Indenture has been discharged, the Commission may act on its own behalf to declare an “Event of Default” hereunder and to exercise any of the enforcement remedies set forth above to the same extent and with the same effect as if taken by the Trustee. Notwithstanding any provision in this Regulatory Agreement, the liability of the Owner with respect to default in payment of the amounts owing under the Note is limited as provided in Section 8.11 of the Loan Agreement. 17. RECORDING AND FILING. The Owner shall cause this Regulatory Agreement and all amendments and supplements hereto and thereto, to be recorded and filed in the real property records of the County of San Diego and in such other places as the Commission or the Trustee may reasonably request. The Owner shall pay all fees and charges incurred in connection with any such recording. Upon recordation, this Regulatory Agreement shall supersede the provisions of Sections 2 and 3 of the Developer Agreement in their entirety and be controlling. 18. PAYMENT OF FEES. In the event that a party to this Regulatory Agreement brings an action against any other party to this Regulatory Agreement by reason of the breach of any condition or covenant, representation or warranty in this Regulatory Agreement, or otherwise arising out of this Regulatory Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable attorneys’ fees to be fixed by the court which shall render a judgment, as well as the costs of suit. Notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Indenture, throughout the term of this Regulatory Agreement, the Owner shall pay the Commission’s annual administrative fee of -23 percent of the principal amount of the Bonds as of the Closing Date in arrears on September 8 of each year, commencing September 8, 1995, and shall also reimburse the Commission and the Trustee for all expenses reasonably incurred by them in connection with enforcement of their rights and remedies under this Regulatory Agreement. On the Closing Date, the Owner shall pay the Commission’s initial administrative fee of .23 percent of the principal amount of the Bonds. 19. GOVERNING LAW. This Regulatory Agreement shall be governed by the laws of the State of California. The Trustee’s rights, duties and obligations hereunder are governed in their entirety by the terms and provisions of the Indenture. 20. AMENDMENTS. Except as provided in Section 6(a) hereof, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of San Diego. The parties hereto agree that the Prior Regulatory Agreement shall terminate and be of no further force and effect as of the date of recordation of this Regulatory Agreement and PUBL:17495~1(RKD:17477~2~~0:~17477_1)109~B2062.14 15 08/l 1194 agree that the recordation of this Regulatory Agreement shall operate as evidence of such termination of the Prior Regulatory Agreement. 21. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by personal delivery, certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Commission: Carlsbad Housing and Redevelopment Commission 2965 Roosevelt Street Carlsbad, California 92008-2389 Attention: Housing and Redevelopment Director Trustee and Program Administrator : Owner: First Trust of California, National Association 101 California Street, Suite 1150 San Francisco, California 94111 Attention: Multifamily Housing Group Seascape Apartments, Inc. c/o Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Vice President Suretv: Continental Casualtv Comuanv CNA Plaza Chicano. Illinois 60685 Attention: Senior Vice President and General Counsel with a cow to: Continental Casualtv Comuanv CNA Plaza Chicago, Illinois 60685 Attention: Coruorate Secretarv Notice shall be deemed given three business days after the date of mailing, by certified mail, postage prepaid, return receipt requested, or, if personally delivered, when received. 22. SEVERABILITY. If any provision of this Regulatory Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. 23. MULTIPLE COUNTERPARTS. This Regulatory Agreement may be simultaneously executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original. 24. TRUSTEE LIABILITY. The Trustee has entered into this Regulatory Agreement in its capacity as Trustee under the Indenture and not in its individual capacity. Its PUBL: 17495-l (RKD: 17477~2~~0:~17477~1)109 1 B2062.14 16 oat1 1194 duties, obligations, rights and privileges hereunder shall in all cases be subject to the provisions of Article X of the Indenture. 25. LIMITED RECOURSE PROVISIONS. Notwithstandina anv nrovisions of this Reaulatorv Agreement (other than the nrovisions of Section 7 hereof) to the contrarv, in anv action commenced to enforce the obligations of the Owner created or arisinp hereunder, the iudpment shall not be enforceable nersonallv against the Owner or its successors or aaainst anv affiliate. subsidiarv or cornorate narent of the Owner), or against assi ns or P ( anv assets of the Owner or its successors or assigns (or wainst the assets of anv affiliate, pbsidiarv or coreorate narent of the Owner). extent for the Granted Pronertv and all rents, issues, urofits. nroceeds. revenues, insurance nroceeds and awards and other income from the Granted Pronertv. IN WITNESS WHEREOF, the Commission, the Trustee and the Owner have executed this Regulatory Agreement by duly authorized representatives, all as of the date first written above. CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION By: Chairman ATTEST: Secretary FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee By: Author&d Signatory SEASCAPE APARTMENTS, INC., an Illinois corporation By: Vice President ATTEST: PUBL:17495~1(RJZD:17477~2~T0:~17477_1)109~B2062.14 17 08/l 1194 Secretarv 18 08/l II94 STATE OF CALIFORNIA 1 1 COUNTY OF SAN DIEGO ) On aPPe--I , before me, 3 personally and , - personally known to me -- OR -- - proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their author&d capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. Witness my hand and official seal. (Signature of Notary) CAPACITY CLAIMED BY SIGNER: Individual - - Corporate Officer(s): Title(s) - Partner(s): _ Limited _ General - Attorney-in-Fact - Trustee(s) x Guardian/Conservator Other: Chairman and Secretarv SIGNER IS REPRESENTING: The Carlsbad Housing and Redevelopment Commission ATTENTION NOTARY: Although the information requested below is OPTIONAL, it could prevent fraudulent attachment of this certificate to another document. THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED AT RIGHT: Title or Type of Document Number of Pages Date of Document Signer(s) Other Than Named Above: ~~~~:17495~1(~~~:17477~2~~o:_17477_1)109~ B2062.14 19 08/11194 STATE OF CALIFORNIA 1 ) COUNTY OF SAN FRANCISCO) On appeared , before me, , personally and , - personally known to me -- OR -- - proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. Witness my hand and official seal. (Signature of Notary) CAPACITY CLAIMED BY SIGNER: Individual - - Corporate Officer(s): Title(s) - Partner(s): _ Limited _ General - Attorney-in-Fact - Trustee(s) Guardian/Conservator x Other: Authorized Signatories SIGNER IS REPRESENTING: First Trust of California, National Association ATTENTION NOTARY: Although the information requested below is OPTIONAL, it could prevent fraudulent attachment of this certificate to another document. THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED AT RIGHT: Title or Type of Document Number of Pages Date of Document Signer(s) Other Than Named Above: 20 OS/l l/94 STATE OF 1 ) COUNTY OF ) , before me, , personally and , - personally known to me -- OR -- - proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his author&d capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. Witness my hand and official seal. (Signature of Notary) CAPACITY CLAIMED BY SIGNER: Individual x Corporate Officer(s): Title(s) - Partner(s): _ Limited _ General - Attorney-in-Fact - Trustee(s) Guardian/Conservator - Other: - SIGNER IS REPRESENTING: Seascape Apartments, Inc. ATTENTION NOTARY: Although the information requested below is OPTIONAL, it could prevent fraudulent attachment of this certificate to another document. THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED AT RIGHT: Title or Type of Document Number of Pages Date of Document Signer(s) Other Than Named Above: PUBL: 17495~1(~~D:17477~2~~o:_17477_1)1091B206.14 21 OS/l 1194 EXHIBIT A LEGAL DESCRIPTION All that certain real property situated in the City of Carlsbad, County of San Diego, State of California, described as follows: Lots 100 and 101 of CARLSBAD TRACT NO. 73-23, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 8081, filed in the Office of the County Recorder of San Diego County, February 28, 1975. Excepting all crude, oil, petroleum, gas, brea, asphalturn and all kindred substances and other minerals in and under said land, but without the right to enter upon the surface of said land above a depth of 500.00 feet to explore for or extract same, as reserved in a Deed recorded August 27, 1969 as File No. 157186 and that Deed recorded August 27, 1969 as File No. 157190, both of Official Records. Also excepting ah oil, oil rights, mineral rights, natural gas rights and other hydrocarbons by whatsoever name known, together with all geothermal steam and steam power that may be within or under the parcel of land hereinafter described, together with the perpetual right of drilling, mining, exploring and operating therefor and storing in and removing the same from said land, or any other land, including the right to whipstock or directionally drill and mine from lands other than those hereinafter described, oil or gas wells, tunnels and shafts into, through or across the subsurface of the land hereinafter described and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate such wells or mines, without, however, the right to drill, mine, store, explore and operate through or on the surface or the upper 500 feet of the subsurface of the land herein described. PUBL:17495~1(FSD:17477~2~~0:~17477_1)10962.l4 A-l 08/l 1194 EXHIBIT B CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE The undersigned, being duly authorized to execute this certificate on behalf of Seascape Apartments, Inc., an Iknois corporation (the “Owner”), hereby represents and warrants that: 1. He has read and is thoroughly familiar with the provisions of the various Loan Documents associated with the Owner’s participation in the Carlsbad Housing and Redevelopment Commission’s (the “Commission”) Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1994 (Seascape Village Project), such documents including: (a) the Amended and Restated Regulatory Agreement and Declaration of Restrictive Covenants dated as of September 1, 1994 (the “Regulatory Agreement’) among the Owner, the Commission and First Trust of California, National Association, (the “Trustee”); (3) the Loan Agreement dated as of September 1, 1994 between the Owner and the Commission; and (cl the Note dated September 1, 1994 from the Owner. to the Commission representing the Owner’s obligation to repay the Loan. 2. As of the date of this certificate, the following percentages of residential units in the Project (i) are occupied by Lower-Income Tenants or Very Low Income Tenants at Affordable Rents (as such terms are defined in the Regulatory Agreement) or (ii) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Lower-Income Tenant or a Very Low Income Tenant vacated such unit; as indicated: Occupied by Lower-Income Tenants (including Very Low Income Tenants): Occupied by Very Low Income Tenants: -% Unit Nos. -% Unit Nos. Held vacant for occupancy continuously since last occupied by Lower-Income Tenant: -% Unit Nos. Attached hereto is the current rent roll for the units described above. PUBL:17495~1(RKD:17477~2~~o:~17477~1)109~~062.14 B-l OS/l l/94 3. To the best knowledge of the Owner, (i) the Owner is not in default under the terms of the Regulatory Agreement and (ii), no Determination of Taxability has occurred with respect to the Bonds. SEASCAPE APARTMENTS, INC., an Illinois corporation By: Its: PUBL:l7495-1 (FtED:l7477~2~To:~l7477~1)109~ B2062.14 B-2 OS/l 1194 EXHIBIT C INCOME COMPUTATION AND CERTIFICATION NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development (“HUD”) Regulations (24 CFR 813). You should make certain that this form is at all times up to date with the HUD Regulations. All capitalized terms used herein shall have the meaning set forth in the Regulatory Agreement. Re: Address of Apartment Building I/We, the undersigned state that I/we have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the above apartment project. Listed below are the names of all persons who intend to reside in the unit: 1. 2. Name of Members Relationship of the to head of Household Household 3. & 4. 5. Social Security - Place of Number Emulovment HEAD SPOUSE Income Comnutation 6. The total anticipated income, calculated in accordance with this paragraph 6, of all persons over the age of 18 years listed above for the 1Zmonth period beginning the date that I/we plan to move into a unit is $ . Included in the total anticipated income listed above are: ta) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions; 0) the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion PUBL:17495~1(RED:17477~2~~0:~17477~1)109 1 B2062.14 C-l OS/l l/94 (cl W interest and dividends (including income from assets excluded below); the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts, including any lump sum payment for the delayed start of a periodic payment; 63 (9 Cd payments in lieu of earnings, such as unemployment and disability compensation, workmen’s compensation and severance pay; the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities; periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; 00 all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (0 any earned income tax credit to the extent that it exceeds income tax liability. or amortization of capital indebtedness or any allowances for depreciation of capital assets); Excluded from such anticipated income are: (a) casual, sporadic or irregular gifts; 0) Cc) amounts which are specifically for or in reimbursement of medical expenses; lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen’s compensation), capital gains and settlement for personal or property losses; G-0 te) amounts of educational scholarships paid directly to the student or the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans not used for the above purposes are to be included in income; hazardous duty pay to a household member who is away from home and exposed to hostile fire; (9 relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; PUBL:17495~1(FtED:17477~2~T0:~17477~1)109~ B2062.14 c-2 OS/l l/94 63 0) (0 (iI 04 (1) Cm) (n) (0) foster child care payments; the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1977; payments to volunteers under the Domestic Volunteer Service Act of 1973; payments received under the Alaska Native Claims Settlement Act; income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; payments or allowances made under the Department of Health and Human Services’ Low-Income Home Energy Assistance Program; payments ‘received from the Job Training Partnership Act; income derived from the disposition of funds of the Grand River Band of Ottawa Indians; and the first $2,000.00 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims. 7. Do the persons whose income or contributions are included in item 6 above (a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land) -Yes - No; or (b) (cl have they disposed of any assets (other than at a foreclosure or bankruptcy sale) during the last two years at less than fair market value? -Yes - No. If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? - Yes -No 60 If the answer to (c) above is yes, state: (1) (2) the amount of income expected to be derived from such assets in the 12month period beginning on the date of initial occupancy in the unit that you propose to rent: $ , and the amount of such income, if any, that was included in item 6 above: $- 8. ta) Are all of the individuals who propose to reside in the unit full-time students*? Yes - No - PUBL:17495~1(RKD:17477~2~~0:~17477_1)109~ B2062.14 c-3 08/11/94 *A full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional on farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. 0) If the answer to 8(a) is yes, is at least 1 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return? Yes - No 9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner of the rental housing project in which the unit is located (hereinafter the “Owner”), has any family relationship to the Owner; or owns directly or indirectly any interest in the Owner. For purposes of this paragraph, indirect ownership by an individual shall mean ownership by a family member, ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trustee held by the individual or a family member; and ownership, direct or indirect, by a partner of the individual. 10. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit; and I/we declare that all information set forth herein is true, correct and complete and based upon information I/we deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11. I/we will assist the Owner in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding calendar year. 12. I/we acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the unit and will entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings. PUBL:17495~1(RKD:17477~2~~0:~17477~1)109~ B2062.14 C-4 08/l 1194 I/we declare under penalty of perjury that the foregoing is true and correct. Executed this - day of in the City of , California. C-5 Applicant Applicant [Signature of all persons over the age of 18 years listed in number 2 above required] OS/l l/94 FOR COMPLETION BY APARTMENT OWNER ONLY: 1. Calculation of eligible income: a. Enter amount entered for entire household in 6 above: b. (1) If the answer to 7(c) above is yes, enter the total amount entered in 7(d)(l), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ); (2) Multiply the amount entered in 7(c) times the current passbook savings rate as determined by HUD to determine what the total annual earnings on the amount in 7(c) would be if invested in passbook savings ($ ), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ); (3) Enter at right the greater of the amount calculated under (1) or (2) above: C. TOTAL ELIGIBLE INCOME (Line 1 .a plus line 1 .b(3)): 2. The amount entered in 1 .c: - Qualifies the applicant(s) as a Lower-Income Tenant(s). - Does not qualify the applicant(s) as a Lower-Income Tenant(s). Qualifies the applicant(s) as a Very Low Income Tenant. 3. Number of apartment unit assigned: - Bedroom Size: Rent: $ PUBL:17495~1(RED:17477~2~~0:~17477~1)109~ B2062.14 C-6 $ $ 0811 l/94 4. This apartment unit [was/was not] last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the apartment unit qualified them as Lower-Income Tenants. 5. Method used to verify applicant(s) income: - Employer income verification. - Copies of tax returns. - Other ( ) Manager c-7 08/l 1194 INCOME VERIFICATION {for emnloved persons) The undersigned employee has applied for a rental unit located in a project financed under the Carlsbad Housing and Redevelopment Commission Multifamily Housing Program for persons of lower income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee’s current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Overtime Bonuses Commissions Total current income I hereby certify that the statements above are true and complete to the best of my knowledge. Signature Date Title I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under the Carlsbad Housing and Redevelopment Commission Multifamily Housing Program. Signature Date Please send to: PUBL:17495~1(R!ZD:17477~2~~0:~17477_1)10~ B2062.14 C-8 08/l 1194 INCOME VERIFICATION /for self-emnloved Dersons) I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Signature PUBL:17495~1(RJiD:17477~2~~0:~17477_1)10~B2062.14 c-9 Date 08/l 1194